Generative AI Is Not A Real Industry

In the second of this week's two-part episode, Ed Zitron walks you through the dark truth of the generative AI industry - that consumer adoption of Claude, Gemini, Copilot and Perplexity is incredibly small, and it’s time to accept that there is nothing coming to justify the ruinous costs of Large Language Models. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/ Discord: chat.wheresyoured.at https://discord.com/invite/QUUQUP9szv Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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• 0:00Speaker 00

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• 1:08Speaker 02

  Call Zone Media.

• 1:12Ed Zitron?

  Hello and welcome to Better Offline. I'm your host, Ed Zitron.

• 1:27Ed Zitron?

  Last part, I really laid down how bad things are for OpenAI, how bad a company they are, how they spent $9 billion to lose $5 billion, how bad things look. But OpenAI, they have users. I mean, the users lose the money. Every single user paying or not loses the money. They can only survive if they're given more money. They will literally die if not given more venture capital money. And that really bothers me. And that bothers me a great deal. Listen to the episode again if you want to really understand why. But let's start this one with a very, very simple question. Is generative AI a real industry?

• 2:03Ed Zitron?

  Look, the large language model paradigm is yet to produce a successful mass market product. And no, large language models are not a success, nor are they mass market. I know you're gonna say ChatGPT is huge. We've already been through that. I just talked about that. But surely, surely, right? Like, it wouldn't just be OpenAI, right? Like, we've, we've been through this, but if generative AI was a real industry, there'd be multiple other players with massive customer bases as a result of how revolutionary it was, right? Like, at least close, right? Maybe, maybe like half the size, a quarter of the size, right? Right? Wrong, wrong, so wrong, so very wrong, so fucking wrong.

• 2:43Ed Zitron?

  It boils my blood. It makes me scared for the future, for the market, for Silicon Valley. The venture capitalists are so fucking wrong, and so are the hyperscalers. Wrong, wrong, wrong. Let's look at some estimated numbers that I got from data intelligence firm Center Tower, and that's referring to these monthly active users on apps and SimilarWeb, which is just unique monthly active visitors to websites. And this is for the biggest players in AI in January 2025. And I must be clear, the following really fucked me up a little. So OpenAI's ChatGPT had 339 million active users on ChatGPT's app and 246 million unique monthly visitors to ChatGPT.com in January 2025. Pretty good, right? One would assume that everybody else, especially the hyperscalers,

• 3:27Ed Zitron?

  they'd be pretty close behind, right? They've got way more money, they've got a ton of advertising. And one would be wrong. Google Gemini, Google's Gemini had a pathetic 18 million monthly active users on the Gemini app and a mere 47.3 million unique monthly users on their website. For comparison, CNN.com has over 150 million unique monthly visitors and did not require purchasing billions of dollars of GPUs. Nevertheless, though, Microsoft, who funds OpenAI, they wouldn't have blown this, right? They wouldn't have like got a tiny amount of users, right? Wrong! So very wrong. Microsoft Copilot had an embarrassing 11 million monthly active users

• 4:08Ed Zitron?

  on the Copilot app and 15.6 million unique monthly users, visitors, I mean, to copilot.microsoft.com. They had a fucking Super Bowl commercial a year ago, man. What the hell? These are terrible numbers for a company with a market capitalization of $3 trillion that spent over $75 billion on capital expenditures in 2024. But you know what? Maybe it's just that big tech hasn't worked it out. The plucky startups of Silicon Valley must have, right? I mean, we've all heard about Perplexity. They seem to be giving away pro accounts all the time. They're pretty big, right? They must be. Wrong! They had an abominable 8 million monthly active users on their app in January and a paltry 10.6 million unique monthly visitors to perplexity.ai. This company's raised $665 million. They have a multibillion-dollar valuation.

• 4:53Ed Zitron?

  This is absolutely fucking pathetic. What are we doing here? You know, maybe I'm just being a sourpuss. Maybe I'm just being a hater. You know, I sit in my hater's throne and I hate them. Like, ooh, I hate the company so much, right? That's it. It's just bias, obviously. There's one hulking juggernaut I've been leaving out, and I would never, ever, ever leave them out because Anthropic has raised $14.7 billion. One would assume with all this money, with all of the press attention, all of the people saying that Wario Amade, sorry, Dario Amade, will have AGI in 2027 around there, right? They'd be huge. They must be huge. They must be huge, right? Right? Right?

• 5:34Ed Zitron?

  So flipping wrong! Anthropic's Claude had, I mean, shit you not, 2 million monthly active users on the Claude app and 8.2 million unique monthly visitors to claude.ai, and that's the web-based version of their app. These numbers are absolutely abominable. They're trash. They're garbage. Anyone saying that Anthropic has a real product is talking out of their asshole. I'll get to API calls later, don't you worry, but it's time to wake up and stop yammering about these companies that they're building the future or have any real product-market fit. What a goddamn joke. I am furious. Getting these numbers pissed me off so much. I have had these chunder fucks telling me, "Oh, Ed, you have no idea how big this is. Oh, Ed, they're tiny. This is so small." I know. I said it'd be calm. I said it'd be calm.

