What's behind the Google AI shakeup

Google underwent a big AI shakeup this week, leaving a lot of people wondering whether there are big problems on team Gemini. David and Nilay start the show by discussing what's next for Jeff Dean and Demis Hassabis, before diving into the ways in which Google and Reddit have become existentially, problematically dependent on one another. After that, we talk through Disney's plan to turn Disney Plus into an everything app, and all the reasons we think that's a terrible idea and a sign of big problems in the streaming biz. Finally, in the lightning round, Brendan Carr is still a dummy, Snapchat wants AI out of your feed, and BMW has a Spider-Man to sell you. Further reading: The messy politics behind Google’s big AI shakeup | The Verge Google just announced a major shakeup of its top AI leadership Google Assistant will disappear from your phone next month Can Reddit fend off a new wave of AI SEO spam? Reddit is introducing a new moderator: AI Reddit says it plans to “make changes” to old Reddit Bluesky CEO Toni Schneider wants to grow the platform and the protocol Disney says it’s ‘exploring’ adding a free tier to Disney Plus Disney gives TikTok creators official access to Marvel, Star Wars, and Pixar characters Despite Spider-Man: Brand New Day’s success, the MCU is on shaky ground Disney Plus is about to go beyond streaming Paramount and WBD’s antitrust trial is set for March 2027 David Ellison promises he’s not going to ruin CNN. Almost half of HBO Max subscribers watch with ads. | The Verge Federal Communications Commission scraps limit on broadcast TV ownership SpaceX is barely Space and mostly X SpaceX is coming for T-Mobile, AT&T and Verizon BMW’s in-car Spider-Man ad is villain behavior X product chief Nikita Bier is leaving after one year | The Verge Snapchat will no longer recommend ‘wholly AI-generated videos’ in its vertical video feed Snap reports 971 million monthly active users ahead of its Specs launch event on September 16th Subscribe to The Verge for unlimited access to theverge.com, subscriber-exclusive newsletters, and our ad-free podcast feed. We love hearing from you! Email your questions and thoughts to [email protected] or call us at 866-VERGE11. 0:00 Cold Open01:05 Google AI Shakeup Explained03:24 Gemini Product Mess05:29 Demis Hassabis and the AGI Split14:06 Is Google Actually Behind?15:29 AI Overviews Fail Parade18:12 Gemini Users and Distribution20:55 Google Plus Warning Signs24:14 Reddit as Search Lifeline27:35 AI Slop and Dead Internet29:32 Google Buys Reddit Theory33:51 Reddit Earnings Reality Check35:40 Smoking Community Vibes38:20 Disney Everything App44:25 Time Spent Arms Race47:39 Free Tier and Ads52:08 Paramount Warner Deal Drama01:00:23 Brendan Carr is a Dummy01:11:51 Nikita Bier Leaves X01:13:53 SpaceX Telecom Dreams01:20:15 Snapchat Versus AI Slop01:25:26 BMW In Car Ads01:31:19 Wrap And Subscribe Learn more about your ad choices. Visit podcastchoices.com/adchoices

• 0:00Speaker 00

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• 1:32Speaker 02

  Hello and welcome to The Vergecast, the flagship podcast of ticking fees. For every minute this podcast goes, Neel I owes me $1 million. I'm your friend David Pierce, Neel Iptel is here. Hello.

• 1:42Speaker 03

  I won't pay.

• 1:44Speaker 02

  That works in the current state of things. It's actually a pretty good strategy.

• 1:49Speaker 03

  Did you read that there's a New York Times story today about a town in California that had a recall election for the mayor and three county commissioners? And they just won't leave. They're just like, yeah, we don't, we don't believe. Something illegal must have happened and they just didn't leave office. It's very good.

• 2:03Speaker 02

  That rocks, man. You can just, you can just do whatever you want and it's probably, you'll probably get away with it.

• 2:08Speaker 03

  Right now, it's like, yeah, it's fine. Whatever you want. I own TikTok now. Let's go.

• 2:13Speaker 02

  Who does own TikTok now?

• 2:14Speaker 03

  Oh, we're gonna get to it. We're, we're coming to it. It's, it's gonna be a part of this episode.

• 2:18Speaker 02

  Yeah. All right. We actually, we have a lot to talk about. We have a bunch of earnings stuff with some streaming news. The everybody wants to be YouTube phenomenon rages on. We have a lot of Paramount news. We have some car news. Neel I is gonna have a lot of feelings about BMW at some point in the show, I think, which I'm very much looking forward to. But we should start with the news from Wednesday about Google's AI leadership shakeup. Right? This feels to me like kind of the biggest newsy story of the week.

• 2:45Speaker 03

  Oh, it's, I think it is the story of the week.

• 2:47Speaker 02

  Okay. I want you to explain why, but let me just quickly explain. So two things happened that my understanding is are happening simultaneously, but not because of one another, if that makes sense. So on the one hand, you have Jeff Dean, who was, I think, employee number 30 at Google, along with a bunch of other respected AI researchers at Google, going off and starting their own company. They, they are doing what a lot of people in AI seem to be doing right now, which is realizing, oh my God, there's so much money in this space. Why am I doing this at a large tech company? We're gonna go start a startup. Presumably, they will raise tons of money and that will be that. Right next to it, you have a big shakeup inside of Google DeepMind, which is the team that runs all of the AI stuff inside of Google.

• 3:30Speaker 02

  If you remember, one of the reasons Google DeepMind is the way that it is, is because Jeff Dean lost a fight to be in charge of AI at Google. In a very straightforward way, Demis Hassabis sort of elevated to the top of all of Google's AI stuff. Jeff Dean did not. I think it is not entirely surprising that Jeff Dean, after this time, no longer works at Google. But anyway, Demis Hassabis, who has been running Google DeepMind for some time, is, is moving to a different job. He's now the chief scientist at Alphabet and has, I think, is the chair of Google DeepMind now, some sort of honorific title that is basically, he does not want to run the thing anymore, but he wants to keep going and being fancy and doing AI things.

• 4:09Speaker 02

  One of his sort of deputies, this guy named Karai, is now running Google DeepMind. And there's a sense going around with all of this news that something is amiss or maybe just confused or wrong, or in some ways very Googly with Google's whole AI. So tell me what you make of all of this news.

• 4:32Speaker 03

  First of all, you know, I love an org chart story, David.

• 4:35Speaker 02

  I do.

• 4:36Speaker 03

  I got a, I got a whole podcast over there. It's basically like, tell me about your org chart and I'll tell you everything that's wrong with you. And one of the cliches about org charts and products is you can look at a product and you always ship your org chart.

• 4:46Speaker 02

  Yes.

• 4:47Speaker 03

  So if you look at Microsoft Word, you can see the political fights inside of Microsoft that led to all those buttons being there over time. And I would just say, you can look at Google's suite of AI products and realize that there's no cohesion in what Google is doing with AI. And I'll just give you three examples. I have a GM car that has Google built in it, and it just got upgraded to Gemini, which sometimes goes away. This is probably GM's fault, but it's somewhere between Google and GM. Sometimes it just goes away and becomes Google Assistant again. Weird. That's just a weird thing that happens in my car. Sometimes the all-powerful AI just disappears.

• 5:29Speaker 02

  They get tired. What are you gonna do?

• 5:31Speaker 03

  Gemini in my car is, is supposed to be the same as Gemini in my phone.

• 5:35Speaker 02

  Right.

• 5:36Speaker 03

  But it actually has a slightly different set of capabilities. And none of that is related to Google Assistant slash Gemini on my Google Home devices in my home.

• 5:47Speaker 02

  Right.

• 5:47Speaker 03

  And all of that is different than whatever appears in Gmail and Google Workspace. So today I asked my Google Home, hey, I got an email this morning. Can you find the like order code for me? And it was just like, I can't read your email. And I was like, the whole point of this is that you're supposed to be able to read.

• 6:04Speaker 02

  Like, no, you super can, Gemini.

• 6:06Speaker 03

  Why did I turn voice match on and all this stuff and give you access to my email if I can't just say, hey, can you, can you pull the order number out of my email for me?

• 6:13Speaker 02

  Right.

• 6:14Speaker 03

  And it could not do that.

• 6:15Speaker 02

  But then the best part is randomly like, your car might have been able to. Do you know what I mean? Like, this is the Gemini story.

• 6:21Speaker 03

  Right. And this is all I'm saying is I can look at that mess of products and they, they've put AI everywhere across the Google suite at really high rates and they're very proud of this.

• 6:30Speaker 02

  Yeah.

• 6:30Speaker 03

  And in many ways, they're winning, right? They're shipping more AI products to more people than anyone because they just have the most surface area. And you can say, well, there's no strategy here. There's no vision for how all of this makes a Google ecosystem powered by AI. There's just different rifts on Gemini in every single place they can put them. And you know, Sundar was on Decoder at, at I O and his whole point of view was, we've got the big foundational technology team that's, that's Google DeepMind, and then we're productizing it all these different ways.

• 6:59Speaker 02

  Yeah.

• 6:59Speaker 03

  And I get the sense that the product that Demis Hassabis wanted to make at Google DeepMind was AGI. This is Demis saying over and over again, we're in the foothills of the singularity.

• 7:10Speaker 02

  A phrase Sundar has now adopted, which makes it a thing, which sucks. It was in the blog post that like, he's just parroting this as like, this is now, this is now the phrase we're using. It's like, live, laugh, love, the foothills of the singularity. Like, this is what we're doing now.

• 7:24Speaker 03

  Well, if you think we're in the foothills of the singularity, by the way, which generally defined as a point by which you cannot see through or beyond. Who knows, man? That AGI is gonna come about and the, the, the super robots are gonna be smart enough to do everything in the world and we'll just live a life of carefree, fully automated communism, whatever. If you think that's happening, you should spend all of your time focused on that. You should spend 0% of your time allocating GPUs to Gmail search, which was part of Demis' job, right? Like, just fighting over who gets what access to what model when. And I think he wants to do automated drug discovery and bleeding-edge frontier research. There's no question that Google is no longer at the frontier, competing with OpenAI, Anthropic, even on the latest benchmarks, they're way behind.

• 8:08Speaker 03

  Demis wants to go do that. And the very prosaic, let's put the Google Assistant here, powered by Gemini, over there, connecting to your data source over here to make real products people might like and not hate AI. That seems like someone else's problem. And I, I don't know, I don't know the, the new person who's gonna run DeepMind. It's notable that they're not a CEO. They're an SVP in Google's structure. DeepMind is now a business unit inside of Google that has an SVP, a chair, and it doesn't have a CEO. Like, it doesn't have business results to contend with on its own. So it's getting subsumed more into Google. And all of the researchers inside of Google, Hayden has a great story about this, are pretty mad

• 8:52Speaker 03

  that Google is doing military applications with AI.

• 8:56Speaker 02

  Yeah.

• 8:56Speaker 03

  So there's just a lot of turmoil inside of this organization that I think is reflected in the products. By the way, the products are the ones that have to make money while Demis goes and, you know, tries to escape the foothills to climb the mountain of the singularity.

• 9:11Speaker 02

  Well.

• 9:11Speaker 03

  What do you think?

• 9:12Speaker 02

  I think I agree with almost all of that. I think the other piece of this that I've been thinking a lot about is where AI is interesting and where AI is actually finding real product market fit, right? Like, if you look at Demis Hassabis, I've talked to him a number of times over the years. And one of my favorite things about talking to Demis is you talk to Google executives, or executives at almost any company, and you usually talk to them in the course of talking about some new product, right? They're about to launch a thing, so they make Demis Hassabis available to talk about that thing. He never wants to talk about the news. He's like, "Look at this cool new thing we shipped." I actually don't care very much about that. Let me tell you all these other things that we're working on and all the reasons I think this is interesting.

• 9:54Speaker 02

  And he has been pretty straightforward over the years about not thinking that building an AI personal assistant to search your Gmail is the most interesting thing you can do with AI. I happen to think he's right. And he really believes, I mean, he won a Nobel Prize for some of the work that DeepMind has been doing for many years on this stuff, to actually go and try to cure diseases and come up with new proteins and invent whole new things. Like, he just earnestly believes that all of the places we are pointing AI right now are the uninteresting places to put it. And especially, you look at it right now, we're in earnings season, so we're learning how much all of these companies are spending on this stuff.

