Microsoft beat the FTC, and the Nothing Phone 2 is here

The Verge's Nilay Patel, David Pierce, and Alex Cranz discuss Microsoft winning the case against the FTC for its Activision Blizzard deal. Also: the Nothing Phone 2 and more gadgets. Further reading: Meta-provided Facebook chats led a woman to plead guilty to abortion-related charges Microsoft wins FTC fight to buy Activision Blizzard Read Xbox chief Phil Spencer’s memo to Microsoft employees about the FTC win FTC appeals its loss to Microsoft in Activision Blizzard case Nothing Phone 2 review: the vibes abide Is the Nothing Phone (2)’s camera better than these? Apple iMac rumor suggests a 32-inch version is being considered Sarah Silverman is suing OpenAI and Meta for copyright infringement 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

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

• 0:00Speaker 00

  This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, hosts Lizanne Saunders, Schwab's Chief Investment Strategist, and Colin Martin, Head of Fixed Income Research and Strategy for the Schwab Center for Financial Research, bring you fresh insights on what's happening in the markets and why, and what the implications might be for your portfolio. Join Colin and Lizanne as they explore questions like, how do you evaluate corporate bonds that look interesting? And what sectors are on the move right now? Download the latest episode and subscribe at schwab.com/oninvesting or wherever you get your podcasts.

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• 1:30Nilay Patel?

  Hello and welcome to The Vergecast, the flagship podcast of an algorithmic following feed. You're gonna like it. It doesn't matter what you think. Have you followed the Nugget account yet? Nugget, it's gonna follow you. That's my impression of Instagram threads. That's a whole review. Hi, I'm your friend Neelai. Alex Cranz is here.

• 1:48Alex Cranz?

  I haven't used the feed despite being on threads daily.

• 1:51Nilay Patel?

  David Pierce is here.

• 1:52David Pierce?

  Alone in the studio.

• 1:54Nilay Patel?

  It's weird, this is a real inversion. If you're watching us on video, David's in New York and we're both at home. That's not how this usually goes.

• 2:00David Pierce?

  No, I came to the office today and you said no. It's just you and the Nugget account in the office. You don't get to be around people you like.

• 2:07Nilay Patel?

  Nugget account's killing it. And then, you know, our friend Taylor Lorenz, like, has a deep intuitive understanding of how social platforms work. And she's like, a new social platform is defined by volume. And she's going ham. And God bless her.

• 2:18David Pierce?

  Oh, yeah.

• 2:19Nilay Patel?

  It's like, some people know, and I can't do it. But like, the Nugget account, PopCrave and Taylor, they're like, we're gonna dominate threads.

• 2:26David Pierce?

  Yep. For me, it's memes are.

• 2:28Nilay Patel?

  Oh, memes are.

• 2:28David Pierce?

  I don't know where memes are came from, but like, every other post is memes are. And it is true, it's a, it's a algorithmic land grab. They're like, oh, you don't know who to follow? Here's some posts.

• 2:37Nilay Patel?

  Yeah, just fire shit into the algorithm and maybe it will reward you. Adam Mysterio will be like, turn up the knob on that person. PopCrave. For a while there, I was getting Bible verses. I think Casey was getting Bible verses too. And I was like, this algorithm is not very good. This, no thank you.

• 2:52Alex Cranz?

  It's just the Wendy's account for me on Sunday. Only Wendy's.

• 2:56Nilay Patel?

  All right, we should start with threads. There's a bunch of stuff to talk about. Microsoft FTC resolved. FTC lost. Microsoft may be able to buy Activision. That's a big deal, big, big deal. We should talk about that. There's new Apple beta to talk about. There's a Senate hearing right now about OpenAI and its data practices. The Nothing Phone 2 came out. There's just like a lot. Bob Iger just like randomly said he was gonna sell ESPN today.

• 3:17David Pierce?

  Yeah.

• 3:18Nilay Patel?

  It's all kinds of stuff going on. But let's start with threads, just like a quick vibe check on threads. How are you feeling?

• 3:24David Pierce?

  I'm torn. So I feel like we've, we've been through this thing. What? Threads is now eight days old.

• 3:30Nilay Patel?

  Yeah.

• 3:30David Pierce?

  As we're recording this, has over 100 million users. The growth is insane. Seems to be going very well. Everyone at Meta is very excited and keeps talking about how this has exceeded their wildest imaginations. But I also feel like it's not even a backlash. It's like a pre-backlash. Like, everyone is talking about how mad they're about to be at threads for all the things that it isn't and all the features it doesn't have. And the fact that your whole feed is just the Nugget account. There was definitely, it had that energy for like, four days of just like, pure summer camp joy. It was just like, a bunch of posters found each other again, and it was very exciting. And it feels like that is already kind of starting to turn off. And at least my feed. Feed has gotten very like engagement porn.

• 4:13Nilay Patel?

  Yeah.

• 4:13David Pierce?

  Constantly. It's just like interact with this. Look at this meme. Do you like this meme? Here's the Spider-Man meme. Remember you found the Spider-Man meme funny? Here's some more Spider-Man memes. And I still think it's more fun than Twitter.

• 4:27Nilay Patel?

  Yeah.

• 4:27David Pierce?

  But it is definitely like it's settling into, I think, a slightly less enthusiastic phase. At least is my read so far.

• 4:35Nilay Patel?

  Yeah, my feed is a combo platter of jaded tech journalists being like, all the problems are coming. And then the Nugget account and then Shakira being like, what's your favorite color? And it's like, blue? Will you talk to me Shakira? I hear you're single. Like, you know, it's like, what are we supposed to do with this? And I think that's kind of exactly what they want. Yeah. One thing that's really interesting. Right now, Blue Sky is in the middle of some sort of content moderation scandal. Like, they always will be.

• 5:06Alex Cranz?

  They don't have any. That's the issue.

• 5:08Nilay Patel?

  Yeah, they don't have any trust and safety. Like, they're just always gonna have scandals. Like, they didn't have any filters, so people put the N-word in their usernames. Like, that's just baby stuff, right? Like, baby problems for babies. Instagram has it all. So I've seen all these people talk about like, why are the vibes nice? And like, they've said only the answer is like, because we're behaving ourselves. And the answer is like, no. The answer is a gigantic metadata center is keeping you away from it. And it works and it's good. And the product is content moderation. And so you see stuff that's good and you don't see stuff that's bad. And then occasionally the Nugget account is like, do you remember the 80s? And you're like, yes. And like, people, it's crazy, but like, they're good at it. They're good at that thing in that way. That's my vibe check on it right now.

• 5:51Nilay Patel?

  It's like, people are sort of, they're pre-mad because they think the problems will happen again in exactly the same way that they've always been happening. But Meta has like, lived through most of those problems. So they're gonna have new problems. Don't get me, there's still Meta and we should talk about that a little bit, but it just seems like that first wave of disillusionment of new social platforms is definitely not going to happen to Threads.

• 6:13David Pierce?

  Yeah, I have found myself in the unusual position this week of spending a lot of time running around reminding people that actually Meta is better at running social networks than any other company on the planet, which is like a deranged thing to have to say and feels not true, but it is true. Like Meta is better at this than everybody else. It's so much bigger at it that it gets to deal with all the problems that no one else has.

• 6:34Alex Cranz?

  They're better to an extent, right?

• 6:37David Pierce?

  I think, I think the truth is it's impossible to be good at it.

• 6:39Alex Cranz?

  Yeah.

• 6:40David Pierce?

  But no one else is doing this better at any kind of scale than Meta.

• 6:45Nilay Patel?

  Yeah.

• 6:45Alex Cranz?

  That's right, yeah.

• 6:46David Pierce?

  Which is a deeply sad state of affairs, but seems true. And so I've like, it's weird to be that guy, I'm like, defending Meta's content moderation abilities, but like, I think you're right, Neil.

• 6:55Alex Cranz?

  I found myself defending Meta a lot this weekend. Like, I didn't realize so many people I followed were very like, "We hate Facebook, so we just hate being here at all." And it's like, "Well, you don't, you don't have to be here. You can go somewhere else." They're like, "No, but I want to be here because I need to like, be here."

• 7:10David Pierce?

  Please follow me.

• 7:10Alex Cranz?

  So I'm going to be just very angry here. And I'm like, "That's just like a week." And so it's like, I'm having to be like, "You don't have to be here. You can just turn this off. I don't like, you're just railing at the injustice of Meta existing."

• 7:22Nilay Patel?

  Yeah.

• 7:23Alex Cranz?

  And that's a weird space. But my actual, like, the interactions I'm having there are good. I've just realized, like, "Oh, if someone's being dumb, I don't have to interact with them and I can like mute them or block them."

• 7:36Nilay Patel?

  Yeah, I think that's the other thing. Like, you're a pro. You're like a social media pro.

• 7:39Alex Cranz?

  Yeah, we're a pro now.

• 7:41Nilay Patel?

  No one has to convince you to use the block button. You're just doing it.

• 7:44Alex Cranz?

  I can just not do that. And I can go and like, interact with people who just want to talk about cool stuff and like, that's really, really nice. I'm not having to worry about getting pulled into culture wars. At one point, some guy was like, "Oh, you're saying this, but you're trash," or, you know, whatever random troll thing it was. And I was just like, mute.

• 8:00Nilay Patel?

  Yeah.

• 8:01Alex Cranz?

  Done. Insane. And my life went on and I didn't get really upset for an hour, like, have to call somebody and be like, "Do you believe what this guy said on Threads?" Which was far too common occurrence on Twitter.

• 8:11Nilay Patel?

  Yeah. I just think in general, people are overestimating how much the vibe is good because people are generally cool and underestimating how much it is that Meta is good at content moderation. And to your point, they're not perfect at it. And there's, there's, it's still Facebook, right? Like, they're still biased towards, and Shakir asking you what your favorite color is. Like, it's just, they want engagement and they're good at getting it. And sometimes that means just the weirdest stuff is happening on this platform. And like drivel, like, basically. Do you know the fourth most popular Facebook page last week was like a picture of a potato?

• 8:53Nilay Patel?

  Oh, it's, it was in garbage day by Brian Broderick, who's, who's great. We'll link it. But it's like, it's, he just had a great piece about how like the just the cultural impact of Facebook itself is almost nil. Because being so weighted towards engagement means that you have to acknowledge that the fourth most popular page is a picture of a potato. Right? It's up against Barbie Heimer. You know, like, it's like, which movie are going to see first? Barbie Oppenheimer or look at a picture of a potato? Like, they're not on the same cultural scale. And so Facebook has tons of engagement and, but it just doesn't have the impact. Threads is an opportunity for impact. I think they're taking that seriously. The last two things I'll say about this. One, a lot of people have asked me in particular if I believe them about Activity Pub, because I have said very loudly, the only reason I

• 9:36Nilay Patel?

  feel comfortable using this platform is federation and decentralization. The evidence that they are serious about it continues to grow. Right? I've been sent screenshots of Meta employees very sincerely engaging in like mailing list discussions about the standard. I've seen Meta employees on Threads itself, like soliciting feedback for how Activity Pub should work, like being involved in the technical side of it. I think they have to do it to launch in Europe. I, I actually don't think they have a choice for any number of like regulatory reasons now.

