Tech Consolidates Stock Market Growth, Lawyer Uses Hallucinating ChatGPT, XR Wars Heat Up

Ranjan Roy of Margins is back for our weekly discussion of the week's tech news. We cover: 1) Tech stocks consolidating growth in the S&P 500% 2) The 'Asset Market Meltdown Hypothesis' 3) Amazon's entry into wireless. 4) Japan's threat to AI copyright law 5) The lawyer that used ChatGPT and looked like a fool 6) The Center For AI Safety's bold Statement 7) The fake 'simulation' where an AI killed a military operator 8) Meta's new Quest 3 headset 9) What to expect at Apple's big WWDC event -- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ 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?

  This episode is brought to you by Genesis. What does it actually take to put Agentic 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, 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?

• 0:43Alex Kantrowitz?

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• 1:09Alex Kantrowitz?

  Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format. We are here with you on a very big Friday. We have Apple's big WWDC event coming up on Monday, so we're going to preview that. But first, we're going to talk about how the tech stocks have started to consolidate much of the gains in the S and P 500. We're also going to talk about AI copyright, what's going on in Japan. Actually, there's a story brewing that you might want to hear about, and AI hysteria, all these signatures about preventing the worst from AI. We're going to get to all that and more. Joining me today is, as always, is Ranjan Roy, here with us from margins on Substack. Ranjan, welcome to the show. It's Friday. Good to be here. Great to have you.

• 1:51Alex Kantrowitz?

  So let's start right away talking about our big story, because you sent this to me, and I said, we have to talk about this. And what's happening right now is the market is absolutely ripping. The S and P 500 is up almost 12% on the year, which is extremely impressive, especially given the terrible down year it had last year. And who's making up the growth? You would think that with interest rates rising, you would have a much more even distribution of the growth. But no, this is from Axios. The five that are responsible for the vast majority of the stock market's 2023 gains are Apple, up 36% this year, Microsoft, 37%, Alphabet, 39%, Amazon, 44%,

• 2:32Alex Kantrowitz?

  and of course Nvidia up 159% this year. What's happening here, Ron John? Because it doesn't seem to make sense, given everything I heard about how higher interest rates are supposed to bring down tech valuations and maybe open room for other companies in the economy. I thought rotation was the key word, but we're back to technology.

• 2:55Speaker 01

  I think we're back to that point where, again, the jobs number came out today. It was strong. Employment is strong. Inflation is falling. Economic growth looks stable. And then you have the AI hype cycle. So all these factors coming in together are perfectly placing these big tech companies to go up at this scale. And I think the two biggest questions investors have to ask themselves now are, one, do they continue the dominance? We've talked a lot about, you know, is open source a threat? Are they really positioned well to capitalize on the AI hype? Is there a business model, a feasible business model for the AI hype? But I think another thing, I'd seen one comment around,

• 3:40Speaker 01

  like, when do investors start trimming? You see gains like this. You see levels like this. You see PE ratios like this. At a certain point, you like, can it keep going? And obviously, that's, you know,

• 3:52Alex Kantrowitz?

  Very dangerous question to ask.

• 3:53Speaker 01

  The most dangerous question to ask. But, but at a certain point, again, out of the S and P, 490 stocks have been flat or down. This is what Jeremy Siegel, the professor at Wharton, said last week. And as you said, if not for the seven companies, if you add Meta and Tesla to the five you mentioned, the S and P would be down on the year. So I think from an investor's standpoint, is this too much is the main question? But then also, you know, from a general health of the economy standpoint, we're in an even worse position than we were a few years ago when we were talking about over-concentration among a few companies.

• 4:31Alex Kantrowitz?

  So I guess like, I'm trying to figure out why tech is having the surge now. You can say AI and all that, but. Wasn't, I mean, this is your whole thing, right? Wasn't the fact that interest rates, and I mentioned this in the open, the fact that interest rates are going up. We're not supposed to see these valuations. I was checking the valuation of Apple. It's nearly $3 trillion again. So explain that one for me, Ron, John. I'm truly puzzled by it.

• 4:54Speaker 01

  Yeah, no, no, I think this is the amazing part. Again, the fact that we are currently in this Goldilocks scenario, falling inflation, strong growth, and it's stable and strong employment. I did not expect that. I think most people did not expect that we would be in that kind of situation. So the question is, can that continue? So I think on the general macroeconomic side, everything is still very geared towards these big tech companies. But then also, again, I think it is the AI hype cycle is at the basis of all this. It's bringing energy back to these companies. And yes, Apple is not directly benefiting from that, but Apple is just kind of caught in this wave as well.

• 5:39Speaker 01

  But, but it's, it's given this narrative. I think that once again, there's untold economic potential and untold growth right around the corner, thanks to this new technology. And who better to benefit from it than the incumbent players?

• 5:55Alex Kantrowitz?

  It does, I mean, we've talked about it a lot on this show, about how that economic promise is not certain at all yet. And we're going to see what's going to happen here. But it does make me a little bit worried about the state of the economy.

• 6:07Speaker 01

  No, no, that's one of the dangers I think I see here is that, again, once all resources and energy and investment start flowing back into these seven companies, maybe nine companies, then the other stocks, the 490 other S and P, and imagine mid-cap and small-cap stocks, or just other companies are not going to be receiving that and can easily get killed through this. And this is basically what happened in the mid 2010s in some way. But that's where I think it's, in terms of like, the overall innovation potential of the economy. I think I've said it in the past. And I think, again, we're back to that place where it's a problem.

