Google Losing Grip on Search? & US Economy Keeps Chugging Along

0:28Change is always happening. Good Morning Brew Daily show. I'm Neil Freiman. And I'm Toby Howell. Today, Google's new AI podcast feature has me and Toby considering a career pivot. Then the U.S. might have reached a public health milestone decades in the making. It's Monday, October 7th. Let's ride.

0:52If you have been a fan of Morning Brew Daily for a while, you probably have a fair share of fun facts or numbers from Neil bouncing around in your head. So we were thinking, wouldn't it be fun to have a chance to put that knowledge to the test on, say, a trivia night? You're burying the lead here. Toby and I are hosting the first ever MBD Trivia Night this month. It'll be Tuesday, October 29th at Morning Brews HQ in New York City alongside our partners, Monobos. We have been looking forward to this for a long time now. Now, Neil and I obviously love trivia, and we also can't wait to have a night with you all in person.

1:30So if you want to come hang with the MBD crew and Bonobos, head to morningbrew.com slash events to reserve your spot. Space is limited, so we give you permission to pause the podcast now, pull up your browser, and type in morningbrew.com slash events to make sure you snag a spot for what's going to be an awesome evening. One more time, that's morningbrew.com slash events. Come show us how smart you are and start thinking of creative team names right now. Now, a quick word from our sponsor, Wise Business, the app for doing things in other currencies. Neil, Morning Brew Daily listeners missed you last week.

2:05Well, that's nice, but I was just back home in Massachusetts. Oh, see, I was telling everyone you were off on an international adventure exploring new countries. Nope, just some quality time with family, but now you're giving me some ideas. If you ever do decide to jet off or if our podcast goes global, Wise Business has our backs. And Wise has your back too. It can handle multiple currencies without a hitch, pay suppliers, or get paid by clients overseas with no hidden fees or inflated exchange rates. It's as easy as booking a flight. I can tell you haven't flown internationally recently because Wise is easier.

2:39You can make international payments in seconds any time of day. Okay, next trip we're going beyond Longmeadow. I guess you're inviting yourself to my family get-togethers now. Obviously, I'm invited. For anyone who's looking to simplify your international finances, visit wise.com slash business. That's wise.com slash business. I'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.

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3:25Before the weekend, we previewed the jobs report for you all, and it looks like you brought the right vibes to that Friday podcast because, oh boy, was it a blowout. The U.S. posted its biggest jobs increase in six months, adding 254 ,000 jobs in September, beating expectations by nearly 100 ,000, and the unemployment rate ticked lower to reach 4.1%. It was just what the doctor ordered for the economy. The report was hot enough to reassure investors that the sky is not falling and the economy is still humming along, but not so hot that the Fed gets a sunburn and decides to rein in its rate-cutting plans.

4:03Plus, the port strike ended on Friday, giving a laxative to what was getting close to a dangerously backed-up economy. All in all, it was a pretty good last couple of days, though danger signs are looking that could shake things up, namely geopolitical tension in the upcoming election. But for right now, things are looking pretty good on the economic front, Neil. They're looking really good. And the question now is, is this a really good economy or is this maybe one of the best economies we've ever had? The economy has had positive job growth for 45 months now, which is the fourth longest streak on record.

4:40The U.S. has added an average of 199 ,000 jobs per month, which is below what we added last year, but it still outpaces pre-pandemic gains from 2019. So economists are looking at the economy and the labor market right now, 4.1 % unemployment, job growth that is through the roof. And we had revisions to the upside in both July and August. So the question now is, is this a really good economy or is this the best U.S. economy we've ever seen? So let's immediately turn to what could go wrong. The most obvious things that could go wrong is on the geopolitical front. Obviously tensions in the Middle East show no real sign of resolving anytime soon and could erupt.

5:21Any strike on maybe an Iran oil facility or some of the vital shipping lanes that go through the region could lead to this huge spike in oil or on a less exciting front, regular old inflation could creep back up again. The inflation report, the CPI report is coming on October 10th. And the job market, again, it's not overcooked. It's not getting to the point where the Fed thinks that it's going to lead to a spike in inflation again. But you never know. There is still a chance that prices could start to rise at a quicker rate than they have been before. There is good news, though. I mean, there's a lot of good news.

5:53Wages are going up faster than prices. Average wages in September were up 4 % from a year ago. So that is probably going to more than likely outpace inflation that we see on that October 10th reading. So you are right. A lot of good things, but also a couple of warning signs that you could point to ahead and say maybe it's not going to be smooth sailing for the rest of the year. Speaking of oil prices, they will definitely be in focus this week because they gained 8 % last week, which was the biggest weekly increase in nearly two years. But on the stocks front, everything is still humming along.

