Big Tech Is The Enemy of Innovation

26:37And I really am sure that there's a societal shift coming against big tech. The natural result of years of excess and bullshit, of the loudest people in tech trying to convince people that a large language model that can generate texts and images that kind of suck is basically the same thing as an iPhone. I have no idea how quickly the shift comes, but it's coming. It's inevitable. This lack of big profitable ideas will eventually lead to some sort of reckoning or collapse in big tech. Healthy, well-run companies, they don't do things like this, let alone several different trillion dollar companies all bumbling into each other like the Three Stooges, billions of dollars of cash falling out of their pockets.

27:17It's an absolute disgrace. I will say, if the AI bubble really does pop, this is a great time to point and laugh. Regular people like yourself could see this was bullshit from the beginning. Most people find generative AI either briefly interesting or somewhat disgusting, and they're capable of seeing that stealing the entire internet so you could spend$100 billion making a shittier version of the past is kind of a stupid idea. The utility really hasn't been there from the beginning. Describing what ChatGPT is is actually kind of difficult, and any technology that's going to be worth trillions of dollars should not have the users saying, wait, what does this do exactly?

27:56And I really feel like regular people notice this. If this was as magical as it was, regular people would be lining up to use it. And while it has a lot of users, I don't know anyone who's fanatical over it other than AI fanatics. It's just very sad. But regular people aren't the only ones. And I have criticized journalists for missing this, but I want to call some people out in a good way. Economists, analysts, and journalists have been saying this isn't the future, like I said. Shira of V-Day in March 2023, mere months after ChatGPT's launch, said it wasn't magic, for example, in the Washington Post.

28:31Shira, the goat. Alex Kantrowitz and Douglas Gorman reported in August 15th, 2023 that ChatGPT isn't good enough to take jobs and it's unlikely to cause mass layoffs. The hot takes have run into reality. Little bit early, but you're correct. Paris Marks called the ChatGPT revolution another tech fantasy in July 2023, and Gary Marcus worried about generative AI being a dud in August 2023. While this is by no means an exhaustive list, it's important to note that people have been saying this, people with big platforms, and the markets chose to ignore them. As an aside, a year later, when many outlets were still tripping over themselves to say that generative AI was the future, Shura Vida of the Washington Post asked, if these chatbots are supposed to be magical, why are so many of them as dumb as rocks?

29:17It's important to call out when a national newspaper actually does the work that needs to be done to critique the powerful. Good work, Shearer. Open invite to come on the show. At this point, it seems inevitable that the bubble will burst, that the acceleration has stopped, that the funding won't be there, and that the market's taste for the billions of dollars it's going to take to make generative AI some indeterminate level of better just really isn't there. By all means, tell me I'm wrong. You certainly do on Twitter and you certainly do on email. And I'd be genuinely intrigued to see how open AI wriggles out of this jam, especially because it would mean they made a meaningful product that makes money when they don't have the chips to train GPT-5, a model that likely still wouldn't change the game enough to matter.

29:59I mean, what if they have a new architecture, I guess? But I refuse to give them credit for something they haven't done yet. And in the event that OpenAI or Anthropic is able to raise again, we'll see the cycle continue another quarter, I'm confident, at which point something crazy would need to happen to make any of this worth it. If these companies can actually raise, they'll keep the bubble inflated, but it really is borrowed time. There's enough money to fund them both maybe one more time and after that, where is the profit? Where's this going? And it's really worth considering that the narrative is bad and that there is very little that anyone can really do to change it outside of something truly incredible.

30:37These companies can play for time, hope that Sachin Adela and Sondar Pichai stand pat and say that they have great faith in the promise of AI, but I really don't think they get another series of earnings for big tech like this. In many ways, though, this is Sam Altman's greatest gambit, and so much lies on OpenAI's back as a result. This is the moment we find out if Sam Altman has really got it, whether it's worth agonizing and wringing our hands about how scary he is, or whether he's just able to hoodwink enough credulous billionaires that have their hands welded to eternal money printers. Impress me, Samuel.