• 6:46Alex Kantrowitz?

  Okay, let me make the other side of the case, then we'll move on. The other side is these companies all fell when interest rates go up, went up. And the inflation problem is being tamed. Interest rates are going to come down. The market is investing, not for what's happening today, but for what's happening 12 to 18 months from now. And in the S and P 500, you have the strongest companies in the economy, strongest companies. And if you're the S and P 500 and you're being buoyed by an Apple and an Amazon and an Alphabet, and Nvidia, which is a new technology, new innovation, maybe that's not the worst thing in the world.

• 7:21Speaker 01

  Yeah, but I mean, Nvidia is trading at 172 times earnings, where, you know, traditionally call it 20 times is solid.

• 7:31Alex Kantrowitz?

  Yeah.

• 7:31Speaker 01

  Like, like, yes. And again, I have been bullish on Nvidia for a long time, and they are well positioned. And as we talked about with John Herman last week, like Nvidia has actually shown every time there's this kind of potential around the corner, they're able to go and grab it again, starting with video game graphics cards and actually being able to evolve into, you know, the just microchip processing and now moving into actually being the kind of like infrastructure for AI. So, so again, these companies, they show that they can, they've shown past experience, they can get there. The opportunity, it's, it's a clear idea of how they get there, but still the execution side of it, I think it's rich.

• 8:15Speaker 01

  Hey, Kathy Wood said Nvidia is rich. When Kathy Wood says your stock, obviously she sold it.

• 8:20Alex Kantrowitz?

  Yeah, she lost out on all the gates. Right. I don't know if we can really listen to Kathy's investment advice anymore.

• 8:27Speaker 01

  That was a bit, that was a bit tongue in cheek right there.

• 8:29Alex Kantrowitz?

  Yeah. No, no, I'm, I think that you're right. It is a good signal if she's calling the top. But then again, like, I don't know.

• 8:35Speaker 01

  That actually makes me want to almost buy into it.

• 8:38Alex Kantrowitz?

  You gotta be in, obviously. 137 times earnings is, is cheap.

• 8:43Speaker 01

  172.

• 8:44Alex Kantrowitz?

  172. So let me talk to you about this quickly, and then we can move on to the AI stuff. There's, in 2001, there was a paper from, from Wharton that talked about the asset market meltdown hypotheses. And that was that you had a lot of boomers in the economy who had much of the investment and they were all going to retire. And here's the philosophy, 10 to 15 years from now, millions of boomers will retire. And instead of putting money aside for their old age, they will begin cashing in. And it stands to reason that this will reduce demand for stocks. And as any beginning economics student knows, lower demand means lower prices. It's kind of a bit of field from what we typically talk about, but I actually wanted

• 9:27Alex Kantrowitz?

  to get your thought on this, which is that I'm curious how much of this market right now, because the market is going up despite some of the negative conditions that we're seeing here. And I do wonder whether there's part of the market that's at risk of people retiring and spending that stock or cashing in those stock investments and then lowering demand.

• 9:48Speaker 01

  It's tough when you think about these kind of very aggregate demand style theories around the stock market. I mean, one thing I was just reading about was, I think there's, I think it was close to $2 trillion in outstanding student debt. The student debt pause has still been going on since COVID. So I imagine, once that resumes, how much liquidity gets taken out of the market? That's something no one could have predicted. The, I mean, general, just overall influx of money during COVID via stimulus and everything else, no one could have predicted. So I think trying to predict this stuff based on like, you know, the demographics and what typical behavior could be, I think it's tough. But, but it was interesting because

• 10:32Speaker 01

  even on that historical perspective, I was looking at like, in terms of concentration, is, is it a good bet to still go into an Alphabet or a Microsoft or an Amazon? And it was at like an AT&T in the early 1930s made up 13% of the entire stock market. General Motors in 1928 was 8% of the entire stock market in 1928. This was all from Ben Carlson, A Wealth of Common Sense, which is a great blog. Like this idea that at points in history, we have seen this kind of concentration, but those concentration usually happens before bad economic times. And I think that's where this question of like, is the economic healthy?

• 11:13Speaker 01

  Look at it. It's healthy for seven to nine companies and it's not healthy for the other 490 or however many else. So I think, I think it's one of those where trying to bet on demographic predictions around behavior is going to be tough because, I mean, who would have guessed millennials and meme stocks? Like, that's definitely not something we could have predicted. But, but even more so, I think this question of like, where would you put your money right now? Would you buy, like, would you buy Nvidia right now?

• 11:42Alex Kantrowitz?

  Hell, no.

• 11:43Speaker 01

  Well, it's, it's a tough one.

• 11:46Alex Kantrowitz?

  It's an easy one.

• 11:47Speaker 01

  All right, all right.

• 11:48Alex Kantrowitz?

  You would.

• 11:50Speaker 01

  It's I still I buy into like the story. I've I've owned it in the past and made some money of it and then took profit. And again, I regret not continuing to hold it. And it's they're one of those companies that like they've very quietly and cleanly executed and realized multiple visions, but all based on the multiple evolutions of the same vision. Again, like computing power is the core thesis. It's not like Facebook, your social network and you want to make a headset, which we'll get into in just a moment. It's all a really clear path, which is what they've done, and they've done it well. So like on that side, I would want to own Nvidia, but I wish I owned it a month ago or two.

