Big Tech is back on trial

We promise, this episode is only a little bit about header bidding. Nilay and David are joined by The Verge’s Alex Heath to talk about some big news in tech regulation: Google lost its ad-tech monopoly trial, which could reshape both Google and the internet altogether. And that’s not the only monopoly news! Meta’s trial also started this week, and Alex was there to see Mark Zuckerberg and others try to defend Instagram, WhatsApp, and the company as a whole. After all that, we talk about OpenAI’s plans to build a social network, and how this company seems to never run out of ambition. Finally, in the lightning round, it’s time for another round of Brendan Carr is a Dummy, and some news about viral cameras and the Switch 2. Which we’ll be yeeting into our homes as soon as possible Further reading: Google loses ad tech monopoly case FTC v. Meta live: the latest from the battle over Instagram and WhatsApp Meta CEO Mark Zuckerberg defends Instagram purchase in antitrust trial Zuckerberg defends his empire during FTC antitrust trial Mark Zuckerberg suggested spinning off Instagram Mark Zuckerberg tells court that Meta made WhatsApp, Instagram better Mark Zuckerberg once suggested wiping all Facebook friends lists to boost usage Meta reportedly offered $1 billion to settle the FTC’s antitrust lawsuit. Zuckerberg defends his empire during FTC antitrust trial Google, Apple, and Snap aren’t happy about Meta’s poorly-redacted slides Meta’s antitrust trial slide redactions aren’t actually hiding anything OpenAI is building a social network OpenAI debuts its GPT-4.1 flagship AI model OpenAI might finally get better model names soon. OpenAI’s upgraded o3 model can use images when reasoning ChatGPT will now remember your old conversations OpenAI is reportedly considering a $3 billion deal to buy AI coding tool Windsurf. Netflix is testing a new OpenAI-powered search Brendan Carr on X The Media and Democracy Project on Bluesky Trump excludes smartphones, computers, chips from higher tariffs Smartphone tariffs are coming back in ‘a month or two,’ says Trump admin TSMC is unfazed by tariffs. Microsoft’s Phil Spencer: “I want to support Switch 2.” In pursuit of a viral, five-year-old compact camera Email us at [email protected] or call us at 866-VERGE11, we love hearing from you. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:31Nilay Patel?

  Hello and welcome to Vergecast, the flagship podcast. Knowing what Facebook is, just surprisingly complicated. We're gonna, we're gonna explain that in great detail. I'm your friend Neelai. David Pierce is here.

• 1:42David Pierce?

  Hey, it's gonna be a very short podcast if we have to attempt to explain what Facebook is.

• 1:46Nilay Patel?

  Or the world's longest podcast.

• 1:48David Pierce?

  Longest podcast ever, yeah.

• 1:50Nilay Patel?

  Alex Heath is here, direct from the Meta and I Trust trial. What's up, Alex?

• 1:55Speaker 06

  I'm just over here on MeWe, guys. Come on in, the water's warm.

• 2:00Nilay Patel?

  The best part of any antitrust trial is when the accused monopoly insists that insane things are true competitors. So Comcast will be like, yes, like infrared internet is a real competitor to our fiber network. Whenever it's like, that's not. And they're always like, we're so helpless and weak. And that's very much what Meta is doing in the courtroom with other networks like me. So we got to talk about that. Alex was in the courtroom with Lauren Finer. Mark Zuckerberg was on the stand for a long time this week. We're going to talk about all that. But what's wild is that while all that was happening, the Google ad tech antitrust case got a decision and the court ruled that Google has a monopoly in ad tech. And I don't

• 2:44Nilay Patel?

  even remember this. We forced David to go to that trial way back when. David, just briefly sum up what that trial was like.

• 2:53David Pierce?

  Sure. I should, I should say, poor Lauren Finer had to go to a lot more of that one than I did. I just had to go for a couple of days because she couldn't or just didn't want to. Or like, I think at some point, you spend enough time listening to people explain how ad exchanges work. And you're like, I can't do this anymore. And I have to leave. But anyway, so basically, this case was about three things. One was, did Google acquire its way into a monopoly in advertising technology? Two was, is Google basically putting all the different pieces of its advertising puzzle together in a way that is illegal? And three is basically, does

• 3:38David Pierce?

  the sort of breadth of Google as a, as a search engine, as a publishing engine for the rest of the internet? Like, is Google so big that it should not have this much power over how advertising works? And they spent, I mean, just, just like weeks litigating like the deep tech of the ad stack. But what it really came down to is Google owns advertising on the internet in like, a really real way.

• 4:01Nilay Patel?

  Wait, on the web? I want to be careful about on the web.

• 4:05Nilay Patel?

  Because it's, this is right up against Meta and like advertising and Meta apps.

• 4:10David Pierce?

  Well, and, and a not in substantial part of Google's argument is that Meta exists.

• 4:16Nilay Patel?

  Yeah.

• 4:16David Pierce?

  But yeah, for the, for the open web in particular, Google essentially is the advertising engine behind everything. And it increasingly has controlled every piece of the advertising puzzle. It has controlled every market in this space for many, many years. And the overwhelming question was, is it a monopoly? And it actually turned into one of the more sort of straightforward monopoly cases we've had. I think like, the question of is Google search a monopoly is really complicated. The question of is Meta a monopoly is really complicated in ways that we're going to talk about. But like, just sort of definitionally, what Google has and did with it is like, right down the middle of what we talk about when we talk

• 5:01David Pierce?

  about monopolies, which is super interesting. And I think is part of the reason, I think, I certainly left the case being like, I think Google is going to lose this case.

• 5:09Nilay Patel?

  And we should also compare and contrast this to the other antitrust case Google lost, which was about its dominance in search.

• 5:17David Pierce?

  Right.

• 5:17Nilay Patel?

  So Google was declared an illegal monopoly in search a while ago by a court. That case is headed to a phase called the remedies trial, where you figure out what to do with it.

• 5:27David Pierce?

  Also this month.

• 5:28Nilay Patel?

  Also this month. The government wants Google to sell Chrome and maybe some other stuff. Google would not like to do that. And then this trial reached its opinion by the judge. Google has a monopoly, an illegal monopoly in advertising in various ways, which we'll talk about. And then that will proceed to a remedies trial. All of that is against while the Meta antitrust case is like literally happening in real time. Like it's, it's happening while we are talking. It will be happening while you were listening to this. It will always be happening. And then sometime down the line, there's going to be an Apple antitrust case. So this is a lot of like Lena Khan and Jonathan Kanter stuff happening all at

• 6:08Nilay Patel?

  once inside the Trump administration, which we can talk about. But Google in particular has now gone 0 for 2.

• 6:16David Pierce?

  Yeah.

• 6:16Nilay Patel?

  In like big ways, big, meaningful ways. You will note, Google also when Epic sued Apple and Google for antitrust issues, Google was the one that lost there, which I think is, and Apple kind of got away with it, still want to peel in various ways.

• 6:29David Pierce?

  Does Google just have bad lawyers? Like, is that really the takeaway here?

• 6:32Nilay Patel?

  Again, I'm really interested to compare and contrast this with Meta. My read on this is that Google's commitment to openness, and I'm putting openness in quotes, but openness in Android on the web means that it has to influence lots of things that aren't Google. Right? So with Android, it has to convince Samsung what to do, or whatever. With search, it has to convince a bunch of websites to like operate in search and be indexed, or whatever. With ad networks, it has to convince a bunch of publishers and advertisers to play ball. And so it does that. It like uses its influence. And there's emails, and then there's deals, and there's meeting notes, and there's contracts, and there's all this stuff you can go look at. And it's Google executives being like, if I turn this knob,

• 7:13Nilay Patel?

  the publishers will do that. And you have all this evidence. They did the thing. Whereas, you know, with Apple or Meta, Tim Cook or Mark Zuckerberg is like, I don't make number go up. And like, some product manager does it. That's the end of that. And so I think Google is just like structurally at a disadvantage all the time, because it has to make deals to get what it wants.

• 7:32Speaker 06

  The business success of Google over the last 20 years could really be tied to tying this idea of monopoly tying, tying products together to get leverage in another area, which is why the DOJ is pushing for Chrome specifically and changes to Android. We should probably also clarify, though, this ad tech case, this doesn't attack Google ads on Google search. This is actually a much smaller part of their business. I think the stat I saw was it's like 10 to 12%, right? Of the ads that they serve on other websites. That's specifically what this case is about.

• 8:04Nilay Patel?

  Yeah. And that, that number's getting smaller, too, right? Google makes its money on search. It makes its money in shopping. It makes its money on YouTube increasingly. It's the part of the ecosystem where they monetize the entire web, which is what David was talking about. That number is getting smaller, but it's also under the most pressure because Google, well, now we know, Google has been a monopoly there.

• 8:24David Pierce?

  Right, but this is what I mean by it's a more sort of straightforward monopoly case. Because the thing that a lot of these other ones have run into is, what is the difference between me doing something that is good for my business and a monopoly action? And that's actually a hard thing to put together, especially for something like a free product. So like, if I make my search engine better and it hurts my competition, is that monopoly maintenance or is that good business? And it actually turns out the line there is very fine and really not obvious to figure out. But in this case, it's like, the basic finding of the case was, and I will attempt to do this without either being wrong or going way too deep on ad tech, both of which are very possible to do in this case.

• 9:08David Pierce?

  But that basically, Google owned the part of the advertising stack that advertisers use, the part that publishers use, and the part that connects the two things. Those are three separate products and Google owned them all. And basically, the only way to get a good experience on any of them was to use all of them. And so everybody essentially agreed, and this was like the expert opinion over and over and over throughout the trial, that these products suck, but you have no choice but to use them, even though they're bad and more expensive, because without one, or without them all, you can't get one. And that is like, that's a monopoly. Like, that's just it, right? That's railroads and trains.

• 9:48David Pierce?

  Like, it is the oldest school version of how we talk about what monopoly tying is. And it's in such a more straightforward way than like, what does it mean that no one cares about any search engine except yours? You know what I mean?

• 10:01Nilay Patel?

  Well, there's that. I mean, I'll just read you the conclusion from the opinion, which tracks with what you're saying, but in a more strident way. Here it is, quote, "For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets. Google further entrenched its monopoly power by imposing anti-competitive policies on its customers and eliminating desirable product features." It goes on. She's not happy. Um, and really what, you know, it's so funny. We, I, I opened the show with a joke about like, what is Facebook? So much of this comes down to like, what is the market? Is the market for search and competition with people searching on Tik Tok? And you end up in these like existential minefields.

• 10:44Nilay Patel?

  And here again, it's very simple because there's only three products that do the thing. You can't be like, well, I could replace this horse with an airplane. What is the market? It's like, no, you, for here, there's three products, one that displays the ads, one that goes and gets the bids from the advertisers about how much they'll pay and the systems that tie them all together. And you can't just replace those with anything. Like those are literal software products you have to go and buy. And we know what the replacement products would be, and they don't exist because Google killed them all. Like it is very straightforward in a way that makes it easy to talk about, but then it's also ad tech and like, I'm confident we've already lost a bunch of people. But the, the issue is like, this is the money. Like it, it's a small part of Google's money, but it's the money that funds the open web.

• 11:28Nilay Patel?

  And the open web is Google, like Google search without things to search for is not a good product. Google's AI training that everyone's doing across the entire open web doesn't work if you crush this entire ecosystem. And that is more or less what has been happening. And one of the reasons it's been happening is because now by this ruling, Google has been extracting more value and it's been giving back to these publishers. I should note, by the way, that we run a publisher and like we use DFP and our executives are very interested in the outcome of this case. We are far, far away from that. That is literally when you look at a Verge webpage, there's like the stuff we make and the ads. And the ads are run by another team and they, and like literally other computers

• 12:12Nilay Patel?

  that are all tied up in Google's systems.

• 12:14David Pierce?

  Shout out to Ryan Pauli, though, a Vox Media executive who appears in the decision a couple of times.

• 12:18Nilay Patel?

  Does he really?

• 12:19David Pierce?

  He does.

• 12:20Nilay Patel?

  Ah, that's a great.

• 12:21David Pierce?

  Concert, baby.

• 12:23Nilay Patel?

  I'm gonna go upstairs and find, yeah, we run a programmatic ad exchange. It is all tied up in this. You know, the thing that really got me, and I'm going to try to like, make this real or at least tangible to people, because ad tech is really complicated. Like complicated and full of like pure hacks to get around Google that Google then crushed. Like this cat and mouse game, which is kind of neat. But it's also just like a bunch of ad people doing ad stuff to extract pennies at scale. And your eyes just glaze over. But the way, the essential way it works is that you load up a Verge webpage. And you know, the story comes from WordPress. That's the system we use. And the advertising all comes from another set of systems. Right? Double click for publishers is the one that they're always talking about in this decision, DFP.

• 13:08Nilay Patel?

  That goes out and says, I've got this ad space. Does anyone want to buy it? I'm going to serve it to these demographics that I found on this website. And advertisers are supposed to bid on it. And that's an auction. And so like whoever bids the most for the space and the scale wins or supposed to win. And what has been happening here with Google is they, because like David said, they own all the, the systems that interconnect. They just keep giving themselves advantages.

• 13:36Speaker 06

  Right.

• 13:36Nilay Patel?

  So they run the software that delivers the ads to us. They run the bridge software in the middle and they run the supply software that the advertisers buy into. And the two things that jumped out to me are these policies they had. So it's an auction, right? Like just think about you at an auction. Google had a policy called first look, which required publishers to give Google the first right of refusal for every impression. So you're like, I'm going to put this up for auction and Google will be like, I want it. And that would just be the end of that.

• 14:05Speaker 06

  Right.

• 14:06Nilay Patel?

  And then they had a policy called last look, which gave Google the ability to see everyone else's bids in an otherwise sealed auction before it could bid. So you have this like sealed auction and Google can look at it and say, oh, that is worth it and pay. So they had the first look and the last look on the auction.