31:15Wake up, Sammy, Mr. Altman. Bring me the technology. Show me what you've got. Show me your great works. Show me the works you have buried in that non-profit, for-profit monstrosity you've used to trick other visionless power brokers into giving you their entire futures for a dead-end friend best known for an absenteeism that rankled his peers and some of the startups he was supposed to nurture. Show me what you've got, Sam. Show us all. You're so smart. You allegedly can solve problems in a single phone call. Everyone talks about your big brain. What's the big play, big guy? You've got maybe six months, and that's the most generous estimate I've got.

31:56What is it? What's the plan? Wait, what's that? Search GPT? Search GPT? Sam, you're crazy. You're crazy, Mr. Altman. There's no way you can build a Google search competitor. Trust me, I know. No, really, I worked it out. I spent a few hours looking up Google's financial reports over the last decade or so, trying to figure out how much the company spends on operating costs and capital expenditures, just related to search alone. Due to the way Google structures its financials, I had to make some guesses, some more informed than others. But I reckon it costs Google about$30 billion a year to run their search product, and that's not taking into account the cost of degenerative AI-powered search summaries.

32:34All right, Sam, here we are. So that's$30 billion a year to create something that can scale to the size of Google Search. And that's just the start. You with me, man? Things do not get easier. You see, you're not just building a Google Search competitor with SearchGPT, as you also have to build the ad tech infrastructure to actually make money off of it, which you are not good at. Okay, but you've got to copy features from companies like DoubleClick, which Google acquired in 2007 for$3.1 billion and pretty much underpins the whole operation. Or maybe you have to build something like AdWords, which Google got when it acquired Applied Semantics in 2003.

33:08You will need something like both of these. And that's going to cost you in the best light, in the best day ever, about$3 billion. Or you're going to have to outsource it, which will make it worse and less profitable because outsourced companies are going to take a cut of your revenue, thus reducing your margins, which are already really bad. then you've got to hire experienced ad personnel and use that ad tech infrastructure you built you built that right to enter a market google will use their entire cartel power to kick you out of wait what was that sam wait what right right you've got to make money and ideally more of it than you spend something as i've mentioned you have some issues with like i said google search costs an absolute shit ton to run 30 billion dollars easy and that's with decades of optimization a coding language that they invented, thousands of miles of underground cables, and decades of experience in doing a thing you're just learning to do.

33:57And they have PhDs who specialize it, who've been at the company decades. You did all that? Whoa. Okay, Sam, I'm impressed. You're on a roll. You can do this. I believe in you, Mr. Altman. Now, just checking. How many ad salespeople do you have? What's that? None? You don't have any ad salespeople for your search engine? Sam, you're going to need them. Google had over 30 ,000 ad salespeople before its last round of layoffs. You're not going to make this thing profitable without ads. In fact, I don't think, Sam, you're going to make this search product profitable at all. But you know what may or may not be profitable?

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35:31If you're not absolutely in love, send it back for a full refund. No return shipping or restocking fees. Every penny back. Upgrade now at washablesofas.com. Offers are subject to change, and certain restrictions may apply. Parking shouldn't slow you down. ParkWiz gives every driver a shortcut. Book ahead, save up to 50 % and skip the hassle of circling the block. Park smarter, park faster. ParkWiz. Download the ParkWiz app today and save every time you park. This week on a very special episode of Health Discovered, we're taking a closer look at a condition that affects hundreds of thousands of men each year, prostate cancer.

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37:52All right, all right, we're back and I'll dispense with the Sam Altman bit. So when I was looking up Google's financials, as I mentioned, I was able to make a few educated guesses. And I've got a hunch that Google has about a 35 % profit margin, which is pretty good. but that's with over two decades of infrastructure and a near monopoly on the search market open ai has a none of those things they don't really own their infrastructure at all as i mentioned and it's going to be relying entirely on gpt for the most part which is insanely power and compute intensive and thus costs a lot more and as i've said a billion times already gpt and other transformer based architecture is deeply unprofitable unsustainable and that's before you even get to the hallucinations the hallucinations that underpin your search engine you need to be profitable, which isn't profitable.

