Big Technology Podcast - Tech Consolidates Stock Market Growth, Lawyer Uses Hallucinating ChatGPT, XR Wars Heat Up

Episode Date: June 2, 2023

Ranjan Roy of Margins is back for our weekly discussion of the week's tech news. We cover: 1) Tech stocks consolidating growth in the S&P 500% 2) The 'Asset Market Meltdown Hypothesis' 3) Amazon's entry into wireless. 4) Japan's threat to AI copyright law 5) The lawyer that used ChatGPT and looked like a fool 6) The Center For AI Safety's bold Statement 7) The fake 'simulation' where an AI killed a military operator 8) Meta's new Quest 3 headset 9) What to expect at Apple's big WWDC event  -- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Questions? Feedback? Write to: [e-mail]

Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. We are here with you on a very big Friday. We have Apple's big WWDC event coming up on Monday, so we're going to preview that. But first, we're going to talk about how the tech stocks have started to consolidate much of the gains in the S&P 500. We're also going to talk about AI copyright. What's going on in Japan?

Actually, there's a story brewing that you might want to hear about, an AI hysteria, all these signatures about preventing the worst from AI. We're going to get to all that and more. Joining me today is, as always, is Ron John Roy, here with us from Margins on Substack. Ranjan, welcome to the show. It's Friday. Good to be here. Great to have you. So let's start right away talking about our big story because you sent this to me and I said, we have to talk about this.

And what's happening right now is the market is absolutely ripping. the s mp 500 is up almost 12% on the year which is extremely impressive especially given the terrible down year it had last year and who's making up the growth you would think that with interest rates rising you would have a much more even distribution of the growth but no this is from axios the five that are responsible for the vast majority of the stock markets 2023 gains are apple up up 36% this year. Microsoft 37%, Alphabet, 39%, Amazon, 44%, and of course, Nvidia up 159% this year.

What's happening here, Ron John? Because it doesn't seem to make sense, given everything I heard about how higher interest rates are supposed to bring down tech valuations and maybe open room for other companies in the economy. I thought rotation was the keyword, but we're back to technology. I think we're back to that point where, again, the jobs number came out today, it was strong,

employment is strong, inflation is falling, economic growth looks stable, and then you have the AI hype cycle. So all these factors coming in together are perfectly placing these big tech companies to go up at this scale. And I think the two biggest questions investors have to ask themselves now are one. Do they continue the dominance? We've talked a lot about, you know, is open source a threat? Are they really positioned well to capitalize on the AI hype? Is there a business model, a feasible business model for the AI hype? But I think another thing, I'd seen one comment around, like, when do investors start trimming? You see gains like this, you see levels like this, you see PE ratios like this. At a certain point, like can it keep going? And obviously,

That's, you know, very dangerous question to ask. The most dangerous question to ask. But at a certain point, again, out of the S&P, 490 stocks have been flat or down. This is what Jeremy Siegel, the professor Warren said last week. As you said, if not first, the seven companies, if you add meta and Tesla to the five you mentioned, the S&P would be down on the year. So I think from an investor's standpoint, is this too much? is the main question. But then also, you know, from a general health of the economy standpoint, we're in an even worse position than we were a few years ago when we were talking about

over concentration among a few companies. So I guess like I'm trying to figure out why tech is having the surge now. You can say AI and all that. But wasn't, I mean, this is your whole thing, right? Wasn't the fact that interest rates, and I mentioned this in the open, the fact that interest rates are going up, we're not supposed to see these valuations. I was checking the valuation of Apple. It's nearly three trillion dollars again. So explain that one from Iran, John. I'm truly puzzled by it. Yeah. No, no, no. I think this is the amazing part. Again, the fact that we are currently in this Goldilocks scenario, falling inflation, strong growth, and stable and strong employment, I did not expect that. I think most people did not expect that we would be in that

kind of situation. So the question is, can that continue? So I think on the general, macroeconomic side, everything is still very geared towards these big tech companies. But then also, again, I think it is the AI hype cycle is at the basis of all this. It's bringing energy back to these companies. And yes, Apple is not directly benefiting from that. But Apple is just kind of caught in this wave as well. But it's given this narrative, I think, that once again, there's untold economic potential and untold growth right around the corner, thanks to this new technology, and who better to

benefit from it than the incumbent players. It does mean, we've talked about it a lot on this show about how that economic promise is not certain at all yet, and we're going to see what's going to happen here, but it does make me a little bit worried about the state of the economy. No, no, that's one of the dangers I think I see here is that, again, once all resources and energy and investment start flowing back into these seven companies, maybe nine companies, then other stocks, the 490 other S&P, and imagine mid-cap and small-cap stocks, or just other companies are not going to be receiving that and can easily, you know, get killed through this.

