Disney's Hulu Deal, UAW Strike Impact, and Guest Chris Krebs

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Hi, everyone.

Kara here.

After we taped this episode, FTX founder Sam Bankman-Freed was found guilty on seven charges of fraud and conspiracy.

He was convicted on all counts that the prosecutors had leveled against him in a jury decision that came really quickly.

The case is just as we predicted.

We felt that he was a thief, plain and simple, and that the jury would see that right away.

Others had thought, and then made the argument that he was just a sloppy manager and seemed to have misplaced billions of dollars of other people's money somewhere else.

When in fact, what he did was what the top federal prosecutor in New York, Damian Williams, said, was this kind of corruption is as old as time, even if the crypto industry is new.

And that is true.

We'll dig into that more next week, but for now, enjoy today's show.

Hi, everyone.

This is is Pivot from New York Magazine and the Vox Media Podcast Network.

I'm Kara Swisher.

And I'm Scott Galloway.

Scott, how much fun did you have on our trip to the White House?

Well, first off,

it was really exciting to be there.

It was intimidating.

All these people were coming up to us, but

it was wonderful.

The woman next to me, this lovely woman, Dr.

Geraldine Richmond,

on leave from the University of Oregon to serve our country, introduced herself and she ended up, she's a deputy undersecretary of energy.

and she's this brilliant professor background in chemical engineering and had won a national science prize and it was just inspiring that somehow the government find goes to the far reaches of our nation and finds these incredibly important people and convinces them to move to washington i thought it was really i thought actually vice president harris did well i think this is something she can own but also it was it was lovely you you were like my i won't call you my mom but my older sister going that's the situation where you seem to enjoy seeing the White House through my eyes for the first time.

So I was very flattered.

Yeah, you, Scott had never been to the White House.

And we went for to the lovely John McCarthy.

That's right.

Thank you, John.

And Ray Montoya, two people, let's call them out particularly.

Ray gave us the quickest tour in America of the White House.

He does advance for President Biden and is a fan of the show.

And John McCarthy took us to lunch who works for Steve Roschetti, who's a top advisor to Biden.

Also, a terrific young person, smart, engaged, working.

I think you were impressed.

We had lunch and then we walked around the White House and then we went to the event, which was what was the name of the Navy room?

What was the name of the room we had the lunch at?

The mess, the White House mess.

The mess, the White House.

The mess.

It's a naval theme thing.

The food was good.

And the staff was amazing.

And what they were trying to show is the situation room is literally across from them.

It's like next to the snack room.

It was impressive yet informal at the same time.

At the same time.

And when if you I have been down there for, I won't go into the reasons why, but that's a flex.

That is not a flex.

My ex-wife worked there.

And we used to be, it's much more accessible.

That's such a flex.

Jesus Christ.

I'm so important, I can't disclose what my meetings were about at the White House.

No, no, no, no.

But yeah, I mean, weren't you amazed by how open the White House was too?

Like how so many people are wandering around.

I was impressed by how many people are walking around with machine guns.

Oh, yeah, that's true.

You don't need those guns.

They could literally, they could take on an army.

I mean, if aliens land, be careful.

They're ready.

Yeah, well, you saw White House down.

They have to.

We met the florist.

Yeah, they have a florist.

Go.

What's with that?

We saw all the flowers and we took pictures.

We took lovely photographs.

And we were, well,

we saw Chuck Schumer from a distance.

He was sitting in the front row.

Give me your assessment of the Biden situation.

Look,

I've been pretty vocal.

He addressed the crowd, just for people.

He addressed the crowd, but he's got,

to a certain extent, in a situation like this, I think especially with the war in the Middle East, his age has turned into a feature as opposed to a bug.

And the thing I noticed about him live is that he's able to kind of laugh at himself.

A couple of times he rolled his eyes when he was talking about technology.

And he's just very comforting.

And when you meet these people, and I didn't meet him, but when you're in their proximity, it's hard not to be awed and impressed by how impressive they are to pull this off and do this stuff.

It's very important.

And the majesty and the heft and the importance of the whole event, you get very, I mean, you feel very patriotic.

You feel very grateful.

And you also feel a lot of admiration for these people, just recognizing the thing I would say about

President Biden and the reason I'll work for him and canvas for him and maybe give a little bit of money is that if there was a coach of, you know, a team and he was older than you'd like, that's bad.

But if everyone around him, his trainers, his coaches, his strength conditioners, the people running the venue, the people marketing the team were outstanding.

You'd want that team in place.

And the thing that struck me when I was at the White House is just everyone I met there, I thought, Jesus Christ, this person is impressive.

So I liked the team and the team, you know, the team of the best players wins.

So it did what it's supposed to do.

I came away very impressed.

Here's my certification.

When he went, he's on prompter, he seems older.

When he's not on prompter, when he made all those asides, he seemed like

pretty good shape, very likable, very fast on his feet, very thinking.

He gets subtlety.

He's funny.

He's funny.

You know, I'm saying the prompter is the problem.

I actually told this to one of his aides.

I was like, when he's on the prompter, he seems older.

When he's not, he's like, you know, a pretty witty, older man kind of thing.

he's also in quite good shape i mean oh yeah especially comparatively um like he's very fit um and i think it was it was he did a good job in introducing it and then he vice president harris also did um we also met tony blinken right walking up the street like walking up exactly i gotta be honest kara i've always mock you for your name dropping you are the definition of soft power we're walking around and you see it's like a i kept thinking they modeled this place after the set of vieb because my total frame of the White House is through the show Veep.

Over West Way.

And you see this photogenic man walking up with all of these young, impressive people trying to get 10 seconds of his time and then descending to the back of the crowd as they follow him, like something out of a movie.

And the guy literally stops, looks at you, and then throws his arms up and goes, Kara.

And I'm like, oh my God, she really is powerful.

Yeah, it's Tony Blanket.

But he also knew you.

He knew you.

He was very.

He was on TV.

He was, but he was aware.

He listens to Pivot.

He's a Pivot fan.

Anyways, but I was very impressed.

And also, I was very, I felt very fond of you because you just seemed, it was like you were taking your nephew on a tour of the White House.

You're like, look at this room, Scott.

Look at this room.

And you're like, isn't your food great?

Well, I was trying to give you a good time because I thought about little Scott not going to the White House.

And most kids actually do, especially on the East Coast, go to the White House at some point.

