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OpenAI is growing slower than anticipated. What does that say about the broader AI story? Elon Musk and Sam Altman meet in court and Anthropic's valuation is approaching $1 trillion. That and more is coming up on a big technology podcast Friday Edition, right after this. This week I'm live at Knowledge 2026, ServiceNow's annual conference in Las Vegas, where enterprise AI moves from promise to production. I'm sitting down with ServiceNow's president and CPO Amit Zaveri on the platform strategy, powering it all, the people on what AI means for the workforce, the engineering team behind ServiceNow's Nvidia partnership, and what it really takes to ship AI at Scale and Ultra Beauty on deploying AI across 1300 stores. These are the conversations you won't hear anywhere else, and new episodes are dropping this week on my YouTube page.
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A
welcome to Big Technology Podcast Friday Edition where we break down the news in our traditional cool headed and nuanced format. We have a great show for you today. So much news to break down, including OpenAI's user and potentially revenue mission. We'll talk about the internal numbers, the company's response and what it means for the rest of the AI story. We also have Musk and Sam Altman in court and of course a big week for big tech earnings. Joining us as always on Friday is Ranjan Roy of Margins. Ranjan, great to see you. Welcome back.
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B
Good to see you Alex. A lot to cover this week, a
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A
lot to cover and it's weeks like this where we see some data that comes in and in the data you can start to see some broader stories and really where the AI trend is moving. Let's go to our first story here. OpenAI misses key revenue user targets and a high stakes sprint towards its IPO from the Wall Street Journal. OpenAI recently missed its own target for new users and revenue stumbles that have raised concern among some company leaders about whether it will be able to support its massive spending on data centers. OpenAI is of course pushing back on this story. To me, honestly, like the revenue numbers is one thing, like obviously this is a new category. You're going to have revenue misses. Right. That sort of comes with the territory. But to me, the bigger part of this story is that OpenAI had a goal to hit a billion ChatGPT users by the end of the year. In 2025 it missed it. It's still not even announced that number. So the latest that we have is 900 million active users of ChatGPT. That came in February 2026 and the billion is yet to be found. Now of course it's still a big product but. But we saw toward growth last year and some big moments with the Studio Ghibli stuff. Voice of course was important. Now that consumer story is tailing off and it makes me wonder about the future of consumer products in generative AI. So what do you think?
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B
Well, are they an enterprise company or a consumer company? I think the new focus mantra, the new pivot to enterprise. This is, I've been saying this for months now that they have to have some kind of general focus and decision and strategic direction or is it Codex and actually the developer communities where they're going to see growth, but I think going from 900 to a billion, it is kind of amazing because GPT image 2 went mildly viral certainly as much as the Studio Ghibli stuff. When was that? Six months ago, eight months ago? Whatever it was, it all time is a flat circle.
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A
Yeah.
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B
Who knows exactly.
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A
Could have been last week for all I know.
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B
But this is exactly where maybe you don't need to get to a billion users and that's okay. And it seems like the strategic direction they're going. I saw one thing that showed they went from 3 million users in Codex to 4 million. And that was impressive and that is impressive. But. But trying to do everything all at once and actually pushing back when this reporting is coming out, rather than Sarah Fryer saying, you know what, we're okay not hitting a billion users and that's fine because the way we are building our business is not purely going to be on ChatGPT consumer growth, but they're Trying to have it every way. And I think that is potentially setting them up for issues as like more official numbers come out as they try to push to ipo.
- [05:23]
A
Okay, so I definitely, let's put a pin in the enterprise side of things. And OpenAI's response to the story, by the way, I have it on from a spokesperson. This is ridiculous. We are totally aligned on buying as much compute as we can and are working hard on it together every day. So OpenAI is vigorously disputing the fact that they are wondering about whether they should buy more compute. And you could even say that that's going to be their strategic advantage over Anthropic as these, as this battle heats up. And we'll talk about Anthropic's forthcoming fundraising pretty soon, but I, I, I think that we'll get to enterprise. We've been talking a lot about enterprise, but I am curious to hear your perspective on the fact that this has sort of hit a wall with consumers. Let's take all the Data points together. ChatGPT should have been at a billion. It's not consumer sentiment or sentiment overall about AI extremely negative. In fact, had somebody come into the comments on Spotify and be like, I heard an ad for your podcast Fu and fai, like, that's how negative I'm like, what? I'm not even the industry, I'm, I'm being critical here, you know, but that, but I would be just the very fact that I'm talking about AI got me a double, double FU this morning and then the last thing, and I think this is important, this is new data that I got from Aptopia. So this is exclusive to the podcast here. Daily active user growth across all AI, AI apps. So that includes Perplexity and Claude and the Geminis of the world. ChatGPT growth is not just tailing off, it's down. So you can see that, you know, while like the space is growing overall, the growth is, is, has completely flatlined and it's been down, I think from according to Atopia, four of the past five months. So this is like, this is a real slowdown. So what's happening?
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B
Well, does the Apptopia data actually, I mean their name is Aptopia include like app usage or is it mobile, web and web usage?
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A
It includes app usage. So that's interesting because we, we also, and I'm going to get to this in a moment, but maybe it's worth bringing up now, if you are a user of this, of these apps, your usage is actually up. But the gross Addition of users is slowing down. Okay, gross. I mean, you know, sort of a, the number. Not like as an, this is a nasty user.
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B
We're a gross in Net. Come on, our listeners know gross. Our listeners know gross.
