Oracle wins Tik Tok, the future of AI chips, and Friend of Pivot Alex Stamos deep dives on TikTok privacy

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Hi, everyone.

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

I'm Kara Swisher.

And I'm Scott Galloway.

Scott, how are you doing?

People seem to be liking our act lately.

We've been getting a lot of nice on the Twitters.

Have you noticed that?

Lately, yeah.

People have been very generous with us.

They're being very nice, except not you, not you with me.

I noticed.

Your tweet was a drunk.

What was your day-drinking tweet at me this week?

I don't day drink.

I don't day drink.

Whatever.

No, it was just pure bile.

It was just people noticed, you know, they thought we had.

I'm trying to bring, I am trying to bring attention to the new gay nightclub in Fort Lauderdale and your second best podcast, Sway.

Wait, hold on.

Let me just.

If I had a gay nightclub, it would be called the hammer, first of all.

It would be called the hammer or anvil or something like that.

That's what my gay club would be called.

Okay, this is this is the copy from the geniuses at the New York Times about sway.

Okay, hold on.

Hold on.

Oh my god.

I guess so.

It's so apparent.

A new podcast about power.

Who has it?

Who's been denied it?

And who dares to defy it?

Oh my God.

We like ourselves.

I'm our first guest, and I just want you to know I'm going to come on.

I'm going to snort Cialis because I dare to defy erectile dysfunction.

I dare to defy it.

I dare to.

That's your power.

What is, Scott, let me ask you.

I'm going to ask you this.

What is your power?

Tell me your power besides being like obnoxiously tweeting at your at your very good friend Kara Swisher on the advent of a very exciting new opportunity for her.

I was nothing but supportive of Prof.

G, et cetera.

But let me, what is your power?

What is your power, Scott?

Well, my aspirationally, I want to be known as generous and fearless.

What's your superpower?

Superpower is about what you want to be known.

Why?

Why is it what you want?

Why?

Because as Al Pacino said, the definition of God is grasping beyond your reach.

Your superpower is what you commit to.

I love me just the way I am.

Oh, here we go.

Sway.

Introduce yourself for those who defy it.

Oh, my God.

I love the power the way it is.

I don't have anything that I'm going to say.

I'm so coming on that.

You're not coming.

You are staying.

They have a perimeter around the New York Times, of which your picture is at every entrance, just so you know.

I'm on the BBC today.

I'm on the BBC today.

I'm on the BBC.

I just testified.

I know.

We're going to talk about

it.

We're going to talk about that.

But I'm just saying,

I'm not going to be able to invite you to the launch party, which is not going to happen because of the pandemic.

There you have.

Come on.

I'm great at parties.

I get drunk.

I have a great time.

People love me at parties.

Anyway, away from sex clubs right now and gay clubs and all kinds of clubs, let's talk about the big story.

Speaking of clubs, TikTok, let's break it down.

We've been following it for weeks.

TikTok.

As I noticed, don't knock Oracle out.

Everyone make fun of me, including you.

We'll be partnering with Oracle.

I don't know what that means, bypassing Microsoft's bid to buy the company.

Just days to go before the imposed deadline from President Trump, before Chinese-based app to partner with the U.S.

company or be banned from being used in this country.

The next step is for the White House and the Committee on Foreign Investment in the U.S.

to approve the deal.

The bid is on Steve Mnuchin's desk as of Monday morning.

Something to think about, President Trump in August called Oracle a great company.

It was six months after Oracle's chairman Larry Ellison hosted a fundraiser for the president.

Microsoft was also had a bid to buy the company, which it confirmed in a press release that the bid had been rejected.

The company reiterated that their bid would have been focused on data privacy and actually ownership and control.

What do you think?

I think the way it reads to me is this is the Series G financing byte dance at an inflated valuation from an investor group led by Oracle.

I don't,

you know, people were giving us a hard time on Twitter saying, oh, you got your prediction wrong.

It's been bomb.

No, it hasn't.

This is nothing but, it seems to me, a financing at a rich valuation

that'll, and quote unquote, they'll be their technology, their technology partner.

The other thing it signifies on a more metal level is we have become fully socialist.

And that is socialism is when the means of production and the spoils are controlled by the government.

That's socialism.

And we have effectively the winning, the company that wins is a company that's blessed by the president because they held a fundraiser.

I mean, it's almost as if we're becoming kind of numb to this sort of state-level corruption or this isn't corruption, it's socialism, but I don't get it.

And I'm sticking to argons.

I don't

think this happens.

Microsoft, we're taking the Trump administration at face value that they wanted to do something to protect the American consumer when, in fact, this is not what's happening here.

From what we can tell, we're going to be talking to Alex Damos later about this, but Oracle was like a distant fifth or sixth in the cloud business.

They recently got Zoom.

They had gotten Zoom, which has been a big boon to them in their cloud business.

But they've sort of had their head handed to them by Amazon, by Microsoft, by Google, by IBM.

I mean, they're way behind all those players.

And now this is a big deal for them to get this deal.

Now, it's interesting.

Google actually has the cloud deal with TikTok for a three-year deal that was signed a year ago.

So we'll be a question of what happens that because this is not a sale.

You know, when LinkedIn was sold to Microsoft, because of a sale, they were able to get rid of that contract.

This is not a sale.

This doesn't seem to be a sale in any way.

And it's just a vendor relationship.

And the two questions are, one, does it accomplish anything Trump said he wanted to accomplish?

I would say no.

Two, you know, the idea that

they're going to make significant changes to the algorithm in ways that will be protective of U.S.

citizens, 100 million at this point,

using it.

It's just, this is just.

I called it, it's just, it's just not what they said they wanted to do in any way.

Yeah, it's a bit of a head head fake.

If you try to think about what might have happened behind the scenes, it's that Trump makes this big, bold statement and his advisors, his legal advisors go, well, this is fraught with all sorts of legal challenges.

And the best way to declare victory and leave is to get the backers of ByteDance, who are American venture capitalists, and coordinate some sort of deal.

that in where you can declare victory and move on.

And because this isn't a sale, as far as I can tell,

it doesn't do, as you've pointed out, it has nothing to do with security.