• 14:24Speaker 06

  Sounds like a great business.

• 14:26Nilay Patel?

  It printed money. Like, where do you think all the GPUs came from? They got slides in the office, man. Like all of that Google, you know, like we can't figure out pixel phones. We can just not do that forever because this is printing money. And every time a publisher would try to do something to stop it, they would do hacks. Right? They would run their own auctions before opening up the auctions to Google's ad server. And then Google would find a way to shut that down. Like that's the level of cat and mask game that was going on. Revenues just went down and Google's search traffic is down. You're like, oh, the web that Google built is dying. It's under all of this pressure that we can see, but it was also under this massive revenue pressure this whole time.

• 15:06Speaker 06

  If Google loses control of this ad plumbing that fuels and funds a lot of the web, like we're talking about, what happens next?

• 15:15David Pierce?

  Do we, do we have an idea? I mean, the, the hopeful version is you get a, a huge teeming market of ad technology, right? That like, there, there is this big push a few years ago now, I've, I don't know, what is time? Uh, but there was this big push towards this thing called header bidding, which was essentially the idea that actually, instead of just Google being able to bid in real time for ads and everybody else had to like, submit them ahead of time. Like, this whole thing is insane. That was the hack I was talking about. I did my very best to not say header bidding. I know, David just said header bidding. But header bidding, the, the whole idea was like, we can use one line of code to essentially level the field and give everybody equal access to this, which means the advertisers are going to get the thing that they want and they are going to pay the most money for it and

• 15:56David Pierce?

  everybody wins and, and the money just keeps flowing. And in theory, that's where, that's where this goes, right? Like the, the actual technology to make this stuff work is out there. It's just that Google has so thoroughly like, subsumed all of the supply and demand inside of its own system, that if you blow it out, in theory, advertisers will get better placements for their ads and thus better performance on their ads. Publishers will get more money for their content. Like this is, this is the thing you were trying to pry open is just sitting there. The question is, is there any actual reality in which that works? Like, Google is so far ahead. One of the things they talked about in this trial over and over was how high the switching costs are, that like, even these companies

• 16:41David Pierce?

  that know Google is charging them twice as much as some of its competition, which everyone agrees is a better product, you just, it's just not worth the hassle to leave because you're essentially just like, throwing all of your money away while you try to switch ad platforms. So, Google's bet forever has been, people will stay because it's too annoying to leave. And even with all of this, it seems like there's a real chance that that is what happens. And Google ends up being forced to spin off either, you know, one, one part of that pipeline.

• 17:13David Pierce?

  But I don't know. In, in practice, it seems very possible to me that not that much actually changes.

• 17:17Nilay Patel?

  First, I want to say that David did say header bidding, and I should have just said it first. And I did my very best to not say header bidding, which is, if you ask the ad world, and you say, if you like, go into ad world, and you say header bidding, they all just like, lose their minds. Like, that's when they lost. They know it's when they lost. It's just this very weird, wonky thing. But there are quotes that really back up what David is saying here from the opinion. I mean, just straightforward. Like, again, this judge did not play around. Quote, "Direct pricing evidence shows that Google could profitably price significantly above competitive levels because enough customers would keep buying those products and not go elsewhere." Right? They were just raising the price, and the switching costs were too high.

• 17:56David Pierce?

  Which, by the way, is like, the most classic monopoly move, ever. Get everybody in, and then, once they can't leave, raise the prices. It's like, that's, that's, that's the definition of monopoly.

• 18:08Nilay Patel?

  Yep. AdEx, which is one of the Google products here. AdEx's relatively high market share viewed in conjunction with high barriers to entry, and expansion that exists for other ad exchanges, supports the conclusion that Google has had and continues to maintain monopoly power. And then, the last piece of the puzzle, which is really interesting, is that Google also has the demand. Right? And they have the demand because of search, which they also have monopoly in, per another court. So, the court says, "You can do all this switching, but this big volume of advertisers is already buying Google's search, and Google's just like, selling them this other product on the side. They're tying them together." Like you're saying, Alex. So, here's a quote. "Google has been able to amass this unparalleled

• 18:50Nilay Patel?

  group of mostly small and medium-sized advertisers, in large part due to the dominance of search, which another district court has found to be the source of Google's monopoly power in the markets for general search services and general search text ads." So even if you can build a better system that returns higher rates, Google has tied its dominance of the ad tech market to its dominance in search. And people are buying the search ads and they said, you want to buy ads across the web? When you're on the shoe review website? People say yes, and Google extracts all of that money too. So you've reduced competition sort of across the board. And there's all this evidence because Google has to make deals with everyone. And there's all this evidence.

• 19:26David Pierce?

  But also to your point, Alex, that that's in, in, in that is the real threat to Google here. Right. Because what you're saying is actually all of these things are so powerful in part because they are tied together. Because when you want to buy search ads, now you're in our system and it's actually easier and faster and more efficient for you to buy AdWords ads on the rest of the web in the same way that you're building ads, products for search. Now we have a big hole getting poked in the middle of search. Big questions about what's going to happen there. And you have being forced to open up the ad tech stack. Like all of a sudden, if I'm Google, I'm looking at this as like, yes, it's a threat to that small piece of our revenue that is coming from this like open web advertising system.

• 20:09David Pierce?

  But this also, this rolls right back into search ads, which is that's where the real money is. Like if you're Google, that's the money you're worried about. And this is, this is not exactly that, but it is right next to it.

• 20:19Nilay Patel?

  It's also, what are you going to search?

• 20:21David Pierce?

  Well, there's that.

• 20:23Nilay Patel?

  Like, what are you going to search? For real, what are you going to search? If you kill the web in this way, if you put the SEO pressure on it, you put the AI scraping pressure on it, the AI answers in search pressure on it. You've put this much revenue pressure on it. Profit really making a webpage, which disclosure is the business we're in, is crazy.

• 20:46David Pierce?

  Yeah.

• 20:46Nilay Patel?

  Like I've asked this question of so many different kinds of media executives, of platform executives, of like the CEO of Squarespace comes on Decoder. I'm like, why would anyone make a website? And like, I don't know. And that's bad. Like that is the thing that is worst for Google. The only answer any of those people can ever really give me is to do e-commerce. You start websites to do e-commerce because you don't want to sell your product on the TikTok shop. So you want to kick people to a website so you don't have to pay a bunch of platform fees. Bad. Like, that is, that is a nightmare for Google because the new information is getting published in the platforms that are decidedly closed to the Google search crawlers and the Google AI systems. It's bad for all of us because the open web is just under all this

• 21:30Nilay Patel?

  pressure that you can see every day. And all the new information is on TikTok, which doesn't talk to Instagram, which doesn't talk to X, which it's like, there's a real thing here where it's like the future of Google's at risk, but the future of the internet's at risk because the open system has been kind of crushed out of being. I don't know what's gonna happen next. If I was Sundar Pichai, I would call Larry Page and politely ask for permission to break up the company before the government does it first. That's what I would do. Like, straight up, that's what I would do. I would say, look, we're gonna sell YouTube and let YouTube be its own thing, and we're gonna try to fix this web problem so that we don't lose to closed systems because our entire self-conception has been

• 22:11Nilay Patel?

  about openness. And if we lose openness because we crushed it out of existence, that will just be our fault. I don't think they're ever gonna do that. We did learn in the meta trial that sometimes they think about splitting up their own companies. And I would just say to all these executives, it would be better for you to do it on your own terms than have the government do it for you. But it's kind of like Google might be at that point where it would be better for them to do it themselves before letting two different district courts in two different remedies phases come to their own conclusions.

• 22:39Speaker 06

  This feels like a make or break moment for Google in pretty much every way. So you've got them losing their monopoly power that they've used to build, build the best business in the history of the world over the last 20 years. You've got OpenAI and AI eating into search. You've got the internal cultural problems, which I've written about a lot over the last year. And yeah, it feels like Google has to rise to this challenge, or this may be the end of Google as we know it.

• 23:09Nilay Patel?

  Yeah, I think it absolutely is the end of Google as we know it.

• 23:11Speaker 06

  Right?

• 23:11Nilay Patel?

  It, it already is.

• 23:13Speaker 06

  Right, structurally, but I'm saying in terms of relevance, in terms of power, in terms of Google just being this on the Mount Rushmore of big tech, just always being there. It feels like they are vulnerable.

• 23:24David Pierce?

  I've been wondering recently if that happened a while ago and we just didn't notice. Like, because I think the, the certainly in terms of like relevance and, and sort of market power, it's still at the peak of everything. But I think, I, I just think about sort of the company that Google was for a long time. And like, I think a lot of people really rooted for Google because Google set itself up in a way that was like, okay, as, as the web, as an open accessible thing wins, Google will win, right? And I think, I think most people saw that as like a net good. Google was like, okay, we want to help people get online. We want to give people things to do on the internet. We want to give people access to lots of things. We're going to make a ton of money and that's a pretty good trade. And, and it was like, that was a pretty good trade.

• 24:07Speaker 06

  The mission statement was organize the world's information and make it universally accessible. And I think that last bit is what the industry at large loved and what

• 24:16David Pierce?

  Right.

• 24:16Speaker 06

  endeared a lot of goodwill to Google. And what these monopoly cases are showing is that once the money came in, it wasn't actually about making it universally accessible to everyone. It was about how can we benefit our constellation of products that we use and tie together to maintain dominance.

• 24:33David Pierce?

  Right, totally. And I think somewhere along the way, Google stopped being good for the internet and it just took us a long time to realize it.

• 24:41Speaker 06

  Yikes.

• 24:42Nilay Patel?

  I gotta sit with that one for a while, but that really does cut against everyone's conception of Google.

• 24:49David Pierce?

  Including Google's conception of Google.

• 24:50Nilay Patel?

  I have been harsher on Google than anyone in these past few years. And I, there's still the idealism within the company. And I think the thing that Alex is pointing at is the money side of the company stopped being idealistic a long time ago. Right? That is just a bunch of sharks and like. That's advertising. Like, have you ever met people in advertising? Like, they're sharks. Like, they're just trying to sell you nail polish in sports cars. And it's great. I love those things. But like, Google's idealism to make great products and to funnel that money into whatever wacky idea, whether contact lenses that could see, like, detect health problems, like, all of that started fading because none of that started working and they weren't, they didn't find anything else to make money on,

• 25:33Nilay Patel?

  except search. So they just turned the screws on search in this very specific way. And the openness became their weakness in these antitrust cases. Like I said, I, if it was up to me, I would, you know, this is like the time for radical reinvention of Google. And in particular, to say, the open web needs to be protected because if it dies, or the next new person who has an idea to make information will not do it on the web, that's death. Like, I, that's just death. I think I even asked Sundar Pichai last year, like, why would anybody start a website? And he was kind of like, well, we have YouTube. And that's not great. Like, that's death. And you gotta, you gotta do something to protect that feedback loop so that the web persists in a way that allows search to exist,

• 26:17Nilay Patel?

  but also just allows more information to be published in open ways. I don't know what's gonna happen. Like, there's a remedies phase, there's the search remedies phase. It's just wild that this existential problem for Google is literally coming up the week that Meta is also facing an antitrust trial. And they seem to be in almost the exact opposite position where the government can't even describe what Facebook is.

• 26:40Speaker 06

  It's so funny, we're talking about this. I've been looking at my notes because being in the courtroom, you know, you can't have a phone enough. So I've just been writing all these notes all week. And Zuckerberg actually talked a lot about Google because he was getting asked about, basically, and I don't know if we're officially segueing now, but the FTC was saying, do you think that Instagram and WhatsApp could have been as successful with another company? And Google was kind of the main example. And I don't have the exact quote, but it was something along the lines of, he said, "Well, I think ability and execution are different things." And she basically chat on Google's

• 27:19Speaker 06

  Organizational structure and he was like, look, I think they're technically excellent. I think that they often struggle. He was basically like, it perplexes me sometimes the decisions they make because they have the ability. And I think organizationally, I think he said they're challenged. And it's just funny in hindsight with like these two cases back to back.

• 27:39Nilay Patel?

  We should talk about the meta case now. I don't know what's going to happen to Google. We are going to get the two remedies phases. Google, by the way, says it's going to appeal and in its statement said, we've won half the case. I hate to be a scold. There were three counts. Google got one dismissed and lost the other two. That is technically one third. Just putting that out there, just, just noting.

• 28:00David Pierce?

  And it turns out that losing by a little and losing by a lot don't actually matter all that much.

• 28:06David Pierce?

  It's not like the scoreboard doesn't really chart.

• 28:09Nilay Patel?

  If Google has to sell add X and D F P, they have lost by a lot. And that's the, that's what they're staring at. But the meta case is fascinating, right? Not only because Mark Zuckerberg is apparently doing Decoder bait live on stage in our nation's courtrooms. But because there isn't all of this contractual evidence that they were influencing the thing, even though everyone knows that meta ties its products together to make a stronger ecosystem. Like if you breathe at Instagram, that content ends up on five different platforms before you even like finish pressing the button. But that's meta controls it all. So it's like, fine. And I, I think the government is really, it appears the government has very much struggled in this case.

• 28:48Speaker 06

  Yeah, I would say so. First, I just want to talk about what it was like being there because there's something beautifully egalitarian about being in court for something like this. Cause you know, Zuckerberg, he rolls like the president, right? He's, he's got a ton of bodyguards. He's a third richest man on earth. And you know, it's kind of, it was cool and, and made me have some hope for America, just watching this all play out. So this judge, Chief Judge Boesberg of the U S District Court of D C. During like one of the breaks, like 10 minute breaks, he filed, you know, that he was possibly going to hold the Trump administration in contempt over the El Salvador deportations and, and the illegality and question marks around that.

• 29:32Speaker 06

  So he's got a lot going on. Trump has called him a left wing lunatic. The security in the court beyond just Zuck being there was very intense because of the fact that it was him doing the case. So it was really interesting to see this.