• 12:35Alex Kantrowitz?

  Yep. So, okay, you mentioned that AT&T used to be a big chunk of the S and P 500. I need to ask you this before we move on to some of our AI stories and then headsets. AT&T's stock is down 4% today after Amazon said it's been in talks with wireless carriers about offering a low cost or possibly free nationwide mobile phone service to Prime subscribers. It's according to Bloomberg. What the heck is Amazon doing here? And is this like why we're seeing consolidation in big tech companies? Is because Amazon is moving into mobile, Apple is moving into banking, Alphabet is moving into AI. Is this what's what we're seeing?

• 13:13Speaker 01

  Well, I it is interesting because I hear a lot of sentiment of like, whenever you see these moves, what is Lina Khan doing? Where's the FTC? Where's antitrust? I thought it was supposed to be here by now. But there's been plenty of strong moves, you know, like Facebook, Giphy now, uh, Microsoft or Activision and Microsoft from the UK like they're more so than we saw in the last 15 to 20 years. They've been plenty of aggressive antitrust activity. But yeah, I agree that. Amazon being able to go into mobile to lose more money in e-commerce because they have AWS and can funnel profits over from there, I think is not the best economy or the most innovative

• 13:58Speaker 01

  economy we can live in. However, I don't know, I think Amazon is playing a riskier and riskier game. This was our entire conversation last week around Timu and Shein and how they're threatening Amazon in ways that they've never seen, probably in their lifetime, or at least since they've achieved some kind of dominance. So I think Amazon making more high-risk bets around trying to just, you know, like, give you an impossible package as a Prime subscriber in order to just try to keep growing, rather than looking at actual unit economics and trying to, you know, make their e-commerce division genuinely profitable, I think, I think is a very risky thing to do.

• 14:41Alex Kantrowitz?

  What is this mobile move in reaction to? Is it the fact that like, they need to offer people cell service to keep growing Prime? Is it possible that Prime has sort of now saturated the middle and upper end of the market and they now need to basically throw in mobile service to, you know, maybe the lower end of the market to make it something that they might want?

• 15:03Speaker 01

  I can picture this slide in a presentation. It's the average lifetime value of a Prime customer is, you know, like, 5X the non-Prime customer. So how do we get more Prime customers? All right, people on average spend however much money on mobile phones every month on their mobile bill. So like, you know, how much of a loss can we take that will make up on e-commerce? Like, I'm sure, again, like, I can see either a management consultant coming and pitching that one, or in general, even a corporate strategist kind of like outlining that. It's a pretty simple case, but again, it's, I think they're running out of ideas.

• 15:44Alex Kantrowitz?

  Well, also, it doesn't sound desperate to you at all?

• 15:47Speaker 01

  No, it does a bit. I agree. I think, I think they are realizing the limits of like, well, actually, hold on. It's desperate in the sense that I think they are realizing more and more non-subscribers, again, non-prime subscribers, that entire market. Maybe they are recognizing that Shein and Timu are a genuine threat to them.

• 16:10Alex Kantrowitz?

  Oh, so do you think this could be like a direct outgrowth from like our discussions over the past couple of weeks?

• 16:16Speaker 01

  I think, I think.

• 16:16Alex Kantrowitz?

  Are they listening to the pod?

• 16:18Speaker 01

  Jesse was listening to Big Technology Podcast.

• 16:19Alex Kantrowitz?

  Wait, Timu? We gotta give the cell service.

• 16:22Speaker 01

  Yeah, I think, no, I think Bezos was listening on the beach, all buff and jacked somewhere and put the call in and said, hey, we gotta do something about Timu. Up the prime subscribers.

• 16:33Alex Kantrowitz?

  Yeah. I mean, one other thing that someone floated to me was that mobile networking is like a pretty high margin business. Once you have the infrastructure installed, but it looks like they're working with other cell carriers. But I'm curious, do you think that that is part of the calculation for Amazon as well?

• 16:48Speaker 01

  Oh, maybe I could see, this is one thing where, what's the Amazon, like, local area networking across houses? They had some effort where it was like.

• 17:01Alex Kantrowitz?

  Mesh Network?

• 17:03Speaker 01

  Yeah, the mesh network, but you're like.

• 17:05Alex Kantrowitz?

  Arrow? Is it called Arrow?

• 17:07Speaker 01

  Euro, I actually have, yeah, that.

• 17:10Alex Kantrowitz?

  That's for home.

• 17:10Speaker 01

  Is, yeah, that's for home. They had something where your home network could help power access for external people to then power their own network. Basically, the idea, basically what I'm thinking is here, maybe the idea would be you sign up, they use other people's mobile infrastructure, but over time, again, in this slide deck I'm envisioning, they can say, you know, day, year one, prime subscribers by 5X more. Year four, we're starting to make high margin business because we built our own infrastructure by that point. And I mean, if anyone, they certainly have enough real estate and infrastructure around

• 17:53Speaker 01

  the country that they could, if anyone could toss up an entire mobile network, I could see it being Amazon.

• 17:59Alex Kantrowitz?

