This Week in Startups - Using GPUs as leverage, MSFT beats the case, FTC fails under Khan | E1775

Episode Date: July 11, 2023

Lemon.io - Hire pre-vetted remote developers, get 15% off your first 4 weeks of developer time at https://Lemon.io/twist OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at openphone.com/twist VEED makes it super easy for anyone (yes, you) to create great video. Filled with amazing features like templates, auto subtitles, text formatting, auto-resizing, a full suite of AI tools, and much more, VEED gives you the tools to engage your audience on any platform. Head to VEED.io to start creating incredible video content in minutes. * Today’s show: Jason breaks down investors and companies using the GPU shortage as leverage to invest in AI startups (1:33) before discussing Microsoft’s run-in with EU regulators over bundling Teams into its Office suite (28:53). They wrap on the FTC's loss in its quest to stop Microsoft's Activision Blizzard acquisition, and Lina Khan’s track record as FTC chair (37:58). * Time stamps: (0:00) Nick joins Jason (1:33) Nvidia’s GPU leverage (9:48) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist (11:07) CoreWeave’s pivot & the pros and cons of WFH (19:28) OpenPhone - Get 20% off your first six months at https://openphone.com/twist (20:54) Daniel Gross and Nat Friedman’s GPU play (27:24) Veed - Sign up and engage your audience on any platform at https://www.veed.io/avatars?utm_campaign=TWIS&utm_medium=YT&utm_source=MKT (28:53) Microsoft’s run-in with EU regulators over bundling (37:58) FTC loses cases against Microsoft and Activision Blizzard merger (46:37) Lina Khan’s track record as the head of the FTC * Follow Nick: https://twitter.com/nickcalacanis * Read LAUNCH Fund 4 Deal Memo: https://www.launch.co/four Apply for Funding: https://www.launch.co/apply Buy ANGEL: https://www.angelthebook.com Great recent interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland, PrayingForExits, Jenny Lefcourt Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

I love innovation and venture. I love when people innovate on the five partners with the $300, $400, $400 million fund, making two investments a year sitting on 12 boards. God bless benchmark. Go girl is my guy. Fred Wilson's my guy. You know, they're great at what they do. They're the goats.

But then, you know, sometimes the game changes. And you get like a step curry coming in and it's like, you know what? I'm going to stand four feet behind the three-pointer. And I'm going to shoot, you know, 20 or 30 three-pointers a game. and I'm going to hit 10 of them, 12 of them. So stop me. And you know, Clay Thompson might hit 10 in a quarter. All of a sudden the game's changed.

It's like, well, wait a second. This is a different style of basketball. This weekend startups is brought to you by lemon.io. Need to speed up your product development without draining your budget. Hire vetted engineers from Europe at lemon.io. Go to lemon.com. To get 15% off for the first four weeks. Open phone brings your team's business calls, text, and contacts.

into one delightful app that works anywhere. Get 20% off your first six months at openphone.com slash twist. And Veed makes it super easy for anyone, yes you, to create great video. Filled with amazing features like templates, auto subtitles, text formatting, auto resizing, a full suite of AI tools, and much more. Veed gives you the tools to engage your audience on any platform. head to v.io to start creating incredible video content in minutes. All right, everybody, welcome back to this week in startups.

Everybody loved producer Nick reading the news last week. He wasn't on camera, but we had a bunch of breaking news and didn't have time to get a news reader in here. So I said, hey, producer Nick, read the news. And you know what? After a couple years of doing this week in startups, I feel like you got a handle on the news and writing show notes for three years, four years? Show notes, yes. presenting the show notes, no. I have no idea what I'm doing. So everybody strap in and come along for the ride. This is my parents' basement. I have moved out of Hoboken. My house is not built yet. So I am actually

coming to you live from my parents' basement. This is true. Literally a millennial trope. I'm working from my mom's basement. All right. So here we go. We have a couple of stories on tap today. I know the Microsoft Activision case. We had that breaking news this morning that Lena Khan has lost again. Yes. And what else is on the docket? Just give people a little preview. Yeah. So I think first up, I just

want to get your thoughts on a story that I think is a really big deal. And it seems like nobody is talking about, which is using GPU access as leverage to invest in companies, which is happening a lot right now, it seems like, or in two cases, two very big

cases it's happening. And then after that, we're going to talk about, yeah, like you said, Microsoft. So there's two things with Microsoft. Great news. They basically beat the FTC case. They beat the case for the Activision deal. And then bad news, they're facing an EU antitrust probe over how it bundles teams. Ah, bundling. Yeah, we'll get into that. Okay, so let's start with this first one. I think this is a fascinating insight that you found writing the notes for the all-in, you know, weekly docket and for the weekly AI roundtable that we do at Sunny and Vinny. So, chew this up here. I'm interested in your observation. Yeah. So for anyone listening to this that didn't listen to yesterday's episode, Jason and Sunny covered inflection AI, who raised $1.3 billion

at a $4 billion valuation and a 22,000 GPU supercomputer or cluster that they're putting together. But I think that there's like a little bit more meat on the bone of the story. So obviously, Obviously in tech right now across startups, there's a massive GPU shortage. There's a ton of startups looking to integrate AI applications and do it themselves, but they don't have access to these GPUs either in the cloud or on-prem, right? Because you can't buy these Nvidia GPUs. You can rent them out for really, really expensive, but that's basically what's going on, right? Would you say that was accurate?