• 10:05Alex Cranz?

  It's like a get out of jail free card. I don't know why they wouldn't do it.

• 10:10Nilay Patel?

  Yeah.

• 10:10Alex Cranz?

  Like, it just ends so many regulatory discussions. It brings up a whole bunch of new ones. But it ends so many of the big ones.

• 10:18Nilay Patel?

  Well, it's, your choice is, it's like a very contradictory regulatory position that they're in in Europe, which is, you have to be interoperable so you can get past the competition concerns. But then you've created a bunch of illegal privacy practices because you're interoperable. And that's like, yep. Oh, I don't know the answer to that. But if anyone can figure out it's Meta. And I think also on top of all of that, they want to. I think they just want to. I think they think it's a neat technical challenge that their company is able to solve. Like, technical, legal, like, all that's, all that machinery, this is the hardest problem for that machinery to solve. So I think they want to, I think they might have to, but I think they're excited about applying themselves to that problem.

• 11:00David Pierce?

  I think the Instagram team is excited about it. Like Adam Mosseri just cannot stop talking about Activity Pub. Like, I believe him when he says how excited he is about integrating. But I think one of the things that I have wondered a lot about is because it's gotten so big so quickly and because Meta clearly now sees this as like a real player and a real revenue opportunity for the company, does this start to look less like a place we can experiment with what sort of might be the future and more like we have to make money to make the Metaverse happen and it's suddenly going to look really profitable short term to keep the doors closed? The part of me that is cynical about this happening says that actually the more successful it gets, the harder it will be both technically and like culturally within Meta to do this.

• 11:45David Pierce?

  But I do think all the people who are actually building this thing seem to be genuinely serious about it. And I believe them, at least at this point.

• 11:53Alex Cranz?

  It's a pretty small team, right? I think that's what Alex Heath said last week on the show.

• 11:57David Pierce?

  Yeah, I think Mosseri has said it's like a couple dozen people. Like, it's not, it's not huge.

• 12:01Nilay Patel?

  Yeah.

• 12:02Alex Cranz?

  Like, this hasn't been a big time sucker, financial suck for the company. And like, the upside's just enormous.

• 12:08David Pierce?

  Yeah, right.

• 12:09Nilay Patel?

  And I think the money importantly is also not, they don't have to invent a business model. They have to get some data and do some ad targeting and deliver some impressions that convert into e-commerce. And they know how to do that. Like, it's just-

• 12:23David Pierce?

  They're just good at this.

• 12:24Nilay Patel?

  Like, the Facebook ad units exist today. If all Meta was saying was run these Facebook ad units and you can now target people on threads, they make the money.

• 12:35Nilay Patel?

  Will they convert? Like, are they good? Who knows? But they don't have to like invent it from whole cloth and go out to the market and say like, here's a new thing to buy. They're just like, can you extend the reach of our existing things that are... This thing is Facebook.

• 12:49David Pierce?

  Yep.

• 12:49Nilay Patel?

  It is the Facebook newsfeed. It's kind of funny that we, you know, we're excited about it. 2011 again. Here it is again.

• 12:57Alex Cranz?

  But key difference, I have not had to watch someone make a horrible, horrible dish in a video yet. Yet. Like, I haven't gotten that, that like taste.

• 13:05David Pierce?

  Give it time.

• 13:05Alex Cranz?

  Am. But it's coming.

• 13:07Nilay Patel?

  My god, the celebrities are there to cook at you at any minute. It's coming. I will say, it is still Meta, this story, you know, good vibes on Meta, Zuck's a hero, he's got a six-pack, whatever. It's still Meta. The flip side of Meta is still Meta, right? All the problems are still there with the other platforms. They do not have end-to-end encryption enabled in Messenger by default. And so just this week, a woman pled guilty for exchanging messages with her daughter that enabled her to get abortion pills in a state in which abortion was legal. The cops were able to go get a warrant to search her texts because Meta has not enabled end-to-end encryption by default. They should do that. They should take the political hit and just do that. And they haven't done it, and this is people have been asking them to for years.

• 13:52Nilay Patel?

  I would make the direct comparison to Apple, right? Which is insistent upon encryption. And yes, there are ways around it, especially if iCloud on all that stuff. But when there was a San Bernardino attack and the FBI said unlock the phone, Apple said, we won't. We have these principles. And so I just, it's great that Zuck is jacked and flexing on Elon. Like, all great, right? They still run some large platforms with some real problems. And that, that story about the woman going to jail, like, that is a horrible story. Like, I'm outraged by that story every time I think about it.

• 14:22Alex Cranz?

  I mean, there's a lot of those horrible stories. We're not going to get into them all today, but like Meta consistently has said profit over people, and they're going to continue to do that. Just right now, it's really fun for the people, so.

• 14:35Nilay Patel?

  Yeah, yeah, take some of those good vibes.

• 14:37Alex Cranz?

  Make money off of me. I'm having a great time.

• 14:38Nilay Patel?

  This is like an old political quote, like, when you have the chips, you gotta cash them. They don't hold. So you got the political chips, cash them on end-to-end encryption. That's all I'm saying. Other thing we should talk about real quick before we go into FTC. It's Apple Public Beta Week. They just hit. We've got a bunch of coverage. Although Apple's, like, all the people have had them forever. People have been breaking the NDA's on these forever. But the official public betas are here. They're fun. They're, they're like, it's a fun set of updates.

• 15:06David Pierce?

  Widgets, man. It's just widgets.

• 15:08Nilay Patel?

  Yeah.

• 15:08David Pierce?

  Life is widgets now. 2011 again.

• 15:11Alex Cranz?

  David, you're very happy.

• 15:12David Pierce?

  I love widgets. I will die and my last breath will be to say, smartphones should not just be things you use to open apps. That'll be, write that on my tombstone.

• 15:23Alex Cranz?

  What an epitaph.

• 15:24David Pierce?

  Monica wrote a really good thing about how the Mac is just turning into the iPhone, which I think is exactly right. Like, you can have desktop widgets on your Mac now. Standby is a thing. The smart display stuff is starting to become interesting. I, I think it's very cool. I have also installed all of these betas and they have just absolutely decimated the battery life on every single one of my devices. My, my phone now runs really hot for about four hours every single day. It's really great. I really recommend the public beta. I talked a bunch about this with, with a bunch of our team on the Wednesday show. What are you guys psyched about? Have you tested anything? Is there anything you're seeing that you think is cool?

• 15:58Alex Cranz?

  I have been terrified to test it because I need my battery life. I already have bad battery life. I can't make it worse. So I have, I've put it off so far, but the standby mode like that. I just got one of the MagSafe chargers, but for my bedside table and I'm like, oh.

• 16:13Nilay Patel?

  Oh, nice.

• 16:13Alex Cranz?

  Oh, I want this. I also got one for my car and you're a liar, Neely. They suck. Just throwing it out.

• 16:18Nilay Patel?

  Which ones you get? Someone hit me up on threads and said, there's a new one.

• 16:22Alex Cranz?

  Okay.

• 16:22Nilay Patel?

  I gotta find the brand, but they're like, you should buy this one. It's, it's the new, it's the newest hottest one.

• 16:26Alex Cranz?

  I put, it's like a Belkin one and I stuck it in my vent and it immediately just tipped down.

• 16:31Nilay Patel?

  It starts drooping. Yeah, it's too heavy for the vents. All that's better than CarPlay. So, you know, whatever.

• 16:36David Pierce?

  Nope.

• 16:36Nilay Patel?

  So I'm an every other year macOS updater. So I've been, I, I just skipped Ventura. Like I just like missed me with it. Like come at me the next year when you figured it out, you know?

• 16:46David Pierce?

  Sure.

• 16:46Nilay Patel?

  So I'm just, I'm just excited about like a fresh coat of paint on macOS. And then I missed out on all the Ventura features. So I'm excited about dumb stuff like continuity camera that I just haven't used for a year. And that's, it just seems like there's a layer of polish on that stuff. Stage manager on the iPad, David, you wrote about it. It's not great, but it's not just a.

• 17:05David Pierce?

  But it's not awful anymore.

• 17:06Alex Cranz?

  David's no longer like furious every time he mentions it. Like previously we would have heard a loud groan as soon as you said stage and we didn't get that.

• 17:14David Pierce?

  It's gotten to the point where like, I no longer think you're a bad person if you use Stage Manager.

• 17:19Nilay Patel?

  Wow. It was, it was a moral flaw.

• 17:21David Pierce?

  Yeah. Like if you used Stage Manager, you and I are just not on the same page. How the world works. But now it's like, they're doing a thing. I don't think they've done it yet. There's a lot of work left to do. And I like, I feel the same way about standby actually, which is that standby is like an amazing idea that basically has no idea the rest of the iPhone exists. So like you, you put your phone up, landscape, and then you tap the thing to open the app and it just opens an app sideways.

• 17:44Nilay Patel?

  Yep.

• 17:44David Pierce?

  And it's like, well, that's not great. This is not how this is supposed to work, but you can see where it's going. And stage manager, I think now you can see where it's going, and that makes me very happy.

• 17:54Nilay Patel?

  Yeah. I wonder if I'm ever gonna use standby mode. It's one of those things where I'm gonna, I'm gonna buy a dock and be excited about it, and it will never happen.

• 18:02Alex Cranz?

  You're gonna use it when you get in your car and CarPlay comes on and you're like, oh, actually CarPlay is good. Then your phone will just go into standby mode.

• 18:10David Pierce?

  No, Neelai, you do wanna know my theory? The thing of all of this that is going to be the best for you is the redesign on the watch, where you just scroll the digital crown, the revolutionary input device on par with the mouse and multi-touch. And it's just widgets.

• 18:24Nilay Patel?

  Yeah.

• 18:24David Pierce?

  Just, just a bunch of widgets. Neelai's gonna be out here just widgeting all day.

• 18:28Nilay Patel?

  I read V's preview of WatchOS 10, where she was like, and now you use the digital crown more. And I was like, oh, we're going backwards. We just got, Kevin Lynch got in that car and he was like, and put it in reverse and was like, speed it off the cliff backwards.

• 18:41David Pierce?

  People, nobody understands the magic of it. He has to make you use it now.

• 18:45Nilay Patel?

