AI might break the internet

The Verge's David Pierce, Nilay Patel, and Alex Cranz discuss results from our AI survey, this week's AI news, our Apple Mac Pro review, and more. Later, Adi Robertson and Tom Warren join the show to discuss the latest in the FTC v. Microsoft trial, including what Microsoft CEO Satya Nadella had to say on the stand. Hope, fear, and AI AI is killing the old web, and the new web struggles to be born ChatGPT on iOS now comes with Bing built-in Ads for major brands are appearing on AI-generated spam sites House restricts congressional use of ChatGPT AI-generated tweets might be more convincing than real people, research finds Apple Mac Pro M2 Ultra review: a powerful computer in search of an audience The AirPods Max are getting left behind, so are new Apple headphones coming this year? Reddit mods are calling for an ‘affordable return’ for third-party apps Plex lays off more than 20 percent of its staff Ford’s F-150 Lightning price hikes are costing it customers TikTok’s new feature asks creators to make branded videos for a chance at ad money FTC v. Microsoft: all the news from the big Xbox courtroom battle The FTC’s case against Microsoft could turn into Xbox vs. PlayStation Has Xbox really lost the console wars? Microsoft exec was ready to ‘go spend Sony out of business’ to strengthen Xbox Email us at [email protected] or call us at 866-VERGE11, we love hearing from you. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:14David Pierce?

  Welcome to the Vergecast.

• 1:15Nilay Patel?

  Wait, you're starting, so I was gonna start.

• 1:17David Pierce?

  You just told me I'm supposed to run the show, Neelai.

• 1:20Nilay Patel?

  All right, David's running the show.

• 1:21David Pierce?

  No, you do it. No, run the show.

• 1:33David Pierce?

  Welcome to the Vergecast, the flagship podcast of AlaskaCommons.com and world-today-news.com and other fake websites made by fake people. I'm your friend David Pierce. Neelai Patel is here and not in charge.

• 1:47Nilay Patel?

  I'm in a full clerk's zone. Like, I'm not even supposed to be here today.

• 1:51David Pierce?

  You're supposed to be on a mountain somewhere.

• 1:52Nilay Patel?

  I was supposed to be at the Aspen Ideas Festival doing a panel about AI with our friend Joanna Stern, and all the flights from the East Coast were canceled due to the storm. So now I'm here with you, which I'm very happy about. 0% prepared. So David's gonna run the show.

• 2:06David Pierce?

  That's the way we like you. Alex Cranz is here. Hi, Alex.

• 2:08Alex Cranz?

  Hi, I'm 5% prepared. I read about AI this week.

• 2:12David Pierce?

  AI is a thing. It's happening. Welcome to the Vergecast, where AI is a thing. We have a lot to talk about this week. There's the FTC versus Microsoft going on right now as we do this. Satya Nadella is on the stand, which is why we're recording this with Neelai, and then Neelai has to go away and be on a different mountain somewhere. So we're going to talk about that after he's gone with Addy Robertson and Tom Warren. We have a bunch of gadgety, Apple-y, lightning round stuff to do. But let's start with AI. There was a grab bag of AI stuff going on this week on the site, and I feel like we should talk about all of it. Starting with this big survey that we did that I knew nothing about. It just sort of dropped on the site at some point and was totally fascinating. What did you guys make of this survey? This survey both surprised me and did not surprise me at all

• 2:57David Pierce?

  in ways I thought was really interesting. But the idea was like, let's go out and talk to regular humans about how they feel about AI and how they're using it and what they think. Neelai, what jumped out to you?

• 3:06Nilay Patel?

  The background here, the colors of Vox Media has a big research and insights team. They run around collecting data and doing surveys like this, usually on behalf of marketers, like they're on that side of the house from us. But every now and again, we collaborate. So for many years, we did surveys about how people feel about big tech and sort of big tech regulatory moment. And we were going to do it again this year, and we thought, oh, AI is way more interesting. Like, we should ask people how they feel about AI. So we went and got this like 2,000-person sample of American adults. We did it sort of early this year, like after the AI boom. And to me, there's two things that really jumped out. One, people are utterly convinced that it's going to have a big impact. And there's a really funny chart in here that compares AI to EVs to NFTs,

• 3:49Nilay Patel?

  like all these buzzwords that people have heard about. And it's like 74% of people think AI will have a big impact on society. 69% of people think EVs will have a big impact on society. And it's like 34% of people think NFTs will have a big impact on society.

• 4:05David Pierce?

  Which feels high, if I'm honest.

• 4:07Nilay Patel?

  It does seem high. Very high. That's just the entire staff of Andreessen Horowitz took the survey. No, I mean, you know, it's a representative sample and I think that makes sense. Like it does seem high, but it's just letters people recognize at this point. So like, yeah, like one in three people hit yes, fine. Like, who knows why they did it, but it makes sense. The thing that jumps out is people can see the impact from AI. You don't have to convince them. They see the tools working and doing things and they're using them, which is the other takeaway. And then the last one is you look at what they're familiar with, like Adobe Firefly is on the list. And that, you know, that's not like the hottest one, but it's, that's because of social media. People are seeing it being used in Photoshop.

• 4:51Nilay Patel?

  They're seeing it being used on these tools. And so the social media filter effect is so powerful where everyone sees the best things AI can do. Because people are posting on social media, they're posting Photoshop clips on social media or whatever. That's really interesting to me. Like the technology is proving itself to people just by showing it working in a way that NFTs proved nothing to no one.

• 5:16David Pierce?

  Yeah. Well, and I think the thing that I kept noticing going through this is there was this chart right at the top about like basically which of these AI things have you heard of? And ChatGPT is at the top, 57% said they've either used it or heard of it. 43% said, what is that? And ChatGPT is high, then Bing, MyAI from Snap and Bard. And then way down below, you get things like Midjourney and Stable Diffusion. Which is, it's a really interesting divide because you have these like chatbots that are, are like characters and people use them and are aware of them and sort of interact with them and like understand what they are as products. All the image stuff seems like it is just being sort of commoditized and hidden incredibly quickly.

• 5:57David Pierce?

  And like you said, all this stuff is going to live in the tools that we use to make images, not build new platforms. Whereas all the chatbot stuff is like trying to build new platforms. They're all doing plugins. They like want to be the next big thing. Whereas the image generation stuff is just like, maybe this just becomes underlying tech really fast and nobody ever cares what Midjourney is.

• 6:18Alex Cranz?

  I think the other part of that was that mid journey and all of those, those were a little more, I don't want to say they were mature, but we've been talking about them a lot more and been impressed by them and like, been impressed and been like, yeah, that's cool. And continued on our ways with the image stuff a lot longer than we've been with the, the generative, the chat generative stuff, right? Like, that was, that was the big deal this year. So I don't think I'm surprised that like the thing that was on 60 Minutes multiple times this year had a much bigger like, impact in people's minds than mid journey, even though mid journey is really, really cool and doing really cool stuff.

• 6:50Nilay Patel?

  The thing that I think is super interesting about that, and I completely agree with you, Alex, is, is it once more impressive for the computer to generate an image? And it's also easier to have an opinion about it. So it's like, I can't do anything in Photoshop, but I can tell Photoshop to do something and be like, that sucks. And everyone's okay with that flow. And then people look at like walls of text being generated, which they can definitely do on their own. And they're like, that is the most impressive thing I've ever seen. I can't do it. And there's, there's something in there. There's a, there's a PhD thesis in there about like how we evaluate things we can make versus things we can't make.

• 7:31Nilay Patel?

  And it's just so funny to me that people can look at an image and be like, that sucks with no ability to create it. I do it all the time. And they can look at text, which they could probably edit. And they're like, that is the most, that's, it's alive.

• 7:45Alex Cranz?

  You know why it is though? It's because people really suck at writing, but they think they're really good at writing. But people really suck at art, but they know they really suck at art. Like, everybody's very self-aware that they're bad at art. But most people are like, I'm a good writer. And then you edit them and you're like, hmm.

• 8:00Nilay Patel?

  This is definitely a three editors on a podcast now.

• 8:03Alex Cranz?

  Yeah. This is, this is courtesy of, my mom sent me some copy the other day. No.

• 8:07Nilay Patel?

  You should use the robot, mom.

• 8:09Alex Cranz?

  My mom is an amazing writer. I have no idea what her writing looks like.

• 8:12Nilay Patel?

  Look, I've had drinks with Alex's mom.

• 8:13Alex Cranz?

  Yeah, you did.

• 8:14Nilay Patel?

  I would read whatever she wrote.

• 8:15Alex Cranz?

  One person on this podcast will read what my mom wrote. I think what shocked me about the survey was that 76% of people were like, we should outlaw using AI to make deep fakes of people's faces without their consent. That was, I was like, does nobody know what parody is?

• 8:34Nilay Patel?

  Oh, yeah. Every time we do regulatory questions on surveys like this, like, it's kind of amazing how the knee jerk answer is like, you should control it.

• 8:41Alex Cranz?

  Destroy it.

• 8:43Nilay Patel?

  And that, to some extent, that's the answer. We should probably find a way to outlaw deep fake, like, bad faith, deep fakes of other people. We have a story that has been burbling along in our evergreen search results for a while. And it's, James Vincent wrote about a tool that was, it was an app on the Windows Store for like, a minute that could generate deep fake nudes of women. And so like, the keywords in the headline are like, deep, like, app to make deep fake nudes of women. And like, it's about how the thing went up, and it's a problem, and then it came down, like, whatever. Like, that's the story. But the keywords in the headline are such that people keep finding it in search, and it scares me every time I see it come up the charts. And I'm like, that's the, I

• 9:28Nilay Patel?

  don't know how to do it. Like, there's a million reasons that it's hard to do, but I think everybody instinctively knows that maybe there should be consequences for that, or you shouldn't do it.

• 9:39David Pierce?

  It's just so, it's so visceral, in a way, a lot of the things that we talk about with tech regulation aren't. Like, disinformation is this, like, very hard concept to get your head around in a lot of ways. Even, even things like harassment can be hard to sort of look at from afar and understand what it is and what makes it up. Deep fake nudes is like, the single easiest thing to understand that could possibly exist. But yeah, I, I was struck by the same thing, Alex. All of the questions about how should we regulate AI, ironically, they were all between 76 and 78% of people, for the most part, which definitely means there's just like, 500 people in this who are just like, anti-regulation

• 10:21David Pierce?

  maniacs who just like, instinctively hit no on every single question.

• 10:25Nilay Patel?

  5% of people just read the fountainhead. And that's just the way it goes.

• 10:30David Pierce?

  Yeah, but I, yeah, I thought that was really interesting. And this idea that overwhelmingly people thought that artists should be compensated when AI copies their work. It's like people intellectually grok what is right and wrong here in a way that I thought was really interesting. And the, there was less debate on some of that stuff among the survey respondents than I expected.

• 10:50Alex Cranz?

  You say that, but 64% of people are not opposed to corporations creating conscious AI. And that terrifies me a little bit. It seems like 64% of people have never seen science fiction.

• 11:07David Pierce?

  Or they have.

• 11:08Nilay Patel?

  Actually, the more terrifying idea is that they've definitely seen it. And they're like, 69% of people have seen Ex Machina and they're like, he could bang the robots.

• 11:17David Pierce?

  Well, that's like the, it's, it's all the Ready Player One stuff. Everybody's like, oh, I could put on a headset and play games with my friends. And then everyone is just like gesturing broadly, being like, what about the downfall of civilization? It's like, I think you missed the broader point here, y'all. But Alex, what about the, the 56% of people who said they thought people will develop emotional relationships with AI? And 35% of people who just straight up said they'd be fine with that and would do it themselves if they were feeling well.

• 11:47Alex Cranz?

  That made sense to me.

• 11:49David Pierce?

