Morning Brew Daily - FTC Investigates OpenAI, Birth Control Finally Available Over The Counter & Bob Iger Goes Off

Episode Date: July 14, 2023

Episode 103: Kyle Hagge joins the show! Kyle and Toby discuss all of the headlines swirling around the FTC right now; including their investigation of OpenAI, the clash between Chair Lina Khan and Congress and why Twitter is asking a federal court to drop a settlement from 2022. Plus, for the first time birth control will be available over the counter - what does this mean for insurance companies? Also Bob Iger says Disney is considering selling off traditional TV assets among taking other cost-cutting measures. The guys then share the stock and dog of the week, explain why cricket may be the new wave and how a new white paint developed by scientists could... slow global warming? Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Terms and conditions apply. Good morning brew daily show. I'm Toby Howell. And I'm not, Toby. On today's very special Friday episode, we're checking in on the FTC, which has its site set on a new big tech foe. Plus, a new white paint is so white it could solve global warming. Oh, yes, an electric show we have for you. We're also going to be talking about a historic FDA decision for over-the-counter birth control.

And breaking news, we'll be talking about a sport other than pickleball. It's Friday, July 14th. Let's ride. All right, Not Toby. It's our first show without Neil, and it feels like our parents are out of town for the weekend and we're about to throw a rager. That's the perfect metaphor. The electricity in the air is astounding. And I am actually worried that putting Toby and Not Toby together will have unintended consequences. I see the heat death of the universe in our future because you're right. It's too an unstoppable force meets an removable object. It's the inn and the yang right now. Yeah, absolutely. But seriously, thanks for jumping in as you always do. but Neil's parting words to me before he left for Portland on Friday

was don't forget to do fast week in slow week. So here I am not forgetting, Kyle. Was this a fast week or a slow week for you? Well, first I have to say, we miss you, Neil. Yeah, for sure. Enjoy Portland. This was a very fast week for me, actually. My actual job besides jumping on the podcast when you need me

is running these courses for Morning Brew, and we had one this week for New Mangers. So I was running that all week. That's so fun. I had one late in last night, and then I woke up at 4 a M to do this. So it was a very fast week. You do a lot, man.

It's actually crazy. My week feels actually slow in comparison to that because honestly I had this date marked on my calendar for a while. So I was nervous but excited to do our first not Toby Toby's show. But that's our fast week, slow week. So Neil, if you're listening, I did not forget. All right, Neil, I mean, Kyle. Let's jump into our top story of the day

where the Federal Trade Commission is taking another big old swing at a tech company, but not one with a trillion-dollar market cap. No, this time the agency is probing OpenAI's chatbot, chat GPT. The FTC is especially interested in whether it harms consumers by spreading misinformation that may damage people's reputations. And so while OpenAI doesn't command the market cap of an Amazon, of a Microsoft, or other targets of the FTC, it is the buzzy tech of the summer and Washington is desperately trying to get out ahead of figuring out how to regulate this new technology. But the awkward undercurrent to all this is that the FDC has been striking out big time trying to rein in big tech. FTC chair, Lena Kahn, swung and missed at stopping the $69 billion

Microsoft Activision Blizzard merger, though they are appealing, and also tried and failed to stop meta's acquisition of a VR gaming company earlier this year. So, Kyle, what do we think about the beaten down and bruise FTC picking Open AI as its next target? I mean, I think everyone is trying to figure out first and foremost, like how to regulate AI. So I think the lawsuit will probably, if it does go the distance, we'll just tell us more about how the U.S. is going to view artificial intelligence going forward. So it might actually help set some guardrails and frameworks, but I think this is part of a much more aggressive FTC. They've challenged 10 mergers in court last year, up from 6 in 2021 and 8 in 2020. And this is pretty much the Lena Con playbook. But I actually

think Lena Con, her story is fascinating. So I want to give a shout out to Lena Con quick. Give it to us. She's born in England, family of Pakistani origin. She moves to the U.S. at age 11, and now she's the chair of the FTC at 34. I'm close to her age and I sometimes host a podcast. So like, pretty freaking cool to me, though. Shout out to Lena. She had then had an offer from Wall Street Journal or to go to Yale. She goes to Yale. And she wrote this essay at Yale called Amazon's Antitrust Paradox. And somehow an essay at law school like blew up. Like her debut. It was like Jay Z's reasonable doubt. Like it was huge and it actually gained a lot of traction.