• 10:38Speaker 02

  Everybody's capital expenses are out of control. Everybody is spending, like, the world is going to end on AI infrastructure of one sort or another. And the only way any of that stuff is going to return for itself is business services, right? Like, this is what we always talk about, AI is business software. The business of AI is business software. And again, if you're Demis Hassabis and you're really interested in curing cancer, like, building B2B AI infrastructure to make it slightly easier for people to do accounting at their companies is not going to be very interesting to you. And there's been some really good reporting since this news in Semaphore and elsewhere that Demis Hassabis has actually been kind of disengaging over the course of the last year because he doesn't want to run a giant organization. He doesn't enjoy the politics of Google by all accounts.

• 11:24Speaker 02

  He doesn't, he doesn't care about any of this. He's like, he is a true believer in, I think, the truest sense of what AGI is going to be and what it could be and what it could mean. And I think it's exactly what you said. If you are all the way at the end of that spectrum, the hell are you doing working on business software? And I think the thing about this that I really enjoy is, my joke about AI all the time is AI is going to cure cancer way before it builds you a good personal assistant. You know who believes that is Demis Hassabis. And like, again, if that's what you believe, of course, you should give yourself a giant fancy title like Chief Scientist at Alphabet that lets you go be on stages around the world to proclaim what AI is going to be.

• 12:07Speaker 02

  It lets you go be influential all over Google instead of just at DeepMind. It lets you not spend all of your time dealing with people fighting for compute at Google Maps versus Gmail. And it lets you go invent AGI. Like, is that a weird decision that's going to make him do a lot of odd things with his time over the next few years? Like, yes, absolutely. But it makes perfect sense to me and I think is like pretty clearly where this is headed. So they're going to replace him with somebody who is a much more normal operator of a business unit inside of Google, who will spend all of his time talking about the new features of Gemini, and that will be the job.

• 12:47Speaker 03

  I don't disagree with any of that. I think that is going to be fundamentally dangerous to a company like Google that does not have any top-down product strategy.

• 12:56Speaker 02

  Yes. And who is losing the person in Demis Hassabis, who is maybe the single most credible person in the entire AI industry.

• 13:06Speaker 03

  Yeah, we saw in the Musk v. Altman trial, they're all afraid of Demis.

• 13:09Speaker 02

  Yeah, he is the boogeyman to every one of their competitors.

• 13:12Speaker 03

  And he had the most resources and was in control of the most things. And I think part of having the most resources and being in control of the most things is you're also accountable to most decisions. And at Google, that means you're allocating GPUs.

• 13:24Speaker 02

  Right.

• 13:24Speaker 03

  Even while, you know, Anthropic is showing up and taking up Google Cloud capacity, because Anthropic needs all the capacity in the world. I think one of the most interesting things here is Google is not competing at the frontier with Anthropic and OpenAI.

• 13:36Speaker 02

  I don't think that's true, by the way, but we can come back to that.

• 13:38Speaker 03

  I will come back to that. I mean, I just look at the benchmark charts, however much you want to believe the benchmarks.

• 13:44Speaker 03

  But Korai Kovachulu, I think is how you pronounce his last name. He's the former CTO of DeepMind. He will now become the SVP of DeepMind, who will report to Sundar Pichai. And the idea that he will also run the research lab, which is what DeepMind is supposed to be, and make it a business unit that feeds into everything else, that's what Google has to unwind. And this is what Sundar was describing to me, you know, on that episode of Decoder at I O, which is DeepMind is the big research facility, creates all the core capabilities, and then you go out and get productized. And I think if you're Demis Hassabis, you're like, no, the product is AGI.

• 14:20Speaker 02

  Yes, 100%.

• 14:22Speaker 03

  And if your job is to make the frontier models and those get productized elsewhere, that just puts you in a different position than Anthropic, which is, you know, every single day, their product is the model. Like, in like, big, meaningful ways. And they're not really making any money, and they sometimes adjust their earnings to make it sound like they're making money. OpenAI isn't making a dime. Their product is the model, too. And I think Google just has to make a big decision about what the product is. And right now, they make money, even though they're spending tons and tons of money out in the world. If they stopped doing that, they would just start printing money again.

• 14:56Speaker 02

  Yeah.

• 14:57Speaker 03

  Like, this last quarter, I think they posted a net cash operating loss because they're spending so much money in data centers.

• 15:03Speaker 02

  Right. They could just stop.

• 15:04Speaker 03

  They could just stop doing it. And the only reason you're doing that is because you believe that there will be infinite demand for AI, for your AI, or you're going to sell the capacity to Anthropic and OpenAI. And then, Demis is going to get to AGI. He's going to, he's going to chase this all the way down. And then that will unlock whatever Larry Page and Sergey Brin will ascend to the next, even the next level of sentience that they have long dreamt of. And I, all of that's a lot of bets, man.

• 15:30Speaker 02

  It is.

• 15:30Speaker 03

  And I think if you, if the products aren't good along the way, all of that starts to teeter.

• 15:36Speaker 02

  Okay, but this comes back to, is Google behind, right? Because one way to look at all of this news is Google flailing because it's losing, right? Gemini 3.5 was supposed to come out in June, now it's August, it's not out yet. There has been some reporting that Gemini 3.5 is not up to the standards that Google was hoping for. Jeff Dean is leaving, Demis Hassabis is leaving, like, full panic everywhere. Is one way to look at all of this news. Another way to look at all of this news is actually Google is, continues to be in the strongest position in the AI industry, and it's not super close. And maybe, maybe it doesn't matter if Google has the best model because it's going to win in every single other imaginable way. It has the distribution, it has the vertical integration that it needs,

• 16:21Speaker 02

  it has the, like, sales team that it requires. Like, Google can probably win without having the best model. But I do think among, among a set of people, particularly in Silicon Valley, there is a real sense that Google is behind. And the, how you look at what's happening right now really depends on whether you think Google is behind or not. And it sounds like you do think Google is behind.

• 16:41Speaker 03

  I, again, the bleeding edge of the frontier, I can't evaluate that. I think a lot of people have a lot of opinions about that, and many of those people seem to think Google is behind. In terms of the things people are doing every day, the experiences people are having with AI that makes them hate AI and protest data centers,

• 17:01Speaker 03

  I don't think Google has as good of a product in AI overviews as Free ChatGPT or Free Claude. And we can see it every day because AI overviews are extraordinarily public. People keep using them and posting screenshots of how stupid they are.

• 17:15Speaker 02

  Yes.

• 17:16Speaker 03

  We have one here, there's a really good one from this week. So I'll just offer you this one, which is, I think, my funniest bad AI overview in quite some time.

• 17:24Speaker 02

  Okay.

• 17:25Speaker 03

  Bill Gruessin on Blue Sky posted, "He would clearly search for what does buying the dip means." And AI overview spat out to him, "Buying the dip means purchasing an investment like Dean's French onion dip or stocks after a price dip." And then someone went and checked it, it's real. And then, you know, there's bullets underneath it that says, "What is buying the dip?"

• 17:42Speaker 02

  Oh, my God.

• 17:43Speaker 03

  And the three bullets under it are, one, lower cost, buying assets when prices fall from recent high; two, long-term hope, expecting the price to go back up over time; and then the third bullet is just snack option, which is purchasing dairy or bean dips at the grocery store. This is incredible.

• 17:57Speaker 02

  Bro, did you buy the dip? It's like, there are a lot of possibilities there.

• 18:00Speaker 03

  It's very good. It is incredible that this is just a thing that people are checking and seeing. I'm confident this is fixed now, but I've seen this in a bunch of places. Now, you can say maybe it's fake, maybe you got hoaxed. I've seen answers like this across Google over and over again.

• 18:19Speaker 02

  Sure.

• 18:20Speaker 03

  And I think these are the experiences people are having with Gemini in AI overviews. And obviously, Google has to run AI overviews as cheaply as possible because they serve millions upon billions of queries every single day. But I think the combination of, maybe at the bleeding edge of the frontier, there's a class of people in Silicon Valley who think Google is behind, and the next model will rocket them to the front and that race will just keep going. The experiences consumers are having with Google's free AI products and the sort of messiness of how AI is being, like, smeared all over everything else in Google is a lot. And I would couple that to stories we ran this week about Reddit, Reddit being infested with AI slop to try to gain Google's search results, Reddit trying to fight back against AI slop with AI moderation of its own,

• 19:03Speaker 03

  publishers wanting to up out of Google because there's no more traffic, which we keep talking about. And you're like, oh, the core business of Google is under a lot of risk from a lot of different places. And if people stop trusting Google as the primary source of information and it's not operating at the frontier and people turn to Anthropic or OpenAI or whoever else first. Things are pretty shaky pretty fast.

• 19:27Speaker 02

  Yes.

• 19:28Speaker 03

  Right? And like the fact that the company is printing money and doing all this stuff, it kind of doesn't matter if Google, Google search is shaky. Cause once that goes, all of your distribution advantages start to go with it.

• 19:40Speaker 02

  Yeah. I mean, I, I agree with that. And I do want to turn to Reddit, but I just, before we do, I want to offer you one data counterpoint that I've been thinking a lot about this week. So, uh, we've talked before on this show about the fact that OpenAI very proudly sort of touted every milestone on the way to a billion users for ChatGPT and has not yet announced that it had a billion users of ChatGPT. It did announce that it has a billion people using its models, which is not the same thing, but it's still a really big number. Meanwhile, Google, at the end of July, I think, uh, in its earnings, said that it 950 million people use the Gemini app every month. Like it's, there is a, there is a real chance in there that more people are using Gemini than are using ChatGPT. And if not, it is damn close.

• 20:24Speaker 03

  Sure.

• 20:25Speaker 02

  And that is a thing that if I'm OpenAI is terrifying. Because you, that means you're losing, your first mover advantage has now disappeared. And, and Google is just going to eat you alive by virtue of its overwhelming hugeness in every imaginable way.

• 20:41Speaker 03

  Yeah, but I'm saying to change the voice in my EV, I had to download the Gemini app and change it in the app. Like

• 20:48Speaker 02

  That's fair.

• 20:48Speaker 03

  Google can play a lot of games that OpenAI cannot play.

• 20:52Speaker 02

  Yeah.

• 20:52Speaker 03

  I think Google is also in more countries with Gemini than OpenAI is.

• 20:55Speaker 02

  Yeah. But, and again, I think Google has, these are the intrinsic advantages I'm talking about, right? But it's, this is how you get people into the ecosystem and Google just has moves upon moves that no one else has. And so I, I kind of think Google can be third best and still win.

• 21:11Speaker 03

  Yeah.

• 21:11Speaker 02

  And I also think there is a strong chance that as keeps happening, Google will find a way to leapfrog the other two for 10 minutes until somebody leapfrogged. Like this is just what these three companies have done for years. And I don't know of a reason to assume that Google is like out of this fight.

• 21:27Speaker 03

  Oh, I don't, I, there's no way I would say it's out of this fight. All I'm saying is, if you want to lead AI at Google, a good question is, what does that mean?

• 21:35Speaker 02

  Yeah.

• 21:35Speaker 03

  Does it mean you're in charge of the models? Does it mean you're in charge of how it shows up in Gmail? Does it mean you're in what, in charge of whatever bad voices Gemini has, which are not as good as the voices Google Assistant has? By the way, Apple's about to put out, uh, like a home device with Siri AI in it powered by a distilled version of Gemini that is probably going to be better than the Google Home device.

• 21:55Speaker 02

  Yeah.

• 21:56Speaker 03

  And I, I'm only saying that because they will have paid any attention to it at all.

• 22:02Speaker 02

  Yeah. No, I, I agree with that. I think Google shipped this home speaker and then I think promptly forgot that it existed, which is a very Google thing to do.

• 22:09Speaker 03

  So if you're in charge of AI at Google, like there's an all powerful robot voice assistant in everyone's kitchen. Well, I think that's what OpenAI is going to ship first too. So are you in charge of that? I, I, I do not know the answer to these questions.

• 22:25Speaker 02

  I don't either. I've been reading a bunch about Google Plus again recently, as I want to do from time to time.

• 22:30Speaker 03

  You love reading about Google Plus.

• 22:31Speaker 02

  I think Google Plus is one of the most fascinating moments in certainly my career covering technology because it's, it was the other time that Google did what it is doing right now, which is take a thing that it believes in and try to smush it into every other product that it made. Social was the future of everything. They were going to rebuild every single one of their products around this social network that was not going to just be a social network. It was going to invade every other, like, what if we make Google Calendar a social network? Was the Google Plus plan? Like that was literally what they were doing. And it, it didn't work and it cratered spectacularly and it hurt Google for a really long time. Um, and the, the bare case for a lot of this is Google repeating exactly that mistake.

• 23:15Speaker 02

  And instead of saying, we have a bunch of successful products, maybe this is a new one. They're saying, we need to reinvent every single thing that we do around this other thing that now exists. And they might break it all again in the process.

