Apple Wants Google's AI & America's Hottest Housing Market Cools Off

0:03When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Mr. Beast is taking his talents to streaming, but can he replicate the magic that made him YouTube's biggest personality?

0:41Then Google and Apple might be teaming up on AI, and if I was Sam Altman, I'd definitely be a little bit worried. It's Tuesday, March 19th. Let's ride.

0:57Okay, here is a hypothetical question that's been making its way across the internet. I am a genie and I show you three doors. Through one door, you can travel 50 years into the past. Through the second door, you get$100 million. And opening the third door will allow you to travel 50 years into the future. Toby, which door are you going through? This is interesting and I hate to be this guy, but I need to get into the semantics here. Returning to the past is only good if you can then come back to the future with, or no, if you remain there, because then you can use your future knowledge and kind of build yourself a nice portfolio, because you know NVIDIA is going to pop off eventually.

1:37Going to the future, though, is only good if you can return to the present with the knowledge you gain there. So those two doors are confusing to me. So I think I just end up on the$100 million, because that's like the only sure thing here. Where do you land? Right. Well, if you go into the past, I think you don't have to come back to the future. And you could do everything from invent Facebook before Zuck does, and you'll be worth$200 billion dollars you could bet on every sports game because you know every single outcome the past is good because you stay there but so what but if you came back that's what i don't know does the door return you to the present moment i'm i'm a genie with not that information but let's take door two out of it are you more interested in traveling to the past or the future just that binary i think the past a little bit because i mean i've never seen 50 years in the past and also the future it could be a little dicey in 50 years so i'm taking the sure thing of the past.

2:26This all reminds me for some reason of Twilight and being like the ageless vampires in some way. Wow, we've really gotten off topic here. Let's hear a quick word from our friends over at Factor. Neil, you know that I get a little antsy about varying up what I eat. I know. I've seen you order from five different breakfast places in five consecutive days. Hey, I like to switch it up, which is why Factor and I get along so well. It has a new menu of 35 dietician-designed options every week. Well, I'm happy eating leftovers every day, but I will say opening that Factor box to see some delicious meals, fresh, never frozen, does get me fired up.

3:03See, variety is the spice of life. If you are stuck in a food rut, Factor is full of healthy and delicious options to help you break free. To break free of your food rut, head to factormeals.com slash morningbrew50. Then use code morningbrew50 to get 50 % off. That's factormeals.com slash morningbrew50 with code morningbrew50 to snag a tasty 50 % discount. Race the rudders. Raise the sails. Raise the sails. Captain, an unidentified ship is approaching. Over. Roger. Wait. Is that an enterprise sails solution? Reach sails professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more.

3:44Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at LinkedIn.com slash campaign. Terms and conditions apply. Apple and Google are teaming up Power Ranger style to try and establish a better foothold in the AI space. According to a Bloomberg report yesterday, Apple is in talks to license Google's Gemini AI to put it on iPhones and other Apple devices. This is a match made in synergistic corporate heaven. Apple would finally gain a foothold in the generative AI space after being suspiciously quiet throughout the latest AI hype cycle.

4:24And Google would not only gain a massive scale in the AI arms race, but also help patch up its image within the industry after a series of embarrassing missteps. Plus, the two are pretty cozy already. Google has been paying Apple for years to serve as a default search engine on iPhones, A relationship that has been fruitful for both, but has drawn regulatory heat as well. Neil, we're still in the talking stage here of this arrangement, but do you ship these two? Do I ship these two? What does that mean? That means, do you put them in a relationship? It's like, it's my term. All right. Well, I'm clearly showing my age.

5:00It does make sense, I think. It is also interesting that it is an admission by Apple that they are so far behind. You think that Apple would be creating its own software to power its next iOS. This could be a part of iOS 18, Google's Gemini. But it is an admission that Apple's like, wow, we're so far behind that we need Google's help. They have had a big partnership for years. As you mentioned, Google pays Apple$18 billion every single year. So that Google search is the default search option on Apple's iPhones. It's worked out for them well, except for the fact that we can get into this. There's been a lot of regulatory scrutiny on that partnership.

