Loading summary
Transcript1 lines
- [00:05]
Brian McCullough
Welcome to the TechMe Bright Home for Friday, February 7, 2025. I'm Brian McCullough. Today is the UK government about to force Apple to put backdoors into all our iPhones, tallying up the tech earnings week of capex announcements. We might get a new iPhone next week, the weekend long Read suggestions and listen to the end of the show because I'm running an experiment. Here's what you missed today in the world of tech. Sources say that in a secret order last month, UK security officials demanded Apple create a backdoor to access all cloud content any Apple user worldwide has uploaded. So that includes you and me, even if you're not a UK citizen. They demanded this backdoor for any Apple user, full stop, quoting the Washington Post the British government's undisclosed order issued last month requires blanket capability to view fully encrypted material, not merely assistance in cracking a specific account, and has no known precedent in major democracies. Its application would mark a significant defeat for tech companies in their decades long battle to avoid being wielded as government tools against their users, the people said, speaking under the condition of anonymity to discuss legally and politically sensitive issues rather than break the security promises it made to its users everywhere. Apple is likely to stop offering encrypted storage in the uk, the people said. Yet that concession would not fulfill the UK Demand for backdoor access to the service in other countries, including the United States. The Office of the Home Secretary has served Apple with a document called a Technical Capability Notice, ordering it to provide access under the sweeping UK Investigatory Powers act of 2016, which authorizes law enforcement to compel assistance from companies when needed to collect evidence, the people said. The law, known by critics as the Snoopers Charter, makes it a criminal offense to reveal that the government has even made such a demand, and Apple spokesman declined to comment. Apple can appeal the UK Capability notice to a secret technical panel which would consider arguments about the expense of the requirement, and to a judge who would weigh whether the request was in proportion to the government's needs. But the law does not permit Apple to delay complying during an appeal in March, when the company was on notice that such a requirement might be coming, it told part Parliament there is no reason why the UK Government should have the authority to decide for citizens of the world whether they can avail themselves of the proven security benefits that flow from end to end encryption. End quote. The Home Office said Thursday that its policy was not to discuss any technical demands. We do not comment on operational matters, including for example, confirming or denying the existence of any such notices, a spokesman said. One of the people briefed on the situation, a consultant advising the United States on encryption matters said Apple would be barred from warning its users that it its most advanced encryption, no longer provided full security. The person deemed it shocking that the UK government was demanding Apple's help to spy on non British users without their government's knowledge. A former White House security advisor confirmed the existence of the British order, end quote. So the only way to look at this, I think, is what the great cryptographer Matthew Green has said on Twitter, quote, the UK is coming after all encryption, end quote. And all users like you can't be like, hey, sucks to be a UK citizen. If this happens, you will be affected if you are an Apple user, full stop. And the thing is, the UK market is big enough. I don't feel like Apple would be inclined to take a principled stand here. Amazon earnings Q4 revenue up 10% slightly beating estimates net income up 89% to a whopping $20 billion. They can pile up cash when they really want to, but the stock is down nearly 4% as I write this. Want to guess why? Well, before we get to the big why, a slightly different why ad revenue was only up 18% year on year, which suggests that growth in Amazon's ad business is slowing or might be hitting some sort of natural market limit. But yes, back to that big why? If you shout it at your EarPods capex, you're right. Amazon expects to boost its capex to $100 billion in 2025, largely Dr. AI and up from 2024's around $83 billion in capex and what Andy Jassy calls a once in a lifetime opportunity. Quoting cnbc we spent $26.3 billion in CapEx in Q4, and I think that is reasonably representative of what you expect in annualized capex rate in 2025, Jassy said on a call with investors after the company released its fourth quarter earnings report. The vast majority of that CapEx spend is on AI for AWS, end quote. Amazon has been rushing to invest centers, networking gear and hardware to meet vast demand for generative AI, which has exploded in popularity since OpenAI released its ChatGPT assistant in late 2022. Amazon has introduced a flurry of AI products, including its own set of Nova models, Trainium chips, a shopping chatbot and a marketplace for third party models called Bedrock. Jassy tried to reassure investors on the call that the jump in spending will be