TBPN - Full Interview: Eric Seufert on AI and Advertising

Episode Date: January 30, 2026

This is our full interview with Eric Seufert, analyst at Heracles Media, recorded live on TBPN.We discuss Apple’s AI and privacy tradeoffs, Meta’s AI-powered ad rebound, and how Google is monetizing Gemini at scale.TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to podcast platforms immediately after. Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella.TBPN.com is made possible by:Ramp - https://Ramp.comAppLovin - https://axon.aiCognition - https://cognition.aiConsole - https://console.comCrowdStrike - https://crowdstrike.comElevenLabs - https://elevenlabs.ioFigma - https://figma.comFin - https://fin.aiGemini - https://gemini.google.comGraphite - https://graphite.comGusto - https://gusto.com/tbpnLabelbox - https://labelbox.comLambda - https://lambda.aiLinear - https://linear.appMongoDB - https://mongodb.comNYSE - https://nyse.comOkta - https://www.okta.comPhantom - https://phantom.com/cashPlaid - https://plaid.comPublic - https://public.comRailway - https://railway.comRamp - https://ramp.comRestream - https://restream.ioSentry - https://sentry.ioShopify - https://shopify.comTurbopuffer - https://turbopuffer.comVanta - https://vanta.comVibe - https://vibe.coSentry - https://sentry.ioCisco - https://www.ciscoaisummit.com/ai-virtual-summit.htmlFollow TBPN:https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

Eric Super, how are you doing? Good to see you. How's going, guys? Thanks for having me. Thanks for hopping back on. We've been following the chat GPT ads, rollout the story. You've had a ton of great analysis. We've talked about it a little bit on the show, but we wanted to, you know, hear it from

you and dive way deeper. So maybe you could set the table for us on what the launch is looking like right now, what the product is looking like, what your expectations were. Just maybe begin at the beginning of this saga for the. ads in chat cheptie well the saga begins where chat gpt begins we all knew we were going to end up here we all knew ads were coming i mean i wrote a piece may 2025 i said obviously chat gpt will monetize with ads why did i feel so confident in that because they had just hired fiji simo she's kind of known for having led the uh the mobile news feed uh ads product to facebook

that's obviously been one of the the most successful ads uh businesses in in the history of mankind. And so it seemed natural that they would bring, given the domain expertise they had acquired, that they would bring ads to bear for chat. GPT, and they have. Now, the launch looks like the launch of Netflix ads, right? And if it remains that way, it's probably doesn't bode well for the, for the business. But I think they're going to evolve it over time. And what they've said now, or what's come out, the information has had a lot of good reporting on this. They're charging on a CPM basis, which is, you know, not standard for kind of direct response ads. That's more like a brand advertising formulation, but so it's $60 CPM, which is exactly what Netflix came out of the

gate charging. They're asking for commitments of less than a million dollars, so this is clearly like a testing phase. And they're going to offer very little in the way of measurement or targeting. So this feels like a very sort of primitive MVP, but, you know, the question is like how quickly can they evolve it into something that looks more like the Facebook ads platform? So what do you think, like what do you think, like, what do you think, us to this place where you get Fiji Simo. She's done this before. She has massive connections and skill set,

but it still takes eight months to roll something out that feels not as mature as something else. Is it a talent issue? Are there other regulatory concerns? Or do they need to worry about certain edge cases that people might not be aware of? Or is it specifically strategic to actually, is there some secret reason why they're taking this approach?

So here's my hypothesis, right? And so it's not just about, you know, Fiji Simo. She's the CEO of apps, but they acquired Statsig, which is, you know, staffed by a lot of ex-meta people. That was an experimentation platform. That's the exact kind of talent that you want to ingest into a company if you're going to roll out an ass platform, which needs to be aggressively experimented on. Here's what I think happened.

I think, you know, chat cheap, so OpenAI kind of evolved over time. It was a research lab. Then, you know, obviously they've had the drama around trying to pitch. of it into a for-profit corporation. My guess is the investors wanted them to bring in somebody that was a little bit more sensitive to, you know,

the commercial sensitivities, right? And so, you know, Fiji, CMO would be a very good fit for that profile. They brought her in, and my sense was there probably was a little bit of animosity internally towards the idea of this being an ads, an ads driven business, right?

