The Problem with ChatGPT Erotica

0:00This podcast is supported by Google. Hey folks, Stephen Johnson here, co-founder of Notebook LM. As an author, I've always been obsessed with how software could help organize ideas and make connections. So we built Notebook LM as an AI-first tool for anyone trying to make sense of complex information. Upload your documents and Notebook LM instantly becomes your personal expert, uncovering insights and helping you brainstorm. Try it at notebooklm.google.com. Today on the AI Daily Brief, OpenAI opens the door to adult AI content. Before that, in the headlines, Citigroup's use of AI has freed up 100 ,000 hours for their developers each week.

0:42The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI.

0:53All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, Gemini, Superintelligent, KPMG, Robots and Pencils, and Notion. To get an ad-free version of the show, go to patreon.com slash AIDailyBrief, or you can subscribe on Apple Podcasts. To learn about sponsoring the show, or to check out other opportunities, including speaking, a survey about some possible AIDB extensions for next year, and most recently, an AIDB growth roll that is available, go visit AIDailyBrief.ai. Welcome back to the AI Daily Brief Headlines Edition, all the daily AI news you need in around five minutes.

1:29Since we have so many of these MIT-style studies claiming no positive results from AI floating around, we're going to start a new little corner on the show called the ROI Spotlight, where we highlight companies that are making announcements about how much actual tangible value they're getting from AI in the here and now. Kicking off this segment, we have Citigroup, where the bank has claimed huge AI efficiency gains in their earnings report. They said that their two main enterprise-wide AI tools combined for 7 million utilizations last quarter, which tripled the usage of the previous quarter. In addition, AI coding tools have completed 1 million code reviews year-to-date, saving in their estimation around 100 ,000 hours per week across their developer teams.

2:09Remember, this is not showing up in a press release, this is showing up in an earnings report. And as we move into a 2026 where ROI is one of, if not the dominant enterprise AI theme, we will continue to keep an eye out for reported results like this. Now, speaking of enterprises and AI, yesterday Walmart announced that they were partnering with OpenAI on AI shopping. A couple of weeks ago, we heard about ChatGPT's new checkout features, and Walmart now joins as the biggest partner to take advantage of them. ChatGPT users will now be able to shop Walmart products right in the app, complete with a buy button and integrated checkout.

2:41Daniel Denker, Walmart's executive VP of AI Product and Design, said, We view this as an opportunity to deliver convenience in a way that meets customers where they are. Said Walmart president and CEO Doug McMillan, For many years, e-commerce shopping experiences have consisted of a search bar and a long list of item responses. This is about to change. There is a native AI experience coming that is multimodal, personalized, and contextual. We are running towards that more enjoyable and convenient future with Sparky, and through partnerships, including this important step with OpenAI. Sparky, by the way, is part of Walmart's super agent strategy, where they reorganized dozens, if not hundreds of sub-agents into four main agents.

3:18If you're interested in that, go check out the episode Walmart Blast Past Agent Experimentation. You can find it on YouTube or your podcast channels. It came out at the end of July. We talk frequently on this show about the difference between efficiency AI and opportunity AI. Efficiency AI is, of course, using AI to do the things that you do now, faster, better, cheaper. Opportunity AI is about new experiences and opportunities that simply weren't possible before. And while it may seem small, what's interesting to me about this partnership between Walmart and OpenAI is that it nudges more in that direction of opportunity AI and fundamentally new types of consumer experiences than just doing the old stuff cheaper.

3:54Another big partnership with OpenAI yesterday came from Salesforce. Salesforce CEO Mark Benioff tweeted, Salesforce and OpenAI partnership unleashed new AgentForce 360 apps now live in chat GPT, query CRM, build Tableau dashboards, analyzed conversations, even closed deals with Agent Force Commerce. Trusted data and seamless workflows plus the world's best AI equals unstoppable enterprise power. Now, we talked on Tuesday's show all about Salesforce's attempt to turn themselves into an AI context platform. But what was interesting about this announcement yesterday is how much it did not move Wall Street, at least not in the direction that you would have expected.

