Meta Agrees to Historic $18B Settlement & NYC Has More Tech Workers Than SF

0:01Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Meta settles for$18 billion and a landmark moment for social media. Then Bill Gates is sounding one of the loudest alarms yet when it comes to AI. It's Thursday, August 27th. Let's ride.

0:25If you missed the solar eclipse in Europe a couple of weeks ago, tonight brings the next best thing, a lunar eclipse. beginning at 9 23 p.m eastern the earth will travel between the sun and the moon casting a shadow on the moon's surface covering 96.2 percent of it at the peak should be a pretty cool sight because the earth's shadow on the moon will make it appear reddish orange in what's been dubbed a blood moon best part is it'll be visible from the continental u.s if the skies cooperate don't skip your afternoon coffee though because the eclipse will heat up around 10 30 and peak at 12 12 a.m.

1:01Neil I've been saying this there are more eclipses this year than ever before it seems like every single week there's some celestial body passing in front of another one am I crazy or are there more this year you're not crazy there are it's not necessarily more this year but the reason that there is two in the past couple of weeks is because solar and lunar eclipses do come in pairs there's usually one eclipse and then two weeks later when the sun or when the moon goes from a new moon to a full moon, we get another eclipse. And there's just fortuitous math, the way these celestial bodies appear in the sky because of size and distance.

1:37It's pretty crazy the way this works out. The sun is 400 times farther away from earth than the moon is. And the sun is also 400 times bigger than the moon. So it cancels out, you know, you do your second grade math there and we look, they look, these orbs look the same size in the night sky. Of course you knew the actual answer to why there's been more. Do you know why it turns red though? No. It's not that exciting, but sunlight's obviously made up of a spectrum of colors and our atmosphere actually absorbs most of the yellow and blue parts of the spectrum. The only one that skirts by is the red part, which is why it gives the moon a blood red hue.

2:11There you go. And now a word from our sponsor, American Express. Neil, I am all go. You're what? I am up the wall. I am nonstop. I am busy, which is why I appreciate the American Express business platinum card because it's backed by a membership that's designed to support businesses wherever opportunity shows up. With award-winning customer service, statement credits for key business solutions and premium travel benefits, the Business Platinum Card gives you support that's there when you need it most. So while you're focusing on running your business, the Business Platinum Card and American Express membership are built to back you every step of the way.

2:47Learn more at go.amex slash morningbrew and find out your welcome offer, which could be as high as 300 ,000 membership rewards points. That's go.amex slash morningbrew. Offers and benefit terms apply. Facing potentially$200 billion in damages from a sprawling lawsuit, Meta decided it was in a settling mood. Just over a week into the trial, the social media giant reached a landmark settlement with 48 states, agreeing to pay up to$18 billion in penalties over 10 years and make key changes to Facebook and Instagram to make them safer places for kids. It's among corporate America's largest settlements ever.

3:25Attorneys General hailed the deal as a historic win. DC's AG Brian Schwab called it a, quote, monumental public health victory for young people, saying the safety features Meta is required to install will fundamentally and immediately change how young people use Instagram and Facebook. In a statement, Meta called the settlement an important step that aims to set a new industry standard for kids' safety on the Internet. We want to get this right for parents and teens, the company wrote. But the fact that Meta came to the negotiating table instead of seeing the trial out shows how fraught its predicament is.

3:56This year has brought a wave of trials. Many have compared to big tech's big tobacco moment where mounting backlash against social media has resulted in significant legal peril for major platforms like Meta. This case in California was seen as the climax, acme pinnacle of the social media reckoning. dozens of states had come together to accuse meta of hooking kids onto its apps using addictive design features then misleading the public about the harms they were seeking about 200 billion dollars in damages and ultimately ended up with 18 of that toby for almost a decade we've been wondering whether the pushback against big tech would amount to any material consequences or reforms that was finally answered yesterday 18 billion dollars to normal people sounds like a a lot of money, but Meta can pretty easily afford it.

4:41One, it's$18 billion spread over a decade, so it comes out to$1.8 billion per year, but only 70 % of that$18 billion is guaranteed that Meta will have to pay. The remaining 30%, which we'll get into, depends on whether YouTube and TikTok make similar concessions of their own. Meta generated$32 billion in operating cash flow in the June quarter alone. So relative to its overall cash generation abilities, this settlement is not particularly expensive, which is why actually some were confused as to why the stock didn't do much yesterday. There's a lot of other factors feeding into why Meta stock is not exactly loved on Wall Street right now, but it did briefly go up, but end of the day, right around flat.

