Google's AI Narrative Is Flipping, Microsoft Hedges Its OpenAI Bet, AI Clones Are Here

0:28Is Google flipping its AI narrative? month, an AI-heavy show. Ranjan, welcome to the show. This week, or today I'm in New York, but I am just back from Las Vegas at Google Cloud Next, and excited to talk about AI, Google, Humane, all these things. We have so much AI to talk about, which is great, right off the back of the Jack Clark Anthropic co-founder interview. So that's coming up. First of all, last week we talked right in the wake of Earthquake, this week in the wake of the Eclipse. Pretty cool thing. I drove up with my father to go see the eclipse. We're both kind of astronomy nerds. And just to be there as the sun disappeared behind the moon was pretty special.

1:09So I know we have a global audience and a lot of people who listen are on the West Coast. And I'm sure you're all sick of hearing it at this point. But definitely worth seeing once in your life, for sure. Well, I'm even more sick of hearing it, Alex, because I was flying to Las Vegas for this conference. and I had Wi-Fi on the flight and Delta Wi-Fi actually worked pretty good. So shout out to Delta. And all I did was see nonstop messages about how life-changing this was from every single person I knew. And I live in New York all the time and everyone enjoyed it. So I'm glad it was that good. Listen, there was this Vanity Fair reporter, Delia Kai, who was actually in jury duty during the eclipse and tweeted about how annoyed she was that she was serving on a murder trial while the eclipse was taking place.

2:01And then she tweeted, but I'm glad I got a chance to look at the hot FBI agent among us. They threw her off the case. Jury duty. Pretty amazing. That's one of my favorite stories of the week. One more thing before we dive into the heavy tech stuff. I tried Suno, this AI song generator, and it's incredible. It is so, so good. It blew my mind how good it actually is. I told you, I would put, and actually there's Sonato last week when we were talking with Zeke about it, Suno. But I've tried now both. They're both pretty equivalent. For me, I'm going to put it out here. ChatGPT, then MidJourney, and now Suno slash Sonato and Musical Creation.

2:47These are the three most magical moments with generative AI I've experienced. text, then images, and now music, it reached that same level of just, wow, I can't believe this is happening, and how very, very good this is. I couldn't believe how good it was. And I actually asked it to write a little jingle about our Friday shows with a very generic prompt, and it made this great song called Tech Talk Showdown. Let me see if I can... Alex is surprising me with this one.

3:22The park of the town, Alex and Rangin, they're the best around. Every week they bring the latest news to you in the world of gadgets. There's nothing they can't do. Tech Talk showdown, turning up the heat. Alex and Rangin, a clash it can be. Baby, baby, they discuss, but it's all in good fun.

3:57This thing is amazing. It's nuts. No, I mean, even the ability of it to get that kind of like momentum into the chorus and the buildup in the chorus. And even when you specify that kind of stuff, it still blows my mind. My one note that I've already learned after playing with this stuff is I have to now, my name is spelled R-A-N-J-A-N. but I have to spell it R-O-N-J-O-H-N to get it to, uh, to get it to do it right. Yeah. No, I'm starting to play with it a couple of times to get it to do your, your name. It's all about the prompting. It's all about the prompting, but this stuff, I can't, I cannot believe how good it is.

4:35It's incredible. You know, one of the things that's amazing to me is that I'm still amazed by tech breakthroughs in like a world where like, you'd think you would just get numb to them, but this stuff is still just, it blows your mind how good how good it is in so many different disciplines you're right chat image generation now song creation and we're eventually going to see video creation video it's going to be nuts we'll see it when it comes again this it almost made me more and i'm sure when we start talking about google cloud next and other other events like this or other news it makes me more wish we don't get demos and we just get the real thing and we get to play with it because even Sora now we've talked about it and it looks amazing and I think it probably will be very good but but I just want to start playing with this stuff as soon as possible totally so I definitely want to get into your experience at Google Cloud Next but I also want to frame it in a way that it kind of maybe you'll be able to give your reflections through a question right so here's the question that I have do you think Google is flipping its AI narrative around and I wrote about it this week in Big Technology Podcast.

5:45I'll just say the night of the Big Cloud keynote on Tuesday, I was at a dinner with a bunch of reporters and three public tech company CEOs, including Aaron Levy from Box and the CEOs of MongoDB and Datadog. And Google came up in like the context of like, well, they didn't lock Anthropic down the same way that Microsoft did and Anthropic is working with Amazon now. And the overriding feeling among the CEOs was, we're gonna look back and be confused at how Google has been so written off in this narrative. And they have the computing power, the personnel, and the resources to be able to build the key foundational model that's going to effectively come into line or even exceed what's out there currently.