I'm going to take my boys.

John invited me and my boys back.

Good.

That's really good.

And also, by the way, of course, Scott's like, I got to get to my train because, you know, he's desperate to get to New York so he can hang out in his apartment.

And he wanted to meet Vice President Harris.

Two minutes after I left, you were basically doing shots with her.

I saw these pictures of you and her.

I ran into her.

I was going up to talk to Steve Richetti.

And, you know, you have to stop when the president or the vice president is moving.

And she comes right at me.

She goes, Carol.

And she says, walk with me.

I was like in the West Wing.

And so I walked with her to her car.

and we were talking about the UK Bletchley summit, the AI summit that she was headed to right after this.

And I said, oh, Scott was just here.

And she goes, anytime Scott wants to come, I'll meet him anytime.

So we will expose.

Yeah, it was really nice.

But I was like, literally, it was two seconds late.

Anyway, we had a great time.

Anyways, thank you to you and Tammy Haddad for making it such a nice day for me.

Tammy Hadded was also there.

Anyway, we have a lot to talk about.

Today we'll talk about the repercussions of the UAW strike, Disney's move to make Hulu part of the family, and friend friend of pivot Chris Krebs will join us to talk about the new AI executive order.

But first, Scott, did you see the news?

I'm joining CNN as an honor contributor.

You finally are going to do that whole scratch that TV-itch.

You and Chris Wallace.

It's literally John McLaughlin is rolling in his grave.

Yeah, it's a panel show.

I'm going to let Chris just tell what it's going to be about.

Maybe sometime we'll have him on.

Are they going to call it the four or the six?

It's basically a ripoff of the five.

No, it's the Chris Wallace show.

Okay, it's basically a total ripoff.

Anyways, so it's not a ripoff.

We don't have idiots on the, it's all really intelligent people.

Jessica Torlov is a gangster and very intelligent.

Jeff is amazing, but Pierrot.

Okay.

We don't have Janine Pirot.

Four idiots and Jessica.

Or Jesse Waters, but somehow we'll survive.

Yeah.

We're fancy.

Anyways,

tell us the form.

What are you doing?

Tell us the format.

Well, it's a, again, it's Chris's show, and Chris is the sort of center.

And there's, it's a panel show, obviously, but it's, I'll let them announce all the various panelists.

I don't know who they've announced yet, so I probably shouldn't say.

But it airs on Saturday mornings.

There's a lineup of Christiane Amanpour, Michael Smirkanish, and us, the sort of smart Saturday, I guess.

And the panel is really high level, but it's also, you know, talking about issues of the day.

And

from a really smart perspective, everyone that was involved in the, I was on from pretty much the beginning, but everybody who was in the tryouts, I guess.

were all impressive, speaking of impressive people, really smart.

They want it to be more substantive.

They don't want it to be two second takes from people who don't know what they're talking about.

I think it's meant to be like, let's lean into smart and analytical.

And

I think that's, that's why I said yes.

You know, I've said no to a lot of these things, as you know.

I know I say yes.

Well, you're so busy at the White House.

Jesus Christ.

I blink it.

Every time you do this, I'm going to go blink it.

Blink and blinking.

That was impressive.

I got to be honest.

That was impressive.

Anyway, I'm hoping it'll be a good discussion.

It is also going on, not just live, because I think that's, you know, that's that ship has sailed, as you know, we've talked about, but it's going on Max.

I'm sure they'll do a lot of socials.

I do think they're trying to build a smarter, I think, you know, with Mark Thompson as the head and someone I respect a great deal.

That was one of the reasons I decided to sign on because I have a huge respect for Mark Thompson.

I think they could do some really smart,

there's, you know, there's screamy, there's screamy to remove the screamy.

And I think that's, that's what I'm hoping.

That's my great hope.

So we'll see.

We'll see.

I'll tune in.

We'll see.

Good.

No, you probably won't, but that's all right.

I did watch you on Bill Maher, which I really liked you on.

Anyway, now on to the news.

Hold on to your Krispy Kreme stock, Scott.

Drugs like Ozempic and Wagovi could take a bite out of junk food sales, according to industry analysts who downgraded the stock from a buy to a whole.

You are on this early, Scott.

Bank of America analysts have made similar predictions.

I actually thought you were a little crazy when you said this, saying the total American calorie intake could decline between 1 and 3 percent by 2030.

The S ⁇ P food and beverage industry index is down 10% for the year.

Again, victory lap.

Tell us your thoughts.

This was an easy one.

First off, Novonordisk is now the most valuable company in Europe.

And the initial research I saw on this just absolutely blew my mind.

And then I just did a quick analysis.

I looked at PepsiCo and Hershey's stock since 2000, the last 20 years, are up sixfold.

McDonald's stock is up tenfold.

And you think, well, are they well managed?

Do they have product innovation?

Yeah, but more than that, the number of Americans that have are morbidly obese in the last 20 years has gone from 5% to 10%.

The number of people obese has gone from 30 to 40%.

These aren't these companies, they will never say this on an earnings call, but they might as well.

You could perfectly predict their stock price if you just weighed all Americans.

And now that we might have,

for the first time, not only a flattening in our obesity, but a decline in it, these companies are getting taken to the woodshed.

And the market has already moved on to kidney dialysis machines because if

weight goes down, they'll be...

Yeah, the repercussions.

Yeah, absolutely.

And next is going to be hospital networks.

But the fascinating things about these drugs is they're finding that people are biting their nails less.

They're consuming 60% less alcohol.

And this will be my prediction.

The real test is I believe that as we go out the blast zone of this, what is effectively scaffolding on our instincts to try and update our instincts to institutional production in a superabundance economy.

I wonder, Kara, if for the first time we're going to see evidence that people such as myself begin to address their addiction around social media when they're on these drugs.

I mean, this is, I just, I don't think people, and Bill Maher, speaking of Bill Maher, really pushed back on me, mocking me for saying this could have a bigger impact than AI.

But the $1.7 trillion ecosystem of obesity is just about, is about to be really really hammered and peter just to the other side of that dr attio out on my podcast and just tarlow who is a panelist said you haven't really acknowledged cost you it's not getting to the right people and that's a fair point and to that point i would think every drug company in the world is trying to come up with something and eventually competition will bring prices down but to the point of how inaccessible it is The number one geography in terms of per capita consumption or prescriptions of this drug is also the region that is the thinnest.