5:24Jim Cramer, to cite a market watcher, said, wow, this stock is hated because I would have thought that this was great news because of how small the settlement was in comparison to how big it could have been. Yeah, let's talk about those two phases that you mentioned. Super interesting, very unique settlement here. We have two parts. One is the 70 % that Meta will pay out over a decade. That's$12.7 billion. And then the other 30 % is contingents on two different conditions that are met. It's if YouTube and TikTok, which are completely separate companies, implement similar design changes that Meta is about to do like a one hour daily limit night mode.

6:04So you don't get push notifications at night and age assurance measures. And then also YouTube and TikTok have to pay the 30 % match. So they also have to pay about$5 billion for this to unlock Meta's additional payment as well. So Meta is really tying this to broader changes within the social media industry. They want their competitors to do the same because their argument is that, look, we can make the changes, but then kids will go to other platforms and nothing will have changed. They're also taking out major ads and major newspapers, pushing YouTube and TikTok and this big PR campaign to make these changes as well.

6:40So very interesting, very unique settlement where we're seeing this in two phases designed to change the overall industry. I think the real consequence isn't the monetary penalty. It's the fact that Meta is forced to change how its apps operate. The important distinction here is that those features that you mentioned, those overnight time limits, those blocking notifications during school hours, those will be on by default. And that is always the big question mark when it comes to social media change. If features are on by default, it forces you to go through into the settings and manually toggle them off.

7:13That is a lot more friction than before versus if you had to opt in. It's the opt-in versus opt-out debate. So the fact that you have to opt out is the thing that people think will bring real change here. Meta has been very reluctant to ever put these safety measures into place. You go back to 2020, Adam Masseri, the chief of Instagram, announced plans to hide Instagram like counts. That was something that's been in the works for a long time now, but ultimately backed away from the plan because he did not want to reduce the amount of time people spent on Instagram. I mean, Instagram's entire business model relies on your attention scrolling so they can sell you ads.

7:53any decisions that you make that reduces that intention is bad for business, which is again, why this feels like a big step forward, because these are attention blocking measures that are now on by default when it comes to kids and their social media. Yeah. Just to sum up. So if you are a kid under 18 or you're a parent, here are the exact features that meta is going to change because of the settlement. There's gonna be a two hour daily time limit, no access at night as default, no notifications during school hours, prompts every 15 minutes of continuous screen time being like, hey, you've been using this for a while and more robust parental controls.

8:31To sum this up, I think there is a wave. There's no denying that there's a ton of momentum building against big tech. We've seen a number of countries limit social media to over 16. Australia was the first, but then Britain, Canada, Denmark, Indonesia, and New Zealand are all following suit. Meanwhile, Meta still faces thousands of lawsuits that have been filed by school districts and individual plaintiffs going ahead. There's been a lot of comparison about big tech's big tobacco moment, this moment for Meta compared to this moment for, say, Philip Morris. Well, when they reached the settlement back in the 90s, that wiped out, that shielded them from all future lawsuits.

9:12This one doesn't. So Meta still has a lot of legal wrangling still to go. at 5 30 a.m yesterday morning the infamous market soothsayer jim kramer tweeted out i sense a monumental day what had kramer up early and ready to roll on a seemingly random wednesday well you can't fault a man for getting excited for the biggest company in the world to report its third quarter earnings nvidia lived up to the expectations mr kramer foisted upon it and more it reported nearly$100 billion in revenue and emphasized there is more growth to come. NVIDIA is the market bellwether, and investors pay attention not only to the numbers they report, but their guidance going forward to see if the AI freight train has enough fuel to keep chugging along.

9:56And on that front, NVIDIA soothed any worries. Wall Street had been expecting its revenue to grow 45%, but NVIDIA said, Nuh-uh. How does 70 % growth in the next fiscal year sound to you? Incredibly, we are seeing demand acceleration even at our scale, its CFO said. CEO Jensen Huang followed that up by assuring everyone that, quote, the AI infrastructure buildout is at full steam. Now, of course, when the AI trade is popping up most of the market, it's almost not enough to be amazing. You have to be spectacular. NVIDIA's stock had closed lower for seven straight days leading into earnings, but finally rose 7 % as investors breathe a sigh of relief.