Primarily an ads driven business, which I think it ultimately will be. Only, only like, two years ago, Sam said, I look at ads as like a failure state for. Yeah. And then he started pivoting the rhetoric and started saying, well, I like some of the Instagram ads.

When they're targeted well, they're actually delightful. And in the right context, they can be good. And he was coming around to the three of our worldview, which is that advertising is great. But he did have to message that externally. And then obviously had a whole bunch of work to do,

messaging it internally. And maybe that's why there was a little bit less energy internally to really push towards that. That makes a lot of sense. Well, he may have been the one that was message too. He may not have been the one controlling the message there. He may have been the one that was message too. We need ads because ads are inevitable.

It's not that ads are great. Ads are inevitable. If you want to reach what I call humanity scale, ads are inevitable. If you want to monetize that at the scale, it can be, at its total potential, you need ads. That's how you do it, right? And so he may have been the one that was convinced. And bringing someone external in who had been there done that may have been part of an investor strategy. But putting aside my hypothesis, look, I think this has the potential to be,

be an incredibly successful initiative. The question is how quickly can they pivot into something that looks like the meta model, right? So if you look at it right now, it's, you know, and I think, look, to everything you just said, mirrors what happened at Netflix. For years, Netflix said we would never do ads. Ads are offensive. They're in a front. They're in front to my sensibilities as a consumer. That's what the leadership said. And then one day they weren't, right? The exact same thing happened with Open AI. The question is, is it six months? All in. All in. All in. All in was anti-ad and. And I had. And I had. And that's right. we beg them. We beg them. We beg them. And now, and I think they made the decision independently,

of course, but they're running ads now. They always come around. I've been, I've been banging the drum for, for, since May of 2025. Yeah. But I think the question is, is it six months? Is it 12 months? Is it 18 months to get something that looks like meta ads, right? And that means, uh, targeting, right, based on behavioral profiles. Uh, that means measurement. That means allowing, that means explaining to advertisers the, the, the sort of impact of what that you've delivered on their behalf. And that means like a whole lot of tech that needs to be built out, right? And that means, you know, creative optimization, all these things. Just conversion optimized advertising is very different from what they're offering. And is it six months? Is it 12 months? Is 18 months to get there?

That's a big question. Right. But that'll determine the success. And if you say, look, this mirrors what Netflix did, well, that's not really a playbook that you want to draw inspiration from, right? I mean, they had to pivot. They had to do a hard pivot. I mean, the ads here has been alive for three years. They did $1.5 billion in 2025, right? So, you know, it's not a significant chunk of the revenue yet. think it could be a much larger chunk of the revenue, but Netflix has other concerns, right? They've got quality concerns. They've got, you know, consumer sentiment concerns where they can't just, like, fully embrace ads. I don't think chat GPT is limited in that way. Yeah, yeah. Take me back to

that initial launch of Netflix. You said similar CPM, $60 per thousand views, but what was the response like, like, were there any advertisers that were like, yes, this is great, I got my money's worth, it worked out? Was it just vague and unattributable? My perception is, like, great performance marketers are always excited to try new channels, especially a channel that's driving high intent traffic, right? So if you tell a performance marketer, hey, I've got a billion users and I'm going to let you advertise to them, they're going to be excited no matter what the general setup is because they just want to get in there with a test budget.

And like, you'll talk to marketers. And at a certain scale, they'll, they're like, yeah, let's try 100K here. Let's try 100K there. It's just like, you're just kind of throwing around money. and then you're going to double down on what really works. Right. For the initial rollout, this is how you launch an ads platform. Don't get me wrong.

This is how you launch an ads platform. That's what I'm talking about six months versus 12 months. This is how you do it. This is how you bootstrap the data. This is how you get people onboarded. This is how you get feedback. You have to launch it like this. There's no other way.

You can't launch a conversion optimized ads platform because by definition, you don't have the conversions data yet. Right? Now, that's another reason why I think they launched instant checkout. I think instant checkout is a stalking horse. I think that's a method of, of gathering conversion data that they can use to then target against with ads.

I think that was the whole purpose of that, right? I don't think that was seen as a long-term revenue opportunity. I think that was seen as a way to bootstrap the data. But this is how you launch in an ads platform. I mean, it's got to evolve the new conversion optimized dash platform, but you can't be that at the start. You can't intuit the settings. You can't intuit the tuning that you need to implement to make this work.

