Are LLMs Hitting A Wall, Microsoft & Alphabet Save The Market, TikTok 'Ban'

Deirdre Bosa is the anchor of CNBC's TechCheck. She joins the show for our weekly discussion of the latest tech news. We cover 1) Whether LLMs are running out of resources 2) The costly business of AI 3) Meta's stock drop after Zuck talks costs 4) Meta's roller coaster 5) Microsoft's AI results 6) The virtues of Claude 7) Google's impressive earnings report and dividend 8) Sundar's comeback 9) TikTok's 'ban' goes into action 10) Is TikTok already dead? ---- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Alex Kantrowitz?

  Our LLMs hitting a wall. Microsoft and Alphabet might have just saved the market and the TikTok ban is on. We'll talk about all that and more on a special Friday edition of Big Technology Podcast, coming up right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis Chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, Head of Enterprise Business Solutions at Voya Financial, to go inside a large-scale agentic CX transformation, including the business decisions, trade-offs,

• 0:42Alex Kantrowitz?

  and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format. We have a special guest for you here today

• 1:24Alex Kantrowitz?

  to help talk through the big tech earnings, along with the latest AI news, and of course, the TikTok ban. Deirdre Bosa is here from CNBC, one of my favorite people to watch on CNBC and to speak with. It's great to have you here, Deirdre. Thanks so much for coming.

• 1:37Speaker 01

  Well, what a coincidence. This is one of my favorite podcasts to listen to. So I'm so glad we could collaborate. I'm very excited to be on. And what a week. There was so much to get to.

• 1:47Alex Kantrowitz?

  I know. It's crazy. I mean, it's so funny because like you kind of think you know the story going into a big earnings week, and then everything gets flipped on its head. Companies miss and their stock goes up. Companies beat and their stock goes down. And then you end up having, you know, real check-ins with companies like Alphabet's and Microsoft in terms of like where this market is going and You know, some narrative reversal there as well.

• 2:10Speaker 01

  And for us, sort of the whole markets hinge on a few of these companies, right? Because they just make up more and more of the broader market. So whenever it comes along, we like to say at CNBC that it's our Super Bowl, but we have a Super Bowl every quarter.

• 2:25Alex Kantrowitz?

  Exactly, I know, just a series of Super Bowls. And that's kind of what makes this news fun to watch. And one of the things that I've been watching over the past week is just the amount of resources that these large language models consume. And I'm curious what you think about this. So last week, when I was speaking with the head of generative AI at Meta, Ahmed Al Dala, he said that they use 10 times the amount of data and 100 times the amount of compute to go from Lama 2 to Lama 3, right? And in fact, there was a story in the New York Times talking about how they needed to buy Simon and Schuster or something on that magnitude to get enough data to be able to keep pace with ChatGPT. Then you have Mark Zuckerberg on the Dwarish Patel podcast talking about effectively like

• 3:07Alex Kantrowitz?

  the biggest constraint is going to be energy and you might need a nuclear level plant in order to keep running these models. And so the idea of what these things have always been, you throw more data, you throw more energy and you throw more compute at them and they'll continue to improve. And I'm curious from like the people that you speak with and your view of the of the industry, whether you think that, you know, we might be close to hitting a wall or do you think that this is something to be worth paying attention to because the principals are speaking out loud about it?

• 3:35Speaker 01

  Yeah, and so there's compute power on one hand, which requires enormous amounts of power and that requires enormous amounts of capital. On CNBC this week, we had Dario Amadea from Anthropic and he was saying that he was talking about the idea that these large language models would be commoditized. And he said, the costs are only going up to your point. By the end of this year, to create a large or to build a large language model, it's going to cost something like a billion dollars. But he said by next year, 2025, 2026, it could cost up to 5 to 10 billion dollars. And that's really going to narrow the field. I thought it was interesting because the same day that he said that, there was this article out from the Nikkei in Japan saying that SoftBank, Maso-san, was looking to develop

• 4:21Speaker 01

  A Japanese large language model and they had earmarked up to, you know, nearly a billion dollars. And you just think that's not going to be enough. And even if they do get that money together, they need the compute power, they need the energy to be able to do so. But Alex, isn't there another camp that says that the chips, everything about this is going to become more efficient. So the cost will actually go down?

• 4:42Alex Kantrowitz?

  Yeah, definitely. And that's, I wrote about that in Big Technology this week, basically saying that if we keep going with the way that we're going, we're going to hit a wall, or the tech industry really will hit a wall with LLMs. Like they're basically, if you think about it, out of data, almost out of compute and out of, and running out of energy here. And so it is going to take these optimizations in terms of models and chips, and even potentially more energy efficient solutions to make it work. And they're going to do that all the while they're trying to get more and more of the natural, of the ingredients here, right? So we're thinking about like, you know, there's going to be synthetic data that they're going to add so they'll have more data. And then, you know, maybe someone does go build that nuclear power plant, like seriously, like Zuckerberg's like, it's just a matter of

• 5:25Alex Kantrowitz?

  time till it happens, which is crazy to think about. And then you have Sam Altman running around and saying, let's get $7 trillion for chips. And so, you know, what you might end up having right now is this kind of dual action where you have effectively companies that are finding ways to build these things more efficiently. We think that's happening already off across the board. There, I speak with an Amazon executive yesterday who said that there's some researchers in Stanford who are learning to train these things faster with the same amount of data and 10 times less cost for inference. And it's like, all right. So that's happening. And then on the other hand, the other side of it is, we, these executives see how important it is to have these ingredients and they're doing whatever they can to expand.

