What’s Next for OpenAI + Binance Is Binanceled + A.I. Is Eating the Internet

It’s full steam ahead for the tech world despite, well, everything.

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

• 0:00Speaker 00

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• 0:32Casey Newton?

  I don't know if you saw this, Kevin, but I posted a picture of myself in the airport.

• 0:36Kevin Roose?

  Yes.

• 0:37Casey Newton?

  When I was recording the emergency podcast. And this image has haunted me ever since.

• 0:43Kevin Roose?

  I saw someone texted it to me because it went viral on Reddit. You were like on the front page of Reddit and it was, it did not identify you. It just said like, basically like, look at this weirdo podcasting in the middle of the San Francisco airport.

• 0:55Casey Newton?

  It's a subreddit called I Am The Main Character, which is about people behaving inconsiderately in public. And it received over 2,000 upvotes and the title was just Airport Podcaster. Which I think we can all agree is one of the worst kind of podcasters.

• 1:11Kevin Roose?

  Yeah.

• 1:12Casey Newton?

  Even worse, after it had this moment on Reddit, it then went over to X, Elon Musk's notorious hate platform, where it received over 13,000 likes from a person who said, I would crop dust this dude so hard. Do you know what that means, Kevin? Someone was threatening to fart on me. Okay? These are the kind of risks I'm taking to record this podcast. And it's got to stop and it's out of control. So.

• 1:39Kevin Roose?

  I did, my favorite comment on it was like, imagine you land at San Francisco airport and the first thing you see is a tech podcaster podcasting from the gate.

• 1:48Casey Newton?

  Welcome to town.

• 1:54Casey Newton?

  I'm Kevin Bruce, a tech columnist for The New York Times.

• 1:56Kevin Roose?

  I'm Casey Newton from Platformer.

• 1:57Casey Newton?

  And this is Hard Fork. This week, catching up with OpenAI. What happened over the break and where it goes from here? Then, Binance is in a shambles. The Times' David Yaffe Bellini joins to explain why CZ may be going to prison. And finally, AI is eating search. We'll eat the whole web next. And we'll leave comments.

• 2:31Kevin Roose?

  Casey, I hope you had a nice Thanksgiving break. Did you actually get to relax and unplug a little bit?

• 2:36Casey Newton?

  I did. I got to spend it with a friend's family this year, which was a great time. And, you know, I'll tell you, Kevin, there were actually some Hard Fork listeners at the dinner table.

• 2:46Kevin Roose?

  Oh, boy.

• 2:47Casey Newton?

  And so, you know, every podcaster's dream, their podcast being talked about over turkey mashed potatoes is a great time. Thank you very much to my friend's family.

• 2:55Kevin Roose?

  Yeah, and thank you to the kind folks at OpenAI for not breaking any news over the long weekend. But we do have to catch up on the drama because this story is not over yet. And a little more has come in since our last emergency podcast. So I think we should just talk about what has changed at OpenAI since we last podcasted and what the latest is at the company and in the AI industry in general.

• 3:20Casey Newton?

  Yeah, we need to just like catch our breath a little bit. Like, a big crazy thing happened. The big crazy thing is mostly but not completely resolved. So let's take a moment to just kind of take stock and maybe like forecast what happens next.

• 3:33Kevin Roose?

  Sure. So first of all, let's just catch up. Like, if you happen to, you know, take a nap for the last 10 days or not be listening to podcasts.

• 3:41Casey Newton?

  If this is your first technology podcast you've ever listened to, Kevin will walk you through it.

• 3:44Kevin Roose?

  Okay, so there's something called artificial intelligence. No, so to give the briefest possible recap of these events, the week before last, the board of OpenAI fired Sam Altman, the CEO, for vague reasons, presumably including coming on the Hard Fork podcast.

• 3:59Kevin Roose?

  And the company's president, Greg Brockman, also left. There was a staff revolt. People threatened to quit. Microsoft said it was hiring Sam and Greg and building a new AI research team. One of the board members who voted Sam out, Ilya Sutskever, sort of recanted, said that he regretted the decision. Sam and Greg were brought back, but they're no longer on the board. Three of the board members who voted to fire Sam, Helen Tonner, Natasha McCauley, and Ilya Sutskever, have agreed to step down. And as of now, two of them have been replaced. One of the new board members is Brett Taylor. Who used to be the chairman of Twitter's board. And the other is Larry Summers, who was the Treasury Secretary under Bill Clinton.

• 4:42Kevin Roose?

  Microsoft will also get a seat on the new board, though it will be a non-voting observer seat. They still also have some vacancies to fill. And there will also be an independent investigation into what went down here and why Sam Altman was fired in the first place.

• 4:59Casey Newton?

  And we hope you got all of that down because there will be a quiz at the end of the podcast.

• 5:03Kevin Roose?

  So what's new this week at OpenAI, Casey? You had some details in your newsletter about what has been going on at OpenAI. What'd you learn?

• 5:13Casey Newton?

  Well, really just kind of a handful of morsels, I guess I would say, but a few things that became clear to me over the past few days. One of them that explained some things for me was just that when this board realized that it did have a majority willing to fire Sam, everything else happened very, very quickly. Okay? This was not something that had been in the works for weeks and weeks. It was something that it was like, oh, okay, we're gonna do this, we're doing it, boom, it's done. And this just explains a lot of the chaos and the confusion that we saw. It explains in part why the board was not able to tell us with any specificity why they fired Sam. I think there's a lot of legal concern there about exactly what they can say. I think it also explains why maybe they didn't think some things through fully, such as

• 5:57Casey Newton?

  like, what would the 700-plus employees of OpenAI think when the board came to them and said, we're gonna fire your popular and charismatic CEO for reasons that we can't really discuss, right? So that was kind of one of the big things.

• 6:10Kevin Roose?

  Yeah, I mean, there's still some big unresolved pieces of this. I was talking to someone last night who referred to these pieces of dark matter that are sort of in this story, these question marks that are still unresolved. One of them, the most obvious one, is like, what was the sort of proximate cause of firing Sam? Why did the board decide that this was their time to make a move? And it sounds like they're still deciding if and when to say anymore about that, but that is still one of the big question marks here. Another one is, you know, what happened with Ilya? How was he convinced to sort of recant his decision? And advocate for bringing Sam and Greg back to the company. There are still a lot of unresolved questions, but I think for the most part,

• 6:53Kevin Roose?

  we're starting to get a sketch of what happened here. This does not appear to have been a sort of board coup that was motivated by any one specific concern about AI safety. You know, there was some speculation that OpenAI had achieved artificial general intelligence, or they had made some huge research breakthrough that had scared the bejesus out of all of the board members. And they, you know, decided to take Sam out because that was the safest thing to do. I think it's now clear that it was not something momentous like that. But we still haven't gotten a lot of satisfying answers about what those reasons might have been. But I think there are some things we can say going forward. One of them is that, you know, Sam Altman is back in the driver's seat at OpenAI.

• 7:38Kevin Roose?

  Greg Brockman is also back on the team as well. And they are starting to sort of do some of the work of reaching out to clients and business partners and, you know, just sort of trying to patch up things that may have been a little bit fractured or uncertain over the past couple of weeks.

• 7:53Casey Newton?

  Yeah. Now, do we want to talk about Q-Star?

• 7:55Kevin Roose?

  Sure, we should talk about Q-Star because there's been some reporting on this that I think deserves some closer scrutiny. So there were some news reports in The Information and Reuters about something called Q-Star, which was apparently a research project that was made inside OpenAI. Not a lot of details on what that is, but people speculated that maybe it was some breakthrough that they had made that had allowed their AI systems to become much more powerful. But Casey, what have you been hearing about Q-Star?