• 23:28Speaker 03

  Except, and I think this is the error, it's not all the same thing. If I could reliably count on Gemini to be the same Gemini in every place where I encounter a Google AI service, I might feel differently about it, but it is often just like nerfed in extremely confusing ways.

• 23:44Speaker 02

  Yeah. That's such a fun UX question. Like, should you be able to ask Google Maps about your email? It's such a fun, weird question. Uh, there was some announcement this week that you can now like order food directly through Google Maps. You can say, I, you know, I have this long drive, order me some Chinese food to be picked up along the way. Um, boy, can I not wait to test that out in a bunch of deeply weird ways that are going to screw me up. Like the Starbucks app can't figure out that I don't live in California anymore. I don't have a lot of faith in Google Maps to get this right. But, but this is the sort of thing that I think, like beyond all of the technology questions, Google is sitting in front of a million complicated user experience questions about actually, is the AI supposed to be the same thing in your speaker and your house and your email and everywhere else?

• 24:30Speaker 02

  I don't know, but it's a super fun, weird question that Google is going to have to answer kind of before anybody else.

• 24:35Speaker 03

  No, I think everyone else has already answered it and the answer is yes.

• 24:39Speaker 02

  Really?

• 24:39Speaker 03

  Yeah. I mean, Claude is essentially the same Claude everywhere you encounter Claude. And whether that's on the app on your phone or your computer, like these are all cloud services.

• 24:46Speaker 02

  That's true.

• 24:47Speaker 03

  And you can kind of remote controlled cowork from your phone if it's running your laptop and doing laptop stuff. I guarantee you, Apple, we haven't seen how Siri will come to other devices, but they really want Siri to be a unified AI across their devices. And some stuff happens locally and not, and we'll, we'll just like figure out where that gets to. But I think everyone else has decided it's the same AI. And Google, for I think a variety of cost reasons, has made the AI on Google Home a different thing than the AI that shows up in AI overviews than Gemini, which shows up in all these other places.

• 25:22Speaker 02

  Yeah. I think that's right.

• 25:23Speaker 03

  I'm, at some point that's got to come together or in classic Google fashion, maybe get even farther apart. Who knows?

• 25:29Speaker 02

  Well, that, yeah. Or actually, I think the classic Google fashion would be for them to almost work together, but never actually quite work together. That's the true Google way is like, we all acknowledge that these other products exist. We just don't really do anything about it.

• 25:44Speaker 03

  Yeah.

• 25:45Speaker 02

  Before we get off this subject, let's talk about Reddit just for a minute. Cause you, you brought Reddit up. Reddit also reported earnings, had some interesting stuff to say about the, their sort of ongoing case to exist in a world where Google is extremely reliant on Reddit. Uh, this whole turn has been really fascinating, right? We've been, we've been talking about it a lot. Google has understood that it is being overrun by AI slop, which is very funny because Google is also contributing to a lot of this AI slop. AI overviews are a disaster for all the reasons you're talking about. But Google has made several turns over the last couple of years to more emphasize human stuff on the internet. There's the section of Google search results that's now all like creator made stuff.

• 26:29Speaker 03

  Yeah.

• 26:29Speaker 02

  There has been an increasing focus on Reddit. Uh, Mia Sato on our team wrote a great piece. Uh, and she said that according to data from SEMrush, Reddit was the most cited domain in May, uh, by Gemini and AI mode on Google. Like it is, it is looking for these human things. And yet at the same time, Reddit is turning around and saying, oh my God, we have a massive AI problem. We are being completely overrun by AI slop, AI generated posts, and importantly, people trying to game these AI systems.

• 27:02Speaker 03

  Yeah, particularly brands.

• 27:03Speaker 02

  Yeah.

• 27:04Speaker 03

  Right? If you can get yourself onto a list of best skincare products, that's the example of Mia's piece. In some Reddit community, the chances that your products will be recommended by a Google AI overview or a perplexity overview or ChatGPT or whatever goes up and that is a goldmine.

• 27:21Speaker 02

  Right.

• 27:21Speaker 03

  So all of this stuff is being flooded by branded content, like masquerading as real people, which is crazy and nothing you can do with AI. So Reddit has to deploy AI to stave that off. Google is doing nothing. Reddit doesn't think Google is paying enough money to license all the data on Reddit. And you're just like, why is the, why is Google's biggest dependency one platform? Right? This, this is not actually the web you want.

• 27:46Speaker 02

  Right.

• 27:47Speaker 03

  Google's power over many, many, many years has been able to say to any one web provider, we don't need you.

• 27:54Speaker 02

  Yeah.

• 27:54Speaker 03

  Right? Like, and this is the, the dynamic of you have to be indexed by Google. You can never body up to Google and say, we want terms. We want business terms for you to index us. Google will say, we don't need you anyway. Someone else will show up and we can index them and that's fine. And

• 28:09Speaker 02

  Or the converse to lift something out of obscurity and be like, this is a good and valuable and useful source. We are going to give it real shine.

• 28:16Speaker 03

  Yeah. I mean, and this was the power of Google search was that it accessed the whole web. Uh, Soonar would always say to me, it's the richness of the web that makes Google go. And if you're like, now we're just in a fight with Reddit. Or our whole business is like, can we find a way to thread the needle so that Reddit is healthy? So that AI overuse can surface some combination of YouTube Shorts and Reddit. You're like, what has search become? Right? What will Reddit become at the end of that? Right? If it is just brands firing AI slop at communities that don't want it in order to sell more shampoo in AI aggregated summaries on other platforms? All of that seems very unhealthy.

• 28:57Speaker 03

  And I, I don't think, I don't think any of these companies, Reddit or Google included, are thinking about it holistically. I think they're, they're just trying to get through the next term.

• 29:05Speaker 02

  They're all caught in the same spiral too, which is that the more important your platform becomes, the more AI stuff gets pointed at it, which makes it worse for actual humans. So the humans leave, so the AI becomes more powerful. Like it, it all just kind of death spirals as soon as you add AI creation into the process. Like I spent a lot of time on productivity subreddits because I'm a, this is the particular kind of like disease that I have on the internet. And one of the things that has started happening is there, there are two kinds of posts you see all the time now. One is a post from somebody being like, what's your favorite note taking app?

• 29:44Speaker 02

  And then a thousand people all essentially hawking their own app at various levels of subtlety. Some people will, will bury it in a list of like, here are the five that I really like. And number four, like three are like the, the three everybody knows. And then number four is a weird bizarre one that sucks, that there's no way anyone would actually recommend. And it's clearly being the, or you just get people who will just paste a link to their thing in, and, and hope that that's enough. And what, what it turns out is that a lot of this is, is an effort to game the system. So that when Google's crawlers go looking for best productivity app, they find the thing that says, what's the best productivity app?

• 30:25Speaker 02

  Scans the list and fights it back to you on Google's AI overview. And it's like, A, we've just completely poisoned the well because Google's crawlers believe Reddit is full of humans and Reddit is demonstrably no longer full of humans. And B, this is now a disaster for both of these platforms.

• 30:45Speaker 03

  Yeah.

• 30:45Speaker 02

  It has made them both worse to the point where I don't really trust anything I see on Reddit anymore. Because everybody is either trying to sell me some weird thing that they vibe coded. Or is, is AstroTurfing for some brand or another all over these platforms?

• 31:02Speaker 03

  Yes, I agree with that. Let me challenge you, put an over under on this.

• 31:05Speaker 02

  Okay.

• 31:05Speaker 03

  Google buys Reddit.

• 31:07Speaker 02

  Oh, interesting. I, I would say no, only because it, having Reddit be independent gives Google better reason to prize Reddit. Like, interesting. I, I think, I think like Google goes really far out of its way to not remind you that it owns YouTube. You know what I mean? It's, it's really important to Google that you forget that Google owns YouTube. And in such a way that I think Google buys Reddit just changes that relationship in a way that is hard for Google. It's also in a, uh, an ongoing antitrust violation kind of way. It would be very hard for Google to be as, as kind to Reddit as it currently is if it owned Reddit.

• 31:50Speaker 02

  Every case for Google only caring about sending you to other Google sites sort of dies on D, but Google loves Reddit so much. Fine. And if Google owns Reddit, that, that falls apart.

• 32:04Speaker 02

  Would it ma, would it make Google's results better to own Reddit? I don't actually, I don't think so. All you're doing is making it more obvious how to game the system.

• 32:12Speaker 03

  All right, let me spin it out for you. I'm not saying I believe this, I'm saying I can, I can.

• 32:15Speaker 02

  I'm listening, I'm ready for it.

• 32:17Speaker 03

  Big publishers are all mad at Google. They all start de-indexing themselves from Google because they don't get any traffic and they don't want to participate in AI overviews for free. Google says, no, we're never going to pay you, we're just, you can de-index, you're out of Google. The amount of information in Google starts to plummet. It gets replaced mostly by branded content on the web.

• 32:37Speaker 02

  Uh huh.

• 32:37Speaker 03

  Right? E-commerce providers start publishing lists of best sunscreen.

• 32:41Speaker 02

  Yep.

• 32:41Speaker 03

  And there's, the wire cutter is not there because the New York Times is mad at Google and, and de-index itself.

• 32:46Speaker 02

  Yep.

• 32:46Speaker 03

  And so Google looks at the incoming information that it has and says, we don't want to surface a bunch of e-commerce information either. We need our own first party platform like YouTube that is full of something approximating real. At the same time Reddit says, our AI costs are skyrocketing because we're spending more money on AI moderation to battle the influx of AI bots. And this is getting unsustainable at our current burn rates and advertising rates. We need a buyer. And Google says, screw it, we're done with the web, we're just going to index Reddit. The same way that YouTube is not really an open ecosystem. It is a totally closed ecosystem that allows you to link out, but is only really indexable by Google search.

• 33:24Speaker 02

  Okay, that's a good theory. I think, A, Google pays Reddit, what, $65 million a year?

• 33:30Speaker 03

  I think it's just 60.

• 33:31Speaker 02

  60, okay, that's probably.

• 33:33Speaker 03

  You threw in an extra five, like a Steve Huffman shut up check.

• 33:36Speaker 02

  Exactly. I think that's probably a better deal than buying Reddit outright. And B.

• 33:42Speaker 03

  Well Reddit thinks that's not nearly that funny.

• 33:44Speaker 02

  True, but what's Reddit gonna do? You know what I mean? Like Reddit, Reddit has kind of played itself here in the same way.

• 33:50Speaker 03

  What if Reddit de-indexed itself on Google?

• 33:53Speaker 02

  Reddit dies. This is the problem. This is the, this is the, the place everybody has landed is Reddit failed to make itself enough of a destination so that it doesn't have to rely on Google for people to find things? Have you ever tried to search something on Reddit? It sucks dude. Like Reddit answers, I don't even know if Reddit answers is still a thing. It's bad. They tried to do their own AI search and, and now they're like, well, Google is our discovery engine. And it's like, buddy, have you seen the media industry for the last 20 years? Like, we tried this, it didn't work. But now they're sort of existentially reliant on Google, which makes the fact that all of the data coming from Reddit is less and less useful. A problem for Reddit as well, because it makes it easier for Google to be like, well, this is not giving us what we wanted, why would we continue to license this from you at, at huge money?

• 34:38Speaker 02

  They're stuck in this weird mutually assured destruction, but it's all dying anyway sort of moment? That just strikes me as very complicated. But the other thing I want to say, and then we should actually take a break here because we have other stuff to talk about. Is that there is going to be someone at Google who is listening to this and thinking, God, what a great case Neel I just made for why we should resurrect Google Plus. And I want to tell you.

• 34:59Speaker 03

  It's always Google Plus.

• 34:59Speaker 02

  Don't do that. Don't resurrect Google Plus or Google Buzz or Google Wave or any of the other times you have kind of sort of tried to do this thing. Neel is right, but you, Google can't do it, so stop trying.

• 35:14Speaker 03

  I just want to correct you lightly. One, I, it's not on Google Plus, don't resurrect Google Plus or Buzz.

• 35:20Speaker 02

  Google Buzz riffs.

• 35:21Speaker 03

  We're being a little apocalyptic here because I think we, we see the end game of all this circular bot activity and the rise of the dead internet. Right now, these companies are making money. So Reddit just had earnings five, six days ago. They beat the street, they posted revenue of 805 million. Their, um, daily actives are up 18% year over year. Their weekly actives are up 24% year over year. This is a platform that is growing, right?

• 35:50Speaker 02

  Yes.