  It's like, you will use it. I'm using, I don't wanna prejudge. I, I, I understand why you would head that way, right? These like app clippy widget things, where you get lots of slices of different apps on a screen that's getting ever larger. I, I get it all sort of emotionally, but I'm just kinda like, I don't know, man. I'm not, I'm not out here trying to like fiddle with the watch all day long. Like, give me the modular face with as much text on it as I can get, and I will be happy. But we'll see.

• 19:15Alex Cranz?

  Just a little book on your phone, on your watch.

• 19:17Nilay Patel?

  But the betas are out. Go, if you're, you know, the sort of person who downloads betas, go hit them, like, use them, and then send us a note. I, I'm very curious to see what you all think of them.

• 19:26David Pierce?

  I will say, the one I, I would, most years, I would say at this point in time, everyone, almost everyone should feel comfortable downloading the public betas. This year, especially on iOS, I have had more weirdness than usual. There's this weird keyboard bug in a lot of apps that like, it'll just sort of disappear the text box. And so you'll be kind of typing into nothing. It's gone in some apps, but like, it's still there for me in messages. So it's still like, if you are not a person who wants to spend your day like closing and reopening apps to make things work, I would probably wait one more rev on the public beta before you download it.

• 20:01Nilay Patel?

  Okay, two things. I just thought of two things. I have, I have a, I have a much better answer to my favorite public beta moment.

• 20:07David Pierce?

  Okay.

• 20:08Nilay Patel?

  So we are like long past the point where Apple can even talk about all the features of iOS.

• 20:14David Pierce?

  Yeah.

• 20:14Nilay Patel?

  Like, do you remember when Apple was like, and now you can copy and paste? And that took an hour to announce. Right? And now it's just like, there's too much.

• 20:21David Pierce?

  Long press was like an entire Apple event.

• 20:23Nilay Patel?

  Yeah, they could not. They could not announce all this stuff this year. And one thing they didn't really announce or spend time on is this personal voice assistant thing and accessibility where you can train it on your voice and then it can speak for you. So you do 15 minutes of training and then overnight locally, it processes an AI voice for you. Cool as hell. Straight up cool as hell.

• 20:42David Pierce?

  Have you done yours yet?

• 20:43Nilay Patel?

  I have, no, I don't have the betas yet. I'm not brave enough. Look, this is a production environment, David. All right? We don't mess around.

• 20:51David Pierce?

  So I, I have recorded the requisite 150 sentences. My, my thing is still processing. It takes a long time to do it.

• 20:59Nilay Patel?

  It turns out data centers are faster at this than your phone.

• 21:04David Pierce?

  But I will, I will come on the show next week and I will, I will play for you some of what we have. And then we're working on some other fun stuff for later this month.

• 21:10Nilay Patel?

  So here's my absolute favorite public video moment and shout to our friend Marquez Brownlee, because I understand exactly why this happened. He made it TikTok demoing this feature and it was obviously in drafts and TikTok has a bug where if the video is in drafts and you publish it, it will just play whatever music you picked at full volume and not run your audio. And it was just the Paw Patrol theme song.

• 21:32Nilay Patel?

  And it was just the funniest thing I've ever seen. And I was like, I really hope they leave it up. And they took it down and they put it up and it's a real video now. It's great. Marquez did a great job, but there was just that brief, like 50 minutes where it was just, it was a regular Marquez demo video. He's talking, but instead of any audio, it was just full volume Paw Patrol. Incredible. I was like, this is what, this is what the internet's for. We, don't worry, we saved a clip. If you need it, you know, send us a Bitcoin. Don't do that. It's horrible for the environment. Okay, but if you're using it, virtus. com. I'd love to hear.

• 22:04David Pierce?

  Yeah, let us know.

• 22:05Nilay Patel?

  Okay, we should talk about the big, big news of the week. There's just a lot of interpretation of this. A lot of ways you can think about it, but Tom, Addy, Andrew, we covered the hell out of the FTC versus Microsoft trial. Ups, downs, twists, turns. Decision came out. FTC lost, like in pretty thorough fashion, I would say.

• 22:25David Pierce?

  Yeah, it was. This whole thing went very quickly because Microsoft had this July 18th deadline by which it had to acquire, or it had to finalize the deal to acquire Activision Blizzard or not. So this all happened super fast. And the thing I really want to talk about, and the thing I want you specifically to explain to me, Neil, because you've been sort of talking about this obliquely all week, and I want you to like, put all your thoughts in one place for me, is this entire thing turned out to be about Call of Duty.

• 22:51Nilay Patel?

  Yeah.

• 22:51David Pierce?

  In the judge's ruling, like the second or third sentence was about Call of Duty. It says, "The gist of the FTC's complaint is Call of Duty is so popular, and such an important supply for any video game platform, that the combined firm is probably going to foreclose it from its rivals for its own economic benefit to customers detriment." And then it goes on to basically say, "That's not the case, and so they lose." How is that what this trial was about? Like, if just this became, can everyone have Call of Duty or not? And I don't feel like that was what the FTC actually meant to argue if it was going to try to win this case. What is happening here?

• 23:23Nilay Patel?

  Yeah.

• 23:23David Pierce?

  Explain this to me.

• 23:24Nilay Patel?

  I'm going to respond to this by offering a statement that I can not back up, but which I believe is true.

• 23:30David Pierce?

  Okay.

• 23:31Nilay Patel?

  Sony doesn't think cloud gaming will happen.

• 23:34David Pierce?

  Ooh.

• 23:35Nilay Patel?

  That's what I believe.

• 23:35David Pierce?

  Okay.

• 23:36Nilay Patel?

  I don't know if that's true. I don't know if inside of Sony, there's some, you know, that we've, we've reported on, and Sean Hollister has reported on, you know, the hires that Sony has listed to build a new cloud gaming service, and they've had their fits and starts and whatever. They've got this weird handheld that only runs over Wi-Fi. It doesn't seem like they're working on it very hard, right? They bought Gaikai and killed it. Like, Sony, I think, at a, at a base level, is like, the future of consoles is giant-ass GPUs in your living room, and will send code to you, and you'll run them locally, right? Like, I think that's Sony's bet. If you're Sony, that's a good bet. It has won you every generation of the console war.

• 24:12David Pierce?

  Yeah. Every time Microsoft is like, we have a new idea and Sony is like, we have more powerful games and Sony just keeps winning.

• 24:17Nilay Patel?

  Yeah, it's, it's, it's just the way it goes. You know, Microsoft's point of view, and I've had Phil Spencer on Decoder and he has said this out loud. I think he said a trial. I was like, look, the console market is shrinking. We're losing to mobile. So winning this small, ever smaller slice of pie is not the point. And he has said to me and he said to the court, Call of Duty is not the point of this acquisition. The point of this acquisition in the present is like Candy Crush, the king, which Activision also owns, that makes a ton of money on mobile games. The point of this acquisition is building a library for our cloud gaming future, which, hey, we own Azure. This is a great business for us to be in. We, we've got all these ideas about cloud gaming. One day we'll solve the Apple problem and ship an Xbox cloud gaming app on the phone.

• 25:00Nilay Patel?

  And so you're like, that's why they're doing it. And so if you're the FTC, I think they kind of got baited by both Microsoft and Sony into endlessly talking about Call of Duty. Because what Sony wants is Call of Duty.

• 25:14David Pierce?

  So Sony's version of this is we don't care about any of the rest of this. We just want some kind of assurance that we're going to keep getting Call of Duty.

• 25:22Nilay Patel?

  Right. That's the only game that Activision makes that Sony gives a shit about.

• 25:25David Pierce?

  Right.

• 25:26Nilay Patel?

  Apparently, I, I, they haven't talked about any others.

• 25:29Alex Cranz?

  They don't care about Diablo IV.

• 25:30Nilay Patel?

  They don't care about Diablo IV. They don't care about Starfield. Like all, you know, all this other stuff Microsoft makes. Like, they don't, they have a lot of exclusives.

• 25:36David Pierce?

  Right. And the numbers we've heard are insane and back that up, right? Like the, the numbers that came up about the, the huge percentage of people who game, who only play Call of Duty and the billions of dollars in revenue that this is, means to Sony every single year. Like, you can see why. But yeah, again, to your point, like this actually should not have been a lawsuit about Call of Duty because no one was actually in disagreement about Call of Duty.

• 25:58Nilay Patel?

  If you're saying, we're worried about this and your opponent is like, here you go. Like over and over again. It's like, here you go. You want it on the Switch? What's some no name third rate game streaming service? Crackle. We'll put Call of Duty on Crackle. Anything you want. Call of Duty wherever you want it, right? Microsoft's been saying this around the world. And, you know, the court in its opinion said, this is one of the biggest deals in the world. It deserves scrutiny. It got a lot of scrutiny. This is fine. Guess what? All the scrutiny resulted in Call of Duty. Microsoft was showing up at the table with that deal for everyone.

• 26:28David Pierce?

  Yeah. Can I just read you that chunk of the opinion? Cause I actually think it's super interesting. It says, "Microsoft's acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off. Microsoft is committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch, and it entered several agreements to, for the first time, bring Activision's content to several cloud gaming services." And then it's basically, the implication there is like, "And we're done here."

• 26:55Nilay Patel?

  Yeah.

• 26:56David Pierce?

  And, and I think you're right. Like, that's, everyone at Microsoft was up there yelling that this was what they wanted to do through the entire process.

• 27:03Nilay Patel?

  Yeah. Here's a deal that we would like to give you. And the court's like, "They're gonna give you that deal. That's fine." I just think that there's something in there that's like, everyone wants to pile the FTC for losing this case, and you should. I think they did a bad job. I think they got distracted into this Call of Duty sideshow, right? And it's because Sony wanted this deal. So like, Sony is screaming, like, "Give us Call of Duty." And the FTC is like, "All right, that's our way in. Like, this other big company is mad about it, and like, we'll find some anti-competitive stuff." And then you've got Sony's own executives in emails in evidence being like, "I'm not so worried about this." Whatever. But then you look around the world, right? It's still not done in the UK, and the UK is like focused on cloud gaming. You look at the EU, which focused on cloud gaming and Call of Duty, and got Call of Duty and said, "All right, we'll see if the Americans can do this."

• 27:47Nilay Patel?