• 8:22Casey Newton?

  Well, you know, the other thing about Q-Star was they said that it was able to do basic math. And I thought, wow, finally, an AI that has reached the level of the calculator that I had in elementary school. But of course, it would be a big deal if the AI could do math because these systems are predictive. We have talked on this show in the past about how bad these systems don't really are at math, so that would sort of be a big deal. The Reuters report said that the board had gotten a letter about some powerful AI discovery that could threaten humanity. Presumably, this was Q-Star. And suggested that this might have been one of the things that shook them to their very core and made them say, we need to act here. But I can tell you, based on my own reporting, that this does not seem to be true.

• 9:05Casey Newton?

  According to a source I talked to, the board never received a letter about Qstar or anything having to do with Qstar. So it might be something that is rattling around in the hallways of OpenAI, but it doesn't seem to have played a role in this story. And when I asked OpenAI about all this, they just said, no comment.

• 9:23Kevin Roose?

  Yeah, I've been reporting on this too, trying to figure out what the heck Qstar is and whether it played a role here. And my sources are saying the same thing that yours had. So we don't know what Qstar is. The company is not saying anything about it. There is an idea in reinforcement learning, which is sort of a branch of AI called Q Learning, which is basically a type of algorithm that can help an AI learn from its own experiences and make more autonomous decisions. So you can kind of see why if Qstar is related to Q Learning in some way, maybe people on OpenAI's safety team would be concerned about this.

• 10:03Casey Newton?

  I mean, you said something really important, though, that I want to underscore because one of the narratives that came out of the OpenAI drama, which I do think is false, is the idea that there was the sort of Sam Altman forces that were all coming together aligned around the idea of advancing AI very quickly and very aggressively and in a sort of very business minded way. And then you had the folks who were slower and more cautious and more focused on AI safety. And that what we saw play out was the sort of classic corporate drama of the people who wanted to go really fast and the people who wanted to go slow. And there was a huge conflict there to blow up. Based on, I think, both of our reporting, Kevin, we very much believe that that was

• 10:45Casey Newton?

  not what happened here, that this was not a safety versus Sam situation. But at the same time, what you said is true. As ChatGPT exploded in popularity, as OpenAI became such an important company, the stakes for everything just got way higher. And so what might have been OK a year ago Terms of Sam's interactions with the board just wasn't okay anymore. And it's not explicitly about safety, but to my mind, it's not not about safety. Right. The idea is that you are working on these very consequential systems. And is the CEO governable is in some ways a safety question. So I feel like this has been one of the most vexing parts of the whole debate is like,

• 11:28Casey Newton?

  where do you put the question of AI safety in relation to all these pieces? And that is the best that I have been able to square the circle over the past few days.

• 11:36Kevin Roose?

  Yeah, absolutely. I think that's a really great point. Even something that is not sort of technically about safety is about safety. If what you're talking about are who are the people in charge of these powerful AI models?

• 11:48Casey Newton?

  Exactly.

• 11:48Kevin Roose?

  And what kind of responsibilities do they have? Okay, so here's another question that I have for you, Casey. Do you think this whole drama is over or do you think there is more to come?

• 11:59Casey Newton?

  I wrote this week that I think that there is more to come for a couple of reasons. One is Adam D'Angelo is still on the board. This is a guy who voted to fire Sam before and will play a role in filling out the rest of that board. And obviously, all of us will be very curious to see who he puts there. But keep in mind that this is one of the concessions that the board got from Sam before they restored him to the company was that the guy that fired him was still going to be around. So I think people should remember that. And then they should also remember that they are going to do this investigation. Now, corporate investigations vary widely in quality and thoroughness. And it is very possible that this investigation kind of comes and goes. And we never hear anything about it and nothing changes at the company. Absolutely a possibility.

• 12:42Casey Newton?

  But sometimes investigations turn up serious stuff and there are changes as a result. And I think that the the board is going to want to be able to say something about what it found. I think the people who left the board are going to have some incentive to speak out and tell their side of the story at some point eventually. And somewhere in there, there could be consequences for Sam Altman and there could be consequences for OpenAI. So, you know, I don't know what those are. But if anyone is sort of thinking, okay, the OpenAI drama is over and we can just kind of sort of wash our. Or hands of the whole thing, I would say give it a few months. What do you think?

• 13:17Kevin Roose?

  Yeah, I think you're right. I think this is not over. I think that the storm, the immediate storm has passed and you know, on paper, things are basically back to where they were two weeks ago before any of this. Sam Altman is the CEO. You know, Greg Brockman is, is, you know, running things over there. This company in some ways looks a lot like it did before any of this. But I also think that the psychological impact of all this can't be understated. If you're Sam Altman, walking back into this company, you are not the same person that you were two weeks ago, right? Sam, he may be distrustful of certain people that he works with who he feels didn't have his back.

• 13:56Kevin Roose?

  Maybe you don't trust Ilya, your co-founder anymore, because even though he came back to your side, he did ultimately vote to fire you. You certainly don't trust Adam D'Angelo, who is the board member who is still on the board, who was part of the coalition that voted to fire him. You're not on the board anymore if you're Sam Altman. And you do know that you have some leverage, you know, your employees will go to bat for you. So that's something. But you also have this investigation hanging over your head. I think this is a very fragile, very vulnerable company right now. You know, obviously they still have a lot going for them. They have super popular products. They have a lot of talent. Everyone's very happy not to be working at Microsoft. I can tell you from talking to people there.

• 14:37Kevin Roose?

  But I also think there are some wounds from the events of the last couple of weeks that are not going to heal immediately. And I think it's going to take a while for trust to be rebuilt. And so I think one thing that I have heard that I can pass on is that this is a moment where every other AI company in the industry is absolutely licking its chops.

• 14:59Casey Newton?

  Yeah.

• 14:59Kevin Roose?

  They see a competitor that was dominant, that is now vulnerable. And so they are going after OpenAI's clients. They are, you know, they are working the phones, trying to get as much business away from them as they can. The Wall Street Journal reported last week that Google has launched a sales campaign specifically to persuade its corporate customers to switch from OpenAI to Google's AI services.

• 15:24Kevin Roose?

  Is also sort of pointing to what happened at OpenAI as a reason to go with a platform like Amazon, which allows you to choose from many different companies AI models. Other companies are making this argument that OpenAI has shown that it is so unstable and so vulnerable that if you are a business building important technology using OpenAI's models, you should really leave them and go with someone who's not going to have like a board coup that threatens the future of their company. What do you think of this, Casey?

• 15:55Casey Newton?

  It's so bitchy, but like, what else are they gonna say? You know what they can't say? We have the best AI model. So that's what they say, you know? Like, if they had the best AI model, they would say that, but they don't. And I think that tells you a lot.

• 16:06Kevin Roose?

  Right. I did like the the attempt that Salesforce made in the middle of all this to poach OpenAI employees. Did you see this going on? It's so funny. So Marc Benioff, the chairman of Salesforce, was that this tweet that's basically like, like, just, just sort of blatantly trying to poach their employees, saying, you know, we'll match your, we'll match your compensation, come over to Salesforce and work for us if you've been affected by this. And my favorite reply came from an OpenAI engineer who just said back in a tweet, look, I love Slack, but the company that built Tableau is not going to build AGI. Tableau, of course, one of Salesforce's many enterprise software products.

• 16:46Casey Newton?