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A
Sure do.
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B
Well, well hold on to clarify, it's actually a declining aggregate gross number of users in these apps is what the data is showing or it's the additional. Yeah, I mean at this kind of base. So that doesn't surprise me. I do believe that there is like everyone who is interested has downloaded a ChatGPT, a Gemini, Claude, whatever else has started to use it. I think even out of my personal experiences, friends, family, everything, like everyone already has it on their phone. 900 million. I mean, I think like in the US it's probably reached relative saturation. So to me like the actual growth side of it is not as much of a concern. I do think, like how do they find those next hundred million users? Is it like that? You don't hear a lot of talk around international growth and strategy from these companies and this whole market. Like I, I, I don't know, like in India, obviously China is going to be its own very, very specific market. Like in Africa, like where is the next kind of vector of growth? Because when you're at 900 million, you've tapped out the US pretty much, I'm guessing as much as you're going to. And then as long as the average person who is using it is using it more, it's still, still, you know, moving in the right direction.
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A
Well, let me, let me push on this a little bit further. In enterprise we're seeing all these different use cases. Right? We're seeing of course the agentic use cases that we talk about all the time, but we're also seeing purpose built apps for finance, for legal, for medicine. Right. All over the place. Any industry you look, there's a purpose built GPT app that's actually proving valuable. Taking off building users and having real like significant valuations. There's a new one I hear about every week. Consumer. It hasn't happened that way. You would think that with a technology this powerful there would be a breakout of consumer apps and we're going to get into big tech earnings in a bit. Meta is case in point. Right. They have had this technology, they're trying to build a consumer app with it. Yes, they're trying to develop the foundational models, but they're also working on the applications. It's just not taking off with consumers is my point. Do you think I'm wrong about this, yes, completely.
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B
And this is going to be my rant for the week or one of many potentially. But it's interesting. Like the entire meta ecosystem experience is now powered by AI. Like the way everyone talks about AI does not have to be like, yes, meta AI, the chat experience. I don't know anyone that's using it. I know they put out crazy numbers and I'm sure people get kind of looped into interacting with the chat experience. But every time you scroll your Instagram feed, the recommendation engine that's powering the ad that is being served to you, this was meta's like greatest. I mean they broke out of the Apple iOS 14.5 prison and kind of showed that they can. Why everyone is more addicted to Instagram than ever. Every ad that's being created probably has AI component to it. Like I think actually Facebook is just one big AI slop fest if you've logged in recently. So like I think the end user having a Chatbot experience like ChatGPT is where everyone's head goes into. But in reality, so much of consumerization Spotify, the number of AI generated songs, for better or for worse that are showing up on the platform and getting plays is increasing. So I think the big kind of like disconnect here is everyone is thinking consumer generative AI or consumer AI overall is are people downloading and asking questions to a chatbot. Meanwhile every existing consumer experience restaurants on doordash are creating much more engaging images using like it's happening everywhere. So I think to me that is the real consumer AI application, not how many people are using ChatGPT.
- [12:23]
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And apparently Amazon, Amazon even has like these little AI powered podcasts about their product, they're about their products. And Katie Nitopoulos from Business Insider was like playing one of the podcasts about I think eczema cream and no, no diaper rash cream. Yeah, you can write your own questions in. The host will address it and she just writes like my butt hurts. And they're like, that's a great question, Kat.
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B
Amazon, like the growth in Rufus from what I've been hearing is actually spectacular. I've been using Rufus more myself.
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Now what's Rufus?
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Rufus is Amazon's AI. Actually it is a chat experience for the most part, but it's basically so it's like you can ask questions. You can either ask questions directly in an Amazon product page. Now my Amazon and probably cause I've been using it more, the entire left rail when I log in is actually Rufus. So they are pushing people more towards it again you ask questions. It not only gives you recommendations, you can ask questions about a product. Does this have USB C charging when I was getting something recently. But also they're actually injecting their entire Amazon ads business directly within Rufus as well. So like when we've been talking about, well, ChatGPT have ads, they're already building out this entire AI advertising ecosystem directly. So I think. But it's embedded in the product. It's not someone going to ChatGPT. And ChatGPT shopping has not taken off in the way everyone was expecting six to eight months ago. Meanwhile, Amazon is figuring it out. So I think there's so many pockets and I know I work in the AI industry and I want to be biased, but you know, I can be very skeptical about this, but this one I have to push back on. Consumers are engaging with a more than ever.
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A
Okay, let me, let me push back on this one more time. Then we can move on to our other stories. First of all, I would say you and we've had this debate before. I think you really have to take the recommendation engines, the AI based recommendations, recommendation engines and put them in one category and then the generative experiences in another category. We've had AI based recommendation for a long time like feed sorting and ad serving. But what I'm talking about specifically is how does generative AI translate into real consumer experiences? And yes, you can, you can chat and with Amazon and you can, you can listen to a podcast about, about diaper cream. You know, that's all exciting. But what I'm saying is where are like the wave of consumer applications that, you know, we might have expected? You know, there's no, you know, remember character AI. Like there's no like AI character or AI friend app that's, that's taking off. There's no like Explore History app that's taking off. There's no like, you know, AI stylist app that's taking off. There's no AI prominent AI dietitian that's taking off, etc. Etc. There are definitely, you know, categories of consumer products that just do not have a consumer generative AI application taking off in a way that you thought it would. And, and then again like you're seeing this slowdown in ChatGPT growth. Not that it's nothing. I mean it's going to hit a billion users. The question is when? But like even OpenAI and they said they were stretch goals, but even OpenAI anticipated that it would hit a billion and it just hasn't. So what's your Response there.
