$13B Mega-Deal Creates Advertising Giant & Google’s Staggering Quantum Computer

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the ad companies behind Got Milk and Think Different are combining to upend the marketing industry.

0:40Is it because they're worth it? Ben, Google has made a quantum leap in quantum computing. It's Tuesday, December 10th. Let's ride.

0:52A suspect in the killing of UnitedHealthcare CEO Brian Thompson was taken into custody yesterday in Altoona, Pennsylvania. Luigi Mangione, a 26-year-old former high school valedictorian from Maryland, was arrested after being recognized at a McDonald's 280 miles away from the initial crime scene. They found Mangione in possession of a gun similar to the one used in the shooting, multiple fake driver's license, as well as a three-page handwritten manifesto. According to online court records, Mangione has been charged with murder hours after he was apprehended. He was also charged with three gun-related charges and forgery.

1:29So, Neil, finally a suspect in custody. What do we know about Luigi Mangione as of now? Well, we know quite a bit. He had a very extensive digital footprint that people were combing yesterday. He did come from a prominent and influential real estate family in Baltimore, went to a prestigious prep school there named Gilman, then went to UPenn for engineering, got a bachelor's and a master's there. It seemed like he was very interested in technology, computer gaming. He even built a mobile app before college. And from his goods reads, it seems like he was very interested and is from his Twitter profile, very interested in things like self-improvement, healthy eating, also veered into criticism of capitalism.

2:10And then it feels like a few months ago, he kind of went off the map after back surgery in his manifesto. He railed against health insurance companies and corporate America, saying they were seeking profits over putting customers and Americans first. So still a long way to go to understand what really motivated him, but quite a digital footprint that left a lot of people, you know, amateur sleuths researching what this guy was all about. He's now being held without bail in Pennsylvania and at some point will be extradited to New York. Yeah, and we'll keep you updated as we learn more about this story.

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4:00Like a good neighbor, State Farm is there. It was Merger Monday on Madison Avenue as advertising giant Omnicom agreed to buy another advertising giant inter-public group to create, you guessed it, the largest advertising company in the world. The tie-up is Legacy Marketing's response to AI and big tech firms like Facebook and Google, revolutionizing the way advertising works at their expense. You may not have heard of Omnicom and Interpublic Group before, but their vast network of agencies are behind many of the TV commercials you mute and the online ads you scroll quickly past. Their client rosters include AT &T, Amazon, Pepsi, Unilever, and Geico, while they're responsible for some of the most iconic ad campaigns in history, such as Apple's Think Different, L 'Oreal's Because I'm Worth It, and Got Milk.

4:50Together, the combined company will be worth more than$30 billion. But times, they are a-changing, and this isn't Don Draper's ad industry anymore. The days of asking Peggy and Michael to whip up some copy and present it to your client on an easel are over. Artificial intelligence has dramatically lowered the cost to create and serve ads, while big tech is eating a growing share of the marketing pie. Neil, is it too late for Madison Avenue to compete with Silicon Valley? We're going to find out. I mean, these companies are trying to refashion themselves more as digital technology companies than classic media agencies.

5:23They've been on a buying spree acquiring smaller companies over the past decade that you would think has nothing to do with classic advertising. These are digital brokers. These are influencer marketing platforms. These are e-commerce companies that help you sell on Amazon. the entire industry has shifted under their feet and they think they need to build scale now to compete against AI, which lowers costs and renders a lot of their services obsolete. You know, say I would typically go to an agency to whip up some ad creative for me. Now I can just use maybe an AI generator that Adobe makes and create something on my own for a fraction of the cost.

6:04Maybe I would go to an ad agency to help me plan my media buying. where should I buy ads? Should I buy this billboard? Should I buy a TV commercial? Now I can just go to Facebook or Google and they'll all do it for me and have all these personalized services where I can target people in a way that I never could before. So this is a rapidly changing industry and the big four, there's big four companies need, are buying all of these other smaller companies to keep up. So clearly these agencies are scrambling, trying to say that, no, we're at the cutting edge. We're at the forefront of the AI boom to try to attract those clients.

6:36But another aspect of this that even though that they're parading around AI is the reason for this merger, I do think scale is very important in the advertising business because there's this thing called principle-based media buying where agencies go around and just snap up all this ad inventory in advance, then sell that in packages back to companies. This is definitely a little controversial because they don't tell the companies what they initially bought the media inventory, the price that they bought it at. But that is something that scale definitely lends itself too. If you can be the biggest player in the advertising industry, that means you can buy more of the ad inventory space.

