Morning Brew Daily - The Global Economy is STRUGGLING & Duolingo Ditches Contractors for AI

Episode Date: January 10, 2024

Episode 232: Neal and Toby talk about the World Bank’s latest forecast indicating a slowing global economy for the third straight year. Then, politicians are the latest being ‘swatted’ — a scary trend that has its roots from Twitch. Plus, the battle between grocery chains and food suppliers has each side blaming the other as the problem. Finally, Duolingo cuts its workforce for AI, dog meat is banned in South Korea, and what ‘The Sopranos’ meant for TV 25 years later. Bada bing! Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, Brew Daily show. I'm Neil Fryman. And I'm Toby Howe. Today, the World Bank warns of a wasted decade for the global economy. Then more and more politicians have been the subject of swatting. We'll tell you what exactly that is in just a bit.

It's Wednesday, January 10th. Let's ride. Yesterday afternoon, in a long anticipated move, the Security and Exchange Commission tweeted that it had approved a spot Bitcoin ETF, a watershed moment for Wall Street's embrace of cryptocurrencies. Crypto prices spiked, euphoria rained on the internet, and even SBF let out a fist pump from his jail cell. There was just one problem.

The SEC hadn't approved the ETF. Its ex-account was hacked, and 20 minutes after the first tweet, it posted a follow-up saying it had not greenlighted the fund. So what initially was a celebratory moment turned into a major cybersecurity. incident involving the country's top financial services regulator. But what a fun 20 minutes it was. The memes were flying. Everyone was very, very excited. You can look at this in two ways, though, like maybe whoa, X slash Twitter has this huge cybersecurity problem. This is not the first major hack we've seen on this platform.

Or the SEC itself has bad security on its X account. And according to reports, it did not even have two-factor authentication on. Come on, SEC. Two-factor authentication. That's baseline. level stuff. People who are also pointing to a past tweet from the SEC saying, careful what you read on the internet, the best source of information about the SEC is the SEC. There's always a tweet, Neil. There's always a tweet. Before we jump into the show today, we have a quick word from our sponsor, Veem. So on this show, we've covered plenty of debilitating ransomware attacks this year, everything from hospitals to casinos, you name it. Vime helps you avoid getting in the headlines, though. They confront, contain, and conquer ransomware.

before it can disrupt your business. Or you might just get an unwanted appearance on the Morning Brew Daily show. Don't become a ransomware headline. Head to Veem.com today to discover more. That's VEEAM.com today. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get

the best of both worlds. Get the unreal college deal, everything you need to study and play with select Windows 11 PCs. eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last ends June 30th, terms at AKA.m.m.S. College PC. So the World Bank issued its projection for the global economy, and it's fair to say they do not expect these 20s to be roaring. The global economy is at risk of a wasted decade and the weakest stretch of growth in 30 years, the World Bank.

Bank warned in its semi-annual report. From recovering from a global pandemic to inflation to wars raging around the globe, things have been pretty bleak lately, and they're expected to take a big toll on the economy. Growth in world output will continue to slow in 2024 for the third straight year, declining to 2.4%, the report predicted. Compare that to the 2010s when growth averaged 3.1%. It hurts even more because this was intended to be a transformative decade for development. people were predicting that the 2020s could look a lot like the 1920s, with explosive growth and incomes, innovation, productivity, and more.

Now, with all the risks looming worldwide, the global economy is set to rack up a sorry record by the end of 2024, the World Bank said. Less like the jazz age, more like the blues age. I saw this news and was like, wait a second, I thought economic activity was turning around. I mean, prospects appear much brighter than a year ago, at least, when inflation was kind of rippling through the global. economy, and we were thinking maybe we're going to tip into a recession. But then you look under the hood, and globally growth is slowing. The main threats that the World Bank cited, as well as other reports we've read, is geopolitics. There's just so much instability right now between so many different countries. You look to the Middle East right now. That could send energy prices skyrocketing

at any moment. So under the hood, even though it does feel like we've kind of put this inflation bug a little behind us, knock on wood, there is some stuff that is still. making this not the roaring 20s. Yeah, one thing I want to point out is global trade. So global trade growth is now at its slowest point in the past 50 years. You're seeing this in the major trade routes just being disrupted. The Suez Canal is home to 30% of global container shipping. The Iran-backed Houthi rebels are now just firing at any ship that crosses there. So now you have these big shipping companies like Maersk having to go around the corn of Africa, which adds 13, to 15 days of transit time, and that could lead to a higher cost. I mean, you're already seeing

higher costs for shipping rates skyrocket since these attacks have started. Meanwhile, in the other sort of trade nexus in the Panama Canal, there's been plenty of delays, too, because drought is slowing the flow of goods through that channel. So those are two kind of flashpoints, bottlenecks that I think people are pointing to and saying, this is how geopolitics, this is how climate change and bigger factors are affecting global trade. Right. And it's mostly poorer countries that the World Bank thinks is going to struggle. One, because sky high borrowing costs because of this high rate environment. But then, yes, global trade constrains their economic progress more so than high-income countries.