worthwhile, calling it a once in a lifetime type of business opportunity. I think that both our business, our customers and shareholders will be happy medium to long term that we're pursuing the capital opportunity and the business opportunity in AI, jassy said. We also have Capex that we're spending this year in our stores business really with an aim towards trying to continue to improve the delivery speed and our cost to serve. End quote. Look, this was the quarter of capex spending announcements between just Amazon, Microsoft, Alphabet and Meta. They announced nearly $75 billion in spending just this quarter. In 2024, those four spent a combined $246 billion on this stuff. And if you tally up their forecasts, they're expecting to spend $320 billion this year. 2025 quoting the Journal the four biggest spenders on the data centers that power artificial intelligence systems all said in recent days that they would jack up investments further in 2025 after record outlays last year. Microsoft, Google and Meta platforms have projected combined capital expenditures of at least $215 billion for their current fiscal year's, an annual increase of more than 45%. Google shares are down about 7% since its earnings report Tuesday, which showed disappointing growth in its cloud computing business. Still, parent company Alphabet said it is accelerating investments in AI data centers as part of a surge in capital expenditures this year to about $75 billion from $52.5 billion in 2024. The spending will go to infrastructure, both for Google's own use and for cloud computing. I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, said CEO Sundar Pichai. AI is as big as it comes and that's why you're seeing us invest, to meet that moment, he said. End quote. So a third of a trillion dollars expected to be spent just by these four companies this year, that's like completely impacting the larger economy level spending. Like that much spending, it's going to have an impact. And I guess that means we're in for a reckoning at some point, because this level of spending has to taper off at some point or level out even to just take a breather. Because that's exactly the thing. If these companies suddenly start spending less, then Wall street might actually reward them, cheer the pullback in spending on behalf of these individual companies, like their individual stocks might go up. But in terms of what that pullback in spending would mean for the larger tech industry and even the global economy it would probably at the same time cause Wall street to freak the F out. Overall, a couple of things now that are probably about to happen, so I'll tell you now in case they get lost in the shuffle or happen over the weekend. First sources are saying we might get that long awaited overhaul of the iPhone SE as early as next week, but it's probably going to slip out as just a segment on this show because we're unlikely to get any kind of event with Apple opting to reveal it on its website, apparently. So at some point next week I'll be like, here's the iPhone SE specs, but no dog and pony show to cover. Quoting Mark Gurman in Bloomberg. The company expects to announce the device as early as next week, ahead of it going on sale later in the month, according to people with knowledge of the matter. The debut will mark a major shift for an oft overlooked smartphone, which Apple first introduced in 2016 as an entry level model. The existing version, released in 2022 has grown dated. It's the only iPhone that still has a home button and lacks Face ID. The new version will look more like the iPhone 14 and also include Apple Intelligence, the company's AI software. There are already telltale signs that the new phone is coming. Inventory of the current iPhone SE has dried up at Apple retail stores in many parts of the US which typically happens before a refresh. The current SE costs $429, which is hundreds less than the $799 regular iPhone 16. Given the new features and design of the updated model, Apple may increase that price, but it's likely to remain in the same general range as entry level smartphones from Samsung and Google. A new iPhone SE could be especially enticing in overseas markets like China, India and other parts of Asia where Apple is trying to bolster its business. The combination of high end features and a roughly $500 price point could make it an attractive alternative to even though it will likely remain more expensive. Apple's sales fell 11% in China last quarter, but grew in other emerging markets, end quote and this is what really could happen. While we're not talking, sources are telling CNBC that SoftBank is set to invest $40 billion in OpenAI at a $260 billion pre money valuation. And this is about to happen imminently. OpenAI was last valued at 157 billion do private investors in October, of course quote SoftBank would pay out the funding, which would mean a $300 billion post money valuation for OpenAI over the next 12 to 24 months, with the first payment coming as soon as spring, Faber reported Friday. SoftBank would be able to syndicate as much as $10 billion of the amount. The round was initially expected to award OpenAI a valuation of $340 billion, but a source familiar with the matter later told CNBC that the amount would be closer to $300 