Data Centers are the New Railroads - DTNS 5137

0:03This is the Daily Tech News for Friday, October 31st, 2025. 35, 31st. What's the 31st? It's something. I'll remember it. We tell you what you need to know, give you the important context, and help each other understand. Today, Andy Beach tells us why AI has folks running for the shelter of text edit. And in part two of our discussion of tech earnings, we realize why everybody's head is in the clouds. I'm Spooky Tom Merritt. I remembered it's Happy Halloween. I'm Jen Cutter, who can't wait to shell out all of his candy so I don't eat it. Good luck. Let's start with what you need to know with that big story.

0:42All right, so cloud is now king, as we saw in the earnings reports earlier this week from Microsoft and Alphabet, and further bolstered by Thursday's Amazon earnings. Amazon reported that AWS revenue was up 20 % on the year, driving the overall 13 % rise in revenue for all of Amazon. That's only behind advertising in growth. advertising rose 24%. AWS is growing at a pace we haven't seen since 2022, re-accelerating to 20.2 % year over year, our largest growth rate in 11 quarters. That's CEO Andy Jassy. Of course, he's right along with the others. Google's cloud revenue grew 24 % last quarter. Microsoft Azure grew 40%.

1:28So 20 % isn't even all that much. But AWS has been the leader. So you usually grow a little bit slower when you're that far ahead. Amazon also raised its capital expenditures forecast for the rest of this year and expect to have an even bigger number in 2026. They're going to spend a lot. Amazon also says that it's cost cutting if you're like, wait a minute, they're spending all this money on stuff, but they're firing people. Yeah, they laid off 14 ,000 in their headquarters staff. But Andy Jassy says it's not what you think. The announcement that we made a few days ago was not really financially driven, and it's not even really AI driven.

2:09Not right now, at least. It really, it's culture. And if you grow as fast as we did for several years, the size of businesses, the number of people, the number of locations, the types of businesses you're in, you end up with a lot more people than what you had before. And you end up with a lot more layers. Now, what he's saying there is basically we just needed to flatten the organization. We hadn't cleaned up the org chart in a while. But it is spending money and it's spending most of its money on AWS infrastructure, building out capacity for AI demand. That's the demand that is driving cloud revenue.

2:52At Google, cloud is its fastest growing segment, finally challenging YouTube as the number two cashmaker behind the juggernaut that is Google advertising. And as Jason and Sarah talked about yesterday, Google also spending a lot on infrastructure, as is Microsoft. Now, Jen, Amazon's been a cloud company for years, as has Microsoft for that matter. It looks like maybe Google is becoming one too. I feel out of step with this one because I had always thought of Google as, okay, like email, because everybody thinks of email, YouTube. But I also always thought of them as cloud, I guess, because my brain is like, oh, well, all of, you know, sheets and all that stuff is online that everybody uses for sending data.

3:36my brain has always been like, well, YouTube's online. So that's clearly cloud because it's very hard to download stuff unless you're on a premium. But the infrastructure is where everybody's going. And I'm always slightly skeptical. It's like, we're going to spend trillions and trillions of dollars on all of this stuff. And I tend to believe it only when shovels have hit the ground and hiring happens because there are places that have started and not finished, not necessarily talking about data centers, but just like big industrial projects in general. Yeah. And that's what's confusing about what Amazon's doing here.

4:11And when you're explaining, you're not winning. So those amount of words from Andy Jassy is going to cause a lot of people to go like, okay, but what do you really mean when you say you're clearing up layers and flattening the org structure and all of that? But let's take him at his word that that's all that is. you're right. When do we see all this money from data center build out turn into revenue? And I think they can point at these earnings and say, this is the beginning. This is the hockey stick starting to turn up. We're going up the ladder and it's just going to go up from here. A lot of people are rightly skeptical that this is going to continue to rise as much as it is.

4:56A lot of people say that this is all circular. It's a bunch of people paying each other for something that eventually maybe no one will want. I tend to think that this looks like railroads. A lot of people went broke building railroads. But in the end, you had tracks and people figured out how to make use of tracks. And you've got freight shipping all over the world on railroads as a result. a lot of times the companies that spent the money building the tracks were not the ones to benefit from the tracks down the road. And I wonder if that might happen here too. As a Canadian, I always get jealous when Europeans talk about trains that actually go places.