  You know, what's interesting is not only did a huge number of employees at OpenAI not defect to go work at Salesforce, the former co-CEO of Salesforce, Brett Taylor, instead joined the board of OpenAI. So that's how well Marc Benioff's tweet went over.

• 17:01Kevin Roose?

  I think my favorite, like, underappreciated story from the week of chaos at OpenAI was that Microsoft, when it, in the sort of like 48 hours, when it looked like a big chunk of OpenAI was gonna leave and go work for Microsoft, they actually like set up a space for the OpenAI employees in the offices of LinkedIn, which Microsoft owns. And so there was just this team that was like, setting up desks and actually bringing in Macs because they guessed, I think, correctly that the OpenAI employees would not want to use Windows-based PCs.

• 17:32Casey Newton?

  So they wouldn't even know what it was. They just poke it with a stick.

• 17:36Kevin Roose?

  Anyway, okay, anything more to say on OpenAI? What are you expecting next?

• 17:40Casey Newton?

  I'm expecting it to just carry this podcast for the next year. We want to thank everyone at OpenAI for really giving us some interesting subjects to dive into. Hugely appreciate it.

• 17:51Kevin Roose?

  When they do make the Netflix movie about this saga, who do you think will play the puckish podcasters who interviewed Sam Altman two days before he was unceremoniously canned?

• 18:01Casey Newton?

  You know, there are very few actors in Hollywood that can credibly pull off an airport podcast. I think it really is down to Timothy Chalamet and Jacob Elordi are the only people who can play me, just sort of for the physical resemblance, but then there's also the gravitas you need to bring to the role.

• 18:14Kevin Roose?

  Yeah, I was gonna suggest Stanley Tucci for you, but he needs to grow a few inches.

• 18:21Kevin Roose?

  When we come back, finance goes bye-bye.

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• 20:33Kevin Roose?

  So Casey, there was one story that sort of got lost amid all of the drama and hubbub at OpenAI, but I think in any other news week, it would have dominated the headlines. And that is the implosion, basically, of the crypto exchange Binance.

• 20:46Casey Newton?

  You know, every time I hear the word Binance, I think of how Rusty Foster described it to Dan Taps. He would write, "Finance, the leader in bisexual finance." I cannot get this out of my head to save my life. If anyone knows how to get that out of my head, please let me know. But yes, Binance is falling apart.

• 21:02Kevin Roose?

  So Binance, not actually a cryptocurrency exchange for the bisexual community, it is a cryptocurrency exchange for criminals.

• 21:10Casey Newton?

  Basically explicitly.

• 21:14Kevin Roose?

  So Binance, as we have talked about in this show, is the crypto exchange run by Changpeng Zhao, or CZ, as he is better known. And just before Thanksgiving, CZ and Binance pleaded guilty to violating money laundering rules. Binance agreed to pay $4.3 billion in fines and restitution, which is one of the largest settlements ever imposed by the government on a financial firm. The company also agreed to accept the appointment of a government monitor to oversee its business. And CZ himself agreed to pay a $50 million personal fine and step down from his role as CEO. And he has also agreed not to appeal a prison sentence, if he faces one, of up to 18 months.

• 21:57Kevin Roose?

  So he is going to presumably turn himself in, and Binance, as we know it, is no more. Casey, did this news surprise you?

• 22:05Casey Newton?

  Well, yes and no. I would say that during the height of crypto mania in this country, Binance was, on one hand, seen as very much a leader, just in terms of trading volume.

• 22:20Kevin Roose?

  They were the biggest one.

• 22:21Casey Newton?

  Their sort of reach. They were the biggest one. At the same time, whispers that it was being used extensively by money launderers. I mean, they weren't even whispers. This was just like, this was just always part of the conversation around this company was like, yes, it's a very big crypto trading platform and it is also being used by money launderers. And you did sort of expect that that would catch up with them one day. The only other thing I would say is I remember that when we started to see the early troubles in the crypto market, so before FTX collapsed, it was Sam Bankman Fried and CZ who were negotiating to try to keep the entire industry afloat, to prevent all these little smaller exchanges from going under.

• 23:02Casey Newton?

  And it really felt like it was up to these two men in particular to preserve the crypto market. And you fast forward a little over a year and now both of them are either in prison or on their way there. So that to me, very interesting.

• 23:16Kevin Roose?

  It's an amazing turn of events and I would say my sources in the crypto community were, I think, startled but not surprised by this deal. Binance has had, as you've said, a reputation for playing fast and loose with regulators. They famously did not have a headquarters for many years and when asked where their company was based, they would just sort of change the subject or just say like-

• 23:40Casey Newton?

  They would say, hey, who wants to know?

• 23:43Kevin Roose?

  And they were based in Malta for a time. They started in China.

• 23:46Casey Newton?

  Huge red flag, huge red flag to be based in Malta.

• 23:50Kevin Roose?

  Nothing good happens in Malta. Sorry to any of our Maltese listeners.

• 23:55Kevin Roose?

  They started in China, then they left China under somewhat murky circumstances. They were based in Japan for a while, then left Japan under somewhat murky circumstances.

• 24:04Casey Newton?

  They followed the Eras Tour with Taylor Swift around the world for a little while, just sort of setting up shop in the parking lots and tailgating with fans.

• 24:11Kevin Roose?

  Yes, so on one level, this was sort of a shady seeming operation from the start, but I also think it's important to underscore, this was not a small company. There were rumors at the height of Binance's popularity that CZ, the founder of Binance, might secretly have been the richest person in the world, like richer than Bill Gates, richer than Mark Zuckerberg, richer than Elon Musk. Even and we don't know that for sure, but the scale of these crypto businesses at the height of crypto mania a couple of years ago is just really hard to wrap your arms around. So now we have this settlement, this fall from grace for Binance. And so I think people in the crypto industry are still trying to make sense of what happened. And I think there's a big question here, which is like, why now? What happened where

• 24:56Kevin Roose?

  the Binance and CZ, which have been sort of resisting oversight for many years, finally agreed to plead guilty? What changed? And why is this all happening now? So to help us answer these questions, we're going to bring back New York Times crypto reporter, David Daffy Bellany. David Daffy Bellany, welcome back to Hard Fork.

• 25:18Speaker 06

  Thanks for having me.

• 25:20Kevin Roose?

  So I want to just dig into some of the specific charges here because, you know, money laundering violations, that sounds very broad. What are the specific allegations that the Department of Justice has made here that Binance and CZ have now pled guilty to?

• 25:35Casey Newton?

  Well, now Kevin sounds like a prosecutor over here. Yeah, go ahead, David.

• 25:39Speaker 06

  Yeah, I mean, I guess an important thing to understand here is a money laundering violation does not mean that, you know, that person was laundering money. Like, nobody is saying that, like, you know, CZ stole money from the bank and then like washed it in some sort of way.

• 25:52Kevin Roose?

  Well, some people are probably saying that.

• 25:53Speaker 06

  Some people are probably saying that, but the government is not, is not saying that, you know. Essentially, what the company and what CZ have pleaded guilty to is sort of deliberately not setting up an infrastructure that would have prevented bad actors from using Binance to launder money. And, you know, there's also all sorts of evidence that it wasn't just a turn a blind eye sort of thing, that like, the company was conscious of what was going on, CZ knew what was going on, and allowed it to continue because this was how the company, you know, attracted new customers.

• 26:23Kevin Roose?