• 29:47Speaker 06

  And, you know, I expected, you know, I was there with a few other reporter friends and the first morning we expected, you know, throngs of cameras and lines of the public because, you know, it's a public courtroom. Anyone can go in. I don't know if people realize this in this country, you can literally just walk into this courtroom.

• 30:05David Pierce?

  There was a guy, fun fact, this not to derail you, but there was a guy who sat in the courtroom every single day I was there for the Google search trial and read a book. I cannot explain to you why this man was there, but he just, he wore like cargo khaki pants and read what looked like a, like John Grisham novel. Every single day in court. Don't know why.

• 30:22Speaker 06

  I mean, the marshals are very serious, like no electronics, like very funny. Mike Isaac from the Times was wearing his Meta Ray Bans at one point. And he almost got thrown out because they were like, is that recording?

• 30:35David Pierce?

  That's great.

• 30:36Speaker 06

  But it was very cool just watching it play out and the, um, the pomp and ceremony of it all, but also just like the, okay, this, this part of the government, at least right now, seems to be working. And, you know, Meta's got all these high priced fancy lawyers. Uh, the FTC's team was, I would say fairly young. I was actually surprised to see everyone looked to be like kind of in their thirties and, um, it was, it was interesting to see the dichotomy of the two sides. But it's like, it's literally me, a few other reporters, like Joel Kaplan, I was sitting right behind Ferguson, the Chair of the FTC, the first day. Would not talk to the press, uh, wouldn't really look at us.

• 31:17Speaker 06

  And so, yeah, that was just like what it was like being in the room. It's this grand, you know, it's the chief judge's room. So it's just very grand.

• 31:26Speaker 06

  And to watch Zuckerberg walk in, you know, he still manages to have like one bodyguard come into the room with him. But just to watch him be regulated to like a common man, you know, like he doesn't, he doesn't get to like leave first or come in last, right? He kind of filters out with everyone, like shoulder to shoulder, you know? It was cool. Um, but the case itself, uh, I left DC.

• 31:53Speaker 06

  Really with the impression that our government does not understand how social media works, which is a bummer because I think there's a lot of really interesting questions you should be asking about if you're the US about Meta's power. Should one company own this much of social media, really control fundamentally speech at this level? And unfortunately, the way they're attacking it, I think is, is it just makes no sense. It's not, it doesn't, anyone who actually uses the internet would look at this case and say it makes no sense. So basically, the way the FTC is, you know, because for an antitrust case, you have to define the market, right? And this is actually where this case has struggled and where it got thrown out originally is the judge found that the FTC had not kind of properly defined the market.

• 32:35Speaker 06

  So they narrowed it down to what they think is the market that Meta competes in in the US. And do you want to know the only other apps that are in that market?

• 32:43David Pierce?

  Wait, no, before we even get to that, I want you, I want you to explain what they think that market is because I, I have read a lot about this now.

• 32:50Speaker 06

  Yeah.

• 32:50David Pierce?

  I couldn't explain it to you, but you sat in court, like what, what is, how do they think about this market?

• 32:55Speaker 06

  They have narrowed it to what they call personal social networking services. So like

• 33:00David Pierce?

  The hell does that mean?

• 33:00Speaker 06

  SN, I don't know. No one knows. I've covered social media for 15 years. I've never heard of this before.

• 33:06Nilay Patel?

  Wait, and can I just add one more piece of information to that? Because I think this is, it is, you just mentioned that this case got thrown out once before. Lena Khan's FTC got this case thrown out. Judge Boesberg threw out Lena Khan's version of this case, saying the market was ill-defined and made no sense.

• 33:21Speaker 06

  Yeah.

• 33:22Nilay Patel?

  Andrew Ferguson, Trump's FTC chair, is now in charge of this case, pursuing it even though Mark Zuckerberg is in the White House every day. And he's landed on whatever this definition is to cure the already muddled definition that Lena Khan got through.

• 33:38Speaker 06

  Yeah, and there's also a narrative out there that this was the Biden administration's lawsuit. It actually got first filed under the first Trump administration. So this has gone through now three administrations. So that's, that's their idea. So basically Meta competes for sharing between friends and family. That's the market they're trying to say they should break Meta up for.

• 33:58David Pierce?

  Okay.

• 33:58Speaker 06

  Uh, okay, guess, guess the, the apps that are in this market?

• 34:02Nilay Patel?

  Sharing between family and friends.

• 34:03Speaker 06

  Yeah.

• 34:05Nilay Patel?

  Facebook.

• 34:06David Pierce?

  Facebook.

• 34:07Speaker 06

  Besides Facebook.

• 34:09David Pierce?

  Like X? Seems like it would belong.

• 34:13Nilay Patel?

  Snapchat.

• 34:14Speaker 06

  Yes.

• 34:15David Pierce?

  Snapchat's a good one.

• 34:16Speaker 06

  There's only one more besides Snapchat.

• 34:18David Pierce?

  I keep thinking of messaging apps that Meta already owns, which is a bit of a problem.

• 34:21Nilay Patel?

  It's not messaging, right? It's sharing between.

• 34:23Speaker 06

  No, it's not messaging.

• 34:24David Pierce?

  But if we're sharing between friends and friends, that's where people share.

• 34:26Speaker 06

  No, not according to our government.

• 34:28David Pierce?

  Oh, my God. Okay. Um.

• 34:31Speaker 06

  Snapchat and one other.

• 34:32David Pierce?

  Tumblr.

• 34:33Speaker 06

  No.

• 34:35Nilay Patel?

  Is it MeWe? Is it the one that you mentioned at the top?

• 34:37Speaker 06

  It's MeWe.

• 34:38Nilay Patel?

  What is MeWe? I don't even know what MeWe is. I just heard you say it before.

• 34:41Speaker 06

  Funny, Meta's lead attorney asked Mark Zuckerberg that very question on the stand, and he said he does not know. And he said, have you ever heard of it before this case? And he said, no. I checked my email. I've actually gotten pitches from MeWe over the last couple of years.

• 34:55Nilay Patel?

  What have you been doing, Alex? The greatest threat to Meta that exists.

• 34:59Speaker 06

  They have some kind of blockchain angle. Tim Berners-Lee is involved. Frank McCourt, who is also trying to put TikTok on the blockchain, is an investor. So that's MeWe. They have about 20 million, I think, something like that, users worldwide. I have never used it. I have never met a person who's used it. But that is, that is the market, according to the FTC. So on the, on its face, that's, that's just ridiculous, right? And, you know, I was talking to some other antitrust reporters who, who know the actual, you know, how the mechanics of this play out better. And apparently the judge can define the market however he sees fit, you know? So it's not like the FTC's market is definitely going to stick, or that Meta's rebuttal of it will stick. The judge might just be like, you're both wrong.

• 35:44Speaker 06

  And they probably are. Although I do actually buy Meta's argument a little more, which is that, no, we compete across TikTok, iMessage, YouTube, X, Telegram, Signal, et cetera, et cetera. I would say Zuckerberg spent a lot of time saying that YouTube and TikTok especially were his main competitors. And a lot of time, I would say, throwing like founder shade at Snapchat. And saying like, yeah, I wish we would have made it work. I think they'd finally beat a billion users, and they still aren't 10 years later. Stuff like that. So, um, because he, you know, it came out in the courtroom and it's been well-covered, but that he, he tried to buy them as well. So this is the FTC's argument and.

• 36:30Speaker 06

  You know, I do think they're also looking at some interesting things around network effects around what happens when you reach this scale and there's so many people on a network. And the switching cost is actually your friends not coming with you. And they talked about that a little bit, but I found their examination to be fairly meandering. There was a lot of like, do you remember that you wrote this Facebook blog post in 2008 about sharing on the newsfeed? Like, stuff like that. And Meta's argument about the market to be much stronger.

• 37:03David Pierce?

  Yeah. It just feels like I just have a really hard time looking at this in any way that says Facebook doesn't compete with TikTok and taking that seriously. Like, it just, it just does.

• 37:17Speaker 06

  Yeah.

• 37:17David Pierce?

  It just does.

• 37:18Speaker 06

  Some of the most interesting evidence was actually in the opening arguments. Meta displayed some internal data and we have it on the site. We've got a stream that I and Lauren Finer have been contributing to. Everyone should go check it out. There's a lot in there. Meta actually showed data that when TikTok was briefly offline, you know, earlier this year because of the ban, traffic surged to actually Facebook a little bit more than Instagram. And then they had like Snapchat way at the bottom, like Snapchat got like a percent. And Snapchat actually got so mad about this that they had their lawyer in the courtroom a couple of days later. Also because Meta didn't properly redact the slides for the public, saying like, you're revealing our confidential information.

• 38:00David Pierce?

  Snap's lawyer is like, don't tell anybody that nobody uses our products.

• 38:05Nilay Patel?

  The inside baseball, by the way, is that Meta tried to threaten Alex into not publishing their unredacted slides. And I was like, that's not, it's just not our problem. Like, if you email us unredacted slides, we can publish them.

• 38:16Speaker 06

  Yeah, it's a tale as old as time. This has happened in like every good case. The Apple's lawyer was in there too, like saying, we don't have faith. Meta will, you know, not disclose our confidential, you know, confidential info, which I'm sure Meta would love to, right? They, they hate Apple, but yeah, and that's, that's, that's the high level of it. And I'm curious, like.

• 38:36Speaker 06

  I'm curious how much of this case is actually just naked politics because I was watching Ferguson on Fox Business after the first day and he point blank said, we are doing this to make sure 2020 never happens again. And he didn't say exactly what that meant, but I think it means, you know, the Trump administration has been very mad about how Zuckerberg funded voting drive stuff, mail-in ballot initiatives during the election. He actually thinks that Zuckerberg somehow played a key role in, in him losing that race. And then you have Ferguson on, you know, the president's favorite news channel saying, you know, this case is to make sure that never happens again. So I think that kind of shows the motivation here.

• 39:20Nilay Patel?

  I want to get to the substantive argument, but I'm actually fascinated by all of that aspect of this case in particular, because, you know, the Google case we're talking about, that was argued under the Biden administration, it was filed on the first Trump administration, argued under the Biden administration by Jonathan Cantor, who has been on our shows before. I'm trying to get him to come back and actually talk about it. But, you know, like I've asked Cantor, like, you're the assistant attorney general for antitrust. Like, how do you run your team? And he had like answers, you know, like, he's like, here's how I do decisions. Here's how I like prioritize. And they were very good. Right? And that's the DOJ, which was basically a different law firm with a different boss. This case

• 40:01Nilay Patel?

  is the FTC, which was run by Lena Kahn, different law firm. Like, that's the way to think about it. Like, the DOJ and the FTC have different legal teams. They might have the same theories or the same goals, different lawyers, different legal teams, different relationships to the president, right? The DOJ is a law enforcement organization. The FTC is a law enforcement organization, like, in a civil way, right? Like, they're just different. And Ferguson, in particular, is caught up, the new chair of the FTC under Trump, his Democratic commissioners were fired. Like, Trump fired them. They're suing him. It will go to the Supreme Court and like a hundred-year-old precedent about whether the president can just fire FTC commissioners

• 40:42Nilay Patel?

  is going to come up for review. So Ferguson is in this weird box, right? He has a boss who shouldn't be able to fire him, but has proven that he will and like break the law and like go fight at the Supreme Court. Under this conception that the president is the chief executive of the country and makes all the decisions, which is not true, but kind of true. It's like very weird, right? He's just in this weird spot and he's got this case that was argued by a bunch of his predecessors. And now everyone else got fired too because of Doge. So he's got all these baby lawyers and he's, he, he has to play the role of like the fire breather that everyone else has to play now. And so of course he's on Fox Business being like, the reason I'm pursuing this case

• 41:25Nilay Patel?

  is because Donald Trump didn't get a candy bar on January 6th, 2020, or like whatever it is, right? But that's not why this case started. That's not why this case was pursued under Lena Connaughton and Biden. That's not why they kept the case going. That's not why they kept the case going, even though Mark Zuckerberg has been in the Oval Office repeatedly saying that he'll make a deal for numbers that range from like $5 to like $3 trillion, like just numbers.

• 41:51David Pierce?

  Yeah.

• 41:51Nilay Patel?

  Like me, just a range of numbers. That's, none of that's the real reason, but I think to keep Trump from firing him or making a deal or undercutting this populist antitrust movement that is pretty bipartisan, he's got to say this is about censorship. Or Andrew Ferguson has fully converted to MAGA like our buddy Brendan Carr and it's about censorship. Like I don't, I truly don't know, but that's just the weird uncertainty inside all of this.

• 42:18David Pierce?

  He is very much doing the thing you have to do, no matter how you feel about it. Like whether he is just a zealot who wants to win this case or is just actually purely in it for the politics, you would do the same thing, which makes it weird. Like that is the speech you give on Fox Business, no matter how you feel about actually what's going on in this case.

• 42:36Speaker 06

  Yeah. I mean, he tells the world it's to keep, you know, J6, you know, Trump getting kicked off from happening again. But like inside the courtroom, there was nothing about censorship, nothing. It was not in any of the FTC's arguments, um, because it's not, you know, private companies can do whatever they want as it relates to speech. That's, that's the constitution.

• 42:55David Pierce?

  That's how that works. Yeah.

• 42:56Speaker 06

  At least for now. And like me, we censorship never came up once in the three days Zuckerberg was on the stand.

• 43:04David Pierce?

  Interesting.

• 43:05Nilay Patel?

  Yeah. Cause the case is fundamentally about, did you perceive Instagram to be a competitor and buy it to preclude competition?

• 43:11Speaker 06

  Right.

• 43:12Nilay Patel?

  Did you perceive WhatsApp to be a challenger and buy it to preclude competition?