Yeah. I mean, if you are going to try to do your own language model, you want to do stuff at scale, you need to have, you have thousands of these apparently. and that means $100 million to a $250 million ticket to get started if you want to do your own language model, which that seems like a lot of startups want to do. So as you talked about yesterday with Sunny, this round was led by Microsoft, NVIDIA,

Reid Hoffman, who's also a co-founder, Bill Gates and Eric Schmidt, the former CEO of Google. And you guys talked about the round-tripping potential on yesterday's show. And I'm wondering if this kind of falls into that basket or it's something a little bit different. So, Invidia, seemingly as part of this investment, but this hasn't been confirmed anywhere, at least that I've read, is going to help inflection install more than 18,000 Nvidia H100 GPUs. The H100 is basically the top of the line GPU right now. It's the most expensive one.

It's the one everybody wants. Inflection already has 3,500 of them currently in use. So this would give them 22,000, as we said. The company said this is going to be the largest AI-specific GPU cluster in the world, which is pretty crazy. some other large clusters. Meta has a 16,000 cluster. Microsoft said they're adding tens of thousands of them soon. But it seems like Nvidia might be using the GPU shortage and its position in the market as leverage to take ownership positions in startups.

Okay. So is there an example of this? Yeah. Infliction. Oh, okay. So in flat, I thought there was a second example. Well, I have a couple after, but yeah. Okay, good. Yeah. So, I mean, it's, there is a phrase in Silicon Valley, no conflict, no interest. And so if there is a chance to press your advantage as an investor, you know, or as a business, you're going to take it, right? So Apple, as one example, has a lot of iPhones. And those iPhones

have a search box. And, you know, they need to give people search results when you're using Safari. They sold that to Google. And they make something like $20 billion a year just off of that franchise. And so that's but one example of, you know, two people who might be considered conflicted, right? Android competes with iOS and, you know, tons of different products compete between those two. But they found some common ground here. Google wants to maintain their monopolist position in search. Apple wants to make a ton of money. So Apple didn't launch a search engine or do a deal with duck, duck go or bang. And then, of course, you have here Microsoft saying, hey, hey, we would like to back inflection, even though they're put $10 billion into open AI. So that's conflicted. So there's always conflicts. And if you can find leverage and GPUs could be leverage or access to them. Now, we don't know here if inflection is waiting in line with everybody else or if they got to jump the line.

But all's fair in love and more. All's fair in startups and investing. No conflict, no interest. So people have all kinds of conflicts. The partners at YC, we've talked about this on the show many times. Partners at YC get first look and the insiders get first look at the startups there because they come and they mentor them early and they've got their own network. The top 10% of startups at YC are swept off the table.

If you go to demo day, you're going to see like the 80% or 90% that weren't taken by the insiders for funding. So you just have to always keep that in mind. People are angle shooting, as we say in poker. And this is an angle shot. Yeah, sure. We'll get you to the front of the list. We don't know that that's happening. But you can assume that they're going to have preferred treatment because

Nvidia has got a stake in this company. Yeah, big stake too, right? So $1.3 billion investment. They're part of the lead, probably a couple hundred million dollars, you would imagine. Yeah. Yeah. And then the round tripping, all of this is massively conflicted. You have many conflicts going on here at once.

And that makes for. very interesting business. Do you think it's enough for an anti-competitive case against them? You know, the government gets involved in antitrust and so dovetail with the Lena Khan story coming up, typically in a very narrow set of circumstances, consumer harm being the number one vector that people look at, the number one lens or framing they look at. So is there some consumer harm here? No.

is now are shareholders getting harmed? Or is there some allegiance between open AI and inflection that Microsoft should have, you know, be loyal to open AI and not inflection? You know, okay, maybe. That would be something Sam and Greg could bring up with Satya Nadell and say, hey, why are you doing this? These guys are competing with us. That's not cool. But, you know, Masayoshi-San was investing in. Uber competitors around the world.

And I think he famous, I think he's pretty famously invested in DoorDash and was like, that's not competitive with Uber. So, you know, no conflict, no interest. And so it's just massively conflicted,

but it's not a legal issue. It's an issue between partners. And then for NVIDIA, they're an arms dealer. So when you're an arms dealer, like the United States is, we give our Patriot missiles to any number of people. Those people could get in conflicts with each other.

And we could be replenishing their missiles. and be on both sides of a conflict potentially. When you're an arms dealer, you're an arms dealer. You just want to sell weapons. Right. And then Zidia is an arms dealer. Okay, listen, you got an idea for a tech startup. Great.

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I want you to hire developers smarter and faster. Visit lemon.com slash twist and give it a shot. Yeah, Nvidia's has made a couple of investments in recent AI startups, actually. They invested in Runway, which we had the founder on the podcast, suite of generative AI editing tools. Cohere, whose founder is going to come on the podcast. They're basically building like a B2B LLM and a couple more AI startups.

