DeepSeek's Fallout For AI Companies, OpenAI’s Path Forward, Siri Somehow Got Worse

27:56And I'm always, I'm very pro-ban TikTok and in other areas, really cognizant of the, you know, like national security implications of a lot of this. I am curious, like they've already shown us it's not effective anyways. So I don't know. I think it was a little self-serving. Oh, definitely. And this is like going to go to like the practical theory of how CEOs act, which is in their own self-interest. Yeah, fair. You know, it was like very interesting to like see everybody on X reacting to what Dario's saying by saying like, this is an unprecedented level of cope. And he's just trying to hamstring, you know, the Chinese companies now that they've released a reasoned model and he doesn't have one.

28:38And he's just upset about this, like as if you're supposed to do anything else as a CEO than try to look out for your own interests. I don't think it looks good for him, but I don't think it really matters. Well, Dario, I can just beg you, now that we all have access to cheaper models, can you please make Claude the paid subscription level not hit my rate limit when I'm halfway through a project? Because it's one of the most frustrating things. There's going to be some problems there. Maybe they're just going to try to sell themselves now that I guess acquisitions are legal again in America. Yes.

29:14That's actually, I mean, back on the political side, I think the whole changed M &A environment actually is really worth watching with a lot of these companies because there was kind of this assumption, I mean, over the last couple of years that, especially once you're hitting these like many billions of dollars in valuation, that M &A is essentially off the table. So that'll be pretty interesting. But also, I mean, and we haven't even mentioned Google in all of this. Google has been making some pretty big strides, at least on the model building side, even on the application layer side. So then you start to get into which company really needs an Anthropic.

29:56Again, Claude's a great product, but at what price? Yeah, I mean, maybe it'll be a capitulation sale to Amazon. but even Amazon is in good shape this week after DeepSeek had put DeepSeek in its product and Andy Jassy bragged about it. I was planning to talk about it later, but it's worth talking about now. It took a week and it's there. And I think in a minute, it is the best model in AWS. And that's going to lead to more building through AWS. So I think that they're probably doing jumping jacks over at AWS HQ. Yeah. Remember, we had the theory that Amazon was going to Amazonify this whole space by bringing you into the AWS ecosystem, offering you the fancy expensive models.

30:40Actually, they were going to deep seek with their Amazon Nova, their new foundation model suite, which was supposed to be winning on cost. That was kind of our thesis anyways, that they were going to just bring you in, let you use the high price stuff, and then give you the Amazon Basics version. And now they got DeepSeek already. So I think they have actually played this pretty well then if they haven't invested in them, just kind of been sitting to the side. Definitely. And just telling that it was Jassy that was out there tweeting about it yesterday. It's clearly important to the company. All right, one last thing on Anthropic.

31:18This is from Hugging Face co-founder Tom Wolfe. He says, if both DeepSeek and Anthropic models had been closed source, Yes, the arms race interpretation could have made sense, but having one of the models freely available for download and with detailed scientific report renders the whole closed source arms race competition argument with artificial intelligence unconvincing, in my opinion. Here's the thing. Open source knows no border, both in its usage and its creation. And I think that like to just put a point on the first half of this conversation, it is this has just been the week where it's been the open source week and good for open source, good for the companies that benefit from open source, like let's say the Metas and the Anthrop and the Amazons.

32:04It's bad for the proprietary model builders. And it brings us right into the meta thing, actually, which is like a lot of this commotion over DeepSeek began when there was a screenshot passed around of like a blind post saying meta engineers had been freaking out about the fact that DeepSeek had surpassed their open source models. And there's like now reporting that top executives within Meta are worried that the next iteration of Llama won't perform as well as DeepSeek. But ultimately, I think that as they digested it, people like Jan LeCun, who's going to be on the show in a couple of weeks, and Mark Zuckerberg were basically like, yep, it's going to be open source.

32:45We will take what they did and put it into our models. And we're going to ultimately, you know, be in the right place, which is that we're going to help develop AI that's available to all. It's going to be on our terms as long as we can keep our lead. Right. That's the big question. And then we're going to benefit. Well, this is one thing I've not been fully clear, because like if we're talking about it, does the value accrue to the model layer or the application layer? Meta is in a position where they should probably be able to do some pretty amazing things at the application layer. One, you have distribution that absolutely no other company or nothing in the history of mankind has had in terms of your billions of users that you can push products onto.