• 6:06Speaker 01

  And you're seeing that show up a lot in like the cloud infrastructure numbers and capex numbers from big tech we saw this week, is they're just spending so much more in this race. One of the best ways I heard this described is that, like a typical or traditional Google search takes a certain amount of compute power. And then for a chatbot search, a chat GPT or Gemini or whatever, search takes 10 times the amount of Compute power, even though it may just be a simple question like two plus two equals four, they're still running the whole gambit to get to that if you're asking it through a chatbot versus a traditional Google search. So like that efficiency, it seems crazy to me that that's not going to be figured out soon.

• 6:49Alex Kantrowitz?

  Exactly. And I mean, you know, we can get right into the earnings now because it sort of was a theme for everybody, but especially for Meta. And with Meta, it was like they, they are doing like they increased their ad, their ad revenue like tremendously. And you think about these companies going off like the bases, right? Like you're, you're in the $30 billion a quarter range and you're still growing at like, you know, 15, 20, 25%. That is unbelievable. But what happens in this earnings call is Mark Zuckerberg goes ahead and says, listen, we're in this era where we're going to have to spend a lot on AI. It's not going to get more efficient anytime soon. And this has happened to us in a number of areas, like reels and stories and the move to mobile. And you're going

• 7:34Alex Kantrowitz?

  to want to hang along with us for the ride, but it's not going to happen overnight. And then all of a sudden the stock goes down like 18% after hours. And everyone's just like, all right, Meta's done. And I guess I don't understand why, why investors sort of bail on a company like this. Like, it seems like very sensible. Is it just the moment that we're living in right now? That's just like, there's so much pressure because of the higher interest rates? Or is there something else going on there?

• 7:58Speaker 01

  We talked about this earlier this week in the context of a piece that we're doing over at CNBC, which is like the roller coaster ride that is Mark Zuckerberg and Facebook and Meta. And coming off the year of efficiency, which he really pioneered for the rest of big tech, he made it okay to do lots of layoffs to get fit, kind of coming on the call and saying, okay, that year of efficiency was great. And we're going to keep that kind of discipline in terms of our workforce and certain costs. But when it comes to generative AI, we are all in and we're going to be spending tons of billions of dollars. I kind of thought he was just more candid than the other CEOs. When I say others, I mean, Google and Microsoft.

• 8:40Speaker 01

  They didn't give numbers and they try to say, listen, we're monetizing generative AI. But look through it, we don't actually know. Sure, maybe they're monetizing it around the edges, but they're not breaking it out. They're not telling us exactly how much. We're just sort of trying to look through the cloud numbers and say, okay, maybe this is coming from generative AI. Where Zuckerberg was a lot more, I think, upfront and transparent, saying, listen, the payoff for this is some years out. And yes, it's a different model, right? He's basically giving it away for free right now. He doesn't have the cloud platforms that Microsoft and Google have. He's, his company is not a hyperscaler. So yes, it's further out. But I don't actually think the story is all that much different than what we heard from Amazon and Microsoft,

• 9:24Speaker 01

  which had huge reactions. Part of it, though, I will say, is that Facebook has a lot smaller revenue base, right? So as a percentage of their revenue and percentage of earnings, they are spending like kind of an unbelievable amount. And he's also spending on the metaverse.

• 9:40Alex Kantrowitz?

  Exactly. Got to keep those headsets going. And yeah, I mean, the revenue is incredible. So in pulling up the actual numbers, it was, they jumped 27% to 36 billion on the quarter, up from 28 billion the year before. And this is amazing because, you know, analysts have talked to me about, hey, look, like, there's only so much more room to grow in digital because you're, you're just taking all the money from, you know, these other formats and you're going to eventually just hit a wall because they'll still remain relevant. You don't have that much more time spent. And for them to increase 27% is crazy. I mean, maybe it's taking money from the rest of the open web. But, um, but you're right. You pair that money with sort of Zuckerberg's message of it's the year of less efficiency, right?

• 10:21Alex Kantrowitz?

  He's saying by building the, the leading AI, we will also, uh, will also be a larger undertaking than the other experiences we've added to our apps. And it's going to take several years for this to play out. So it is, it is very interesting. It's, I'm curious, like, from, from an investor standpoint, do you just kind of like run away from, from the stock when you see that there's going to be increased spending? Or is there a case like, you know, I was seeing in my feed, basically right after the market punished Meta so bad that everyone's like, all right, this is the buying opportunity. I mean, I know you're usually the one asking those questions, but I'm curious what you think.

