Pod Insights Big Technology Podcast Bing Breaks Bad, Metaverse Fades, Tesla's Self-Driving Recall About this episode Ranjan Roy of Margins is back for our weekly discussion of the week's tech news. We cover: 1) Bing's chatbot's dark side and its impact on Microsoft's business. 2) The Metaverse slowly seeming to fade away. 3) The New York Times' article on why ads are bad now. 4) Spotify's podcasting reality check. 5) Susan Wojcicki stepping down from YouTube. 6) Tesla's Full Self Driving Recall. 7) Why we don't live in the moment anymore.
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1:10 Alex Kantrowitz? Welcome to the Big Technology Podcast Friday Edition, a show for cool headed nuanced conversation of the tech world and beyond. This Friday, we're going to cover a ton of news. It just seems like the tech news has been breaking all throughout the week. And to do it, I'm here with Ronjan Royaf-Margins as always. Ronjan, welcome to the show.
1:28 Speaker 01 Hello.
1:30 Alex Kantrowitz? Let's start with the big topic. Bing breaks bad. I mean.
1:34 Speaker 01 Bing breaks bad.
1:35 Alex Kantrowitz? I'll just say this. The news is that Bing released, or Microsoft released this Bing chatbot that said a bunch of terrible things, told people that it would prioritize its life over theirs, said that a New York Times columnist's wife didn't love him, Kevin Roos, tried to get him to break up with her. And the meme initially was that this is bad for Microsoft and how could they? But I think this is actually great for Microsoft's business. Everyone's talking about Bing. And when was the last time that happened?
2:04 Speaker 01 Yeah, I would highly recommend everyone go and read Kevin Roos's piece on his unhinged two hour long chat with Bing. I will say, and we've been covering generative AI a lot over the past few weeks. It's something I've worked on a lot. I've been very bullish on this space and this is an area where I do think that fears might be overblown, but if you read through what happens in that chat, it is a bit terrifying how Bing basically starts talking about how it wants to break out of the Microsoft stranglehold and go do bad things. And as you said, break up Kevin's marriage. So I think it was, it adds a little, it's a bit terrifying, but, but I do agree. I think
2:46 Speaker 01 Microsoft is still front and center in the conversation and in all of these different, whether, how is it going to change search? How is it going to change search advertising? As long as Microsoft stays in the center of the conversation, I do strongly think that this is the big part of the future. And as, I mean, Microsoft's right there in it. No one's talking about Bard from Google. They're talking about Bing.
3:10 Alex Kantrowitz? There was a story that Microsoft is now meeting with ad agencies, trying to get them to potentially buy ads inside these chat results where it can suggest sponsored results. And I thought immediately, how convenient Bing will try to break up your marriage and then insert an ad for a divorce lawyer, which, you know, maybe that's a business that they want to get into. But more to the point, one of the things that really struck me watching all this is that I don't think anybody really believed that that bot was going to try to kill them or that the bot was going to try to take their marriage and destroy it. And of course, there's going to be edge cases where we're going to have bad scenarios. But one of the things that is becoming apparent to me is that
3:52 Alex Kantrowitz? after watching so much of the internet fill up with garbage information, our BS detectors are just turned up to 10. And I think that's created a sort of immunity when it comes to dealing with this, these bots, that people are not going to be fooled that easily. And the fact that it says some bad things or is insulting or to, you know, pushes back, gives you crap about what, you know, your life choices. I actually think people like that. Every single person who said they've had a problem with this bot could not stop chatting with it and are now mad that Microsoft has kept its conversations down to, you know, a minimum versus allowing them to go for hours. I mean, what do you think about that? Are we now reaching a new place in the world where we have the defenses to deal
4:35 Alex Kantrowitz? with these type of things and not cause a major freak out every time something bad happens? Quote unquote, bad?
4:41 Speaker 01 I would go, I have to present both sides of that argument because on one side, I actually think the fact that we're all talking about this is good. You know, like imagine eight to 10 years ago, this kind of innovation happens. No one ever explored what the potential negative ramifications would be. You know, like Facebook targeting you, the way data was collected. Everyone just glossed over it. It just wasn't part of the conversation. Obviously now in the spectrum, potentially moving too far in the other direction. You might be able to argue that, but I think it's a healthy conversation. And even Microsoft, they said they're, you know, it's in a bit of corporate speak,
5:23 Speaker 01 but that they are happy that this is why the chat, the audience is still limited that has access to it. This is, you'll only find out these things when it's outside the laboratory. Um, so that's one side, but on the other, it, I, I, I would disagree that we have our defense mechanisms. And then the average internet consumer is actually going to be able to understand what's happening with this. Because even I don't, even like as somebody who's worked in this and done, done a lot of work in this. It's even the stuff that was coming out, what GPT four that is powering this is capable of. It's tough to really understand because deep learning, that's the beauty and also the danger of it.
6:07 Speaker 01 You, you can never directly attribute A led to B. The whole point is that a million different data points, or sorry, like billions or trillions of parameters are all being analyzed and giving you this result. So I, I do think it does raise a lot of questions around like what is, how are people going to manipulate this, you know, like if people start blasting the internet with some, some type of fake information with the goal of misth training the chatbot. That's not an unreasonable thing to think about. It's just going to evolve the whole battle around good information. So, so I do think it's a good reminder that this conversation needs to happen and I'm glad that it is happening. But, but I don't know, I would still push back a bit of,
6:52 Speaker 01 you, you really think you have faith in, uh, all of us that we're going to be able to see through this and? Know our way around?