One of them is called CoreWeave. Have you heard of this company? No. Okay, so. Educate me and the audience. CoreWeave is interesting. They are the company that's actually helping inflection deploy these 818. thousand GPUs. They started as an Ethereum mining company back in 2017. So this is this is like a

genius pivot. They put together this big cluster of GPUs to mine Ethereum when crypto is going like this. And then at some point over the past few years when it started to go like this, they pivoted from crypto mining to basically being a GPU cloud provider. So if you go on your, if you go on their website, you can look at they have all the Nvidia GPUs ranked like this. And the top ones are the most expensive and you can rent them on an hourly basis. It's like such a great business. Yeah. If you think about what crypto did really well, it was build infrastructure and build these federated or networks of computers peer-to-peer architecture, just like Napster did previously

or scour, Travis's first company before Red Swish, etc. So CDNs and peer-to-peer, Kaza, Skype was peer-to-peer. All that stuff is kind of in the same wheelhouse, which is how do you take a job and put it out across a large network. And that's what GPUs do, or Tesla's supercomputer that they've built is doing. So this is a really great pivot, obviously. And we're seeing that across the board. I think if you're a crypto person

and you don't consider pivoting right now to AI and you've got like a really great tech team, kind of crazy because consumers and businesses were open to hearing about crypto solutions, right? Everybody was like, okay, yeah, tell me more. Tell me more about NFTs. Tell me more about blockchain. Tell me more about permissionless, you know, currencies, tokens.

And people heard it and were like, too complicated, not enough value for the end user, whether it's a business or consumer. Now you juxtapose that with AI. I don't know if you saw the link I shared with the sales team using chat GPT for. And producer Brian was, you know, giving them some advice on how to look up potential sponsors. I won't say what the thread was, but producer Brock. on the media side of our business was telling the sales team,

hey, look, here I made you a thread of how to get all the sponsors of other events. So when you sell sponsorships for the All-in Summit, here are some people who sponsored other events and put it in a table for them really nice and clean.

So I think that is why you know, people are falling in love with these language models and tools so quickly is that they just make you faster at your job. And it takes out the, I find it takes out

the most arduous, repetitive, boring parts of your job. Sifting through Google links. Sifting through Google links. Formatting stuff into a table, tagging a blog post, whatever it is, you know, doing some basic research. And it's getting better and better. So if it gets 30% better a year, which I think is a pretty low benchmark, man, as I've said, hiring freeze across the board. We're 19 people in our company. And I feel like we're doing the work of, we're doing more work than when we were 23 or 24 people. Yes. And this is going to be what rebounds the entire economy, not to go on a total tangent. But if people are concerned about earnings, as I said on the All-In podcast many times, and I got a little bit of pushback on this, I kept saying like, well, you know, if your earnings go, if your revenue goes

down, if you cut your spend, you can actually keep your earnings the same or better. That's math, baby. It's just basic math. And, you know, I think Shabath was like, yeah, that's not easy to do. And I was It's not easy to do, but you can do it. And then all of a sudden, Facebook, Twitter, Microsoft, Google layoffs happen. And you're like, wow, they took the medicine fast. And I think that was all CFOs and founders just saying, you know what? I don't want my stock price to crash. I want to have good earnings.

And so who cares if we cut 10 or 20,000 people, if we have 80 or 100,000, it doesn't make any difference. And also in Google and Meta's case, those 10, 20, whatever thousand people, cut were probably recently hired. Yes. Because they just, they doubled their head count in, or maybe not recently hired,

but, you know, they were, last two years. Yeah. Over COVID, basically. And so they probably hadn't even onboarded them and gotten them,

you know, hitting their stride yet. So it was like, if you have never been into an office, did you even work for the company? That is a, that is a pretty, interesting angle.

That's a joke. Don't, you know, don't, don't, I mean, if you want to get people riled up, you could say remote work is BS.

Yeah, you're really into that right now. You go all over that space. I just have come to the conclusion that 20% of people are more productive at home. 50% of people are less productive. And then 30% are probably as productive, maybe 25% are as productive. I think generally speaking, does that track with your experience? Yes. If you had to put people into buckets, maybe it'd be a third, a third and a third.

But I can't ever imagine how a company of, hundreds or more people runs fully remote. Yeah. I'm sure that there are some that do it and do it well, but I can never. I think for smaller teams, it can work, especially if you have like seasoned people that know what they're doing, that know what they have to do. But for training and onboarding and things like that, it is really hard. And I'm just, I'm worried about the psychological impact this is having on people, especially

young people who don't get to build relationships. And then if you are home all day, and then. and then you don't go out at night and you stay home at night, which is pretty easy to do with, you know, ordering a DoorDash and, you know, watching whatever's on Netflix or HBO Max. You know, like, people get weird. And so I think it might, I think the big issue is it was too onerous, the American system of two weeks vacation a year and 10 holidays and whatever,

a couple sick days. I think Europe has something figured out where like a longer break over the summer, four weeks, six weeks, and that would make it a little more tenable to be in the office, you know, four days a week, five days a week, if you could look forward to having August off, right? Or, you know, taking two weeks off twice a year instead of two weeks off once a year. Yeah, I find myself missing the unproductive parts about being in an office, you know? I miss like the BS, like the nonsense.

Like, people always, like when we went fully remote, it was like, oh, there's no more water cooler talk. Like, this is great. And it is for productivity. But I also kind of miss it. Like, I used to sit right next to Matt, our sales guy. I love Matt. Yes, Matt's like a dog. Yeah, he's a complete dog.

And I miss just making fun of him and seeing him every day and laughing with him, you know what I mean? And watching him come on in his bike. Like, those are the things that I miss. But it's all the unproductive stuff. That's why I did the stand-ups every day and told everybody to be on camera and to take a shower and be dressed and have a background. And I said, listen, we're going to have a sales stand-up, a program's team stand-up and the media side stand up and just get on a, just wake up and get on a call. And at least they hi to everybody and, you know, have like some rhythm to your day. And the turning it off is the hardest thing.

