AI Device Wars Heat Up, RIP Metaverse?, Netflix Acquires Warner Brothers

30:36It doesn't seem like it. Oh, yeah. Yeah. Yeah. Is that just like the early startup energy, finding a category that's going to work, failing and sort of waiting for big tech to come in and pick it up? Or is that a sign of something much worse? Maybe the fact that, yeah, all these companies have an AI device initiative, but maybe it won't work. Maybe this is just a bunch of wheel spinning and we're sort of talking our way through something that's not really going to work. No, I see. I think the humanes of the world, the rabbits of the world were actually victims of hype and of the cycle that like a proper startup having time to kind of like work through, get it into the hands of early adopters, have people test buggy devices, be happy about it.

31:24They never had that because they got so hyped up so fast. They raised so much money. They came out big with lofty videos and these devices did not work well to start. So I don't think, again, I really think the AI first device battle is going to be one of the most interesting stories of the next few years. And speaking of hype that hasn't panned out, the metaverse. This is from Bloomberg. Mark Zuckerberg plans deep cuts for metaverse efforts. Meta's Mark Zuckerberg is expected to meaningfully cut resources for building the so-called metaverse, an effort he once framed as the future of the company and the reason for changing its name.

32:06from Facebook Inc. Executives are considering potential budget cuts as high as 30 % for the metaverse group this year, which includes the virtual world's product, Meta Horizon Worlds, and its Quest virtual reality units. Cuts that high would most likely include layoffs as early as January. It's amazing seeing the names of these products, Horizon Worlds. Never forget. What the hell do those products look like today like are there anybody is there anybody roaming around the actual metaverse anymore i would say except for meta employees but even then even actually hold on now like that makes me wish i don't own any meta vr products i've tried all of them uh i want to like put it on and just go into horizon worlds and see who's there like you're just going to find some random guy just holding on bosses in there just yeah just i hate to say it i mean i shouldn't even say it but you could imagine there are some unscrupulous well yeah that's making their way around horizon world actually maybe it is kind of like an amazing blade runner style dystopian plates right now end of society yeah the wild west mad max blade runner this is like now i'm kind of interested yeah but do you think this is okay so they're gonna cut 30 potentially essentially.

33:27Is this the end of the metaverse? Seems like it seems like that's over. And it's good because like, again, an augmented reality layer in their glass, like whatever was supposed to happen before did not. It didn't work. I think moving to all these other new form factors and opportunities, the fact that they're going all in hiring the Apple execs. It's good. It's good. I think it's over. I think virtual reality should go back to niche use cases, gaming, hopefully keep improving, be this kind of like product that's maybe a reasonably big market, but not the way everyone interacts with life. Right.

34:10We just had Nick Clegg back on the VP of the former head of global affairs at Meta. And to prepare for that interview, I listened to the time that I interviewed him at Davos and like four years ago. And back then he was telling me about how how great it was that he was able to have a meeting with his direct reports in a virtual conference room and feel presence. And the fact that like they might be in separate cities or countries and they could all feel together. I think in theory that might have sounded like a good idea. Did anyone really do that? I think Meta might have done it a little bit, but...

34:47Did you guys really do that? Come on. I just, like, did these meetings ever take place in reality? Like, yeah, I so wonder whether... Because, yeah, no, it's funny you bring that up. Like, that actually would be kind of a fun... I'm going to go on YouTube and start looking up those old interviews because, like, it's going to sound... It sounds preposterous. Preposterous right now. Again, we could sound preposterous five years from now when you're all listening to me and the replays of talking about pins and whatever else. Big blocks that just record your voice all the time could sound ridiculous.

35:23Yeah. All right. So overall, Metaverse dead, but good pivot from Meta because they were able to put a lot of that technology into this AI classes, which is actually showing promise. Do you think Mark Zuckerberg should more directly say it was a mistake? Yeah, I think he should. I think he should too. He should say it was a mistake. We're Facebook. We're back to Facebook. We're back in a big way. We actually figured out and are leading this next revolution in hardware. And you know what? We tried. We took a bet. It failed. But look at us. We're agile and enough to actually keep going. Versus the, well, there was so long where they were trying to conflate the AI development with the metaverse.