And the World Bank predicts that by the end of 2024, one in four people in low-income countries will still be poorer than they were pre-pandemic. And again, you want humanity to progress. You want the global economy to lift people up. And seeing that stat that one in four people will still be poorer than they were pre-pandemic is not what you want to see at all. No. And then the final point I want to make is China. China is the second largest economy.

When its economy does well, it's not just good for China. It's good for everyone in its trade orbit, the Far East region, even the United States, because we trade so much with China. But China's growth is expected to slow to 4.5 percent this year. year from 5.2% in 2023. We've talked about the young people in China being, kind of feeling a little disillusioned and not spending as much. The property sector there is just a complete debacle. So I think slowing growth in China will also play a big factor in hindering global growth. But we've got to say, the U.S. is kind of putting the team on its back. Yeah. If the U.S. can do better than expected, then it could lead to another boon time,

could lift up the global economy. But that's an if, according to the World Bank. As we are well aware, 2024 is also an election year, and already a disturbing trend has emerged targeting politicians. More and more elected officials are getting swatted. No, that doesn't mean getting lightly slapped. Swatted is a prank born from the internet that involves calling the police to report a fake threat is going down at a target's home in the hopes of triggering an aggressive response from, usually a SWAT team, hence getting swatted.

On Christmas last year, both special counsel, Jack Smith, and Representative Marjorie Taylor Greened were the target of SWAT attacks. Thankfully, both those were sniffed out by the police before a big response. But a third Christmas swatting in New York was successful, and police actually did show up to the House of Representative Brandon Williams. This used to be a prank that targeted famous Twitch streamers usually, where bad actors tried to get them swatted on camera in clips that would often go viral. but to see it leak into the realm of politics is concerning, to say the least, especially in a year where there's an element of fragility to our democratic processes right now. Right. We've talked about 2024 being the biggest election year in history and new technologies like AI could disrupt democracy all around the world. And we're seeing this play out in a big way in the United States here for various elected officials. It does seem to have been targeted a lot of people associated with Trump and Trump prosecution, but also election officials at.

various places around the country. It must be extremely traumatic and it can be life-endangering. You come home to your house and you see this massive police presence. Luckily, you might not be home, but if you are home, it has led to deaths in the past to some of these Twitch streamers around

call-of-duty disputes. Yeah, it is a bad corner of the internet that is unfortunately kind of growing into a much bigger thing. This is a way to exert pressure on judges, on politicians, in a very obviously undemocratic way.

One of the scariest instance of swatting was actually targeting a judge. A caller pretended to have broken into the home of Maine Secretary of State, Sheena Bellows, a day after she disqualified Trump from being on the state's primary ballot. So that's where you see kind of a direct correlation between a cause and effect of something a judge did

in how it ends up kind of reverberating in a very unsafe and unsound way. Right. Let's go back to the beginning of swatting. So this goes back to 2008, at least that's the first documentation of when the FBI first posted about it. It called it a new phenomenon and swatting targeted celebrities like Tom Cruise, Justin Bieber, Ashton Coucher, and Miley Cyrus. And it still has stayed, I think, a lot in that celebrity realm. But then it morphed to become this big thing on YouTube and targeting YouTube and Twitch streamers.

And you said that's because they want to see everyone's live streaming them playing games and stuff. and these people who are conducting these phony calls want to get the police interaction with this streamer on camera. And that seems to be a very potent force. And then it did seem to spike back in 2022. The FBI issued a renewed call saying that four Twitch streamers in the span of a week had been subject to swat it. Right. And I could certainly see this spilling over into the business world eventually. I mean, business leaders have just as much influence and are just as much public figures as politicians are.

they're also getting pulled increasingly into these ideological battles with really strong opinions on the other side. So, I mean, like Bill Ackman, Mark Cuban, these people may be next in line. I could certainly see it entering the business realm as well. The FBI did say that increasingly, it has seen swatters targeting public places such as airports, schools, and businesses. So kind of an ominous start for this big election year, that's for sure. Okay, a food fight is escalating between Pepsi and the French supermarket giant Kerafor. It started last week when CARIFOR took the drastic step of saying it would no longer sell Pepsi products because the prices were too high for consumers. And by Pepsi products, I don't just mean the soda, but everything it sells, Laze potato chips, Quaker cereals, Doritos, Cheetos, and more. Kerriffor isn't doing this quietly.