• 43:17Speaker 06

  And They absolutely did. I've been covering this company for a long time. Some of the emails they were showing and internal documents, like I actually like scooped back in the day. It was actually wild to watch like internal documents that I remember first publishing, being shown in this courtroom like, and it was all about that. And it's totally true that yes, they saw Instagram and WhatsApp as competitors. They weren't direct competitors, but they foresaw them becoming that. Um, to the point that, you know, there's words like neutralized that Zuckerberg said, you know, that it, these famous emails that have now been out for a while. I was expecting the FTC to show some new evidence. Um, and there were a couple of things. I would say the only time inside the courtroom where like

• 43:58Speaker 06

  you could feel the meta trial team bench kind of just like set up a little bit was when, um, they started reading, they started having Zuckerberg read this memo to his exec team in 2018 where he said, I think we should spin off Instagram and literally said that companies tend to do better after they've been spun off.

• 44:17Nilay Patel?

  I'm telling you, man, do it before the government does it for you. If you think you're so much smarter than all these government flunkeys, you probably are. Mark Zuckerberg, smart guy. Do it in a way that meets your interests, that makes everybody money before the people you perceive to be dumber to you, do it to you on behalf of the American people.

• 44:36Speaker 06

  Yeah.

• 44:36Nilay Patel?

  Just do it first. I, I continue to believe that is the smartest answer for most of these companies to do it in a way that satisfies the optics of all these people, but preserves the business.

• 44:46Speaker 06

  Yeah.

• 44:46Nilay Patel?

  And like, I don't think, I don't think they will learn that lesson. I think we're going to see a bunch of weird breakups coming, but it's just very funny that Mark saw it.

• 44:53Speaker 06

  Yeah.

• 44:54Nilay Patel?

  He was like, oh, I should spin this out and let it become its own thing.

• 44:56Speaker 06

  Yeah.

• 44:56Nilay Patel?

  Cause it'll go faster.

• 44:57Speaker 06

  Yeah. I mean, you can't deny when you look at these lengthy, like exec memos he writes inside the court, like he's, he's a brilliant strategist. And in 2018, ahead of the Biden administration, he was writing to his team. I, I think, uh, especially with a democratic administration, uh, big tech's going to get broken up. Uh, we should be thinking about this seriously and planning for it. And, um, you know, he saw this coming. And so at the same time though, he's like grinning and saying, I would totally buy WhatsApp again. It was awesome. Like, um, and that's the tension, right? Is like, you have him acknowledging and the FTC presenting evidence that he knew that the company was going to face these calls to get broken up, broken up. And then I'm sitting in the courtroom

• 45:41Speaker 06

  and I'm watching the argument for doing it. And I'm looking over at the Meta people and they're literally like sometimes high fiving as they walk out on breaks. Like, they feel like this is a layup, like they're just gonna crush this case. And that's, it's a bummer. It's a bummer for like taxpayers. It's a bummer for holding power to account. Like, there is actually power here that needs to be addressed in some way. I think there's more interesting arguments to be made around interoperability. Why is there so much energy around the Fediverse? It's because people feel the actual cost of these platforms, which is taking your speech and your network with you. Should a platform as large as Meta have to allow interoperability? That's something I would love the government to, to look at. But instead, they're like, you're competing with me, we.

• 46:26David Pierce?

  It is very strange because I'm, I'm so torn between like my principles and how I feel about technology and the internet. And like, I, I would like using WhatsApp more if it weren't owned by Meta. Like, that's just, it's just how I feel.

• 46:40Speaker 06

  A lot of people feel that way. Yeah.

• 46:42David Pierce?

  Yeah. And yet, every single thing I have seen and read about this trial makes me agree with Meta. And, and there's just so many moments, like so much of this discussion seems to have been, basically, the FTC saying to Zuckerberg and the other witnesses, like, you bought these companies because they were threats. And, and they're sort of like, sure, like, we, we thought that they might be, but also, they are only as successful as they are because they are part of this company. And I, I, like, again, I hate how compelling I find that argument.

• 47:15Speaker 06

  The evidence is, it's irrefutable.

• 47:17David Pierce?

  It is. And, and I think the WhatsApp piece of it is, is my absolute favorite because there, there was a bunch of evidence presented that, basically, the WhatsApp guys were just happy. They were just like, they, they remind me of like when Microsoft tried to buy Nintendo and Nintendo was like, what do we want with your money? Like, leave us alone. We're having a great time over here. But the, the, basically, like, you heard this more than I did, Alex, but my, my impression is basically, like Zuckerberg goes to talk to the WhatsApp co-founders and he's like, he's like, don't you wanna have lots of features and sell ads and take over the world and you're gonna be huge? And they were just like, not really. No.

• 47:49Speaker 06

  No, they said they wanted to be Craigslist. And Zuckerberg is like,

• 47:53David Pierce?

  hell, yeah.

• 47:54Speaker 06

  Zuckerberg was like,

• 47:54David Pierce?

  more of us should want to be Craigslist.

• 47:55Speaker 06

  So and then the judge is like, how does Craigslist work? And then Zuckerberg is like, well, Boesberg feels like a Craigslist guy. I have to say, if I had to pick one platform for George Boesberg, it would be Craigslist. Yeah. And and Mark was like,

• 48:08David Pierce?

  or Nextdoor.

• 48:09Speaker 06

  And Mark was like, I, I didn't want them to be Craigslist. Like, I saw this being a billion plus user platform. And he literally called Yang Koo, the CEO of WhatsApp, unambitious after he met with him the first time. And that really cuts at the FTC's argument because intent alone does not prove you did something to become a monopoly. You act, as, as far as I understand it, the government has to show that Meta degraded the marketplace by, you know, buying competition, that basically these apps, these services got worse, prices went up, they can't argue that because it's free, right? Although they're trying to make some ad load argument that's not really even sticking as they're saying it in court.

• 48:48Speaker 06

  And then Zuckerberg can just say, no, like, we, and they're showing the board decks were like, they projected to get to X user milestone, they way surpassed it way faster. Nearly 3 billion people use WhatsApp now, which is the first time I've heard a WhatsApp user stat in years, something Zuckerberg said on the stand. Instagram, he was like, Kevin Systrom and I, we thought we could get to 100 million users. And if we did that, that would be a success. And it got to a billion within a few years. And so it's hard to argue that Instagram and WhatsApp became meaningfully worse. Now, I know everyone is listening and going, I, come on, what are you saying? Like, I hate Instagram, I love it, but I hate it, right? And that's the tension of the case is that people do feel strongly that these apps could

• 49:32Speaker 06

  be better if, if Meta and its incentives weren't, weren't behind them. But if you look at the marketplace, it's like, there was a lot of time spent on path, right? Which like, I had not thought about path in so long.

• 49:44David Pierce?

  I was just going to mention path. Path caught so many strays in this trial.

• 49:48Speaker 06

  Oh, my God.

• 49:50Nilay Patel?

  And it was because Zuckerberg also looked at buying Path. And Path is an example of a startup that he didn't buy. And it died and it's been lost to the, you know, to tech history.

• 50:02David Pierce?

  And he talked about it in exactly the same way, which is I think why Meta kept bringing this up. That it was like, it was the same, like, this is growing, people really love it, maybe it's a threat. Like, he talked about it in the same terms he talked about Instagram. And it's like, look at the one that they bought and look at the one that they didn't. And it is, uh, I'm not saying those two things are like predictive, right? Like correlation causation, but, uh, one is Instagram and one is not.

• 50:25Nilay Patel?

  Well, okay, so I will, I'm gonna try to use Zuckerberg's own argument against him.

• 50:29David Pierce?

  Okay.

• 50:30Nilay Patel?

  Cause it is true that Zuck's strategy memos, even if it's like dashed off emails, where he like emails a random engineer and is like, I have this idea. And the engineer is like, help, you know? Like, the ideas are always really good, because he's smart and he's ruthless. And he, there's an email, it's one of the emails you scooped back in the day, Alex, where he's like, my insight is that every generation comes up with a new sharing mechanic, and I need to buy the sharing mechanic.

• 50:57David Pierce?

  Yeah.

• 50:57Nilay Patel?

  So we had friends and family updates on Facebook. Instagram is photo sharing. And then he clearly saw that messaging was the next one with WhatsApp, right?

• 51:05David Pierce?

  Yeah.

• 51:05Nilay Patel?

  And this tracks everything Facebook and Instagram say about themselves.

• 51:08David Pierce?

  Yeah.

• 51:08Nilay Patel?

  All the action is in the DMs. They say this all the time. So you just see, Mark was like, okay, I had this mechanic. I see the next one is gonna be photo sharing. I'm gonna buy that mechanic. What's the hottest thing there? Okay, the next one is obviously private messaging. I'm gonna buy that mechanic. What's the hottest thing I can buy there? And he just did it. And I could not tell you what that thing is as it relates to Path. Check, checking into, like, what, what? I don't even remember what it was. But it wasn't something where I'm like, oh, there's some core mechanic here that will undercut the entire promise of Facebook.

• 51:41Speaker 06

  I think it was their idea that the graph would be artificially limited, because Path was like, you could only add so many people. They based it on that. There was like a theory.

• 51:49Nilay Patel?

  That's not a sharing dynamic, right? That was past theory. And even by Zuckerberg's own, like, framework, it would never be a thing.

• 51:55David Pierce?

  The location-based check-in thing was, was real.

• 51:58Nilay Patel?

  That was Foursquare.

• 51:59David Pierce?

  I know, but it was like, it was all sitting right there, right? This like, sort of, real-life geographic thing was like, was almost that.

• 52:06Nilay Patel?

  Sure, I'd like, bring back Path, David. You could check in on Facebook. Federated Path, it's the, it's the future. You can have six friends and all of them are like, why am I here? But the next turn, the one that they almost missed was, what if we show you videos from people you don't know? Truly, that was the next turn. That was TikTok. And they immediately, they could not buy TikTok. And they even said, there were all these like Chinese issues, Chinese ownership issues of why we couldn't buy music.

• 52:34Speaker 06

  Again, he looked at it before anyone else. He met the founder before it was even in the US because he knew this was coming. And he was like, I couldn't do it because of the China stuff.

• 52:42Nilay Patel?

  And they had to hard pivot Instagram and they had to compete.

• 52:46Speaker 06

  Yeah.

• 52:46Nilay Patel?

  Whatever you think of Instagram reels, it is a better competitor to TikTok than YouTube Shorts, right?

• 52:51Speaker 06

  Yep.

• 52:52Nilay Patel?

  Because they absolutely had to compete and they are worth this and they're very good at it and they'll just do it. And that's the market distortion that the government hasn't been able to articulate. Like if Facebook had actually had to compete with an Instagram, that actually had this new dynamic that Mark Zuckerberg had identified, things would be different. Both of those companies would be competing with each other.

• 53:09Speaker 06

  Yeah.

• 53:10Nilay Patel?

  But that's, it's, it's still illusory. To David's point, you will never know. And Meta's argument on the other side is pretty good, which is, well, I don't know, it's Instagram. Here it is.

• 53:19Speaker 06

  I am not an expert on the edge cases of antitrust law enforcement and maybe the FTC will finally get something through, throughout this trial that makes sense. I have looked at an absurd amount of internal Facebook documents over the years. And their data analysis, how they view the market and not stuff that like, it's been PR sanctioned, like stuff leaked to me. I feel like I actually have a under the hood real assessment of how they view the world. They think maniacally about time spent, about, they talk like they're the UN, it's like population density. It's like, we are at X density in X country. They're thinking so much broader than the FTC. They're thinking like, how can I suck time away from Netflix, et cetera, right?

• 54:03Speaker 06

  It's like the Reed Hastings quote is like, I'm competing with sleep, who was on the board of Facebook for like 15 years. That's how these companies operate because that's the business model. And I don't think the FTC understands how the business model informs. The strategy, which is that if you're an advertising business model, really all that matters is eyeballs and getting as much of those eyeballs for as long as possible. And the only real monopoly meta has is its network, is its network effects. And the thing Zuck is constantly trying to fight is a new thing coming in and eating into those network effects, whether it was Google Plus back in the day, which got an insane amount of airtime in this trial. It was very fun. I really felt like I was getting like a, like a Stanford business like seminar, like Silicon Valley tech history class. It was really fun.

• 54:49Speaker 06

  Google Plus path, like OpenAI, which we'll talk about in a little bit. Snap, these things that come in and like potentially siphon people away from the network, which leads to a thing called network collapse, which they did talk about in the courtroom. That he just, like you said, he recognized these formats and goes, I can graph this onto my bigger network. I'll scale it faster and that will make sure that the startup that invented that form, whether it's stories or whatever, can't reach a billion users. He kept saying over and over, he's like, once you get to a billion users, like, uh, the world is your oyster. Like, he's like, he's like, I really like, there's very few companies that do that. Very few do it on their own. He's like, he actually made the case that none have done it on their own, that they all have big parent companies.

• 55:31Speaker 06

  YouTube, TikTok with ByteDance, Snap is close to a billion.

• 55:35Nilay Patel?

  Yeah, I feel like, is this more Evan Spiegel shade? Like you, you can't get to the magic number.

• 55:39Speaker 06

  It was around the Snap acquisition questions. Yeah. Is when he said this. And that's, he knows that's his competitive moat and that's, it's, it's strong and it's durable and there are monopoly questions there, but it's not like time. It's not like what Google does with its products where it, it's just like, he recognizes if he can get to something and strap it onto his scale, he'll kill it. And he's done that very well over the last 20 years.

• 56:04Nilay Patel?

  We'll see what happens with this one. And again, I don't want to overdo it on the, on the like legal inside baseball piece of it. But you got like a doged up FTC that fired everybody run by a guy who has to be a fire breather on Fox News to please his boss, who has absolutely shown that he will come right up to the edge of the law and ask the Supreme Court to overturn a hundred year old precedent and fire people that he's not supposed to fire. Like, that's not a recipe for great lawyering. Right. And like, I think the DOJ under Biden, Cantor specifically, like having talked to him about how he ran what was effectively a law firm. I was like, oh, they're doing good lawyering.

• 56:45Nilay Patel?

