Live from DLD: Microsoft's AI Future and the FAA Meltdown

Support for this show comes from Nike.

What was your biggest win?

Was it in front of a sold-out stadium or the first time you beat your teammate in practice?

Nike knows winning isn't always done in front of cheering crowds.

Sometimes winning happens in your driveway, on a quiet street at the end of your longest run, or on the blacktop of a pickup game.

Nike is here for all of the wins, big or small.

They provide the gear, you bring the mindset.

Visit Nike.com for more information.

And be sure to follow Nike on Instagram, TikTok, and other social platforms for more great basketball moments.

Chronic migraine, 15 or more headache days a month, each lasting four hours or more, can make me feel like a spectator in my own life.

Botox, onobotulinum toxin A, prevents headaches in adults with chronic migraine.

It's not for those with 14 or fewer headache days a month.

It's the number one prescribed branded chronic migraine preventive treatment.

Prescription Botox is injected by your doctor.

Effects of Botox may spread hours to weeks after injection causing serious symptoms.

Alert your doctor right away as difficulty swallowing, speaking, breathing, eye problems, or muscle weakness can be signs of a life-threatening condition.

Patients with these conditions before injection are at highest risk.

Side effects may include allergic reactions, neck and injection, side pain, fatigue, and headache.

Allergic reactions can include rash, welts, asthma symptoms, and dizziness.

Don't receive Botox if there's a skin infection.

Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myasthenia gravis or or Lambert Eaton syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects.

Why wait?

Ask your doctor, visit BotoxchronicMigraine.com, or call 1-800-44-Botox to learn more.

Hi, Pivot listeners.

We've got something special today.

Scott and I recorded this episode live at the DLD conference in Munich.

Let's see how many wiener jokes Scott can make.

I have a dachshund.

Enjoy.

From New York Magazine and the Vox Media Podcast Network, I'm Kara Swisher.

And I'm Scott Galloway.

Hello, Scott.

And this is Pivot live from the DLD conference in Munich, which is Germany, Gudenaben.

I actually lived in Germany for almost a year.

I lived in Berlin.

You were planning to

work for a security apparatus.

You were learning German, right?

Yes, I was.

Yes, I was learning German.

And I lived here.

I had a fellowship, and it was was lovely.

I had a great time right after the wall fell.

And it was really, it was really, I lived in Kreuzberg, and I still speak German badly.

So anyway, we're going to do this in English, if you don't mind.

We're going to start off with topics and then some big stories.

There's a lot of news everywhere.

And we're going to talk a little bit about the EU and its efforts to rein in big tech, which are ongoing, but there's all kinds of things we're talking about.

But we almost didn't make it here.

Well, I didn't because I don't fly private like some people I know.

The FAA briefly halted departing flights in the U.S.

yesterday due to an outage of a system that sends safety alerts to pilots.

The White House and FAA say there's no evidence of a cyber attack.

It sounds like a very antiquated system failed.

I can't believe it.

We already had tons of flight delays this past summer, staffing issues.

Southwest Airlines had a historic holiday meltdown.

People in the U.S.

were thrown off flights because of weather issues and there's a bomb cyclone thing that's happening across the U.S.

and now there's a river cyclone happening in California.

Maybe we should take Europe's Europe's approach and build trains.

That might be great.

But what do you think about this?

Because France is moving ahead with a plan to ban some short-haul flights between cities that are linked by train.

What do you think about this FAA situation?

Just first off, just I should disclose, I am profane and crude, and what you hear is edited.

So this is not edited.

So I think train travel is amazing.

I have my first oral sex on a train.

Okay.

And

so I'll tell you, Kara, that'll be the last time I fall asleep with my mouth open on a train.

I warned you.

I'm sorry.

Go ahead.

All right, more seriously, more seriously, what this reflects is very simple.

And that is, in America, we have decided that we no longer want to invest in the middle class.

And the most obvious productive means of investing in the middle class is investing in infrastructure.

Middle class people need to take

municipal transportation.

They need public schools.

They don't have brittle water filters.

And we in the U.S.

have decided to optimize everything around the top 1%.

So the easiest way to do that on a capex level that is indirect is to slowly but surely squelch public investment.

Our airways, it takes longer to get from New York to Dallas now.

on a aircraft than it did in 1970.

And it's mostly because of air traffic control delays.

And our infrastructure is crumbling.

Whereas

R ⁇ D, we spend more than any nation in the world because then smart entrepreneurs can come along and put a thick layer of innovation across GPS, across the U.S.

post system,

across DARPA, and make billions of dollars.

But when it comes to actual infrastructure, Europe and most modern democracies are just well ahead of America because America has decided that low taxes and a lack of investment in infrastructure is the optimal model.

Now, some of it, some of it was, first of all, it was this antiquated system, which is just shocking that there's always one point of failure.

And I think Secretary Buttigej decided to close it down because they didn't know.

They didn't know if it was someone going to crash planes into each other.

They had no idea.

Yeah, it was a system where pilots communicate about second-tier issues that can low probability, high severity, something on the runway.

Yeah, exactly.

And so the fact that they just had one system and they couldn't like,

I mean, basic internet for teenagers is better than the FAA system, is the way it was explained to me.

And so I think one of of the problems is why you could see something with the staffing issues in the U.S.

because the airlines lay people off.

I don't know if it happened here in Europe, but they laid a lot of people off and therefore staffing issues, everywhere I go, staffing issues in the U.S.

and many places are really severe.

They just don't have enough people, restaurants, airlines, and things like that.

Sorry.

And

so

the other stuff is climate, which you can't really do anything about what's happening in California right now.

I mean, you can in the long run, but there are these severe storms, mudslides, road outages.

