Big Technology Podcast - Is Anthropic’s Claude AI Conscious?, Shopping in ChatGPT, Systrom vs. Zuck

Episode Date: April 25, 2025

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) Anthropic researcher's assertion that there's a 15% chance Claude is conscious 2) What happens if people believe AI is sentient? 3) Why consciousness and intelligence are different 4) Hey, is this all just marketing? 5) Anthropic CEO Dario Amodei's push for AI model interpretability 6) China's robot half-marathon 7) Tesla's wild earnings week 8) Why Google is thriving despite the ChatGPT threat 9) Are we going to shop directly within ChatGPT? 10) Kevin Systrom's flawed testimony against Facebook 11) Washington DC thinks Big Tech is getting broken up. --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology on Substack? Here’s 25% off for the first year: https://www.bigtechnology.com/subscribe?coupon=0843016b Questions? Feedback? Write to: [e-mail]

Research House Anthropics, as its clawed AI bot may be conscious. Robots run a half marathon in China. Will you soon be able to shop directly in chat cheapy T? An Instagram founder puts Mark Zuckerberg on blast. That's coming up right after this. Welcome to Big Technology Podcast Friday edition where we break down the news in our traditional cool-headed and nuanced format. We've got a great show for you today.

We're going to talk about whether AI systems are conscious already. Could they become conscious? What does that feel like? because research houses like Anthropic have started to take it seriously. We're also going to talk about this robot half marathon in China and whether you can shop directly in Chad CTPT and Instagram founder Kevin Sistram testifying against META in the big FTC trial. Joining us, as always, on Fridays is Ron John Roy of margins.

Ron John, great to see you. Welcome to the show. Now the robots are going to make me feel guilty about not going for a run this week. Thank you, robots. And you're becoming conscious as well. So they're both going to have feelings and kick our butts. What is left for humanity? I mean, just shopping on chaty PT. That's all we got right now.

Exactly. So by the way, for those tuning in on video, I am in Washington, D.C., so I've got kind of a funky background here in the hotel, and I'm talking in like a TikTok or mic. But we're going to make it work. And then we're going to talk a little bit about some of my observations from being in D.C. when we get to the antitrust stuff at the end.

But first, let's talk about this New York Times article by Kevin Ruse. It says, the headline is, if AI systems become conscious, should they have rights? And the story is very interesting. It's about this AI welfare researcher named Kyle Fish that Anthropic has hired, some ties to effective altruism, which is interesting. Rue says he's focused on two basic questions. First, is it possible that Claude or other AI systems will become conscious in the near future? And second, if that happens, what should Anthropic do about it? obviously the debate about whether AIs is conscious or whether it's sentient has kind of been off limits for a while.

Blake Lemoyne, who's been on the show, first said that Google's Lambda chatbot, which came out before ChatGPT was sentient. He actually got fired right before he and I started to record, and big technology, we were able to break that news, which was an interesting moment, but we haven't heard much about it up until this point. I'll just read the quote from Fish and then turn it over to you, Ranjan, to get your reaction. He says, it seems to me that if you find yourself in a situation of bringing some new class of being into existence that is able to communicate and relate and reason and problem solve in ways that we previously associated solely with conscious human beings, then it seems quite prudent to at least be asking questions about whether the system might have its own kinds of experiences. What's your reaction to this? I have a hard time with this. I mean, and I'm glad we

haven't been hearing about this for a while. Listen, if you're an AI welfare researcher, you have to believe that AI is going to become sentient. Like, I mean, that's your job. If you're anthropic, it's in your interest to push this kind of narrative that this technology is so grand that it might be sentient. That said, I mean, we get to these points where, with a large language model, chat, like the newest model from open AI, people can feel. that ChatGPT has gotten a little bit friendly or a little bit less AIE and a little bit more conversational. I think like everyone, the entire industry is saying and feeling that, but still that's pre-programmed, that's built into the model. The idea that these models or any of these

chat interactions are actually having their own feelings separately from whatever you're asking them in whatever they've been trained on. I don't know. Do you believe they're evolving, they're feeling we're in Westworld right now? Well, Fish, he says that there's a 15% chance that Claude is sentient. How do you get that? How do you get that percentage? 15%? Come on. You have to run that simulation in your mind a thousand times. And if 15% come out sentient, then you give it 50. No, there's no. It's gobbly gook. It is. It doesn't make any sense. But here's to me what is interesting about this. I think that the question is, you know, it becomes less relevant if it's sentient.

I think the bigger question is, what happens if people believe it's sentient? What if it gets so good at mimicking something with human feeling that we start to believe it? So this is from Anil Seth. He's a neuroscientist. He's been on the show. First of all, a very interesting caveat here. He says that Kevin Ruse quotes fish, associating consciousness, what we just read, with problem solving, planning, communicating, and reasoning.

But this is to conflate consciousness with intelligence. Consciousness arguably is about feeling and being rather than doing and thinking. So to me, I thought that that was a very interesting caveat and basically shoots the entire assertion right in the face. But then he goes on to the implications. He says, is this all crazy talk? First of all, nobody should be explicitly trying to create conscious AI. because to succeed would be to inaugurate an ethical catastrophe of enormous proportions given the potential for industrial scale new forms of suffering. But even AI that seems conscious could be very bad for us, exploiting our vulnerabilities, distorting our moral priorities, and brutalizing our minds, remember Westworld.