10:36Sale aside relief begs the question, relief from what? Despite NVIDIA beating expectations 16 quarters in a row, its recent moves from chip seller to data center financier has some people nervous. NVIDIA has assembled a$500 billion credit line for various financial firms to help its customers better afford its chips, raising concerns of circular financing. Neil, yesterday was a perfect microcosm of the predicament NVIDIA finds itself in. It's not just enough for it to report great numbers quarter after quarter after quarter. it's become the AI Lorax forced to speak for the entire industry. Not exactly surprised that NVIDIA is making nearly$100 billion in a quarter because paid attention to big tech earnings a few weeks ago, each one of them came up and said, we are going to spend like$200 billion this year on AI CapEx from Meta to Amazon to Google.

11:28And most of that spending is going to NVIDIA. And so NVIDIA is reaping the rewards, but that also is becoming a bit of a risk, a bit of a liability because those hyperscalers, those big tech companies account for about half of NVIDIA's revenue. And this transformation that you're talking about for NVIDIA to become the more of the bank of AI, it's trying to attract new customers. And these customers are often smaller than Meta. They're smaller than Amazon and NVIDIA stuff is expensive. So what they're doing is unlocking a lot of financing so that these smaller companies, these less credit-worthy companies can start buying their chips.

12:06It's called vendor financing. It's been used in the telecom. There was a bubble back in 99 and 2000. So we'll see how this plays out. But it's been a very fascinating transformation because a lot of people just can't afford NVIDIA stuff. So they're saying, here, we're going to help you get financing for that so that you can buy stuff from us. It really just shows how you become a victim of your own success. Whenever you do something great in this life, people go, all right, well, what's the next thing that you're going to do. And right now there's very little concern about demand around NVIDIA's chips.

12:35Like quarter after quarter, they have proved that this is durable. People are going to spend, these hyperscalers are going to buy NVIDIA chips. So what are investors concerned about? They're concerned about circular financing, but they're also concerned about China. NVIDIA still isn't counting on any money coming out of China going forward. It expects zero data center revenue from China next quarter. So that's concern number one. Number two, we've talked a lot about how memory prices have been going up. That hurts NVIDIA as well. They're saying that their gross margins are going to fall going forward because they also have memory as an input cost.

13:10And then number three, they kind of have competition emerging from their own customer base. OpenAI and Anthropic are both working on their own custom chips designed around their specific AI needs. Jensen Huang kind of shrugged it off and say those are very specific to their needs. We are still the general computing platform that a lot of people are going to use, but those are the question marks that are now hanging above NVIDIA. Not so much is there demand for their chips. Moving on, Bill Gates is scared of the pace of AI progress, and he wrote a nearly 6 ,000-word essay to voice his qualms. His main point, the people building AI understand how dangerous it could become, but the financial incentives are so great it prevents them from saying so publicly.

13:53The private versus public disconnect comes from Gates' own experience in the technology world. He points to three technological turning points he has lived through. The first was back in the 80s, seeing graphical interfaces, which convinced him that personal computers would become the future. But then he puts seeing chat GPT and clawed code in action right up there alongside computers as the other seminal tech moments of his life. It is with that context in mind that Gates launches into his darkest fears, namely that AI differs from other tech revolutions of the past. Most tech proponents argue that new breakthroughs may destroy some jobs, but will create even more new ones.

14:29Gates, however, looks at AI as, quote, utterly, absolutely, completely, totally different. For starters, most technology doesn't bring with it the threat of bioterrorism in the same way AI does. Gates also thinks mass unemployment is possible because AI doesn't just affect a single industry, but all parts of the economy, leaving lots of people vulnerable to job losses. Gates has some solutions in mind. One, have governments tax AI usage, making it more expensive to replace a human worker with AI. And two, make some jobs off limits to AI in what Gates dubs human reserved roles, which he'd apply to jobs like caregivers, for example.

15:08Neil, plenty of room here to critique the messenger given Gates' public missteps in recent years and his position as one of the richest people in the world. But what do you think about the message itself? I would like to lobby Bill Gates to make podcasters human reserve jobs, too. What stood out to me is, is this the same guy from three years ago? Because he also wrote something about AI three years ago. And he said, look, maybe AI job disruption is going to be bumpy, but it would be a manageable transition. People would work more efficiently. It's going to bring about huge gains. So he was pretty optimistic about the technology not too long ago.