• 6:19Ed Zitron?

  But when you spend two years having people calling you a hater and a cynic and a pessimist and a pig and a dog and they spray you with their hoses, you get a little angry about this stuff. And also, why is nobody, I'm a PR guy who does a podcast and a newsletter, why am I the person to say it?

• 6:36Ed Zitron?

  But what's really funny is that the recently emerged DeepSeek had 27 million monthly active users on the DeepSeek app and 79.9 million unique monthly visitors to deepseek.com in January. This figure, by the way, doesn't capture DeepSeek's China-based users, who at least on mobile, access the app through a variety of different marketplaces. From what I can tell, the DeepSeek app, I keep speaking like Cathy, I guess, but I'm gonna keep this going, we don't need to edit that. The app has nearly 10 million downloads on the Vivo store, which is just one of the different Android app marketplaces serving mainland China. It's not even one of the biggest. But for the sake of simplicity, assume that all of these numbers refer to those outside of China, where most, if not all, of the Western-made chatbots are blocked by the Great Firewall. But let me put this

• 7:20Ed Zitron?

  all into perspective. The entire combined monthly active users of Microsoft Copilot, Claude, Gemini, DeepSeek and Perplexity's apps amount to 66 million monthly active users, or 19.47% of the entire monthly active users of ChatGPT's mobile app. Web traffic slightly improves things, I say sarcastically, with 161 million unique monthly visitors that visited the websites for Copilot, Claude, Gemini, DeepSeek and Perplexity, making up 65.69% of all the traffic that went to chatgpt.com. However, I'd argue that including DeepSeek vastly overinflates these numbers. They're an outlier, and they're also relatively new, and they've enjoyed a big moment in the media, so we can leave them out for a

• 8:02Ed Zitron?

  second. Without DeepSeek, Copilot, Claude, Gemini and Perplexity made up a total of 39 million monthly active users across their apps, and a grand total of 81.7 million unique monthly visitors. Without ChatGPT, it appears that the entire generative AI app market is a little more than half the size of Pokémon Go at its peak, which had around 147 million monthly active users. Though this number is kind of hard to chase down, I've heard 200 million. Nevertheless, even if it was 100 million, it would still be more. And while one can say, "I missed a few apps: XAI's, Grok, Amazon's Rufus, Character AI",

• 8:37Ed Zitron?

  there isn't really a chance in hell they cover the shortfall. These numbers aren't simply piss-poor, they're a sign that the market for generative AI is incredibly small, and based on the fact that every single one of these apps only loses money, they're actively harmful to their respective investors or owners. I do not think this is a real industry, and I believe that if we pulled the plug on the venture capital aspect tomorrow, it would die. It would die within a month, maybe two. But let's talk about API calls, and this is when companies plug their apps into OpenAI's models, Anthropic's models, Google's models, any company's models, to power some sort of supposedly amazing generative AI feature. And the counter I hear a lot is that these API calls are a kind of hidden adoption, that there's this massive swell of engaged, happy customers using generative AI, they're just not using it on any of the major apps.

• 9:22Ed Zitron?

  And that the connection to these models, that's the real success story here, because people are adopting generative AI, they're just doing it through other apps. This isn't the case. OpenAI, as I've established, is the largest player in generative AI, making more revenue, roughly $4 billion in 2024, though they lost $5 billion after revenue. Again, OpenAI lost, they spent $9 billion in 2024 to lose $5 billion. Anyway, they still make more than everyone else, and every other private AI company. The closest I can get to an estimate on how many actual developers integrate their applications through OpenAI is a statement from OpenAI from October 2024's Dev Day, where they said they had over 3 million developers building apps using OpenAI's models. And as I've discussed in the past, OpenAI's revenue is heavily weighted towards its

• 10:07Ed Zitron?

  subscription business, with licensing access to its models like GPT-4O making up less than 30%, around $1 billion of their revenue. And subscriptions to their premium products like ChatGPT Plus, Teams, Business Pro, Government, and so on, make up the majority, around $3 billion in 2024. My argument's fairly simple. OpenAI is the most well-known player in generative AI, and thus we can extrapolate from it to draw conclusions about the wider industry. In the event that there was a huge, meaningful industry integrating generative AI into distinct products with mass-market consumer adoption, OpenAI's API business would be doing far, far more revenue. But let's get a little more specific about what an API call is. When a business plugs OpenAI's models, or any other generative AI company's models,

• 10:51Ed Zitron?

  into their apps and the customer triggers one, such as just asking the app to summarize an email, OpenAI charges the business both for the prompt, which is the input, and the result, which is the output. As a result, where weekly active users might be indicative of attention to OpenAI's products, API calls are far more indicative of consumer and enterprise adoption, and usage, in fact. To be clear, I acknowledge that there are a lot, a nonspecific amount, but a fair amount, of app developers and companies adopting generative AI. However, judging on the revenue both from OpenAI's developer-focused business and the lack of any real revenue for any business integrating generative AI, I hypothesize that customers, which include developers integrating OpenAI's models into both consumer-facing apps and enterprise-focused apps, are not actually using these features that much.