The same thing happened in the Midwest over Christmas, which was a peak travel time.

It's that we don't have resilient systems in the U.S., and then the distances are so long, it makes it even worse.

So this idea of we have never had high-speed trains anywhere in the United States, I believe, correct?

We have Amtrak.

Yeah, we just don't we don't make those sort of forward-leaning leaning investments.

So what would it take to do that?

Well, one, I mean, there is a reason along the Eastern Corridor and the California Corridor, you need a density, but what you need is a different mindset that says that we're going to invest, make long-term investments that can't be financialized.

I'll bridge this to OpenAI.

OpenAI was initially funded with the notion by a group of people thinking, we need to fund this because we want to make sure that AI has safeguards on it.

These were visionary people that said, okay, we have to be careful that AI doesn't go very dark places.

Do you know who the biggest funder of that was initially?

A guy with a hair transplant who's a man-child.

Anyways.

Yes.

That would be Elon Musk, just so you know.

Or oh yeah, or him.

But you have,

all of a sudden, people smell money.

And now we've come up with some

weird structure that pretends it's for not-for-profit, but the first $90 billion

are going to go to Microsoft or employees or investors.

So about the time it starts becoming a non-profit, it will have had to have been one of the five most profitable companies in history.

What extraordinary bullshit.

We have the financialization, anything that shows potential, anything sniffs of a profit opportunity, we immediately snap from the public sphere.

I can't imagine the people who initially set this up thinking we want to make sure we have safeguards in it, imagined that all of a sudden it would be the differentiating feature of Bing.

Yeah.

It just isn't.

But we will get to that in a second.

But it's true.

It's really a problematic situation and it's problematic for innovation and getting the economy back.

Another moving on, Parler's parent company laid off the one that Kanye was supposed to buy, which we predicted he would not buy.

And also, I mean, who would have thought he would have said something anti-Semitic all the time?

I don't know.

It was such a shock to all of us in the United States.

It laid off most of its staff and executives in recent weeks.

It's the right-wing Twitter clone.

I've interviewed, well, I got its first CEO fired.

The second one I've interviewed is married to Candace Owen.

Last fall, Parler said it would sell to Kanye.

As we said, the deal fell apart.

Twitter also has its own issues right now.

There are reports that employees walked out of his Asia-Pacific headquarters in Singapore over the weekend for non-payment of rent.

It's discussed selling usernames in online auctions.

I bought you at douchebag.com.

I'm so excited to give it to you for the holidays.

Birthday.

And they're trying to come up with money.

Obviously,

he's still having problems there.

He has recently said he's back at Twitter after spending three days at Tesla, whose stock is off 70%.

And apparently, he's fixed everything in those three days.

Really great works, Elon.

Thank you.

So what do we think of this?

What's going on with social media?

Still really problematic in terms of making money.

Yeah, but we knew this, right?

Getter, Parler, Rumble, the ones that tried to say their positioning was that you'd be liberated around free speech.

And the question is, well, what exactly can you not say on Twitter?

What are you going to get to do on these platforms that you can't do?

So positioning them immediately as far right just turned off advertisers.

They never got any real traction.

But you touched on a couple of things that that Twitter, the second order effects, it's a fun spectacle.

But the biggest impact, the biggest business strategy of 2023 isn't going to be AI.

It's not going to be supply chain.

It's going to be how to be tough without being an asshole.

And what do I mean by that?

The greatest erosion, the greatest fall, the greatest decline in revenues ever incurred by a private company over a billion dollars has happened in the last 90 days.

50, Twitter had a run rate of $5 billion on the day that Musk made his offer.

50 of the 100 biggest advertisers have taken their budgets to zero, which means the other 50 are probably down somewhere between 20 and 70 percent.

And if that's a proxy for the larger network, you're talking about a business that has gone from a revenue run rate of $5 billion

to one to one and a half in 90 days.

I challenge anybody to name a company that either, without some sort of exogenous shock, a natural disaster, disaster, or a war, where that's happened in the last hundred years.

In addition,

that $45 billion that he's basically pissed away, this is already the second worst acquisition in history, assuming it's worth $5 or $10 billion.

He's taken $40 billion into the street and immolated it.

But in addition, he's going to destroy 7 to 10 times the value of Twitter because Twitter, the Twitter virus, has escaped the lab and it's now affecting Tesla.

And who is the average Tesla buyer?

Is it a hard-right Republican in Kansas who's on Medicare?

Who buys Teslas?

It's guys who like to think they're woke, who have a lot of money, who want to say to the world, I'm rich, but I hug trees, have sex with me.

And as a result of that self-expressive benefit that is Tesla, they have the highest margins in the industry.

And what has happened to the Tesla brand?

Its net favorability in the last 90 days has gone down.

And by the way, anyone been in the new Mercedes, I think it's called ESQ or the BMW i7?

That shit's for real.

Yep, yep.

Competition is coming for Tesla.

It exactly.

The thing is, let me Tesla's still way ahead.

I was just visiting Lucid Motors, which is a beautiful car, by the way, another beautiful car.

I was actually almost killed by a German man who's designing it.

He was driving me around the streets of Palo Alto in it, which was frightening.

But it's a beautiful, powerful, luxurious car.

I think Teslas feel like the inside of an egg when you're inside them and you get rattled around.

But they are they all of them acknowledge Tesla's very far ahead from a technology, manufacturing, etc.

They can't make enough cars for the ones that people want.

But competition is coming.

China demand is off.

What you're saying about a Tesla now is like wearing a MAGA hat in the United States for a lot of people, so they don't want to be in them.

A lot of the people who bought them,

who are not MAGA people,

are buying them and the trucks aren't coming anytime soon and the cheap cars aren't coming anytime soon.