5:37Well, that's passenger trains, right? I'm talking about freight. No, but same here. I'm talking about the ones that you have to stop and roll down your window because, you know, the huge procession of boxcars is going by. Yeah, well, we need more of those too. I do agree that like somebody is going to benefit from these data centers down the line. However, many of them get built, people will find a way to use them because they've already made the investment, whether it's selling them off or renting them off or any other ways to move money around. But I think it's going to come down to a people problem.

6:09Same with how video games, they talk about like, oh, we've streamlined our development and gotten rid of some managers and a whole bunch of programmers. we're not going to see the effects of that for possibly three to five to seven years because of how long development processes take these days, especially for AAA. So right now there's 8 billion games and nobody has the time for it. But how does that look years down the line? Do these processes pay off? Is AI going to make a sustainable difference in the future? As you said, we're going to find out and I don't know how fast we're going to find out.

6:44So that will affect the hockey stick. Yeah, that would be the downside, right? If the promise of these tools is not as, not even half as useful as people expect, then it might not make use of those data centers. You might have ghost data centers in the future, right? Where it's like, ah, they built this expecting the AI gold rush and it never happened. I expect that we will find uses for computing power. And whatever you think of these tools now, I know that the rapid improvement of them, just think about the difference between what ChatGPT was two years ago and what it is now. The rapid improvement of them means they are becoming useful for more things and we're still figuring out what the current tools are useful for.

7:34So I feel like it's a pretty good bet that we will find uses for these. I also think it's a pretty good bet that they will not be the uses that everyone is marketing them for right now. Because that's usually the way things go with technology. And like you say, yeah, we will make use of those data centers for something, you know, people will come to use them. But the folks who are smart about adjusting to this and flexible will do better than the folks, like you say, who cut too much. Now, Amazon is saying that they are cleaning up years of organization that was not adapted to the to this current situation and that it's not yet AI related.

8:14I noticed that he's like, well, at least not yet. So I think he yeah, Andy Jassy is still indicating that maybe he thinks they might have to reorg again once they start figuring out what these tools are good for. But he's being very cautious, of course, because he's talking to investors when he says that. And I appreciate that. I think there's a lot of other executives out there who are saying, we're going to have to lay off a bunch of people in the future because these AI tools will take over. And I don't think that's true. It's always good to be a little cautious also because your shareholders like it.

8:48But like the old saying, like, oh, if you shoot for the moon and miss, you're still among the stars. It's like, okay, yeah, but you also might be broke and stuck in space. Exactly. You might run out of oxygen because you're nowhere near a replenished source. It's a very good point. DTNS is made possible by you, the listener. Thanks to Jeff Wilkes, Tim Deputy, Brandon Brooks and Luke Holbrook. Yay! Thanks, patrons. There's more we need to know today. Let's get to the briefs. Apple announced its earnings on Thursday, and among the highlights were a 15 % rise in services, its highest growth rate this year.

9:26Apple also believes holiday sales of the iPhone will propel it to its biggest December quarter ever, projecting 10 to 12 % revenue growth. Sales of the iPhone this past quarter were up 6 % on the year, the biggest ever. The company will need sales to bounce back in China, where iPhone sales fell 4 % unexpectedly. Apple CEO Tim Cook attributed the drop to temporary supply constraints and believe sales in China will recover quickly. Cook also told investors the company is making good progress on a better Siri for launch next year, which is what he said last quarter. He also told analysts that Apple is open to acquiring companies to, quote, advance our roadmap.

10:09And Cook told CNBC that Apple is preparing to announce partnerships with more AI companies like the one Apple has with OpenAI. Yeah, so you always got to kind of read the tea leaves with Apple. And they always say they have a record quarter because the revenue is almost always going up. So, yeah, iPhone sales went up 6%, their biggest quarter ever, because they went up 6 % again and they haven't gone down a lot. So I don't get too caught up in the like, it's a record revenue, but Apple likes to tout that. It does seem like it's a decent earnings report for Apple and they're not in trouble now, but everybody is asking them about the future.

