Brian Stelter on the 60 Minutes Mess; Nilay Patel on Apple’s AI Problem

17:05Brian Stelter:he said a lot of really powerful things in that memo about restoring trust. Has Weiss restored trust in media is then the fair question to ask nine months later.

17:15Peter Kafka:Yeah. I mean, I have a real problem with that 70 percent argument, like because what it says, what it says is CBS is a bunch of leftist lunatics and we need to move them to the center slash move them to the right so they can regain the trust that they have squandered by being, you know, Jacobins.

17:32Brian Stelter:And has CBS done that? I don't see a lot of evidence that CBS has markedly, dramatically changed on television or online. By the way, I said nine months. It's been about eight months. You know, maybe it's too soon to evaluate what's happened at CBS News. I hear from some staffers who barely know Barry Weiss exists, for example, in the D.C. Bureau. You know, then again, I also hear from staffers who are constantly getting ideas and messages from her. I don't think the content has changed dramatically. So I say to folks, judge the programming, not the people. There's lots of drama with the people.

18:02Brian Stelter:We should judge what actually airs. And CBS is producing strong journalism every day. But is that because of Barry Weiss or is that in spite of Barry Weiss?

18:09Peter Kafka:On the business side, there's something Pelly talks about in his interview. Look, it's 60 Minutes. CBS News has not done well compared to its peers. But 60 Minutes is a strong show. Nine million viewers at its peak. Yes, a lot of that is football. But even when football is not on, 60 Minutes still gets millions of viewers. it is a working television show you know when when paramount canceled colbert their argument was it loses money there's a debate about that but they said you know it was not uh financial their argument is it was a financial decision this this argument that 60 minutes needs to be blown up it's a melting ice cube that's nick bilton's language that we need to move it into the future um let's stipulate that yes the future is coming and we should all embrace the future on On the other hand, a successful broadcast television show that attracts millions of viewers is not nothing.

19:03Peter Kafka:Where do you come down on the 60 Minutes needs to be blown up slash reinvented slash actually we could just sort of ease our way into something else?

19:11Brian Stelter:So I find it to be a very persuasive, compelling argument that 60 Minutes, and I acknowledge this is mostly the Weiss camp saying this on background, that 60 Minutes is really powerful, but it's out of date. It's archaic. It's too insular. Everyone knows it literally operates from its own building across the street from the rest of CBS News. Historically, CBS News bosses have wanted to get involved in 60 Minutes, but have been basically told to stay out. And there have been these battles in the past. Never has it blown up to the degree that it has in the past two weeks, though. Weiss clearly determined to make her mark at 60 Minutes and not allow the historic insularity of 60 Minutes to continue.

19:52Brian Stelter:you. Now, it comes down to a question. So I think there are some really strong arguments for why you should evolve now from a position of strength while the show is still high rated rather than wait for the ratings to erode. You know, the line that Bilton and Weiss used internally was, if you don't disrupt yourself, you will get disrupted. I think the history of media shows that is true. But it always comes down, Peter, to not whether to do it, but how you do it. How do you execute on the plan? Isn't this the story we cover over and over again? People doing the right things maybe in the wrong ways.

20:22Peter Kafka:I say all the time, the New York Times in 2010, reasonable people said this thing looks like it may not be around. It may go bankrupt. It was scary to work there back then. You were there and it is now by far, I think, the strongest news outlet in the country, if not the world. Financially, that is.

20:40Brian Stelter:So an example of taking the right action early before it was too late, but then executing carefully, methodically over a period of years to achieve a desired outcome. That's the New York Times story. At CBS, I think there are a lot of folks internally who say you could have done this in a very different way that would have been much more comfortable, much more constructive. Maybe wouldn't have led Scott Pelley to erupt in a meeting and get fired.

21:05Peter Kafka:And or maybe some of the old guard is upset because they do get moved out. But there's a way to do it.

21:11Brian Stelter:Two weeks ago, the intent of Weiss and her inner circle was to keep Scott Pelley in the fold. They wanted him to be part of the future of 60 Minutes. So let's back up two weeks. Is there a world where instead of ousting the top producers all at once in a very sudden way, could this have been handled differently? Yes, Sharon Alfonso's contract was going to be allowed to expire. It was clear that Weiss and Alfonso were not going to see eye to eye. That relationship was going to end. But did Tanya Simon and her direct reports have to be fired the way they were? You know, one of them was out of the country when it happened.

21:45Brian Stelter:Pelley has said that Simon did not see this coming, even though, you know, rumors about her fate have been swirling. Did it have to be so harsh? Wasn't there a world where Nick Bilton could have been brought in to bring some outside energy with Tanya Simon? You know, maybe he could have been put on top in some sort of layered role. In other words, Peter, there were lots of ways to do this that could have been less disruptive.

22:09Peter Kafka:There's a Leslie Stahl interview from the weekend where she says, my producer, I was flying out of the country to do reporting and my producer was fired while I was flying out.

22:18Brian Stelter:Right. This happened in a very sudden, very dramatic way that created a lot of hostility and a lot of distrust. By the way, the distrust was already there. You know, Weiss did not trust the 60 Minutes folks. 60 Minutes folks did not trust her. This was bad from the beginning, but it became so bad two weeks ago that you now have people wondering if it's too much of a distraction for David Ellison.

22:40Peter Kafka:One last attempt at this. Isn't this what David Ellison wanted when he brought in Barry Weiss, who has zero television experience and is an ideologue and says, I want you to run this news organization, including 60 Minutes, and I want you to blow it up? Isn't this what you're asking for? Or if you're not asking for the details, you are asking for there is a tree stump over there. I want you to get rid of it. I don't care if you use dynamite or a saw or I don't know how you remove tree stumps. I need the tree stump removed. I don't care how it gets done. You go do it.

