OpenAI’s User Growth Miss, Musk vs. Altman, Prediction Market Ban

OpenAI is growing slower than anticipated. What does that say about the broader AI story? Elon Musk and Sam Altman meet in court, and Anthropic's valuation is approaching $1 trillion. That and more is coming up on a Big Technology Podcast Friday edition right after this. Next week, I'm live at Knowledge 2026, ServiceNow's annual conference in Las Vegas, where enterprise AI moves from promise to production. I'm sitting down with ServiceNow's President and CPO, Amit Zavery, on the platform strategy powering it all, their people and technology leaders, on what AI means for the workforce, the engineering team behind ServiceNow's Nvidia partnership, and what it really takes to ship AI at scale, and Ulta Beauty on deploying AI across 1,300 stores. These are the conversations you won't hear anywhere else, and new episodes are dropping on my YouTube page starting next week. This week, I'm live at Knowledge 2026, ServiceNow's annual conference in Las Vegas, where enterprise AI moves from promise to production. I'm sitting down with ServiceNow's President and CPO, Amit Zavery, on the platform strategy powering it all, their people and technology leaders on what AI means for the workforce, the engineering team behind ServiceNow's Nvidia partnership, and what it really takes to ship AI at scale, and Ulta Beauty on deploying AI across 1,300 stores. And Ulta Beauty on deploying AI across 1,300 stores. These are the conversations you won't hear anywhere else, and new episodes are dropping this week on my YouTube page. Insurance isn't one size fits all, and shopping for it shouldn't feel like squeezing into something that just doesn't fit. That's why drivers have enjoyed Progressive's Name Your Price tool for years. With the Name Your Price tool, you tell them what you want to pay, and they show you options that fit your budget. Enough hunting for discounts, trying to calculate rates, and tinkering with coverages. Maybe you're picking out your very first policy, or maybe you're just looking for something that works better for you and your family. Either way, they make it simple to see your options. No guesswork, no surprises. Ready to see how easy and fun shopping for car insurance can be? Visit Progressive.com and give the Name Your Price tool a try. Take the stress out of shopping and find coverage that fits your life on your terms. Progressive Casualty Insurance Company and Affiliates. Price and coverage match limited by state law. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. We have a great show for you today. So much news to break down, including OpenAI's user and potentially revenue miss. We'll talk about the internal numbers, the company's response, and what it means for the rest of the AI story. We also have Musk and Sam Altman in court, and of course, a big week for big tech earnings. Joining us as always on Friday is Ranjan Roy of Margins. Ranjan, great to see you. Welcome back. Good to see you, Alex. A lot to cover this week. A lot to cover, and it's weeks like this where we see some data that comes in, and in the data, you can start to see some broader stories and really where the AI trend is moving. Let's go to our first story here. OpenAI misses key revenue user targets in the high-stakes sprint towards its IPO. From the Wall Street Journal, OpenAI recently missed its own target for new users and revenue. Stumbles that have raised concern among some company leaders about whether it'll be able to support its massive spending on data centers. OpenAI is, of course, pushing back on this story. To me, honestly, the revenue numbers is one thing. Obviously, this is a new category. You're going to have revenue misses, right? It sort of comes with the territory. But to me, the bigger part of this story is that OpenAI had a goal to hit a billion ChatGPT users by the end of the year in 2025. It missed it. It's still not even announced that number. So the latest that we have is 900 million active users of ChatGPT. That came in February 2026, and the billion is yet to be found. Now, of course, it's still a big product, but we saw torrid growth last year and some big moments with the Studio Ghibli stuff. Voice, of course, was important. Now that consumer story is tailing off, and it makes me wonder about the future of consumer products and generative AI. So what do you think? Well, are they an enterprise company or a consumer company? I think, like the new focus mantra, the new pivot to enterprise, this is, I've been saying this for months now, that they have to have some kind of general focus and decision and strategic direction, or is it codex and actually the developer communities where they're going to see growth? But I think going from 900 to a billion, it is kind of amazing because GPT image 2 went mildly viral, certainly as much as the Studio Ghibli stuff. When was that? Six months ago? Eight months ago? Whatever it was, it all times itself. In AI years, right? It's like, who knows? Could have been last week, for all I know. But this is exactly where, like, maybe you don't need to get to a billion users, and that's okay. And it seems like the strategic direction they're going. I saw one thing that showed they went from 3 million users in codex to 4 million, and that was impressive. And that is impressive, but trying to do everything all at once and actually pushing back when this reporting is coming out rather than Sarah Fryer saying, you know what? We're okay not hitting a billion users. And that's fine because the way we are building our business is not purely going to be on ChatGPT consumer growth, but they're trying to have it every way. And I think that it's potentially setting them up for issues as like more official numbers come out as they try to push to IPO. Okay, so I definitely, let's put a pin in the enterprise side of things and OpenAI's response to the story. By the way, I have it on from a spokesperson. This is ridiculous. We are totally aligned on buying as much compute as we can and are working hard on it together every day. So OpenAI is vigorously disputing the fact that they are wondering about whether they should buy more compute. And you could even say that that's going to be their strategic advantage over Anthropic as this battle heats up. And we'll talk about Anthropic's forthcoming fundraising pretty soon. But I think that we'll get to enterprise. We've been talking a lot about