38:36Oh boy, this is really bad for them. Assuming the bulk of the cost associated with running Google search comes from the vast number of servers required to actually power it, it's hard to imagine how anything OpenAI does could even ever reach a profit, even if they had the monopoly Google has. Now, I'm confident that OpenAI is trying to raise capital right now on the idea that SearchGPT is able to create a meaningful competitor to the most profitable software business ever made, one that Google will likely protect with various monopolistic weapons like its treasure trove of patents. While the Department of Justice did just declare that Google had a monopoly over the search market, and I'll get to that in an upcoming episode, it will take years for things to move on that front, and nothing about this situation fixes any of OpenAI's problems.

39:22On top of that, Google spends, as I previously mentioned, billions of dollars on hardware and property, and OpenAI would likely have to build infrastructure that dwarfs even the outlays of generative AI to scale a search engine that could handle even hundreds of millions, let alone the billions of people that use Google search. It could get Microsoft to build it or lease it from the likes of Oracle, and Microsoft could probably pay for it too. But that would be another massive increase in capital expenditures at a time when the markets are waiting for the stuff to make money rather than the companies to spend more money on it.

39:54And I also should note that Microsoft recently described OpenAI as a competitor in the search business, and it's unlikely to kill Bing, which has been profitable since 2016. Let's be honest though, this is all fan fiction. OpenAI isn't competing with Google search. It would cost too much money, and the underlying technology is neither good enough nor efficient enough to actually support a search engine at scale. And even if it was, is it better? Probably not. What about ChatGPT says that it's going to be more reliable than Google search. And God, all of this is such a boring fucking farce. We're not watching startups mess around Silicon Valley experimenting in ways to fix weird problems.

40:32We're watching big tech outsource their research and development costs to one of a few hand-selected con artists that they'll drop the second that Wall Street gets pissy. Why even pretend anymore? Anthropic is propped up by Google and Amazon who invested billions of dollars in cloud credits. Microsoft props up OpenAI to the point that the NVIDIA chips crisis affected it because daddy Microsoft was buying them for OpenAI to use. And Google, Amazon and Microsoft are all making their own models to the point that Microsoft has already reported, like I said, that they see OpenAI as a competitor. It's just, it's just all so craven.

41:07Big Tech funded a cloud-dependent product that costs so much more than anything else in the market based on a spacious hype about what artificial intelligence could or could not do. They do so as a means of selling a new product, one that, while not particularly useful, also means that they can charge a lot for the cloud compute service it runs on, creating demand for a product that pays them money just for existing, allowing them to vastly expand their physical data center locations, further enforcing their monopolies over the cloud storage industry. Microsoft, Google, Meta, and Amazon created a new way to turn money into more money, investing in a tech that required you to pay them all a lot of money for cloud computing services to run on, like I said.

41:47The problem, it seems, was that none of them were willing to consider a world where this stuff never really turned into anything remarkable other than in its waste. And a lack of creativity in the tallest towers of the valley in Redmond has allowed the richest men in the industry to be conned by a snake oil machine that loses billions of billions of dollars. To be clear, there's nothing wrong on its face inherently with generative AI. It does interesting things with documents, and I fully believe there'll be some lo-fi version of generative AI that plugs around silently once the hyperscalers piss off.

42:17My problem is that it's so horribly wasteful to put all of this money into these large language models, the ones that steal everything, that require so much energy and create so little in return. Now, the reason I brought up previously the whole calculation of open AI needing$5-10 billion to survive is because I wanted to make it clear how expensive them staying in place is. That is the money they will need to continue building the thing they are doing today. They don't have anything in reserve. I'm confident about it. Maybe they can survive. Maybe they can surprise me. Maybe that can happen. But I just don't really see it happening.

42:56Greg Brockman's gone. And I mean, he was just another non-technical guy. What's going to happen? You think Mira Morati's going to come up with something? You think Sora's going to do it? No, they don't have anything. And I realize it's so strange to say this, especially if you're a member of the media listening to this. I know it's strange to accept this, but what if they're just full of shit? What if this is the best they've got? How do we deal with this? And I think we start by accepting that all of this was completely and utterly ridiculous. We live in incredible times. We're at a boiling point in the tech industry's history where these sins of excess and this total lack of vision have crippled big tech's ability to make new things.