As long as the algorithm is controlled, I mean, this is, I spent the weekend on TikTok.

Have you used TikTok?

Yes, many times.

I've told you about it.

I wrote a whole column about it.

It's really delightful.

It is, it's, it's delightful, Virginia, like in the same way, kind of heroin is really delightful.

Okay.

I went in, I went on, I literally went onto TikTok Friday at 4 p.m.

and I got off at about 30 minutes ago.

I can't get over how good TikTok or addictive TikTok is.

And it's so scary.

And enjoyable.

Let me just say, what I was talking about, enjoyable, it's like you, I didn't know I was interested in tie-dyeing or weird.

Oh, you found it.

It's so interesting.

It's like a Rochard test that basically.

Well, I've, I'm, uh, clearly, I'm, according to TikTok, very interested in two things, hot women with big asses and Labradors.

And here's the thing, Kara.

I didn't know I was into Labradors.

I didn't know I was into Labradors.

I thought I was more of each one guy, Kara.

Okay.

Anyways, I'm like sticking the pivot gun in my mouth, pulling the trigger and seeing what happens.

Yeah, you just did it.

You just did it.

So, but wait,

I think the issue is that this does not solve the problem.

And this was, so it was so much bullshit.

It's sort of like a

way to get us back on track.

Thanks.

I'm going to try to get away from it.

Rio Amendment.

Okay.

Rio Amendment.

I get on TikTok, I get

dances and tie-dyeing.

A lot of

tie-dyeing.

That's a big thing on TikTok.

There's a whole bunch of different memes.

Taylor Lawrence sent me a whole bunch of the latest latest memes and they're all really interesting.

They're all But the real power of it dawned on me.

And that is, if you think about what artificial intelligence is, it's the ability to bring nuance around decision-making.

And I've always thought that the best example of AI was that if you're watching season four, episode three.

of House of Cards, it figures out, and you watch it the whole way through.

Right.

It figures out that you would like episode four and three, two, one.

And part of that is the strength of it is not only the algorithm, but your ability for the algorithm to absorb as many data points such that it can calibrate in on what you like and move you towards things that you just like a rabbit hole you just can't get out of.

And this thing is so, because of short form video, it is so, it gets so many data points that it's effectively like, it's like flying on instruments where it has so many inputs and so many signals to take the plane exactly where you want it to go, which is in their case to content that you can't get off of.

And if you think about the power here around education, if you think about the power around e-commerce, immediately zeroing in on the things you need, the content areas that you are weak at in terms of test prep.

And unfortunately, this could be very, very dangerous in terms of profit.

Well, that's one of the issues.

That's another issue that people were pointing out to me that this doesn't solve the misinformation problem on this website.

And they've been recently dealing with it more and more.

You can maybe put the headquarters in the U.S., for example.

Now, this company was going to go public in the U.S., by the way, before Trump waded in here.

Microsoft was going to make a big investment and then it was going to go public.

And it was trying to de-link itself from China already because they understood the problem.

But Trump wades right in here and makes a giant mess of things.

It could have been a public, a NASDAQ company, whatever, and probably valued it a ton.

I think one of the issues is that misinformation can go big on this platform in ways that you don't realize because it's so entertaining.

And so, or, or lack of information, I guess, it keeps you involved in things that you don't know about or removing information about certain groups of people.

And so that's where a lot of it's powerless.

So now I don't, what is Oracle going to do?

Is Oracle going to be the cop of this thing?

I just don't, it just like, it just wants to win this cloud deal.

That's,

and because it's been such a nice

person,

company, corporation to Trump, they get to do that.

They get to like get this cloud deal, essentially, which strategically was critically important.

I think Microsoft really was going to go in there and really take it over.

And I think probably the owners of Byte Dance were like, we'd rather have not have a lot of control and sort of win this ridiculous fight with Trump.

Yeah, they've, they've all the so Oracle, my understanding is their cloud actually has very strong security features, that some of their technology is very strong.

Their stock is up 5% today, which is like a seven or $8 billion bump.

So this feels like a win for Oracle.

It never made any sense for Oracle to own the thing, but it sounds like it's a, I mean, effectively, it's a financing slash long-term vendor relationship here.

And it gives Trump the ability to declare victory and leave around something that was just going to get increasingly obvious that he didn't know what he was doing.

And he was going to be able to do that.

Right.

But then does that solve the problem of surveillance and the control, the Chinese control?

I mean, maybe if they move that, it's going to be all like.

face-saving stuff and not real change, not real privacy changes.

I think that's the issue.

And so we're sort of right back to where it was going to be anyway, just that he's allowed Oracle to get a deal that it would never have gotten.

Google had it, right?

Because whatever you think about Oracle's technology is fine.

It still has gotten, is not the number one cloud provider.

And they certainly were in a position to be that.

I mean, Amazon ran circles around them.

And so it's sort of doling out, you know, goodies to its friend, to the friends of the Trump administration, which this is one of them.

The danger or the threat that struck me spending a bunch of time on tick tock this weekend wasn't so much about surveillance because i thought okay the data they're garnering from me isn't as rich as the data i think if you somebody hacks into yeah uber and puts a limited amount of ai on it they can say oh you're contemplating terminating a pregnancy oh you're clearly having an affair oh you have stage three

cancer.

I think there's just so many things that you could figure out with a limited layer of AI on top of Uber.

What I think is the biggest threat, if you will, of TikTok is if if it said, okay,

we want to influence the elections and we want to undermine the credibility of Joe Biden.

And they slowly but surely start saying, well, how do you do that with a consumer?

Is the best way through humor?

Is it through conspiracy theories?

Is it talking about economic policies?

Is it talking about, you can just begin to calibrate so finely.

and see how do I, how do I guide this person?

How do I be their Sherpa around their beliefs?

Because the real power of TikTok is A, the content community,

the creators, or again, they're getting basically free content.

And it's the 30-second bite size.

So granted, if I watch House of Cards at 60 minutes, they get 120 data points for every one Netflix gets because they're in 30 second bytes.

So they can begin calibrating and leading you to the destination.

So if someone on the back end has said, all right, we want to undermine this administration because they're less prosino or whatever, less they're contrary to our interests.