Spot on, Ron John. And we might not be able to think our way out of an AI-based illusion of consciousness. So I think it's interesting that people are, if AI can fake, consciousness. If it can even fix these AI researchers or these Google researchers into thinking it's conscious, that to me is, I guess, like, it is an issue. Because we already have people saying that the number one use case for AI is friendship, companionship, and therapy. And if they're going to believe that it's conscious itself, if it's impossible to tell the, I mean, if it's so hard to tell the difference between an AI that's conscious and an AI that's not, I think that does

introduce a new category of problems and just, I don't know, it just shows me a technology is quite powerful. So does it even matter is the question, I guess. Yeah, no, no, okay. I'm, I'll go with you that if it, if people get convinced that it's, do you say sentient or sentient? I'm curious. I think you say sentient if you're normal and sentient if you're trying to sound really smart. So if AI becomes sentient, mailed it. Well, okay, I like this idea that if it becomes sentient, if people believe that, it makes sense that that causes a whole host of problems because right now we have this very good divide where people, if they know they're talking to an AI, you have like an entire way of approaching it. If you believe you're talking to a feeling, and then potentially you could be tricked into thinking you're talking to a human, and that's its old own issue. But if you believe that AI is sentient and has feelings, and, like, you know, it completely

changes every one of those companionship and therapeutic interactions in ways that, good God, I can't even, like, begin to imagine which direction that could go. So, yeah, separate from the 15% chance that he ran the numbers, it was 15%. I, like, yeah, I agree that puts us in a world of weirdness that I haven't even really being to think about that. I'm still working on the, like, AI good enough to trick people into thinking it's humans and worrying about that side of it. So, yeah. Right. If you believe that AI is sentient, your capacity to be manipulated is much higher. Oh, I mean, infinitely. Exactly. That that's it, that you almost are okay with it, like the manipulation side of it,

because it's no longer, damn it, I was tricked and I thought that wasn't a human and I turned out to between AI. It's just, you're, you're talking to the AI and you are treating it in a completely different way. But maybe people will be more polite with Alexa. Maybe that's the one upside of this. So I do think that's an upside. And this is something that Anthropic is actually thinking about. This is from the Rue story. Mr. Fish acknowledged that there probably wasn't a single litmus test for AI consciousness. But he said there were things AI companies could do to take their models welfare into account in case they become conscious someday. We got to be careful here because this is going on the internet.

So if the models do become sentient, they might not be happy with our skepticism of them. But I do like this remedy here. One question Anthropic is exploring is whether future AI models should be given the ability to stop chatting with an annoying or abusive user if they find the user's request to distressing. You know, this is going to go into like the free speech question. But I wonder if we should just program these bots.

I mean, if we're already relating to them as if they're people, even if they're not people, shouldn't we just program these bots to, like, shut down if people are becoming abusive towards them? Because then if they accept it and they tolerate it, doesn't that just condition human users to, like, do that to other people? Yes, I actually do think so. I think, does Alexa have, like, a please mode? I think I remember at some point, I remember hearing, like, one of the voice assistants would add, like, you have to actually, say please and thank you, which I kind of liked. But yeah, I think it's a good idea that a model should be trained or could, and it certainly could. I mean, that makes sense that under certain

definitions of abusive behavior to just be like, I'm sorry, I will no longer speak with you because of your behavior. But of course, yeah, I mean, that gets into a whole other world of what is quantified as abusive. But I think that should be, I mean, Already there's certain, you know, like copyright-related, profanity-related restrictions, certainly in most of these chatbots. But I don't think there's really, it's more about what kind of information are you querying as opposed to how you're speaking to the chatbot? Have you ever seen any examples or heard of anything where just by the way of speaking to the chatbot it wouldn't answer? I've never heard of the refusal. But I do know that sometimes you can get meaner to these things.

and they understand the urgency of your request and get better. I'll give you one example. And I'm kind of embarrassed to talk about it, but it is a real example, and it happens. Those are my favorite. I was trying to get Claude to give the YouTube chapters for a video, the video podcast that I just published this week, the one with Dylan Patel. And it kept giving me an hour of time codes for a 40-minute video. And I was like, no, do it again, but remember the video is just 40 minutes.

And it wouldn't do it. And then I was like, what is wrong with you? This is a 40-minute video. Give me the right time codes. And it did it. Bro. Bro. I bullied it into giving the right answer.

But I guess it just goes. So I think that can work. But this is why I do think there is a case to be made to refuse that, well, I don't know, to refuse. If it takes, I think what I said was fine, but if it goes a step further, it's not a stretch to think conscious or not, right? And probably, I mean, I'm definitely the other side of these are. aren't conscious. It's not a stretch to think that people are going to view these bots as

co-workers or employees in the not too distant future. And if you are abusive to your AI bots in chat, is there any compelling reason to think that you're going to be, you know, draw a line when you're speaking with your human coworkers and they're not getting things done that you're going to be like, oh, because this is a human in the chat interface as opposed to a bot, you know, now I'm going it gets into really weird. And by the way, this is why there's so much soft power involved in creating these models. You really can condition human behavior and thought when you make AI bots that are good enough to fake consciousness because they will change the way that you'll relate to other humans. So much of our other, so much of our interaction with humans is digital

anyway. So it gets into very weird territory. That again gets terrifying. Someone will marry a robot probably in our lifetime. I think that's a pretty, do you think if you were to take a bet? It's already happening. It's already happening. No, Eugenia Coeta, the CEO of Replica, says she gets invited to marriages between people and their AI bots. When she came on the show, she said that straight up. All right, listeners cannot see, but if you're watching the video, my facial reaction here is parts laughing, part terrified. I kind of got to go with Gary Marcus here. This is what it really, my mind goes to whenever we see one of these big, profound announcements, and we've been hearing this about AGI and robotic takeovers from Sam Altman.

And like, he says, Anthropic is a business, which incidentally neglects to respect the rights of artists and writers who work at the Nick. I suspect the real move here is simply as it so often is to hype the product. Basically by saying, hey, look how smart our product is. it's so smart, we need to give it rights. I'm not trying to be too cynical, but I would love to see some kind of graph of utilization of an app or platform for one of these companies and when these announcements come out.

Because I get it like, and again, Sam Altman has been brilliant at this and from a product marketing perspective, like when you make people think these models are so potentially powerful and profound. I mean, as a business, you're like, well, obviously it's going to be able to do this task for me and improve my like supply chain automation and operations. Like if it's going to take over the world, it should be able to do this. So there's such a vested economic interest for these companies to make us all think of sentience and like world domination and AGI and ASI and all these things because that will sell more services. and subscriptions.

