Meta Settles Addiction Suits, Tim Cook Signs Off After 15 Years, OpenAI’s Jalapeño Chip | Diet TBPN

0:01John Coogan:We are back. We missed you. Two weeks is a crazy amount of time to be away. I don't understand how children do this for weeks or months at a time. It's wild. It's wild. It's crazy. A lot of video games. I was sitting there. I had somebody this morning say it feels like it must have gone by so fast. And I was thinking no, it absolutely didn't go by fast at all. It felt like two months. Yeah, it did feel like two months. We manipulated time. Yeah, but thank you to the Microsoft team, the Activision team. They sent us codes for Modern Warfare 4. My review is in. It's fantastic. I love it. It's a really good game.

0:39John Coogan:Really polished. And the Kill Block. Did you revert back at all to... No, didn't really have the opportunity. I was joking about full relapse, just gaming from dusk till dawn. But that is, in fact, not in the cards these days. I had a relapse on pizza. Pizza? I was eating pizza like twice a day at times. I was eating a lot of pizza, surfing a lot. That's good. Do you think pizza is potentially addictive? I do. You think that there could be a settlement? I do think. I don't think there could. I think there should. There should be. I do wonder. Because cigarettes were very scientifically proven to be addictive.

1:18John Coogan:You can give nicotine to a mouse and it will go and try and get more nicotine. It's the most cut and dry. You can run the experiment with any animal, any creature in the blood. Based on my own personal experience, pizza and surfing would fall into that same box. Oh, you give a mouse pizza? You let a mouse get barreled. Yeah. If you give a mouse a cookie. If you give a mouse a barrel. A barrel. He's going to want a Corona with a lime. Yeah, for sure. But it will be interesting to see where the addiction stuff goes. because when all this came up, you know, the meta social media addiction, I was kind of like, give a massive scroll.

1:56John Coogan:Like, I understand that people were trying. I don't know. Can you get mice or monkeys addicted to reels? Maybe. I'm sure. Almost certainly. You think you could get a monkey addicted to Instagram reels? I think 100%. Well, we got to try. I think 100%. We're going to find out. We can't get any monkeys because they're sold out. No, no. You can get a monkey. you just have to pay top dollar. They're expensive, but you can buy one. It did seem like it was a tougher sell because it was not a chemically addictive product. It was more of a psychological thing. There's a benefit to it. There's a free speech element, all very complicated.

2:33John Coogan:I was not expecting to see a big settlement when this first came up years ago. I thought it was going to be more nickel and diming, little case by case things. But in fact, there has been a huge settlement by Meta two days ago, or this was when this was written, this was August 26th. Meta announced settlements with attorneys general representing 48 states and the District of Columbia and three U.S. territories. So there were only two states that held back. I believe it's Texas and New Mexico over allegations that Facebook and Instagram harmed children and teens. So this has been boiling up for a while.

3:08John Coogan:There were smaller settlements. This is the big one. And so the high level numbers here. Meta will pay the states$12.7 billion over 10 years, and it could go up to$18 billion if other platforms join the settlement. It is a big number. It is a big number. And honestly, if you are a state legislator or you care about having your state funded for a variety of things, this is good news. This is a size gong moment for the states because they will be getting this money distributed to them, and they can use that to do whatever states do from education to healthcare there's a lot of different things that states can do I know Tyler's pissed because he doesn't like the government getting a dime but but it is a size-gog moment for them I did find a video of a chimpanzee hitting reels if we can pull this up this is important this is definitely more important than okay yeah this looks okay maybe maybe maybe social media is addictive now that I'm seeing this this is yeah it be universal if it crosses wow using it so intuitively yep yep i mean that's just good ui design come on you got to give the the ux engineers some credit here uh make it so easy to use that even a monkey could use it that was the prompt if it crosses species barriers i'm much more likely to agree that something could be addictive um but well and here especially you know he's looking at Other monkeys.

4:41Other monkeys.