As you know, I have a Chevy Bolt, which I love my Chevy Bolt $28,000 in the United States I love it it's it's great like there's no way I would have been a Tesla possibility if they had a lower car but I never would buy it now and and never again and my you know my kids are the same way they don't want to get in one

we were gonna rent over the holidays we were in palm springs and there was a possibility of running a Tesla and my sons go not that douchebag that's exactly what they said I'm like okay we'll get the GMC whatever and it was great it was a hybrid car and it was great the almost near-perfect analogy is Netflix.

For eight years, because Hollywood couldn't get their act together and didn't want to attack a legacy business that was creating billions of dollars by putting a movie with a man in tights and a cape in the movie theaters for six weeks and then putting it onto cable and selling it, they didn't want to make the requisite investment in streaming.

And Netflix really, for eight to 10 years, had absolutely no competition.

Absolutely none.

And then all of a sudden competition came in, margins got compressed, we started running out of credit cards to buy subscriptions, and the stock went down 76%.

Yep.

Tesla really has had no competition for the last eight years.

And I don't think they're way ahead.

I spent, and I'm biased.

I dislike the man.

I think he's a menace and terrible for a terrible role model for young men.

Besides that, I think there is competition coming.

I think the new Mercedes and mostly the Mercedes and VMWs.

And then

Japan's going to be coming.

Anyway, it'll be interesting to see what happens, but Parlor is dead, from what I can tell.

We're going to go through a couple ones quickly before we we get to two big stories.

We've got limited time here, although we're just going to keep talking because we feel like it.

Disney.

Disney getting an attack from Nelson Peltz, who is a very famous and very well-regarded activist investor.

He's done that to PNG.

He's on the Unilever board, and Bob Iger declined to put him on the board of Disney.

Bob Iger, of course, just came back to Disney.

He hip-checked the Bob 2 out.

He's Bob 1.

What do you think of that, very briefly?

So Disney stock is at a five-year low.

And Disney made the mistake mistake that most old economy companies made, and that is they started showing profits consistently.

And once investors get their lips around the crack cocaine of profits, if you take the pipe away, they become very irritable.

Whereas their competitors, specifically Netflix and Amazon,

never got their investors really wet on the metric of

profits.

The metrics were always subscriber growth, right?

Or

viewership.

And so Disney is in this atmosphere where they have to invest billions of dollars.

Disney's business, if you look at it, is actually pretty strong.

The parks are pretty strong.

The Disney Plus on a subscriber level is off.

But the only way they can go toe-to-toe with Netflix and Amazon and Apple is to make these extraordinary investments that really ding their profits.

And the stock's at a five-year low.

A tactical mistake on Iger's part.

I've served on a shit ton of boards.

The best way to silence an activist, the CEO never wants to put an activist on the board because the CEO gets to decide their compensation.

So they want to have people that like me a lot on the board.

And so anyone who feels like maybe they don't like me, they try and get off the board.

They have big egos.

They circle the wagons.

The smartest.

Yeah, this is an error by Iger.

It's interesting because in an interview with me, he even said Disney's not quite big enough, even.

It's just almost too small to compete with the Apples and Amazons.

He was talking about Warner and others.

And so I think this was a misstep by him.

I think it was a, I'm surprised.

He's usually very, he's the cashmere prince.

The easiest way to silence an activist is put them on your board because they, then they have to be, they have to maintain confidentiality.

But there's a, there's a non-zero probability you could see Disney, if its stock continues to go down, to get split up and be put in play.

Yeah.

Because that streaming network is amazing for anyone.

But Disney in terms of their existing capital and shareholder base.

Their shareholder base is used to profit.

It's still such a strong company altogether.

My daughter watches Frozen on Endless Loop, my three-year-old.

And recently, I went to the store and there was frozen string cheese.

And it wasn't frozen, it was frozen string cheese.

And it was all the characters on the sticks of string cheese.

And I had to buy them because she screeched until I did.

And then I texted Bob Iger.

I go, go fuck yourself with this string cheese.

That's enough.

I've spent enough on anyway.

He enjoyed that.

I didn't realize he was wrangling with Nelson.

Pace goes, I'm busy right now.

And I'm like, with what?

The string cheese is upsetting me.

Anyway, let's move on.

We're going to go to our big stories.

Artificial intelligence.

You just mentioned it.

Microsoft is talking about integrating artificial intelligence into its office suites and products.

Reports say Microsoft's products such as PowerPoint, Outlook, and Word could incorporate technology from OpenAI, the group behind ChatGPT.

Microsoft already uses OpenAI products in its co-pilot tool, which helps programmers write code.

And last week we heard that ChatGPT potentially could come to the Bing search engine.

That's a successful piece of shit.

So now it could be revived.

Bing could, Bing, Bing, Bing.

C Bomber started,

introduced Bing at one of our conferences, and he kept saying throughout the interview, Bing, Bing, it was super weird.

But what do you think?

Who's getting the better deal?

You seem to think Microsoft is doing well here.

Why is OpenAI

hugging Microsoft so much?

I've been the whole thing, I'm still trying to wrap my head around it.

And I was watching

Sri Ramaswani at Neva talk about this.

this.

It seems as if already

Sam Altman, who's this really smart guy, says that AI, by virtue of the technology, will likely become a commodity faster.

And at the end of the day, you need the infrastructure and the computing powder.

Supposedly, it's about two cents per query of processing power, which is seven times what a Google search takes.

So if you're going to have hundreds of millions of queries a day, that's real cost and investment.

We're going to lose about $550 million.

But if you think about

he's going vertical, and that is, he wants to find somebody who has the processing powder, who has a huge cloud infrastructure, and already has a front-end monetization tool.