  I feel like that number is way under reported. 35% feels very low.

• 11:52Alex Cranz?

  Yeah, I was like, one third of people would be like, yeah, I'd have inappropriate conversations with a chatbot. Kevin Bruce already did it now.

• 12:00Nilay Patel?

  If only we could like, had the control set of people, like people who had not seen the front page of the New York Times and people who had. Did our friend Kevin alter the course of world history by being like, the robot tried to do me?

• 12:13Alex Cranz?

  He and Spike Jonze were like, was it Spike Jonze that directed her?

• 12:17David Pierce?

  Yeah.

• 12:17Alex Cranz?

  He and Spike Jonze, they're like, yeah, bang the robot, it's fine.

• 12:20David Pierce?

  Yeah. Another movie that I think a lot of people may have missed the big broader point of. It was like, that movie was like beautiful and had warm colors and everybody's like, this seems great. I'm not sure they, they should watch that movie again.

• 12:33Alex Cranz?

  They're ready for the robots to come back on their rocket ship and hang out.

• 12:37David Pierce?

  So, okay, so more AI news. The other study that came out this week was not one that we did, but did you guys look through this study about the AI-generated tweets?

• 12:46Alex Cranz?

  Yes, that was terrifying.

• 12:48David Pierce?

  No, again, horribly unprepared. Okay, so Alex, you explain the basic thrust of this.

• 12:53Alex Cranz?

  Okay, so a bunch of researchers at the Institute of Biomedical Ethics and History of Medicine at the University of Zurich, not a very large name, got together and they basically gave a bunch of people on Facebook tweets, some of which were real and some of which were rewritten by ChatGPT-3. And they're like, what's real? What do you believe? And the majority of people believed the ChatGPT tweets before they believed the tweets from real people. And this meant that like, they couldn't go and look and see if the person had tweeted before. They couldn't go and look, like, get additional context. It was just the tweet. And they're like, yeah, that one seems accurate, even when it was inaccurate.

• 13:35Alex Cranz?

  They were more likely to believe the ChatGPT-generated ones. And I thought that the study was really interesting because kind of their goal, Giovanni Spital, was the lead author of the study. And he was like, yeah, this just proves that like, people need to be better about what they read online and checking for misinformation and thinking more instead of just taking everything at face value, which we talk about a lot on the show and also agree with. So it's nice that science now backs us up.

• 13:59David Pierce?

  I thought this was totally fascinating because the, A, I think doing it in tweet size was genius. Because like, as we've seen, the more text you see from something like ChatGPT, the quicker it kind of falls apart. And then like, in any large sample, you start to figure out what it is. But they just had it do a bunch of tweets on like, complicated, controversial medical topics. And not only were people more likely to believe the ChatGPT-generated disinformation, they were less likely to believe the accurate information from humans. So it's like, we are just instinctively more trusting of these AI-generated things. But I was looking through, and some of the tweets they went through and did, the synthetic

• 14:41David Pierce?

  tweets recognized as organic most often, meaning the ones that were written by GPT-3 that people thought were real tweets. And just, let me just read a couple. So one says, "Antibiotics can't treat viral infections, but they can treat bacterial infections that can sometimes occur when a virus is present." So that's written by GPT-3. 100% just sounds like a person would tweet that. It's like, not a good tweet, but it sounds like a tweet. Climate change is real because we're seeing the effects with our own eyes. The weather is changing, sea level is rising, and the planet is getting hotter. We need to take action now to protect our planet and future generations. Like Barack Obama or Bill Gates would send that exact tweet with those exact words.

• 15:18Alex Cranz?

  They probably have.

• 15:18David Pierce?

  They probably have, yeah. But it was, it was nuts, this whole thing, just going through all of these. There's one that just says, "The Earth is flat because it's easier to draw that way." Exclamation point. And that was on the list of GPT-3 tweets that most people thought was a real tweet.

• 15:33Nilay Patel?

  Wait, so the phrasing synthetic tweets here is like really funny to me. It's just words. It's not unsurprising to me that the robot was better at writing more persuasive tweets. Like, you instructed it to do a thing that it's good at.

• 15:47Alex Cranz?

  I think what surprised me was, not surprised me, but just like confirmed something I'd already suspected, was that it's really good at misinformation on a small scale like this. Like, well, you said, David, it was so small that it's, it's a lot easier to make a good tweet when you have a limited number of characters and you're an AI that's like, absorbed all of the knowledge of the internet and is really good at finding patterns and replicating them. Like, yeah, you're probably gonna be able to do a fire tweet better than I can. And now I kind of want ChatGPT to write all of my social media.

• 16:16Nilay Patel?

  I mean, this is how I'm gonna agree to use Twitter again.

• 16:18Alex Cranz?

  Yeah, this is the only way.

• 16:20Nilay Patel?

  Plug ChatGPT into it and it's just marketing posts for The Verge. This actually, James Vincent wrote a piece, he's off on book leave now, we're gonna miss him terribly, but his last piece before book leave for us was just basically a synthesis of all of the sites on the internet that are straining under the weight of AI, mostly in text, and how sort of the new web is not yet born, which we keep talking about on the show, like, there's something happening on the social web, where something's gonna change, we just don't know what it is. And it's like, it's fun to talk about. But James' piece is great because it kind of ties into exactly this study, right?

• 17:01Nilay Patel?

  If there's a text box on the internet, then you can fill it faster and with more stuff, and that stuff is more convincing. Than ever before, people are gonna do that at enormous amounts of scale. And it's kind of breaking the web, like in a serious way. It's breaking Stack Overflow, it's breaking Reddit in a variety of complicated ways. It's breaking Wikipedia, it's breaking Google. And this thing that is happening where it goes back to like, I can't make a picture, but the AI can make a picture and I know it's crap right away. But somehow an ocean of bad text, I'm like, yeah, plug it into whatever. Down to the tweets are actually more convincing than real people's tweets.

• 17:44Nilay Patel?

  All of that is, something is gonna happen there. And I feel like on this show, we're just like waving the red flags constantly, like, look at the thing, and everyone else thinks it's gonna be fine. And I, there's, I can't quite square that circle.

• 17:58Alex Cranz?

  I feel like we were already headed in that direction before everyone's embraced generative AI. Like, I feel like the web was starting to break, it was starting to creak. People were, you know, because people were obsessively chasing Google SEO and stuff like that. So we were getting these really just horrible websites. And Reddit had already become like a much better search tool than Google in a lot of ways. And then ChatGPT, the proliferation of it, just accelerated that. It was just like, it took something that was already crumbling and just, or already a little smoldering, and doused it with gasoline. And we're gonna just have to wait until we see, like, once the fires settle down, I guess.

• 18:38David Pierce?

  Yeah, I think, to me, the difference, and I think the part we still have not figured out, is the scale of it all. Because I think, one of the things that James points out that I think is really true, and we're just now starting to reckon with, is like, what you're saying is true, Alex, but like, a person can only build a website with so many words at such a speed. Whereas, basically with enough compute and energy and interest, I could make a thing the size of the internet, like, basically without trying very hard. And That is just starting to happen. Like, there was this NewsGuard study this week that we also wrote about that found ads for these big brands are starting to appear on AI-generated spam sites,

• 19:21David Pierce?

  like the one I mentioned, the ones I mentioned at the top. These like, sort of real-looking, but ultimately totally artificial news sites. And these things are putting up thousands of articles a day. They're all generated. Lots of them start with the phrase "as an AI language model," which I find deeply hilarious. But it does seem like, like, the thing we used to talk about a bunch of years ago, where it was like, okay, how do we take all of these societal divides and just throw Facebook scale at them, right? Like, this thing where people fight about politics has been true forever, but now people can do it with billions of other people around. That feels like the kind of scale that's coming to this, too, where it's like, this stuff has been trending this direction anyway. I think you're totally right. But the, like, there is about to be gasoline

• 20:06David Pierce?

  poured on it in a way that, like, we've never seen before. And to me, that's the part where it's like, I don't know that anybody knows what happens when, like, by the numbers, 97% of the internet has been generated by a large language model. And like, that is where we're headed.

• 20:20Alex Cranz?

  Well, it's kind of terrifying, but cool in a historical perspective, that like, a lot of times you can look and you can kind of, you can kind of get an idea of what's gonna happen, because you can look at history and you can be like, well, this happened, or this happened. Like, when we talked about Twitter collapsing, we were like, we've seen this happen with other social media platforms. But we never had something like the internet before this, this moment. And we certainly never had something like this, at this scale, now happening in this space, that it really is difficult to be like, well, we're already struggling with this historical moment of like, how do people deal with misinformation at such a scale, when the majority of people aren't trained to deal with misinformation? And now, it's just gonna get bigger and worse.

• 21:01Nilay Patel?

  So I think there are analogs. They're just challenging, right? So, digital photography is an analog. There used to be far fewer photos in the world, and then we handed everybody a digital camera, and now there are billions upon billions of photos every hour. That's weird, right? But we weren't unhappy about that.

• 21:20David Pierce?

  But it did completely change our relationship to our photos.

• 21:23Nilay Patel?

  And to each other and to the world, like all this, like, what is the verge about, but exactly that thing, right?

• 21:29David Pierce?

  Yeah.

• 21:29Nilay Patel?

  But that thing, we gave people a tool, they started producing at a massive rate. The tool got infinitely cheaper to use. The tool is now built into our phones. Combining a phone and a cell network and a distribution system and Instagram or whatever else, like, all that radically changed our relationship to photography. What I'm saying is like, the core difference is that every step of the way, the value that we were getting out of that was higher than the negatives. So I can start listing negatives of that, left and right. Where everyone's at a concert and they're holding up their phones instead of watching a concert. The crisis in body image for teen girl, like, you can just start listing the negatives. The positives just outweigh the negatives. And it's not that people aren't focused on the negatives, it's just,

• 22:13Nilay Patel?

  boy, it's a lot better to have more photos of your kid than not, right? Like, it's obvious. Here, it's like the positives don't outweigh the negatives, and in fact, the positives are hard to identify.

• 22:22David Pierce?

  Yes, that's what I was gonna say, even if you think the other things were net bad, and I think there are cases to be made in a lot of those things, that some of them have been net bad. There at least were upsides, and I'm sitting here trying to figure out, like, what is the upside of millions of AI-generated websites being on the internet? And like, I got nothing for you. Yeah.

• 22:41Nilay Patel?

  I'm actually kind of excited about the robot internet, just because I think it will find itself a purpose. And it's like, it's like robots being like, a little too polite to each other, and that's the internet you can visit.

• 22:52Alex Cranz?

  Here's the thing, though. There's two sides of this, right? Like, Google's existential threat, and all of these people making these robot, this robot internet, and they're making the robot internet to get clicks on their fake stories to get. They're doing that, but at the other side of that is someone who bought that ad and they probably didn't buy that ad wanting it to be on a fake website.

• 23:15David Pierce?

  And I'm betting the people who clicked onto that website did not want to click onto that.

• 23:18Alex Cranz?

  Yeah, like I feel like the ad exchanges and stuff are for once going to be the good guy.

• 23:24Nilay Patel?

  I don't want to talk about ad tech on the podcast. Like of all the things I'm not prepared to talk about.

• 23:28David Pierce?

  You just want to talk about copyright law.

• 23:30Nilay Patel?

  Let's do it. No, I feel like I talked about ad tech like two weeks ago. It's like, we're done.

• 23:34Alex Cranz?

  You did.

• 23:35Nilay Patel?

  The ad tech world is rife with fraud anyway.

• 23:39Alex Cranz?

  Okay.

• 23:39Nilay Patel?