And this is basically what happened in the mid-2010s in some way, but that's where I think it's in terms of like the overall innovation potential of the economy, I think I've said it in the past. I think, again, we're back to that place where it's a problem. Okay. Let me make the other side of the case. Then we'll move on. The other side is these companies all fell when interest rates went up and the inflation problem is being tamed.

Interest rates are going to come down. The market is investing not for what's happening today, but for what's happening 12 to 18 months from now. And in the S&P 500, you have the strongest companies in the economy, strongest companies. And if you're the S&P 500 and you're being buoyed by an Apple and. and an Amazon and an alphabet and then video which is a new technology new innovation maybe that's not the worst thing in the world yeah but i mean invidia is trading at 172 times earnings where you know traditionally call it 20 times is solid yeah like like yes and and again i i have been bullish on

invidia for a long time and they are well positioned and it was as we talked about with john herman last week like in video has actually shown every time there's this kind of potential around the corner they're able to go and grab it again starting with video game graphics cards and actually being able to evolve into you know the just microchip processing and now moving into actually being the kind of like infrastructure for AI so so again these companies they show that they can they've shown past experience they can get there the opportunity it's it's a clear idea of how they get there But still, the execution side of it, I think it's rich. Hey, Kathy Wood said Nvidia's rich. When Kathy Wood says your stock, obviously she sold it right before. Lost out on all the gates. Right. I don't know if we can really listen to Kathy's investment advice anymore.

That was a bit tongue in cheek right there. No, no. I think that you're right. It is a good signal if she's calling the top. But then again, like, I don't know. That actually makes me want to almost buy into it. You got to be in, obviously 137 times earnings. is cheap 172 so let me talk to you about this quickly and then we can move on to the AI stuff

there's uh in 2001 there was a paper uh from m from uh wharton that talked about the asset market meltdown hypotheses and that was that you had a lot of boomers in the economy who had much of the investment and they were all going to retire and here's the philosophy 10 to 15 years from now millions of boomers will retire and instead of putting much aside for their old age, they will begin cashing in, and it stands to reason that this will reduce demand for stocks. And as any beginning economic student knows, lower demand means lower prices. It's kind of a bit of field from what we typically talk about. But I actually wanted to get your thought on this, which is that I'm curious how much of this market right now, because

the market is going up despite some of the negative conditions that we're seeing here. And I do wonder whether there's part of the market that's at risk of people retiring and spending that stock or cashing in those stock investments and then lowering demand. It's tough when you think about these kind of very aggregate demand style theories around the stock market. I mean, one thing I was just reading about was I think there's, I think it was close to two trillion dollars in outstanding student debt. The student debt pause has still been going on since COVID. So imagine once that resumes, how much liquidity gets taken out of the market. That's something no one could have predicted. I mean, general, just overall influx of money

during COVID via stimulus and everything else, no one could have predicted. So I think trying to predict this stuff based on like the demographics and what typical behavior could be, I think it's tough. But it was interesting because even on that historical perspective, I was looking at like, in terms of concentration is, is it a good bet to still go into an alphabet or a Microsoft or an Amazon? And it was at like an AT&T in the early 1930s made up 13% of the entire stock market. General Motors in 1928 was 8% of the entire stock market in 1928. This was all from Ben Carlson, a wealth of common sense, which is a great blog. Like this idea that at points in history, we have seen this kind of concentration, but those concentration,

usually happens before bad economic times. And I think that's where this question of like, is the economic healthy? Look at it. It's healthy for seven to nine companies and it's not healthy for the other 490 or however many else. So I think it's one of those where trying to bet on demographic predictions around behavior is going to be tough because, I mean,

who would have guessed millennials and meme stocks? That's definitely not something we could have predicted. But even more so, I think this question of like, where would you put your money right now? Would you buy? Like, would you buy in video right now? Hell no. Well, it's, it's a tough one. It's a tough one. It's an easy one. All right, all right. You would. It's, I still, I buy into like the story. I've, I've owned it in the past and made some money off it and then took profit. And again, I regret not continuing to hold it. And it's, they're one of those companies that like, They've very quietly and cleanly executed and realized multiple visions, but all based on the multiple evolutions of the same vision. Again, like computing power is the core thesis. It's not like Facebook, you're a social network and you want to make a headset, which we'll get into in just a moment. It's all a really clear path, which is what they've done and they've done it well.

So like on that side, I would want to own Nvidia, but I wish I owned it a month ago or two. Yeah. So, okay, you mentioned that AT&T used to be a big chunk of the S&P 500. I need to ask you this before we move on to some of our AI stories and then headsets. AT&T stock is down 4% today after Amazon said it's been talked with wireless carriers about offering a low-cost or possibly free nationwide mobile phone service to prime subscribers. It's according to Bloomberg. What the heck is Amazon doing here? And is this like why we're seeing consolidation in big tech companies?

is because Amazon is moving into mobile, Apple is moving into banking, Alphabet is moving into AI? Is this what's what we're seeing? Well, it is interesting because I hear a lot of sentiment of like whenever you see these moves, what is Lina Khan doing? Where is the FTC? Where is antitrust? I thought it was supposed to be here by now. But there's been plenty of strong moves, you know, like Facebook, Giffy now, Activision, and Microsoft from the UK. Like they're more so than we saw in the last 15 to 20 years. They've been plenty of aggressive antitrust activity. But yeah, I agree that Amazon being able to go into mobile to lose more money in

e-commerce because they have AWS and can funnel profits over from there, I think is not the best economy or the most innovative economy we can live in. However, I don't know, I think Amazon is playing a riskier and riskier game. This was our entire conversation last week around Timu and Shee and how they're threatening Amazon in ways that they've never seen it probably in their lifetime, or at least since they've achieved some kind of dominance. So I think Amazon making more high risk bets around trying to just, you know, like give you an impossible package as a prime subscriber in order to just try to keep growing rather than looking at actual unit economics and trying to, you know, make their e-commerce division genuinely profitable, I think is a very

risky thing to do. What is this mobile move in reaction to? Is it the fact that like they need to offer people's cell service to keep growing prime? Is it possible that prime has sort of now saturated the middle and upper end of the market and they now need to basically throw in mobile surface to maybe the lower end of the market to make it something that they might want. I can picture this slide in a presentation. It's the average lifetime value of a prime customer is like 5x the non-prime customers. So how do we get more prime customers? all right, people on average spend however much money on mobile phones every month on their mobile bill. So, like, you know, how much of a loss can we take that we'll make up on e-commerce?

Like, I'm sure, again, like I can see either a management consultant coming and pitching that one or in general, or even a corporate strategist kind of like outlining that. It's a pretty simple case, but again, it's, I think they're running out of ideas. It does. Well, also, it doesn't sound desperate to you at all. No, it does a bit. I mean, I agree. I think they are realizing the limits of like, well, actually, hold on, it's desperate in the sense that I think they are realizing more and more non-subscribers, again, non-prime subscribers, that entire market. Maybe they are recognizing that Sheehan and Timu are a genuine threat to them. Oh. So do you think this could be like a direct outgrowth from like our discussions over the past couple weeks? I think are they listening to the pod and saying, wait, Timu, we got to give the cell service.

Yeah, I think, no, I think Bezos was listening on the beach, all buff and jack somewhere and put the call in and said, hey, we got to do something about Timu, up the prime subscribers. Yeah, I mean, one other thing that someone floated to me was that mobile networking is like a pretty high margin business once you have the infrastructure installed. But it looks like they're working with other cell carriers. But I'm curious, do you think that that is part of the calculation for Amazon as well? Oh, maybe I could see this is one thing where what's the Amazon like local area networking across house? It was it. They had some effort where it was like the mesh network. Yeah, the mesh network.