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B
This is actually a perfect example. Are you. I'm guessing this is as far away from your everyday habits as possible. But have you ever used a dress up app?
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No, this is not something I've used, but that was a very good prediction ahead of time.
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B
Well, no, this is another working very closely in the retail and consumer world. This is something we had started experimenting in my previous experience at Adore Me. Virtual dress up apps and try on apps actually have been exploding in popularity. Then you have Google actually within Google shopping. Virtual try on is actually gaining a lot of ground where you can actually find a model exactly your size. You can even upload your own picture and then you can actually try on items within the Google shopping experience. Those are all generative experiences. Those are all not going to show up in aptopia like chatgpt experience. But I do think again it's being integrated into the things people are doing every day. And also LLMs are feeding into an Instagram like their recommendation engines. It's no longer just machine learning anymore, so it's still embedded in there as well.
- [17:10]
A
Okay, look, I think the reason why I'm bringing this up and the reason why I wanted to start the show this way is because well, we have of course this concrete data point from OpenAI but obviously everybody is. Every company is making this pivot into some form of agentic type of experience like the codex and the cloud codes of the world and the enterprise move. And so my question really is are they making this move from a position of strength where like they have, you know, you would like to have massive growth of ChatGPT but to see that there's potential in, in these, this enterprise and agentic application and say okay, we're just going to place our bets. There's. Or are they moving out of a position of weakness where like oh, it's not growing as much anymore and now we have to make our move.
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B
So. So that's where I can turn and get skeptical again. I think, I think they're moving like from. It is a strategic mistake. I think rather than. And my, my kind of like hot take on this is when you have like a company that's a developer first culture. Everyone is going to get more excited about codecs and why is everything like moving to the command line? Most average people are never going to do anything from a command line interface. Yet so many of these projects, so many of these products are moving in that direction. People get very excited and I even see all this stuff around how like everyday users are going to be actually like in the command line using Codex. No, they're not like. So I think it's a bias within these organizations because they are developer first cultures. And I think it's a mistake. I think there's a lot of opportunity from everything I was saying and actually again, Amazon I think gets it. You don't see Amazon. They know this is our product, this is our business, this is our customer. So we are going to embed generative experiences or AI first experiences throughout the and we're going to move things in that direction. And that's where I think everyone is rushing there. This is what I work in everyone. And again you're seeing Anthropic had this historic run and suddenly 4.7. You just see all this negative sentiment come out around cost and people instantly start stepping back little and then Codex comes in in 5.5. And I don't think when everyone is rushing towards the same thing that for a company like OpenAI that has such a foothold in consumer it's the right decision.
- [19:49]
A
Your advice to OpenAI would really be like stick with consumer. Don't give up on the SORA type stuff and try to own the consumer side of generative AI as opposed to shifting to Codex.
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B
Yeah, unless they're almost accepting Google will beat them at it. Unless. And which. Which is not unreasonable. Like when you are Google and you're already on the. I don't know. Did you see this study around how like Google, I mean in an evil way like giving Chromebooks to every student in America. And now the actual YouTube utilization like YouTube usage during school hours is up like exponentially. But I think it's better for. Yeah, but for better.
- [20:33]
A
Hopefully they're watching big technology podcasts there.
- [20:35]
B
Well, as long. As long as the first graders of America are just actually my son who's in first grade, he. If I ever play our podcast in the car when we're driving, he gets so mad and he's like this is the most boring thing ever. So I'm sorry, I don't think the first graders that that demographic is our biggest fan.
- [20:58]
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These are the people that were angering first graders and anti AI listeners hate mail from. These are the keys.
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B
He's leaving two star reviews without me even knowing on my phone.
- [21:09]
A
But Ranjan, I mean I. Okay, so this is the thing that my other side of it is even though these. Let's just take this stuff to be true. Even if it were true revenue miss. User miss. But deeper engagement. I would say OpenAI is heading in the Right direction with Codex. I mean if you think about Anthropic, right. Last July I was in Anthropic speaking with Dario. He was happy that they were making 4 billion arrangements. Now they're at 35. Potentially there is a tremendous market opportunity to go after with this agent style use case in the enterprise. And so to me, like if OpenAI thinks that they can pass Anthropic because they're going to have more capacity and potentially on par or better models go there.
- [21:53]
B
No, I mean I work in that at Rider. Like that's, I mean I see it firsthand. It's very attractive and it's like when it's working, it works very fast, but it's competitive. It's also like when for a company of OpenAI size again at Rider, we've been enterprise only for our entire life. So that's the game. OpenAI, it hasn't been the game. And they have this asset of 900 million users. They can be integrated directly within everyone. And, and the important thing here is you can grow revenue fast. And I do think this is all ahead of this, the big IPO race and battle here because you can grow revenue a lot faster by getting a bunch of developers using your tool, them not paying attention and token maxing and like just blowing out tokens and you'll increase consumption, you'll increase revenue very quickly. But that's a short lived phenomenon versus you have every person in the US you own the verb to search with AI is to chatgpt. Something like that is a tremendous asset and I think they're kind of ceding it to Google right now.