And it's the upper east side of Manhattan.

Basically, right now, this drug is for wealthy people looking to lose 10 or 15 pounds that can afford it.

But hopefully it'll get pushed down into the people who need it most.

But I think this is.

I think stock market analysts are going to go to the outer rings and end up at a lot of different places that are going to be impacted by this.

Yeah, I agree.

I sent you that Lena Wen

article about the number.

Like if you could, this is how much it costs to treat someone with a heart condition or diabetes, and this is how much these drugs cost.

At some point, I actually do believe they will, the price will go down and the repercussions.

You know, I think there's a lot of people that are in this

diabetes complex, right?

That everyone needs to be treated.

And addiction, like it just, there's so many industries that live off of it that you could see the repercussions.

But I do believe it's, you know, see, as long as these are safe drugs, as they start to do more and more studies, this is something even the government should get behind, right?

That this is something that should be around,

you know, if we could move, especially with fentanyl issues, like if you could start to really study this, and they are, obviously, they've done study after study around addiction.

It's fascinating.

It really is fascinating.

And it's also, I'm not a doctor, but this is a natural, this is a thing that

we can do.

You know, when we talk about body manipulation, this is the kind of thing you kind of hope you could do it with, right?

That you could change people's feelings around food, especially especially food that's bad for you, not food that's good for you necessarily.

Anyway, fascinating.

You got you called it right, and it's going to be fascinating to watch.

Um, another one that you were you've talked about a lot, you got famous for WeWork stock is down 45% following the news that the company plans to file for bankruptcy as early as next week.

The company was once valued at 47 billion dollars and now has a market cap of 120 million dollars, if you can believe it.

The stock is down 98% for the year.

Uh, is this the end of WeWork?

You know, a lot of companies are thinking of doing temporary offices.

Maybe there's a revival for it.

I don't know.

You are the WeWork guy.

So tell.

I actually think it's not the end of WeWork.

And WeWork is part for a number of reasons, part of the cultural zeitgeist.

It represents this.

kind of hysterical consensual hallucination, capital as a weapon, massive investment out of the Gulf, a guy who was a visionary to the point of actually being what appeared to be crazy.

They've lost $10 or $11 billion, kept throwing good money after bad to try and save face and pull this thing out.

And the one-two punch here was one, a very charismatic founder with long, flowy hair that managed to talk people into overinvesting in a company believing it was a tech company versus just running desks and created just a totally economically unviable model.

But the second part of the punch, if you will, that really

put a death knell in this company as a public company was that the office market continues to decline and their occupancy has gone from 80% to 70%.

Now, having said that, where do we go from here?

I think you're going to see someone come in and buy these bonds, pennies on the dollar, and then under the cloud cover of bankruptcy, which is one of the keys to our success in the United States, go to every bad lease, get out of it, or dramatically negotiate it down under the power of bankruptcy, where you get exonerated from your obligations, move to a franchise model where they say, hey, we work Barcelona or we work Cleveland.

You're actually profitable.

You get to hold on to the brand.

It is a global brand with real equity.

And then you get our technology platform and you pay us 8% of gross revenue, similar to like a Four Seasons or a hotel model.

I think that this is going to be, I think the people who come in here, the distressed investors are actually going to do pretty well because it's a global brand.

I think some of the dynamics in the workplace, work from home, actually lend themselves well.

I had a couple of kids, a couple of my analysts came to London, said, You're there.

We want to come hang out in London.

Mia and Caroline are having a great time.

When they think of temporary office space, they think of one thing.

They think of WeWork.

Yeah.

I had

a big company saying, oh, we're thinking of maybe just downgrading and then using WeWork.

Yeah.

Big companies are taking entire floors.

So it's a good brand.

It's a good concept.

It just had a terrible capital structure.

And bankruptcy lets you exit all the leases that aren't working.

So it's like hotels.

They say the third owner of a hotel is the one who makes money.

The first one is someone with a big ego.

He has to give it back to the bank.

The bank takes it, doesn't know how to operate a hotel.

And then finally, for 30 or 40 cents on the dollar, an actual operator comes in and makes it work.

I think we're at that point with WeWork.

It's going to be a dramatically smaller company.

But whoever comes in and buys these bonds,

if I were them, I would just move to a franchise model.

And I think they're going to make money.

But it really is the end, if you will, of an era.

And the impact that SoftBank had on the entire ecosystem, forcing everyone.

This is a big investor of WeWork for people who don't know.

Forcing everyone to make to dramatically increase valuations.

I mean, I'm seeing it play out now.

I still deal with a bunch of founders that haven't come to the realization that their $60 million company is not worth $2 billion.

And that

Masio Shu-san literally changed the entire investing ecosystem, probably not for the better, but this is end of an era.

I would, I would agree.

I just had a memory, and I didn't put this in my book, of someone in San Francisco.

We were down on, down in an area, I don't, Pacific Heights.

I was over there, which I've never usually was.

And they said to me, this soft bank guy is going to fuck us all.

Like, what he's doing is crazy investing.

Like at the time, and because of the, because they, and everyone had to meet him, right?

And everybody was in this.

He goes, it's so non-economic.

And this guy was losing his mind over it, but he had to follow.

And I felt like it was a long time ago.

And he's like, I just, and then he goes to my competitor if I don't take the money, right?

If I don't take the money, he goes and funds my competitor, which fucks me.

And it was, I remember them being like, this is going to end badly.

And it was a long time ago.

And I just had this memory because we were having drinks.

And it was, he was so exercised about the situation.

Anyway, you're right.

100%.

And what of Adam Newman?

His hair is still flowing.

Well, have you heard anything?

Has anyone heard from Adam with his new concept, Flow?

His flow.

Basically, an apartment building that, again, he's trying to recast as a tech company.

We haven't heard much about that recently.

Good luck, Mark Andreessen.

You keep typing those essays and investing in Adam Newman.

That sounds great.

Anyway, let's get to our first big story.

The United Auto Workers six-week strike is coming to an end as GM and UAW reached a tentative agreement this week, following Ford and Stellantis.

The deals are relatively similar with an hourly wage increase of at least 25% over four and a half years plus a cost of living allowances.

Tentative agreements still need to be ratified by UAW members at their respective companies, but it's a big win for Sean Fane.

Also, Toyota is also talking about giving up some, they gave their workers in the U.S.

a 9% raise.