7:10And that's where these are the company's bread and butter, which is media buying, which is managing media spend for big companies. So even though you hear this AI as the thing that they're saying, this is why we're combining under the table, the scale is very helpful in just the good old fashioned meat and potatoes, the ad industry as well. And scale could be a problem. As I mentioned, these are the third and fourth largest advertising companies in the world and combining they would be the number one eclipsing publicist group and WPP, which are the are one in two right now that could raise antitrust concerns.

7:43Yes, we are moving away from the Biden administration's very harsh antitrust stance. But the incoming Trump administration, Trump nominated Gail Slater, who's a pretty tough and competition enforcer to run the DOJ's antitrust division. So this combined company could get a look from regulators. She is known, Slater's known for going after big tech companies pretty hard, but we'll see. This is, you know, these companies want to fashion themselves as tech companies now. So we'll see what happens in the antitrust realm. China and NVIDIA are beefing over suspicions that the second biggest company in the world may have been skirting anti-monopoly laws in the country.

8:20China's state administration for market regulation said yesterday that it had opened a probe into the company specifically looking at a 2020 acquisition of an Israeli chip designer called Mellanox Technology. Beijing did give approval for the deal four years ago, but it came with certain conditions like NVIDIA was not allowed to discriminate against Chinese companies. Now, of course, this comes at a time when trade tensions between the US and China are higher than ever. Washington has barred NVIDIA from selling its most advanced semiconductors to China, while also pressuring international companies like ASML to do the same with their chip-making machines.

8:56China has fired back with export bans on key earth minerals used for semiconductor manufacturing, but NVIDIA is its biggest target yet in the tit-for-tat tech trade war. The market reaction to this move was relatively muted. NVIDIA finished the day down about 3 % yesterday, but still, China accounts for about 15 % of its revenue, so antitrust scrutiny there is certainly not ideal, Neil. No, no, this is a big deal. I mean, the temperature in the trade war between the U.S. and China is absolutely heated up just in the last two weeks. And China is not revealing what NVIDIA may have violated over this agreement that they made a few years ago.

9:34But this is absolutely sending a message to the United States that China will respond and will flex its government powers to put American companies, NVIDIA being perhaps the most prominent and the most important of any company in the world under the Microsoft. So we're seeing a rapid increase and rapid escalation in the supply chain warfare between the U.S. and China. And right now, both countries are just laying their chips on the table, perhaps to pursue a grand bargain, a big deal coming up in the next few months. But this is a big deal. It is confusing, though, if you are an investor at NVIDIA.

10:12Is this going to impact NVIDIA's march towards being the biggest company in the world? And you can look at multiple data points that say yes, it is, or maybe no, it isn't. NVIDIA used to dominate China's AI chip market. They had a 90 % market share before some of these curbs started being put on the books. However, now China has been telling Chinese companies to buy chips from domestic companies like Huawei being the main one there. China did account for about 15%, 12 % to 15 % of NVIDIA's revenue in the last year, but that is down from 26 % two years earlier. So clearly that position is sliding downward.

10:49So it is one of those things where, again, probably the money makers for NVIDIA are going to be like the big tech companies based in the United States, like the Metas, the Googles of the world. But China still has a significant slice of the revenue. So that is why you might see a little bit of apprehension around the stock in like the next few weeks. And NVIDIA is being squeezed on both sides, not just in China, but in the United States. The United States has barred NVIDIA from selling its most advanced AI chips to China, which are probably the most expensive. And then at the same time, the U.S.

11:19is also investigating NVIDIA for antitrust concerns because no one makes the chips that it does as well as it does. So it has a 90 percent market share of this AI advanced AI chip market. So it is being investigated for whether it did, you know, did so it acquired this dominance illegally. So NVIDIA is becoming one of the biggest political footballs in this in this trade war between the United States and China. Google just unveiled a revolutionary new quantum computer. And let's just say you won't have any buffering issues watching Netflix on it. This quantum computer took just five minutes to solve a problem that take the best supercomputers around 10 septillion years, 10 with 30 zeros.

12:05In a blog post, Google wrote this mind boggling number exceeds known timescales in physics and vastly exceeds the age of the universe. It leads credence to the notion that quantum computing occurs in many parallel universes in line with the idea that we live in a multiverse. Okay, this breakthrough is made possible by a new chip Google calls Willow, which has cracked a three-decade-old problem keeping quantum computers from making it to the big time. Experts compared Google's technological milestone to the first man-made nuclear chain reaction in 1942. It's that huge. You're probably rolling your eyes and thinking, come on, Neil, I've heard this before.