- [23:10]
A
Okay, well I think we'll just have to watch this play out as OpenAI does this, of course it has the thorn in its side of Elon Musk. And I'm curious how if you've been watching the trial between OpenAI and Musk this week and if you have any thoughts on whether this trial will lead to anything of consequences. Of course Musk is suing OpenAI for taking his money going from a charity from a for profit, from from a charity to a for profit unjustly enriching themselves and betraying the charitable trust value. That case is taking place this week. What's your read on it?
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B
It's rare that listeners will hear me agreeing with Elon Musk, but I think this is one case. Like it feels like at a very simple, logical level this is they were a nonprofit and that was the entire founding story for a long time. I mean they are a nonprofit. Hold on what if the current status so much happens that I can't even remember have they converted or not?
- [24:23]
A
Yes, they've converted, but they still have
- [24:25]
B
the nonprofit arm that owns. Yes, that owns a certain amount of. Yeah, like we've joked for a long time around how opaque the structure is. I think it puts Elon Musk in a pretty good. Just from a very human logical. Like if you're trying to convince a jury, I think it's a pretty good argument. I think there's been zero accountability for any large technology company for so many years that the idea that anything would ever happen that would actually derail the business because there's just so much vested interest in it. I don't know. The cynic in me just assumes nothing will actually happen. Maybe there's a fine there. Musk and Sam put on a good show. But do you think there will actually be any consequence coming out of the trial?
- [25:21]
A
No, I don't think so. I mean maybe there should. Maybe there will be a fine to open AI because like they'll have to end up paying that money to the non profit. But I agree with you. I think that Elon has a leg to stand on here. I mean he gave 30 plus million dollars to found this thing and he currently has like no share in it at all. I don't see how that's fair. And of course the open A argument is like, well, Elon gave this as a donation to a charity. He can't look at it as an investment. And I'm like, well, of course he gave it to. As a donation to a charity. You were a charity. You set up that structure with him in the beginning. If you began as a for profit, he would have looked at us, looked at it as an investment. Now I know Musk is trying to get Musk and Sam Altman remove. Sorry. He's trying to get Sam Altman and Greg Brockman removed from the top of Open AI. I don't think that's going to happen. But. But I wouldn't be stunned if the jury ended up siding with Musk here. And of course it's advisory, so we'll see what the judge does. I think the judge is going to blow up open AI but there could be some consequences like.
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B
But what though? Couple.
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Yeah, Billions. Billions going. You think billions from the for profit to the nonprofit. I wouldn't be stunned. I mean, I guess like a significant amount of billions. And by the way, that could hamper the whole, you know, build out the. Can you imagine, you're an investor and you put all this money in for them to, you know, have database capacity to compete against anthropic and then you have to and has to go elsewhere. I don't know.
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B
So the interesting part here is one, the fact that GROK is a direct competitor xai, like it just makes the whole thing even just richer, I think in terms of how they're approaching this. Did you see that Elon was promoting the Ronan Farrow Sam Altus article across Twitter X?
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A
So talk about what happened there.
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B
Yeah, so users were reporting. It was actually like a new UI experience almost of like having an article pop up, both in the standard ad format, Elon retweeting it, but also even just popping up at the bottom of your screen. The Ronan Farrow New York article about Sam Altman having many faces, which. Did you read it? If you've been following Sam Altman and OpenAI for a long time, there wasn't anything groundbreaking in it.
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A
No surprises there.
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B
Yeah, yeah. But it painted a pretty strong picture, especially if you're not following closely. But it's still funny to me that like this bastion of free speech and non manipulated speech, supposedly of X, literally the owner going to trial is able to kind of just manipulate and control what people are seeing.
- [28:14]
A
Do you think that OpenAI kind of has a zuck Winklewei argument to make here, which is like if you were, if you were so smart, you would create a Facebook, but you didn't like they could point to the fact that like most of the value has been created by them and Elon has sunk billions into building xai, which has had mixed results almost.
- [28:39]
B
That would be. Has that been said yet? Because if you're listening, Sam, that's the argument. I feel this whole thing is for show. I mean, I think they both recognize and Elon's trying to kind of cut them at the knees ahead of their IPO boost xai, obviously there's a strong show element and that would be the greatest. It's like, how's XAI going, bro? You already paid your 44 billion for X and for Twitter and you're jamming that into everyone as much as possible. But we built something people love. We basically like invented this entire industry right now. How are you doing?
- [29:24]
A
I will say though, there are GROK users out there. I was flying back from Vegas to New York and sat next to a guy that drives the subway and I was like, we were talking about AI and he goes, yeah, I use grok. I don't have to badger it to give me an Answer I want. So there is appeal out there, but clearly it's not. It's not as far as, like, the big businesses go. It's not holding a candle to OpenAI or anthropic right now.
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B
Well, what is the. What do you think the GROK strategy is in this? Do you think they're going to pivot to enterprise away from consumer?
- [29:58]
A
No, they should. Speaking of the opening and consumer, maybe they should lead into bad Rudy and that other AI girlfriend that Musk made. That could be the potential, you know, growth area. There's. Well, just from a business standpoint, maybe
- [30:11]
B
if OpenAI is truly kind of moving away from consumer. It does, like, open it up. But I guess why has Meta AI? I mean, it's not a good product. But the actual chat bot experience from every time I've tried using it, but it's just, to me, it still feels like if you already have the consumer's undivided attention, they don't have to open up another app and experience like, someone should be killing it on this. Whether it's meta, whether it's Elon and X. Like, but it hasn't happened yet.