10:47Are you going to have a Siri product that can compete with Gemini, whatever open AI comes out with, Amazon, which has a much improved, although not perfect voice assistant now as well. I see a good thing here, which is Cook saying they're going to do more partnerships so that you'll be like search. They're approaching it like search engines. You'll be able to say like, yeah, Google's the default, but I would like to choose Bing or DuckDuckGo or something like that. I think that's good. Making promises that they're making good progress on the better Siri is not the verbiage I would like to hear.

11:24I want more confidence. The part I am paying attention to most is the rise in services. because a lot of people, I don't know, among your friends or not, yes, they have rushed out to buy the latest iPhone, but this is their last phone purchase for a while. They're like, this thing better last me 10 years. With the economic uncertainty going on right now, a lot of people are investing now, fearing that the personal tech they use will get more expensive later. So Apple is going to have to find a way to compensate for that if that pattern holds true. Yeah, this is the slow motion pivot to services that Apple has been doing for the past 10 years.

12:04It keeps getting better and better and better. It's still not ready to take over for iPhone, but it is already eclipsing iPad and even Mac as far as revenue goes. So I think it is a more solid part of Apple's portfolio than Siri is at this point. I do think that a lot of people are worried about future more than they might need to be. At least I hope so. It usually ends up being that people say, oh, I'm going to buy this and I hope it lasts me 10 years. And then two years down the road, things aren't as bad as they expected. And maybe they upgrade. I imagine Apple's hoping that ends up being true as well.

12:44Well, knock on wood, eh? Yeah, yeah. No kidding. Tonight, we have a great performance from Lacerahim.

12:59Yes, that is NVIDIA CEO Jensen Huang making the most of his visit to South Korea. He's introducing the pop stars LeSera Fim at the GeForce Gamer Festival. He had Chimik Chicken and Beer with the leaders of Samsung and Hyundai. And he's been meeting with top execs from SK and Naver and a bunch of others as well. All told, NVIDIA will sell 260 ,000 GPUs to Korean organizations to build up data centers, including 50 ,000 for public programs to develop domestic foundation models, like a national foundation model, as well as a national data center. Samsung is going to build a factory. It's being called a mega factory in partnership with NVIDIA that uses NVIDIA tech for automation, optimization, analysis.

13:43Samsung and NVIDIA are also developing next-gen memory called HBM4 together. And NVIDIA will work with SK Telecom, KT, and LG U +, to co-develop something called AIRAN, a mobile base station tech that will improve performance and decrease battery use. And meanwhile, China's left on the sidelines. China was the big star of this summit in Seoul, but there's no word on easing restrictions on selling GPUs to China. So NVIDIA is still waiting on that. Though Wong said he's still hopeful they might be able to do something. See, if NVIDIA wanted to go retro, especially since they're also doing some work with LG, they could have brought back Girls' Generation and FX because for some reason, I remember they released like music videos and stuff called Chocolate for the Chocolate Foam.

14:30That's a good memory. They're going to throwback. Let's go. Yeah. I'm surprised we won't see. I'm surprised if we don't see more of that. LeSerafilm appearing at GeForce, they also did Overwatch in the past. They also were partnering with Android earlier this year. So lots of stuff like that still going on. It's cool to see. Open AI has started selling credits for its Sora video generation tool when people reach their regular limit. Free users can generate 30 videos a day, but can now pay$4 to get 10 more. Paid subscribers have higher limits, but can buy more generations if they max out as well.

15:09OpenAI is also exploring deals with rights holders to let them sell the ability to include their intellectual property in video generations. So this is where the rubber meets the road on Sora. The most optimistic think Sora could become its own kind of social media platform. Some even think it would replace TikTok. I don't think it's going to be that. I think it'll be a different kind of thing, just the way TikTok didn't replace Instagram. Uh, I think this is a good gamble for them to offer this to rights holders. I don't know if rights holders are going to bite on it. It will take one or two brave souls to risk the ire of their own employees and clients to do so.

15:53But if they do, and, and this is the big and also see a huge benefit from it, like a huge promotional uptick from it. Then I think the floodgates with Open. There's a lot going on on the Sora platform that's really fun, that's really promotional, that makes people bond with brands the way that they would on other social media platforms. And I can see that being a potential revenue stream for OpenAI. It's just going to take, it's a huge hump to get over, I guess. I think a lot of brands and creatives might be waiting for all of the lawsuit dust to settle before they start cooperating. Because I know a lot of creatives are a little frustrated with, oh, now they're going to ask permission.