6:27And that will help power their business there. Now, again, I think even the conversations that we've had in the past few weeks about this are totally not invalid. All the challenges still exist. but I do sort of think that it's starting to become accepted now that this is going to be an area where Google is going to catch up in and it's only a matter of time. So with that being said, I'm curious to hear your perspective on it and tell us a little bit about the event. Yeah. So we have talked about this a lot on the show and I've definitely believed that generative AI that lives where you already are always has an inherent advantage.

7:11So Gemini existing in docs and sheets and slides in the workspace context is going to be an advantage. They did a lot. They showed a lot around Gemini in BigQuery and other areas of Google Cloud and coding assistance and data analysis assistance. And I think that's going to be an advantage. So always the companies that have, you know, deliver the tools that you already work in will have a head start in this. But I think for me more, I went to the last cloud next edition, and it was only about 10 months ago, then they rushed this one up and, or they got back to the regular schedule and now are doing it again in the spring.

7:50The last edition felt like demos and promises. And this one felt like actual tools. And already I've been using Gemini and Workspace and I can talk about it and it's pretty exciting. I tested Gemini and BigQuery to try to write SQL queries for me and it actually works. So I think it was really good to see that it's for real. It's actually happening. What they're delivering, you can actually use and is no longer a demo. If we even think about it, nine months ago, it was duet AI and BARD. And now we have one nice term that we can all talk about, and it's Gemini. So I think Google is getting their stuff together.

8:29They definitely showed that they're delivering. I do think, but I did walk away thinking more, the talk around size of foundation models, quality of foundation models, even in your Jack Clark episode, it really still did feel like there was this talk around arms race and the tens or hundreds of millions of dollars in compute spend to create these foundation models, I really think is not as relevant as the productization of these tools. And I think that's what was exciting for me is to see the productization is moving pretty quickly, especially at that scale. Yeah, it is all about how you put it into production, right?

9:10And I even wrote about this today in Big Technology that that's going to be the big challenge for Google, right? It will definitely reach this parity of models. And the question is going to be whether it can actually put that into play on products. And by the way, we should also note that Google is at an all-time high as we record in the stock market. And Ben Thompson, who writes Tritechery, who we've talked about, he had called for Sundar Pichai's job a couple of weeks ago, and now he's praising Sundar's, basically Google's play at Cloud Next, talking about how it's going to rely on its infrastructure to push this AI.

9:48But let me go back then to our discussions around Gemini and the slow start. Do you think this was an inflection point where we now see that they're turning around? Or, and this is pretty interesting, is it just that they're better at executing for enterprise than they are for consumer? It'd be a very interesting shift for Google. But one of the stories that I saw was that people have a lot more control, for instance, with image generator for enterprise, the Gemini image generator and they've never had an issue like they had before. And this might be the case. I'm curious to hear your perspective on how this all shakes out and where the company stands on that front.

10:25Wait, that's a really interesting point because, again, I was at Cloud Next and Google Cloud still, which includes Google Workspace. So all the docs and sheets and slides tools and everything else is essentially the enterprise division of Google. And to me, they are rolling out Gemini and generative AI in a pretty strategic, methodical way and an effective way versus we saw the Gemini consumer-facing image rollout and all the chaos that kind of went along with it. So maybe it is affected and it would be good for them both from a stock market perspective and just I think overall as the direction of the company, because I've always believed enterprises where the real money is or the only viable business models are in generative AI.

11:19So that if they are actually shifting more towards an enterprise focused company, which the revenue of the Google Cloud division, I mean, it went from$5 billion to$36 billion in just, I think, four or five years would also show. I think that could be the real direction Google is, because we always thought of them as a consumer company for years while Microsoft was the enterprise giant. And now it looks like maybe they are shifting to at least more of an enterprise company. Yeah, I mean, it definitely is impressive that they've been able... Last year was their first profitable year on cloud. And they're now forced.