33:34And Meta AI, obviously already, I mean, image generation, it's fun to play with. In the Ray-Bans, it works incredibly well. Even the real-time language translation is getting pretty good. So getting good products in front of people, at that point, I do wonder why do they care so much about having the winning model? Because in reality, they can build it with DeepSeek if they want. I mean, they're building it with Lama right now. But what the massive incentive is... And originally, I remember thinking like it was all done in an awesomely, like, you know, in an amazing way to undercut the open AIs and all the other paid players.

34:21But I'm still a little bit confused on that. I mean, I do think, like I said earlier, that everybody wants to dictate how this goes. So they kind of have an idea of where it's going and they can lead like the product development and have people that are developing on their tools and making it better as opposed to somebody else's. You really want to be in the pole position there. But again, it's not the end of the world for Meta if DeepSeek just kicks their butt and they're like, all right, well, we'll just put this into Messenger. And maybe people will use our chatbots, which I don't think they use right now.

34:50Even though they're talking about how they want the billion user assistant. I don't think anybody is, maybe some people. But top of mind, the fact that Meta has an assistant, it's still not really competing with ChatGPT as far as I can tell. I actually, I use it for like quick, fun image generations, my son, like just because it's right there in WhatsApp search. Like I actually, I'm convinced that probably a large percentage of their AI assistant usage because it's built into the search bar essentially is people accidentally trying to search for something and ending up using meta AI. But it's actually, it's good.

35:30I mean, it's not, I've never spoken with anyone who's using it as a more dedicated chat bot or chat assistant, like most of us use ChatGPT and Claude and others. But for like quick one-off questions, I feel it's, again, the distribution side of it, it's right there in the apps that people are in all day long anyways. In terms of pole position, I think it definitely has an advantage. Yeah, and it's just going to get better over time. as let's say these open source models do achieve AGI, right? To just go with the crazy example. Well, you can then deliver that to a billion users and you don't have to rely on open AI to do that or billions of users for that matter.

36:14There's still a lot of what if though on this front. And let's quickly talk about this Jevons paradox thing. So this was Satya Nadella's reaction to it. He says, as AI becomes more efficient and accessible, its adoption will soar, transforming it into an indispensable commodity. I think we mostly share his opinion on that. I think you definitely do, Rajan. But my only question is, if AI gets exponentially cheaper, you know, then will we see an exponential rise in applications? Because on the application side, we have ChatGPT, we have these metabots, then we have some stuff in enterprise software like Salesforce as agents, and then of course there's coding applications.

36:54But after that, for as powerful of a technology that AI is, I don't know if we've seen the applications that I would anticipate. Well, let's start with, so Jevin's paradox is not actually a paradox where it's not a logical contradiction. It's just kind of, it was a bit counterintuitive at the time. So that's been frustrating me, I think more than anything, because it's just completely sounds like one of those things that people have been using because it sounds smart, but we're still going to have to talk about it. And it's the idea because everyone is. And again, to me, it actually is intuitive as any kind of resource becomes more efficient and accessible.

37:32It'll actually grow in overall aggregate demand and output because people will figure out more uses. And no, I mean, I think at the core, this is it. This is what we've been saying. And this is now the thousands of startups building interesting apps on top of it. And finally, the promises that we've been made for so long and have not been realized will be realized because people will actually pay attention to building cool experiences and products using AI. It's not just Microsofts of the world and open AIs of the world and only a few, and then others trying to build stuff, but being really limited based on the actual cost input side of it.

38:17So I think it is real. It's like the idea that AI is going to become much more deeply integrated into everything we do in a good way, I think is going to be real. And this makes it a lot more real. So do you think that this is unfairly punishing NVIDIA? Or do you think it makes sense because there's been more uncertainty that's been at it and like we were the ai industry was moving on like i don't know if a linear path is the right way to put it but on a path and now the path sort of changed directions i think yeah i definitely think it's fair the biggest change is for the last two years the nvidia story has been ironclad like and every earnings report the every growth in the i mean so the valuation just becomes richer and richer and the overall market cap grows and grows, but no one could question it.