I personally am having a hard time with that. That's why I'm going back to an office. I chose that for myself because I can't turn it off. You know, like I got my kids all day with me. And then at night, I'm still working. But then I'm partially with the kids. I liked it much better when I got in a car. I drove to the office.

I had 20 minutes of, you know, of listening to a pod or doing a phone call. Boom, I'm at the office. I just grind for eight hours, nine hours, and then I come home, and that 20-minute decompress time on the way home, then I don't feel bad about sitting with the kids turning the phone off and, you know, yeah, maybe at 10 o'clock a night after I spent three or four hours with them, I can do more. But I liked that rhythm better now. I'm kind of over it. Now, with the exception of ski season, which I do not want to give up. Yeah. And every Goldman Sachs banker is like, yeah, we've got to be in the office until it's time for Mon Talk.

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Anyway, so sorry, let me reel this back in. So I brought up CoreWeave because they also kind of fall into this category. So, Nvidia invested in CoreWeaves, $220 million series B at a $2.1 billion valuation a couple of months ago. Yeah. But what's really interesting is that in that round, Nvidia's co-investors were Daniel Gross and Nat Friedman. Do those investors bring about? Pioneer Labs, Pioneer Labs, Daniel Gross, Nat Friedman. Daniel Gross, he's been on the pod and I love Daniel's model for.

Pioneer Labs. Yeah, he's amazing. And Nat formerly the GitHub CEO. Yeah. So Daniel and Nat invest together, but I don't think they have a formal fund, but they do, they co-invest very often. Okay. And these two are actually in the news, well, they actually weren't really in the news. You

saw this, but nobody really talked about it. They are now offering a 2,500 GPU cluster to their portfolio startups. I thought this is a joke at first. It's not. It's called an adromeda cluster. Yeah. Yeah. So, you know, at market prices. So baller. It's crazy.

So baller. Do you think that this had anything to do with their core weave deal? Do you think that they got some kind of discount on CoreWeave GPUs and then they used it as leverage? You know, you see with like the link I'm trying to make here? CoreWeave is somehow associated with Pioneer Labs. No, Nat and Daniel

invested in their $220 million Series B alongside Nvidia. Again, back to no conflict, no interest. Here's what I learned how things worked in the Valley. Everybody's kind of competing. and collaborating. And like if a deal comes up

and I can get you into the Uber deal or you can get me into the, you know, DoorDash round or DoorDash is competing with Uber, but, you know, Cloud Kitchen, you know, everything becomes like very murky and overlaps. And Wycombinator, perfect example, Sequoia and their reach perfect example,

you know, Sequoia's an LPNR funds. You know, Ruloff and I are great friends for over a decade now. Sacks. rule off work together at PayPal, right? So you see these like little, you know, gangs for him, right? Yes. And then now with All In, you have like the All In gang and then, okay, this, there's like three or four other podcasts that have come up with little clusters of, you know, investors and entrepreneurs. I think my friend Dave Moran from Path.com, who I've always talked very highly of, he started like

an All In competitor, not competitor, but let's call it inspired by All In. And it's pretty good. But, you know, it's not great, it's not bad. It's just like, okay, they have their opinion now over here. And then Pirate Wire guys did theirs and Moment of Zen did theirs and three cartoon avatars did theirs. These are all like little balkanized tribal things. And like Inresa and Horowitz doesn't like All In, right? Like, he doesn't like me.

He doesn't like Chimoth. I wonder what. Well, I mean, whatever. We said critical things, right? But I mean, he's good friends with Sax and Friedberg. Right. So you have this very weird tension that can occur. Okay, is he blocking Chamoth and myself at this moment of time or not, right?

And so what I've learned is like enemies accumulate over time. And you don't want to miss opportunities. So, you know, to this extent you can squash beef. And, you know, New York's got New York. Jersey's got Jersey. You know, maybe somebody's got upstate New York. South Jersey, Philly. South Jersey, Philly.

You know, Rhode Island. Providence a little different than Boston, you know, but maybe they overlap. These families can kind of like do business together, but they could also get into spats, right? And that's what happens in tech. And then sometimes you got somebody who hits like a home run like this, like having their own cluster. I just have to say if, hey, I entrepreneur, what a baller move. Oh my, if Nat and Daniel spun this core weave deal and they had a little carve out for a couple extra GPUs on the side, and now they're using that as a way to get startups to basically pitch them for investment, I mean, Bravo. Like, that is what a move. I mean, it's like ballwalk empire. Like, they're getting like some ships coming in from like with bourbon on them. But maybe they make it to New York. Maybe they don't. That's my theory. So I don't know that's the truth. But oh my God. Like, that's awesome. Again, no conflict, no interest. You know, five families, different, you know, a faction's all trying to, you know, just get in the next deal. You just want to get in the next deal. It's just leverage, right? It's leverage, right? Yeah. So if you were, if you have those 2,500 GPUs they have sitting there and, you know,

Daniel Gross is competing with Y Combinator, right? And he's trying to preempt Y Combinator by getting to startups before they do. I don't know. The Y Combinator got 2,500 GPs laying around. So if you're an AI entrepreneur, why would you go to YC when you could go to, you know, if you need access. Now, everybody doesn't need access to them. It's probably one in 25 startups need access to GPUs directly like that. The other 24 can just use, you know, hit an API and use chat chipb4s.