But the question is, how long does it take them to get there? Right. And so that, you know, that will just see. But my sense is they've got the DNA. the information report, they have 700X meta employees. Like essentially everyone at meta is working on ads, whether they're working as an account rep or up they're working as an ML engineer.

They're all sort of rowing in that direction. Yeah. What's been your reaction to instant checkout? There's been a lot of debate on the fee structure. Some people saying no retailer can afford this. We were pushing back on that. In a number of different cases, there's plenty of brands where you say,

like, would you spend like 4% of AOV to acquire a customer. I can also see the other side of it. A concern that I have is like, you know, you're running an ad on a meta platform to find a customer. The customer then goes to Chachapit, if that's where they're searching for products. And then the brand is effectively paying twice

to like actually find the customer, drive them, get them interested, and then at the bottom of the funnel, they're paying like another 4% fee. That feels like not great, but what's been your reaction? Yeah, so I was in the former camp. I said that that's not a workable fee. Let me come back to that, though, because you asked a question about what happened when Netflix offered ads.

They had too many advertisers sign up. They had too many. They were supply constraint, not demand constraint. They had to return money. I think that's exactly why Open AI is saying, no, look, we're setting an upper limit on this. A million is the max, right? Because they won't have enough people to advertise, too. This is just a way to test it out and to start scaling.

And the problem Netflix made it was they never act. So the problem that Netflix had from day one was they had the partnership with Microsoft with Xander. They were using external tech to run the ads, right? Zander is an ad platform. And so that's the problem. They couldn't implement, you know, custom placements. They couldn't do a lot of measurement stuff.

They couldn't do a lot of targeting stuff because they weren't operating the actual pipes, the actual plumbing that was delivering the ads. There's a lot of like data issues, just access to data issues. That's not what Open AI is doing here. Open AI is starting out by building their own tech. And Netflix, by the way, pivoted to that. But they pivoted to that very late. That's why I think the ad initiative at Netflix was not successful.

and hasn't really delivered that much revenue. But going back to the 4% fee, first of all, here's what I think is going to happen. I think you're going to drop that to zero or very low. It'll be tiny because I think the whole point of this is to just drive conversions. And the whole thing is like when you see performance in ChatGPT as a retailer who's just basically paying

for the conversions essentially with the fee, you're going to want to actually advertise against that. You're going to want to control it because you have no control if it's just surfaced based on what ChatGPT believes is relevant. And at some point, you're going to have too many retailers to place into a single placement they're going to have to mediate that by bids, right? So ultimately, I think this gives way

in the main, this gives way to advertising. But whether the 4% is sustainable or not, actually comes down to how you view what those purchases are, because it's not user acquisition. You're not acquiring a user. If you were, then you compare that to LTV. But since it's not user acquisition, you're not acquiring that user as a sort of like with a long-term relationship in mind. You're essentially trading a percentage of the checkout for the checkout, but that user doesn't interface with you, right? And in a lot of, in a lot of terms, there's not going to be passed through to the underlying vendor, you're saying? Like, I mean, look, you're the merchant of record, right? And you get their information because you have to fulfill the order. But

Chat, GPT, Open AI specifically says in the terms that you can't use their email address for like remarketing, right? And, you know, Amazon says this too. So I think is you're not capturing a customer, just getting, you're giving 4% for that one-off transaction, but you have no control over whether you reach that customer again, whether that customer is brought into your orbit. There's very, that's a very different proposition from advertising to someone and acquiring a customer. You acquire that customer, you get a whole stream of opportunities to remark it to them. If you're just, you know, trading 4% for the transaction, that's all you get. So it's not actually customer acquisition. If you think about 4% per transaction, now consider that if you thought about the, people talk about,

you know, when that number came out, they talked about, well, some people spend, you know, 50% 60% on Facebook ads. Why is that different? Because that's over the life cycle of that customer, not for the more of transaction. Or even just, or even one time they pay for the customer one time and then they come back, you know, 15 more times or they end up subscribing and they've actually, they actually own the customer relationship. Yeah. Exactly. Exactly. And, and, you know, think about it also this way. You know, that 4% that might be all the margin you're getting as an e-commerce, you know, as an e-commerce, you know, operator, right? And the thing is, that's not preventing you from advertising. That's not saying, okay, you could just save your entire advertising, but you're going to