Is it called arrow? Euro. I actually have. Yeah, that's for home is. Yeah, that's for home. They had something where your home network could help power access for external people to then power their own network. Basically what I'm thinking is here, maybe the idea would be you sign up. They use other people's mobile infrastructure, but over time, again, in this slide deck I'm envisioning, they can say, you know, year one prime subscribers by 5X more, year,

before we're starting to make high margin business because we built our own infrastructure by that point. And I mean, if anyone, they certainly have enough real estate and infrastructure around the country that they could, if anyone could toss up an entire mobile network, I could see it being Amazon. Very interesting. Okay, let's just touch on a couple of these AI topics and then we'll take a break and go to headsets. So this is one of the things that you've been talking about for a long time is that eventually, you know, the thing that this runaway AI development is going to run into is copyright law. But it only takes one country to say there's no copyright law when it comes to training AI here to sort of flip that equation on its head. And that seems to be

what's happening in Japan. Now, the reports are a little bit shaky. The one that everybody's talking about this week comes from a website called techno manners.aI. So caveat for what it's worth. It doesn't seem like this has been shot down yet. So here's the story. Japan's government recently reaffirmed that it will not enforce copyright on data used in AI training. The policy allows AI to use any data, regardless of whether it is for nonprofit or commercial purposes,

whether it is an act other than reproduction, or whether it is consent obtained from illegal sites or otherwise. Okay, so basically this is the Japan Minister of Education culture, sports, science and technology, confirming this at a local meeting and saying that Japan's laws won't protect copyright materials used in AI data sets, to which Jan Lacoon, the chief's AI scientists at Meta, says Japan has become a machine learning paradise. Ron John, what is your reaction? Well, one, I continue to take this with a grain of salt because, and I'm glad you kind of gave the disclaimer as well that there's one blog that basically says that the English language

coverage of this topic is sparse, and then that was retweeted by someone, and then Jan Lacoon of Meta retweeted that or commented on that. So I think I would be, I'm also a bit cautious about what exactly is happening, but I think that question of global coordination on the topic is a good one because could one country being this machine learning paradise ruin it for everyone else and actually make it so then to stay competitive you have to allow for you know unlimited access to all content but okay here's where i think this almost feels like the crypto argument that if you regulate us we'll go elsewhere and then they will be the paradise and the place that makes all the money is I it goes we always we've gone over this many times it's like I don't believe

that size matters in AI models and some Sam outman's gotten into it and like the idea that you have to have access to ingest everything is the only way to build these models so I actually think this could be a case where the same way a complete lack of regulation can almost hinder crypto's development because it leads to chaotic you know outcomes. that make it impossible for mainstream adoption. I think this is a similar situation where, I mean, we see, and we can talk about hallucinations and training on too big a data set can create models that just aren't applicable and usable in real business situations.

I think we're going to move to, if we move and when we hopefully move to a world where it's more specialized models, I think you won't need to ingest everything all at once and have unlimited ability. And it's better for the overall ecosystem as well if there's some kind of compensation and some kind of understanding of how economics are distributed throughout both the content creators, the AI models, the AI trainers, everybody.

Interesting. So you don't think that people will inevitably flood. I mean, like this is, part of this is Japan does want to be an AI leader. You don't think that there are going to be countries that will say we want to be an AI leader and you know, okay, there might be some rules established elsewhere about compensation for training. Who cares about the size of your model? You can just go take them if you want.

Well, hold on. But there's also the technical aspect of this, right? That there's like the scraping. And I do think one thing I really have been thinking about is like both in terms of API access is the simplest way to kind of like, you know, cut off unfettered access to your content. but then even preventing scraping in more at like more scalable ways or just trying to think about how people protect their own content i think it's going to increasingly be part of how the web is built and how people publish and think about content so yeah how would that play out practically

no like even if in japan i am not liable for training a model on uh all content on Reddit. If I'm unable to easily take in all the content from Reddit, then it's no different for me. So like just because there's a lack of legal liability, there's still the technical question. I think on the technical side of it is going to be just important as the regulatory and legal side. That's interesting. Yeah, that'll that'll definitely change things. So something to keep an eye on. We'll just sort of keep hitting on it as we get more or more concrete stories coming out of Japan or wherever it might be. Did you see the story about the AI lawyer guy, the lawyer that presented a number of fake

cases to a judge that he just sourced from Chad GPT? It's sort of interesting because it comes at this moment where we're talking about the power of AI and you just have complete jackasses like this guy who's running to the judge and saying chat GPT did my homework. He deserves the. the backlash he's getting like i think this was all then what there was very oh the the court filing cited six cases that completely did not exist yeah so this is from ars technica a lawyer is in trouble after admitting he used chat gpt to help write court filings that cited six non-existent

cases invented by the artificial intelligence tool chat gpt lawyers stephen schwartz of the firm levidow levidow and overman by the way amazing law firm name quote greatly regrets having utilized general artificial and generative artificial intelligence to supplement the legal research performed here in and we'll never do so in the future without absolute verification of its authenticity i i just love how they're like lawyering it away being being not being like you know we know clearly we messed up but like talking about how it's so so like weasley to supplement the thing and like we we've We've been adding more AI in our practice to get the cutting edge. Like, come on, guys, just admit what happened here.