It strikes me that they can really have, I see it as a propaganda.

That is exactly where you should focus.

And also, it's also, it will do it through media.

I mean, I always say they're like, oh, it's a social media.

I'm like, no, it's a media organization.

It really is.

It's a very sophisticated, socialized media organization, not socialism.

So is your sense?

I know that people were calling you last night and you're doing reporting.

Is your sense that this deal will actually go through?

I didn't have it before you read it in the news.

Aren't you lucky to know me?

But go ahead.

I know people.

I know people.

I know people.

I was trying to get people not to

tweet it, but go ahead.

Sorry.

But is your sense there's a deal will close or there will be a deal?

I think who's going to attack it, right?

Who's going to like

no one cared about this in the first place, and now they'll just declare victory.

I think there's just that.

We'll see if there'll be some pushback, but I don't think this solves the problem that President Trump said he was trying to solve.

But we have to take a quick break.

When we get back, we're going to talk a little about NVIDIA, buying out chip designer company from under SoftBank Arm.

Plus, we'll have more on the TikTok deal with our friend, a pivot, Alex Stamos, who's going to tell us whether there's any good in this deal whatsoever.

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off.

Welcome back.

Let's talk shortly about NVIDIA buying chip company ARM from SoftBank.

The deal is worth $40 billion and NVIDIA said it will make it the quote premier computing company for the age of AI.

NVIDIA is best known for supplying chips that render images and video games, but it's so much more than that.

NVIDIA has become sort of the power player in this area.

And I know you're not a chip expert, but

this is a critical company for

this term.

And I do want to get into the idea.

idea of what it means for certain companies sort of owning a space.

And you just recently testified testified about single companies or a small group of companies owning spaces and how dangerous that is.

Well,

it feels like this was a bit of a forced sale because SoftBank has pledged to raising $40 or $50 billion.

And my understanding is they're not going to make a ton of money.

I think they bought this company.

I think they bought Arm for about 30.

30 or 32 billion just about three years ago.

And they're getting a mix of stock and cash.

What'll be interesting is that now, first off, NVIDIA,

the most impressive company I just don't know about, it's now got a larger market capitalization than Intel, which when I was in business school was considered kind of the most innovative giant company in the world.

It's just not.

Yeah, they've been blown by.

And then what happens?

Does Apple still want to do business with NVIDIA when they buy a competitor to their chip?

to their chip design?

So the chip wars looks like it's about to get more interesting.

And just

agreed.

A company that gets sold for 40 billion, although that's a bit bit of a headline number, it was, it includes performance and all sorts of other stuff that does about 1.2 billion.

You're talking about 30 times revenues.

And then NVIDIA, with a, I think it's got a $300 billion market cap with $12 billion in revenues.

I mean, this stuff is just, it's seen as obviously very strategic, but that literally exhausts my total knowledge of the chip making space.

Do you have any thoughts on this deal?

Well, I think people don't realize Jensen Huang, who's the CEO,

is sort of this quiet

person who's super.

I tried to get him to come to code last year and was like, oh, chips, the, but I think it's really important to understand how powerful this company has become and how innovative

it's been.

You know, Arm Holdings was a designer of chips for mobile phones.

SoftBank had struggled in this area.

SoftBank was sort of into everything,

but it bought it for $31 billion a couple of years ago.

So, you know, it needed money because of all the other problems it's having.

And this is an opportunity for NVIDIA.

But

it's gone well beyond mobile for NVIDIA.

And it's in graphics.

It's AI.

It's been moving into self-driving vehicles is an area that

it's moved into.

And so

it just says that, you know, it's going to buy up everything.

Like you were talking about all these opportunities that were, that are, a lot of the focus here is going to be on SoftBank because it's been involved in so many deals that that have sort of blown up you know whether it be uh you know this this the the overvaluation of we work or or other issues it's been having or the the collapse of the vision fund and things like that so a lot of people like to focus on softbank because it's an interesting sort of ongoing traffic accident but really nvidia is has quietly uh been

you know becoming the go-to chip company, not just with graphics and games and things like that, but artificial intelligence, self-driving is another another area it's moving into i think it's it's going to grow internet of things uh and stuff like that and softbank was just not able to do anything about it so i think you have to focus on nvidia being on this sort of tear uh beyond where they've started and i think people don't realize it's one of these companies that you don't pay attention to very much like um

oh i'm blanking the other there's another chip company that just is doing incredibly well it's run by lisa su um

that it's just there's there's all these companies that are holding incredibly powerful positions, AMD,

also on a tear, that are very important to the future.

And so that, you're right, there's going to be a real focus on where the chip business is going.

Well, it's a bit of a pandemic company.

Its revenues are up 46% because we talked about, obviously, people are at home spending a lot of time.

gaming.

But remember when we had Mark Cuban on, he said that he thought one of the biggest threats in terms of a concentration of power and a quote-unquote strategic threat, that if for whatever reason this company became impaired or was influenced, if you have the company making the brains for AI and autonomous driving vehicles or autonomous flying vehicles, I mean, that this, this is a market that requires a robust ecosystem that is,

it, it doesn't feel like it gets the scrutiny it wants.

I mean, where you and I are spending a lot of time talking about,

you know, the four, NVIDIA and the chip, the consolidation and concentration of power around the brains, you know, it really is sky nut.

It does feel, it does feel like if for whatever reason this technology fell into the wrong hands or there was a deep espionage infrastructure inside of it, it could just be very, very bad for a lot of different entities.

And then if you talk about this company all of a sudden has an inability to produce things during a crisis that you know, we're talking about more than not being able to get cotton swabs to people.

What it's doing is decreasing the reliance on the video game market.

And I think that's what's really interesting.

And,

you know, it's, I don't want to call them like Cisco but they're sort of moving into this

it's it's doing it's doing a lot of stuff but it like bought this one company and again this is not my area of expertise but I was interested in it a company that makes ethernet switches and networking hardware it's called Mellanox

in the I think it was in the same quarter

so it's just it this is a company to watch just like AMD and others that we really don't pay enough attention to

going in the future.