4:42John Coogan:Oh, okay. That's a little, I don't know. Yeah. No, I know. But an algo feed, it's going to naturally start serving a lot of those videos. Yeah. Yeah. Makes sense. Anyway, everyone has been drawing analogies to the tobacco industry's master settlement agreement around this because that's the last time there was a huge multi-billion, tens of billions of dollars settlement between a large organization around addiction and a bunch of states. That's what's happened when cigarette companies signed the master settlement agreement. All of the companies agreeing to pay all the states. But the structure was a little bit different, and there's some nuance there.

5:16John Coogan:And so Eric Sufort over at MobileDevMemo, friend of the show, he said, Meta settlement is no big tobacco moment. That was his takeaway in MobileDevMemo. You should go subscribe because this post is a paid post. But I'll take you through some of the interesting analysis that he put together. I was debating with a lawyer friend of mine about this over the weekend and have some interesting details here. So the headline here is that what Meta is going to pay as a percentage of revenue or what the social media industry will pay as a percentage of revenue relative to what the tobacco industry paid as a percentage of revenue is off by almost an order of magnitude.

5:52John Coogan:So let's put them in context here. So he says Meta's settlement is comparatively paltry. A white paper from the USDA using BLS data estimates that the total U.S. consumer expenditure on tobacco products in 1998, when the master settlement agreement was signed, was roughly$57 billion a year. Annualizing the roughly$250 billion in combined tobacco settlement payments over 25 years produces an average of$10 billion per year, is what they've been paying. And so that was equivalent to 17.5 % in 1998 domestic expenditure. So you can think about it as like when tobacco got hit with like, you're addictive, what did the government say you got to pay?

6:36John Coogan:They asked for 17.5%. Very, very meaningful. Very, very meaningful. And that's off the top, right? Yes. Yes. This is revenue. It's not like, hey, you got to give us a percentage of your profits. Yes. And so it's calculated in a more complicated way. It's not exactly a percentage. It's on a per pack sold, but it is inflation adjusted. And so there's a whole bunch of other mechanics that really have allowed the master settlement agreement to deliver tens of billions of dollars on an ongoing basis. Even while now tobacco sales are slumping, cigarette sales are declining. And so that does create more complex dynamics for the states.

7:13John Coogan:But still, it's 17.5 % of the industry's revenue coming to states as effectively an extra tax on top, which I think a lot of people would agree is good because cigarettes are bad, right? But what's going on with Meta and social media? So given Meta's full year 2025, U.S. revenue of$75 billion roughly per the company's 10K, its average annual payment, if they pay the full$18 billion, because they're paying that over 10 years, it's$1.8 billion. So what is$1.8 billion of$75 billion? It's 2.4%. So instead of 17.5 %… Sorry, where are you getting the$75 billion? 75 billion was their US revenue last year.

7:53John Coogan:Oh, US. Globally, it was like a couple hundred. Yeah, bigger, bigger. But you have to comp it to domestic because that's where this is taking effect. It would be even lower if you look at overall revenue, which is a good point. But you can think about it as tobacco had to pay 17.5 % of domestic revenue, social media, 2.5 % of domestic revenue. So not quite an order of magnitude, but a significant gap, significant gap there. It is important to reiterate here, says Eric Suford over at MobileDevMemo, that the MSA payment, the master settlement agreement, payment schedule is inflation adjusted and tracks unit sales.

8:30John Coogan:Meta settlement has no such mechanism. So let's say that Meta doubles revenue, their percentage they'll pay is lower. And then let's say inflation kicks in, they're still going to be paying this$1.8 billion a year. 10 years from now could be, could be pennies if hyperinflation happens. Who knows? The only reason it felt somewhat significant from a dollar standpoint is because MEDA is just spending so much money on AI. Oh, interesting. You can just imagine Zach being like, I really wish I could have given that to Jensen. Right. So I had the opposite. I had the opposite read, which was, I saw 18 billion and I was like, ah, that's like, you know, a month of AI spend for them.

