Kamala's Tech Agenda, Drunken AI Spending, Meta’s Open Source Necessity

26 Jul 2024 · 1 h 6 min

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Big Technology Podcast: Episode Summary

Episode Title Kamala's Tech Agenda, Drunken AI Spending, Meta’s Open Source Necessity

Episode Description Ranjan Roy from Margins joins Alex Kantrowitz for a discussion on the latest tech news, covering topics from Kamala Harris's approach to tech and AI spending trends to Meta's new open-source model.

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Key Topics Discussed

  1. Politics and Technology
  2. Kamala Harris's Ascension:
  3. Discussion on how Kamala Harris may approach tech policy compared to Joe Biden and Donald Trump.
  4. Potential changes in leadership at the FTC, particularly regarding Lina Khan's role.
  5. Harris's pro-business stance may align more closely with Silicon Valley interests.
  • Political Memes:
  • The emergence of memes related to Kamala Harris and other political figures, including the J.D. Vance couch meme.
  1. Venture Capitalists and Political Affiliations
  2. Discussion on how VCs reconcile their support for Trump amidst political shifts.
  3. David Sachs's controversial remarks about Kamala's rise and the implications for venture capitalists.
  1. Twitter's Role in Political Discourse
  2. Examination of Twitter's continued centrality in news and political announcements.
  3. Biden's choice to announce his departure from the presidential race on Twitter highlights the platform's ongoing relevance.
  1. AI Spending Trends
  2. OpenAI's Financial Challenges:
  3. OpenAI's projected losses and spending strategies raise concerns about sustainability.
  4. Discussion on the operational challenges of companies like Anthropic in the AI space.
  • Google's AI Position:
  • Google’s handling of AI investments and its strong performance amidst economic pressures.
  1. Meta's Open Source AI Model
  2. Meta's introduction of Llama 3.1 as a robust open-source AI model.
  3. Zuckerberg's pivot to an open-source strategy as a competitive move against other tech giants.
  4. Discussion of the implications of open-source AI for the broader tech landscape, including concerns about competition from Chinese companies.
  1. Emerging AI Models and Tools
  2. Exploration of the significance of new AI models, including DeepMind's performance in mathematical reasoning.
  3. Personal anecdotes about using Claude for coding and app development, highlighting accessibility of technology for non-technical users.
  1. Southwest Airlines Changes
  2. Southwest's decision to end open seating in favor of assigned seating as part of its strategy to adapt to customer preferences.
  3. Commentary on the broader implications of this shift and reflections on flying experiences.

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Key Takeaways

  • Political Shifts in Tech: Kamala Harris's administration may lead to a more business-friendly environment for tech companies.
  • Venture Capital Concerns: The political landscape is influencing venture capital decisions, with investors reconsidering their allegiances.
  • Twitter's Vitality: Despite financial struggles, Twitter remains a critical platform for political discourse and news announcements.
  • AI Market Dynamics: Companies like OpenAI face significant challenges in balancing spending with revenue generation, while Meta’s open-source strategy may disrupt the competitive landscape.
  • Tech Democratization: Tools like Claude showcase how AI can empower individuals to build applications without extensive coding knowledge.
  • Customer Preferences in Airlines: Changing consumer expectations are reshaping airline business models, as demonstrated by Southwest's move away from open seating.

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Conclusion This episode of Big Technology Podcast delves into intricate intersections between politics, technology, and consumer behavior, offering insights into the evolving landscape of the tech industry as it adapts to both environmental pressures and consumer expectations.

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Transcript

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0:00Kamala Harris is in. We sort out where she stands on tech. Is runaway spending starting to catch up with big tech and the open AIs of the world? Meta goes all in on open source with its new Llama model. And Southwest Airlines is ditching open seating. This is going to be interesting. All that and more is coming up on a Friday edition of Big Technology Podcast right after this.

0:25You'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 Beeler. 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.

0:52Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. Well, a week after we started talking politics, we've had a swap at the top of the Democratic ticket. We're going to talk all about how Kamala Harris might approach the tech industry, but we're going to do that briefly and then get into the meat of our show, where we talk about the capital expenditures of companies that are working in the open AI field, Meta's new Llama 3.1 model, and then, of course, the Southwest, Bruhaha, and plenty more. So joining me, as always, on a Friday here is Ranjan Roy.

1:26Ranjan, welcome back to the show. I'm back in New York. I have my shore mic in front of me and I'm ready to talk about this week's news. Okay, well, we are set and ready. And last week we talked about how Joe Biden was at the top of the ticket, but we don't know for how long. I think you presciently said, you know, probably within 48 hours, it could all be different. And lo and behold, 48 hours later, it was all different. And Biden is out. Kamala is in. And the big question here, because like last week, we talked a lot about the differences between the candidates and their approaches to tech is how Kamala would be different from Biden on tech.

2:04And then whether she'd actually be all that different from Trump on tech. I think the big question here really comes down to, is she going to keep Lena Kahn or not? I mean, there was a story in the New York Times talking about how, you know, what her approach has been to AI regulation because she's been the AIs are. I mean, it's been very pro-business. Everything that she's done has been extremely pro-tech and pro-business. But, of course, the question is, do you keep the same leadership at the FTC? That's the big question for me. I'm curious how you're thinking about this. Yeah, I'm thinking very similarly, because I think whatever decision Kamala makes around Lena Kahn will represent exactly what her overall stance on the whole technology industry will be.

2:49And remember, Kamala, it kind of reminds me of the Obama era administration to tech, definitely hands off, definitely much friendlier. That's been the way she's generally approach things. And I think the Biden administration has been very, very aggressive. And I think it's a good thing in terms of the way they've approached antitrust. And I think that could be a big change under a Harris administration. Yeah. And I think that's the difference when you have a senator from California versus a senator and then vice president from Delaware. You know, say what you will about California's anti-tech regulation.

3:25And there's certainly been policies that have driven some in the tech industry out, but not many, but to places like Austin and Florida, you look at Harris and she understands the economic engine that these companies are. Well, it's not just the economic engine. You have, I mean, remembering that people are influenced by their surroundings. When you come up in California politics and when your brother-in-law is the chief legal officer of Uber and someone who's been very, very aggressively and successfully anti-regulation, it has to influence the way you think. I can't imagine it wouldn't. So to me, the most interesting part of this will be, I'm so fascinated what's happening internally right now.