23:15Brian Stelter:The implication to your question involves President Trump and Trump's anger about 60 minutes and his past lawsuit or just the settlement. Yes. And the desire to appease him.

23:23Peter Kafka:Partly Trump. Yes. But also just I just don't think this is an asset that I think this asset needs to be completely overhauled. And it will be messy. And I'm going to hire you to do it. And by the way, you report to me. You don't report up to the news organization.

23:37Brian Stelter:I think there's a lot of truth in what you're saying. And I have perceived from people close to Weiss that she looks around CBS News. She was shocked by just how obsolete some of the operations were back when she arrived last October, shocked by how out of date the building is on West 57th Street, and looked around and said, look, these programs, not 60 Minutes, But yes, the evening news, the morning show, these are third place morning shows, third place evening shows behind NBC, behind ABC. She looked around and she said, this place has been failing. This place has been losing. So I'm not going to be tethered to what you were doing for 10 or 20 years.

24:10Brian Stelter:It wasn't working. And she had a lot of latitude and she has and does today have a lot of latitude to say that thanks to Ellison. But Ellison also said in his announcement the day that she was hired, he said, we're going to make CBS News, quote, quote, the most trusted name in news. We believe the majority of the country longs for news that is balanced and fact-based, and we want CBS to be their home. The issue now, Peter, in June is a lot of these actions, a lot of these controversies, they have eroded trust. They have not built trust back.

24:40Peter Kafka:Yeah. And if the premise is, as some folks think, is that what we're really going to do is build sort of a Fox News competitor, because we think there can be more than one, what they consider main center right, mainstream right organization. I don't know that you're going to get those viewers to CBS this way, but we'll see.

25:00Brian Stelter:You can't out Fox Fox. And I think Weiss knows that. And let's give Weiss her due. You know, CBS News is covering stories that I don't know if it would have a year ago. CBS has been devoting more time covering cases about fraud. They've been on the immigration beat really aggressively. I think CBS has put some points on the board. And I don't want that to get lost amid all of this noise about 60 Minutes.

25:23Peter Kafka:Noted. Let's go back to where you started. You're covering this at CNN. Oh, where did I start?

25:29Brian Stelter:Oh, CNN. Yes.

25:31Peter Kafka:Give me the vibe at CNN as you guys are both reporting this and watching this saying, these people are going to probably own us. This person may or may not be our boss. What's the vibe in the room?

25:46Brian Stelter:Yeah. Full disclosure, right? I'm covering the Paramount saga from inside the company that Paramount is trying to acquire. I am very happy to say, though, I have full autonomy to do so. No one is influencing my reporting. No one's reviewing what I'm saying on TV. I'm sitting here in my basement where I usually do my live shots. My live shots are usually unscripted. So it's really just me as well as my editor, Andrew Corral, and we're just the only ones that are reporting on this story and figuring out how to do it and what to say and how to frame it. So I'm really blessed to have that autonomy.

26:19Brian Stelter:And I'm aware that CNN's a much bigger organization than CBS News. So let's play this merger out for a moment. Let's say that Paramount does win all the necessary approvals, and then CNN and CBS are owned by the same company. There are a lot of great opportunities. You know, I see a lot of potential. It makes a lot of sense, you know, as both a viewer as well as an employee of CNN. There's a lot of potential to bring those assets together. But nobody knows how it's going to work. And, you know, you asked where the story goes now. A lot of the news coverage this week has revolved around what might that look like.

26:51Brian Stelter:There were reports Tuesday morning from Axios and Variety about Paramount trying to bring in a business side partner for Barry Weiss. I think there's some reasons to be skeptical of those stories, but it just shows the amount of uncertainty that exists right now about what that post-merger landscape looks like. And I know the other angle of all this that you're interested in is whether the state AGs take action. These Democratic state AGs, some of whom are up for reelection, are under tremendous pressure to file a lawsuit to try to block the merger. And I suspect that's going to consume some of our summertime news coverage.

27:22Peter Kafka:Yes, we will write about it. And there's always extra angles like the head of Paramount's chief lawyer saying that people who are opposed to the mergers are anti-Semites. You can go read my coverage of that in Business Insider. Brian, when you're done reading my coverage in Business Insider, you should go then read Brian's newsletter because I was telling Brian before we're on the air, he writes my favorite media newsletter and I pay for many. So thank you for joining us. Appreciate your help.

27:50Brian Stelter:Thank you for that endorsement. I will try to live up to it.

27:54Peter Kafka:Thanks again to Brian Stelter. In a minute, we're going to hear from The Bridge's Nilay Patel, but first a word from a sponsor.

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29:45Brian Stelter:Big news this week for all my Gordon Gekos, my Robin Hooders, my Claude Squad, But Anthropic, which is newly the most valuable AI company in the world, announced it would be going public. That news follows reporting that OpenAI plans to go public as soon as September. And that that news follows reporting that SpaceX, which also considers itself an AI company, will be going public in maybe just a few weeks from now. Welcome to the era of the Omega IPO.

30:17We are about to see millionaires, billionaires, and yes, probably even the world's first trillionaire created overnight. And yes, it's that guy.

30:27Brian Stelter:This is the chainsaw for bureaucracy. Chainsaw! But all the tech bros who are going to make all the money, they need our money way more than we need their products. And we're going to remind you why on today's Explained from Vox.