enterprise, but I am curious to hear your perspective on the fact that this has sort of hit a wall with consumers. Let's take all the data points together. ChatGPT should have been at a billion. It's not. Consumer sentiment or sentiment overall about AI, extremely negative. In fact, I had somebody come into the comments on Spotify and be like, I heard an ad for your podcast. F you and F AI. Like that's how negative. I'm like, what? I'm not even in the industry. I'm being critical here. You know, but just the very fact that I'm talking about AI got me a double F you this morning. And then the last thing, and I think this is important. This is new data that I got from Apptopia. So this is exclusive to the podcast here. Daily active user growth across all AI apps. So that includes Perplexity and Claude and the Geminis of the world. ChatGPT growth is not just tailing off. It's down. So you can see that, you know, while like the space is growing overall, the growth is completely flatlined and it's been down, I think from according to Apptopia, four of the past five months. So this is like, this is a real slowdown. So what's happening? Well, does the Apptopia data actually, I mean, their name is Apptopia, include like app usage or is it mobile web and web usage? It includes app usage. So that's interesting because we also, and I'm going to get to this in a moment, but maybe it's worth bringing up now. If you are a user of this, of these apps, your usage is actually up. But the gross addition of users is slowing down. By gross I mean, you know, sort of the number, not like as in this is a nasty thechness. Yeah, exactly. Could have been last week for all I know. But, but this is exactly where, like, maybe you don't need to get to a billion users and that's okay. And it seems like the strategic direction they're going. I saw one thing that showed they went from 3 million users in codex to 4 million. And that was impressive. And that is impressive. But, but trying to do everything all at once and actually pushing back when these reporting is coming out rather than Sarah Fryer saying, you know what? We're okay not hitting a billion users. And that's fine because the way we're building our business is not purely going to be on ChatGPT consumer growth, but they're trying to have it every way. And I think that it's potentially setting them up for issues as like more official numbers come out as they try to push to IPO. Okay. So I definitely, let's put a pin in the enterprise side of things and OpenAI's response to the story, by the way, I have it on from a spokesperson. This is ridiculous. We are totally aligned on buying as much compute as we can and are working hard on it together every day. So OpenAI is vigorously disputing the fact that they are wondering about whether they should buy more compute. And you could even say that that's going to be their strategic advantage over Anthropic as this Personal experiences, friends, family, everything, like everyone already has it on their phone. 900 million. I mean, I think like in the US it's probably reached relative saturation. So to me, like the actual growth side of it is not as much of a concern. I do think like, how do they find those next 100 million users? Is it like you don't hear a lot of talk around international growth and strategy from these companies and this whole market? Like, I don't know, like in India, obviously China is going to be its own very, very specific market. Like in Africa, like where is the next kind of vector of growth? Because when you're at 900 million, you've tapped out the US in pretty much, I'm guessing, as much as you're going to. And then as long as the average person who is using it is using it more, it's still, you know, moving in the right direction. Well, let me push on this a little bit further. In enterprise, we're seeing all these different use cases, right? We're seeing, of course, the agentic use cases that we talk about all the time, but we're also seeing purpose-built apps for finance, for legal, for medicine, right? All over the place. Any industry you look, there's a purpose-built GPT app that's actually proving valuable, taking off, building users, and having real like significant valuations. There's a new one I hear about every week. Consumer, it hasn't happened that way. You would think that with the technology this powerful, there would be a breakout of consumer apps. And we're going to get into big tech earnings in a bit. Meta is case in point, right? They have had this technology. They're trying to build a consumer app with it. Yes, they're trying to develop the foundational models, but they're also working on the applications. It's just not taking off with consumers is my point. Do you think I'm wrong about this? Yes, completely. And this is going to be my rant for the week or one of many potentially, but it's interesting. Like the entire meta ecosystem experience is now powered by AI. Like the way everyone talks about AI does not have to be like, yes, meta AI, the chat experience. I don't know anyone that's using it. I know they put out crazy numbers and I'm sure people get kind of looped into interacting with the chat experience. But every time you scroll your Instagram feed, the recommendation engine that's powering the ad that is being served to you, this was meta's like greatest. I mean, they broke out of the Apple iOS 14.5 prison and kind of showed that they can, why everyone is more addicted to Instagram than ever. Every ad that's being created probably has AI component to it. Like I think actually Facebook is just one big AI slop fest if you've logged in recently. So like I think the end user having a chatbot experience like ChatGPT is where everyone's head goes into. But in reality, so much of consumerization, Spotify, the number of AI generated songs for better or for worse that are showing up on the platform and getting plays is increasing. So I think the big kind of like disconnect here is everyone is thinking consumer generative AI or consumer AI overall is, are people downloading and asking questions to a chatbot? Meanwhile, every existing consumer experience, restaurants on DoorDash are creating much more engaging images using like it's happening everywhere. So I think to me, that is the real consumer AI application, not how many people are using ChatGPT. That's fair to say. And apparently Amazon even has like these little AI powered podcasts about their products. And Katie