4:28Over the past month, we've seen Oracle, AMD, and Broadcom all see big pops from their announced open AI deals. We also saw Coursera, HubSpot, Figma, and Bookings.com also all have huge pops when they were mentioned on stage at OpenAI Dev Day. And yet following the announcement, Salesforce stock was down 3.6%, its worst day in over a month. So does this mean that the OpenAI magic is fading and markets no longer care about big AI announcements? Not necessarily. Salesforce has had a number of tough years, with earnings growth slowing way down across that period. This year's growth forecast is less than 10%, which is below other leading tech companies and way down from the 25 % plus that they maintain for over a decade until 2023.

5:09As a smaller sub story, Salesforce also announced on Tuesday that they would not be paying a ransomware demand that could impact customer data, so that could also be a part of what's driving the drawdown. Still, you better believe as people look for signs of an AI bubble bursting, a stock tumbling on the announcement of an open AI deal is raising some eyebrows. Back over in news that the market likes, we have the latest in the chip wars where Intel is preparing to get back into the AI chip market with the release of a new GPU next year. One of the biggest knocks on Intel has been that they sat out the entire AI boom, but that's actually not technically true.

5:41Intel produced various CPUs that were used in NVIDIA AI server racks. They also designed a series of AI accelerator chips culminating in the Gaudi 3 chip released in April of last year. That said, the Gaudi chips never captured any meaningful market share. The new chip is codenamed Crescent Island and is expected to be ready for customer testing in the second half of 2026. This will be the first release under a new plan to produce new GPUs on an annual basis rather than an irregular schedule. During July's earnings call, CEO Lip Bhutan said that the company's focus would be on efficient AI chips for serving low-cost inference.

6:12In a statement for this announcement, CTO Sachin Khati confirmed that plan, commenting, AI is shifting from static training to real-time everywhere inference driven by agentic AI. Scaling these complex workloads requires heterogeneous systems that match the right silicon to the right task, powered by an open software stack. He added that Intel's new chip will quote, provide the efficient headroom customers need and more value as token volumes surge. Remains to be seen whether Intel can actually accomplish this, but there is a lot of merit to their focus on cheap inference rather than training.

6:41Then again, there's no shortage of companies designing their own GPUs, TPUs, and ASICs for efficient inference, so exactly where Intel fits into all of this remains to be seen. Lastly today, Oracle announced plans to deploy 50 ,000 AMD GPUs as the blockbuster AI infrastructure deals continue. Oracle said on Tuesday that they expect the installation to begin in the second half of next year using AMD's new M1450 chips. It's part of a longer-run commitment from Oracle to start making widespread use of AMD chips. There's also a likely link to OpenAI's recent deal with AMD to buy 10 gigawatts worth of chip supply.

7:14Karan Bhada, the senior VP of Oracle Cloud Infrastructure, suggested the move is about AMD somewhat catching up to NVIDIA. He said, We feel like customers are going to take up AMD very, very well, especially in the inferencing space. I think AMD has done a really fantastic job, just like NVIDIA, and I think both of them have their place. Separately, Oracle's new co-CEOs have defended the company's aggressive AI build-out. Last month, Mike Cecilia was promoted from President of Oracle Industries, and Clay McGorick was promoted from President of Cloud Infrastructure to take over leadership of the company.

7:43Cecilia told the Wall Street Journal, We're really in a unique situation to deliver what we call applied AI. Now, Oracle has been on a bit of a journey in the last month. They saw a huge pop after announcing a$300 billion deal with OpenAI, but then the information later reported that Oracle has low margins on their AI product driving the stock price down. But now many analysts believe the reporting mischaracterized the accounting. Derek Wood of TD Cowan said, You have to go build the infrastructure before you can turn on all the revenue meters. But as the consumption meters start going on, you start to recoup a lot more of your capital expense and start to see gross margins significantly improve.

8:16Still, the stock remains 0.8 % down off its recent high, and in that context, the new co-CEOs will make their case to investors at an investor day on Thursday. If there is anything interesting there, we will, of course, report on it. But for now, that's going to do it for today's AI Daily Brief Headlines edition. Next up, the main episode.

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11:31To some, this news was completely inevitable. To others, it feels like a major course shift. To some, it's just a head-scratcher. And yet for others, in this latest announcement, they see the signs of deep cultural fracture that could create major problems for AI in the years ahead. Mario Knopfel, X's aggregator-in-chief, writes, ChatGPT's adult mode is coming, literally. Ugh, Mario. Starting December, OpenAI will let adult users access mature content on ChatGPT, but only if they verify their age. CEO Sam Altman says it's part of treating adults like adults, which includes stuff like erotica and more customizable chatbot personalities.