39:09There was absolutely no doubt. I do think, again, the NVIDIA story has fundamentally changed. And I'd mentioned this before, but it's almost fascinating to me when you remember, think about the$3 trillion market cap, how much money is tied into this company? Because every sell side analyst report, just emails left and right. Everyone is just like, this means nothing. The story is still great because the amount of just vested interest in this company right now means that people are going to fight for it. People are going to fight to make sure the story doesn't go away. But it was always a story and they were realizing it pretty well.

39:54But now there's at least a seed of doubt that was not there in the last few years, that at a certain point, do we need better and better chips? Is that where the battle is going to be won? Because then there's no competition. Do we need more and more compute? And even if the world needs more compute, do they need the latest NVIDIA chips to realize actual utility and applications? Maybe not. There's at least a little bit of doubt. So I think the recovery here over the last few days is warranted that, you know, it was a pretty sharp sell-off for a company that size, but the invincibility of NVIDIA for me is gone.

40:32There's still so many unknowns, right? A lot of this is based off of things that should happen, right? Like because DeepSeek was able to develop with like lesser chips, then if you actually put those innovations and you use the better chips and use more of them, then they should deliver better innovation. But this is all based off of hypotheses, right? It's not like a rule, just a hypothesis. Like, it's not a law. And so, yeah, I totally understand why people would be a little wary about NVIDIA. And when you trade a company like that, you trade probabilities. So did the uncertainty change the probability that they would dominate?

41:05Yeah, maybe a little bit. By the way, breaking news. This is from TechMeme. They're quoting Wired. Sources say OpenAI plans to release 03 mini today with 01 level reasoning and 40 level speed as the company staff is galvanized by DeepSeek's success. So it's game on. I guess it's game on, but just make operator a little better before you do that, guys. That is like, I mean, it still baffles me. And I say this again because I'm not an AI researcher. I am just a technology person that's using all these different apps and technologies, like building some stuff. But like, why are they so focused? Like they released Sora with so much fanfare.

41:54it's basically useless for the vast majority of the world in its current incarnation. Operator, huge release, not really usable. Enough people show some demos and there's endless Twitter threads of like 10 amazing ways you can use Operator. But in reality, no one is using Operator today in an actual day-to-day way that helps their work. So I just, rather than focus on making that stuff good and being so caught up in the model battle, it feels like to me that if that mentality never changes, that$300 billion valuation looks even richer. Well, you're underestimating pride here. There is a level of pride that's involved and that's probably what's happening.

42:46So, okay, let's quickly hit some of the misconceptions about DeepSeek. We can just go through this real quick. We talked about last week, it was a misconception. We talked about last week that, you know, they said that they trained just for 5 million. I think we can both agree now that they trained for a lot more and 5 million was just their last training run. Or even though it's impressive for a training run, it doesn't fully incorporate the cost. So we should definitely note that. Yeah, no, no. I think it seems to be like everyone has accepted it's not five or six million. It's something more, but it's still not 500 billion or a hundred billion, or it's not at that scale.

43:24And I think that that still means that the story is very important. And then also, again, even amidst the export controls, and then you get into, did they circumvent them? When did they circumvent them? What chips exactly did they get and did they build on. But whatever it is, it was not some super cluster of the most advanced up-to-date chips. And so it still reminds us that kind of that necessity breeds innovation or whatever the quote is, is still definitely part of this story. Yeah. And I said this on CNBC, like it's not the process as much as it is the output. And the fact that they were able to run reasoning at such a cheaper cost is the thing that matters most.

44:11And people can complain about the way they did it. They can complain about the fact that they're talking about a different number of chips, but ultimately, like the process has galvanized. I mean, the output has galvanized Silicon Valley, like you're hearing from Altman and Amadei. And that's the bottom line. The other thing that's been interesting has been the anger, it seems like, from Microsoft and OpenAI and from others, where it seems like OpenAI, that DeepSeq had effectively copied some of the stuff that they were doing, or like maybe taken their data. This is from Bloomberg. Microsoft probing if DeepSeq linked group and properly obtained OpenAI data.