30:48Peter Kafka:I'm with Nilay Patel, editor-in-chief of The Verge. It is early June. You are in a hotel in Sunnyvale that can mean only one thing. You've been at Apple's Worldwide Developers Conference. Lots of hands. Was there hands-on stuff at this point, or is it just watching movies? There was. They were very insistent that we try the AI demos ourselves to prove that they were real this time. All right. I've stepped on my intro. But what I was going to say is you've seen Apple's Developers Conference. You've heard from them. And this is one of two really big Apple events, maybe the biggest Apple event every year now.

31:21Peter Kafka:It's sort of where they lay out, here's what's coming with our operating systems, our software. They'll show off a new iPhone in the fall. Usually that looks like every other iPhone. But the spring announcement is usually when they say, here's sort of where we're headed as a company. So I think it's pretty interesting. Two years ago, they said, hey, we're going to do some AI stuff. Sounded kind of cool. I remember talking to Ben Thompson about it. It kind of seemed like a smart way for them to play AI, which was to let open AI and the other LLMs kill themselves and sort of rent space from Apple on your phone.

31:51Peter Kafka:And they were going to do this cool thing where they would use a limited amount of AI to sort of dig through your email for you and make your life better. It's called Apple intelligence. And then it turned out that never showed up. But now they're saying it's here for real. Did I get that right? Something like that. It's here. It is real. I think the sum total of what they've announced is a replacement for the free tier of Chat GPT. You know this term Sherlocking? Apple developers love this term. Yes, but explain it to the rest of us. There was this app called Watson a long time ago. It was like a search tool.

32:24And Apple built a thing called Sherlock and just destroyed it. And so every year, Apple does this in their operating system. They look around the ecosystem of cool third-party apps, and they just build the feature into the operating system.

32:34Peter Kafka:That's a cool feature. Why don't we just make it our own thing? And you'll never have a reason to buy this app again. Yep. And that's called Sherlocking in the Apple developer community. And here, what they have just nakedly done is Sherlock the free version of ChatGPT. It's slightly better in some ways. And the way it's architected is more private in Apple's version of events. We can talk about their CapEx and the fact that they're running on NVIDIA chips in Google Cloud. We can come to that. But fundamentally, the announcements add up to, why on earth would you use free chat GPT when Siri is right here behind a button on your phone and it can do all the same stuff.

33:09Peter Kafka:And so to back up even further, I can't even remember when Apple introduced Siri, but at first it seemed pretty interesting. And then it's been a long running joke that is slow and not useful. And most people just forgot that Siri existed. And then when chat GPT popped up in late 2022, we're like, oh, this is kind of what Siri should be, this thing that can answer questions for you in a helpful way. And then there has been this ongoing idea that Apple should, one, be embarrassed about Siri, and two, it is behind in AI. And so what it did, again, a couple years ago is seemingly said, yeah, yeah, we can't ever catch up to the LLMs.

33:46Peter Kafka:We're just going to let them do the thing that we ought to do. And that kind of seemed reasonable to me. Did that make sense to you at the time? It did and it didn't. two years ago, we were in an entirely different AI paradigm. And I think Apple's approach mirrored their approach to everything, which is, let's see how this plays out, and we'll make a great product out of it. And I think what happened instead was the models got ever more capable, and the product turned out to be writing code for you. There isn't like another great consumer AI product, at least as far as I can tell. There are the chatbots, and you can go ask the chatbots to do a bunch of stuff, but there's not some great AI pendant that is a threat to the iPhone, right?

34:28That thing has not yet emerged.

34:29Peter Kafka:Yeah. Stop there because, you know, the chat GPT and its derivatives and its competitors, sometimes people are dismissive of them. Sometimes people say, well, it's just kind of like Google search, but I think it's a great version of Google search. It's way better than Google search for me. That seems like a pretty good product, right? It does. I think all that stuff happens on your iPhone or your Mac. OpenClaw is a thing that sells Mac minis. Apple's point of view here is like, great, you made software that sells our hardware. We're very happy for you. Yeah. Yeah. That's where I was going, which it sort of seemed like Apple could say, we don't need to play in AI.

35:07Peter Kafka:We have the iPhone. Everything you want to do with AI will involve our phone. You can either pay us to be on it or we're going to participate in this some way. It just won't involve us spending gazillions of dollars on servers and 24-year-old AI experts. And you can just use our phone, which remains the best phone. Right. The problem in the long run is all of those chatbots will start doing things for you in the cloud. And you will disintermediate the app model. And you could disintermediate Apple services revenue, which is their big line of revenue. It drives their whole business. And so if you can talk to Gemini and Gemini can run around a bunch of cloud services and get you the Uber and place your DoorDash order and shop for you in Chrome all running on Google's cloud, none of that stuff is happening on your phone.

35:56Doesn't it?

35:57Peter Kafka:But it's still you're using your phone to access that. I know everyone wants to develop glasses and pendants, but right now it's the phone. The phone remains undefeated. And I think this is why Sherlocking the free version of ChatGPT protects the phone right now. The problem is that long run view of how computing might go. And that's why I'm saying the killer app for AI right now is that it can do software development. Because once you can do software development, you can maybe do anything digital, right? You can write, you know, the future of Google search is custom search results that write code for you and build you a trip planning app or something.

36:29All of that is a threat to Apple's model, which is you will pay$9.95 a month for TripIt or whatever, and Apple will take 30 % of that revenue. And so I think right now what they're doing is they're saying, we're going to reclaim the first cut of the interface. We're going to reclaim the chatbot. And then whatever the next app model is, we will make sure we participate.