still have to advertise everywhere. This is going to be a tiny sliver of your orders that you're not in control of. You can't control it. This could be lumpy. This could be up one month down the next, right? You can't control that. You can have to continue to advertise. Now, you have no idea, to your point, whether this is cannibalizing purchases that would have happened from the people that you advertise on other platforms, right? So this ends up just being a cost, a drag, probably on your advertising expenditure elsewhere. Can you explain attribution in the of Netflix's ad product because if I'm sitting on my couch watching a movie and I see an ad and I go to my phone, it feels really disconnected even in a pre-ATT world, it feels extremely hard. How do they do attribution?

How good can this get? And then with chat GPT, what's the upper bound on attribution for OpenAI, given that we are in a post-ATT world? Upper bound is basically what you see with Facebook because it's going to be direct response. It's going to be click-based, right? With Netflix, it's a little different. So with CTV, the way that companies do measurement and attribution in CTV is traditionally they set up what's called a clean room. So I set up this environment, it's a centralized environment. I push all the ad interaction data that I have.

So basically when I know I showed an ad to someone, I push all the data into this clean room. A lot of times it's, you know, it's IP address and device information. And then the advertiser pushes that information into the clean room and I match it up. That's attribution for CTV traditionally. Now, there's other ways to do it. There's other ways to do measurement that's just totally probabilistic. This is like medium mix modeling and stuff like that. But with attribution, when you want to use that term, traditionally it's done with a clean

room like that. So I'm just like linking the data sets together based on some key. A lot of times it's the IP address. But if you think about clicks, like clicks out, right? So that's like I'm viewing. I'm on second screen. I can look at time, like there's time elements. You look at temporal elements to do attribution.

But if I'm clicking out, I've got the click. Right. I've got the click. And so that carries a lot of information. I can still look at temporal aspects of that, but I can do a lot with the IP address too. And so that's, you know, if you look at a CAPE, that's what CAPE is. A CAPE is just a way to get this data on the back end.

So it bypasses the apps, you know, it bypasses the mobile device. It bypasses the browser. So there's no way for, you know, Apple to interfere with that with IATP or ATT. And so you're able to get, you know, it's still probabilistic in that way if you consider, you know, the decay of the validity of the IP address over time to induce probabilistic measurement. But that's traditionally how I've done and then a pixel as well.

But I mean, that's what OpenAI has at its disposal. It's got the CAPE and the pixel because it's going to be click-based. So there's a high degree of fidelity that'll come with the measurement there, the attribution. That's way higher than what you can do with CTV. What do you think the prospects are

for the number of companies that are trying to build LLM ad networks? I got pitched at least a few companies that were maybe a year or so go saying like, hey, LMs are going to be free. They're going to insert ads. We're going to build this kind of network to serve ads across a bunch of different apps. I was super bearish on those, specifically just because I thought that OpenAI would want to own

the full stack. Obviously, Google would own the full stack. And I think we're heading towards, you know, an oligopoly of sorts in consumer AI and where's the scale really going to come from. But any kind of takes on that front? Well, there'll be a long tail of agents that are going to want to monetize with advertising. So I think there might be space for an ad network to exist that services them. I don't know why that wouldn't be an existing ad network.

I don't know why that wouldn't be, you know, just sort of DSP. I don't know why that wouldn't be the trade desk to say. But, yeah, I mean, I think there's probably an opportunity to monetize some of those longtails of agents with ads. But if you think about like a chatche, of course they're going to build their own. I would have, you know, perplexity is apparently restarting its ads initiative. I think these companies, it would be silly to not build their own. You want to have that ad stack so you can make everything bespoke, right? And maximally perform it, right?

If we look at meta earnings, I mean, that's exactly what delivered that big beat. And I think what people forget about the prospects of this sort of like AI enablement with advertising in digital advertising is that these effects compound over time, especially when you're talking about direct response-based ad platforms, right? So like with meta, I've been banging this drum since Q1, 2025. these effects compound. Like people point to like, oh, 3.5% or 5% or whatever increasing click-through rates or increasing conversion rates from Androma or from Gem or from lattice.