  Very interesting. Okay, let's just touch on a couple of these AI topics and then we'll take a break and go to headsets. So this is one of the things that you've been talking about for a long time is that eventually, you know, the thing that this runaway AI development is going to run into is copyright law. But it only takes one country to say there's no copyright law when it comes to train, uh, to training AI here, uh, to sort of flip that equation on its head. And that seems to be what's happening in Japan. Now, the reports are a little bit shaky. The one that everybody's talking about this week comes from a website called techno manners.ai. So caveat for what it's worth, but it doesn't seem like this has been shot down yet. So

• 18:41Alex Kantrowitz?

  here's the story. Japan's government recently reaffirmed that it will not enforce copyright on data used in AI training. The policy allows AI to use any data regardless of whether it is for nonprofit or commercial purposes, whether it is an act then other than reproduction, or whether it is consent obtained from illegal sites or otherwise. Okay. Uh, so basically, this is, um, the Japan Minister of Education, Culture, Sports, Science and Technology, uh, confirming this at a local meeting and saying that Japan's laws won't protect copyright materials used in AI, AI data sets, to which Yan Lekun, the chief AI scientist at Meta,

• 19:24Alex Kantrowitz?

  says Japan has become a machine learning paradise. Ranjan, what is your reaction?

• 19:31Speaker 01

  Well, one, I continue to take this with a grain of salt, uh, because, and I'm glad you kind of gave the disclaimer as well, that there's one blog that basically says that the English language coverage of this topic is sparse. And then that was retweeted by someone and then Yan Lekun of Meta retweeted that or quoted, commented on that. So I think I would be, I'm also a bit cautious about what exactly is happening, but I think that question of global coordination on the topic is a good one because could one country being this machine learning paradise ruin it for everyone else and actually make it so then

• 20:13Speaker 01

  to stay competitive, you have to allow for, you know, unlimited access to all content. But, okay, here's where I think this almost feels like the crypto argument that if you regulate us, we'll go elsewhere and then they will be the paradise and the place that makes all the money is, I, it goes, we always, we've gone over this many times. It's like, I don't believe that size matters in AI models and Sam Altman's gotten into it. And like the idea that you have to have access to ingest everything is the only way to build these models. So I actually think this could be a case where the same way a complete lack of regulation can almost hinder crypto's development

• 20:58Speaker 01

  because it leads to chaotic, you know, outcomes that make it impossible for mainstream adoption. I think this is a similar situation where, I mean, we see and we can talk about like hallucinations and training on too big a data set can create models that just aren't applicable and usable in real business situations. I think we're going to move to, if we move and when we hopefully move to a world where it's more specialized models, I think you won't need to ingest everything all at once and have unlimited ability. And it's better for the overall ecosystem as well. If there's some kind of compensation and some kind of understanding of how economics are distributed

• 21:40Speaker 01

  throughout both the content creators, the AI models, the AI trainers, everybody.

• 21:46Alex Kantrowitz?

  Interesting. So you don't think that people will inevitably flood? I mean, like this is, part of this is Japan does want to be an AI leader. You don't think that there are going to be countries that will say, we want to be an AI leader? And you know, okay, there might be some rules established elsewhere about compensation for training. Who cares about the size of your model? You know, you can just go take them if you want.

• 22:08Speaker 01

  Well, hold on, but there's also the technical aspect of this, right? That there's like the scraping and, and I do think I, one thing I really have been thinking about is like, both in terms of API access is the simplest way to kind of like, uh, you know, cut off unfettered access to your content, but then even preventing scraping in more, at like more scalable ways, or just trying to think about how people protect their own content. I think is going to increasingly be part of how the web is built and how people publish and think about content. So.

• 22:44Alex Kantrowitz?

  Yeah. How would that play out practically?

• 22:47Speaker 01

  No, like even if.

• 22:50Speaker 01

  Japan, in Japan, I am not liable for training a model on

• 22:56Alex Kantrowitz?

  Reddit.

• 22:56Speaker 01

  All content on Reddit. If I'm unable to easily take in all the content from Reddit, then it's no different for me. So like, just because there's a lack of legal liability, there's still the technical question. I think on the technical side of it is going to be just important as the regulatory and legal side.

• 23:15Alex Kantrowitz?

  That's interesting. Yeah, that'll, that'll definitely change things. So something to keep an eye on. We'll just sort of keep hitting on it as we get more and more concrete stories coming out of Japan or wherever it might be. Did you see the story about the AI lawyer guy, the lawyer that presented a number of fake cases to a judge that he just sourced from ChatGPT? It's sort of interesting because it comes at this moment where we're talking about the power of AI. And you just have complete jackasses like this guy who's running to the judge and saying, ChatGPT did my homework.

• 23:50Speaker 01

  He deserves the backlash he's getting. Like, I think this was, hold on, what, there was very, oh, the, the court filings cited six cases that completely did not exist.

• 24:06Alex Kantrowitz?

  Yeah. So this is from Ars Technica. A lawyer is in trouble after admitting he used ChatGPT to help write court filings that cited six non-existent cases invented by the artificial intelligence tool ChatGPT. Lawyer Stephen Schwartz of the firm Levidau, Levidau and Oberman, by the way, amazing law firm name, quote, greatly regrets having utilized general artificial, generative artificial intelligence to supplement the legal research performed herein and will never do so in the future without absolute verification of its authenticity. I just love how they're like lawyering it away, being, being, not being like, you know, we know, clearly we messed up, but like talking about how it's so, so like weasely to supplement the thing and like we, we've been

• 24:51Alex Kantrowitz?

  adding more AI in our practice to get the cutting edge. Like, come on, guys, just admit what happened here.