9:14John Coogan:And I was like, ah, this is not that much money. And then, of course, it's over 10 years. And so when you think about it as it's$1.8 billion a year, so that's 100 mil a month, that's their token budget right now? I don't know, maybe less? No, overall, it's insignificant. But when they are spending more money than they are making, it hurts a little bit more. Mike Isaac's been reporting on this. He says, Meta is going full bore with pushing other companies to add the same restrictions it will add to its apps as part of the settlement. Meta plans to run this copy as a full page print advertisement in the Washington Post, the Los Angeles Times, and the New York Times tomorrow morning.

10:00John Coogan:Wow, a little circular deal for Mike promoting the New York Times. He works there, man. Undisclosed. What's going on? No. Yeah. And it is just a very wonderful spin to get to be forced to pay a$17 billion settlement for getting children addicted to your product and then tell other social, other addictive social media companies to join us in supporting teens. It's just chef's kiss from - You think it should be like join us in apologizing as well, basically? Well, I just think it's a good spin. That's all. Okay. Well, here's what they said. Through this agreement, they've set out a path toward industry-wide commitments to further empower parents by introducing a two-hour daily time limit, turning off access to our apps at night as a default, no notifications during school hours, clear prompts and notifications to teens every 15 minutes of continuous screen time, new parental supervision controls so parents can decide how their teens use their apps.

11:03John Coogan:I think all this makes sense. Defaults are powerful. So even if a parent wants to go in and allow their kid because they've got a night owl who's cooking up an incredible new IG account and is printing or something. I don't know. I mean, there are plenty of good reasons to use social media, even while you're young. But defaults are powerful, and I think this is a good thing. I don't think it affects the business that much. I don't think they make that much money from young people because kids don't buy cars on Instagram, like expensive things. Whereas a lot of millennials and even Gen Xers and boomers are on there shopping all the time.

11:39John Coogan:So the immediate revenue impact of any of these is minimal. You just don't want to wind up in a situation where you lose ground to TikTok and YouTube because they become the kid-friendly one that the kids are like, oh, well, TikTok doesn't have any of these stupid restrictions. So I'm going to use that. And then they remain a user for their entire life and you lose an entire generation. Yeah. I mean, if somebody is primarily addicted to Instagram and they get their two hour budget and historically they would have used the product for three, four hours, you have that spillover attention. So it will potentially help less addictive, addictive social media platforms, get more user minutes.

12:19John Coogan:Yeah, yeah, exactly. And this was the original Instagram threat was that younger generation was using Instagram and Facebook was going to become like the, what do they call it? The blue app or the old book or something. I don't know. It was going to only maintain the older cohort. And that's sort of what happened, but it didn't matter because Meta bought Instagram. Then Snapchat was even like the younger crowd. They tried to buy it. They couldn't, they wound up cloning it. They were successful. And so the company maintained, but they can't let a new social media app come up and dominate kids. Not for the short-term monetization, It's for the long term.

12:53They don't mention Snap in the open letter. Is that a shots fired? It's a dig. A subtle dig?

12:59John Coogan:I think so. I don't know. Tim Cook sent a final memo to Apple employees on his last day as CEO. He said, I will miss this work in ways I can only begin to imagine. Even as I remain completely at peace with my decision. Just reading the entire memo. I'm not regretting it. But I will miss it. He's a workaholic. He doesn't want to retire. I was really hoping he would have another 30-year run in him. If Warren Buffett and Charlie Munger can work until they're in their 90s, why can't Tim Cook? Fundamentally, how is the job? I think he was unhappy with the pay. When you have MLB players making as much money as you while you're running one of the largest companies in history, when you're one of the greatest CEOs in history, period.

13:54Yeah. And you can barely...

13:56John Coogan:75, 74.3. They couldn't even get him over 75. Yeah. And not enough people were willing to march on Cupertino in protest of this, right? And so I think at some point he's like, look, if people, if shareholders, customers... I'm voting with my feet. I'm voting with my feet. I'm out, I'm out. In the news today in the Wall Street Journal, booming corporate earnings, fuel lofty outlooks, the economy is doing very well. A lot of that's driven by tariff refunds. Tim Cook, I mean, people lament the lack of an entirely new form factor. The Vision Pro wasn't a breakout success. A lot of the great devices still came from the Steve Jobs era, and Tim Cook merely managed and carried everything along.