Natopoulos from Business Insider was like playing one of the podcasts about, I think, eczema cream. No, no, diaper rash cream. Diaper rash cream. You can write your own questions in the host will address it. And she just writes like my butt hurts. And they're like, that's a great question, Katie. Amazon, like the growth in Rufus from what I've been hearing is actually spectacular. I have been using Rufus more myself. Now, what's Rufus? Rufus is Amazon's AI. Actually, it is a chat experience for the most part, but it's basically, so it's like you can ask questions. You can either ask questions directly in an Amazon product page. Now my Amazon and probably because I've been using it more, the entire left rail when I log in is actually Rufus. So it's, they are pushing people more towards it. Again, you ask questions, it not only gives you recommendations. You can ask questions about a product. Does this have USB-C charging? When I was getting something recently, but also they're actually injecting their entire Amazon ads business directly within Rufus as well. So like when we've been talking about, will ChatGPT have ads? They're already building out this entire AI advertising ecosystem directly. So I think, but it's embedded in the product. It's not someone going to ChatGPT and ChatGPT shopping has not taken off in the way everyone is expecting six to eight months ago. Meanwhile, Amazon is figuring it out. So, so I think there's so many pockets and, and I'm, I know I work in the AI industry and I don't want to be biased, but you know, I can be very skeptical about this. But this one, I have to push back on consumers are engaging with AI more than ever. Okay. Let me, let me push back on this one more time, then we can move on to our other stories. First of all, I would say you, and we've had this debate before, I think you really have to take the recommendation engines, the AI-based recommendations, recommendation engines, and put them in one category and then the generative experiences in another category. We've had AI-based recommendations for a long time, like feed sorting and ad serving. But what I'm talking about specifically is how does generative AI translate into real consumer experiences? And yes, you can chat and with Amazon and you can listen to a podcast about diaper cream. You know, that's all exciting. But what I'm saying is, where are like the wave of consumer applications that, you know, we might've expected? You know, there's no, you know, remember character.ai? Like there's no like AI character or AI friend app that's, that's taking off. There's no like explore history app that's taking off. There's no like, you know, AI stylist app that's taking off. There's no AI prominent AI dietician that's taking off, etc., etc. There are definitely, you know, categories of consumer products that just do not have a consumer, a generative AI application taking off in a way that you thought it would. And then again, like you're seeing this slowdown in ChatGPT growth. Not that it's nothing. I mean, it's going to hit a billion users. The question is when. But like even OpenAI and they said they were stretch goals, but even OpenAI anticipated that it would hit a billion and it just hasn't. So what's your response there? This is actually a perfect example. Are you, I'm guessing this is as far away from your everyday habits as possible, but have you ever used a dress up app? No, this is not something I've used, but that was a really good prediction ahead of time. Well, no, this is another, like working very closely in the retail and consumer world. This is something we'd start experimenting in my previous experience at Adore Me, like, like virtual dress up apps and try on apps, like actually have been exploding in popularity. Then you have Google actually within Google Shopping. Virtual try on is actually gaining a lot of ground where you can actually find a model exactly your size. You can even upload your own picture and then you can actually try on items within the Google shopping experience. Those are all generative experiences. Those are all not going to show up in a AppTopia like ChatGPT experience, but, but I do think, again, it's being integrated into the things people are doing every day. And also LLMs are feeding into an Instagram like their recommendation engines. It's no longer just machine learning anymore. So it's still embedded in there as well. Okay. Look, I, I think the reason why I'm bringing this up and the reason why I wanted to start the show this way is because while we have, of course, these, this concrete data point from OpenAI, but obviously everybody is, every company is making this pivot into some form of agentic type of experience like the codex and the cloud codes of the world and the enterprise move. And so my question really is, are they making this move from a position of strength where like they have, you know, you would like to have massive growth of ChatGPT, but to see that there's potential in, in these, this enterprise and agentic application and say, okay, we're just going to place our bets there. Or are they moving out of a position of weakness where like, oh, it's not growing as much anymore. And now we have to make our move. So, so that's where I can turn and get skeptical again. I think, I think they're moving, like from a, it is a strategic mistake. I think rather that, and, and my, my kind of like hot take on this is when you have like a company that's a developer first culture, everyone is going to get more excited about codex and why is everything like moving to the command line? Most average people are never going to do anything from a command line interface. Yet so many of these projects, so many of these products are moving in that direction and people get very excited. And I even see all this stuff around how like everyday users are going to be actually like in the command line using codex. No, they're not. Like, so I think it's a bias within these organizations because they are developer first cultures. And I think, I think it's a mistake. I think there's like a lot of opportunity from everything I 4.7, you just see all this negative sentiment come out around cost, and people instantly start stepping back a little. Then Codex comes in in 5.5, and like, it's, I don't think when everyone is rushing towards the same thing, that for a company like OpenAI that has such a foothold in consumer, it's the right decision. Your advice to