AI’s Power Problem, Have We Passed Peak Social Media? and How to Save Democracy

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Speaker 4 Welcome to Office Hours of Profit. This is the part of the show where we answer your questions about business, BigTech, Entrepreneurship, and whatever else is on your mind.

Speaker 4 If you'd like to submit a question for for next time, you can send a voice recording to officehours at profitmedia.com. Again, that's officehours at profitmedia.com.

Speaker 4 Or post your question on the Scott Galloway subreddit, and we may feature it in our next episode. First question.

Speaker 4 Our first question comes from Reddit. Thank you.
Mr. Uppercut asks, Hi, Scott.
A lot of people theorize about eventual UBI when AI takes all the jobs.

Speaker 4 But why are we not getting an energy subsidy right now? Data centers across the country are using so much power, the demand is pushing prices up for everyone.

Speaker 4 Sam Altman recently said OpenAI will need 250 gigawatts to power their data centers. Why aren't these multi-billion dollar companies being forced to subsidize everyone else's rising electricity bills?

Speaker 4 What can be done to lessen the stranglehold AI has on this facet of our lives?

Speaker 4 Okay, this is becoming an increasingly interesting topic. AI models are incredibly energy hungry.
In 2023, U.S. data centers consumed about 4.4% of total U.S.
power.

Speaker 4 The Department of Energy projects that could double by 2028, reaching 7 to 12% of national demand.

Speaker 4 Meanwhile, companies are racing to build hyperscale campuses, often in states with cheap land, weak regulation, and fragile grids.

Speaker 4 This rapid growth is driven by AI, cloud services, and more compute-intensive workloads. But the pressure is very real, and data centers are very much behind the increasing prices on the supply side.

Speaker 4 Data published this month by the Labor Department showed that electricity prices rose 5.6% over the past year. More broadly, consumer prices increased 2.7%.

Speaker 4 Research from North Carolina State and Carnegie Mellon indicates that data center expansion could drive up average electricity bills by 8 percent nationwide by 2030.

Speaker 4 And here's the thing, as we're debating about how we can make big tech pay for the power it uses, the government is canceling the cheapest, fastest way to generate more of it.

Speaker 4 Nevada had the lowest increase in electricity prices in the entire nation despite rising demand, thanks largely to a massive amount of solar it's built. And what do you know?

Speaker 4 We're cutting subsidies to solar. Meanwhile, the Trump administration just canceled the Esmeralda 7 project, a 6.2 gigawatt solar and battery farm in in Nevada.

Speaker 4 It would have powered nearly 2 million homes, but it was scrapped as part of a wider rollback on renewables.

Speaker 4 Aaron Powell, the bottom line is, if you think of electricity as a public good, that means we're going to need big government.

Speaker 4 I'm a huge fan of infrastructure investments, and that is

Speaker 4 the Eurostar here, which can get you to downtown Paris in two and a half hours.

Speaker 4 It makes no economic sense from a shareholder perspective, but it makes sense from a stakeholder perspective as it increases fluidity fluidity and mobility and such that we can do more business with France or the UK can do more business with France and vice versa.

Speaker 4 And it's a huge unlock for people to see their families, spend money, encourages economic activity.

Speaker 4 I think it's insane we don't have a high rail speed system up and down the west and east coasts of America.

Speaker 4 All roads lead to the same fucking place, and that is corporations who are paying their lowest tax rates since 1939 need an alternative minimum tax. It's not even their tax rates.

Speaker 4 It's the fact there's so many loopholes around being able to, you know, now they can directly expense CapEx in the first year.

Speaker 4 The middle class is an accident, and the only way you continue to support it is with a redistribution of income. I don't think you can say to

Speaker 4 PowerComp or to AI, you need to pay for an upgrade in the electric grid.

Speaker 4 What I think you can say is that corporations need to have an alternative minimum tax of, say, 30 or 40 percent, such that we have the capital to upgrade the grid.

Speaker 4 What you can also do is, as states compete for

Speaker 4 these large data storage or these large data centers, part of that might include, all right, you have to make some investments in the grid because just this uptick in costs or this uptick in demand is likely going to hit middle-class households pretty hard.