14:41John Coogan:Obviously did so much on the services side that no one really gives him credit for with advertising in the app store and just money printing machine working flawlessly. But he also negotiated like a very tumultuous political environment for a decade or more, essentially flawlessly. Like the fact that Donald Trump has never called Tim Cook, Tim Crook is a huge, huge feather in his cap. I agree. Because it was sitting right there as a Trump style dig. Never had to go for it. He never had to go for it. And so he was able to negotiate Washington and all of the different quagmires that are there, not get his supply chain nuked, keep the products flowing.

15:29John Coogan:There were little hiccups here and there, but overall, the company has been firing on all cylinders. So what a great send off. You can go read the full letter. Apple Vision Pro's layoffs went beyond video and gaming. It included employees across the company, including people working on device security, audio engineering, Siri integration, testing, and the product's operating system. They are focused on AI devices. And people are really optimistic about the new Mac M6 chip just being really good for AI and being something that continues to drive value for the company and creates an AI winner narrative in the face of not really spending any money on AI in the traditional sense, not buying a NeoLab, not buying a bunch of data centers staying out of the weeds, but still benefiting because these powerful computers get only more powerful when you have computer use.

16:17It still is so crazy they haven't pulled the trigger on a Neolab.

16:21John Coogan:I don't think they need to. I don't think they will. I think they're just going to be a hardware company. That's what they do. Neolab is software. They don't need software. Now I think the strategy is working. But if you ask me a year ago, will Apple make a$500 to$1 billion acquisition of a NeoLab, just a talent acquisition. Is that a NeoLab for ants? What are you talking about? Yeah, what NeoLab can you buy for$500? $500 million NeoLab? I'm not going to name names, but there's been some NeoLabs that would raise$100 on$500. Isn't there a NeoLab that you were just on the phone with that they could maybe pick up?

16:57Oh, yeah, Charleston AI.

16:59John Coogan:Do we have a video of Charleston AI? Yeah, yeah, let's pull up Charleston AI. Cupertino, Charleston, I think there's something there, potentially. I actually think that you could rapidly scale a franchise business that takes the Charleston AI concept, gives somebody all the programming and all the different product offerings, and then helps local entrepreneurs set up their own. I think that's what Charleston AI does. No, I know, but I think Charleston AI needs to go global. Ooh, okay. I'm one of the co-founders of Charleston AI. We're local to Charleston, and we're here to help humans help humans with AI.

17:33John Coogan:And here is our lab. This is where AI comes alive. What used to take months to get accomplished, we can do in hours for you. Here we have an empty office available to somebody that wants to make Charleston AI their home. Charleston AI's conference room, where our clients come in, individuals and small businesses come in, and we discuss what it is they'd like to do with AI in their business or personally. We listen very carefully, take notes and make sure we get it right and then we offer them a way to make it work. Now you called Charleston AI, correct? Correct. Who answered the phone? So yeah, one of the founders answered the phone but it was an AI version of him and it sounded exactly like his voice.

18:18That's pretty impressive. Yeah, it's a very funny video but I think it's actually a good business. Yeah, probably. And I think it should exist. No, you're right. Like some people, they're curious about AI. Maybe they're running a small business. Maybe they're a freelancer. Maybe they're a teacher, whatever. It's nice to just drive by something and go in somewhere and talk to real people that are in your community to learn about something that's complicated and sometimes scary. So I'm very in favor of it.

18:45John Coogan:Didn't Best Buy build a whole Geek Squad team for exactly four of us? I think they acquired Geek Squad, didn't they? Was it over or under$500 million? Let's find out. Anyway, there's an interesting story. Yes. Acquired. Acquired. That would be cool. Yeah. New Charleston AI on wheels. On wheels. Oh, they come to you. Mobile data centers. Okay. That can come. The Geeksquad acquisition was only 3 million. What? 3 million. 3 million. 2002. It's not bad for back then. That's like 400 million in today's dollars, Tyler. I know it was before you were born, but that was a lot of money back then. Yeah. OpenAI has reportedly bought tens of thousands of Mac minis and Mac studios for reinforcement learning and training computer use agents, while Anthropic rents Mac minis through AWS.