API or use Google's API or whatever. So it'll be abstracted that way as well. But I thought it was one of the more baller and innovate. I love innovation and venture. I love when people innovate on the five partners with the $300, $400 million fund, making two investments a year sitting on 12 boards. God bless benchmark. Bill Gurley's my guy.

Fred Wilson's my guy. They're great at what they do. They're the goats. But then, you know, sometimes the game changes. And you get like a Steph Curry coming in and it's like, you know what? I'm going to stand four feet behind the three-pointer, and I'm going to shoot, you know, 20 or 30 three-pointers a game, and I'm going to hit 10 of them, 12 of them.

So stop me. And I might, and, you know, Clay Thompson might hit 10 in a quarter. All of a sudden, the game's changed. It's like, well, wait a second. This is a different style of basketball. Shaquille O'Neal. Patrick Ewing, Hakeem, Elijah, you know, they changed the game for a long time.

You had to have somebody to stop those three players specifically, or else you were just not getting to the finals. And Jordan had to figure out, how do I beat, how do I get through Patrick Hewing? How do I get through Alonzo Morning? How do we get through Duncan Robinson? You know, like these were, or Tim Duncan, no, Duncan Robinson. Definitely not Duncan Robinson. Well, whatever. I mean, there were, you know, there were concerns of how do you, how do you get through some dominant. No, Duncan Robinson is a, you know, he's the white guy on the heat now, not Tim Duncan.

But you combine Tim Duncan and David Robinson into Duncan Robinson, I think. Yeah, yeah, sorry, I'm getting older, like these things old because like one super, team. Listen, I'm doing five podcasts weeks and I can tell you dealing with video, it's a hundred times harder than just doing audio. Why? When you do video, you got to put cuts in it to make it visually entertaining and you got to have skills like producer Nick. If you want to level up your clip game, just check out Veed. My team started using it and we are saving a ton of time. It's a web-based video editor that makes it easy for anyone to create great video content. Everybody can use it. Veed has every editing feature you're going to need.

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which is critically important. Head over to v.io and start creating professional quality videos in minutes. That's VEED.i.o to sign up today. You want to move on to Microsoft? Yeah, I think this is really fascinating. I think I'm going in reverse order. Cue up the bundling issue because we've talked about this on All In many times. And I saw this and I'm sure it will come up on this week's All In with the return of the world's greatest moderator.

Let's talk about that. Okay. So we'll do the bad news first then. Okay. So Microsoft is facing an EU antitrust probe over how it bundles its team's product for free into the greater Microsoft Office suite. The problem stems from a complaint. that Slack issued in 2020 to the EU over Microsoft bundling its Teams product, as I just said. Teams was initially added as a free product to Office 365 back in 2017.

And Brian, if you could pull up this chart, just look at what happened when, I mean, this just shows you the scale of Microsoft's enterprise customers, right? So the purple line on the bottom is Slack's users, which if you zoomed in, you'd be like, oh, it's pretty good growth over time. And then you zoom out and you see what happens when Microsoft starts bundling teams for free. to, you know, not saying that these are Microsoft users, but let's say Citibank, the NBA, like Volkswagen, giant enterprise customers and growth just completely skyrockets. It's 20X, whatever, Slackass or whatever.

And Chamath has mentioned in the past, obviously being an early Slack investor, I think they led the Series A with Mamun over there, right? Yeah, Mamun, I think led that deal. Yeah, famously. He, once teams did that, they, everybody on the board, he said kind of saw this coming. And I think Slack actually made out great selling to Salesforce for almost $28 billion when it did because teams just came in and basically killed their growth. It looks like. I mean, we didn't get in any numbers after 2020 because that's when Salesforce stopped reporting or Slack stopped reporting and sold to Salesforce.

But what do you think about this? So I think this is what Lena Khan should be working on is tactics because she was put into the FTC because she was anti big tech. She was anti, you know, the power of these. And, you know, that was a great way to get the job, I think, because it spoke to the Biden administration. They felt tech was like lording over them too powerful, social networks, Trump getting into office. All this stuff was like very present in their minds. And, you know, politicians don't want to have to answer to Zuckerberg or previously to Jack at Twitter or YouTube. You know, all of these things were very concerning to them.

And the problem is, Lena Kahn's premise, which sounds really interesting, is I want to preserve competition in the future. So we have to get to these monopolies before they become monopolies. We've got to stop them.

Now, have you ever seen the movie Minority Report? It's a little before your time. All right, that's your homework assignment, Minority Report. I need you to watch it because when you do the news read next week, I want to discuss it with you. There's a concept of a precog.

And what precogs do is, they can see into the future, the near future, and they know when somebody's going to commit a crime. And then they send the police out to arrest you before you do the crime. And this seems like, wow, society's safer and better. But it's also kind of like, well, wait a second, this is profoundly unfair. Where's free will? I'm not going to kill this person. I'm not going to rob this house.

And it goes against all of our ideas about justice, right? And so she can't predict the future, but she wants to believe she can. And this resonated with people who were anti-Big Tech, which I would say, you know, there's Republicans who are anti-Big Tech and they're, you know, but the problem is the FTC executes laws. They don't create them. They're the umpire, not the league. You know, the league has to create the rules.