And in it, she said we can't just look at consumer welfare, which is what the FTC normally would do, making sure that consumer prices don't go up because of monopoly. She said we have to have a much more expansive view of monopolistic practices. So that's what they've been doing. It looks like they're going to continue doing that with OpenAI and Twitter and others. Yeah. And just to go back to the question of like how do you regulate something like ChatTVT or OpenAI, there's been all these questions around how artificial intelligence models are trained.

And actually Sarah Silverman, the comedian, sued OpenAI and meta for copyright infringement literally this week because she said that they were reproducing stuff that she had written way too closely to how she had originally written it. And then remember, there was this Australian mayor back in April that threatened to sue ChatGBT, after it just made up the fact that he was involved in a bribery case. So these are some of the questions that why the FTC has kind of turned its laser beam onto Open AI. But literally as this FTC probe into Open AI was disclosed, FTC chair, Lena Kahn, was on Capitol Hill getting roasted by politicians. And we actually have a little clip we'd like to play for you that shows the gist of how her appearance went.

But are you bringing cases that you expect to lose? Are you bringing cases that you expect to lose? Absolutely not. Okay. your track record seems to suggest otherwise. So clearly it did not go well. And both sides of the eye were actually jumping down her throat. Jim Jordan, who's Republican, said the FDC had unchecked power.

Democrats agreed a little bit saying that the protection of consumers, which is the FDC's job, is not a political thing. And then another rep called Kana Bully for trying to prevent mergers. And then rep Kevin Kiley, who you just heard in that clip, said you are now O for Foreign merger trials. Why are you losing so much? So it didn't go great for her. No, she, yeah, she was getting roasted. It's quite interesting because her nomination was pretty bipartisan. Right.

She's 9 to 28. Granted, that was in the Senate, but things are maybe not going well for Commissioner Kahn. Yeah, it's crazy, too, because her whole goal was to take Big Tech down a little bit of a peg, and it seems like Big Tech is taking her down a peg in some ways. I mean, Twitter actually is also piling on. They asked the federal court yesterday to end an FTC commission on how the company stores user information. And that actually dates all the way back to 2011. And Twitter's basically saying, like, you guys are piling all these investigations on us. Like, it's time. Like, just let us,

we're not violating any laws. Just let us, like, store our consumer data as we want to. So it has been a rough, it's been a rough go of it for the FTC. Yes. So. And your girl, Lena. So we're talking FTC. Now let's talk OTC. And that is over the counter. No, it's not getting emergency for a cold. It's not getting Tylenol for a searing hang of over headache, you're actually soon going to be able to get birth control pills over the counter. Now, this move was approved by the Food and Drug Administration on Thursday. This is actually incredibly historic. This will be the first birth control pill to be sold without a prescription in the U.S., which is a huge milestone, which could significantly expand access to contraception.

The medication is called O-Pill. It will actually be the most effective birth control method available over the counter. It's more effective than current methods such as condoms or spermicides at preventing pregnancies. We're not sure if it's more effective than men putting a picture of themselves fishing in their hinge profile. We will see. But in all seriousness, experts in reproductive health said its availability could be especially useful for younger women and those who have difficulty dealing with the time, cost or logistical hurdles involved in visiting a doctor or obtaining a prescription, aka everyone in America. So Toby, what do you think about this decision? I think the big looming question over this is,

is actually the price of the pill, because Parago, which is a pill's manufacturer, has not named a price yet. And so a VP at the company did say that it's committed to making O-Pill affordable and accessible, but a drug company's definition of affordable and accessible might be a little different than a normal person's definition of that. So that's the real, I think,