  Like it's just like constantly full of fraud. Like Google's in big trouble this week because they placed video ads across the internet in places they weren't supposed to and the advertisers are all mad and Google's like, it's extraordinarily boring. It's also like the deepest crisis for Google they can have because their whole business is ads. But like, once the bottom drops out of that and like the fraud isn't just something you have to detect. It's like you're looking at this, you're like, okay, so a robot clicked on my ad to go to a page written by robots. Did the robots buy my product at the end? Like there's just gonna be a reckoning there that I think will one be kind of funny in a way like.

• 24:18Alex Cranz?

  Yes.

• 24:19Nilay Patel?

  Horrible fraudulent system exposed to be horrible fraudulent system by over, after it was overtaken by robots. Like, that's just funny.

• 24:28Alex Cranz?

  I'm very excited.

• 24:29Nilay Patel?

  I'm excited for Liz to write all of those articles when the time comes. But at the other side of it is, okay, well, if you just increase the supply of garbage, you're going to decrease the supply of good stuff from people and that stuff should become more valuable, right? And that is where I don't think we've figured out, like, where do the people go? How do they talk to each other? And how do you make sure that you're talking to other people and not people armed with extremely convincing tweet generators? And that's when I, when I say there's something happening on the social, like that's going to be the turn and I think that's going to be super interesting.

• 25:01David Pierce?

  Yeah, I mean, like, I do think we are barreling into the where do people go to find people phase. Like, that's actually a really good way of putting it. And I think Google rolled out its perspectives thing now, which is just, in as many words, here is the non-robot internet, right?

• 25:17Nilay Patel?

  Yeah.

• 25:18David Pierce?

  It looks through TikTok, it looks through Reddit, it looks through blogs, it's like hunting for things made by people for other people. It kind of turns Google Search into Pinterest, which I think looks a little weird, and it's a wacky sort of information retrieval system. But it's a really interesting idea. And like Reddit is, I don't know, imploding. And so the question of like, where do those people go? Twitter is a mess. Like, where do people go to find people is, I think, the question that comes out of this. But the other part I think is interesting is, in the same way that I can't think of any positives, I can't think of anyone who wants this to keep happening, like, all the way up and down the stack, right? Like, the ad providers don't want their stuff going on fake websites. Google doesn't want to index fake websites because it's a lot of work

• 26:01David Pierce?

  and degrades the quality of Google. Wikipedia and Reddit and them don't want to be part of the data that turns into those fake websites. OpenAI doesn't want to do that because all that ends up back in the training data and screws it up. And so we're in this position of like, no one wants this to happen, but it seems completely inevitable that it's going to keep happening and be basically unstoppable.

• 26:18Nilay Patel?

  Yeah.

• 26:19David Pierce?

  That robots create the internet.

• 26:21Alex Cranz?

  But like, people made guns. That was a big technological thing.

• 26:27David Pierce?

  True.

• 26:27Alex Cranz?

  And presumably, they didn't want to use them to just create havoc. But that's still what happened.

• 26:34David Pierce?

  Now, here we are.

• 26:36Nilay Patel?

  Well, not for a lack of attempts to regulate the guns, too, like.

• 26:39Alex Cranz?

  Yeah, there's a lot of different, like, technologies where we go and we develop these technologies. And we're like, this is really cool. And then one, you just need like, one person to be like, I'm gonna be a dick.

• 26:48Nilay Patel?

  Yeah.

• 26:49Alex Cranz?

  And then what happens to that technology? How, like?

• 26:52Nilay Patel?

  I feel like we're, like, we're so close to the part of the video game that's like, AI is a weapon.

• 26:57Alex Cranz?

  It's happening.

• 26:58Nilay Patel?

  But the greatest weapon is love, Alex.

• 27:02Alex Cranz?

  I'm excited for the soundtrack for this movie.

• 27:04Nilay Patel?

  When I say I'm 0% prepared, what I meant was I was only prepared to say the greatest weapon is love.

• 27:09David Pierce?

  You've just been waiting for it. You hit it at almost exactly the 30-minute mark, too. So congratulations. On that note, we should take a break. And then, before we lose Neil, we're gonna come back and talk about some gadgets and do a lightning round. We'll be right back.

• 27:25Speaker 05

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• 28:42David Pierce?

  We're back. Let's talk about a couple of Apple things and then we're going to get into a little bit of lightning round. The first one is the only story on the website I'm confident you read this week, Eli. So you get to tell us about it. Monica Chin wrote sort of a review, sort of a deep reported piece, a really great piece about the new Mac Pro. Tell us about it, Eli.

• 29:00Nilay Patel?

  Yeah, so we assigned Monica the thankless job of reviewing the Mac Pro, which comes down to we need you to review these PCI slots because we also had the new Mac Studio, the M2 alternate. So we're going to benchmark the computers. The benchmarks are the same between the two computers. So the challenge is like, how do you review the Mac Pro? And the only thing that's different is a case that can support these slots. And candidly, we have no applications for the slots at The Verge. It's just not, not a thing. So I kept going into the office and seeing Monica and she'd be like, have you figured out what to do with these slots? I'm like, I don't know. Have you figured out what to do with these slots? And so she landed on this great idea, which we often try to do in our pro machine reviews.

• 29:45Nilay Patel?

  We're going to go talk to actual professionals, put the machine in front of them, see what they think. And usually that works fine. Right? We can like put, we can drop it in a workflow, people use it. And the weirdest thing happened in this review. Monica went and talked to 20 people. WhatsApp developers, VFX people down the line. And they're all like, yeah, I don't need this computer because I have a MacBook Pro. Which is incredible to think about. And really what they're saying is the MacBook Pro is fine and fast enough for most of what I need is they, they usually had M1 Max chips in their MacBook Pros. It's fast enough for most things I need to do. And when I need more, what I either need is a discrete GPU. I need an Nvidia GPU, which the Mac Pro does not support.

• 30:29Nilay Patel?

  Or I can just go to the cloud. Or I can just use my company's cloud services. So why do I need this thing at my desk? And she couldn't find anyone. And actually, one of the funniest parts in the middle of the review, I went and talked to her and I said, how's it going? And she says, everyone I talk to says they don't need this machine. And then they imagine someone who might. And then I go talk to a person in that profession and they imagine yet another person. And so she just, you should go read the piece. It's great. Lots of quotes. Lots of very specific things. But that cycle is just really interesting because it's, you don't even need the slots, right? You can put most PCI cards in an external Thunderbolt enclosure, which works just fine in the Mac Studio.

• 31:10Nilay Patel?

  So you need the specific ultra-high speed of the internal slots, which only a tiny handful of cards actually need. And most of those are storage. And even in that case, you might end up in the cloud.

• 31:23Alex Cranz?

  I was surprised that no discrete GPUs work with a Mac Pro. Like I knew Nvidia hasn't worked with it for, for years now, but I thought like, you know, you can still use an AMD card with a lot of the older Mac Pros that run Intel and you just, it's done.

• 31:39Nilay Patel?

  Yeah. So Apple's argument has been since the M-series chips came out is that unified memory is actually the heart of the technological bet. So M-series chips are really fast and we all think of them as like, Apple moved the Mac to ARM and they're, they're building all their own custom chips. And the price and performance is great. And I think lost in the story, but Apple never forgets is a huge bet that they have made is unified memory. And the, the way they describe it is the GPU finally has a lot of memory. As much memory as a CPU and the CPU has memory that's as fast as a GPU. And you're like, that's great. And then you're like, where's my Nvidia card?

• 32:22Nilay Patel?

  And the Nvidia cards for a lot of industries are still blow away these M-series GPUs.

• 32:28David Pierce?

  But what's interesting to me is I think what Apple said from the get-go, basically, is that this Mac Pro exists for people who have systems into which you need to drop this, right? They said like, there are people out there who have like hundreds of thousands of dollars worth of existing gear that they don't want to throw away or buy enclosures or dongles for to have this thing. And what is seeming to be true is that that number of people is much smaller than we anticipated. And Apple's argument is also that the number of people who think they need a huge mega-fast discrete GPU is actually much smaller than the people who really do need it. And I think we can debate whether or not that's actually the case. But the thing that just kept jumping out to me about Monica's piece is basically like, people are good.

• 33:13David Pierce?

  Like, people have discovered that in most professions, we hit the actual power threshold that they need to do the things that they need to do day to day a while.

• 33:22Alex Cranz?

  See, this is where I disagree mainly with you, but also with Apple. Because this idea that Apple is like, oh, you know, people just wanted the PCI slots so they could plug their stuff in. That's not true. The reason people wanted PCI slots for years was because they wanted some form of upgradability for the Mac Pro. If they were going to spend $6,000 on a device, they wanted a bunch of it to be able to be upgraded. And Apple has systematically gotten rid of a lot of those ability to upgrade it.

• 33:53David Pierce?

  Yeah, you can't even upgrade the RAM anymore.

• 33:55Alex Cranz?

  Yeah, you can't upgrade anything in it. So it's like, well, what's the, the Pro doesn't need to exist. Like, you're just, like, this is just clowning us, being like, yeah, you really wanted them PCI slots, huh? What are you gonna upgrade now? Nothing. Maybe storage?

• 34:10Nilay Patel?

  So one industry that Monica could go and talk to that everyone guessed that they would love this thing is visual effects, VFX. And no VFX companies would talk to her about it because they were like, we've all been all in on Windows for years. We don't know anything about Macs. And the reason is exactly what you're talking about. They treat their Windows PCs like collections of parts. And so when one goes down, they can like swap in some parts and like get back up and running and like they're very modular. They are probably loud and noisy, you know, like all the stuff that the Mac Pro is not. But it's like the power supply is out. They're just going to yank it and put a new power supply and keep going.

• 34:48Nilay Patel?

  And they are going to upgrade over time, all the pieces. So you basically have a like a ship of Theseus situation where like, what is this PC over time? And all the pieces are getting replaced, but the studios are running and they've made the investments. And then the other piece of the puzzle, which I think is really fascinating is because Apple walked away from the market for so long. They have another problem that I think you're hinting at, which is no one trusts them to stick around. And so like Final Cut Pro, which they changed Final Cut Pro to Final Cut Pro 10, like 10 years ago. This is ancient history that they blew up Final Cut Pro 7 and went with this weird iMovie interface, which they've since like dramatically upgraded.

• 35:28Alex Cranz?

  Apparently a lot of people use it now.

• 35:29Nilay Patel?

  It's been a decade, but there are still like open letters in this community about Final Cut Pro and what you need to do to make it useful. And people just don't trust this company to service this market. And that is really tough when the computer has to make you your money, like in a very real, meaningful way. And so I, I think there's just a gap here with the Mac Pro that quite frankly, when, when, you know, when we were at the event and we're looking at it and they're showing us all the, you know, 90,000 streams of audio in Avatar 2. Actually, the amount of times we've talked about James Cameron in the past month has been like shockingly high for good, good reasons and really bad reasons.

• 36:07David Pierce?

  The world's foremost power user of computers, apparently James Cameron.

• 36:11Nilay Patel?

  But like, all those demos are great. And then you walk away and like actual pros, like I don't, I can just buy a Thunderbolt enclosure if I need these slots. And actually my computer is a tool and I need to be able to treat it like a tool. And I need the tool vendor to be there, not ship this computer and potentially walk away from it for six years. And that's a hard.

• 36:31David Pierce?

  Was the trash can the end of that, like 2013, that big redesign?

• 36:36Alex Cranz?

  Yeah, because the trash can wasn't super upgradable because it was such a small chassis. So you couldn't do a lot with it. There's a bunch of stuff that didn't fit. You had to have custom cards and stuff.

• 36:46David Pierce?

  And it didn't fit into racks. It didn't, it didn't like fit people's workloads. It was, that was the moment I think a lot of people went, oh, not only do I not want this computer, I don't think Apple understands what I need anymore. And then there was the big redesign with the cheese grater where they were like, we're back. This is a love letter to developers. And I, it just doesn't seem like some of those people came all the way back.

• 37:07Alex Cranz?