Who cares? These are tiny. No, but first of all, that's every quarter they're noting these performance improvements, but also they compound over time. If I'm targeting 90% a 90-day recoup on my ad investment and, you know, 120% 110% row ads, what am I doing after 120 days? I'm reinvesting 110% in advertising on your channel. And so if you're giving me 3.5%

5% bumps every quarter, that's just going to end up getting reinvested. That's why we're seeing the growth re-accelerate. Growth is re-accelerating going into Q1, 2026. That's amazing. That's why Facebook was up 10% last night because growth is re-accelerating. They're going to see growth rates they haven't seen

since the post-ATT doldrums. That's incredible. That's incredible growth. And anybody who doubted the CAPEX going historically has to accept that reality now. And they did. They did yesterday. Yeah.

Yeah. Yeah, what people, like the criticism is like Zuck is being so balzy with the CapEx. Specifically on Gen. On Gen. On Gen. Specifically. And the criticism is like hasn't launched a hit Gen A.I.

product yet. Our take earlier on the show was like, look, this guy is serving more Gen A.I. content than almost anyone on Earth. Even if he doesn't have like a breakout net new product, his product has massive tailwinds because of all this. like he's in a perfect position to decide, yeah, I'm going to, I'm going to be, you know, one of the biggest spenders in this category and plan, you know, however many years out in advance. They're making more money on AI than anybody except for Google. Look, the idea that they're not,

they're not utilizing generative AI. Have you seen the ads on Facebook? Those are all generated. There was a revolt. There was an advertiser revolt. There was a scandal recently because Meadow was being too aggressive with the ads generation. The idea that they're not implementing generating AI is absurd. I mean, first of all, generating AI is not just what you see in the output. I mean, they talked about pairing LLMs with ad ranking. That's really fascinating, cutting-edge research in advertising. Using LLM to sort of give you feedback on the ad. Does this resonate? Is this something that someone would click on? Like, pretend you're this demographic. There's already research that shows that that has a really beneficial impact on advertising.

It's not just like what you see in your feed, but also the stuff that you see in your feed is generated. The idea that they're not utilizing generative AI in advertising, that's absurd. You can see it. Just go on Facebook right now. Yeah, that makes a lot of sense. I want to move on to other companies, but I want to have one more question about opening AI. Do you think that there's any sort of risk to like push back of like the creepy ads, like being

too well targeted? Facebook went through that with like the T-shirts that said your name on them basically and like your whole career path. Yeah. My assumption is that eventually like your own. only getting ads that were specifically generated for you. Like this idea of, like, historically, you'd have, you know, one ad that a brand would make, and they'd run it at the Super Bowl.

They're like, we're going to send this to all of America. And then eventually with, you know, on platforms like meta, I would assume that every ad is like a one-off generated, and it knows exactly how to position a product, what color, what environment to put it in. And it'll be insane that we used to have ads that we'd make one piece of creative and then run it to, like, 10 million people because it was, like, good. And it's like, no, this will all just niche, niche, niche, niche, niche down more and more. Yeah, what do you think?

Look, I mean, it's like the idea that everyone would see the same feed when they opened up Facebook is absurd now, right? I mean, like, look, if people truly hated creepy ads, Facebook user numbers wouldn't, you know, monotonically increase every quarter, right? And, you know, Europeans would be lining up to buy the subscription in Europe. in fact, only 1% of users in Europe has taken that offer. Is that an offer to eliminate? Is that like an ad-free, like meta offer? Is that what you're talking about? Because I know they're talking about rolling out the-

So they've got the less personalized ads option in Europe as a result of the DMA compliance. So they have three options. They have a full-on subscription, no ads. They've got the less-personalized ads and they get the normal experience. 1% of people opted into the subscription. Like people hate ads.

They just hate them less than every other monetization model, right? People love ads. If you look at, you know, demonstrated behavior, people love ads. People love access to free tools. People love access to sort of like endless, endless capacity, right? You start capacity constraining things or you start putting up paywalls, you know, obviously by definition those are going to get used less, right? Or, you know, most likely by definition.

And so the thing is like the idea that like chatchip is going to run into this problem and that's unique to chat pots, I just don't buy that. And first of all, maybe they will because maybe they'll design this in the wrong way. them the benefit of the doubt. I think they can do it in the right way. And one way to do it, it's to just not tether the ad at all to the chatbot context. You could just say, look, this is a display ad for what we know you're in market for based on Cappy, based on the pixel. And we're going to make sure it has nothing to do with what you're talking to the chatbot about. So you never have to even question whether the chatbot has your best interest in heart.