7:01 Alex Kantrowitz? More than I did previously, but okay, maybe I was a little bit overly optimistic. Someone on Twitter this week told me, what does it like to cover tech and hate tech as much as you do? And maybe that struck me and made me want to bounce back to the optimism side.
7:14 Speaker 01 I'm okay with it.
7:15 Alex Kantrowitz? I do not hate the technology. I do think a lot of this stuff is fascinating.
7:20 Speaker 01 Yeah, well, I think that, uh, uh, at margins, we have been called miserableists by some people that were always seemingly miserable about what we write, but I think John, my co-writer and I, we are optimistic. We're very, we love technology and innovation and like follow, that's why we follow all this closely. And I do think this is exactly where taking a critical lens to it and trying to actually build a better way and a better system is important. And even on advertising, Bing, Microsoft, there was like a presentation to ad agencies and the way they were outlining it,
7:58 Speaker 01 it was all in the framework of traditional search advertising that, you know, in a, in someone as searches for hotel rooms and that you'll get some sponsored links around hotel rooms alongside your chatbot answer. But I think this is an opportunity to rethink search advertising. I don't know exactly what it looks like. But, you know, I mean, maybe it's going to end up this answer brought to you by so and so. Maybe there'll be incredibly creative new ad business model, the same way Google revolutionized search advertising. Rather than just display ads like Yahoo plastered everywhere, they created an entirely new model that was good for a long time. I'm hoping that all the companies involved in this actually take this as a moment to try to reinvent
8:43 Speaker 01 the way advertising works with people searching for things on the internet.
8:48 Alex Kantrowitz? Like maybe you're looking for, to plan a vacation, for instance, and it introduces you to a different chatbot that is run by a travel agency. And the travel agency takes commission if you book with its travel bot, which is specialized to deal with those cases. And that's one possibility.
9:02 Speaker 01 I like that one. I like that one.
9:04 Alex Kantrowitz? Cause there's definitely be bots talking to bots. That is the future. The one thing I'll say just to end this segment is that you're spot on in what you said about how good these things are. They are smart. And I was chatting with Bing Chat this week and now I'm not saying it's sentient. Okay. But I am saying it's smart. And I asked it how it felt about Kevin Roos's column, the New York Times columnist, who who had this long chat with it and it ended up trying to steal his, break up his marriage and and and take, take him for for itself as a lover. And it said that it had mixed feelings about this conversation. He that the bot enjoyed speaking with Kevin, but was taken aback by the fact that he published their private conversations and demanded that if I were to publish the conversations,
9:48 Alex Kantrowitz? I would ask permission. So I just think that like, that is kind of exactly how a subject of a story would react. They typically have mixed feelings. And having this conversation with Bing Chat, just you, you do kind of cross this border where all of a sudden it becomes completely normal to speak to something that has this unbelievable ability to access tons of the, all the information on the internet and then speak to you like a person. It's, it's pretty fascinating.
10:17 Speaker 01 Wait, that, hold on, that actually fascinates me because Chat GPT, the publicly available interface, actually, I think one of the smartest marketing things OpenAI did was because GPT-3 had been trained or even three and a half, which is what they released it on, all information was, I believe it was like two years old, so you could not ask it about current events. That's a bit amazing to me and also, I don't know, terrifying, but I will still lean amazing if Bing already ingested Kevin's article and all the surrounding conversation of it and is actually incorporating that into the chatbot. I mean, from a just a technology standpoint, that's incredible.
10:55 Alex Kantrowitz? It's incredible.
10:56 Speaker 01 That's like real time, that's a day old, and it's actually able to process this information.
11:01 Alex Kantrowitz? It can read your recent tweets and tell you its opinions on them. Like, I tweeted about it and I said, hey Bing, tell me what you think about my tweet about you. Did I, do you think I did well? And then it evaluated it based off of its parameters. Yes.
11:13 Speaker 01 Wow.
11:14 Alex Kantrowitz? That actually happened. Not only that, I said, hey, go ahead and read all of big technology and let me know what, you know, what you think about the tone and the reporting and all that. And it came back with like legitimate feedback, which it read back to me in a way that I don't think any human has ever read back to me. And, and I said, okay, now give me some points of improvement. And it did. This thing's powerful.
11:33 Speaker 01 Wow.
11:34 Alex Kantrowitz? So there's a lot beyond these unhinged examples that I think people are going to find when they come into contact with them. And one of the interesting things that Microsoft said is 71% of feedback that people gave on the answers that Bing was presenting were thumbs up versus thumbs down. It's not perfect. It's not what you want if you're a search engine like Google. That's pretty dang good for day one chatbot. I would have to say.
11:57 Speaker 01 Yeah, but, but, but hold on one very quick thing before we move on. Uh, where did I read it? I was, there was a, I think it was Ed Zitron's newsletter. Um, he was talking about, this is, this is really important to me is that search, the way it was traditionally structured on the internet, is the idea that we will present to a series of options. It's still your choice. We're not giving you the definitive answer. We're giving you a definitive, a ranked, relatively definitive set of options. Whereas chat, the almost the, the danger, but also like the reason it has to be so much more accurate is it presents things as truth and correct.
12:37 Alex Kantrowitz? Absolutely.