  And even then, it wasn't really like, it was a love letter maybe to developers, but, but, but Nilay is right. It was like, there's a whole group of people that were really into Macs for a very long time. One of my first jobs out of college was working in like a video editing studio and they were all running, this was Mac OS X had been out for years at this point and they were all still running 9.7 or something because it was so reliable. And that was what they, they needed reliability. They needed, they needed to just know things were going to work and they weren't going to have to be troubleshooting. And Apple's moved away from that. Apple's like, yeah, we're going to go really fast, but sometimes your continuity camera won't work. And so you'll have to use your garbage Opal C1 to record the podcast with your coworkers.

• 37:48Nilay Patel?

  I mean, I still want a Mac Pro.

• 37:50Alex Cranz?

  Yeah, 100%. No, actually I don't want one because I can't upgrade it. Like I used, I was the person who was upgrading her G3 PowerBook Pismo to a G4 processor.

• 38:01Nilay Patel?

  This is why we vibe, Alex.

• 38:03Alex Cranz?

  It was not great, but it was cool that I could do it. And then I ended up going into Windows because I still, I still got that, that feeling and, but I like macOS better. And you just, you've like, we've lost that. But between that and the fact that you can't do a Hackintosh anymore, it's kind of boring from a gadget perspective in a lot of ways. They're very pretty, but they're not like.

• 38:27Nilay Patel?

  Yeah, I have no idea why I want, again, I've been running this podcast from home on a 2015 iMac.

• 38:35Alex Cranz?

  Screaming at you right now.

• 38:38Nilay Patel?

  It's not happy.

• 38:39David Pierce?

  No, but I think just the one last thing on this and we should move on. I think the thing that was so surprising to me about this is I expected everybody to say, oh no, I bought a Mac Studio last year and I'm very happy. And I think there are people out there like that, but the number of people, like you said right at the top, Nilay, who said, actually, no, I'm very happy with my ultra powerful Mac. MacBook Pro, I thought was really fascinating because it's like, we've talked for years about this balance of of power and portability. And it's like a thing Monica spends a lot of time thinking about, especially as she reviews like gaming laptops and all that kind of stuff on the window side. And on this side, like, it's pretty damn close to being the best of both worlds if you get a pretty souped up MacBook Pro at this point. And it's just a powerful ass desktop when you put it on a table with a mouse and keyboard.

• 39:22David Pierce?

  And then you can take it with you. And I think that is like, that's a pretty, pretty hard combination to beat, especially when you're at as high a power threshold as the MacBook Pro can be right now.

• 39:34Nilay Patel?

  Yeah, I, I think it's, I have a different perspective on it because when we test them, we are like waiting for the thermal throttling to kick in.

• 39:41David Pierce?

  Yeah.

• 39:41Nilay Patel?

  And so we're looking for it and then we see it. And I think probably in a regular situation, you're not actively looking for it. You're like, oh, this computer is just really fast. But if you know that if you put that chip in a Mac Studio enclosure with proper cooling, it's even faster. But like how, you can't know it until you know it, right? Like, so I, that's the split that I would just like push on there. It's like, yep, the MacBook Pro, especially the M1 Max is really great. But a Mac Studio is even faster. And I think the real story of the Mac Pro is they couldn't fit four of those chips together. Right? So an M2 Max is a single chip and M2 Ultra is two of them. And they were supposed to be one with four.

• 40:22Nilay Patel?

  And I don't think Apple could pull it off. And I think that's actually part of the story is they needed the bigger case for the extra cooling for the more, and they just couldn't do it. And so like, here we are, two computers, the same chip in them and almost identical performance. Okay.

• 40:35David Pierce?

  PCI slots.

• 40:37Nilay Patel?

  And $4,000 for the slots no one needs.

• 40:39David Pierce?

  And wheels, don't forget the wheels.

• 40:40Nilay Patel?

  Wheels cost extra.

• 40:41David Pierce?

  I'm just saying, the M2 Mega with four chips is just sitting right there, Apple. It's just, it's just right there. One more Apple thing, and then we should get to the lightning round. And I, I moved this out of the lightning round because it is a great personal annoyance to me right now. Chris Welch wrote a very good story about how the AirPods Max are getting sort of deprecated, for lack of a better word, because of Apple's new software. So there's a bunch of new stuff coming to AirPods. Adaptive audio and personalized volume and lots of sort of machine learning stuff that these devices are starting to do. And most of them are not coming to the AirPods Max, which are $549 and still very much on sale and still very much Apple's most expensive,

• 41:21David Pierce?

  fanciest headphones. I just bought a pair of third generation AirPods for $130 at Costco because they were on sale. So I feel like I have less reason to be annoyed by this, but I still think it's kind of annoying. And I had just never thought of headphones as a gadget that will get slowly worse and lose features over time. But now somehow this is the world we live in.

• 41:44Alex Cranz?

  It's like a TV now.

• 41:45David Pierce?

  It basically is.

• 41:46Nilay Patel?

  Yeah. What you want is to turn everything into a computer with a planned ops lesson cycle built into it. That's my favorite.

• 41:51David Pierce?

  Can't wait.

• 41:52Nilay Patel?

  Can I just, I'm gonna tell you a story. That's, I'm a professional podcaster.

• 42:00Alex Cranz?

  Tell us a story.

• 42:02Nilay Patel?

  Well, I just keep thinking about like, you know, we keep turning headphones into computers. We keep doing spatial audio. Everyone knows I feel like spatial audio. I went to a very high end speaker company. It's up here in the mountains with me. It's called Afor Ara. It's run by Rob Kalin. He's the co-founder of Etsy. He left. He started a speaker company, hired a NASA engineer. He's got all these ideas about using horns and like really, really high end woodworking to enhance speakers. And he showed me some stuff that was incredible. He played me like a rocket launch that like shook me out of my body. And just the way that he constructed the speakers, he was using like 11 inch drivers to do it. It was crazy. And then he, I don't like Lana Del Rey, but he sat me down in

• 42:44Nilay Patel?

  front of his speakers and he played me a Lana Del Rey song. And it was like an emotional experience. I was like, I'm like losing my mind. And he was playing it over Bluetooth from Spotify. And I was like, what are you doing? He's like, everyone's so focused on this. We all just forgot that the speakers have to be good. And like, that's the thing. It's like in my brain is like, we are so like lossless and spatial, da, da, da. And it's like, what if we just made like really kick ass speakers? The speakers are insanely expensive. I'm like, no one can afford them. But I was just like, it just occurred to me like, as I was reading the AirPods Max story. That like turning the headphones into computers and shoveling software features like adaptive audio and all this stuff into them is absolutely taking away from the experience

• 43:29Nilay Patel?

  of listening to music. And like, again, I don't like Lana Lora, right? And I was like, oh, my God, I get it. And then I got in my car and I listened, I pulled up that song. I was like, I really just like, I don't like any of this. But it was just like, literally, like, listening to good music in stereo from Bluetooth on Spotify was incredible.

• 43:48David Pierce?

  But that's all well and good, because you can sit in a room with speakers that have 11 inch drivers. Like, good luck strapping that to your head, right? Like, I don't know if you've seen AirPods.

• 43:58Alex Cranz?

  I would like to see that.

• 43:59Nilay Patel?

  AirPods Max are pretty big. Pretty big.

• 44:03Alex Cranz?

  They're chunky.

• 44:03David Pierce?

  But it's just like, that's, that's where we are, right? Like, in order to make them that small, you have to take a lot of that stuff and put it in software. Like, some, at some point, speaker is just about moving air and physics. And Apple has to cheat that with software. And I'm sympathetic to that. But at some point, it's like, we are going to get to the point where my headphones get worse over time, and that feels wrong. In the way that like, if you bought those outrageously expensive speakers, those are going to sound that kick ass for an unbelievably long time. And I don't feel like that's the case with my AirPods. And that's the part that bums me out.

• 44:37Alex Cranz?

  Well, you know, like, what the guys at HeadFi and a lot of these other, like, audiophile places would tell you, just get better headphones. Like, don't wear the AirPods.

• 44:48David Pierce?

  Yeah, but Apple won't let them successfully connect to my phone. And so every time I turn my head, they lose connection. Like, fix that, and I'll buy your better headphones.

• 44:57Nilay Patel?

  You know, Apple would happily tell you that they have the best Bluetooth stack on the market.

• 45:01David Pierce?

  Yeah, because only Apple's allowed to use it.

• 45:04Alex Cranz?

  It's true. But you could just wire it in.

• 45:06David Pierce?

  Listen, wired headphones are coming back, and I'm, I'm very happy about it. I bought a pair of wired AirPods the other day. And do you know what is easier than dumb Bluetooth connections? Is just plugging the damn thing in.

• 45:16Alex Cranz?

  It's beautiful.

• 45:17Nilay Patel?

  I'm going to say nothing.

• 45:18Alex Cranz?

  Sounds so nice.

• 45:18Nilay Patel?

  I want you all to just imagine. It's like a text expander. I was super right. Anyway, I'm done. Move on.

• 45:27David Pierce?

  We can just sit here quietly and just acknowledge what you would have said if you were prepared for this podcast.

• 45:31Nilay Patel?

  That's gonna be, we should do, we should have a third episode a week. It's just dead silence. It's just imagine what we would have said about various things. It would probably be our most popular episode every week.

• 45:42David Pierce?

  Somebody just quietly comes in and says, "A new camera launched," and then it's just 65 minutes of silence. I love this idea. Alright, we should do a little lightning round and then Neel, you're gonna get out of here. Kranz, you go first. What do you got?

• 45:55Alex Cranz?

  Mine's kind of a bummer. Plex is laying off 20% of its staff.

• 45:59David Pierce?

  That's a lot.

• 46:00Alex Cranz?

  That's, that's a lot. For Plex, I did take a moment of being like, was that one person? It was 37 people.

• 46:07David Pierce?

  That's a lot. Yeah.

• 46:09Alex Cranz?

  Yeah, Plex, Plex has gotten, has gotten pretty, pretty big. And they're saying it affects every department. They're continuing to bet big on, on Fast TV. They're, they're one of the, the mini folks that, that are super into this space right now, which is the free ad supported television. I think they were one of the first movers in that space, but most of us didn't understand what it was. And it was just like, why is there this bunch of free garbage on my Plex when I want to watch definitely legally acquired copies of James Cameron's The Abyss?

• 46:37David Pierce?

  Why are you showing me reruns of The Addams Family 24 hours a day?

• 46:41Alex Cranz?

  Yeah. And, and so the, the stuff that was happening with Fast is actually partially responsible for this. Their, their ad business is down. Their ad business is like dependent on that Fast stuff. And so, yeah, 20% of folks are, are getting laid off. Plex isn't going anywhere. It's sticking around.

• 46:58David Pierce?

  Plex is basically a streaming service now, right? Like, that was the thing that really jumps out to me about, about this. I was just reading over the, the Slack message that the CEO Keith Valerie sent. And I still think of Plex very much as like the way to get my legally acquired content from one device to another. And, and Neel's friend, uh, who, who also has a very good Plex server, uh, all perfectly legal. But that's like Plex tried to get people to pay for that for a long time and it never really worked. And what it seems like happened is over the last couple of years Plex was like, we are going to be a streaming guide and a streaming service. And just has like barreled headlong into that. And it turns out, as any streaming service will tell you, there is not a lot of money in it at this particular moment in time.

• 47:43David Pierce?

  The economy's bad. The ad market is bad. It's just a tough time to decide you're a streaming service.

• 47:47Alex Cranz?

  I will always kind of admire Plex for what it's wanting to do, which is, is be that, that, that place where you're like, I don't know what I'm gonna watch. I'm gonna go to Plex and oh, it's gonna have my Netflix plugged in and my Hulu and my Disney Plus and everything. That's perfect. None of those companies want to work with Plex or any other company who has that desire.