maybe sticking point to see if this is going to be a viable over-the-counter solution for people, because if it's prohibitively expensive, then it doesn't matter if it's available, if people just can't afford it. So I think that's going to be the big thing. And then also the big question comes around, will insurance be able to cover it? Because right now, insurance doesn't cover over-the-counter medications. Like, if you're buying Tylenol, your insurance isn't going to kick in to help with that. So Congress is actually pursuing a bill that would require insurers to pay for

non-prescription birth control. But that's still, that's going to take a while to go through. So those are the two questions I have when I saw this headline initially. Yeah, I think they're great questions. And And zooming out a bit, I think, after kind of quote unquote post-row abortion bans and other threats to reproductive rights, this is coming at, again, like a pretty historic time. And, you know, just I wanted to know, like, how many other countries do this. So there's about 100 other countries that have non-prescription birth control pills available. So this is pretty common. And estimates say that about 19 million women living in areas that lack health centers could really benefit from having more contraceptive options. Yeah.

I mean, again, we're not, it's breaking. ground in the U.S., but like 100 other countries already have some form of over-the-counter pill. And so it is, again, it's historic for like the current moment you're in. You're totally right. But like, this is not historic in the grand scheme of how other countries approach reproductive health. So yeah, this is a big deal.

And I will just be closely wondering when that price point comes out to see, hey, is this really a solution or not? All right. Let's move on. So on Wednesday's show, we actually mentioned that there was a big, big conference going down in Sun Valley where financiers and media moguls and billionaires get together. Yeah, I got my invite. You got an invite. Ours is lost in the mail. Come on. Maybe it said Toby. Yeah. I told him I had to do the podcast and said. Got. I love that for you. So Disney CEO,

Bob Iger, it was one of the names we mentioned to keep an eye on. And boy, were we right, Iger gave an interview yesterday that was absolutely filled to the brim with revelations about the future of the company that he leads. First and foremost, it came out that Disney extended Iger's contract two more years to keep him at the helm till 2026. And in that time, it looks like Iger will be in fat trimming mode. He entertained the idea of selling off Disney's linear TV assets, which include ABC and cable networks like Nat Geo and FX, because he kind of thinks that traditional TV is dying. He did make sure to clarify that ESPN isn't on the chopping block as of now, but the company would be open to taking on a strategic partner for the sports network. And then finally, he dropped a

bomb for some superfan saying that there will for sure be a pullback in content spending in creation for the Star Wars and Marvel franchises. Kyle, so many soundbites there. Any of those stand out to you in particular? I have a few, but first I have to say, Bob Eiger is the worst at retirement in the history of the world. He's addicted. He's addicted to the game. He is literally trying to Mike Jordan us. He retired briefly. He's coming back. And he's looking to try to three Pete again like Mike. But he is facing a lot of battles, right? The strikes, the decline of linear TV. He has a duel with DeSantis, Pixar's underperforming, tough macroeconomic environment. So he's got a lot to worry about, but I feel like he actually loves that. And his

track record is not one to bet against. The things that I'm quite interested in are one, he talked a lot about focus. And I think during COVID, companies experimented. They tried producing a lot of content. Now it is kind of the year of focus where they're trimming the fat, so to speak, as he's saying, said and really doubling down on what is working. Then the second thing is, I got to say, when he said they're going to pull back on Marvel, that made me so happy. I, this might catch me some flack. I can't stand how many Marvel movies there are.

Ant Man and the Wass Quantum Mania debuted as the 31st film in the Marvel universe. Every time I try to watch one of these movies, it's like I need to watch seven prior to understand what's going on. You need a PhD in Marvel studies. So thank you, Bob, for doing that. That got me excited. There is an odd sort of symmetry to these planned moves because some key Bob Iger moments from the past were acquiring Marvel, acquiring Lucas Films who makes Star Wars and acquiring Pixar. And now he's kind of gambling on himself by doing the exact opposite, cutting down on these major mainstay franchises.