So it already struck me that the people who really understand this company are like, we're not going to have much differentiation

for very long.

We need to vertically integrate forward with a front-end business app and sit on top of unbelievable computing power.

And I can't help but think

the greatest concentration of IQ in history through the 60s, 70s, and 80s was NASA because we got the best German scientists out of World War II.

But the greatest concentration of IQ ever assembled right now in history is at Google.

And I wonder what Google is going to do.

And they've been eating away at Google Workspaces, taking bites out of Microsoft.

Microsoft is still the dominant productivity suite, but there's others.

But they've been eating at it.

And Google has started to really rein in a lot of its crazy stuff.

All his, you know, the moonshot stuff is staying on the moon.

What have you heard about ChatGPT?

I'm still.

You know, here's what's interesting about it is it's the first time when you think about cryptocurrency,

I still believe it's

just Sam Bank and Freed aside, there's still an important tech, the blockchain stuff is important.

We don't know where it's going.

When the internet started, someone said to me,

I don't get what it is.

I don't get what I use.

What is it?

What is it?

And I said, it's everything.

And they're like, what?

I go, everything.

And they're like, what does that mean?

I go, I don't know.

I don't know what it's going to make, but it's everything.

And you can.

You sound like an ad for Bitcoin.

I know.

It's true.

But Bitcoin isn't everything.

You started to see the uses of it, whether it was wet when you got Yahoo, uses, uses, uses.

And then the efficacy became obvious very quickly, right?

Whatever happened to roll out, you're like, oh, I like that.

But you didn't know what it was going to be.

And that's how I feel with ChatGPT.

I don't know what it's going to be, but you're already starting to see either entertainment uses, writing press releases.

There's all kinds of things it could replace.

It's essentially what

spreadsheets, digital spreadsheets did for accounting.

You just plug the numbers in and it does it.

This is going to do for text and then photos and stuff like that.

And so I don't know what it's going to do, but it feels like it has efficacy and you can see it at work, even if it's stupid and it answers dumbly.

That's at the beginning of this.

They're like, someone once said they're like dolphins now and they're going to surpass human brainship ship very soon but they're they're still dolphins right they're incredibly smart and so i think it's we don't know quite what's going to happen but i do think it's you can see you can see in your head where it could work it could start to begin to it's not as fuzzy as crypto like what am i going to use cryptocurrency for except for speculative and i don't feel like doing that the thing we do know will happen is this is the year of ai in terms of fundraising just as everyone showed up and all the money from crypto will happen 98 and 99 saying oh we're not william sonoma we're WiiamSonoma.com.

I can't imagine the number of named new companies that are going to be AI-powered or AI-I don't know if the reality will catch up to the perception, but it feels so exciting.

It's going to be a new gold rush in terms of capital.

Yeah.

And you look at a mental health nonprofit used GPT to provide counseling for 4,000 people before pulling the plug because they said simulated empathy feels weird.

You know,

I guess.

You know, it'll be interesting to see if they could get it right.

One of the issues, when I was at the MIT Media Lab once, they were using therapy for

robots for therapy, and they could never get the eyes right.

The answers were good, the eyes were off.

CNET,

the website, the news website, has been publishing AI-written articles since November.

And next month, an AI-powered chatbot will help a defendant in U.S.

fight a traffic ticket in court.

I mean, things like that.

Like, who would have thought of that?

You know, we'll see.

I think we're going to probably go through that bad actor cycle like we did with cryptocurrency.

I think this is the story of this year, year because I think these big companies, by the way, the most dominant people continue to be Apple, Facebook, Meta,

Amazon, and Google and Microsoft.

So it'll still be the big companies dominating, but it'll be interesting to see innovation.

Yeah, but if you talk about Amazon, Facebook, and Google,

take Microsoft out.

We always talk about big tech as if they're all equivalent.

It's really now big Apple.

But they're headed into the headset.

That's what they're going to introduce this year, this headset that costs.

Oh my God, what an enormous bag of shit that's going to be.

I love the notion that people think are under the impression anyone will put anything on their face that must make them more attractive to other people.

And the first thing that happens when you put anything on your face from a tech company is it's a prophylactic and you'll never consent to the child.

This will be the Hermes watch.

It'll get a ton of press.

A bunch of people will try them.

You'll get one.

And then it'll be in the drawer with your Fitbit and your fuel band.

Yeah, could be.

I just found my Google Glass the other day.

I feel like that was the single greatest line I ever wrote, although now today it's not as, it seems a little bit.

You're more hopeful, though, for those.

I am, I am, I am.

When Google Glass came out,

when Sergei, he took it to the Victoria's Secret thing and they wore them, do you remember that they were wearing them and walking down the aisle with them?

Diane Von Furstenberg, wasn't it?

DVF?

She was there, yeah.

DVF was there.

And they...

They called me and they said, what do you think?

I said, you've rendered supermodels unfuckable.

Nice.

Which I think you can't say now.

I believe it's cancelable at this point, but oh well, I just said it.

So there you have it.

And so we'll see where it goes.

I do think that actually we'll have applications, and I'm very eager to see what Apple does because you know, we didn't think those air whenever those AirPods came out, even though you go on and on, everyone made fun of them.

Great product.

The AirPod.

I think they will make something worth looking at.

And we'll see where it goes from there.

We'll be right back with more from the DLD conference.

As a founder, you're moving fast towards product market fit, your next round, or your first big enterprise deal.

But with AI accelerating how quickly startups build and ship, security expectations are also coming in faster, and those expectations are higher than ever.

Getting security and compliance right can unlock growth or stall it if you wait too long.

Advanta is a trust management platform that helps businesses automate security and compliance across more than 35 frameworks like SOC2, ISO 27001, HIPAA, and more.