36:05Just refusing to acknowledge it was over. right if i'm thinking about the name maybe keep meta actually because the right name the ray-ban facebook's would be weird i don't know you're right meta ray-ban has maybe grown on me even though it's embarrassing no you're right like in meta it doesn't necessarily mean the metaverse it's just kind of it's meta you know yeah yeah i mean but no no you're right ray-ban facebook's would have been terrible ray-ban meta i say it all the time not totally naturally yeah yeah okay Okay, so metaverse dead, but meta is alive. Meta is alive. All right, we're going to take a quick break.

36:43And when we come back, we're going to talk about the code red inside OpenAI regarding ChatGPT, what the implications are there, whether ChatGPT is actually losing users, whether Anthropic might be gaining in the enterprise world. And then we are also going to break down this big deal that was just announced this morning. Netflix is planning to acquire Warner Brothers Discovery for$72 billion. And the deal may or may not go through. I think it won't. All right, we'll be back right after this. Finding the right tech talent isn't just hard. It's mission critical. Hiring great engineers isn't just filling roles.

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40:06Is your enterprise ready for the future of Vigentic AI? Visit agency.org to explore use cases now. That's A-G-N-T-C-Y dot O-R-G. And we're back here on Big Technology Podcast, Friday edition, breaking down the week's news. Earlier in the week, I thought this was going to be our lead story, but so much has happened since that, you know, we pushed it to the second half, but it's still important. OpenAI declared a code red within the company as Gemini threatens ChatGPT's lead. Here's from the information. OpenAI CEO Sam Altman on Monday told employees he was declaring a Code Red to marshal more resources to improve ChatGPT as threats rise from Google and other artificial intelligence competitors.

40:50As a result, OpenAI plans to delay other initiatives such as advertising. Altman said we are at a critical time for ChatGPT. Altman said the code red surge to improve ChatGPT meant OpenAI would also delay progress with other products such as AI agents and Pulse, which generates personalized reports for ChatGPT users to read each morning. How dire is it for ChatGPT? I mean, there are some reports that they lost like 6 % of users to Gemini. I don't know if I fully buy that. I don't think everybody just ran away to Gemini right away. Maybe they were trying it. But how dire do you think the situation is for ChatGPT right now?

41:33So the numbers around 6 % was sourced from similar web. So I take that with a grain of salt because that's not going to capture actual app utilization. And that's just like web traffic, which I mean, I have to imagine at least my own personal life, and I'm guessing most the app is like the core entry point for their ChatGPT usage. But But I mean, certainly Gemini 3 has come on strong. And we talked about this last week that just being as good poses not an existential threat, but a significant one for OpenAI because Gemini is going to be everywhere. All the people who have never used ChatGPT, 800 million is a lot.

42:13It's not, what is the world at now? 7 billion people, whatever it is. So I think that is important. But also what was really interesting to me was what you just read there. Like, it's going to, you know, is it going to pause its ad product? Is it going to, even the fact that they said like pausing agents, like, which, because to me still agentic is even chat GPT, what's happening underneath is agenting in its nature, but whatever they were advertising before about kind of building these more agentic workflows or their agent builder, which they launched and you never heard about again. and then Pulse, which we talked about a little bit, but...

42:54It's an ad product. That was supposed to be their ad product, yeah. All of this and what we were saying about their consumer devices, they have been launching everything, like nonstop. And everything always kind of looks pretty good. Their browser, Atlas, I've tried it, used it. It's as good as Comet from Perplexity. um they've launched all these things but is that the right approach like to you know the spray and pray and hope you find like the winning product or you just focus on chat gpt and the core product and just distribution getting people using it maybe there's like a marketing campaign something like that what do you think well they're gonna have to spend they're planning to spend 1.4 trillion on developing infrastructure for future model building.