43:37Things have been too easy, too comfortable and too frictionless for too long for people like Sundar Pichai and Satya Nadella and even people like Larry Page and Sergey Brin who are the only two people who can fire Sundar from Google. Tech needs to go back to creating interesting and cool things and having companies run by people that actually care about building them. Technology is capable of solving real problems, or at least it has been in the past, and proven time and time again how profitable it can be to do so. And I believe it can do just fine without having four or five companies that do every single thing that technology can do at the same time in the hopes that they can monopolize it.

44:13I don't think the most powerful people in tech realize how frustrated people are, how deeply affected by technology everyone is, even those who don't identify as tech nerds or enthusiasts. And I think men like Sandar Pichai and Satya Nadella are deeply unaware of how ready people are for a change, how disgusted they are by the cratering quality of the average tech product at a time when executives have never been richer. Regular consumers know that Google search sucks. They know that Facebook sucks. They know that websites are worse, that they visit certain ones and there's 18 pop-ups and your phone's really hot.

44:49They know that their iPhones are randomly trying to make them buy Apple News. and they know that there are people responsible tim cook eddie q at apple by the way welcome to come on the show but guys stop trying to sell me apple news i don't want it i don't want any of this apple shit don't make me use it unless i have to other than i message but moving on there are real targets here there are people that need to go to fix things sundar peshaya and satya nadella must go they are no longer trustworthy stewards of the future and have inspired hundreds of billions of dollars of waste in the hearts of their equally myopic competitors.

45:26These men do not care about their customers. They don't fear competition. And the government should break every single hyperscaler up. Google, Meta, Amazon, Apple, Oracle, all of them, and find ways to stop them ever growing so large in the future. Maybe we shouldn't have such large tech companies. Maybe we don't need multiple trillion dollar juggernauts that do everything in a shitty way. Maybe we don't need companies that do online advertising and also provide a platform, because that kind of monopoly leads to insane incentives like you're seeing with Google Search and Facebook. And we all deserve better.

46:04And the way to get there is to say the names of those responsible, to document their disgraceful acts, and call for accountability again and again and again and again until something actually happens and changes. And it is changing. The narrative is changing and soon it will shift more aggressively and more violently against big tech. And I think this is a great thing for the world and ultimately to take industry at large. Now, as we see the bubble, the AI bubble collapse, I must be clear, none of this is a victory lap for me. This is not actually how I wish this went. I wish this bubble had burst earlier.

46:38It would have caused less harm to the environment, to the markets, to the freelancers who lose their jobs, to the artists who email me every week. It would have wasted less money, taken less attention away from the rest of the industry, and allowed Sam Altman to accumulate less money and power. Instead, this bubble has been allowed to swell so large that it will only emphasize how bereft of ideas big tech has become, and the consequences are a growing distint against tech from the general public. And this era was ultimately the result of a lack of fear in the hearts of big tech, and a deeply held belief that their positions were permanent and their customers were trapped.

47:12My purpose in documenting this, in what feels at times like narrating the end of the world, I'm not looking to be a pundit or a talking head or a person who wants to be given credit for calling out the bubble, as none of these serve you, the customer, the listener, or history itself. What I say may be imperfect, but it exists to try and give you a clear understanding of what's happening, and yes, it's a little emotionally charged and very clear in its biases. I believe that the tech industry has lost its love and curiosity, and I find it disgusting. And the best way to fight back is to studiously explain things as they happen from my perspective at length, but with, I hope, a clarity that doesn't require a ton of technical knowledge.

47:52As things have accelerated, I've become a little more introspective about the role of my podcast, my newsletter, and my posts. I don't have a particularly profound conclusion other than that I believe that I have a brevity and clarity about the tech industry that many don't, and I also find that I'm extremely fast at writing, and I also find this all very interesting because I'm a horrible little goblin. And I don't talk for nearly two hours or write thousands of words because I desperately need the attention, which I do love. I do it for the thrill. I like covering this stuff. And because if I don't say these things out loud, the cats in my brain will eventually try and emerge.