  It's not that the FTC shouldn't have done this scrutiny. Every other big regulatory body apply the same level of scrutiny and is getting various kinds of deals. I think what people are looking at is, the FTC lost this case in court, and they've lost some other cases, and you're like, "Maybe this isn't, maybe they're just always gonna lose, and they should never try." And I just, that to me is the mistake, and it's a mistake for two reasons. One, the court itself is saying, "Look at what this scrutiny got you. It got you Call of Duty." If Microsoft wasn't anticipating this scrutiny, they wouldn't have started with, "We'll give you Call of Duty." They would have started with, we're going to make Call of Duty exclusive like they did with their other games. So weird, right? Like, that's just a weird thing to be like, if you take away the threat, they'll still behave. I don't believe that. Then there's the second thing,

• 28:31Nilay Patel?

  which like very, very, very wonky, but the Lena Khan project at the FTC and Lena Khan has been on this show before she was the chairperson at FTC. You can go listen to her. Her project is that the antitrust laws of this country are bad, right? Right? That they were reinterpreted in the eighties by Robert Borg and Ron Reagan, all this stuff, and that we got to a place where we no longer think about competition. We just measure prices. And that has led to all kinds of bad effects. And I think that is true, if it's true for a variety of reasons. And her project is to go get the courts or Congress or someone to reset antitrust law. And there's two ways to do it. One, you create a lot of political capital. You make a lot of angry people so that Congress does something. So Amy Klobuchar

• 29:15Nilay Patel?

  and Elizabeth Warren and Ken Buck, who's a Republican, who's on that committee, can pass this antitrust bill that they've had in their back pocket forever, right? Saying, look, this wasn't the right outcome under the existing law. Here's a new law. Or you take it up to the appeals court and say, the way we've been applying this law for ages is inappropriate because of these effects and this thing. We want you to write a new precedent. And then you take that to the Supreme Court, which I would just point out, this particular Supreme Court is like, new precedent? Here you go. Like, they're just into it. So you, she's just playing a long game. I think she's played the early innings of that long game, kind of stupidly, like candidly, I think she has done a bad job with these things. She certainly has not explained that she is playing a long game.

• 29:56David Pierce?

  And you would think it would help to have some kind of like small wins along the way to prove that like we are stepping in the right direction. And instead it's just like, I'm going to lose aggressively and then I'm going to win. And that that gets harder, I think.

• 30:07Alex Cranz?

  Could she have ever won this case? Because like even the, the deal for the Sony deal, that's only 10 years. Call of Duty has been around for what, more than 20? It's been a huge, huge thing for more than 20 years. So nothing's to stop Microsoft 10 years from now from just saying, okay, that's it. Exclusive.

• 30:24Nilay Patel?

  Yeah, but we'll all be dead then. There'll be like a new generation of dancing teens on a different platform, like whatever.

• 30:30Alex Cranz?

  That even that felt kind of anti-competitive to me and the court saying, no, this is fine. Was there any hope of winning this case if she'd gone after the other stuff if she hadn't gone after Call of Duty?

• 30:43Nilay Patel?

  I don't know. I, I, I think we just won't know. I think the Call of Duty stuff was just such a distraction and somehow we ended up talking about it. And I just will point you, Phil Spencer on Decoder is like, this deal is not about Call of Duty. Who wants it? Well, we're gonna run Call of Duty in an iframe on theverge.com like 10 years. So he'll write that deal with us tomorrow. Fine. As long as you're paying 70 bucks a pop for Call of Duty, it's a great business. They're not going to change it. This thing is about, okay, how do we create a new paradigm for games that ends the console era and creates new market share? And that's how we end up talking about like the Switch and all this other stuff, right? Like, okay, and maybe they should have a big library of exclusives to do it. But you just see how with every other kind of streaming media,

• 31:28Nilay Patel?

  that cycle is bad for consumers. It leads to less choices. It leads to less content and it leads to higher prices. Like, just look at the streaming television industry. Not everything is on every service. All the prices are completely insane and the apps are not good. And you're like, do we, is that how you want this to go? Like, shouldn't we make sure there's like a lot of competition here? A lot of like developers across these services? So they have to compete for our dollars of quality as opposed to competing for dollars with content that comes and goes? That's the thing I'm worried.

• 32:00Alex Cranz?

  My question is, why didn't the judge see that? Because they, they made that case like during the thing. They maybe didn't hammer on it the same as Call of Duty.

• 32:07Nilay Patel?

  David's got the opinion. If you look at the opinion where the judge deals with cloud gaming, she's kind of like, I don't know, this seems weird. We're not gonna do it.

• 32:13Alex Cranz?

  Yeah, like, that's, that's my thing is like, how could she have won if the, the judge doesn't even like, understand cloud gaming, right? Like, if the judge is kind of being a dumbass.

• 32:21Nilay Patel?

  Wait, I, I realize I've been very strident, but I think if we get to a place where like, how can the American legal system not understand cloud gaming? We might have already lost.

• 32:30Alex Cranz?

  This is true. If her strategy is to overturn antitrust law at a higher court, they're gonna have to understand cloud gaming, right? Like, they're gonna have to understand this stuff.

• 32:40David Pierce?

  Yeah.

• 32:41Alex Cranz?

  If we can't get this judge to understand it, how are we gonna get the next judge to understand it?

• 32:45David Pierce?

  But this is where we come back to, I feel like so many of these fights and trials end up coming down to market size definitions. And this was the case again, right? They had this giant fight over is Nintendo a genuine competitor to Sony and Microsoft? And is the cloud an actual threat to the console world? And I think in that case, if Sony is in the ear of the FTC, being the one sort of explaining the other side of this fight, and Sony is out here saying, "Yeah, we're not that worried about cloud gaming, that's fine." Then I can see how you would sort of write it off as like a lark that Microsoft is on. And Microsoft has been on many larks that have not worked out.

• 33:27David Pierce?

  And so I think Microsoft is also sitting there saying, "Cloud gaming is like cool and fine, but we don't really care about it." Like, they spent so much time. They tell investors it's the future, they tell the world it's the future, they talk a ton about it, and then they sit on the stand and say, "Oh, we've pretty much paused all of our cloud gaming stuff. We don't care about it all that much."

• 33:44Alex Cranz?

  Is that like where the screw-up happened for Colin? Like, is that where she's, or her team screwed up? Is they didn't try to explain the actual technology stuff?

• 33:52Nilay Patel?

  No, I think the screw-up happened that Sony basically was like, "We're the competitor and we will be harmed, and the judge will understand us Sony saying this is anti-competitive." And then they fell down the rabbit hole of Call of Duty.

• 34:06Alex Cranz?

  Okay.

• 34:07David Pierce?

  Yeah, I think that's right.

• 34:08Nilay Patel?

  One I'll compare to, and this is really interesting. Antitrust is broken, so this is so wild, just go with me on this. This is what's a vertical merger, right? Where you buy the next company up and down the stack from you. So Microsoft needs games, it buys games, they're not direct competitor. It's a vertical merger. Microsoft bought Sony, that'd be a horizontal merger, right? They're direct competitors. Vertical mergers like never get challenged. There hasn't been one in like 40 years. The last one... The challenge was AT&T Time Warner by the Trump administration.

• 34:34David Pierce?

  The answer to every antitrust trivia question in like the best way.

• 34:38Nilay Patel?

  It's a very good. So this, this opinion like has to cite the most recent precedent. And it just has to continuously cite AT&T and Time Warner as good precedent for allowing vertical mergers. And it's just like, my dude, did that work? Was that a good idea? Is anyone happy about that except for David Zaslove, Zach Snyder?

• 35:02Nilay Patel?

  Like Zach Snyder got to put out like a weird gray square version.

• 35:06David Pierce?

  The eight people who watched that are probably happy.

• 35:08Nilay Patel?

  I watched all three hours. I thought about watching it again the other day and I sat down and I was like, I can't do this. Like I can't be watching a square movie right now. Like if there's, you know, those AI things where it's like, we made the thing wide. It's like, just do that for, for Justice League. Just please, just AI the shit out of it.

• 35:26David Pierce?

  Just expand the frame.

• 35:28Nilay Patel?

  Please, let me use my whole TV. That's it. It's like, super didn't work. It was a disaster idea that caused thousands of people to lose their jobs because the theory of the merger was bad. And yeah, you could say maybe the market will sort out over time. But like the government could have stopped it by saying this will reduce competition, which it definitely did. We definitely ended up with more consolidation on the other end of that in streaming. And we ended up with a less competitive wireless marketplace over time. Like it's just all that happened. Like AT&T did not spend money on its network because they were busy spending money on fucking gray Justice League. Why? But that's the only other vertical merger case that we have. And in that case, the, the court

• 36:12Nilay Patel?

  in AT&T Time Warner is constantly talking about how there's no precedent. Like this is the first one in 40 years. That's weird. We should have more of these.

• 36:18David Pierce?

  Oh, wow.

• 36:19Nilay Patel?

  So like, I would just take a beat. Like, this is a big project to reset how we think about competition in this country. It will, the beginning of it will be more losing than winning. I, it's just inevitable. And maybe we need a new law, but like you get to the new law by a bunch of senators and congresspeople saying, well, the FTC does not have the tools it needs to create competition. We have to give them some new tools.

• 36:43Alex Cranz?

  I guess my concern is, we did have some protections for vertical integration. There was like the Paramount Consent Decree, which was from the 30s, which told like film studios that they couldn't own the theaters. Now they own the theaters again. They're just streaming. And that also in the Trump era got overturned because they were like, no, we don't need this anymore. So it's like, the court seemed to be like, yeah, vertical integration, coolest thing in the world. So how is, how do they go through their courts to stop something like Microsoft acquiring Activision or AT&T acquiring Warner Brothers?

• 37:15Nilay Patel?

  I just want to be clear. At this point, a workable antitrust law in this country would just be to make it illegal for AT&T to buy anything or for anyone to buy Time Warner. If that was just the rule, it might be fine. Like, more people would keep their jobs. And that's a way to measure like, what's a good policy is like, when you have mergers, people get laid off. It ruins lives. Maybe some shareholders will make more money, but along the way, a bunch of like secretaries, like that redundant function, like your back offices merge and you like lay off your accounting department, right? Like, those are destructive actions for like thousands of people. If you just banned AT&T from buying stuff, like

• 37:59Nilay Patel?

  more people would have kept their jobs. Like, that's just a way to measure it. If you could ban anyone from buying Time Warner, like AOL might still exist. Like, it's just one of those things.

• 38:09David Pierce?

  Do you buy the logic that the FTC and even the judge in this case have said, which is basically just that the existence of cases like this and the fact that there is someone paying attention and willing to pick this fight is going to do a lot of the work all by itself?

• 38:24Nilay Patel?

  Yeah.

• 38:25David Pierce?

  Because before, I think we spent a generation with companies just being like, no, everyone at the FTC is asleep at the wheel. This is a non-issue. We'll get anything through we want to. And now, the case for Alina Khan would be at least someone is willing to pick the fight and that's going to make fewer people want to be on the other side of it.

• 38:40Nilay Patel?

  Wait, I have two questions. I have two questions for you. Name one other commissioner of the FTC.

• 38:44David Pierce?

  No.

• 38:45Nilay Patel?

  Okay.

• 38:46David Pierce?

  I know them all. I don't want to.

• 38:49Nilay Patel?

  I don't want to pick favorites. Name the previous chair of the FTC. Right? It's tough.

• 38:57Alex Cranz?