That's a very easy way to sidestep that problem. But I think they've got very skilled people there. They know exactly what that trap is and they're going to avoid it. Yeah. Do you think we're going to get ads in? in Siri in the next 24 months. No, just because of Apple's, because of the optics of Apple doing it. And I think Apple would probably love to do that. I think there's probably people inside Apple that are pitching that, but they won't because it's not in alignment with their optics around advertising.

But nonetheless, Apple is also increasing. We were talking, like, I think people will be normalized to ads in Apple products. They obviously are in the App Store today. German was talking about ads in Apple Maps coming in the near future. And then I think from that point, if people are starting to use Siri as a search engine, there will be ads eventually. It will just be to be able to serve ads like basically natively in the UI to iPhone consumers will just be too tempting. They got to do ads in the alarm clock app.

I want to wake up to a different ad every day. get out of bed and start buying. Get online. It's time to check out. Yeah. Morning tonight. You should be consuming. I don't know, maybe.

I think Maps podcast for sure. But the thing is like, I wrote this piece when Apple insurance ATT, I said Apple robbed the mob's bank. I said, look, this is just an opportunity for them to shift some of the budget that's going to meta into their own ads ecosystem. They did that because they expanded their Apple search ads. They just doubled the number of impressions per search. They've got two plays.

now in Apple's search ads, and they're also blurring the lines between ads and organic results there, right? So the idea that Apple hates ads, I think, is mistaken. I think what Apple needs to do is they need to sort of walk this tightrope of appearing to hate ads, while also benefiting from ads because they are such a, you know, an accretive, a sort of margin expansive way to make money, right? So Maps for sure, I think podcast is another prime piece of real estate for ads to be inserted into. I don't know about Siri. That feels like maybe a little bit too on the nose, but who knows? What about Gemini?

What was your reaction to Demis talking about ads in Gemini? That makes total sense, because they're already monetizing Gemini with ads. They're doing it with AI overviews in AI mode. They're monetizing ads and AI overviews at parity with search. Why would they rush to put ads in Gemini, the chatbot? Keep in mind, Gemini's two things. Gemini's the family of models and Gemini's the chat bot. Why monetize with ads in Gemini, the chat bot?

You never need to. You could just drive adoption of that. They're already monetizing Gemini, the family of models, through AI overviews and AI mode. AI overviews reaches 2 billion people a month. That's the biggest single LLM output ad surface that exists. They're already monetizing Gemini through there. Yeah. And is that product just what's the shape of that product? Is that just the exact same as just branded keyword search on Google? Are there anything different or any learnings from the ads in AI search overviews or AI powered search? So AI mode is essentially the chatbot. AI overviews is the results that basically takes up now the whole above the fold on Google search. But it's better. It's better than search.

You know why? Because the whole point with search is, I want this to be one shot. I want to type in my keyword and I want to get the best possible result in that first list of results. And if I don't, then I think your product is bad. And so Google is incentivized to make sure that there was one click. And that's it. So you get one chance to show ads. With AI overviews, the whole point is to then prompt further queries.

Right. So you get a bunch of opportunities to show ads. Right. So if that's monetizing at parity, it's probably also driving impressions up. I think that's a much better ad surface area than traditional search. Yeah. How should startups, business owners be thinking about TikTok under new ownership? TikTok is funny.

because they're going all in on commerce again, it seems. Like, they had a really big kind of Black Friday, you know, whatever event, you know, revenue pop, revenue spike. But, you know, they seemingly were walking back the TikTok commerce opportunity. Now they seem to be leaning into it. I'm not quite sure what to expect there. I think, you know, TikTok, I think they were in a little bit of the stasis for a while just because of the uncertainty around what was going to happen with the spinout. My sense is now that they have the certainty, they'll probably lean into where they feel, their best position, and that might be commerce now that META has completely abandoned it.

You know, but I think, like, I just don't think that that's the right approach. I don't think Western audiences really appreciate that as much as just the ads-driven model. And so, you know, the pure play ads-driven model. So we'll see if that ends up working for them. But, yeah, I mean, I think TikTok, you know, if meta can do what they did to snap with TikTok, they're going to be in a pretty difficult position. And they may have to just adapt in ways that meta won't. And that would be leaning into commerce more heavily.

Yeah, I always assumed maybe naively that they would lean out from commerce because it seemed like it was just a money pit. They were just lighting money on fire. And the new owners would say, like, okay, we just bought this. We have to pass back 50% of our revenue to bite dance. Like the whole economic model of the business seems like super upside down. Let's just serve ads and try to run the business lean and maintain the user base. But leaning into commerce just feels like, I don't know,

There's so many brands that I've heard about over the last 12 months that are scaling into the hundreds of millions of revenue. And it's almost all on TikTok shop. And it just feels like that was basically subsidized by ByteDance for a long time. And will the new owners want to subsidize these brands that are driving real volume? But ultimately, I don't know if they would be able to stand on their own two feet. Yeah, I mean, they did walk it back. I mean, they did two rounds of layoffs in the commerce. division. Yeah, I mean, the thing about, so one thing you have to remember about TikTok and the bite

dance and the whole like the parameters of this deal is that they're like, they're still licensing the algorithm, right? So like, I think that impacted the kind of the valuation and that may impact some of these other economics. But yeah, I mean, I just, I just feel like they may be, they may be sense that that's an area where meta retreated and so that's where they could potentially flourish. But it was odd because they did walk that back. And now they seem to be, you know, embracing it again. Yeah. What's your current thinking? about the Netflix Warner Brothers deal. It's, it feels like we're in a lull. It's moving forward, but would be interested to see. Yeah, I'm also interested just how do you think about, you know,

Paramounts prospects as an ad platform without all of that IP? Yeah. Yeah, well, so it's interesting. So like the thing is like the IP is so so important, right? So like one of the aspects that I found really interesting about the Netflix deal was that they essentially valued WB games at zero. Right, so WB games makes, remember they're big hit games, it makes their Game of Thrones game on mobile, and they've got Mortal Kombat games and a lot of different console games, Batman Arkham. And at one point, it was for sale in the multi-billions price range, right?

And so Netflix essentially a value to zero. Why? Because ultimately there'd have to be like an IP licensing agreement that allowed them to continue to monetize those games, right? So I think the same is probably true on the IP side, just generally with WB. My sense is like what this indicates to me is like, you know, and this was just, I mean, this was said explicitly in the earnings call.

It's like, you know, we're going to pay for content one way or the other and like we need this high end IP, right? And like, you know, if you look at, I mean, everyone saw the Joe Rogan clip with Matt Damon and Ben Affleck talking about like Netflix makes us restate the plot of the movie like every couple minutes in dialogue because if people don't hear it explicitly, they just lose interest because you guys are on their phones. You wonder, okay, well, is that a result of, like, people's attention spans, you know, declining? Or is that just because of stuff you're pumping out, isn't that interesting? And people are not really paying attention because they're kind of bored, right? And so I think maybe it's the latter. And so if you bring in a bunch of top-notch IP, maybe that keeps people more engaged. And then, hey, maybe that boosts the ad CPMs or, you know, and ultimately boosts subscription numbers.

But my sense is, like, they're going to pay for content one with the other. and like, you know, maybe just buying a lot of it in bulk at once is the best way to do that. What else are you tracking this week across earnings, you know, Microsoft and Tesla? I don't know if you follow those stories, but what else is interesting you this week? Well, we got Apple right now. Yeah, I mean, I think like, you know, you had a German on yesterday, and, you know, he's just always an amazing wealth of leaks. It's pretty impressive that he's able to get those. Apple's pretty buttoned down. But yeah, I mean, I think just the AI story there is kind of embarrassing.

And, you know, like I wrote this piece of while back, Apple's besieged on all fronts. And I was talking about like, look, if you look at AI, if you look at some of the threats to ATT and Europe, you know, there's a lot of issues that they face. I think, you know, one of the big questions for me when they announced to deal with Google to use Gemini for, you know, Apple intelligence, you know, which among other use cases include Siri, was how they would just manage the privacy aspects of that, because they were so adamant, right? They talked about the private cloud compute. They were so adamant that when we do this, we're doing it the Apple way, we're doing it the privacy-centric way. And then they do the privacy washing thing, which is just

then to partner with Google and allow them to do all the dirty work of sourcing the data, right, sourcing the data to train the model, right? Or of just monetizing with ads, like, and they just get a cut on the back end. And in this case, Apple's paying, but at some point, Google will be paying for penetration into iOS and the exposure. And I think, you know, that's just a question of, like, is that really the reason? Is that part of the reason why they never invested here? Because they couldn't really do it in the Apple privacy-centric way. And if you want someone, you know, if you understand that the dirty work of sourcing this data in ways that maybe are not completely above board or just monetizing with ads. I mean, Apple makes so much money from advertising.

They just don't do it directly, right? They do it through the partisan. with Google. Now they're going to be making money through AI interactions, but they're not actually the ones training the models and sourcing the data in ways that could be questioned. Right. So I think that maybe plays a part in it, and I think maybe when you go to a point where all this can be done on device, right, when the device is actually

powerful enough to service most of these use cases, maybe you have smaller models. You don't have like foundational models, but you have smaller models that can all run on device, and maybe Apple be more interested in that. But I mean, like, you have to look at the AI thing as either it was a massive whiff, which seems to be what Germans take was, or it was just a sense of like,

Look, this is actually going to be really difficult for us to reconcile with our brand imagery and the sort of messaging that we've relied on for years and years, like privacy that's Apple. Maybe we'll just outsource this in the same way that we outsource search, right, and advertising to Google until we're able to all process everything on device and ensure that we can maintain that messaging. Yeah. I mean, my take is like I agree with the WIF narrative, but also it does feel like there's the seeds of a rebuild between this new acquisition that they're doing.

They're starting to open the pocketbook a little bit. The hardware really is best in class. We saw that with the Mac Mini boom to some degree. People are excited about the silicon and Apple Silicon. And then just the partnership with Gemini, like they're going to have access to something frontier so they can start to vend it into different places. But it's just on Apple's timelines,

which have been slow lately. So, yeah. Yeah, but the iPhone Air was a flop, right? I mean, you know, we'll see what happens with the foldable, but like, I mean, I think they are facing, you know, obviously the replacement cycle is really long now. I think one thing that's like under-discussed is like I wrote this piece of while back, like years ago, where I said, you know, what are the implications of a billion iPhones? And this is well before there were a billion iPhones circulation. And my point was the implications are that a lot of those are in the developing world, right? They're secondhand, third-hand iPhone devices.

And that's kind of like there's this strange dilemma that Apple faces. is like the more powerful the devices get, obviously the longer you can go without replacing them, right? Because the demands of Spotify aren't changing. The demands of Facebook and Instagram aren't changing from like a hardware perspective, right? And so the question is like how central can you make AI to the core use case, which is a lot more compute intensive if you do everything on device, how central can you make that to instigate a need to replace the device more frequently?

Right? Not just like the power of device. at some point doesn't even matter. Like, okay, you tell me, like, the compute capacity of the next iPhone is 10X what I have now. Okay, well, are the demands of Spotify 10X? Because that's the only app I use for hours and hours every day. Right? And so that's kind of the question.

And so it's like if all of that functionality can sort of like percolate down to like the iPhone 7, right? And no one really sees a difference in sort of like the lifestyle between like the brand new iPhone and the iPhone and seven with their only using Instagram and Spotify, how do you actually convince people to upgrade on every cycle, right? Because keep in mind, like that as that sort of install-based that, like, you know, iOS install-based grows, most of that's going to be through like secondhand. Yeah, yeah. Yeah, German, it was interesting yesterday. He shared that a lot of Apple's advantage on the hardware side in AI is because of the self-driving push.

The car that ultimately failed allowed them to do the R&D that is now being. rolled out of devices. Apple had a huge quarter beat estimates on the revenue side by 4 billion with China specifically and up after hours. The other news that's kind of interesting, I'd be curious before you leave, Eric. Chat Chb-T is retiring 4-0 as of today. Yeah, that's interesting. Putting it to bed. I'm sure that'll make a lot of people mad.

But it's simpler process for them. Well, yeah, but they also launched Go, right? Which is the sort of like lower price point subscription tier. So my sense is like, you know, if you're trying to push people to adopt that, which I think they are, you maybe have to give it to some like the older models that the free tier relied on. Well, thank you so much for taking the time to join. This is a lot of blast. Yeah, I really enjoyed it.

Come back on soon. Yeah, we'll talk to see you. Have a good one. Goodbye.