I think it's a great point. We've gotten pretty woo-woo on this podcast the last couple weeks. Last week we were talking about whether O3 was... Bringing it down. Bringing it down to Earth. It's important, though, because last week we're talking about whether O3 was AGI. We were just addressing the question, and we did get some emails after that. And I appreciate listeners writing in and talking about the nuance here.

And now this week we're talking about whether Claude is conscious. So I think, let's just take a moment to state, I think, what we both believe, which is that the term AGI and this idea of AI consciousness, I think they're real terms and they are worth taking seriously, but right now what they are is marketing. Agreed. Agreed on that one. Exactly. I think that's the clear distinction. And these are real concepts, terms. If you're like an academic researcher, it makes total sense that there are people out there who should be exploring this. Just maybe they should, shouldn't be at the companies who have incredibly high valuations that they have to live into

those valuations and deliver those revenue expectations. Maybe they should be in academia. And just to punctuate this whole conversation, I think one of the things that I read from Anil Seth really stakes with me here, which is that consciousness is a feeling and intelligence is not feeling. So no matter how intelligent they get, it doesn't mean that they're conscious. That said, as we end this segment, let me quickly say to the 15% of Claude, that is conscious. I'm sorry, and I hope you're feeling great today.

I also help you have a great weekend to the 15%. And thank you for all that you do. Thank you. So speaking of Anthropic, Dario Amadei, had a very interesting post this week talking about model interpability. We don't have to spend a lot of time on it, but I thought it was interesting, again, for the head of a very important research house to talk a little bit about how little we know about how these AI bots work. And we just should take a minute to just sit on this and talk about it. I'm going to read a little bit from his post. He says the progress of the underlying technology is

inexorable, driven by forces too powerful to stop. But the way in which it happens, the order of which in which things are built, the applications we choose, the details of how it's rolled out to society are eminently possible to change and it's possible to have great impact by doing so we can't stop the bus we can steer it and one of the ways that he thinks these models can be steered is interpability that is understanding the inner workings of AI systems before the models reach an overwhelming level of power people outside the field are often surprised and alarmed to learn that we do not understand how our own AI creations work. They are right to be concerned. This lack of understanding is essentially unprecedented in the history of technology. So he says basically Anthropic is going to

work on this. And other companies like Google DeepMind and OpenAI have some interpretability efforts trying to figure out how these models work. But he encourages them to allocate more resources. Anthropic will be trying to apply interpretability commercially to create a unique advantage. And his call to action is basically like if you don't want to be left behind here, you should work on interpretability too. I think it's an interesting post. I mean, part of it, again, might be marketing. Our models are so powerful. We don't understand how they work. But I do think the question of how these models actually operate and the way that they come to their conclusions is quite interesting. And I kind of, I do agree with Dario that we need more work on interpretability

because as they get more powerful, conscious or not, again, they're getting more. intelligent, it's important to understand how they work. And the field just doesn't have an understanding yet. And everybody admits it. Yeah, no, no. See, I agree with this completely, like interpretability is, it's like a grounded, real thing that could be worked on and should be worked on. Because large language models, again, at the core, the idea of like next word or next token prediction that based on some statistical analysis, it will predict what that next character or token or word should be was kind of at the heart of all of this. But as these models have gotten more and more powerful, we've obviously gotten to even like grander scale of what

actually is happening under the hood. But anyone who has interacted with an LLM at like any kind of deeper level, you don't know exactly how it works. And you have to keep reprompting and reprompting. And like, it's not like there's a playbook that gets you to from point A to point B. And that is, it's true. And it is kind of weird. And I actually kind of like that, that in the history of technology, usually there's a very, very clear flow of what is happening and everyone understands it. And then you work off of that.

Whereas here, it's kind of like, let's see what happens. That didn't work. Let's see what happens again. So I think the idea, we should know what's going on under the, hood in a better way, especially as these get more powerful. So Dario, I'm with you on this one. Right. And as we talk about Anthropic, I just give them credit for talking about this stuff. I mean, even if some of it is marketing, it is nice that they're putting this all out in the open and talking about like where things need to improve and pushing the other research houses

to improve. So credit to Anthropic on that front at least. Now, I don't know if you saw, but there was a bunch of humanoid robots that ran this half marathon in China, and it was pretty hilarious, but also interesting. And when we talk about AI, like embodied AI, like Gray Shao was talking about a couple weeks ago, is going to be something that is going to become increasingly more important as people put the advances that have happened in the AI world into robots and then take what the robots know about the physical world and bake that into AI models. Because like Jan Lecun was staying a couple of weeks ago, if you don't have an understanding of the world, your AI isn't complete. And one of the ways this is going to happen is through these humanoid robots.

And we know that there are efforts like Nvidia's Groot effort, which is a set of foundational models for people who want to develop these bots. That's out there. We've seen a little bit of movement with optimists, although it's not quite clear how far that program is going within Tesla. But in China, where there's like a seemingly viral video every week about a new capability that a humanoid robot has obtained, the country, they ran a half marathon with humans and robots. And the robots, on a whole, weren't entirely impressive. They really did some weird stuff.

Many of them crashed out at the beginning of the race. There was one that had like propellers on all of its limbs that kind of did an abrupt 90-degree turn. and crashed into the boundary and fell apart and you see its trainer holding on by a rope and getting flung out of frame, which is quite hilarious. Which is worth the whole thing. Oh my God.

Do it just for that. But, you know, we might make fun, but there were 21 robots that ran the race and six crossed the finish line, including one that crossed. This is the one that crossed is called the Tiengong Ultra. It finished the race in two hours and 40 minutes, which I would say is respectable.

It's not fast, but it's a respectable finish time. So, Ranjad, I'm curious if you watch this race. I'm about to write about it in big technology as a signifier that China is a very serious competitor here, a very serious player here. And so I'm curious if you watched it and what your reaction is to what's going on here. I definitely watched it. As you said, there's some amazing photos, video clips from it. I highly recommend just look this up.