• 11:36Ed Zitron?

  I should add that OpenAI makes about $200 million a year selling their models through Microsoft, meaning that their API business may be as small as $800 million. Again, this is not profit, it's revenue.

• 11:48Ed Zitron?

  Before we go forward, there is also an alternative. OpenAI is charging way, way, way less for their models than they should, which is an argument I made in the subprime AI crisis last year. But accepting this argument means that at some point, OpenAI will have to become profitable, which they've shown no signs of doing so.

• 12:05Ed Zitron?

  Or they're gonna have to charge the actual cost of running their unprofitable models. Do you not see the problem there? If they have to raise all the prices for this thing that people aren't really using, why would they keep it? But you're wondering probably, how bad is this? For Anthropic, it's pretty disastrous. The information reported recently that Anthropic was projected, and I should be clear, this means made up, that they will make at least $12 billion in revenue in 2027, despite the fact they only made around $900 million in 2024, and lost $5.6 billion somehow. Anthropic is currently raising $2 billion at a $60 billion valuation for a business that loses billions of dollars a year with an app with an install base of 2 million people

• 12:48Ed Zitron?

  and a web presence smaller than that of a niche hobbyist news outlet. The information also adds, and CNBC reports as well, that 60 to 75% of that revenue came from API calls, though this number is from September 2024. So what? They're making most of their money from people integrating it, and they're making, what, a few hundred million dollars? And it costs them billions of dollars to serve this small customer base? This company is not worth $60 billion. Anthropic has raised $14.7 billion to create an also-rented large language model company that some people like more than OpenAI, with a competing, consumer-facing, large language model called Claude that has an install base of maybe 2% of the five free-to-play games made by Clash of Clans developer Supercell.

• 13:30Ed Zitron?

  Anthropic, much like OpenAI, has categorically failed to productize its large language model, with the only product it appears to have pushed being computer use, which is like operated by OpenAI, and it's similarly useless, and it can sometimes successfully do in minutes what would only take you a few seconds with your hands. Anthropic, like OpenAI, also has no moat. While they have, they've got kind of chain-of-thought reasoning in their models, that has been, as I mentioned, commoditized by DeepSeek. Its models, again like OpenAI, are totally unprofitable. They're unsustainable and heavily dependent on training data that has either run out or is running out. Anthropic CEO Dario Amadei is also a sleazy con man, who, like Sam Altman, continually promises that his company's AI systems

• 14:14Ed Zitron?

  will become powerful and autonomous in a way that they've never shown they have any possibility of becoming. He loves talking about AGI, he's just like Sam Altman, he's just as big a con man, fuck Dario Amadei. Any investor in Anthropic needs to seriously consider what it is they're investing in. Anthropic has, other than iterating on its large language model Claude, shown little fundamental differentiation from the rest of the industry. Anthropic's business, again like OpenAI, is entirely propped up by venture capital and hyperscaler dollars, Google and Amazon in this case. And without them, it would absolutely die, almost immediately, because they have only ever lost money. Anthropic's products are both unpopular and commoditized, and they lost 5.6 billion dollars last year. Stop dancing around this fact, stop it, stop doing this, we need to stop.

• 14:59Ed Zitron?

  If you're a member of the media writing about this, listening to this, I need you to fucking stop. We, by not reporting this in every article, it's journalistic malpractice. These companies will die, how can you not see this?

• 15:19Speaker 04

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• 15:50Speaker 02

  Empower is all about helping you invest well, so you can go out and live a little. And their Free Empower Personal Dashboard shows you your full financial life in one place. You'll be able to see your net worth, monitor budgets, analyze your portfolio, set retirement goals, and more. Whether you're saving for something big, want to treat yourself, friends, or family, or meet long-term goals, Empower helps you see where you stand. You've worked hard for your money, and Empower can help you make the most of it. Download the Empower Personal Dashboard or visit empower.com. Not an Empower client paid or sponsored.

• 16:25Ed Zitron?

  Let's talk about Perplexity and my general view on Perplexity is who gives a shit? Who cares? Perplexity, a company valued at $9 billion towards the end of 2024, has 8 million people a month using its app, but the Financial Times reporting that they have a grand total of 15 million monthly active users for an unprofitable search engine. Perplexity, like every generative AI company, only ever loses money in its product, generative AI-powered search, is so commoditized that it's actually remarkable that they still exist. I mean, they're bigger than an anthropic, that's crazy. Other than the slick design, there's little to be excited about here. An 8 million monthly active users is pathetic, it's embarrassing, deeply embarrassing for a company with the majority of its users on mobile. Aravind Ravinath is a desperate man with questionable intentions that made a half-hearted

• 17:09Ed Zitron?

  attempt to merge with TikTok in January. Really funny, by the way, it's like, "Hey, I have a really shitty company that loses a bunch of money, can I merge with your beloved app for some reason?" Like, you need to do this. Also, their product rips off journalists, by the way. They had a whole thing forced, they were just ripping fucking content, did it with Business Insider too, it's disgusting. But any investor in Perplexity needs to ask themselves, "What is it I'm investing in?" An unprofitable search engine? An unprofitable large language model company? A company that has such poor adoption of its product that it was prepared to become the Shell Corporation for TikTok? Hmm. Personally, I'd be concerned about the bullshit numbers they keep making up. The information reported to Perplexity said they'd make $127 million in 2025 and $656 million in 2026. How much money did it make in 2024?

