Morning Brew Daily - Disney and Universal Sue AI Image Company & NYC Broker Fees Are Banned

Episode Date: June 12, 2025

Episode 603: Neal and Toby dive into May’s inflation report which rose just slightly, which was a positive sign despite concerns from tariffs. Then, NYC’s broker fee ban went into effect, which some are celebrating, while others are concerned about costs showing up in other ways. Also, Disney and Universal are suing Midjourney, an AI image company for copyright infringement. Meanwhile, Neal shares his favorite numbers from the week: congressional stock trading, Waymo, and Din Tai Fung.  00:00 - US World Cup Starts 2:30 - Inflation not that bad for now 7:00 - Disney fights AI 10:30 - NYC broker fee ban 14:20 - Lawmakers and their stocks 17:30 - Waymo safer than humans 19:00 - Din Tai Fung crushin’ it 22:00 - Sprint Finish! Check out domainmoney.com/mbdaily and start building your financial plan today We are current clients of Domain Money Advisors, LLC (Domain). Through Domain's sponsorship of Morning Brew Daily, we receive compensation that included a free plan and thus have an incentive to promote Domain Money. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note  Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Brew, Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, inflation is coming on down Bob Barker style, but will the prices stay right? Then Hollywood has finally had it with AI image generators

copying their homework. It's Thursday, June 12th. Let's ride. The countdown has begun one year from today exactly. The U.S. men's national team will play their first game of the World Cup,

which the country is hosting alongside Mexico and Canada. I'm sorry to say, but I do not believe that we will win. The USMNT has lost four straight games for the first time since 2007, including a four-nil thrashing at the hands of Switzerland on Tuesday night. New coach Maricio Pachitino, whose $6 million a year's salary was partially bankrupted by Ken Griffin is under increasing pressure to get the squad in respectable form

before their World Cup debut. Toby, is it time to panic? Neil, you know that feeling when you haven't prepared for a test? And it's slowly creeping up, just this horrible pit in your stomach because you're so far away from being ready. But you're going to have to take it anyways. That is how I feel about this World Cup. Our boys in red, white, and blue are not prepared.

Let's just face it. We lost 4-0 to Switzerland, to Switzerland, Neil. No disrespect to the Swiss. But I can't believe that this kind of amorphous concept, this circle far off on the sporting calendar, is very close to becoming a reality now. I just really hope we can get our act together. Me too. And now a word from our sponsor, Domain Money. Toby, do you have an expert on Toby that knows you? I mean, really knows you.

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Quick disclaimer, we are current clients of Domain Money Advisors LLC through Domain's Sponsorship of Morning Brew Daily. We received compensation that included a free plan and thus have an incentive to promote domain money. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th,

and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavat Theater.com, only at Yamava Resort and Casino, celebrating its 40th anniversary. You in? Must be 21 to enter. We got inflation data yesterday, and like Addison Ray's budding discography, it was pretty good.

Prices rose less than expected in May as yet another month went by without major impacts from elevated tariffs. The CPI reading, a broad-based measure of goods and services, increased just 0.1% from the month before, putting the annual inflation rate at 2.4%. Still above the Fed's preferred 2% mark, but in line with economist expectations. Shelter prices were a standout with their 3.9% annual increase, the smallest rate of increase since late 2021. egg prices seem to have finally cracked too, with an 11% drop from last month to their lowest level since December. So where are these tariff-induced price increases? According to a Goldman Sachs analysts, quote, these tariffs aren't having a large immediate impact because companies have been using existing inventories

or slowly adjusting prices due to uncertain demand. All eyes now look ahead to the Fed meeting next week, although no change in interest rates are expected, with the labor market softening and inflation cooling, Jerome Powell and Coe now have a clearer path in front of them. Neil, inflation isn't doing much of anything right now, which is a good thing. It's rising less than forecast now for the fourth straight month, and you mentioned where are the tariffs?