12:42Quantum computing seems like they've been trying this forever and nothing really has come of it. And you know what? You are right. The concept of quantum computing dates back to the 1980s and has, despite billions and billions poured into the field by companies and governments, these insanely powerful computers have yet to offer any useful applications. To get something done practically, you're better off with a TI-89. But that could change thanks to Google's achievement. Toby, what was the key breakthrough here? Well, I just want to take a step back first and explain what the heck the difference is between a quantum computer and a regular computer.

13:17I would very much appreciate that. I'll put on my technology hat here. So a traditional computer, like your laptop or the smartphone you have in your pocket, it uses binary bits. It stores zeros and ones in those silicon chips, performs calculation by processing those bits of information. The key to remember, though, is each bit can only ever be a zero or a one. A quantum computer, on the other hand, very hard to wrap your mind around. They use something called quantum bits, a.k.a. quibbits. Quibbits can hold a combination of ones and zeros. I think of it as Schrodinger's quibbit. So one quibbit can hold two values simultaneously.

13:52Two quibbits can hold four values, so on and so forth. As the number of quibbits grows, the compute power grows exponentially alongside it. More quibbits equals an infinitely more powerful computer. Now, the problem, and you said that practically speaking, we haven't found any real uses for quantum computing. That's been true because one of the issues is that as the amount of compute increases, the number of errors usually also increases with it. Google said that its machine, its willow chip that it created, has surpassed the error correction threshold, which means that it allows one of these machines to reach its potential because errors aren't going up in exponential fashion at the same pace that quibits are.

14:36So that has been something that scientists have been after for decades, and it looks like they finally exceeded that threshold. That was pretty impressive, Toby. Nice job. Yeah, that concept of something existing in two states of matter at once is called superposition. Definitely look up Schrodinger's Cat, which kind of is the most famous example of something existing in two states at once. So say we figure this out. Google said that it reduced the amount of errors that quantum computing is able to, you know, it's able to handle these errors now and can maybe do these do these computations without many mistakes.

15:10What are some potential use cases for this down the line? Because companies have poured in billions of dollars, Intel, IBM, Google. They're betting on quantum computing to actually be able to be commercially viable one day. So one big use case that experts think could be used by quantum computing is drug discovery. And drug design could crack encryption, speed up decision-making in financial transactions, improve machine learning, even address climate change through forecasting and weather modeling. So there do seem to be some ultimate applications. But I think even with Google's breakthrough, they're saying, like, don't expect anything soon.

15:49We're not about to open up our MacBook, and it's going to be a quantum computer anytime soon. You mentioned at the beginning of this segment that you can eventually watch Netflix on a quantum computer. Can you imagine a world where you're just streaming in, like, I don't even know, 4K, 8K, 16K, HD, because we're all watching on quantum computers? Don't know if we'll ever get to that point, but fun to think about. Up next, it ain't Neil's numbers yet. It's Toby's Trends. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks.

16:27And most of those people maintain skin that's still more clear at one year with monthly dosing. EBCLIS, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. Allergic reactions can occur that can be severe.

16:56Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglis and visit epglis.lily.com or call 1-800-LILY-RX or 1-800-545-5979.

17:36and encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. If you've got long nails and a massage table laying around, boy, do I have the side hustle for you. Today's Toby's Trends is all about professional back scratchers. It's the hot new field for keratin-blessed individuals who are charging over$100 an hour for their services. They're not just targeting annoying inches in between your shoulder blades, though. The Wall Street Journal talked to various scratchers who say their primary goal is to help people slip into blissful states of relaxation. Think candlelit rooms and the good kind of goosebumps.

18:15Some social media famous scratchers charge as much as$162 for a one-hour session. While long manicured nails often filed to a sharp point are the primary instrument for most scratchers, some like Julie Luther, who runs Soft Touch ASMR Spa in Pasadena, California, also introduce things like makeup brushes or rooster feathers to amp up your sensory experience. The goal is to trigger the release of the holy trinity of chemicals in your brain, endorphins, oxytocin, and dopamine, to leave clients feeling sleepy and satisfied. Neil, if you scratch my eye back, I'll scratch yours. I have never gotten a massage from a professional masseuse, but I would consider getting a back scratch because that sounds absolutely delightful.