• 17:53Ed Zitron?

  Just over $56 million! Is it profitable? Fuck no! Perplexity's product is commoditized, and they make less than a quarter of the revenue of the baseball team, the Oakland Athletics, in 2024 at least, though I should add the Perplexity's app is marginally more popular. It really is time to stop humoring these companies, though. It's time to stop writing about them like they're gifted children. They are horrible, they are abominations of startups, they are abominations of capitalism, which is already fairly abominable. I'm really just disgusted. Reading these numbers jokerified me 100 times, I didn't even need to put on the Joker makeup, it just appeared on my skin naturally. I'm currently high-kicking around this sound cube I record everything in. But really, all of this is far more apocalyptic for the hyperscalers.

• 18:39Ed Zitron?

  The Wall Street Journal reports that Microsoft intends to spend $93.7 billion in capital expenditures in 2025, or roughly $8,518 per monthly active user of the Copilot app in January 2025. Google is planning to spend $75 billion on capital expenditures in 2025, or roughly $4,167 per monthly active user of the Gemini app in January 2025. Sundar Pichai wants Gemini to be used by 500 million people before the end of 2025, a number so unrealistic that someone at Google should be fired, and that someone is Sundar Pichai. The fact of the matter is that if Google and Microsoft can't make generative AI apps work, if they can't get meaningful consumer penetration, this entire industry is screwed.

• 19:22Ed Zitron?

  There really are no optimistic ways to look at these numbers, and yes, I'm repeating myself. Microsoft Copilot had 11 million monthly active users on the Copilot app, and 15.6 million unique monthly visitors to copilot.microsoft.com. Google Gemini had 18 million monthly active users on the Gemini app, and 47.3 million unique monthly users, uh, visitors even to their website. These are utterly pathetic, considering Microsoft and Google's scale, especially given the latter's complete dominance over Google's search, and web search in general, and the ability to funnel customers to Gemini. For millions, perhaps billions, Google is the first page that they see when they open a web browser. Google should be owning this by now. Look, 47.3 million unique monthly visitors is a lot of people,

• 20:06Ed Zitron?

  but considering that Google spent $52.54 billion in capital expenditures in 2024, it's hard to see where the return is, or even where the return could be. Google, like most companies, does not break out revenue from AI. Just to be clear, if they were doing well, they would, though they do love to say stuff like "a strong quarter was driven by our leadership in AI and momentum across the business", which means nothing, by the way. That shit is made for journalists to read and go, "Oh, that means they're making money in AI", when a company's making money in something they'll tell you directly.

• 20:39Ed Zitron?

  And as a result of its unwillingness to share hard numbers, all we have to look at are numbers like those I've received from SimilarWeb and Sensor Tower. And it's fair to suggest that Gemini and its associated products have been a complete flop. Worse still, Google spent $127.54 billion in capital expenditures in 2023 and 2024 combined, with an estimated $75 billion, like I said, for 2025. What the fuck is going on? Yes, Google is likely making revenue from people running generative AI models on Google Cloud. And yes, they're likely making money from forcing AI onto Google Workspace customers by raising the prices and saying you get this for "free." But Google, like every single other generative AI company, is losing money on every single generative AI prompt.

• 21:23Ed Zitron?

  And based on these monthly active user numbers, nobody really cares about Gemini at all. Actually, I take that back. Some people care about Gemini. Not that many, but some. And it's far more fair to say that nobody cares about Microsoft Copilot despite Microsoft shoving it in every corner of our lives. 11 million monthly active users for its unprofitable, heavily commoditized large language model app is a joke, as are the 15.6 million monthly active users for its web presence, probably because it does exactly the same shit that every other LMM does, and everyone knows it's powered by ChatGPT. It's just... It's remarkable. Microsoft's Copilot app isn't just unpopular, it's irrelevant. For comparison, Microsoft Teams has, according to a post from Microsoft from the end of

• 22:05Ed Zitron?