Lastly, to finish this up, you just testified about

single companies becoming critically important.

Talk just briefly about it, and then we'll get to Alex Deimos.

Yeah, it's sort of the same thing.

I think states have decided that they can no longer depend on the federal government around antitrust.

So New York and California are looking at proposing their own antitrust legislation.

And I think Senator Giannaris and New York has got a real opportunity here.

And it just, you know, whether it's income inequality, whether it's lack of innovation, whether it's job creation, whether it's destruction in our tax base, whether it's Washington being overrun, power corrupts.

And

we have states starting to fill this void or this of

kind of lax or anemic antitrust.

And New York hopefully is

taking a leadership position on it.

And we testified today, thoughtful people.

Professor Wu went before I did.

We'll see.

I mean, I'm hopeful a lot of states, California is always seen as a state where, you know, as California goes, so goes the rest of the nation.

But maybe New York can play a leadership leadership role here.

And Senator, everyone, I mean, even going back to the HQ2, Senator Giannaris and AOC

and Corey Johnson were all accused of being socialists when they said no to Amazon.

Amazon is now hiring more people than it had originally anticipated.

There's an opportunity here, I think, for New York to take a leadership.

position around antitrust because it just feels like the FDC and the DOJ have been kind of asleep at the switch.

And now Bill Barr comes out and wants them to rush it in time for the election.

And then you had a bunch of lawyers at the DOJ resign saying we can't do as good a job as we'd like.

So anyways, it feels like New York and California are starting to fill the void around a lack of federal leadership.

We'll see.

I just don't know if there should be 50 different, you know, it's the same thing with privacy.

We don't get anything because there's so many different

possibilities, even if there's leaders, you know, in these things.

It just, I don't know.

I just feel like, oh, really?

This is something the federal government should be doing.

They should be.

But even on, if you think about tobacco, the states tend to do a better job, or at least the state AGs have traditionally done a better job coordinating than we've seen the federal government coordinate states lately.

So I'm hopeful.

I think in New York, obviously, New York or California have tremendous sway over these companies because as much as they threaten to leave or not locate their headquarters or these companies go where the human capital is.

And as long as the brightest young men and women in the world want to live in California or New York, there'll always be a market and it'll always have outsized influence.

So anyway, I'm

hopefully down.

I'm going to talk about your interest.

What you watch on TikTok when they get you to testify in front of fancy committees?

No, I don't want to answer that.

Don't want to answer that.

Listen to me.

Don't rag on my hobbies.

Listen to me.

Don't rag on my hobbies.

I need to have better algorithms.

That's all I have to say.

Tie-dye.

I don't know.

I think the algorithms.

I think it just reinforces the problems we have with you.

Anyway, Labrador.

Scott.

Lilabradorad.

Our friend of Pivot.

We're going to go back to TikTok.

We're talking to Alex Stamos.

He's been on the show before because he's so smart.

He's a perfect person to go deeper on the TikTok Oracle deal today, such that it is.

He is the director of the Stanford Internet Observatory.

He's also former head of security for Facebook and now an advisor to Zoom to improve their privacy and security.

And of course, they use Oracle.

So tell us what you think of your overall impression.

First of all, how are you doing in California?

We're doing okay.

I mean, you know, we're at the tail end of two weeks of unhealthy air quality where we are.

Our kids have been stuck inside.

So not only are they going to school on Zoom all day, but then they can't even go outside to play.

It's, I mean, look, my wife and i have nothing to complain about we're we're both employed and we're doing fine we have a we have enough space for our kids that i don't know how other families are doing it and i'm i'm really wondering like what the long-term effect of this is going to be on kids right of this period of like a lost year educationally but just the social emotional aspect of being trapped inside and not really understanding what's going on yeah my kid was two weeks in quarantine and i thought he was going to i was like prison's not going to work for you louis you better not break the law

which was funny so talk to me about this oracle because you have experience with them with zoom because zoom is their

they provide cloud services for zoom yeah i mean i i don't have a lot of direct experience with oracle they they do run a cloud computing product zoom uses them for a couple of purposes one of the things they do that i think is a little bit different some of the other cloud computing platforms is they do a lot of uh raw hardware uh cloud right so um i think that's something that zoom enjoys uh but you know they're not considered one of the the big three right which are obviously amazon microsoft and google they're not even the big five i think maybe not even the big five, right?

Yeah.

Cause you do have a number of other companies.

So I do think, you know, one of their problems is they don't have a centerpiece kind of keystone social media product, right?

So if you look at AWS, their Keystone product was Netflix.

That was a big deal.

I don't know if you guys remember, but it was a huge deal here in the Valley among technical people when Netflix said, screw it, we're going to AWS.

And everybody's like, that's crazy, right?

Like at the time, the idea of pushing all of your infrastructure to somebody else and the fact that they crushed it and it meant a lot of good things for them financially was a huge deal among executives in Silicon Valley of proving that this model works.

Azure has a number of products.

Google Cloud has Snap, right?

Azure doesn't need it so much because Microsoft gets all of these enterprise clients because they're moving from Windows environments, right?

So like Microsoft has kind of a built-in advantage.

But Oracle, you know, Zoom is probably Oracle's most famous client right now.

And I think, you know, they are definitely looking for something to put them on the map.

I mean, this, we don't know a ton about the deal, right?

So Mnuchin was on CNBC this morning.

So I watched that interview and he didn't give a lot of details.

But what it's sounding like, you guys both read the Microsoft announcement, right?

Like the incredibly passive-aggressive press release.

It was aggressive, aggressive.

Go ahead.

It was pretty aggressive.

Yeah.

I mean, as you guys know, and especially Scott, like corporations don't communicate like this, right?

And, you know, they had this line in there about all of the security things they were going to do.

And basically, like, well, we're interested to see what happens next.

And then you could like insert the Kermit drinking, sipping tea emoji.

Right.

And you know, reading between the lines of that, and then the discussion of Oracle being a technology partner is it sounds like this is going to be a much less aggressive integration than what Microsoft was considering, right?

Like it was.

The discussion with Microsoft seemed to be that Microsoft would really own at least three or four regions of TikTok.