No, but this to me is the most, this is one of the most important stories that came out in the last week, because this is what I've been like ranting about for months now, is that getting actual usable AI generated content that is risk-free that can be used in high-risk situations and important situations is difficult. And that's why the gap between, again, making a funny limerick in chat GPT and getting to somewhere where in a business setting, you're going to actually, you know, create predictable, repetitive content, there's still such a gap there. And that there's, and I strongly believe that we're going to get there.

But I think like this idea that everyone was just going to, you know, plug in something or just ask chat GPT something and everything would. work out perfectly, I think was ridiculous for context in starting to prepare for today's podcast on our topic of the concentrated big tech companies and the returns of the S&P this year. I asked Google's barred, barred their chat bot, you know, like I just wanted to quickly see what were the returns of the 10 biggest companies of the S&P. And it told me that meta is down 58% this year. It says as of June 2nd, 2023,

meta is down 58% again. So embarrassing for Google. We got to get Jack Craftrick back in here and make an answer for what's going on here. And the thing is, I would even see like chat GPT would probably at least have like a bunch of disclaimers like financial information should not be taken from this site or whatever. Google's just like straight up. For the record,

Betta is up 119% this year. Thank you, because I knew it was more than doubled. I knew. But here's what I don't get about, like, let's take that question. Doing a simple mathematical, today's price minus the Jan first price, you know, to figure out the percentage, like, that is like, you know, sixth grade math or what I don't know, like the idea that this all-knowing chatbot that's going to, lead to human extinction didn't do that simple calculation or got it somehow completely wrong.

I don't even know where the data came from. That's just a reminder to me that there's so much distance between what we're promised and where we are today. And again, I'm still very bullish on this, but it's a reminder of where we are. It actually ended up being like the perfect follow-up story to this discussion of Japan as the AI paradise, maybe not as much of a paradise as Jan and some others might hope. I do, I am starting to come to your standpoint that maybe we do need some rules and actual like sophistication around how these models get trained as opposed to a free for all. So but even

still, even as we're having such a, you know, such issues with something like chat GPT, we're like having this, it's a very weird and interesting wave of like very impressive people starting to come out all together and talk about how like AI could potentially, you know, destroy us. And this This came out of the Center for AI Safety earlier this week. It was the biggest tech story of the day, actually, on Monday, where you had hundreds of AI scientists sign on to this statement from the Center for AI Safety, and it's just a sentence. It says, mitigating the risk of extinction from AI should be a global priority alongside

other societal scale risks, such as pandemics and nuclear war. And the people that signed it, I mean, Jeff Hinton, Yahshua Benjio, or by two-thirds of the the AI, the people that basically invented deep learning. The other third is Jan Lacoon, Demis Sassabas of Deep Mind, Sam Altman. You know, the list goes on. Bill Gates is on there. I'm sure Elon is on there somewhere. What the heck is going on here, Rajan?

I mean, why are these people feeling the need to come out and put their names on these statements? I mean, what do they know? Again, Google Bard just told me that Meadow is down 58% this year. A lawyer tried to use chat GPT. in cited six non-existent cases. Like, this is all kind of like out of the box technology. We're figuring out what, and we talked about this, I think a couple of weeks ago when Sam Altman testified in DC.

It's like, what's the game here? Because I still cannot remove, actually though, I guess in this case, when you have some people who are more pure academics signing on this, it makes me take it a little more seriously Because when it's purely someone who owns the technology to sell for their business, like a Sam Altman, I can never move past the idea that obviously overstating the fears of what is possible is good for business. Because then everyone will go to it. It's like, you know, only I can save you.

Everyone will go to you. But when an academic who, you know, essentially invented this stuff has the same fears, all I can think of is is there some is there some chat group somewhere that everyone's like sharing like the computers telling that they're going to kill us all and just not letting us in on that information well it's obviously like they're not talking about chat GPT which I think is important like their fear is not about it but their fears about where AI could go but it is just so interesting that this is all being heralded by chat GPT and other LLM technology that makes these fears seem so tangible to people And I find that interesting. One of other interesting things you asked about the chat room. First thing I thought about when I saw this statement is who is coordinating this? Because it's not coming out of nowhere. And the Center for AI Safety is not an apparation.