With deep integrations and automated workflows built for fast-moving teams, Vanta gets you audit ready fast and keeps you secure with continuous monitoring as your models, infrastructure, and customers evolve.

That's why fast-growing startups like Langchain, Writer, and Cursor have all trusted Vanta to build a scalable compliance foundation from the start.

Go to Vanta.com slash Fox to save $1,000 today through the Vanta for Startups program and join over 10,000 ambitious companies already scaling with Vanta.

That's vanta.com slash box to save $1,000 for a limited time.

Support for Pivot comes from LinkedIn.

From talking about sports, discussing the latest movies, everyone is looking for a real connection to the people around them.

But it's not just person to person, it's the same connection that's needed in business.

And it can be the hardest hardest part about B2B marketing, finding the right people, making the right connections.

But instead of spending hours and hours scavenging social media feeds, you can just tap LinkedIn ads to reach the right professionals.

According to LinkedIn, they have grown to a network of over 1 billion professionals, making it stand apart from other ad buys.

You can target your buyers by job title, industry, company role, seniority skills, and company revenue, giving you all the professionals you need to reach in one place.

So you can stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads.

LinkedIn will even give you $100 credit on your next campaign so you can try it for yourself.

Just go to linkedin.com slash pivot pod.

That's linkedin.com slash pivot pod.

Terms and conditions apply only on LinkedIn ads.

But let's let's have another big story.

We're going to talk about the EU.

This is not your area of expertise necessarily, but I'm definitely paying attention to regulation.

The U.S.

and the EU are racing to regulate tech giants.

This month, European regulators fined Meta more than $400 million.

That's 390 million euros over privacy violations.

Meta says it will appeal.

Meanwhile, President Biden is calling on Republicans and Democrats to unite against what he called big tech abuses and asked for legislation on privacy, competition, child safety.

Of course, all that legislation was in the U.S.

Congress and none of it passed last year.

And now, with

the current

Democrat-Republican split, nothing is going to pass in the House, except for whatever Marjorie Taylor Greene, I'm sure, will do something against Jewish space lasers this year and take care of that problem.

But otherwise, there's nothing going to happen.

The U.S.

is in the lead when it comes to Microsoft's pros taker of Activision Blizzard.

The FTC is suing to block the deal.

EU regulators aren't quite there yet, but that could be a real problem for that deal.

Many think it's not going to go through.

Last month, they sent a questionnaire to game developers.

So

FTC is on the case, but it doesn't look like a great ⁇ there's a lot of competition in games, by the way.

And then there's TikTok.

President Biden signed a bill banning TikTok on government devices at the end of last year.

Meanwhile, TikTok's CEO is on a good wheel tour of the EU, addressing reports.

The company is tracking U.S.

journalists.

They actually have done that.

Should the EU do more to regulate TikTok?

The U.S., you know, they've just created a new

China subcommittee in the House.

So you're saying a lot.

Let's back up.

EU regulation, right?

Yep.

The regulation that the EU has passed is exponentially, has more teeth, more meaning, and is more elegant than anything that has happened in the U.S.

That is correct.

And

from what I understand, I've read of your regulation, you're demanding interoperability, and you're basically saying you're having this really crazy notion that hate speech that is illegal offline is illegal online.

It sounds pretty obvious, but no one's done it until the EU just now.

And this is a big deal.

And it's also getting around this one

problem we faced and that is Facebook decided 10 years ago that the smartest thing we could do for shareholders was break the law oh we're depressing teens and we know it lie

and if they find out we're lying and they fine us okay oh our data is being used to weaponize elections we could get fined no problem we are such a cash volcano that any fine they come up with will not be worth complying with the law.

And part of this regulation in the EU says a percentage of their global revenues.

So that shit gets real fast.

When you start talking about a fine that could be five or seven percent of global revenues,

all of a sudden they go, okay, the world just changed for us.

We need to start doing these things.

And it makes sense that you would have more abiding regulation.

Why?

A third of my class of my students at NYU will go to Amazon.

10 of them will go to Google.

We have huge upside.

We're net gainers in the U.S.

from big tech.

As much as we rail on them, they create ecosystems, a ton of shareholder value,

incredible employment, great highly paid jobs.

You get all of the calories of big tech.

You get the weaponization of election, the coarseness of your discourse, the destruction of jobs, media companies.

You get teen to press.

You get all of it, but you get none of the great tastes.

As far as I know, there aren't that many hospital wings or universities in Munich named after Google or Facebook billionaires.

So you get all of the downside and a fraction of the upside, which stiffens the backbone of EU regulators.

And you're going to see the EU lead in regulation.

Because in the U.S., we have a system, election system, where all you need is to give money to our elected representatives and you make them a compelling offer.

I'm going to give you a lot of money.

The fastest expense, growing expense line for big tech is lobbying in Washington.

There are more full-time lobbyists working for Amazon and living in D.C.

than there are sitting U.S.

senators.

And the value proposition is this.

I'm going to give you a shit ton of money.

Okay, what do you want from me?

I want nothing.

I want you to make sure nothing.

And we saw that happening with Senator Klobuchar, who promised these antitrust bill would pass, the privacy bill would pass.

None of them did.

And they targeted her as someone who's ruining the internet.

And, you know, it's interesting because the Republicans are sort of anti-tech, more focused on China than anything else, but very anti-tech comparatively.

And so is the Biden administration.

And yet, nothing happens.

They just, there's a lot of noise and not a lot of action.

Kevin McCarthy, though, is quite tight with the tech titans.

He's been visiting them and getting money from them.

And so the whole thing is just nothing happens.

No legislation happens and no privacy legislation happens.