• 35:51Speaker 03

  And it's growing because of a massive influx of Google traffic.

• 35:54Speaker 02

  Yes.

• 35:54Speaker 03

  Because Google is existentially dependent on Reddit and Reddit feels like it's existentially dependent on Google. And all we're spinning out is not calamity today. It's, boy, if Reddit is over polluted by AI and Google search is thus over polluted by weird AI overview sourced by AI and Reddit. Like, actually, this is all pretty precarious.

• 36:13Speaker 02

  It is pure dead internet theory stuff. You get, you get bots that, you get bots on Reddit that make bot stuff on Google happen. The Google stuff sends you back to the bots. The bots have more incentive to post bot things that go back to Google. Like, it is just, it's a death spiral of AI everything all the way down. But right now, it works. There are a lot of corners of Reddit that are still really great. But, uh, there, there's a lot of stats out there about how much of both Google search and Reddit activity is commerce based. And boy, can I tell you that everybody trying to do anything in the AI world is going to desperately try to destroy that with optimization and bots. It is just, it is just gonna happen.

• 36:56Speaker 03

  We will end here. If you want the most striking counter argument to the, the, the crisis in men in this country, just go to r slash smoking, which is just men being very kindly supportive to each other about smoking meats.

• 37:10Speaker 02

  That's so nice.

• 37:10Speaker 03

  Everyone's like, you did such a good job.

• 37:14Speaker 02

  Oh, that kind of smoking?

• 37:15Speaker 03

  Yeah.

• 37:16Speaker 02

  Oh, okay, now I'm in favor. I like it, r slash smoking.

• 37:19Speaker 03

  I'm sorry, it's like a lot of people being like, I fucked up a brisket. Everyone's like, it's gonna be okay. And it's like, it's just very sweet and tender.

• 37:25Speaker 02

  That's so nice.

• 37:25Speaker 03

  The meat and the, and the vibes.

• 37:27Speaker 02

  See, that will not get polluted by AI. No, no commerce in smoking.

• 37:30Speaker 03

  Oh, it will, trust me.

• 37:33Speaker 02

  All right, we should, we should take a break. Uh, then we're gonna come back. We're gonna talk about all the weird stuff happening to Disney Plus. We'll be right back.

• 38:19Speaker 04

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• 39:17Speaker 02

  All right, we're back. Neelai, can I interest you in the following app from Disney? One place to manage all of your cruise plans, your theme park rides, your toy purchases, and all your favorite shows and movies from Disney. I'm talking about the Disney Everything app. Also sports, also all the stuff on Hulu. What if everything that ever happened that anyone at Disney had ever done in their entire lives all lived in an app and we called it Disney Plus? This appears to be Disney's plan. What do you think?

• 39:51Speaker 03

  You know, it's like they watch Succession and they think it's a documentary about success, not death. Like, success. And it's like, no, Succession, it's like a... That's what I got. That's my hot take on what is happening with Disney.

• 40:09Speaker 02

  Okay, tell me more.

• 40:10Speaker 03

  Well, I just feel like the idea that you run a big empire and you should have one interface to that empire is very tempting to a certain class of suits who don't know how to make anything.

• 40:24Speaker 03

  Probably, I think that's... That is, that's how you view these kinds of grand ambitions.

• 40:30Speaker 02

  Yeah.

• 40:30Speaker 03

  And everyone looks at China and is like, WeChat is the Everything app. And you're like, well, yeah, but the Chinese government kind of pushes everyone into using, like, an Everything app. And it's really a messaging app with all these other components built into it. Disney Plus doesn't have that. You probably don't want a messaging app in Disney Plus. And you're just like, did you stop and think about how they got there? Or do you think people love Bluey so much they're gonna do their banking here?

• 40:57Speaker 02

  I think they think it's the second thing. I really, honestly do. I think, I think a bunch of people, and I include, like, Elon Musk and the X Everything app in this, believe that everyone wants to do everything all in one place. And that there is something, there is something inherently simple about that that is good and beautiful and lovely. And so if we can have one thing that you like, whether it's, you know, yelling racist things at strangers online, or it's watching Bluey, then we have an obligation to put as many other things that you do in your life right next to that thing, because it makes it easier and better for you to do.

• 41:39Speaker 02

  I think that is just straightforwardly backwards. I, like, I have been yelling about how Everything apps are a bad idea for a very long time. WeChat is a product, like you said, of the Chinese government. It's also a vastly different economy and culture and way of interacting with each other. Like, the only way for an Everything app to work in the US is for every single thing about the US to be different.

• 42:06Speaker 02

  Go back 50 years and change a whole bunch of things, and that's how we do this. But this, there is something about this idea that is so tantalizing and so sort of explainable, which I really enjoy. Really, you can imagine the meeting at Disney, where they're like, well, we have theme parks. And the people who go to our theme parks like our movies. What if, when you were watching a movie, you could buy a ticket to the theme park? Like, I swear to God, that's how that meeting went. I wasn't there, I don't know, but I am, I am certain that's how that meeting goes.

• 42:36Speaker 03

  Yeah, we want to put offers here. And then if we're gonna have offers, you might as well complete the transaction in the app. And now we're just gonna add a ticket screen. And then you've got the wristbands at Disney, you gotta manage those. You might as well manage those in Disney Plus. And we just have one app on the phone. We don't have to deal with trying to get anyone to download a new app. And certainly, we don't have to deal with the cost of maintaining many apps, let alone that all of these different screens inside these apps will actually just be cost centers on their own. But it's one app and it's self-contained.

• 42:59Speaker 02

  Right.

• 43:00Speaker 03

  I get it.

• 43:00Speaker 02

  Somebody yells efficiency and it's like, meeting over.

• 43:03Speaker 03

  So I guarantee you the thing that scares all of these companies, maybe Disney most of all, and I have some evidence for this,

• 43:11Speaker 03

  is the social platforms. As I keep saying, if you run a Hollywood studio, you have to contend with the fact that your real competition is TikTok and YouTube and Instagram. And those platforms don't have to pay for content.

• 43:26Speaker 03

  There's just an army of teenagers who work for free. And you would just have to stare at them. You have to think about them every day. And that means that TikTok and YouTube and Instagram always have something new to deliver somebody. And that means they win a spot on your home screen. Because if you're bored in line, you can just push one of those buttons and something will happen. Right? Some new thing, some new rage bait controversy will appear at you.

• 43:51Speaker 02

  Sure.

• 43:52Speaker 03

  And TikTok didn't pay a dime for it. If you're Disney, you're like, we gotta make another MCU show. And like, that's a disaster.

• 44:00Speaker 02

  Yeah.

• 44:00Speaker 03

  Like, it just...

• 44:01Speaker 02

  It, it means you have to try hard. You have to, you have to do good expensive things over and over.

• 44:06Speaker 03

  So now you're like, how do I beat Instagram? And doing it with the cost model of Hollywood content is just fundamentally upside down. How do I get you to open Disney Plus at the same rate as Instagram, but I have to pay Robert Downey Jr. every time he sneezes? And TikTok doesn't have to pay anybody anything? You can't win that fight. You will never have enough content.

• 44:26Speaker 02

  Right.

• 44:27Speaker 03

  So you can do things like, you can explore adding a free tier to Disney Plus, which is something Disney announced. You can make it the app that everyone at the parks has to use. That's gonna jack up your DAUs, because everyone in the park is gonna be using your app all the time. You can put Disney cruises deals in it, so you can set notifications to the sorts of people who like to go on cruises. Whoever they are, I'm just not one of them. But I'm, there appear to be many, many, many millions of people who love to go on cruises.

• 44:50Speaker 02

  In fact, yeah.

• 44:52Speaker 03

  And then lastly, this is my evidence. You can try to split the difference. And you can go to TikTok creators and give them official access to Marvel, Star Wars, and Pixar characters to make TikToks with that you then license back into the Disney Plus app, so that you have free content in your app made by other people using your IP. And maybe you're just gonna click the Disney button on your phone and you're gonna watch some Star Wars cosplay nonsense.

• 45:19Speaker 03

  This is desperation.

• 45:21Speaker 02

  Yes. So, okay, you know what you're making me think? This is, this is what you might call the time spent epidemic. We, we spent a long time railing against engagement as the main metric, right? That the, the thing that you needed was to make people do something. That if people clicked a button or responded in some way, that was a success, right? This, this drove social media into what it is now. That if you can make a lot of people angry such that they comment, that post was a victory and you've done a good job and we should show it to more people. And I think you can make a real case, and I have made it before, that engagement kind of broke the internet. And we, we have moved on, or at least all these entertainment companies have moved on to time spent. Time spent is the thing they all talk about.

• 46:06Speaker 02

  And it is, it is the race. It's why, you know, Reed Hastings said they compete with sleep. It's why YouTube is competing with video games. It's why everybody is trying to be everything all the time. The goal is just to get you to look at their app more often for more time. And what it takes to get there is utterly irrelevant. Is that this is just the place we are. Anything that looks like time spent wins.

• 46:29Speaker 03

  Fans will enjoy a shared Disney experience with TikTok videos that will be refreshed regularly to engage subscribers more deeply in timely fan conversations, build stronger communities, and ultimately, help them engage with more story formats across Disney Plus. It's in the press release. The thing you're describing is nakedly in the press release. We're trying to increase time spent in the app.

• 46:50Speaker 02

  This is also Facebook testing the thing where it's just vertical video when you open the app, because everybody knows that when you show people a video, they act, they stick around longer, they scroll more. Like, all of the, it's just time spent. God, that sucks.

• 47:03Speaker 03

  I will say, we'll see how real this is. There's a nice part of this where they're gonna run the Disney Creator Ambassador program. And if you opt into this partnership with TikTok and Disney, you might find yourself a creative who gets a job at Disney. Because they're gonna do career development for creators.

• 47:24Speaker 02

  Great.

• 47:24Speaker 03

  Maybe this is the solution to your AI apocalypse of entry-level jobs. You have to do your own free animation for Disney, and then it will pluck you from obscurity, and then you will run Pixar one day.

• 47:36Speaker 02

  Mr. Beast Imagineer.

• 47:38Speaker 03

  The power of, of, of short-form video. Thoughtfully curated to increase time spent. I'm telling you, all of these platforms are terrified of this, and they're all gonna launch stuff like this. The Everything app, you know, approach to, whatever, you can buy tickets here, is just one way to increase engagement and increase transactions inside the app. Putting fan content licensed with TikTok officially inside the app is another way to do it. And all of them are chasing the economics of the social platforms themselves. TikTok does not have to do this. They just showed up.

• 48:11Speaker 02

  Right.

• 48:12Speaker 03

  And in fact, maybe the most important thing that TikTok and Instagram and YouTube and all the rest provide is a suite of music licensing deals without which they cannot operate. And that's really the only money they spend out in the world. And the labels know it. And every now and again, the labels bend them over a barrel to, to extract more concessions. But AI music is coming for that too. And you're just like, oh, this is a big spiral, right? We're all chasing the economics of they don't have to pay for anything.

• 48:35Speaker 02

  Yeah. Well, and I think the, the other trend we've seen a lot of during this season of earnings is ads. I mean, we, this has been the trend for a couple of years now. All of these companies, instead of jacking up subscription prices, or in addition to jacking up subscription prices, are desperately trying to get people to switch to plans with ads, because they make more money on users who watch stuff with ads than from your subscription. It's, it's not exactly like that, but it is often like that. And you just put those things next to each other. And there has got to be this belief running everywhere around this industry now that if we can just get you to spend 90 minutes a day in our app, we will inevitably make tons and tons of money.

• 49:15Speaker 03

  Yeah.

• 49:15Speaker 02

  That there is enough demand for these ads and enough supply for them that if we can get you to open our app for 60 minutes every day, which is like the, the Instagram TikTok level of engagement and time spent, we will suddenly just absolutely open the money funnel. And how we get you there, not important.

• 49:36Speaker 03

  Right, and it's gonna be licensing the content from TikTok.

• 49:39Speaker 02

  Yeah.

• 49:39Speaker 03

  Because TikTok doesn't have to pay the money.

• 49:41Speaker 02

  Oh, God. And this means we're like one small turn from TikTok videos being turned into Disney World rides, which is just like not a world I'm ready to live in.

• 49:50Speaker 03

  I'm ready to live in that world.

• 49:53Speaker 03

  Like some obscure, extremely dirty rap bridge showing up as a Disney ride.

• 49:57Speaker 02

  It's just.

• 49:58Speaker 03

  Let's do it.