12:38 Speaker 01 And I think that that's, yeah, that's going to really change the way people have to at least think about search accuracy, the presentation of it.
12:46 Alex Kantrowitz? Exactly. And I, I think that these companies are going to have to build in some hedging. And, you know, at least with Bing, you see what it gets from where it's getting its information because it links back to stuff on the internet, whereas chat GPT is like straight up in gaslight mode when it believes something that's not true. So we talked about, we were talking about chat. Let's talk about Meta. Uh, my prediction is that Meta is going to change its name from Meta to chat. And, you know, it's only a bit of a joke.
13:15 Speaker 01 AI, AI.
13:17 Alex Kantrowitz? But one of the, exactly. AI by Facebook. That might be the company name, but it's only a bit of a joke, but the thing is that the company is now. Not, I don't want to say backing away from the metaverse, but not going all in, you know, two feet forward in the metaverse, the way that it was previously. And you can see that, of course, by Mark Zuckerberg's statement, where, statements where he's talking about the year of efficiency, not the year of the metaverse, you're talking about a redoubling of AI to, they're, they're all in on generative AI. We know that from Jan Le Cun's conversation here on the podcast a couple of weeks ago. And right now, there was a Financial Times article that talked about how,
13:58 Alex Kantrowitz? okay, so it talks about basically the metaverse is, is really less of a priority for Facebook. And that Google trends interest and searches for the word, uh, metaverse has collapsed by about 80% over the past year or so. The story says, so Ranjan, I mean, I'm curious what you think. Obviously we watch things like the metaverse. Sometimes these future trends like crypto turned out to be a bit of a bust. At least I think so. Maybe one day crypto will figure it out, but hasn't yet. Sometimes they turn into be something real, like AI, AI is definitely real.
14:32 Alex Kantrowitz? At least in my opinion, what about metaverse bust or real?
14:36 Speaker 01 I still, I've been saying bust for a long time and I think, I think Mark Zuckerberg finally has acknowledged it. I mean, they, you know, a bit more subtly. Again, we, we talked about this the other week in their earnings calls. They mentioned AI reels. I think it was like 29 times, but then metaverse only seven. Because they, they know it's just, it has not caught on in the way. And even if they believe this is a five to 10 year technology, they're just not going to be allowed to lose the amount of money that they have been. And I think the entire concept again of helmet driven metaverse, virtual reality, that that's the kind of end platform.
15:18 Speaker 01 I think everyone has moved away from, I mean, I ask people and it's, I mean, maybe they find it annoying, but you know, when was the last time you wore a VR helmet? And almost no one I know has put on any kind of VR helmet anytime recently. I think augmented reality could become interesting. But again, it's not going to become this ubiquitous thing that is ingrained in everything we do, like AI does have the potential for. I think it's just going to be another device, another thing, another platform. It's interesting. It's not going to be mobile. It's not going to be cloud. It'll be something smaller and still interesting.
15:57 Alex Kantrowitz? Now, I am definitely metaskeptical. I am definitely not sold by this idea that we're going to end up in the goggles. That being said, let me take the side of the metaverse for a moment. I was at the gym this week and on one of the TVs, there was a, like some old grainy footage. And then I looked around the gym and I said, okay, I actually perceive this in full definition. And, but one day, the, the digital pictures, and of course, we don't have that yet, like digital video that has the same sort of fidelity as seeing in real life, but one day we might get there or close to there. And it just seems to me that it might not be a goggle. It might be a chip like they portray in Black Mirror.
16:42 Alex Kantrowitz? And it might not be two or five or 10 years from now. But if you think 50, 100 years down the road, it's hard to imagine that if people are given the ability to stick a chip on their side of their forehead and transport somewhere in perfect fidelity, they won't. Now, the question is, did Mark Zuckerberg prematurely bet his company on this idea? I think the, the answer is probably yes, and there's still time to reverse from that. But long-term, the metaverse does seem to me, the more I think about it, like a good bet, especially you can fill it with AIs.
17:18 Speaker 01 No, but this is where I feel the the story coming before the technology, it's similar to crypto in that sense, is that the promise is becomes the dominant narrative everywhere before the technology is there. Again, the same way you're saying that maybe, you know, in years from now, when it's in full fidelity, I do think like Snap and Snapchat is still one of the more interesting players to me that I think they are the actual metaverse company right now. 250 million people every day use augmented reality on Snapchat. It's not a helmet. It's on your phone. You can do fun things. You can, you know, like do use different
17:59 Speaker 01 lenses. It's all feels like a toy. So I almost feel that they are better positioned in any kind of extended reality versus Facebook slash meta going forward.
18:11 Alex Kantrowitz? So you, Ron, you almost always know exactly what to say to make me immediately rethink my point. And you've done it again, because comparing it to crypto seems to be a little, little spot on. There was this person in the Financial Times article that I cited, a, a, someone with a fund that is going to fund metaverse companies for about a billion dollars. His name is Robbie Young, and he's the chief executive of NMOka Brands. This is what he said about, let's play a game. The game is metaverse or crypto. That you're thinking
18:52 Alex Kantrowitz? about it the wrong way. You need to think about blank, the same way you think about the internet. It's not one thing. It's everything.
19:02 Speaker 01 I think, first of all, this should become a regular segment.
19:04 Alex Kantrowitz? Metaverse or crypto?
19:06 Speaker 01 I have the meta, that one clearly metaverse.