5:37So you have to expect there will be even more eyes from D.C. looking at this if it were to happen. Yeah. Investors reacted favorably to this deal. Google shares closed up 4.4 percent yesterday. Apple jumped over 3 percent before finishing up just under 1 percent. And I think the delta between those two investor reactions does reveal something deeper, as you kind of mentioned. And this partnership gives Gemini a huge leg up in the AI race. Because, again, if you can get on literally the billions of Apple devices out there, it just gives you an immense scale that other platforms cannot offer you.

6:14But on the Apple side of things, it does reveal that its AI efforts are just not going very well. It has been working on something. It's codenamed Ajax. It hasn't released so much as a chatbot yet. There does seem to be potentially a future, though, where Apple creates an AI that helps you do stuff on the devices itself, but it doesn't actually pull in anything from the cloud, versus it uses Gemini AI to do those things that we typically associate with generative AI, like text-to-image generation or something like that. So, I think that even though investors reacted positively on the whole, it does show the difference between the fortunes of these two companies.

6:51Right. And Apple stock, I mean, it's just been kind of in the dumps recently. It's underperforming the NASDAQ by about 16 percentage points this year, which is the biggest underperformance it's had since 2013. And you have investors calling Apple stock more like a value stock like Coca-Cola or Walmart, which is just crazy to people who have been following the stock market for the past 20 years, because Apple has been the quintessential growth stock up and to the right. And now, without so much innovation, without a ton of growth potential in certain areas, it's late to the AI game. that it's more of just this reliable profit-making machine that's not necessarily going to rise exponentially over the next few years.

7:34You know who I bet is really mad right now, though, is Samsung. Because Samsung just rolled out a new smartphone that has AI features powered by Gemini. And now here Google's in talks to put Gemini on its biggest competitor, Apple. But also, this is not just a one-horse race. Again, we keep saying it. They're in the talking stage. It's a situation ship. I'm throwing a lot of relationship terms at you right now, Neil. But this is not a one horse race because Apple has also held discussions with OpenAI and considered using its model. So this is anything but a sure deal. But it does. Again, the synergies are there for both these companies.

8:08So I could see it happening. All right. Moving on to understand the context for this next story. You need to go back to peak covid. The Biden administration and social media companies like Facebook exchanged tense emails in which the government urged the platforms to remove misleading posts related to vaccines and the pandemic. The question of whether that government pressure constitutes illegal censorship went before the Supreme Court yesterday in a closely watched case that could set standards for free speech in our digital era. How'd we end up here? Well, in 2022, two Republican led states and individual social media users sued the Biden administration, accusing it of illegally suppressing views it didn't agree with and creating a vast censorship enterprise that bullies platforms to remove offending posts.

8:53An appeals court sided with the challengers and severely limited the amount of contact government officials can have with social media platforms. And after more legal jockeying, it ended up at the highest court in the land. Yeah, there is a lot of different kind of interpretations of what bullying means in this case. Like how much pressure can the government exert on these social media companies and still have it not violate like the First Amendment. Right. So there was a lot. A lot of the justices had very differing opinions on this. some people are like Alana Kagan, for instance, was saying that these same communications happen with journalists every single day.

9:29She literally said this happens literally thousands of times a day in the federal government. It's not bullying. It's just you work with these people on like almost a daily basis in some cases. So I think that you're the justices are looking to draw a line in the sand here. And it's a little bit murky. It does seem like they were skeptical of the arguments being made by the states, though. Right. It did seem like the justices we're going to rule against the states. Obviously, we don't know, but their line of questioning made it seem like they favored the Biden administration's position that this was amounted to just that—if anyone who's seen the West Wing knows that the government officials are on the phone with reporters and editors all the time trying to get them to publish more favorable things or complaining about particular coverage.