I mean, you're totally right, though. I'm a Marvel guy. Marvel Overload is a real thing because, yeah, I did not, like, I'm just disinterested at this point. Once phase one ended, blah, blah, we don't need to get into it. But, yeah, sometimes the. a company just becomes too bloated. And earlier this year, Disney rolled out this huge reorg where they're trying to cut $5.5 billion in costs, $3 billion of which are coming from its content biz.

So this was him. And then I do just want to touch briefly on the, you mentioned the actor strike. So we talked about on the show yesterday, but the actor strike did go into effect yesterday. So as of right now, Hollywood is pretty much shut down. And Bob Iger did comment on that. And it did not come off greatly because he said, that he respects the fact that the unions want to get the best possible deal for their members, but they must be realistic about the business environment.

And of course, whenever you have a CEO saying to workers, get realistic about the business environment, it's never going to go over well. It's not a good look. And it's a very interesting time in kind of Hollywood and in TV. And, you know, one of the things that were interesting that Bob talked about was streaming services, including live TV offerings, have proliferated. And cable, a lot of people are cutting the court, I think. In 2023, there are 60.5 million U.S. households with cable TV packages, which is down 40% from a decade earlier.

And it seems like YouTube is where people are going. I think maybe because we're on YouTube. That must be it. That's a plug. If you're listening to this podcast, go check us out. See what Toby and not Toby look like. Thank you for that plug, Kyle. All right, before we jump into the next story, we're going to take a quick break.

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While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. All right, Kyle, we are back with our Friday segment, Stock of the Week, Dog of the Week, where we check in on one stock that you would bring home to your parents and one that your friends are kind of hinting at you should break up with. As always, not Toby and I are not financial advisors, so please do not take any of this as financial advice. Kyle, as my guess, you have the honors. What's our stock of the week?

Yes, definitely don't take this as financial advice. I got a D in AP accounting, so like do not listen to me. I didn't even take it, so that's fine. There you go. So my stock of the week is actually Nicola, which is the EV company specializing in hydrogen power. powered trucks. Now, you actually might remember Nicola from a few years back because they kind of did everything during COVID that a company could to get attention. They came out of nowhere and they went

public through a SPAC in 2020. Then their original CEO, Trevor Milton, was convicted on securities and wire fraud. And then they named their company Nikola as in Nikola Tesla, the famous scientist. Maybe you've heard of the last name Tesla, which was already taken by another car company. So they really did everything they could to get attention. With that being said, they're trying to turn the corner and become actually legit. They've hired Michael Lockseller as CEO who has worked in the auto industry for decades. He was the CFO of Volkswagen and Mitsubishi. And they just announced just the purchase of 50 Nikola hydrogen fuel cell electric vehicles for the transport of hydrogen gas.

So very cool technology. Shares are up 34% to a whopping $1.84. cents, which is a long way to go from their high around $70. But look, the EV Craze is heating up. They're looking to be a significant player, but it is going to be tougher, higher interest rates, car companies need a ton of capital. But they have a long way to go. We love a good comeback story, though.

So my stock of the week is Nicola. I want to own a Nicola and a Tesla. So good luck to them. I cannot believe that we were talking about Nicola in 2020. Because, yeah, we left him for dead. Yeah, he got... Comeback story. Remember, the fun of it.

The funniest part from the rise of Nicola was that Hindenberg, which is this activist shortseller who, like, publishes these deep reports, basically expose it for what they called being an intricate fraud. And they also accuse it of rolling its truck down a hill during a promotional video and like passing it off like that it was driving. Yeah. Which is hilarious because they were right. Like they, Nicola did admit to rolling a truck down a slight incline and saying, look at this thing go. But yeah, I think this is, so the deal that actually made the stock jump 30% is a kind of I scratch my back, you scratch your back thing. It's with a hydrogen fuel transport company. And so they both bought, agreed to deals to each other. The hydrogen transport company will

buy some of Nicola's trucks. And then Nicola will actually use the technology that the hydrogen transport company is coming up with. So it's kind of a good deal. And like this, I don't know if we're not financial advisors. But like, If Nicola is actually back, like hydrogen-powered vehicles is a huge, huge potential business, which is why we're still talking about Nicola to this day. We just can't quit it. Yeah, exactly. All right, Kyle.