  So my understanding is that if you are a bank or any kind of financial institution in the United States, you have to do what are called KYC and AML. You have to do know your customer, which is basically, you know, if you're setting up an account, we have to have your ID or in some other way, verify who you are. And AML, anti-money laundering, which is basically, are you on some sanctions list? Are you a drug trafficker? Are you an arms dealer? Are you someone that we may not want to be transacting with? And that Binance basically looked at those requirements and said, like, no, we don't want to do any of that.

• 26:58Speaker 06

  Yeah, pretty much. They had all sorts of loopholes in their system that allowed people to open accounts on Binance without doing any of that. The sorts of people who are opening accounts, you know, people operating in sanctioned countries like Iran, Cuba, Syria, people linked to terrorist groups like Al Qaeda, all of these sorts of bad actors were using the platform pretty freely for years and years. And Binance wasn't that interested in stopping them. And it was a classic sort of startup mentality of like, let's grow as fast as we can, not worry too much about the potential legal repercussions of this. And, you know, that's sort of what got us to where we are today with Binance.

• 27:36Casey Newton?

  You know, David, I was reading about this case and I saw that the Department of Justice pointed in their case against the company to this 2019 chat conversation in which a Binance compliance employee said, quote, "We need a banner. Is washing drug money too hard these days? Come to Binance, we got cake for you." And I guess my question is, how common is that for compliance employees to put that in writing?

• 28:00Speaker 06

  I mean, look, that's arguably not even the best thing that a Binance compliance employee put in writing. I mean, when the SEC sued, there is a famous quote from a Binance compliance official cited in their lawsuit that went something like, "We're running a fucking unlicensed securities exchange in the US, bro." So it's like a whole genre of like ridiculous stuff that Binance employees have put in writing over the years, essentially copying to various crimes.

• 28:28Kevin Roose?

  So I guess my question, David, is like, how did they get away with this for so long? Like, it doesn't seem surprising at all to me or, you know, other people who have been following the crypto industry for, you know, years and heard about this sort of open secret of Binance. But they really were in operation for a very long time. They had lots of customers. As you said, the biggest crypto exchange in the world, you know, billions of dollars passing through their platform. How did this carry on for so long?

• 28:53Speaker 06

  I mean, part of it is just that law enforcement in the US moves very slowly. I mean, these investigations that have, you know, sort of finally culminated this year were going on for years and years and years. But Binance is, you know, largely an overseas company. CZ, the founder and CEO, who just pleaded guilty, he's very secretive. There was a concern for a long time, almost certainly, that it would be difficult to extradite him were he charged. He's been holed up in the UAE for the past year, which doesn't have an extradition treaty with the, with the US government. And so what's been going on are essentially, you know, talks between the company and all the various agencies in the US that were going after it. Like, how can we reach some sort of deal that will resolve this illegal behavior, hold

• 29:35Speaker 06

  the company accountable, but also not kind of like drag this out in a sort of unmanageable way? And so I think that partly explains some of the, the delay. And in the meantime, like Binance claims to have cleaned up its act, hired a bunch of new compliance guys, they've got, you know, fancy former federal prosecutor running the compliance operation now. And so their story is like, we've turned over a new leaf.

• 29:58Casey Newton?

  Right, right, because back in June, the Securities and Exchange Commission had also sued Binance, right? And it also made this series of, of claims against the company. Does that get resolved with this deal? Or is that also still ongoing?

• 30:12Speaker 06

  So that's one of the most interesting things about this, actually. The SEC's case has not been resolved. And remember, the SEC is the most aggressive federal agency in the US going after crypto. You know, some are arguing that what the SEC essentially is trying to do is force crypto out of the US entirely. And that SEC lawsuit had some really kind of bombshell claims about Binance, including that the company was co-mingling customer funds with corporate accounts in a way that had a lot of echoes of what happened to FTX.

• 30:42Casey Newton?

  Right.

• 30:42Speaker 06

  And the SEC was not part of this big settlement that was announced last week. And the charges against Binance and against CZ did not include any references to this co-mingling or misuse of funds. And actually, in Binance's sort of like PR response to all of this, you know, they had executives tweeting things like, yeah, you know, we may have facilitated some money laundering, but the government doesn't say we stole money from customers, you know? We're not FTX.

• 31:06Casey Newton?

  Yeah, but, but in the crypto industry, that's a huge flex not to co-mingle funds. That's, you almost, it's almost unheard of in this industry.

• 31:13Speaker 06

  It's a, it's a, it's a huge flex. And we just found out last week that, that Kraken was doing something similar, you know? That's another big crypto exchange.

• 31:19Casey Newton?

  Not Kraken, oh my god.

• 31:20Kevin Roose?

  Wow. So

• 31:21Speaker 06

  I know, Casey, you've got all your money in Kraken.

• 31:23Kevin Roose?

  I had all my money in Kraken.

• 31:26Kevin Roose?

  So I used to cover the banking industry and something that was pretty common, especially in sort of the early 2010s was that banks would just commit some crimes and then they would make a deal with the government and they would agree to pay, you know, a bunch of money and maybe an executive or two would step down. But then, you know, things would continue on. The bank wouldn't go out of business. This was sort of part of the cost of doing business. If you're a big bank is sometimes you have to pay penalties when your employees do things that are illegal. So is that the likely outcome here is that CZ steps down, Binance, you know, goes through this sort of image rehab process and they come out the other side of this? Or do you think this actually could be the end of the exchange?

• 32:07Speaker 06

  Binance is certainly going to live on in some form for the foreseeable future. There's a new CEO named Richard Tang, who has actually been sort of groomed to be CZ's successor for a long time. So it wasn't a surprise to anybody that he was the person picked. And he's a former regulator and, you know, he's already started doing interviews and trying to kind of cast himself as the sort of like compliant face of this new business that's sort of emerging from this kind of difficult period. It's sort of remarkable that, you know, a week that saw the biggest company in crypto pay a nearly $5 billion fine, have its chief executive step down and like face prison time, that that was spun by a lot of crypto investors as good news because it was not the worst case scenario of what could have happened to Binance. You

• 32:52Speaker 06

  know, what people have been afraid of for months in the crypto world was that the US would indict CZ and that he would hole up in Dubai and try to avoid the charges, essentially becoming a fugitive. That Binance would then lose a lot of its licenses to operate in other countries around the world, which, you know, aren't, aren't fans of companies run by international fugitives. And that, you know, essentially the exchange would shrink, that money would move off of it. There'd be this kind of void in the center of the crypto universe and, you know, it would create a lot of uncertainty about the future of the whole industry. And that hasn't happened. You know, CZ has, has stepped down and sort of faced the music and You know, Binance, in theory, can sort of operate as normal. Now, I mean, it's, we'll find out the extent to which its business was like contingent on

• 33:37Speaker 06

  the fact that it was facilitating money laundering. And there's going to be a US government monitor installed to oversee operations for the next three years as well. And so like, will Binance be able to, you know, keep up business as usual under those circumstances? It's hard to say.

• 33:51Casey Newton?

  I mean, to underscore your point, though, you know, to me, the big reference here obviously is the collapse of FTX. That was the other sort of big exchange where somebody went to prison. But FTX like barely exists anymore, right? It's like absolutely a shell of its former self. And maybe it'll come back after they sort of emerge from bankruptcy proceedings and there's something to be salvaged there. But FTX, as we knew it, was basically done as soon as, you know, the exchange collapsed. Binance, it doesn't seem that way. And like, you know, this deal that they've reached, it feels like it's more than a slap on the wrist, but I, it does not seem like it is the end of Binance as we know it, unless you believe that CZ was such a force of personality and was so central to this company that it's just not going to be able to compete with him in prison anymore.