OpenAI would really be like, stick with consumer, don't give up on the, on the, um, Sora type stuff and, you know, try to own the consumer side of generative AI as opposed to shifting to Codex. Yeah, unless they're almost accepting Google will beat them at it. Unless, and which, which is not unreasonable. Like, when you are Google and you're already on the, I don't know, did you see this study around how, like, Google, I mean, in an evil way, like, giving Chromebooks to every student in America, and now the actual YouTube utilization, like YouTube usage during school hours is up, like, exponentially. But I mean, for, yeah, but for better or for worse. Well, hopefully they're watching Big Technology podcasts there. Students. As long as the first graders of America are just, actually, my son, who is in first grade, he, if I ever play our podcast in the car when we're driving, he gets so mad and he's like, this is the most boring thing ever. So, I'm sorry. I don't think the first graders, that, that demographic is, is our biggest fan. These are the people that we're angering. First graders and anti-AI listeners. Hate mail from both. These are the constituencies we will not win over. He's leaving two-star reviews without me even knowing on my phone. But Ronjon, I mean, I, okay, so this is the thing, that my other side of it is, even though these, let's just take this stuff to be true. Even if it were true, revenue miss, user miss, but deeper engagement, I would say OpenAI is heading in the right direction with Codex. I mean, if you think about Anthropic, right? Last July, I was in Anthropic speaking with Dario. He was happy that they were making $4 billion ARR. Now they're at $35 billion, potentially. There is a tremendous market opportunity to go after with this agent style use case in the enterprise. And so, to me, like, if OpenAI thinks that they can pass Anthropic because they're going to have more capacity and potentially on par or better models, go there. No? I mean, I, I work in that at Ryder. Like, that's, I mean, I see it firsthand. It's very attractive and it's like, when it's working, it works very fast. And, but it's competitive. It's also like, when it, for a company of OpenAI's size, again, at Ryder, that's, we've been enterprise only for our entire life. So, like, that's the game. OpenAI, it's not, it hasn't been the game, and they have this asset of 900 million users. They can be integrated directly within everyone. And, and the important thing here is, you can grow revenue fast. And I, I do think this is all ahead of this, the big IPO race and battle here, because you can grow revenue a lot faster by getting a bunch of developers using your tool, them not paying attention and token maxing and, like, just blowing out tokens and you'll increase consumption. You'll increase revenue very quickly, but that's a short-lived phenomenon versus you have every person in the U.S. You own the verb to search with AI is to ChatGPT something. Like, that is a tremendous asset. And I think they're kind of ceding it to Google right now. Okay. Well, I think we'll, we will, we'll just have to watch this play out. As OpenAI does this, of course, it has the thorn in its side of Elon Musk. And I'm curious how, if you've been watching the trial between OpenAI and Musk this week, and if you have any thoughts on whether this trial will lead to anything of consequences, of course, Musk is suing OpenAI for taking his money, going from a charity, from a for-profit, from, from a charity to a for-profit, unjustly enriching themselves and betraying the charitable trust value of that case is taking place this week. What's your read on it? It's rare that listeners will hear me agree with Elon Musk, but I think this is one case, like, it feels like at a very simple logical level, this is, they were a nonprofit. And that was the entire founding story for a long time. I mean, they are a nonprofit. Hold on. What, if the current status, and so much happens that I can't even remember, have they converted or not? Yes. They've converted, but they still have the nonprofit arm that owns a certain, that owns a certain amount of, yeah, yeah. Like, we've joked for a long time around how opaque the structure is. I think it puts Elon Musk in a pretty good, just from a very human logical, like, if you're trying to convince a jury, I think it's a pretty good argument. I think there's been zero accountability for any large technology company for so many years that the idea that anything would ever happen that would actually derail the business because there's just so much vested interest in it. Like, I don't know. I don't, I, the, the cynic in me just assumes nothing will actually happen. Maybe there's a fine. Musk and Sam put on a good show. But do you think there will actually be any consequence coming out of the trial? Uh, no, I don't think so. I mean, maybe there should, maybe there will be a fine to OpenAI because like, they'll have to end up paying that money to the nonprofit. But I agree with you. I think that Elon has a leg to stand on here. I mean, he gave $30-plus million to found this thing. And he currently has like no share in it at all. I don't see how that's fair. And of course, the OpenAI argument is like, well, Elon gave this as a donation to a charity. You can't look at it as an investment. And I'm like, well, of course you gave it to, as a donation to a charity. You were a charity. You set up that structure with him in the beginning. If you began as a for-profit, you would have looked at it as, looked at it as an investment. Now I know Musk is trying to get, Musk and Sam Altman removed, I'm sorry, he's trying to get Sam Altman and Greg Brockman removed from the top of OpenAI. I don't think that's going to happen. But I wouldn't be stunned if the jury ended up siding with Musk here. And of course, it's advisory, so we'll see what the judge does. I don't think the judge is going to blow up OpenAI, but there could be some consequences. Like, but what, though? A couple, billions, billions going from, from the for-profit to the nonprofit. I wouldn't be stunned. Like many billions. Like a significant amount of billions. And by the way, that could hamper the whole, you know, build out the, can you imagine you're an investor and you put all this money in for them to, you know, have database capacity to compete against Anthropic and then you have to, and it has to go elsewhere. I don't know. So the interesting