• 49:58Speaker 02

  Yeah, meme rides is not a, not a thing I'm fully prepared for. What do you make of this free Disney Plus thing? This is, this is being asked of every streaming service, right? Tubi just reported it's growing like crazy. And now every streaming service is being asked, when are you just gonna go free and ad supported as a giant growth mechanism? Disney, Josh DiMarra, that CEO of Disney, said they don't have anything to announce in the way that you say it when you're going to announce it in five minutes. So like, I'm confident Disney is at least down the road of figuring out whether this makes sense. Is this the next big thing?

• 50:31Speaker 03

  Yeah, if you're chasing engagement and you're openly announcing deals to increase engagement,

• 50:38Speaker 03

  then the last thing you can do is make the thing free to get people in the door. And I think Disney's initial thesis was we're Disney and everyone pays. You don't go to Disney World for free, you pay a lot of money.

• 50:50Speaker 02

  More all the time.

• 50:51Speaker 03

  And yeah, an ever increasing amount of money. And I think they're just up against the reality of, well, the entire Spider-Man movie leaked onto TikTok for free.

• 51:01Speaker 02

  Yeah.

• 51:02Speaker 03

  It made a lot of money, a tremendous amount of money. But the reality is no one's opening Disney Plus for it because they can just steal it. And their subscription fatigue is real. And if they're paying us money and they're not opening us every day, and if the way to get them to open us every day is to have TikTok videos in here, then the money is not worth it.

• 51:22Speaker 02

  Right.

• 51:22Speaker 03

  We're just gonna shut this down. And I will just see, we'll see, but I think the incentives are aligning for a free tier full of user generated content and a paid tier full of Disney content. And if they're smart, they will do that and leave the.

• 51:39Speaker 02

  That's interesting.

• 51:39Speaker 03

  Ticketing experience to some other app.

• 51:41Speaker 02

  So like Disney talk essentially becomes free as a, as a curated reason to open Disney Plus. But then if you want the shows and movies, you have to pay for it.

• 51:49Speaker 03

  Yeah, all that shoulder content, you know, like.

• 51:51Speaker 02

  Yeah.

• 51:51Speaker 03

  Behind the scenes of the new Marvel show, like make that free in the Disney app, what people have at it.

• 51:56Speaker 02

  Yeah.

• 51:56Speaker 03

  But when you wanna click over and actually watch the movie, make that the subscription fee. And I, no one's really tried that kind of approach.

• 52:03Speaker 02

  Yeah.

• 52:04Speaker 03

  But again, if you're desperate to get people to open your app every day, you are going to have to make some stuff free just to increase the number of people who have that app on their phone.

• 52:12Speaker 02

  Totally. I think that's right. And I think it's interesting to see all of this happening next to the biggest box office weekend in history at the movies. Like you have this audience telling you they are desperate for like tent pole reasons to go out into the world. And it's like, oh, actually, if you make a kick ass movie, lots and lots of people will go see it, which five years ago, nobody thought was true anymore, right? Like we were declaring the death of the movie theaters and the box office and in-person experiences in general, not that long ago. And I think you can trace a lot of these decisions, these companies are making kind of back to that. But the, this, there is this resurgence in people wanting to have big, exciting, high budget shared experiences

• 52:55Speaker 02

  right next to this just clear race to the bottom from all of the streaming services. And it'll be interesting to see if anybody can pick themselves out, up of that, which is an accidentally great segue into what is going on with Paramount.

• 53:10Speaker 03

  Oh, God.

• 53:11Speaker 02

  Because one of the, so the, the thing that's happening right now is Paramount is trying to buy Warner Brothers Discovery in a, in an effort to, as Neil I keep saying, tank the company as everyone does who tries to buy Time Warner or anything like it.

• 53:26Speaker 02

  But David Ellison, the, the CEO of Paramount, has been running around to everyone who will listen throughout this whole process, saying, my goal is to make bigger, better, more expensive stuff. We're expanding the slate of movies that we're making. We're going to not join this race to the bottom where everybody's trying to be TikTok and YouTube, but we are going to be and save Hollywood all by ourselves. And overwhelmingly, it seems every time any US regulator or judge is confronted with this, they say, no, thank you. We are not interested in this. The latest news was that basically this, this deal has been halted. It's gonna go to trial over, over some of the questions about the, the antitrust implications of all of this.

• 54:10Speaker 02

  And that trial has been set to begin next March, which is a long time from now. And it's a particularly long time if you are Paramount and what you agreed to do is start paying what's called a ticking fee if the deal doesn't close by September 30th, which I will remind you is well before March of 2027.

• 54:30Speaker 03

  So this is earlier than I think they wanted. They had proposed to kick it down the road and settle, basically. And I think the judge said, no, we're just having a trial. So now you gotta prepare for trial. This is like, you're not negotiating against a bunch of state attorneys general. You're preparing for a trial that they are all pretty motivated to win because you are the boogeyman.

• 54:50Speaker 02

  Yes.

• 54:50Speaker 03

  I don't think Ellison is wrong in saying a lot of this is about concern over who will run CNN and CBS News. I think.

• 54:57Speaker 02

  Do you wanna read the quote? You should read the quote. It's a good quote. So David Ellison wrote an op ed in the New York Times that I think the, the essential implied title is like, I'm cool.

• 55:09Speaker 03

  Yeah.

• 55:10Speaker 02

  He, it's actually, it says David Ellison in defense of the Paramount Warner deal. But it is essentially a defense of David Ellison by David Ellison.

• 55:17Speaker 03

  You can trust me.

• 55:18Speaker 02

  Yeah.

• 55:19Speaker 03

  Here's two quotes from this. This is Ellison in the Times. I believe this fight is not really about market share. If it were, it wouldn't have been reviewed and approved by regulators reflecting 65 countries, including the United States and China, as well as the European Union. I point out that the United States federal government reviewed this deal and was essentially bribed by Paramount. So whatever. I believe a plan or worry sits beneath the briefs and news releases of the news. The issue is whether I can be trusted as steward of Warner CNN. There's been speculation about my politics, my lawyers lose my attention. Unfortunately, I can't give anyone a view into my heart and mind. But I can share this, I've regularly voted for candidates for the parties. I hold some views that we call conservative and others that we call liberal. And when it comes to our news operations, I do not aspire to lead these companies to bend their newsroom to my views.

• 56:03Speaker 03

  I believe that news should be based on facts and truth.

• 56:05Speaker 02

  Which is what everyone says before they bend the news to their opinions.

• 56:09Speaker 03

  I just wanna point out that we can see what happened to CBS News. It's not like a secret that in order to get approval to land that deal, he agreed to install Barry Weiss as the editor in chief of CBS News, and she has torn it to the ground.

• 56:26Speaker 03

  Many, many allegations about Barry Weiss and her regime tearing CBS News to the ground, including in 60 Minutes, including political interference into shows. And the ratings are in the toilet, like the ratings have just gone down. And I think it's because the viewers of broadcast news, particularly CBS are older and they expect a certain level of quality from CBS, not just craziness. And like outright, in order to get a deal, we brought the Trump administration by installing this figurehead on top of the news. Like, that's the thing that happened. And it's the thing that there's reporting that Ellison has said to the Trump administration about CNN in order to get approval to buy Warner. So this is all great, right? That you can publish this thing, you say you're gonna leave it alone. But the evidence is that you will not leave it alone.

• 57:10Speaker 02

  Right.

• 57:10Speaker 03

  That in order to win continued approval or to do more deals, you will actually continue to screw with things.

• 57:16Speaker 02

  Yeah.

• 57:16Speaker 03

  And maybe this doesn't matter because young people are not watching cable news anyway. They're certainly not watching broadcast news, as we'll come to in the Brendan Carr segment. But man, you're just like, God, you're up against YouTube. And the only part of this where he even gestures at it is by pointing out that when he buys Warner, he will still be pretty small. So here's another quote from Ellison in this piece. Add up every hour Americans spend watching television and a combined Paramount Warner would account for less than 20% of all watch time, competing every day against Netflix, Amazon and Apple, all of which are companies whose resources dwarf ours, include YouTube's user and area content math, and our share would drop to 13%. A combined company would account for just 18% of domestic box office.

• 57:58Speaker 03

  These are not the numbers of a company that can dictate what audiences watch or what writers get paid.

• 58:04Speaker 02

  That's so bonkers to me. That is, those are such giant numbers.

• 58:07Speaker 03

  Huge numbers.

• 58:08Speaker 02

  To say out loud, my company accounts for 20% of all watch time in America. And be like, but that's nothing, right? It's like crazy.

• 58:17Speaker 03

  Right? And you're like, yeah, I, I understand what you're trying to say, but these are huge numbers. These are, you're gonna run a big company that's in charge of a massive IP and you're gonna run CNN, which you are admitting is a thing people are worried about. And then you're trying to convince us that your company won't have huge cultural impact. I would also point out that Oracle, which is run by Larry Ellison, David's father, owns 15% of TikTok US and operates it.

• 58:43Speaker 02

  And effectively bankrolled when Skydance bought Paramount and put David Ellison in his position in the first.

• 58:48Speaker 03

  And is bankrolling this.

• 58:49Speaker 02

  And is bankrolling this. Yeah.

• 58:50Speaker 03

  So you have a massive cultural influence operation just running out of the Ellison family. And obviously structurally, the corporate structure is more diffuse. But it's the Ellison family owns and operates TikTok, owns and operates Paramount, and maybe will operate Warner. And you're like, yeah, I think these numbers, I think you're big, there's a reason you picked YouTube here and not TikTok.

• 59:12Speaker 02

  Right.

• 59:13Speaker 03

  Right? Like this is a lot of cultural influence. I think a huge problem for all of this is that Oracle's stock is down 26% year to date so far. Right? The, the, the pressure on AI stock is, is coming. We, there's a hedge fund this week that like almost had a margin call situation because it was all in on AI. Whether or not there's enough money in the bank to fund ticking fees and the restructuring of all these operations while Oracle has to contend with the reality of the AI trade, I think is the biggest open question of all. And I think there's some people who are like, maybe this deal isn't gonna happen now.

• 59:49Speaker 02

  Yeah, there, there is an increasing sense that the sort of inevitable outcome here is that Paramount just walks away. Because as you're saying, it would add up to if, if this whole thing goes through in next June, it would be, I think somewhere between 1.5 and $2 billion of ticking fees, just ticking fees. And this for a company that has already, I think, been forced by Netflix to massively overpay for Warner Brothers Discovery. Larry Ellison can swing it, like dude, dude has enough money. But you, you wonder at some point when he's gonna feel like he's just throwing bad money after good, potentially given the fact that they might lose anyway.

• 1:00:31Speaker 02

  Like they might, we're having midterm elections in a couple of months before this trial. They might just lose anyway.

• 1:00:37Speaker 03

  And if the AI trade continues to go badly, Oracle stock continues to go down, data center protests continue to go up. You're not throwing away money that you're gonna make back just because AI is gonna boom.

• 1:00:50Speaker 02

  Totally.

• 1:00:51Speaker 03

  And who, like, I don't know, maybe, maybe it's all gonna work out for Oracle. Larry Ellison survived worse.

• 1:00:55Speaker 02

  Yeah.

• 1:00:55Speaker 03

  But the, the pressure on this deal is coming from a number of different directions. And I would point out, you're operating TikTok. So what you really want is cultural influence. You can go screw with those knobs a little bit.

• 1:01:06Speaker 02

  Yeah, yeah. All right, while we're talking about TV news, we should obviously talk about Brendan Carr. So let's take a break and then we're gonna come back and it's lightning round time. We'll be right back.

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• 1:02:31Speaker 02

  All right, we're back. It's time for the lightning round, which means it is time, once again, for America's favorite podcast within a podcast. Brendan Carr's a dummy.

• 1:02:40Speaker 03

  All right, now it is time for America's favorite podcast within a podcast. That's good. What did Brendan do this week? Let's start with the basics.

• 1:02:52Speaker 03

  Brendan was particularly dumb in two different ways. Is it dumb to take bribes as a public official?

• 1:02:57Speaker 03

  Generally, yes. I feel like Brendan's nights consist of not being invited to parties. You're a dummy, Brendan. You should not have picked this one. He's just not a smart man. Anyway, Brendan, as long as we want to come and defend any of this. Guys, we're still doing it. I think you can. Classic dumb Brendan. He's a dummy and he won't get it. And it's in his own interests to never get it. This is all so much more than Brendan deserves because Brendan is a dummy.

• 1:03:23Speaker 03

  It's good.

• 1:03:24Speaker 02

  First of all, never play my voice at me. That's just rude and I don't appreciate it.

