(Preview) Meta’s New Restrictions for Teens, Nvidia’s Open Source Investments, Q&A on Netflix, Druckenmiller, Parameters and Performance

On today’s show Ben and Andrew begin with initial reactions to Meta’s settlement with 29 states, including behavioral remedies that will impose restrictions on teens using Facebook and Instagram. From there: Reactions to a report that Nvidia is set to acquire HuggingFace, including why a robust open source ecosystem looks increasingly urgent for Nvidia, and why OpenAI’s surprisingly impressive jalapeño chip underscores the point. At the end: Netflix pivots from a longstanding refusal to funnel customers to rivals, F1’s declining ratings on AppleTV, ESPN abandons the bottom line for college football, Stanley Druckenmiller uses AI for his Wall Street Journal op ed, a vibe coding question (and more adventures with Ben’s over-engineered psychosis), a coffee pot question, parameter sizes and the mysteries of model performance, and a hurling PSA yields an appreciation for various sports on TV.

• 0:00Speaker 00

  Hello and welcome to a free preview of Sharp Tech.

• 0:09Speaker 00

  Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing?

• 0:19Speaker 01

  I like to take issue with the tech industry. Too much news on Wednesdays. We've talked about this. The worst part is I'm always vaguely nervous about Sharp Tech. Because of course it's timely. We're recording on Thursday. We can talk about stuff that I haven't written about. On the other hand, it just reiterates, and this is sort of a purpose of the conversations we've been having. The value of writing is that, that I feel fully confident. I've thought through all my takes instead of going a little bit off the cuff. So we're going off the cuff today. To this one, we're gonna see how it goes. Yeah.

• 0:51Speaker 00

  It is pretty funny because it didn't feel like summer until the past two weeks. Like the news cycle really started to slow down. Did you experience that writing Stratechery in the past couple of weeks?

• 1:03Speaker 01

  Oh, absolutely. I was like, I was like, because I took my vacation earlier than usual in July.

• 1:08Speaker 00

  Right.

• 1:09Speaker 01

  Usually I take the vacation in the middle of August.

• 1:11Speaker 00

  And it was busy back then. In July, it was very busy.

• 1:14Speaker 01

  I'm like, I'm hurting right now coming up with topics. Like I was, I'm like staying up later than usual to write, mostly because I'm just dilly-dallying, trying to like figure out, oh, I want, what am I actually motivated to write about here?

• 1:27Speaker 00

  Squeeze some meaning out of all sorts of nonsense.

• 1:30Speaker 01

  But to the point, basically like about yesterday, it started to feel like, okay, summer is drawing to a close. Maybe it's because my kid went to school this week. Who knows what it is, but yes, we are approaching the end.

• 1:41Speaker 00

  As of Wednesday, summer officially ended. So yes, we have a number of news hits to work through this week. I will begin with news that came down Wednesday morning and I'll read a tweet from Variety. Meta will enforce a two-hour daily limit on Instagram and Facebook for children as part of a record $17.1 billion settlement with 29 states over social media addiction claims. And behavioral remedies agreed upon as part of that settlement include productive pauses for children, including mandatory pauses after 15 minutes of continuous use. And again, at 60 and 90 minutes to interrupt endless scrolling.

• 2:24Speaker 00

  Nighttime blocks restricting children's access from 12 a.m. to 6 a.m. Limited school time access for children, eliminating push notifications on weekdays from 8 a.m. to 3 p.m. during the school year. Robust age assurance measures to more effectively verify the age of young users. Safer, age-appropriate content controls, including stronger safeguards against bullying, content promoting eating disorders and content related to suicide and self-harm. Stronger, more user-friendly parental controls and limits on social comparison features, including beauty filters and visible like counts that have been linked to poor mental health outcomes in kids and teens.

• 3:05Speaker 00

  Both the implementation and effectiveness of the features will be regularly assessed by an independent auditor and the settling states. So this seems like a pretty big deal. What comes to mind when you see this news?