If you want to have hand-checking or, you know, whatever. rules, you know, zone defense, whatever. You got to have that in committee. You set the rules. All the teams get to adjust and they play the game on the field. She's got to call fouls and balls and strikes not decide, you know, how many runs are scored or how many bases there are. The cases that she's picked, she's just going after people because they're big tech. This going after Facebook over this tiny little, you know, VR app when VR is not.

Within Unlimited, yep. VR is not a thing. And it was a very silly. The argument was that Within Unlimited made a workout game that was sort of like Beat Sabre, right? Yes. If you can't see me, if you're listening, but I'm swiping that. Beatt Sabre. Yeah, you're a Jedi.

Congratulations. Yeah, exactly. And that, you know, basically saying meta, having this app and Beat Sabre would give them an unfair advantage in the VR space. In the future, like, there is no VR space. Yeah. Nobody we know played Beat Sabre. this week. Zero. I mean, if you play Beat Sabre this week, you're a loser, period, unless you're under the age of 12, right? You're just a complete utter loser. So all you 14-year-old beat saber players, you guys are nerds. You should be playing baseball, go outside on your bicycle, you know, play some basketball, do, you know, I don't know, go to a dance, do something. They lost that one, by the way. And they lost, of course, they're going to just keep losing these because they're being vindictive and it's a stupid strategy. There's a much easier,

strategy. Now, if you go through American antitrust law, price fixing is obvious. If you're Microsoft, if you're Google and your Apple, you can't say, hey, let's set the price of our phones at $900 this year, $9.50 next year, and $10.50 the year after. We all agree on price fixing. So you can't do that. And people have done that. You also can't do market allocation like, you know, on the Sopranos where like, okay, we get gambling in this town, you get gambling in this town. You get gambling in this town, here's the street. You can go on the other side of the street. You can't do market allocation kind of situations and divvy up a market. That's collusion, right? It's anti-competitive. You can't be a monopoly and you can't do bid rigging. You can't do these kind of tactics.

Bundling and predatory pricing are very interesting ones. Predatory pricing and bundling is what Microsoft's doing here. What does teams cost? What does teams cost? Zero. It costs the cost of the office suite. It's an ad. It's bundled. Yeah. It's bundled.

And so there's a very simple solution for her here is to look at instances like that where people are doing this kind of market allocation. You could argue what Apple does with their app store is like they've allocated that only they can sell in this geo location, i.e. iOS. And just say, listen, you can't do that. You have a monopoly on these phones. You're in a duopoly. So in the case of a duopoly, where there's two players who own 90% of the market, we want you to have more interoperability and we want more open platforms. So there should be other app stores on iOS.

Now, you can just saber-rattle and say, listen, I'm Lena Con, I'm the FTC. We're preparing a case against you, Apple. You have six months to allow Amazon to have a digital store, Microsoft to have a digital store, and the Google Play Store to exist. on Apple, and they have to do the same. And you can't make iMessage closed. There should be interoperability. And they'll say, like, well, we can fight that.

You can fight it. But this is what we're asking, since you have a monopolistic position, we're asking you to be more interoperable. Remember in the early days of iOS, they wouldn't let you have like a VLC, a video player. They wouldn't let you have the Dolphin browser or Chrome browser. In the early days, they wouldn't let you use a third-party browser. They wouldn't let you use a third-party media player.

Jobs really wanted to own those. And so they would block you installing that. And then Microsoft, of course, got in trouble for bundling where they put, and that was the massive Microsoft case, that massive antitrust case, in the 90s, where they put the Internet Explorer, the edge browser, to try to kill Netscape. And so if you make it free, used to buy Netscape. Shout out Mark Andreessen. Come on the pot anytime.

they used to buy Netscape for 50 bucks a year you would go buy it and then they would like Netscape Navigator 4.0 would come out 5.0 would come out you give them 50 bucks, 99 bucks, you would go to Comp USA and you would buy a package shopper, bring it home, put it a CD in and install the new browser.

And they're like, yeah, it's in the operating system now. So that's a much simpler execution, I think. And it's actually better for consumers. Consumers do not, there's no consumer harm if Microsoft buys Activision or Microsoft releases teams. But there is harm when they do it for free or if they said Activision is only going to have their games on Xbox for the first two years. And then it goes to PlayStation or PC. And they already conceded that they wouldn't do that, correct?

So I think we can pivot to the next story. They did, yeah. Actually, this story has a complete masterstroke that I just found out this morning by Satya Nadella. Another master stroke by Satya Nadella. He's a killer. I mean, wait until I tee this up for you. You're going to lose your mind. All right. So, all right. So Tuesday morning, a federal judge denied the FTC's

attempt to delay Microsoft's acquisition of Activision Blizzard, which can happen as soon as this month now. So just a quick timeline on the acquisition. It was announced first in January 2022, Microsoft announced they were going to acquire Activision Blizzard for $70 billion. This would have

in Microsoft's largest acquisition ever, and it would also be the largest gaming acquisition ever. December 2020, almost a year later, the FTC issues a formal complaint announcing its intent to try and block the deal. And one of the main reasons for the complaint, one of their main arguments, was that the probability of Microsoft making Activision properties like Call of Duty or World of Warcraft Xbox exclusives would hurt competition and would hurt consumers. So the UK and the EU both followed the FTC in reviewing this deal. In April 2023, the UK actually formally blocked the deal, which is wild. In May, 2023, the EU approved the deal, so they went the opposite direction.