16:42You could have asked permission all of this time and chose not to. So there's a bit of resentment on that front. Yeah. And I think that's part of that big hump that someone will get over or someone needs to get over. But if they can get a big enough name to do it, and I think they will, they'll get a big name or two to say like, you know what, let's try it. Let's see what happens. whether they can actually get a benefit from it is the big question. I have been of the opinion that Sora is a novelty that won't sustain forever. And I'm having a lot of fun using it, but I still am skeptical of whether it will be a long-term product of its own.

17:23But this is the kind of thing that would have to happen to make it that, right? Is somebody going like, oh my gosh, this movie, let me remix trailers, et cetera, et cetera, et cetera. And we saw all the memes and it just takes off. I don't know if Sora has the user base for that to pay off yet. I don't know if they have the safety. They dropped the invite code. Yeah. Well, it's a safety for it too. Have you used it much? No, not at all. Because the safety rails are harsh. It is easy to find an example of them not working and then put that on a blog post. It is difficult to make it do that. Uh, so this, the example that first popped into my head was back on Twitter, why, um, Tony the tiger had to stop participating on Twitter.

18:10So I'm thinking like, okay, if someone like Kellogg jumps in and you can play with their mascots, yeah, they're, they're going to have to be real quick on that safety thing. Yeah. And, and again, the, the problem is there might be something slipped through for a half second and it make a bunch of headlines. Right. Of course. But it would more people would find out about it from the headline that would find out about it on the platform. Because as someone who has tried to put himself in a Sora video and been told that's a content violation and and you write and it's a meme on Sora itself. How many times you run into content violations when you're not trying to infringe it, it is it is pretty harsh, but it's also not perfect.

18:50So you're not wrong that there could be something. With the resources they're throwing at it, like, I do think that these problems will be sorted. And I think even the growth between now and Christmas of, you know, guidelines and safety and errors and stuff is going to be cleaned up significantly. But it's just like any social media. It's never perfect. Right. And it only takes one for someone to grab and then tout it and say, look what happened this one time. I will die on the hill that Vine was perfect. Yeah. It didn't last long enough for us to find out. The Register reports that many companies presenting at the Ubuntu Summit announced support for Canonical's Snap packages for app distribution.

19:33DreamWorks Pictures, for example, will distribute its free and open source Moonray, MCRT ray tracing software using Snap. Proton is going to distribute using Snap. Still, the package format is missing the big name. So no Chrome, no VS Code. And while there is an unofficial snap packaging of Steam, the Valve package apparently works better and they're still combating that percentage. 20 % of Steam users, though, are using some form of Ubuntu, which is much higher than I would have expected. Same. And I wish that that was kind of subdivided into, OK, how many of those are handhelds? Yeah. Well, and and I think it's if I'm remembering right, the ThinkPad handheld Steam uses a different distro.

20:17I think it uses Arch. And so it's not even all the handhelds that have Ubuntu on them, but enough do. Probably most of them are handhelds, I'm going to guess. Well, I'm going to be one of those people running Steam on Linux shortly. So yeah, I'm going to try out a few distros and see how it rolls. All right. Finally, some quick headlines that are good to know. If you want to understand the news in the future, we're not going to spend a lot of time on them, but pay attention. These are important. Android Authority found code that indicates known battery hog Google Maps is testing a power saving mode that would remove extraneous UI elements and labels and make the screen monochrome.

20:54No indication of when this might ship. The Danish Council presidency of the European Union will no longer propose mandatory scanning for CSAM by online platforms. This has been referred to as chat control, if you've heard that or seen that in the headlines. However, it will encourage scanning just on a voluntary basis. Pony AI has received the first permit to operate autonomous taxis throughout the entire city of Shenzhen, China. That's basically the Silicon Valley of China. So it would be like all, you know, all of, I don't know, San Jose and San Francisco. It's big. It's a big place. Getty Images reached a licensing deal with Perplexity Friday to display the vast collection of its images and content in perplexities generative search results.