• 24:58Speaker 01

  No, but this to me is the most, this is one of the most important stories that came out in the last week because this is what I've been like ranting about for months now is that getting actual usable AI-generated content that is risk-free, that can be used in high-risk situations and inborn situations is difficult. And that's why the the gap between, again, making a funny limerick in ChatGPT and getting to somewhere where in a business setting, you're going to actually, you know, create predictable repetitive content, there's still such a gap there. And that there's, and I, and I strongly believe that we're going to

• 25:41Speaker 01

  get there. But I think like this idea that everyone was just gonna, you know, plug in something or just ask ChatGPT something and everything would work out perfectly, I think was ridiculous. For context, in starting to prepare for today's podcast on our, on our topic of the concentrated big tech companies and this, the returns of the S and P this year, I asked Google's Bard, Bard, their chatbot, you know, like, I just wanted to quickly see what were the returns of the 10 biggest companies in the S and P. And

• 26:19Speaker 01

  it told me that Meta is down 58% this year. It says, as of June 2, 2023, Meta is down 58%.

• 26:30Alex Kantrowitz?

  So embarrassing for Google. We got to get Jack Craftchick back in here and, and make him answer what's going on here.

• 26:35Speaker 01

  It's like, and the thing is, I would even see like ChatGPT would probably at least have like a bunch of disclaimers like, financial information should not be taken from this site or whatever, like.

• 26:47Alex Kantrowitz?

  Google's just like straight up, for the record, Meta is up 119% this year.

• 26:51Speaker 01

  Thank you. Cause I, I knew it was more than doubled. I knew. But, but here's what, here's what I don't get about, like, let's take that question. Doing a simple mathematical today's price minus the Jan first price. You know, figure out the percentage like that is like, you know, sixth grade math or whatever. Like the idea that this all knowing chatbot that's going to lead to human extinction. Didn't do that simple calculation or got it somehow completely wrong. I don't even know where the data came from. Like, that's just a reminder to me that there's so much distance between what we're promised and where we are today.

• 27:34Speaker 01

  And again, I'm still very bullish on this, but it's a reminder of where we are.

• 27:40Alex Kantrowitz?

  It actually ended up being like the perfect follow up story to this discussion of Japan as the AI paradise. Maybe not as much of a paradise as Jan and some others might hope. Like I do, I am starting to come to your standpoint that maybe we do need some rules and actual like sophistication around how these models get trained as opposed to a free for all. So, but even still, even as we're having such, you know, such issues with something like chat GPT. We're like having this, it's a very weird and interesting wave of like very impressive people. Starting to come out all together and talk about how like AI could potentially, you know, destroy us. And this came out of the Center for AI Safety earlier this week.

• 28:22Alex Kantrowitz?

  It was the biggest tech story of the day, actually on Monday, where you had hundreds of AI scientists sign on to this statement from the Center for AI Safety. And it's just a sentence. It says mitigating the risk from extinction, mitigating the risk of extinction from AI should be a global priority alongside other societal scale risks such as pandemics and nuclear war. And the people that signed it, I mean, Jeff Hinton, Joshua Benjio, two thirds of the AI, the people that basically invented deep learning. The other third is Jan LeCun, Demis Hassabis of DeepMind, Sam Altman. You know, the list goes on. Bill Gates is on there. I'm sure Elon is on there somewhere. What the heck is going on here, Rajan? I mean, why are these people feeling the need to come out and put their names on these statements?

• 29:08Speaker 01

  I mean, what do they know? Again, Google Bard just told me that Meadow is down 58% this year. A lawyer tried to use ChatGPT and cited six non-existent cases. Like, like, this is all kind of like out of the box technology. We're figuring out what, and we talked about this, I think, a couple of weeks ago when Sam Altman testified in DC.

• 29:33Alex Kantrowitz?

  Right.

• 29:33Speaker 01

  It's like, what's, what's the game here? Because I still cannot remove, actually, though, I guess in this case, when you have some people who are more pure academics signing on this, it makes me take it a little more seriously because when it's purely someone who owns the technology to sell for their business, like a Sam Altman, there, I can never move past the idea that obviously, uh, obviously overstating the fears of what is possible is good for business because then everyone will go to, it's like, you know, only I can save you. Everyone will go to you, but when, uh, when an academic who, you know, essentially invented this stuff has the same fears,

• 30:17Speaker 01

  all I can think of is, is there some, is there some chat group somewhere that everyone's like sharing, like the computers telling that they're going to kill us all and just not letting us in on that information?

• 30:29Alex Kantrowitz?

  Well, it's obviously like, they're not talking about ChatGPT, which I think is important, like their fear is not about it, but their fear is about where AI could go. But it is just so interesting that this is all being heralded by ChatGPT and other LLM tech now, not technology that makes these fears seem so tangible to people. And I find that interesting. One other interesting thing, so you asked about the chat room. First thing I thought about when I saw this statement is who is coordinating this? Because it's not coming out of nowhere and the Center for AI Safety is not an operation. It's an actual nonprofit that is being funded by someone. And I thought maybe we can get a little bit towards the motives if we figure out who's funding it.