• 34:34Casey Newton?

  But at the same time, if you have crypto, like where else are you going to put your money? Like, is there any, any sort of feeding frenzy of other crypto exchanges saying, hey, Binance is over, bring your money over here?

• 34:45Speaker 06

  I mean, there was a little bit of a victory lap from, from some other crypto executives. I think the, the number that I saw is that there was about a billion dollars in outflows from Binance after these criminal charges were announced. And that's just a drop in the bucket. I mean, this is a company that by some estimates, custodies about $65 billion in customer assets. And so for a billion to flow out one day, it's just not, not that big a deal. And so there hasn't been any sign that customers are, you know, leaving Binance in droves.

• 35:15Kevin Roose?

  Yeah, my, my favorite reaction to the Binance news came from Brian Armstrong, the CEO of Coinbase, which is the sort of the regulated big crypto exchange in the US. And he was sort of taking a victory lap after this settlement between Binance and the Department of Justice. And he said, "The industry can finally close the chapter of bad actors." And I thought to myself, that's pretty ominous. You sure? You sure there aren't any more bad actors out there? You sure you got them all? Because to me, it just seems like the hits keep coming for bad actors in crypto.

• 35:49Casey Newton?

  Yeah. Also, like in this weird way, it almost seems like Binance customers had all factored this possibility into their holdings being held at the exchange, right? Like, you would have expected to see more money come out. The fact that it didn't sort of indicates to me that it's like, yeah, like eventually they're going to get popped for money laundering violations.

• 36:05Speaker 06

  It's like remarkable that they, you know, the customers like actually believe what Binance is saying because, I mean, for months and months, you know, every time there was a story about the fact that the Justice Department was closing in on Binance, you know, CZ would respond by just tweeting the number four, which was a reference to another tweet in which he kind of listed his priorities for the year 2023, and number four was ignore, fear, uncertainty, and doubt, or FUD, which is the catchall that crypto investors use to like dismiss any criticism. And so CZ would just tweet that every single time there's any negative story about Binance. And now, like, a lot of this story has been proven completely true, you know? He was in the crosshairs of the government, you know, he has pleaded guilty to committing all these crimes. And he's like no longer the CEO of the company.

• 36:49Speaker 06

  And yet, even after this, you know, there are people tweeting like, thanks so much for what you've given to the industry, CZ. Like, we still appreciate you. This guy just admitted to having allowed terrorist groups to launder money on his exchange, and he's being hailed as this conquering hero.

• 37:04Kevin Roose?

  In fairness, those people were members of Al Qaeda, but they did, they did thank CZ for his work over the years.

• 37:12Speaker 06

  I mean, I don't know if you guys saw CZ's statement on Twitter after all this happened, but he had some line about how he would be happy for like any startup founders to like come to him and he'll, he'll offer advice and do some informal coaching on the side.

• 37:25Casey Newton?

  Well, and he'll have a lot of time in prison to do that mentoring. You know, his calendar has never been clearer than it's about to be.

• 37:31Speaker 06

  Yeah, I mean, he actually said he was very pleased about that in this post.

• 37:34Kevin Roose?

  Okay, so more seriously, what is CZ doing right now? Where is he and is he going to prison?

• 37:40Speaker 06

  So we don't know exactly where CZ is right now, but he's somewhere in the United States. Initially, the magistrate judge who was overseeing his guilty plea allowed him to return to the UAE while he awaits sentencing, which will be sometime next year. But the government then said, wait, no, we don't want this guy in the UAE. He's a potential flight risk, and so we want to keep him in the US until he's sentenced. So we're still waiting for a higher level judge to make a determination on that. I think we can expect news on it in the next few days. And then we'll have to wait to the sentencing to see how many years he gets. But we're talking potentially something in the range of like 18 months, two years in prison. The government has the option of pushing for more,

• 38:25Speaker 06

  but that's generally, I think, what people are expecting based on the nature of the crime that he pleaded guilty to and the fact that he did plead rather than fighting this at the trial. And so that's very different from the 30, 40, 50 years that Sam Bankman-Fried potentially faces after getting convicted at his trial.

• 38:42Casey Newton?

  So David, the last time you were on the show to talk about this, Binance was saying that it was going to fight all the allegations against it vigorously. And now here it is capitulating to the government. So what's your sense of what happened in between?

• 38:55Speaker 06

  So the disappointing answer is that we don't totally know. I mean, we do not have a clear window into those kind of confidential discussions between Binance and the government. But it's true from reporting that I was doing earlier this year, around the time a huge number of Binance executives quit as a group, that CZ was telling people, I don't want to leave. I want to hold on to power. And if it means becoming a fugitive, then I'm prepared to do that. And that was part of the reason that there was this kind of exodus of top executives from Binance. And that was sort of the state of affairs in mid to late summer, when talks with the government were falling apart. What happened between then and now, we don't know exactly. But it's true that a lot of pressure has come to bear on CZ.

• 39:39Speaker 06

  I mean, there were those executive departures. That's sort of a big sign of people lacking faith in your vision for the company. And you know, again, this is sort of in the realm of speculation now, but you know, this guy had to sort of contemplate a life on the run essentially. And, and maybe that just wasn't super appealing. So again, it's not, we don't have like a satisfying explanation for, for what changed, but you know, you can sort of see how, you know, he might've come around to that view.

• 40:08Kevin Roose?

  So stepping aside from Binance specifically, David, every time we have you on this show, we talk about something horrible and criminal that has happened in the crypto industry. And we ask what it means for the future of the crypto industry and the sort of general vibe is like, well, it's not good. And yet, the crypto industry seems to be chugging along just fine. In fact, the price of Bitcoin is up more than 120% this year. People are still paying thousands of dollars for NFTs like the Bored Ape Yacht Club. Why is crypto, despite all of this villainy and all of this treachery and all of these lawsuits and settlements

• 40:50Kevin Roose?

  and potential jail time, why is crypto not doing worse?

• 40:54Speaker 06

  Well, I think so much about the state of the crypto markets has to do with narratives and what people are thinking and believing at a certain point. And of course, nobody really understands why markets go up or down. It's, it's a mystery even in traditional finance to some, to some degree. But you know, the narrative that crypto investors have chosen to believe is the one that, that Brian Armstrong was advancing, which is that we're washing out the bad guys. And actually, this is good news for crypto because we're kind of turning over a new leaf and the industry is going to be cleaner going forward. And then the other, the other sort of dominant narrative in crypto right now has absolutely nothing to do with Binance or FTX. It is about the possibility that the SEC may approve

• 41:34Speaker 06

  something called the Bitcoin Spot ETF, which is an exchange traded fund, like a financial instrument through which you can invest in Bitcoin and potentially other cryptocurrencies if others of these ETFs are approved. And the crypto industry thinks that this is a way to get more people into crypto investing in this kind of indirect way that.

• 41:56Kevin Roose?

  Right, because then you don't have to bother with like converting your dollars into Bitcoin or Ether. You could just, you know, use your broker to buy shares in this Bitcoin ETF.

• 42:07Speaker 06

  Yes.

• 42:08Kevin Roose?

  Just like you would buy, you know, a mutual fund or something.