43:46And the reason why they have the money to be able to do that is because the world, by and large, thinks that they're the best at building AI, at building AI products. The second that sheen goes away, all of a sudden your ability to raise this ungodly amount of money goes away. Like, go completely. Right? Like, Mark Benioff had an interesting quote this week where he was just like, AI models are a commodity. I just find cheapest one and plug it in who has said that mark who's been saying that for years right here he's been on the show and yeah and uh and he uh maybe he's listening but i do think that if the world starts to pick and obviously benioff praised gemini if the world starts to pick uh up on this signal and all of a sudden chat gpt is one of many or open ai and chat gpt and the gpt models are one of many as opposed to the leader then the open ai story gets much much harder to put together Yeah.

44:38And then I had actually seen this thread and it was really interesting to me. It was that like OpenAI, and I've said this for a long time too, from a product, and actually we've spoken, we're speaking about like hardware UI for all the early part of the episode. from a software UI standpoint, they have built beautiful products. They've built usable products. They created the whole chat UI was not really a true thing. And now like they led the way and all Google has to do is just copy everything they do. Wait for them to innovate, release, just copy because UI is not patented. UI is not going to be like, and like whatever new features they're releasing in that interface.

45:23Google just replicates it. It's not overly complicated stuff. And then Google, that just keeps them on par. And I think like that actually, thinking about it that way was even more terrifying for me in regards to OpenAI. Yeah, I'm looking at some data from the FT here. It looks like Gemini is getting very close to the number of monthly downloads that ChatGPT has. It surpassed it in average time spent, which of course is a uh a tricky metric um but uh that's pretty worrying i think if you're if you're open ai what are you gonna because again and we're gonna talk about this in a moment you've effectively i wouldn't say you've seeded enterprise ai but you're losing enterprise ai to anthropic somewhat seeded it so you have to you have to you cannot allow gemini to surpass you here otherwise the the company is built on a story if the story falls apart the company falls apart no no you're right Like, and that story is we are just better.

46:22We're the best. AGI, super intelligence. Yeah, you see, and you're right. Like for, what is it now? Oh, three years. Just a week out from the third anniversary for, call it two and a half, there was no one even close. Like even the Claude's of the world, like among more tech forward people, they would find things. And I mean, we all found like certain things Claude would do better. But yeah, they can't lose that reputation and feel in the market that, especially in the consumer space, they own it. okay we talked about this last week what do you think they do uh in this code red like what do you think they do to make chat gpt better and does it potentially involve pulling some levers that they were reticent to pull or hesitant to pull previously uh in terms of personality sycophancy oh yeah yeah stickiness and get you know optimizing engagement maxing as it's called Where are you going with this, Alex?

47:25Love, erotica. Erotica. No, it doesn't even have to be. I'm just saying like, what do you do? No, no. I mean, clearly Alexa is your companion, but I think. Thank you for reminding us all of that. While I'm just taking photos of birds with my meta glasses. We're hip. We're hip. We're cool.

47:47No, hold on. That's a really good question. What could they do or what should they do? because like, I'm going to throw it out there. They need a good marketing campaign. I still, so my parents over Thanksgiving, it's very cute. They're just like, what do I do with AI? You know, like I'm trying to show them, trying to show them like voice mode on, especially like my dad has trouble kind of typing on the phone. I'm like, this literally will be amazing for you. And it's just conceptually, it's still difficult to understand. Like, what do I do with this? It's a blank screen on a chat. Like, that's my call.

48:25Like, educate the 6.2 billion people that don't really understand what, how to use AI chat. And that's your opportunity. And so what would you put in the marketing campaign? I think they've done a little bit of this. They do like fitness and diet. Oh yeah, no, no, that was a good campaign. I think it's amazing for fitness. Yeah. I use it like as my fitness coach. No, no. As you can tell viewers, it's paying.