billion. Part of the funding is expected to be used for OpenAI's commitment to Stargate, sources told CNBC. Stargate is a joint venture between SoftBank, OpenAI and Oracle that was announced by President Donald Trump in January. The plan calls for billions of dollars to be invested in US AI infrastructure. End quote. This episode is brought to you by IQ Bar, our exclusive snack sponsor. This is the absolute truth. My wife and I both have fallen in love with IQ Bar. It was literally my breakf this morning. A protein bar and their coffee start the new year off right with IQ Bars, Brain and Body Boosting Bars, hydration mixes and mushroom coffees. Their Ultimate Sampler pack includes all three. All IQ Bar products are entirely free from gluten, dairy, soy, GMOs and artificial sweeteners. IQ Mix is a zero sugar drink mix that hydrates with electrolytes, improves mood with magnesium and boosts clarity with lion's mane Aptogen. I've tried that too. It's tasty. IQ Joe is a jitter free instant coffee packed with 200 milligrams of natural caffeine and brain and productivity boosting ingredients. IQ Bar makes the number one brain and body nutrition bar, hydration mix and instant coffee in the us and right now IQ Bar is offering our special podcast listeners 20% off all IQ bar products plus get free shipping. To get your 20% off just text Techmeme to 64,000. Text Techmeme to 64,000. That's T E c h m e M E to 64,000. Message and Date rates may apply. See terms for details. Even if you think it's a bit overhyped, AI is suddenly everywhere from self driving cars to molecular medicine to business efficiency. If it's not in your industry yet, it's coming fast. But AI needs a lot of speed and computing power. So how do you compete without costs spiraling out of control? Time to upgrade to the next generation of the cloud Oracle Cloud Infrastructure or oci. OCI is a blazing, fast and secure platform for your infrastruct database application development plus all your AI and machine learning workloads. OCI costs 50% less for compute and 80% less for networking, so you're saving a pile of money. Thousands of businesses have already upgraded to oci, including Vodafone, Thompson, Reuters and Suno AI. Right now, Oracle is offering to cut your current cloud bill in half if you move to OCI for new US customers with minimum financial commitment. Offer ends March 31st. See if your company qualifies for this Special offer@oracle.com Techmeme that's oracle.com Techmeme Time for the weekend Long Read Suggestions first up, how Epic is transforming Fortnite into a content platform paying I did not know this $350 million to creators just in 2024 alone, 36.5% of the total playtime on Fortnite now is being spent in games made by creators. Quoting the great Julia Alexander on her substack, Fortnite is the perfect example of where these worlds meld, and Epic's creators program is a perfect example of where the games industry may be going. Epic Games announced last week that the number of creators working within Epic's Unreal Engine for Fortnite program nearly tripled between 2023 and 2024, jumping from 24,000 contributors to more than 70,000. This resulted in nearly 200,000 in game islands for players to experience, with an approximate 60 made islands being played each day, according to the company. Clearly, more creators are looking to construct within the world they spend the vast amount of time in, and players are willing to experiment. It's the monetization part of the equation that is particularly interesting, though. More than $350 million was paid to creators in 2024, up 11% compared to the same period measured in 2023. More than 37 creators made more than a million dollars, 14 creators made north of $3 million, and seven creators or developer collectives collected more than $10 million in Reven. As Epic noted, quote, players spent 5.23 billion hours playing games made by creators, a number that represents 36.5% of total Fortnite playtime and continues to rise. Building within and building for are two different acts. Building within Fortnite is an opportunity to showcase creative prowess to an incredibly large player base. There are reportedly more than 30 million daily Fortnite players. Building for Fortnite, however, is recognizing that the ultimate benefit is to Epic games to a centralized environment. For a company focused on keeping players on its servers, that doesn't make Epic games bad. Nor does it make building within or for Fortnite a problem. It merely makes Fortnite look more like YouTube. The real question then, is whether Fortnite can capture the magic of what makes YouTube work without falling into the company's same traps. What makes YouTube as powerful as it is boils down to a couple of unquestioned dominances a creator contribution cycle that prevents substantial competition from forming in a hyper specific format of product, growing in popularity globally while seeing value in new technologies and incorporating them before competitors to capture more time spent than other mediums. YouTube's rise to its mega monopolist status was built on the philosophy of attention Merchant101 if a product is free, then you're the product. We call this advertising. And if the goal is to increase the number of products to serve advertisers, then you need an