  Ronald Raich.

• 39:00Nilay Patel?

  Herbert.

• 39:03Nilay Patel?

  I don't know. It doesn't like she has a reputation and her reputation is that she thinks big mergers and consolidation are bad. Maybe she'll win, maybe she'll lose, but that is like a drastic change. And I do, I want to be clear, two things. One, I think she did a bad job arguing this case trial. I think that Call of Duty had fake, she just got lost in it. Two, the more I think about it, it's more like, I don't care if Microsoft owns Activision, like.

• 39:31Alex Cranz?

  Oh, I do.

• 39:32Nilay Patel?

  Why?

• 39:33Alex Cranz?

  Because vertical, as we saw with streaming, vertical integration is bad.

• 39:37Nilay Patel?

  But like the, the actual bad outcome of that, when Sony is dominant and Apple is not going to let anyone do cloud gaming anyways, like.

• 39:43Alex Cranz?

  Because Sony is dominant today and they have Call of Duty today. Is there anything in that decision to stop Microsoft from saying, okay, Diablo four no longer works on PS5?

• 39:55Nilay Patel?

  Well, so now there's, there's a lot of Phil Spencer running around saying that would be bad. There's all of this. And then on top of it, Microsoft is in third place. So like if the market's more competitive, is that bad?

• 40:07Alex Cranz?

  I mean, that theoretically, that's it. If at any point micro, like this is all dependent on Microsoft being like, yeah, we're just good guys. We're fine with third place because we're keeping an open, like we're altruism.

• 40:19Nilay Patel?

  No, I don't think they're fine with third place. I'm saying if

• 40:21Alex Cranz?

  They're not.

• 40:21Nilay Patel?

  If they flip out and they make Call of Duty exclusive and then sales between the Xbox and PS5 even out and the market is more competitive. Is that a bad, I don't know the answer to that question.

• 40:35Alex Cranz?

  Is the market more competitive if one of the largest gaming console makers in the world owns the majority of the studios? Cause Activision Blizzard is just one of many studios they've acquired. They've been on a buying spree.

• 40:48Nilay Patel?

  Yeah.

• 40:48Alex Cranz?

  They own most of the big studios, like with the exception of things like EA, they own just about everything, but he after they acquire Activision Blizzard.

• 40:55Nilay Patel?

  But even in that case, Sony's still winning.

• 40:58Alex Cranz?

  For now.

• 40:59Nilay Patel?

  Well, well, but I'm sure, but like, okay. So let's say it evens out and Microsoft goes from third to first.

• 41:04Alex Cranz?

  Mm hmm.

• 41:04Nilay Patel?

  That means the market's more competitive, like.

• 41:06Alex Cranz?

  And then they go from third to first and then they say, okay, it's been 10 years. Call of Duty is now exclusive Diablo five or six or whatever is now exclusive. If you want to play any of these games, you have to play them on an Xbox. And so now Sony has nothing, no leg to stand on because it's been 10 years. They bided their time. And they're having a great time. Like, we saw this happen over and over with streaming. Streaming was like, yeah, we're going to acquire this stuff. We're going to do this vertical integration and then we're going to pull the rug out from under people. And because it's financially expedient for us. And I'm just like, I don't trust companies to do what's best for the people. They do what's best for their bottom line and their bottom line does not always mean what's best for people, right?

• 41:48Nilay Patel?

  Yeah, I don't think we're agreeing. I'm just saying that instinct to do what's best for your bottom line is usually tempered by competition in the market. You only have two choices, like either I can set prices for every product in America. Vote Patel, I'll be a great benevolent king. Or you can have like actual market competition that people can vote with their dollars. And right now you kind of don't, right? And I think that's the thing that I'm getting at is Microsoft is so far behind that if you want a new console, you kind of end up buying a PS5, right? Like

• 42:18Alex Cranz?

  Because they have exclusives. That's why it's doing better is because it's got all the, it's got Naughty Dog. And now Microsoft owns everybody that's not Naughty Dog.

• 42:25Nilay Patel?

  But that's market competition. Like if Sony waits, sits on its ass for 10 years.

• 42:31Alex Cranz?

  Yeah.

• 42:31Nilay Patel?

  And then Call of Duty goes away and they're like, whoops, Microsoft. Like that is their fault. Like Sony is also a multi-billion dollar self-interested company. And that's all I'm getting at is like, the harms here are hard to see and they're definitely more pronounced than cloud gaming. And the FTC kind of blew it. But the bigger project of the FTC is to say like, any antitrust enforcement is good and the laws should change. And I, I think everyone is kind of missing that second turn that they were always walking into a loss. Because the law does not support Lena Khan's theories for how this should work. And again, you can go listen to her on this show before she worked at the FTC talking about her theories.

• 43:11Nilay Patel?

  And it's basically like, this kind of consolidation creates a ton of bad outcomes for consumers that aren't just measured in raw prices.

• 43:20David Pierce?

  So in that case, it's, and we really should take a break here. But in that case, it sounds like what you're saying is it's not so much the loss that's the problem. It's the fact that the FTC allowed itself to fall down this distraction of Call of Duty being the problem. That is actually the thing that's going to pull it away from getting to where it was trying to go.

• 43:36Nilay Patel?

  Yeah, I think that's right.

• 43:37David Pierce?

  But at least we get Call of Duty, Call of Duty on the Switch.

• 43:39Nilay Patel?

  Yeah.

• 43:40David Pierce?

  Hooray. Animated, it's like Call of Duty, but you're Yoshi. It sounds awesome.

• 43:45Nilay Patel?

  I think a real problem for me is that I do not play Call of Duty. So it's like, whatever, you can have it. Phil, if you're listening, I want to run it on the homepage, okay? We'll, we'll, we'll sign the deal. 10 years of Call of Duty at theverge.com. Love it. All right, we should take a break.

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• 45:20Nilay Patel?

  Okay, we're back. David is just waving his computer around in the studio. What is happening there, man?

• 45:26David Pierce?

  A thing that happened about 20 minutes ago on this podcast is I spilled one whole pomplamoose la croix just all over my computer.

• 45:34Nilay Patel?

  Turn it upside down.

• 45:36David Pierce?

  I did for a while. It was, the, the key is to just make a tent and put it on the floor.

• 45:42Nilay Patel?

  Yeah.

• 45:42David Pierce?

  And then that makes everything better.

• 45:45David Pierce?

  It, luckily Liam, our producer, brought me what I would say is several rolls of paper towels that I have now used.

• 45:50Nilay Patel?

  Put in some rice. Liam, get a bag of rice.

• 45:53David Pierce?

  Really big bag of rice. The most astounding part is it seems fine. I think the software updated at one point. But now I'm just, I'm, I'm back. If it suddenly like lights on fire while we're sitting here, that's why, and I will probably have to leave briefly, but I'm, I'm somehow.

• 46:10Nilay Patel?

  It's gonna make for great TV.

• 46:13David Pierce?

  Listen, did I almost burn down the building when I tried to poke a battery for a video at the Wall Street Journal? Yes, I did. And this can be, this can be round two.

• 46:22Alex Cranz?

  Gonna make a GIF of it.

• 46:23Nilay Patel?

  Prans, I have a stat for you.

• 46:24Alex Cranz?

  Okay, hit me with it.

• 46:26Nilay Patel?

  The average Blockbuster store had between eight and 10,000 videos in it. Some of them had 7,000 videos. Netflix, 3,600 movies. So like, in moving to the streaming area, the amount of choice on the, on the platforms has dwindled.

• 46:43Alex Cranz?

  Shrink.

• 46:43Nilay Patel?

  Yep.

• 46:44David Pierce?

  Which is the opposite of what people think. I bet if you gave those two numbers to a person and was like, which is which, I bet almost everyone would say Netflix is the bigger number.

• 46:52Nilay Patel?

  Yep.

• 46:52Alex Cranz?

  But then you ask them to go find a movie they remember from their childhood on Netflix. And they'll be like, oh, this is garbage.

• 46:58Nilay Patel?

  Yeah, I'm just saying, pump up the volume. Not available on any streaming service. It's made to happen. It was definitely in Blockbuster.

• 47:04David Pierce?

  You had that ready to, you did not just look that up. I want everyone to know, Neelai did not just Google to confirm that. That is a fact he knew before this podcast began.

• 47:13Alex Cranz?

  I think he just knows it at all times. Like if, if, if it does appear.

• 47:18Nilay Patel?

  All right, that's my stat for you. But to Alex's point, like you move to the streaming world and your choice gets lessened. Like, it's, it's a real stat about Blockbuster, which I think is fascinating. All right, let's talk about a gadget. There's a bunch of gadgets to talk about. There's, there's a new foldable from Honor. There's some iMac rumors. I think we should start with the Nothing Phone 2. Is it in parentheses? In my head, it's in parentheses because whenever I get a new iPhone, it's always like iPhone 4. And that's how it shows up on all the Bluetooths, you know? And this is the Nothing Phone 2.

• 47:47David Pierce?

  It is in parentheses. Our, our style guide says that it is not in parentheses, and I love our style guide for that. But if you ask nothing, it is in parentheses.

• 47:57Nilay Patel?

  This thing is like a vibes phone. It's like the first true vibes phone.

• 48:01David Pierce?

  Yeah, I think that's exactly right. It's like, I don't know, the, the Nothing Phone 1 was like, cool because it was new, right? And I like, I root for every company. That wants to make phones because we need more good phones in the world that are not made by Apple or Samsung. And like we've been talking about, competition is a good thing. And if someone could figure out how to sell phones that isn't Samsung or Apple, that would be terrific. But it was like it was a new phone, right? Like it had some weird performance stuff. The camera wasn't amazing. The battery life was kind of like, it felt like a first phone. And this one, Alison Johnson reviewed it for us and basically came out of it saying like, look, it's a very good phone. It has a bunch of big ideas that either work for your brain or they don't.

• 48:43David Pierce?

  It's big on like, we want to give you tools to help you use your phone a little bit less. And one of those tools is making all the icons look the same, which is weird. It's like, what if it was harder to find the Instagram app?

• 48:52Alex Cranz?

  No, that's a good thing.

• 48:54David Pierce?

  So that's the thing, right? Like how you respond to that idea.

• 48:57Alex Cranz?

  It's good. It's aesthetically pleasing.

• 49:00David Pierce?

  Oh, it's beautiful. The home screen of the nothing phone is one of the best looking home screens I've ever seen.

• 49:03Alex Cranz?

  Gorgeous.

• 49:04David Pierce?