We're just not seeing even in the particular types of goods where you would expect to see price increases from tariffs. I'm talking apparel prices. We get virtually all of our apparel from overseas. we now have tariffs on those products. Well, apparel prices fell 0.4% in May. What about autos, new car prices? Those also have tariffs on them now.

Well, new car prices fell by 0.3% last month. So whatever is going on, whether it's stockpiling or companies, just kind of eating those extra costs and not passing them on to consumers yet, it's happening. One subplot to this data collection is the fact that the agency is responsible for, you know, coming up with the CPI port. that's the Bureau of Labor Statistics, they are staring down some major staffing shortages as well, creating some concerns about the quality of data

that it is actually ingesting. The way that the CPI report is generated is pretty much by going out and doing the dirty work, hundreds of enumerators, as they're called, go out to brick and mortar stores across the country, and they actually document the prices of specific products. That then is converted into the CPI reading. But if you have fewer enumerators,

that means more educated guessing is going on. So even though this was a pretty solid report overall, there exists some growing concerns about this gradual erosion of the trust-rilliness of some of this federal data that markets, the Fed, all rely on. So that's just if 1A is the headline that inflation is mellowing out a little bit, 1B is that there's some fears that the data we're actually collecting isn't as high qualities as it could be. And that's because there's been a hiring freeze across the federal government.

But overall, you said we're looking to the Fed means. I think Fed Chair Jerome Powell has been in wait and C mode for the better part of a year because the economic forecast is just too cloudy to make any decisions. Well, maybe the clouds are parting just a bit from this report because based on the jobs report we got last week, we saw that the labor market is cooling. Now, with inflation here, it also looks like inflation is cooling. And there's still a lot of question marks around that. But the overall trend line does seem to be that way. perhaps Jerome Powell can maybe peer through the fog right now and say, okay, I think maybe it's time that we can cut because there's been so many question marks about whether these tariffs would spark inflation and then an interest rate cut would even pour more gasoline on that fire. So we got a cooling labor market. We got cooling inflation. We got in various surveys, people in America saying we expect less inflation because of these sort of the trade detente that's going on. You might see an increase. bet on the Fed to cut rates, not at this particular meeting, but when they meet in September.

Yeah, the base case right now that the market is pricing in, two rate cuts probably in the back half of 2025. Right now, there's still no signs that the latest, the next meeting is going to bring a rate cut. It still looks like it's going to be in the back half of the year. Disney and Universal are done Mickey Mouse in about when it comes to AI, dropping the hammer yesterday by suing the image generation startup Mid Journey for copyright infringement. The lawsuit contends that Mid Journey helped itself to a bunch of copyrighted materials from Disney and Universal's stable of characters to train its software. Quote, Mid Journey is the quintessential copyright freewriter and a bottomless pit of plagiarism,

the lawsuit says, which sounds a lot like my academic career in high school. Mid Journey is not the first and won't be the last AI company sued for scraping the internet without compensating creators. The New York Times, for instance, has sued open AI on similar grounds, but Disney and Universal are the first major Hollywood studios to get in on the act. The framing of the case is that Mid Journey violated copyright in two ways, one, by training its AI model on intellectual property, and two, by generating images that display that protected IP.

It's that freeloading that, quote, threatens to upend the bedrock of incentives of U.S. copyright law that drive American leadership in movies, television, and others. creative arts. It's a bedrock that holds up a film and TV business that supports over $229 billion in annual wages. For Mid Journey, it's a threat to one of the more popular text to image generators on the internet, as it now has to go toe to toe-to-to-neal with one Angry Mouse and a bunch of minions. Disney was not going to sit this out. They are the most litigious company maybe in history, so we were kind of waiting for them to sue an AI company for stealing their IP. And when you combine Disney and Universal, their IP libraries, it's pretty, it's pretty much something to behold in their