unprecedented amount of content. The only way to get that quality, keeping in mind that actual quality turned out to be less of a concern than anticipated by traditional content magnates, was to incentivize a group of creatives and wannabe celebrities by eliminating the barriers of entry, defining an audience, and a promise of payment upon finding said viewers. End quote. And hey, speaking of games, the SIMS just turned 25 years old from the New York Times Speaking of monetizing games in new ways, it's actually an old thing that games like the SIMS were pioneering 25 and 30 years the SIMS was a sandbox for the American dream when it was released on February 4, 2000, with Wright pulling inspiration from biology, architecture, comics and psychology to dictate the rules of his virtual dollhouse. It was an unusual proposal at a time when most games were goal oriented and linear, and a predecessor to create your own adventure games like Minecraft that give players a pickaxe and carte blanche. Although more than 500 million people have played games in the Sims franchise, which is particularly popular with women, it was originally seen as a risk. Executives at the game studio Maxis had urged Wright to focus Instead on the SimCity franchise, his urban planning simulator from 1989 that had put the company at the forefront of American game design. Everyone in the room hated the idea of the Sims, wright recalled. Even before the Sims was released, developers invited people to create custom content, providing basic programming tools for the invention of in game furniture. As more players adopted the software, content creators opened websites and offered subscription platforms that provided a steady income. The people who were really invested in the game weren't even playing the Sims, wright said. They were maintaining websites for the community. It was the beginning of a community driven phenomenon that continued with the SIMS Online in 2002. A noble failure, wright said of the Wild west iteration, where players could interact with One another, users developed new Personas, fueling a national debate about the limits of free expression online. Some players operated digital bordellos. Others formed mafias. 25 years later, players are continuing to push the boundaries. Sure, there are glitzy houses and happy families in the Sims 4. But by modifying the game's code, players have created a healthcare system as byzantine as the real American one, and taught Sims how to wield pistols and knives. The game's official expansion packs offer their own weirdness. Sims can become vampires and witches. They can even play the Sims inside of the Sims. End quote. Alright, as promised at the start of the show, I'm gonna run an experiment this week. I imagine most of you listen to this show close to daily or something like that. Maybe you miss a day or two and either skip it or catch up. But I can see in the download logs and have for years that some of you like to catch up in batches. Like maybe you've missed a couple weeks. So you grab like a week of shows at a time and I guess binge listen to catch up on them. So for years I've wondered, what if I just collected a week's worth of shows in one omnibus episode? Because it must be annoying to have to queue up episode after episode in order if you're binging. So if it was in one episode, that would be easier to listen to. So that's what I've done. Tomorrow I'm going to release every segment I did on the show this week in order in just one show. No intros, no outros, just the segments in order. So roughly one 75 minute episode. Here's the experiment. If you sign up to the ad free feed, the Ride Home premium feed, you will have access to this omnibus episode of all the week's news in one go every week. I'm posting it here on the ad feed this week to give you a sample of it. But the only way you'll be able to get this omnibus episode going forward will be to sign up to the premium feedback at Tech Supercats Tech. The reason I'm calling this an experiment is I don't know for sure if this is actually valuable to people. So if you think it's something you want, vote with your dollars. If like 500 of you sign up in the next 72 hours, then I know this is something that is needed. If nobody signs up. If like three of you sign up, then I'll do it for like a month and then I'll stop. But Brian, what if I'm one of those people those three people that sign up for the premium feed just to get this weekly omnibus episode and you stop doing it because it was only me and two other people. No worries because you know you subscribe to the premium feed month to month you can cancel it at any time. I will go in and cancel you personally if I end up canceling it because there was no interest. So anyway that's the experiment. Everyone will hear a sample of the omnibus episode this weekend. I'll run ads on it on the ad feed cause why not but it will be completely ad free on the premium feed obviously so if you want this going forward would like it to continue Sign up at Tech Supercast Tech like I said vote with your dollars if hundreds of you sign up I'll keep doing it as an exclusive benefit for premium subscribers because I know it's valuable. Also hit me up with any feedback about this over the weekend. Talk to you on Monday.