• 42:10Speaker 06

  Totally, totally. And like, financial advisors would be more comfortable with this sort of outcome. And, um, you know, huge companies like BlackRock are trying to get these ETFs approved. And it's like a real sign of like, major institutions in the financial world kind of adopting crypto to some degree. And so that's sort of a, you know, an optimistic sign for the industry. And basically, you know, the SEC unsurprisingly had tried to block these ETFs from being approved, but recently lost a big legal fight with a company that wants to offer one. And so now it looks likely that, that some of these ETFs could get approved as early as, as January. And so there's a lot of excitement in the crypto world that this will mean like billions of new dollars coming into crypto investing, essentially. You know, various analysts have sort of disputed

• 42:54Speaker 06

  those projections, but like, that's one of the narratives that's kind of propelling the current optimism in the markets.

• 43:00Casey Newton?

  It, it does seem like optimism in crypto is strongly related to, is there a new get rich quick scheme available? And so it sounds like this could be the next one of those.

• 43:09Speaker 06

  Yeah, well, that's the long-term problem, right? Is that this doesn't have anything to do with the use of any of this technology. It just has to do with the sort of short to medium term chance that like more money will come in and everyone's bag will get a little bit more valuable.

• 43:23Kevin Roose?

  Yeah, I mean, my own instincts have been to, you know, pile on and to say there's nothing there if you take away all of the gambling. But the fact that this industry has not died, the fact that, you know, crypto, you know, prices, some of them are up in the past year despite all of this, it does seem to signal to me at least that there is some hope remaining among investors, you know, some of whom are probably, you know, diehard crypto evangelists who just can't let go. But I do think there's still a lot of money and optimism flowing into the crypto industry. And I just, that's the part where I just feel like maybe my own instincts are not right here, because clearly someone is still buying out there. So David, can you

• 44:07Kevin Roose?

  just give us a sense of like, who is still, who is still participating in this industry even after all these scandals?

• 44:14Speaker 06

  I think it's a lot of the same people who've been there all along. And it's, you know, the kind of like hardcore crypto people that you see on Twitter, who are like obsessed with charts showing that, you know, numbers are going up and that, and that sort of thing. It's, you know, it's, it's people who have had skin in the game for a long time and like really need the industry to succeed. And, you know, I have not seen any evidence that like the recent price increases have anything to do with like new people coming in. But that's not to say that like crypto can't ever achieve that. And so there could be a future for this industry beyond the, the gambling. It's just like hard to, to be super confident in that.

• 44:53Kevin Roose?

  My, my last question for you, David, as someone who spends a lot of time thinking about cryptocurrency and who also is referred to just by his initials, are you worried that you could end up in federal prison for some crime?

• 45:04Speaker 06

  I am very, you know, actually four. That's all I have to say.

• 45:11Kevin Roose?

  All right. David, thank you so much for coming back. We look forward to discussing the next instance of crypto villainy on the show with you.

• 45:17Speaker 06

  All right. Thank you.

• 45:21Kevin Roose?

  After the break, how AI-generated content is eating the internet.

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• 47:20Kevin Roose?

  So Casey, I don't know if you remember a few months ago when we were talking with Ben Smith, the editor-in-chief of Semaphore, about how AI was going to sort of change and possibly destroy the online news ecosystem.

• 47:34Casey Newton?

  Oh, yes.

• 47:35Kevin Roose?

  This is a topic that you and I have both been interested in because this is our industry after all. And I think this was a week that something really clicked for me in this respect, which was that AI-generated content is not going to eat the internet. It is eating the internet actively as we speak.

• 47:50Casey Newton?

  Yes.

• 47:51Kevin Roose?

  And some of it may already have happened.

• 47:52Casey Newton?

  AI is having a Thanksgiving meal. It is chowing down on the world wide web.

• 47:58Kevin Roose?

  It's true. AI ate the internet and left no crumbs, as the kids say.

• 48:03Casey Newton?

  It came hungry and it left full. Incredible.

• 48:06Kevin Roose?

  So there are three things that happened in the past week that made me think, okay, okay, we've got to talk about this on the show. The first one was, of course, the debacle out of Sports Illustrated. Now, Sports Illustrated, I don't know if you're a big reader of Sports Illustrated. It's my favorite thing to pick up when I'm at the dentist's office. And I was a subscriber for many years back in my sports phase.

• 48:28Casey Newton?

  I was, I got the phone. You remember the football phone? When you subscribe to Sports Illustrated, they would send you a telephone in the shape of a football and you would sort of pick up the top half of the football to make phone calls. Do you remember this?

• 48:39Kevin Roose?

  No.

• 48:39Casey Newton?

  Okay.

• 48:40Kevin Roose?

  Did you have the football phone?

• 48:41Casey Newton?

  You're gonna have a great time. Just look up the Sports Illustrated football phone. Iconic 90s culture.

• 48:46Kevin Roose?

  Okay. So this week, the publication Futurism reported that Sports Illustrated, which has gone through a bunch of, you know, ownership changes in the past few years, appears to have published some articles with fake authors who had AI-generated headshots and who may have also filled their articles with AI-generated text. One of these articles, which was a review of different kinds of volleyballs, said that the sport, quote, "can be a little tricky to get into, especially without an actual ball to practice with."

• 49:19Casey Newton?

  It honestly had not occurred to me before I read this story.

• 49:23Kevin Roose?

  News you can use. It's helpful if practicing volleyball to have a volleyball. Futurism looked into some of the authors behind some of these strange articles and found that several of the authors appeared to have been AI-generated. Their headshots were for sale on a website that sells AI-generated photos. And Sports Illustrated's publisher told Futurism that these were not AI-generated articles, but that they came from a content partner called Advan Commerce, which is basically a content marketing company, and that Sports Illustrated had paid them to write these articles and that they were going to cut off their contract with Advan. And that they had learned through their investigation that Advan had writers use

• 50:08Kevin Roose?

  a pen or pseudonym in certain articles to protect author privacy and that they were removing the content while they investigated it. So it is apparently the case that if you are writing an article for Sports Illustrated about volleyballs, you may be at such risk that you need to not only use a pseudonym, but also go onto a headshot website and buy an AI-generated photo for yourself. Casey, what do you make of this?

• 50:32Casey Newton?

  This story is, it is, it is, it is funny in some ways, but it is also so sad. Like, the truth is, I am not a huge sports fan anymore, but man, I really was as a kid. And Sports Illustrated was an absolute pillar of American journalism.

• 50:47Kevin Roose?

  Iconic magazine.

• 50:47Casey Newton?

  Some of the best sports writing ever in our country was in this magazine. And this magazine is so old that it was novel that there were pictures in the magazine. That's how old and distinguished this thing is. And you fast forward to the AI era and you have it, it's basically like, my understanding is that Sports Illustrated is now owned by something roughly equivalent to the Sheinhardt Wig Corporation from 30 Rock. Where like, where Sports Illustrated is just like, sort of an Excel spreadsheet that exists like, somewhere in a, in a really Byzantine corporate structure. And, you know, you want to talk about a horrible euphemism, a content partner?

• 51:27Casey Newton?

  Like, you've just hired someone to pollute your hallowed brand with a bunch of articles filled of affiliate links, so you can just sort of draft off of the prestige and credibility that you once had to sell as many frickin' volleyballs as possible, and you're not even gonna do the work of testing the volleyball yourself. Like, you could not imagine a more cynical media business if you tried. Absolute props to the people at Futurism, who also revealed similar shenanigans at CNET earlier this year, they've been all over this stuff. And, obviously, it bothers us as media people, who want to see real jobs in media, and who want to see a really thriving information ecosystem with lots of good journalism in it. But man, if you were a consumer these days, and you were just Googling around, and you

• 52:11Casey Newton?

  do have an actual interest in buying a good volleyball, this is what you're up against now, is that the worst people in the world are trying to trick you into clicking on sludge, and they're using big brand names like Sports Illustrated in order to do it. I think it is gross, I think all of these people should resign, and we should just say no to AI content spam garbage.