6:26The Dow had a record close. The S &P has closed at a record high 43 times this year, and it's up 21 % year to date. So stocks are doing well. And of course, we have earnings season coming up starting this Friday. So that could add jet fuel to the stock rally that we've had or put the brakes on a little bit. But that is also coming on the horizon. And then finally, the last thing you should be looking for on the horizon is the election is coming up at the beginning of November. It takes place just days before the Fed's November meeting where they will announce their next kind of rate cut. It doesn't look like we're going to get that jumbo 50 point basis point cut that we got in the previous Fed meeting.

7:09But 25 basis points still seems to be pretty locked in there. Again, you can never say something is 100 percent locked in. So a lot of big economic reports coming, inflation coming October 10th, and then the Fed is meeting at the beginning of November as well. So still a lot to look forward to. We'll have plenty to talk about in the coming months. Well, Toby, the day is finally here. Robots are coming for our job. Google released a tool that turns text into a conversational podcast hosted by two AI bots. and it's been going viral because of how scarily good and human sounding these podcast hosts are.

7:49Some tech leaders are even calling it the second chat GPT moment since it could forever revolutionize how we consume complex information. The tool itself isn't exactly new. Google released an AI research assistant called Notebook LM last year that allows you to upload content like Wikipedia articles or research papers and it'll spit out AI-generated text summaries with the main takeaways. Then last month, Google thought, why limit this to text? Let's put Toby and Neil on notice. And they released an audio overview feature that turns those text summaries into podcast-style explainers hosted by these two chatty bots, a male voice and a female voice.

8:29People have found these podcasts so realistic and helpful that they've been creating them on a variety of topics and posting them on their social media feeds. It's pretty goofy, but at the same time, it also feels like a huge breakthrough. After playing around with Notebook LM for a while, Wall Street Journal columnist Ben Cohen said it was one of the most compelling and completely flabbergasting demonstrations of AI's potential yet. So, Neil, first thing I did was, of course, sneak into your prep doc and feed your intro into Notebook LM just to see who did better. You know what? Let's just listen to it right here.

9:03What makes Notebook LM really fascinating is this new feature they've added called Audio Overview. It basically converts those text summaries into like mini podcasts complete with AI-generated voices to guide you through it all. See, this is what's got me all spun up. AI voice is so real, so realistic. They can basically host your podcast. Oh, God. We are so done for. That baritone. Neither of us have that rich baritone right there. But yes, truly just amazing. It's one of the craziest things I've heard is just how the rhythm is good, how it has filler words. We just heard in that example right there, she tosses in a like to make it sound more human-like.

9:42So that is part of the reason why it's going so viral is that it just mimics human conversation so well. And it does have us feeling like we got a target on our backs here. We are sweating in the studio. Yeah, it's definitely notable that it was made by Google as well. Google's AI rollout has certainly been bumpy to say the least. its AI overview for search was widely panned. It told you, you know, you can eat rocks and weird things like that. So the fact that they have this viral and very successful product where people are just using it to do so many different things is a huge boost to their AI vision.

10:16And they're probably just watching how people use this. And they're going to make tweaks and customizations to make it even better. They're going to allow you to do more voices, allow you to change the length and they're going to do so many things with it just because they had this unexpected viral hit on their hands, which they didn't even know about. I mean, they released this tool last year and then they released the podcast thing in September, but only now people are discovering it. So Toby, I mean, look, you have this tool, like what would you use it for? What do you see as the possible use cases for this?

10:46A lot of the use cases that people wrote about was that feeding more boring source material into it and having it spice it up. I mean, feeding Wikipedia pages about history into it and then maybe going on a long car ride and just listening to it break down this source material. I fed it one of my old college essays and just listened to them vamp about it. And one thing I've also seen people doing is feed your resume or maybe your personal website into it. And then all of a sudden you feel like on top of the world because you have these people breaking down your life story and they usually are gassing you up as well.

11:20That is the real breakthrough here. It doesn't merely summarize the source material. It goes beyond. It adds commentary. It focuses on specifically the most interesting and surprising part. So of course, this is the internet. So someone just fed it a document of a thousand reputations of the word poop and fart and just to see what would happen. And they actually dug into like, what does this all mean? Is this some deeper meaning here? Why are we talking about this? Someone also said, hey, pretend you're doing a podcast where you just figured out that you two are AI bots and you're not real people.