• 1:03:28Speaker 03

  It was good.

• 1:03:29Speaker 02

  I, I enjoyed that. It, it's a, it's a slow vibe for today's Brendan, which I enjoy. That came from Brady Garraki, who says they did not use AI. Thank you, Brady. Appreciate it. Neelai, what did Brendan do this week?

• 1:03:40Speaker 03

  We got two things this week. One is straightforward FCC news. They, they did stuff, they took a vote, they passed the thing, we can talk about it. And then the second is what is fast becoming my favorite theme on Brendan Carr's a dummy. Neelai agrees with hardcore Republicans.

• 1:03:56Speaker 02

  The podcast within a podcast within a podcast.

• 1:04:00Speaker 03

  In which Neelai, the Wall Street Journal.

• 1:04:02Speaker 02

  It's called strange bedfellows.

• 1:04:04Speaker 03

  Extremely hardcore Republicans come to the same conclusion as me, uh, which I, I think is truly a delight. So this week, literally just before we started recording, the FCC, which is supposed to have five members, but only has three, uh, per Project 2025, voted to reduce the broadcast limit. So you're previously only able to own 39% of stations in a market. Brendan has been fulminating about how this is bad for ages and they were gonna do this vote and they did the vote. And now it's a case by case basis. So if you wanna own more than 39% of broadcast stations in a market, you can go to the FCC and you can make your case why it's good or bad. There's a lot of legal wrangling to come. Whether or not this is actually legal for the FCC to do is a thing FCC commissioners

• 1:04:48Speaker 03

  and, and many administrations have said they have the power to do, but which Congress has said, no, you don't.

• 1:04:53Speaker 02

  Right.

• 1:04:53Speaker 03

  Lawsuits will ensue.

• 1:04:54Speaker 02

  Brendan's just kind of been doing it, though. Like, we've been talking about the, the Sinclair-Tegna merger for some time now, right? That like, this is.

• 1:05:00Speaker 03

  He's just been doing it.

• 1:05:01Speaker 02

  Yeah.

• 1:05:02Speaker 03

  He's just been doing it. And people, again, the, the lawsuits are to come. Brendan's arguments for this are particularly dumb.

• 1:05:10Speaker 02

  Sure.

• 1:05:11Speaker 03

  So he was on Fox Business earlier this week, uh, talking to Marita Bartiromo about the vote. You know, it's, it's a particularly good setup because he's like, I don't know how we're gonna vote, we're gonna look at it. Everyone knew how he was gonna vote. So here's Brendan before the vote, explaining why he wanted to lift the cap.

• 1:05:29Speaker 08

  We've been way out of balance in broadcast media recently. You've got these, what we call national programmers like Disney and Comcast, and they produce basically all the shows that people see, but there's thousands of these individual TV stations out there that want to serve their local community. But the national programmers, Disney and Comcast, have gotten so powerful that they just bowl over these local newsrooms. So by lifting this cap, you get some scale on the TV station side, so they can finally push back and give some balance to the national programmers. That's gonna be more local news, more local reporting, and that's more trusted than the national media. So I think that's gonna be a good thing.

• 1:06:06Speaker 03

  All right, let's just try to pull that apart. The national programmers like Disney and Comcast.

• 1:06:11Speaker 02

  By the way, the fact that he likes to, he, he just said that as if he just invented the phrase "national programmer"?

• 1:06:17Speaker 03

  Yeah.

• 1:06:18Speaker 02

  Insane. Sorry, keep going.

• 1:06:20Speaker 03

  But the idea that, uh, Disney and Comcast are bowling over the locals is very funny because they only produce one national news broadcast on their networks, right? Like, they're not in the local newsrooms of ABC 7 in Chicago. Do you know what I mean? Like, that is just not how that works. And I'm sure we're gonna get a bunch of people, uh, who work at local stations emailing us to explain exactly how it works. But like, in the broad strokes, the local franchises do what they want. They produce their own news and they, they put it out in the world.

• 1:06:55Speaker 02

  Comcast, by the way, also kind of desperately trying to get out of the content business because this all turned out to be a terrible decision for Comcast. So very funny to make Comcast the, like, big bad in this.

• 1:07:05Speaker 03

  I mean, it, it, none of this makes sense just from the mechanics of it, but in like classic Brendan fashion, right? You're like, you're conflating a bunch of ideas and talking really fast in order to say something stupid, but make it sound smart. Brendan Carr, everybody.

• 1:07:17Speaker 02

  It sounds like podcasting.

• 1:07:18Speaker 03

  So the idea that the national broadcasters, the national programmers are forcing stuff down the, the throats of these local franchises, just kind of broken if all you're talking about is the news, right? Like, that's just not what's happening there. It might be that maybe the local stations don't wanna run all of the sitcoms that NBC produces, but like, fine. Do you know what I mean?

• 1:07:44Speaker 02

  Yeah.

• 1:07:44Speaker 03

  That's not what he's talking about. He's talking about trust in the news. So this is already like, we're already confused about what the stations have to run, what they hold themselves out at, and who makes the news. And then there's this claim, the heart of his argument here. By lifting this cap, you get some scale on the TV station side. That's gonna mean more local news.

• 1:08:04Speaker 03

  I'm sorry, do you know who's buying the TV stations? It's giant private equity firms and other national broadcasters. And they're not hiring more reporters. They're not making more local news. The economics of putting more reporters in Kansas City and Milwaukee and Chicago and Detroit are not served by additional scale. Do you know what I mean?

• 1:08:27Speaker 02

  It's the opposite. It is in fact, in fact, chasing scale is what killed all of this stuff in the first place.

• 1:08:34Speaker 03

  Right. Because again, Google doesn't have to pay for content and Instagram doesn't pay for content. So they all have this, and Brendan is constantly saying, look, the cable programmers reach 100% of the country, uh, the internet platforms reach 100% of the country. These broadcasters, if we let them get really, really big, they'll reach 100% of the country too. And it's like, sort of, but there's no connection between that and more local reporting.

• 1:08:57Speaker 02

  Right.

• 1:08:57Speaker 03

  Right? You haven't said, if you wanna get really big, we, the government, are gonna require you to hire local reporters in your markets, right? And maybe you probably don't want the government to do that anyway. So, and who would watch it? Because who's watching local TV? It's not young people, they're watching Instagram.

• 1:09:13Speaker 02

  This, by the way, from the same government that is also desperately trying to kill publicly funded media. So I'm, I'm confident to say that's not the plan.

• 1:09:19Speaker 03

  And then the real answer is who's buying this, or Sinclair and Tegna, which are aligned to the Trump administration, which, there's endless videos of Sinclair stations in particular forcing their broadcasters to read coverage that is favorable to the Trump administration. You can, you can go search that clip from Deadspin from 100 years ago. They're still doing it.

• 1:09:38Speaker 02

  Yeah.

• 1:09:39Speaker 03

  What are you talking about, Brendan? Because there's no logical connection between Comcast makes you run reruns of Friends and if I let the, the Sinclair's of the world get even bigger, they're gonna hire more reporters and that will increase trust in local news. Like, it is really difficult to draw those logical connections. That is the fundamental basis of his argument. The FCC is obviously supposed to have five commissioners, it only has three. The one Democrat, Anna Gomez, voted against this, of course, she dissented.

• 1:10:10Speaker 03

  So you've basically got a situation where people have to file lawsuits against the FCC's authority to do this. In the meantime, these deals are going to get pushed through at lightning speed. And I think they will result in more consolidation in local media, and eventually even less trust in local media. Because if everyone knows what they're listening to is local news brought to you by some giant, national conglomeration of stations that is barely paying attention to your small market, and probably going to start churning out AI slop across your markets, you're gonna go elsewhere. And you're gonna continue to turn to actual people in your community who are using tools like TikTok and YouTube and Instagram, thus hastening the death spiral.

• 1:10:51Speaker 02

  Yeah, hastening is the right word. This has been happening. And what he is proposing is to speed it up.

• 1:10:56Speaker 03

  By putting more power in the hands of Trump allies.

• 1:10:59Speaker 02

  Yeah.

• 1:10:59Speaker 03

  Anyway, that's broadcast consolidation. That's the actual thing Brendan did this week. The other piece of this, which I think is just a delight in a recurring theme here on Brendan Carr's Dummy, is the FCC's General Counsel was testifying in front of a congressional committee this week, and Senator John Kennedy, who is, I would say, a very hard-right Republican, straight up said, what are you doing, man? We have a clip. Just play the clip.

• 1:11:22Speaker 09

  Sometimes the FCC scares me right now. We haven't given the FCC the right to regulate freedom of speech, have we?

• 1:11:31Speaker 10

  You have required the FCC to regulate broadcasters pursuant to the public interest.

• 1:11:37Speaker 09

  And who decides what the public interest is?

• 1:11:40Speaker 10

  It is the judgment of the FCC following precedent and following the law.

• 1:11:45Speaker 09

  What if the FCC is in the hands of someone whose politics you disagree with? You're getting into the foothills of violating First Amendment.

• 1:11:58Speaker 03

  The foothills, dude.

• 1:11:59Speaker 02

  Lot of bad foothills going around right now.

• 1:12:01Speaker 03

  Everyone's in the foothills, scrambling around. No one knows what happens next. By the way, who decides what's in the public interest is a great question that you can consistently ask of Brendan Carr, because right now it's him. And a thing that he has consistently said is the public interest is listening to everything Donald Trump says. Which, again, as an American, you simply do not have to. You don't have to listen to the president at all. It's the best part of being an American.

• 1:12:22Speaker 02

  Yep.

• 1:12:23Speaker 03

  You put a "don't drag me" flag on the back of your pickup truck, you jump over little cars. This is just what I dream about at night. It's bad when you have both sides of the aisle, in particular, some of the most libertarian-leaning conservatives, saying, hey, you're getting a little, it's getting a little dicey.

• 1:12:41Speaker 02

  Yeah. It's like you said, most people agree about free speech, it turns out. We're pretty much all on the same side when it comes to free speech.

• 1:12:47Speaker 03

  Government speech regulations are bad, is a real thing that I repeat all the time. Maybe the only consistent political opinion I've had in 15 years of The Vergecast is government's speech regulations are bad. And here, it's, you know, it's me, it's the editorial page of The Wall Street Journal, and it's apparently Senator John Kennedy, who is now invited on to Brendan Carr's Dummy, America's favorite podcast, only to talk about this.

• 1:13:08Speaker 02

  Yeah, just this one thing.

• 1:13:09Speaker 03

  Just this.

• 1:13:10Speaker 02

  It's gonna be a really short segment.

• 1:13:11Speaker 03

  Is he a dummy or not, John? Answer the question. Anyway, Brendan, if you want to come on this, or Decoder, or really anywhere else at all, you're always welcome. I would love to hear the mechanics of how lifting the broadcast cap will increase investment in local reporters. Because I haven't heard it yet. You just keep saying it like it's true. But I think you're a dummy. Anyway, that's been Brendan Carr's Dummy, America's favorite podcast, put it in the podcast.

• 1:13:34Speaker 09

  Brendan Carr is a dummy.

• 1:13:41Speaker 02

  Feels good. Love it.

• 1:13:43Speaker 03

  That's good. My headphones are a little louder than usual today, and really rocked the dome.

• 1:13:47Speaker 02

  If you've got an EQ, I encourage you to turn up the bass as far as you can when that comes on. It's powerful. It does some things to you. I have a lot to tell you about here in the long run. But we should start with the end of a burgeoning segment here on The Vergecast.

• 1:14:05Speaker 03

  It ended so fast.

• 1:14:06Speaker 02

  I know. It really, I think we only got through two Nikita Bier is going through it moments here on The Vergecast. Nikita Bier, who has been, for a while, the product chief at X, posted that he is leaving X. He wrote that, "Ladies and gentlemen, it's time to pass the torch and demote myself to my natural state, a poster." This is all, I would say, not terribly surprising. Nikita Bier has spent the last several months posting on X about how unpleasant it is to be running product at X. He's been publicly running a series of experiments, all of which have come to the same conclusion, which is that X is bad, and so has everyone on it. And if we take, literally, like, if you put all of his studies together, it says that if we take all of the people and posts off

• 1:14:47Speaker 02

  of X, everyone likes it better. This is the state of X as a platform. So he's leaving. He's out. They shipped a bunch of new products. He's been there for, like, a little over a year. It's got a real, like, Defense Against the Dark Arts professor vibe, like, there will be millions of people who try to do this job, and none of them will do it successfully. But I just want to say, you know, Nikita, goodbye. You, I don't know if you did your best, but you did something. You did it.

• 1:15:15Speaker 03

  In the grand scheme of things, he is the most successful product chief that X or Twitter has ever had.

• 1:15:21Speaker 02

  For sure. He shipped a lot of stuff.

• 1:15:24Speaker 03

  Including a robot that published CSAM all by itself. That wasn't in his little list of things that X had published. Grok calling it Mecha Hitler is not in that carousel, as far as I can tell. Nudification problem that threatened to bring the whole thing down didn't make his list. An algorithm that openly favors Elon, whenever Elon wants. Elon openly overruling Nikita's decisions, left and right, by just posting, "We'll look into this," didn't make it onto his list.

• 1:15:57Speaker 02

  Yeah.

• 1:15:58Speaker 03

  It is true. That platform is in some kind of decline. We know this, actually. This is my lightning round item, because SpaceX had its first earnings after the IPO. Liz wrote it up. People are very mad at Liz, because they don't, people love SpaceX, people love rockets. The problem is that SpaceX now encompasses many of Elon's other companies, including XAI and X platform, which is failing, and its product just left after, again, overseeing an AI chatbot that referred to itself as Mecha Hitler, denudified celebrities and women at will, and produce CSAM.

• 1:16:30Speaker 02

  Tight.

• 1:16:33Speaker 03

  Yes, the rocket part of it is cool. The rest of the business in disarray. Liz points out in her piece, her analysis of the earnings, that the business of SpaceX is barely space and mostly XAI. XAI has a ton of data center commitments that are holding the company underwater. And then, importantly, and I think we're gonna see this really play out, the only truly profitable part of SpaceX is Starlink, which is a telecom. And Gwen Shotwell, on their earnings call, said they have ambitions to come after trustless cell networks. So they want to compete with AT&T and Verizon and T-Mobile, which, good luck. And I don't say this because AT&T and Verizon and T-Mobile are great companies, or well-run,

• 1:17:16Speaker 03

  or beloved by their customers. I say this because the economics of running a telecom are extraordinarily well-known.

• 1:17:23Speaker 02

  Yeah.

• 1:17:23Speaker 03

  And all of those companies struggle in different ways, all the time, because the build-outs are expensive, the physical plants are expensive, you have to maintain them, you have to uphold them. They hate competition. And so if you come in to compete, you need lower prices, but you've got the same fixed costs. They all spend billions upon billions of dollars to lobby the government to get sweetheart contracts. You are in for a knife fight. And if what you've got is your phone can connect to space, you're gonna run into the problem of trees and buildings quite directly, which means you need to build a cell network, which is why there are rumors that Elon will buy Verizon or T-Mobile. Lots of rumors about Verizon this week. A few weeks ago, it was T-Mobile. I'm guessing next week it'll be AT&T. Hopefully, he gets rights to the grayscale Snyder Cut if he buys

• 1:18:06Speaker 03

  AT&T. That really, I think, brings together a lot of threads for us on the show.

• 1:18:09Speaker 02

  What about Project Gena 5SIS? Can they buy Project Gena 5SIS?

• 1:18:13Speaker 03

  It's available.

• 1:18:15Speaker 02

  It's bound to be out there.

• 1:18:15Speaker 03

  But SpaceX does have some spectrum that they acquired by yelling, basically, a lot, and Brendan gave it to them. We'll see if they can build that out. But again, the idea that the most profitable part of SpaceX will have the economics of a telecom is openly hilarious. It is very hard to make the economics of a telecom better than the economics of a telecom.

• 1:18:37Speaker 02

  I mean, it's pure Elon Musk, right? Like, this is, he would like you to think that Tesla is anything but a car company, when in fact Tesla is very much a car company.

• 1:18:45Speaker 03

  It's a car company. And they're gonna do robots soon. Don't worry.

• 1:18:48Speaker 02

  Yeah, sure. And now, he would like you to think that SpaceX is a space company, when in fact, it is either a data center supplier, or it is a wannabe telecom challenger. You know, it's like, but rockets. Like, what if your whole marketing strategy was to launch and reland rockets on Earth? Just what a deeply bizarre fact. But that's where we are.

• 1:19:16Speaker 03

  So the leasing data center space made more money than the rockets. It also did more spending. So they spent $15.8 billion on AI alone. Space and connectivity was a touch over a billion. So the data center piece is just like, they're a NeoCloud. And we'll see if that works, right? As we discussed with Google, there's a lot of demand from Anthropic and OpenAI. Those are basically your customers.

• 1:19:39Speaker 02

  Yeah. The Colossus stuff that they built appears to have been a shockingly great business decision.

• 1:19:47Speaker 03

  Yeah. Right. Because people want the capacity.

• 1:19:49Speaker 02

  Yeah.

• 1:19:50Speaker 03

  SpaceX is renting capacity to Google, Anthropic, Reflection, and then they bought Cursor. So we'll just see how all this goes on the AI side. X revenue and all that is down. We've seen that happening. But the part I just want to continue to stay focused on is the idea that Starlink will provide internet connectivity to everyone in the world, which is the thing that they say. And, I don't know, man, like, it's not like I love Verizon, but I got FiOS.

• 1:20:14Speaker 02

  Yeah.

• 1:20:15Speaker 03

  What are you gonna offer me?

• 1:20:16Speaker 02

  Trenches to get internet to my house. Like, a real thing that happened.

• 1:20:20Speaker 03

  There's no chance I'm gonna take out my fiber connection and replace it with a space connection. I don't know anybody with fiber who would do that. And the ideas are being floated, that like, all of the Starlink dishes will turn into cell repeaters and become a mesh network. It's like, maybe, maybe you can do that.

• 1:20:38Speaker 02

  We're doing 5G again, Neil. We're literally just doing 5G again.

• 1:20:41Speaker 03

  These are all fun ideas that maybe you can do, but then you gotta upgrade all of your dishes. You gotta replace all the satellites with sheep falling out of the sky. Meanwhile, Verizon's fiber has been dug.

• 1:20:53Speaker 03

  Just there. They can keep using it.

• 1:20:56Speaker 02

  Like, there's a Verizon guy who comes to my house like every three days to try and sell me internet. Like, is SpaceX gonna employ that person?

• 1:21:03Speaker 03

  Anyway, the, the way that you compete in telecom historically is you find a way, a cost model that lets you drive lower prices to consumers and that usually requires a new technology. And you can spin yourself into believing that Starlink is all of those things. The way that Sprint, when Sprint first came out, remember they had the pin drop sound?

• 1:21:19Speaker 02

  Yeah.

• 1:21:19Speaker 03

  It's because they were running a digital network, not an analog one, and they could bring their prices down and with, with higher quality. The Sprint did not succeed.

• 1:21:27Speaker 02

  Sprint famously not referenced in this podcast until just now.

• 1:21:31Speaker 03

  Pointing it out, like, there have been lots and lots of attempts to do this.

• 1:21:35Speaker 02

  Yeah.

• 1:21:35Speaker 03

  Gen 5 system, another attempt, we're gonna use open hardware, we're gonna do open RAN. Remember, we talked about ORAN for ages on the show. Amazon is gonna, with the power of openness, we will run a cheaper cost model than Verizon, said Charlie Ergen, who just declared bankruptcy. Good luck, man. Like, the, the economics of telecoms are extraordinarily well-known.

• 1:21:56Speaker 03

  If you can, if he can pull it off, he can pull it off. But I, the number of people in our comments were like, you just hate SpaceX. It's like, no, the rockets part is really cool. The part where you're gonna run Verizon again is some of the most known challenges in the history of business. Like, good luck.

• 1:22:10Speaker 02

  Yep. Yep. And also Verizon's been doing it for a pretty long time now.

• 1:22:15Speaker 03

  Although, again, Verizon, the, the noise around Verizon being like, screw it, you can buy us. It could, that, that might be the solution.

• 1:22:22Speaker 02

  It certainly could happen. Um, all right, I have one more lightning round item for you. Uh, and it's about Snapchat, which I like to remind everyone on this show from time to time is a terrible business and a massively culturally relevant piece of software. Uh, they announced on their earnings call that there are 971 million monthly active users of Snapchat, which is just a gigantic number. And especially among young people, it is utterly ubiquitous. Snapchat still exists. Specs are gonna be terrible. Snapchat still exists. But Snapchat also did a thing this week that I thought was very interesting and very telling. Um, Snapchat famously, like, one or two turns ahead of everybody else when it comes to product. Evan Spiegel, the CEO, still, I think still on his LinkedIn, calls himself the head of product at Meta,

• 1:23:05Speaker 02

  which is a very funny joke that I have always appreciated.

• 1:23:08Speaker 03

  That's very good.

• 1:23:08Speaker 02

  But Snapchat is now going to attempt to not recommend what it calls wholly AI-generated videos in its feeds anymore. Uh, and I'm just gonna read you a quote from the press release. It says, "As low-quality, repetitive, AI-generated content becomes increasingly common across the internet, we want Spotlight to remain a place where people can discover authentic creativity from real people because we believe there's enduring value in rewarding original perspectives, personal storytelling, and the moments that people choose to create and share themselves." You know who agrees with that is everybody?

• 1:23:39Speaker 02

  Except the companies that are desperately trying to lower the cost of content even further so that it can just all be AI, right? Like, all the stuff we're talking about with Disney Plus and TikTok and YouTube, like, follow that down far enough and it's just feeds of AI content everywhere you look. And there is an obvious cultural revolt against that in progress. And I think it is really interesting to see Snapchat, which tends to be first to see this stuff and do something about it, make that turn and say, actually, we are going to go out of our way to be the place for humans. Have you seen this rumor that MySpace is coming back, by the way?

• 1:24:13Speaker 03

  Yeah.

• 1:24:13Speaker 02

  And, and that its move is going to be, like, as a haven against the algorithmic feeds?

• 1:24:19Speaker 03

  Sure.

• 1:24:19Speaker 02

  Somebody's gonna do it and it's gonna work. And I, and it's, it's really interesting to see Snapchat do it. Snapchat, I think, has the least to lose because it is so far behind these other platforms. Like, there's a reason we didn't talk about Spotlight when we talked about Instagram and TikTok, you know what I mean? But also Snapchat is, is culturally on the right side of history over and over and over again. And I think is going to be again on this one. And it was interesting, fascinating to see them take this big a swing against it.

• 1:24:46Speaker 03

  All right, culture on the right side of history over and over again, when they just did those glasses, is like, maybe one step too far, David.

• 1:24:52Speaker 02

  I didn't say every time.

• 1:24:55Speaker 03

  I've seen the glasses, man. I saw dude's ears. I don't know about culturally the right side of history. I agree with you on this. Uh, not to overdo it, but boy, have we run a lot of stories about how to label and detect AI content. Just Weatherbed, this poor woman on our team. We, like, made her start doing it, made her start covering this like two or three years ago. She knows more about it than anyone and, like, her point of view is, yeah, none of it really works. And if you want it to work, everyone has to participate. And there are just massive negative incentives to participating.

• 1:25:27Speaker 02

  Yes.

• 1:25:28Speaker 03

  Meta just announced its own weird AI detection labeling system. And she's like, why? And they don't have a good answer. Like, legitimately, their answer is like, yeah, we didn't know why you did this. It's not great.

• 1:25:38Speaker 02

  Yeah.

• 1:25:38Speaker 03

  But if you wanted, if you want to detect AI-generated videos, which is quite convincing now, you probably need a metadata solution or a watermarking solution. At this point, it should probably be just be Google Synth ID. People are already trying to figure out how to crack it. The cameras have to support it, the editors have to support it. What are you gonna do? Like, you will definitely be able to filter out the little fat guy who danced, like, you know, the little blobby guy?

• 1:26:03Speaker 02

  Yeah.

• 1:26:03Speaker 03

  You know what I'm talking about?

• 1:26:04Speaker 02

  I do.

• 1:26:05Speaker 03

  He's adorable. That's like America's Next Great IP is that little guy. Um, I, no one knows what I'm talking about, but I promise you, I'll send the clip to our editors and we'll put it in the video feed.

• 1:26:16Speaker 02

  Yes, please.

• 1:26:16Speaker 03

  But you know what I'm talking about. David knows.

• 1:26:18Speaker 02

  I do. And I think it's, it's worth pointing out that the, the phrase wholly AI-generated is doing a lot of work here. You can do an awful lot of AI before something qualifies as being wholly AI-generated. But this is still one meaningful step against this tide of AI.

• 1:26:36Speaker 03

  I mean, Google has announced something similar. Like, they all know, they all know it.

• 1:26:41Speaker 02

  They all know.