19:36John Coogan:You can rent Mac minis through AWS. That's interesting. I didn't know that. The information reported this. I was playing around with computer use over the break. Had a lot of fun. I had Codex try and beat Bellatro, this poker-style game that I like to play on PC. It did okay. It was a little slow still, and I don't think it actually won the full game, but it's fun watching it play a new game. I saw that demo of it beating Slay the Spire, which is pretty impressive because it's a hard game. I like the Codex or ChatGPT playing the game. I want to see the latency come down. I want to see it play Modern Warfare because I want to play against it and I want to see who's better me or the AI in somewhat related news to the to the speed of inference open a eyes jalapeno is spicy says Dylan Patel Dylan Patel says open a eyes jalapeno is spicy usually first generation ships aren't competitive but open AI is beating Nvidia Blackwell and even Ruben this is huge news we got to go into open a eyes lab to dissect their new chip and dive into the software architecture and performance.

20:51John Coogan:Incredible work. There's a bunch of interesting details about this chip. I put a whole blog post, but to clarify some important points, it's an LLM inference chip, not designed for training, but the results are really good. Roughly 1.5 to 1.9x more useful inference throughput per watt than NVIDIA GB200, GB300 systems while simultaneously cutting end-to-end latency 1.7 to 3.6 x. So faster inference, less latency, but also just your dollars and your energy, your watts are going to go a lot further, which is very, very good. It's a data center rack scale system. I would love to get this in the consumer device, shrink it down, do something there, but it's going in the data center and they're going to do a lot of them.

21:40John Coogan:Did you know the size of the Broadcom deal? 10 gigawatts of this chip. It might not be exactly this chip. It could be the Gen 2, the Gen 3, but the pre-existing Broadcom OpenAI. Put it into context, that's roughly five times more compute than the whole company currently has operational. Yeah. But this is through 2029, but that's aggressive. That's like three years, three months away, I guess you can do the end of the year. Yeah. 10 gigawatts It's open AI designed accelerator systems manufactured by Broadcom or in partnership with Broadcom deployed from the second half of 2026. And the crazy thing is that like they're on track for this second half of 2026.

22:22John Coogan:Like it is going into production and it's a lot faster than most people thought. The previous like industry knowledge was, yeah, any new chip is going to take years. And this happened very, very quickly. So good to stretch that energy further. you need less data centers to do more inference that's good good for gross margins and also just good for the narrative of C W K O and E says please tell me y 'all are going to touch address instinct in the 350 million raise it two and a half billion yeah super impressive how much attention and traction instinct has received after just they've been building the company for like four or five months, it seems.

23:08It's like very recent. I haven't used the product yet just because giving that level of access to this new startup. I looked at, I mean, their terms and conditions were floating around and it kind of seemed like you're giving away the...

23:24John Coogan:I mean, everything you get is, all of your data is going to be saved like pretty much in like a clear text database. It'll be secure, but like they will have access. Yeah, so I wasn't ready to try it yet even though it seems like a lot of people, what's cool is it seems like people are quickly having a magical moment, right? Whether it's getting a reservation for a restaurant or movie tickets or things like that. And I think that's super, super important for a consumer product to have that sort of short timeline. I was reflecting on the instinct round and my immediate thought was, well, back in my day when a hot consumer tech company like caught a little bit of attention, they would get like a 25 on 150 from benchmark.

24:13and that was seen as like, oh, wow, this company has some meaningful traction and potential, but it's just crazy to see this quickly a company get the$2.5 billion round. And I think that there's reasons to be a little bit wary. I want to see them break out of the VC hype cycle with this product. So historically, when we've seen consumer products or prosumer products, I'm thinking of Clubhouse or Superhuman, when there's somewhat of a question of the more a VC likes something, potentially the less viable it is at a massive, massive scale. So it's possible that it can. But again, if they can solve the always on digital assistant, it is a massive, massive opportunity.

25:14But I'm just saying they're pricing a lot of that in right now when this company is four months old and valued at like a third of what Snapchat is, right?