Instead, taking a page from the Game of Thrones shame playbook and putting up signs where Pepsi products are that read, we are no longer selling this brand due to an unacceptable price increase. But on Monday, Pepsi told the Wall Street Journal that Carrafort didn't dump them. They dumped the supermarket because the two sides couldn't reach an agreement on a new contract. So we've gotten to the point that consumers at thousands of Carrefour stores in France, Belgium, Italy, and Spain won't be able to buy Pepsi products when inventory runs out. And the backdrop here is that food inflation has remained stubbornly high in France, even as broader inflation has come down. And the government is extremely sensitive to price hikes at the grocery store. It's taken several measures over the past years to force manufacturers and retailers to bring down prices,

and those tensions have spilled over into a high-stakes blame game between two huge corporations. Yeah, the blame game is, you mentioned the word petty, and it is petty. Leaving notes on the shelves is the definition of pettiness. And there was this line in a Wall Street Journal piece about it, and it's equally petty, even though PepsiCo didn't write it. CAREFOR stores in those four countries represent around 0.25% of PepsiCo's global revenue. So it was funny to see them back to back as CARFOR's leaving notes and saying this, while Pepsi, it's not affecting the bottom line. If you zoom out, though, this tension is something that could eventually affect Pepsi because they kind of got away with these massive, massive price hikes all throughout the last two years,

really. Consumers just kind of accepted them because there's not much else you can do. but as soon as these governments started putting pressure on suppliers to come to agreements with retailers to lower prices, then we're seeing someone finally pushing back against these near constant price increases. And so the way France sets grocery store prices might be kind of mind-blowing to people here in the United States. It's very different than what we think happens here, which is that Pepsi hikes their prices, and then the grocery store, Big Wye, shout out Western Mass.

or stop and shop or wherever, Wegmans, they hike their prices almost immediately, right? It's this, like, oil, gas price dance where prices are going up and down based on whatever prices of the manufacturing sets. But in France, there are these year-long contracts where manufacturers produce suppliers and the grocery stores kind of come together to work out an agreement, and they set a price for the entire product line for the entire year. It's like you're locking them into a... You're locking them in.

There's, like, such heavy-handed regulation in French supermarkets, which is kind of an interesting tidbit. And that's why I think this price war has kind of come to the fore, whereas in the United States, something like this could maybe never happen because prices fluctuate much more frequently. Analysts do think eventually they will reach an agreement because you can't just not sell PepsiCo products. I mean, again, you mentioned some of the products that are under that label. It's not just Diet Pepsi that you see in the checkout line. It is a whole range of products. So eventually just from consumers need to have these products on the shelves for them, and these supermarkets do eventually want them back as well.

So I think they'll figure it out, but if not, then a precedent has certainly been set. And this is not the first time that Caraphor has done the shame game against producers. We've talked about shrinkflation where the producer will basically put a smaller amount of product in the packaging and charge the same price. and when this was happening over the past few years, Carrefour also put these bright orange stickers on all the products that it considered were doing shrinkflation and said, this is shrinkflation, just so you know, we are working with these suppliers to bring down prices. But we want you to know that, you know, this is shrinkflation. This is not our problem.

Name and shame, yeah. Because most of all, consumers do blame the supermarket rather than the actual supplier for price increases. They want to protect their good name. All right, before we jump into the next part of our show, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill 3-burner gas grill. Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard.

Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to home depot.com slash price match for detail. Today we helped a Latte for Sam Coffee shop Get an insurance quote

Simply and easily And made sure A floral delivery van Was able to make someone's day We're the Hartford With decades of experience Ensuring millions of unique small businesses When it comes to your small business insurance

One size Absolutely does not fit all Get a quote or find an agent today At thehartford.com slash small business Duolingo, home to the internet's favorite unhinged bird mascot and language training platform, is the latest company to cite AI as a reason for scaling back their workforce. It's letting go of 10% of its contractors opting to use AI to do their work instead,

and people are more than a little worried. It's one of the clearest examples of AI literally replacing a human's job one for one, which has always been in the back of people's minds as generative AI has proliferated. Plus, the fear in this specific context is that AI won't understand the cultural nuances or idiomatic expressions. A native speaking human expert might. Duolingo has been using AI in machine learning for years now. Its AI model birdbrain was introduced all the way back in 2020 and helped set the difficulty of exercises based on users' performances. But up until 2023, anything AI generated was reviewed, edited, and translated by a human being.