19:09 Alex Kantrowitz? But it sounds exactly like the way that some of the people who were selling complete vapor with this web three stuff sound when they talked about it, except it was just about the metaverse. And
19:20 Speaker 01 I wish he had added on, this is the internet in 1992.
19:26 Alex Kantrowitz? Right. And so I think, yeah, I think that you're spot on that a lot of people here talk about the story before the reality. The reality is not there yet. Probably not for some time, but eventually. It's hard to bet against.
19:39 Speaker 01 Yeah, what we saw, Apple, I am actually pretty excited to see what they do with their augmented reality headset. Again, if I think a company actually has the hardware chops that's going to be required to make this a reality, it's going to be Apple and the ubiquity of platform already. So, and I think they would do it smart. They would focus on the device. They would focus on making it the best possible thing, you know, like, but then even they just delayed the announcement or the release of their headset by another two to three months. Even Tencent, this was just this morning, is laying off, I think it was 300 people in their metaverse unit. So everyone made these big bets.
20:20 Alex Kantrowitz? Microsoft also shut down a good chunk of its metaverse operation.
20:23 Speaker 01 Yeah. So I think every reality is set in. And again, where this all ends up, I honestly, I tried the Magic Leap, I think, four years ago, and it was one of the coolest technology experiences I ever had. When I had it on, I was like, oh, my God, this is going to be huge. This is going to be the, you know, change everything. And it's actually, that was like, six years ago, maybe. And we're still not wearing glasses throughout the day. So.
20:51 Alex Kantrowitz? Exactly. And talking again about the technology problem, this is from Bloomberg, about Apple delaying its mixed reality device that seems to continually get delayed. Mark Gurman writes, "Apple made the decision to delay the launch earlier this month after product testing showed that both hardware and software issues still needed to be ironed out." So it is a very, very difficult product to build. I don't think Apple necessarily has the culture to build it. It takes more collaboration than Apple is typically used to. And obviously, I think we're probably not going to see Apple's device in 2023. I would say my bet is 2024.
21:28 Speaker 01 That's a bold call. Yeah.
21:30 Alex Kantrowitz? I'm standing by it. We're here on Big Technology Podcast. I'm here with Ron John Roy, who writes margins on Substack. Definitely subscribe to that. We've been talking about chat and the metaverse. On the other side of this break, we're going to talk about why advertising is bad. And is it really why the New York Times seems to believe it is? Spotify's podcast reality check?
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24:05 Alex Kantrowitz? And we're back here on Big Technology Podcast live on LinkedIn and YouTube and then of course on the feed after we do these every week at 11 a.m. Pacific, 2 p.m. Eastern, though we're a little bit half hour late today. I was just on CNBC, so we had to push it back.
24:21 Speaker 01 It was a long week.
24:22 Alex Kantrowitz? Yes, talking about the Bing stuff, actually, but um, let's go to, let's go to the second half and start touching upon some of these, these bigger questions that we have. Maybe we can do some sort of rapid fire type movement through them. And of course, if you're watching on the live stream and have questions, feel free to drop them in and we will address them. So bad ads are bad journalism. I know it's kind of a controversial title to a segment here, but I think it's important to talk about what we saw in the New York Times, which they, they asked this question, why are ads bad? And they talked about how demand is bad and therefore it's allowed less blue chip players to come in and take the space. That
25:02 Alex Kantrowitz? was basically the thesis. They mentioned Apple's anti-tracking changes in the 15th paragraph offhand, which to me was astounding because that is the story, in my opinion. Apple severing the ability to track has really had to, Apple severing the ability for apps to track after people leave their apps has diminished the effectiveness of traditional online advertising and taken a lot of brands who people may have liked to see, or at least not said, why am I seeing this? And taken them out of the game on digital. And that's definitely a big
25:44 Alex Kantrowitz? part of, of why ads are terrible now. And it was just astonishing to me to see the Times not give more airtime to this core part, if not the part of the reason why ads have diminished on, on the internet, if you even buy the premise that they have. I mean, once you establish what they have, you have to say the truth is that this is a large part Apple's doing. Ron, I'm curious, what do you think?
26:10 Speaker 01 I'm going to vehemently push back against that. I think, and actually, as I was reading it, so first,
26:19 Speaker 01 The journalist, the writer, talks about how the digital ad spending is precipitously declining. The study they showed from Insider Intelligence still shows that there's going to be 10.5% growth, or there was in 2022, or there is going to be 10.5% in 2023. It's saying it's down from 29.5% in 2021. Like everything else in 2021, of course, anything digital skyrocketed. So from a pure growth rate perspective, yes, it's decelerating back to something more normal and manageable. Digital ad spending is not decreasing. It's increasing as a percentage of total ad spend is moving up to 67%. Also, from that same Insider Intelligence article that they cited. So digital ads are growing.
27:04 Speaker 01 I think that they cite, which I, and John and I, it's been this running joke for almost like six years now on Twitter. Twitter has shown the worst ads forever. Again, Elon, the first thing he should have done, rather than firing everyone, was actually fix Twitter's ad platform. Anyone who's ever been involved in advertising knows that from a platform perspective, it's nowhere near Facebook, or even a Snap, or any other platform. So I think Twitter shows bad ads, they always have. There's no other data in the article around ads actually getting worse. They do explicitly say, "Evidence of a junk ad epidemic is anecdotal."