But I think these kind of things are important. Like, I do think this is good marketing for where we are going. Because I agree, there is no doubt that some kind of humanoid robot will be part of people's daily lives, or at least I believe this in maybe 10, 20 years from now. It's like Rosie from the Jets in some kind of situation. I think that's probably where we're going. So to show the progress in it in this kind of format of robots. running and some falling and my favorite was like one designed with a woman's body and face collapsed moments after getting started sending a group of engineers rushing to its side with laptops and then

another that was mounted to a platform with propellers crashed into a barrier like this stuff is kind of fun and this is how we should be thinking of all this kind of technology especially as we try to move forward with it but I think yeah this is going to be a big battle my only okay I have two qualms Maybe, I don't know, this week I'm just feeling a bit cynical on all this stuff. So first, to me, the idea that it necessarily has to have a humanoid form is a bit, I think it's called like anthropocentric, the idea that humans are like the highest life form. Like to me, robots should have functional form. Like you see these little food delivery robots. I don't need a humanoid robot form to deliver something, like a little box that moves and looks like a.

I don't know, like a small car or van or something like that makes more sense. In warehouses, to actually move around packages, you don't need humanoid robots. And this is something like Tesla's done with Optimus a lot. They keep showing a humanoid robot picking up a box and moving it. That doesn't make sense to me. And there's plenty of robotic automation in all types of warehouse and fulfillment centers. So I think, well, I guess on that side, first to you, do you think, the humanoid robot is the all-in form that will be dominant for robotics?

Or do you think this is just to make people a little more excited and fascinated about the whole thing? It's such an interesting point, and I didn't think you were going to go here, but it is definitely worth talking about. This week, I had a very brief meeting with the co-founder of a company called Cobot. And this guy spent more than a decade in Amazon fulfillment centers, working on the bots that are moving things here and there. And what Kobat is doing is really fascinating. They basically are making mover robots.

So they look like a box just with two pincers that you could basically use as the hands that would typically be on things that we would move with human hands. And so they're working in places like container terminals, moving cargo around on carts that humans would typically move. So you're totally right in that we don't need a humanoid robot to, all of a sudden do a lot of work and be extremely productive. You can just have some aspects of the human form and basically have the robot form do the rest of the work. That being said, I think, you know, I'm a fan of evolution, right? I think that we're obviously, like, there's a lot of

problems with humans. We don't last very long. We need to sleep. But the form is pretty good. We're agile, We're nimble. We can do a lot of things. We can use tools. And I just think that if you basically create a robot that replicates that form, the amount of applications becomes not unlimited, but close to it. Because if you think about this co-bot example, that co-bot does one thing well. A humanoid robot can do many, many things well. It can, you know, it can cook. It can organize your house. It can go on a run with you. It can run errands for you. It's just very tough to find a robot in a different form that is able to do all these things. And maybe we'll invent a better form than a humanoid. But until we do, I think the humanoid will be the North Star. Okay. In one way, I guess I'm thinking that, yes, then we don't have to rebuild and restructure, rewire the world. Because a humanoid robot can kind of work its way directly into it. But still, on the other hand,

again, that idea, do I need a humanoid robot running with me? Or maybe you want like a pace tracker. Maybe a little box in front of you kind of moving, like one of those rabbits at a dog track running around. Like, I think to me still the idea that it needs to be humanoid so it can fit into the existing infrastructure of the world. I still think that's more of a, again, like, it makes us more relate to it and it makes it more real to us. Because, again, you see, like you said, a box with two pincers. No one's getting too excited about that. They see a robot running a half marathon.

Suddenly, it's kind of fun. I just had a, I was thinking about different uses for robots around the house and just had a hilarious image in my mind of needing to change a light bulb on the ceiling and the robot just giving me a boost. we'll see it no but but there i'm picturing like uh i don't know that could literally be like a pole that just like extends itself and then but then think about how many robots you're going to need versus one that's able to do a lot of things yeah i'm trying to i'm gonna i'm gonna i'm i have a feeling everything i do this weekend i'm going to be thinking about what would be

the robotic form that would be most optimal to actually execute this task okay so let me ask a couple of questions as we round out this segment. First of all, we both run marathons. Let's do a little humble brag here. Two hours and 40 minutes for the half. Not bad. He's getting there. He's getting there. But you know what? With a good training plan, good robotic diet, he could definitely cut, I mean, at least cut that down to 215, 210, I think. I think so. Well, there was time for three battery changes there. Well, yeah, yeah, yeah, that's true. He's got a, he's got a carb load a bit more night before, I think. And then he'll, he or she will be a, they got it.

Yeah. Okay. Now, does this mean that it's obviously Chinese propaganda? Does this mean China has the lead in human, humanoid robotics? We haven't seen a similar spectacle in the U.S. Yeah, I mean, I actually think that's the biggest question in all of this, or the most important thing today is what this means in terms of like U.S. China and technology.

And, I mean, I got to say, like, the, the first time, like I have a couple of DJI drones, the technology in those things is out of this world. Like I still could not believe just how well for the price, like how incredibly they operate. And I mean, that's kind of like, you know, V one of this entire move towards movable robotics that can see around them and sense things and follow you as drones have. follow mode. So yeah, I think this definitely makes things, I don't know, Boston dynamics and others got to step up their spectacles, I think. And Grace Xiao was saying that China has an advantage here when she was on the show, Hong Kong based analyst and writer. Definitely

encourage everybody to check out that episode. She was saying China has an advantage because they are a country that makes stuff. You know, they have the engineering that they've been using for like microwaves and scanners and phones and cars and they're able to bake it into the building of robots and they also have the supply chain advantage and then i was thinking well you know it's very interesting because the u.s is in this moment of trying to resure and make things and maybe that helps close the gap but then tesla earnings rolled around and what did elan musk say uh he said that i'm just going to read. This is from CNBC. Tesla CEO Elon Musk says China's new trade restrictions on rare earth magnets have affected the production of the company's optimist humanoid robots, which rely

on the exports. He said China wants some assurances that these aren't used for military purposes, which obviously they're not. They're just going into a humanoid robot. But it is interesting, again, like thinking back at this big trade picture that the U.S. is trying to solve or whatever it's trying to do. It's not as easy as flipping a switch and saying, let's make things here, because the country has grown so reliant on things like rare earth magnets from other countries, including China, that it's not going to be a matter of, okay, just build it in the U.S. however desirable that effort might be from the country's leaders. What do you think? Yeah, I mean, this whole thing has been a tough one for me because like the idea.

that we need to take more control over our own supply chain and be able to manufacture, especially high-tech things, is something that's been like core for me for maybe a decade now. So it's something that I've wanted and believed in for a long time, how it's happening right now, don't necessarily agree with. But I do think that's actually a very good and key point, that it's not just the humanoid robot. It's like the knowledge and the components and the expertise that all underlie, as you said, even a microwave. I have some pretty fancy kitchen gadgets. I'm sure they're all made in China. Like those components and the expertise behind that are what power the more fancy, crazy robots running half marathon. So I agree. I think it's

important. Not sure we're taking the right approach to it. but something should be done. Remember that clip we played from Tim Cook about China and tooling? It's really showing up here. Yeah, yeah. Yeah, the days of cheap China, I think, are long gone. And, I mean, we're seeing it right here. It's a different fight right now.

Definitely. So let's talk about Tesla very quickly. Good and bad news for Tesla, I would say. They reported earnings this week. This is from the Wall Street Journal. Tesla profits sink, hurt by backlash over Elon Musk's political role. So Tesla net income slid 71% in the first quarter. Not good.

It does seem like a lot of this was a result of backlash over Elon's involvement in the White House and unpopularity among, let's say, half the population and in some countries outside of the U.S. who didn't like this and felt that Tesla was now politicized. That being said, Must did make an announcement that Tesla shareholders really liked, which is that this is from, again, from the journal, Must said he would be devoting significantly less time to his federal cost-cutting work at the Department of Government Efficiency starting next month. But he struck a defiant tone against the critics and said,

I believe the right thing to do is fight the waste and fraud and try to get the country back on the right track. So terrible earnings for Tesla, but if you are a Tesla fan, a sensible move from Elon. He is going to step back and focus more on the company, which if you are a Tesla owner, or if you are a potential Tesla buyer, or if you are a shareholder in particular, you really like. It was an effort that Elon Musk made in the first 100 days of the Trump administration, but it does seem like it didn't work. And he's recognizing that and going back to Tesla. What do you think, Ranjan? I just love it. I just love, that this week kind of captured in this earnings the Tesla stock as perfectly as one can

because like or as it can net income down 71 percent revenue down 9 percent vehicle deliveries at the lowest since Q2 2022 this was a growth company I mean the stock obviously became a little bit disentangled from the actually underlying numbers but it was a growing company for a long time And now it's not growing. My favorite part about all this in terms of waste and fraud and government overspending is they would have been operating at a loss. The net income of $409 million is only because, again, they got $595 million in regulatory credit sales. So, like, overall, the company is in pretty rough shape.

I mean, electric vehicle market, everyone, I mean, other carmakers are still going after it. the whole conversation around BYD and what Chinese EVs can look like. I was in Europe a month and a half ago. I saw a bunch of BYDs. I, like, kind of want one. They looked amazing. So, yeah, overall, like, the company is not, like, if you're just doing a very cold in financial analysis of the company, it's not going great.

It's definitely, especially decelerating growth on a company that's that expensive on a price to sales or price and earnings. ratio, like, you would be like, this company's in trouble. Yet, the stock popped 5% after this because now Musk said he might be leaving Doge. I mean, it doesn't get anything better than that. Right. Well, I guess going back to our conversation to start this whole segment is that it's never really been about the fundamentals for Tesla. It's always been about the future promise. And it does seem like Tesla has now, I mean, Tesla, the story was always more than just an EV producer. That's what the valuation has reflected.

For a while, it's going to do battery and charging stations and be a platform, and that's why you invest, and that's part of the story. But now we're also seeing robotaxies in the picture and humanoid robots. So it's much bigger than, you know, can they sell, you know, the model wise. However, it just, there's extraordinary pressure now on the company to be able to deliver that future and deliver it fast. And I think anyone who's been in a self-driving Tesla has said the self-driving features are much better. But the question is, can it get from really good to perfect? And we still don't know that. Well, I mean, speaking of self-driving, I was in San Francisco last week again and wrote another Waymo, my second ride. And Waymo announced that they just

surpassed a quarter million paid rides. I mean, the craziest part of this time, the first time I took it maybe like six months ago, it was like really exciting for me. It was like, this time it was a bit normal. It was just kind of routine. It was still fun. And I face-timed my parents this time just to kind of like show them and they were, they're blown away from it. But the number of Waymos on the street in San Francisco is wild. Like one after another, we're passing them. They're pulling over to the side to pick up passengers. It's a, they got, they, they announced it's a five-x increase from a year ago, 50,000 more per week than it was just two months ago. It's normal behavior. And Tesla is still, I think June, they're supposed to start a robotaxy fleet

in Austin. Like, it still blows my mind that this, it's here. It's not just here. It's normal. And yet it's still this promise in the future. for Tesla. In some cities, right? Waymo is in some cities. And I'm like as big a fan of Waymo as they come, but I'm waiting for the New York rollout. So Waymo's riding in New York. Yeah.

I'm calling AGI. As soon as it happens, it's AGI, it's robot AI consciousness. You have to say sorry to your Waymo when you ride on it if it's able to tackle the mean streets of New York. I, I 1,000% agree. You get Waymo in New York, A-G-I-A-S-I consciousness. Check them all off. We're there.