11:54And they said, I just called my wife and I wasn't even sure if it was my wife. Like it got really existential. So that is why people are kind of focusing on this because it goes beyond that rote repetition or rote regurgitation of the source material and actually adds a little bit of context and color to it. I do wonder if you listen to so many of these, it'll start to make mistakes and it'll start to seem a little bit like video game sports announcements where they repeat the same phrases over and over again. So there's time where this kind of tech really wows us and takes us to another place.

12:28But at the end of the day, we always come back to humans because they have lived experiences that these AI podcast hosts can't don't have. And we actually do. So, I mean, I'm sweating a little bit. I still think this technology is in its infancy, but it is pretty remarkable to hear them talk about a particular topic, and you do feel like you're listening to humans. In the past 10 years, if you're an advertiser looking to target people searching for things online, there's really been only one item on the menu, Google. But these days, the search business is looking a little bit more like an all-you-can-eat buffet.

13:02With so many options now, Google's share of the search ad market is expected to drop below 50 % next year for the first time in over a decade, according to eMarketer. Despite frequent antitrust scrutiny, a whole host of competitors have begun to claw away at Google's dominance in recent years. People are increasingly turning to TikTok for their search needs, so the platform has started allowing brands to serve personalized ads based on user search queries, just like Google does. Perplexity, the AI-infused search engine startup, is also lurking in the weeds with plans to introduce ads later this month.

13:36Perhaps the biggest reason Google is hearing some Halloween Michael Myers music and looking back over their shoulders is that Amazon is breathing down its neck. Amazon's ad product is growing at 17.6 % year-over-year compared to Google's 7.6 % growth to reach 22 % share of the market. But Neil, in 10 years, are we not even going to say Google it anymore? Is Google falling to the wayside? It's possible. I think there's definitely change in the atmosphere now with AI and social video like TikTok doing things maybe better than Google can. And obviously Google is going to respond to this. We just talked about how they're releasing AI podcast tools.

14:17And they also are revamping their search engine for the AI age. But, I mean, things always change. And people go on TikTok and search for things now. They say that 23 % of all users go on TikTok and do a search within 30 seconds of going in. And so I think it is certainly not inevitability that Google will have its dominance extended for the years to come, especially with all this antitrust action happening against it as well. Yeah, and perplexity is definitely angling for a piece of the same market. It's just now rolling out its ad product to advertisers right now. And remember, perplexity behaves a lot like a chat bot that you've probably interacted with.

14:55When you Google something, when you search perplexity for something, a lot of people end up asking follow-up questions. And that's where they think they have this unique ad product that they won't serve you an ad on your first query. But if you do ask a follow-up question, then it gives you an opportunity to interact within a branded search. They think that people might actually go off on a tangent and start interacting with the search result and talking to someone about like a Tide pen or something like that and going deeper into that and interacting with advertisers in that way. I'm a little dubious of that mainly.

15:29I don't think I'm going to take many side quests where I start talking to a brand. But it is a compelling ad product. They're rolling it out with a very specific suite of advertisers here in the coming months. But that's just another person or another kind of competitor that is potentially going to steal away some of that market share that Google has just enjoyed for such a long time. Meanwhile, Google still is absolutely dominant. I mean, especially compared to to an upstart like Perplexity. Perplexity said it processed 340 million queries in September. And then by comparison, Google has said it handles two trillion searches a year.

16:03So what Perplexity does right now is essentially a rounding error to Google. But if it gets more revenue through these new ad products, it could put up a little challenge. Up next, you got our winners of the weekend coming your way. 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. And 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.

16:48Also 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 EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979.

17:18Tuesday on NBC, Jimmy Fallon and Bozema St. John host a 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. Welcome to Winners of the Weekend, the segment where Toby and I picked two things that had a better weekend than Vanderbilt fans after their historic upset of Alabama.

17:58I won the pre-show fitted sheet folding competition, so I get to go first. And my winner of the weekend is U.S. Public Health. Because a milestone sought for decades has finally been reached, America may have hit peak obesity. According to new data from the National Health and Nutrition Examination Survey, the U.S. adult obesity rate dropped by roughly two percentage points between 2020 and 2023. It's a watershed moment for a country where two in five adults and nearly 15 million children and teens are obese, with rates rising more than 11 % from the late 90s through 2020. But then came Ozempic.

18:38While there's no smoking gun linking the fall in obesity rates to the explosion of weight loss drugs such as Wagovi, Zepbound, and others, the Financial Times says it's highly likely they played a major role, and that's due to overwhelming circumstantial evidence. First is the sheer number of Americans taking these drugs. One in eight American adults have used them, while 15 million are using a prescription. Second, college graduates are seeing the steepest decline in obesity rates, and they're more likely to take the weight loss drugs. Finally, the timing. Usage of these medications took off in 2021, right in the period when the drop was reported.