4:08Like, what are the discussions? Who's she going to keep on? Is she just because Reid Hoffman coming out and saying that she should get rid of Lena Kahn and here's$7 million that I'm donating. Does that stuff influencer or, you know, to me, the Biden administration's messaging around controlling big tech and working for common people and data privacy and all these things, I think could be powerful in this election cycle and I think still will resonate. So where she stands on that, I think is going to be very, very interesting. Yeah. And I think that's just going to be something she'll figure out over time right now.

4:46She's probably just like, how do I stand up a presidential election in like three and a half. She's got memes to work out right now. It has been interesting watching how memeable she's been. Coconut memes, J.D. Vance couch memes, you name it. Okay, the J.D. Vance couch meme. Do you understand the J.D. Vance couch meme? I do. I have spent a lot of time thinking about and analyzing the J.D. Vance couch meme. Okay, let me set this up because the only thing, I saw a video of J.D. Vance being compared to a couch And then the AP apparently ran a story saying, no, J.D. Vance didn't have sex with the couch.

5:20That's what I've heard about it. All right. Would you like me to walk you through the story of the J.D. Vance couch meme, Alex? Yes. All right. So someone totally shitposting tweeted that J.D. Vance in Hillbilly Elegy, the book he wrote in 2016, had written about how he had stuck a rubber glove in a couch and had sex with it. And this was in Hillbilly Elegy. Now, this is completely untrue, or it is not in the book. This one person posted this one absurd, ridiculous thing. And we're going to talk about Twitter more. And this was just Twitter at its finest, that like this absurd, ridiculous thing.

6:06and i i think the beaut a great meme is great when it's just so ridiculous but there's part of you that you're like i could see that being true that could be especially within hillbilly allergy in the book that like and that the memes have been good they have been great so i didn't fully understand what was going on but i understood that there was this rumor because the ap came out with a debunk which the ap eventually removed from its site and i think it should have because the headline was like no jd vance didn't have sex with a couch and it's like what are you even doing no i i actually thought to me that bothered me a bit because it kind of shows how the absurdity of fact checking when people are too online like it's okay it's embarrassing for the ap to put that out there like no one's thinking about that outside of like terminally online people on twitter and my yes including myself which that would count there's not a count and i don't need a fact check.

7:02I don't, anyone who is enjoying a good JD Vance couch meme is not actually thinking he had sex couch. And even if you are, you know, I mean, maybe, uh, the, you're not the type of person, if you believe that you're not reading AP fact check, that's not your home page. It was really an embarrassing moment for the AP. Um, but you are right. The memes are good because I did see a photo of JD Vance and his wife, uh, sitting on a couch and someone wrote sort of great picture of my favorite throuple. Yeah. Jesus. J.D. Vance just has defined what intersectional means. But yeah. Someone wrote. Oh, my God.

7:40That was one of them. Oh, no, I've been enjoying this. But I think the Kamala side, I mean, to me, it's been fascinating because there's part of me that the coconut memes, the unburdened by what has been memes, Like this whole energy on one side is amazing to watch because we have not seen that level of kind of like social media enthusiasm since Trump in 2016. Like we haven't seen that level of just like energy around a candidate and just absurdity and people having fun posting online. So I think I think it's really interesting and it's powerful. but obviously the big question is is this just what we are all looking at but in reality majority of people don't even know the coconut thing or understand it and don't care of course it won't influence them at all and maybe they'll actually view it as a negative so i think that that's we'll see where that goes but one thing that is directly applicable to our world is that the questions we had last week about some VCs coming out in support of Trump and like how this would change things for them.

8:51There's been two things that have happened that have been really interesting. First of all, Kamala coming in has changed the calculus on the election. So if they were all trying to bet on the winning horse, it went from an almost certainty to still likely. But that sort of changes the like back the winner mentality. So that's interesting. But I think even more profound is that we've started to see, remember we talked last week about like, wouldn't it make more sense to be neutral? And, you know, you've mentioned that, okay, maybe they're gonna try to attract some, you know, founders with ideological similarities.

9:25But for me, it's just like, all right, you're playing in politics. You're gonna, everybody knows politics is a dirty game and you're going to get dirty. If your job is to give founders money, that is a risk. And I think we're starting to see it both in terms of the supporters of Trump and the supporters of Kamala, because David Sachs has been nonstop, who's the VC, who's spoke at the convention, didn't do a great job of it, to be honest. he has been saying that the Democratic Party engaged in a coup by taking Biden out and putting Kamala in. And so Parker Conrad, who was the former CEO of Zenefits, while Sachs was the COO, he said, let me tell you, coups are this man's specialty, because Sachs apparently led a push to get Parker Conrad out of Zenefits and then took over as CEO.

10:18So this is basically Saks drawing incoming fire. And he says to he quote tweets Conrad and says, you were sanctioned by the SEC. Nobody else, only you, but you spent the last decade trying to shift the blame onto others for your own poor ethics. Okay. So for, for a little bit of context, like Zenefits had some compliance issues. This was reported about by some of my colleagues inside Buzzfeed, but basically they had a macro program that would like make it look like some of their benefit administrators were sitting through courses that they weren't. And that was part of the reason why Parker Conrad was ousted.

10:52So Sachs is like now, you know, basically public target there and, you know, fighting back. And then Paul Graham, who's I think more on the Democrat side, writes to him, do you really want the full story of what you did to Parker to be told publicly? Because it's the worst case of an investor maltreating a founder that I've ever heard. And I've heard particularly all of them. I was talking recently to another investor about whether you're the most evil person in Silicon Valley. He thought about it for a few seconds and agreed that he couldn't think of anyone worse. This is Paul Graham talking to Saks.

11:25We're not going to litigate the whole Zenefits thing or the, you know, the big, the coup one way or the other. But I do think that this is something that like, once you get into politics, the oppo file gets dropped and people take this stuff very seriously. and they will throw punches they've previously held. And I think that's what we're starting to see spill out this week and it could get uglier. Yeah, I think especially Paul Graham coming out and I don't think I would qualify Paul Graham as a Democrat. I think he's a pretty independent thinker. Some views I agree, some I don't. But again, very respectable founder of Y Combinator.