They would have some kind of licensing deal, but they would own the stack top to bottom.

And the people who would be running TikTok us would be microsoft employees right that does not sound like what we're going towards now what it sounds more like and again i'm just reading the tea leaves here so this might change significantly over the next week um that oracle will be providing hosting services for sure um and then the question is how much up the stack do they go there and who are the employees that have access to data there are kind of three legitimate concerns about tick tock right the first is access to americans data um which is a great concern because there's a long history of the prc doing stealing data and then looking at it in these big data warehouses.

The second concern was the potential of a backdoor or what we call a bug door, which is an intentional mistake in your software that allow people to get into your system.

And then the third would be kind of a subtle manipulation of the media environment in the United States through the control of the algorithm.

And, you know, as much as people talk about algorithms on Twitter and Facebook, the number one determinant on most social media sites like those of what you see is who your friends are.

TikTok doesn't have that, right?

Like TikTok is 100% algorithm.

And that's why they've kicked so much butt so far is that their ML is really, really good.

And the discussion now from these things is, you know, one of the reasons that I think they're looking at this fallback position is that the Chinese Communist Party and the People's Republic of China, the government said, we are not going to allow you to export certain things to the United States.

And they tagged the ML algorithm.

Right.

And so there's no way for ByteDance to sell all of TikTok US.

And so I think they're looking for like a face-saving face-saving half measure.

The problem is, is if Oracle is just providing hosting and the actual operation and most of the software development is still happening in ByteDance, Beijing, then it doesn't actually address any of those three issues.

The Chinese aren't accessing data by going to the hard drives and pulling it out of racks and then imaging it, right?

Like the way they would access data would be that

they have subverted ByteDance employees who have access to the data warehouse and they can do queries on behalf of the government.

And I have not seen anything yet announced.

Now, again, it's it's early days.

But if it turns out that ByteDance employees are still running the back-end operations, and if there's a huge amount of software that's a black box to Oracle, then you can't claim that this is actually for security, right?

There's no actual security.

This seems like a favor to Oracle, getting them a deal.

It seems like, right, it's a favor to Oracle.

Larry Elson is kind of famously probably the most conservative, you know, other than Alex Carpent Palantir, but of like the major tech companies is the only one who's like a really obvious Republican.

I think there's a lot of secret Republicans, but you'd know that better.

Yeah.

Right.

But he's just out there like doing fundraisers for Trump and such.

And yeah, it just looks like a favorite for Oracle and kind of a face-saving move.

I think one of the things that happened here is Trump got over his skis on,

you know, banning TikTok is the kind of thing that in theory, the executive branch has some power that's been given to it under Sipheus and some additions to Syphius that have passed since then.

In practice, it's never happened.

And to really do it, you would have to go force Apple and Google.

And I expect what the White House has heard is that Apple and Google would fight this one to the Supreme Court, right?

So they're talking about you're not just fighting TikTok, but you're fighting two of the largest tech companies in the U.S.

To not to ban the app.

Right, because they can't allow this to all of a sudden for the U.S.

executive branch to be able to decide what's in their global app stores.

That's the end of those companies, right?

Like every country will want that capability and nobody would trust the United States to wield it.

And so I expect that this is kind of a fallback position because they got over their skis on what the power of the presidency is in the situation.

And so they're looking for if they can both scratch the back of a big of a big donor

while also giving themselves a fig leaf of like, we've made everything secure.

That's great.

And this thing's so complicated, right?

Like, you know, how many people are going to understand, oh, well, operationally, do you have control of the data warehouse?

And like, you know, who has access to certain databases and who has access to the CDN?

Like, nobody understands that, right?

All they understand is that Oracle got some money.

Yeah.

So this is a fig leaf in that this is not going to do the things that many of us Timu had talked about this really protecting Americans in any way.

Why, what was Manuel?

What was your take on Mnutian?

Well, he was very careful to basically say this is still under review.

And he said there's two processes, right?

There's a CFIAS process, which is not a very technical process, right?

Like generally, CIFIA is kind of been seen as being kind of an economic competitiveness view.

And that there's a national security process.

The real interesting question is, is who's running that national security process?

So that's like the NSA cyber division, which is run by a very competent woman, Ann Neuberger, this is the new division of the NSA that does defense of cybersecurity on behalf of the United States, then they are absolutely going to understand those distinctions.

And I think I'm really looking forward to the Washington Post leaks

of things leaking out from these secret committees where

you very possibly have like NSA and Cyber Command and DHS CISA, which is the DHS's cybersecurity infrastructure security agency saying, oh, this deal doesn't really do much and then getting overridden for political concerns because they don't want to have to actually shut them down on the 20th.

Wasn't Microsoft's, wasn't Microsoft's fatal flaw here believing the president that this thing needed to be sold?

I mean, when they,

at the end of the day, I mean, this just feels so cooked and so backroom.

You have

Ellison, a conservative CEO.

You have the backers of ByteDance.

picking the winner here and saying, okay, how do we turn this into what, I mean, what is effectively just a follow-on round of financing and a big cloud victory for Oracle?

It just feels so,

this is just kind of, it just feels so fake to me.

It doesn't, it really, the term acquisition, it just doesn't, we shouldn't be using, by the way, I heard, I heard, and Alex, tell me if you, if you can confirm this, that Oracle was advised by the crack M ⁇ A team of

Gerald Levin, Carly Fiorina, and Marissa Mayer,

that they brought their acquisition expertise to this deal.

That's a little M ⁇ A humor.

That's a deep M ⁇ A humor.

Alex has had a lot of experience with these types, anyway.

Yeah.

Yeah, I cannot confirm or deny that one.

Yeah,

you actually bring up a good point, too, which is there's all of these like, there's Sequoia, there's a bunch of Silicon Valley kind of players and money people involved.

And so the final ownership structure of whatever TikTok US looks like, which it looks like Oracle is going to own some, maybe some investors, is going to be really interesting.

And I think following the money of who is making a ton of money from this is going to be really interesting.

From the Chinese side, too, like they're pretty pissed.

And I, you know, there is a legitimate risk from the PRC and from Chinese companies.