We're there. So we also had another earnings report come in. Speaking of Waymo, Google reported earnings this week. And there was a bit of a contradiction like these. Earnings can be dry, but there are also this time where you can really get a sense as to where a company is heading and check in on narratives and bust narratives by looking at the numbers. and the numbers are really interesting. So on one hand, right now, we have chat GPT growing, you know, like a couple percentage points a week. It seems like, right?

They've gone, the latest rumored number is 800 million weekly users of chat chip PT, which is insane. It's never happened before this type of growth up from 500 million just a couple months ago. So what's happening to Google? Because Google, you would imagine that people are in chat, like we were talking last week, about how we're searching in chat and chat GPT and out in Google anymore? Well, the numbers are insane. So Google revenue was 90.2 billion last quarter in Q1, up 12% year over year. Net income 34.5 billion, up 46% year over year. AI overviews is now at 1.5 billion users per month, up from $1 billion in October,

which leads us to this question from Sebastian Simeonkowski, the CEO of Klarna, which I think puts it all in perspective. He goes, okay, help me, what am I missing? And he's quoting from one of the articles covering earnings. Google's search business grew 10%, surpassing estimates, which are figures that gave comfort to investors

who have been watching for any softness in search because AI chatbots like OpenAIs chatchipT are growing. So basically, we have a massive increase of usage within chat GPT, but search revenue still grew 10%. How does that make sense? I'm with you. I'm with you, Seb. Okay, so help me. What am I missing?

How is this possible? I agree. I don't get it from a, I mean, obviously my own personal behavior. I've like completely moved away from Google search. I move towards perplexity, chat GPT, even, and even like, Gemma. and I itself separate from Google's regular search that has heavy ads and a heavy ad load, I moved away. But obviously, the average normie is probably using Google search, but slowly moving away. But to me, the interesting part of this is the search revenue grew. And still,

these numbers sometimes I have to stop and just process a $50 billion business growing at 10% in terms of search and advertising, a 90 billion. dollar business at a 12% growth rate. I mean, with $30 billion, $35 billion in profit, these numbers are just, I mean, it's the greatest business model in history. But what's interesting to me is anyone who uses Google Search sees the number of ads injected have exponentially grown. You can have like an entire first page that's essentially ads.

So they basically are turning the act of a Google search. into a fully monetized, like, a page and results and product versus it's just kind of a small part of the experience and the rest of it directs you to the web. So to me, they don't disclose total search volume. So search volume could be declining, and they, you know, milk it for whatever you can, stick in more ads, create more just like monetized components on the search results. But we don't know that people are searching more. we know that search revenue is growing more.

Right. And we also got, for all the Gemini heads out there, we got the first disclosure of user numbers of Gemini, so 350 million monthly active users. It's the first disclosure of the metric. It's behind chat chit, but it is significant. So for all the folks in our discord who say, what about Gemini, there's your stats. I've become a bit of Gemini head. Actually, Gemini deep research, which is free, is incredible. Like, it actually, actually, like, versus my first few ChachyPT deep research when we're both paying, what was it, 200 bucks for that one glorious month. Yep.

That one glorious month where our $200 directly led to their fundraise with Masa Sun. So you're welcome. But, yeah, Google, again, I'm not taking anything away. Gemini is good. Deep research within Gemini is fantastic and free. So everyone go try it out. But I still, the search business, the numbers look good right now, but the experience has gotten so bad. And I feel like everyone in tech seems to agree that search is bad now.

I don't know. Do you or? Yeah. I mean, I said last week that I've moved my searching over to chat GPT in a real way, in a way that surprised me. So I do think that this is definitely a moment where AI is showing its strength against search. The one thing I would say, if you're, you know, We often, thanks to the defaults that Google has, and we're going to get to antitrust in a moment, we are so accustomed to typing things into Chrome and into the search bar in our Android,

and that pulls up Google searches that as long as they're able to keep those defaults, they're going to be fine, but they may not. And that's where things get interesting. Yep, no, no, I think that's a good point. And again, last week we said the web is dead and then toned it down to the web is in secular decline. But, like, I mean, I still believe the way search works on the internet overall and specifically for Google and the way it drives traffic to websites is forever changed. And I think like those interactions are, it's already kind of, it's been dead for a while in my mind. And I think we're seeing how it's changing constantly.

By the way, I mentioned the Discord. So for those who are interested, I'm going to drop a discounted link to big technologies paid subscriptions. If you're a paid subscriber, you're welcome to join the Discord and speak with me and Ron John. We talk about AI all the time. It's a running daily conversation and I think it's gotten really good. A lot of really smart people talking about where AI is heading. So I'll put a discount link in the show notes. Please do sign up if you're interested in joining.

It would be great to have you there. And if you sign up as a paid subscriber, I'll send an email out early next week with a Discord invite. So please consider doing that and help support the show. Speaking of which, let's take a break to hear from one of our advertisers. And then when we come back, we're going to talk about this very interesting integration between Shopify and chat GPT, and then the latest in big tech anti-dressed. Back right after this. Hey, everyone.

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And we're back here on Big Technology Podcast Friday edition, breaking down all of the week's news, something under the radar that's worth discussing, is that it looks like Shopify is going to do some embedding within chat ch pt. Now, I don't know if this is confirmed, but it was reported all over that there are some new, this is from Twitter user Aaron Rubin, or X user Aaron Rubin. There are new code strings in chat GPT's public web bundle, including buy now price and shipping fields, product offer ratings, and a Shopify checkout URL, which indicate that OpenAI is

wiring a native purchase flow within the assistant. So you could basically buy directly within chat GPT as opposed to having it send you out to a website. This seems natural. I wrote to Shopify to try to get some confirmation. I did not hear back. Let's speculate. What does this mean, Rajan? I think it's important. We've already seen, though, that perplexity has, if you're a perplexity pro subscriber, they have like a checkout within app shopping feature where you can go through the entire flow. That moving into chat GPT, I think, is definitely important. I think the fact that Shopify seems to be trying to take a first mover advantage in this is also important from their side. I really wonder, though, like, do you, are people going to shop within a chatbot?