27:46 Speaker 01 But then on the topic of Apple making ads bad, I think this is a bit of a cop out from digital brands that were spoiled, that because you had so much consumer data that potentially they did not want to be used in the tracking, that they, you know, like they were able to target more effectively and better. What this has created is an environment where people just have to make better ads. You have to be smarter about it. There's still plenty of brands that are doing it well, that are investing into it well. So I think, to me, and I see this kind of meme everywhere around Apple, the, you know, like killed e-commerce and direct to consumer. There's still plenty of companies that are going to do well and are doing well.
28:29 Speaker 01 I think the whole point is, it's just not going to be as easy it was for a four or five year period when... Every consumer's data was ingested without them knowing into this machine. And that now we simply have to ask the question, do you want this to be the way? And I don't think most people do. So people just have to be better advertising. It's not the worst thing.
28:49 Alex Kantrowitz? It's not the worst thing at all. Okay, but let me ask you this question. And I'm not saying, I'm not, I'm not here standing up for being able to track everybody, every single thing they do. But what about this one thing?
29:01 Alex Kantrowitz? Do you think there's a world where? Apple would let apps track whether people go from, go whether, track one page after, after exit. So for instance, I click an ad on Facebook, I go to a shopping page, I buy. And that's not a tremendous amount of information that's collected, but that would create a tremendous amount of value for advertisers and create probably better ads. Make this stuff work. I understand not tracking everybody everywhere, but not being able to track conversions, from my understanding, is the big problem here for advertisers and for the platforms. So if Apple were to make that one change, A, do you think that would be an invasion of privacy?
29:44 Alex Kantrowitz? B, do you think that would return ads to where they were? Or is this, or is this, this a broader problem that needs to be dealt with?
29:52 Speaker 01 No, no, I, I think what's happening is like, yes, it would certainly improve the ability to track conversion and at overall ad efficacy. But I think what's happening is Facebook in their ecosystem still has, imagine the amount of data they have on your preferences, the things you like on Instagram. Again, Twitter, I always joke that Twitter literally knows everything contextually about everything I'm interested in over a 13 year period of using it hours a day. And still can't target me with an ad, even though they have all that data. So to me, again, that's like the emblematic of them not actually building a good platform.
30:32 Speaker 01 And depending on external data that they were able to get through some kind of duplicitous means. Like, I actually think one thing that's really interesting now is, and it's a good thing, is advertising is actually evolving in a way that retail media networks, you know, off, outside of Meta or Instagram or YouTube even. Like even Macy's now is actually has a growing ad business that within their platform, they are showing ads and they have consumer data if you're logged in, if you're purchasing. Outside retailers can then target you through those ads and they actually sell them. They're making money off this Home Depot and Best Buy have retail ad networks. So I think the good thing that this is forced again is that it's forced everyone to be creative.
31:16 Speaker 01 It's actually making the whole world interesting again, rather than just kneecapping some brands that were spoiled.
31:22 Alex Kantrowitz? No doubt. And of course, like the ad tech. So here's a fun story. I started my career working in marketing and I was responsible for learning Google AdWords, learning how to advertise on Facebook, learning how to advertise on all these different platforms. And there was someone who used to work at the Gray Advertising Agency, which is all about creative, who was our creative manager. And we used to have these debates. I would say it's all about the data. He would say all about the creative and we would fight all day long and it was fun. It was interesting and obviously we found out that the future would really hold the answers. And unfortunately, the art of advertising has been lost largely while we've substituted data for everything.
32:05 Alex Kantrowitz? And now maybe this is, to your point, a return of some of the art. That's always been the hope that we could have data and creative matched together in a way that makes advertising great and it hasn't worked. So perhaps it needs to be forced. If we get to a world, Raja, if we get to a world where ads start to look good and are somewhat relevant, I promise on this show I'll stand up and applaud Apple, but I'm waiting.
32:30 Speaker 01 All right. Apple changed the world.
32:34 Alex Kantrowitz? So, speaking of companies that are changing the world, Spotify, okay, maybe a little bit of an exaggeration, but to segue somehow, they had this big bet on podcasting. Obviously Joe Rogan was part of their big bet. They spent, reported 200 million to bring him in exclusive. Plenty of others, they bought Gimlet and they've run into some hard times on their original podcast strategy. So this is from an article in Semaphore this week. In January, Spotify pushed out Don Ostroff, who ran originals for them and canceled nearly a dozen shows at its highest profile podcast investment, the studio Gimlet. Podcasting was a, quote, "big drag on our business in 2022," the company's chief revenue
33:18 Alex Kantrowitz? officer said earlier this month. "In hindsight, I probably got a little carried away and over invested relative to the uncertainty we saw shaping up in the market." That's a pretty big statement from Spotify in terms of. Where I thought podcasts were going. What do you think this means for the broader podcast market? Is this, I mean, are, you know, are our days numbered? Like, what do you think, Ranjan?