And I think it'll be up to the EU to take care of this, honestly.

I think that's the only thing the EU wants to is now pushing tech companies around telcos and things like that.

And of course, Meta vaguely threatened to leave Europe last year over regulation on moving data out of the EU.

Really kind of ridiculous.

In any case, keep going, EU, because...

Can we just talk about TikTok?

Because I know there's a lot of regulators here and a lot of people who have influence.

Yep.

I love TikTok.

I think it's amazing.

I'm a huge consumer of it.

I think it's just incredible.

I think it's one of the largest threats to democracy we've had in the last 50 years.

And if you believe like me, there is no separation between the CCP and a Chinese company where they can disappear for a CEO in four.

for four weeks.

Imagine if Jeff Bezos just disappeared for four weeks and then showed up in Tokyo and said, I've taken up painting.

Right?

That's what they've done.

So, if you, like me, believe there is no separation between the CCP and Chinese companies, if you believe that China has a priority or a strategic imperative to make the West, Europe, and the U.S.

less powerful, and you recognize that all of our children, all the young adults younger than 28, spend more time on TikTok than every other streaming media company combined,

wouldn't they be stupid?

Wouldn't they be be ignorant to not put their thumbs on the scales of anti-Western content, income inequality, systemic racism, democracy doesn't work?

That's what I would do.

This is a TikTok either needs to be spun to Western assets in those domains or it should be banned full stop.

And we keep talking about espionage.

It's not an espionage tool.

That's what Facebook is for.

It's the ultimate propaganda tool.

We are going to raise a generation of civic, military, government, and business leaders that feel a little shittier about Germany, London, France, and U.S.

because the CCP is going to be a lot of

anti-Western content.

It should be banned.

The government had moved to take it off of all government phones, the use of it on government phones and use by government officials.

The second thing is across the U.S., there's lawsuits right now of using it in schools or Seattle has a lawsuit.

We'll talk about that more in London.

But it's really, there's growing controversy around the uses of it.

And it leaves even out the addictive nature of it, which I think is, the problem is it's a great product and it's an addictive product.

You can't stop looking at it.

So they've perfected that in the ways other companies haven't.

In any case, let's finish with predictions.

Then we have time for a few questions.

Predictions, go ahead, go for it.

So I have two predictions.

I tried to do some research on

EU-based tech companies.

Germany's fallen behind.

There's just no getting around around it.

The rise of China hasn't hurt U.S.

It's hurt Europe.

All the

biggest companies in the world, it used to be U.S.

and then Europe.

Now it's U.S.

and China.

We still have as many unicorns.

It's really come, China's rise has really come at the expense of the EU.

And Germany, despite having a much larger economy, has half the market capitalization of its tech companies of the UK.

I don't know why, but clearly there's something.

not working in terms of you look at how outstanding the culture and the education and the work ethic in Germany relative to your tech output.

It's just not working.

But I did find one company, and this is my prediction.

The biggest tech IPO in the EU, it probably won't be in 23, it'll be in 24, is a German company.

Does anyone want to guess?

And I might not be right, but this is my prediction.

The biggest tech IPO in the EU will be a German company.

Solonis.

400 million in revenue last year, growing 50% this year, 90% logo renewal, which is no churn, 140% dollar renewal, meaning everybody that renews is spending 50% more.

Business performance software, this company, every metric.

You know, I spent a lot of time thinking about software and investing.

I've never seen anything like this in a private company.

So I think this is going to be, I hope this inspires a lot of follow-on investments, a lot of VCs pop in journal.

Although difficult because look, they were just showing Stripe and Instacart are way off.

They were supposed to go public.

All these tech stocks are down.

It's going to be hard.

Oh, look, the markets are cyclical.

The wind is in our face now in the world of tech.

But when the wind comes back,

the great companies are still there.

This is a company that every metric I've seen is just killing it.

It's just doing really well.

Do you have a prediction?

I have one more.

Sam Bank and Fried is guilty.

Will he be found guilty?

Yes.

Yeah, I think you're right.

Yeah,

his unmade bed three-year-old toddler boy act is getting very exhausting.

He's a 30-year-old man who stole money from people.

Oh, by the way, Sam Bank Fried said he's not guilty.

Well then, so my other prediction is that in 50 years, when we look back on the West,

supposedly at the end of your life, the thing you regret the most is that you were so hard on yourself.

You wish you'd been more forgiving of yourself.

And I think we're going to wish we'd been more forgiving of ourselves and acknowledge the best trade in 2023 will be the capital, the weapons, the intelligence we are supplying to Ukraine.

For just 6% of the military's budget, we are kicking a murderous autocrat in the nuts over and over and over.

We have removed 50% of the kinetic power of Russia.

We have basically run the world's longest advertisement that Europe and the U.S., when they join hands and actually agree on shit, we are an insurmountable force.

This is, we are going to look back.

We are going to look back, I think, and maybe hopefully sooner and say, why didn't we celebrate each other and celebrate?

Europe is a union again.

NATO is out of a brain coma,

right?

We are no one, no one.

And by the way, no boots on the ground from Germany and the U.S.

That's kind of a free gift with purchase, right?

We're going to look back and think this was this was one of the greatest accomplishments of the West of the last season.

Can I just say, though, I just interviewed your friend Ian Bremer, and his top risk is Russia turning into a rogue state.

Going nuclear.

They're like Iran.

I agree.

Yeah.

He's wrong.

That's the danger.

Anyway, that's a good prediction.

So we're going to get some questions from the audience.

Oh, my other prediction is George Santos is lying about quitting.

That's our hope.

He said he's not quitting, but he's lying about quitting.

Things are so much better in Germany when George Santos was chancellor.

Oh, he'd be so.

He was chancellor.