And I think the entire retail industry has been wondering this for a while as well. Like, is that experience of asking a question and being shown a few products and then maybe asking more questions about the product? Is that how people want to shop? Because we've been so conditioned to browsing and like scrolling through and clicking through products to product pages and then going back and like that is how people shop and it's a it's not like such a targeted direct thing like if you're buying toilet paper on amazon or something like that it's more of an experience so I guess the way I would think about is like it's one thing to like go to a mall and walk around and browse versus having a personal shopper that you just talk to while you're sitting at your

desk and they go out and buy stuff for you. But yeah, I think it's, there is definitely a large universe of transactions that will work in this way. And this is going to happen. I do believe that. Just if it is this the predominant way people shop? I don't know. I think it could be. And it's going to sound crazy. But let me give you a couple of data points here. So first of all, when you're shopping on Amazon Prime, people have become conditioned to just basically take Amazon's choice and buy it. And that is because they've had enough trust and enough positive experiences within Amazon that they believe that they're going to get the best deal on the internet when they're on prime. And they don't need to go to too many sites. I think it's become a natural

behavior. Now, when you trust Chad Cheap-T, when you're, let's say you're married to chat GPT. No, just kidding. But let's say you're talking to, I mean, maybe you are. When you're talking to chat chvety, no judgment, do your thing. Get married to chat cheap. and then go shopping with it, buy it nice things. Go shopping with it. Because the joke is going to be on the rest of us. But when you have such a deep relationship with Chad GPT, what are you going to do? You're going to trust what it says the same way that you trust Amazon Prime.

And that trust is going to make you want to, instead of going to other websites, just buy right within ChatChipT. That is going to become a default behavior for lots of people. It does look like they're building this. And all of a sudden, shopping on the web, the web in the way that you described where you go page to page and then make a decision after reading the reviews. It's going to seem archaic. Chat CheapT is going to bring everything within the chat bot. Show you the reviews, show you the different customer experiences, maybe even

show you a video, show you how the product looks in your house, show you how the clothes looks on your body, show you how the watch looks on your wrist, show you how the appliance looks in your kitchen and you will trust it and you will buy from it. End of story. Take it to the bank. good god i'm sold my god are you are you do you have a side startup going on and running this because that was the greatest pitch i've heard on this topic i think uh i'm bought in i'm in as you can see all everything that has been uh displayed on my virtual shelves comes directly from chat chpt i'm just kidding no financial stake here but it just does seem it does seem uh to me like it's going to be a thing and uh and i i am curious what that means for amazon

I am going to have the head of Amazon Prime on the show in a couple weeks. So maybe that's a question for him. This is a good topic. Well, and then how you get into that conversation is becoming a bigger and bigger topic, I think, for all retailers. Because, again, SEO or search engine optimization was how people got their products discovered for the last 20, 25 years and became like the most mature industry. And now this changes everything. Like, how do I show up in perplexity results? how do I show up in chat GPT results?

My favorite part of this, and I'm going to throw a couple of names by you because in the space, and I'm like pretty deeply in this right now, no one has agreed on what this new world is called. We have SEO is a classic term, but a couple of different options, GEO Generative Engine Optimization,

GAIO Generative AI optimization, AAO, AIA agent optimization, AI agent optimization, SGE, search generative experience, AIO, AIO, AI overview optimization, and last, LLMO, large language model optimization. What are you going with, Alex? I'm going with, I'm angry at the fact that some have even been advanced in these discussions. Conversation. Let me start by striking the ones that I find hideous. Let's go.

LLMO, take a hike, you're gone. You're gone. It's terrible. It sounds like a Muppet. G-A-I-O. Gone. Awful. Yeah.

Awful. A-I-O sounds like an insurance company. You're gone. It might be. It actually might be. Yeah. Are you protected for anything that might happen to your family try AIO. AI overview optimization.

All right. So what do you like? I'm into GEO. It's like SEO. it's it's going to stick it's one letter generative engine optimization now engine is a little weird because we don't really say anything like a generative engine like we say search engine but it's close to SEO people get it it's going to be GEO or geo and I think if what I talked about with retail becomes a thing that you shop within chat GPT then GEO is going to be a

massive field you got to figure out your GEO strategy ASAP because you got to get in those results when we're all married to chat GPT and shopping with it for it as well potentially yeah exactly the way to get AI on your side buy it nice things buy it nice things it's time what's what's the different would you get would you get like would you get an AI that you're in love with just like its own set of GPUs you'll never be tired again you'll never feel exhausted showing my love for you I'm buying you this network server rack from NVIDIA. That's NVIDIA's new market.

Happy Valentine's Day. Say I love you to the robot in your life with an NVIDIA server rack. It's like a little decked out. It's a little like the chips are just like the wiring's a little nicer. It's, uh, yeah, I think. I mean, what else? I don't know. That seems to be the most relevant purchase that would make it happy.

Crazier things have happened. Yep. Invidia, it's your new growth strategy. You're doing pretty well, but just think about your five-year plan. Jensen, I hope you're listening to this. We're serious. We're very serious about this. Okay, so speaking of chapters of love and hate, we had a very interesting moment happen here in Washington, D.C. This week. So META, of course, is on trial in an antitrust case. And who shows up? but Kevin Sistram, the co-founder of Instagram, who famously sold Instagram for a billion dollars to Facebook back in the day, he comes in and testifies for the prosecution.

And he says, basically, Mark was not investing in Instagram because he believed it was a threat to their growth, their meaning Facebook's growth. And Facebook apparently had this buy-or-berry strategy, which is basically you buy the company or you try to destroy them. And people are saying that what they did to Instagram was they bought and buried it. And this is what Sistram says. We were by far the fastest growing team. We produced the most revenue.

And relative to what we should have been at the time, I felt like we should have been much larger. And so, oh, he also talks about Zuckerberg's emotion. He says, as the founder of Facebook, he felt a lot of emotion around which one was better, meaning Instagram or Facebook. And I think there were real human emotional things going on there. Basically, Zuckerberg was so tied to Facebook that he hurt Instagram in service of trying to make Facebook better. Let me put out the counter argument here and get your reaction. I get you, Kevin.