• 52:35Kevin Roose?

  Yeah, it is really sad. So, Sports Illustrated has gone through some ownership changes, as I said. It is currently published by The Arena Group, which is a New York-based media company, whose other brands include Men's Journal, Parade, and TheStreet.com. This is sort of one of these conglomerates that has just been sort of buying up distressed media properties on the cheap, and turning them into essentially SEO farms, right? Companies that exist to get links onto Google, then to derive ad revenue and affiliate revenue when people click through to those links or go buy a volleyball or something. It is a part of the news industry that I don't think anyone is particularly proud of, but that does unfortunately still make some money. And so that's why you see these sort of, I would say like, you know, half-assed attempts

• 53:20Kevin Roose?

  to just do this stuff, crank it out as cheaply as possible, in some cases using AI.

• 53:26Casey Newton?

  Yeah.

• 53:26Kevin Roose?

  But it's not just formerly hallowed media brands that are taking advantage of AI-generated content to spam Google with a bunch of garbage. This week, we also saw a big controversy around what people are calling an SEO heist. Casey, did you see this story?

• 53:44Casey Newton?

  I did see this story. I mean, there's basically nothing I love more than a heist story in general. And once you tell me it's a search engine optimization heist, well, let's just say you've got my full attention, Kevin.

• 53:52Kevin Roose?

  Yeah, new sequel to The Italian Job just dropped.

• 53:56Casey Newton?

  Yeah, so tell us about Ocean's 15 here.

• 53:58Kevin Roose?

  Yeah, so this story came from a content marketer named Jake Ward, who posted on X last week that his company had just pulled off an SEO heist that stole 3.6 million in total traffic from a competitor. He went on to explain how they did it. And Casey, you're gonna wanna, you're gonna wanna just brace for this, because this is truly one of the grossest sequences of events I've ever heard of in the media business.

• 54:26Casey Newton?

  Let's hear it.

• 54:27Kevin Roose?

  So Jake Ward's company went to a competitor's blog, and they downloaded basically a list of all of the articles on the site, all of the URLs. They then used an AI writing platform to write blog posts based on the keywords. They did this for 1,800 articles, basically using AI to kind of paraphrase an entire website.

• 54:50Casey Newton?

  Plagiarize might be another word people would use, but you go ahead.

• 54:53Kevin Roose?

  Yes. So they built this sort of near replica of this competitor's website, and according to Jake Ward, they stole a huge portion of the traffic from this apparently legitimate website. Now, a couple of caveats here, this person Jake Ward is- Apparently the founder of some sort of SEO consulting firm called Content Growth. And he's also a co-founder of the AI-generated writing service that he used in this experiment. So he's obviously sort of promoting his services here, trying to get attention. Even if people hate him, maybe they're still contacting his company for help with their SEO heists. And we still don't have any sort of independent verification that this is actually how this heist worked.

• 55:37Kevin Roose?

  But I would say this, for me, struck a note of kind of like, man, I knew stuff like this would happen. I just thought we had a little more time to prepare ourselves.

• 55:47Casey Newton?

  I mean, go back through the archives of the show. This is one of the things that we just said would happen, is that AI would be used to generate pages by the thousands and thousands and just flood the internet. I will say, I had not considered this sort of more vampiric approach, where you target a website that is doing well and just sort of click a couple buttons to say plagiarize this and reap the rewards in Google. But once again, if you surf the web, this is just now the garbage that you are being confronted with. And it is up to Google and the other search engines to try to muster some sort of defenses against this. And I would say, so far, doesn't seem like they're doing a great job.

• 56:27Kevin Roose?

  Yes, and that actually brings me to the third domino that fell this week in the AI is eating the internet narrative, which is specifically about Google and not some strategy to sort of hack Google, but the ways in which AI-generated content is ending up at the top of Google results. So this was brought to my attention by previous Hard Fork guest Ethan Mollick, who posted on X the other day that if you do a Google search for the Hawaiian singer Israel Kamaka Vio Vole, who is famous for his rendition of Somewhere Over the Rainbow, which you've probably heard, the first image that you see in the Google Images pane

• 57:07Kevin Roose?

  is a AI-generated image of this singer that was taken from the Mid Journey subreddit.

• 57:14Casey Newton?

  Which I'm sure is exactly what his family's wishes were when he passed away.

• 57:17Kevin Roose?

  Yeah, so not a real photo of him. I also did some testing on this because I was just curious, like, what other kinds of AI-generated content is sort of floating up to the top of Google search results? I noticed that if I search for Freddie Mercury, who is the dearly departed lead singer of Queen.

• 57:36Casey Newton?

  I know who Freddie Mercury is.

• 57:39Kevin Roose?

  Well, if you search Freddie Mercury Pride on Google, you get a AI-generated image of Freddie Mercury at the 2023 San Francisco Pride Parade, which obviously he did not attend because-

• 57:53Casey Newton?

  But what about huge news if he did?

• 57:55Kevin Roose?

  Yes. So, Casey, what do you make of the sort of multi-pronged, multi-front war on real content on Google? Whether it's coming from brands like Sports Illustrated, from content marketers like this guy Jake Ward, or from just the way that AI-generated content is getting indexed and ranked from sites like Reddit?

• 58:16Casey Newton?

  Well, here is the challenge that the search engines face, and I do think it's a legitimate one. They do not want to ban all generative AI-produced works, right? Like, we both think that this stuff can be used for cool and creative things. Some of those things will be posted to the internet. Those things should be searchable on Google, right? The challenge for Google is that we're in a moment where we have a great deal of trouble separating what is generative AI versus what is not. And even if you can decide which is which, you then do have the problem of like, well, how are you going to rank this? And I think that Google has not yet figured out what are the set of signals that we are going to use to prioritize so that if you search for this Hawaiian singer, where should the generative AI art of him appear?

• 59:00Casey Newton?

  Now, I think you and I would both argue, not at the top, maybe not even on the first pages of results. Maybe somewhere, maybe with a flag that says this is a synthetic image, but not there. But look, we have been saying for months that it did not seem like the search engines have a plan for this stuff. And now that we are beginning to live through the early stages of it, it's just very clear to me that they still do not.

• 59:19Kevin Roose?

  Yeah, and this actually is sort of something that I think I got wrong. I thought that the biggest challenge to Google from generative AI was going to be that people would prefer going to ChatGPT when they have to look something up or go, you know, try to figure out some, you know, some travel plan or something. I thought that their biggest vulnerability was in the search portal itself, right? What box do you type into when you are looking for an answer on the internet? You know, I think maybe I was a little premature or a little overexcited about that. It seems like plenty of people are still going to Google, even though ChatGPT, I would say for certain types of queries, at least for me, works better. But I would say the bigger issue for them is just that the entire ecosystem that Google

• 1:00:03Kevin Roose?

  is trying to index and serve you results from is just being degraded very quickly by an influx, a surge of AI-generated content, such that like, if they don't figure out a way to filter this stuff out, or at least to label it, people are just gonna get sick of going to Google. It's gonna be like going to, you know, a very sad mall where all of the like flagship stores have just been replaced by like little weird kiosks and people trying to scam you. It's just, it's going to feel very different in Google search results if they don't get a handle on this.

• 1:00:36Casey Newton?