• 10:56Speaker 01

  It's a great question because the morning after Meta reported was also, I believe, the morning we got GDP. So if you were watching CNBC, you would hear on our air all morning fears of stagflation. GDP came in lower than expected. Stagflation is obviously an investor's, you know, worst case scenario. We haven't seen it in decades and it's very scary for the market. So there's this idea that you do flee for safety. You don't flee to a company or you get out of a company whose earnings are way out in the future, right? And I make the argument often on air that the mega cats are safety. They've got pristine balance sheets,

• 11:36Speaker 01

  huge moats, like very little debt. But when you just heard Zuckerberg say, "We're investing billions and billions of dollars and the payoff isn't till many, many years in the future," you just look at your discounted cash flow model. If you're an investor and you say, "I'm not going to buy this right now. I'm going to go to something that gives me earnings right now," especially when interest rates are where they are and having cash in the hand is actually, you know, a pretty good proposition right now, or something like gold, which has been rising and rising this year. So I love that you asked that question. You always have to put tech, even the biggest tech companies, in the context of what's going on in the macro environment. But I wouldn't be surprised if you see what happened last year when interest rates were rising and when they were higher than they've

• 12:20Speaker 01

  historically been over the last decade. Investors come back into tech because of the reasons that I first listed. They're actually kind of like these giant consumer staple companies because of their cash flows and their cash piles. And on that point too, it was so interesting because it was last quarter that Zuckerberg said Meta was going to issue its first ever dividend and the stock like went crazy, went to the races. So it's almost like we forgot that, spending billions and millions of dollars, but it has so much cash flow that it can still return cash to investors, which is very, you know, not typical from a techie growth company. And of course, that could lead us into Alphabet's big announcement yesterday.

• 13:02Alex Kantrowitz?

  Yeah, yeah. So I mean, Alphabet announced this dividend. Before we get into it, just let's just touch on this point that we spoke about earlier in the week that just like it is really a roller coaster for Meta. I mean, like last week, you had Zuckerberg and the fur coats like releasing these AI models on top of the world. And this week, he's like, "We're going to spend on that AI." And everyone's like, "What the..."

• 13:23Speaker 01

  You brought up this point. He's one of the last of a founder, founder, CEO generation. He's one of the last guys standing, along with Jensen Huang, who, I don't know, has the boldness or the confidence to, or I don't know what it is, just this founder quality to have a lot of conviction in what he's doing and not necessarily do everything for Wall Street. Like you have some of these operators who have, who are more, I don't, I don't know what the word is. Like, Zuck's done a really good job in speaking to Wall Street, like better than some of the other operators CEOs that we have. But he also, this just proves that he's not afraid to, you know, upset them too, if he thinks something

• 14:07Speaker 01

  requires a lot of capital and a lot of risk.

• 14:11Alex Kantrowitz?

  Yeah. And I definitely want to get to Google, but I kind of think let's, I'm dying to talk about Microsoft because it's kind of the other side of this, you know, whether AI is going to sort of prove itself out. So we have this no business model, kind of, I mean, maybe not no, but unproven business model. Give everything away for free, although I guess they are going to license Lama out through the cloud services, but that doesn't seem like it's going to be meaningful revenue for Meta. And then you have Microsoft, which is just like, yep, shipping it out, longest partnership with OpenAI and it's currently in market. And so like, we're starting to see like how valuable this stuff is actually. And I don't, I can't tell whether the numbers that Microsoft announced yesterday are big or small and would love to get your perspective on it. So first of all, they, they beat on earnings and revenue

• 14:56Alex Kantrowitz?

  and their stock is up. So they, between them and Alphabet, they seem to be saving the stock market. But this is from, from the report, that Azure rose 31% during the quarter. And Microsoft said seven percentage points of the Azure growth came from its AI services, up from six percentage points the previous quarter. And, you know, if you're telling me AI is a revolution, not you, but them, you know, they're telling us that AI is a revolution, like, all right, single digit percentage point on cloud growth is nice. Am I just being impatient? Or is there some real concern that this is not going to translate?

• 15:28Speaker 01

  I think the story with Microsoft has always been that they're well placed, right? And I think that Satya Nadella has done such a good job just saying like, listen, we're out front in this, we're going to make Google dance, we're going to do all of these things, right? So stick with us, we're the play. But I completely agree with you that revenue contribution is so unclear still. I think maybe investors realize and accept that, but 7% of Azure growth, I don't even know what that means. That could be, like, we need to know what exactly that looks like, right? That could just be like some services that they renamed, AI or some existing services. And then when it came to Copilot, like, no details either, just kind of like some mushy

• 16:13Speaker 01

  talk around how important it is and no hard numbers on how well it's selling. So I agree with you. I mean, they have all the right partnerships, they're saying all the right things, just don't look too hard at the numbers.

• 16:25Alex Kantrowitz?

  Yeah, right. And this is one of those interesting things about this AI moment is that it's, it's progressing so fast, like, the innovation is like, the fact that I can like live type and Meta AI and see an image appear before my eyes is staggering, or upload documents, like, many meetings to Claude and ask it to synthesize them is, is incredible, but we also just like, don't really know exactly what the revenue picture is going to look like. Oh, you were going to say something about Claude?