48:55That's why Lex is so interested. So, no, no. Like, again, it was good. It was like, I remember it was like someone's car is broken down. It's like, help me fix my radiator. What should I do? Whatever. Like, there is an opportunity there. I think the product is good enough. There's still that entire additional world of people that do not use it. Focus on them. But I really don't understand how they're going to have so much going on right now. They have to have so much going on. And I said it last week, like the math still doesn't work to me of like, what does their cloud business look like? What does their consumer devices business actually look like?

49:40But they have to focus. And I don't think they will. But how do they say it themselves? I don't think it's a marketing campaign. Here's a way I think that you can make the product better and not resort to sycophancy. Improve memory. Memory to me within ChatGPT has been the killer feature. I find ChatGPT is remembering much more about me in a way that I find not creepy, very useful. I've been planning this trip coming up in December, and we've been talking about logistics a tremendous amount. And it really does a great job of pulling from past conversations. and again, like losing this goldfish brain that so many chatbots have, starting to get to know people better.

50:28I mean, does that make you more, make it more of a companion? Yeah, because it knows you, but I think that will make it unbelievably more useful and that's the direction I think they're going. Agreed. And I actually, I agree with the caveat that like I have found it to the memory to actually be not good. like it's supposed to retain memory within a project but across multiple chats within a project it does not like very clearly sometimes it does sometimes it doesn't at the kind of like when you get out of the project layer into the main chat it sometimes randomly remembers stuff so so i think they got work to do but i okay i like that that like just imagine that that got yeah if that actually percent better which i think it can and if you had like granular control over what is remembered what's not remembered where is it remembered like sometimes like if i'm like doing some like funny create song lyrics here and then in another chat where i'm trying to do something more professional like it'll pull in that random prompt i was creating like like giving users granular control over that is interesting but i they got so much going on over there i don't see how like that's one of those things that all hands on deck lets win memory in context.

51:46That is interesting, but can they pull it off? I think so. Code red. I like the code red. You see you have a problem and you're going to attack it. Did you order the code red? Sam did. Yeah. Okay. Let's talk a little bit about Enterprise before we move to Netflix. We could talk about this briefly. Ramp has this AI model adoption rate where it talks about businesses. And Anthropic is really gaining ground on OpenAI there. Let me take a look here. So they say that Anthropic has grown 2.1 percentage points over the past month. And they say at a business level, API spend by business is larger than typical enterprise chatbot contracts.

52:31It's also probably getting stickier over time because business users are starting to figure out which models are best for which tasks. APIs are also more reliable revenue generator than consumer AI usage, especially as consumers have an increasingly numbers of free options at their disposal. So I'd be pretty happy to be Anthropic right now. It's an underrated business if you're looking at consumer adoption of AI tools and business use is their most important revenue generator. It's customer base indexes to the tech sector, but that's changing as rapid adoption grows and moves across sectors. So there it is.

53:13Anthropics bet on enterprises is really paying off. No, I mean, I think it is. And again, like, as I work in enterprise AI at Writer, like for us, the big opportunity is actually business users building workflows and like bringing AI into the way they work. And Anthropic, I still feel, I mean, from everything I've heard, and they've made claims that they're getting more into the actual business side of things. But one, coding and two, API usage. It's still a developer first company. Like even the way I actually have been working, like playing around with Claude's skills, very developer driven.

53:49So they're going all in on like IT engineering and the business, that side of the enterprise. Like, I think it's actually great for them. And I think they're going to crush open AI in that. So I think overall they have shown, I think as a revenue scale from like one to six billion, a lot of the coding they nailed. I mean, just being this API first offering, they nailed. So I think they're relatively well positioned, but I actually don't think the way this article called like API spend sticky. I don't think it's sticky. Really? No, I think like that's actually almost more having worked with this stuff.