  Yes, but let's play this out just a little bit further, because what happens in that world that you suggest? And, you know, by the way, Kevin, I am somebody who is using ChatGPT as a replacement for Google Search in a lot of cases, and I'm surprised daily by how good it is at that. But let's say that this world comes to pass, more and more people start doing what I'm doing, that kind of spreads around the world. Well, Google gets to have its cake and eat it too, because it is not just a portal to the web as it exists. It is also building its own replacement for the web. It is accessible today via Bard. And so even if the web withers and dies, and I would argue that it is withering and dying right now, Google still gets to cash all of those checks, because it owns the sequel, right? It owns today's platform and it owns tomorrow's platform.

• 1:01:19Casey Newton?

  And the reason that I think this matters, just beyond, you know, Google's continued dominance into a new era of computing, is that I think that this actually disincentivizes them from fixing the web. Like, this is why I do not actually think the web winds up getting better, because on a fundamental level, Google will not care. Now, if sooner or later I was sitting across the table...

• 1:01:40Kevin Roose?

  Wait, wait, say more about that, because I don't get what you're saying here. You're saying that they don't care if Google search results get worse because people aren't gonna be searching the way that they do now?

• 1:01:48Casey Newton?

  Because over time, and this is gonna take 10-plus years, Kevin, but over time, they're gonna figure out how to monetize Bard and whatever becomes the Successor to Bard, right? Like, the Google search bar might just search Google's language model before it goes out to the web. They're going to figure out a way to monetize all of that, right? And the fact that search results have been corrupted by a bunch of generative AI nonsense, it doesn't matter to them. Because over time, they're going to route more and more people to their own language models with its own monetization. And the digital publishers who are on the web today, they're just going to be an afterthought. So what I'm saying is, don't be surprised if the web just continues to get worse and worse, because Google knows that generative AI is the future, and that is where the investments are going to be. I'm sure they'll put up their blog posts, "Oh, you know, look at all the things that we're doing to sort of help you tell, you know, what's fact and what's fiction."

• 1:02:33Casey Newton?

  That's true, but we are in the middle of a 10-year transition, and I'm telling you, it does not end with the web as we know it in a healthy place.

• 1:02:39Kevin Roose?

  But I don't get what you're saying there, because these, these language models, when you ask them, you know, "Where do I, you know, where do I go on vacation?" Or, "What's the best kind of volleyball to buy?" They don't have any intrinsic answers in their knowledge graphs. They have to go out and use the Google search index to figure out what to tell you.

• 1:02:56Casey Newton?

  Yeah.

• 1:02:57Kevin Roose?

  Right? Am I getting something wrong?

• 1:02:58Casey Newton?

  No, you're totally right. What I'm telling you is, you'll just never see that webpage. Like, that information will be accessed by the AI, and it will be delivered to you by the AI. The webpage itself will never be visited. No publisher will ever make any money off of that.

• 1:03:09Kevin Roose?

  But then won't the answers be worse?

• 1:03:11Casey Newton?

  Maybe. I mean, we'll just have to see. Like, I do think, sort of, what become the reliable sources of knowledge in a world where publishers can no longer make money is a really good and important one. And that probably is, maybe, one of the biggest challenges to the scenario that I'm painting coming into practice. But there's a lot of free, there's a lot of free, static information on the internet that, you know, I mean, like, how many, like, how-to articles are on the, you know, how to change a doorknob, how to, like, you know, install a faucet? All of this kind of stuff, a huge percentage of people's web surfing. It just all goes, it is all just delivered to you by the AI. And the billions and billions of dollars that publishers make, they're just not going to make them anymore, man.

• 1:03:51Kevin Roose?

  Yeah, I worry about that too, but I also think this is, in some ways, the only silver lining I see here is that this influx of AI-generated content may finally force Google to start caring about search result quality in a way that they have not, to my knowledge, for the past several years. Like, I don't want to make the mistake that I think sometimes people make of saying like, "AI is killing the internet. We need to like, get rid of it and go back to what it was before." Because the before picture here is still not very good. And in some ways, I think this could be a spur to Google and other companies to really start caring about search result quality. At the same time, the issue you brought up is very real. Where are publishers going to make money in order to be able to hire humans to write good articles

• 1:04:36Kevin Roose?

  if all of the traffic that they used to get from Google just disappears?

• 1:04:39Casey Newton?

  Yeah. And let me say, every time I talk about this or write about this, I always hear from folks at Google who get very frustrated. From their perspective, search results have never been as good as they are today, and they love to point to all these things they've done. And what I would just say to those folks is like, I'm sure, yes, you have obviously made improvements to search over the years, but I am just telling you, ask your friends and family how they feel about the search results. Because I don't know anyone who feels like Google is better today than it was five years ago. And I wish the Google folks would spend more time reflecting on that.

• 1:05:08Kevin Roose?

  Yeah. Well, I am gonna go enlist my content marketing firm to scrape all the archives of Platformer and create a better near replica of your website and steal all your subscribers.

• 1:05:19Casey Newton?

  And I am calling Olympic volleyball players to ask them what is the best volleyball, because at this point, they're the only people I trust, Kevin.

• 1:05:28Kevin Roose?

  I still think Wilson from Cast Away is the best volleyball.

• 1:05:31Casey Newton?

  Certainly best supporting actor in a film among the volleyballs.

• 1:05:57Speaker 03

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• 1:07:41Casey Newton?

  Hey, gang. Before we go, we're planning another round of our segment, Hard Questions. That's where we listen to your ethical quandaries and dilemmas about technology and try to offer you some advice. But this time, we're planning to bring on a very special guest to help us out. And I'll just say it, it's a celebrity. So if you have a situation you're dealing with, a technology situation, some way technology is showing up in your life, and you're just not sure how to handle it, send us a voice memo. Let us know your name, where you're from, email it to us at [email protected], and it could appear in an upcoming episode.

• 1:08:13Kevin Roose?

  Casey, what is a good example of a hard question that someone could write in and ask us about?

• 1:08:19Casey Newton?

  Such a good question. I do not have something else. Okay, let me just, let me just take a minute. Let me take a minute.

• 1:08:23Kevin Roose?

  You could say it was a hard question about hard questions.

• 1:08:25Casey Newton?

  Let me take it. Yeah. Okay, let me just say, um.

• 1:08:29Casey Newton?

  Do you have a partner who won't stop talking to an AI chatbot, and you feel like it's getting a little flirty?

• 1:08:35Kevin Roose?

  Yeah, that's the kind of thing we're looking for. Please don't ask us for tech support advice. We cannot fix your broken printer. And I would also say, the last time we did one of these callouts, we got so many submissions that were some variation of like, is it ethical to use ChatGPT or some other generative AI tool at my job? And I will just say it, we got too many of those.

• 1:08:56Casey Newton?

  Yeah, it should make us physically uncomfortable to read if it's going to be about can you use ChatGPT. We'll say that.

• 1:09:04Kevin Roose?

  So, thank you in advance. And as Casey said, you could send those to us as voice memos, and you can email those to [email protected].

• 1:09:12Casey Newton?

  Thanks, Forkers.

• 1:09:18Casey Newton?

  Hard Fork is produced by Davis Land and Rachel Cohn. We're edited by Jen Poyant. This episode was fact-checked by Caitlin Love. Today's show was engineered by Brad Fisher. Original music by Marian Lozano, Rowan Nemisto, and Dan Powell. Our audience editor is Nell Gallokey. Video production by Ryan Manning and Dylan Bergerson. Special thanks to Paula Schuman, Hui Wing Tam, Kate LaPresti, and Jeffrey Miranda. You can email us at [email protected].

• 1:10:33Speaker 00

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