  It has the glyph thing on the back. So if you put it down on the table face down, it has these lights that show up that will do some new stuff. It has the little charging indicator. So like the light at the bottom will fill up as it charges. It has a new countdown thing that if you have a timer on, it'll actually sort of decrease the light as the timer counts down. There are these nifty things like, do any of these add up to like a transformational idea about smartphones? Like, no. But there's some cool ideas here. And I think that's what you mean, Neelai, by calling this a vibes phone, right? Like it's if the things about it make you feel something, awesome, you're going to love this phone and be super happy. Because it does all the phone things pretty well, unlike the phone one. But it's still like, is this the future of smartphones? Like, there's really nothing here that screams, yes.

• 49:47Nilay Patel?

  We've just come to a place with smartphones where that question is kind of like saying like, is this the future of shoes? It's like, it's just like doesn't, what are you talking about? Like, and it because of the platform split, you're kind of always like, will the nothing phone to capture share from the iPhone? And it's like, that doesn't matter. Like, if you're in the Android ecosystem, you now get to pick from like a bunch of different vibes. Right? You can pick a Galaxy Fold and like run Subway servers next to TikTok, next to Discord and like just fully live in that zone, which is crazy. Or you can like get this phone, which is like very chill and has lights on the back.

• 50:28Nilay Patel?

  I think it's just like a neat place for phones to be in, at least on the Android side of the equation, where you can almost buy a mood or buy a style. And yeah, it's only because this one has a reasonably good camera and like it does phone things well. Whereas I think on the iPhone side of house, it's kind of like, boy, that camera bump got even bigger. You know, it's like, and that's fine, it's fine. But it's just, at least on the Android side of the equation, you can now kind of pick a style, which is interesting. And it hasn't always been the case.

• 50:57David Pierce?

  Yeah, so I just like a few hours ago, sat in this studio wearing this shirt and talked to Carl Pei, the CEO of Nothing. That's going to be on next Wednesday's show. But one of the things he kept saying that I thought was really interesting is, is kind of to your point, Eli, that like, we're sort of at a point now where like, if you just want a phone, this is especially true in the US, if you want a phone and you have no follow-up questions, the answer is an iPhone, right? It's like, it is, it is sort of, it is the phonest of phones at this point. And Samsung is like, kind of there on the Android side, but it has some weird, bad ideas and some wacky ideas and some good ideas. But Android is the place where there should be lots of different ideas about what a smartphone can like be and do and how it can work.

• 51:42David Pierce?

  And we're finally, it seems like, sort of turning into that era. And you mentioned like the Honor phone, that the foldable thing is starting to happen and the tech is getting better really fast. The flip phones are starting to be competitive. It's like, there are finally a bunch of different kinds of phones you can buy in the Android ecosystem. My issue with the Nothing phone too, is it doesn't push on any of those ideas far enough to really feel big.

• 52:06Alex Cranz?

  Can anyone push on those ideas? Like, one of the reasons Samsung and Apple have become such, so big is because they were the ones that had the resource to do things like make the camera not garbage.

• 52:17David Pierce?

  Right.

• 52:18Alex Cranz?

  And everybody, nobody else had the, like, you need a lot of really good engineers to do that and nobody else could afford that. So like, it seems like most of the big kind of ways to make the phones interesting. Are expensive and nothing is like, okay, well, we're just going to go for the interesting cosmetic stuff because that's a ring light on the back of your phone. It probably costs them five bucks to stick it in there.

• 52:39David Pierce?

  Right. It's like a thing they can do instead of pouring $10 billion into camera R and D.

• 52:43Nilay Patel?

  Yeah. Right. But like all things, even camera R and D got commoditized, right? You can Right. Like this phone, I think is an example of it per Alison's review. Like it's, it's fine.

• 52:54David Pierce?

  Yeah.

• 52:55Nilay Patel?

  In a way that I think when we were sort of on the cusp of computational photography, like you needed the money and now you're like, or I can just buy it off the shelf because it's a commodity.

• 53:05David Pierce?

  Yeah. I mean, yeah. And that's even true. Like the, the nothing fun has the Snapdragon eight plus gen one, which is technically a last year chip, but it's a very good chip. It does all the things you would need a smartphone chip to do. It's pretty efficient. It's pretty fast. Like that stuff just is widely available now to your point, which is, which is really cool. But the weird central tension of all of that is that all this stuff is so commoditized, but there are so many people in the market that it can still be hard to get in because even though everyone is out here building better cameras than ever that you can buy, there's so much more competition to buy those cameras that small companies have a hard time getting to these new supposedly commoditized things because like Foxconn is just tapped

• 53:50David Pierce?

  making all the phones for all the other companies making phones. And so it's just, it's a weird thing where it's like the, the stuff is all there. It's more accessible to more people than ever. And yet it's still kind of on the other side of the wall unless you're a really big company.

• 54:03Nilay Patel?

  Yeah. Which is, I think how you end up with, we're still, we're still here talking about Apple, Samsung and nothing. Like, you know what I mean? And like nothing is connected to much, like they have the ability to capture some of the resources in big companies just because of the way, because of Carl Pay, basically. It's so cool. I mean, like it has LED lights in the back. I want it.

• 54:21David Pierce?

  The aesthetic, like honestly, the home screen is so, so, so good looking. They're doing this monochrome thing with the like old timey pixelated text. It just, it just looks so good and it makes me so happy. And it's like the first Android phone where they're like, what if we actually gave like one whole shit about what it looked like when you turned it on? I don't feel like there's any other Android manufacturer out there doing that. And it makes me happy that nothing is doing that.

• 54:45Nilay Patel?

  Yeah.

• 54:46Alex Cranz?

  You know what it kind of looks like? It kind of looks like the, the Books Palma that was also announced this week. The six inch Android e- Inc. phone.

• 54:54Nilay Patel?

  I knew it was coming. It's not even on the list and I knew it was coming.

• 54:58Alex Cranz?

  Yeah, I, I, I was sneaking it in. I was, I was waiting for the right moment and, and the Nothing phone gave it to me. But yeah, this thing is, I think this thing is gorgeous for the same reason that I want the other one is like something about that just monochrome sleek design. I'm like, yeah, all right. I don't need colors. I got a TV for colors. That's fine. Threads doesn't have colors. It's great.

• 55:19David Pierce?

  I got a TV for colors is a, is a stance I would really like you to keep on this show for a very long time.

• 55:25Alex Cranz?

  I'm gonna see how long I can make that one last.

• 55:27David Pierce?

  All the colors I need in life are satisfied by my television is, is a, is an Alex Cranz belief that I feel like you should carry on for a long time.

• 55:34Alex Cranz?

  It's true.

• 55:35Nilay Patel?

  My gadget that I was inevitably gonna sneak in this conversation is that Telly has started shipping the free TV.

• 55:40David Pierce?

  Yes. It's real. Did you guys think it was real?

• 55:43Nilay Patel?

  I knew, I mean, it's like not a hard product to ship. It's a TV and they ship it to you for free.

• 55:50Alex Cranz?

  I mean.

• 55:51Nilay Patel?

  They didn't even have to turn on Stripe. They were just like, here you go.

• 55:55Alex Cranz?

  How much are they spending on the TVs? Like, or on the shipping of the TVs? Cause anytime I had to review a TV, that was always an affair.

• 56:03David Pierce?

  Oh, yeah.

• 56:04Alex Cranz?

  An expensive one for whatever the company shipping it to be one.

• 56:07Nilay Patel?

  They had to capitulate. Did you read this? They had to capitulate because it, you know, it doesn't have any streaming software built into it. It just has intrusive advertising software. So they're just like, screw it. Here's a Google TV dongle in the box. It, I mean, everything about this is great. I cannot wait for people to get it.

• 56:23Alex Cranz?

  I hope it's just rattling around in there. Like it's not even its own package, it's like taped on the side.

• 56:28Nilay Patel?

  It's sad to me that the internet's like tearing itself apart right now. Like I'm very happy about it for some reasons. But like that Reddit is in turmoil and like knowing that Twitter and Twitter's like, there's a version of the internet. Where immediately disassembling this thing and figuring out what worked would have been all we all did together for a minute. You know, and like, I, I just can't wait for people to get this thing.

• 56:48Alex Cranz?

  If you get one, please email us. We want to know.

• 56:51Nilay Patel?

  Oh, yeah. If you have a telly, I am not allowing one in my home, but if you get one, you know. Let me know, let me know on, on the side securely from an honest account about how.

• 57:03David Pierce?

  Yeah. Call the hotline and tell us about your telly and we, we can change your voice and play it on the podcast if that's what you want. I am desperate to know more about this thing. I think, I continue to think it's actually an extremely good idea. I think it's going to work. I think it's going to be very successful. I also think it is hilarious nonsense in the best possible way.

• 57:23Alex Cranz?

  Do we know what panels they're using?

• 57:25Nilay Patel?

  I don't know.

• 57:25Alex Cranz?

  Like where they're sourcing them?

• 57:26David Pierce?

  It's a free television, Alex. It has all the colors I need.

• 57:29Alex Cranz?

  I need to, I need to know what's their haloing.

• 57:32Nilay Patel?

  Uh, yeah. I mean, the whole thing is very, very good. Other gadgets, there's a rumor that Apple's going to do a 32 inch iMac.

• 57:39Alex Cranz?

  Yes.

• 57:39Nilay Patel?

  I'll buy this thing in a heartbeat. I am so close to always buying a Mac mini. Like every time there's one on sale and there's one on sale lately all the time, especially the M1, which is all that I need. Because all I would, I run one app to podcast.

• 57:51David Pierce?

  I have one and it's wonderful.

• 57:52Nilay Patel?

  I'm always so close to buying one, but then like, then I gotta buy a display and then. You know, you end up in that display thing where I buy a cheap one, but then I'm, I'm me and I can't buy a cheap one. And like crap, I'm not going to buy a studio. It's like.

• 58:03Alex Cranz?

  You spend so much money. It's great.

• 58:05Nilay Patel?

  Yeah, just.

• 58:06Alex Cranz?

  Monitors. That's the other place I get my color.

• 58:11Nilay Patel?

  You're like, I'm very, this is, you should start like a wellness trend.

• 58:16Alex Cranz?

  Just have color on your TVs and your mom, anything bigger than 27 inches.

• 58:20Nilay Patel?

  Can have color.

• 58:20Alex Cranz?

  You can have color on it. Anything smaller? No.

• 58:22Nilay Patel?

  You should.

• 58:23Alex Cranz?

  Black and white iPad.

• 58:24Nilay Patel?

  Like a chroma diet. Like that's like the TikTok trend, a chroma fest.

• 58:29David Pierce?

  Gwyneth Paltrow just trademarked that while you were talking.

• 58:32Alex Cranz?

  No, Goop, don't steal our idea.

• 58:36Nilay Patel?

  Goop, don't steal. I'm watching you, Gwyneth.

• 58:40David Pierce?