Speaker 4 So just as I'm thinking the type of regulation, just as I'm thinking when they build

Speaker 4 condos in New York that are going to go to mega millionaires, they demand that they build a park or sometimes they demand that a certain percentage of the units go to low-income or artist housing to try and keep the city diverse.

Speaker 4 I think something along those lines. But then again, the states are competing against each other.
I think all roads lead to the same place, and that is we need

Speaker 4 a more progressive tax structure on the wealthiest Americans and corporations such that we have the capital to make the kind of upgrades to our grid that

Speaker 4 will

Speaker 4 meet the additional demand and also

Speaker 4 investment or redistribution from corporations and the wealthy to the middle class. And one efficient way for that redistribution is an investment in infrastructure.

Speaker 4 And how do you pay for it with a progressive tax structure that just enforces the tax code? $750 billion

Speaker 4 tax gap,

Speaker 4 meaning that you don't have to raise taxes.

Speaker 4 You just need to collect the taxes that are owed by the wealthiest 1% who weaponize the tax code, are very sophisticated tax attorneys such that they can delay, obfuscate, or just evade paying taxes.

Speaker 4 Not a hopeful message. Not a hopeful message, but anyways, a thoughtful question.
I appreciate you submitting your query.

Speaker 4 Power up.

Speaker 4 Question number two.

Speaker 4 I recently read an article in the Financial Times entitled, Have We Passed Peak Social Media? This tied into the trends I've been seeing with fewer friends on fewer platforms.

Speaker 4 Facebook has long been my favorite platform, but of late, the algorithm seems to only want me to see lame videos and content from groups and pages that I don't follow, on top of the ads, of course, with increasingly rare posts from actual friends.

Speaker 4 I still have an excessive need for my friends and family to enjoy my obviously exceptional photography and excessively handsome and impressive boys.

Speaker 4 But whether from AI or influenced through slop, the social media companies seem hell-bent on turning the product into anti-social media, only encouraging us to engage in content from folks we don't know or who may not even exist at all.

Speaker 4 I can't make sense of that as a sustainable business model. Can you? Thanks for your insight.

Speaker 4 Thanks for the question. So data from the FTE article shows that time spent on social media peaked in 2022 and has been in a steady decline since.

Speaker 4 At the end of 2024, users age 16 and older spent an average of two hours and 20 minutes a day on social platforms, down by almost 10% since 2022.

Speaker 4 Surprisingly, the decline is most pronounced among teens and 20-year-olds.

Speaker 4 The decline can be attributed to the evolution of social media from a place to connect and share with friends and family to one of doom-scrolling through hours of content posted by strangers and increasingly AI.

Speaker 4 It's now kind of arguably you would argue that it's anti-social media.

Speaker 4 And the number of people who report using social platforms to stay in touch with friends, express themselves, or meet new people has fallen by more than 25% since 2014.

Speaker 4 And some, it's not connecting us, it's disconnecting us.

Speaker 4 More and more users have been reporting opening up these apps to fill spare time, making a shift from mindful social engagement to mindless browsing.

Speaker 4 Meanwhile, Meta and OpenAI have released new AI-generated social content platforms in what we've called the great slopification, if you will.

Speaker 4 So look, how do these companies continue to grow their revenues? They use AI to do a better job of targeting.

Speaker 4 I mean, I'm sure you have a couple of those moments where you just get chills down your spine where I'm talking on the phone about going to Paris, and the next thing I know, I get served an ad for a hotel in Paris.

Speaker 4 It's like, okay, someone's listening. It's just their targeting has become so strong that they can just deliver to advertisers the right person at the right moment and the right product, if you will.

Speaker 4 And their CPMs or the prices they can charge have gone up.

Speaker 4 I I haven't been on Facebook in 15 years.

Speaker 4 So that's not, I'm just not that,

Speaker 4 I'm just not that familiar with it. But I wouldn't worry about them.

Speaker 4 I think young people are actually smarter than we give them credit for, and a lot of teens are deciding it's unhealthy for them. I think my colleague Jonathan Hyde is having an impact.

Speaker 4 And schools are banning phones in schools.

Speaker 4 So I think just as it took 20 years to figure out opiates and then kind of 30 years to figure out cigarettes, it feels like it's taken us about 20 years to figure out sort of the phone and social media and recognize that

Speaker 4 the more kids are on social media, the worse they feel about themselves and the more likely they are to engage in self-harm.