  2023, over 320 million monthly active users. That's more than 10 times the amount of monthly active users of the Copilot app in January 2025 and the Copilot website combined. And unlike Copilot, Teams makes Microsoft money. Now, I obviously don't have the numbers on people that accidentally click the Copilot button in Microsoft Office or Bing.com, but I do know that Microsoft isn't making much money on AI at all. Microsoft reported in its last earnings that it was making $13 billion of annual revenue, a projected number based on current contracts versus booked money. And this was on their artificial intelligence products. Now, I've made this point again and again and again, and I'm gonna keep making it, but revenue is not the same thing as profit, and Microsoft does not have an artificial intelligence

• 22:48Ed Zitron?

  part of its earnings breakdowns. These numbers are cherry picked from across the entire suite of Microsoft products, such as selling Copilot add-ons to their Microsoft 365 Enterprise Suite. And by the way, the information reported in September 2024 that Microsoft had only sold Copilot to around 1% of their customers buying 365. They also make it selling access to OpenAI's models on Azure, roughly $1 billion in revenue, and people running their own models on Azure Cloud, Microsoft's cloud compute platform. For context, by the way, Microsoft made $69.63 billion in revenue in its last quarter. $13 billion of annual revenue, not profit, is about $3.25 billion in quarterly revenue, off of upwards of $200 billion of capital expenditures since 2023.

• 23:32Ed Zitron?

  The fact that neither Gemini nor Copilot has any meaningful consumer penetration isn't just a joke. It should be sending alarm bells through Wall Street. While Microsoft and Google may make money outside of consumer software, both companies have desperately tried to cram Copilot and Gemini down consumers' throats, and they have categorically unquestionably failed, all while burning billions of dollars to do so. But Ed, Ed, what about GitHub Copilot? All right, let's talk about GitHub Copilot, shall we? According to a report from the Wall Street Journal from October 2023, Microsoft was losing an average of more than $20 a month per user on the paid version of GitHub Copilot, with some users costing them more than $80 a month. Jesus Christ. Microsoft said a year

• 24:15Ed Zitron?

  later that GitHub Copilot had 1.8 million paid subscribers, which is pretty good, except like all generative AI products, it loses money, like I just bloody said. I must repeat that Microsoft will have spent over $200 billion in capital expenditures by the end of 2025. In return, Microsoft got 1.8 million paying customers for a product that, like everything else I'm talking about, is heavily commoditized. Basically, every LLM can generate code that some are better than others, by which I mean they all introduce security issues into your code, but nevertheless. And somehow, Microsoft loses money even when the users use it paid. Am I getting through to you yet? Is this working? If you are working for a hedge fund, an investment bank, or anyone like that, please get in touch. I will protect your identity. Is anyone around you freaking out because they should be?

• 25:01Ed Zitron?

  They should be, man. I'm freaking out a little. And I just keep all my money in a big box under my bed. I don't have a bed. No, I do. Anyway, not gonna do that joke. So one of the arguments people make is that AI is everywhere, but it's important to remember that the prevalence of AI, you seeing it in different apps, is not proof of its adoption, but the intent of companies to shove it into everything. And the same goes for businesses integrating AI that are really just mandating people dick around with Copilot or ChatGPT. And I'm really not kidding, no really. KPMG bought forty seven thousand Microsoft Copilot subscriptions last year at a significant discount to be familiar with any AI questions their customers may have. Management consultancy PWC bought hundred thousand enterprise subscriptions,

• 25:44Ed Zitron?

  becoming OpenAI's largest customer in the process, as well as their first reseller, and have created their own internal generative AI called ChatPWC, the PWC staffers absolutely hate. It's really cool that when you actually talk to the users, they just fucking hate it. And while you may see AI everywhere, integrations of generative AI are indicative more of the decision-making of the management behind the platforms and the demands of the market, more than any consumer demand. Enterprise software is more often than not sold in bulk to managers or C-suite executives tasked less with company operations and messy things like doing stuff or making sure the company runs, more with seeming on the forefront of technology. In practical terms, this means that there is a lot of demand to put AI in

• 26:25Ed Zitron?

  stuff, and some demand to buy stuff with AI on it, by enterprise buying software, but little evidence that this actually leads to significant user adoption or usage. I'd argue this is because large language models do not really lend themselves to features that would provide meaningful business returns. And I think everyone can agree on that. Like, there are things like summarizing emails, which I'll get to, get to that in a second. Look, in fact, let's do it now. Look, let's briefly talk about where large language models work, where they're actually good. And some of you are not gonna love this, but I know there's one of you who's like, yes, yes, now I will get Ed. I've got him now. I have him in my sights. To be clear, and this is really dealing with the "am actually" responses.

• 27:08Ed Zitron?

  I'm not saying and really have never meant to say that large language models have no use cases or no customers. People really do use them. They use them for coding, for searching defined libraries of documents, for generating draft materials, for brainstorming, for summarizing and searching documents. These are useful, but they're not magical. They're cool, but that's about it. And their coolness or usefulness is a tiny little ant compared to the costs and stealing for millions of people and damaging our power grid and our planet.

• 27:40Ed Zitron?