  The 32-inch iMac, I think, is super exciting. I think it's, if we get a 32-inch iMac before we get a 27-inch iMac, I'm going to be furious because the 27-inch iMac is a perfect product, and the fact that it doesn't exist is so stupid and bad. And a 24-inch iMac is a dumb idea, but a 27-inch iMac is an amazing idea. But I also think, there was this rumor, I don't know if we've heard about it since, like, January, but there was this rumor at the beginning of the year that Apple is starting to think about smart display stuff. And like, you look at standby and the lock screen widgets, and there's like, this thing's starting to happen where Apple is like, what can your screens be when you're not using them? And I think the idea of like, Apple basically doing that with my computer monitor is very exciting

• 59:25David Pierce?

  to me. Like, make that the hub of all of my stuff, because it's a big screen that just sits on my desk and I'm near it all the time. Like, I love that. I assume this thing will cost $67,000, and I will not buy it.

• 59:38Alex Cranz?

  What if it's the iMac Pro? Remember, like, if we get to see that again, that's the 32-inch. You want a big screen? It can't be cheap.

• 59:47Nilay Patel?

  That's very, see, this is the problem. It's like, I want to buy just an M1 Mac and like, a beautiful display that's not expensive, or isn't a panel from 1985, which is the current studio display.

• 59:58David Pierce?

  Can I interest you in the Spectre 4K monitor that I bought that just randomly turns off three times a day for no reason?

• 1:00:03Nilay Patel?

  See, I can't live that life, man. I'm too old now.

• 1:00:06Alex Cranz?

  I refuse.

• 1:00:07Nilay Patel?

  I got gray hair in the beard. I only the finest of displays. When I break my Chromafast.

• 1:00:16David Pierce?

  I only Chroma between noon and 8:00.

• 1:00:20Nilay Patel?

  I do a 16:8 Chromafast.

• 1:00:21Alex Cranz?

  HDR is a treat.

• 1:00:23Nilay Patel?

  All right, all this color has exhausted me. I gotta take a Chromafast. We're back. By the way, did you know, when I was in high school, I stage managed over 70 productions of Joseph and the Mason Technicolor Dreamcoat?

• 1:00:36Nilay Patel?

  100% true. We'll be right back, everybody.

• 1:00:43Speaker 00

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• 1:01:19Nilay 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.

• 1:01:41Speaker 06

  We pulled 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.

• 1:02:05Nilay 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.

• 1:02:18Speaker 07

  This series is presented by EY.

• 1:02:24Nilay Patel?

  All right, we're back. I have so many questions, Neelai.

• 1:02:26Alex Cranz?

  Yeah, we've got something to talk, no lightning round.

• 1:02:29Nilay Patel?

  We're just gonna talk about Joseph. All right, I'm just gonna tell this once. There's so many stories embedded in this. So I was like a theater tech nerd kid. This should be very obvious to everyone. Super off-brand for Neelai. Yeah. And so it's like, summer in Wisconsin in the 90s. My theater nerd friends and I'll just like descend on the Racine Theater Guild, which is mounting a production of Joseph Mason's technology. This is true, happening. I don't know. I don't know how to describe all the things that happened there. But rest assured, there's a scene in this Andrew whatever musical where Joseph and his brothers have to destroy a goat. Are you aware of this? This is a real thing that happens in the show. And they're seeing theater guild is theater in the round. So there's voms down the side of the stage.

• 1:03:14Nilay Patel?

  So to get the goat on the stage, you couldn't build the normal things that you would build. So I took a remote controlled truck and disassembled it and built a goat on top of it. And we had a remote controlled goat that this is like one of my like highlight of my youth.

• 1:03:28David Pierce?

  That's legitimately like peak Neelai.

• 1:03:30Alex Cranz?

  Would it like drive in?

• 1:03:32Nilay Patel?

  Yeah, it would like, we'd like speed up the, the side of the stage. And then they would like rip its legs off and like, you know, he would sing about how sad he was or whatever. And then we would drive the disembodied goat down. I think one time in the many, many shows, because we're like teenagers, we were like, go out and party after every single one of these things. I forgot to plug the, you know, the old school RC battery back in its charger. So the thing didn't come back down off the stage. It just went, oh. And, uh, yeah, that thing just got kicked, just straight up dance kicked off the stage.

• 1:04:07David Pierce?

  This really feels like the, the, the adult version of Neelai needs to disassemble his Ford Raptor and turn it into a robot goat.

• 1:04:16Alex Cranz?

  That's your weekend plan.

• 1:04:18Nilay Patel?

  I hadn't thought about that until Kruppa Fest. I'm gonna cry.

• 1:04:23Nilay Patel?

  All right. It's lightning.

• 1:04:26Alex Cranz?

  Yeah.

• 1:04:27Nilay Patel?

  Prans, you should start because as we've been talking, there has been massive news in the world of entertainment.

• 1:04:32Alex Cranz?

  Yes. As we were talking, SAG declared that starting Friday at midnight, they're on strike. So they are officially, if you're listening to this, SAG is on strike. They're picketing. This is the first time both SAG and the Writers Guild, the WGA, were both on strike since 1960.

• 1:04:50Nilay Patel?

  Yeah.

• 1:04:50Alex Cranz?

  So it's, it's been a while. Like WGA goes on strike at the drop of a hat. Love him for it. But SAG usually doesn't.

• 1:04:58Nilay Patel?

  Uh, we should note a series of escalating disclosures here.

• 1:05:01Alex Cranz?

  I know. I wanted to see how far I could get before you interrupted.

• 1:05:04Nilay Patel?

  Well, I think once you get to WGA strikes the drop of hat, I think we have to disclose our newsroom. Wonderful people united with WGA.

• 1:05:12Nilay Patel?

  Uh, they're great. We love them.

• 1:05:14Alex Cranz?

  I'm a member.

• 1:05:15Nilay Patel?

  Yeah, Cranz's in it. Great. Uh, we're fine, but we should disclose that. We make television shows with Netflix and HBO. I'm the executive producer of a Netflix show. And then Comcast, which runs NBC, is an investor in the company. All of them are on the one side of the table or the other.

• 1:05:30Alex Cranz?

  None of them are making anything as you're listening because all the actors and the writers are on strike.

• 1:05:36David Pierce?

  Well, and this is also happening as there was this big deadline story in which a bunch of unnamed studio executives basically said, not even basically, said in as many words, "We are just going to wait out the writers until they lose their homes and then they're gonna have to come back to the table and we're gonna win."

• 1:05:53Alex Cranz?

  Is incredibly stupid.

• 1:05:56David Pierce?

  And there was apparently some backroom, this is not like a dumb thing an executive said off the top of their head. There was some like backroom strategizing among studio executives, apparently, who decided to say all this stuff to a reporter who was going to put it into a story as if it was like a negotiating move. And instead, I think it is, uh, to the extent that you can move things even more against a bunch of billionaires who are mad at writers for wanting to have homes, it has shifted it even further against the billionaires who don't want writers to have homes. It's really something.

• 1:06:33Alex Cranz?

  Yeah, it backfired terrifically. There are rumors that there's like recording of the video call of all the producers arguing about the deadline story after it went up, which if you have that, hit me up. I would love to see it.

• 1:06:47David Pierce?

  Cranz's posted the phrase, and I quote, "This is my PP tape. I must see it."

• 1:06:53Nilay Patel?

  Lots of our chest, everyone.

• 1:06:55Alex Cranz?

  And we're done.

• 1:06:56Nilay Patel?

  I think that's the fastest segue from Andrew Lloyd Webber to PP tape in media history. That's a PhD thesis for you.

• 1:07:03David Pierce?

  Breaking records here.

• 1:07:07Nilay Patel?

  Call Dr. Guinness.

• 1:07:10Nilay Patel?

  I don't know if there's a Dr. Guinness. I don't know how any of that works.

• 1:07:12Alex Cranz?

  But yeah, this, this thing is, is popping off. Uh, and it didn't help that Bob Iger today said that the, the writers were hurting the industry. I think that probably only added fuel to the fire. Fran Drescher spoke. She's the president of SAG, the nanny.

• 1:07:29Nilay Patel?

  Yeah, yeah.

• 1:07:30Alex Cranz?

  That's her. She is the president of SAG. She had a very fiery speech saying that basically they're, they're ruining lives. They're getting rid of residuals. Um, that's, that's the big thing here. That's like the big fight with both the WGA and SAG is they want residuals. If they make product, they want to make money from that years down the line, because that's how most of them support themselves, especially like people who maybe have big careers in their thirties and then nothing in their forties, because people start hiring them for a wide variety of reasons, usually due to ageism. So they really want these residuals and the companies are like, well, no, because we're doing streaming now. We don't make enough money to pay you residuals, but I, Bob Iger, make 27 million dollars a year.

• 1:08:12Alex Cranz?

  And I think you guys need to get back to work. Just a terrifically tone deaf move on his part. That was a real bummer.

• 1:08:19Nilay Patel?

  So I encourage everyone to go watch this. Iger, Iger was on CNBC. It's the Sun Valley. It's an incredible setting to be like, this strike is disturbing and it should stop, right? He's at Sun Valley.

• 1:08:29David Pierce?

  Because this is where all the billionaires go to make mogul deals where they buy each other's companies.

• 1:08:34Nilay Patel?

  Right. Like the next turn, he's gonna be like, and we're consolidating all the studios even like, who knows, right? But the occasion of it is that he just signed a new two-year contract. Like he's never leaving Disney.

• 1:08:45David Pierce?

  No.

• 1:08:45Nilay Patel?

  They're like, the last thing that they're gonna do at Bob Iger is instead of the animatronic Spider-Man, they're just gonna yeet him into the sun at that exhibit. And that's how he's gonna go out, right? Like it's, he's, he's just in the company. And he said two things originally. One, he said, the strike is disturbing, like the actors and the writers are not paying attention to the economic reality of this industry, which is fascinating. And you can feel any way you want about that. Like on some level, there isn't a grain of truth in there, which is these companies do not make as much money selling Seinfeld 60 billion times over and over again in different territories in the world. Like that's, the economics of that aren't happening. Should they still make it more equitable? They should. And like somewhere in there is probably the right icon, but nobody knows what it is.

• 1:09:30Nilay Patel?

  And then he said, oh, I might sell ESPN and ABC. Like linear television is like on its way out for us and we might have to do something else. And that is like, that's the end of Disney as we know it. ESPN funded everything, like the cable fees for ESPN funded the acquisition of Marvel and Lucasfilm and all this stuff. And that engine is gone, is basically what he's saying. And I think that is utterly fascinating.

• 1:09:55David Pierce?

  Well, and not only that ESPN like was the shining star of the cable business for decades. Like a big part of the reason that the cable business has started to go away comes back to what people say about ESPN, which is I don't want to pay these massive carriage fees for sports because I don't watch sports and my cable bill includes $7 a month for ESPN because ESPN has to pay billions of dollars to the NBA in order to get games. So they're charging the cable providers who are charging me and I don't watch sports. And so like, that is the single cleanest example of why unbundling is useful. And it has just, it's destroying ESPN as it happens. Like ESPN spent so much money because it could pass those fees on to so many people.