36:48Peter Kafka:I don't normally do this, but I just want to take one more run at it. Yeah. I use Gmail on my iPhone. I use Google Maps instead of Apple Maps. I use Spotify instead of Apple Music. Apple would obviously prefer if I use their homegrown versions of those things. and they also don't care because I bought a thousand dollar phone from them last year and I'll buy another one X number of years from now. Yes, they'd like me to buy, to spend money on apps and stuff, but I'm not doing that. I'm going to continue to use an iPhone until there's no reason for me not to use an iPhone. And I get that one day they could be usurped by something else, but as long as there's a device involved.

37:27They would have to make a device that usurps their own phone, which they are, maybe that's the thing that they're working on. Maybe that's what John Ternus is the CEO in order to figure out, right? They picked out, they very much picked a product guy. This is the narrative around John Ternus. Maybe that's his whole job is to figure out the next paradigm. What they can't do is assume the phone will hold for another 10 or 15 years. And so I think next year at the phone holds and the year after that. But if you believe that user interface paradigm shifts are what leads to new hardware, the squirrel wheel brought us the iPod, the multi-touch screen brought us the iPhone, and on and on it goes, then, oh, you can just talk to an agent and it can go get things done for you, leads you to any number of hardware form factors, one of which Johnny Ive is attempting to build at OpenAI.

38:14And so you see, at least the industry is mounting the threat and Apple needs to respond. And I think this version of Apple intelligence is very much, oh, we can't, we have to at least protect, you can talk to the phone. Because if you're not using Siri, you might use ChatGPT. And if you use ChatGPT enough or Gemini enough, then when they have the hardware, they can say, you're not even using the rest of this phone. Okay. So point and shoot camera in our little pendant and you'll be set and you won't have social media to distract your kids.

38:44Peter Kafka:So I use Chat all the time. Right now I use the enterprise version because my employer is a partner with OpenAI. So they pay the fee. Will I still want to use Chat as much next fall? when this software rolls onto my phone, or will I swap it out for Apple Intelligence? What can it do? If you're on the paid versions of these tools, I don't think Siri is going to be all that compelling for you, outside of the fact that it has better access to your messages, your iMessages on your phone. Or if you are an Apple Photos user, it has better access to the index of photos on your phone. And they did re-architect a lot of that stuff, right?

39:18That its understanding of the content in Apple's ecosystem is much better than it was before. It's much faster than it was before. We've all tried to search photos and had it just beach ball at us. Can't even search email. Yeah, that stuff is, they're claiming that they have fixed that. And that's why Apple intelligence will have better personal context. So I think what you're going to see is talking to Siri about things inside the Apple ecosystem will become vastly more compelling than talking to the other chatbots about things in the Apple ecosystem. Hey, someone texted me this. Can you find it?

39:44You're going to want to use Siri for that. Everything else where you have these like long running agentic tasks or go do deep research for me because I'm on the paid tier of ChatGPT or the paid tier of Gemini, Apple's nowhere close to that. And even their demos aren't even trying to pretend that they're close to that, right? This is why I keep making reference to the free version of ChatGPT. That's about where they are. And even their technical specifications for the models, the context window size, all the stuff that they're actually revealing, indicate, oh, this is actually on par with the free version.

40:16It's not the million context window size that Google is very proud of, for example.

40:20Peter Kafka:And what is their thinking? That they're going to now belatedly spend billions of dollars and catch up and build their own LLMs and eventually they'll reach parity or close enough to the big guys? One of the most interesting parts of all of WWDC is that after the keynote, which is their pre-taped infomercial, they brought all the journalists and influencers and creators, a very small group of people into another theater. And Craig Craterie, who runs software engineering, and Mike Rockwell, who runs Siri, and two of their product managers were on stage with them. Tim Cook was in the front row, which had to have been nerve wracking, just watching them.

40:55And they gave a presentation.

40:56Peter Kafka:I'm done presenting. That was my last presentation. I'm done. And it was on the one hand, it was just cute. Like they're out of practice. They haven't done live events in so long that they weren't as polished. I've seen lots of Apple events. They're usually very polished. This was a little rougher. And I think they wanted it to be a little rougher. And they took some questions. They're obviously pre-screened. And we had to submit it beforehand. but they got into it. This is how it works. Here's the architecture slide of how Apple intelligence works versus how Gemini or OpenAI works. And the point they were making is you all think we're running on Google services, but we're not.

41:32We use Gemini models to refine our models, Apple foundation models, and we re-architected our private cloud compute system to run on NVIDIA hardware and Google Cloud, but those belong to us. And Apple devices only talk to Apple code. everything is signed this is a closed apple ecosystem they're just our hardware vendor and like model refinement provider now how much do you believe this right like we have to like actually see and test the claims and verify it but the capex question is really interesting there sure they're not doing the big data center build out but they're paying google enough money to support google's big data center build outs in data centers full of nvidia chips they're kind of

42:08Peter Kafka:spend aren't they paying what are they paying google every year it's a billion a year to license Oh, so nothing. Okay. Yeah. All right. And then it's great because then Google is paying Elon 14 billion for. Yeah. It's a big, great daisy chain. And the antitrust pressure on the Google search default deal is still very high. So maybe that number goes down and you can set new search defaults, but the AI number goes up. There's a lot here, but the fact that Apple didn't pick Google TPUs, which Google's very proud of its own chips. They picked NVIDIA GPUs inside of Google cloud services. Like Apple has a CapEx bill for AI now, right?

42:45There's hardware that they are funding to support running its own.