- [30:47]
A
This is the point I was making at the beginning of the show. All right, thank you for seeing the light.
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B
I guess that chat bot. I guess Google. Google has shown.
- [31:00]
A
Google for real? I don't think so.
- [31:02]
B
Yeah. No.
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A
You think Google is this great hit consumer AI chatbot.
- [31:08]
B
I mean, Gemini, like funneling users from your core experience to a standalone app. Google has shown they are able to do that far more successfully than Meta. I mean, I think, like, based on Gemini's numbers in the consumer market, they've shown you can do that.
- [31:28]
A
Okay, before we go to break, because we have a lot more to cover today, you highlighted a section of dialogue in this court case. You want to share a little bit about why that's important and what it is. Yes.
- [31:42]
B
So one of the. There's a few interesting, really interesting parts that came out so far in the trial, including Elon playing like logical jiu jitsu about like, it's a yes or no question. That's like asking me, do you beat your wife? Which I don't know. Doing that in a courtroom is just so ridiculous to me, as though it's like I did high school debate and that felt like the kind of thing you would do when you were a freshman. But more important relative to the industry, Musk was asked, do you know what distillation is? By OpenAI's lawyer, William Savitt. It means to use one AI model to train another model. And he was asked, has XAI done that with OpenAI? Musk replied, Generally, all the companies do that. So that's a yes, partly. Musk continued, Distillation is a technique where a smaller AI model is trained to mimic the behavior of a larger, more capable model, making it cheaper and faster to run while preserving much of its performance. So it's actually continued the Sabbat. Has OpenAI technology been used in any way to develop Xai Musk? It is standard practice to use other AIs to validate your AI. I think, like, this is significant because I think the distillation conversation when it comes to Chinese models and deep SEQ has been a pretty loaded one. And if the fact that he's just admitting this openly and saying it confidently still from a commercial perspective, what does that mean? Is kind of crazy to me, you would think. And maybe there, I guess there's probably not a lot of law and regulation around not doing this, but it's still, I don't know. Again, from a purely commercial perspective, I was shocked that he was saying this. Were you?
- [33:35]
A
Yeah, definitely. No, it's, it's stunning and clearly it's happening everywhere. And, and it goes to sort of a question I asked Greg Brockman last week, which is that, like, is it going to be economically viable to train these models if you just get distilled? And I don't know. There's coming there, there may come a point where, you know, right now we're seeing real leaps in every, every new model to a degree, and it might come a point where it sort of levels out. And once that does, you know, how far is the distillation going to be behind the proprietary stuff? Probably not that far. And so that sort of gets to the question of, well, do we end up seeing sort of intelligence at a certain point, commoditize and compute at a certain point, commoditize, and we end up in a price war because everything is basically delivering the same. And so then you compete on price. I mean, that's sort of, that was the logic behind this kind of memorable quote that Mark Cuban gave me in the episode we did on Wednesday where he said OpenAI is shitting money away at scale, because that, that's his belief is effectively you kind of get to that place. What do you think, Ron? John?
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B
Well, are you saying that the models will be commoditized and it will be about product and price?
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A
Yeah, that could, that could be the case.
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B
Just checking, just checking.
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A
I'm advancing this theory. I'M not sort of throwing it out.
- [35:01]
B
I think it's possibility on that. I don't know if you saw like one of the more on the topic of both distillation and price, there's a lot of hype around. Deep Seek v4 is supposed to be again, top level frontier model at a fraction of the cost. That almost certainly proudly is distillation at its core. And then, I don't know, had you seen Brian Chesky who's I think been on the show a few times. Yeah. Okay, so they're talking about using Quinn from Alibaba from a cost perspective that basically. And I do think moving to a world where let's say you use Anthropic and OpenAI to actually build but then start to cost optimize towards cheaper models. And maybe it's within their ecosystems, maybe it's just an open free for all in terms of any model. I do think that's where things will go. But did you see there's apparently a House representative's recommendation around banning the use of Chinese models and actually calling out Airbnb specifically.
- [36:13]
A
Really? No, I haven't seen that. I mean I, I have seen. I mean if you look at like apps like Perplexity for instance, like they'll allow you to use like the OpenAI or anthropic models or Kimmy K2, which they have of course, like they've downloaded the weights, they've post trained on their own, they've sort of given their own version of that model. But I just don't see the Chinese models going away. Because ultimately if you ban the Chinese models, aren't you effectively saying like you're banning open source? I mean there are the Nvidia Nemo models which are open source, but outside of that it's mostly a China thing.
- [36:47]
B
Well, actually, so here, so two Republican led House committees, they're probing specifically Airbnb and any sphere which is the owner of cursor over their use of Chinese models. So I found this really interesting specifically because after like we didn't talk about Meta and Manus last week. I mean to me, like first of all, we can definitely get into what's going to potentially happen there. But China, that's like quite the salvo, you know, like you cannot acquire our technology even after that technology has moved to Singapore and trying to get out of, get out of the CCP oversight to actually say we are blocking that transaction. To me, actually like the US China tech cold war like heated up significantly when that happened. And then when I saw this, that the Republican House committees are actually like throwing out this idea that you cannot use Kwen or other Chinese models. I think it's going to get, I mean that whole Jensen Dworkesh exchange is going to become that far more significant or a bigger story this year.