  Okay, okay, so you're probably wondering, I brought it up earlier, agents. You've heard about agents, Marc Benioff wanking off about agents, Sam Altman talking about agents. They love, they love talking about agents, right? They love saying agents of the future. When a company uses the term agent, they're intentionally trying to be deceitful because the term agent means autonomous AI that does stuff without you touching it, goes off and does things for you with one command, and it knows what to do. Remember, these models don't know anything. The problem with this definition is that everybody has used it to refer to what is actually a chatbot that can do some things while connected to a database, which I would regularly call the chatbot personally. In OpenAI and Anthropic's case, agents refer to a model that controls a computer. This is closer to the truth, other than the fact that their agents are so unreliable

• 28:24Ed Zitron?

  as to be disqualifying, and the tasks they succeed at, like searching TripAdvisor, are very simple and did not need automating. Next time you hear the agent, actually look at what the product does and maybe flick a booger at the person. "But Ed, Ed, you just burst into my door and having a nice Diet Coke and you're in my house, what are you doing here? Ed, what about artificial general intelligence? Aren't they gonna turn this into artificial general intelligence? No, they're not, get out of my house." Generative AI is probabilistic, and large language models do not know anything because they are guessing what the next part of a particular output would be based on the input. In reasoning models, they might look at that a few times, go, "Oh, maybe it's not this, maybe it's this." They are not making decisions. Generative AI does not make decisions. They are probability machines, which in turn makes them only as reliable as probability

• 29:09Ed Zitron?

  can be and as conscious, no matter how intricate the system may be or how much infrastructure is built. A pair of dice. We do not understand how human intelligence works. And as a result, it's completely laughable to imagine we'd be able to simulate it. Large language models do not create or resemble, or they're not artificial intelligence. They are at most the most powerful parrot in the world, trained to respond to stimulus with what they guess is the correct answer, and they're pretty good at it. They're pretty good, right? There is, it's pretty cool, except we shouldn't be burning hundreds of billions of dollars to make them slightly better at this. Let me put it in simpler terms. Imagine if you made a machine that threw a bouncy ball down a hallway and it was really, really, you got really good at dialing it in to throw the ball so that it followed

• 29:54Ed Zitron?

  a fairly exact trajectory. Would you think the arm was intelligent? Would you think the ball was intelligent? Would you think that the ability to precisely do something or more reliably do something would make it smart? The point I'm making about large language models is that they're a cool concept with some interesting things they can do. But they've been used as a cynical marketing vehicle to raise money for OpenAI by lying about what they're capable of doing, starting with calling them artificial intelligence.

• 30:34Speaker 04

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• 31:39Ed Zitron?

  All right, really though, at this point, I need to ask a very fucking simple question. Where is the goddamn money? Where is the goddamn money? Where's the money, Sammy? Sammy, give me the money. Where's the money? Money me, money now, Sam Altman. Where is the money? Dario Amadei, where's the money? Sachim Nadella, where's the money? Sundar Pichai, where's the money? Marc Benioff, where's the money? Where is the goddamn money? Because revenue is not the same as profit. I will say it again. Revenue is not the same as profit. And even then, Google, Amazon, and to an extent, Microsoft, the companies making the most investments in AI, do not want to state what the revenue is on AI. I hypothesize the reason that they do not want to disclose it is that it's pretty goddamn small.

• 32:20Ed Zitron?

  It is extremely worrying that so few companies are willing to directly disclose their revenue from selling services that are allegedly revolutionary. Why? Salesforce says they closed 200 AI-related deals in their last earnings. How much money did they make? Why does Google get away with saying that they have growing demand for AI and nothing else? Is it because nobody's making that much money? As a sidebar, I can find, and I've really, really looked like one company that appears to be making profit from generative AI, during a consultancy that helps generative AI companies find people to train their models that made 300 million dollars in revenue in 2024 and reached an indeterminate amount of profitability. We don't know if it was like a million dollars or not.

• 33:02Ed Zitron?

  While Microsoft may disclose it made 13 billion dollars in AI revenue, that's annualized, so projected based on current contracts rather than actual money in the accounts, and does not speak to the specific line items like one would say if said line items were not going to make the market say, "Hey, what the fuck?" Put aside whatever fantastical beliefs you may have about the future and tell me right now what business use case exists that justifies burning hundreds of billions of dollars, damaging our power grid, hurting our planet, and stealing for millions of people to train these models? Even if you can put troublesome things like morals or the basic principles of finance aside, can AI evangelists not see that their dream is failing? Can they not see that nothing is really happening? That generative AI at best can be kind of cool, yet mostly sucks, and comes at this

• 33:46Ed Zitron?

  unbearable moral, financial, and environmental cost? Is any of this really worth it? And where exactly does this end? Do you, AI evangelist, gun to your head, your life contingent on the truth leaving your lips, believe that this goes much further than you see today? Do none of these AI people see that this kind of sucks? Do they not see that generative AI runs contrary to the basic tenets of what makes science fiction cool? It doesn't make humans better, it reduces their work to a stagnant unremarkable slop in every way it can, and reduces the cognition of those who come to rely on it, and it costs hundreds of billions of dollars and a return to fossil fuels for some fucking reason. It isn't working, the users aren't there, the revenue isn't there, the best time to

• 34:28Ed Zitron?

  stop this was two years ago and the next best time to stop is as soon as humanly possible. Generative AI is a group delusion, its own kind of real life hallucination. What you're seeing in the news is not the success of the artificial intelligence industry, but a runaway narrative created by and sustained by Sam Altman, OpenAI, Dario Amade, and of course Sachin Adella. These fucking people. What you're watching is not a revolution, but a repetitious public relations campaign for one company that accidentally timed the launch of ChatGPT with a period of deep desperation in big tech, one so profound that it will likely drag half a trillion dollars worth of capital expenditures along with it. The bubble will only burst when either the markets or the hyperscalers accept that they've chased their own tails toward oblivion.