42:47Peter Kafka:So they went from we're not chasing AI to we're chasing AI. We're just doing it in a way that is sort of de-risked. And I've always been confused watching what we now call the frontier labs. The AI guys spend gazillions of dollars every year to make their models incrementally better than to get matched by their competitors. And then for whatever innovation they've created to become commoditized six months, 12 months down the road. And I get there's reasons why they think they need to be on cutting edge, cutting edge, cutting edge. Does Apple need to be on cutting edge for this stuff? It depends on where.

43:27So if you look at Xcode, which is the platform that Apple developers use to write iOS apps, all of the frontier models plug into that. So if you are an open AI codex person, you write all your code in codex, you use cloud code, you can use those models inside of Xcode, their software development platform, and they have to be there. They cannot lose developers to vibe coding platforms or agentic tools. They have to integrate those models. I don't think they have to make their own models in those cases. I think they give you the choice. You could pick your model in the dropdown, but they have to participate.

43:57I think in the parts of the ecosystem where AI is disruptive already, Apple has to participate at the frontier. I think in the consumer world, I'll just keep coming back to this, there are not great consumer products yet. There are not products that make it obvious to every consumer in the world why we have to support data center build-outs and blah, blah, blah, blah, and the energy prices go up. Like that product does not yet exist. And I think Apple's approach is to start layering on the capabilities until that product comes into focus.

44:26Peter Kafka:Yeah, put a pin on the product idea. I want to come back to it. But speaking of consumers, after they prematurely announced Apple Intelligence in 2024, they made an ad campaign with the actress. Was it from Last of Us? Yeah. And they got sued. They got sued, took the ad. And anyway, they were promising Apple Intelligence in these phones. And I know because I know some normal people that even though they had no idea what Apple intelligence was, it sounded good. And when I told them I got a new phone, I said, oh, does it have Apple intelligence in it? And they were at least vaguely interested in the idea.

45:01Peter Kafka:Do you think that when Apple intelligence comes around for real next fall, that that will induce anyone to buy an iPhone who might not have bought one or to get it that much faster? Or do you think this has no effect on iPhone sales? I think it has no effect. I was talking to my friend Casey Newton, who was at WWDC, and he was like, it's interesting to be here. It's interesting to meet these announcements. At the end of the day, nothing Apple or Google announced at these events convinces anyone to buy an Android phone over an iPhone or convinces anyone to buy an iPhone over an Android phone. These install bases are huge.

45:31Moving the needle is you got to hire 100 million new iPhone customers or fire 100 million customers. You can't do it. I think it's almost too hard to move the needle. They're very protective of their market share. They're protective against churn. and that's why you see all the carrier deals and promotions. That stuff is all defensive at this point. The install bases are huge. Everyone's minting money. When there's great new hardware, new colors, they sell more phones. But there's not a killer feature every year.

45:57Peter Kafka:Well, remember when they introduced the talking poop emoji? That was a big deal. That was really good. Big form factor changes. The iPhone 6 sold a lot because the screens are big. I think we're all expecting a folding phone this year. Maybe that'll do it. But it's not. Those are upgraders. Those are people who have held on to phones for a long time. And so sales are pulled forward or pulled from operators who are lagging. And this is Apple's curse of success. They make such good products. Everyone has them. In fact, they hold on to them longer because they're so good. There's no need to upgrade them every year.

46:28I think what you're going to see, though, is the thing they will market is not Apple Intelligence. It's Siri. This is now an app on your phone. It is a thing you can talk to. It's a brand people know and trust and recognize. It is very marketable. It's tangible. It's coherent in a way that Apple intelligence never was.

46:45Peter Kafka:And maybe it's different than saying we've added a sixth sensor to our phone, which you didn't know existed anyway. Yeah. You know, we will probably see some of the photography stuff get marketed. The reframe a photo, expand the background, get rid of the junk. But I think all of that will be secondary to you can now talk to Siri and it does what you expect after all this many years of Chachi PT existing. What does it mean that OpenAI was their chosen partner and now seems to be so unhappy that someone is leaking to Businessweek that they're considering suing Apple because they're so unhappy with the deal?

47:21Peter Kafka:Does that tell us anything about Apple or OpenAI? I think it tells us something about both companies. From Apple's perspective, the thing that they are proudest of is they have rebuilt a system that is on par with the free chatbots in a privacy-focused way. So they have a system called Private Cloud Compute. It is very technical, but basically it protects your data. It runs on their servers and on video chips and Google Cloud. They can look at your email and text. No one else will. The servers can, but no one else can. And there's no data being stored. And there's all these ways to protect your privacy and your anonymity in the way the data is transferred and stored.

47:58And that's all open to researchers. They want that validated. And so they spent a long time building that capability. I think Google has been their long-term enterprise partner for a lot of things, particularly a big search deal that has pressure on it. There's a lot of reasons you want to just walk away from that antitrust litigation and say, look, the future isn't even default search engine placement in Safari. It's being our model provider or refiner, I guess they would call it. Like I said, the future isn't even being the default search engine in Safari for 10 blue links. It's being our model partner on the future, which is AI.

48:30And Google can just switch those revenue lines. the anti-pressure goes away. Google is good at having big corporate clients, right? This is a big stable company that can just assign engineers and resources to you. They can say, fine, we'll re-architect Google Cloud for you. Go ahead. It's done. I think OpenAI is just a vastly more chaotic company with its own interests. They also just had a messy breakup with Microsoft. They want to be the big consumer company of the next generation. They are building their own products. They are trying to do everything all at once without any particular focus, if you are a big enterprise customer of OpenAI, I think you're looking around and wondering, is this company even going to survive to its IPO?