• 3:19Speaker 01

  Is it a big deal? Actually, what comes to mind, number one, this is the early call for feedback because I have a number of like conflicting takes on this. And there's a real opportunity to sway me personally, I think, one side or the other.

• 3:34Speaker 00

  Okay.

• 3:35Speaker 01

  Around a number of these topics.

• 3:36Speaker 00

  So that's the challenge for the emailers for the next week and me.

• 3:40Speaker 01

  First up, I am, my tendency, my sort of default position is parents need to do their jobs. Like there's, there's a certain implication of a societally sanctioned shift of responsibility to large faceless organizations for raising children. That properly sits with the parents. And even if it's well-intentioned or arguably necessary, or whatever you might make the case. If you zoom out, there's a very disconcerting structural shift embedded in this entire topic. That's number one.

• 4:22Speaker 01

  Number two is a settlement like this is very much an end around the First Amendment.

• 4:29Speaker 00

  Okay.

• 4:29Speaker 01

  There is things in here about like, for example, and I'm going to use like their, their extreme examples because people care about them. But like limits on discussion about eating disorders, for example, where there's like a ban or like a limit on like some of the beautifying filters and, and stuff like that. All of those are pretty crystal clear, fall under First Amendment protections. But because, so you couldn't pass a law that bans those sorts of things. But in this case, you have this settlement between a private company and a bunch of AGs. It's going to basically have the force of law. It's going to be like referred to. It's going to be a basis for these sorts of things.

• 5:11Speaker 00

  Yeah.

• 5:11Speaker 01

  Without actually being a law. And it's that.

• 5:16Speaker 00

  So it makes you instinctively uncomfortable on principle.

• 5:20Speaker 01

  It makes me, it makes me uncomfortable. The counter to all of this is it's, stuff is hard and difficult. Like I worry about my son being on Instagram reels too much, right?

• 5:35Speaker 00

  I would say on the parenting point, that would be one counter is make parents' jobs easier across the country.

• 5:43Speaker 01

  Right.

• 5:43Speaker 00

  Because it does seem very, very difficult to just constantly monitor how your kids are using cell phones.

• 5:50Speaker 01

  Right. I mean, he does go to a school where they have these pouches that every kid is assigned one at the beginning of the year. When they get there, they have to put the phone in the pouch and the pouch like automatically locks when they, when they go into school or, or something like that.

• 6:03Speaker 00

  Same pouch you use when you go to a Dave Chappelle comedy show. Seems like a no-brainer as far as I'm concerned.

• 6:09Speaker 01

  I think they're, I think it's awesome. Like, like especially in the context of my son moving back to America, going to a new school. You could imagine those first few weeks in particular, it would be so easy to just sort of retreat to a corner.

• 6:23Speaker 00

  Yeah.

• 6:24Speaker 01

  Yeah. And like talk to your friends back in Taiwan or, or just be on Instagram reels. Whereas you're there, you kind of have no choice but to talk to others. And I've referenced this in passing about this being sort of, I think, a challenge that my daughter had going to college, where it's just so easy to stay in touch with your old friends. That you don't have the, I have no choice but to make new friends sort of pressure.

• 6:48Speaker 00

  Sure.

• 6:49Speaker 01

  That we had in college. And this is why it's a hard thing to talk about because I could definitely see both sides. I could definitely be a hypocrite. And then overarching all of it is business analyst Ben, which is like regulatory capture and Meta burying all the bodies at once. And locking in how much they're gonna have to pay and basically trying to set the rules of the road going forward.

• 7:13Speaker 00

  Right. And pressuring their competition to make all these same changes themselves, which will be interesting and is sort of a topic unto itself. In terms of whether this is a big deal, I do think it's a fair question because one thing I'm keeping in mind before declaring this as some kind of watershed moment for our relationship to technology. Australia banned social media for kids under 16 and the early returns on that experiment are not great. Because basically kids have found ways to work around the ban. And the 86% of children surveyed reported using at least one age-restricted platform before the ban. Three months later, that figure remained above 81%.