lawsuit. So these were, Disney and Universal included dozens of images from their popular characters that they allege mid-Journey was stealing. I mean, here's the list. Yoda, Wally, Deadpool, Iron Man, Lightning McQueen, Aladdin, Spider-Man, Grout, Elsa from Frozen Guardians of the Galaxy, and a ton of Star Wars characters, Chewbacca, Stormtroopers. And they even called out specifically, there was entire section on Darth Vader specifically, saying that when you prompt Mid Journey, say, show me a picture of Darth Vader, it shows you a picture of Darth Vader, and that is copyright infringement according to Disney. Yeah, I think why Mid Journey specifically was targeted here is that it does it with such little friction. It just immediately obliges you want to see Darth Vader.

Here's Darth Vader. I was playing around with Chachabit this morning and it's image generation tool. And if you ask it to generate Darth Vader, goes, no, can't do it. It violates. copyright features. It has this filter over some of that IP. I mean, you can get around a little bit. I started pushing the boundaries a little bit. And if you say, give me a Sith-like character surfing, for some reason, it will then generate that image. So it's not a perfect system, but certainly Mid-Jurney was the low-hanging fruit here because it clearly trained its library on these characters, because the image generation outputs that it creates look exactly like Darth Vader. So the big picture here is that a bunch of these publishers and now Hollywood,

companies giants are suing these AI companies accusing them of copyright infringement New York Times with Open AI. That's probably the biggest lawsuit going on, but Universal and Disney, their size, their heft, their influence, what these new AI tools mean for the movie and TV industry will certainly be up there like 1A, 1B in terms of the significance of the lawsuit. And one thing that they definitely want to stop is majority is coming out with a new video tool this month. So of course, image generations are bad, but they are a Hollywood movie studio. Both of these are Hollywood movie studios. So if they start infringing on that territory, that's where they really want to stop this into tracks before it gains even more popularity. Moving on, yesterday was

essentially a religious holiday for the people of New York City because a law went into effect that means renters no longer have to pay a broker fee before they move into an apartment. For decades, New York City tenants were on the hook to pay a broker a one-time fee once a contract was signed on a new place. But the Fair Act for fairness in apartment rental expenses alleviates them of that burden and instead shifts the broker payment to the landlord. New York City was just one of two major North American cities that had the tenant pay the broker fee. With this change, Boston is the final holdout because, of course, it is. For renters, the law could eliminate a huge component of the upfront cost required to move into a new home. The broker fee isn't standardized across

the city, but it typically ranges from 10% to 15% of. of a full year's rent. For a $3,000 a month apartment, the broker fee could run up to $5,400. Yeah, it is a nightmare to move here. So home costs are going to be a lot cheaper, right? Not so fast because landlords aren't going to eat the new broker fees by themselves. The Wall Street Journal reported that New York City apartment seekers

woke up yesterday to the biggest overnight rent increases in the city's modern history as owners foisted their new costs onto prospective tenants. That is exactly what opponents of the United States. this law like the real estate industry were warning about, they argued that by putting the broker burden on landlords, rents would surge. Of course, it's all very early, so we don't know exactly how this is going to shake out, but a significant moment in real estate history nonetheless. Yeah, it lops off a ton of money that you had to kind of shell out up front, which was just a massive expense. I mean, I just went through this process, which kind of stinks honestly,

because I did pay a broker fee, even though we were one month away from this Fair Act government. into place. So yeah, that stings a little bit. But if we just go back into the history of why brokers were even a thing in the first place, back in the pre-internet days, they were kind of a gatekeeper to a lot of listings. You needed to have a broker to find the best apartments. But now that Street Easy exists and all these other sites exist, Zillow, you can see the inventory. So that's why it just hurt even more and why it became almost anachronistic, that feeling of paying a broker, even though you didn't even interact with them until maybe they unlocked the door for you. So that is reason why this Fair Act gained a lot of momentum. But I will say New York is quite the rental