Speaker 4 I'm addicted to social media. I go on it a lot.
I'm probably on it,

Speaker 4 I don't know, probably like two hours a day. I'd like to think a lot of it's for learning.

Speaker 4 I like to get the clips of interesting news stories and interesting views from economists and who you follow and who you curate.

Speaker 4 But this business model of keeping you glued to your phone is working really well.

Speaker 4 40% of the SP by market capitalization is from firms that either enrage you to engage you or sequester you from your friends and family and other media.

Speaker 4 So if you think about social media algorithms, they purposely put some negative comments in there, elevate content that will both inspire you, great Danes playing with babies, which is what I like, but also content showing ice that just enrages me, but I can't help, but I can't look away.

Speaker 4 So they know how to keep you glued to your phone. And AI, quite frankly, you know, those prompts at the end, would you like bullet points? Or would you like me?

Speaker 4 My son's applying to college, so I'm curious about all these different schools. And I'll say, would you like me to compare this university versus this one? Or

Speaker 4 what is the likelihood that someone applying from the UK would get into these schools?

Speaker 4 And they're just genius and they test a million times a second. What would be an offer for an additional prompt that would keep this person engaged?

Speaker 4 Now, are they enraging you on AI as they do on YouTube or with Meta or other or X? No, but what they're doing is

Speaker 4 making it almost impossible to look away from the screen, such that you're sequestering from your friends and family and real-world relationships and also synthetic relationships, which is quite frankly my biggest concern right now that young people, especially young men who are

Speaker 4 more neurologically sensitive, are engaging in these low-friction, low-effort relationships with character AIs and starting basically to rush home and get advice from their AI friend or maybe get their AI girlfriend to take off her clothes and slowly but surely not

Speaker 4 engaging in the messy, difficult prospect of what is a real world relationship.

Speaker 4 And engaging in those real-world relationships, specifically the friction and difficulty of them, trains you to be a more competent, skilled human being and develop real victory.

Speaker 4 And AI will just keep telling you you're amazing and being encouraging and empathetic. But don't cry for me, Argentina.
These companies are still sequestering you from more and more media.

Speaker 4 They have regulatory capture. They show up.
They give the president a rub and tug or an engraved trophy from Tim Cook.

Speaker 4 I can't, what's the point of having all the fucking money if you got to go bend a knee in the White House? But they're all doing it.

Speaker 4 And then

Speaker 4 so Trump tariffs everyone but the big tech companies. So that's a transfer of value from the companies trying to figure.

Speaker 4 Imagine how you're trying to plan your business if you're Caterpillar afford right now. So are you going to go to work for them and invest them? No, just invest in Meta.

Speaker 4 And then the most recent AI legislation basically says to the AI companies that they can molest the IP of any company in the world and not have to pay them a licensing fee.

Speaker 4 So these companies, don't worry about them. They are doing exceptionally well economically.
Appreciate the question. We'll be right back after a quick break.

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Speaker 4 Welcome back onto our final question, which comes from Reddit user ISOPH DJD, I think.

Speaker 5 And they ask, the boycott of Disney Plus showed voting with your wallet can work and work faster in the era of Trump.

Speaker 4 With Trump claiming that the U.S.

Speaker 4 is under attack from an internal insurrection, should organizations including the Olympics, FIFA, and other high-profile events publicly call into question the viability of hosting these events in the U.S.

Speaker 4 if Trump's claims are true, this would hurt Trump's pride and cut into his grift of these events. Do you think this and similar efforts by businesses and community would help preserve our democracy?

Speaker 4 Okay, so.

Speaker 4 Well, what did Bob Dylan say? The money doesn't talk, it swears.

Speaker 4 Look,

Speaker 4 there are few organizations more corrupt

Speaker 4 than

Speaker 4 international athletic bodies whether it's the ioc

Speaker 4 or the international or fifa you know they operate in this nether netherland they take bribes and it basically goes to the highest bidder fine they're not about sport they're about making a shit ton of money okay um

Speaker 4 and by the way i think the nc2a is not exact uh is corrupt okay let's pay people in kansas four hundred thousand dollars a year to pass regulations and pay the white guy, the white 55-year-old guy, the coach $3 million a year, but the black 19-year-old, no, no, no, he doesn't get any money on the basketball court because of the purity of the game.