part here is, one, the fact that Grok is a direct competitor, XAI, like, it just makes the whole thing even just richer, I think, in terms of how they're approaching this. Did you, did you see that Elon was, like, promoting the Ronan Farrow, Sam Altman article across Twitter X? Yeah. So talk about what happened there. Yeah, so users were reporting. It was actually like a new UI experience almost of like having an article pop up, both in the standard ad format, Elon retweeting it, but also even like just popping up at the bottom of your screen, the Ronan Farrow New York article about Sam Altman having many faces and which, did you read it? It was, if you've been following Sam Altman and OpenAI for a long time, there wasn't anything groundbreaking in it, but it Yeah, but it painted a pretty strong picture, especially if you're not following closely. But it's still funny to me that, like, this bastion of free speech and non-manipulated speech, supposedly of X, literally the owner going to trial, is able to kind of just manipulate and control what people are seeing. Do you think that OpenAI kind of has a Zuck-Winkelvi argument to make here, which is like, if you were, if you were so smart, you would create a Facebook, but you didn't. Like, they could point to the fact that, like, most of the value has been created by them and Elon has sunk billions into building XAI, which has had mixed results at most. Oh, that would be… Has that been said yet? Because if you're listening, Sam, that's the argument. Like, I feel this, this whole thing is for show. I mean, I think, like, they've both recognized and Elon's trying to kind of like cut them at the knees ahead of their IPO boost, XAI. Like, obviously there's a strong show element, and that would be the greatest. It's like, how's XAI going, bro? Like, you already paid your $44 billion for X and for Twitter, and you're jamming that into everyone as much as possible, but we built something people love. We basically, like, invented this entire industry right now. How are you doing? I will say, though, Not a good product, but like the actual chatbot experience from every time I've tried using it. But it's just like, to me, it still feels like if you already have the consumer's undivided attention, they don't have to open up another app and experience. Like someone should be killing it on this, whether it's Meta, whether it's Elon and X. Like, but it hasn't happened yet. This is the point I was making at the beginning of the show. All right. All right. All right. Thank you for seeing the light. All right, I guess that chatbot, I guess Google has shown. Google, for real? I don't think so. No? Do you think Google is this great hit consumer AI chatbot? I mean, Gemini, like funneling users from your core experience to a standalone app, Google has shown they are able to do that far more successfully than Meta. I mean, I think, like, based on Gemini's numbers in the consumer market, they've shown you can do that. Okay, before we go to break, because we have a lot more to cover today, you highlighted a section of dialogue in this court case. You want to share a little bit about why that's important and what it is? Yes. So one of the... There's a few interesting, really interesting parts that came out so far in the trial, including Elon playing like logical jujitsu about like, it's a yes or no question. That's like asking me, do you beat your wife? Which, I don't know, like doing that in court is just so ridiculous to me. As though it's like you're... I did high school debate and like, that felt like the kind of thing you would do when you were a freshman. But, more important, relative to the industry, Musk was asked, do you know what distillation is by OpenAI's lawyer, William Savitt? It means to use one AI model to train another model. And he was asked, has XAI done that with OpenAI? Musk replied, generally all the companies do that. So that's a yes, partly. Musk continued, distillation is a technique where a smaller AI model is trained to mimic the behavior of a larger, more capable model, making it cheaper and faster to run while preserving much of its performance. So it's... Actually, and he continued, the Savitt, has OpenAI technology been used in any way to develop XAI? Musk replied, it is standard practice to use other AIs to validate your AI. I think like, this is significant because I think the distillation conversation, when it comes to Chinese models in DeepSeek, has been a pretty loaded one. And if the fact that he's just admitting this openly and saying it confidently, still, like, from a commercial perspective, what does that mean is kind of crazy to me. Like, you would think... And maybe there... I guess there's probably not a lot of law and regulation around not doing this, but it's still, I don't know, again, from a purely commercial perspective, I was shocked that he was saying this. Were you? Yeah, definitely. No, it's stunning. And clearly it's happening everywhere. And it goes to sort of a question I asked Greg Brockman last week, which is that, like, is it going to be economically viable to train these models if you just get distilled? And I don't know, there's coming... There may come a point where, you know, right now we're seeing real leaps in every new model, to a degree. And it might come a point where it sort of levels out. And once that does, you know, how far is the distillation going to be behind the proprietary stuff? Probably not that far. And so that sort of gets to the question of, well, do we end up seeing sort of intelligence at a certain point commoditized and compute at a certain point commoditized, and we end up in a price war because everything is basically delivering the same? And so then you compete on price. I mean, that sort of... That was the logic behind this kind of memorable quote that Mark Cuban gave me in the episode we did on Wednesday, where he said OpenAI is shitting money away at scale because that that's his belief, is effectively you kind of get to that place. What do you think, Ronjohn? Well, are you saying that the models will be commoditized and it won't be about product and price? Yeah, that could be the case. Okay, okay. I'm just checking, just checking. I'm advancing this theory. I'm not throwing it out. I think it's a possibility. Well, actually, on that, I don't know if you saw, like, one of the more, on the topic of both distillation and price, there's a lot of hype around