You know, everybody's that these are non-unionized foreign companies.

We'll get to that in a second.

Why do you think they were so successful?

Again, UAW president Sean Fane, who was sort of a maverick there, sort of broke the cabal of people who they thought were too cooperative with the companies, brought in three 30-something labor activists to make the union more media savvy.

It was a great story in the Wall Street Journal.

We're learning more about their plans for the future.

Let's listen to what Sean Fane said a few days ago.

We demanded a longer contract because one of our biggest goals coming out of this historic contract victory is to organize like we've never organized before.

When we return to the bargaining table in 2028, it won't just be with the big three,

but with the big five or big six.

I think he's so impressive.

I have to say, he's really smart, and he really did push away a group of labor people at the UAW who were sort of in with the companies.

A lot of people felt they were or that they weren't doing, they weren't in the modern age.

So, do you think the UAW will be able to bring some of these non-union companies into the fold?

Toyota, as I said, is raising wages of its U.S.

factory workers, all non-unionized after pay hikes from these deals.

They have to.

Tesla,

he said he's going to aim at Tesla unionizing a 20,000 worker plant in Fremont, California.

Currently has a UAW organizing committee, according to Bloomberg.

Of course, Elon Musk is famously hostile to unions.

So what do you think?

He's put on a masterclass, not only in just what unions are supposed to do, but in negotiation.

First off, he had leverage.

The industry is strong, and he was very strategic.

He went after the factories that were producing their most profitable vehicles, And

he strategically had certain people strike such that the auto industry couldn't wait out the economic livelihood of the workers, such that they wouldn't rip through their strike fund.

He made it such that he's like, folks, I can go a long time having strategic surgical strikes against key points in the supply chain against you.

And the biggest ad for why unions work without unanimity here is that everyone else, per your comments about Toyota, Toyota, is having to respond to these higher wages.

And the big white rhino here, no doubt about it, is Tesla.

And it all points, it's all, you know,

the wonderful thing about this.

You wanted to say white rhino, didn't you?

I did.

I did.

Okay, good.

The wonderful thing about this can be summarized with one piece of data, and that is as a percentage of GDP, corporate profits have never been greater and wages have never been lower.

Now, I've argued that unions aren't the best way to close that gap, but you just have to give it to this guy.

The leverage, the way they deployed this, the media savvy, the results, and the second order effects of other automobile companies being forced to raise their wages.

Look, it's good for America.

Capital has been beating the shit out of labor for 40 years.

And so I hope that we return to a point where younger people and middle class people can have more money, can form families.

Because I think a lot of what's going on, whether it's, you know, just anger, dissatisfaction with government, being willing to, you know, cut someone off in traffic or shitpost them online or demonize people, I think a lot of it stems from the fact that society has lied to them.

They've worked hard.

They're good citizens and they're not, they don't have the same quality of life their parents did.

Meanwhile, social media is serving them up these images that everyone but fucking me is on jets and has ripped abs.

So we need to put more money in middle-class households.

So I look, I think this guy deserves

a lot of praise, and I think this is a good thing.

And I hope it ripples out to the rest of the automobile industry.

And mostly, mostly, I hope it's Tesla.

Yeah, Tesla's, and I mean, Toyota responded, Tesla is making the argument that it's better for its workers without being a unionized, but I think they're in for a world of hurt from this guy.

I think he's effective and smart, and

he looks substantive compared compared to Elon in this thing.

It's going to be his chance.

Elon should be focusing on this over almost anything else rather than his Twitter, whatever he's doing over Twitter.

Elon is smart.

My guess is what he's going to do.

He's going to preempt it, and he's going to raise their wages or give them stock options or something and just try to say, I think he's just going to try and block it.

And the only way he can block it, he can either be hostile, which is not going to work, and he might do that.

But I think what he'll do is I think he'll raise their wages or give them options or give them a free ride on SpaceX or something.

But, anyways, we'll see.

Yeah, he's got to act.

Everyone's dancing to this guy's tune, though, in any case.

Good job, Sean Fane.

Oh, by the way, it was mentioned when

it was at the White House.

It was announced when we were there.

Gene Sperling had worked on it, who works for Biden, and he got to announce it there.

It was a very wide-ranging group of people.

We had a good time.

Anyway, and it was nice to see Biden announce that there.

That was a nice thing to do.

Anyway.

All right, Scott, let's go on a quick break.

When we come back, we'll chat about Disney taking full control of Hulu.

and friend of Pivot, Chris Krebs, will join us to break down the new executive order on AI.

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Scott, we're back with our second big story.

Disney has announced that it will take full control of Hulu, paying at least 8.61 billion to buy out Comcast 33% stake.

That is the floor price.

They've got to value it.

What I'll talk about in a second.

The two companies had a 2019 agreement, giving both sides the option to trigger this deal, which Comcast chose to do.

Most people thought that was going to happen.

The ultimate price for Comcast stake will be determined by the appraisal process.

There's a couple banks.

If they don't agree within 10%, then another one gets involved.

Hulu had a $27.5 billion guaranteed floor value no matter what when Comcast and Disney entered the agreement.

And, you know,

Brian Roberts, who runs Comcast, called Hulu a scarce kingmaker aspect at a conference in September.

I think he's right and also said it's more valuable than what deal was made.

Of course, he has to say that he wants more money.

Some people think 30 billion.

So what do you think about this?

We will solidify Disney as the biggest player, presumably.

And then I assume Comcast will want to buy Warner.

But what do you think?

Well, we knew this was coming.

And the market is just, I mean, really, the market really is an amazing thing.

And when you were looking at streaming a year or two years ago, it was just pretty obvious.

At some point,

a few things are going to have to happen.

They're going to have to cut costs.

They can't sustain this level of spend.

There's going to need to be consolidation and they're going to need to raise prices.

And all three of those things have happened.

And this is part of the consolidation part of the program.

And it goes to kind of capital structure.

And that is initially they thought, as a response to Netflix, we need to create a Switzerland where all the other media players can contribute their assets and we can have a platform that everyone feels comfortable putting their content on.

That did not work.

It turned into a Frankenstein.

And when you have, when you only own...

If you own 20% of ESPN as Hearst does, you get billions of dollars of free cash flow and it makes the value of the company go up.

When you only own, when you're a minority owner in a company that's requiring investment and you may not have that stake long enough to recognize that value down the road,

you don't get the value for it.