And then last month, the FTC sued Microsoft asking a federal court to postpone the deal closing by issuing a restraining order. So fast forward to July 11th, which is today, Tuesday, Microsoft wins, the FTC loses. Microsoft can now close the deal as soon as this month. and basically the judge ruled that the FTC failed to show that this was going to result in harm. And to top it off. Yeah, just an hour before we went live today, Reuters reported that the UK is now open to looking at the deal again and changing its decision. Yeah.

Perfect. I mean, it is an obvious decision. And this is where you just put conditions. And if that's what should be happening here is conversations with the major players and saying, hey, we could take action here. we can slow this down. We can give you a speeding ticket. We might win. We might have a 20% chance of winning.

We might have a 50% chance of winning. Why don't we just both agree on what's in the best interest of consumers here? If Call of Duty is available to, I think Activision's biggest title is Call of Duty. If everybody gets Call of Duty at the same time, we're good. We're good. And if the games are the same across all platforms, we're good. And if it's interoperable, so PlayStation and Xbox and PC gamers can all play each other, great. or you have to hit four of the five major platforms in the first year.

You can come up with some very basic, you know, things that preserve consumer choice and you're fine. This is right, Lena Kahn. Sorry to say it, Lena. I know that you're not pleased with my assessment of your tenure. I think you've done a bad job of really picking your fights. The job of the FTC is to pick your battles. and just being anti-tech is not is not picking your battles. Look at that.

That was kind of her strategy too, right? She wanted to go spray and pray. She was like, we shouldn't just pick battles that we think we're going to win. We should go for a bunch of different things. Yeah, yeah, yeah. I mean, people who are, you know, bringing cases, you know, I've heard pre-Brahara say this a bunch of times. Like, if you're going to bring a case, you want to be sure that you have a really good chance of winning.

But, you know, it doesn't have to be 100%. You like to be 90% or 100%, but sometimes you go with something that's 70 or 80%. I just think she came out and it's just like saying no to everything. Yeah. Does it make sense? Does this undermine the credibility of the FTC, you think? I think it feels very partisan and it feels vindictive

and it doesn't feel like it has anything to do with consumers. So I think she wants to have a bigger role than what the FTC is supposed to do. And so I think her ambition as a young person who's brilliant, clearly she's a brilliant young person. I think she's in her 30s. I mean, the youngest ever. So sometimes brilliant young people want to, you know, make a name for themselves. But this is not the way to do it. If you wanted that, you should be a senator and, you know, make laws and change the laws. That would be a better use of her time, you know. So, yeah, she's 34, I think at this point. So she was 32 maybe when she got in. She's two years into this.

Yeah, June 2021, she was sworn in, I believe. Anyway, she's not going to make it to a second term, I don't think. I think if somebody else needs to, or she needs to change her tactics. immediately. And I'm not talking my book here. For me, as an early stage investor, just so you know, it's better for me that big companies, that companies don't get acquired in some cases and they go bigger. If Uber had sold at $5 or $10 billion to Amazon, that would be terrible for me. It wouldn't be worth $80 or $90 billion, which is I wouldn't have gotten the last, you know, whatever, 20x out of it, 15x. So for venture capitalists and investors in technology companies, you kind of want them to go long, stay independent longer, because that's how true value is created.

But you also want there to be an exit ramp for companies. So if they don't, like this beat saber company kind of stuff, like for those companies, if they're not going to be platforms and they're not going to be huge, yeah, it's great to have an exit somewhere where they can have a nice safe landing. They also had done that thing with the Giffy keyboard or something. I can't remember that case, but the FTC. I think that was a UK deal. Is that UK?

Yeah. They forced him to sell it or something. I didn't think that predated her. But this is another perfect example of like, are we just trying to be vindictive because Zuckerberg, you know, didn't defend democracy against Trump? And that's the problem we talk about on All In all the time is trust in experts, trust in institutions.

And you nailed it. Like, do you feel like Lena Khan is playing referee or umpire or is she Tim Donaghy, you know, like, and she's shaving coins? Right. She's wearing the jersey of the other team underneath the referee. Exactly. And it kind of feels like she's doing Biden's bidding, who gave her the job? All right. So do you want to hear about Satya's Jedi Mind trick? Yeah, do it. Okay. So obviously, Microsoft owns Xbox. Xbox is one of three major console makers, right? There's Xbox. Sony makes PlayStation and Nintendo makes the Switch. Duty, which is one of the most popular games in the world.

Warzone, which is like an offshoot Call of Duty game, is a popular free-to-play game. It's kind of like the Call of Duty version of Fortnite. Got it. And it has 52.5 million monthly active players via ActivePlayer.io with daily active players ranging between 1 and 3 million. That's crazy. Yeah, it's really crazy. And I know this, I kind of feel like this is accurate because my friends love playing

Warzone. Like grown men, like 27, 28-year-old grown men are like on it every night. like they're in middle school again. Those are kind of teenagers in today's world, but sure. Basically, yeah. So one of the FTC's big arguments, again, as we mentioned before, was that Microsoft would take call of duty, make it an Xbox exclusive, which would suck for consumers, and they would just cut them off.