11:57Like they're not an afterthought. There was people that were telling me they should be selling off cloud and it was a failure. Now it's profitable. They had record quarter in the fourth quarter. They beat expectations. And we actually spoke about this again at this dinner that I was at on Tuesday. I asked this question. I was like, Google cloud has been known to not be really good at sales. And if this is going to be, if AI is going to be, the value of AI is going to be unlocked in enterprise, then why would they be better off even if they had a better model, right? than Amazon or Microsoft because those companies are used to, especially Microsoft, are used to selling this technology into enterprises.

12:32Is there something that's shifting within Google that's like making you think that they have a better chance or of being able to sell in cloud? I mean, or something that's powering the fact that they've had this cloud turnaround? Like what is happening on that? Because this is on that front, this is the most important thing. They're going to face a margin decrease in search no matter what. Like even if Google search remains dominant, they're going to not make the margins that they were making before. So they need to make it up in cloud. So tell us a little bit about what's going on with that division of the company.

13:01Okay. So as we have talked about Sundar's future many times in this podcast, and as you mentioned, Ben Thompson, and among many others questioning it, if they very strategically, and there's no reporting around this and total speculation but i mean if if they actually did forecast the decline of search or the unpredictable future of search which i think we all agree none of us know what search will look like a year or two from now already you know for me i've moved much more towards generative chatbots for any kind of search type query so if you really recognize if sundar is driving the idea that it's unpredictable.

13:48We don't know what the search business model is going to be. So let's start diversifying more towards enterprise and cloud. That's pretty amazing, because it looks like that's what they're doing. So in terms of flipping the script and the narrative, if six to 12 months, we find out from now, we find out that this was all a very clear strategic push. I think Sundar will be sitting okay for a while and pretty confidently. But how many tech giants can eat off of the move to cloud, right? Because Microsoft did it, now that's Microsoft's business. Amazon did it, now that's Amazon's business. Is cloud a big enough business to sustain three tech giants?

14:30No, no, but cloud, so there's the actual cloud services and kind of like data storage and processing and just more general cloud service type revenue. But to me, it's the entry point to every other enterprise service. Again, even the more business consumer facing segment of workspace or Microsoft Office 365, that's just one extension of cloud or the enterprise. So to me, it's less, the name cloud is almost a misnomer versus it's more Google enterprise. So I think there's any type of enterprise service can then go live in that division. And to me, there's no shortage. In fact, I mean, you could even imagine, again, total speculation here, but like I was just seeing in Accenture's numbers, I think they reported that they had$600 million in services for generative AI.

15:22So just imagine like the amount of business needs that are growing as companies try to have some kind of AI transformation and any kind of service you can provide around guiding companies, whether it's actual products or services or consulting or knowledge, whatever it is. If you become that kind of guiding force for every large enterprise towards the AI transformation, it's a pretty interesting proposition. So give your 1 to 10 rating of where you thought Google was coming into this week and where you think they are now. 1 being in real trouble and 10 being in amazing shape. I would put it going in around a 4.5 to 5 and coming out maybe a 6 to 7.

16:09I really did. It flipped the script for me. i i mean one thing and just to kind of like bring folks into vegas it is still somewhat i almost want to say disarming where you're in like at the keynote you're in allegiance stadium you walk in i think there's like maybe there's like 15 16 000 people in there it's so loud it feels like like a tiesto concert or something like that just it's kind of it's almost comical how over the top the production value is and then they come like thomas curry and the ceo of google cloud walks out sundar's on the screen again this is not google google this is google cloud um and then you know like it's still funny to me too they announced their new arm based processor chip and two guys next to me actually high-fived they were so excited that is weird yeah i know i know i mean and one guy actually said this is fire i will never forget that moment it was amazing um people were very excited.

17:10And to me, again, the most important transition, because I had a direct reference point from nine months ago, it was all demos. And now it's actual stuff. Again, and I said Gemini and Workspace already, this is all I wanted. And now I actually have used it and it's happening. Now, if I'm in the beta testing group of Gemini and Workspace, you have a right panel you can click on it in a slide deck say okay you know summarize this deck for me even pull numbers out of charts that are in the deck or even be like you know based on this marketing deck create me 10 taglines and it marketing campaign taglines and it will do it directly from unstructured data that you have you can do the same in docs like so so being able to connect all these different tools they have and pieces is going to be their advantage even another thing they showed was within, you can be in Google Docs and let's say all of your company's data lives in Google Cloud or BigQuery, you can directly, you know, pull data from your company's actual databases into your presentations and docs.