So for Disney to get the credit

that they should for being big and dominant in the future, which is streaming, and to be able to make the requisite investments that

that category requires, they need to own it.

And one of them had to own all of it, or all they were going to get was the requirements, the capital requirements

of a platform that requires more investment, but they weren't going to get any credit for it.

So this is absolutely the right thing to do as Disney moves to parks, movies, and streaming, and movies and streaming are synergistic, and the IP flows down to the parks.

This was a smart thing to do for both companies.

Yeah.

Down to this question of price.

Disney announced earlier this year that Hulu would be available on Disney plus the subscribers of both services with one app experience by the end of the year, these one app experiences, so it's not confusing.

We don't know what users would pay.

With this emotion,

they're going to have to divest.

I think ESPN, possibly

obviously ABC, and so they can, maybe they could spin off ESPN to Comcast.

That makes a lot more sense.

There's all kinds of, there's going to be a lot of media stuff in play here, no question.

Meanwhile, Nelson Peltz is still making a play for the Disney board and is now an ally and former Marvel executive Ike Perlmutter, who was his ally before, by the way.

Who's kind of a jerk, as I understand it from those who have told me this, who revealed this week he entrusted his Disney stake in Peltz's fund.

Pearl Mutter was fired from Disney earlier this year as a result of what he calls fundamental differences with leadership.

You know, he's a troublemaker, is what he is.

But, I mean, a legendary executive, but not a nice person from what I understand.

But nonetheless,

Peltz is still over there pressuring Bob Iger.

Any thoughts?

This will get solved.

I mean, we made this prediction.

We said that Nelson Peltz or representatives of Tron were going to get seats on the board.

And Bob Iger is, he's not only kind of a class, he doesn't want to go to the board meeting and gin up a fight.

He's got bigger fish to fry.

So my guess is both sides are talking to each other and negotiating a board seat for Nelson or a representative.

And that's it.

Bob Iger's style is just not to like show up to the start shit posting and show up to the annual meeting in a fight.

He just doesn't want to do that, even though it's not their stake.

They still don't own a large stake because it's a big company.

But he doesn't want to get in a war trying to convince his shareholders and counter communication because all the communications from Trion, Trion, if they go to an annual meeting, it's going to be just how bad Bob is and what shitty decisions they've made.

Bob doesn't need that distraction.

He's a smart person who is able, which a lot of CEOs aren't able to do this, and that is

elevate shareholder interests above his ego.

And so he's just going to say, look, this is bad for me.

It's bad for you.

It's bad for the stock price.

Let's come to some sort of agreement.

Who do you want on the board?

And then let's get back to the good work of adding stakeholder value.

I think that's, I'm shocked it hasn't happened already.

This does not go to the annual meeting.

This gets solved.

They're both adults.

Nelson Peltz and Baibeiger are both adults.

Yeah.

And this move is important.

This Hulu move is important.

They've got to consider.

Disney's got to make a profit at this.

And by the way, Hulu was profitable.

Was it one of the early and profitable streaming ones?

So there is money here if the consolidation happens.

That's really, and then you've got Paramount Plus, MGM Plus, and stuff like that.

But those are small, like nothing burgers that people will suck up.

Anyway, interesting times, interesting times.

Lots of content today.

Even more so, let's bring in our friend of Pivot.

Chris Krebs is the former director of the Cybersecurity and Infrastructure Security Agency and is now a partner at the Krebs Stamos Group with Alex Stamos, who we adore also.

He's going to help us break down President Biden's new executive order on artificial intelligence.

Welcome, Chris.

So let's start at the top.

How effective do you think the order would be?

It is long, it is wide-ranging.

It hits pretty much

every stop on the bus route.

Talk a little bit about it.

It's over 100 pages.

It's going to address cybersecurity, global competition, discrimination.

It directs federal agencies to establish rules and guidelines, includes reporting and testing requirements for AI companies tied to national security.

Give me your overall.

It's a lot.

I mean, you could chunk this thing up and probably get six, seven, or eight individual executive orders out of it.

So, as you mentioned, it's over 100 pages, 111, 118, something on that.

order.

And it got pulled together actually pretty quickly.

So if you think about the landscape of AI and generative AI AI in particular, it wasn't,

it was only really, what, 11 months ago that ChatGPT was made available for public release, November 30th, 2022.

So they pulled together this honking large executive order over the course of, I mean, it's just, it's

that is a very, it's, it's like flops and floating point operations and things like that, honking.

It's very technical.

Yeah.

And it was spearheaded by Ben Buchanan, who is a bit of a name in the tech communities, operating out of the Office of Technology, Science, and Policy.

And under the kind of guidance and direction of the Chief of Staff's Office, and it pulls together all these different elements within the executive office of the president, a dozen or so agencies.

There was a significant amount of input from industry and academia, a bunch of different listening sessions, and then they roll it out earlier this week.

So it's, you know, it's impressive in and of itself.

And I'm also a little bit reminded of, or when I was reviewing yesterday's AI summit, safety summit.

In England at the same time.

Yeah.

And

he who shall not be named on the podcast said something on the order of, you know, right now, AI is 80% beneficial, 20%

potentially damaging.

And I view the executive order the same way.

There's a lot of goodness here.

There's a lot of benefit.

There's educational tools.

There's workforce enablement.

But it does give a pretty quick priority rundown of the things that can be bad in the immediate future related to artificial intelligence.

Aaron Trevor Barrett, so is it a win?

Because there were a lot of congressional people.

Obviously, everybody thinks Congress should be doing this job, not President Biden or by executive order.

And you've been involved in those.

I mean, it's not the way we want to legislate, presumably.

Yeah, I think it is a win, particularly when you consider the transatlantic element, where you have the European Union that has the AI Act, and then you have the UK that's looking at regulation.

I think it sets the right tone and is consistent with the typical American approach to regulation, which is, you know, let's let this play out a little bit and then regulate to prevent the biggest societal harms, as opposed to the European approach, which is regulate first, ask questions later.

So I think it's really it will enable the innovation community and the ecosystem.

I know there's a lot of chatter about regulatory capture and the bigs that are, you know, positioning so that they have solidified the high ground in the AI wars in the coming years.

This is open source versus closed systems.

Well, it's a little bit of that, but also, I mean, there's plenty of the proprietary systems and the burgeoning VC community that wants to get into the proprietary and closed side too.