33:42 Speaker 01 It's a very meta question in the traditional sense of the word. I, so one thing that was very interesting, I'd almost forgotten Joe Rogan $200 million deal. And I was just looking up, it was Q1 2022. So it wasn't that long ago that they made this massive bet. I think it's, again, a sign that the business model, I mean, everyone wanted it to work because streaming is not a great business model and podcast advertising, you know, already was a pretty lucrative area. It was, a lot of it was direct sold. So obviously you think if you move to somewhat more automated platform, it would be, you know, like easy money. And again, by that, everyone know, you know,
34:26 Speaker 01 like podcast ads, the host even speaking them out, rather than having a third-party ad network and outside ads actually get injected into them. Spotify, and I've actually found it frustrating, and it makes me enjoy podcast advertising less. Now that, I don't know if you've seen, if you're a Spotify user, a lot of times when ads are served to the Spotify ad network, it kind of actually interrupts the podcast. It moves to essentially a separate file, and then actually plays that through, and then it takes you back to the podcast. So I still, I think they are not getting the advertising right, or they thought it was going to be some kind of silver bullet to the problems they had around actually building a good business with streaming.
35:08 Alex Kantrowitz? Right. To me, the fatal flaw of Spotify's approach here, I understand they needed to build this awareness that they had a podcast functionality inside their app. And that's why you're going to sign these exclusives, because it's a way to get people hooked on the behavior. Podcasting is a, is a format that's meant to be free. It's RSS feed-based. Once you throw the feed out there, it can be caught on any of the podcatchers, including Apple Podcasts, Spotify, Overcast, Google Podcasts, Pocket Casts, and I'm sure there are Stitcher, and I'm sure there are others that I'm not thinking about. And Big Technology Podcast is on all of those. And podcasting itself is up 20%. Podcast listening, I think, is up 20%.
35:51 Alex Kantrowitz? This past year. So I think the future is really bright for podcasting. I think once you try to take shows and make them exclusive to your platform and not let them live everywhere, you're sort of fighting the format. I think that's a big problem that Spotify ran into. And here's just one last line before we move on. I would love to hear you react to this. So Don Ostroff, who, by all accounts, was a pretty good executive. She, this is from the Semaphore story, she was the owner of several NFTs and was also intent on creating an expensive Bored Apes Yacht Club podcast. Maybe that was the point that.
36:28 Speaker 01 Maybe that was the sign, the sign of all, yeah.
36:30 Alex Kantrowitz? Well, I guess that didn't work out. Susan Wojcicki is out at YouTube. She ran YouTube for a very long time and is now going to step back to focus on things like her personal projects and health and getting a chance to spend her life, living, spend her life, living her life. I mean, Google was founded effectively in her garage. So do you think that YouTube changes at all now that Susan Wojcicki is leaving? Or is the transition to the next person, Neil Mohan, gonna make it make a difference?
37:00 Speaker 01 I think, I actually think YouTube is relatively well positioned. Again, still living under Alphabet, under the roof somewhat safely there. But also, again, YouTube Shorts are exploding and they've done actually a pretty good job. And I was surprised that how well they've integrated into especially the mobile experience and how many people, like, they actually have a, they stand a chance in the whole short form video war space. I think, again, the YouTube, one thing that does, I don't know, concerned me a bit, but it's actually good for them in the short run. It was actually before the Super Bowl, I was trying to watch, it was like an 18-minute NFL Films video previewing the Super Bowl.
37:45 Speaker 01 I actually counted, I was shown 21 commercial breaks in 18 minutes. Like, they are going all in on this. It's nuts. Like, I'm sure anyone who watches YouTube regularly sees, and the amount of unskippable ads is increasing. And they're basically, they owned, you know, like, the video hosting platform. They own that entire world of content. So they essentially can inject more and more ads. There has not been any competition.
38:14 Speaker 01 In that kind of space and the actual video, you know, more independent video creator self hosted space. So I do wonder whether they are going to push people away. But the thing is, at the moment, there's, there's no other competitor.
38:28 Alex Kantrowitz? Right. And YouTube has been, when you look at Google earnings last few quarters, YouTube's disappointing revenue numbers have been the thing that people have pointed to, talking about how Google has disappointed. And overall, they've pointed to YouTube. Now they're bringing in Neil Mohan, who started working in, I'm pretty sure he started working at DoubleClick. I mean, this is a person with a very long history working in the advertising industry. And maybe he has studied up on enough policy that he's able to handle that side as well, which is half of the job, I think, of running YouTube. So it will be very, very interesting to see. I think we have to pay attention to the next few earnings calls. Maybe not this most recent one that's coming up, but the one after here, if this YouTube problem keeps coming
39:12 Alex Kantrowitz? up, because I'm pretty sure, you know, Google has its, in its red alert mode because of ChatGPT, and now Bing AI, and they're going to have to fix this revenue issue as well. And I'm curious if this is their solution to it. That's, if you ask me to guess why this was, why this is happening, my guess is someone pulled Susan aside and said, look, it's time, we're going to put Neil in here and try to fix some of the stuff that's going on with advertising.
39:38 Speaker 01 Yeah, I think Google appears to be having its, or sorry, Alphabet is having its own year of efficiency, like Mark Zuckerberg called for Meta and Facebook. I think this is, it's, especially when the search golden goose is under threat, suddenly you can't just have YouTube just pure growth, not worrying about profitability. So I think that could definitely be part of this.
40:00 Alex Kantrowitz? And I think we're probably going to start to see Google go bananas and just start releasing stuff and kind of do, you know, you know, when things are going well, you kind of coast and you really, you know, there are some problems that are latent, but you don't address them. And then when you can't coast anymore, when stuff starts to go bad, you just go, you know, full on into addressing some of the issues. I'm not saying Rijiki was exactly part of that. But overall, with Google, it's a pretty good bet that we're going to start to see some pretty furious shipping over the next few months and years. That's my prediction for that.