market. No other city on earth really comes close. For one, 70% of residents in the city rent, that puts a ton of pressure on supply. You go back to listings last April. 1.6 million people were looking to rent. There was just 6,300 active rental listings in the entire five boroughs. So vacancy rates are super low here. So that is why. the New York Real Estate Board and a lot of these real estate groups are arguing that this lawsuit is going to jack up rents is going to make the supply crunch even worse because they're just going to start passing those broker fees onto people in the form of raised rents. What this really is going to do, you know, one affected definitely will have is encourage more

mobility. So people will move more because the upfront costs have come down. You were stuck in your apartment for so long maybe because you're like, well, I'm paying like a lot in rent. But when I move, I'm going to have to pay that huge broker fee to begin with. And that's what you just dealt with. So whoever wins from this, maybe it'll be renters, but who will definitely win is moving companies because everyone's going to move. Speaking of moving, let's move on. Up next, we're going to serve you up a hearty helping of news numbers. We're the Hartford, with decades of experience ensuring millions of unique small businesses when it comes to your small business insurance.

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Stop taking bad travel advice. Start comparing hundreds of sites with Kaiy. and get your trip right. Kayak, got that right. Welcome to Neal's numbers, the segment where I share three stats from the week's news that will have you hitting every fairway at Oakmont. My first number is more than 700, which is how many stock trades were placed by House lawmakers and their families in the six days between April 2nd when Trump announced Liberation Day

tariffs on the rest of the world and April 8th when he rescinded most of them. That period was one of the most volatile for the stock market in recent, and attracted more trading volume than any other period since records began in 2007, lawmakers weren't planning on sitting it out. According to a Wall Street Journal analysis, House members and their families placed more trades in April than any other month of the past year. Some, like Republican Marjorie Taylor Green, were big buyers. She scooped up at least $20,000 worth of stocks like Amazon, FedEx, and Palantir.

Others yelowed into riskier bets like options. Democrat Josh Godheimer of New Jersey tapped to. the call options trade tied to Microsoft stock on April 4th, a company he used to be an executive app. The trading flurry around Trump's tariff announcements has increased scrutiny on the ability of policymakers to play the stock market. While backlash has risen in the past few years, notably around prolific trader, former House Speaker Nancy Pelosi, it hasn't led to any reform.

Many lawmakers have called for a stock trading ban to no avail, including reps Ro Kana and Rob Bresnahan. And I mentioned those two because, according to the Wall Street, Journal, they and their families reported the most stock transactions of anyone else in the house in the week following Liberation Day. I think we all forget how crazy of a time that was in the stock market, first of all. I mean, we were having like the biggest gains and the biggest losses back to back. But the first thing I did when I saw this headline is I wanted to know who made out with some money, who made profitable trades here. And unfortunately, the way stock disclosures

work, you can't really pinpoint exactly how much money they made or lost, for instance, a typical purchase disclosure might read that a member bought between $1,000 and $15,000 of stock on a given day. You don't have to give specific amounts or the exact size of the investment. So that is a little bit of a bummer because I did, if all these people are training, I want to see who actually made money, who lost money, but it's just a little bit difficult to pin down the exact numbers. Now, the Wall Street Journal reached out to all these lawmakers that they did this analysis on, and to a T spokespeople for them said, look, I wasn't actually making trades.

I have an outside financial advisor who did this without my knowledge and they didn't talk to me. And so they sort of, you know, deflected it to their third party financial advisors saying, I don't really know what's going on. It was a crazy time in the stock market. Literally everyone else was trading, but that's not going to stop the criticism at all. Meanwhile, there's another bill that's coming through Congress right now. It's bipartisan AOC Chipproy of Texas, who's a Republican. They're working on a new bill.

anything amounts to it, but over the past few years, it's certainly been this outcry over certain trades that are made, and then sort of silence on the side of congressional lawmakers who actually need to put this into place. For my next number, a few Waymo cars may be burned to a crisp in L.A., but all the other ones are out there busy saving lives. A forthcoming study, the most comprehensive analysis of self-driving car safety ever released, found that self-driving cars are far safer than human drivers, according to Vox. Waymo analyzed the performance of its fleet of cars across 56.7 million miles driven in San Francisco, Phoenix, L.A., and Austin, and found that compared to human drivers, the robo-taxies

had 81% fewer airbag deploying crashes, 85% fewer crashes with suspected serious or worse injuries, 92% fewer crashes than that involved injuries to pedestrians, and 96% fewer injury crashes at intersections. In one sense, this shouldn't be surprising. Self-driving cars don't need to respond to text. They don't get tired. They never drink. They don't belt the chorus to Pink Pony Club with their eyes closed. Human drivers do all that with as much as a 2.5 second gap between you perceiving something and reacting to it in a car traveling 60 miles per hour. That's contributed to the nearly 40,000 traffic fatalities in the U.S. last year, deaths that perhaps could be preventable with more robotaxies.

Yeah, this was an eye-popping study because especially this was relatively small when you come to the actual amount of miles driven. 56 million miles feels like a lot, but drivers across the U.S. typically log 3.3 trillion miles a year. So there is obviously a big delta there. So that could mean that this study could, or it might be overstating the safety impacts, but it also might be understating because if you start to extrapolate those numbers across 3.3 trillion miles driven, that is a lot of life.

lives that you start to save, you know, 40,000 deaths a year. If you can start chipping away at that, that is one of the underrated parts of this autonomous driving revolution, is just how much safer the roads could actually end up being. For my final number, here's a little trivia question for you. Which U.S. restaurant chain generates the most revenue per location? Pause here if you want to venture a guess. Okay, the answer is Dintai Fung, a Taiwanese soup dumpling chain, and it is not even close. Dintai Fung's 16 U.S. locations generated an average of $27.4 million last year, which is almost double second place, the Steakhouse Mastros, according to industry researcher Technomic.

Here's some more context on just how ridiculously lucrative Dinty Fung stores are. As restaurant business notes, the company's revenue per store would be like combining two cheesecake factories into one restaurant, nearly four chickfilets, and a little. under seven McDonald's. If you haven't heard of Dintai Fung, it began in 1958 as a cooking oil company, but transformed into a noodle business and first landed in the U.S. in 2000. Business is booming across 180 locations in 13 countries. It did $412 million in total sales last year, an almost 20% annual increase. It's famous for its Zhao Long Bao or soup dumplings, but scoring some is notoriously hard and will probably require you to wait in a line.

Toby, think you could have guessed this? No, I know I couldn't have guessed this because you quizzed me on this. And I immediately said Chick-fil-A because I thought that that was the gold standard. But Dintai Fung just has one, a higher average check size, two, they're big, and three, they're busy. And that's the holy grail of just ripping revenue per location. So I do want to give. So if you go to the other top five, there's three steakhouse restaurants with between like 10 to 20 locations. and then you have the Cheesecake Factory that comes in six-place, 12 million per location.

But it has 215 locations. So I know this is about Dintai Fung, but I also want to put some respect on the Cheesecake Factory's names because Dintai Fung only got 16 Cheesecake Factory, 25. Those things are big and they're still ripping in revenue. So just pretty... You don't think Cheesecake Factory has enough respect to its name? I don't know. I mean, I just wouldn't have put it at number six on this list. I mean, it's above Nobu.

Like, it's making more money per restaurant than Nobu. but yeah, dintai fung, that was an eye-popping number. Like, it is not even close how much more money it's making per location. So I've never had it. I haven't contributed at all. We got to go. They just opened one in Midtown, and apparently the line is extremely long. So that was like one of the most hyped restaurant openings of the past few years

is because there is so much excitement around this particular chain. There's not that many in the United States. And you've been? No, I haven't been. Oh, you haven't been either? No. We got a date. Let's do it.