• 16:51Speaker 01

  Well, because I was, I was kind of like pointing at you because I saw your tweet, which made me so curious. You said you were happy to pay for Claude, $20 a month. It's the only one that I don't use. And I switch a lot between Gemini, ChatGPT-4, and Perplexity. I haven't used Claude and your tweet made me really curious to try it.

• 17:10Alex Kantrowitz?

  Yeah, so now I'm going to vow Claude head. I used to be a Bing boy, you know.

• 17:15Speaker 01

  Oh, okay, you just undermined your whole argument.

• 17:18Alex Kantrowitz?

  I know. Ron John, who's usually with us on Fridays, he's a Gemini guy, so we'll let him defend himself next week. But he actually is the one that turned, turned me on to Claude. And I think one of the cool things about Claude is just uploading documents. And one of the things that I've been doing recently is uploading full podcast transcripts. And of course, like, initially, I was like, I'm just going to speak with Claude about, like, what happened in the show and like which questions I missed. And I'm also, I love saying, rate this conversation on a variety of metrics. And it really does, it does, on chemistry and depth and breadth of the conversation.

• 17:54Speaker 01

  Has it ever offended you?

• 17:56Alex Kantrowitz?

  Uh, no, it's actually been pretty good on that front. Uh, there's even been points where I've been like, uh, you need to rate one aspect of the conversation, one of 10. This is not an option. And it's like, well, yeah, actually the weakest part of the conversation was, was this. Uh, but I've been using it for recently is actually I go in and I say, listen, I have to make some, uh, video clips from my show. Um, give me some timestamps of things that you think might be compelling and it does an incredible job. This used to be something that I wouldn't do because it would just be so time intensive that there was no justification for like sitting in the video and finding the perfect timestamps. And Claude is actually, I'm like, all right, those are good suggestions. Let's clip those.

• 18:35Speaker 01

  That's really fascinating. I tried to do that yesterday. Actually, we do this, um, tech check weekly piece, which is sort of a deeper dive on the week's biggest topic. And I put it into chat GPT four and I said, give me, you know, like a condensed Tik Tok version of this. And it was so bad. I just was like, I quit right here now. But I think that's an interesting way of doing it. Look at the time codes. They can't do it all for you. They can never do everything for you at this point, but, um, I'll have to try it out.

• 19:01Alex Kantrowitz?

  Yeah. I mean, so they have this like, uh, paid version that's gets you their most powerful model, which is Claude Opus. And I used to like, basically the reason why I sent that tweet was, um, I kept like logging in, signing up and then immediately cancelling the auto renew because I'm like, yeah, I'm only going to need this. I'm trying it out. And this was the week where I was just like, I'm not even cancelling the auto renew. I need this. So it's like now definitely part of the mix. And is it going to cost me $240 a year? Or maybe a little bit more with the fees? Yes. Is it worth it? Multiples. So, so, so that's like, oh, sorry. Go ahead.

• 19:38Speaker 01

  On a slightly different note, I was telling, um, I produced a Laura Bachelor yesterday how, and this maybe gets us into Google earnings. Um, sorry if I'm jumping the gun here, but my method of working now is to have, and I guess my, I'm a GPT four person. You're Claude and Ron John is Gemini, is that right?

• 19:58Alex Kantrowitz?

  Yeah. So I think, uh, yeah, we'll put you squarely in second place here.

• 20:03Speaker 01

  Sure, I'll take it.

• 20:08Speaker 01

  But I was telling her how I always have that window open now and I truly, truly use a traditional Google search. I use Google News a lot too in the past, but I use it way less than I ever have and it truly is kind of my co-pilot, to use that word, that is so buzzy and hot right now.

• 20:28Alex Kantrowitz?

  Right.

• 20:28Speaker 01

  But I use it, you know, I'm going to it, you know, every few minutes, just for like idea generation, to check something that I'm thinking, to get better wording on something that I'm thinking. And that is really like the worst case scenario for a Google and we are journalists and we cover tech, so it's not surprising that we're sort of early adopters to using this. I don't know how that rolls out to the mainstream, but that was sort of one of the biggest fears going into the Google quarter is that search queries would be hurt or you would see any kind of softness as people use chatbots more.

• 21:06Alex Kantrowitz?

  And that hasn't happened at all. I mean, they also, they beat like crazy. Earnings per share, $1.89 versus 151 expected and then they beat on revenue as well. And I think every, every category beat. So yeah, I'm curious, I'm curious why you think Google's, I mean, the market reacted so positively to Google. I think it's up 10% today. You know, between Google and Microsoft, I was getting texts like from people being like, thank God they saved the market. So.