• 35:12Ed Zitron?

  There is no justification for any of the capital expenditures related to generative AI. We are approaching the limit of what transformer-based architecture can do if we haven't already reached it. No amount of beating off about test time compute and connecting large language models to other large language models is going to create a new use case for this technology, and even if it did, it's unlikely that it ever makes enough money to make it profitable. I will keep talking about this stuff until I'm proven wrong. I do not know why more people aren't more worried about this. The financials are truly damning, the user numbers are so small as to be insignificant, the costs are so ruinous that they will likely cost tens of thousands of people their jobs, and one of the hyperscaler CEOs their job along with it, although admittedly I'm a lot less upset about that.

• 35:54Ed Zitron?

  And they're going to inflict damage on tech valuations that may well rival the dot com boom or worse. And if the last point feels distant to you, ask yourself, what's in your retirement savings? That's right, Google, Microsoft, and hundreds of other companies that will be hurt by the contagion of an AI bubble imploding. I should also not be the person saying this, or at least I shouldn't be one of the first. These numbers are horrifying and I have no idea why nobody else is worried. There's no industry here, there is no money, there's no proof that this will ever turn into a real industry and far more proof that it will cost more money than it will ever make in perpetuity. OpenAI and Anthropic are not real companies. They're freeloaders living on venture-backed welfare for an indeterminate amount of time

• 36:37Ed Zitron?

  because the entire tech industry has agreed to rally around the world's most unprofitable software. And like any other free ride that doesn't actually produce anything, when the money goes away, they're fucked. Seriously, why are investors funding OpenAI? Do they seriously believe it's necessary to let Sam Altman and OpenAI continue to burn five or more billion dollars a year on the off-chance he's able to create something that's alive? This motherfucker can't create something that's profitable. What's the endpoint here? How many more billions? Where's the fucking money, Sammy? Where is it, Sam Altman? Where's my goddamn money? Where's my money, Sam? I say all this because generative AI is OpenAI. The consumer adoption of this software has completely failed and it's going nowhere fast.

• 37:21Ed Zitron?

  ChatGPT is sustained entirely on deranged, specious hype drummed up by a media industry that thinks it's more remarkable to write down the last lie that Sam Altman told than say that OpenAI has lost nine billion dollars in the last year to... Sorry, they spent nine billion dollars to lose five billion dollars in the last year and they intend to more than double that number in 2025 for absolutely no reason. Look, look, it's time to stop humoring OpenAI and time to stop directly stating that it is a bad business without a meaningful product. We also really need to be clear that the generative AI industry does not really exist without OpenAI and thus this company must justify its existence. And let's be abundantly clear.

• 38:02Ed Zitron?

  OpenAI cannot exist any further without further venture capital investment. This company has absolutely no path to sustain itself. No moat and loses so much money that it will need more than fifty billion dollars to continue in its current form in the next year.

• 38:18Ed Zitron?

  I don't know how I'm wrong, and I've sat and thought through and researched a great deal on how I might be. I can't find any compelling arguments. I don't know what to do but tell you what I think and why I think that way and hope that you, the listener, understand a little bit more about what I think is going on, because this, this really bothers me. As I've said before, like, I grew up on the computer, the computer made me who I am. Seeing the tech industry like this sickens me because it's getting money away from people doing cool shit to the least cool people doing the least cool shit possible. And it's frustrating. But I'll leave you with one thought and one thing that particularly bothers me about generative AI. Regular people, for the most part in my experience, do not seem to want this. While there are occasionally people I'll meet who use ChatGPT to rewrite part of an email, most of the people I meet feel like AI was forced upon

• 39:03Ed Zitron?

  them. With that in mind, I believe that Apple is actually radicalizing millions of people against generative AI by forcing them to reckon with the terrible summaries, awful suggested texts, and horribly designed user interface choices from Apple Intelligence, one of the worst product launches I think I've seen in my life. Something about generative AI has caused the hyperscalers to truly lose their minds, and the intrusion of generative AI into both Microsoft Office and Google Docs has turned just about everybody I know in the business world against it. The resentment boiling against this software is profound because the tech industry has become desperate and violative, showing such contempt for their customers that even Apple will force an inferior experience upon their customers to please the will of the rot economy and the growth-at-all-cost mindset of the markets.

• 39:46Ed Zitron?