DeepSeek v4 is supposed to be, again, like top level frontier model at a fraction of the cost that almost certainly, like proudly, is distillation at its core. And then, like, I don't know, had you seen like Brian Chesky, who's I think been on the show a few times, was talking about... Yeah, okay. So they're talking about using Qwen from Alibaba from a cost perspective that basically, and I do think moving to a world where let's say you use Anthropic and OpenAI to actually build, but then start to cost optimize towards cheaper models. And maybe it's within their ecosystems. Maybe it's just an open free for all in terms of any model. I do think that's where things will go. But did you see, there's apparently like, a House of Representatives recommendation around, like, banning the use of Chinese models and like actually calling out Airbnb specifically. Really? No, I haven't seen that. I mean, I have seen, I mean, if you look at like apps like Perplexity, for instance, like, they'll allow you to use like the OpenAI or Anthropic models or Kimi K2, which they have, of course, like, they've downloaded the weights. They've post-trained on their own. They've sort of given their own version of that model. But I just don't see the Chinese models going away because ultimately, if you ban the Chinese models, aren't you effectively saying, like, you're banning open source? I mean, there are the NVIDIA Nemo models, which are open source, but outside of that, it's mostly a China thing. Well, actually, so here, so two Republican-led House committees, they're probing specifically Airbnb and AnySphere, which is the owner of Cursor, over their use of Chinese models. So I found this really interesting specifically because after, like, we didn't talk about Meta and Manis last week. Right. I mean, to me, like, first of all, we could definitely get into what's going to potentially happen there. But China, that's like quite the salvo, you know? Like, like, you cannot acquire our technology, even after that technology has moved to Singapore and trying to get out of, get out of the CCP oversight to actually say we're blocking that transaction. To me, actually, like, the U.S.-China tech Cold War, like, heated up significantly when that happened. And then when I saw this, that the Republican House committees are actually like throwing out this idea that you cannot use Qwen or other Chinese models. I think it's going to get, I mean, that whole Jensen Jorkash exchange is going to become without a far more significant or a lot bigger story this year. Okay. This week, I'll just say one thing, then we really need to go to break. This week, I heard probably the best explanation of what Jensen's position is, which is effectively, if you, if you don't sell the American or NVIDIA tech stack into China, you will force the Chinese model makers to build, to optimize, basically, algorithmically on Chinese chips, like chips from Huawei. In the event that they are able to make those optimizations and in some ways, you know, outpace the American models or become an appealing alternative, they could potentially build those on Huawei chips alone and not make it compatible on the NVIDIA stack and then do their own form of export controls on the U.S. or to the rest of the world and basically have control over AI. So let's say they make state-of-the-art models, models built on Huawei chips, they could hold the U.S. back from actually using those and effectively restrict our ability to have cutting-edge AI. By putting that constraint on them, you sort of put yourself under the barrel in that way where you could potentially not have access to the AI that you want. I think that's a circular but reasonable argument. But question then, should large tech companies in the U.S. be allowed to use Chinese models? Yes. I mean, you should be able to download the weights, do the work on your own, and then run them. I think so. Okay, but only the open source side of it, not directly connecting to the Alibaba QWEN infrastructure the same way you would to an Anthropic. Yes or no? It depends what you're doing. It's a yes or no question. God, Mr. Senator, I'm going to say yes. I'll say yes. I don't have a problem with it for now. Until we see newer things. I don't think it will lead to a clear catastrophe right away. Like, is the fact that you can't say something? I mean, I don't know. This is kind of a weird thing to go down, a weird rabbit hole to go down. But is the fact that you, like, can't get straight answers about Tiananmen Square going to impact which hotel or apartment room you book on Airbnb? That would be weird. Well, maybe feng shui. I say this with a Taiwanese mother-in-law, could start injecting itself into Airbnb successfully. Maybe that would be, wouldn't that be good for everybody? Exactly. So maybe this is what we're both arguing for. Okay. That form of soft power, I'm for. 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And because it's continuously analyzing real workflow activity, the insights stay current instead of going stale the moment a process changes. You can see which workflows are happening, where time is going, and which tools are involved. It automatically surfaces top issues, explains why they're happening, and even recommends ways to fix them with estimated time savings. And importantly, it's built with privacy in mind. So activities only captured in admin-approved business apps, and user-level data is anonymized by default. The kind of visibility that used to take months, now it's just always on. If you're ready to stop guessing and start seeing, visit scribe.how slash bigtech. That's s-c-r-i-b-e.how slash bigtech. And we're back here on Big Technology Podcast Friday edition. Just to continue going on with my conversation or my point here about AI consumer. If you look at the earnings that came in this week, if you were a cloud company, you were very happy. If you were building AI consumer apps or you were building for consumers, you were either not happy or you were thrilled that you didn't invest a lot into into AI. So let's just break it down. This is from CNBC. You look at Google Cloud. Google Cloud grew by 63% $20 billion. This is by far the strongest growth rate for any period since Google started breaking out cloud results in 2020. That's massive. AWS, by the way, stuck in the 17, 18% growth rate range for the past few years, grew 28%. Microsoft grew 40% Azure. If you are providing the AI infrastructure for, you know, this enterprise build out, you are doing really well. What do you think about this, Ranjan? I mean, the numbers are insane. 