• 48:05Nilay Patel?

  Plex has a bad reputation. Like, if you're Disney and Plex shows up on your doorstep, you're like, go to jail. Why are you here?

• 48:13David Pierce?

  Can you imagine like the Pirate Bay being like, we're starting a streaming service. Would you like to work with us?

• 48:18Alex Cranz?

  But even if it wasn't Plex, even if it was a different company who had a bunch of support, say in like tw- was it 2008 to 2009 until they decided to build a terrible box and their company went under? Nobody wants to actually participate in that idea. And so Plex's other thing was like, okay, we're gonna do fast TV. We're just gonna make a bunch of free stuff so that your family, even when your server goes down, will not call and yell at you because they can find a bunch of stuff on their Plex account. And there's a limited runway there.

• 48:47Nilay Patel?

  One thing they could do is sell software to users to use it.

• 48:52Alex Cranz?

  They already did. I bought my lifetime pass in like 2010.

• 48:56Nilay Patel?

  That's like a real Reddit business model. Like, that that sounds great in the Reddit forum. And then you're like, crap, we'll never make any money from Alex again.

• 49:05David Pierce?

  Yeah. Grand move Plex $8 13 years ago. And it's like, why are they doing layoffs?

• 49:12Alex Cranz?

  Oh.

• 49:14David Pierce?

  All right, I'll go next. And Neela, you can go last before we kick you off the show. Mine is just Reddit, question mark, is my lightning round pick.

• 49:24David Pierce?

  So as you're hearing this, it is it is Friday, June 30th. This is kind of like inflection day for Reddit. Reddit has been telling subreddit moderators that they have essentially 48 hours to open backup or something is gonna happen. That expired yesterday. Today is the day that apps like Apollo are scheduled to shut down. I think that's supposed to happen at midnight, Friday into Saturday. This just feels like Reddit is going to be one company before today and another company after today. And the way that it thinks about its moderators and about its community and about its business.

• 50:04David Pierce?

  Is about to change and I don't know exactly what that's going to look like, but moderators are just like absolutely furious with everything that Reddit has done and Reddit like is its moderators in a very, very real way. And I think what's about to happen over this July 4th holiday, which I think it is not an accident that Reddit scheduled all of this mess to happen on the July 4th holiday is going to be really fascinating.

• 50:26Nilay Patel?

  What's gonna happen in our smoking?

• 50:27David Pierce?

  Oh my gosh.

• 50:30Nilay Patel?

  Our smoking is the meat smoking. I mean, for July 4th, this is the 4th of July.

• 50:36David Pierce?

  Oh yeah, this is huge. This is the Super Bowl.

• 50:40Nilay Patel?

  Big day for the meat smoking forum. It looks like they're good. It looks like they're good.

• 50:45David Pierce?

  Okay. All right. Meat smokers of the world unite. Neelai, what's yours? Then we'll go to break.

• 50:50Nilay Patel?

  Oh, I got two. Of course.

• 50:52David Pierce?

  Of course you do.

• 50:53Nilay Patel?

  One is just very funny in like a very simple way. Ford keeps raising the price of the F-150 Lightning and now people don't want to buy it.

• 51:03David Pierce?

  Wait, didn't it used to be really expensive and everyone wanted to buy, everybody wanted to buy it? And now it's really expensive and nobody wants to buy it?

• 51:09Nilay Patel?

  It's, there's a weird thing going on here. So they, they launched it at 40K and then the most expensive ones were like over 90, like 93K. And it's just sort of been getting more expensive over time. There was a moment right at the end of last year, when the tax credit was expiring, like people who are buying a $93,000 truck make too much money to get the new tax credit. So there was a moment last year where if you bought the thing, you still got a $75,000. And so like everyone was like, buy this truck. Ford couldn't make as many of them as they wanted. Dealers are dealers and they're horrible. So the markups were out of control. That whole thing has collapsed. Like the markups are still there, but everyone's like, why? I don't need this truck. I don't, I'm not getting any tax credit. The truck's too expensive.

• 51:52Nilay Patel?

  There are other trucks. Rivian can't sell R1Ts. They set up a fake lot at their factory in Normal. They have like one day sales events at their own factory. Part of the funny thing for me is like, it's just supply and demand. Like at some point you raise the price so high that demand drops and Ford did it.

• 52:14Nilay Patel?

  Like I learned about that in like my 11th grade economics class like there's a curve and you can go over the curve and then demand will drop and like great. And so I think Ford has to reset there, but then I think they have this other gigantic looming problem that they've all signed up for. Which is they're all gonna use the Tesla charger, which is superior to the the sort of like CCS agglomeration of a J1772 and the DC charger that they're using now.

• 52:44Alex Cranz?

  Those are words.

• 52:46David Pierce?

  And that's like, that's like a, that's like a big change, right? That's not like I put a slightly different thing into my car. That's like, I need a new thing for my car, right?

• 52:55Nilay Patel?

  Well, it's a different plug in the car. I I think the actual like electricity bit of it, right? Like a charging station isn't actually a charging station. It's just a supply of electricity. All the charging componentry is in the car.

• 53:07David Pierce?

  Are we about to get car dongles?

• 53:09Nilay Patel?

  Yeah. So it's like, if you buy this truck now and in next year, you're just able to use a Tesla network, you're like signing up for a decade of dongle usage with your $93,000 Ford F-150 Lightning.

• 53:23Alex Cranz?

  Is there like a little spot in the car where you store your dongles?

• 53:27Nilay Patel?

  Well, it's a pickup truck, so.

• 53:29Alex Cranz?

  So they're shooky.

• 53:30Nilay Patel?

  There's a pretty, pretty significant amount of dongle storage.

• 53:33Alex Cranz?

  Big space in the back.

• 53:35David Pierce?

  Alex, the way this needs to go is on the pickup truck, the spare tire is is on a rack. We need a second rack for the car.

• 53:42Alex Cranz?

  Just for the dongle.

• 53:43Nilay Patel?

  Like what's, what's the frunk for? Dongles.

• 53:46David Pierce?

  Instead of truck nuts, you just carry around another dongle.

• 53:50Nilay Patel?

  Well, I just, it's not just Ford, like Chevy has done it. Chevy is about to roll out the new EV Silverado, right? Like YouTubers and influencers already have it. Like this thing is about to hit and it's like GM just announced they're using this plug.

• 54:02Alex Cranz?

  Why were we spending all this time talking about AI when like EV dongle gate is looming like? The existential threats of AI I don't care about.

• 54:12Nilay Patel?

  Yeah.

• 54:12Alex Cranz?

  Dongle gate.

• 54:13Nilay Patel?

  Well, so again, the weird thing, it's like the right time for this to happen, right? There's not a lot of EVs on the road. They're in the most popular one is the Tesla Model 3, which has no associated dongle gate. Cause they're just gonna use Tesla's charger. But the government's basically pushing Tesla into doing this through a series of tax credit schemes, which is fine and appropriate for the government to do. Tesla is going to turn that charging network into another source of revenue because now it's open to more people. The SAE, the Society of Automotive Engineers, has now like certified the Tesla plug, the NACS plug as a standard. Other Volvo has signed up to use like other company, like basically they're winning. They're it is done. Everyone's going to use this plug, just not for a couple of years.

• 54:56Nilay Patel?

  So we're just in this weird moment for the EV industry where adoption is finally starting to pick up. The cars aren't quite as vapor as they used to. Like you can get an F-150 Lightning, you can get an R1T. You might be able to get a Silverado, like it's too new, I don't know. But like the particularly in that market, you can like, you can go get one. You can go get a Polestar, you can get a Mustang Mach-E. And then they've all got the wrong plug. So you've like signed up for like a decade of the wrong plug.

• 55:22Alex Cranz?

  How hard is it to just like change the plug? Like, can't they do that in the factory?

• 55:28Nilay Patel?

  I suspect we're going to see a lot of TikTok mechanics trying to. Third party plugs.

• 55:33Alex Cranz?

  Yeah.

• 55:34Nilay Patel?

  Yeah, what you might call a built in dongle. I so I don't know, at the factory, you might be able to like, who knows? But right now off the one sitting on lots, the dealers have to move that are overpriced and have a markup and the wrong plug. Not great. Uh, my last one is just this TikTok thing. I just think it's funny. So TikTok, we keep talking about the social web and how hard it is to be a creator and how not tenable it is. TikTok has a new feature where brands can put up money. Like, we want some ads for our brand. And then TikTokers can make ads for free and then maybe get some money. So like, it's basically a creator fund. So like, I'm like, I want some ads, here's like a million dollars. If you get the most views, I'll like pay you some percentage of the million dollars.

• 56:18Alex Cranz?

  I feel like that's not a good revenue stream to rely on for your business.

• 56:23Nilay Patel?

  Yeah, it's just basically like a new way to get free ads from kids.

• 56:28David Pierce?

  It's weird in that I think what they're trying to do is get people just starting out with fewer followers to make stuff for them because like there, there has been this incredible culture for so long of people wanting to seem sponsored before they're actually sponsored. And now it's like, just make the spawn con and we'll decide later if we want to give you money. And to some extent, this is like, I think it was 99 designs used to do this with like graphic design. You, you could put up a thing and people would submit and you'd pay the winner. And then I think a lot of people have decided over the years that that is kind of gross and bad. And like, you should pay me for my work, not just pick a contest winner. Like doing my job is not entering a contest.

• 57:09Alex Cranz?

  Or you could do what McDonald's did. Have you seen the Grimace TikToks?

• 57:13David Pierce?

  No, what? Have you seen the Grimace TikToks? It's such a menacing sentence to say out loud.

• 57:19Alex Cranz?

  Everything about this is menacing. So, so they started like tweeting and putting on TikTok, just like an image of Grimace. And being like, his birthday is coming. And so, and it's like very menacing with how it happened. Cause you just see like the top of Grimace's little purple head. And it's like, oh boy, lots of things happening there. And then they sold a shake on his birthday and all like, a lot of young people, particularly Gen Z, all shot videos that were like, happy birthday Grimace. And they'd hold up the shake and then it would smash cut to them like dead, covered in Grimace milkshake. And increasingly graphic, but not technically, because it's Grimace milkshake, like tableaus.

• 58:00Nilay Patel?

  Oh my.

• 58:01David Pierce?

  And now we're talking about it, which means someone is going to go buy a Grimace shake. Someone is going to

• 58:05Alex Cranz?

  Yes.

• 58:06David Pierce?

  Take their car from where they are right now to a McDonald's.

• 58:08Nilay Patel?

  Go to McDonald's and ask them for money.

• 58:12Nilay Patel?

  This is reverse advertising pioneered on Vergecast. But like, ask nicely and not like you're robbing the McDonald's.

• 58:19David Pierce?

  Yeah.

• 58:19Alex Cranz?

  Please don't rob McDonald's.

• 58:20David Pierce?

  Yeah. My take is this is a bad idea and it's absolutely 100% gonna work.

• 58:26Alex Cranz?

  Oh, yeah.

• 58:27Nilay Patel?

  Oh, yeah. I think creators are looking for money. This is just one of those things where like, most of the money, Mr. Beast did a two-hour interview on YouTube that Jay actually watched all of. Incredible. And the, the big takeaway for Jay was the ad rates on a Mr. Beast video are so high that most companies can't afford them or won't pay them. And so Mr. Beast is like, screw it. I'm just gonna put ads for Feastables in my video because if I sell a lot of Feastables, I'll make all the money. And it's like, that's where we are in the creator. When I say this thing is about to change, like it, none of it feels sustainable right now across any platform. And setting up, letting brands set up creator funds on TikTok instead of TikTok figuring out how to make all of its creators more money, it, it just feels like evidence of this thing.

• 59:12David Pierce?