49:10Is Sam Altman going to be CEO forever? Is the next set of executives going to get fired tomorrow?

49:17Peter Kafka:So do you think this is more about Apple saying, we'd like more control over AI or Apple saying, we'd like to work less with OpenAI? I think this is Apple's DNA. And the part Part of Apple's DNA that I think is most important here is called the Cook Doctrine, where he said to shareholders many years ago, we want to own and control the primary technologies that we base our products on. In this case, they don't own Gemini, the frontier model. And maybe they're not going to make that investment. But they own private cloud compute. They own the code that's running on those servers in Google Cloud.

49:47They own the NVIDIA GPUs and how they're being used for this stuff. And I think OpenAI ultimately wants to be a competitor to Apple in a way that the frenemy relationship with Google has settled itself down. And now these are corporate entities that rely on each other.

50:02Peter Kafka:Instead of making a new Android, they're going to make a new something that Johnny Ive is going to make. Right. And they're just very competitive. And OpenAI is just very competitive. I think this led to the Microsoft breakup. I just had Mustafa Suleiman, who's the CEO of Microsoft AI on my podcast Decoder. And he was like, it's a great partnership, but eventually they wanted to do more and we wanted to do more and goodbye. And I don't think OpenAI is a big enough or old enough or sophisticated enough company to have that frenemy relationship yet. All the other big tech players have these frenemy relationships.

50:34Apple and Meta hate each other. These are companies that are not fond of each other. Their executives are always taking shots at each other. There's no Instagram without the iPhone and there's no iPhone without Instagram. And they know it. And so they keep a distance that is very important. And I think some of these other companies want to be very big, but they just haven't developed the skill set or experience or thick enough skin to pull it off.

50:53Peter Kafka:We'll be right back with Nilay Patel, but first a word from a sponsor.

51:01So the 2026 midterms is shaping up to be an all out brawl. But the biggest fight may not be between Democrats and Republicans, but over the congressional maps itself.

51:10Peter Kafka:Gerrymandering is not a good thing. We don't like it. And then all of a sudden we're going out and telling people, vote for this. So I'm in Ashland, Virginia, a small town just outside of Richmond, which calls itself the center of the universe. And that checks out because it's the center of the political universe, at least when it comes to the 2026 midterms. That's because Ashland sits in Virginia's first congressional district, which is one of only about 35 or so that are actually competitive. That makes Virginia particularly important when it comes to the question of gerrymandering. The gerrymandering is a major problem, but it's not like Democrats drew first blood with this one.

51:47Donald Trump doesn't think he should be held accountable by anybody. So he's trying to change the rules because he doesn't like the game.

51:52Brian Stelter:We've shown what we're capable of. Now let's keep up the push through the midterms. America Actually will be in your feeds and on YouTube every Saturday with an interesting interview in politics or culture. Have we underestimated the damage Trump has done?

52:09Peter Kafka:It's easy perhaps to chuckle at a Donald Trump. There are times when he's sort of campy. I think there are things that he does, you know, his little dance and some of the other kinds of things to come across as a rascal. But I think we have to look under those things at the real harm he has done to American institutions and the rule of law.

52:29Brian Stelter:I'm Preet Bharara, and this week, former U.S. attorney Barb McQuaid joins me to discuss this administration's mob-style governance and corruption. The episode is out now. Search and follow Stay Tuned with Preet wherever you get your podcasts.

52:53Peter Kafka:And we're back. We mentioned it. John Ternus is going to be the new CEO that Tim Cook is leaving, long run, sitting in the audience, like he said. I don't know John Ternus at all. I've only read, I think, Mark Gurman's profile of him. How do you think he is going to navigate Apple through this phase in a way? And how might it be different than Tim Cook? So, you know, I've reviewed a lot of Apple products over the years. I've been in a lot of briefings with John Ternus. He's a product guy. Like, you know, they would put him in front of product reviewers. And I would ask him questions about how much DRAM the iPad had.

53:28And we'd sit there and talk about it. There's a part of this narrative where his job is to invent the next generation of products. And maybe to speed up hardware development. it. If you look at Apple, one of the most unique things about it is it doesn't have very many categories of products. It makes lots of products. There are lots of SKUs of AirPods and iPhones and iPads, but it's not in lots of categories. One of the things that AI gets you is, oh, you can be in more categories. This might be a layer that connects all these devices together in really seamless ways because you can just talk to your new HomePod and it has all the data from over here.

54:01And maybe you reach this ambient computing future where you are just talking to your your airpods or your glasses or whatever so i think the narrative around turnus is it's his job to usher in the next class of devices the thing that will be different is tim cook as statesman was his whole personality and and not product guy he was specifically not you guys make

54:23Peter Kafka:the awesome products i'll tell you how we can build them and i'll make sure we get along with china yeah and donald trump yep and so i don't know you know you you have a show you've interviewed lots of people over the years. I've never even requested the Tim Cook interview. I've watched a lot of them. And it always struck me is I'm not going to get a lot out of this. He is never going to say a word he doesn't want to say. He's never. We're never even going to have that glimmer of emotion from him because it is not in his interest to have those glimmers of emotion. And I think the interesting thing about the Ternus era will be that Tim Cook is still there.

54:58He's still there to handle Donald Trump. He is still there to handle China. He's not going away. That's going to be his new role at the company. And Ternus gets to be more of an emotive character. And you can already see it. The night before WWC, Apple had a welcome reception for journalists and creators. Ternus was there. He's taking selfies with all the creators. He's cracking jokes, big smile on the face. He's just going to be a different kind of character and avatar for Apple because Tim Cook still exists to do the other job. And the interesting part of this is when Anderson took fully a step away and who will do that job in the future.