63% at that scale. I mean, and I guess it reflects this is like a public company earning breakout that kind of tells the anthropic story as well that we keep hearing about through fuzzy AR numbers. Here we have a clear 63% growth to $20 billion in a quarter for Google Cloud. Cloud is nuts. Like I think, yeah, it's I feel the will there be demand or are we over building capacity? It seems like that question has been answered. Do you see any holes in that story? Yeah. So here's a tweet from Gary Marcus. Sheer insanity. Amazon, Google, Microsoft and Meta collectively are spending more money than the Manhattan project every single month, more than 20 times the Manhattan, 12 X the Manhattan project every year. And what do they have to show for it? None are making major profits on AI. None has a technical moat. A massive price war is inevitable. A few of their customers are seeing major returns on investment. Greatest capital misallocation in history. I mean, here's the question is what these cloud services divisions are seeing this big, massive bump in revenue just downstream of the major amounts of money that the Anthropic and the OpenAI are raising and sort of not, you know, not quite sustainable without those big fundraising. And by the way, big fundraising moments. And by the way, a lot of that fundraising is coming from them. What do you think? OK, I like your circular funding. And again, and actually a lot of that funding is in the form of cloud credits often that is recognized as revenue. I'm not saying that's 100% sure what's happening, but maybe. Yeah, yeah, yeah. So so on one side, I feel like, again, if you listen regularly, you know, I can be very skeptical and I will OpenAI or Anthropic have a successful IPO. I'm not sure. I feel like Gary Marcus and Ed Zitron and them like, I wish they just said, OK, something positive or impressive has happened. Like not everything. Gary has to a degree. He did say that Claude code is a combination of neuro symbolic systems and machine learning. And that's why it's working. Which is fair, which is fair. Like LLMs on their own without a harness, without a product, without like all of this. OK, all right. At least Gary's recognizing it. I do think the the investment in the infrastructure side, it's it's interesting because maybe okay, maybe the one argument against this is obvious that the demand is there and they got to keep building is is maybe if I take what he's saying and extrapolate a bit, is the idea that the economics of how they're investing are flawed, that like the building out assuming constant price at today's growth and today's like revenue, the fact that it will scale linearly or exponentially like that. I maybe it's true that as costs come down, the way the amount they've invested, if DeepSeek V4 and Quinn and others and people are using open source and the actual cost goes down dramatically, then it could be pretty bad capital allocation. Right. I mean, I think we can't, even though the use cases are there, which they are, right. And even though this won't go to zero, we cannot discount the fact that there could be a collapse here because of the very factors that Marcus is pointing out. Yeah, I think, okay. I'll I'll say, and it's true. No one understands the economics of any of these businesses right now. Like what the act, what is a true margin will again, we've, we've seen it with anthropic that just that insane, spectacular growth, the pushback on price and understand it after four seven came out and recognizing that a lot of it is subsidized anyways. So what are the expenses to anthropic? We'll eventually have a more clear picture of like, and then how all of that relates to the infrastructure side. I guess it's fair. No one. What is an average margin for an AI business? No one knows yet. Exactly. So that is something that I, I don't know. I think we need to keep coming back to on this show. You know, at first it was like, is this technology going to work? The technology is working. And the question is like these business decisions that are being made are There's no other way to really describe them than YOLO decisions, right? Nobody knows what's going to happen here. The demand is coming in, but it's a brand new category. There's bumps in the road and we could end up seeing a, a price collapse. I also actually, when you say YOLO, it kind of makes me think like, like the executives, the CEOs of these companies are all in the same circle, which makes this interesting too. So like when everyone around you that you have known, respected, hated, just like, that is your basically social circle or like professional circle, your, your closest LinkedIn connections is saying the same thing. It's going to exacerbate how you think. Like, yeah, it is interesting to me that, and it's a very, the, the Musk Altman trial reminds us this is a very, very small group of people that have known each other, competed against each other. I mean, you know, had spats with each other. Like remember when Zuckerberg and Musk, the cage match, like all types of interactions. And they're all speaking of they're all thinking the same exact thing. Maybe that's another reason everyone could be wrong. Well, it's sort of what makes what Apple has done, even though Apple did try to make this happen, which has made what Apple's done quite impressive that they decided, Hey, we don't want to spend on foundational models. I'm kind of going one 80 on Apple, honestly. They, they, let me just say they, they had a iPhone sales grow 21.7%. They don't have AI on the iPhone. Siri sucks. This is just the counterpoint to what we've been saying. They had quarterly sales of a hundred, $111 billion. I think I foreshadowed it earlier by saying, you know, in consumer, you're probably unhappy if you spent a lot or you're happy if you didn't spend anything. And when I said that second part Could happen. I mean, conventional wisdom now is like, oh, Apple, you did a good thing, and now you're selling your Mac minis. By the way, in the earnings call, they talked about how Mac mini has become an important part of the AI agent infrastructure, and they've also talked about how the new Siri is coming this year. So you might end up getting the best of both worlds. Believe it when I see it. Believe it when I see it. Honestly, if they