is this the first cracks of AI taking our jobs like many have feared, or is this all a little overblown? Well, the duolingo execs want you to think that it is overblown, and they completely, I think they do read the room, they understand how sensitive this issue is. Execs came out with interviews right after this news broke saying it wasn't a straight one-to-one replacement. This is a complete corporate word style. This is pretty impressive. The head of communications said there is some merit to the idea that AI's contribute to the reduction of our contract workforce, but it would be an oversimplification to say, this is the sole reason. So, good for that head of comms there.

They were definitely on a comms war because, yeah, they tried to frame it more as, like, they were just not bringing, they were not resigning their contractors. Duolingo also does have a very large contractor workforce larger than, and probably an $8 billion company or $9 billion company would expect. So they really tried to get out in front of the PR train. but Reddit posts were going viral saying that the only thing the remaining contractors were doing were just reviewing whatever, and this is a quote, garbage AI spits out. So there's definitely some tension on they think that there's a worst product now being put out from Duolingo because AI for all its positives still is prone to hallucinations. And it's definitely not as artful in the translation as a human being is. Yeah, I think we're also seeing what kinds of companies are going to be embracing AI quicker than others.

Duolingo needs to create a ton of content across a variety for its millions of customers. And it also wants to have these customers to have these personalized translation journeys. And the CEO has been on record saying, look, we want to create as low-cost education as possible. With generative AI, we can literally press a button and create millions and millions of words and all of these personalized training plans. So I think you're saying a lot of disruption in education. I mean, Chegg, the online homework company, was one of the first companies to also said it was laying off a small portion of its workforce in place of AI.

So I think you're seeing AI coming to tutoring, content creation, customized tutoring plans before you're seeing it come to even other industries. Yeah. Let's shift gears a little bit here. South Korean lawmakers unanimously outlawed the breeding slaughter in sale of dogs for human consumption yesterday, putting an end to decades-long tradition that had fallen out of style in modern times. The practice of eating dog meat in Korea traces its origins back to the Korean War when meat was scarce. It's most popular used in a dish that translates to, quote, soup good for your body, but younger generations aren't so enamored with the concept of eating dog.

The New York Times writes that about 93% of South Green adults say they have no intention of consuming dog meat in the future. And 82% of it, say they supported a ban, according to a survey conducted by an animal welfare organization. Despite the unpopularity, though, there is still a robust industry in Korea that will now need to pivot. In 2022, over half a million dogs were being raised for human consumption at 1,150 farms, sold at 1,600 restaurants. To help ease the transition, there's a three-year grace period before the law takes effects. So it will be interesting to see how local governments align financial incentives with people who rely on this industry for their livelihoods. This does seem like a complete

generational divide where you have older people saying this is a part of our way of life. Like, this is part of our cuisine. I eat this all the time. And then you have younger people who say, this is a different South Korea. We are an economic and cultural powerhouse. I think one factor here is we have a lot of pets now and we view dogs as part of our family. I mean, in 2022, there were one in four Korean households owned a pet dog. And that was just 16. in 2010. So I think that's been a sea change. There's also been a push by the first family, the prime minister and his wife. They own six pets. And the first lady has been a huge advocate of this of this law. And so she's like put her her force, her political force behind it. And that's,

I think, also been a big, a big reason why this law has got, has been gotten past because they've tried for years and the industry has pushed back on it successfully. Yeah, successfully. In Korea, farmers are still angry about this. Leader of the Farmers Association in the country said, quote, this is just a clear state violence as they're infringing upon freedom of occupational option. We can't just sit idly by. So they are treating it as infringing on freedoms to kind of make your livelihood in a way that

the government shouldn't determine what you can do in order to make money. Although in this case, that's literally exactly what they're doing. They're passing a law. So as in November, they threatened to release. all their dogs on their farms if this was going to pass. So there's been a lot of tension between kind of special interest within the industry and the actual laws themselves that are getting passed. Quick correction on the fly. I said Prime Minister, I meant President.

There we go. Correction on the fly. Correction on the fly. Okay. Let's go to our final story. 25 years ago today, Sunday nights were changed forever when everyone's favorite New Jersey mob family first appeared on HBO with a pilot episode of The Sopranos. You hear it a lot, but it is undeniable that this show changed the medium of television. There was an era before the Sopranos, and then there was an era after the Sopranos.