But I think it does give plenty of opportunities and plenty of pathways for everyone to get into this ecosystem.

And it's not just about locking out, kind of like it looks like in hyperscale cloud battles, that it's not limited and everyone still has an opportunity to get in.

Just for people who don't know, Bletchley Park is about 50 miles from London and was the place where British codebreakers worked during World War II.

It's a meeting that's going on in London.

Vice President Harris went.

Elon Musk is the person you're talking about was there too.

A lot of people.

And it's, of course, where they solved the Enigma,

the Nazi Enigma with Alan Turing.

So it's a very famous place for this, one of the first, sort of the birthplace of this modern computing, essentially.

Nice to meet you, Chris.

If you were to try and guess who are the winners, typically with any sort of regulation, there's winners and losers.

And let's start with companies.

Do you think that the big AI guys are winners?

If you were to discern, again, who are the winners and losers in the private sectors?

And also, from a consumer standpoint, what do you think will be the first effect that the consumer feels?

of this executive order.

Well, on your first point, it's always interesting to see who comments and comes out first when there are big executive orders or regulatory movements.

And there are elements of regulation

within the executive order.

And there's, you know, you heard Lena Kahn at the FTC jump out there and say, hey, you know, there's no AI carve out in the FTC's authority.

Right.

I'll read the entire tweet.

There is no AI exemption from existing laws, and the FTC will continue to promote fair competition, privacy, and honest business practices.

Go ahead.

Yeah, that's a flex.

There's no question about it.

But, you know, Brad Smith from Microsoft's out there.

You had one of the co-founders of Anthropic out there.

You had Aaron Levy from Box out there.

So, you know, the industry, I think, is saying, hey, this was a smart way to do it.

You know, don't, you're not boxing us in.

So, you know, from a winners and losers perspective, I think that the bigs,

particularly when it comes to the large language models, certainly

have preserved their lanes to success.

And, you know, I still see the blockers as fairly minimal in terms of large language models going forward.

And you look at some of the thresholds where the reporting to government kicks in.

And those don't even exist, at least in large deployment right now.

And that's my understanding: is that the thresholds are above what's currently deployed.

It's for the next chat GPT.

This is the flops that we're not going to go into it, but it has to get, they have to do these reporting if they get to a certain size

and inform the government and testing of safety.

And at least at my reading, even the reporting requirements are not particularly onerous.

You just have to tell the government that you're about to train this model.

And then as you go about it, you have to provide the results of any red team testing.

Now, I just, I don't see red team testing, safety testing, as particularly high of a bar to clear for anyone that gets into, that wants to get into the game.

I think it's kind of table stakes.

So

yeah, for now, for now, sure.

But then you have the government procurement side, which is pretty standard.

It's like, you know, if you want to play ball, you must be, or, you know, if you want to get on the ride, you must be this tall.

And so they continue to kind of adhere to power of the purse

requirements.

Do you think the federal agencies have resources actually of what's being asked of them?

Because he also asked the federal agencies to do a number of things.

Yeah, you know, when you start at the national security community, Department of Defense, the National Security Agency, and the Intel community, I think they're...

The Commerce Department.

Yeah, well, so I mean, I like carving these things up.

I look at the IC and DOD, and the things I'm seeing over there are, again, it's smart.

It's saying, hey, if we're going to bake AI into any of our workflows, let's make sure we know how it was built up, how it's getting implemented, and then we have the proper controls in place so it can't go haywire.

The commerce side's a little bit different, right?

It's setting up guidelines for

watermarking and deception of AI generated content.

It's got NIST figuring out how to deploy the AI risk management framework.

It's got CISA in the Department of Energy looking at cybersecurity implications of AI, but also for critical infrastructure, but also sponsoring these grand challenges or cyber challenges that say, hey, how can we use AI to our benefit in software coding to detect vulnerable code and potential

bad spots

for threat actors to get in?

I was shocked.

Typically, when you see this type of executive order or any regulation coming out of the president's,

off the president's desk, immediately there's talking points from the other side saying, why, this is going to ruin America.

And I haven't seen that this morning.

I'm just, I'm curious what your thoughts are.

There's a little bit, right?

The effective accelerationists are right there saying, you got to let us go, do ourselves.

So say, say more,

comment on that.

What so far are the talking points on the other side of this?

They are minimal, but you're seeing a little bit out of, you know, Sandhill Road about,

you know, you guys are bending us in.

You can't stop innovation.

And generally, I agree with the philosophy that we're not going to be able to dial back or rein in technology development.

But I think it is smart that you have to keep looking for where the societal impacts may be and blunt them to the greatest extent possible.

But understanding that, you know,

at least in the U.S., we're not going to lose this race.

And we're not going to do

what, for instance, what the Europeans have done with cloud and some of the other software development innovations that have happened here as opposed to over there.

Right.

Although there is the sort of the damage that was done by having no regulation at the beginning of the social media phase or any of the internet phases, having zero privacy regulation.

And that was the argument then.

Let's not do anything.

Let's let them figure it out.

And there's been damages, as you know, as you've been part of.

Yeah, of course.

And we see that every day

across the internet.

So what about the future of openness in AI?

I want to mention a substack that I think people I like a lot called AI Snake Oil, written by two Princeton academics.

They published a piece cataloging the openness of the various policies in the order.

The piece says it's mostly good news for those who favor openness, particularly since there are no licensing requirements, though it doesn't do much to require transparency in AI development minus the national security.

So people can keep their secrets, except for when it affects the government.

I was a little surprised that there were not any requirements on explainability and transparency in the training sets.

The AI Act has explainability and transparency requirements.

Some of the

legislation that's been proposed in the U.S., Congress similarly has those requirements.

That's not to say that they're off the table.

I just think this is kind of the early shots and some of the subsequent regulatory movements may come.

But to kind of the earlier question,

I do not feel entirely comfortable that we've just left this entirely in the executive branch to determine the path forward on what the guardrails are.

I think the Congress is going to have to move.

I think this is one of the areas where there is some, it's kind of like China, where there's uniformity across

the two parties.

There's a bipartisan need, but I just, I don't think we have the technical policy chops in the U.S.

Congress right now

to get where we need to go.

That said, these AI insight forums are happening on a regular basis to inform the conversation, at least in the Senate.

So I think that's a smart approach.

Yeah.

Do we feel Mike Johnson has technical skills?