• 7:55Speaker 00

  So not a huge change down there in Australia. So I'm taking a wait and see approach in terms of what this actually means and how teens will use Meta platforms, but.

• 8:06Speaker 01

  Well, the other thing to know is that a lot of the sort of quote unquote research, or I just don't know why I said quote unquote, but a lot of the, about the harms that have come from smartphones and social media is heavily confounded by changing definitions in the exact same time period.

• 8:22Speaker 00

  Okay.

• 8:22Speaker 01

  Basically, I believe it was related to Obamacare generally, but the, the definitions and it also sort of returns on prescribing certain conditions was the same time smartphones became a business. Why is 2012 or around that sort of, sort of time period? And that is just, this is something people, it's worth looking into before you start accepting a lot of these quantitative figures where people point to a specific time period. And there's very legitimate and real things that would significantly change the numbers where a seemingly shock one-time shift, be like, oh, there's a smartphone. You can see it.

• 9:02Speaker 00

  Yeah.

• 9:03Speaker 01

  It's like, well, the smartphone was 2007. Why is it 2012? Like just that is something that over, is sort of overarching here. And I bring this up, not that I want to litigate this point, other than there's a lot more uncertainty around this. And there's really is an aspect of all you ultimately have to go on to some extent is lived experience.

• 9:25Speaker 00

  I was gonna say, yeah.

• 9:27Speaker 01

  Optimistic way to frame this is, and I think you mentioned this before, I just want to build on the point you said. To the extent it helps parents parent, it's a positive thing. So for example, if you have, these limitations are there by default, right? Or it's just like everyone's doing, like I've.

• 9:47Speaker 00

  There's a collective action problem with social media among children.

• 9:51Speaker 01

  Well, not just that, but sometimes laws are useful in the extent they sort of express societal disapproval. Right? This is where I'm not a libertarian around things like legalized drug use, for example, or sports gambling. Like there was, I think, a real push amongst a certain cohort of people who like to sort of, you know, smoke a joint on the weekend in college. Always felt vaguely guilty about that because they knew where they're, they're breaking the law and were motivated by the sense of relieving their guilt to make it legal. Not thinking about the implication of you getting like industrial-grade weed that people can get and are smoking every single day and you act on New York City and it stinks. Right? Like there's, there's some aspect here of.

• 10:37Speaker 01

  Even if the reality is it's kind of gray and ambiguous, and maybe this is my living in Taiwan background, I've talked about the context of like US, China and Taiwan. Sometimes gray is good. It's okay to be there. We don't have to make everything black and white. And there's a drive here like, we had to make it clear this is legal because I felt bad kind of breaking the law. Actually, sometimes no gray is good, right? And like, is there an aspect of this here where society broadly signaling that it's okay to police your kids, parents can point to the law, they can realize that the default is limiting exposure, not as opposed to the other way where the default is whatever

• 11:20Speaker 01

  you may do. I mean, it's almost a very small C conservative view of this.

• 11:27Speaker 00

  Right.

• 11:28Speaker 01

  This is like a, it's not a right-left debate. This is like a conservative libertarian debate. It's kind of like what this question is, is coming down to in many respects.

• 11:37Speaker 00

  Yeah, yeah. And I would add, in terms of what you were talking about with our own lived experience, I do think that's why a lot of people identify with research that links social media use and phone use to poor mental health outcomes. I think a lot of people look at their own experience using these tools and are not a fan of how it makes them feel. And they project that experience on society.

• 12:02Speaker 01

  Just another thing on here, by the way, the US numbers vary wildly from the rest of the world, which adds credence to the US definitional change that that's that's sort of happened. But to your point, how many of us have looked up from two hours on Reel?

• 12:16Speaker 00

  It feels like true, if you've used a smartphone over the last 15 years. But I also, you know, from a social perspective, I do think it's a small C conservative position to say, regulating human behavior to optimize for productivity and a healthy society. That became taboo over the last 20 or 30 years, but there are healthy arguments in favor of laws that do that. And again, if Twitter just shut off for me after one hour every day, I would definitely be better off and I should make that change.