21:42Just the search results, but it's a big deal. Google reached an agreement with Reliance Geo, India's largest mobile carrier, to offer Gemini AI Pro at no additional cost for 18 months to subscribers of Geo's 5G unlimited plan. WhatsApp began offering an Apple Watch app for the first time. It's on test flight right now, but it lets you reply, send reactions, and share voice messages along with a few other features. Jesse Cain, who once taunted Nintendo while streaming pirated versions of its software on YouTube, now owes the company$17 ,500 after losing a lawsuit over the unauthorized streaming.

22:21That's capitalism for you. An interesting indication of the state of cryptocurrency, if you're interested. Coinbase reported revenue increased 55 % to$1.9 billion last quarter. And it has scheduled a product showcase. So things like predictions markets, apparently, coming December 17th. And Reuters sources say Netflix has hired a financial advisor to prepare a bid for Warner Brothers Discovery. Comcast is also said to be investigating making a bid. And Paramount has reportedly made a bid and been rejected. Ooh, Netflix buying Warner Brothers would be really interesting. I don't think that's what's going to happen, but I kind of want that to be happening.

23:03Because it's more interesting to talk about. Those are the essentials for today. Let's dive a little deeper. As AI makes our apps more complex and our screens more crowded, some users are retreating to the simplest software of all. Andy Beach explains why that matters. Andy, do you know that I have a long-running text edit document called Untitled 11? I didn't know that, but I inherently knew that about you. I guess at some point after opening 10 instances of text edit, I kept the 11th version open on my desktop just as a scratch pad. I have right now six text edit documents open where I've just taken notes.

23:52So this story speaks directly to my heart. Tell me about this piece from Kyle Chaka. Yeah. So this is a New Yorker piece called The Quiet Rebellion of TextEdit. And it is one of those everything old is new again, almost in a rebellion to sort of the complexity and the AI-ness, the cloud-ness of all of the apps that we're feeling. there is this drive right now for really stripped down and simplified applications that do a very simple, simple task purpose, much like text said it was. I understand where they're coming from, where Kyle is coming from with this. However, I'm definitely not doing it right because I have grammarly on correcting things in my text edit.

24:43And there's some spellcheck and stuff that you can do in text edit. You can turn it off, of course. But I get where he's coming from, even though I do that, because one of the reasons I use text edit is because it's simple, because I know it's not going to change a feature on me. It's been unchanged for decades, and it's always going to act predictably. Yeah, I think this goes back to another argument that we saw, particularly around sort of the recent redesigns we've seen in macOS and iOS around sort of the return and the reemergence of skeuomorphic design, which we haven't seen in a while. And that's it, which is that return of interfaces that sort of look like physical objects.

25:23And so I think there's a little bit of that combined with just the desire for there to be more minimal pieces. I do think there is a balance. So like to your point, I think you can add in the elements you want now that get it there, but you can do it as plugins. You're not relying on an app that's to necessarily have to integrate every piece as a feature for you. So you can, you can find that balance of, of how much you want, uh, either AI or a new feature to, to interrupt, but you can still have something that it, that is simple and, and straightforward and, and takes up very little processing power to, to run and just sits there and does what you needed to do.

26:06Yeah, everything old is new again, right? And for Windows fans, Notepad is perfectly respectable. I use Notepad in the same way. I just don't write as much on my Windows machine as I do on my Mac. But it's the same kind of thing. Do you use a Notepad or a text edit, Andy? So I have gotten slightly away from them over the years. And I would say I made an early jump into like the Evernote world that sort of got me into using something that I could use on any device, which then became OneNote. and I have slowly moved back out of that because I'm now back in a world where I have both Mac and PC much more predominant in my life.

26:49And I find myself using sometimes just the simple notepad inside of iOS because to your point, most of the writing I'm doing these days is on my Mac because it's my portable versus my PC that is more of a desktop. So it tends to be more of like a production machine, not a writing and brainstorming machine. Yeah. Well, and text edit now syncs through iCloud. So I can actually open untitled 11 on my phone. Should I, should I need to, but for that situation specifically, I actually use simple note, which has been around forever. I used to use it with a, with an app that the name escapes me that always saved to simple notes so that I could get it across machines.

27:34And then I just started using simple note in the browser and stopped using the app. But it's that kind of need for just simple text editing. I'm glad to see is perhaps even making a resurgence here. Who knows? Yeah. And I, you know, I think this is a positive indicator, even in the world of AI, that there's still always going to be room for those those simple sort of single function apps out there in our lives. They don't all have to be Swiss Army knives and that's totally OK. Well, some things are better simple and some things are better multi-talented and that's Andy Beach. If folks want to find what you do, where should they go?