18:19That is something that no other, I mean, other than a Microsoft, almost no other company will be able to do. Yeah. I mean, there was also some other cool stuff. Like you could write, you can kind of do like a scratch pad where you would like write the type of email that you want to write and it would just produce it for you. I guess it's like a prompt thing, but you would like write an email, like you would write a text and it would turn that into a formal email, which I thought was, was interesting. But yeah, lots of interesting things. I would say I started the week out kind of a little bit more optimistic than you 5.5, it's like five to six on Google.

18:51And now I think I'm at a six, seven. It was an impressive week without a doubt. It's all they can ask for. They both of the big technology folks, They moved up the scale. We're Gemini guys now, I guess. Gemini. I'm still a bard boy at heart. Bard boy. Well, yeah, you could keep living that dream. I'm surprised they didn't have it in the sphere, by the way. Did you get a chance to go to the sphere? I saw it from the outside. I wanted to, I was, I wish actually now that I went in, they have apparently this like Darren Aronofsky film. I did not go in, but Google actually for one of the day, one of the nights had the sphere and had this whole Google cloud visual on the sphere.

19:31And, and I went with a group of people and we like looked at it. It's, it's pretty visually stunning. Yeah. I want to go to, did you go in? I went to U2 there. Oh wait, you went to U2? Oh man. Exactly. Yeah. It was pretty cool. It was pretty cool watching it. Yeah. I want to go back, go to a concert there. Definitely. That's on the agenda now. When we have the big, big technology next, we can get tickets for a show you know we're gonna we should we should host a friday show at the sphere at the sphere i think that's the only way to do it jim dolan if you're listening and i know you are let's speak after this whatever theater is i'm sure we can cover it but but i will say midweek las vegas was kind of depressing it was really empty it was uh i this if anyone from google's listening my only feedback would be i don't think vegas is the place for cloud next it There was no one in the casinos other than the 30 ,000 people attending Cloud and Cloud Next.

20:31And I don't think any of these people gamble or play the tables or walk around the casino. So it was - And you were there on your DraftKings app being like, man, I'm just going to keep playing until they ban this prop bets on college players.

20:47It was actually interesting in terms of the MGM sports book. they when you walk in there's like 10 people as you walk in that are trying to get you to download the app so even like rather than placing a bet directly at the sports book oh that's fascinating yeah they everywhere in the entire physical sports book there's someone with like a t-shirt and a sign on that's trying to get you to download the mgm sports with sports book app which i did and you get 25 free bucks or whatever yeah that's how they get you ron john i know i know this is all again it's chris christie thing so thanks chris christie thanks chris christie we gotta have our chris christie shout out every show let's talk about this very interesting news coming out of microsoft speaking of google's ai play microsoft's ai play is actually quite getting quite interesting So they obviously brought in Mustafa Suleiman, who was a DeepMind co-founder, to run consumer AI there.

21:50But it also really kind of caps off this series of different moves that Google's made to try to, what I would say is hedge its bet on OpenAI. I would say last year this time, they were all in on OpenAI. Now, if you look at where the dots are going and try to connect them, it looks like the hedge is coming. And I'm curious how big of a hedge. So by the way, this is just from the information. So they say, while Microsoft remains staunchly committed to its partnership with OpenAI, which exclusively powers Microsoft's first-party AI apps such as Copilot, it has also ramped up its own small model development, and it continues to expand the catalog of models available through its Azure cloud platform.

22:34This week, Microsoft made Cohere's large language model available in Azure. And last month, the company made headlines with a splashy deal with French AI company Mistral. Okay, so everywhere you look, Microsoft seems to, I think, and I would argue smartly, be hedging the OpenAI bet and saying no matter what happens to OpenAI, we're going to be in good shape. And Sadia talked about how like during the Sam Altman crisis, that they were fine, but I don't think they were as fine as he wanted them to be. and I think he's trying to get them there with these moves. You add all this to the fact that Suleiman is in there and we're going to go a little bit deeper into what his remit is inside Microsoft and you're left with like a very clear picture.

23:18I would say that they're trying very hard to hedge that opening AI bet. What would you say? Yeah, I think it's both hedging, but it's also this is what enterprise generative AI will look like going forward. Because another thing that, I mean, kept coming up at the Cloud Next, but also is relevant for Microsoft is these models can be very expensive and costing is going to become a much, much bigger deal as companies actually operationalize this. So being able to, and actually Mistral, the French company, they've already made a big deal that supposedly they've discovered or some new way of processing data or whatever that makes their models cheaper.