• 12:50Speaker 01

  There's a real, I think this is going to be probably increasingly important where Scott Alexander wrote a piece a long time ago about like gray tribe versus blue tribe, or, you know, it was really compelling and sort of framing, actually, the reason why the great tribe, blue tribe hate each other is because don't even think about the red tribe. That's like, that's a way out there. But there is a bit where people, the distinction on the, that's about, that was about a distinction on the left. That was like early, if you read Scott Alexander, you saw a lot of the rationalists and EA stuff, because he's a very, you know, brilliant writer and a very sort of foundational figure with a lot of that stuff. But on the right, the distinction between conservative and libertarian is actually a fairly massive

• 13:33Speaker 01

  chasm, whatever it is, right?

• 13:37Speaker 00

  Sure.

• 13:37Speaker 01

  And I can see that distinction actually coming to the fore more and more, and it being somewhat, a lot of people being somewhat oblivious to it, just because they're not even aware of sort of the distinctions. And this is, this, no, but this is a great example to your point. Like, the, I mean, another example of this is, maybe, I don't know how much this maps, but another issue I have a really hard time talking about, because I can't decide, is the age verification question.

• 14:09Speaker 00

  Yeah.

• 14:10Speaker 01

  On one hand, if we must have age verification, I do think that should be Apple and Google's responsibility. They're the, already, they have so much trust. We've talked about this. You trust your smartphone provider the most. They have root access. They see everything. Apple's entire sort of like, privacy proposition is predicated on the fact that trust us and we'll take care of everything else. In this context, them verifying who you are and giving an API, are they above age or not, feels much more scalable, usable, and preferable than Facebook having to sort of...

• 14:55Speaker 00

  Or each app in this future having to jerry-rig their own age verification process. It just doesn't seem very efficient.

• 15:03Speaker 01

  They're being mandated. They're being, no, not just that. They're being mandated to pry ever more deeply into understanding who you are, so that they don't break the law.

• 15:11Speaker 00

  Which we all complained about for 10 years. So, yeah.

• 15:14Speaker 01

  Exactly. No, it's funny how stuff changes, right? On the other hand, this is the libertarian side. It's like, who are you to be verifying who I am?

• 15:26Speaker 00

  Granular data. Yeah, sure.

• 15:28Speaker 01

  And to have an API that can be abused, you know, used in ways it wasn't intended to, to ascertain who I am. Sure, it's bad that Facebook can guess pretty well. We're going to make it binary, yes or no, right? Like, they sort of really understand deeply who you are. Fundamentally intention. And so, I think I come down on, Apple and Google should provide this API, just because the current of society is going in this direction. And if we're going to do it, let's do it well. Even while I reserve the right to object to the overall doing it as we go.

• 16:09Speaker 00

  Fair enough. Well, and it will be interesting, to the extent this could be a watershed moment for social media and how America uses social media. I think the way we get there is, this is a framework that then is codified by Congress going forward.

• 16:27Speaker 01

  That's not going to happen. It can't be, though. Number one, there's First Amendment violations. Number two, like, this is just another end around our broken legislative process. Like, this is going to become the law, which by the way, to the business point, is probably why Meta is not too upset about this.

• 16:46Speaker 00

  Okay.

• 16:46Speaker 01

  They got to negotiate their outcome.

• 16:50Speaker 00

  And how this will work. Yeah.

• 16:51Speaker 01

  They're still going to have lawsuits going on, but I would expect most courts to defer to this settlement going forward. If people, there's going to be a whole power game ensuing everyone else in social media and pointing to this settlement and expecting the same thing. Meta gets to come in, they get to say, oh, like, there's a requirement in there about like, responding within nine hours, a 90%, something that requires a lot, like, a lot of resources, right? Like, the classic regulatory capture, we can handle this. Oh, and by the way, we can handle $18 billion, or whatever it is, paid over 10 years. And, oh, we only have to pay if like YouTube and TikTok set up as well.