44:52Microsoft and OpenAI are investigating whether data output from OpenAI's technology was obtained in an unauthorized matter. Microsoft security researchers in the fall observed individuals they believe may be linked to DeepSeq exfiltrating a large amount of data using the OpenAI application programming interface or API. This led us to a, I think, quite funny headline at 404 Media. OpenAI furious DeepSeek might have stolen all the data from OpenAI stole from... Ranjan, you're pretty good at like sort of assessing like when it's fair for tech companies to take content and when, you know, it's all right to rip it off or rip other people's products off.

45:31Is this like a sort of nefarious move from DeepSeek or is this like somebody in a glass house throwing rocks? I think glass house and rocks, especially OpenAI. So you have on one side the kind of, I mean, certainly larger question that I've still predicted will be answered in some capacity around individual artists' work or creating in the style of specific artists or certainly the New York Times lawsuit. But then even at scale, if we remember, OpenAI apparently had been scraping YouTube at a large scale for their initial data sets. And the entire world seemed to have reacted in a pretty similar way where obviously it's a bit rich from all companies, OpenAI kind of going down this route.

46:26I don't believe they had released any kind of official statement. So at least to their credit, these were off of kind of like just more like either leaks or just genuine reporting that they're looking into this or exploring it. But yeah, I don't think anyone anywhere is going to have any sympathy for OpenAI in this matter. Yeah, I'm on the same page there. And it was like, it wasn't done through hacking, it was done through the API. So like, I guess, cry me a river. Yeah, I mean, it's the YouTube example, perfectly. Like, and it's a big platform against big, well, actually, small platform against big platform in this case, but just using the actual available technology and probably breaking the terms of service a little bit, and then using that to get started.

47:14Okay, so I want to take a break but before we do i should say that we have a discord now so ronj and i had been talking about uh starting a discord as these stories had continued to break and there was more to talk about and we were kind of curious what the audience was thinking throughout the week so that discord is now open it is open to big technology paid subscribers so if you go to bigtechnology.com you can see there's a post that says let's talk deep seek ai etc on big technology's new Discord server. If you're a paid subscriber, you just scroll to the bottom. There's the invite link. If you're not, you can just sign up and then scroll to the bottom.

47:48And there's the invite link. It's been kind of fun. We're just about wrapping day one, and there's been some really good conversation there already. Alex Damos, the security researcher, is in there telling us right now about how DeepSeek's security issues really are compared to all the hype. Like, what happens if you download DeepSeek or are you in trouble? So thank you for the idea, Ranjan. It's been fun getting it off the ground and we hope listeners will join. I actually learned, I think, more from just a few comments from Alex Damos around what are the actual security concerns or considerations on DeepSeek than pretty much everything else I read this week.

48:27So actually at a very technical level, even having to myself look up what safe tensors are and other like really deeply technical terminology. So it's off to a good start today. Yeah, it's been cool getting it off the ground. And again, you could go if you want to join, just go to BigTechnology.com, click the Let's Talk Deep Seek AI, et cetera, on Big Technology's new Discord server link, and then join us. We'll see you over there. All right, take a break. And when we come back, we're going to talk about how Siri's still terrible, or maybe it's even worse, and then briefly touch on Apple earnings.

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50:13You're used to hearing my voice on the world bringing you interviews from around the globe. And you hear me reporting environment and climate news. I'm Carolyn Buehler. And I'm Marco Werman. We're now with you hosting the world together. More global journalism with a fresh new sound. Listen to the world on your local public radio station and wherever you find your podcasts.

50:40And we're back here on Big Technology Podcast Friday edition. So we've talked about Deep Seek the entire episode so far, which I think has merited. But we're not going to let the week go away without talking about this great post by John Gruber on Daring Fireball titled, Siri is super dumb and getting dumber. I mean, the long and short of it is that basically he had a friend who asked Siri when the Super Bowl, who won each Super Bowl. And Siri got 34 % of those right, which is truly disastrous. And basically, Gruber's point is Apple got this gift of generative AI. it put it into Siri and somehow it made Siri worse.

51:22It definitely, the summary notifications have been getting worse and worse, or just realizing how useless those have been getting is just becoming even more and more acute in my day-to-day. Genmoji were fun for a minute. And I ranted a bit about this week, so I'm glad that even Gruber, who is about as long time an Apple fanatic as it gets, the fact that he is recognizing and ranting himself about how bad it is. But it really calls into question, where are they in all of this? The only thing though, I don't know, I'm curious, do you think this is good for Apple this week, reminding us that the entire direction of the AI industry is in question?