Speaker 4 They figured out a way to, again, transfer money from non-whites to whites, but more so from young to old.

Speaker 4 So look,

Speaker 4 I don't know if that specifically works. What I do buy is the idea of an economic strike.
And that is voting with your wallet. And that is

Speaker 4 what Trump listens to is the economy. The thing that scared the shit out of Trump and backed him off the tariffs initially was the 10-year spiking.

Speaker 4 And I wonder if right now America is a big bet on AI. And that is the reason why Trump feels emboldened to send troops into Portland and Chicago is because the SP is up 14%.

Speaker 4 And America, who is increasingly just about, America, for the most part, is just, I want more stuff. That's how I would describe the promise of America.

Speaker 4 So as long as the markets go up, people think, oh, I should be able to buy more stuff.

Speaker 4 So, whatever Trump is doing, regardless of censoring late-night talk show hosts or sending masked Secret Service or Secret Police into a county, as long as

Speaker 4 my stocks are up and my 401k goes up, he must be doing something right. And that is being driven by AI right now.

Speaker 4 75% of the gains in earnings and 72% of the increase in the stock market has come from just 10

Speaker 4 companies. So, the idea of an economic strike that takes the economy down temporarily or scares the shit out of a company is really powerful.
Now, you could do general strikes are harder to pull off.

Speaker 4 I think if I were going to try and organize a general strike, I would want to play on the

Speaker 4 or target, if you will, or try and convince the wealthy. The wealthiest 10% of Americans now account for 50% of consumer spending.
And the wealthy could take their spending down 10 or 20%, no problem.

Speaker 4 It's hard for the middle class to reduce their spending by 10% because you're starting to cut into things like rent and groceries.

Speaker 4 But the wealthy, especially in this era, have become such conspicuous consumers they could take it down by 10 or 20%. Would they? I don't know.

Speaker 4 What has been more effective is a specific call to action with a specific outcome. So organically, Ted Cruz and Tucker Carlson are pissed off about

Speaker 4 a late-night talk show host being canceled.

Speaker 4 And then people on the left just don't like anything Trump does. So there's an organic pushback and people start taking pictures, screenshots of Disney Plus being canceled.

Speaker 4 That is very actionable, very visible, because typically it's not the economic strike itself that foments change.

Speaker 4 Most economic strikes or boycotts result in about a 1% decline in that stock. So almost meaningless.

Speaker 4 The way they're effective is the media attention, the negative media attention they bring to the individual.

Speaker 4 So Bob Iger, basically, who not once but twice bent the knee to Trump, backed down when all of a sudden there was a ton of press around all of these people canceling Disney Plus and ESPN Plus.

Speaker 4 And he basically said, after speaking with Jimmy, yeah, fuck you, Bob. Jesus Christ, you're Neville Chamberlain in a cashmere sweater minus the dignity.
So an economic strike against the Olympics?

Speaker 4 No, I don't think that works. When we boycotted Russia, they then boycotted us.
I don't think it had any impact on either nation.

Speaker 4 But a targeted specific attack, if you will, or boycott that creates media tension and is somewhat organic i think words i've heard ideas ranging from home depot which has been accused of cooperating with ice to transferring or canceling your at t phone contract who is also supposedly coordinating i believe with ice

Speaker 4 um and going to a another phone carrier so I don't think what you're proposing works, but I do think the idea of an economic strike has real merit.

Speaker 4 I'm beginning to believe that is probably the only or one of the few ways or one of the most effective ways that consumers could,

Speaker 4 if you will, check back or create a co-equal branch of government. I think it needs to be targeted with

Speaker 4 a specific company and a specific ask.

Speaker 4 Thanks for the question.

Speaker 4 That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at profitumedia.com.
That's officehours at profitumedia.com.

Speaker 4 Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit, subreddit, and we just might feature it in an upcoming episode.

Speaker 4 This episode was produced by Jennifer Sanchez. Our assistant producer is Laura Janair.
Drew Burrows is our technical director. Thank you for listening to the Prop GPod from PropG Media.

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