12:08OpenAI made the bot pretty strict before to protect people with mental health struggles, but now says it has the tools to ease those limits safely. Basically, ChatGPT might soon flirt back, drop emojis, or talk like your bestie, but only if you want it to. Alright, so as you might imagine, the erotica part of this has captured the most attention. But let's try to get the whole picture before we dive to any conclusions. On Tuesday, Sam Altman tweeted, We made ChatGPT pretty restrictive to make sure we were being careful with mental health issues. We realized this made it less usable and enjoyable to many users who had no mental health problems, but given the seriousness of the issue, we wanted to get this right.

12:44Now that we have been able to mitigate the serious mental health issues and have new tools, we are going to be able to safely relax the restrictions in most cases. In a few weeks, we plan to put out a new version of ChatGPT that allows people to have a personality that behaves more like what people liked about 4.0. We hope it will be better. If you want your ChatGPT to respond in a very human-like way or use a ton of emoji or act like a friend, ChatGPT should do it. But only if you want it, not because we are usage maxing. In December, as we roll out age-gating more fully and as part of our Treat Adult Users Like Adults principle, we will even allow more like erotica for verified adults.

13:20There is so much to unpack around all of this. One interesting part of it has to do with the further fallout of the launch of GPT-5 and the deprecation of 4.0. Back when that happened, there was, of course, a massive rebellion and outcry of users who had gotten used to the interaction patterns with 4.0 and who didn't like the cold and clinical feeling of GPT-5. At the time, there were lots of questions around the sycophancy of models and what subtle but insidious problems that might create. there were conversations around strategy and obligation to users and how people form relationships with models that the companies who released those models kind of had to accommodate for even if they didn't expect that to happen.

13:58There was also just the straight-up contingent of people who thought of 4.0 as something close to a romantic partner. Now, interestingly, although the 4.0 rebellion worked and people got their beloved model back, at least for a time, as we later learned, it seemed like in part 4.0 had been deprecated because it didn't function properly with OpenAI's new content moderation system. For example, shortly after Foro was brought back, OpenAI noted that conversations on certain sensitive topics would be filtered to GPT-5. This was part of a blog post from mid-September called Teen Safety, Freedom, and Privacy.

14:32As with most of OpenAI's most important blog posts, this one was authored not by the team, but by Altman himself. In addition to noting that certain types of conversations were going to be auto-routed to GPT-5 because their content moderation system could better handle them, we also heard the first inklings of how OpenAI was going to approach this age-gating issue. And while the thrust of the blog post in general was that OpenAI really wanted to prioritize freedom and privacy, and for adults over a sort of nannying safety, that when it came to teens, the reverse was true. Altman wrote, we prioritize safety ahead of privacy and freedom for teens.

15:03This is a new and powerful technology, and we believe minors need significant protections. Altman noted that they were building an age prediction system to estimate age based on how people use ChatGPT, but if there was any doubt, they'd play it safe to default to the under-18 experience. So to the extent that this is just a continuation of what they've already been talking about, i.e. a bifurcation of the experience into a non-adult and an adult experience, there's not all that much that's necessarily notable here. Also, it should be noted that this is not the first time that Altman has talked about allowing adults to use ChatGPT for adult conversation and adult content.

15:41This is something that's come up in previous interviews going back quite some time. There are a couple things I think that make this conversation different right now, though. The first is that in the weeks following GPT-5, Altman took a number of different potshots, presumably aimed at Elon Musk, who had allowed his Grok app to lean much more into the adult and erotic type content. Writes Fortune, Altman did jab at companies developing Japanese anime sex bots, continuing, you will not see us do that. We will continue to work hard at making a useful app, and we will try to let users use it the way that they want, but not so much that people who have really fragile mental states get exploited accidentally.

16:15And while for Sam, this may all feel consistent, to people who are just casually getting this, they're basically hearing one month, Sam ripping on Elon for having what Altman characterizes as Japanese anime sex bots, and then a month later seeming to say, yeah, that's fine here too. Even if obviously Sam and OpenAI would argue that there is a big difference between releasing a full adult mode and actually building these characters as Grok has done versus just taking a more hands-off approach to whatever adults are going to do. The other reason that this is hitting more skepticism, however, is that it comes on the heels of the Sora app.