15:45And now here he writes this nearly 6 ,000 word screed saying, quote, I am in a state of shock that I'm sort of the first one saying this is crazy. This is insane. I'm just deafened by the silence. So this is a person who has spent a lot of time in the tech industry doing a complete 180 on what he thinks AI is going to bring to humanity. I can't help but think about the position of these stories in our show lineup today. We just talked about NVIDIA saying that absolutely we are seeing AI become useful. We're seeing this mass adoption, like growth is going to continue full steam ahead. And then you have Bill Gates saying like, wait a second, the economic usefulness of this technology does not offset the question of whether it is ultimately good for society.

16:29So that was his big thing. He was trying to make the argument too that he is uniquely positioned to make this argument because he has worked in technology. He understands it. He also doesn't have any financial incentives. You might roll your eyes on that one because he still owns a lot of Microsoft stock. But he was saying that I can be the person to sound the alarm right now, even though all these other companies are just kind of blinded by the economic benefits that they will reap rather than what it will actually mean for society. Fascinating how this debate is playing out because Anthropic CEO Dario Amadei has been criticized by many in the tech world for being too doom and gloom about AI.

17:09He's come out and said, I think that 50 % of white collar jobs are going to be wiped out. And people are saying, what are you doing? Like you're trying to sell this product to people. You can't say this is going to be the end of all humanity. It's going to wipe out 50 % of jobs. So he's gotten a little more quiet on that respect. Bill Gates is saying, look, I actually agree with you, dude. Like, you should also speak up. And then we also have Mark Zuckerberg, on the other hand, the CEO of Meta, saying, launching this new optimistic AI message over the past couple of weeks, saying, I think AI is going to be really good for humanity.

17:42Just really interesting how this messaging is playing out. Then you have the whole data center issue where people, you know, nine out of 10 people hate data centers. And that is going to be an existential threat for the growth of the AI industry. So here's Bill Gates coming in saying, look, if you think the data center thing is bad, you need to be regulated because the backlash that is coming when everyone loses their jobs because of AI will make the data center backlash look like basically nothing. All right, we're going to take a quick break and come back with Neal's Numbers right after this.

18:14Meet Amazon Ads rising star Daryl Spencer, who set out to redefine men's self-care with his brand Crown Skin. Amazon Ads helped him grow. I walked away from big tech to build a luxury brand in a category that no one was paying attention to. With the help of Amazon ads, I'm reaching relevant audiences and competing with the biggest names in men's grooming. We've scaled to over$500 ,000 in monthly revenue. Watch Crown Skin's story at advertising.amazon.com slash rising-stars. Cyber security as we know it is dead. It's a figure of speech, but the truth is the old model was built on protection, safety nets, recovery plan systems designed to withstand the last era and maintain the status quo.

18:58The AI era demands confidence that you can secure and accelerate your business operations so nothing stops your momentum. Rubrik can give you that confidence. Their singular platform is designed to secure your data, control your AI, and protect your identity built as one architecture, not stitched together after the fact. To learn more, head to rubrik.com slash mb. That's r-u-b-r-i-k dot com slash mb. Neil, you know how parents always get loads of unsolicited advice about kids' clothes? I believe it, but I can't say I've experienced it. Wait, are you expecting, uh... No, for clothes you can actually count on, there's little sleepies.

19:40Real Moms created little sleepies with clothing designed for the realities of daily life with babies and kids. plus super soft, super stretchy fabrics and no scratchy tags. Snag some for the kids in your life at littlesleepies.com. That's littlesleepies.com. Welcome to Neil's Numbers, the segment where I share three stats in the week's news that will have your friends nicknaming you Claude. For my first number, what would you say is the tech capital of the United States? Because it's not as clear cut as you might think. According to the latest tech talent report from CBRE, New York has overtaken the San Francisco Bay Area as the region with the highest tech workforce by total headcount.