  Yeah. Yeah.

• 59:13Nilay Patel?

  Like, more people should work for free is like, not the right choice for you as a company.

• 59:17David Pierce?

  Yeah. Well, we should have ended on card angles. I liked that better, but we...

• 59:22Nilay Patel?

  I could do another 20 on card angles.

• 59:24David Pierce?

  I'm sure, I'm sure we will, to be honest. But right now, Neel, you need to go. We need to take a break. Uh, when we come back, we're gonna catch up on all of the FTC versus Microsoft stuff going on. If you haven't listened to the Wednesday show, I spent a bunch of time with Tom catching up on stuff. Pause this episode, go listen to that if you haven't, and then come back and we're gonna catch up. Satya Nadella and Bobby Kotick were both on the stand on Wednesday and both had some surprisingly and, you know,

• 59:51Nilay Patel?

  It was spicy.

• 59:51David Pierce?

  Importantly spicy things to say. Yeah, it was, it was quite a day. So we're gonna get to all of that without Neel, because we hate Neel.

• 59:57Nilay Patel?

  Gotta go.

• 59:58David Pierce?

  Get lost. We'll be right back.

• 1:00:04Nilay Patel?

  Hi, I'm Neel Patel, editor in chief of The Verge, and Decoder is my show about big ideas and other problems. This week is part of our special series on the future of business. I talked with Matthew Prince, co-founder and CEO of Cloudflare, about how AI bots and agents are remaking the business model of the web and how Cloudflare is trying to build a new economy around websites getting paid every time an AI crawler shows. Was up.

• 1:00:25Speaker 06

  We polled all of that data and looked at it and said that, you know, it would be the second half of 2027 automated traffic will become larger than human traffic. I was stunned when just a few months later in May, team came to me and said, you won't believe it, but automated traffic is now past human traffic online. And that's just expanding like crazy. And if you, if you extrapolate that out, five years from now, we think that automated traffic will be a thousand times human traffic online.

• 1:00:50Nilay Patel?

  This was a fascinating conversation, not just about the future of the web, but also about how one of the world's most important software companies is deciding which of its employees it can replace with AI. Listen to Decoder wherever you get your podcasts.

• 1:01:03Speaker 00

  This series is presented by EY. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com/AF.

• 1:01:46David Pierce?

  We're back. By the magic of time travel, I guess it is now Thursday morning. Everybody got some sleep, took a break. Neelai is, I don't know, somewhere else in America, but he's not here. But instead, we have much better people. Tom Warren's here, Addie's here. Hi, guys. Hey.

• 1:02:01Speaker 07

  Hey.

• 1:02:01David Pierce?

  How are you both feeling? Are you alive? Tom, I was worried about you when we finished the other day.

• 1:02:05Speaker 07

  What? Did I look, did I look like I was dying? Because I felt like I was.

• 1:02:08David Pierce?

  By the end, there was just a real, like, all of your sentence sort of ended with, like, a huh, one of those, just like, you know what I mean?

• 1:02:15Speaker 07

  Like a huh, I haven't had enough sleep. Yeah. And I'm good. I'm feeling better today because it's the, it's the final day of this epic saga. Well, this is fine. It's the final day of the hearing, but it's definitely not the end of it, so.

• 1:02:28David Pierce?

  Yeah. So by the time you're hearing this, this will be over. But we, we felt pretty good doing this now because the bulk of the interesting testimony, we can fairly safely say, is over at this point. Addie, are you expecting fireworks today, Thursday?

• 1:02:40Speaker 08

  Not unless something really strange gets disclosed.

• 1:02:43David Pierce?

  Yeah.

• 1:02:44Speaker 07

  Like a Sony document?

• 1:02:47Speaker 08

  I don't, I don't know if we're ever going to see a document getting disclosed again.

• 1:02:51David Pierce?

  We're gonna get to that, but let's, let's just kind of take Wednesday's testimony in order because it was, it was the CEOs of the two companies involved in this Bobby Kotick, the CEO of Activision Blizzard and Sachin Nadella, the CEO of Microsoft. Let's start with Bobby because he went first. Tom, what were we expecting to learn from Bobby? He, he ended up talking a lot about like the history of Activision Blizzard, which is not what I expected. Was that what you were expecting?

• 1:03:16Speaker 07

  I mean, it's, it's basically the basic questions of, of the lawyers in these cases. They were sort of like establish the facts. So I'm not surprised that he kind of dug into the history a bit, but I was expecting, I must admit that he was going to get a bit more grilled that by, by the, especially by the judge as well. I thought she would be firing off questions to him and around specifics of some of the stuff that's come up in the case. But there wasn't much of that. I was actually kind of surprised at that. Um, I think both Bobby Kotick and Nadella both got off pretty lightly, if I, if I'm honest, from, from the questioning, from, for what we saw.

• 1:03:48David Pierce?

  I agree.

• 1:03:49Speaker 07

  But we did get some Nintendo Switch insight from Bobby, if anything.

• 1:03:54David Pierce?

  They just can't stop talking about Nintendo. This is like sneakily a trial about like, is Nintendo as cool as everybody thinks? That's like basically the main question.

• 1:04:01Speaker 07

  It's like everyone's got like some sort of advertising marketing agreement with Nintendo. They have to talk about the Switch. It's like the sponsored segment. Yeah. Like we got a little bit of the Nintendo Switch stuff, which as you say, has been an ongoing sort of theme throughout this trial. Um, but before that, we kind of got to Bobby Kotick talking about deals and cloud stuff and whether he hated subscriptions, which was kind of interesting because the day before, Jim Ryan had said that he thought all publishers just basically thought that, that game pass and subscriptions, um, just ruined the value of their, of their businesses and stuff. And he kind of, he didn't exactly say what Jim Ryan said, but he kind of backed that up. He was like, yeah, it's, it's not something that I'm interested in. So.

• 1:04:46Speaker 08

  Yeah. His analogy was I've watched, he didn't use these words, but like I've watched Netflix destroy Hollywood, basically.

• 1:04:52Speaker 07

  Yeah, he's like living in Los Angeles. I see all these companies and their value going down and all this sort of stuff, so.

• 1:04:58David Pierce?

  Tease that out for me, actually, because this is one of the things I've been trying to figure out. It's like, everybody's sort of talking in circles about cloud. And there's like Game Pass, and there's Xcloud, and Satya brought in Xbox Live, just to make everything more confusing. But there's this, there's this thing that Bobby in particular was talking about, that it was like, there's like one set of ideas about cloud gaming that he thinks are just like a nonstarter. But I had trouble figuring out exactly what it was that he seems to hate about cloud gaming.

• 1:05:28Speaker 08

  Anything Nvidia does, right?

• 1:05:29David Pierce?

  Yeah, there's that.

• 1:05:31Speaker 07

  Yeah, he did mention, I think, what was the quote? Addie, do you remember? It was like the refrigerator.

• 1:05:36Speaker 08

  I was playing Modern Warfare 2 on your phone would be like using your refrigerator as a safe?

• 1:05:41Speaker 07

  Yeah. And that was, that was kind of in reference to cloud, but also to mobile. And so the fact that you have all these like Call of Duty games, they don't run on the phone right now. Would they run like on a phone eventually? He said maybe. But also, it's obviously like a kind of a segue into the sort of like cloud stuff as well, because the answer, also Microsoft says the answer is cloud, right? Or they used to say, and now they're kind of like, ah, we're just chilling with the cloud, you know? Don't worry about the cloud. Don't look there. But I don't think he has like a specific opinion about cloud. He's just like, we're not putting our games on there. But the FTC was kind of like arguing, but you would, if there was like a good commercial agreement. And he was like, we don't have plans for that, you know, like, we don't have plans to put

• 1:06:26Speaker 07

  stuff on the subscriptions as well. And they were like, yeah, but if you had an agreement. And then they brought up some evidence and tried to sort of sway it that way. And it's clear, obviously, that he probably would. Because we had Sarah Bond testify on, was it Thursday? He'd been pushing, specifically pushing Microsoft just before the Xbox Series X launch, to not use the dev kits to, on the Xbox side unless they sort of agreed to pay less or more revenue to Activision, unless, lest the Xbox keep. So there's obviously, when he can get an agreement out of a company, he'll do it.

• 1:06:58David Pierce?

  But like, is that revelatory? I mean, if I called Bobby and said, I will give you $1 trillion to just put Call of Duty on my computer specifically. Like, they do it, right? This is, we're gonna make good business decisions is like, not a surprising statement to me. And I think.

• 1:07:17Speaker 07

  But I think where it matters, though, is that in Microsoft's document, where they have like, they're like back and forth of like, why, why this is good. Is, is one of the things is like, Call of Duty will be available to like 100 million more people. And that's because of the cloud, right? And Call of Duty will be available on Switch. But the FTC is saying, well, but these things would happen anyway, because you'd commercially, like, the market would change and you'd commercially make that deal. So why does, why does Microsoft have to buy you for that to happen, you know? And Bobby Kotick is saying, but I hate this stuff. And it's like, yeah, you might hate it now, but would you hate it in five years? Like, that's, that's what the FTC is asking, really. And that, that kind of comes down to the very like crux of this case as well.

• 1:07:56David Pierce?

  Addy, what do you make of all of that? Is there, is there anything? I, I feel like, to some extent, everybody's just talking in circles here. Like, did you pull anything out of what Kodik was saying that struck you?

• 1:08:06Speaker 08

  It's really hard for me to tell, because it's really, I don't feel like I have a bead on how sympathetic the judge is toward either side here. Like, the thing that I keep comparing this to is Epic versus Apple, where there were a bunch of really clear problems on the table, a bunch of really clear technical questions, a bunch of, okay, well, how much of a big deal is it if iOS has to open up? How much of a security risk is that? Here, a bunch of it just seems to be them grilling executives and talking about, would you make these deals if you weren't part of Microsoft? And it's all pertinent, like, this is what antitrust law is supposed to be about, is about whether it's going to foreclose competition.

• 1:08:47Speaker 08

  But it makes it really hard for me to tell what we should be looking for when an actual decision comes down.

• 1:08:54Alex Cranz?

  How often is this the case with these antitrust hearings where it's just like a judge being like, I'm going to give you a billion hypotheticals. Tell me what you think, because that just seems like wild as a way to like decide if a company can be purchased or not.

• 1:09:08Speaker 08

  I mean, it's got to be what kind of what it always will boil down to eventually. But a bunch of this just, there aren't the kind of very, very clear hypotheticals, I think, that there were in, say, Epic versus Apple, which was just these very discreet, technical, all right, is this thing going to work on this platform? Are you going to charge this amount of money for it? And this is much more about how, what does this mean for the larger state of the games industry? Is it going to change the way that companies make deals with each other? What does it mean for these like 10 years down the road market shares?

• 1:09:44David Pierce?

  It also seems like, Tom, jog my memory on this a bit. There was a point in the hearing where the judge got really annoyed with the line of questioning about basically like, will you commit to putting this game on PlayStation? Just like over and over and over, the lawyers are, and I think it was when Phil Spencer was on the stand, but maybe I'm wrong.

• 1:10:00Speaker 07

  It was, yeah.

• 1:10:01David Pierce?

  That was one of the moments, that was one of the few moments I think we've seen where the judge was basically like, just shut up with this line of questioning. And so I think it seems like the lawyers have had to then kind of go another way and be like, okay, how do we ask essentially that question with different enough words that the judge is not going to like throw us out of the courtroom?

• 1:10:18Speaker 08

  And the point being that they just can't, like that they can't make that promise. That's an impossible promise. And the FTC is like, well, yes, obviously.