52:08So maybe them screwing up the first phase of this battle so badly actually means they'll be okay and they can start fresh. It's definitely the galaxy brain take here. It was kind of interesting watching. So the Apple earnings came in yesterday. They sold less iPhones in this Q4 than they did in the year previously. So iPhone sales are going down. Apple intelligence is garbage. And yet you look at what happened. Deep Seat comes out, actual AI innovation, there's panic and a sell-off. Apple made Siri worse and selling less iPhones and the stock is up 6 % on the week. It really is amazing. I don't know.

52:50I really, to me, I'm a little bit puzzled at the buying activity on Apple. I just don't see what the news is, maybe services. They beat on services revenues. That's pretty impressive. But we talked about it, that when Apple intelligence came out, it wasn't going to lead to a super cycle. It hasn't led to a super cycle. And I think Mark Gurman put it pretty well today. He said, Apple intelligence is a half-baked marketing strategy that was rushed in response to OpenAI and Google Gemini. Yes, Apple had no choice. It's exactly the right thing, but they shouldn't have been in that position in the first place.

53:29So I guess like what the market is saying, you know, why it sent it up this week, of course, as the services beat. But even after DeepSeek came out, and I just think it's a pretty simple thing, which is just that you can build more with DeepSeek and Apple has got to find a way to build consumer products and it can maybe use open source to do it. But I don't know. Do we have faith Apple's going to do it? I don't. Well, I was thinking because even that idea that the marketing drove the product side of it with Apple, which usually it's the other way around. To me, the most fascinating part of this is, and I think a lot of companies, and Apple probably is the one most troubled by this, is the kind of the dichotomy between normal everyday users and call it the industry.

54:18And by the industry, I mean the actual, the technology focused people working in the companies, the investors focused on the companies. There's such a distance between what any normal person wants or expects from AI and what these companies are pushing. And to me, that distance has actually been the core part of Apple's errors in this, that they're more focused on the market and probably their own competitors and even their own employees and what they're thinking about rather than what the everyday consumer is thinking about because, again, I can promise you, most certainly non-tech-focused iPhone users were not clamoring for Apple intelligence.

55:06And I think even most technology-advanced Apple users could easily install ChatGPT and whatever else on their iPhone and still be fully locked into the Apple ecosystem. So the idea that they needed to do this, I actually disagree with Mark Gurman that they had to do this. I think they could have still just sat back. The only reason they would have had to do it is for the market. And I mean, apparently it's still kind of working. Apparently the average Apple investor has not actually tried to do a basic task with Siri, but it's still working, I guess. I just want to end with this. I love the how it started, how it's going meme.

55:47And I saw one come across my X timeline this week that just really sort of captured it all. How it started is the Think Different campaign with these beautiful black and white images that can note, like, if you're an iPhone user, you're just kind of more artistic, iconoclastic, you have more taste. And then I've been in, okay, and then the second image is how it's going. And it's, imagine it, Genmoji, and it is a sunny-side-up scrambled egg with hands and feet. This is what people want. This is what they've been clamoring for and why they will spend, it will launch an entire new iPhone super cycle.

56:28The sunny side up egg with hands and feet. I mean, I've been in Miami for most of the past week. And these, I don't know if they're in New York yet, but these Genmoji billboards are everywhere. And they're terrible. They really don't say anything. And if that's your AI play, Lord help you. I saw some posts around like everything they've offered feels like something that Tim Cook is the only user of. Even notification summaries, like again, they're relatively useless and almost counterproductive. But I can see if you're Tim Cook, maybe they're kind of useful. I can see Tim Cook really being into Genmoji.

57:11He's just churning out, tossing out Genmoji left and right. I mean, someone's got to be using it. All right. Well, I will make like a Genmoji as a big scrambled egg with one hand up and say, have a great weekend. Have a good one. All right, everybody. Thank you, Ranjan. And thank you all for listening. We'll be back on Wednesday. Actually, I'm speaking with NVIDIA executive. So that'll be fun to air on Wednesday. And then Ranjan and I will be back on Friday to break down the week's news. Thanks again for listening. And we'll see you next time on Big Technology Podcast.