I don't know if you know that.

No, he was.

He's a congressman who literally, every time he says something, it's a now.

The latest one is he's the volleyball champion.

Like, how how honest?

I mean, I have to give it to him.

He's an excellent liar.

Anyways, they don't know who he is.

Congressman just lied about everything I got.

Yeah.

We'll be right back with more pivot in Germany.

At blinds.com, it's not just about window treatments.

It's about you, your style, your space, your way.

Whether you DIY or want the pros to handle it all, you'll have the confidence of knowing it's done right.

From free expert design help to our 100% satisfaction guarantee, everything we do is made to fit your life and your windows.

Because at blinds.com, the only thing we treat better than windows is you.

Visit blinds.com now for up to 50% off with minimum purchase plus a professional measure at no cost.

Rules and restrictions apply.

Support for the show comes from Saks Fifth Avenue.

Saks Fifth Avenue makes it easy to shop for your personal style.

Follow us here and you can invest in some new arrivals that you'll want to wear again and again, like a relaxed product blazer and Gucci loafers, which can take you from work to the weekend.

Shopping from Saks feels totally customized, from the in-store stylist to a visit to Sachs.com, where they can show you things that fit your style and taste.

They'll even let you know when arrivals from your favorite designers are in or when that Brunella Caccinelli sweater you've been eyeing is back in stock.

So if you're like me and you need shopping to be personalized and easy, head to Saks 5th Avenue for the best fall arrivals and style inspiration.

Questions from the audience?

Let's go.

Oh, and by the way,

I'll say there's a fan named Andreas couldn't make it tonight because he has a daughter in the hospital.

Get well.

We want to say that to him, his daughter.

All right, questions, let's go.

Hi, I'm Ava Rappaport from Munich.

Yeah.

I run an intercultural contra

youngster network, and I would like to understand

why

the world is not supporting Iran people in their fight for their freedom.

That is an excellent question.

The way, you know, there's a lot of attention.

It's something we've talked a lot on our various shows about, and I have to say, I think the U.S.

press is actually doing a pretty good job covering it, and especially the executions and the sentencings just recently.

I've noticed an uptake in media coverage of this.

But, you know, there's

because we'd rather look at some ridiculous circus in the House over voting and whether Matt Gates is smiling or not and that kind of thing.

And so what's happened with at least the Republican Party in the U.S., this is just from a U.S.

perspective, is that they don't have, the focus is on so many other things, including the political chaos in the U.S., that they're not focusing in on what's happening in Iran.

And so there's not a, and then there's Ukraine,

and then there's the weather stuff and the energy crisis and everything else.

And so there's risk after risk, and it gets pushed further down the list.

That's my impression.

I have noticed an uptake, especially as they've become more and more murderous.

That's all you could say.

They're murderous rogue thugs.

They're getting more attention for it.

I'm not sure there's much we can do about it, especially since they're aligned with Russia now in such a significant way.

But, Scott?

I don't think the world is missed that you see news about Russia and you see men fleeing, and then you look at around and you see women taking huge risks and

trying to inspire.

I don't know, inspire a revolution, inspire a better world.

I went to UCLA.

I lived with my my two roommates who are Iranian.

I've never understood why the U.S.

and Iran aren't great allies.

The Iranians I knew in L.A.

felt more American than Americans.

I mean, we just, I felt like this was such a culture that felt so similar to me

as America.

And we don't have time.

It's dangerous.

But I guess the question, I feel like your question was pregnant with a comment, and that is,

what should we be doing?

Because my sense is we put in pretty harsh restrictions and sanctions against Iran.

I mean,

should our security apparatus be more aggressive?

Would you want to see us take military intervention?

I guess the question is, what do we do?

What should we be doing that we're not?

Yeah.

Yeah.

It should be a more unified approach, would be guessed.

All right, another question.

We have time for two more.

Hi, Clyde Hutchinson,

longtime listener, first time caller.

Just say Elon Musk disappeared today.

Okay.

What would yourself and Scott do with all your spare time?

You know, we didn't really talk about him that much today.

Just because he happens to be an open AI investor, that's all.

He's been, he hasn't been quiet.

He said a number of stuff.

I think people are getting tired of him, actually.

Even though I hate to tell you, people write us and say, stop talking about Elon.

But when we do, the numbers are crazy.

It's like Trump, you know, stop talking about Trump.

But then everybody wants to read about him.

And that's an unfortunate thing.

I think the problem is he is really in many ways a visionary and like Tesla and the rockets and even Starlink, no matter what you think, the geofencing he's doing, which I think is appalling.

There's so many astonishing things, and then this jerk shows up on the other half.

So I think it's difficult.

And I think his story is a lot bigger than you think, because he's involved in foreign policy.

You know, he's involved in space travel and national security.

It's more than just him being a jerk on Twitter.

It is a bigger story.

So I don't think he's going to disappear.

I think, though, there is a good, there's an interesting chance if he becomes.

The question is, is he like a Thomas Edison or is he Howard Hughes?

Right?

I think that's real.

And you know how that ended.

Charles Lindbergh.

Charles Lindbergh.

You know, you don't know what's going to happen to him.

The U.S.

has been littered with visionaries like this.

But I got the sense from your question.

You feel like we talk about Elon too much.

Is that accurate?

If I read into the second layer of your question, I just think we have about 25 different stories

You're worried about us?

We're fine with that.

I invite that.

I need more people.

Yeah, we like more characters.

We were thrilled with ChatGPT.

Let me just comment.

On the ground,

the biggest impact on business, I think, in tech is another, is going to be, is inspired by an action of Elon Musk, and that is,

you have to acknowledge, and every CEO in tech

has noticed that Twitter, as much as I was hoping the site would crash, is working.