28:09So when I'm not in text edit, I'm writing about the convergence of media and AI over at my sub stack, which is called Engines of Change. And that's Engines of Change.ai. Thank you, Andy. Thanks, Tom. I remember the name of the app now, finally, after talking to Andy. Notational Velocity. I don't know if you ever used that one, but that was the one I used to use. Do you use text edit? Do you use I've never used a text edit. My go-to is notepad++. Oh, notepad++, a classic. Yeah. It is a classic. It has too many features. I think if anyone goes to try it, you will end up turning off some of those features, but they're all local.

28:46It is, it can do anything. It can do anything. It really is good. Well, we don't have a text editor for sale, but we do have t-shirts and mugs with the DTNS logo on them. And in fact, on my Friday hangout this week, I'm going to be chatting with Len Peralta about holiday art so we can have some DTNS holiday cards and stuff. It's all available in the DTNS store. Go check it out. It's a great way to get gifts and support the show. It's dailytechnewsshow.com slash store. We end every episode of DTNS with some shared wisdom. Today, Kevin has some thoughts on the ongoing topic of whether you should or should not use AI to create expense receipts.

29:29Yeah. So if you don't listen to DTNS live, this Thursday, they read an email from Tony who says he has used LLMs to make receipts for actual expenses, but the vendor didn't provide a receipt. That was in response to the story Rob and I talked about on Monday regarding AppSense reported increase in the number of generated receipts in expense reports. Many of those were not actually valid. Kevin writes, and I'm so glad Kevin wrote, I am a tax preparer and I also help run a different finance department for a company with a lot of travel. The topic of fake receipts crosses both of my roles. My first thought is to the validity of the receipts made by AI on legit expenses for tax documentation purposes.

30:13Estimates can be accepted in tax examinations, but would be subject to higher scrutiny. Proven fake expenses submitted by employees not only should result in termination to the employee, but also could put the employer's business at risk for stiff fraud penalties and criminal prosecution by the IRS. It will be interesting to see how this develops in the coming years in tax court and other places. Yeah, the first time I saw this story, I was thinking the CRA, the Canadian Revenue Agency, would have my head if I submitted stuff like this. I'll be like, thankfully my accountant would stop me first, but like, oh no.

30:52I imagine it's true of the CRA too. And in fact, if there are any Canadian tax accountants or tax preparers listening, let us know that there is a way to show an expense without having the actual receipt. But like you said, there's going to be a lot of scrutiny on that. You're going to have to show some other evidence, you know, that you actually paid this. You can't just make it up whole cloth. They're not going to accept that, right? Yeah. No, what I've just, just don't pay these things in cash and then you have an electronic receipt of I was physically here doing this and there you go definitely I agree what are you thinking about do you have some insight into a story because we want to hear it share it with us at feedback at dailytechnewsshow.com big thanks to Andy Beach and to Kevin for contributing to today's show thank you for being along for daily tech news show you keep us in business by becoming a patron do it at patreon.com slash DTNS.

31:44We'll talk to you on Monday.

31:54This week's episodes of Daily Tech News Show were created by the following people. Host, producer, and writer Tom Merritt. Host and writer Jason Howell. Co-host Sarah Lane. Co-host Rob Dunwood. Co-host Jen Cutter. Producer Anthony Lemos. Producer Roger Chang. Editor Hammond Chamberlain. Editor Victor Bognot. Science correspondent Dr. Nikki Ackerman. social media producer and moderator Zoe Detterding. Our mods, Beatmaster, WSkottos1, BioCal, Captain Kipper, Steve Guadarrama, Paul Reese, Matthew J. Stevens, a.k.a. Gadget Virtuoso, and J.D. Galloway. Mod and video hosting by Dan Christensen. Music provided by Martin Bell and Dan Luters.

32:30Art by Len Peralta. Acast ad support from Tatiana Matias. Patreon support from Bobby Wagner. Our guest this week was Andy Beach. And thanks to all our patrons who make the show possible. This show is part of the Frog Pants Network. Get more at frogpants.com. The Diamond Club hopes you have enjoyed this program.