12:03And I think like this is a perfect example that David Sachs trying to get involved, trying to become hyper aggressive on this, trying to get a spot speaking at the Republican National Convention. You're right. You're going to take incoming fire on this and we're seeing it happen. And I actually, you said, we're not going to litigate Zenefits now and we are not, but I will admit I'm excited to see what comes out because I don't think this is ending. And I think like David Sachs, I mean, has spent a lot of time being very, very aggressive in the things they talk about and the way he communicates.

12:44And I think it's going to come back around and it appears to be right now. But what do you think about the fact that Twitter has been so central here in this moment? Obviously, people said that Twitter was done for once Elon took over. Clearly, it's the center of everything. Now, one interesting thing that happened was that Biden, when he posted his I'm leaving letter on Sunday, he posted it on Twitter. And everyone's like, whoa, Biden posted the news to Twitter. Why did he choose that platform? Actually, he didn't choose that platform. He put it on Twitter. He put it on threads. He put it on Instagram.

13:25He put it on Facebook and I'm sure other platforms. But the only one that people paid attention to was Twitter. So clearly there's a vitality that has remained under Musk, even if the business is suffering, which it clearly is. Like Peter Thiel recently said that this is not a good financial decision to invest. But I'm curious what you think about the centrality of Twitter in this moment and how it's felt, especially post-Biden dropping out. I mean, I can tell you I've not been on blue sky for a while. That's where the real action is going. going down maybe it's all really going down on blue sky or even threads i actually just opened up my threads again and it's just the most random out of uh the moment posts twitter is back twitter is back with a vengeance i'm spending way too much time on it as i'm sure you are as well and it's becoming where all of these these things are happening again and i think that's it's it is such a weird thing because there's a few parts of it again from a business standpoint does increased engagement actually result in improved financial performance one thing i had seen once was like if you the costs of actually serving a heavy twitter user because the ad inventory is so poor could they actually be losing money on total utilization like which would be amazing that you're actually costing Elon money.

14:48He's paying for you to use Twitter. I don't think that's happening. But I mean, it's that that was a certainly hyperbole. But like, I think I don't think the quality of advertising that I'm seeing on there is not getting better. It's still the same random stuff. Wait, are you saying that telling advertisers to go F themselves actually led them to leave the platform? No, I mean, if you think about it, like Like, I have to imagine all measures of engagement are skyrocketing right now. Everyone I know who is off, Ezra Klein is back talking on there. Like, everyone, people are on there. That's where the conversation is happening.

15:28And they still can't get the advertisers. And it's clear that, and it's even the fun stuff is happening on there, the coconut memes and everything else. And they can't get them. So I agree that I think that was a problem. But the other thing that was interesting to me was, so I was on Twitter the moment that I refresh my feed and I see the Biden post almost like one minute old. And the weirdest part of it was I had to do like five checks to believe it. Like and I still wasn't quite sure that that because verification has been so screwed up that what is real, what's not real, that Biden, even though it's from the account at Joe Biden, I'm looking at it.

16:13I click on the letter, start reading it. I'm like, oh, my God, I think he dropped out, but I'm not sure. so the like verification veracity side of twitter has gotten into such a ridiculous place that it's almost turning into just like even less of an information source and more of just a pure entertainment platform which maybe is not the worst thing well it's still it's still vital for news and there has been this moment where like people are like okay does this mean that threads is now important for news because biden posted there as well let me read you the engagement numbers because they're crazy.

16:49So the Biden post that he's leaving on threads has 2.6 thousand reposts. The Biden letter on Twitter that he's leaving has 352 ,000 reposts. So just a mere 350 ,000 more. And this has even reached Facebook. I mean, this is from an information post. Even the head of product for threads, Emily Dalton Smith, was dissatisfied with how the policy played out in the apps in the app in the wake of Biden's announcement. This is from the information. She complained that there was no trace of news in her for you feed. It feels broken that a topic overwhelmingly overwhelming my following feed does not show up at all in for you, she said in the post.

17:32And this is the point. I just think that like if threads, it's a double edged sword and it's tricky, right? If threads does not engage in this content, it's going to be totally irrelevant. Like to not be a player in this moment, it's a real-time network. That's what this text, a text network is a real-time network. And to not play in this way, you just cede ground. And you were given, effectively, if you're Thread, you were given a gift by Biden to start this up and did nothing with it. Yeah, I think they've made it clear that they will not go into news. They're going to deprioritize it. And Thread still feels like an experiment that they had its moment.

18:10They were playing with it. I mean, I genuinely think that Twitter is back and will beat threads, especially for real-time information, and that's what it does better. So I think – I'm curious to see where threads goes, how much it's mentioned at the next earnings calls. I mean, I'm not even sure if Zuck – I get, like, WhatsApp or Instagram message broadcasts from him now, but I'm not sure if he's even threading these kind of things. So I think Twitter is winning on this one. All right. I think we've done enough politics. Let's talk about what's going on with Gen.AI. So you posted in our shared doc, you posted a story from the information asking if Open.AI is a good business.

18:52What do you think? Okay, so the information this week reported, and this is very, these numbers are pretty insane, that the company could lose as much as$5 billion this year, more than double the$2 billion that was estimated lost in 2023. And this is despite generating what's estimated between three and a half to four and a half billion dollars in revenue this year. So let's say in the midpoint, you generate$4 billion in revenue, you're losing five, so you're spending$9 billion. And that's taking into account that Microsoft charges OpenAI a discounted rate for users of its cloud. So they're burning money.

19:30But also the same article had a quote from Sam Altman when earlier, actually it was in 2022, saying whether we burn$500 million a year or$5 billion or$50 billion, I don't care. As long as we stay on a trajectory where we create more value for society, that as long as we can figure out a way to pay the bills, if we're making artificial general intelligence, even if it's expensive, it'll be totally worth it. I think this is going to be a problem for them. I think that people are going to start asking questions around the numbers. We've talked about this a lot. Maybe that Goldman Sachs report was the inflection point where people start to really pay attention to the numbers.

20:15But I think the way OpenAI has been spending is not, it's going to be an issue at some point. And then you start to question what's their competitive moat. And we're going to talk a little bit later about my love affair with Claude and incredible experiences learning to code with Claude's Sonnet 3.5. But like, this stuff is so interchangeable. The moats are so low. And if the moat is enterprise, than Google Cloud and Microsoft Azure and everyone else has a competitive advantage against OpenAI. So I just don't see what their advantage would be other than having hit product after hit product, which maybe Sora is finally released and blows us all away.