• 31:11Alex Kantrowitz?

  So I went on a little bit of a treasure hunt this week, trying to figure out where this money's actually come from. And I'll talk to you a little bit about. How that went. So first thing first, so you go to the Center for AI Safety's website on Monday, when the statement comes out and you want to figure out where's the money coming from. Here is the closest you're going to get. By the way, founded this center, which got all these people to sign, was founded in January 2023. They talked about their funding. They say, "The Center for AI Safety is a nonprofit organization entirely supported by private contributions. Our policies and research directions are not determined by age of individual donors, ensuring that our focus remains on serving the public interest."

• 31:53Alex Kantrowitz?

  Like, okay, what does that say? It says nothing. And I emailed them and I said, "Can you please reveal who's funding you?" I didn't get anything. I know the LA Times picked this up and emailed them and they didn't get anything back. Okay, I checked back later this week. Clearly, they're like, "Well, there must have been a scramble because they updated the website on their funding." And they're like, "We have to put something up there." Still no reply to the email. Here's the update. "The Center for AI Safety is a nonprofit organization. Currently, over 90% of our funding comes from Open Philanthropy, an independent philanthropic organization. We would not accept funding from stakeholders, which would compromise our mission of reducing AI risk. We are currently bottlenecked by funding and seeking to diversify

• 32:36Alex Kantrowitz?

  our funding sources, so please consider donating here." I mean, okay, so they updated. They said that the money's coming from this group, Open Philanthropy. You go to Open Philanthropy, you have to click the governance to figure out who's funding that. Okay, "Support for the fund comes primarily from our main funders, Carrie Tuna and Dustin Moskovitz." And Dustin, of course, is the CEO of Asana and the co-founder of Facebook. So it's in his interest. Now, I invited Dustin on the podcast to come to speak about why he is interested in this, why so many people are coming around, and to help fill the information vacuum around it.

• 33:18Alex Kantrowitz?

  And I'm currently, I'm being passed to his handlers, you know, and he's saying he's not doing much press, but maybe he'll make an exception. I would love to have Dustin on the show to talk about why we're seeing this happen. Now, we know about Open Philanthropy. We understand a little bit about Jeff Hinton and the others, but what the heck is happening here? I think it just would serve the public's interests for Dustin in particular to talk about it. And I hope to have him on. So that's kind of where I netted out, but it is very interesting how it started vague and then with a little bit more scrutiny, it became a little bit more open.

• 33:50Speaker 01

  Viewers can't see how I was just, oh, sorry, listeners can't see how I was hanging on that because for context, I did not hear this story before from Alex. So I was just very excited to see where that ended up. I mean, yeah, yeah, I think there's only one way to find out.

• 34:06Alex Kantrowitz?

  Dustin should come on and talk and I'll note Asana is releasing AI products. So like, you know, I'm not saying

• 34:14Speaker 01

  I'll also note, I'll note, I love Asana as well. I'm a, I'm a big fan of Asana as a product.

• 34:20Alex Kantrowitz?

  Yeah, look, I'm not saying that this is, you know, motivated to drive the stock price because it has AI tools, but I would really just like to know exactly what's happening here. And I think, by the way, as a practice, when these organizations come out and make these type of announcements, just put the funding there and make it easy to find. Like, it shouldn't have to take this type of work. Now, of course, like Open Philanthropy had disclosed it on its website and Dustin replied to me saying so, but it's not like people are going to check every single philanthropy website to figure out where that money is coming from. Like it should just be, and what percentage of the funds it is, it should just be disclosed upfront. And I'm glad that the Center for AI Safety did disclose it. Whew. Now, speaking of AI's existential threat to our world, there was some weird, this is like going through

• 35:05Alex Kantrowitz?

  this, like we're in this weird moment of hysteria where, you know, this, this, it's just snowballing and people will take any evidence of some, something bad happening as like, okay, we're all going to be, you know, dead. And I think, okay, there's part of it that plays on the fears of like, people like the idea of like, thinking about how bad this could get, but it is so irrational. And that leads me to the story of the US Air Force saying this week that AI killed its operator in a simulation trying to, you know, basically test whether an AI drone would kill humans. It turns out this story was completely fabricated and it's coming

• 35:46Alex Kantrowitz?

  from a US official who misspoke about the simulation. This never happened in real life. There was never actually a simulation. This is from Vice. "The rogue quote AI drone simulation was a hypothetical quote unquote thought experiment from outside the military based on plausible scenarios and likely outcomes rather than an actual US Air Force real world simulation." And this is a quote from an Air Force spokesperson. "We've never run that experiment nor would we need to in order to realize that this is a plausible outcome." This story though, took off in the craziest way and there were hundreds of different stories talking about how literally AI killed a human operator. When not only did the the experiment

• 36:29Alex Kantrowitz?

  not happen, but the whole thing was fabricated, complete like completely played off as a thought experiment from someone within the military. What the heck is happening here?