• 21:33Speaker 01

  Yeah, it's true. It goes back to that point I made at the very top. If these companies performed really badly, it would take the whole market with them. And Apple will be another important test. Nvidia, of course, coming up. But when we look at, when we look at Alphabet, excuse me, it was that dividend, I think that was so important that investors have been looking for. And in the lead up to earnings, I was saying, well, there's a small chance, but they absolutely can do a dividend. I don't know what they're waiting for. I asked Ruth Poratka every single quarter when I got on the phone with her, like, what's your capital allocation plan? How are you thinking about it? Will that change? And, you know, them announcing the dividend is just such an important thing for investors. It was 20 cents a share. It's very small, but this idea that they've reached a new phase,

• 22:17Speaker 01

  that they're shareholder friendly, that they're returning capital to investors as a sign of maturity at the big tech companies that I think investors have been looking for for a long time and just, I think, indicates that they're thinking about the shareholder more and they're balancing growth and value a little bit more, which shouldn't be all that surprising, but them doing it is like a big indication that maybe they've entered a new phase. In terms of generative AI not killing or materially hurting search anytime soon, maybe I'll highlight a few comments from the earnings call last night. Sundar Pichai, the CEO, said that they're seeing an increase in search usage among people who use their new AI overviews. And then Philip Schindler, a top exec there, said

• 23:02Speaker 01

  that advertising is actually finding a place in their gen AI products. And he said that he was really confident that the opportunity will expand. So it's not like either or. They're finding opportunity. And I think the key people who aren't like us that have embraced these chatbots early on that are still going to Google search, they're discovering generative AI queries through Google. And that is like so much more important than us, you know, debating Claude or Gemini or GPT.

• 23:31Alex Kantrowitz?

  Right. It's just the the distribution, I think, is is what matters. Right? And that's like what you saw with Meta is they're able to ship their AI model. And all of a sudden, you know, it's in billions of people's hands where OpenAI was celebrating getting in 100, I mean, reasonably so, getting in 100 million people's hands in a month. Now Meta has that scale advantage and it's like, it's Mark versus Sam. And Mark tends to win these battles, especially if you look at, you know, the other victims in the in the wake, you know, Evan Spiegel and TikTok and all that. So.

• 24:02Speaker 01

  Yeah, but Sam Altman, that guy's a killer, I feel like. It's gonna be a good battle.

• 24:07Alex Kantrowitz?

  I love it. I think, you know, well, you know, we never got to see Zuck versus Elon. I doubt we're gonna see MMA between Zuck and Sam, but this business battle itself is gonna be fascinating to watch because it is like, you know, people like were framing a Sam versus Sundar or Sam versus, I don't know, Dario, but him versus Zuck, I think is gonna be very, very interesting to watch.

• 24:29Speaker 01

  That's a cage match. I would pay $20 a month for it.

• 24:33Alex Kantrowitz?

  Definitely. I would too.

• 24:34Speaker 01

  One last, one last word on Pichai. It's so interesting that like he doesn't enter that conversation, right? It's Musk versus Sam Altman, Musk versus Elon Musk, or maybe Dario. And Senator Pichai, he's just sort of never been seen as this wartime CEO, right? And I always question that because I think he's shown flashes of it. Last week when you had the sit-in, right? And they immediately, you know, fired the 28 employees and he came out with a memo the next day that said, this is a business in no uncertain terms. It's interesting. He takes a much more quiet route. And even you asked me why investors were so stoked on the quarter of last night. They're spending a ton in CapEx also, like the same

• 25:18Speaker 01

  if not more as Meta. But then he also, you know, talks about engineering durable growth. I hate that phrase so much. It just means that they're gonna continue to be efficient. Like Zuckerberg knows how to talk to Wall Street. Maybe he goes, a year of efficiency is a lot more catchy than engineer durable growth. But Senator Pichai and his team are keeping an eye on efficiency while investing huge amounts of money into generative AI while issuing a dividend. So he kind of like hit everything last night. It's like an investor's dream.

• 25:49Alex Kantrowitz?

  Totally. It's a great point to pull out. It does seem like Sundar is like taking a very intentional path right now to sort of revamp like what he's seen as. And I think that like maybe he fired, I think it ended up being 50 people to sort of, because you can't really take over your cloud CEO's office in the middle of a workday and expect to keep your job, especially when you're not being paid to take over your cloud CEO's office. But it also sort of, I think, pretty intentional that, you know, in the past, he let a lot of this go. There were protests over military technology in the past at Google. And he sort of, you know, said, all right, like, we're going to give you what you want in some ways. And talked about AI principles and stuff. And now he's like, all right, we're done with that. And I think he needs to show that, especially given how like the narrative on Google shifted.

• 26:34Alex Kantrowitz?

  You know, as they were seen as like a company was slow. People were asking if Sundar was the right person. I kind of think that that eventually reached him. And some people advising him were like, all right, you got to change the way that this company is operating. More urgency, less bullshit, and away you go. And to combine that, and he even wrote about it with this like new mission statement, which Alex Heath and I spoke about last week. But you combine that and you combine, you combine that with better earnings, growth in cloud, and maybe the fact that, you know, Gemini, like you're right, these Gemini, and even though I can sing clutch praises all day long, it's not replacing Google Search. And then you get a good quarter out of Google and all of a sudden, everything shifts real quickly for them.

• 27:18Speaker 01

  Here's an idea, maybe the year of ZAC is ending and the year of Sundar Pichai.

• 27:23Alex Kantrowitz?

  It could happen.

• 27:24Speaker 01

  Wouldn't that be interesting?