- [38:01]
A
Okay, this week I'll just say one thing then we really need to go to break. This week I heard the, probably the best explanation of what Jensen's position is, which is effectively if you, if you don't sell the American or Nvidia tech stack into China, you will force the Chinese model makers to build, to optimize basically algorithmically on Chinese chips, like chips from Huawei. In the event that they are able to make those optimizations and in some ways, you know, out outpace the American models or become a appealing alternative, they could potentially build those on Huawei chips alone and not make it compatible on the Nvidia stack and then do their own form of export controls on the US or to the rest of the world and basically have control over AI. So let's say they make state of the art models built on Huawei chips. They could hold the US back from actually using those and effectively restrict our ability to have cutting edge AI. And by putting that constraint on them, you sort of put yourself under the barrel in that way where you could potentially not have access to the AI that you want.
- [39:20]
B
I think that's a circular but reasonable argument. But, but question though. Should large tech companies in the US be allowed to use Chinese models?
- [39:31]
A
Yes. I mean you should be able to download the weights, do the, do you do the work on your own and then, and then run them? I think so.
- [39:40]
B
Okay, but only the open source side of it. Not directly connecting to the Alibaba Quinn infrastructure the same way you would to an anthropic. Yes or no?
- [39:49]
A
It depends what you're doing.
- [39:50]
B
It's a yes or no question.
- [39:53]
A
God, you know, Mr. Mr. Senator, I'm gonna say, I'm gonna say yes. I'll say yes. I don't have a problem with it for now until we discuss things, I would say it's not gonna lead to, I don't think it will lead to like a clear catastrophe right away. Like is air. Is the, is the fact that you can't say so. I mean, I don't know. This is kind of a weird thing to go, a weird rabbit hole to go down. But is the fact that you like can't get straight answers about Tiananmen Square going to impact which hotel or apartment room you book on Airbnb. That would be weird.
- [40:27]
B
Well, maybe Feng shui, I say this with the Taiwanese mother in law could start injecting itself into Airbnb successfully. Maybe that would be much clearer understanding of Exactly. So maybe this is we're both arguing,
- [40:41]
A
okay, that form of soft power I'm, I'm, I'm for All right, let's go to break. We'll go to break and come back and talk a little bit about big tech earnings and prediction markets right after this. Look, if you have a kid in school right now, you know the drill. What you take 20 minutes of homework, ends up taking two hours and usually ends in tears. And every good tutor, well, they're fully booked for months. This episode is brought to you by Brainly. Brainly is an AI powered by a personal tutor, built by educators, not a general purpose chatbot. It doesn't just give your kid the answer, it walks them through step by step explanations so they actually understand the material. It learns how your child learns, diagnoses when they're struggling, and builds a personalized learning path in under three minutes. Available 24 7. There's no scheduling headaches and it's just a fraction of the cost of a private tutorial. Finals are coming. Build your teens study plan now. It only takes minutes. Go to brainly.com bigtech to get 50% off your first Brainly subscription with my code Big Tech. That's B R A I n l y.com BigTech Most leaders know how work is supposed to happen, but when it comes to how it actually gets done day to day across tools, teams and handoffs, they're mostly guessing. That's exactly the problem Scribe Optimize was built to solve. Trusted by over 80,000 enterprises, including nearly half of the Fortune 500, it gives leaders a live view into how work is really happening across approved business apps without interviews, manual process mapping, or extra effort from the team. And because it's continuously analyzing real workflow activity, the insights stay current instead of going stale the moment a process changes. You can see which workflows are happening, where time is going, and which tools are involved. It automatically surfaces top issues, explains why they're happening, and even recommends ways to fix them with estimated time savings. And importantly, it's built with privacy in mind, so activities only captured in admin approved business apps and user level data is anonymized by default. The kind of visibility that used to take months, now it's just always on. If you're ready to stop guessing and start seeing, Visit scribe. How BigTech that's s BigTech. And we're back here on big Technology podcast Friday edition. Just to continue going on with my conversation or my my point here about AI consumer if you look at the earnings that came in this week, if you were a cloud company, you were very happy. If you were building AI consumer apps or you were building for consumers, you were either not happy or you were thrilled that you didn't invest a lot into into AI. So let's just break it down. This is from CNBC. You look at Google Cloud. Google Cloud grew 63%. 23 billion. $20 billion. This is by far the strongest growth rate growth rate for any period since Google started breaking out cloud results in 2020. That's massive AWS, by the way. Stuck in the 17, 18% growth rate range for the past few years. Grew 28% Microsoft grew 40% Azure. If you are providing the AI infrastructure for this enterprise build out, you are doing really well. What do you think about this, Ron John?
- [43:58]
B
I mean the numbers are insane. 63% at that scale and I guess it reflects this is like a public company earning breakout. That kind of tells the anthropic story as well that we keep hearing about through fuzzy ARR numbers here we have a clear 63% growth to $20 billion in a quarter for Google. Cloud is nuts, I think. Yeah, I feel the will there be demand or are we over building capacity? It seems like that question has been answered. Do you see any holes in that story?
- [44:37]
A
Yeah. So here's a tweet from Gary Marcus. Sheer insanity. Amazon, Google, Microsoft and Meta collectively are spending more money than the Manhattan Project every single month. More than Twin X, the Manhattan 12X, the Manhattan Project every year. And what do they have to show for it? None are making major profits on AI. None has a technical moat. A massive price war is inevitable. A few of their customers are seeing major returns on investment. Great. Greatest capital misallocation in history. I mean here's the question is what these cloud services divisions are seeing this big massive bump in revenue just downstream of the major amounts of money that the anthropics and the open air are raising and sort of, okay, not, you know, not quite sustainable without those big fundraising, by the way, big fundraising moments. And by the way, a lot of that fundraising is coming from them. What do you think?