• 17:28Speaker 00

  Not even a drop in the bucket, a molecule in the bucket for Meta over the next 10 years.

• 17:32Speaker 01

  And then they put this to bed. This has been an overhang on the stock, like, for a while. And it's very, like, even if overall, they think it's, they didn't admit fault, right? Even if they think it's unfair, it's not right, the measurement's all wrong. Large corporations are political animals. And this is where the politics are going. And in that, from a business management analysis perspective, very smart. They're getting ahead of it. They're putting it entirely to bed. They got to negotiate it around their preferred parameters. They get to layer on this, this, like, oh, sorry, we have to, we really have to profile you because the age requirement requires us to. So sad. Like, the, if you're going to get

• 18:16Speaker 01

  there, best to get there on your terms. And that is kind of what Meta did.

• 18:20Speaker 00

  Yeah, I agree, you know? And I, the only note that I would add on the potential for legislation, you're right, betting on Congress getting its act together in this area and passing any legislation is usually a bad bet. However, I do think you could overcome some of the First Amendment concerns, because you're talking about children and child safety as a compelling interest alongside the First Amendment concerns. I don't know exactly how that would be resolved, but I do think that there's political will to go that direction. So it'll be interesting to track over the next several years here. As far as the competition and Meta's competition, Mike Isaac on Twitter shared an open letter that Meta has written

• 19:02Speaker 00

  to fellow social media giants, YouTube and TikTok, imploring them to implement these changes as well. That letter ran as a full-page print ad in the Washington Post, LA Times, and the New York Times on Thursday. Isaac, he noted that Snap was not even mentioned, which is an amusing indication of where that platform stands. Many have compared that to Don Draper saying that he'll no longer represent tobacco companies. Do you like that comparison for Meta there?

• 19:31Speaker 01

  I mean, it's one of those things, make lemons out of, or make lemonade out of lemons, right? Like, we are the leaders in this. We've done all these sorts of things.

• 19:39Speaker 00

  Well, I mean, have you thought about whether YouTube and TikTok would ever comply with Meta's demands there and make these changes unilaterally themselves without prodding from litigants?

• 19:50Speaker 01

  I think there's a good chance they will. Basically, I don't, you're the lawyer, you can tell me. This case is not like precedent-setting, like Supreme Court precedent. But there's like a whole nother arena of the political culture around court cases, where this is de facto precedent-setting. And like, I'm sure, there's probably like a thousand lawsuits fired yesterday.

• 20:11Speaker 00

  Well, courts who are dealing with these novel issues are going to look, how did other courts handle this? How did it get resolved? So it's going to be a pretty persuasive tent pole that people look to.

• 20:23Speaker 01

  Right. And so, probably the question facing Google and TikTok is, do we want to wait for the inevitable lawsuit that is probably going to be settled on the exact same lines as this? Or do we want to...

• 20:35Speaker 00

  Do we get ahead of it? Yeah. And go there ourselves. Okay. Well, we'll see.

• 20:39Speaker 01

  We'll see. I can imagine, I guess my, my instinct is that Google will move first and TikTok will try to escape by for a while. But then again, TikTok's been very eager to like, be seen as following the law. Yeah, I'm going to reverse that. I think maybe TikTok will move first. I don't know.

• 20:54Speaker 00

  Well, time will tell. Final note, Sagar and Jetty tweeted on Wednesday, is there any good argument for why the Meta changes for teens shouldn't be universal for all adults? I wouldn't have a problem if they went that direction for reasons stated previously. If we're nominating classes of people who need to be regulated, though, I would like to nominate boomers and their social media use being regulated before all of society.

• 21:22Speaker 01

  Right. We do need age limits. The age limits are just all in the wrong direction.

• 21:25Speaker 00

  Exactly. Anyone over 65, strict limits. All right. And that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Sir Teckery and the Sir Teckery Plus bundle. Check it out. And if you've got feedback, please email us at email at sharptech.fm.