21:02But I think this number, if it's real, is going to be an issue. Yeah, I've been saying all along that OpenAI is in the hits business. And by the way, it's not just OpenAI. So this is sort of the moment, especially we have like all the big tech companies reporting their capital expenditures. And this is the moment where we're starting to see these questions that have sort of bubbled up over the past couple of weeks, really, really become spotlighted. And this is from a thread that Michael Spencer, who is an AI watcher, shared on threads. So fair enough, but he did put it on threads, but I found it because he commented on one of my LinkedIn posts and linked to it.

21:37So So anyway, it just tells you enough. We've done the threads segment, but just to pile on here. So he said Alphabet's Q2 earnings report yesterday revealed a 91 % surge in capital expenditures to$13.2 billion and$2.2 billion spent on AI development alone. And he's saying generative AI is not sustainable. And he talks about then, he brings up the open AI spending,$8.5 billion annual revenue, maybe 3.5 to 4 or even 5 billion lost this year. And then he says anthropic situation is potentially even more dire, reportedly making one fifth to one tenth of open AI's revenue while burning 2.5 in compute costs alone.

22:21And he mentions that an analyst said we're unlikely to see material AI revenue until 2025 or even 2026. And he says, my analysis, nobody is going to be around but big tech by 2030, most likely. And he says most foundational model builders outside of big tech, Google, Meta, XAI won't be able to fund their activities given the weak revenue generation. So this does seem really that we're in a moment where the ROI is starting to become front and center and the funding is going to run out unless like commensurate revenue is going to start or even, you know, revenue starts to touch the size of the spending hits.

23:01And it's just not here yet. Wait, two things on this. First, especially not to go back to the politics situation, but it is interesting to think about an anthropic, a mistral, and we've talked about this, is the bet for a lot of investors that they do get acquired for a hefty sum by one of the big tech companies? And obviously, if it's Lena Kahn in charge, that's a very different story than if it's not Lena Kahn in charge. So I think who does win the election and who's head of the FTC does influence the direction a company like Anthropic goes. Wait, hold on. Before you move to the next thing, I do think that the bet was that they are all racing to build the best model.

23:46And it's starting to look like it's just going to be a size thing. And it wasn't clear that that was the case in the beginning. and so maybe some of these models are are doomed i mean i don't know if that's the case but i do think oh it's like anthropic doomed there's a chance don't take away claude for me uh but uh i mean either but i yes i uh yeah i i think that's exactly it that uh i mean there's this moment that But like 20 bucks a user, what does that have to scale to? Especially when then if Gemini is free and gets better, then do you move away from Anthropic? Does someone else release a chatbot?

24:27Facebook, we're going to talk about it. And Meta goes open source. So yeah, the competition is so heavy. Honestly, are we just in ride sharing circa 2015? Because it's kind of what it sounds like where these companies are losing insane amounts of money. The goal is to build the best model and monopolize or at least gain market dominance. And meanwhile, you and I get to probably use Claude for either free or even at 20 bucks. It's a bargain for what it can do. And maybe the compute costs we're running are actually more than$20. That we're being paid to use. No, no, exactly. So it kind of feels like ride sharing 2015 right now when Uber's in New York City.

25:13I could go from downtown to uptown for like eight bucks and now it costs me$30 to$40 to just go across town. And the subsidized life is over. So enjoy those queries while you can, I guess. Let me ask you this. Have you seen what's happened to the S &P this week? Oh, yeah. I think these questions. To me, the fact that Google's overall ad sales were growing, sorry, their ad sales slowed, but AI revenue was reportedly up. I think the fact that people were not looking at only the top line, but this is the first time that the stock actually ended up down, even with pretty good numbers, because people talked about the capital expenditures.

25:59So people are actually asking about ROI, about investment. What is this actually going to look like? Which in the past, we never saw these questions coming up. For real. I mean, the S &P had its worst day since 2022 this week. It had multiple days. I think one day down 2%, another day down 1%. Usually doesn't happen like that for the S &P. These are significant drops. And the S &P, of course, is made up largely of these big tech companies who've ridden the momentum on AI to the point where they are. And the S &P is still up something like, I don't know, 20-something percent year to date. Oh, no, it's only up 13 percent year to date now after the fall this week.

26:41It was up like 18 percent. So this is investors. Only 13 percent in July. I know. No, it's still a great year. But compared to where it was and where it was going. And I do think that investors are pulling back largely from these big tech companies because they're starting to read the same things that we're reading and see the same things we're seeing and being like, okay, and what do you see? Like the smaller companies are getting funding. Russell 2000 is doing well. S &P 500 or not. Yeah, I think it's finally being asked. And I mean, NVIDIA is going to lead the market the same way it let it up.

27:17And as it's starting to fall, I think there's going to be a lot of follow on impact from that. And I think it's a healthy thing. I mean, we've talked about this a lot. But for me, again, as a believer in Gen.AI and this AI future, things have gotten out of control. Expectations have been inflated. And I would rather that a little bit of air is let out now rather than we see some kind of total collapse later. So a nice healthy correction is not the worst thing. I want to talk to you about the Google thing also because, yes, Google stock is down almost 3 % this week after it basically beat all of its earnings.

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27:56Maybe YouTube was earnings expectations. Maybe YouTube was a little bit slower than expected. But should we take a moment to appreciate how well Google has handled the moment? And maybe some of that was luck because people haven't gone to Bing instead of Google and that search business remains strong. I mean, this quarter it grew 11. It grew at search business 11%. Last quarter it grew at 13%. And we're not talking about small numbers, right? This is from the Wall Street Journal. Alphabet reported Google generated$64.6 billion in ad sales April to June, an increase of 11 % in the same year. And so, yes, it's spending more, but it has to spend more.