  I think they had a, they had better cases to deal with because Google does have all these deals. I'm very curious. The DOJ has the Apple case, which has the same dynamics as Meta here in big ways, right? It's just Apple. They're just like, well, we have the iPhone. We can do whatever we want. iMessage. Here it is. But it's done. We'll see. Right? A lot of this is, once you have, once you own a platform, how dirty can you be? And is that illegal? Right? And some of the stuff with Apple is like, we all know it. App developers, like, they, they call me and yell at me to start in-app subscriptions because that's where they make the money from. Totally. I don't know. But that was started under one administration and now it's come to this one. And Pam Bondi is going to pursue Apple?

• 57:29Nilay Patel?

  Like, there's just an element of that, which is like, is it the government's case? Is it the law that's bad? Is it that Meta's legal or Apple's legal? Or is it just a bunch of Doge kids don't know what they're doing? There's, and they're, and they're up against Meta's lawyers, right?

• 57:40Speaker 06

  Yeah. And I, well, I think there's also an element, you know, leaving DC and talking to a lot of the Meta execs, you know, because they're all there and, you know, it's off the record, but just the vibe I got is like, I think there's a consensus that Trump is going to be harder on all these companies than they thought. And that if they, they thought if they could just kiss up, that things would be easy. And I think Trump is a little smarter than they maybe gave him credit for in terms of leverage. And I, I, I think Meta would have very much liked to settle this case, not necessarily because they were worried about losing it, but because it's a, it's a massive pain and it's a, it's a, you know, bad headlines. It's Zuckerberg's time, a ton of money, et cetera. The discovery process, which is very embarrassing. But yeah, I, I would hope, I would think that,

• 58:25Speaker 06

  and you know, the Journal had a great story about this, that how Zuckerberg pushed to, to, you know, settle this. I, I think he probably thought that he would, might be able to because of the, the January stuff that we talked about, all the MAGA changes that they made. And Apple's going to go to DOJ. And like, I, I think all these CEOs are in for a kind of a leopard face moment in the next year or so.

• 58:46David Pierce?

  That photo that everybody has of all the CEOs standing on the dais behind Trump at the inauguration is going to end up being iconic for reasons that none of those CEOs like.

• 58:55Nilay Patel?

  Exactly.

• 58:56David Pierce?

  Is my ongoing thesis.

• 58:57Nilay Patel?

  Actually, can I respond to that in like, just a slightly different, I agree, that photo will be very embarrassing for all of them because the leopards are eating all their faces. It's happening. Trump wants these wins and he wants to settle, like, he wants to win the trials so that he can negotiate the settlement that ends the appeals, right? That's, that's what you do. The tariffs on China are 5 billion percent and then we're gonna make a deal. Trump. The thing that kills me at that is the expectation they had going into that photo was corruption.

• 59:23David Pierce?

  Uh huh.

• 59:24Nilay Patel?

  Right? Tim Cook is gonna personally donate a million dollars to Trump's library and that'll take the DOJ case away from Apple. Naked corruption. That is a nakedly corrupt thought. There's, there's nothing about, and that's fine in the sense that like, a lot of people believe the government is corrupt. And so like, Trump being even more corrupt does not offend them, but it's not fine in the sense that like, even when we were covering the Google case today, people on Blue Sky were replying to me being like, they'll just buy him off.

• 59:56David Pierce?

  Yep.

• 59:57Nilay Patel?

  What? Like, that, that means that the system is collapsed. Like, you don't believe in it anymore. And maybe you didn't before, but like, the level to which we have accepted that just naked corruption is how this works, is a little more dangerous than I think people are, are giving it credit for. Like, if you believe that Google can do like, ah, screw it, write him a check and it'll go away, and that is, maybe you don't think that's right, but you think that is possible, you are, it's, it's gone. You have to not believe that's possible. You have to actually hold everybody accountable and say, actually, that's corruption. So not saying call your senator and tell him to break up Google, just an idea that you could do. I'm saying, I'm saying you can't, if you give in to nihilism that the corruption is

• 1:00:41Nilay Patel?

  already won, you've, you've just given in. Like, you should not feel helpless, you should feel outraged that the expectation of that photograph was corruption. And there's, Talc said, there's a little glimmer of hope that it hasn't been just overt corruption from the jump. Like, they at least have to go to trial. I don't know what's gonna happen after that, but they at least have had to go to trial.

• 1:01:01Speaker 06

  I think Trump is more savvy about power and leverage than the CEOs thought and knows that the moment he just starts taking-

• 1:01:07Nilay Patel?

  Or most of his staffers, as we will come to.

• 1:01:09Speaker 06

  Yeah, yeah. And the moment you just start taking any check to kill anything, you've lost power. And I think Trump cares about power.

• 1:01:16Nilay Patel?

  Yeah. All right. We gotta take a break. When we come back, we're gonna talk about OpenAI, which is also making some moves to scare Mark Zuckerberg. We'll be right back.

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• 1:02:58Nilay Patel?

  All right, we're back. David tells me that we just spent an hour on Anan Trust News.

• 1:03:03Nilay Patel?

  So we got to talk about products and rumors and stuff now, right? Things, not ideas.

• 1:03:09David Pierce?

  No more ad tech for the rest of this episode, I promise.

• 1:03:13Nilay Patel?

  I'm not making that promise, Dave.

• 1:03:17Nilay Patel?

  All right. In the middle of all of this, Alex, you and Kylie delivered a pretty big scoop about OpenAI, that they're going to build a social network, which I will not say people reacted to with warm thoughts. Tell us what is going on here.

• 1:03:34Speaker 06

  Yeah, I would say it was mixed. I saw a lot of the obvious, like, oh, great, more AI slop stuff. And then I actually, you know, I think people who work in tech get it and understand what's happening here. But yeah, OpenAI has been for the last several weeks showing off this internal prototype that is a kind of X-like social feed with a bunch of AI stuff in it. Apparently, they're calling the post Yeets, which for early Blue Sky users was the the name for posting on Blue Sky affectionately before Jake Reber killed that.

• 1:04:05David Pierce?

  Well, no, they were Skeets on Blue Sky.

• 1:04:06Nilay Patel?

  Oh, wait, they were Skeets, not Yeets.

• 1:04:09David Pierce?

  Somehow slightly worse on Blue Sky.

• 1:04:11Nilay Patel?

  No, it's not slightly worse. It's horrible. It's a joke that is fully out of control.

• 1:04:16David Pierce?

  Oh, my God.

• 1:04:16Nilay Patel?

  And people still call them Skeets, even though I believe Blue Sky would prefer you didn't.

• 1:04:19David Pierce?

  No, Liz Lapato calls them Skeets. No one else calls them Skeets.

• 1:04:22Nilay Patel?

  More people than you want call them Skeets.

• 1:04:25Speaker 06

  Does Yeet come from something else, though?

• 1:04:27Nilay Patel?

  Yeet's like a gamer term. It means like throw a thing into the ocean.

• 1:04:30David Pierce?

  Yeah.

• 1:04:31Speaker 06

  Yeah, okay. So they're yeeting and.

• 1:04:38David Pierce?

  I'm gonna yeet myself off this podcast.

• 1:04:40Nilay Patel?

  That's right. See, that's, you understand what I mean.

• 1:04:43Speaker 06

  No, so there, Sam Altman has been going around to conferences and in private dinners, et cetera, and talking about how he wants to compete with Elon and X. And they have a prototype, and we scooped some of the details. It's very early. It's like, it's early, but the way OpenAI works is like something that's very early could actually ship within like a few weeks. So especially after, I think, the reaction to this and all the headlines. And I think the story got a lot more attention than maybe we even expected. So maybe that pushes them to ship faster. I saw. Kevin Weill, their CPO, who was the former head of product at Instagram, gave an interview to Bloomberg shortly after the story, saying like, we need to find a way to let people

• 1:05:25Speaker 06

  share stuff that they do with ChatGPT more easily. So they're already starting to hint at it. This puts them on like a direct, you know, collision course with Elon, obviously, but also Zuckerberg, who is adding a feed-like AI social network to its assistants later this year. They're actually going to turn the Meta Ray-Ban app, the companion app, into the Meta AI app. So you'll still have to have it to pair with the glasses and they're going to ship new glasses later this year. But they're going to have a feed as well in there. So this is like a Grok and X merged, right? They're the same company. If you're on X, you'll see Grok, you know, suggesting things and the responses. It's everywhere in the app and now the product teams are merged.

• 1:06:07Speaker 06

  So this trend is happening across the industry. So it kind of makes sense for OpenAI to go here. You know, ChatGPT has been a, you know, a single-player experience and I think OpenAI recognizes that to, you know, they're probably not thinking about this it this way, but really to justify this in, you know, incredible valuation they have and all this money that they've raised. They, they need to make money beyond just selling ChatGPT subscriptions, though I don't think they're going to do advertising anytime soon. I think this would be a natural, this is why I said we may still talk about ad tech.

• 1:06:39Nilay Patel?

  Wait, what's the money if they don't do advertising? They started a social network and there's no advertising. What's the money?

• 1:06:43Speaker 06

  What's the money?

• 1:06:44Nilay Patel?

  Yeah.

• 1:06:45Speaker 06

  Just running ads in the feed.

• 1:06:47Nilay Patel?

  So it is, it is advertising.

• 1:06:48David Pierce?

  But it's not advertising in ChatGPT. It's advertising in social GPT or whatever.

• 1:06:53Speaker 06

  In the feed that will probably, they may do a standalone app. The prototype is standalone, but they may just merge it with ChatGPT.

• 1:07:01Speaker 06

  Their CFO, Sarah Fryer, was the CEO of Nextdoor, which sold ads in a feed. Like they have a lot. I mean, they could do this. It would make sense. And it begins to explain to me why Zuckerberg has been so focused on them beyond just the model competition. I think, and he was, it was kind of interesting, like publishing the story when I was in the courtroom, like the same day, I'm like, watching him on the stand saying like, look, once you get to a billion users. You know, really like it's it's very hard to compete and you can fan out and spread out, I think was his words and do a lot of different things. And I think he probably saw this coming. So OpenAI is is approaching a billion users. They'll probably hit it

• 1:07:42Speaker 06

  this year. And they're just in this huge expansion product mode, right? So they're going in a bunch of different directions, but I think the social piece really makes the idea of ChatGPT being more than just a Google killer. Potentially now they also want to be a meta killer. So this is like the kind of ever expanding ambition of Sam Altman, I think.

• 1:08:03David Pierce?

  This runs into one of the big trends right now that I find like completely befuddling, which is that everyone is now convinced that lots of people really want endless feeds of AI generated content. And maybe they do. Maybe I'm the one who's wrong here. But like, you know, listening to Mark Zuckerberg sit on stage and say, people really love ads. People love ads so much that we've actually considered at one point, having a feed of just ads, because people like the ads as much as they like the content, which to me reads not as we have great ads, but we have shit content is like that's you should take that as an insult, not a compliment. But anyway, and then like, everybody's building these creative tools so that it is easier and easier to make stuff with AI and share

• 1:08:48David Pierce?

  it on your feeds. And we're like, running headlong into all of my social feeds are going to just be absolutely overrun by AI content.

• 1:08:57Speaker 06

  They already are.

• 1:08:58David Pierce?

  And it seems to me what's happening is OpenAI looked at like the the Studio Ghibli thing, right? That like took over the internet for two days and everybody was sharing the stuff they made in ChatGPT somewhere else.

• 1:09:09Speaker 06

  Yep.

• 1:09:10David Pierce?

  And they look at that and they're like, okay, no, we need to own this whole cycle. And to me, I'm like, no, it's just AI all the way down. And this is a disaster. And so I'm like, I'm so, I don't know, I'm just lost between these two different things that both seem to be happening. And it doesn't not seem like a thing anyone should want.

• 1:09:26Speaker 06

  I mean, Eli, what you said on Blue Sky is right. Everyone wants their own distribution. I don't think they want, yeah, these images and the value and attention around them being just monetized by Elon Musk, who is actively suing them and trying to literally keep them from existing.

• 1:09:43Nilay Patel?

  Dude, why won't Sam Altman quit X and join Blue Sky? Like you want to compete with Elon, you've got this big problem. He's still on his platform every day. Like just do it. Stand up your own Mastodon server. I don't do something other than that.

• 1:09:57Speaker 06

  The open AI people are constantly, yeah, complaining about Elon. I'm like, you're just giving him training data. Like your entire company is posting nonstop on X all day long. And as a result, the AI industry is very active on X. Like X has lost a lot of audience, but I would say the AI industry remains one of its core audiences. And I do think OpenAI would have a, a pretty compelling pitch to take that audience with them on a, on a different surface. And it could end up being like, uh, even more split, right? Where you just have like people who like Elon's version of AI on X. Uh, and, and the audiences fracture even more. I think we're just going to continue to see this constant fracturing.

• 1:10:38Nilay Patel?

  Yeah. I was just like, it's, it's funny to me. Like you can stand up your own social network. You can, you can do all this stuff, or you could just stop using the one owned by the guy who hates you. Who's your competitor?

• 1:10:46Speaker 06

  But you still got to eat. Where are you going to eat?

• 1:10:49Nilay Patel?

  Threads, like anything, like find some obscure European Mastodon server. And be like, I live here now and like a bunch of people will come with you because you're Sam Altman. Here's where the news is going to be.

• 1:11:00Speaker 06

  Yeah.

• 1:11:01Nilay Patel?

  Right? Like here's where I'm going to lowercase sad boy tweet of how no one liking like you can do it anywhere you want. But like he chooses to do it on X for some reason. And I'm assuming that reason is the absolutely bizarre relationship between those two men.

• 1:11:16Speaker 06

  I think it's also network effects. It's what we were talking about with Meta. It's just the AI industry is there. It's where companies still announce news, tech, tech companies especially.

• 1:11:25Speaker 06

  And I, I think OpenAI sees an opening because they are the hottest tech company in the world right now to take that audience.

• 1:11:32David Pierce?

  And I think the idea that if you're Sam Altman, people will follow you to your obscure Mastodon server. I'm not sure that's true. And I'm, and I'm, I know for sure that if you're Sam Altman, you're not sure you want to find out.