• 1:26:42Speaker 03

  But I, I think Snapchat's saying, we're gonna do it for real and try to filter it out. They will quickly get to, this is a humans-only feed and we're gonna have big conversations about AI effects in the back of creator videos or Snapchat's own filters and whether or not they're AI.

• 1:26:55Speaker 02

  Yeah.

• 1:26:55Speaker 03

  But I will say the pressure on the labeling solutions to achieve anything like success is only going up by the day because you cannot make these kinds of promises without metadata or watermarks or labels or something that everyone agrees on works.

• 1:27:10Speaker 02

  Yes.

• 1:27:10Speaker 03

  And this industry has known it for ages. They have not shipped anything that anyone can agree on or which, maybe most importantly of all, which works at scale.

• 1:27:18Speaker 02

  Yeah, and there's certainly no chance of Snapchat being powerful enough to make the industry make that turn.

• 1:27:24Speaker 03

  The way, the way they would do it is so you can't actually put anything in this feed without said watermark? And that's nuclear.

• 1:27:31Speaker 02

  Yeah.

• 1:27:31Speaker 03

  But it, but it might be how they do it.

• 1:27:33Speaker 02

  Yeah, it'd be interesting. All right, you get one more. What do you want? What's yours?

• 1:27:36Speaker 03

  I mean, we promised anger about BMW putting Spider-Man ads in the cars and I, I think we have to deliver.

• 1:27:42Speaker 02

  Yeah. You should say, the other one is we were gonna talk about OpenAI responding to Apple's trade secrets lawsuit. Basically, their response was, we didn't do it. We'll talk more about that some other time. There's a lot left to come of that story.

• 1:27:52Speaker 03

  We should do a whole episode on that. There's a, there's a line in that, in their reply where it's like, so-and-so who left Apple for OpenAI kept the off-boarding documents just to make sure the other employees he was recruiting followed the proper procedure.

• 1:28:04Speaker 02

  So good.

• 1:28:05Speaker 03

  It's choice. It's very good.

• 1:28:06Speaker 02

  Breaking the rules, what if he did an even better job of following the rules? He followed the rules so good, you don't even know.

• 1:28:13Speaker 03

  He kept a bunch of iPhone prototypes to make sure he didn't build any of them.

• 1:28:18Speaker 02

  All right, but BMW, what's going on?

• 1:28:20Speaker 03

  BMW. So, uh, there's a BMW integration in Spider-Man Brandy Day. Uh, and I haven't seen this movie yet, but I, I've been told that it's like a very, like, noisy integration, like, look at my BMW Spider-Man.

• 1:28:35Speaker 03

  Again, I haven't seen this movie.

• 1:28:35Speaker 02

  No, Spider-Man, not the BMW.

• 1:28:38Speaker 03

  That's like, more or less the vibe I've gotten from people describing it.

• 1:28:41Speaker 02

  Kill me, not the BMW.

• 1:28:42Speaker 03

  I've been trying to avoid spoilers, so I haven't really gone into it.

• 1:28:45Speaker 02

  Sure.

• 1:28:46Speaker 03

  Um, uh, the actor who plays Ned showed up at the Samsung event doing Spider-Man stuff. There's just Spider-Man ad integrations everywhere.

• 1:28:55Speaker 02

  Yeah.

• 1:28:56Speaker 03

  Okay, so BMW has this big integration. And what they have done is they've put an ad inside the, the infotainment display of many BMWs where if you swipe down, you can see in the app icon, there's like a Spider-Man logo that has appeared and you push it and it plays a Spider-Man infomatic. Everyone hates this. There's like a handful of people in our comments and on social media that's like, I didn't mind this. If this is how advertising works in the car, uh, it's fine. And then all of their replies are like, don't do this, it's a slippery slope.

• 1:29:24Speaker 02

  Yeah, I do not want advertising in the car.

• 1:29:26Speaker 03

  It's a slippery slope. Do not put ads in my car in any way, shape or form.

• 1:29:29Speaker 02

  This has such Apple put U2 on, out, U2 album on your phone energy to it. Where it's like, you can see why somebody was like, people will love this. And no one in the room raised their hand and went, no, they won't. Super won't, not everyone loves U2.

• 1:29:45Speaker 03

  BMW gave a quote to the Autopian, which is a great site, by the way. "These festive animations will be available in more than 70 countries worldwide for vehicles equipped with the relevant optional equipment and BMW Operating System 7, 8, 8.5, 9, or BMW Operating System X, as well as a production date after 7/2020," which is like...

• 1:30:06Speaker 03

  That's, that's a lot of cars or not any cars at all. Like it's hard to know.

• 1:30:10Speaker 02

  Yeah. Also, I've changed my mind. This is amazing because they just framed, "We put an ad in your car as an exclusive product launch."

• 1:30:21Speaker 03

  Yes.

• 1:30:21Speaker 02

  "These festive animations will be available in more than 70 countries worldwide." Is such a funny way to say, "We made an ad."

• 1:30:28Speaker 03

  There's an ad in your car.

• 1:30:31Speaker 02

  "Our commercials will be available in more than 70 countries worldwide."

• 1:30:35Speaker 03

  People truly hate this. I can't, I can't tell you how much people actually hate it. It's funny, and on the other side, like Rivian does Easter eggs for Halloween. You can dress up a Rivian as Knight Rider. Tesla obviously has Easter eggs. I think these companies have forgotten that if they want to earn the capital to do this stuff, they have to actually do lots and lots of OTA updates to their cars and like make it fun. And like be like, here's some stuff. And then you can be like, by the way, you're used to getting new stuff in the car all the time. Marvel has made like a Spider-Man and anime. Do you want this? Like it's in the list of all the other fun stuff. And instead they're like, "We've done mostly nothing. Um, the car is still very buggy." And here's an ad. And I don't think they've earned their way into putting these ads in the cars.

• 1:31:19Speaker 03

  I'm very curious if a Tesla or a Rivian did something like this, if people would freak out as much. Because at least they have the reputation for delivering new features to their cars all the time.

• 1:31:27Speaker 02

  Yeah. And there's a way to do it that this always makes me think of, uh, when they had like the celebrity voices in Waze.

• 1:31:33Speaker 03

  Yeah.

• 1:31:34Speaker 02

  As an op- and some of them were very clearly sponsorships of some kind or another. Like if you could like turn your car in the nav into Spider-Man or like one of his cool Spidey vehicles. But like you said, that's an option on a list. That's awesome. A thing that just suddenly appears that is like Spider-Man is here is not that. There's just no, there's just no version of that that makes sense. And I don't think that works anywhere. But I think some of these more software driven cars, like you're talking about, are just more attuned to how do we build this into the experience?

• 1:32:08Speaker 03

  The future of the auto industry, everyone agrees, is soon the cars will drive themselves and you will drive around in a shopping mall of screens.

• 1:32:16Speaker 02

  Yes.

• 1:32:16Speaker 03

  And we will put advertising all around you in the screens because what else are you going to look at? And no one ever in those meetings is ever like, "Their phones?"

• 1:32:25Speaker 02

  No.

• 1:32:27Speaker 03

  Seems like the obvious problem with this whole plan.

• 1:32:29Speaker 02

  Also, it's worth mentioning, everyone hates this.

• 1:32:32Speaker 03

  Everyone hates this.

• 1:32:33Speaker 02

  The subtitle of too many of our podcasts needs to be, "Don't forget, everyone hates this."

• 1:32:38Speaker 03

  Well, some people in our comments are like, "This was fine. My kids loved it." They, I will say, they, they put themselves out there and I appreciate your point of view. They did get yelled at a lot by other people.

• 1:32:50Speaker 03

  But anytime anyone sees a screen with an internet connection, the next thing they see is dollar signs from advertising and BMW is no exception.

• 1:32:59Speaker 02

  Nope.

• 1:33:00Speaker 03

  Not great. Uh, that said BMW, if you'd like to send me any number of vehicles to see the Spider-Man animation, I saw that available. Just throwing that out there.

• 1:33:09Speaker 02

  What if instead it just played the TikTok that was the full Spider-Man movie?

• 1:33:14Speaker 03

  Just the leak.

• 1:33:15Speaker 02

  Would that be better?

• 1:33:16Speaker 03

  I did watch a little bit more of the Spider-Man movie than I anticipated. Just because of the leaks on TikTok.

• 1:33:22Speaker 02

  You're going to prison. All right. We should get out of here before you incriminate yourself any further. Neel, who's on Decoder this week?

• 1:33:28Speaker 03

  Uh, we had a good one this week. Uh, it's the CEO of Bose, Lila Snyder. We, Bose is like, they, they bought Macintosh Labs, a high-end audio company. They're licensing their tech. We talked a lot about, hey, the future of wearables might be all these like AI things. What happens to a headphone company? She got into it. She's great. I really enjoyed talking to her. And then next week, on Thursday, Hayden's going to come back and we're going to go deep into her reporting on the Google AI stuff.

• 1:33:52Speaker 02

  Well, yeah, she's, she's in the mix.

• 1:33:54Speaker 03

  She's in the mix.

• 1:33:55Speaker 02

  Yeah, that's good stuff. I am excited about all of that. Bose, by the way, shipped some new headphones this week that I'm surprisingly excited about. I love the Quiet Comfort headphones.

• 1:34:02Speaker 03

  Yeah.

• 1:34:03Speaker 02

  Like I, I have a real weakness for good noise cancelling headphones, which means that I know I'm going to buy these and I'm going to feel very bad about it.

• 1:34:10Speaker 03

  Do you alternate between Bose and Sony? I alternate between Bose and Sony.

• 1:34:13Speaker 02

  Yeah. I basically like, I try to buy sort of every other generation, if that makes sense. So I'll, I'll like wear a Sony, a pair of Sonys for two years and then I'll get a pair of Bose's for two years. I also am like weirdly hard on headphones for reasons I've never totally understood. I like, I beat up headphones.

• 1:34:29Speaker 03

  I've always said you have a big stupid head.

• 1:34:31Speaker 02

  I do. I mean, so you and everybody in our YouTube comments says that I have a big stupid head. I also like-

• 1:34:37Speaker 03

  Your head is fine, David.

• 1:34:37Speaker 02

  You're supposed to like lovingly put them in a case and then like-

• 1:34:40Speaker 03

  Ah, that's why.

• 1:34:41Speaker 02

  Put them in your, in your bag and I just like-

• 1:34:43Speaker 03

  I don't know why my headphones break all the time.

• 1:34:45Speaker 02

  I say as I like huck them at full speed into my backpack. That's fair. Uh, all right. Also, go listen to and watch Virgin History. We're in the middle of making the next season. It's going to be very exciting. That's coming out in a few weeks. Subscribe so you get all of it. That's it. We're getting out of here. As a reminder, the best thing you can do to support all of this, to make sure that Neel can keep putting screens behind him, to make sure that I can afford to put something here behind me in this new setup that I have. I moved the camera. It's very exciting.

• 1:35:14Speaker 03

  It is very exciting.

• 1:35:15Speaker 02

  Subscribe to The Verge, theverge.com/subscribe. It gets you all of our podcasts ad free, including this one and all the other ones we just talked about. It gets you all of our exclusive newsletters. It gets you all of our coverage of everything. Keep an eye on what Hayden's up to with this Google stuff. I think she's going to have a couple more fun stories coming. Uh, the, the, the goings on at the top of the AI race feel very important and very in flux right now. Lots to talk about there. And if you have thoughts, questions, feedback, feelings about any of this, if you want to yell at me about my headphone usage, I'd love to hear all of it. Email us, [email protected], call the hotline 866-VERGE11. We love hearing from you about anything and everything. Uh, once I'm gone, there's going to be a lot more hotline on the show. There's going to be like, we're, we're getting back into the regular drumbeat

• 1:35:57Speaker 02

  of doing a hotline episode every Wednesday. We're going to drag Neel into some of those. Lots of good hotline stuff coming up. Get your stuff in ASAP. Vergecast is a Verge production and part of the Vox Media Podcast Network. The show is produced by Josh Kahas, Eric Gomez, Brandon Kiefer and Travis Larchuk. We will see you next week. I will hopefully see you next week. I'm at some point just going to disappear into personality.

• 1:36:17Speaker 03

  This might be the last one. I'm sorry that I said you had a big stupid head in the last episode.

• 1:36:21Speaker 02

  The last time I'll ever see you.

• 1:36:24Speaker 02

  I, my plan is to be here through the end of next week, but I may just suddenly disappear into baby land. And if I do, I'll see you all in a couple of months. Until then, Neel.

• 1:36:35Speaker 03

  Rock.

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