19:01It's part of this growing ASMR economy. You have these ASMR spas opening up in Los Angeles and New York. There's one right down the road from us in Williamsburg that we'll definitely have to check out. The global wellness industry was worth, what, over$6 trillion last year. This is part of that industry of people really caring about the way they feel and their bodies. So I am bullish on backscratching. I am bullish, too. There's this one company called the Scratcher Girls Spa in Miami. They actually go on tour across the country multiple times a year because a big part of this phenomenon is social media.

19:35You watch these videos. You can kind of imagine yourself being in that scenario. You know what having your back scratching feels like. So it's really led to these big accounts blowing up. And the Scratchers Girls Spas in Miami, they're going on a European tour next year because they're like people from all over the world watch our videos. I do think too that a part of it is not just the scratching experience, but some people whisper words of affirmation in their clients' ears saying like, you are safe. You are tracing a scene on a client's back and narrating what that scene is. So it's definitely a full sensory experience.

20:08It's not just a massage from a professional masseuse. It is something far beyond that. And my back is tingling just thinking about it. And it feels like the only big overhead cost here is making sure your nails are good because some of these people have three-inch nails that they have to keep perfect for optimal scratching. So that is just one of the considerations. If you have good nails, maybe grow them out to three inches, keep them filed, and then open up an ASMR spine. You could be raking in$160 for 50 minutes, which is what one of these people are charging. Let's sprint to the finish with some final headlines from the news.

20:45Mondelez International is hot for more chocolate. The maker of Oreos is reportedly thinking about buying Hershey in a mega deal that would create the world's largest confectionery company with sales of nearly$50 billion. Hershey owns more than 90 brands, including Reese's and KitKat, but it's had a rough year due to skyrocketing cocoa prices and consumers pulling back on their buying. So shares have fallen 14 % in the last three months. That means Mondelez, which owns Chips Ahoy, Ritz Crackers, and Sour Patch Kids, thinks it could snag Hershey at a bargain while boosting its chocolate portfolio.

21:19Toby, would this deal spark Almond Joy? First of all, I hate Almond Joy, so no, it wouldn't spark Almond Joy for me. But yeah, I do think that there is some potential here because yes, as you said, Hershey's had a little bit of a tough year. Hershey Trust owns about 80 % of the voting power at the company, and they have been slowly selling off a lot of its shares because they've said they want to diversify some of their holdings. So it does look like they are maybe open or amenable to a transaction like this. This would be the biggest merger of the year, actually surpassing Mars' agreement to buy Kelanova, another big snack merger tie-up.

21:54So if you're in the M &A space, you definitely like all this confectionery action that's going on. I'm just excited to see what could happen to Hershey Park. A little Sour Patch Kids ride there. We get some of Mondelez's portfolio. Leo. But besides that, it does seem like chocolate companies are being hurt a lot. Cocoa prices have more than doubled from the start of the year. And so these these chocolate companies are maybe looking for a way out. But this is not the first time Mondelez has tried to buy Hershey's, tried to do it for twenty three billion dollars in 2016. Hershey says Hershey said no.

22:30Now we are eight years later. It's going to be a much higher price. So we'll see if the Hershey Trust is going to accept the deal this time. OpenAI finally released Sora to the world yesterday, its highly anticipated text-to-video AI tool, as part of its 12-day Shipmas product release series. Chat GBT Plus and pro subscribers in the U.S. and a few other countries can now create videos up to 20 seconds long at 1080p resolution. Remember, this was the tool that went viral when OpenAI teased it a few months ago in February that lets you generate videos from text prompts, animate static images, or remix existing videos.

23:07Neil, a goal of OpenAI is to advance multi-modality, which is combining text, image, and video into one big suite of AI models. And this is getting it one step closer to that goal. Yeah, and they're taking a lot of safety precautions with this release because this is the first time where they're releasing it to the wild. And being able to create videos from AI just by typing in a sentence and create a video certainly has raised a lot of concerns. All of these videos will have visible watermarks and metadata that show that it was created by AI. You are not allowed, it's not, they're not allowing users to create any photos with, or any videos with people now.

23:46So it's likely to just be animals and scenes. So it'll be interesting to see what happens with Sora. In the meantime, since it was first introduced and now it's released, a bunch of competitors have stepped in. There's Google, there's Runway, there's a company called Minimax, there's ones from China. So there's been a, you know, everyone was blown away by a store, but now it's certainly not the only player in this field anymore. The stimmies could be coming back, at least for New Yorkers. Governor Kathy Hochul said yesterday that the state brought in more money than expected from sales taxes and plans to send that money back to New York residents in the form of direct payments.