55:32There probably won't be a Donald Trump in the mix at that point, right? There probably won't be a Xi Jinping in the mix at that point. Shrugging. Yeah, because that might be many, many years in the future. But that is the role that Cook has played at the top of Apple. And now you're going to see that pull apart a little bit more.

55:49Peter Kafka:You've said this multiple times. We're 22 minutes into this interview that there are not really signs of consumers wanting a lot of AI. They might be using AI in various ways. A lot of people are actively angry about it, but a lot of people were just sort of nonplussed by it. You had a great rant you published in April. Great headline. It's called The People Do Not Yearn for Automation. Great title. Tell me what you mean, and then I've got a follow-up. Sure. I think people who make software for a living think the whole world looks like software. Yep. And I love people who make software for a living.

56:30I'm a tech reporter for a reason. I want to spend my time understanding this world and bringing it to a big audience and pushing on all the hard questions. It's the thing that I enjoy most doing in my workday. But if you spend enough time with software people, you're like, oh, they have this thing that I call software brain, where everything looks like a database and a front end to the database. And if you could just put more data in the database. You can run more loops on the database to do the next thing. And you can see it. They're right. In some cases, they're right. But you can see it in the demos.

56:59Every Google AI demo ends in a transaction. Every time you're like, I'm watching this thing, sell me some shoes for hiking. And it like goes and searches the web and it looks at all the databases of all the shoes and it like brings you a product recommendation. And you're like, is this right? It only reflects the data that Google can get in its database, which might be vast. Every Apple demo, if you look at it, ended with trip planning. Because Apple doesn't care if you buy anything on the web. Google really cares if you buy something on the web. Apple doesn't care. And they're like, okay, we've assembled all the data from the databases, and here's an itinerary for you to go on a trip.

57:30And you're like, this isn't actually how people think. People in their personal lives as consumers are not trying to maximize productivity. Ben Thompson had a good line in his newsletter, organizations and businesses are trying to maximize time they're trying to maximize productivity consumers are trying to waste it right that's why we watch i don't think yeah and i don't think silicon valley has contended with this that in your personal life you're trying to find joy you're trying to find entertainment you're not trying to actually optimize everything there's a class of people that find joy in optimization i'm wearing a whoop band right now right like i get it but But these are the same people that tell me that I should be vibe coding.

58:11Peter Kafka:And I go, okay, what would I vibe code? And they go, you could rename your file folders. And like, no. This is what I mean. And you're like, every great piece of software automates some little task, like fundamentally, right? The idea that you can look at your life and see like, oh, I do this in a repetitive way. I should build a tool that does it for me is one kind of personality. It is not every kind of personality and it is not universally applicable. And so you see the AI companies have all landed on, oh my God, we can make software. With a prompt, we can do vibe coding. That's everything.

58:41We can solve every problem now. Every business will bend to our will. And I think consumers, regular people are like, well, you're threatening to take all our jobs away. That our feeds are full of AI slop. We see it, we hate it. And our energy prices are going up. And I don't care to vibe code. I don't care to automate my day-to-day life. And if you're telling me that this is going to develop a wonder drug,

59:04Peter Kafka:like I don't have a wonder drug. So let me know when that shows up. and now you know all the aics are starting to walk back their job claims they're saying they won't take all the jobs in fact software engineering jobs are up like they've realized they've run into the political reality of their rhetoric and they're walking it all back but i i honestly think and this is very reductive people yell at me every time i say this but just for the sake of the argument if you just pointed at a data center like that's where netflix is people wouldn't be so mad yeah right they would they would understand the value exchange and they might still be mad about the power bills.

59:38They might still be mad about the noise being generated, but they would at least understand, oh, that's where YouTube comes from. That's where the app store is. Right. That's where the AI is going. It's like, what am I getting out of that? You're just going to take my job away. My kids don't have a future now.

59:53Peter Kafka:And even the, you know, I had Paul Ford on this show and he is a human being who codes and speaks English. And he was trying to give me the human version of this. And in his mind, and he makes business software. It's you are at your desk job doing Excel or some version of Excel and you want a feature that Excel doesn't have and you tell someone who either works at your company or that your company partners with and they build you that thing. And even that is hard for me to get my head around because who is really thinking about tweaking their software mix? It depends. I think there's a lot of people whose job is essentially to use a piece of software and lots of people have a job that kind of revolves around a piece of software.

1:00:32One of my jokes is that the person at your company who runs the Airtable is the most powerful person at your company. Right. Because no one else is going to sit down and figure out how to use fucking Airtable. But that person is like literally in charge of prioritizing the list.

1:00:44Peter Kafka:And if you don't use Airtable, it is a productivity software. Yeah. Or Trello or whatever it is that your company uses. But the person who runs that thing is the most powerful person because they get to reorganize the priorities. They figured out the software. That person probably has a million ideas about how to improve Airtable or Trello or whatever piece of software that they are tasked with using every day. The cost to implement those ideas used to be high, right? Someone had to be taken off some other priority. You had to pay a vendor. Working with a vendor sucks because they don't speak your same language.

1:01:12Their interests aren't the same as yours. Okay, now you can just tell Airtable, hey, I want you to work this way and the code will be generated for you or the AI will use Airtable in the way that you want it to. Maybe that person got vastly more productive. The flip side of that is maybe the boss says, I don't need you at all because I can just talk to Airtable myself. There's no more point in learning how to use Airtable. Airtable as an interface is deprecated. Airtable is a database of information for my agent to go talk to is actually the future. We're going to fire everybody. And you can kind of see this happening already, right?