10:14And that sort of communication, that line of communication is healthy, it happens. And the Biden administration is arguing that it's basically the same thing that they were doing with social media platforms, Facebook and Twitter, telling them that, you know, a lot of the stuff on your platform is dangerous right now. It's going to kill people. You should probably take it down. And, but on the other side, the Republican-led states, I thought it was Louisiana and one other one, are saying, no, this absolutely crossed the line. Like, there was retribution involved, although the Biden administration is saying we wouldn't, we didn't take any steps to punish social media platforms for not doing our bidding.

10:49Yeah. And I think that's the key differentiation here. It's the difference between maybe the FBI saying, we want data on someone or something, versus if they say, if you don't give us data, then something, quote, bad will happen to you or anything like that. So it does come down to the coercion aspect of this. Using the word bully pulpit was thrown around a lot. Is the government using its position as the government to bully these social media platforms into doing something that violates their First Amendment rights. It was interesting to see. A lot of the justices, though, were saying, I don't really know about this.

11:25It doesn't seem like there's enough here to show that they were being coerced. All right. What goes up must come down. Yes, even Austin's housing market. The Texas capital that symbolized the COVID housing boom is seeing the greatest fall in home prices and apartment rents of anywhere in the country, according to the Wall Street Journal. Since peaking in 2022, home prices in Austin have fallen 11 percent, the biggest drop of any metro area in the U.S., and at the same time, rents have fallen 7 percent, also the most of any U.S. city. One factor driving prices down, more apartments. All those cranes dotting Austin's skyline have cranked out more apartments since 2021 than in any other American city, leading to a glut that has helped soften the red hot rental market.

12:11And what would be unthinkable just a few years ago, Austin landlords are offering tenants weeks of free rent and other perks to fill empty units. Toby, feel like you could look at this in one of two ways. The first, this is a clear case that building more housing actually helps lower rents. The other, Austin's once bright star is fading in this post-COVID world. I'm going to look at it in both ways. Austin had so much going for it. I mean, Remember, remote workers with these big tech salaries were moving there. It had the good weather. It had the low taxes. Tesla and Oracle also moved their offices there.

12:45Lower business regulation. And so, Austin's economy grew at nearly double the national rate and became the country's 10th largest city. So, again, it had everything going for it. But I think what you did see is a classic boom-and-bust cycle. You started to overbuild a little bit, which, again, isn't necessarily a bad thing, because, yeah, housing prices going down, rents becoming more affordable. Not a bad thing, but I do think that there is some signs of maybe it was a bit of a bubble that flew a little too close to the sun. Yeah. And there was a very interesting debate going on over the Wall Street Journal framing of this piece because their headline was once America's hottest housing market, Austin is running in reverse.

13:24It's kind of this negative framing. And then you have a bunch of commentators on Twitter being like, why are you framing it like a negative? This is what we should be celebrating. We're building more apartments. Rents are coming down. So that's exactly how you should be framing it. Not in the sense that your growth has been sputtering, but in essence, wow, the stuff, the policy mechanisms we've been urging cities to put in place to lower rents and solve this affordability crisis are working in your city, and we should celebrate that. You should celebrate it, but this is why I think that the Wall Street Journal did frame it in a certain way, that Austin Star is falling a little bit, because in Q3 of last year, more people were searching to move away from Austin than they were to move to it, according to Redfin.

14:07And that, to me, doesn't necessarily show anything about the policies and the increase in housing. It is literally just showing that people are trying to get out of Austin faster than they are trying to get into Austin. And so I do think that this shows some cracks in kind of that Austin veneer, that this was going to be the next big tech hub, the next big rising star. I mean, again, it's still doing all right with itself, but I think that shows some cracks in it. I think it's still the fact that Austin is very unaffordable. I mean, prices skyrocketed 60 % in two years. So the fact that they're down 7%, 11 % still makes it seem like most people cannot afford to live there.

14:45It's still very, very, very expensive. But I will tell you, the place that's growing the fastest in the United States, it's not too far from Austin. It's up I-35. It is the Dallas-Fort Worth-Arlington Metroplex area. There was new census data released last week that found that this area is the fastest growing metro area in the entire country. Now it's more than 8.1 million people up in North Texas. So if you're looking for the growth areas, maybe Austin's kind of simmering a little bit. I think it's still growing. I'm still very bullish on Austin. But the Dallas area, holy cow. Texas, though. It's ripping.