• 1:11:43Nilay Patel?

  If you have the confidence to just like roll up to, to roll up to the richest people in the world and make, here's what I need, a trillion dollars. Like you should find out if people will follow you to a Mastodon server.

• 1:11:53Nilay Patel?

  Like there's one person who has this, the sheer audacity to be like, I need a billion, I need a trillion dollars to buy every GPU in the world.

• 1:12:01David Pierce?

  I mean, Elon Musk spent $44 billion to make himself cool on Twitter. Like it's, it's, it's a harder thing to do than you think.

• 1:12:08Speaker 06

  Stargate is just to fund the biggest Mastodon server in the world.

• 1:12:12Nilay Patel?

  There's this quote in your piece, Alex, it's by somebody who runs a different AI company. They're anonymous. The Grok integration with X has made everyone jealous, especially how people create viral tweets by getting to say something stupid.

• 1:12:22David Pierce?

  Neil, the next thing I said was about to be this quote.

• 1:12:24Nilay Patel?

  It's very good.

• 1:12:25David Pierce?

  Ever.

• 1:12:26Nilay Patel?

  It's it's an incredible quote. It has just made me think about AI art and how people react to it and the feeds being full of art and like why people are into it. And the in, we've written a lot about this. Like Addy and I have like spent a lot of time being like, AI, it's like, why we, it's very much like someone telling you about their dream. Like, that's how I always feel. Like, has someone ever excitedly told you about a dream they had? And you're like, cool. And it's like, the most important thing that's ever happened to that person. And just the disparity in experience is just too vast to be overcome. Like, were you riding a dolphin? Great. Like, that's like, how I feel every time I see AI art. It's like, very good. And I think the Studio Ghibli stuff hit because of the incredible

• 1:13:08Nilay Patel?

  juxtaposition of the art style and the creator hating it. And then you're making Guantanamo Bay memes with it, right? Like, there's something in there that was wrong. Like, on a fundamental level, the thing itself portrayed the great conflict of our time. And then you turn to the next one, and you're like, oh, you made an action figure of yourself? Is that, oh, my God, is that your MacBook? Who gives a shit? Like, like, who cares? And I think the AI industry has really misconstrued what the interest was. It's not people talking about their dreams. It's people stealing artistic expression and that driving a wave of conflict. And then people being able to participate on either side of that conflict

• 1:13:50Nilay Patel?

  in ways that, like, drive the conflict forward or amplify it. Like, no one was outraged when people made their weird action figures. Like, no one felt bad about it.

• 1:13:59David Pierce?

  No, it's just boring.

• 1:14:00Nilay Patel?

  It was just like, here's some stuff.

• 1:14:01David Pierce?

  There's even diminishing returns on the outrage, right? Like, you can't run the Studio Ghibli playbook over and over and over again. And I think, like, I'll be honest that the novelty factor of I asked ChatGPT to do something and look at this wacky thing it came back with, has lasted a lot longer than I expected. It's still very much there. This is the thing that a lot of these companies are trading on is like, people think Grok is silly, and they they like that. And maybe that'll last forever.

• 1:14:30Nilay Patel?

  No, but the even even the Grok one, the conflict with Grok is really obvious, right? Grok is often like, yeah, yeah, it's pretty racist. And that's hilarious.

• 1:14:38David Pierce?

  Right.

• 1:14:40Nilay Patel?

  It's subversive.

• 1:14:41David Pierce?

  But it's not like I too can type Elon is racist into a text box and then screenshot it.

• 1:14:46Nilay Patel?

  But you're not a robot controlled by Elon. Like, there's nothing subversive about us doing it. We just do it all the time.

• 1:14:51David Pierce?

  Right, but but is that is that going to be funny forever? Like, this is my point. I just I don't know how many versions of that thing we're going to get before this just stops being interesting.

• 1:15:01Speaker 06

  I mean, OpenAI's user base doubled after it launched that chat, the upgraded image generation. So you can argue.

• 1:15:09Nilay Patel?

  Right, because it's a new capability.

• 1:15:09David Pierce?

  Can we say that differently? A lot of people went to a website after that happened. That's what happened. A lot of people went to a website.

• 1:15:18David Pierce?

  It's not the same. It's just not the same thing. Like, there are a lot of people, and the numbers are crazy. I absolutely agree with that. But like, a lot of people went to a website.

• 1:15:28Speaker 06

  Yeah, I just I just I I too have a problem with like, uh, the Studio Ghibli thing in particular, like, the fact that they picked the style of the guy who called, what did he call AI? He said it was like a, the Studio Ghibli founder, didn't he say something about how it's like a?

• 1:15:44Nilay Patel?

  It's like a crime against humanity.

• 1:15:45Speaker 06

  Crime against humanity. The fact that that was the style that went viral feels feels wrong.

• 1:15:49David Pierce?

  Yeah.

• 1:15:50Speaker 06

  But I don't think we can discount the interest people have at scale with this stuff. And OpenAI sees it in their numbers. Sure, maybe it's like fleeting.

• 1:16:02Speaker 06

  Or maybe it's a gimmick that can only be replicated so many times, like you're saying. But I think, look, I think we're professional writers and we.

• 1:16:10Nilay Patel?

  I'm sorry, uh, insult to life itself.

• 1:16:12Speaker 06

  Just insult to life itself. Yeah. We're we're professional writers. We like, it's our jobs to like, say, say things on the internet. I think most people look at X or Threads or Blue Sky, whatever, and they don't really know what to say. And I think the the tech product view of this, just talking to the people inside these labs is that like, we see a a demand for people who want to engage and don't necessarily know how to or are scared to, and AI will help them. AI will give them ways to express themselves that they could not before. And it's reflected in the metrics of how people are gravitating towards these products. So, yeah, like, the I think the culture class is going to continue to have,

• 1:16:53Speaker 06

  you know, a lot of like, hand wringing and like, rightful criticism of how these companies approach things like IP. But I also think we can't deny that this is a trend that is here to stay. I at least think so.

• 1:17:04David Pierce?

  I do buy that, but I think I think that's a that's actually a really great definition of AI as a tool, you know, in a way that I really like, right? AI is an enabling tool for lots of things. I think is actually really exciting.

• 1:17:16Speaker 06

  Yeah.

• 1:17:17David Pierce?

  But what I see so much of the bet here being is that AI is going to keep being sort of the main character. And again, it has been for much longer than I expected. So maybe I'm just wrong and maybe this thing is so funny and silly and weird and unexpected that people will keep wanting to interact with it forever. But it just that just does not feel right to me. I don't know.

• 1:17:39Speaker 06

  I don't think the OpenAI social network is going to be just like an endless feed of only people's like C. O. Gibley photos. I think like it's a jumping point to build a AI native social network that uses AI throughout the entire posting and editing and publishing and recommendation process that like every other established company is now trying to retrofit. And OpenAI has this insane, highly engaged user base that I think they think they can fan out and take this opportunity, especially with what Google's going through, like we were talking about, and the fact that these other companies seem to just not get product in this way.

• 1:18:15Speaker 06

  So yeah, I think I think it's going to be a disaster, but it's also the future, which is like

• 1:18:20David Pierce?

  The verge, everybody.

• 1:18:26Nilay Patel?

  There's other stuff going on AI world. OpenAI debuted GP 4.1. And then Sam was like, I promise I'm gonna clear up these names.

• 1:18:35Speaker 06

  God, they're so bad.

• 1:18:35Nilay Patel?

  What is going on here? Like, it's better, right?

• 1:18:38David Pierce?

  I personally feel so vindicated by this because I've been complaining about the names on this show and elsewhere for forever. That when you go, it's like a dropdown of nonsensical numbers where they don't even go up in order in the way that you think that they should. And so to have Sam be like, yeah, we know the numbers are ridiculous. Please make fun of us. We're gonna fix it. Made me made me feel a lot better.

• 1:18:59Speaker 06

  Something else OpenAI and Google share besides their bitter AI rivalry is a horrible naming convention.

• 1:19:06Nilay Patel?

  But my Alex, am I crazy or is OpenAI on like a pretty wild product run here? Like it's it's really the there was deep sea and then they were like, oh, we're gonna launch some stuff and like, boy, have they.

• 1:19:16Speaker 06

  It seems unprecedented to a degree where it's like hard to even keep up as someone covering it. My understanding is this model architecture is their first. And I I still feel like I'm trying to understand really what this means practically, but like agentic model that is now. It's the first one that does the deep thinking stuff, but also can hook into all of the chat GPT products. So it can pull in web results, do multimodal. It can like, um, apparently like do really interesting weird things with images and like edit them and turn them around. And like, people are dropping an image in to like have it reverse engineer where it was taken. So like the YouTube, like Google Earth guy, like viral stuff, but like with AI.

• 1:19:58Speaker 06

  So it's just a it's a smarter model that now hooks into all of the product. Whereas the models have so far been fairly sequestered to certain aspects of chat GPT and what it can do. That's my understanding of it, but um, they're they're on such a tear, it's really hard to keep track. I mean.

• 1:20:16Nilay Patel?

  It's interesting because the tear seems to be more related to making better products out of all the products.

• 1:20:22Speaker 06

  Yeah.

• 1:20:23Nilay Patel?

  Or like attaching capabilities between products to each other to get to the next step. As opposed to here's the next new model, which is smarter than the last model by.

• 1:20:33Speaker 06

  Yeah.

• 1:20:34Nilay Patel?

  However, many percentage. I do wonder if that's because Kevin Wiles there, he's the product guy. And he's like, make the products good. But there's also a part where it feels like the frontier model is not going to get so much better.

• 1:20:46Speaker 06

  Yeah.

• 1:20:46Nilay Patel?

  That it drives usage, you actually have to like make products.

• 1:20:49Speaker 06

  Yeah, I've been writing about this for a while. The the competitive nature now is that the product layer, not the model layer. The malls are commodifying, yes, like they still feel different, like when you use a new one. But I think chat GPT, they're trying to make it like an operating system for your life. I think they want to be Google meta. You know, product, all productivity software. It's this, it's it's one of the grandest visions I've ever seen in like consumer tech in terms of like, we are going to use AI to try to do everything. And and then he's working with Johnny Ive on hardware, right? That like you you tie that into your own hardware over time.

• 1:21:23Nilay Patel?

  What if humane but good?

• 1:21:25Speaker 06

  What if you made the good?

• 1:21:27David Pierce?

  I mean, and to be clear, this is the story you have to tell in order to raise the amount of money that they have raised.

• 1:21:31Speaker 06

  It is, but, but, but you look at what they're doing to chat GPT and that is clearly the goal is like to encompass more of your everyday life.

• 1:21:39David Pierce?

  Yeah. I mean, there was the, was it this week that they announced the thing where it'll remember all your past conversations?

• 1:21:44Speaker 06

  Yeah.

• 1:21:44David Pierce?

  I think, I feel like that didn't get talked about enough that that's like, all of a sudden, if you, if you can have this thing be sort of accumulating over time as you use it. The, the possibilities of stuff it can start to do for you is really powerful.

• 1:21:56Speaker 06

  It's lock in too, because it knows more about you and it's way easier to, it's way harder to want to switch to another product because chat GPT knows everything about you.

• 1:22:04David Pierce?

  Totally.

• 1:22:05Nilay Patel?

  I realize I'm saying this as a guy who's on a, been on a podcast for 15 years, like has made a lot of YouTube videos and I just don't want to be perceived in this way. Like I, I don't want the computer to know me.

• 1:22:17Speaker 06

  It already does. It's already showing you ads for like random car stuff like.

• 1:22:21Nilay Patel?

  Oh, man. My computer so believes that I'm going to buy a Volvo EX90. Like whatever, whatever's going on in here, it knows one thing and it's going to sell me a goddamn Volvo EX90.

• 1:22:33David Pierce?

  I feel like your computer's wrong about that.

• 1:22:35Nilay Patel?

  It's so wrong.

• 1:22:36David Pierce?

  Yeah.

• 1:22:37Nilay Patel?

  It's not correct. Also a Range Rover. It really believes that what I'm going to do is buy a Range Rover Sport.

• 1:22:42David Pierce?

  That feels closer.

• 1:22:44Nilay Patel?

  It's not. I, I, I've looked at the reliability records of that vehicle. Um, I just want to like.

• 1:22:48Speaker 06

  My real thing. Do you guys use the voice mode on chat GPT?

• 1:22:51Nilay Patel?

  All the time. I was actually just looking at my history to be like, what would this thing think about me? And it will think that I'm a six year old girl who occasionally asks for a pickled red onion recipes. And that's. That's like, those are the two things that happen.

• 1:23:05Speaker 06

  When I was in DC.

• 1:23:06Nilay Patel?

  We use it all the time. Like, yeah, I use it all the time.

• 1:23:08Speaker 06

  Yeah. When I was in DC, I was like, before I was the first day of court, I was like laying in bed and I was like, I'm going to court tomorrow, this court, like, I'm not exactly sure how it's going to work. Like, what do I need to know about going in? Like, what can I not bring? And like, it was, it was amazing. Like, it was like, this is. I can't believe it just it works.

• 1:23:25Nilay Patel?

  Was it correct?

• 1:23:27Speaker 06

  Yes, it was correct. Yeah. And that's like, I don't know if they're doing better grounding with like real data that they're stealing or what, but it's, excuse me, buying licensing.

• 1:23:38Nilay Patel?

  Now I have to disclose that open access licensing deal with our company somewhere on the backend. It's there.

• 1:23:44Speaker 06

  Yeah.

• 1:23:45Nilay Patel?

  Has nothing to do with us.

• 1:23:46Speaker 06

  Yeah, but no, I think like the combo of like the desktop product really starting to encompass like all the productivity, the voice being very good, and then then doing hardware with Johnny, I think is like this insane play for everything.

• 1:24:00David Pierce?