1:01:43Matthew Prince, the CEO of Cloudflare, his justification for firing thousands of people is there's all these people and jobs that are to measure things at my company. I fired all the measurers. I just want individual contributors. This will backfire. Like anybody with an ounce of sense is going to say, actually, we need some people to hold everyone else accountable. Like no one's going to listen to a computer in this way. Like at some point you actually want someone to say, I measured this. I got it right. I'm accountable for the measurement. And we need to do the, we need either change course or double down or whatever it is we need to do next.

1:02:14We're on the cusp of some of the weirdest org charts and ideas in history. Jack Dorsey wants all 6 ,000 people blocked to report directly to him. met us putting together teams of 50 engineers and one manager. Who knows how any of this will work?

1:02:27Peter Kafka:The pendulum will pendulum and they'll say, oh, it turns out actually some managers are good. In some way. We're going to see something happen. But this notion that just letting people write their own software should re-architect how every organization runs kind of misunderstands the role of the person who uses the Airtable. Does it make sense to tie this back into what Apple is isn't doing with AI, that they're not telling you that this is productivity software, that they're not telling you that this is going to automate some part of your life, that they're saying, yeah, you can make better emails and improve your photo.

1:03:02Peter Kafka:And it's just going to do sort of day-to-day things. Or am I overthinking that? They've actually mixed it up quite a bit. One of the demos I saw all on the same sort of run was they asked for a dinner recommendation from text messages. And then they opened notes and they're like, and then I took some messy notes at a meeting about a project launch and like vendors and they asked apple intelligence to turn that into a memo to send to the boss and then it was a hard right turn into like asking about the lyrics of a song and i was like this most people have like a work laptop like all this stuff is not happening in the same place like why are you talking about all in the same way as though my company wants my apple account to have my work notes in it and they kind of didn't have a good answer right it's this is software brain it's to show you the demos we have to construct these scenarios in which everything you're doing kind of looks like work until we land right on the doorstep of actual work.

1:03:55And I think that, you know, in many people's lives, a lot of things look like work. Like I have two kids managing the calendars. The two children is just an administrative burden. Great. Apple intelligence, like you take it over. Like here's the horrible PDF of the dance class schedule. Like please figure this out and put in a calendar. Happy for that to happen. But the part where it bleeds into actual work, I think everyone's employers are going to have a lot to say about whether it's Apple system or the Gemini system they're paying for that protects the data or some other system. Speaking of employers, you work for Vox

1:04:27Peter Kafka:Media. I make this podcast with Vox Media. Vox Media is being split into two. James Murdoch and his wife are buying the podcast part of the business and the part of the business you work at, The Verge and many other fine sites is going to be its own thing. What do you think about that? I think it's good. I do. I really do. Just to clarify, I host two podcasts at The Verge. I co-host The Vergecast. I host The Decoder Podcast. Those are on The Verge's P &L, so those aren't going. There's a lot of confusion about this. The Vox Media Podcast Network is, at least in my experience, is an ad sales network, and they're very good at it.

1:05:06They saw a lot of our ads. They saw your ads, right? But they don't have editorial control of us. So just to clarify that, because I think there's a lot of confusion about that relationship with the Verge and the Podcast. None of that changes.

1:05:18Peter Kafka:You'll be at a different company. I had the Versant CEO on a few weeks ago, and I was politely, I thought, needling him about, hey, you're the cast-off company. If Comcast really wanted you, you wouldn't be a standalone company. And he had a little argument about how they were going to have new resources and they were going to be able to invest. Is there a version of this that you are excited about? There is. I would say you talk to a lot of media company CEOs. I've talked a lot of media company CEOs lately. Jermagov is one of the good ones. The company still existed until this day. Many of the other companies did not come to a similar end.

1:05:56They just crashed and burned. So I give him a lot of credit for navigating a millennial digital media company to an outcome that isn't pure disaster. So that's the first thing. The second part is, you know, to the extent that I've had disagreements with anything, it's a big company. It does a lot of different things. It pulls in a lot of different directions. and I always joke that Decoder is a podcast about org charts like maybe some of that is just therapy like how do you exist in a big unwieldy matrix company uh maybe you can figure out what I'm working through on any given week with whatever I'm asking whatever CEO I think a little focus a little you know there's going to be a transaction some some amount of dollars are going to flow into a company that's going to be good so a little focus a little investment I think will be very healthy for the verge.

1:06:42Um, and I'm excited that we get to try. Do you know what I mean? Like most digital media companies do not get the second shot. They, they just collapse in a ruin or they get turned into SEO farms to milk the last dregs of SEO. We're not going to, we're not going to have to do that.

1:06:58Peter Kafka:Uh, uh, bending, bending spoons is trying to go public at$20 billion. I went through the S one and there's some scary shit there. If your company, well, you know, if your company gets bought by bending spoons, things have gone badly. And then they're not going to get better for you personally. But I wish you the best. You're very good at speaking. You should do a podcast. Maybe one of these guys will figure it out. Thank you. Stay in touch. Thanks, man. Thanks again to Neelai. Thanks again to Brian. Thanks again to Charlotte Silver, who produces and edits these shows for you. She kicks ass. She did both these interviews and turned them around in one day.

1:07:32Peter Kafka:She is awesome. Thanks to our advertisers. Also awesome. Thanks to our listeners. That's you. Everyone is awesome. See you next week.