Our dog of the week is progressive insurance. While Flo was out at the Barbie movie premiere, I'm literally not making that up. She was at the premiere. The insurance provider was getting hammered in the markets. The stock fell 13% yesterday after it reported some less than stellar earnings. basically it's a very weird time to be an insurance provider. Car insurance is getting more expensive, but well, that sounds like a good thing for an insurance provider.

That affects everyone from consumers to automakers to repair shops. So even though Progressive is charging more for insurance, fixing cars is also getting more expensive, which we talked about on yesterday's show. So sales are up, but the price to fix a car is also up, so it's pressuring profits. All that to say that Progressive has a 1% profit margin from insurance underwriting. last quarter, which means they essentially didn't make any money from riding insurance. It's a very weird time to be in the insurance game. Yeah, I think your point about flow at the beginning was huge.

She got too big, and she needs to get back and focus on the core competency of the business, because we know she's an all-star when she's locked in, so good luck to progressive. I do love that. She's a celebrity that goes to red carpets, though, or pink carpets in the case of Barbie. She's incredible. So, Toby, let's move on to a sports segment now. We've talked about pickleball on the show. We've talked about paddle on the show, which is still my favorite, by the way.

We've talked about golf on the show. There's actually a new sport in town in the U.S., and that is cricket. So this week, Major League cricket will play its first ever game in the U.S. And every last ticket to the highly anticipated opener has been sold out. And this is an iconic match. We have the Texas Super Kings on one side. We have the Los Angeles Knight Riders on the other side. Now, why is this a big deal?

Cricket has a long way to go in the U.S. only about 1% of U.S. consumers say they actually follow cricket, so there is huge potential for growth in the sport, but it is one of the most popular sports in the world. They have a huge following in India, South Africa, Australia, Southeast Asia, UK, UAE, all over. And the sport has been kind of steadily growing in popularity in the U.S. for years, particularly in areas with large South Asian populations, including Houston, New York, and Los Angeles, and the Dallas-Fort Worth area has more than 220,000 Indian Americans itself. And so this has kind of been slowly creeping up. It's still at 1%, but there's actually tons of investors pouring lots of money into this,

including Satya Nadella, the CEO of Microsoft. Are you pickleball or are you cricket, Toby? Okay, you know I'm team pickleball for life, but I'm also team cricket because, yeah, there's a ton of factors that are kind of pushing this, mostly the money that's behind it. The investors, including Sadia Indela, has their promise to pour $120 million into this new venture. So whenever there's money, there's usually a good chance of success. So I do think that that gives cricket its best chance to gain a foothold.

In addition to all these other factors that you've mentioned, I do just want to check in on the team names a little bit because they are freaking hilarious. You got the Washington Freedom, the Seattle Orcas, the MI New York, which is apparently a, like a cricket type of naming genre. And then the Los Angeles Nightriders, as you said. And then my favorite, the San Francisco Unicorns, which is just a hilarious. Classic Silicon Valley. Yeah. Like, I love that they're like, ah, you get it? You see it?

The unicorns in San Francisco. And I also did a little digging into cricket's history in the U.S. because I was wondering, like, why has this sport not caught a foot hold in the U.S.? When it has, obviously, other places in the world? And back in the late 19th century, it was vying with baseball for, like, kind of local supremacy. There was a pretty hefty cricket scene. And the Golden Age actually came from Philadelphia at Cricket Club, which was once seen as an equal to some of the best international teams.