  The vision is really big, and I think you're right that it is. The shift has really happened away from like we, I think pretty quickly, we're going to start to have conversations internally at the verge about whether we cover new models. Because it's rapidly getting to the point that it doesn't matter that much. It's like it's like covering new versions of AWS software like it's just, it's just not meaningful to most people in these specific ways. I don't think we're there yet.

• 1:24:24Speaker 06

  We could just do a story stream where it's like new model came out.

• 1:24:28David Pierce?

  Yeah, like new model came out. It's 4% better.

• 1:24:31Nilay Patel?

  Well, I mean, you gotta cover the new models because they're all cheating on the benchmarks, and that's actually the story.

• 1:24:35David Pierce?

  Well, yeah, agreed. Agreed on that front. But yeah, we are, we are very much moving toward like, what can you build to have people do with these things? And that's going to be the only thing that matters.

• 1:24:47Nilay Patel?

  I continue to believe, I mean, the whole industry has been chasing, what is the new input paradigm that overtakes multi-touch forever? Like, even Apple has been chasing. I'm constantly joking about Apple introducing the Apple Watch to the digital crown. Because they, in their head, they have like a system, like an equation that makes good products. And they just learned it from watching old Steve Jobs keynotes. Like they reversed engineer to Steve Jobs keynote, and he's like, well, he did a click wheel. He did, U2 was there, and he said it was small. And then they got to the Apple Watch and like, okay, it's got a wheel. U2 is here, and it's small, like, that's just how their brains work, you know?

• 1:25:28Nilay Patel?

  Everyone has been trying to move on to say, okay, this is the new input. This is the new user interface paradigm that's going to drive the next form factor, that's going to drive the next wave of apps, whatever it is. And it is true that with AI in particular, what you have is natural language voice. You can just talk to the computer, it'll talk back to you. It's a very compelling. And then we still don't know how any of that's going to make money. And then at the same time, right, there's the big cursor deal, which seems like a really big deal.

• 1:25:55Speaker 06

  Yeah.

• 1:25:55Nilay Patel?

  And then OpenAI is going to potentially buy this company called Windsurf for $3 billion.

• 1:26:00Speaker 06

  Yeah.

• 1:26:00Nilay Patel?

  There's this whole enterprise set of applications that has kind of nothing to do with, is this a new input paradigm? It's much more, oh, we're going to make everybody vastly more productive in this specific way.

• 1:26:10David Pierce?

  And that's where all the money is.

• 1:26:12Nilay Patel?

  And that's, that does feel like where all the money is.

• 1:26:13David Pierce?

  Yeah.

• 1:26:14Speaker 06

  Yeah.

• 1:26:15Nilay Patel?

  But I, the part where Johnny Ive is like, I can take the new input paradigm and make the next great product. It, it's, even if it's Johnny Ive, even if it's Sam Altman, even if they have direct access to the next model from OpenAI, like it's still uncertain because it, it hasn't been proven that that's what you want to do all the time.

• 1:26:34David Pierce?

  I'm actually very excited about this next moment because I, I wrote a feature for Wired like 10 years ago now, basically proclaiming the beginning of the voice era.

• 1:26:43Speaker 06

  You were a little early.

• 1:26:44David Pierce?

  I was, I was right and I was wrong, right? Like it was, it, it happened. Everybody started doing voice, but in much more limited ways than I think I was expecting.

• 1:26:52Speaker 06

  Yeah.

• 1:26:52David Pierce?

  But we're now at the point where the tech works. Like it's, it's not perfect, but it works. The, the basic, can I speak and be spoken to with a computer in a useful way? It works. And now the open question is, so what? What do we do with that? And that, no one has good answers to that yet, right? Like it's, it's fun and interesting, but we're sitting on more. And if there's going to be more, it's coming.

• 1:27:16Speaker 06

  I think we're going to be talking about the Johnny thing with Sam Altman in the coming year to two years. I really do. I think Johnny's biggest funder for his new company is Lorene Pell Jobs. Like it's, and he's hired all of the original Apple team, design team. If you're going to bet on anyone coming in as like a wild horse and, and doing something interesting, I would be paying attention to that.

• 1:27:38Nilay Patel?

  Yeah. And meanwhile, Apple is going under whatever series shuffles it's undergoing, right? Like, who knows? Who knows that they can pull it off? But you know, Apple, we started by talking about OpenAI starting a social network. Apple still has the most important distribution of all.

• 1:27:51Speaker 06

  Yeah.

• 1:27:52Nilay Patel?

  Right? It's just like in your pocket, like Oprah at the Apple TV launch being like a billion pockets, you know, like. If they can get it together, like, maybe they'll get there. But it's interesting that they're wavering and Google is wavering. And then Sam Altman's like, I need a trillion dollars. Yeah. And I just don't know how I need that place. All right, we gotta take a break. We're gonna come back with a lightning round. We'll be right back.

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• 1:29:45Nilay Patel?

  We're back. It's time for Lightning Round, which, as always, begins with America's favorite podcast within podcasts. David?

• 1:29:54David Pierce?

  We're doing this. We're like 19 hours into the Vergecast. We've talked about ad tech. Now it's time for what everyone is here for. One of the two best podcasts within a podcast. And we've gotten a fair amount of feedback that suggests that we are number two. And I'm not interested in that feedback. It's time for Brendan Carr as a dummy.

• 1:30:14Nilay Patel?

  It does feel like we should say thank you to everyone who voted for us in the Webby Awards.

• 1:30:17David Pierce?

  Oh, yeah.

• 1:30:18Nilay Patel?

  There's not a category for podcasts within podcasts, but we have issued a stern letter to the Webby people and we're coming for you.

• 1:30:24David Pierce?

  If it comes up next year, it's going to be us against Munch Squad and it is going to be a battle to the death.

• 1:30:30Nilay Patel?

  It's pretty good. All right, it's time for Brendan Carr as a dummy. Brendan Carr, real dummy this week. Brendan Carr is the chairman of the FCC. He was a regular old commissioner under Biden. He wrote the Project 2025 chapter about the FCC. Trump made him chairman of the FCC. He's been dumb for weeks. He's just not a smart man, but he is a naked political animal. Like, that's what he is. That's what this segment is about. Every week, this man does something nakedly political to curry favor of Donald Trump and threaten the speech of Americans. Those are the two things that he does every week. And this week, it is particularly bad. Like, particularly bad. So Brendan loves to threaten or even file what he calls news distortion cases.

• 1:31:15Nilay Patel?

  Where the FCC, which licenses the nation's airwaves to broadcasters, can say to various news organizations, the broadcast news organizations, NBC, CBS, Fox, hey, you're distorting news. You're taking the spectrum we're giving you and doing something misleading with the news on it. They are not supposed to do this in most cases, right? The First Amendment protects those broadcasters and you can air what you want to air as long as you're not being willfully misleading in particular ways. And it is true that Fox owns a bunch of broadcast stations. Sinclair Broadcasting, very conservative, owns a bunch of broadcast stations. And yes, NBC and CBS and ABC also own a bunch of broadcast stations. So you can see already Americans have choices.

• 1:31:58Nilay Patel?

  But this week, the Trump administration is under tremendous amounts of criticism and controversy because it mistakenly deported a man to El Salvador, Kilmar Abrego Garcia.

• 1:32:09Nilay Patel?

  It did this with basically no evidence. It has admitted to the court that it had no real evidence and that this was a mistake. It called it administrative error. And instead of bringing a man back, which the Supreme Court ordered it had to facilitate, it has doubled down now on calling him a terrorist and a gang member. The evidence, by the way, of this man being a gang member is that he was wearing a Chicago Bulls hat and a T-shirt with dollar bills on it, or a sweatshirt with dollar bills on it, where the presidents on the bills had their eyes covered, their ears covered and mouth covered. And somehow that indicated that they were in a gang. I don't know, man. That's the evidence the government has proffered this week for evidence that he's been in a gang. It's not great. It's nothing is what it is. It's nothing. It's nothing.

• 1:32:54Nilay Patel?

  I mean, this is a, he was in the country illegally, but he had a court order saying he couldn't be deported because he was in danger, if you want to tell us, or from other gangs there. So the court, the Trump administration has mistakenly deported him. They've gone up to the Supreme Court, which has ruled that has to facilitate his return. They've gone to the court again. The court is very angry with him, with the Trump administration now. I don't know how this is going to play out, but news organizations around the country have been covering it and covering in particular fact that there's no evidence that this man was actually in MS-13, like none at all, outside of a hat and one confidential informant that nobody has ever. You were good at none at all. That was, you were set there. That's none at all.

• 1:33:39Nilay Patel?

  So Brendan, this week, has decided to threaten Comcast's disclosure. Comcast is an investor in Vox Media, but truly they dislike me. He decided to threaten Comcast this week. He said Comcast outlets have spent days misleading the American public, implying that Abrego Garcia was merely a law-abiding citizen, just a regular Maryland man. When the truth comes out, what is the truth, Brendan? They ignore it. Comcast knows that federal law requires its licensed operations to serve the public interest. News distortion doesn't cut it. Abrego Garcia came to America legally from El Salvador, was validated as a member of the violent MS-13 gang, a transnational criminal organization, and denied bond by immigration court for failure to show he cannot pose a danger to others. Why does Comcast ignore these facts? Because they're not facts, Brendan.

• 1:34:25Nilay Patel?

  They're just not facts. And actually, the job of news organizations, we run one, is to question the government, is to take the political figures of our government, to take the Attorney General, to take J.D. Vance and say, is that true? Is it true what you're saying? We've given you the power to jail people. The state has a monopoly on violence in this country. You have that power. Are you using it well? Are you using it with justification? Are you using it in the name of justice? They're not. Like, whatever you think about this case, whatever you think about deportations, in this case, they have not given this man due process. They shipped him off to El Salvador, and the only evidence they have actually proffered

• 1:35:09Nilay Patel?

  is that he is wearing a bull's hat. Like, great, that is a controversy. You can cover it the way they're covering on a Fox. You can cover it the way they're covering on a Newsmax. You can cover it the way they're covering on MSNBC. But the government doesn't get to go threaten the news organizations covering it. Brendan Carr doesn't get to show up and say, news distortion doesn't cut it. And the only reason he's saying it is because NBC owns some broadcast licenses, and he has the authority to say it. He can't say it to us, we're on the internet. He can't say it to MSNBC or Fox, which are cable stations that he doesn't have control over. This is just naked political posturing, because some of these stations run over the broadcast airwaves. And even in his mentions, I will point out, even in his mentions, people are calling

• 1:35:54Nilay Patel?

  him an idiot. This is just wrong. It's wrong for the person who runs the nation's communications infrastructure to say that not supporting the administration's lies is news distortion. Actually, what he'd be saying is, I support our vibrant broadcast networks, which reach most Americans, pushing hard on the truth. Whether or not you agree with mass deportations, whether or not you agree with the Trump administration coming down really hard on everybody who was illegally in this country, fine. You can think what you want. But in this case, the lie is obvious. In this case, the evidence has not been produced, and it is not news distortion to say the government has not produced this evidence.

• 1:36:36Nilay Patel?

  I just, I, he's such a flunky. It drives me bananas. It is nice that people are starting to calm out on it. I will say that. But it is just obvious that, just like Andrew Ferguson, there are things he has to say, and there are lines he has to accept from the rest of the administration in order to preserve his job. And Brendan does it with such glee that you have to just accept that he wants to.

• 1:37:00David Pierce?

  I think that gives him too much of an out to say, these are things that he has to say. I think all evidence about Brendan Carr suggests that he is oh, so, so happy to be saying and doing all the stuff that he is saying and doing. He's like Mr. I'm out here having the time of my life guy, like.

• 1:37:15Nilay Patel?

  Wearing the head of Donald Trump.

• 1:37:17David Pierce?

  Yeah. None of this is making him sad on his insides.

• 1:37:21Nilay Patel?

  So then here's the loop closing, which I think is even more dangerous. As he does, President Trump was watching television late at night. It's a thing he does.

• 1:37:28David Pierce?

  Yeah. Presidents, they're just like us.

• 1:37:31Nilay Patel?

  He watches 60 Minutes a lot, Donald Trump, it appears. So this week, he's watching 60 Minutes, and he gets real mad, and he posts this long rant on Truth Social about how they're talking to Kamala Harris again. They mentioned the word Trump, and they're not nice to me. And at the end of this long rant, he says, they should lose their license. Hopefully, the FCC, headed by its highly respected chairman Brendan Carr, will impose the maximum fines and punishment for their unlawful and illegal behavior. CBS is out of control, and they should pay a big price for this. When you become the flunky, the President of the United States can say, I want to punish the speech of this company, and my guy's gonna do it for me. That is just a violation of the First Amendment, straightforwardly.

• 1:38:13Nilay Patel?

  No matter how you think about the legal mechanics of who owns the broadcast licenses, the president watching TV, getting mad at the coverage, and then directing his flunky to punish the company is not how it's supposed to work. Like, at all. They work for us. Like, when I watch these press conferences, the thing that I want some reporter to say sometime is, do you realize that you work for me? Because they've all forgotten it. Brendan has forgotten it. He works for us. And I think it's probably time someone reminded him of that. And Brendan, I would happy to do that if you just want to come on Decoder or The Vergecast. As always, the door's open. I don't think you can do it because I don't think you can take the heat. I know people are starting to tweet these segments at you. It's pretty good. So if you think you can do it, if you have the intellectual rigor

• 1:38:58Nilay Patel?

  to show up on the show and justify your actions, you're welcome. That's Brendan Carr is a dummy, America's favorite podcast without a podcast.

• 1:39:05David Pierce?

  Jingle TK.

• 1:39:08Nilay Patel?

  It's funny, like, I'm just becoming like an angry talk radio show, you know, but uh, it's, you gotta fight fire with fire.

• 1:39:13David Pierce?

  It's okay. I like to think we just need to get it out of your system once a week. It makes you like a happier person afterwards.

• 1:39:17Nilay Patel?