Before Tony, Christopher, Carmela, and the North Caldwell crew came into existence. TV was mostly filled with characters who were lovable, but one-dimensional. You didn't need to know what happened in the previous episode to understand what was going on in the one you were currently watching. Then David Chase created the Sopranos in 1999 and brought cinema sensibility. to the small screen. Narratives extended in multi-episode arcs. Characters were emotionally tortured and morally flawed. There was plenty of violence and nudity. Perhaps most importantly, the Sopranos popularized the concept of the anti-hero, a protagonist you hate to love. Tony Soprano paved the way for Don Draper, Omar Little, and Walter White, but also for complicated

characters in female-focused shows like Orange is the New Black, girls, and insecure. I think David Chase described his innovation best. On network, everybody says, exactly what they were thinking. I wanted my characters to be telling lies. So we were talking before the show on whether to include this segment talking about the Subranos. You thought it's interesting because it feels like the end of an era when it comes to prestige TV. I thought it was interesting because they actually chopped up every Sopranos episode and put it onto TikTok in 25 second increments to honor the 25 years of Sopranos. I think your angle is more interesting here because I tried watching the episodes last night.

And it was all, I mean, to steal a phrase, Gabagool, you couldn't follow the plot at all. Too many hairy characters, too many people getting punched thrown out the doors. I have never seen Sopranos. So I really tried to use their TikTok feed to get a sense of what was going on narratively. And it just wasn't a great medium for it.

We've seen a lot of TV shows getting a second life because they've been going on TikTok. They chop them up. I mean, we've seen this happen to suits and it became one of the most popular shows on Netflix, largely. thanks to help from TikTok. But I think what makes Sopranos different and the type of show Sopranos kind of presaged,

if that is a word, I think it is. Prestige? No, presage. Pressage, it is a word. Maybe. Is that it is a slow burn, right? Like, you have to watch it. It takes a while for it to sink in.

You get to know the characters. I think that's what makes Sopranos so great because you know the characters. You kind of, when they don't have to say anything super profound or interesting, but you just love to hear them talk. And I think that's what is so amazing about the Sopranos. It is just as, it's filled with amazing characters. It is not just a mob story. It's a story about America and the American Dream and the American family. So I think that's what really has kept it relevant 25 years later. I'm convinced. You know what this made me sad for, though, was HBO and what HBO has become because the Sopranos gave HBO this reputation for the home of Prestige TV.

Now it's max. In a year of bad rebands where we saw Twitter become We saw HBO kind of rolled up into Max. I just think Max stands for nothing now. HBO used to stand for everything, and it just made me nostalgic for the better times. Right. So you mentioned at the top, but it does seem to be that this era of prestige TV,

which people say is the era of high quality, intelligent programming, the Mad Men's, the Breaking Bads, the wires of the world. Marvelous Mrs. Maisel also thrown in succession. It's kind of ending as a lot of studios and streaming companies kind of pull back the content gusher that they had been in this era of trying to go for profitability rather than acquiring new subscribers.

And if they need to get new subscribers, which they do now, it's going to be very ruthless when it comes to pulling shows and canceling them early. They might not take as many risks. They might focus more on what algorithmically gets people to join their streaming platforms, which may be kind of lower quality content. So we'll see what happens with TV, but it is. clear that the Sopranos is iconic and has really ushered in, you know, golden age TV. And Toby, you should definitely watch it.

I know. I'm going to after this. All right, we have to wrap it up there. This week, we introduced a new MBD tradition to close at the show called swing thought, where Toby leaves you with an idea or concept of focus on throughout the day to be your best self. Toby, what is our swing thought for today? Our swing thought of the day is, quote, a wrong decision is better than indecision from Tony Soprano himself. The amount of time you waste and stress you endure to avoid making a wrong decision is the exact same as the time you waste and the stress you endure on making a wrong decision.

So just do something and figure out the rest later. Tony Soprano, so, so wise. Okay, let us know what you thought about the show at our email, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our editor and producer. Samantha Velaes and Raymond Liu are associate producers. Yuchinawa Ogu is our technical director. Billy Minino is on audio, hair and makeup is sleeping with the fishes.

Devon Emory is our chief content officer and our show is a production of Morning Brew. Great show you that, Neil. Let's run it back tomorrow. All. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel

is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th. Don't pass go and own it all. Only at Yamava, celebrating its 40th anniversary. You in? Details at yamava.com must be 21-20.

Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion.