The Vergecast - Samsung's fake moon photos and Silicon Valley Bank's collapse

Episode Date: March 15, 2023

The Verge's Nilay Patel, David Pierce, and Alex Cranz discuss Samsung faking photos of the moon on its phones, what happened with Silicon Valley Bank, and hottest topic of the season: ChatGPT and AI. This episode was recorded live at SXSW 2023. Further reading: Samsung caught faking zoom photos of the Moon Silicon Valley Bank has failed The tech industry moved fast and broke its most prestigious bank Bing, Bard, and ChatGPT: AI chatbots are rewriting the internet Email us at [e-mail] or call us on the Vergecast Hotline at 866-VERGE11. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to the Vergecast, the flagship podcast of Overdone Brand Activations. I'm your friend David Pierce, and I am at South by Southwest in Austin, Texas. Just to give you a mental image of exactly what that means, I am at the corner of 4th Street and Congress Avenue, one of the main parts of downtown Austin, and I'm at a Porsche booth. It's this big, beautiful blue booth with a bunch of Porsches inside. One of them has an inflatable duck sticking out for reasons, I don't totally understand. And then, just for fun, out front, there is a roughly, 25-foot-tall Optimus Prime statue that is just unbelievably lifelike.

Right next to an unbelievably lifelike and probably 15 feet tall, King Kong statue. It's the Porsche booth. I don't understand it either. But I do know that I just was forced to move by somebody who wanted to take pictures. So I guess it's working. Anyway, we have an awesome show for you today. It's actually an episode we recorded live at South by Southwest at Slack's HQ in Austin.

It's a fun show. You give us a live audience. Things are going to get kind of weird. We talk a lot about the moon and your photos of the moon, and whether if you use a Samsung phone to take photos of the moon, you're actually taking photos of the moon or photos at all. It gets really heady, really fast. We also talk about Silicon Valley Bank

and what it means that the source of money for so much of the tech industry feels like it has just disappeared out from under people. We also talk about AI, the other thing everybody's talking about at South by Southwest. Chat GPT and Bard and Bing and prompt engineers and what all of this is going to mean for the tech industry going forward. And then we take a couple of questions. It's all extremely delightful. It's a super fun episode.

I'm very excited for you to hear it, but first, I need coffee. South by Southwest is not conducive to getting a lot of sleep. We'll be right back. This is the Vergecast. See in a second. Support for the show comes from Retool. Too many companies run critical operations on duct taped spreadsheets, Slack workflows, and whatever else they could cobble together.

Not because they want to, but because building internal tools means, weeks of waiting on someone else's backlog. That's where Retool comes in. Build custom internal tools just by describing what you need. Prompt something like, build me a revenue dashboard on our Salesforce data. And Retool actually builds it on your company's data

in your cloud with enterprise security built in. Go to retool.com slash Verchcast. We all need to retool how we build software. All right. I'm back in the studio. I have coffee. Everything's going to be okay. So let's get into the episode, shall we?

So picture this. It's mid-afternoon. It's like 75 degrees, and everybody in Austin is slowly boiling alive in the sun. We're recording live at Slack HQ, which is on a street corner in downtown Austin. Everybody just had lunch, and Nilai, Alex, and I just sat down on a small stage near the back of the festivities. And now it's Vergecast time. Hello, and welcome to Vergecast, the flagship podcast of Enterprise Software. It's going to be a rip-roaring ride through your SaaS business model, which is definitely not at danger because of Silicon Valley Bank.

It's great. We're very excited to you're here. I'm your friend, Eli. Alex Kranz is here. I'm your friend who really loves the moon today. We're going to get into it. David Pierce is here. Hi.

I've been awake since 1 a.m. I'm not 100% sure where I am right now. He was QA.m. earlier. It's good. David is back. Give a hand for David. He's back after having a child.

He was on break. This is your first trip. with as new dad. Yep. My wife is sending me like once an hour on the hour like adorable pictures of my child

just to remind me of what I'm missing. It's really fun and great. The child is never replaced by AI. All right. We got to start with, I think, the most of urge cast thing

that has ever happened in the history of our show, which is like 15 years and it's the moon. So I just want to say real quick, we had a whole plan for this show and then like 12 minutes ago, Nelai ends up on Reddit.

And he's like, did you see the thing about the moon? We have to talk about it. If you are a listener of our show, you know that a core question that we've been asking for several years now is what is a photo? I don't know the answer to that question. Neither does anyone

else, it appears. Samsung has an answer, which is, I don't know, we're just going to copy and paste the moon into the photos. We can take a picture of the moon and replace the moon with AI. Yeah. The most, what is a photo? So when people think they're taking a photo, most people are

still trapped in the 1920s paradigm of pushing a button, the shutter goes up, the light hits the film, then you have to drive to Walgreens and your parents, 92, Honda Civic, hand the film to someone. They do some magic with chemicals, and then you get photos back. Very specific. That's what happens inside your office. Yes, that's correct. That is no longer what has been happening on these phones for years now, right? There's all this computational photography.

We're merging frames. The phone is already taking pictures well before you push the button. And so you just get to this place where you have no idea what a photo is. Like it's impossible to define a photo as a representation of reality or even light that is happening in the moment. And then there's Samsung. Yeah, okay. Let me explain what's going on. I'm upset about the moon.

You're just in your feelings right now. So, okay, so Samsung, it's a large company. They make phones. Lots of people own them. The S23 Ultra is like normally with the ultraphone, Samsung does like between one and like insane things. Yeah. And this time,

what they did with the S23 Ultra was say, you can take photos of the moon. So it has 100X Zoom specifically designed. There's like a moon mode on the S23 Ultra because that's what people buy phones

to do now is take pictures of the moon. It looks cool. Like you take a picture of the moon very far away and it's like, oh, there's like it renders the moon fairly successfully. Sharply. And very sharply.

And there have been companies, namely Huawei, that have tried to do things like this in the past. And what it turned out they were doing is essentially like, understanding that you were taking the picture of a moon and then like downloading the moon onto your phone and being like, look, here's the picture you took. And Samsung, it turns out, is doing roughly the same thing. So there was this Redditor. I think it was, I break phones is their name on Reddit. I'm sorry to the Reddor if I'm getting that wrong. So basically what they did to test this was they downloaded a high-res picture of the moon and then down-resed it to I think 170 by 170. So they have this teeny tiny little very sharp picture of the moon. And then they applied a blur to it on purpose to make the photo.

photo blurry. And then they went across the room and with the Samsung phone took a picture of this blurry picture, like deliberately blurry picture of the moon that they had downloaded and zoomed in. And zoomed way in at 100x, a picture of a blurry moon. And Samsung's AI processes it for a while as it does and pops up this like beautifully sharp, highly rendered picture of the moon. And this person is like, I didn't even take a picture of the moon. I took a picture of a blurry circle that you decided is the moon and now here we are. So this is now set off a whole thing where you're when... What is the photo? Yeah, yeah. And there were the first comment, there was a, somebody covered this and the very first comment was you're better off just downloading from

Google images than taking photos yourself. And it's kind of like, yeah, you might be. Like, there's a lot of good pictures of the moon out there. And the theory is basically, Samsung was able to basically train an AI on lots of pictures of the moon, figure out what you're shooting, and just download the moon. on top of the blurry photo that it pretends is a sharp photo. Do you think if we took a picture of somebody with like face paint to make their face look like the moon? It would just give us a picture of the moon. So there were people who tried to recreate this with things like ping pong balls and stuff

like that and didn't get it to work. So there is some line at which the S-23 Ultra goes moon and makes it moon. And no one has figured out exactly where it tips there. But it is, Samsung has not acknowledged one way or the other where this is happening. But like the evidence is super damning. that Samsung is basically saying, you would like to take a picture of the moon. We can't do that good, so we're going to download a good one,

and you're just going to have it now. Okay, so here's a number of questions I have for you. I'm losing my mind. That's all I know, so I have nothing else for you. We can all agree that the moon is real. Can we? It's Texas. It's southwest.

Can we agree? Can we agree? I don't know. Yeah, no, that's good. We'll start there. Like facts, you know, Texas. Assuming the moon is real. Assuming the moon is real.

Did we land on it? No proof. But moon real. Baseline assumption. There is. is a moon in the sky. Sure. I don't,

you know, fine. The moon is tidily locked the earth. Right? So when you look at the moon, you're almost always looking at the same thing. Yeah. Okay.

So if you think a photo is I push the shutter and it collects light and then shows me a representation of reality and you point any camera at the moon, the moon is unchanged. So all the photos are similar. Well, no, it's not. It's just like, well,

you definitely took a photo of the moon. Yeah. It's just your camera's better or worse. And the camera's like, I know what you're trying to do. I got you. And it puts the moon there. Did it lie? It's doing you as solid.

I think it's like, you could argue this is like a successful feature that it was. Yeah, I was like, I've taken mini blurry photos of the moon. I would like this flex. I would like to just show my friends. Look at this sick photo I took.

But that's, but I lie. I just want to be clear. No, because I held it up. I held it up. And then I went, boop.

And I took the photo. So it counts. But you held it up and you might as well have been like serious. If I hit the button, it counts, right? That's what Samsung is saying, and I agree with them. This is the world historical, what is a photo problem? Well, you can just walk the streets asking people if the moon is real now. First of all, that's incredible.

And then you can be like, how do you take a picture of the moon? What is a picture of the moon? What is a photo? What is the moon? And you just keep going down the line. It lands at, well, I can just look at any picture of the moon. And that is a representation of my reality. whenever I am looking at the moon.

Yes. Because as far as I understand it, the moon remains unchanged. We found common ground. There's a transformer on the backside of the moon, but we haven't photographed that yet. Don't look back there. I don't know how Samsung is going to address this issue. Because if they wanted to, they could be like, we need to sit down and talk about the nature of reality

before we address whether or not we are gluing the moon under your photos. What if they just start downgrading all the photos? You just open it one day and all your photos are, They're like, oh, this is what you said you want? Here. You want the real thing? Yeah, garbage moon filter applied. It's like the opposite of that TikTok filter that makes you pretty.

It's like you're just a shit moon now. This is like, to me, fundamentally, all of the cell phone cameras, let's ask this audience to this question. I think my iPhone is starting to take like not bad photos. They're objectively very good. They just look fake, right? All the shadows are pulled up way too high. The brights are too bright.

There's like all this HDR going on. no one's faces has any contrast in them in any modern cell phone photo so everyone looks like they have that TikTok filter on all the time and you take a photo with a normal camera that just opens the shutter and does it saying you're like oh this is there's like an artisticness to it because you as a human being perceived shadows and now your camera is like fuck shadows yeah and like I'm just starting starting to tire of like computational photography in this way well it's a very like lowest common denominator thing, right? Because there's like, they did all this work to make sure that you can't take bad photos, right? And that is largely true. Like the night modes on the, the pixel phones are

incredible. I can't take a bad photo. The iPhone stuff is incredible. Not of the moon. I forgot to ask my question this audience. Are you guys feeling that in the crowd? We're like, it's getting weird. We're getting some head nods. Everybody here seems to be like, yeah, they're weird now. You're all wrong. The person behind our producer is like, I love my iPhone. He's like ready to rush the stage. It's fine. Yeah, I love my iPhone too. But there's a. But there's a, point at which I stopped using my RX 100 because I haven't was like really good and I was like this is not quite worth all the extra effort and it's now you've gone back I've gone back because I'm like these photos are just looking weird yeah and you can't quite turn it off and I think this moon situation this is America's greatest crisis the moon situation I have been completely rocked by Samsung putting clip art of the moon on the photos and he jannie yelling to weigh in on this because the moon is changed. They're not lying to you. That is what the moon looks like when you take a photo of it. It's your photo of the moon. All photos are the same photo. Yeah, we got a little bit of a lie.

It's not a lie. She thinks it's a real lie. She's like, yes. Yes, thank you. Thank you for the board. I'm going to spy on this. It is a lie in the sense that it's not what your camera is seeing. It is what the moon looks like, but that's, I'm trying to take a picture of the moon, not like download a picture of the moon. Yeah, it's only lying when Alex is like, look at the sick photo of the moon I took. Yes. That's when I'm definitely, okay. We got to stop talking about. If you run around with your photos saying, is this the moon, then you're on to something. Liam has threatened to make a subscription version of the podcast that's just me finishing the rants, like trailing off into oblivion. We're thinking about it.

But I know we have to move on. We have other stuff to talk about. We should talk about this bank. If you've been walking around talking about South by Southwest, everyone is talking about Silicon Valley back. And I just, this is so emblematic of my trip here yesterday at JFK airport. I'm coming on the flight here. Everyone's chattering about it in line. And this woman was in front of me and she was talking to her friend while she was on a Zoom call.

and she was telling her friend, like, I'm on the Zoom call, but I'm just talking to you. My camera's off and I'm on mute, which is fine. I have done it too. And then something happens and she holds up her phone. And they were obviously talking to the bank. And she turns on her camera. She unmutes.

And then she just loudly says, I have a Bitcoin. And then she turned on her camera. It's all she needed to tell. And I was like, I'm definitely going back to South by Southwest. It's been a few years. I have not been in a crowd. Like, no one even looked.

Everyone was like, exclaiming you have a Bitcoin is like totally normal. Did she say it in a proud way? Like the company is saved. I have a Bitcoin. I was like, uh, all right.

Tell us what's going on with this bank. Okay, so there's a bank, SVB. They were like one of the main banks for all the founders, all the startups in Silicon Valley. And that's why everybody liked them. For like 40 years.

They've been like, since 1983, they have been the bank. And everybody has put their money in them. Everybody has put a lot of money into them. But the thing is, most of the people that put money in don't need loans

and that's how banks make money so SVP was like well we're going to diversify well we'll do loans we'll do a lot of like vineyard like support that's how they diversified because the valley people like yeah yeah so they're like giving money to vineyards and stuff like that but then they were also like we're going to buy a lot of bonds

and we're going to buy government bonds and they're nice and stable this is great unless interest rates go up then things start to get kind of of bad for them. And the interest rates go up. They have a little crunch of like $2 billion in cash and they're like, everybody, calm down. We know we don't have this. Like we're getting the money. Don't worry about it. It's fine. Faneously, your bank telling you to calm down inspires

calm. Yeah, it totally worked. It totally worked. Jamie Diamond's like, calm down. Everybody's like, we're fine. This is great. They did not actually. There was a run on the bank, largely led by a lot of like founders, A16 Z, I think, a couple of the other ones were like, yes, take all of your money out. They called all their people. They said, get all the money out. and they shut down the bank. They just said, nope, hold up. We need to get money to people. We can't do this anymore.

So the bank is shut down. It sounds like right now there's an auction happening and another bank is going to buy the bank. So everybody's money will presumably be okay, hopefully, fingers crossed. That one person in her Bitcoin, she's doing great. She's fine. She's fine. So SVB is done.

It's done as a bank. It's gone. And it's going to get purchased and somebody's going to be really happy with all they've purchased. And some people are like trying to figure out what happened here. Like was it because the Fed decided to raise interest rates? Was it because there was this liquidity crunch? Was it because the founders?

I'm sorry. Keep going. The conspiracy theory is like it's so close. I'm worried about you. Oh my God. What if Peter Thiel had the bank run happen so that he can kickstart a new Web 3 financial institution? And that's Supercast, everybody. That's my favorite.

That's your favorite. That's my favorite. No, no, well, that's it. Several other options. The moon did it. The moon did it. Actually, Peter Thiel is on the moon. He's got a moon base.

You got to stop invoking his name, man. He's going to show up and shut us down. Alex used to work a gawker. This is a real thing that happened. I know. If he kills two companies, wow, I'll be very impressed. But unlikely that's what really happened. What really happened was everybody panicked.

They freaked out. Silicon Valley has a tendency to group. think, see everybody was invested into crypto and now everybody's like AI is the new crypto. Let's go. They move in waves and a big pack. And so the whole pack went, we got to get out of here. And the bank died because of the group think. Yeah. So we obviously everyone here is talking about it. The assumption is that some bank will buy it. Everyone will be made whole. But this weekend, what people are talking about is will it be able to make payroll. Our company banks there, our credit cards were shut down, which is deeply funny. Mostly because the,

So race to float south by southwest for chase points among our staff was out of control. And David and I both lost. I was like, I'll fly. It was already. It was already done. It was already done it. She's like, don't worry. I got you.

And the points. It's done. So that's as much as it has hit us so far. But that is a real situation because Silicon Valley Bank and I was talking to some other founders here, they would give loans to startups. Yeah. With just ridiculous backstories. If you try to go to a loan as a startup, and you're like, here's what I'm going to do.

I'm going to... You're going to take Chase. We're going to charge people money to chat on the internet. Chase says leave. And we're going to call our workplace software slack. Can we get a line of credit? Most banks are like, no, that doesn't make any sense. Silicon Valley is like, we know your investors.

We need your founders. We know the SaaS business. Well, and there's one really important piece of this is also it's 1995 the first time you're doing this, right? Like this is Silicon Valley Bank started because nobody would give these companies loans because they were like, what's the internet? Who are you? How does money?

work, no. If you don't, you can sell things to humans and we'll give you a loan. And Silicon Valley Bank was the one who showed up and they were like, they did, they did deals in equity. They did deals with founders who couldn't get loans. Otherwise, like, they built relationships with they would do mortgages for the founders. So founders could have nice houses. Well, and because the founders have like stable jobs. Yeah. So their financial institution was designed around this particular innovation cycle, which was really good to them for a really long time. And then when they said, calm down like everyone bailed because everyone's in group chats together and it's like the funniest part it was easy because you can just like push a button and take your money out yeah they'd made

it very very like everybody else is like no you got to like wait six weeks yeah maybe you'll get your money maybe we'll take a little off this is a crime of user interface yeah they made it too good they made it too easy if they're if the user interface of this bank was a little shittier it it would have survived a lesson for us all be just a little shitty but that piece of puzzle when it gets bought by whoever buys it, Chase, Wells Fargo, whatever. That bank is going to have not the risk tolerance of Silicon Valley Bank, which just means the ripple effect into the tech ecosystem is going to carry forward. Like, the short term everyone will get funded and fine. Hopefully the money comes back, fingers crossed. It sounds like a lot of the payroll is starting to come out.

Like a lot of people have gone and made partnerships with other banks and stuff to at least get people paid. So it's like a big interruption. A lot of people are working. I bet some of the computers open right now are like trying to figure out what's happening with their money at the bank. But it sounds like hopefully the end of this weekend. Right. And I just think the medium to long term change for this industry is, A, rates are high, like startups are whatever, like the venture dollars is not flowing anyway. And then you've got a financial institution inside of this whole puzzle.

Yes. It is no longer as open to risk as that bank was. Yeah. Well, yeah. And that was, I think it was Gary Tan, the CEO of Y Combinator, who was saying basically, like the two things that are about to happen are a whole generation of startups are about to die. which I think might be slightly overstated, but not that much,

especially if it takes a long time for this stuff to shake out. And then there's a whole generation of startups that aren't going to get founded because there's just not the money or relationships to do it now. And like, we won't know how true either of those statements are

for a long time, which I think is the thing that is nerve-wracking to a lot of people right now. Yeah. This is not, I think, not as big of a scandal as the moon. America's only ongoing crisis.

Sure. Yeah. Is the moon real? But it's big. like it rocked the industry we covered. It's all anybody want to talk about to us. It's all anybody to talk about here. And it's that medium to long term who is going to accept the risk of being the banking institution for a bunch of founders. I mean, you got to do something before you sell your company to Google. And it's like, we're on a startup, you know? And that ecosystem is

like withering. Well, and it's so cyclical, right? Because there was that basically from like the sort of recovery from the 2008 crisis until like last year, the single best thing you could do was just throw money at any startup you could find. Right. Like everybody was raising money. 15 minutes, which is part of the problem was everybody raised so much money and then was like, oh, we need to actually spend some of that money. And that was part of what caused this problem for Silicon Valley Bank. But now we're entering this phase where it's like, we're still in this awkward phase where it's like, how bad is the economy going to get? How long is it going to last? What are we going to do about it? What does it mean for me? And everybody's just like,

I don't know. Right. So there's like this, this sort of gap period is just of this unknown length and in this industry that moves so fast. And especially you have all these people who just got laid off. And the theory two months ago was we're about to have this giant wave of new startups because there are all these people who used to work at meta and Amazon and these other companies who were going to go found new companies. And now there's just no money to do it. And now that money situation has gotten even scarier for the people who might hire those people. So it's just like the unknowns just like ripple on top of each other here. And there's just no like hopefully we get back on Monday and somebody has bought these assets and starts to get

better. And I just want to emphasize this point David's making, which is 2008, last financial crisis, you just put your mind back there. That was one year after the iPhone came out, and that was also the year the App Store was introduced, and that wave of like, we're going to, we lost our jobs. There's a wave of energy in the valley. We're going to make apps. We're going to build new companies for this opportunity. It's all right there, right? And the generation of these massive companies was built in that moment, in that particular economic condition. That's what people thought now. I think this is our next term, we should talk about AI, but like that's why I think we spent a lot of time last year talking about crypto and the Metaverse and now why we're talking

about AI. That is the platform shift that people think is coming. Well, they're looking for that platform shift. Yeah. Or if you're Mark Zuckerberg, you're just ramming what you think that. Just ramming it in. Do it. A brain in a vat. Just get in the vat and look at, I don't have legs. I'm Mark Zuckerberg and I need you to be in this event. Enjoy Metaverse. You're going to like it. Get in the, I like the, I like the Quest 2. The Quest 2 is good. Get in the Metaverse is also a pretty good tagline. Every time I put it on, I think of Mark Zuckerberg's dream, which is that I will have no legs and experience advertising in this way. He's a little cartoon.

But that's his bat, right? He knows he's controlled by Apple. Every other one else is chasing a Metaverse play because you don't have to pay 30% to Apple or Google to build in this ecosystem. That's where all the crypto energy came from. And you would think, like David saying, this moment, this particular set of financial conditions, whatever you think the platform should. shift is you would give birth to the next Amazon meta and Google whatever and maybe not.

Yeah, in like if this was 2013 instead of 2023, there would be a 10 new startups built on chat GPT showing up like every 15 minutes. Like I would be getting pitches in my inbox on we built a weird chat bot while you were having a baby.

Things happen. It did happen. It hasn't stopped. And the problem is they can use chat to write the emails. So it's just a self-perpetuating loop. Hey, David, back here in the studio. We're going to take a quick break, which we forgot to do during the live show. And then you'll hear me talk about all the chat GPT news I missed while I was out. It took three months. I have a lot of thoughts and feelings. We'll be right back.

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it's South by Southwest. Let's get back into it. Let's talk about this. David, you experienced this from the outside. We were in it, obviously, minute to minute. And David's version of, in particular, the Microsoft hype cycle, I think, is very revealing about what it's like to be to online. Go ahead. Oh, it was amazing. So, okay, so I had a baby in December, which was like right as chat GPT was becoming a thing. So I had this distinct memory. Like, this was the first time, like, as a person who is in the news business, I, like, read the news 24 hours a day. And if all of you were like that, I'm so, so, so very sorry. But I got to experience the news like a normal person, which is just like I look at it and then I go do other things. And then I come look at it again

later. It was great. But I had this distinct memory of like basically going back and trying to catch up on like three days of tech news. And I literally saw the story go from Microsoft launches Bing with like open AI stuff, chat GPT built in to chat GPT is in love with me to Bing is about to take down Google. Google is dying. To where is Tim Cook? Why hasn't Apple said anything yet? To, oh no, Bing is kind of a disaster to now everybody's kind of out on Chad GPT.

It like milkshake ducked itself in the time it took me to like catch up on my RSS feeds. And it was this very revealing moment that it was like, oh, all of this stuff moves so fast. And chat GPT in particular is this thing that like the first time you try it feels so remarkable that I think everybody just sort of briefly lost their mind for like two and a half days. And now we've kind of come back down to Earth where it's like, okay, this is a weird thing that's not actually very good. Like I had somebody compare it to self-driving cars or like not that long ago where they were like, it's a new technology that you can sort of immediately understand where it might go and what it might mean.

It's pretty good. The distance between pretty good and really good is decades and let's wait and see how this actually plays out. But it was just, it was very revealing. And it was like, I went to chat GPT and it was like, My baby is five days old. What should I do with him? Why does you talk to it like that?

That's how I talk. That's not how you talk to your chat TVZ? And I hit the keys like this. It's like a baby piano, but it's a keyboard. And I just sort of mash it until it tells me, no, this is just me? That's weird. Okay. This is why I can't take three months off.

It's a huge problem. So two things. One, I'm still coming off, Satchanadella, saying the hardest thing any CEO has ever said in an interview to me, which is that he wanted to make Google. dance. And that was the height, right? Like when the CEO of Microsoft is like, I want them to know I made them dance. It's a real thing. He looked me in the eyes and he said this. He did. He's like, he's taking my business down. And I'm not, I don't, I'm not in the search business. You can ask me questions and I will not answer them. So I think that's for that first part of the hype, right? Microsoft is

openly going to compete with Google and search. And that was the day Google lost like $100 billion of market value in one day because Barr was weird. Yeah. Because group thing. It's just everywhere. So that was truly strange and really interesting. And then. And then. And to bring it back to the moon. Wait, I forgot one part before we get back to the moon. I just want to talk about the moon. Everything comes back to the moon, which isn't real. The one other turn that I really enjoyed that I forgot to mention was the one where Google, like, race to announce Bard because it was felt like it was left behind, which does seem to be real.

Like the panic inside of Google seems to be real. But everybody was like, oh, no, Bard made a factual error in the first demo. And by like an hour and a half later, it was like Bing gets everything wrong all the time. Maybe this is just how this is. Bing is like you should leave your family and kill your neighbors. And everyone's like, actually, Google's might have been right. It's like some dispute there. So the thing I was saying is tragedy is fascinating because it is like medium good.

Yeah. And to bring it back to the moon, no one knows what happens when millions of people get their hands on products. It is the one defining rule of this industry after a decade of covering it. Plus, it's like the companies are like, here's our thing. Here's what it can do. here's how we think it's going to go. And then they launch it at scale. And then the most unhinged, wacky stuff starts to happen because no one has any control.

Like, when Steve Jobs invented the iPhone, do you think that in his mind he was like, and one day Selena Gomez and Haley Bieber will be fighting about their eyebrows? It's like, they don't know. Apple doesn't know that's going to happen. That's all happening on their cameras. There's some iPhone camera engineer now who's like, I got to figure out the eyebrow lamination AI. They're just like losing their minds because people do things with technology that's completely unpredictable. Yeah.

And so Chad should be they built it. They worked it. They got to a place where it works medium good. Yeah. And I don't think what anybody realized was being able to fire a canon of mediocre text at any business model is just leads to the most unbelievable crazy outcomes. Wasn't that just digital media's first big push? No, because the canon, like you can hire. You can hire a bunch of people and be like, write a bunch of stuff.

The problem is that they remain people. Yes. And sometimes they don't want to work, Alex. And sometimes they go to sleep. And sometimes they're like, I don't want to write SEO chum for the rest of my life. Right. I have ambition. Like, whatever.

Nobody wants that. Chat Chief T is like SEO garbage. I got you. All day. All day. Every day. The number of TikToks that I have seen from some sort of like diet Gary Vaynerchuk who's like how to make money with chat chief.

And the answer is they take our podcast transcripts, they feed them in the chat GPT, they produce a summary, they have a robot voice, read the summary out loud, while another robot puts like just random pictures on it. They make thousands of them a day. They put them on YouTube and they collect pennies per thousand videos that they make. But it's all automated, so they just at scale start to make thousands of dollars. That's what you can point a canon of text at a business model. And, like, YouTube, Neil Mohan, the new SVP of YouTube, he was not anticipating that a canon of mediocre text would be fired at YouTube's revshare. Yeah. And now he's paying those server costs and he's paying the ingest costs.

And, like, that is nuts. Like, even at YouTube scale, that's enough to move the needle. And all those views, all those minutes of attention at scale are being taken away from real creators. And so you just see this cycle where it's like, oh, you thought we were going to compete with Google. You thought this whole thing was going to happen and you asked the robot questions and it will tell you how many two by fours fit in the back of a Ford Ranger

which is that was like Microsoft's demo. Yeah. And it turns out people do not want to do that. They're like, do you love me? Are my eyes pretty? I'll just go to the store. We'll just put two by horse in there until they don't fit anymore.

That's fine. Does the robot want a bone at this time? And you get the front page in our time. I saw Kevin Roos last night. He's still just like rocked by this experience he had. right? And it's like all anybody wants to do is someone, like to have someone to talk to. And at the end of it, be like, but we could. And chat GPT is like, definitely. Well, those bots have existed before that. I think that's the thing I keep getting confused by chat GPT is like, I had, I had AOL and you would talk to the little bots on there. You could have some pretty like in-depth conversations. They would quickly not make sense. But in your head, in your teenage head, you'd be like, yeah, this makes sense. Yeah. So I don't think. see like a huge difference between the two. I think it's not and like I it's like smarter child on

a.m is like a whole generation's first experience with chat bots and it's the same thing like we've personifying these things as long as they've existed right and it's like you can you can hear it say a thing like you know the time in Alaska is 6 a.m and you're like it's a person it knows me and it's it doesn't and I think chat GPT is a real like step change in how good it is and how much stuff it can do There are things that can do that are genuinely new. And every time that happens, we do it all over again, where we're like, oh, my God, this is real. It's sentient. This is happening.

And then we turn around and it's like, no, it's just, it's just really good. Definitely telling you what you want to hear. It's fancy auto-correct, right? Yeah. But I will say a robot that will always tell you what you want to hear is, like, maybe the end state of humanity. Very validating. So we ran a piece on, I think LinkedIn is starting to integrate it. Slack is starting to integrate it.

a lot of workplace software starting to integrate. Notion. Notions sort of integrated. It all kind of makes sense. Like, what's that classic thing you do in Slack? You're like, how do I file an expense report? And the answer is you can't because the bank has failed. A little bit of an edge case for chat, GBT.

But like, you know, and like, sometimes not go to a person, but that's like fine to like to talk to a robot about. The turn, I think, is particularly on a social network, James Vincent wrote about this week for us, we're like, your AI on this, like, LinkedIn, we'll start talking to another AI LinkedIn and they will start like work fluencing each other. Yes. And like they'll just brand activate themselves into oblivion. That's how we get Skynet but for marketing.

And then there's this concept out there called heaven banning. So all of you, I'm sure, have been forced to learn about shadow banning from Elon Musk. It's just a word that he just made happen to us. Heaven banning is the opposite concept where instead of having like reduced in presence, you just flood the user's mentions with AI that makes it seem like they're an a perfect world of agreement. Yeah. And then you just silo them into like their AI version of Twitter, which is kind of like

amazing. That's like that might be Elon Musk's experience on Twitter where it's just like millions of bots telling me smart. And he's like, I can do whatever I want. It would work. That 100% like it's a perfect, perfect strategy for Elon Musk and for anybody. But this is what I mean. If you can fire this canon of just medium quality text at anything.

Yeah. But just weird things start to happen. And I think what we're, we all. thought it was going to be search. And it turns out it's all this other weirdness. Well, have you guys seen, have you met any prompt engineers at South by Southwest? Okay, they're here. They're floating around in the wings, waiting to pitch their prompt engineering start-ups to you. And so if you don't know what prompt engineering is to get chat, GBT, or Bing or whatever, to do exactly what you want, you can write these very complicated

prompts. Yeah. And they all have like, I don't know, they all sound like therapy to me, like you're doing robot therapy? Like, imagine that you're successful. Now, make me a list of what a successful person on a diet would eat for the next four days. But do it in a gentle way. And it's like, how is this a company? You have a company that makes these? And there's a million of them here. And this is like a weird local maximum in the arc of these. Because the chat, GP, OpenAI does not want prompt engineering to exist. Right. Right. It's like, what if we had the most emotional command line interface to all of humanity's knowledge possible. And like five companies are building front ends and they just like generate the prompts for

you. And we should disintermediate that. Like there should not be a company between you and chat GPT. It should be us open AI that builds a good interface for this. But this minute where prompt engineering is a thing. And I honestly like if you're here, just go listen to the pitch. The sincerity, which with people are like, I can computer whisper so much that I made a company It's amazing.

And you're like, can you show me a prompt? And they're all like this. So like, imagine that you're an expert. And they tell chat GPT to be an expert. It feels like you always have to whisper it. It's like it's like slowly petting the computer as it. It's like ASMR. I just think of all of the sort of like startup classes, every year at South by Southwest

West, there's like a class of startups that's like really emblematic. And this is the one to me that it's like, oh man, like this is definitely like they're going to Sherlock the hell out of you. Or they'll acquire one in that. I'll be the end of it. But I think it's, to me, the number of people who are using it, right? The sort of widespread knowledge of what it is and how you can use it and the entertaining aspect. And then the fact that it is still hard to use because you have an ocean of companies that we can make it a little easier to use. That's the gap. It might be the opportunity. But I think it represents what you're saying.

It's like it's not quite good enough. Yeah, the UI on top of all of that is unsolved. And it turns out like a blank text box to the internet is not actually a good user. interface because you're just going to ask it like what its butt looks like and that's where this all ends. They were just not ready for that. No, but I think to just to bring it back to search for one second, like one thing that I've been hearing from a couple of people is that like you talk about the cannon firing texts onto the internet. The thing that's going to happen is now the search engines are indexing all of that and all that data goes back into the AI. So we're going to start. We have this crazy circular thing where like open AI is now building tools that will help you detect the stuff that's made by open AI such that you don't trust it very much. And

don't feed it back into your search algorithms. So we're going to end up at this point where, like, if we do this wrong, Bing is going to be literally answering its own questions with its own information that is largely wrong. And we're just going to spiral into this insane place. But it loves you, David. But it loves me so much. It wants you to leave your family.

I think all that's true. It's a verge cast. I have to talk about it cover a while for like five seconds, 45 minutes. All right. The number of lawsuits that are already happening against stability AI against open from people who don't want their data scraped is very high. Microsoft's answer to me, and I saw his PR person just like wince when he was like, fair use.

And I was like, I can't ruin everyone's day. I don't want to do this right now, man. That's the wrong answer. So there's a bunch of fair use cases about search. The funniest one to bring up is Perfect 10 v. Google, or like the booby magazine, Perfect 10 sued Google for lifting its images. And the judge was like, this just helps people find links to your content. And the American justice system had to really seriously contend with perfect 10 and what it represents.

And that is the foundation of fair use for search engines in this country. That is a true story. Beautiful. That doesn't apply when you're just boosting it, right? The fourth factor of this analysis is are you replacing the market for the original work? Right. Right. So most of the Google fair use cases, most of the search cases are like on that factor or not.

You're actually creating a market for the work. You search Google. They pull data in. they're obviously reusing it. They're remixing it. They might be showing you thumbnails, whatever, but then they're sending you to it. Right. So they've actually, they've opened your market for the work. They haven't shut it off. They have not replaced your work. Well, man, that's less and less true over time. Yeah. That's, well, first, like, the number of zero-click searches on Google is going up. So Google keeps you on their pages way more often. Someone from Yelp is about to,

like, jump over a bush and tell us what that exact number is. I can talk about all the time. And then with the AIs, they're just going to answer the question. They are just going to replace the work. So there's, I would say, about a decade of extremely complicated copyright litigation coming up. And it's not just artists think that you can type, make a picture in the style of this artist and replace their work. It's the training data. It's the display of the training data. It's how do you get to keep it? So here's this insane concept in copyright.

It's the ephemeral copy. So everything you do on your computer is a copy. Yeah. And so in the early days of computers, there was a lost suit. Some enterprise software company sued some other companies sued some other. company that was just installing their software onto computers. They were just buying the software and they're installing it. And they're like, you are not authorized to make that copy.

To take it from the disk to the storage, the RAM of the computer, you need a license from us. That was a lawsuit in the 80s. We're like right back in this spot, right? Like everything that happens in your computer, even just to get a bit from the storage to your display is like 50,000 copies. Yeah. And so like the law is basically like those don't count. They don't exist.

you have a training, you're training in AI, necessarily you are making 50,000 copies to point the AI at that database. And there's just no body of law that can contend with it. And it's like, think about judges. Just a mat, close your eyes. Like, imagine a judge. Everybody, what's your judge look like? That's what I do every day. Long, flowing white wig.

Yeah. It's George Washington. That's what everyone's thinking. We all know it. Have you seen that AI rendering of George Washington is hot, by the way? Best use of AI. He has like chin implants. It's great.

I spend a lot of time on the internet. But just imagine a judge having to be like, stability AI is in my courtroom. And I have to know what a computer, how a computer works. And my decision here will shape the economy for the next 10 years. I don't think it's going to go well. I was like, I'm not optimistic about that. Yeah. But all these companies are used to just running fast enough that regulators are never able to keep up.