54:29I mean, just switching out what you're calling. Like truly, this is where even at one point, if Opus 4.5 is better at coding, cost is going to be the driver, especially in the enterprise. And being able to switch the moment you see that there's another model that can actually do the work on par is a very easy thing to do. Okay. All right. Well, the battle will continue. Let's talk a little bit about this Netflix-Warner Brothers deal. All right. So this is from the Wall Street Journal. Netflix to buy Warner Brothers after a split for$72 billion. Netflix has agreed to buy Warner Brothers for$72 billion after the entertainment company splits its studios and HBO Max streaming businesses, a business from its cable networks, a deal that would reshape the entertainment and media industry.

55:16uh the deal was announced friday and uh the two sides entered into exclusive negotiations for the media company known for uh the superman and harry potter movies as well as tv shows uh hit tv shows such as friends um it seemed like it's going to be this big deal for netflix i just think that like you're gonna if you get warner brothers discovery and of course it's pending being reviewed by the Justice Department, which may not like this deal. The early reports are the Justice Department hates this deal and may not let it go through. It may sue to block it. But the bottom line is that this is going to create a streaming powerhouse.

55:57Netflix already extremely powerful, the number one streamer and HBO coming together along with other Warner Brothers Discovery properties. I think Netflix, it's a risky thing. They don't usually deals this big, but at$72 billion, the price is right. And you couldn't let anybody else snatch up Warner Brothers Discovery. What's your take? I think it's that last point's the most important. You can't allow anyone else to pick that up. I think they're still the leader in this entire space. They don't have to manage legacy businesses combined with a streaming arm that It gives some advantage, but also plenty of disadvantage.

56:39And so to kind of pull that this entire gold mine of a catalog into your universe, I think it's like, yeah, it's not defensive in a negative way. It's defensive in a strong way. Like we are trying, we need to do this. And it's going to put us in a better position relative to competitors. Yeah, I think Netflix needs to do this from a business standpoint. Smart move. I do want the government to stop it. Now, the government might want to stop it because they preferred that Warner Brothers Discovery go to Paramount+. Fair enough. Why is that? Well, because of politics. But the other side of it to me is like, even though, you know, as a Netflix subscriber, I might be happy to get some HBO content in Netflix because I subscribe to both services.

57:27We know how cable companies work. You know, they've worked as monopolies. They don't treat customers well. They jack up the prices. There's nothing you can do about it. This might just create like one internet cable company. And, and, and, you know, over time, it's gonna, it's gonna harm the people that are using these services. So I'm against it. It's 100 % going to, I mean, if you've, I actually did this exercise recently and like went through my streaming bills. Like it is insane. Like, I mean, the price has just been increased and increased and increased. So I'll admit, I like took an HBO max, Disney Hulu bundle with ads, And it is the weirdest feeling to watch HBO with ads.

58:10Like, I feel just horrible about myself, but I'm still just going through this exercise right now. But, like, I mean, they've just been increasing, but introducing these services at a heavy loss, getting people hooked on them, and then just increasing prices regularly. And agreed, like from a consolidation standpoint, Ted Sarandos called this like pro innovation, pro consumer. It's not. It's not. It's not. But but still, I mean, from a purely Netflix standpoint, good move for consumers. It's all bad. OK, so let's end on another future of media story, which is that CNN is going to end up in a partnership with Kalshi, which is a prediction markets.

58:57This is from PredictionMarket. This is from Axios. CNN has struck a partnership with Kalshi, the world's largest global prediction market company, bringing Kalshi's data to its journalism across television, digital and social channels. The collaboration marks the first major news partnership for Kalshi as it looks to establish itself as the most authoritative source of information about real time probabilities of major cultural and political future events. plus and a minus here. The plus is that prediction markets have been ahead of the pundits on news events. Talk about elections, talk about other probabilities.