19:13Toby, if the fall in obesity rates is sustained, it would be a public health victory on par with the decline in cigarette smoking. So let's compare and contrast those two public health victories. The decline in smoking was achieved through this big top-down effort, along with public health warnings, tax incentives, outright bans. Meanwhile, the way we have reached potentially peak obesity is due to a single pharmaceutical innovation. It has managed to do in a span of a few years what traditional methods have failed to do over a span of a few decades. Truly a remarkable feat made all the more remarkable by the fact that there's this huge contrast in the mechanisms we use to achieve it.

19:50Right, and you have some pushback to the current class of weight loss drugs actually from a rival, gave an interview with the Financial Times yesterday, the co-founder of Regeneron. He actually warned that blockbuster weight loss drugs could cause more harm than good because they cause rapid muscle loss. And then two in five patients discontinue the treatments within a year. So they're rebounding to their original weight, but they just have less muscle and higher body fat percentage. So Regeneron and Eli Lilly, all of these other companies that are working on weight loss drugs are trying to add a component that reduces the amount of muscle loss as you're, you know, getting your weight loss with these particular drugs.

20:32So, you know, he's warning that it actually might be a net negative for society. I'm sure a lot there would be a lot of pushback to that because there are so many health benefits that come from a decline in obesity, but they still clearly have not perfected these drugs. There are serious side effects, but certainly a public health win for the U.S. that kind of no one saw coming. And then it just kind of happened in 2020. And here we are. My winner of the weekend is the Savannah Bananas. No, it's not a southern fruit company who weathered the port strike well. The Savannah Bananas are an exhibition baseball team who are selling more tickets than some real baseball teams these days.

21:10Getting a seat to see the team play and dance and entertain the masses has gotten more and more difficult in recent years due to their surging popularity. So the team just announced a stadium tour that would make Taylor Swift proud. The Bananas will be heading to Yankee Stadium, Fenway Park, and even a couple of NFL stadiums in 2025. These guys are essentially the Harlem Globetrotters for baseball, with a lot more twerking and TikTok dances. You are just as likely to see an outfielder do a backflip while catching a ball as you are to see a 6-4-3 double play. But fans eat it up, and now they are embarking on a nationwide tour.

21:47They expect to drive over 2 million in ticket sales. I mean, what a rocket ship. They've done such a good job of just capturing what people want to see, a combination between sports and entertainment. They drew more than 1 million fans on their tour this year to 29 cities. That's more than the home attendance of the Oakland Athletics, which is, I mean, maybe a milestone if you want to say. Oakland A's did not get a lot of people. But yeah, next year, 18 MLB stadiums, two NFL stadiums that fit 70 ,000 people. They're expecting overall attendance to double. So they have just worked out this formula, an amazing, amazing product that has grown from just they were a regular collegiate competitive team in 2016.

22:30They switched over to this banana playing style in 2022 with, you know, these different rules that engage fans, especially younger fans in a way that, you know, maybe traditional baseball or traditional sports can't. Yeah, let's dig into those banana ball rules. Games have a strict two hour time limit, which is huge because a lot of people criticize that games stretch on too long. They have rules that engage the fans, too. If a fan catches a ball in the stands, it counts as an out. so everyone brings their glove to the stadium. There's no walks. Instead of a walk, there are sprints where after ball for a batter, sprints around as fast as possible before all the defensive players can touch the ball.

23:10You can steal first base. There's no bunting allowed. So they essentially sat down and said, how can we engineer this to be the most entertaining product as possible? And people are clearly resonating with it. I mean, going to an NFL stadium for a baseball team is, NFL stadiums can fit up to 70 ,000 people. This isn't even a professional baseball team. This is literally an exhibition team, but the demand is just absolutely voracious right now. They have plans to create the Banana Ball Championship League in 2026 where they actually want to make a league with a real championship on the line. I do think they are threading the line between – they want it to be entertaining, but it is still high-level baseball.

23:49These still are incredible players. You can't do a backflip and catch a ball in the outfield unless you are an incredible athlete. So I think they have found this winning success, and it's only going to get bigger and bigger. Have you seen me in right field? I can do that. No. Oh, good Lord. Okay. I've seen you attempt a backflip before. It ain't pretty. All right. It's Monday. So here is your preview of the events to know about in the week ahead. Memorial events and demonstrations are taking place across the globe today to mark one year since October 7th, 2023, when Hamas attacked Israel, sparking a devastating war that has no end in sight.