28:40And it's good that it's spending more as opposed to giving up. But it's growing its business at an incredible clip. It's no longer sort of a laggard, I would say, in AI. and the competitive pressure from AI is just not hitting it the way that we expected. So is this a moment where we should like stand up and say, holy crap, Google did it? I'm sorry, Sundar. I'm sorry for ever saying you should be fired. I don't think we called for his firing. I just think we discussed it very seriously. We discussed it. We said, should Sundar stay or go? And the fact that that wasn't even in conversation probably six months ago, I agree that they've even in aggressive measures I don't know if you saw like in part of their deal with Reddit uh now only Reddit search results will only be allowed to show up in Google and not other uh search engines like DuckDuckGo like they're still playing hardball they're playing aggressive they are pushing in the whether that's good or not is a different question but uh look at all the money they're making it's great no no whether it's good for the internet and society is a different question but it's good for google i'm kidding no no they do seem thoughtful though they're that they're pushing hard and yeah on in in the whole generative ai space i mean they are like amazon is actually the one i think on the enterprise side aws and i mean i know your conversation from a couple weeks ago was actually the first time i heard a clear vision of what they're trying to push and how they're thinking.

30:16But I don't know whether they're just avoiding that public conversation. And in one-on-one sales meetings, this is all being communicated, but Google certainly is telling their story, showing numbers on the cloud side, and it looks in a decent space, at least relative to where they were six months ago. Yeah. I think I'm writing about that this week in big technology, just like Google survived and it's a big deal. The other, but hold on, because OpenAI is coming after them. So this is from a story from the Wall Street Journal. OpenAI is launching a search engine. It's called Search GPT, taking direct aim at Google.

30:59And this is from the story. OpenAI is launching a test version of its long-awaited search engine, which it says will cite sources of information, including news from business partners like the Wall Street Journal and the Atlantic. A tool called Search GPT will summarize the information found on websites, including news sites, and tell users to let users ask follow-up questions, just like they currently can with ChatGPT. It's its most direct challenge yet to Google. Since the release of ChatGPT in 2022 caught the tech company flat-footed, Google this year widely rolled out its own AI search feature that synthesizes information from multiple web sources.

31:38and of course told people to eat rocks for a minute, but then ultimately that faded and we haven't heard anything about AI overviews since. So do you think this is a real challenge? I mean, couldn't you have like asked ChetGPT about the news already? No, no, but they would actually, they were very careful and cautious about the types of answers and saying I can only search up to a certain date or I can't find real-time information. I think this could be big. I think this could be a threat, but to me, this is almost more of a threat short term to a perplexity. Yeah. Again, I've seen even more and more still when it's informational, I go to perplexity.

32:21When it's something more kind of analytical or I know is going to be more of an in-depth conversation, I go to a Claude or ChatGPT. If it's something more, Gemini actually is not bad in the informational space. But I think this was definitely perplexity is the leader in this space. And it could be a huge threat to them if it's done well. But I still wonder, this is not an enterprise product. This is a consumer facing product. And OpenAI as a company, is this what they really need to be doing? Or do they need to be building out their API and working with companies and building out an enterprise sales team and figuring out how to get people to trust them versus another cool consumer facing thing that already exists.

33:09Maybe both. But I would also say that this is probably tied into what we were talking about before, which is it's spending all this money and losing money. And it might be scrambling now to try to find new business applications and search is a fairly straightforward. I mean, with AI, maybe not, but there are keywords in there. It seems fairly like like a straightforward business to add on to like your more experimental businesses. And I'll add one more thing, which is that I am scratching my head and saying, is this a sign that OpenAI is fundraising? And I'm sure all these companies are always fundraising, but are they seriously fundraising now?

33:46Because you sort of show that, hey, we have a search business. And in your PowerPoint presentations, you say this is the total addressable market of search. and we've now tacked that on to our broader ai market and so we have near-term and long-term revenue potentially coming in search gpt give us the cash what do you think that's not a bad uh that's not a bad theory because there is part of like the reporting that came out was you know they're burning tons of cash and their runway could be shrinking i think i saw like 12 to 18 months out there wow um so i mean if you're losing 5 billion and i think they've raised 12 13 um obviously it will catch up with you at some point.

34:29So I like this theory. I think that could be the case. You throw out a couple of different business models to add slides on in the fundraising deck, and maybe that can help you. I do think, though, when we say search is a good business the way it is for Google, I don't think AI search is a good business yet. Because, again, we have talked about this. No one has figured out the model perplexity said. We'll put in some like suggested results and links and stuff like that. But we don't know if this is a good business. We know it's an in-demand business and someone will or could come up with the right business model, but definitely we don't know what that is yet.

35:13So another story that I think is really worth mentioning here when it comes to talking about whether these companies are going to have a lead, whether this is going to be commoditized, right? Because that's what we've been talking about. Is OpenAI and Anthropic going to be able to survive? Is it big tech? How about this? So Elon Musk said that he's built what he calls the most powerful AI training cluster in the world. And we got into it a little bit on the Wednesday show with GitHub, the GitHub CEO. But I think that, you know, I've thought about a little bit more. And I think that this is massive news, totally underappreciated.

35:44And Elon says he's going to use it to create the world's most powerful AI by every metric by December this year. And it sounds like typical Elon Musk bluster, but this is from Tom's Hardware. He's going to call it the Memphis supercomputer. To put the Memphis supercomputer, super cluster, sorry, Memphis super cluster, to put the Memphis super cluster compute resources in some context, going by scale, it's easily outclasses anything in the most recent top 500 list in terms of GPU horsepower. So the world's most powerful computers, such as the Frontier, which has 37 ,000 AMD GPUs, Aurora, which is 60 ,000 Intel GPUs, and Microsoft Eagle, 14 ,000 NVIDIA H100 GPUs, seem to be significantly outgunned by the XAI machine.

36:38And we're going to talk about the meta open AI, sorry, the meta open source model fairly soon. But their Llama 3.1 was trained on 16 ,000 NVIDIA H100s. So Elon Musk is putting together a supercomputer that's going to do multiples of that 100 ,000 GPUs and 100 ,000 H100 GPUs. And you put that all together, if this is really a scale game, does he have a chance later this year to create, by far the best, most capable large language model in existence? I think he has a chance. I don't think, like we've talked a lot about this, is scale the only game? And I don't think it is. I think making a bold claim, especially when your main company's earnings aren't coming out well and your stock drops 12 % the next day is not unheard of from Elon.

37:32And I think like, it sounds exciting, but I genuinely don't know if it is. Because I think it's still, again, is this purely a scale game? What kind of large language model can truly be generated? Because even there's been a lot of talk around like, does Moore's Law apply for generative AI? And I think it'll be interesting to see, one, does this really happen? And two, what the actual impact of this would be? I mean, who knows? Maybe XAI does build the world's most powerful LLM and then Grok gets a sweetheart deal and turns into the chatbot that we all use and beats Claude and ChatGPT and everyone else.