• 1:10:39David Pierce?

  And it is now, I think, very much an open question of, does that business continue to exist? If you have to just charge directly the people who watch the sports?

• 1:10:48Alex Cranz?

  Where are the sports? Like, are they still on ESPN?

• 1:10:52Nilay Patel?

  Yeah, they're on Reddit.

• 1:10:56Nilay Patel?

  Like, it's ju- it's so true for so many people that it's so complicated to watch sports that pirating the streams on Reddit is easier.

• 1:11:05David Pierce?

  Oh, yeah. And sports is a disaster and this will take a long time to play out because they sell these rights like a decade at a time. And so it's going to get real weird. But also the thing that happened is companies like Disney signed decade-long deals thinking that cable was going to very slowly and carefully decline and streaming was going to grow and the money was going to offset and everybody was going to get rich. And now what it looks like is all the numbers are down big, really fast. And so Iger saying like, we need a strategic partner for ESPN was so like, Disney, other than money, Disney doesn't need anything in terms of like how to do content. And so the fact that even Disney can't figure this out is fascinating. You also just stole my lightning round thing, which is the ESPN thing. So that's fine. So I, I'm, I'm done.

• 1:11:48Nilay Patel?

  That's you. I've got another one. I got that Google thing in you for your lightning round.

• 1:11:52David Pierce?

  No, I don't even want to. I'm just mad about ESPN now.

• 1:11:56Nilay Patel?

  David, there's a big future of sports media piece to be written because it is just a total chaos zone right now.

• 1:12:02David Pierce?

  Yeah.

• 1:12:03Nilay Patel?

  And even stuff like Twitter and Instagram threads, like that's where the center of gravity in sports has been for a while, right? It's like, I, here, here's a story I want. I'm desperate for this. Do you know when, if you're a sports fan, you see this happen like every season? Like, high school students get recruited by a college and they say they're going to commit to some college, right? This like happens in every sport. And they all put up like Instagram templates where they've written a bunch of copy and they have a bunch of photos. I just want to know who designs the templates. Who's doing it? Who's opening Canva? And listening to some 17 year old talk about how Jesus is in their heart and they were always meant to play for ASU? Like, who is it? Let me know. Like, I just want to talk to you.

• 1:12:46David Pierce?

  I have all the jerseys done.

• 1:12:48Nilay Patel?

  It's, it's amazing, right? And it's like, where, that's a whole economy of creators and creatives and agencies and da, da, da, da, that exists because of Instagram, not because of ESPN. And so like, you just see, like, even that part of it is shifting. I just think it's like, there's a whole thing to be written about how all of it is shifting, but then the actual part of it where you like sit down and watch the games is so hard that it's easier to open Reddit and just find them.

• 1:13:10David Pierce?

  Yeah. And it's going to cascade through everything else because sports have been the richest thing in TV on all sides for a really long time. Yeah, we'll, we'll talk about that more. Neelai, what's your lightning round?

• 1:13:19Nilay Patel?

  Even everyone saw this coming a mile away. Sarah Silverman is suing OpenAI and Meta for copyright infringement.

• 1:13:25David Pierce?

  Oh, weird. Neelai wants to talk about legal things?

• 1:13:27Nilay Patel?

  Wow.

• 1:13:28David Pierce?

  What?

• 1:13:29Nilay Patel?

  I love it.

• 1:13:29David Pierce?

  How does this relate to Joseph and the Technicolor Dreamcoat? What'd you say?

• 1:13:32Nilay Patel?

  Well, so Sarah Silverman has a coat of many colors. And those colors are a number of legal theories about AI.

• 1:13:41Nilay Patel?

  You know, a real problem being authorized, I'm tweeting out laws, it's getting people like, yeah, this is what we came here for. It's like, this is not the feedback loop America needs.

• 1:13:49David Pierce?

  More lawsuits.

• 1:13:51Nilay Patel?

  No, no, no, no, no. This is what I was trying to get away from. Uh, easy dopamine hit by saying, I hate this judge. Like, stop it. Uh, bad. But I'll do it anyway, because I'm addicted to it. Anyway, Sarah Silverman, uh, there's a law firm, basically, that is organizing itself around suing the AI companies. So they had a couple other offer, they had a couple other children's book authors, uh, and now they filed the second one, Sarah Silverman, some other authors. And they're basically saying, look, you can ask these tools to summarize these books. And they do it. At some point, that means you have made a copy of this book. And that copy was unauthorized. And that's the whole argument. It's a pretty good argument. Like, as far as legal, it's not like out on a ledge, right?

• 1:14:34Nilay Patel?

  It's saying, hey, did you have permission to make this copy of this book? Because usually you don't.

• 1:14:40David Pierce?

  Isn't that like, basically exactly what worked for the record companies against all the free pirating websites? Was it was like, we, we can worry about all the big picture stuff, but you're taking our thing and you're putting it over here and that's not allowed?

• 1:14:53Nilay Patel?

  No, it's slightly different. Like, Sarah John and I could probably do like two hours of our chess on that. They, they had to invent all these theories about how they were enabling users to do copyright infringement.

• 1:15:03David Pierce?

  Uh, okay.

• 1:15:03Nilay Patel?

  Right. It's like Napster wasn't doing any infringement on itself. Like, I was sending a file from my computer to your computer and that was unauthorized. But Napster created a business that let us do that and they knew that's what they're in the state. They just had to like invent a bunch of legal theories about contributory copyright, whatever.

• 1:15:19David Pierce?

  So this one's even more straightforward.

• 1:15:21Nilay Patel?

  This is just straight up like, did you make a copy of this book? Did you have permission to make a copy of this book? If you did not have permission, is it fair use for you to have made a copy of this book, ingested into your servers? And then deliver what is obviously a derivative work of this book, which is summary of the book.

• 1:15:38Alex Cranz?

  Wouldn't that have ramifications for like, everything computers do?

• 1:15:43Nilay Patel?

  Yes, without question. Like, all computers do is make copies, right? Like fundamentally, and copyright law is like very backwards in this way. Because it, I think I've said this many times on the show. It's hard for people in the computer era to wrap their heads around the, the basic of copyright law. Which is that it regulates the act of making copies. So if I make a copy of something, that implicates copyright law. If you don't make a copy, then there's nothing, whatever. Like, right. So like you reading the book, you have not made a copy of the book. You reading a book perfectly memorizing it and then writing it all down is an unauthorized copy of the book. Can you do that? Most people cannot do that. Computers can do that at rapid

• 1:16:26Nilay Patel?

  scale. So like there's a just a decade of law, like furious law, Google Books, like go look at that case, like ferocious lawsuit about the existence of Google Books. Amazon, remember they had a Kindle and the Kindle had text to speech built into it? Ferocious lawsuit from the Authors Guild about whether that was copyright infringement. That makes no sense to me. Like just right? Like it's text, it's on my computer. I can hit a button, it should read it to me. They're like, no, that's a derivative work. We make a lot of money doing audiobooks. You can't have it. Like we're not letting you make that copy. And they they won essentially. They got a settlement on Amazon. So like, there's just this thing where it's like, it's the simplest thing and like, the hardest thing in any conversation is to keep people focused on the

• 1:17:09Nilay Patel?

  simplest thing, which is, did you make a copy of the book? Like, everyone spins off into like, the philosophy of it. It's like, no, no. Did they make a copy of the book? Did they have permission to make that copy of the book? The answer is like, obviously no. And I think this is the these lawsuits are just going to escalate because copyright law is like not ready for this problem.

• 1:17:29Alex Cranz?

  Well, that's exciting.

• 1:17:30Nilay Patel?

  Yeah, I'm thrilled.

• 1:17:31David Pierce?

  And then just to bring this all the way back around, the FTC is also now investigating OpenAI for the way that it has gotten some of that data to train its models. And it just feels like, like Sam Altman was out here a while ago being like, please regulate us. We love regulation and like, boy, is he about to get what he asked for.

• 1:17:52Nilay Patel?

  Yeah, but he's like, he's like regulate some like mythical problem. He's like, make it illegal for the AI to launch nuclear weapons. It's like, fine, okay, good. The part where it's like the AI has hoovered up all the data in the world without permission and hasn't returned any of that value to any of the people who made the the starting works. That is a decade of litigation, like, straight up a decade of lawsuits to come. Which is great, because we have a website and we like writing about lawsuits and the people on threads are like, super into it when I tweet about the lawsuits, so off we go.

• 1:18:22David Pierce?

  I think what we're gonna do is, we're gonna, we're gonna have one Vergecast episode a year, that's just 19 hours long, and it's just all of Neil's thoughts about copyright law.

• 1:18:29Nilay Patel?

  It's like a honeypot Vergecast episode.

• 1:18:31David Pierce?

  Right, and we never even publish it. It's just, it's just on the Intranet. It's gonna be great.

• 1:18:36Nilay Patel?

  I think people, we've been threatening that one, I keep threatening an hour-long about metadata on Decoder. It's all, it's all coming. That's what we're here for. We're the people who did, to do holiday spectaculars. Very few other publications at our scale are sustained success. People are like, "Why is The Verge just a sustained success?" I'm like, "Hour-long HDMI podcasts." Yeah. Get into it.

• 1:19:00David Pierce?

  We were asked the other day if that's a thing we intend to keep doing, and we said, "Absolutely, you are damn right, that is a thing we intend to keep doing."

• 1:19:05Nilay Patel?

  I will die before I don't do a holiday spectacular. That's how much I like it. All right, I don't, I was gonna end on another Joseph and the Amazing Technicolor Dreamcoat joke, but I actually don't remember any of the words. David, you're a musical theater nerd.

• 1:19:17David Pierce?

  I have never seen Joseph and the Amazing Technicolor Dreamcoat. I could sing you several songs from Jesus Christ Superstar, which feels like it's in...

• 1:19:24Nilay Patel?

  This is the most Andrew Lloyd Webber that has ever been on the show. I think it's time to stop. It has been wonderful. I love you, The Vergecast audience. As David said, Carl Payne on the, on the show next week, right?

• 1:19:34David Pierce?

  Yeah, we got some fun stuff coming up next week, but yeah, that's gonna be a good one.

• 1:19:37Nilay Patel?

  All right. That's it. I gotta take a chroma fast. That's The Vergecast. Rock and roll.

• 1:19:49Speaker 07

  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 Marino. Our editorial director is Brooke Minterz. That's it. We'll see you next week.

• 1:20:20Nilay 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.

• 1:20:41Speaker 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.

• 1:21:06Nilay 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.

• 1:21:19Speaker 07

  This series is presented by EY.

• 1:21:22Speaker 08

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