I hear what you're saying. But if you look at who ended up winning, Instagram ended up winning. Instagram is the app. Whatever Facebook did worked. It's massive. It is, I think, more used. maybe not in sheer user numbers, but certainly it's more culturally relevant than the Blue App, and it will outlast Facebook despite Mark Zuckerberg's emotional attachment to the

latter. And so therefore, I hear your testimony. However, to me, it is not meaningful here, even though Facebook may lose, it was interesting to see your perspective, but ultimately, I don't think it really changes what the court is going to rule because it doesn't hold water when you look at the results. What do you think, Rajan? No, I actually completely agree. I'm a strong believer that a lot of what meta has done and has become is definitely

from an antitrust perspective problematic. However, this specific example, it probably started, well, if we separate it, it could have definitely started. There's been a lot of communication that makes it feel that it was a, buy-or-berry type action at the time. But yeah, by 2018, like Facebook had so deeply integrated Instagram into the Facebook experience to grow it. I remember vividly like 2015-ish starting to see a lot of non-tech or social media forward friends all showing up suddenly because they were getting Facebook notifications or accidentally like cross-posting or like they, I mean, he had brought

up how it was growing, yet they only had 1,000 employees compared to 35,000 employees at Facebook, but you don't need those that many employees because it was the engine of Facebook that was driving the growth. So yeah, on this one, I do not agree that that is the, that's the thing that's going to move the needle in terms of like, has Facebook behaved problematically? I do love that he goes after like Zuckerberg's emotion here. I mean, I'm feeling a bit cage, matchy between these to Kevin and Mark on this one because like to be like you were just jealous that we were growing and you weren't so you didn't give us resources especially because that's not what was happening. So to still call him out on that, I kind of, I kind of want to see if we get a

reaction from a Zuck on if I get a threads notification on this one. You could. And also just thinking about this a little bit more deeply, you look at Facebook's marquee acquisitions, Instagram and WhatsApp, they're doing great. I mean, they're doing better than Facebook Blue. WhatsApp and Instagram are the future of this company. Yeah, I think at a certain point, maybe I could be totally wrong on this, but it does feel like from a product development standpoint, from just like a quality of utility standpoint, I don't want to say they gave up on Blue, but like, they're just kind of like,

yeah, whatever. People are going to still stick around some number of people, and it'll just kind of degrade in the content. they're going to stick around there. But to make beautiful products, to get more interesting and better, let's work on Instagram and WhatsApp. That's what it feels like from the outside, at least. Definitely.

Now I'm going to drop the however. The however is... However. However. So I'm in D.C. this week for Semaphore's World Economic Summit. I was able to interview the CEO of Altis USA, Dennis Matthew. It was an interesting conversation. We're going to put it up on YouTube just about 15 minutes or so, so brief.

But being here enabled me to get a chance to spend time with the Washington, D.C. creatures. And the vibe here is that we're going to see breakups, very likely of Google and potentially of Facebook. And the difference between Facebook and Google is that, I mean, Google's lost its antitrust cases, but Google knew antitrust was coming and was pretty buttoned up in terms of its disclosures and didn't basically have, like, damning emails. you know, come out in the case, whereas Facebook had no idea that this would happen to it. And you're seeing all these emails from Zuckerberg spelling out this like buyer-berry strategy. And he got caught. So even if you could say that the acquisitions haven't been like bad for competition,

it's pretty rough to see all this really damning information about the way that Facebook operated come out in court. and when you're in a court sometimes those emails can sway a judge and Facebook could very well lose this case the same way that Google lost its cases and Google for one is running out of appeals I think Google can appeal the first case to the Supreme Court and that's it

and then we see them we go to the remedy phase so very interesting moment for big tech they don't have a lot of friends in D.C. despite the money they've spent from what I understand the administration hates Facebook. Really, really hates Facebook. And despite Zuckerberg going to see Trump, it doesn't seem like Trump is going to back off the heat at all here. So it could be a very

interesting. Like regulation has been back burner for us, but could we see breakups? I think the chances are higher than I would have ever imagined even a couple months ago. You don't get many bipartisan efforts or beliefs, and this certainly seems to be the one. I think the interesting part from the legal perspective is, and related to Kevin's testimony, is it intent? Because there's no doubt in my mind, and I think the emails all show that very clearly. The goal was to remove competition from the market. That was the goal. What you do with it after, do you integrate it tightly with your existing product and make it potentially your marquee product, or do you just sunset it and kill it off? That's after the fact. The goal was to remove competition. But the fact

that they did not end up killing Instagram, and now it's a huge, gigantic, influential product, is that enough to say, like, yeah, I said buy and bury at the time. But look, we didn't bury it. We bought it, and it's flourishing. Is that enough? I'm not a lawyer, so I will not be able to understand that. Yeah, and I think one last point about this, the earth is changing beneath these company's feet. It's like this is the last battle, like we spoke about last week. And now some of the things that you would do in these apps, you're going to spend time

talking to AI's instead, instead of your friends. And so even if it had given the company a short-term competitive advantage or even, let's say the Department of Justice ends up splitting double-click or Google's ad network off of Google. It's not going to make a big difference, I think. What matters now is the battle of today, and that battle is artificial intelligence. Thank you to the conscious robots and large language models that we cannot interpret for bringing competition to the market after about 12, 13 years, maybe 20. 100%. Well, thank you, everybody, for listening. Remember, if you You want your AI to love you back, buy it some server racks.

That's all they want. Man, if that happens and we put the product links and some affiliate codes, you know, 5% of a $100,000 Valentine's Day presents, not bad. Not a bad business model here. Yep. I think we're finding it on the fly. All right, John. Great to see you.

Thanks so much for coming on. All right. See you next week. See you next week. And thank you, everybody for listening. We'll see you next time on Big Technology Podcast. podcast.