There's absolutely a legitimate risk, which is why we have to be smart about this kind of stuff, right?

Like we have to have real rules that we enforce fairly.

And that the rest of the world has confidence we're doing so, because what we want is we want our European allies, we want our Five Eyes allies, we want our Asian allies like Japan to be lined up side by side with us.

And instead, if it looks like this is just a way to pay off a bunch of American donors,

nobody's going to ever believe when we ring this bell again.

And we're going to have to ring this bell.

Sometime in the next five years, there's going to be a major security incident related to a Chinese company having access to people's phones.

This is a win for China, as far as I can tell.

Like they just get to, you know,

maybe.

I mean, if this is really blinking, right?

If like.

If the administration has really blinked, then they stood up to the U.S.

and they forced the Trump administration to blink.

And they've set a precedent that's going to really hurt.

It's really going to hurt U.S.

tech companies too.

Because now, if you're India, you want the exact same thing, right?

You want Facebook to have to pay billions of dollars to some Indian company that has corrupt links to the government.

You know, everybody's going to get, it's basically going to create a situation where you have to bribe any country you operate in by paying some local politically connected company to do your actual hosting.

There could be so many second order effects here that the Chinese could decide, I mean, if they wanted to take down our markets, couldn't they announce that we're contemplating forcing Apple to sell all its supply chain operations to

a local provider, I mean, a domestic provider here.

It just feels like this could go so many weird places.

It feels to me like we've been played.

This is nothing but Sequoia and I think General Atlantic Partners and Oracle deciding they're going to lead the Series G or whatever it's called, that we accomplish nothing around security.

And to your point, Alex, they've said to Trump,

you got out ahead of yourself here.

You got to find a way to have peace with honor.

And all it does is raise all this, gives everyone else an ideas around how they can start abusing our companies, which are increasingly international and dependent upon local laws and consistent application of those laws.

It's just,

it literally is, this feels like Mayweather versus McGregor.

And you have she and you have Trump and the redhead gets the shit kicked out of him.

I just feel like we have been so played here.

Well, you know, and also to get this deal through, and Manuscians probably knows this because he's relatively sophisticated in these areas, is

Safra

Katz, who's the CEO of Oracle, and Larry Ellison convincing Trump that they really are going to protect, like they'll do something tacitly like, we'll have the headquarters here.

We'll have like, they'll have some dumb, beautifully designed headquarters.

Right.

In Florida, across the street.

In fact, if I see that, they'll know.

You'll know.

Yeah, exactly.

So I think it's just really, this is just.

Yeah.

It doesn't matter where the headquarters is.

Who are they?

But they'll do that.

That'll be, let's say, now we have a headquarters in the U.S.

like they're who are doing DevOps.

Who are the data?

And meanwhile, the Chinese data will continue to be, yeah, they'll continue to be a problem.

You know what I would love to get from Alex while we have you here is I can't think of anyone more knowledgeable to give sort of a notes on a scorecard,

cliff notes, script on, give us the state of the cloud oars.

I mean, Oracle, all of a sudden, I didn't even know Oracle had a cloud product.

Give us your state of momentum and the state of play in the cloud ores area.

So,

I mean, Oracle's definitely coming from behind.

Famously, Larry Ellison said the cloud doesn't exist, right?

Uh, yeah, that was a fight with Salesforce, right?

Um, you know, I think I actually see there as a distinction between that there's really two different cloud wars going on.

There's the enterprise cloud war and the startup and everybody else cloud war, right?

So the

the kind of original cloud war is AWS and Google, right?

And that AWS is, you know, they've got enterprise customers, but they also have a lot of startups and smaller companies and tech companies and kind of, you know, they have never made a big deal of enterprise integration as being, you know, of being their sell.

Like if you build on AWS, you build your stuff from scratch.

And again, they have a lot of enterprise customers.

I'm not saying they don't, but they've never made it super smooth to get onto there.

Microsoft's whole point is, okay, great.

You're already using 50,000 Windows machines.

We're going to give you a ramp onto Azure that's incredibly smooth.

And I see that as Oracle's competitive direction is that they already have these enterprise clients.

They've got their tens of thousands of salespeople deeply embedded.

They've got all these companies that are running back-end Oracle systems, and they're going to utilize their on-prem domination into smoothing people out.

So I see Oracle and Microsoft as a fight, and then Google and Amazon in the other fight.

And they have been slow, though.

I would say Google is of these people, Google has been very slow, was the slowest one and let Amazon come in and take the business and was busy doing other things.

I had a lunch with Sunor Pachei.

I'm like, how did you let this happen?

This was years ago.

He's like, oh, we were doing other things.

We weren't really paying attention.

And then in the enterprise space, Microsoft has run circles around Oracle and IBM and others on IBM and

everybody else.

And so Oracle's really lost this one focus on, he just used the little enterprise term on-prem, which is on-premises.

You know, I think they really didn't see this coming in any way.

And it's largely because Larry Elson had this idea that this was.

bullshit.

Well, I mean, this is a problem for all.

Because it went to the heart of their business.

Yeah, exactly.

Is that you don't want to disrupt your own business, right?

Like you always see this in tech, that companies build these big protective moats around a business, and they don't want to breach their own moat.

And Oracle was never going to breach selling a database on a, they still charge per CPUs, right?

Like they charge a ridiculous amount of money for their products compared to building the equivalent of the cloud.

So I am sure.

And Oracle is also a very sales and lawyer-heavy operation.

It is not known as an engineering operation, right?

Like

they're a little bit, I mean, they're not, I wouldn't say they're a joke in Silicon Valley, but like people talk about going to work at Oracle as like dying, right?

You're you're like you know oh i'm so sorry you know i'll see you on the other side i would not say they are terrible but going there it's like dying well right from the technologist perspective right and so you know that that matters here they compete on the legal side and the licensing side and the sales side um and they do a really good job and microsoft you know satya comes in and basically says we're going to disrupt our own business right like he looks at the trend lines and that is the hardest thing for a CEO to do is for a new CEO to come in to look at all of these things that make that just mint money for a company and say, you know, we're going to blow that up ourselves because we know somebody else is going to blow it up.

And it took Oracle a long time to do that.