• 27:25Alex Kantrowitz?

  We've seen, I mean, that would, we've seen comeback stories like that in tech. And so who knows, like, you know, maybe we're going to see that with Google. One, one person pointed out to me that if Sundar serves like maybe another year or two, he's going to be the longest tenured Google CEO ever. And we'll, we'll see if he actually, I mean, there've been some questions about him lasting much longer. It seems like he's pretty solidified though in that position. And these recent moves have, have definitely helped him.

• 27:54Speaker 01

  I think so too. And plus, the people calling for him have been like, kind of the loud people on X or Twitter. You know, I tend to try and, I even asked that activist investor, TCI, that wrote that letter a few years ago on something different, but just how Google needs to get fit quicker, more efficient quicker. I never got through to them. They never responded. But the fact that they're quiet at this time, I think, says something. And I wonder if they're, they're happy now with the dividend and some of the cuts they've been making.

• 28:22Alex Kantrowitz?

  Right. And they, they hit all time highs recently. Stocks up 10% today. They, they did, you know, more cost cutting. So, you know, if you're an activist investor, you're happy.

• 28:33Speaker 01

  Let's not ignore this point. I almost forgot to mention it.

• 28:36Alex Kantrowitz?

  Hmm.

• 28:37Speaker 01

  On the call yesterday, he said YouTube and cloud will exit the year with a combined annual run rate of over a hundred billion dollars. Like, to me, that was Sagar Pichai saying, look, we're not a one-trick pony. We're not just search advertisement. And that is really incredible. Like, just the amount of growth and success that YouTube and cloud have had. And this may be his moment for cloud. I know they're very distant, number three, in terms of the hyperscalers behind Amazon and Microsoft. But if the next phase of the cloud wars is over generative AI tools, Google could be interesting.

• 29:10Alex Kantrowitz?

  Yeah, like, it had a very impressive cloud event. But I think you brought up this point, that to serve a generative query costs, I think, 10 times more.

• 29:17Speaker 01

  Yeah.

• 29:18Alex Kantrowitz?

  And to run a cloud business is more expensive than serving search. And YouTube is definitely more expensive than search because you have to host all those videos and run them. So then you, you, you know, I just, I'm thinking about this. So you end up looking at a Google where you're issuing a dividend. Your margins aren't as big as they once were. Your growth might be a little less. And so I don't think they're fully out of the woods. If you think about, like, the complete picture, I don't know. What do you think?

• 29:46Speaker 01

  I like that take. I, I, it's not one that I consider too much because they have been able to find efficiencies in some places. But I think you're absolutely right. Those businesses, even that they're bragging about, are very expensive to run. I don't know, maybe. And then I do think about the Google and Microsoft position over Meta. Why does Meta have to spend more? Because they're catching up. They don't have the cloud infrastructure that they have. They don't have the scale to be able to get GPUs, I think, at the same scale as Microsoft and Alphabet. So maybe they're catching up and there's efficiencies that you have by already being a giant cloud platform.

• 30:24Alex Kantrowitz?

  Yeah. Or in the background, Zuck is building that nuclear facility.

• 30:28Speaker 01

  Yeah, that would be interesting.

• 30:30Alex Kantrowitz?

  So it's gonna take some bold bets. I'm curious. I mean, some people, basically, Zuck works like someone's gonna build that plant. So if that happens. Or if Sam gets the money for his chips, we might be looking at a very interesting, you know, new chapter.

• 30:44Speaker 01

  And that could be the new, that could be the new kind of like cloud platform in a way. Everyone needs the power. So you're renting out energy space.

• 30:53Alex Kantrowitz?

  Absolutely. All right. Why don't we take a quick break and then talk about the ban, quote unquote, ban, whatever it is, the divestment that might turn into TikTok just not being able to operate in the U.S. So let's do that right after this. This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Copilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data and most teams have no single way to see it, secure it and prove it's under control. That's exactly what App Point does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire AI estate. Your data, your cloud and the agents acting on your behalf.

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• 33:05Alex Kantrowitz?

  And we're back here on Big Technology Podcast Friday Edition with Deirdre Bosa from CNBC. Deirdre, great to see you. Thanks for being here. What did you think when the TikTok divest or ban bill went through Congress over the weekend? I was like, oh, this thing's not moving. Next thing you know, Congress attaches it to a defense bill, Senate votes it in, Biden signs it. It happened way faster than I ever expected, especially with all this talk. What was your reaction when that happened?

• 33:33Speaker 01

  The exact same. I was like, wow, that was fast on the US side. But then my broad thought has remains completely unchanged is that this lies with Beijing. And if you ultimately want to sell TikTok and make it quote unquote, "American" by having American ownership, there's no way that Beijing is going to allow a technology transfer of the most important thing about TikTok, the algorithm, its source code. And I lived in China for many years. My first job was with CCTV, the Chinese broadcasting, national broadcaster. And so I kind of got a view of the inner workings and I know

• 34:13Speaker 01

  how nationalistic it is. And I think that TikTok being the first, you know, major Chinese company to have real success in the US, they're not going to just hand that over easily or at all.