Like we're just now arguing about the ad market. It's like, we're going to. These lawsuits will happen in 2062. It's going to be great. I'm looking forward to it. On it, like, Cabreroa is the only law on the internet. It's the only law in my town. Here in Slack City.

17 USC's. Stop. Okay, one more break, and then we're going to take some questions from the audience, which miraculously did not all boil and leave in the hot sun. We'll be right back. Support for the show comes from LinkedIn. If you're a small business owner, you know that every hire counts, but time and resources are limited.

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Terms and conditions apply. Welcome back. Let's get to a few questions that we got from the audience at South by Southwest. I got one over here. Oh man, you got a Verveach t-shirt. Hell yeah.

That's a good fit. That's good. Yeah, so TikTok is at the Expo Center, trade show, and they're talking about trust and safety, talking about your data in the U.S., creating jobs in the U.S. Is that something that is, you know,

with recent news, something that they are starting, Or have they been doing that and other trade shows? They've been out there. Oh, no, they've been on a full press tour. The CEO has appeared on a bunch of panels. Their CEO, Vanessa Pappas, has been out and about. They have these things called transparency centers they've opened,

which is basically like a kids museum for trust and safety. I don't know how else to describe it. It's like, you go to the exhibits and they're like, you moderate some content that's bad. And they're like, this is the room with the data in it. Do you think it's working? It doesn't seem like it's working. I think our time with TikTok is not long.

for this world. It's my, it's a rare bipartisan. We can be angry at the tech industry and China, and we can irritate all the teenagers in the world. That's just a win for everybody. It's such a perfectly unprovable thing in both directions. Like, there's no way for TikTok to like successfully, perfectly prove that it is a good steward of your data. And there's also no perfect good way to prove that it isn't. So everybody's just going to get mad about politics. And you're right, because it's because China and is an easy thing to get everybody riled up against right now and TikTok is an easy way to get everybody riled up against China. I think you're probably, like right or wrong, I think you're probably right that TikTok is not long for our app stores.

Yeah. I mean, theoretically, there is a way to prove that they're being bad stewards of data. We just haven't like had the whistleblowers or had that story break, but sure. We're like running time. We're like running time. I want to share to take one or two more. Anybody else? Over here. Thank you. I appreciate it. This was my first time ever listening to Y'all's podcast. Oh, no. So sorry. It's always like this. I'm so sorry. Sometimes it's longer. No, I really enjoyed it and I'm also very, very new to the tech industry as well. So I guess I'm asking what would be a good way to orientate myself like in the industry and just kind of learn more like absorb more information that I heard so I can understand

like some moon theories a little bit more deeper. Can you? All right. Read theverge.com. Yeah, the verge.com is our read the verge.com. David is our like normy anthropologist. He just spent three months amongst the normals. Tell us, David. Okay. This may not be a pop. answer, but my actual answer has been newsletters. Like, I, the thing for me was, like, not somebody who wants to spend every second on Twitter. The real answer is, like, get weird into Twitter for a while, and then

you'll eventually hate Twitter, and that's when you're, like, fully in the tech industry. Like, you've made it when you've come all the way around on Twitter. If you feel like a bank run is a good idea, you've made it. Yeah, exactly. But there are, for me, it was like, there are a bunch of really great tech newsletters out there. We have a couple of them. Yeah, command line, platformer.

Yeah, and I think there's so much happening and most of it is nonsense that like finding a couple of places you can sort of be in the nonsense as much as you want but then having a couple of like publications or places or newsletters that you trust to like actually like take a beat and think about it for me at least has been super instructive i feel like it's really easy to just get caught in like the swirl of yeah the new thing that everybody's obsessed with whether it's like killing Silicon Valley bank or having sex with AI or like yeah finding you're only newly obsessed with that uh the thing i would say is to david's It's focus, right?

This industry is really big. Everyone's always talking about the next thing. And you can actually just drill down into one piece and have that be really rewarding. And you just figure out which of that piece. For us, it has historically been like consumer products. And the thing that has been really challenging and fun and interesting this past few years is every product is now a consumer product. Like Slack is a great consumer product that happens to be sold as enterprise software. You just go on and on.

The bank software is too easy to use. That's because they made it a consumer product. And that little bit of focus, like what's my angle? Like, how do I prove or disprove whatever little passionate idea that I have? That's usually been the word for us. I think we're out of time. We've gone over. What a surprise here at the Vergecast.

I want to thank Slack for having us here in Slack City. They will not play the Tiger song, Rock City, as we exit the stage, which I've asked them to do. I don't think that's their vibe. But just the Matt know that it's been in my head this entire time. All right. That's it for the Vergecast today. Thank you so much for listening. And thanks to everyone who showed up at the event live,

the audience was bigger and cooler than we expected. It was really fun. There's a whole lot more stuff from this conversation on Theverge.com, especially about The Moon. We put some links in the show notes, but go to Theverge.com. We're covering all of this stuff practically every day right now. And if you have thoughts, feedback, feelings,

or taco recommendations for places I missed and need to go to next year, you can always email us at Vergecast at theverge.com. Or call the hotline. 866 Verge11. We're going to do a big hotline episode really soon, and we might answer your questions in a future episode. This show is produced by Andrew Marino and Liam James, and Brooke Minters is our editorial director of audio. The Vergecast is a Verge production and part of the Fox Media Podcast Network.

We'll be back on Friday with more of the Verge crew talking about all of the biggest news happening in tech this week, including, I just assume, the moon again. We'll see you then. Rock and roll.