15:20Up next, pour yourself another cup of coffee, because we have a back half of the show that features Joanne Fabrics, robotic masseuses, and Mr. Beast. eczema isn't always obvious but it's real and so is the relief from ebglyss after an initial dosing phase about four in ten people taking ebglyss achieved itch relief and clear or almost clear skin at 16 weeks and most of those people maintain skin that's still more clear at one year with monthly dosing ebglyss 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.

16:00Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EBCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EBCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EBCLIS. Before starting EBCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EBCLIS and visit ebglis.lily.com or call Call 1-800-LILLY-RX or 1-800-545-5979.

16:30I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

17:00Joanne's Fabrics and Sports Illustrated may not seem to have a lot in common on the surface, but dig a little deeper and there is more there than you'd think. Both are staples of a bygone era overtaken by newer, cheaper, and more innovative peers. And both have spent the last few years basically clinging on for dear life. Well, I have an update on both brands. And good news, I hear a pulse. Authentic Brands Group, which owns the IP rights to Sports Illustrated, announced a deal with a new publisher, Minute Media, to carry on the Sports Illustrated brand, which has been on life support after its previous publisher threatened to sunset the print edition.

17:35Meanwhile, Joann's sweet, sweet 81-year-old Joann's is not doing great. It filed for Chapter 11 bankruptcy yesterday and secured$132 million in fresh funding with the goal of helping reduce its monster debt, which had ballooned to$1 billion. But again, its pulse is still beating. It's 850 or so stores will remain open throughout the proceedings in case that crocheting bug ever strikes you again. Neil, two iconic brands hanging on for dear life, but still alive. Still alive. I think let's talk about Sports Illustrated first. There is a huge sigh of relief from anyone who cares about Sports Illustrated that this deal went in place.

18:15They were thinking of shutting the print edition of Sports Illustrated, which, yes, still exists. It comes out once a month. It looks like under this deal that will be revived. Everyone was all of the staffers were laid off of Sports Illustrated. It looks like this new deal will allow them to come back and start writing for the brand again. And Minute Media, I mean, in a world where media companies are so mismanaged, it looks like Minute Media kind of has this act together. It does 400 million dollars in revenue across publications like the Players Tribune and Fan Sighted. And now it's going to be able to publish Sports Illustrated for the next 10 years under this new deal.

18:49So it looks like there is signs of life for Sports Illustrated, which I think is welcome news for anyone who cares about this really iconic brand. There is one thing that makes me nervous about this new deal, though, is that MinuteMedia is focused on, quote, short-form sports content creation. And its CEO said that by licensing Sports Illustrated, they're making an exception to its core strategy. And he said that's not the first time that they've done it. They've kind of gone outside their wheelhouse before. but it does make me nervous because usually quote exceptions to the core strategy are the first thing that get the axe if times get tough so i do think binomedia is trying to expand a little bit here out of its more social media focused content but again sports illustrated such a good brand still right in their wheelhouse so i do see that the the synergies are there what happened to the players tribune have you read anything about have you read any players tribune pieces recently it's kind of hit or miss because they are written by players who are still active or recently retired, and it gives a first-person insight into what's going on.

19:51And if I see a piece that I really enjoy, it still is a company that has an innovative approach to media. Let's talk quickly about Joann's a little bit. Remember, Joann's kind of had signs of life during the pandemic because I wasn't joking about the crochet habit. People were stuck at home during COVID and started crafting again. And so it did have this it's been on a long revenue decline, but saw a little bit of a bump during the pandemic. That is kind of long gone, though. And it's suffered from the usual rising prices. Rising inflation have made consumers a little bit more discretionary about what they're spending their money on.