But as part of the lawsuit, both Xbox head Phil Spencer and Microsoft CEO, Satya Nadella, both said under oath that they would not make Call of Duty an Xbox exclusive, under oath. Yeah. And the judge's decision also quoted Phil Spencer, who noted that Nintendo and PlayStation actually have way more console exclusive games than Xbox does in the first place. So he's basically saying, we don't even do that. But here, here is the brilliant move by Satya Nadella.

This is so awesome. So the main Call of Duty games have never been available on Nintendo. And in February of this year, Microsoft announced that if the acquisition was approved, they would bring the main Call of Duty games to. Nintendo by signing a 10-year deal with them. Perfect. So I'm going to go above and beyond. Not only will Call of Duty not go exclusive, it's going to be available available for like

millions and millions and millions of more people. Yes. Tens of millions, yes. So basically the opposite. The FTC's argument anymore. The FTC's argument is Microsoft is too big. That's all. Big Tech is too big.

They have more power than politicians. Same thing with Bitcoin. Why do you think the F, and I said this, you know, so it was blue. the face. Like, governments are not giving up their control of Fiat currency. Sorry. It's not happening. And you're going to have to play by the SEC rules and you're not replacing Fiat.

And when you said, hey, we're here to disrupt Fiat, guess what? The government believed you. And you were credible. It was a credible threat that crypto could replace Fiat. That's why it's banned in, you know, a lot of countries because they don't want to give up command and control. Yeah. Anything else on the docket?

To hit up Lina Kahn's other lawsuit. actions right now. Ongoing case against meta over the Instagram and WhatsApp acquisitions. She inherited that one from the previous administration. FTC is expected to lose that one. She already lost. You know, if you can't, it's got to be some

statute of limitations here. You know, like really? I mean, that's a crazy one. You can go back and undo the YouTube acquisition. It's not fair to shareholders. It's not fair to the employees. It's not fair to customers. Makes no sense. They, FTC versus Illumina. Aluminas a

tech company and who acquired this company Grail, who actually you just sent us the link to yesterday to invite the founder on for $7.1 billion in 2021. That was dismissed in court in September 22, so they technically lost, September 2022, so they technically lost. But in April of this year, they ordered Illumina to divest Greil again and they intend to appeal and they'll probably win, but that's technically ongoing. And then just a couple months ago, or last month, the FTC sued Amazon for allegedly misleading consumers about how they cancel their prime memberships. Okay. And the quote for the complaint, Amazon use manipulative, coercive, or deceptive user, dark patterns.

There it is. To trick consumers into. This I like. Yeah. This I like. Dark patterns are now illegal in California. However you sign up for a service, you have to be able to unsubscribe from that service.

So when you try to unsubscribe from the Wall Street Journal, they're like, hey, call us. And they put your hold and then they try to talk you out of it. No. If you can take my credit card on the web, you can take my, unsubscribe. I had this happen with Tonal, which I love. My gym got flooded. I tried to pause my tonal membership and they made me jump through so many hoops and I love Tonal and I emailed the CEO and didn't get back to me. And I'm like, why can't I go into the interface and hit pause on my membership? If I'm going to be gone for two months in the summer, I should be able to pause it.

Why should I pay 100 bucks, 50 bucks a month or whatever it is and not use it. It makes, it's not fair. It's the silliest thing of all time. Well, this is where I think the FTC could do great work. They should make a list of the top 100 dark patterns, and then they should just go down the list and just file, file, file, file, file, that's in consumers' best interest. That's where you point the gun, Lena. Yeah. I do think it's funny, though, that she's basically going after like one of the most beloved

like Amazon Prime. Everybody has it. Everybody loves it. She's going to go after ice cream next. Right. Yeah. Hagandas. Yeah.

It's just too good. Right. It's ridiculous. Too creamy. But we should note, she has had some. wins. The FTC recovered $60 million in lost wages for Amazon delivery drivers under Lena Con, which is good. And in one of the biggest settlements in FTC history, Epic Games paid a $520 million fine for tricking young gamers into making unintended purchases, which violated

Copa, the Children's Online Privacy Protection Act. So she has had a couple of wins. Yeah. I think she'll have wins when she goes after the actual cases of people breaking the law and going after specifically anti-competitive tactics that are in the law. And if you want to change the laws, you could inform, you know, the other branches of government that this is how you think laws should change

and then let elected officials work on that. But it's not her job to change the laws and the rules of the game. It's her job to call balls and strikes. And when she does that, she's going to have great success. When she tries to pick who wins the game or tries to push the game to six or seven, a six or seven game series,

or whatever. It's just so obvious that this is just Biden administration, anti-tech, pro-union, nonsense, just like they won't invite Elon or whatever to the EV summit when he's shipping, you know, a quarter million cars a quarter and dwarfing everybody. You wouldn't invite him to and allowing other people to charge on the Tesla. Like, yes, it turns out that in most cases, it's in a business's best interest to not be a monopoly and to have interoperability because things grow and you don't have like this fermenting competitive environment. And Tesla's like, yeah, you want to use our stations? Go ahead. Now Ford and GM, whoever's done these agreements is like, well, now why would they even build stations? No reason.

But now if they didn't let them, then they would all get together and build a consortium against Tesla. So the best thing to do is to just say, yeah, if you want to use them, this is the price, and this is a price, we'll charge the same price that they charge Tesla people. They're not giving Tesla people a discount. Yeah. Versus the Ford and GM people, which I thought was a masterstroke, right? All right, everybody, that's a full show for you today. All In Summit is basically sold out.

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