And it's a minimum viable product right now or an acceptable product with 75% fewer employees.

So you got to imagine in every boardroom.

They love them.

They're going, okay,

what if we took our employees down 20 or 30% and managed to hold on to all the revenues?

And this is a prediction I have for 2023.

I do a predictions tag.

You're going to see revenue growth decline in big tech, and they're going to have the most profitable quarters in history because they're looking at Twitter and go, if he can do this with 75% less people, can't we do what we're doing with 20% less?

And we don't have to tweet terrible things.

You know, I mean, I think they love him.

Trust me, those tech CEOs love what he's doing.

They don't want to do it themselves necessarily, but they will do the actions,

not the

crazy stuff.

He's all his.

All right, two more quick questions.

Right there, this woman right here.

Hi, huge fan of the show, Giselle.

Hi, Giselle.

So I'm an executive coach, and my clients are all dealing with questions very often of mental health.

Scott, you've spoken a lot about it.

You're a huge advocate.

As we think beyond now, how do we take mental health into consideration for the decisions that we're making and the people that we're affecting?

That's a great question.

It's an important one.

Scott and I were just talking about it before.

My son is doing his college things and he's just too wound up.

And they just had a mental health day at school.

And he's always like, why are they having mental health days and not incorporating it into the entire scheme instead of talking about it, which was interesting?

Because Because anyway, go ahead.

Yeah, I think a lot about this.

I struggle with it.

And I think we've, one of the wonderful things about what's happened in the West over the last, just as cancer was destigmatized, I think mental health is in the process of being destigmatized and people are open and can talk about it.

However, I would argue it still hasn't been destigmatized for

men.

I think one way to take your career path off of kind of being a CEO as a male is to talk openly about your struggles with mental health.

I don't think that's a good resume builder.

So I still think there's work to do from a public perception standpoint.

But I also believe that social media, and there's evidence my colleague at NYU, Jonathan Hyde, has shown that about the time social media went on mobile, you saw a dramatic uptick, specifically with young girls and hospital missions and self-harm and self-cutting.

And what's the point of any of this bullshit if our kids aren't mentally well?

So I think we have to hold social media accountable.

And I think we all need to just be,

I can't tell you, whenever I talk about the mental health struggles I've had, how many men reach out to me.

And I'm talking about men who just never talk about it before.

Yeah, you could have a men's movement.

You could be like Jordan Peterson.

Thanks for that.

Yeah.

Thanks for that.

I was thinking about it out loud.

Sorry.

Got it.

And so it just, it's very basic.

When I'm talking about mental health, I try to do this and it's tough for me because in general I don't like people.

I'm trying to be open to new friendships.

I'm trying to reach out and say, hey, what's going on?

I'm trying to be nice.

Do you want to grab coffee?

I think, especially men, I think you need to do a better job of like being open to new relationships.

I was just going to make a friend for Scott in London and make him go to dinner to meet someone.

She set up a play day for me.

I'm going to call you the final call.

I'm Selena Milanovich, a biomedical engineer working at Siemens.

And my question is about digital health.

And we made a few comments earlier about the importance of very strict and very smart ways of regulating the topics relating to digital and AI.

However, when it comes to healthcare, this might be really a showstopper for Europe.

So, countries, for example, like the US or other countries in Asia might actually develop a lot quicker than we can in Europe because they have a little more flexibility and leeway.

So, should we have a double standard in creating,

let's say, regulation

for companies that are using artificial intelligence for entertainment versus companies that are, let's say, are using AI for health.

Yes, I do.

And I think you're wrong.

I think the U.S.

is quite strict on digital health issues.

They may be porous.

That's different.

That's about systems.

But it's quite strict.

You know, that's the one area.

That's why it hasn't developed as quickly.

We have to be thinking hard about the privacy issues around health.

I mean, really.

I mean, Amazon knows more about your mental health than you realize, but given what you buy and things like that.

But I think it's, I think, definitely stuff around entertainment should be different than it should be around mental health.

That said, all of it is data for the system, right?

Anything you do, you'll be tracked the rest of your lives.

And so it all goes into health: whatever you eat, whatever you buy, whatever you go, whatever you do.

And so we can't think of it not as an ecosystem because it's all part of the same things.

But regulators should be very smart about healthcare, travel, EVs.

They have to get smarter and it will involve a lot more regulation.

Last word?

I do think you want to err on the side.

I hate to say this, but

Section 230 and a lack of regulation in the 90s was probably the right call for tech.

And it resulted in some externalities, but we failed to then implement regulation to get it in control.

And I was fascinated with the fact that the EU has fallen, I mean,

your biggest market cap tech company is that chip company in the Netherlands.

The biggest one here is SAP, and they're like 15% of the valuation of big tech.

And I'm like, what?

It doesn't make any sense.

You got an educated populace.

You're digitally very savvy.

It just doesn't make any sense.

And one of the things that kept coming up is that

a lot of regulation that tries to envision and put in place safeguards.

Before things happen.

And so it's a balance, but

there's no doubt about it.

The outcomes appear to favor a lack of regulation being a little bit more promiscuous in terms of what your innovators can do.

Yep.

Anyway, thank you so much.

Sorry you went over time.

We really appreciate it.

Thank you, Hume.

Just a quick programming note: our next episode of Pivot will tape in London and will come out Wednesday the 18th instead of our usual Tuesday drop.

But I promise it will be worth the wait.

That was Pivot, live at the DLD conference in Munich.

Today's show was produced by Larry Naman, Evan Engel, and Taylor Griffin.

Ernie Intertot engineered this episode.

Thanks also to Drew Burroughs and Meal Severio.

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 later this week for another breakdown of all things tech and business.