I do not.

I'm worried a little bit.

But let's not get into him.

You mentioned it was a big week because there was also the UK summit where 28 governments, including the U.S.

and China, signed a declaration agreeing to work together on AI risks, which is a big deal.

Again, Vice President Harris was there.

Elon Musk, Sam Altman were among them.

Harris delivered an address on Wednesday outlining AI guardrails while also putting the U.S.

forward as the global leader in innovation and policies for this technology.

It was important they put this out before this event, for one.

This is one of the reasons I think they got it out so quickly.

But can the U.S.

continue to lead the way here?

Because as you've noted, Europe has passed the AI Act, and they, of course, led the way on GDPR previously.

Look, I mean,

to your point, getting this out A, before the AI Safety Summit, as well as before the AI Act goes into implementation next year was important because it's kind of one of of it what we've seen is the is the EU has tried to regulate U.S.

companies to date and it has not particular you know it's not been particularly effective GDPR in general has not been a overwhelming success you know you look at the some of the other the other tech related regulations that it you know they're struggling to implement a little bit so I again I think it was it was effective.

It was important for the White House to get out in front and in part signal to industry that, hey,

there's a middle path here that will, again, leave the U.S.

tech industry an opportunity to have some dominance in the AI industry.

Chris, how broad and aggressive do you think either cyber or disinformation using AI and deep fakes?

What would be your guess in terms of what we can expect going into an election year?

And how prepared or not prepared do you think the U.S.

government is to deal with it?

And let me just, I'm going to remind people, you were fired from your role as director of CISA by President Trump after you defended the integrity of the 2020 election.

You're the most famously fired person for being right

in recent memory, but go ahead.

Well,

I think this is kind of the key question right now in its two parts, right?

It's what are the risks and how prepared are we?

I am concerned that we may not be prepared for what's coming because we haven't necessarily seen it yet.

We don't have kind of the reps on keyboard to defend against some of these threats that are out there.

So in terms of specific threats, we're already seeing AI, at least from a cybersecurity perspective, we're already seeing AI show up in threat actors using them for things like phishing emails, really kind of overcoming some of the historical challenges that foreign cyber criminals have had with like poor grasp of the English language, poor syntax.

So we're seeing them really clean up their act on their trade craft.

Similarly, with generative AI for video,

for voice, from my conversations with the intelligence community and folks in the national security space, they are seeing threat actors, nation-state actors, China, Russia, and others, that are experimenting with these tools to improve their capabilities to change and influence the public discourse.

We haven't seen it so much, but we know it's out there.

And really, you only have to look at what happened in the immediate aftermath of October 7th and the Hamas attack on Israel

to give you a sense of just how toxic the online discourse is, particularly in social media, and everyone's rush to jump on the next big thing without any degree of discernment whatsoever.

So I think there's a significant amount of risk.

I don't know how prepared the government is because I feel like a lot of the tools that we have historically had in the toolkit have been pulled back with a bit of a chilling effect from some of the the action out of Congress, the House specifics.

Right.

And also the lawsuits.

And the lawsuits, of course.

And Alex and others can talk about that at great, great length with the chilling effect on academic research.

So

I am,

all that said, I'm still not clear what the specific scenarios and use cases are where you would have the most harmful effect of AI plus disinfo around an election.

And I tend to think it would be time constrained and a very discreet event.

You know, the thing that I can keep coming around to is election day, the morning of election day.

There's some video that has a candidate getting assassinated or something else that could spin out churn and impact turnout for the election.

I think everything else you could probably hit at and debunk fairly quickly.

But when you're talking a matter of hours,

I don't know if we have that.

So speed is important here because it moves so fast.

Let me ask you, because you were Director of CISA, now Jen Easterly is running it.

There have been attacks now on CISA continual, including defunding.

Obviously, some Republican states pulled out of

some of the good things they help people do to defend election integrity.

Where's the state of play right now from your perspective?

Aaron Powell,

particularly from a cybersecurity perspective, CISA is still fully committed, as I understand it, to working with state and local election officials on protecting election systems, right?

The Russians, Iranians, Chinese coming at our election systems and the ability to vote and count and certify.

As for the broader information ecosystem, information disorder, CISA continues to, again, from what I understand in my conversation with election officials, election officials on both sides of the aisle continue to express concerns about disinformation

related to elections.

And in fact, you're seeing Republican and Democratic election officials resigning or withdrawing from office because it's just gotten so toxic.

And some of these were historically those that would push the big lie and stop the steal.

And yet they are kind of victims of their own bad behavior and reaping a little bit of what they sow.

So

24, we're going to see the playbook from 20 run again,

except I think we're going to see it sooner.

We're not going to see it after the election.

In volume, we're going to see it before the election continuing through.

and with President Trump back in the election, probably going to be the candidate,

this is someone who fired you for telling the truth.

You don't have to attack him in any way, but what would you expect if he prevails in terms of systems like election integrity?

He's got an authoritarian bent.

I think that's being kind.

What happens to these systems that are in place to defend the integrity?

Because he's put enough,

he's thrown enough slime on it to create,

and he continues to do so.

How big of an effect is that?

I think from an election process kind of infrastructure perspective, this is where the founders got it right.

This is where individual states are responsible for administering elections

within their borders.

And so the chief executive cannot put their finger on the scale, at least when all the checks and balances are working.

And that's, it worked in 20, and I expect it to work in 2024.

I do think that there are some probably concerns at the individual state levels.

I know that the independent state legislature

case went before the Supreme Court earlier this year and that was shot down where

state legislatures could effectively pick who wins

the Electoral College from that state.

That didn't fly in terms of this Supreme Court.

So at least we blunted some of those approaches.

But this is a, again,

it's one of those things where democracy takes a little bit of work, if not a lot, a bit of work.

And there are a bunch of folks that are working to ensure we make it through this election and the next.

Chris, I just want to put forward a thesis, and you nullify or validate it, or tell us what your gut is on it.

If you can't beat us militarily or economically, you try and divide us or atomize us internally,

and you take poorest social media networks with amoral management or a social media network that is the dominant frame through which an entire generation gets its information, and you start dialing up content that enrages young people and divides them against their parents.

50% gap in pro-Israel sentiment, my generation, a younger generation, and a younger generation, is dominated by their frame as

a platform controlled by the CCP or at least influence.

What is the likelihood, in your view, we're going to find out that these platforms have been weaponized by bad actors to try and divide us internally?