- [45:32]
B
Okay, I like your circular funding. And again, and actually a lot of that funding is in the form of cloud credit. That is recognized revenue.
- [45:42]
A
I'm not saying that's 100% sure what's happening, but maybe, yeah yeah.
- [45:46]
B
So on one side, I feel like again, if you listen regularly, you know, I can be very skeptical. And will OpenAI or Anthropic have a successful IPO? I'm not sure. I feel like Gary Marcus and Ed Citron in them. Like, I wish they just said, okay, something positive or impressive has happened.
- [46:10]
A
Like, not everything Gary has to a degree. He did say that Claude code is a combination of neurosymbolic systems and machine learning.
- [46:21]
B
Which is fair. Which is fair. Like LLMs on their own, without a harness, without a product, without like all of this. Okay, all right. At least Gary's recognizing it. I do think the investment in the infrastructure side, it's interesting because maybe the one argument against this is obvious, that the demand is there and they got to keep building. Maybe if I take what he's saying and extrapolate a bit, is the idea that the economics of how they're investing are flawed, that the building out, assuming constant price at today's growth and today's revenue, the fact that it will scale linearly or exponentially like that. Maybe it's true that as costs come down, the amount they've invested, if deep seq v4 and Quinn and others and people are using open source and the actual cost goes down dramatically, then it could be pretty bad capital allocation.
- [47:23]
A
Right. I mean, I think we can't. Even though the use cases are there, which they are. Right. And even though this won't go to zero, we cannot discount the fact that there could be a collapse here because of the very factors that Marcus is pointing out.
- [47:41]
B
Yeah, I think. Okay, I'll. I'll say. And it's true no one understands the economics of any of these businesses right now. Like, what is a true margin? Will again, we've seen it with Anthropic that just that insane spectacular growth, the pushback on price. And understand after 47 came out and recognizing that a lot of it is subsidized anyways. So what are the expenses to Anthropic will eventually have a more clear picture of like, and then how all that relates to the infrastructure side. I guess it's fair. No1 what is an average margin for an AI business? No1 knows yet.
- [48:27]
A
Exactly. So that is something that I don't know. I think we need to keep coming back to on this show. You know, at first it was like, is this technology going to work? The technology is working. And the question is like, these business decisions that are being made are. There's no other way to really describe them than YOLO decisions. Right. Nobody knows what's going to happen here. The demand is coming in, but it's a brand new category. There's bumps in the road and we could end up seeing a price collapse.
- [49:00]
B
I also actually, when you say yolo, it kind of makes me think like the executives, the CEOs of these companies are all in the same circle, which makes this interesting too. So when everyone around you that you have known, respected, hated, just like that is your basically social circle or professional circle, your closest LinkedIn connections is saying the same thing, it's going to exacerbate how you think. Like, yeah, it is interesting to me that, and it's a very. The Musk Altman trial reminds us this is a very, very small group of people that have known each other, competed against each other. I mean, you know, had spats with each other. Like, remember when Zuckerberg was in Musk, the cage match. Like all types of interactions and they're all speaking, they're all thinking the same exact thing. Maybe that's another reason everyone could be wrong.
- [50:04]
A
That's sort of what makes what Apple has done, even though Apple did try to make this happen, which has made what Apple's done quite impressive, that they decide, hey, we don't want to spend on foundational models. I'm kind of going 180 on Apple. Honestly, they, they. Let me just say, they. They had iPhone sales grow 21.7%. They don't have AI on the iPhone. Siri sucks. This is just the counterpoint to what we've been saying. They had quarterly sales of 100, 111 billion. I think I foreshadowed it earlier by saying, you know, in consumer, you're probably unhappy if you spent a lot or you're happy if you didn't spend anything. And when I said that second part, I was referencing Apple.
- [50:47]
B
I mean, if, if their ineptitude and incompetence and God, do I hate Siri. But if that ends up helping them in the long run because by sheer virtue of incompetence, they did not go all in on building their own models and investing in AI infrastructure. And that ends up being the right decision. God bless John Ternus and his reign. Because, I mean,
- [51:18]
A
could happen. I mean, conventional wisdom now is like, oh, Apple, you did a good thing and now you're selling your Mac Minis. By the way, in the earnings call, they talked about how Mac Mini has become an important part of the AI agent infrastructure. And they've also talked about how the new Siri is coming this year. So you Might end up getting the best of both worlds. I believe.
- [51:39]
B
Believe it when I see it. I'll believe.
- [51:41]
A
Honestly, if they do this, I. I will take back of many of the negative things I've said about Tim Cook.
- [51:47]
B
Actually, I'm going to say something positive about Siri today. Do you know Alexa cannot translate into Chinese? My wife was asking, and we actually have an Alexa and Siri both kind of like next to each other. And then she turned around and asked Siri, and Siri was able to translate something into Chinese. So Siri's got something. I guess it's Alexa plus, not the other leading ones. But say Siri won one battle.