Okay. Let's sprint to the finish with some final headlines. Elon Musk is saying, I want you back to President Trump. After their very public blowup last week, the world's richest person sent a flurry of 3 a.m. tweets on Wednesday, saying he regrets some of his posts about Trump, claiming they went too far. Perhaps he was referencing when he endorsed Trump's impeachment or claimed without evidence he was on the Epstein list. Either way, Musk has since deleted some of those most scathing posts and appears ready to make up. unclear if this has any connection to Tesla's $150 billion wipeout during the falling out day last

week, the biggest one-day plunge in the company's history. Toby, things seem to be a-okay between those two. I mean, who among us haven't fired out a couple of 3 a.m. text or tweets, kind of regretting some things you said earlier. So I do think that Tesla especially are pretty happy with kind of this makeup arc that Elon is on. You look at the stock, it's gained four straight sessions. It's up about 10% of this week as Elon is kind of refocusing, maybe making up with the administration, but also refocusing on his businesses because June 22nd is a big date coming up for Tesla. That is when they're tentatively launching their robotaxy in Austin, Texas. So check the box off that make up with Trump and then the next big box that Tesla and Elon has to check is launching this

Robotaxie. Nintendo's new Switch console is selling like hot cakes. The company announced that it had already moved three and a half million switch twos in its first four days, a new record for the 130-year-old company. Despite fears that the much higher $450 price tag might scare away some gamers, quite the opposite has been true. Significant upgrades to performance, graphics, and screens while keeping a familiar form factor has been a winning formula. Still, if it wants to catch up to its elder sibling, the original switch, it's got 148.5 million units to go. Three and a half million, Neil, not a bad start, but respect your elders. Not a bad start. It's the best console launch of all time by a big margin. PS5 ships 4.5 million units in its first

seven weeks. We're talking 3.5 million here in four days, PlayStation 4.2.1 million in a little over two weeks. And yes, the original Nintendo Switch has sold over 150 million units, but it's been around since 2017. In its first month, it sold 2.74 million. So Nintendo Switch is on an absolute rocket ship trajectory, an extremely popular product and, you know, a historic opening. I've seen more Mario Card Open World clips on my social media feeds than I've ever seen of the game before. And I want to play it. It's just literally people driving around doing nothing, but it looks fun. I don't know how to describe it. Finally, the music world is mourning the tremendous loss of Brian Wilson, the least.

leader and chief songwriter of the Beach Boys, who has died at 82. When you hear Beach Boys, you might think, oh, surfing USA, Southern California's sun, convertibles, let's all go, have some fun. But Wilson was a far more innovative artist than that gives him credit for. Pet Sounds, the Beach Boys album with, Wouldn't It Be Nice and God Only Knows, was a seminal album of the 20th century, ranking number two on the Rolling Stones' greatest albums of all timeless. Wilson's sophisticated compositions and complex vocal harmonies earned the praise and

of his musical rivals like the Beatles. Beatles producer George Martin once acknowledged that Sergeant Peppers would not have happened if not for pet sounds. And Bob Dylan said Wilson needs to donate his ear to the Smithsonian. Yeah, Paul McCartney called God Only Knows the greatest pop song ever written, which is pretty high praise. And then also Elton John said in a 20 to 21 documentary that he had an orchestra in his head, just the highest praise from the biggest musicians of the last hundred years here.

We were listening before the show. The Beach Boys have so many bangers, too. Like, I know 10 songs. I don't really listen to old music. God only knows, it's just a fantastic song. If anyone's seen, you know, the end of love actually, that's probably maybe what I associate it with. But this group made the Billboard top 40, 36 times in 36 years.

Just an absolute powerhouse of musician and a big loss for the music community. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Thursday. We are so close to the weekend. If you have any thoughts on today's episode, send an email with questions, comments, or feedback to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer.

Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is picking up good vibrations. Devin Emery is our president and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.