It's an actual nonprofit that is being funded by someone. And I thought maybe we can get a little bit towards the motives if we figure out who's funding it. So I went on a little bit of a treasure hunt this week trying to figure out where this money is actually come from and i'll talk to you a little bit about how that went so first thing first so you go to the center for a i safety's website on monday when the statement comes out and you want to figure out where's the money coming from here is the most the closest you're going to get by the way founded this center which got all these people to sign was founded in january 2023 they talked about their funding they say the center for a i safety is a non-profit organization entirely supported by

private contributions our policies and research directions are not determined by individual donors ensuring that our focus remains on serving the public interest like okay what does that say it says nothing and i emailed them and i say can you please reveal who's funding you i didn't get anything i know the la times picked this up and emailed them and they didn't get anything back okay i check back later this week clearly they're like well there must have been a scramble because they updated the website on their funding and they're like we have to put something up there still no reply to the email here's the update the center for a i safety is a nonprofit organization currently over 90% of our funding comes from open philanthropy an independent

philanthropic organization we would not accept funding from stakeholders which would compromise our mission of reducing AI risk we are currently bottlenecked by funding and seeking to diversify our funding sources so please consider donate donating here i mean okay so they updated they said that the the money's coming from this group open philanthropy you go to open philanthropy you have to click the governance to figure out who's funding that okay support for the fund comes primarily from our main funders kerry tuna and dustin moshkowitz and dustin of course is the CEO of asana and the co-founder of facebook so it's in his interest now i's invited dustin on the podcast to come to speak about why he is interested in this, why so many people are coming around, and to help fill the information

vacuum around it. And I'm currently, I'm being passed to his handlers, you know, and he's saying he's not doing much press, but maybe he'll make an exception. I would love to have Dustin on the show to talk about why we're seeing this happen. Now, we know about open philanthropy. We understand a little bit about Jeff Hinton and the others, but what the heck is happening here? I think it just would serve the public's interests for Dustin in particular to talk about it, and I hope to have him on. So that's kind of where I netted out. But it is very interesting how it started vague, and then with a little bit more scrutiny, became a little bit more open. Viewers can't see how I was just, sorry, listeners can't see how I was hanging on that,

because for context, I did not hear this story before from Alex. So I was just very excited to see where that ended up. I mean, yeah, yeah, I think there's only one way to find out. Justin should come on and talk and I'll note on the show, Asana is releasing AI products. So like, you know, I'm not saying this. I'll note I love Asana as well. I'm a, I'm a big fan of Asana as a product. Yeah, look, I'm not saying that this is, you know, motivated to drive the stock price because it has AI tools. But I would really just like to know exactly what's happening here.

And I think, by the way, as a practice, when these organizations come out and make these type of announcements, just put the funding there, make it easy to find. it shouldn't have to take this type of work now of course like open philanthropy had disclosed it on its website and dustin replied to me saying so but it's not like people are going to check every single philanthropy website to figure out where that money is coming from like it should just be and what percentage of the funds it is it should just be disclosed up front and i'm glad that the center for a i safety did disclose it who now speaking of the i's existential threat to our world there was some weird this is like going through this like we're in this weird moment of hysteria where, you know, this, this, it's just snowballing and people will take

any evidence of some, something bad happening as like, okay, we're all going to be, you know, dead. And I think, okay, there's part of it that plays on the fears of like people like the idea of like thinking about how bad this could get, but it is so irrational. And that leads me to the story of the U.S. Air Force saying this week that AI killed its operator in a simulation trying to you know, basically test whether an AI drone would kill humans. It turns out this story was completely fabricated. And it's coming from a U.S. official who misspoke about the simulation. This never happened in real life.

There was never actually a simulation. This is from Vice. The rogue, quote, AI drone simulation was a hypothetical quote unquote thought experiment from outside the military based on plausible scenarios and likely outcomes, rather than an actual U.S. Air Force real-world simulation. And this is a quote from our Air Force spokesperson. We've never run that experiment, nor would we need to in order to realize that this is a plausible outcome.

This story, though, took off in the craziest way. And there were hundreds of different stories talking about how literally AI killed a human operator when not only did the experiment not happened, but the whole thing was fabricated, completely played off as a thought experiment from someone within the military. What the heck is happening here, Ron. This is, isn't this what the organizations like the C-A-I-S want or what a Sam ultimate, like this kind of hysteria?