20:18The New York metro area grew its tech talent to over 394 ,000 between 2022 and 2025, an 8 % increase, while the Bay Area's tech workforce shrank by 6 % to around 375 ,000. The reason New York is now on top is it's got a more diversified industry base than San Francisco, and those industries, banking, insurance, real estate, have gone all in on artificial intelligence, bolstering their tech teams to reap the efficiency benefits of the AI age. JP Morgan CEO Jamie Dimon said recently, I think we will be hiring more AI people and fewer bankers in certain categories, and it will make them more productive, while Goldman Sachs is building a so-called digital factory floor to automate the repetitive tasks in finance.

21:00All right, so New York now has the edge in talent. However, when it comes to following the money, all roads lead to Silicon Valley still. The Wall Street Journal reported that companies in California have raised around$366 billion in venture funding since the start of the year. That is more than three times the amount of the other 49 states combined. Startups in New York in second place raised just 27 billion. I think it's so funny that New York has become this tech capital because of one thing. They want to put AI into production inside their highly regulated businesses rather than simply experiment with the technology.

21:38That is mainly what's, not mainly, But that is a big portion of what's going on in San Francisco is that you have these researchers who just want to go down the rabbit hole for the sake of going down versus in New York. They're like, wait, this can make us 2 % more efficient. Let's hire every single person we can. So that's, I think, the biggest disconnect. But you are right to say that San Francisco is not this wilting daisy in the tech world. It's not. It's clearly attracting all of the venture dollars. And it really hasn't even lost the AI specific crown either. They still lead in raw number of AI specialists, not just broad tech workers.

22:11AI represents 26 % of all SF tech job postings versus just 17 % in New York. So still very much the AI center of the universe. For my next number, the prime minister of Japan is kind of a hermit. At the very least, she loves working from home. Since entering office last October, Sanei Takeuchi has not left her house at all on a majority of weekends and public holidays. Nikkei reported last Friday. Compare that to Japan's previous three prime ministers who spent a maximum of just 16 % of non-weekdays entirely at home. Bloomberg dug into her schedule even deeper, finding more proof she just wants to be left alone.

22:48As of July, Takaiichi met with finance minister officials 50 % less often than the previous two PMs while holding the fewest cabinet meetings of any leader since 2012. It's not like she's playing video games. Last month, Takaiichi celebrated on social media that she finally got five hours of sleep for the first time in a while, with zero to three hours being the norm since becoming prime minister. However, all this alone time has become a bit of a political problem, and opposition leaders and media figures have called attention to Takeuchi's homebred tendencies. A few days ago, she defended herself on X, writing, work conducted at the official residence, such as meetings held there, are not reported as part of the prime minister's daily schedule, but from my perspective, it's also a workplace.

23:29Zero to three hours of sleep? I will never complain again. The other story that is going viral around her hermit-ness is the fact that she befriended a cockroach when she moved into the official residence for the prime minister. She said that, one, I have never encountered her ghost because there's absolutely rumors that this residence is haunted, but she did encounter a cockroach. But before killing it, she was like, wait, wait a second. What if this is part of the long cycle of reincarnation? She befriended the cockroach. eventually they had someone come in and kind of spray for bugs and she added i was relieved but somehow felt a little lonely a little sad because she no longer had her cockroach buddy for my final number iceland has virtually no murders yet crime is its favorite literary genre in a delightful article the new york times notes that iceland with a population of 400 000 people has virtually no murders it was major news when the number of homicides doubled from two before 2020 to about four in the years after.

24:29According to some surveys, it's the safest country in the world. But whatever crime they lack for in real life, Icelanders make up for by devouring crime fiction, which has become the most popular type of literature in the country. One Icelandic crime writer, who also happens to be the former prime minister, told the Times there are more fictional murders in Iceland every year than real, adding, which is good. So what draws the people of Iceland to violent stories they simply cannot relate to? One factor may be an embrace of the broader Nordic noir heritage. As anyone who's read Girl with a Dragon Tattoo knows, the people who live in these northern European countries like Sweden, Finland, and Iceland love a good murder mystery.

25:07But maybe more influential are the Icelandic sagas, sometimes described as Icelanders' second bible. These stories, from as early as the 13th century, are still taught in high schools and describe bloody Norse feuds and romantic rivalries, themes that echo in modern day crime thrillers. Still, Toby, you kind of have to admit it's odd. There's only been one serial killer ever in Iceland, Axler Bjorn, and he died in 1596. These Icelandic authors crack me up because they're like, we have such poor source material to pull from. One said, the typical Icelandic murder is two drunk guys in a kitchen.