And is there any last question?

Is there anyone coming out from somewhere else we're not seeing in this area?

I mean, I think the other question will be if there's another partner here, you could also see a deal here where you end up with Oracle with the the lowest level and that there's somebody else coming into the TikTok deal where they're taking over some of the operations.

So like Scratch.

Yeah, like another social media company, right?

I mean, I still think like, I don't know if there's there's you guys talk about that, like, like a snap, tick-tock, us mashup would be the kind of thing that would be very powerful.

Oh, that's interesting.

Um, you know, because it's both of them are in not a, you know, are have like a strong, but still, you know, tenuous competitive position against Instagram.

Um, and those two companies together would be strong.

I hadn't thought of Snapchat, and also Walmart can still drop in here, too.

I suspect that is like, I don't know what that is.

Commerce, my friend,

right?

I mean, you might end up with TikTok US being this entity that's owned by 40 different Trump donors.

We'll see where this ends up.

And then, and again, this is going to be really bad for U.S.

companies because the EU is going to demand this.

India is going to demand it.

Brazil, like everybody who has any kind of clout is going to want the same deal.

And it's just going to be...

It's going to be really bad for competition too, right?

Because you're going to end up with the Googles and Facebooks able to pay off basically bribing folks in these countries to do local stuff.

And it will be very difficult for a smaller competitor to get into that.

So thank you, President Trump, for this exercise in utility anyway alex thank you so much i knew you would bring wisdom and insight to this larry olson is having a good day today uh yeah well he's he hasn't been having his good day in his sailing on the water so you know he's got to win something i guess all right thank you so much alex we really appreciate it

Okay, Scott, that was so illuminating.

I knew Alex would do that.

Did you know?

I mean, he's just, he just explained the whole thing for us.

Serious Mandelpower.

Alex Stamos.

Serious Mandelpower.

Now I understand.

What a claim.

The Stanford Observatory.

Is that what it's called?

They have such a cool name.

The Internet Observatory.

I may join them and sit in a big chair.

Sway.

The cost just drips off of you.

Everyone else loves it.

Hey, listen, don't forget who discovered.

Oh, wait, you discovered me.

Never mind.

Never mind.

Yeah.

Never mind.

How do we go with my instincts on this one?

All right, Scott.

One more quick break.

We'll be back for wins and fails.

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Wins and fails, Scott.

Go for it.

Go for it, Scott.

Wins and fails.

Well, my fail is

this nice woman came to my door over the weekend.

Yeah, to my

door.

to my gate.

And I said, release the hounds.

What do you mean we add to my door?

Anyways,

and she was from the U.S.

Census.

And she started asking, and I believe in the census and it's important.

And the amount of money allocated to local school systems, the census is important.

And

I immediately found myself when she started asking about my kids and ages.

And I immediately thought, for the first time, do I want to participate in this?

And I said, okay, why is that?

And it's because I believe our government institutions have lost so much credibility because I think they've been weaponized by an administration that doesn't really have respect for their mission.

And it's just so sad when you think about all these institutions, whether it's, I mean, the CDC is the latest one to have its reputation just kind of torn apart.

And so I thought it's really upsetting.

And it's just too bad that in addition to the U.S.

government, there's so many wonderful institutions.

I think the census is a really

good idea.

Are working on you.

You know what I mean?

Ultimately.

Yeah.

New York Census.

And then all of a sudden, now I'm like one of those guys.

It's worked on me.

I don't trust government institutions.

They have lost credibility with me because I'm worried about the administration and hear them putting a citizenship question on it.

So I think a loss, you know, a big fail is that There just seems to be such short-term thinking around trading off the reputation and integrity of our great government agencies and institutions for short-term or perceived short-term political gains.

So that's my very political loss.

My dad's not going to be able to do that.

I would say this indoor, this is in that vein.

I had a really interesting discussion with my son, and he was like, how could he have an indoor campaign rally?

And I said, he can just keep breaking the law and there's no repercussions because, and he's like, well, why can't they stop him?

I'm like, who stops him?

Who?

Like, most people just follow the law, right?

And then there's, but you don't have to really.

Do you know what I mean?

That's that's the big lie that we all sort of live in the society.

We have sort of a tacit understanding that we're not really going to get enforced, but we might get enforced, right?

There's no fear.

And so him doing it, there is no, you can have the governor saying this sucks, but no police moved in.

And why would you put police in harm's way at this crazy, you know, the running of the maggots, essentially?

It's just that's, I was going to say that, but then I decided it was Rona

McDaniel, whatever, Rona, whatever her name is.

She runs the RNC.

She's Mitt Romney's niece for, I don't even understand that Thanksgiving dinner.

But was saying that it was disgusting, the stuff that Joe Biden was doing around coronavirus.

And I'm like, he ain't running the country.

This is this sort of,

or like Bill Barr saying,

you know, there's not systemic racism.

I mean, there's abuses, but not systemic.

Sort of the drip, drip, drip of cynicism that makes you question yourself, just like you were doing with the, you know, the exhaust.

Like, we're just going to break this law.

We're going to ruin the White House lawn.

We're going to do this.

And I think that's what I'm most scared of is the exhaustion factor of people just giving up.

Like, because there's nothing they can do about it.

So that's my fear.

Yeah,

the early data is, and there's such a wild card here because obviously we've never had an election, or we haven't, I would say, recently in a pandemic, but the early data looks very positive for Democrats in terms of who's requesting mail-in or mail-in ballots.

But, you know, we'll see.

My win is, I read this wonderful article by

Jeffrey Sonnenfeld, senior associate dean at Yale.

And

I love Jeff.

And then Albert Koh, who's a.

He's a live one.

Yeah.

But

I love raging moderates, and he's super thoughtful.

Anyways, I'm a big fan of Jeffrey's.

Anyways, and Albert Koe, who's the department chair of epidemiology at Yale.

And they wrote this fantastic article about referencing a woman named Betty Lee Hampel.

And in 1955, she stood up at the approval meeting for a vaccine vaccine which had been rushed out.

They wanted to get the salt vaccine out as quickly as possible to try and address polio.