Like it's starting with the fact that when you have respected people, it's telling you that AI can lead to human extinction, obviously the bias is going to be moved quickly towards, okay, is it already killing us? Like, we're supposed to be scared by this. And that's the part. that uh like i really wish the conversation would just move back towards all right here's some cool new products they're interesting uh you can do stuff quicker adobe photoshop generative fill is fun to use like like like i do that's you know hysteric is is is is annoying and i think

is going to be counterproductive or could be for the whole ecosystem but but i still yeah i think that's the question maybe throughout this year we'll continue to try to answer it as why spread the hysteria right that was also a good setup for me to promote an upcoming show in july we're going to have two executives from adobe come on to talk about their generative tools and to talk about the legal implications of what's going on on copyright so that should be fun so okay should we talk about headsets why don't we do that after the break we're here on big technology podcast Friday edition talking about the news the week the news that next week is going to be all about the headset wars apple has a new device coming out we've talked about it a bit 10 more minutes on the

other side of this break we'll be back right after this hey everyone let me tell you about the hustle daily show a podcast filled with business tech news and original stories to keep you in the loop on what's trending more than 2 million professionals read the hustle's daily email for its irreverent and informative takes on business and tech news now they have a daily podcast called the Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less, and explain why you should care about them. So, search for the Hustled Daily show and your favorite podcast app, like the one you're using right now. And we're back here on Big Technology Podcast with Ranjan Roy of margins. First half, we talked a lot about the market.

We talked a lot about AI, safety, hysteria, and copyright. Let's talk about what the big news coming up next week, which is that Apple is going to unveil its mixed reality. headset called the reality pro at its worldwide developers conference coming up on Monday. Now, Meta this week tried to get ahead of it, and it's very strange. It's sort of like felt kind of rush. They have an event where they're going to talk about it more in September. Here is the news. So it's the Quest 3.

That's their third generation version of this Quest headset. It's going to start at $499. It has high-res color mixed reality. So there's a couple of cameras and a sensor. on the front that will create a pass-through and that will allow you to be able to see what's going on outside and overlay some of the graphics inside. Kind of interesting. And this is going to try to preempt what Apple is doing. What's your read on the meta device? And do you think that this is like actually a competition among peers is one ahead of the other? Are you excited to use the meta device?

I think and again, I loved using the original quest. Like my brother-in-law had it. gaming on it playing beat saber and stuff like all that it was fun i never bought one i was thinking about it for a bit i still do well okay first i i just enjoyed that now there's a little more corporate drama the fact that meta you know is rushing this news out to try to get ahead of apple's news on the fifth which we've been waiting for for years so this kind of incremental addition they did not announce anything revolutionary is just a better it's like the iphone 14 verse 13, but at least trying to get in the news cycle there. But I think for Apple, I'll admit, I had not thought too much about it. I have not been excited by it, but I've also not been thinking

it's going to be a disaster. I'd say your newsletter this week about the headset wars, like I thought was interesting because I think the most salient point was the idea that is Apple shipping something before it's truly perfect. And that's always been Apple's, you know, in the Steve Jobs era, that was always the game. It's like, we're going to show you something that's going to blow your mind and actually work in ways you never thought possible. So if they're rolling out something a bit janky, I think it could be really problematic. But also, even more important is like, I want to know what they really envision this kind of

computing platform to be because as you also said, Apple's a $2.8 trillion company that sold $200 billion in iPhones almost. So they don't need this new category. So what like what about it is really making them so insistent that they have to go after this? I don't know. The same way I'm wondering what what AI risks are in that chat group. What a what metaverse opportunities are in the tech exec chat groups that make Mark Zucker go all in. It's making Tim Cook risk his entire reputation on this launch. Well, it's very interesting that they decided basically to drink the Meta Kool-Aid and say that's a category they wanted to play it. Now they've been at it since 2015.

But I think what we're going to see next week is it's going to be a device. And that's what I put in the newsletter that's going to blow people away with the technical specs, right? We're talking about 4K resolution in each eye, 5,000 knits in brightness. You know, I don't even know what that means. It's very bright. Okay, they're going to talk a lot about fidelity, right? About how some of these experiences, you're not going to even remember that you're not in those virtual reality worlds or augmented reality worlds. Or the fact that the pass through is so good that when you're wearing the device, you're going to feel like you're actually in the room with the objects that you're seeing.