16:47We talked extensively about this when Sora was launched, about the consumer backlash to people feeling like OpenAI was shifting their focus from these big lofty ambitions of changing the world and curing all diseases to instead just leeching our attention. To some, it felt like the only reason for Sora the app, not the model, was to again lock our attention in, in order to harvest us for data for further training, or to make money in the form of ads that could go to support other things. Now, as I argued, I think that that was not just a chat GPT critique. I think that basically the challenge and the difference was that OpenAI was saying, hey, we're going to try to do social media and specifically short-form video responsibly.

17:26And it just happened to come into a world where there is a large and growing contingent of adults who think that there is no way to do short-form attention-harvesting video responsibly. That is a fundamental contradiction that has no room for compromise. Around the time that Sora launched, former Stability founder Ahmad Mostak wrote, In an age of infinite content, human attention is one of the few finite things. So they'll try to capture as much of it as possible. Attention is all they need. I've seen the echoes of many of those conversations that we had just a couple of weeks ago come back up now, as expressed in this tweet from Drew Harwell of The Washington Post.

18:02Sam Altman went from AI will cure cancer to chat GPT porn in less than a month. Nate Silver also wrote, OpenAI's recent actions don't seem to be consistent with a company that believes AGI is right around the corner. If you think the singularity is happening in 6 to 24 months, you preserve brand prestige to draw a more sympathetic reaction from regulators and attract and retain the best talent, rather than getting into erotica for verified adults. Instead, they're loosening guardrails in a way that will probably raise more revenues and might attract more capital and or justify current valuations.

18:33They might still be an extremely valuable company as the new meta Google, etc., but feels more like AI as normal technology. Now, I think that there is actually a really interesting question at the core of this that gets at one of the uncomfortable realities of this new world that we're living in. ChatGPT currently has around one-tenth of the world's population logging into it each week. When you operate at that scale, at what point do you stop seeing your role as trying to guide people to what you view as acceptable use cases versus effectively seeing yourself as a public utility where you have to basically allow people to do what they want?

19:11I don't think that's as clean or clear-cut an answer as some people are making it out to be. And my guess is that Altman and many at OpenAI see themselves to some extent as Sherpas and stewards for allowing people to figure out what they want to do with AI without trying to be the arbiter of moral right. I actually quite understand that point of view, especially as someone who has fairly socially libertarian views when it comes to adults being able to do whatever they want as long as they're not harming others. At the same time, OpenAI still is a company. In fact, it's fighting a lot of battles right now to become more of a company and less of a non-profit, and I do believe that as such, it gets to decide what it wants to care about and what it wants to stand for.

19:50In other words, there are already ways for people to go have access to those adult experiences with AI should they so choose. ChatGPT does not have to be one of the places they can do that. It will not fundamentally hamper people's ability to get those experiences should they want them if ChatGPT said, we think that's fine for adults to do, but it's not for us. I can't say for sure. It's easy to be a backseat driver, but I think that if I'm in Sam's seat right now, that's the choice that I'm making. Now, hold aside OpenAI itself. There is a much larger societal conversation that this is digging up and that this is a part of.

20:24The response from a number of corners has been loud and negative. Mark Cuban wrote, this is going to backfire hard. No parent is going to trust that their kids can't get through your age gating. They will just push their kids to every other LLM. Why take the risk? Same for schools. Why take the risk? A few seniors in high school are 18 and decide it would be

20:55Now,

21:02Cuban went on to clarify, This isn't about porn. That's everywhere, including here. This is about the connection that can happen and go into who knows what direction with some kid who used their older sibling's login. And so what he's getting at is that this is not just about a new, different way to access pornography. It's about this new relationship pattern, which we've seen indications, like in the 4-0 rebellion, that we don't really understand yet. And that could have some pretty negative consequences. Cuban decided to clarify even further. He writes, I'm not saying we should ban it. I said it was a mistake, that it will hurt the business of open AI.

21:36And I'll say it again. This is not about porn. This is about kids developing relationships with an LLM that could take them in any number of very personal directions. Parents today are afraid of books and libraries that kids don't read. They ain't seen nothing yet. I don't see how OpenAI can age-gate successfully enough. I'm also not sure that it can't psychologically damage young adults. We just don't know yet how addictive LLMs can be. Which, in my opinion, means that parents in schools that would otherwise want to use ChatGPT because of its current ubiquity will decide not to use it. It will be an ongoing battle for OpenAI.