I realize that was a mouthful.

I apologize.

Is TikTok turning them into children of the corn?

I think.

Let's try to keep that tight.

Tight.

Tight.

Thanks for that.

I think it's unquestionable that

our enemies are using our social media platforms as their own

bullhorns to both get their propaganda points out there as well as kind of subvert

stability globally.

There's no question about it.

And this goes to kind of Kara's earlier point about you know, just kind of,

you know, Jesus take the wheel on Section 230 and everything else back in the 90s.

So

we tend to be much more technical and to your point, hard power focused on how the West dominates.

But everyone else kind of looks at it from an asymmetric perspective of the information ecosystem and the psychological impacts of warfare.

And they're much, much better.

We do not have the societal resilience in place right now and i think we're in for a rough go of it uh in the in the coming years all right on that note you like this ai you like this this hundred page open

look i think it's a massive uh you know we're talking a trillion plus in in revenue generation in the coming coming years and so you got to you get you know it's it's a big play and it's a big response from the administration i'm pretty excited about just in general where things go with ai i'm not a doom and gloomer at least you know, Skynet's not here yet.

So, you know, as long as we've got

the rules of the road put down, then I think everybody has the opportunity to succeed.

All right.

Chris Krabs, thank you so much.

Thank you.

Thanks, Chris.

All right.

Good to see you.

Chris is really smart, don't you think, Scott?

He's a very smart man.

Yeah.

Very impressive.

And he got, he was awarded the Moral Compass Merit Badge, and then he was fired by the Trump administration.

Yeah, I know.

I know.

Well, he stood his ground.

It's ridiculous, all this election denials.

And they're all going to jail, like Sidney Powell, the rest of them, they're all pleading and taking deals and everything else.

Looks like Chris came out on top.

Anyway, if you've got a question of your own you'd like answered, send it our way.

Go to nymag.com slash pivot to submit a question for the show or call 85551-PIVOT.

All right, Scott, one more quick break and we'll be back for predictions.

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Okay, Scott, let's hear a delicious prediction.

You've been doing rather well of late.

I don't know what the impact on the stock will be, but I think we're going to see a narrative and some evidence that these GLP-1 drugs that reduce your cravings, the people on these drugs are actually consuming less social media.

I don't know if it's the 2080 rule, but there is a cohort of people that are on social media 24 by 7.

And whether it's porn, whether it's Instagram, whether

it's TikTok or Twitter, it is an addiction in that as it gets in the way of the rest of your life.

And I think we're going to find that people on these drugs reduce their social media consumption, among other addictions.

And I wonder how the market is going to react to that.

So I think that's coming.

I think we're going to start to see news that amongst, you know, in addition to reducing your nail biting, your alcohol consumption, your consumption of Pringles, you're also less likely.

to be on Instagram 14 hours a day.

And then the other one's just a very boring one, but you're about to see, I believe, price increases across the streaming networks.

When Netflix raises their prices.

Well, you are seeing them, by the way.

They've been raising prices.

That's right.

When Netflix raises its prices 15%, it gives everyone cloud cover, especially as they consolidate and have beefier offerings.

Disney Plus, if it includes Hulu, HBO,

or whatever it's called, Macs.

I mean, these guys are really bulking up, and the big player has given them cloud cover to increase their prices.

Like I said, they're doing what they had to do.

They had to cut their costs and increase their prices.

So price increases across Max, Accra, and the new Disney Plus are likely coming.

And now that Kara Swisher is there, it is worth it.

It is worth it.

Uh-huh.

Yeah, that's what I'm getting.

Max.

Chris Wallace is my new boyfriend, just so you know.

Chris Wallace and his delightful red tie.

That depresses me, but you know what I remember when I'm depressed?

He has good hair.

Can I just say?

He has good.

The guy looked 60 when he was 30, and now he looks 60 when he's 90.

That guy has not aged.

He's fantastic looking.

He is a handsome, urbane man.

No, he doesn't even know.

And I'm deeply, deeply in like with him.

Let me just say.

He wears a tie.

His hair is, I'm just saying, his hair.

So just, I just want to cheer you up.

Do you realize, I just found this out, at the Salzburg airport in Austria, there is a desk that is manned or staffed, excuse me, full-time for people

who thought they were going to Australia and errantly ended up in Austria.

Not true.

Not true.

It's 100% true.

It's not true.

There are people every day who landed the Salzburg airport who thought they were going to see the Sydney Opera House.

Got debunked.

This will not happen on my CNN show with Chris Wallace because he likes.

Shrimp on the Barbie?

No, no, not true.

They fact-checked, AP fact-checked.

It is not true.

It is AP.

I have a story here.

Thank you, Lara.

I'm going with it.

No Australian airport.

I'm going with it.

All right.

You stick with it.

This makes me happy.

Debunked.

If that's false, I don't want to live a life of truth.

You're just mad.

I have other boyfriends.

That's all.

I don't know what to tell you.

I don't know what to tell you about any of these things.

Work boyfriends.

Anyway, Scott, that's the show.

We'll be back on Tuesday with more pivot.

I'm excited.

I've had such a nice time with you.

I really did.

I remember saying that to them.

And we went to Napa and then we went to Deep.

Where's our next trip?

Where's our next trip?

I don't know.

So my other family family is asking that I spend some time with them.

I don't know.

Well, maybe over the holidays or something.

Probably Europe, right?

South by Southwest.

Oh, yeah, we got a lot coming up.

Yeah.

We got a lot coming up.

Oh my God.

We're so excited.

Anyway, Scott, read us out.

Today's show was produced by Larry Naman, Zoe Marcus, and Taylor Griffin.

Ernie Unertott, engineered this episode.

Thanks also to Drew Burroughs, Mia Silverio, and Gadda McBain.

Make sure you subscribe to the show wherever you listen to podcasts.

Thanks for listening to Pivot from New York Magazine and Vox Media.

We'll be back next week for another breakdown of all things tech and business.

wait this isn't australia

love that love that

debunked

this month on explain it to me we're talking about all things wellness we spend nearly two trillion dollars on things that are supposed to make us well collagen smoothies and cold plunges, Pilates classes and fitness trackers.

But what does it actually mean to be well?

Why do we want that so badly?

And is all this money really making us healthier and happier?

That's this month on Explain It to Me, presented by Pureleaf.

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