38:16But as with many other things, Elon, I'll believe it when I see it. Yeah. Okay. That is definitely a fair caveat, but I'm also surprised this didn't get more run this week, especially like think about what would have happened, what would have happened if OpenAI or even Meta would have said that they're building a supercomputer. I think it's a genuine fatigue among the press with Elon. That it's like, this could be exciting. But again, the moment it's real, the moment it's seen, the moment he's showing it to reporters or showing the output of what they can produce, then people will be excited. But otherwise, I think people are just taking things with a grain of salt.

38:58Yeah, I guess he's earned that. And he's also talked about whether Tesla should invest$5 billion. in xai most of his twitter followers say yes so maybe that happens i don't know i would not be happy with that if i was a tesla shareholder that stuff i can't even look at because it's like from just a capital markets uh standpoint and just the fact that this stuff is happening and again like as your company your revenue is slowing your margins are collapsing you're talking about you're throwing up Twitter polls about whether you should divert more money to like a like internal deal basically is is bothersome to me but listeners can understand where I generally stand on at least the kind of dealing business dealings of Elon yeah Tesla even with a run-up in the most recent month is down 11 % on the year and S &P 500 is up 13 % okay one more bit of AI news you know, we're in this kind of moment of, we're not quite a disillusionment yet.

40:04We're not quite at that trough, but we seem to be peering over the edge. But that being said, we're in this moment where we're going to have, I think, less and less enthusiasm about AI coming from the public, but also more and more impressive breakthroughs. And I'll put this development from DeepMind in the latter category, right? An impressive breakthrough where they have created a model. It's called Alpha Proof, and it specializes in math reasoning. And they also have this new one called Alpha Geometry II, which focuses on geometry. And this is from Bloomberg. The program aced four of the six problems featured in the International Math Olympiad, an annual competition in which students tackled topics such as algebra and geometry.

40:52Okay, here's why I think this is significant. I think there is a reasoning element here, which is that like with a typical large language model, you ask something and it just like combs its massive amount of information and then spits back an answer. With these math problems, you actually have to work through step by step. That's how it works. And the fact that this thing was able to answer four of six questions correct is, I would say, extremely impressive. What do you think? I think it's definitely impressive. I think, again, that barrier between showing genuine reasoning and where we are today, where it's clear that LLMs don't actually think, they're basically analyzing and just predicting next letter, next word.

41:37I think if that could be shown, we've talked about this a lot, agentic AI and building AIs that can actually perform a network of tasks and be able to reason at every step of the way without having a predefined choice or behavior given to them. If that gets solved, it really will be massive because that will be the kind of like step change in terms of how effective this could be at solving problems. So I think this stuff is interesting. I kind of like how you said. To me, I'm actually excited by the fact that overall enthusiasm is going down while real improvement is happening. Honestly, that's where I want Gen AI to be right now.

42:24You're a trough man. That's really where you stand. I'm a trough guy. I'm a trough guy. The trough is where we do our best. That's true. The trough is where we're all at our best. Respect the trough. Respect the trough. Respect the trough. We should get to hats that say respect the trough. Again, for people unfamiliar, trough of disillusionment is part of the Gartner hype cycle. Get your Gartner right, people. Yeah. All right. Let's talk about the meta open source model and Southwest Airlines canceling or ditching open seating right after this. We'll take a quick break and we'll be back momentarily.

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44:08You'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 Beeler. 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.

44:36And we're back here on Big Technology Podcast, Friday edition, breaking down the week's news. I'm here with Ronjan Roy of Margins. We're going to talk a little bit about this meta open source model. So this is from The Verge. Meta releases the biggest and best open source AI model yet. It's called Llama 3.1. It's the largest ever open source AI model. it is bit trained as we talked about on 1600 nvidia h100 gpus um verge says meta isn't disclosing the cost but it's safe to guess it's in the hundreds of millions of dollars it has a very big context window 128 000 tokens it has support in english spanish portuguese italian german thai french hindi and it's available on aws azure google oracle and then there's companies like Scale AI, Dell and Deloitte that are going to implement it.

45:28So basically the argument here is that this is a frontier model. It's one of the most capable AI models. It's open source. It's largely free to use and Meta is releasing it. And they are basically saying we're committed to open source. So you might be paying, you know, OpenAI per token when you use its models, but you'll pay us nothing and you can customize it however you want. Talk a little bit about the significance of this move, Ranjan, and where do you think this leaves the AI industry? Where do you think it leaves meta? All right. I think this is a huge deal. I think this is kind of like masterclass, brutal Zuckerberg at his best.

46:11Because what's happening here in my read is choosing open source as their path forward. I want to get into the blog post Zuckerberg wrote about called Open Source is the Path Forward. But basically, Meta realized that trying to compete for consumer or enterprise dollars when you don't have a consumer subscription business, when you don't have an enterprise cloud business, would be a massive uphill battle for them against everyone already in the market. it. So instead, go open source, undercut everyone, make this thing free. And the fact that Llama 3.1 is outperforming GPT-4 in a lot of cases, it's as good as anything else out there.

46:59And it is free, is it's just a massive deal. And it's going to, especially at that enterprise level, I think pose a genuine threat. If people start thinking about things that I actually have an open source route to this, especially if it's more customizable, if I have more control over it, that really is a shot across the bow of like everyone, whether, I mean, for open AI, it's a huge problem, but even Google, Microsoft, Amazon, it's a problem as well. That's right. And I think that like, there's been some discussion of like Meta's open sourcing this model because it wants to sort of mess with Google or mess with Amazon and can do it for free, but it's also very expensive.

47:41And Zuckerberg in this post, and they've always been pro open source, but he talked about why it was so necessary for them and did it in like the most direct language possible, which I thought was like very interesting and worth sharing. So he says, one of my formative experiences has been building our services constrained by what Apple will let us build on their platforms. Between the way they tax developers, the arbitrary rules they apply, and all the product innovations they block from shipping, it's clear that Meta and many other companies would be freed up to build much better services for people if we could build the best versions of our products and competitors were not able to constrain what we could build.