That's what we're going to hear about. That's what these specs are going to tell us about. Then they're going to talk to you about the cameras. the sensors right we're talking about three outside cameras on the meta oculus quest three german says maybe a dozen by the way good moment to promo german's coming on next week on friday for a half hour after w wdc so it's going to be really fun to speak to him and get his reaction about this don't miss that show the thing is that even though it's going to blow people away in the apple's typical presentation there's a battery pack you have to wear they were aiming for

lightweight standalone glasses that could pass through AR and could put you in virtual reality, they just couldn't get there. The technology wasn't there. And that's why people are saying, look, this is going to be a major AI, major Apple launch, major new category launch, not going to be the same revolutionary device like we saw with the iPhone, the AirPods, and the watch, which took this preexisting category. We've talked about on the show. and pushed it two or three years ahead, in the iPhone's case, five years ahead. And that's why I'm just so eager,

it's gonna be very, very interesting to watch next week. No, I think it's gonna be, I think I'm more excited now. And as you said, I think that's the most important point is that, again, we all had phones before the iPhone. People wore watches before the Apple watch. I had phones before the AirPods. Each one of those just blew my mind. But I'll also admit if one friend

gets the Apple, the reality pro and just messages me, oh, my God, you have to try this. I can easily see in the next few months being tempted because, again, it's Apple doing it. It's, you know, like hardware. They've done, I never thought AirPods, which I still think are one of the most incredible devices I've owned in the last few years. Like a pair of headphones would excite me that much. So I'm not, I'm definitely not counting them out. Yeah. Look, I think that this device, right, is not going to be the real play for them. Like, it's very expensive, two to three thousand dollars. They were expecting to sell three million. Now they're expecting to sell 900,000, which is still billions of dollars for them at three, you know, 900,000 at 3,000 a pop. What's the play then? The play is that developers, so what they want effectively is to release this out to developers and content programmers. So Peter Kafka has speculated.

that Disney might be a partner, right? So you're effectively going to want exclusive programming or programming so beautiful in these glasses that you're not going to want to watch it outside of, outside of them. And that's what you're going to have Disney tell that story. You're going to have developers try to think of new applications for it. And then over time, as this ecosystem is built, you work on basically filling those gaps in the technology that you couldn't.

You work on trying to build it without that battery pack. And you eventually get to this goldie. lock zone where the glass has worked the way that you wanted them in the in the beginning you wanted them to in the beginning and the technology and there's already a robust app ecosystem and content ecosystem that make people want to buy them you put that together you might really have an interesting product it's just take my money tim cook take my money tim cook you like it you just you sold me it is it's risky though i'm in yeah but look that's i mean the thing is people like threw all these ideas at me big screen no matter where you where you are fitness

gaming etc etc those are all use cases for the quest the thing is people just didn't want to wear the quest around you can do a lot of that on your phone and yeah but this is where it's app facebook never created great hardware they've bought oculus but as a company they've never created hardware apple has created many times over incredible hardware so that That's why, again, if I'm more excited about who's going to deliver me that, I mean, when you just mentioned the idea of Disney, if they show up at launch and like go on stage and just give some demo, oh my God. Dude, Bob Iger's going to be there.

That's my prediction. Bob Iger, wearing the glasses, talking about how you can watch. What about Disney Plus versus Apple TV Plus? Could Disney really be all in on something like this with an Apple? or now that they have competing interests like that? I think so. It wasn't Bill Gates at the iPhone launch talking about the iPad launch? Oh, no.

No, Microsoft definitely did Office for the iOS devices and showed up at the launch events. At the end of the day, they're not going to, Disney Plus isn't going to say we're not working on the Mac. And if this is the next big consumer device, we're coming for it. We could speculate all we want, but we will promo the fact that Mark Gorman, is coming up on the show next week next Friday don't miss it we'll be live on

LinkedIn I at 11 Pacific 2 p.m. Eastern on Friday but you know I think I like will also be on the feed and that's definitely a show that you're not going to want to miss German's been breaking all this news he'll have a great reaction maybe you'll even have been inside there and and have I've been able to experience some of this stuff so we'll cover that next week coming up on Wednesday my interview with Astro Teller, finally. It's going to be here. We're putting it live. Ranjan and I back with you and Mark German on Friday. Ranjan, thanks so much for joining. Hey, have a good week. All right. And we'll see you all next week. Thanks for listening.

We'll see you next time on Big Technology Podcast.