59:37So you might want to bring it close to home if you're a news operation. Second thing is, I think there was a Kalashie executive this week that was talking about how they wanted to make everything bettable, everything that has a potential disagreement about some future outcome, they want to make that bettable. I think we've already seen some of the dangers of sports gambling and how it's really destroying people's lives. And I think that you're going to see that again here. And I wonder if CNN is making a mistake mainstreaming this. So having worked on a trading floor from 2002 to 2009, I can tell you everything can be bettable.

1:00:13But I lived in a world where literally any little disagreement, and it was funny because the cal she founder that's what he's talking about like any like basically trying to bring structure to disagreement i think he said like that's what would happen you you just disagree with someone let's put money on it and i have always loved the idea of prediction markets there was actually an early one in the 2000s called trade sports that started introducing politics i mean every step of the way recently as prediction markets have like come in i i think they add a true element of like context and have people having money versus punditry i think they are better i think from a gambling standpoint and calci tries to say they're not gambling i think it's hugely problematic like i think there are certain things like weather futures which i think robin hood is going to introduce this stuff exists for like institutional customers and like But hedging your business against potential weather issues, it makes sense.

1:01:15Combine contracts that allow you to hedge against potential risk. That's the thesis of it. Trading for fun and just being like, yeah, I want to make or lose money. The more it's out there is problematic. But I actually think this is kind of cool. I just don't like the idea that a news operation is bringing this gambling closer to people. I think it's ruining, for instance, daily fantasy sports or fantasy sports is ruining the fan duels and stuff, ruining sports. No, they're cheating. People are cheating. People are taking their student loans and putting them into these apps. Yeah. No, no. OK, but that is the end user, like the perfect world.

1:01:57You have some number of well-informed, well-capitalized people in these markets, which is what financial markets are supposed to be. And like they're the ones actually driving and towards this kind of prediction and potential outcome, which in the political context is really interesting because, my God, I was home over Thanksgiving and my parents have CNN on and I forgot how terrible it is watching 10 people because I never do it. just talk and argue around a table like versus here's some interesting data and if you think about it polling is an interesting science but like this is another way of approaching that but you on the show have talked about how it's gameable how let's say somebody wants to get a candidate elected you know they might spend a hundred thousand dollars on the super pack or they might just put it on their name so calci and then cnn is going to be like oh candidate why is doing so well.

1:02:54That is why normally this stuff would have happened in well-regulated, well-established, well-monitored exchanges where the SEC or the others, CFTC, are monitoring this. This is not that. So I recognize this is kind of a bastardization of what, in principle, I do love. And I really think is valuable. So I agree. On that side, my God, I'm sure these things are the most gameable things and i agree it's a problem where you game the calci uh they start sending some awful tweet about that it goes viral everyone starts thinking this outcome is an inevitability maybe someone drops out of a race i think that stuff is terrible regulators go try to take a look at this let's build this in a responsible way and that's that would be nice can't happen Now I know.

1:03:50All right. Well, speaking of predictions, it is getting close to the end of the year. So you and I should come back and do some predictions one of these weeks and tell folks what we think is going to happen next year and then put money on it and then put money on it. Prediction market and source that out. Big technology prediction market. Hey, Ryan Reynolds here for Mint Mobile. You know, one of the perks about having four kids that you know about is actually getting a direct line to the big man up north. And this year, he wants you to know the best gift that you can give someone is the gift of Mint Mobile's unlimited wireless for$15 a month.

1:04:27Now, you don't even need to wrap it. Give it a try at mintmobile.com slash switch. A front payment of$45 for three-month plan equivalent to$15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes if network's busy. Taxes and fees extra. See mintmobile.com. Put these derivative contracts out there. All right, but that'll be a fun episode coming up. Ranjan, always great to have you on. And it's great to be able to do this in person once again. Always fun. See you next week. All right. 57 and music taste. Yep. I'll take my creaky knees out of here right now.

1:05:00All right, everybody. Thank you, Ranjan. And thank you all for listening and watching. We'll see you next time on Big Technology Podcast.

1:05:16Thank you.