- [52:14]
A
Okay, well, that is probably more than it's won in any time in recent history. So we got to give one to Siri. Man. Apple again. Don't down Apple. I think that's something I'm learning. All right, let's end today. Talking a little. We have some prediction market news. News. This is a. A recurring theme that comes up on the show about the prediction markets. And we have a story. Ranjan, you can take us away. About senators banning themselves from prediction market trading.
- [52:41]
B
Yeah. The U.S. senate unanimously. How rarely do we see something along bipartisan lines barring senators from trading on prediction markets. And obviously Kalshee and Poly Market. I mean, we. Apparently. It was a few weeks ago, Kalshi said It suspended one U.S. senate candidate and two candidates for the House of Representatives for political insider trading on their own campaigns. There was this crazy story where a US Army Special Forces mass sargent actually was charged with using classified information around the Maduro capture that he was part of that mission to bet on, which is just, like, insane still to me and like the most dystopian thing imaginable. But it's nice to see the US Senate actually restricting themselves from doing something absurd.
- [53:36]
A
Yeah. No, I think that there is a growing recognition that some of the prediction market activity is. Can be very cancerous to a society, can be unfair to voters. Sorry. To gamblers. Which is like, I guess they should know better.
- [53:52]
B
Yeah. Voters no one cares about. But.
- [53:54]
A
Yeah, but. Well, I mean, on the other hand, you could say, well, they're actually like, more accurate now. So what do you think about that?
- [54:02]
B
Where do you stand on that? So I've seen that argument and kind of like the. The companies themselves almost use that argument that if a small number of people are kind of driving the market in the actual accurate direction using insider information, that makes the market more accurate.
- [54:22]
A
Which is true. But it doesn't make me like this any better. And it also rigs it against everybody else. And I think it is, I think if you look at it on a whole, there is a serious, you know, this stuff has only recently been legalized and it's kind of taken as normal today. And I say this as someone who likes to put like a couple dollars on the game when I'm watching anything on and put, put it like the FanDuel odds. But, but you know, there is without a doubt a lot of healthy activity here, but also a lot of extremely cancerous activity here. And it's almost like you're seeing a society that can't help itself. So let me tell you one story before we leave. There's this quarterback in college football at Texas Tech. His name is Brendan Sorsby. He just entered a gambling addiction program for sports betting that could end his college career. This is according to Matt Schick from espn. And then Schick posts a article from CBS Sports about the fact that he could miss the season. This is the second paragraph of of that article and this really annoys me. Texas Tech was an overwhelming favorite to Repeat as Big 12 champions after acquiring Sorsby this offseason, but now has moved to an even money at +100 via FanDuel sportsbook after Monday's news. The Red Raiders projected win total has also decreased, going from 11.5 at opening to 10.5 victories. And Sorsby's no longer on Fanduels Heisman odds list after opening at plus 2500, just outside of the top 10. CBS, allow me to address you for a moment. You are writing an article about a quarterback with a serious gambling addiction problem that may cost him a season in the NCAA and potentially send him right to the pros where his life, you know, may be destroyed because his draft standing will not be anywhere close to where it was before. Maybe destroyed is too strong, but it won't be at what it was before. You have no less than three mentions of the odds movement from said person's
- [56:29]
B
life destroying activity with hyperlinks directly out to those exact bets to those bets.
- [56:37]
A
Now, I don't say this likely. Get a fucking grip, CBS Sports. Don't do this. This is just a, you know, it is a it propels people into these situations that Sorsby finds himself. And I don't understand how we have a society who is looking at this and saying we have no problem here.
- [56:58]
B
I this is disgusting. This is crazy. Like, actually this is a good call out for this is the most kind of like, weird Example of like, obviously, like how much sports sites have been incorporating odds into even. Just like TV broadcasting into every, like their websites, apps, everything. But yeah, that is quite. Do you think someone even. Do you think this is just AI generated and the logic around all these, like incorporating bets is already built into the CMS and like. Or do you think they. Someone actually sat down and was like, I'm going to do this. Or do you think someone had to do it and actually felt sick to their stomach? Which of those three?
- [57:46]
A
Oh, God. I mean, I don't know if it. What. Which one would be better? To be honest, Someone's got to get on the phone with Barry Weiss and say, you know, don't do this, please.
- [57:56]
B
I mean, out of all their problems, this is a pretty bad one though.
- [58:01]
A
I'm gonna do it. I'm writing a letter to the editor. Yeah, I'm gonna do it. I'm doing it.
- [58:05]
B
I'm gonna.
- [58:06]
A
Dear Barry, first time caller, long time listener. Listen, we got to talk about cbs. Well, I guess we will end on on that uplifting note, Ranjan. I mean, Lord almighty, I didn't think we could get more depressing than OpenAI's missed billion user number, but I think we found it here. So we'll land on the doom gloom
- [58:26]
B
generative AI is showing up in consumer experiences. There we go.
- [58:31]
A
Now excuse me while I put a poly market bet on when OpenAI will announce that note.
- [58:36]
B
Yeah, just kidding.
- [58:37]
A
I won't do that. All right, everybody, thank you for listening. Rajan, thanks for being here again.
- [58:42]
B
Have a good week. See you next week.
- [58:44]
A
All right everybody, see you next week. And we will be back next time on big technology podcast.
- [58:50]
B
Some follow the noise. Bloomberg follows the money. Whether it's the funds fueling AI or crypto's trillion dollar swings, there's a money side to every story. Get the money side of the story. Subscribe now@Bloomberg.com par le tu francais hablas espanol parl italiano.
- [59:12]
A
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