23:58So they're already using cost as a direct advantage or a competitive differentiation. So I think if you're Microsoft, if you're Google, you have to offer tons in every single possible model because for different use cases, as companies actually bring this to scale, the cost is going to become such a big issue that they're going to want to use different models for different purposes, even within OpenAI or any other of these big foundation model companies, they have plenty of different models that solve different problems at different costs. So I think it's no question that betting all their chips on one company, OpenAI, especially one that's had some very interesting corporate governance affairs over the last six to 12 months, I mean, they have to do this.

24:51Right. And then you look at what Suleiman is. So we're getting some more information about what Suleiman is tasked with inside Microsoft. And we spoke about a little bit when Jessica Lesson was here, when the deal first happened, but now the information is published in the same story, a little bit more specific. So this is from the story. Microsoft historically has struggled to turn its own AI research into commercial products. That has prompted Nadella to make a bold bet on OpenAI to supply state-of-the-art technology for enterprise apps like office. Suleiman's arrival provides Microsoft with an opportunity to go after another large market AI services for consumers, a moment when it faces intense pressure from Google, OpenAI, and other leading rivals to win over everyday users.

25:37So that's interesting that they would even include OpenAI as a rival there. And this is really it. So you have OpenAI for enterprise, Microsoft and inflection for consumer. And they're sitting, and this is from the story, They're sitting among search, advertising, news, edge, and MSN teams. There are 60 inflection employees that have come along, including Suleiman. Now, of course, it was a failed company, right? For all intents and purposes, it was failed. But again, like if you're thinking about like where OpenAI was positioned when it comes to Microsoft, yeah, of course, they're doing enterprise and that left open for, you know, room for consumer.

26:16But it really just seems like this might pigeonhole them. It's a very significant amount of responsibility that they're giving to the inflection team. And even people within Microsoft are looking at Suleiman and being like, wait, we thought we had competent leaders. Why did you have to acquire effectively this guy and his company in order to make this consumer push? What do you think about all that? Well, that's a very, I hadn't thought about before the idea that 60 to 70 inflection employees are now going to across search and advertising and the browser and MSN, which I always forget that there is a whole team around that.

26:55I mean, that is - Not doing an MSN episode, just a Yahoo episode. No MSN episodes. Sorry, people. Sorry, listeners. There's a, I think like if you think about organizationally, so yeah, Microsoft has gotten to such a place of like competent leadership, at least in terms of perception that from the outside, all of us are like the way they've executed strategically over the last decade has just been incredible. So, but then if you are bringing in a team and you have to assume everyone from inflection who's coming over is friendly with each other, trusts each other. anytime you bring in a team like this.

27:32So to actually disperse them across other teams feels like you are trying to shake things up and disrupt things a little bit and give influence to Suleiman, as you said. So I think that actually makes it feel like an even bigger bet than if they just acquihired them, kind of put them in the corner somewhere and said, do some AI stuff. This really feels like they're actually trying to shake the trees of the organization. Yeah. Yeah, which is interesting. It's like, well, and I think people from Microsoft are rightfully wondering, why do we need this? You know, they're the most valuable company in the world and everything seemed to be pointing up.

28:10But clearly leadership there felt that it was a need. And then, you know, there we even talked about a few months ago about how or a few weeks ago about how open AI, you know, would still, first of all, open AI, we talk a lot about the instability in open AI because it's important. it's still the leading AI research house. Like, don't get me wrong on that front. And I wouldn't make the argument otherwise. But it does have this just ongoing risk. And it showed itself again today. Anyone who said this stuff was over with Altman? Well, they just fired two researchers for leaking information. And that includes, let's see, it includes someone who was closely tied to effective altruism, Leopold Aschenbrenner.

28:57And apparently what happened is that there was a disagreement within OpenAI about whether the company was developing AI safely enough. And these two researchers leaked. And they are very close to effective altruism, of course, right? And now they're out. And they're also, sorry, they're also close to Ilya Sutskever. That's the key point they are ilia's discover allies ilia is the chief scientist at open ai we haven't heard anything from him pretty much since the fall so he remains kind of hidden we don't really know what he's going to do there he's obviously a core part of open ai although opening i will be fine i think without him but it would be a blow if he ended up leaving i still predict that he's going to leave but it's interesting to see that his allies are getting tossed over leaking but we haven't even we haven't even heard one thing that's disappointing to me is this whole drama apparently took place.