• 34:28Alex Kantrowitz?

  Right. No, yeah, I mean, that's, that's the sense I get from people who've been close to that company is, you know, texts have come in saying there's no way they sell. They're going to fight this like to the end. And if they win, then they'll stay. And if they lose, they're done.

• 34:43Speaker 01

  So there was this idea brought up by the former Treasury Secretary Steve Mnuchin, who was on CNBC, maybe like a month ago or something.

• 34:52Alex Kantrowitz?

  And he wanted to buy it, right?

• 34:54Speaker 01

  Yeah. I'm going to get a consortium together to buy TikTok. And it was like, okay, well, what if Beijing doesn't give you the source code? And he said, well, we'll just rebuild it here. And a few of the people I spoke to just thought that was a laughable idea. And one person said to me, you know, you think Zach hasn't tried to do this, going back to Zach being.

• 35:16Alex Kantrowitz?

  Well, that's why he said he bought all those GPUs.

• 35:19Speaker 01

  Exactly.

• 35:19Alex Kantrowitz?

  Do the Reels thing close to TikTok and he still can't do it.

• 35:23Speaker 01

  And he still hasn't caught up to TikTok in terms of engagement, right?

• 35:26Alex Kantrowitz?

  So, okay, Steve Mnuchin, you go get a billion GPUs and see what you can do. Sorry.

• 35:33Speaker 01

  Exactly, a billion GPUs and, you know, the best data scientists in the world. So I'm so interested to see, you know, how this is such a bipartisan issue and how the US is able to, the US lawmakers are able to move so fast on it. But I think at the end of the day, I don't know. I think it's going to be slow going from here. The challenges here onward are a lot greater than, you know, getting it through Congress and getting it on President Biden's desk.

• 36:01Alex Kantrowitz?

  Right. Do you think there's a chance that TikTok can win in the courts? I don't even know, like, can you just sue a law? I mean, you go to the Supreme Court, but what are they going to do on First Amendment grounds? Try to get this thing pulled? I guess that might be the plan.

• 36:14Speaker 01

  I guess, and it's not, I don't think that that's crazy, that the legal system would rule in favor of TikTok based on the First Amendment. But that's the difference between the US and China. China flicks a switch and Instagram, WhatsApp, Twitter, Gmail goes dark and there's no legal process. And that's why we're, you know, the US is so great because there's legal process and it's not that easy to just ban something. The national security concerns, though, I don't want to be glib about this, they are real.

• 36:49Alex Kantrowitz?

  Right.

• 36:49Speaker 01

  Super real. And you've seen sort of the negative effects and consequences of TikTok as well on groups of minorities and teens.

• 37:00Alex Kantrowitz?

  Yeah, and it kind of goes to show you that, like, all right, they're like, we're not going to sell. So this is not a business for you then. And I don't understand, if you had to sell, you wouldn't take the money? It's kind of weird. And there's like, interesting things that might happen in the intervening time, which is that, this is, M.G. Siegler wrote about this in Spyglass. He goes, ban or not, this is the end of TikTok as we know it. And he says, by passing this bill, Congress has draped the service in a scarlet letter and damned it to be bogged down in bureaucracy for its remaining days. And the point's basically come down to this. It's going to be in the courts. It's going to take a lot of energy from it. Advertisers are potentially not going to want to participate in an app that's going away.

• 37:43Alex Kantrowitz?

  Or, you know, maybe not to the same volume as an app that has been, you know, had this scarlet letter placed on to it by Congress. And then most importantly, and I think this thing has been overlooked, is influencers and the people filling TikTok with content are going to look elsewhere if they think it's going to be banned because that, what use is it building an audience of a million people on TikTok if it's just going to go poof one day?

• 38:05Speaker 01

  I am skeptical of all of those points. I think that a scarlet letter for us in the media, for lawmakers, I think that there is a generation and millions and millions of users who love TikTok so much and think that if they continue to use it and continue to sort of be loud in their appreciation for the app, that it will somehow survive. I think you just can't mess with how much people and users love an app. And I think that could carry it at the end of the day. It could go poof. I'm not saying that's not a possibility, but I think that its users will use it until that moment.

• 38:45Alex Kantrowitz?

  When TikTok was facing this ban and then they basically put this notification that it got all their users calling members of Congress, do you think that that helped the case? Because even afterwards, Congress still went through with it.

• 38:58Speaker 01

  Yeah, that's a good point. No, it probably didn't make an impact, right? Because it went through Congress very easily. But again, I just think that folks will continue to use it. I think a scarlet letter is very much for us, not to them. It actually may have the opposite effect on youth that use the app. It galvanizes them to support it more.

• 39:20Alex Kantrowitz?

  One of the funniest things of this whole chapter is, so Biden signs this into law and then they ask the Biden, you know, he made this whole big deal of going on TikTok during the Super Bowl and they asked the Biden campaign, are you still going to have a presence on TikTok? And they're like, yeah, of course we are. It's like.

• 39:35Speaker 01

  And that's the thing, like, why would advertisers go away when the president who signed this bill? Is using it himself and will continue to use it. So I'm so skeptical of that idea that anyone's going to back off just because of the threat of a ban.