• 36:38Speaker 01

  This is, isn't this what the organizations like the CAIS want? Or what Sam Altman, like this kind of hysteria, like it's starting with the fact that when you have respected people telling you that AI can lead to human extinction, obviously the bias is going to be moved quickly towards, okay, is it already killing us? Like, we're supposed to be scared by this. And that's the part again, that, uh, like, I really wish the conversation would just move back towards, all right, here's some cool new products. They're interesting. You can do stuff quicker. Adobe Photoshop Generative Fill is fun to use. Like, like

• 37:22Speaker 01

  moving towards this conversation that's, you know, hysterical is annoying and I think is going to be counterproductive or could be for the whole ecosystem. But, but I still, yeah, I think that's a question maybe throughout this year will continue to. Try to answer it is why spread the hysteria.

• 37:40Alex Kantrowitz?

  Right. That was also a good setup for me to promote an upcoming show in July. We're going to have two executives from Adobe come on to talk about their generative tools and to talk about the legal implications of what's going on on copyright. So that should be fun. So, okay, should we talk about headsets? Why don't we do that after the break? We're here on Big Technology Podcast Friday Edition, talking about the news of the week. The news of next week is going to be all about the headset wars. Apple has a new device coming out. We've talked about it a bit. 10 more minutes on the other side of this break. We'll be back right after this. This episode is brought to you by Avpoint. 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.

• 38:23Alex Kantrowitz?

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• 38:59Alex Kantrowitz?

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• 39:40Alex Kantrowitz?

  prevention tools, and human-led emergency support. So when someone goes looking for your executives, Ironwell ensures they hit a dead end. So here's what to do. Go to ironwall.com/ bigtechnology, fill in the quick form and request your free risk assessment. Their team will show you just how exposed your executives are and how to lock it down before a threat reaches their front door. That's ironwall.com/ bigtechnology. Learn how to stop online threats before they become real world attacks. The link's in the show notes. And we're back here on Big Technology Podcast with Ron John Roy of Margins. First half, we talked a lot about the market. We talked a lot about AI, safety, hysteria, and copyright.

• 40:24Alex Kantrowitz?

  Let's talk about what the big news coming up next week, which is that Apple is going to unveil its mixed reality headset called the Reality Pro at its Worldwide Developers Conference coming up on Monday. Now Meta this week tried to get ahead of it, and it's very strange. It's sort of like felt kind of rushed. They have an event where they're going to talk about it more in September. Here is the news. So it's the Quest 3. That's their third generation version of this Quest headset. It's going to start at $499. It has high-res color mixed reality. So there's a couple of cameras and a sensor on the front that will create a pass through and that will allow you to be able to see what's going on outside and overlay some of the graphics

• 41:07Alex Kantrowitz?

  inside. Kind of interesting. And this is going to try to preempt what Apple is doing. What's your read on the Meta device? And do you think that this is like actually a competition among peers? Is one ahead of the other? Are you excited to use the Meta device?

• 41:23Speaker 01

  I think, and again, I loved using the original Quest. Like, my brother-in-law had it, gaming on it, playing Beat Saber and stuff like all that. It was fun. I never bought one. I was thinking about it for a bit. I still don't. Well, okay, first, I just enjoyed that now there's a little more corporate drama, the fact that Meta is rushing this news out to try to get ahead of Apple's news on the 5th, which we've been waiting for for years. So this kind of incremental addition, they did not announce anything revolutionary. It's just a better. It's like the iPhone 14 versus 13, but at least trying to get in the news cycle there. But I think for Apple, I'll admit, I had not thought

• 42:05Speaker 01

  too much about it. I have not been excited by it, but I've also not been Thinking it's going to be a disaster. I'd say your newsletter this week, you know, about the headset wars, like I thought was interesting because the, I think the most salient point was the idea that is Apple shipping something before it's truly perfect? And that's always been Apple's, you know, in the Steve Jobs era, that was always the game. It's like, we're going to show you something that's going to blow your mind and actually work in ways you never thought possible. So if they're rolling out something a bit janky,

• 42:45Speaker 01

  I think it could be really problematic. But also even more important is like, I want to know what they really envisioned this kind of computing platform to be because as you also said, Apple's a $2.8 trillion company that sold $200 billion in iPhones almost. So they don't need this new category. So what like, what about it is really making them so insistent that they have to go after this? Um, I don't know, the same way I'm wondering what, what AI risks are in that chat group? What, uh, what metaverse opportunities are in the tech exec chat groups that make Mark Zuckerberg go all in? It's making Tim Cook risk his entire reputation on this launch.

• 43:29Alex Kantrowitz?

  Well, it's very interesting that they decided to basically to drink the meta Kool-Aid and say that's a category they wanted to play. And now they've been at it since 2015. But I think what we're going to see next week is it's going to be a device, and that's what I put in the newsletter, that's going to blow people away with the technical specs. Right? We're talking about 4K resolution in each eye, 5,000 nits in brightness, you know?

• 43:55Speaker 01

  I don't even know what that means.

• 43:56Alex Kantrowitz?

  It's very bright. Okay. It's gonna, they're going to talk a lot about fidelity, right? About how some of these experiences, you're not going to even remember that you're not in those virtual reality worlds or augmented reality worlds, or the fact that the pass through is so good that when you're wearing the device, you're going to feel like you're actually in the room with the objects that you're seeing. That's what we're going to hear about. That's what these specs are going to tell us about. Then they're going to talk to you about the cameras and the sensors, right? We're talking about three outside cameras on the Meta Oculus Quest 3. German says maybe a dozen. By the way, good moment to promo. German's coming on next week on Friday for a half hour after WWDC. So it's going to be really fun to speak to him and get his reaction about this. Don't miss that show.