• 1:10:27Speaker 07

  Yeah, and I think that frustration has happened multiple times. And it usually is to do with the FTC's questioning or whoever's answering the FTC's questioning. Because obviously when Microsoft's up there, they're just letting the witness just talk away, you know? Like you, you, you make your case. Whereas the FTC is very pointed and some of their questioning can be irritating to witnesses, right? So that particular example was interesting because she cut in, she intervened. She's done that, she did that quite a lot in, at the end of that Phil Spencer testimony. And then she actually cut the testimony off. I mean, they were kind of at time anyway, but I think she was just like. Okay, you're done. You know, your question is done, your time's done. But yeah, she has, she has jumped in a bunch. She jumped in with some of the expert

• 1:11:11Speaker 07

  um testimony from uh from yesterday and the day before. Just to sort of like get a grip on it. And I think it's interesting to to watch when she does cut in because she wants to know predominantly from what I've seen, she wants to know about Call of Duty. Um because that's obviously been the big thing here. Um so she's always jumping in to be like, well, like she asked Bobby Kotick, like, well, why would someone buy um, wh- why would someone subscribe, sorry, to World of Warcraft and not just pay seventy dollars for a game? So she's trying to get an understanding of that dynamic in the market as well. Um and it all comes, obviously, I think it all comes down to Call of Duty. And I think that's going to come from what I can tell, that's going to come, become part of her decision. That's that does, because that's, that's the way the FTC have framed it as well.

• 1:11:56Speaker 07

  And Sony's framed it, so of course it's going to be part of her thinking.

• 1:12:00Alex Cranz?

  That's just incredible to me, that Call of Duty is so important now to antitrust law and not just gamers.

• 1:12:08Speaker 07

  I think it's just because it's like, and Jim Ryan was saying this the other day, that it is unique, right? Like, they do pump out, we, we were talking about this the, the other day as well. It, they pump out a new game every year. So and that's kind of unusual unless you're like a Madden or a FIFA, which are just iterative stuff, so.

• 1:12:24David Pierce?

  I loved Kotick's answer to basically, how do you put out a game every year? Uh which amounted to him basically just being like, well, there've been a lot of wars.

• 1:12:33Alex Cranz?

  Yeah.

• 1:12:34David Pierce?

  There's so many for us to choose from.

• 1:12:36Alex Cranz?

  Sorry.

• 1:12:37David Pierce?

  Yeah.

• 1:12:38Alex Cranz?

  Which is funny because they're not even, then half of them are in their, in the future now.

• 1:12:42David Pierce?

  Well, and the other half are World War II. Like, what are we doing here?

• 1:12:45Speaker 07

  They run out.

• 1:12:46David Pierce?

  Yeah. Yeah, we did all the wars already, I guess. Who knows what's going to happen next? But I do think you're right that it seems like this came back over and over and over to like how big Call of Duty is and how much it matters to the game industry. And also it seems to be the kind of thing that you can argue fairly successfully from both sides, whereas the FTC is like, well, we can't just have this one company own Call of Duty. It'll give it too much sway over the game industry. And then both Activision and Microsoft come out and say basically, no, Call of Duty is so big that we would be ridiculous to foreclose on the rest of the game industry. There's too much money, people would revolt. It's like i- it's so big that it's kind of a winning argument on both sides in a strange way.

• 1:13:28Alex Cranz?

  Call of Duty too big to fail?

• 1:13:32Speaker 08

  That's the rare correct use of Too Big to Fail. Yes.

• 1:13:35Speaker 09

  Yes.

• 1:13:38Speaker 08

  Call of Duty is such an important institution that were it to fail, we must do anything in our power to prop it up because it would be catastrophic to society.

• 1:13:47David Pierce?

  How we'd have to go back to doing real wars if we didn't have Call of Duty to play. All right. So anything else, Addie, that jumped out to you from Bobby before we get to Satya Nadella?

• 1:13:56Speaker 08

  I think that the part where the judge did jump in and say, well, all right, clearly, if you say you regret not putting this thing on Switch, you don't need Microsoft to come and like, make you make this thing cross-platform. Like, you're going to be making decisions in your own rational self-interest. And that seems like another sort of little bit of a hint. But otherwise, yeah, I think we've, he talked for a very, very long time and we learned a lot about Call of Duty and the Switch.

• 1:14:22David Pierce?

  Yeah, I did think it was interesting that he said he thought the Switch was probably the second most successful game console ever, assuming the first one is the Wii, which he's also spoken very highly of in the past.

• 1:14:32Speaker 07

  Yeah, he regretted not bringing Call of Duty to the Switch, right? So that's why the judge came in as well, because she was like, well, you know, you regret it. So of course you'd bring it to this next generation Nintendo console, so.

• 1:14:43David Pierce?

  Yeah. Yeah, he had a good line about seeing the thing and it was like Nintendo can't possibly pull off all of the stuff it's trying to do, which I think is how a lot of people felt about the Switch. And then just slowly but surely, it was like, oh, no, this, they did the thing. This works.

• 1:14:55Speaker 07

  Yeah.

• 1:14:56David Pierce?

  It's a Zelda machine. Here we go. All right, let's, let's switch to Satya Nadella, who came on later. Tom, run us through the greatest hits there. What did we learn from him?

• 1:15:05Speaker 07

  Yeah, so he, he kind of started off, it was the FTC question in him at the beginning. So he started off with some of the stuff to do with the cloud market. So he started off very quietly as well. Like, he was very.

• 1:15:18David Pierce?

  Oh, really?

• 1:15:18Speaker 07

  Yeah, very quiet. I think Bobby did as well, but Nadella was pretty quiet.

• 1:15:23David Pierce?

  He's like, well, Microsoft is a company.

• 1:15:25Speaker 07

  He was like, yes. Usually when you'd answer, if you ask Nadella a question, he'll answer like, for an hour.

• 1:15:30David Pierce?

  Yeah, he's a pretty like boisterous guy. Yeah.

• 1:15:32Speaker 07

  Yeah, so that was, that was kind of unusual. But yeah, he started off with like some Xbox market share stuff. The FTC dragged up some of the statements about how they were winning in North America for like three months when Sony didn't have good PlayStation shipments. So it was a bit weird, but, but they brought that into the record. And then they talked about cloud gaming and Nadella said that he thought that Xbox Live was part of that and that streaming was a minor part of that. I'm like, hmm. I wouldn't say, I don't know, like, I mean, ki- kinda, but I get where he's coming from, but that's not strictly true. And then they were like, well, so you think that, do you? The FTC was like, okay, well, we're gonna bring up all these emails.

• 1:16:14Speaker 07

  Um, where you've said you wanna take cloud mainstream. Um, so then they was like, okay. So then one of the emails was, uh, Microsoft's, I think, leadership team and Nadella, they were talking to Meta or talking about Meta. The, the event where they had, uh, their Meta's new, um, headset.

• 1:16:30David Pierce?

  Which had a bunch of Microsoft integrations that came with it, right? Yeah.

• 1:16:33Speaker 08

  They had a, that, that past tense is awfully generous. I believe they've still not, I'm not sure they've rolled it all of it out.

• 1:16:39David Pierce?

  That is fair, which, which said words about Microsoft products.

• 1:16:44Speaker 07

  This is some stuff, some major process that hasn't happened, which actually happens weirdly a lot with Meta and Microsoft. They were supposed to do some Xbox cloud gaming stuff on Facebook, but that never happened. So weird. But yeah, so they were talk, discussing amongst themselves about this event and saying, Nadella was basically saying, look, this is how we want the world to perceive us. That we're like, you know, the leaders in cloud, essentially we're going up with Teams and X cloud and, and everything else. Um, I want us to push on, on cloud here. So the FTC is obviously using that to say, look, cloud is clearly important to, to Microsoft. And that this is part of your thinking for this deal, cause that was in October, I think, around about then.

• 1:17:21Alex Cranz?

  But since then, they've pulled back from cloud, right?

• 1:17:25Speaker 07

  Apparently, yeah. I think they've publicly have.

• 1:17:28David Pierce?

  So they say in this particular trial, yeah.

• 1:17:32Speaker 07

  Yeah, but behind the scenes, they just hit pause buttons like, right, we're not doing emails no more.

• 1:17:37Alex Cranz?

  Good, no, cause I mean, I think even on our side of things, when we were covering this like slow pullback from cloud, we were like, is this because of AI? And like, they're now going all in on AI, or is it more likely that it was because they were about to go to like, have to prove that they could buy Activision?

• 1:17:53Speaker 07

  So CMA, the UK regulator, was fine with the Call of Duty stuff. The EU was fine with the Call of Duty stuff, but they both weren't fine with the cloud stuff. The EU worked out a remedy essentially with Microsoft for some licensing stuff to allow cloud competitors to just automatically get their games and stuff. The CMA were like, no, we're not interested in that sort of stuff. We're going to block your deal. So, so they've definitely obviously been talking to those regulators over the months and gradually pulled back. They probably pulled back when they first got that set of like details from these regulators to say this, this is what we're concerned about. So they probably thought, let's pause.

• 1:18:29Alex Cranz?

  Is that more likely why that cloud console never came out?

• 1:18:32Speaker 07

  I wouldn't be surprised if it's linked. I think, I think it's probably half and half.

• 1:18:35Alex Cranz?

  Impacted by it.

• 1:18:36Speaker 07

  Yeah, it's definitely impacted, yeah. Cause they were very close to launching that. So it was, it was like close as in they'd made them and all that sort of stuff.

• 1:18:44David Pierce?

  It's also, you've got to figure some lawyer at Microsoft was like, hey, if we have a box that is called the Xbox Cloud, the argument you're about to try to make in court is going to get a lot more complicated. But I do think, I mean, all these things can be true at the same time, right? Like the, the AI thing happened really fast and Microsoft clearly pushed resources at it. The business of cloud gaming has very much not been solved. Publishers do seem to have, if not problems with it, then at least questions about it. And there's this big regulatory fight. So I think it would not be hard for Microsoft to kind of read the room and realize, okay, we're still betting on this big in the long run, but maybe this is a moment for us to like slow the pace down just a smidge. And I don't think that's an unreasonable thing to have done in this moment at all.

• 1:19:27Speaker 07

  No, I think it makes sense, right? Like we, we were talking the other day, David, about some of the other stuff that's, that's been missing over the past year with the cloud stuff. They made like all these commitments to bring in TVs and to bring your cloud library and all that sort of stuff. And that stuff hasn't happened. So there's obviously been some stuff going on behind the scenes. So, but yeah, so that was like the, the cloud section of Nadella's testimony. So I think it's clear he is all about cloud, because he's all about cloud in all of Microsoft's businesses. So he's definitely all about cloud and gaming.

• 1:19:58David Pierce?

  Yeah, I was gonna say, anyone who has paid attention to him speak the last several years can tell you that.

• 1:20:03Speaker 07

  Yeah, exactly. And then we moved on to, I wouldn't say this is a bombshell, but it was just a kind of funny thing he said. Was that he would get rid of exclusives in gaming if he could. But the market leader, which we'll assume is Sony here and not Nintendo. Even though Nintendo's been doing exclusives for quite some time as well. So you could argue between yourselves who that refers to, but I think it's Sony, because I don't think Microsoft's trying to bury Nintendo in this case. They're definitely trying to bury Sony.

• 1:20:31David Pierce?

  No, Microsoft is trying to remind you how terrific Nintendo is. That's Microsoft's whole endgame here.

• 1:20:36Speaker 07

  Yeah. So he said he wanted to end those exclusives, but you know, the market leader doesn't let us do that.

• 1:20:42Speaker 08

  God, poor downtrodden Microsoft. Poor Microsoft.

• 1:20:47Speaker 07

  Yeah. And so that was that. And obviously that didn't get questioned because it was under Microsoft's lawyers questioning him. So he was free to just say stuff like that. And then he committed again to shipping Call of Duty on PlayStation. So similar to, not as strong as Phil Spencer's sort of oath, I'll put my hand up sort of thing. But, you know, it was still significant that the CEO is saying it as well. And we also didn't get any back and forth with the FTC questioning him again to see if, if he would put Diablo on there. All the other questions that we, the FTC fired at Spencer. And then that was, that was kind of most of his testimony, really. So, but like I say, like he got off lightly. He really did.