do this, I will take back many of the negative things I've said about Tim Cook. Actually, I'm going to say something positive about Siri today. Do you know Alexa Plus cannot translate into Chinese? My wife was asking, and we actually have an Alexa Plus and Siri both kind of like next to each other. And then she turned around and asked Siri, and Siri was able to translate something into Chinese. So Siri's got something. I guess it's Alexa Plus, not the other leading ones. But Siri won one battle. OK. Well, that is probably more than it's won in any time in recent history, so we got to give one to Siri. Man, Apple again. Don't doubt Apple. I think that's something I'm learning. All right, let's end today talking a little bit. We have some prediction market news. This is a recurring theme that comes up on the show about the prediction markets. And we have a story, Rajan, you can take us away about senators banning themselves from prediction market trading. Yeah, the U.S. Senate unanimously. How rarely do we see something along bipartisan lines barring senators from trading on prediction markets? And obviously, CalSheet and Polymarket, I mean, apparently it was a few weeks ago, CalSheet said it suspended one U.S. Senate candidate and two candidates for the House of Representatives for political insider trading on their own campaigns. There was this crazy story where a U.S. Army special forces master sergeant actually was charged with using classified information around the Maduro capture that he was part of that mission to bet on, which is just like insane still to me and like the most dystopian thing imaginable. But it's nice to see the U.S. Senate actually restricting themselves from doing something absurd. Yeah, no, I think that there is a growing recognition that some of the prediction market activity can be very cancerous to a society, can be unfair to gamblers. Sorry, to gamblers, which is like, I guess they should know better. Yeah, voters don't care about, but... Yeah, but well, I mean, on the other hand, you could say, well, they're actually like more accurate now. So what do you think about that? Where do you stand on that? So I've seen that argument and kind of like the companies themselves almost use that argument that if a small number of people are kind of driving the market in the actual accurate direction using insider information, that makes the market more accurate. Which is true, but it doesn't make me like this any better and it also rigs it against everybody else. And I think it is, I think if you look at it on a whole, there is a serious, you know, this stuff has only recently been legalized and it's kind of taken as normal today. And I say this as someone who likes to put like a couple dollars on the game when I'm watching anything and put it on like the FanDuel odds. But, you know, there is without a doubt a lot of healthy activity here, but also a lot of extremely cancerous activity here. And it's almost like you're seeing a society that can't help itself. So let me tell you one story before we leave. There's this quarterback in college football at Texas Tech. His name is Brendan Sorsby. He just entered a gambling addiction program for sports betting that could end his college career. This is according to Matt Schick from ESPN. And then Schick posts a article from CBS Sports about the fact that he could miss the season. This is the second paragraph of that article. And this really annoys me. Texas Tech was an overwhelming favorite to repeat as Big 12 champions after acquiring Sorsby this offseason, but now has moved to an even money at plus 100 via FanDuel Sportsbook after Monday's news. The Red Raiders projected win total has also decreased, going from 11.5 at opening to 10.5 victories. And Sorsby's no longer on FanDuel's Heisman odds list after opening at plus 2,500, just outside of the top 10. CBS, allow me to address you for a moment. You are writing an article about a quarterback with a serious gambling addiction problem that may cost him a season in the NCAA and potentially send him right to the pros where his life, you know, may be destroyed because his draft standing will not be anywhere close to where it was before. Maybe destroyed is too strong, but it won't be what it was before. You have no less than three mentions of the odds movement from said person's life-destroying activity. With hyperlinks directly out to those exact bets, to those bets. Now, I don't say this lightly. Get a fucking grip, CBS Sports. Don't do this. This is just a, you know, it propels people into the situations that Sorsby finds himself. And I don't understand how we have a society who's looking at this and saying, we have no problem here. This is disgusting. This is crazy. Like, actually, this is a good call out for, this is the most kind of like weird example of, like, obviously, like how much sports sites have been incorporating odds into even just like TV broadcasting into every, like their websites, apps, everything. But yeah, that is quick. Do you think someone even, do you think this is just AI-generated and the logic around all these, like, incorporating bets is already built into the CMS and like, or do you think someone actually sat down and was like, I'm going to do this? Or do you think someone had to do it and actually felt sick to their stomach? Which of those three? Oh God, I mean, I don't know which one would be better, to be honest. Someone's got to get on the phone with Barry Weiss and say, you know, don't do this, please. I mean, out of all their problems, this is a pretty bad one, though. I'm going to do it. I'm writing a letter to the editor. I'm going to do it. I'm doing it. Dear Barry, first time caller, long time listener. Listen, we've got to talk about CBS Sports. Well, I guess we will end on that uplifting note, Rajan. I mean, Lord Almighty. I didn't think we could get more depressing than OpenAI's missed billion user number, but I think we found it here. So we'll end on the doom and gloom. Generative AI is showing up in consumer experiences. There we go. Now, excuse me while I put a Polymarket bet on when OpenAI will announce that number. Yeah. Just kidding. I won't do that. All right, everybody. Thank you for listening, Rajan. Thanks for being here again. Have a good week. See you next week. All right, everybody. See you next week. And we will be back next time on Big Technology Podcast. 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