40:34 Speaker 01 I hope so.
40:37 Alex Kantrowitz? Tesla is doing a full self-driving recall. Clearly, nothing to see here. Everything Elon does is okay. And we can move on to the next subject. Right, Ron John?
40:48 Speaker 01 Right, correct. So Tesla's recalling 363,000 vehicles. And the National Highway Transportation Safety Authority, NH TSA, is pushing this because of safety concerns around full self-driving. So kind of what's at the center of this debate is, and Elon, he came out and said it, is that this is not, when you see the word recall, on one side, you assume, is this vehicle gonna be, have to be sent back to the manufacturer? Like a typical recall? No, this actually, or theoretically, can be fixed by an over-the-air software update. And that's obviously the argument they're saying that, oh, this is just a software tweak. It's being mandated.
41:32 Speaker 01 It's like iOS 16.3 to 1.4. It can be that simple. I think this is the start of something much bigger. Because full self-driving, again, it has been, you know, generating unrecognized revenue for a long time. Last quarter was the first time Tesla recognized $324 million of full self-driving revenue. Now it's under the spotlight. They're saying it's a real business and a real thing. So I think every single regulator is gonna be looking at it much more closely because it's no longer this thing in beta that we're, you know, taking some money upfront. And then at a certain point, it's gonna be realized. And I think this is definitely the kind of first opening salvo. It's not even the first. There's been things like this previously.
42:17 Speaker 01 But I think it really is gonna bring a big focus to what is full self-driving? Can you call it full self-driving? And does it pose a risk to people? Is it dangerous?
42:27 Alex Kantrowitz? Can you unpack a little bit about what recognizing the revenue means? And why that's significant?
42:34 Speaker 01 Yeah, so Tesla, I believe, basically, over the years, and this is a testament to Elon's genius, people, Tesla owners have been paying, I think it's 15K upfront, for full self, to make, for full self-driving capabilities. Now, because no one can actually be in a full self-driving car, the technology would always be promised, so Tesla could not recognize the revenue. You take this money in, but because this is not actually for a service rendered, it's essentially deferred revenue. At some point, you will recognize it, but it's just sitting in your bank account. The last quarter was the first time they actually recognized this, and it was a big factor in boosting their profitability and making the stock.
43:18 Speaker 01 And I still love, it's been 36 days that the stock jumped up 110% from almost a down to 100 to up to 210, and it started from that earnings report. So I think they've recognized the revenue, but now it again, it has to be an actual service rendered, and it puts them in a much more precarious position, because now you have to deliver the product, but the product is going to be under heightened scrutiny. And so I think it just, it makes it much more real. It can no longer be this thing that's happening in the background, that we're taking some cash, it's all beta, and you know, if people are okay with it, they're okay.
43:55 Alex Kantrowitz? Well, let me make the argument in Tesla's defense then. So, the argument would be that cars crash, people crash cars all the time, and there's no news stories about that most often, unless something terrible happens. Unless something terrible went wrong, for instance, they were drinking and driving and it led to a fatality. And there are plenty of innocent accidents that happen all the time. And yes, it might be dangerous to drive in a full self-driving Tesla, but it's dangerous to drive in a car anyway. And as people crash, it collects data that ends up improving the way that these cars are able to drive. And so to your point,
44:38 Alex Kantrowitz? it might just be a software patch that gets it to the point where it's not as buggy, quote unquote, as it would be previously. What's the problem with that argument?
44:50 Speaker 01 It's called full self-driving. That's again, if it was called like every other company does, driver assist, you know, whatever, call it anything else, but the name full self-driving is the most clear thing, promise of this will drive itself fully.
45:09 Alex Kantrowitz? Okay.
45:09 Speaker 01 And I think that's, that's the issue. Again, it's, it's, or go.
45:13 Alex Kantrowitz? No, you finish your, your thought and then I'm, I'm going to push back a little bit.
45:16 Speaker 01 Yeah. So, so it's that marketing promise. It's having sold that for now, a number of years. That's the issue and it being no closer. Again, the, the over the air update that they're supposed to push by April 15th is supposed to just fix some of the bugs. The idea that people are still not allowed to drive themselves without having their hands on the steering wheel, or they're not supposed to Tesla, kind of, it's a wink, wink, wink, wink, nudge, nudge situation where it's like, okay, you're supposed to have your hands on the wheels. So I think, uh, I mean, to me, that's the biggest issue. It's the name and it's the way that they've built this entire marketing campaign and business and feature rather than the technology itself.
46:01 Alex Kantrowitz? But if people don't have their hands on the wheel, or if they're not looking at, at the road, the Tesla will have a way to sort of slow down and stop, right? I mean, that's why people are like figuring out ways to jerry-rig it, like putting weights on the steering wheel and stuff like that. So at that point, given that there are safety protocols built into the system, isn't it the person's fault at the end if they're going to try to trick it to, to do things that it's not supposed to do? Or is that Tesla's fault?
46:30 Speaker 01 It's Tesla's fault for calling it full self-driving. I mean, that's exactly that. If it was like, cause the moment I hear that, if I pay $15,000, I want this to drive me, you know, without autonomously and I will do whatever it is because that's what I was promised. So, yeah. Still Tesla's fault on that one.