  Let's be frank, nobody really needs anything generative AI does. Large language models hallucinate too much to be truly reliable, a problem that will require entirely new branches of mathematics to solve, and their most common consumer-facing functions like summarizing an article, practicing for a job interview, or writing a business plan are not really things people need or massively benefit from, even if these things weren't ruinously expensive or damaging to the environment. I believe generative AI is turning regular people against the tech industry, thanks to how much they're trying to force it upon them and make them use the bad idea. And it isn't working. Nobody wants this shit. They're intrigued by the idea, then immediately bounce off of it in many cases, once they

• 40:27Ed Zitron?

  see what it can or can't do. This software is being forced on people at scale by corporations desperate to seem futuristic without any real understanding as to why they need to do so, and whatever use cases may exist for large language models are dwarfed by how utterly unprofitable this whole fucking fiasco is. But I want you to do something if this whole thing has pissed you off. If hearing about these companies has enraged you, as it has enraged me. I want you to tell your friends, your family that OpenAI spent nine billion dollars to lose five billion dollars. I want you to talk about the fact that large language models don't really have a market, that ChatGPT is a marketing con, that Satya Nadella of Microsoft has burned, probably

• 41:09Ed Zitron?

  will burn, two hundred billion dollars chasing software that does the same thing as everyone else, that Tim Cook of Apple has forced Apple Intelligence barely functional software on millions and millions of people because Apple has no more ideas, that Mark Zuckerberg of Meta has pushed AI on everything because he has no more ideas left and it's going to burn so much money in Meta. And Sam Altman and Daria Amadei are two fucking liars, two liars who will tell you that their software will turn into artificial general intelligence. They're lying. They're all lying. And Sundar Pichai of Google is the arc liar, who went in Google I/O and talked about a completely fictional AI agent returning some shoes. The only reason that companies like this lie like this is because the truth is boring, the truth is mediocre.

• 41:53Ed Zitron?

  Believe your goddamn eyes when you use ChatGPT and you say, what the fuck is this? Why does this matter? You're not crazy. You're not an idiot because you can't see the magic of generative AI. The people pushing this stuff are either credulous, they're either bought, or they're making a shit ton of money and lying to you. I refuse to let them keep doing so. Better offline exists to kind of explain this stuff as plainly as possible. You can reach out to me if I wasn't clear about something. I love feedback. Please be nice to me, I guess, is what I ask. But I love doing this. I am scared of how this ends. I think it's going to really hurt the markets. Could be three months, could be six months, could be eighteen months. I don't know. And I don't really think it's the right thing to do to predict. But I'll tell you this.

• 42:39Ed Zitron?

  A better tech industry can come out of this collapse. I don't know how severe the collapse is. I don't think like Google's going to die or anything. It's going to hit tens of thousands of people's jobs. It's going to hit the markets hard. I don't know if a recession's possible. I'm not a financial guy. But I'll tell you this. The tech industry needs, they need to realize how bad this is. They need consumers to tell them. And honestly, consumers not using it should have told them, but they clearly haven't worked that shit out, have they? But I'll leave you with this.

• 43:09Ed Zitron?

  I think when this bubble pops, there's gonna be a lot of people that need to apologize. A lot of people in the media, the Casey Newtons of the world, the Kara Swishers of the world, the people claiming this was the early days of the internet again. But I think the thing we really need to do is make our dispersion known to these tech companies. Find the feedback forms. Go on, go online and talk about them. Say their names. Say their names to the friends you have who are mad at this too, which should be a lot of them. Say their names again and again and again. You ask me, how can things change? These people only have their names. They have more money than any of us combined. They have all of this power and as a result, they actually only have their SEO, their names. How do you think Prabhagavaran feels, by the way?

• 43:53Ed Zitron?

  When you Google his name and all you see is me, the smiling man. I believe that enough of us just talking shit on these people, and I don't mean being irate. I don't mean making stuff up. We're not them. We don't have to operate with lies. We can operate with truths, such as Microsoft is propping up OpenAI, a venture welfare client. All these people hate the poor so much, but they love welfare when it means maybe making money or maybe burning billions of dollars. So fuck their names up. Talk shit about them. Talk them to your friends. I don't care if you mention them better offline. Just tell people what they've done. Tell people that generative AI loses money on every single fucking move. It's so sickening. It's so boring and it's most decidedly not the future. You are not crazy if you don't think this is amazing.

• 44:38Ed Zitron?

  You're being lied to. What you're seeing is a marketing campaign and I will continue to walk you through this stuff. And if I'm wrong somehow, I will correct myself every goddamn time because I deeply care about giving you what I know and what I've seen. And the things I've reported in these two episodes scared the shit out of me, both for the markets and the fact that so many rich people are willing to be so goddamn stupid. And it made me really angry because it shows such contempt, contempt for the media and contempt for the user. And I will not bloody accept it. It's such a pleasure to do this show. I'm very lucky to do so.

• 45:22Ed Zitron?

  Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osowski. You can check out more of his music and audio projects at mattosowski.com. M A T T O S O W S K I dot com. You can email me at [email protected] or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat dot where's your ed dot at to visit the Discord and go to r slash betteroffline to check out our Reddit. Thank you so much for listening.

• 45:54Speaker 05

  Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

• 46:27Speaker 02

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• 47:59Speaker 00

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