And so, Philly, I wish they had a team because that's where, like, cricket's origin in the U.S. came from. And so I wish Philadelphia Cricket Club might be a little angry that they didn't snag a franchise. Maybe Ben Simmons can go back and start the Cricket Club in Philadelphia. I want to say one more thing. The oldest form of the game, which are called test matches, are take typically a maximum of five days. So I do think that is a big threat to gaining a foothold in America.

We have TikTok brains, folks. We cannot focus on anything more than 30 seconds. To get Americans to care about something for five days is damn near impossible. We had to speed up baseball, which took like four. hours. So that might be the kind of death blow to cricket in the U.S. Although the MLC, Major League Cricket, they are playing a new

version called, not a new version, a different version called T20, which is basically a much shorter, much more condensed version that's right around three hours. It only consists of two innings, one inning for each team, and those innings last around 70 minutes each.

So I do think that MLC recognized the fact that, yes, we have TikTok brains, we can't pay attention to anything. So they tried to reduce it to like a three hour more in line with the baseball games. I like it. They're smart. We're bullish on cricket. Yeah. Let's get it. All right, Kyle, for our final story on this Friday show, it's especially pertinent given how flipping hot it's been. Scientists have invented the whitest paint ever, and they think that it can help with our ever-warming climate. So the New York Times did a big interview with the professors who

created the paint this week. And get this. It is so white. It reflects a to 98% of the sun's rays away from Earth's surface and up through the atmosphere and into deep space. Here's the kicker. One of the researchers calculated that if the ultralite paint were to coat between 1% and 2% of the Earth's surface, which is slightly more than half the size of the Sahara, the planet would no longer absorb more heat than it was emitting, and the global temperature would stop rising. Kyle, should we just suit up to start painting stuff white? That's kind of my take.

I will say, I was very excited by this news because they finally discovered something more pale than my skin, which I'm very excited about. The lighting is doing a lot of favors. You're looking great today. But this actually tells me one thing and one thing only. The organization that can most positively impact climate change in the entire world is HGTV. What I need HGTV to do is to get hooked on climate change. I need this white paint in every episode of the Property Brothers. I need Chip and Joanna Gaines to have their own line of this white paint.

Like, they need to double down on this, and we will easily get to 1 to 2% of the world covered in this stuff by 2024. As you noted, the heat is crazy. We've issued a heat warning for 115 million people on Thursday in 15 states. So we definitely need to cool the climate down, and clearly we're exhausting all options. I will say the scientists that has worked on this said, this is definitely not a long-term solution for climate. This is something you could do short-term to mitigate the worst problems, but we actually are going to have to, you know, have a serious thing to solve climate change as well. Not just paint proof.

But it's very cool and I'm glad we're kind of exhausting all the options. This can cool rooms down like massively temperature wise and can get air can cut air conditioning needs by 40%. So it's very cool technology. Yeah. It's in the old technology too because actually if you've ever been to Greece, have you seen all the buildings are white? I don't know why this never sunk in for me, but like in Santerini Greece, for instance, all those beautiful white like stucco buildings you see that's because it's very hot and they're trying to reduce temperatures there i don't know if everybody knew this

and not just me but the idea of painting a structure white in order to cool it down is something that goes back since like the beginning of humanity basically who would have thought that paint is like the most advanced technology for in the world it's fantastic uh yeah i'm definitely going to go purchase a gallon right after the show but that is all the time we have for today always a pleasure to have you in the studio not to Toby. Neal's out, so this is my first time rolling the credit. Here we go. You can hold your applause. If you want to send us a note about our first Toby, not Toby show. Our email address is Morning Brew Daily at MorningBrew.com. Emily Milliron is our editor and producer. Samantha Velaus and Raymond Loo are our associate producers. Yuchena Waugo is our technical director. Billy Minino is on audio. Hair and makeup joined the San Francisco Unicorns for their inaugural season. Good for them. Devin Emery is our chief content officer and our show is a production of Morning Brew. Have a great weekend. All. Pay off your home, travel for life, drive a Ferrari.

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