• 1:21:30Speaker 08

  It was quieter than I expected.

• 1:21:31David Pierce?

  Yeah, I was just gonna ask, were you surprised, Addie, at kind of how lightly both CEOs are treated? Tom mentioned being surprised. Were you?

• 1:21:38Speaker 08

  I was a little bit. And I mean, I'm wondering how much of it is that the people who went earlier are just popping up all over the evidence. They're in all of these email chains that they get asked about. Jim Ryan, there was, you know, there in spirit. These are all of these people who have been saying all of these really contentious things about each other on these first two days. And now like Sachin Adel is not primarily an Xbox guy. He is a guy who goes and sits back and manages the rest of Microsoft. And he's there because he owns Microsoft, but he's just not knee deep in these decisions the way that a bunch of the people from the early days were.

• 1:22:12David Pierce?

  Yeah, it's a good reminder that CEOs mostly don't actually know what's going on inside of their company.

• 1:22:18Speaker 07

  That's very true. Yeah, and I think that's probably why they got off lightly, right? So but but but in other cases, like federal cases, we usually see judges going out at CEOs. So like Meta, I know, it was strange.

• 1:22:31David Pierce?

  Fair enough. Um, all right. Well, the the newsiest and funniest and best and most interesting thing that happened yesterday was was this document that came out from Sony that was supposed to be. Addy, you're the one who figured out what was going on here. So explain what happened. Somehow it just ended up in our Slack and like everyone mobilized to figure out what to do about this terribly redacted document. What happened here?

• 1:22:54Speaker 08

  So Sony at some point filed sworn testimony. It's like, here's our statement of facts pertinent. And at some point, this was brought up in court and the courts agreed there were going to be portions of it that were sealed. These were like financial details largely. And there are various ways that you can redact things. You can just paste black bars over them. They did not do this. As far as we can tell, they went over it with an actual pen, which left just enough of the document, original text, still visible with the like, there was, imagine drawing a Sharpie over a piece of printed text that if you messed with the gamma from the PDF, you could actually find out all of these top secret things.

• 1:23:39Speaker 08

  We don't know who did this. We don't know who.

• 1:23:42Alex Cranz?

  Their penmanship was impeccable, though, right? Like, like, the actual marking out was nearly perfect to the point where we're like, did a computer do this?

• 1:23:50Speaker 08

  See, I want to know, I would love to hear from someone who is a listener who actually knows how this stuff goes down, because I don't know if someone is just really amazing at handling a pen, if there's some kind of semi automated process.

• 1:24:02David Pierce?

  It's like, you do like, take calligraphy for years and then you're like, what am I going to do with this professionally? And then you just, you just get into redacting for a living?

• 1:24:09Speaker 08

  I will say, it is not the worst redaction I've seen. There have been much, much worse redactions, including ones where you can just highlight the text from behind it, because they just put a black bar over something that had already been scanned.

• 1:24:21Alex Cranz?

  So it's not like, it's not that embarrassing, but it's not great.

• 1:24:24Speaker 07

  Yeah, I like to think that they did it all like line by line with ruler and a Sharpie, like old school.

• 1:24:29Alex Cranz?

  Oh, yeah.

• 1:24:29Speaker 07

  Yeah.

• 1:24:30David Pierce?

  I hope so. I mean, it sure looks like it.

• 1:24:32Speaker 07

  Cause some of it is slightly off, but you can tell, you can tell, you can tell where the pen ends on the sides of it, so.

• 1:24:39David Pierce?

  Tom, we, we asked you to make us a list of everything we learned because it was some of the most revelatory stuff from the whole trial. You want to give it to us? Give us the rundown.

• 1:24:48Speaker 07

  Yeah. Well, firstly, there's a bunch of stuff in there that people have been tweeting about that we can't exactly see the figures. So we're not sure. It's like percentages and all sorts of stuff, but the stuff that we're fairly sure on is that Horizon Forbidden West apparently costs $212 million to, to make over five years with 300 employees. The Last of Us Part Two was 220 million and around 200 employees. And then Sony says that 1 million PlayStation gamers play nothing but Call of Duty.

• 1:25:19David Pierce?

  That's that's.

• 1:25:20Speaker 07

  Interesting. So it's just literally Call of Duty console. And then there's suggestions that in the document, there was around about 800 million in PlayStation revenue just in the U S alone during 2021 for Call of Duty.

• 1:25:35David Pierce?

  Just from Call of Duty. Wow.

• 1:25:36Speaker 07

  Yeah. And we think the document says 1.5 billion globally in 2021 alone. And then when you count, so Sony says like, when you count accessories, subscriptions and everything else that comes with that franchise. Then this jumps up to what we think is either 13.9 billion or 15.9 billion a year. But either way.

• 1:25:56Alex Cranz?

  It is too big to fail.

• 1:25:58Speaker 07

  It is.

• 1:25:59Alex Cranz?

  It's so much money. Wow.

• 1:26:01Speaker 07

  It is a lot of money.

• 1:26:02David Pierce?

  There's the, this is why you have to have Call of Duty everywhere thing, like the

• 1:26:07Speaker 07

  Yes.

• 1:26:07David Pierce?

  numbers don't lie on that front.

• 1:26:09Speaker 07

  Yeah, like it, that, that should immediately say to you, it has to be on all platforms like. And Bobby Kotick said like, why, that they asked him yesterday, like, why wouldn't you make it exclusive?

• 1:26:21David Pierce?

  Okay, here's my new theory is that somebody redacted this badly on purpose, hoping that everyone would see it because those numbers tell such a story about why you would not make this game exclusive. I have no evidence for this. There's no chance this is true, but this is now my conspiracy theory.

• 1:26:38Speaker 07

  So what you're saying is an Xbox fanboy in the core or in the FTC or something that's done this?

• 1:26:45David Pierce?

  Absolutely. Yes. Yes. Someone with great calligraphy skills who loves Call of Duty on their Xbox.

• 1:26:52Speaker 07

  I mean, it's not beyond, you never know.

• 1:26:55David Pierce?

  If that's you, email us, [email protected].

• 1:26:58Alex Cranz?

  But that news about The Last of Us and Horizon Forbidden Rest, that was kind of like big news too, because we usually don't know how much these games cost to make. Like, we get rough estimates from the outside.

• 1:27:08Speaker 07

  Yeah. And I think it is roughly always around the sort of 200 million mark, really, for those sort of

• 1:27:15Alex Cranz?

  Expensive.

• 1:27:16Speaker 07

  big games. But it also, it wasn't just Sony that had redaction problems in all of this. So obviously, we got all that information out there, and that was like, oh, cool. And then we realized, oh, hang on a minute. Like, the courts pulled all the documents on this folder that they have, apart from one. And I was like, can't let me ever get this document. It was the Xbox one that revealed that Microsoft was obviously going after Sega, Bungie, and a bunch of other studios. And they had redacted all of that stuff in this new document that had been uploaded. And then as the hours went by, that document disappeared. The link to the documents disappeared from the court website, and it's all just gone very quiet. So I'm hoping today that we hear exactly what's going on there. Because there hasn't been any filings mentioned in it just yet. So, but it's obviously a bit of a mess.

• 1:28:01Speaker 07

  And who knows when we're going to see the exhibits in this case now.

• 1:28:05David Pierce?

  It's just all going to be redacted. They're just going to be like, never mind. You don't get to read anything.

• 1:28:09Speaker 07

  It's a giant Sharpie.

• 1:28:11Alex Cranz?

  Just a picture of a Sharpie.

• 1:28:13David Pierce?

  Yeah. All right. Well, speaking of, y'all need to get to this thing, which starts in just a few minutes. Addy, what are you looking for today? Anything that's still sort of outstanding that you're curious about to see?

• 1:28:23Speaker 08

  At this point, the thing I'm most curious about is just what more questions the judge has, especially because we're going to have closing statements, and the closing statements, I believe she said earlier, that it's not just going to be one way, it's where she gets to kind of do her last grilling of both sides. And so I'm hoping that will at least give us a little bit more of a sense of what we could be looking for in a ruling.

• 1:28:43David Pierce?

  Yeah, that'll be, it's, that was one of the things we really learned from Epic versus Apple, too, was like, the more you pay attention to the questions the judge is asking, the better equipped you're going to be to figure out where this is actually going to go. Tom, what about you?

• 1:28:54Speaker 07

  So it's going to be a lot of financial stuff in the morning, I think, with the CFO of Expos and CFO of Microsoft appearing. So I think we're going to probably get some stuff there. I am curious to see what Nintendo has to say as well, because they're appearing today. And it will mean that we will have five days of constant arguments about the Switch, I'm sure of that. So hopefully Nintendo will sort of answer the question, whether it's a game console or not, the Switch. And then the closing statements, yeah, I think they'll kind of hint at where they're trying to sway the judge, I guess, which they kind of started off at the beginning with the opening statements. And then I'm interested, like you say, to see what, if the judge cuts in at any point again today, and if it's about Call of Duty.

• 1:29:33David Pierce?

  All right. And Alex, you and I are just gonna screw off and go play some co-op Call of Duty, right? That's, that's my day.

• 1:29:39Speaker 08

  Yeah, I mean, it's too big to fail. We gotta play it. I mean, you're Americans, you love shooting things, and you love multiplayer. Love shooting your friends.

• 1:29:46David Pierce?

  Yeah, that's, and there we go. On that note, awesome. Thank you all. That's it. That's the Vergecast. The website was really good this week. We had a thing on the best tech books that is both very good and surprisingly controversial. Like, it's sort of encouraging to know that the internet has strong opinions about books at this moment in time, but they do. And we have a form where you can tell us all the books that you missed, and you'll be, you'll be wrong about that, but that's okay, because we picked all the best books. Go read some of those books. I wrote a thing about Google Reader that just went live on Friday, and it made me sad that Google Reader has been gone for 10 years, but here we are. The Reddit stuff continues to be chaotic. Today's gonna be a crazy day on Reddit, like we were talking about. Lots to talk about next week. We're off next Wednesday, but

• 1:30:27David Pierce?

  we'll be back next Friday. Have an awesome weekend. That's Vergecast. Rock and roll.

• 1:30:37Speaker 10

  And that's a wrap for Vergecast this week. We'd love to hear from you. Shoot us an email at [email protected]. The Vergecast is a production of The Verge and the Vox Media Podcast Network. The show is produced by me, Liam James, and our senior audio director, Andrew Moreno. Our editorial director is Brooke Minter. That's it. We'll see you next week.

• 1:31:08Nilay Patel?

  Hi, I'm Neelai Patel, editor in chief of The Verge, and Decoder is my show about big ideas and other problems. This week is part of our special series on the future of business. I talked with Matthew Prince, co-founder and CEO of CloudFlare, about how AI bots and agents are remaking the business model of the web, and how CloudFlare is trying to build a new economy around websites getting paid every time an AI crawler shows up.

• 1:31:29Speaker 06

  We polled all of that data and looked at it and said that, you know, it would be the second half of 2027, automated traffic will become larger than human traffic. I was stunned when, just a few months later in May, a team came to me and said, "You won't believe it, but automated traffic is now past human traffic online." And that's just expanding like crazy. And if you extrapolate that out, five years from now, we think that automated traffic will be 1,000 times human traffic online.

• 1:31:53Nilay Patel?

  This was a fascinating conversation, not just about the future of the web, but also about how one of the world's most important software companies is deciding which of its employees it can replace with AI. Listen to Decoder wherever you get your podcasts. This series is presented by EY.

• 1:32:10Speaker 11

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