• 44:42Alex Kantrowitz?

  The thing is that even though it's going to blow people away in Apple's typical presentation, there's a battery pack you have to wear. They were aiming for lightweight standalone glasses that could pass through AR and could put you in virtual reality. They just couldn't get there. The technology wasn't there. And that's why people are saying, look, this is going to be a major AI, major Apple launch, major new category launch, not going to be the same revolutionary device like we saw with the iPhone, the AirPods and the watch, which took this pre-existing category we've talked about on the show and, and pushed it two or three years ahead. In the iPhone's case, five years ahead.

• 45:28Alex Kantrowitz?

  And that's why I'm just so eager. It's going to be very, very interesting to watch next week.

• 45:32Speaker 01

  No, I think it's going to be, I think I'm, I, I'm more excited now. And as, as you said, I think that's the most important point is that, again, we all had phones before the iPhone. People wore watches before the Apple Watch. I had phones before the AirPods. Each one of those just blew my mind, but I'll also admit if one friend gets the Apple, the Reality Pro and just messages me, oh my God, you have to try this. I can easily see in the next few months being tempted because again, it's Apple doing it. It's, you know, like hardware they've done. I never thought AirPods, which I still think are one of the most incredible devices I've

• 46:14Speaker 01

  owned in the last few years, like a pair of headphones would excite me that much. So, so I'm not, I'm definitely not counting them out.

• 46:22Alex Kantrowitz?

  Yeah, look, I think that this device, right, is not going to be the real play for them. Like it's very expensive, $2,000 to $3,000. They were expecting to sell three million. Now they're expecting to sell 900,000, which is still billions of dollars for them at three, you know, 900,000 at 3,000 a pop.

• 46:41Speaker 01

  What what's the play then?

• 46:43Alex Kantrowitz?

  The play is that developers, so what they want effectively is to release this out to developers and content programmers. So Peter Kafka speculated that Disney might be a partner, right? So you're effectively going to want exclusive programming or programming so beautiful in these in these glasses that you're not going to want to want to watch it outside of outside of them. And that's what you're going to have Disney tell that story. You're going to have developers try to think of new applications for it. And then over time, as this ecosystem is built, you work on basically filling those gaps in the technology that you couldn't. You work on trying to build it without that battery pack. And you eventually get to this Goldilocks zone where the glasses work the way that you wanted them in the in the beginning. You wanted them to in the beginning.

• 47:28Alex Kantrowitz?

  And the technology and there's already a robust app ecosystem and content ecosystem that make people want to buy them. You put that together, you might really have an interesting product. It's just a big risk.

• 47:40Speaker 01

  Take my money, Tim Cook. Take my money, Tim Cook.

• 47:42Alex Kantrowitz?

  You like it.

• 47:42Speaker 01

  You just you sold me.

• 47:44Alex Kantrowitz?

  Thing is, it's risky, though.

• 47:45Speaker 01

  I'm in.

• 47:45Alex Kantrowitz?

  Yeah, but look, that's, I mean, the thing is, people like threw all these ideas at me. Big screen, no matter where you where you are, fitness, gaming, et cetera, et cetera. Those are all use cases for the Quest. The thing is, people just didn't want to wear the Quest around. You you can do a lot of that on your phone. And

• 48:03Speaker 01

  Yeah, but this is where it's app. Facebook never created great hardware. They bought Oculus, but as a company, they've never created hardware. Apple has created many times over incredible hardware. So that's why, again, if I'm if I'm more excited about who's going to deliver me that it, I mean, when you just mentioned the idea of Disney, if they show up at launch and like, go on stage and just give some demo, oh, my God.

• 48:32Alex Kantrowitz?

  Dude, Bob Iger is going to be there. That's my prediction. Bob Iger, wearing the glasses, talking about how you can watch.

• 48:40Speaker 01

  What about Disney Plus versus Apple TV Plus? Could Disney really be all in on something like this with an Apple? Or now that they have competing interests like that?

• 48:49Alex Kantrowitz?

  I think so. Wasn't Bill Gates at the iPhone launch? Talking about, was it the iPad launch? Oh, no, Satya. No, one of the, Microsoft definitely did Office and for the iOS devices and showed up at the launch events. At the end of the day, you know, they're not gonna, Disney Plus isn't gonna say, we're not working on the Mac. And if this is the next big consumer device, we're coming for it. Well, we could speculate all we want, but we will promo the fact that Mark Gurman is coming up on the show next week, next Friday. Don't miss it. We'll be live on LinkedIn at 11 Pacific, 2 PM Eastern on Friday. But, you know, I think that like will also be on the feed and that's definitely a show that you're not going to want to miss.

• 49:33Alex Kantrowitz?

  Gurman's been breaking all this news. He'll have a great reaction. Maybe he'll even have been inside there and have, have shared. I've been able to experience some of this stuff. So we'll, we'll cover that next week. Coming up on Wednesday, my interview with Astro Teller. Finally, it's going to be here. We're putting it live. Ranjan and I back with you and Mark Gurman on Friday. Ranjan, thanks so much for joining.

• 49:55Speaker 01

  Hey, have a good week.

• 49:57Alex Kantrowitz?

  All right, and we'll see you all next week. Thanks for listening. We'll see you next time on Big Technology Podcast.

• 50:14Speaker 02

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