• 39:49Alex Kantrowitz?

  All right, I take it back. Yes.

• 39:51Speaker 01

  No, it's a good point.

• 39:52Alex Kantrowitz?

  Yeah, no, no, I agree with you. I think now that we think about it this way, Biden's on it after. I mean, the inconsistencies in this government is nuts. Like, there was this great moment.

• 40:04Alex Kantrowitz?

  I think it was Kayla Taush. She was a former CNBC correspondent. She was asking the White House, like, why they invited Bezos and Tim Cook to the state dinner with Japan if they're trying to, you know, take those, their companies on and the Justice Department is saying all these things about like how terrible they are. And the White House didn't really have a good answer. And it's like, goodness, there's very little ideological consistency here, people.

• 40:32Speaker 01

  And that's why we were so surprised at how quickly this TikTok bill moved. But at the end of the day, we questioned whether it actually means anything. It was kind of like, good job, government, you got it together to pass something, but the next part's going to be a lot harder.

• 40:46Alex Kantrowitz?

  Are you a TikToker?

• 40:48Speaker 01

  Do I post TikToks? Actually, okay, I'll reveal a secret. Yes, they're all private. Not like, like, not, just, I don't know, I play around with the different things. I watch it sometimes. I truly cannot open the app. I have to, it's on my phone, but I had to delete it from my home screen. Because once I'm on, it's like an hour is gone.

• 41:11Alex Kantrowitz?

  Oh, yeah, me too. I get into real TikTok holes. I'm just in.

• 41:14Speaker 01

  Insanely addictive.

• 41:16Alex Kantrowitz?

  Yeah.

• 41:16Speaker 01

  So you, you are, are you a like, normal user? Like, do you use it several times a week?

• 41:24Alex Kantrowitz?

  Oh, yeah, definitely. Yeah, I'm, I'm daily.

• 41:27Speaker 01

  Daily. Okay, see, I can't, I just, it's too much of a time suck for me. I can't.

• 41:32Alex Kantrowitz?

  It's it's been weird in that it's like been something I've started to use to follow news where like you end up having like primary sources like post a lot and

• 41:43Speaker 01

  Oh, I need your algorithm that an excuse to actually use it. I just get like the dumb stuff.

• 41:48Alex Kantrowitz?

  Yeah, it was super helpful. Actually, for me, like I went up with my dad a couple of weeks ago to see the eclipse and to like we've I followed like all the weather reports and there were like these meteorologists that were like reporting like where the best place to go was and that was super helpful and I like I opened my feed and I knew I was gonna see the same guy if you know every day with his like daily update first video.

• 42:11Speaker 01

  It was that good. Idea even on X, I was talking to someone about this, how if you can train your algorithm to serve you what you want and like this wide range, it can be really, really useful, but that takes a lot of work. And I think I have yet to do that with with TikTok. I have enjoyed some of the finance TikTok videos that I think are really, really informative.

• 42:31Alex Kantrowitz?

  Great.

• 42:31Speaker 01

  And you get garbage thrown in too. And that's, that's hard, especially if you're like not in the finance world.

• 42:37Alex Kantrowitz?

  Yeah, well, that's that's the whole, that's the whole game, right? They throw in the garbage to see which garbage you might like. And then next thing you know, you're living in in a trash pile that TikTok is.

• 42:49Speaker 01

  I will say I don't touch reels. I do not touch reels.

• 42:52Alex Kantrowitz?

  Really?

• 42:52Speaker 01

  I find it to be terrible.

• 42:54Alex Kantrowitz?

  What what do you like about reels?

• 42:55Speaker 01

  My early usage of reels served me up some really like jarring, terrible stuff. And I won't even say what just really terrible like kid stuff. And I just said, I was so kind of like freaked out by what it was serving. I said, never again. And even on Instagram, I turn off the suggested feed, suggested posts in the feed, but you have to snooze it every 30 days, which I find very frustrating because again, it'll just be a time suck for me. And I, I want to be able to control a little more what I see.

• 43:31Alex Kantrowitz?

  Yep. Well, I've touched on LLMs hitting a wall potentially, Meta, Google, Microsoft, and this TikTok ban or not ban.

• 43:39Speaker 01

  And our TikTok reels usage.

• 43:41Alex Kantrowitz?

  Yes. And then reels, Lord almighty. I see it's a beautiful day in California, so I won't keep you any longer. Deirdre, thanks so much for joining. Great to have you on.

• 43:49Speaker 01

  Such a pleasure. Thanks for having me, Alex.

• 43:51Alex Kantrowitz?

  All right, everybody. Thank you so much for listening. We'll be back on Wednesday with a show with Alan Cohen, who's the CEO of a very interesting company. It's called Yum AI, where they basically take LLMs, translate it to voice, and engage emotion and respond to you in like really weird and human-like ways. It's a very interesting company, so stay tuned for our conversation for that. And then Ron Jam will be back next Friday, and we'll be breaking down the news then. Thanks again for listening. We'll see you next time on Big Technology Podcast.

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