48:26But seriously though, I do these things because I need to. This is important to me. Maybe I'm fighting back. Maybe I just like creating. I don't really know. This is me processing watching an industry I care deeply about get ransacked again and again by people who don't seem to actually care about technology The internet made me who I am connecting me and in many cases introducing me to the people I hold dearest to my heart It let me run a successful pr business despite having a learning disability Dyspraxia or as it's called in america developmental coordination disorder That makes it difficult for me to write words with a pen and thrive despite being regularly told in secondary school that I wouldn't amount to much Any of you listening, go fuck yourself.

49:05I believe that there are many, many, many people that have been allowed to live better, fuller, more meaningful lives as a result of technology. And I believe that the people who built the tools that allowed them to do so no longer control the future. And that makes me really fucking annoyed. I refuse to watch this bullshit happen in silence. And I encourage you, as I have before, to fill social media and conversations with the names of those responsible. Sachin Adela of Microsoft, Sundar Pishai of Google, Mark Zuckerberg of Meta, Andy Jassy of Amazon, Sam Altman of Associated Cons, Mira Morati, CTO of OpenAI, and Reid Hoffman, the venture capitalist who seems to always benefit over the next bullshit machine.

49:46All responsible for this echoing nihilism that's created the generative AI boom. All of these people will be fine, by the way. When this collapses, all of these people will be just fine. Multi-billionaires, they'll be just fine. but the people that won't be are the people they will lay off the people that have invested and lost money in these things the people that may even come to rely on chat gpt in some small way who won't be able to afford it when it goes tits up or gets jacked up price-wise because that's the only way to make it affordable for the company or maybe all of this just disappears and these customers are left with nothing but sometimes i understand you might feel a little doomed The doomer in you.

50:27Someone recently called me a doomer, which really pissed me off because I'm not. I'm angry. And I know some of you might be too. I won't say you're angry. That isn't fair. But based on the emails I get, some of you seem pretty pissed. And I'm not speaking for you here, but I'm angry because I know that tech can be cooler and better and more interesting. That there are real problems of poverty and climate change, of the myriad systems that don't connect very well on every laptop and phone. ways that things can be better problems that can be solved but right now they need to put tens of billions of dollars into generative ai come on man we can do better than this and while there might be little you can do to them directly i encourage you to say these names to your friends on social media prabhagar ragavan remember him from google tell people all about him too i encourage you to let anybody and everybody you know know who's responsible for this.

51:25Because ultimately, what may pop the AI bubble is a narrative. And narratives shift. And narratives are shifted by word of mouth. And they shift because of people like you, and like me, who never shut up.

51:45Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matosowski. You can check out more of his music and audio projects at matosowski.com. M-A-T-T-O-S-O-W-S-K-I.com. You can email me at ez at betteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat.wheresyoured.at to visit the discord and go to r slash better offline to check out our reddit. Thank you so much for listening.

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53:35If you're not absolutely in love, send it back for a full refund. No return shipping or restocking fees. Every penny back. Upgrade now at washablesofas.com. Offers are subject to change and certain restrictions may apply. Parking shouldn't slow you down. ParkWiz gives every driver a shortcut. Book ahead, save up to 50 % and skip the hassle of circling the block. Park smarter, park faster. ParkWiz. Download the ParkWiz app today and save every time you park. Hey guys, it's Erin Andrews from Calm Down with Erin and Carissa. So when the pressure's on, you remember the people who helped you get this far.

54:13whose knowledge guided you and whose care kept you grounded. For me, it was my dad, my mentor, who believed in me when I was just getting started in journalism. A real-life example that showed me when you work with someone who knows a lot and cares even more, you're unstoppable. At Truist, that's exactly how they approach banking. Truist, leaders in banking, unwavering in care. See what knowledge and care can do for you at truest.com slash unstoppable. Truest, member FDIC, leading based on top 10 commercial bank.

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55:49That's 800-884-3863. Or visit Amerifactors.com. This is an iHeart Podcast.