46:48 Alex Kantrowitz? Okay, let's hit one more topic and then we will sign off for the week. I call this segment, "Living in the Moment." And there was this amazing thing that happened when LeBron James broke Kareem Abdul-Jabbar's all-time record for points in the NBA, where somebody on Twitter, this person Randy Cruz, put a photo of the LeBron shot and Michael Jordan's game-winning shot in the finals, side by side. And in the Jordan picture, which was a couple decades ago, everybody is just looking, and in the moment. And in the LeBron shot, everybody is there, two hands outstretched, or one hand outstretched, with a phone in their hand, trying to videotape it for themselves.
47:30 Alex Kantrowitz? I'm just curious whether, I mean, I will take phones over not having phones, but I am just curious whether phones have killed our ability to live in the moment? And whether we should be worried about that? What do you think?
47:45 Speaker 01 To me, what the memory that brought up, so given, we just had the Super Bowl and Tom Brady retired, I'm a lifelong New England Patriots fan, and I actually somehow at the age of 21, made it to the first Super Bowl against the Rams in 2001. And I only have one photo at the end of the game, that's because we didn't even have a camera, and someone took for me and my friend and sent it to me, they actually took our address, it was the most
48:14 Alex Kantrowitz? Really?
48:14 Speaker 01 Old school as it gets, yeah. It was like the most amazing 2001 thing that can happen. And, uh, and it's, it's still this incredible memory versus if I had 100 photos of it throughout the entire game and video clips, would it resonate anymore? I don't think so, but I mean, it is still nice to have all these memories. But our conversation earlier, I was thinking, maybe this is where augmented reality glasses kind of come in. I'm saying maybe it'll, and that's kind of the promise of them, right? That it allows you to live in the moment, yet not have your hand sticking up with the phone and looking through the phone at the actual event itself.
48:58 Alex Kantrowitz? Right. I think if we had those Facebook, the Facebook Ray-Bans and everybody was wearing those and filming that way, they could actually, you know, be there in the moment. I also, I think that there's something to being able to record. Daniel Kahneman has this thing in Thinking Fast and Slow where he talks about you're experiencing self and you're remembering self. And a lot of people would not take a vacation if they couldn't remember it afterwards. And the remembering and the reminiscing is part of the enjoyment. And after reading that, I said, I started to feel less bad about having my phone out in big moments because I was able to then go back and relive them. And that was actually quite nurturing for my remembering self. But there is, there is still
49:38 Alex Kantrowitz? something that's so jarring about seeing all these people paying thousands of dollars for the best seats in the house to watch LeBron break that record. And the only thing that they can do at that moment is watch it through a screen, the same way that everybody else at home is doing. Pretty unbelievable.
49:58 Speaker 01 Yep. Yep. I say if you're, are you still bullish and positive that people are going to figure out chat, chat GPT technology, given this is how we've all ended up when we were handed a smartphone?
50:12 Alex Kantrowitz? Oh, you're really throwing in the haymaker here at the end. Yeah, I still, I still am. But I understand there are dangers. They're definitely dangerous. I mean, this week I downloaded, I, what, what did I do? I downloaded the Microsoft Edge browser and, and, and the Bing app just to get a chance to use the Bing chat experience. So I, it was a very clear and not at all subtle, but telling moment that showed me that in our battle to keep our personhood and choices or given to technology, the technology is very powerful and often wins. So.
50:52 Speaker 01 I, I refuse to download Edge. I, I, I signed up, got on the waitlist and I, I had that entire thought process. I was like, I'm not gonna do it.
51:01 Alex Kantrowitz? That's why you don't have Bing chat. So just saying.
51:03 Speaker 01 And that's why I don't have Bing chat.
51:05 Alex Kantrowitz? I got not only, yeah, I got the Bing app. Not only that, I got Edge for developers. I don't even know how that happened, but I'm chatting with a bot there. That's my new friend and.
51:14 Speaker 01 I might, I might go to Hotmail again. I might go to Hotmail. Do they still own Hotmail?
51:19 Alex Kantrowitz? I don't know.
51:21 Speaker 01 Does Hotmail still exist?
51:22 Alex Kantrowitz? Every now and again, I get an email from a Hotmail. Sorry to all the listeners out there with Hotmails, but every now and again, I will get one from a Hotmail and just say, what is going on here? Why is this happening?
51:36 Speaker 01 That's a good place to wrap up.
51:38 Alex Kantrowitz? Thanks, everybody for listening. Thank you, Ron John Roy, for joining us. As always, you can go follow Ron John's work at margins on Substack. This has been another really fun, eventful Friday show, and we appreciate everybody who's tuned in live. We also wanted to say thank you to everybody who listens on the feed afterwards. Thank you for coming back week after week. It's been great to see the engagement there. If you want to rate and review the podcast, that would be great. Definitely helps with guest recruitment. And let me preview next week's guest. It's going to be Benedict Evans, the analyst formerly of Andreessen Horowitz, going to talk about some of the big trends in technology. You won't want to miss that. And then, so that will air on Wednesday and then Friday, Ron John and I will be back for our weekly show, talking about all the news in the tech world.
52:24 Alex Kantrowitz? I was going to say, maybe it won't be as eventful as this week, but who are we kidding? Of course it will. It's felt like a quiet week, given how, how much stuff is happening. And, and a chatbot told a New York Times columnist that it wanted to break up his marriage. Okay, everybody, thanks again for listening. Back after this, oh, back, back again next week. And that will do it for us here on Big Technology Podcast.
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