  Yeah. The, the number, it's like, what you want most of all is just feedback from the audience. You know, like anybody who makes something just like is desperate, you know, like read my novel and now we get a lot of the feedback, but the feedback only enrages me because it's just stuff Brendan has done that other people notice.

• 1:39:34Speaker 06

  I did the feeling of like you work for me. I had in the meta trial earlier this week when like Ferguson was like looking down at all of us, like who were there with the press and like would not make eye contact with us. And then his like comms lead who used to, I think worked for the Washington Examiner, uh, was also like just pretending we didn't exist when we're standing right in front of him and trying to like ask basic

• 1:39:57Nilay Patel?

  It's like really bad for the comms people, right? It's like, you know, like that's why you're here. But like, I mean, like the highest level, Donald Trump works for you. Whether you love him or you hate him, that's the whole point. He works for us. We, we get to fire him at the end. Right? Like, I, this whole administration completely forgotten this, like very important piece of the puzzle. But that said, Brendan isn't smart enough to make it through the whole four years. So we'll see what happens. All right. Pallet cleanser, David.

• 1:40:27David Pierce?

  Okay. We're gonna skip right over tariffs because that, that doesn't count.

• 1:40:31Nilay Patel?

  That's a.

• 1:40:32David Pierce?

  And also, nothing has changed. Tariffs happen.

• 1:40:34Nilay Patel?

  Well, the numbers, the numbers have changed, but it doesn't matter.

• 1:40:37David Pierce?

  Yeah, but who cares? They'll change again by the time this podcast goes up. Like the, the numbers have changed. There you go. That's the news. Uh, we figured out the G7X story, Eli. Allison Johnson went and answered our question about.

• 1:40:50Nilay Patel?

  There's like two answers to this question and one of them is so confusing and the other one is like also confusing in a very different way.

• 1:40:59David Pierce?

  So, okay, so I, I want, I want you to explain this story because actually the story originates with you. Fun fact, I, I did the, the final edit on this story and I made Allison take out the line where she says, I'm writing this story because Neil I made me do it.

• 1:41:13Nilay Patel?

  We definitely put up a list story today that contains like a very similar line. It's great. That's, that's what being an engineer is about. It is true, however, that other people on our staff also saw the story. Okay, so the Canon G7X3, a camera from 2018, has gone totally viral. You cannot get this camera anywhere. If you can get it, it's even like a used one is selling for like $300 over MSRP. This is not normal. Like, there's lots of pocket cameras with 1-inch sensors that do a good job of just taking photos, but it's gone viral on TikTok, and so it's sold out everywhere. And there are TikToks now about how to get one, like when in the middle of the night to wake up and like power refresh the target website.

• 1:41:56Nilay Patel?

  So I see all this, Alison and the crew and I talk about it. And we had the first idea, which is we should buy one and see if this camera's any good. And then Alison is like, it's been three weeks and I can't buy it. Like, I've been trying to buy one. Like, many people have been like setting up weird bots for to buy. Like, Antonio Di Benedetto on our team was like, I'm really good at buying stuff. Like, I'll help you. So we, we could not get one. Crazy. If you have one, let us know if you like it. But then she talked to all the creators who are using it. And it turns out, one, it's just an answer, which is fascinating. Right? There's still enough choice in that market that just an answer is useful.

• 1:42:37David Pierce?

  Right.

• 1:42:37Nilay Patel?

  So it, yes, you could just buy an RX100. Yes, there's like various Fuji cameras that like do the job. But this is just the answer.

• 1:42:45David Pierce?

  Yeah, like it takes, it takes pretty good video, it takes pretty good pictures. It's a reasonable size that you can carry around with you.

• 1:42:51Nilay Patel?

  And it looks cool, which is important.

• 1:42:53David Pierce?

  Sold.

• 1:42:54Nilay Patel?

  Yeah. And then, so that part is like confusing in a, in the sense that like, who knows how things become the answer? Do you know what I mean? Like, and it's not a Canon, it's stepped up production. It's just, here's this thing everyone wants and Canon's like, it's a five-year-old camera. Buy our new camera instead. Like, very much Canon's like, would you like to buy the new camera? And people are like, no, old camera.

• 1:43:13David Pierce?

  One of the things Alison found is that there is like a newer camera in that line. I think it's called the Powershot V1 that like just relatively recently came out. You can buy it so easily. It's just right there. You can just have it, but no one wants it. They want the five-year-old one.

• 1:43:29Nilay Patel?

  Yeah, because it's just the answer. So that's confusing in the sense that like, why do things become popular? You know, it's like some art and science. Confusing. The more confusing thing is the reason people like it is because apparently it shoots great flash photos. So all the tips for using it are like, open the flash, even in like broad daylight, just like fire that flash out.

• 1:43:48David Pierce?

  It's 1999 again.

• 1:43:50Nilay Patel?

  It's great. I kind of love it. I've been, I've started popping the flash on my RX100 to be like, baby rave. It's like a good time. Wait till these kids figure out how to shoot with slow shutter. So you get the nice background and the flash.

• 1:44:05Speaker 06

  It's so funny. Yeah, flash was just like you, it was, it was embarrassing to need flash for so long.

• 1:44:11David Pierce?

  Oh, yeah.

• 1:44:11Speaker 06

  And but it was cool before that.

• 1:44:13Nilay Patel?

  Now it's the trend. And this one camera, like literally the, the conversation, the discourse is, you need to buy this camera because of its flash.

• 1:44:23David Pierce?

  That means all these kids are like looking at their parents' photos from college, being like, oh, that's so vintage. And those are the pictures they want to take. And I'm realizing those are the pictures that I have from college because I'm 100,000 years old.

• 1:44:36Nilay Patel?

  So when we were like early 2000s, moved out of Chicago, we were in the bar every night. And my friends and I had those like Canon Powershot Els. And they only worked with flash in the bar. Like they did not have low light capabilities. And those flashes are really harsh and really direct and really cold. And we would always hold our Miller Lite bottles in front of the flash and shoot through those because they would both diffuse the flash and then tint them like Miller Lite's brown, you know?

• 1:45:05Nilay Patel?

  And then people were like, oh my God, what if we use a Heineken bottle? Like, what? And they're like, like, we should sell filters for flat. And this idea died. Like, the iPhone came out the next day. We're like, well, that's over.

• 1:45:15Nilay Patel?

  That's how we solved the problem back in the day. We just held the beer bottles in front of the camera flashes. I have a lot of very weird photos taken that way from about like 2004 to 2007.

• 1:45:25David Pierce?

  I love this for you.

• 1:45:26Nilay Patel?

  It was great. Anyway, the mystery is solved and the mystery is it's just the one. Like it just became the one. It's just the thing that's popular and the thing specifically popular about it is the flash.

• 1:45:37David Pierce?

  Right. Yeah, it is like the virality has fully taken hold on that thing and it's like it can happen with anything. It can happen with a weird Fleetwood Mac song with a guy drinking cranberry juice and it can happen with five year old cameras. Like no one knows and it can literally happen to anything at any time.

• 1:45:54Nilay Patel?

  Do not turn on the flash on your smartphone.

• 1:45:56David Pierce?

  No.

• 1:45:57Nilay Patel?

  It's not as good. I just, I need to tell you this.

• 1:46:00David Pierce?

  Do you think we can make the phrase eating the flash happen when you pop up the flash? You're yeeting the flash?

• 1:46:06Nilay Patel?

  No, unless you ripped the flash off the camera and like threw it into another room. No, that's not, that's not what that word means.

• 1:46:12David Pierce?

  Bro, let me get a picture. Just let me yeet the flash real quick. I feel like we can make this happen.

• 1:46:15Speaker 06

  Is yeet gonna be in the title of this episode?

• 1:46:18Nilay Patel?

  We can't do this. We can't, we can't do this. We can't keep saying yeet. Yeet is already old slang. It's like five year old slang already. And now we're just talking about like a bunch of old dudes. Like yeet this is what I'm saying.

• 1:46:29Speaker 06

  How about yeet the monopoly? That's the new title of the Vergecast.

• 1:46:32Nilay Patel?

  We'll accept yeet the monopoly. Do you have one more pal, Cleanzer David?

• 1:46:35David Pierce?

  Yeah. Should we talk just for a second about Phil Spencer saying Microsoft really wants to support the Switch 2, which a bunch of gamers that I know and talked to found a mix of very exciting and sort of odd. Like basically what he said is, you know, Microsoft's whole plan is they want to have Xbox stuff everywhere, including on the Switch 2, right? And they've like, they're launching these games for the PS5. I think Indiana Jones comes out like today as you're hearing this on the PS5, which would be very exciting for some people. But he said, he was like, we want to have our franchises, our games on the Switch 2 also.

• 1:47:12David Pierce?

  Seems like great news. Lots of gamers are like sick. This is the, one of the reasons people don't get things like the Switch 2 is because it can't play some of those games. So the idea that it might is very exciting. But then there was an interesting backlash to it of people being like, Microsoft is just gonna, you know, squeeze Nintendo and ruin this beautiful console for capitalism. And I just think it's kind of funny. Like the, the way everybody talks about all of the gaming industry that isn't Nintendo is increasingly sort of ruthless and brutal and not beautiful and artistic. And then Nintendo is this just like beautiful flower child over here that we cannot allow to be ruined by these other companies.

• 1:47:51Nilay Patel?

  Well, I mean, Nintendo is the only company that can look at something like Zelda and be like, yeah, it's done.

• 1:47:58Nilay Patel?

  We're done. The story's over. We have no more story here. We're gonna start a new story over here. Like, very few companies can look at Breath of the Wild and be like, yep, this version of this has come to its conclusion. Most companies are like, have you heard of DLC? There's more of it. Uh, and then I think for Microsoft in particular, they, they lost this console generation. I don't know what they're gonna do with the next one. They're like, we bought all these studios. We're gonna monetize the games with advertising.

• 1:48:25David Pierce?

  Yeah.

• 1:48:26Nilay Patel?

  So we're gonna put the games everywhere so we can get multiplayer. It's kind of like network effects. So you want a big multiplayer games full of advertising? You just need a lot of players. So of course you're gonna be on the Switch. And I think that's the thing gamers in particular are responding to is like every game is becoming some like open world advertising paradise full of things to buy.

• 1:48:44David Pierce?

  Yep.

• 1:48:44Nilay Patel?

  And Nintendo games are like, would you like to have fun?

• 1:48:48David Pierce?

  Yeah.

• 1:48:48Nilay Patel?

  And that's the end of that. Like, yes, yes, I would.

• 1:48:52David Pierce?

  I will play tennis with Bowser for five hours. Yes, thank you.

• 1:48:55Nilay Patel?

  I think that's why people, um, we've been playing a lot of Astro Bot.

• 1:48:58David Pierce?

  Nice.

• 1:48:59Nilay Patel?

  Like, that game's great. I don't feel like someone's gonna ask us for money while we're playing.

• 1:49:06Nilay Patel?

  Like, there's very few of those games left, and when they come out, people love them. But I think, I think Microsoft has to put advertising on the Nintendo Switch. I think that's what people are reacting to.

• 1:49:14David Pierce?

  Yeah, the other funny Switch thing that happened this week was, uh, Nintendo had another event just to show off more of the new Mario Kart game, which looks sick. Like, I'm so excited about that game. And the whole chat in the whole thing was just about the price. A bunch of people were like, A, like, tell us what the actual price is. Why won't you let us buy this? Lower the price. How dare you? And then a bunch of people being like, ah, games are expensive. And it just, all anyone cares about at this point is like, what is this thing actually gonna cost? And when are you gonna let me buy it? And anytime Nintendo does anything else, that's the only question left. And that is also the question I have, because the preorder date has come and gone. They have not even announced when it's going to happen. I would like to throw my money at a Switch 2, please.

• 1:49:58Nilay Patel?

  It's gonna end up costing like $1,500 to buy the Switch 2.

• 1:50:02David Pierce?

  Honestly, like, you can either wait a year and get it at normal price, or buy it now for $1,000. Like, it could happen.

• 1:50:09Nilay Patel?

  I mean, there's all the, you know, high-minded, like, Trump really began with Gamergate, and to have it come full circle to you can't buy Nintendo is very funny. I'm just gonna, I just needed to say it on our show one time. I, I think Nintendo will, will figure out a way to get this thing on sale. I, I actually really, I talked to the CEO of a very large company that makes a lot of stuff this week, and he was like, I don't think anyone understands we're all gonna solve it with smuggling. Dead serious.

• 1:50:39Speaker 06

  Just like Tim Cook, like, flying planes, like, out of, like, Vietnam.

• 1:50:42Nilay Patel?

  Yeah, like, we're gonna, all the parts will, like, all the parts will go to Mexico for a final assembly, and that final assembly is like a sticker that says "Made in Mexico", and then that will come in through that tariff regime. Like, the amount of that that is going to start happening, the thing specifically that was described to me is, um, you have all these export controls in these various countries, but like, you have to check the list. And he's like, yeah, we just set up 15 shell companies, so that it completely ensures where things are going. All those people get to make money, but that money is less than the tariffs. And I was like, is it smuggling? And he was like, yeah, smuggling. Like, it was just very direct.

• 1:51:20David Pierce?

  So do we pay tariffs, or do we pay bribes? Like, you pick.

• 1:51:23Nilay Patel?

  He was very straightforward. It was like, yeah, we're understanding smuggling. So I'm excited for Nintendo to figure out smuggling. It's the next great Switch 2 game. Smuggle a Switch 2.

• 1:51:34Speaker 06

  Yeet the Switch 2. I would play that.

• 1:51:36Nilay Patel?

  We're done. That's it. That's the Vergecast, everybody. Rock and roll.

• 1:51:45Speaker 06

  And that's it for the Vergecast this week. And hey, we'd love to hear from you. Give us a call at 866-VERGE-11. The Vergecast is a production of The Verge and the Vox Media Podcast Network. Our show is produced by Will Poor, Eric Gomez, and Brandon Kiefer. And that's it. We'll see you next week.

• 1:52:06Speaker 08

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