48:23On a philosophical level, this is a major reason why I believe so strongly in building open ecosystems in AI and AR, VR for the next generation of computing. So basically he's saying, I don't want to be approved by any other platform. I don't want to be relying on any other platform to build. And I am going to just build the underlying technology and open source it. And everybody in the open source movement will help me improve it and gatekeepers be damned. And I think that this is pretty interesting. All right. This one got me pretty hard. And first thing I'm going to say is Zuck's public PR image has been pretty amazingly transformed from sitting in front of Congress pale and like nervous to wakeboarding and wearing like a T-shirt and a chain and looking cool and like hot Zuck memes going across the Internet.

49:17So that PR makeover has been successful. But I honestly think this kind of like developer PR makeover, no one's talking about it might be the bigger story. Because when I was reading this, I was like, okay, some of the things he has in headlines, why open source AI is good for developers. We need to protect our data. This is coming from Facebook. He says, we need to control our destiny and not get locked into a closed vendor. Anyone who is an advertiser understands that Meta is a closed ecosystem. And we want to invest in an ecosystem that's a standard for the long term. And the quote you used around our formative experiences were being constrained by Apple.

50:03anyone who was in tech in the late 2000s early 2010s if you remember farmville and the all the facebook apps and the thriving developer ecosystem that they built with the promise that you will all get to build and do you know zynga going public like facebook was the ecosystem and then they just shut it all off they just cut off everything decided that they didn't want it it was the most arbitrary i mean for them good but for their entire ecosystem bad so the idea that suddenly you have been pained by apple but you care so much about open ecosystems when you run meta i think is a bit rich but this is different though yeah sorry go ahead caveat and then i'll what i last thing but talking to a number of friends or developers they're like bought in they're like, oh my God, did you read this from Zuck?

50:59This is, it's beautiful. This is what I believe too. And so people, so it's working. And that's why, you know, we talk about credit to his like cool guy PR team, credit to whoever's writing these blog posts and who's coming up with this story because it's working. Well, here's what I think that it's different. And this is maybe a maturation because he really has been messed over by Apple. Apple shut down their internal app. People can book conference rooms for a while because of Apple's anger with them. And of course, Apple is a nemesis of Facebook. So I would just say that I think he's generally angry about this.

51:37And they've also given up the ecosystem play within Facebook. They've made a lot of changes to Facebook and Instagram over time. Now, there's still a walled garden. I won't argue that. But they're a different walled garden than they used to be. They're not really all about developers building experiences there because they realize that the platforms are not going to be the entire internet. They're specifically used for a certain thing. And when it comes to AI in particular, if you open source it, it's not going to be everybody living within the meta ecosystem. The idea is here's the underlying technology and you build on top.

52:09I get that argument. I get the idea that, again, they are a different ecosystem than they were before. To me still, you can't forget that that did happen. But I still think that the idea that like it's this, I don't know, the idea that AI is something significantly different, if at any point it is in Facebook's existential business interest to then close off the entire ecosystem and somehow change everything around and try to actually bring everything in house and try to, you know, screw over developers, I think they would in a heartbeat. And I think this is, I don't know, the idea that this is like a genuine vision versus I think it's a brilliant cutthroat business move to go after all your competitors in a way that I think could work, like could work really well.

53:05You take your money from Instagram and Facebook or their advertising is back. People are spending tons of money on it. uh you're still you have you what is it it's like 2.2 billion people use their products every day so i think you're in a pretty good position funnel reality labs lost 3.4 billion dollars last quarter you can afford that you can uh build some open source tools and then kneecap your competitors so i still think that's what it is and i think it was a good blog post i just don't buy Okay, so I can tell you I'm fairly certain that Zuck is freaked out by the consumer adoption of AI tools, or at least was in the beginning, which has led him to build these AI tools, but that's also tailed off.

53:51So I do think that maybe you're right. Maybe part of this is just like him seeing a competitive threat from Sam Altman, who he did needle in interviews talking about how he's building closed models as open source AI and open AI. And Elon Musk's like, yeah, Zuck, you tell him. and yeah go ahead no this is i enjoy watching this this is like business battle at its finest and this is where zuck is is in this in the cage match that we never got someone to be feared because uh i think like the way they've approached this entire thing is is brilliant and i agree i think yeah they probably they sat down they saw a threat and they had to decide how is this gonna to impact our core business?

54:38Is it going to affect messaging, social networking, photo posting? And I think they realized it wouldn't, that TikTok was the only real threat there. So then, okay, what do we do about it? It could at some point pose a threat. So let's mess with their business. Yeah. Okay. One more thing about this, and then we're going to talk about Southwest briefly. The China thing. I know for a fact that everyone is freaked out, not everyone, but a lot of people within the tech industry are freaked out at the fact that meta has open sourced llama and a lot of the chinese ai companies are building on top of it and learning from it and may eventually exceed it when you think about the amount of compute that's going to be available in that country if they want to pull their resources they can have some central planning that can get them into a really good place and this is what zuckerberg says about china our adversaries

56:01And I read that, I'm like, okay good argument but we'll see like i oh my god that that is a great argument i'm telling you whoever he has media training him on these answers i i don't i think this is actually zuck writing this stuff but go go ahead and nick click it never yeah nick like okay maybe it's nick like but he's more involved than i think that you're you're realizing he's very hands-on in that company and especially with messaging i think he's involved but i come on that is so good that if he has the time to write this, I'm worried about him not taking care of the rest of the business because what a brilliant answer.

56:38That's Clegg probably, I would imagine. It's Nick Clegg. Sorry, go ahead. Yeah, yeah, yeah. I mean, it's about small businesses, universities. It's about the little guy and helping them. Yeah, I think they're doing well on the communications front right now. And if Lama, I'm going to try to experiment with it soon. If it gets interesting, it could completely change the economics of even how I'm using these things. Yeah. Oh, I got to give you this opportunity to talk about your cloud experience. Speaking of how I'm using these things, I got to say, so cloud, the other day I was doing a revenue scenario analysis in Excel and something that would have involved hours of building a model.

57:27I was like, you know what? And it's taking like a funnel in e-commerce. And I was like, let me just put this into Claude and say, Hey Claude, I'd like to build an app that allows me to take these numbers and do revenue scenario planning. So it'd be like, I want to change the headline revenue number. I want to change different steps in the funnel. And again, normally you'd have to build a complex, find it like model around this. And instead, Claude's like, let's build an app together in React. And so it starts giving me code and I start testing it within the Claude. They have this new window called Artifacts.