And they

basically almost every major pharmaceutical company bowed to that sort of pressure, put out a vaccine that ended up being flawed.

200 people were paralyzed.

70,000 were sick.

And if you think about one of the best things that's ever happened to our society,

one of them would have to be vaccines.

And when you undermine the credibility credibility of a vaccine, you're basically tearing at something wonderful for humanity.

And

this woman named Betty Lee or Dr.

Betty Lee Hampel at Merck stood up and said, I just can't recommend this.

We're seeing problems.

And Merck, to their credit, listened to Dr.

Hampel and decided not to hold off on the vaccine.

And

it echoes today when the nine pharmaceutical companies took a vow to ensure that they followed protocols around late stage clinical trials before approving a vaccine, that they were not going to give in to pressure, administrative or political pressure.

And you see corporations stepping into the void.

And when you think about it, we always talk about a brand.

When you put a pill on your tongue, when you put a basically a coded item on your tongue,

you're not taking an antibiotic.

When you have someone stick a needle in your arm, you're not ingesting small microbes or fluids or antibodies.

You're basically ingesting trust.

I mean, it's all about trust.

You're saying, okay, the thousands, the hundreds of thousands of people who have made incremental decisions to get me to ingest something, you're placing so much trust in those people.

And I thought the AstraZeneca, when AstraZeneca announced last week that they were temporarily halting the trials to investigate an aberration in

one of their subjects who had become very ill.

I thought that was brilliant marketing because immediately they've said to the world, we take this shit really seriously and we're not afraid to publicize when there's a problem.

And I would bet they've already started again and have found that most likely it probably wasn't related to the vaccine.

We'll see.

But it creates that level of trust if people continue to ingest things they know nothing about

such that they can trust them.

That's my fear: they don't hold out.

But again, it is when you're looking at and saying big pharma is saving you, you know, we're in trouble.

Um, but what on the plus side,

with all this exhaustion, you see things like the

protests in Belarus, and especially there's an old lady there that went crazy on social media, which I love, just like being pushed around by these beefy assholes.

Like, you know, these soldiers all with the

baklava, whatever it's called, whatever the,

whatever, the thing you put on your face.

Isn't that a treat?

Isn't that a Greek dessert?

It is, but it's whatever that thing is called.

The thing you wear, like skiers wear them.

Anyway, they're wearing all these masks and trying to hide who they are.

And this woman kept trying to pull them off.

And old lady, she's as tall as I am, maybe shorter, and just was, and has been at these protests.

I was like, you are, you know, you can beat up this friggin' old lady, but there's a hundred million more behind her.

And so I felt good about that.

And I felt good that it got pushed out by social media.

Maybe it gives you a sense of false hope.

But these people are facing down giant, scary men in masks with guns.

And I really appreciate the people of Belarus for doing that.

And I think it's great.

And this, this ridiculous leader should be taken out and taken out, just taken out by all means necessary, as far as I'm concerned.

Anyway, that's how I feel.

Anyway, we've got to go.

Lots of news this week, obviously, as TikTok ramps up and there's more to come.

We have lots to talk about the rest of the week.

Is there any topic you want to discuss as we go on?

Is there any company you think we should?

I'm super interested.

Well, I'm writing up something on Palantir.

Oh, yeah.

I'm glad you're doing that.

You know, it's really interesting because we were talking before about

that Trump and the administration create, purposely create these dumpster fires of controversy because they don't want you to just

examine the core issue and that it's 5% of the population, 25% of the infections and deaths.

It just kind of all begins and ends there.

So

let's create dumpster fires, even if they make us look bad.

We just create constant distraction.

And I'm reading through this S1 and all this bullshit about how software will save the world and we are no longer a Silicon Valley firm.

You know, it's like, okay, they moved to Denver, which I guess means Liberty Media is

different than every other cable company because clearly when you move to Denver, it means you're no longer part of our capitalist society.

And they create all this weirdness.

And I think it's a total page out of the Trump book.

And they're trying to distract from

one core issue.

It's a shitty business.

It's taken them $3.5 billion in 17 years to get to a business that loses 60 cents on the dollar.

I like that you're doing this.

I will do it.

It's a shitty business.

And it's really interesting.

And then you have their greatest asset is this spy versus spy.

We found Osama bin Laden.

Okay, Peter Thiel's a weirdo, but he's a genius.

We should invest behind it.

And at the same time, their biggest liability is Peter Thiel.

Because do you think Vice President Harris

is going to decide to ever do business?

with Peter Thiel.

And all of a sudden, all of a sudden, Alexander Karp is claiming he's a socialist.

This thing, and I went on to a bunch of these second, um, secondary marketplaces to try and find the pricing on Palantir.

And what was interesting is these second, these secondary market sales where they find shares and then sell them.

They're trying to advertise these shares for 15 to 20 billion dollars.

And then it was leaked that Palantir is willing to take 10 billion.

And I'm like, this is beginning to smell a lot like teen spirit in the form of WeWork.

And that is the people, the insiders with shares are willing to take a 50% haircut on where the value was just a couple of weeks ago.

And what does it mean when the existing shareholders are willing to take a 50% haircut to get liquidity?

It means the people that know this know that they're sitting on a steaming pile of shit.

I was just going to note to you that you should, because we promised to look at this more closely, especially with the number of mentions about Peter and Alex and stuff like that.

So I am pleased.

We will talk about this Thursday.

I don't want you to give away anymore.

I want to hear your entire analysis

on Thursday.

I'm so happy you followed.

Again,

this is where you just surprised me.

Like, here you are, you begin talking, making fun of the the name of my podcast, and you end with a brilliant thing.

This is the conundrum.

It's how I keep our relationship fresh.

It's continuing to be.

It's curious.

It's strange, but here we are.

Anyway, Scott, read us out.

There you go.

Before we go, a big part of what makes our show special, obviously, is you, our listeners.

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Our episode was produced by Rebecca Sonanis.

Our sound engineer is Fernando Finite.

If you like what you heard, please download or subscribe.

Also, special thanks to Drew Burrows and our executive producer is Erica Anderson.

This month on Explain It to Me, we're talking about all things wellness.

We spend nearly $2 trillion 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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