20:24And I guess yarn and the crocheting needles aren't at the top of the list anymore. OK, what do you get when you've conquered YouTube? If you're Mr. Beast, you go to streaming. Mr. Beast, the biggest YouTuber on the planet, announced a deal with Prime Video for a reality competition show with a payout that makes Who Wants to Be a Millionaire look like your high school quiz bowl. The winner of the show will take home$5 million, which is the largest single payout ever in TV history. Called Beast Games, the show will be hosted and produced by Mr. Beast and pit 1 ,000 contestants against each other for the record prize.

21:00For Mr. Beast, who's actually a 25-year-old named Jimmy Donaldson, this series is an opportunity to show he's got the content chops to expand beyond his comfortable home turf of YouTube. And for Amazon, it's a bet that Mr. Beast fans will follow him to their streaming platform, which could really use a hit show. Toby, before we get into the business strategy here, I'm just going to throw it out there. You should apply to be a contestant. I would love to apply to be a contestant. We don't have a ton of details of what's actually going on, but, man, that'd be good content. I don't know if this will work.

21:31I'm just going to be straight up honest with it, because a lot of the reasons why influencers have been able to succeed on their respective platforms is because they have a ton of control over what product goes out. They have this very deep understanding of what their audience wants, and they can cater it towards them. But studio executives, traditional film and television producers, they have much different goals than the creators. They have much different audiences than the original creators to attract. So there's just an inherent tension there. And it's why we haven't seen a lot of successful YouTubers actually cross over into the mainstream.

22:04I mean, we were tossing around names like Jake and Logan Paul before the show, maybe Emma Chamberlain. But none of these true YouTubers have really entered into the more traditional film and TV industry and really done well. So I don't know if it's going to work. Well, Mr. Beast said that the reason he went to Amazon and there appeared to be a bidding war over him from at least one other streamer was that because he'd have full creative control of the enterprise. I mean, he has a 10 million dollar content studio in North Carolina. So he's already got all the infrastructure to make a very high production value show, which he already does essentially on his YouTube channel.

22:40These things are so highly produced. But I mean, I can see one reason he's doing it is because Amazon is reportedly paying him 100 million dollars. Yeah. $100 million for this. I think that shows that Amazon is still throwing money at shows to get people to come to watch Amazon Prime Video. But for Mr. Beast, it's also interesting because he gets, what, like 500 million views on each of his videos that he does? Amazon Prime Video only has 80 million subscribers. So there's going to be fewer people watching him. Yeah. 500 million is probably at the top end of his range. But yeah, still, he does consistently rip at least 100 to 200 million views per video.

23:16So Mr. Beast also occupies such a weird place in culture right now because he might be the most influential person in the world when it comes to that, what I call the used, just kind of that teenager to younger 20s range. Everyone knows who Mr. Beast is. But then if you go to maybe the 30, 35 plus year old range, some people may not have heard of him at all. So it is so weird how bifurcated his audience is and how young it actually leans. So, again, that's how it's going to be interesting to me, because most of the people who subscribe to Amazon Prime are going to be on the older end of the spectrum.

23:50So, again, this could be a beautiful synergistic thing where a new audience is introduced to Mr. Beast, and they like him, and it's great. Or it could be a thing where you see this YouTuber on TV, you have no idea who he is, and you turn the TV off. Okay, let's move on to our final story. I know what you all were thinking. You thought I forgot about Toby's Trends this week. But fret not, it's here, and it's all about robot masseuses. As always, Toby's Trends is where I, a sprightly young Gen Zer, educate my wise millennial co-host Neil on a recent trend I've had my eye on. And today's trend comes from a company called Escape, but it's spelled A-E-S-C-A-P-E, so you know it's very trendy.

24:29Escape offers AI-powered robot massages. You enter a room, lay down on a table, than use an app to control these two life-size robotic arms complete with nub hands that kind of rub you down. If that doesn't sound very relaxing to you, a lot of reporters who have tried it out so far disagree. They loved it. Some of the main highlights, there's no other human in the room with you so you can fully unwind and relax. You don't have to take your clothes off either. Also, the customability aspect was a hit because you can change the pressure or the target area of the massage with just the press of a button.