58:03And I'm in there testing it, saying, actually, I think this is a bug. You're not doing this right. We're improving the code. Then for me, the magical moment, and I will expose myself a bit, even covering tech and being very involved in tech. Like on the development side, I've always known basic HTML and CSS and can do some things and I'm somewhat comfortable. But anytime I get into the command line and I have to deploy any kind of code or like deal with GitHub repositories, I would just get stuck. And this has gone on for years. I would just be like, all right, I don't have the latest version of Python installed.

58:39I don't know how to do this. This is getting too complicated. I literally would just give up. it just walks you through step by step copy this copy this copy this and then even so i'm testing things something something breaks i upload the code base to claude claude finds oh you added an extra bracket on line 233 no let me update that for you here is your new code copy this into this file, upload it. And then I'm like, okay, the actual core of the app is working. Then I'm like, let's style this. Here's a color scheme. Can you add a button here that says this? Then it writes the CSS file. Like it's doing all of this.

59:22And then I deploy it and it's live. And I can even share a live internet link with other people. Like I've made an app from in 90 minutes, just playing around with this. And again, super basic, simple thing. But suddenly I'm, I personally, I'm like, I want to build apps. I want to test this stuff, things that I never would have wanted to do before. And I would always just be like, all right, I'm going to pass this off to someone more technical. And that to me, I'm going to say, I've been trying to document my wow moments. Right now, I think I have first time using ChatGPT, first time using MidJourney, first time using Suno for music.

1:00:02I'm going to put this up there as my fourth, the most magical generative AI moment where you're like, this changes everything. This really, to make people, to democratize the ability to actually not just code, but to actually build things is completely different, especially if you want to just experiment, build small experiences. And I think I heard the GitHub CEO saying, like he built an app that only tracks all of the flights he's ever taken. So something that no one would ever want to build. And for him, it was in the time to drink a glass of wine. For me, it was 90 minutes here. He is the CEO of GitHub.

1:00:43But I think it was crazy for me. It was fun. It was exciting. So why I hope Anthropic doesn't go out of business and Claude is here to stay. So how do you think this changes everything? You said it changes everything. Yeah. No, no. It's to me, so ChatGPT, what it changes is anyone who could not string together words, anyone who is a non-native English language speaker can now market in English, can now have business communications in English. Like it just completely transforms what skills are necessary at a basic level. And for the same thing with images, the way you can now create, you can run an entire e-commerce business.

1:01:26You can do anything around image generation now with code, especially, and not just code, because GitHub Copilot I tried to use, but it's so developer focused. Now you have someone walking you through how to build something. So if you want to, anyone, like I already was thinking about what stupid little things do I want to have an app for that I can actually run on my phone that I do? You know, like what weird little, you can make apps for your family. You can make experiences. You can make just like cool digital things. And then, so that's obviously just making cool little toys. But then people actually getting into launching businesses, it really was that next layer of, okay, this really makes it more accessible for anyone, anywhere.

1:02:11And again, that idea you had spoken of with the GitHub CEO of could you have a one person billion dollar business doing everything? it doesn't seem that far-fetched to me, given how these tools super give you like supercharge you doing things that you never would have been able to do otherwise. Amazing. Yeah. I'm sure we're going to hear more examples of this. All right. So finally, let's talk about the Southwest airline situation where they were hit, I think in this CrowdStrike thing, which has been like this sort of shock moment for so many airlines, like Delta said, they're going to do away with unaccompanied minors.

1:02:47being allowed to fly on their planes. And now Southwest is like, yeah, screw it. We're going to be a normal airline. And this is from the journal. Southwest Airlines is ditching open seating on flights. It will soon assign seats on flights and sell some with extra legroom, making sweeping changes in a bid to broaden its appeal to passengers and boost revenue. The push comes as it fends off an activist investor looking for an overhaul of its leadership and operating strategy. And of course, that investor is Elliott Management, which effectively pushed Jack Dorsey out of Twitter. And this is from the journal, Open Seating has been a hallmark of Southwest flight since the airline got its start more than 50 years ago as part of a business model that produced decades of uninterrupted profits and democratized flying in the process.

1:03:34But Southwest executives said the company needs to adapt to what today's customers want, making what might be its biggest ever shift. Just a quick rant for me. I saw someone say, listen, and people don't want to fly on a bus with wings. They want to fly on an airline. I'll just say my, you know, okay, I'll just say, knowing that Southwest Airlines is going to do away with open seating plans just lights up my heart and makes me so happy. I've flown the airline exactly once and was boarding towards the end. And it was the weirdest situation I've ever experienced on a plane where as you went on, you looked and the rows just filled with one person on each side, right?

1:04:16Aisle and window. And then the middle seats were just left open all throughout the flight. And basically the people coming in had to come in and just file in a middle seat, middle seat, middle seat. I think it gave you the illusion that you were in control, but you weren't. And I found it to be a miserable experience. So rest in peace, the open seating plan of Southwest Airlines. you are not loved in life and you will not be missed in death. I agree with you on that. I think open seating on flights was another Southwest gimmick that I think it's time to move on. And hopefully for anyone out there who has not enjoyed the service of airlines, especially Delta customers, hopefully things start to improve pretty soon.

1:05:00They won't. not if uh pete buttejage or transport secretary uh has something to say about it well yeah i maybe even still i'm flying in a couple weeks and i'm already you know nervous of the delays or what sort of cancellations might arise but such is the peril of flying in the summer all right ronjan welcome back to the u.s great speaking with you as always and we'll do it again next week see you next week. All right, everybody. Thanks so much for listening and we'll see you next time on Big Technology Podcast.

From the publisher

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) Kamala in, Biden out 2) Kamala's tech agenda 3) The importance of Lina Khan 4) Do VCs regret backing Trump after the past week's developments 5) J.D. Vance couch meme 6) Twitter at the center of the story 7) AI CapEx goes wild 8) Google's resilience through the first AI wave 9) OpenAI launches a search engine, SearchGPT 10) Elon's AI supercomputer 11) DeepMind's math-solving AI 12) Meta's need for open source AI 13) Southwest Airlines does away with open seating,
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