Meta can fund free agents with ads while OpenAI cannot

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 35:50

   is just how any of this makes money. You and I have talked many times about the bubbly nature of the AI economy. Zuckerberg has said his plan is for Muse to take a cut of transactions on the backend. So Zuck has given everybody a little Linux computer in a cloud with eight gigs of RAM. Obviously, he's given away tons of free tokens. He does not have to pay advertising costs. He can just put Muse across all of his platforms.

2. 36:14

   And to the extent that Meta is a well-oiled machine, the amount of Muse promotion that is happening across Meta platforms instantly is kind of incredible to see. They just turned it on. I saw an ad during NFL games this weekend for Muse. They are spending money to promote this. They're giving it away for free. They're giving the tokens away for free. and then somewhere at the end of this, they're going to say to merchants, hey, this person was shopping for shoes.

3. 36:39

   Muse brought them to your doorstep. You're going to pay for this customer to buy shoes from you. I don't know any merchants that are excited about this and it certainly feels like merchants that pay meta more money would be preferred merchants and that means that not only do I have an assistant or chief of staff, I have a bribeable chief of staff. Like I have a corrupt butler. Is that what you want?

4. 37:05

   That is a great term for it, a corrupt butler. Yeah, that is not what I want. And I don't think many people do. It's just crazy to me that like we've gotten so far from what people really want, which is they want to trust a recommendation and they don't want to be scammed. The leaders in AI don't think about how this has been, how certain things have been mirrored in other industries. Like, think about when people were paying for reviews for their businesses, or like paying to delete reviews for their businesses. That was a huge uproar. Or influencers getting paid to recommend things without disclosing that it was an ad. Then we saw the rise of micro influencers who were more valuable for a while because they were seen as more trustworthy. They didn't have that many followers. So the things they recommended must be really good, right?

5. 37:53

   And then we saw the, okay, well, their hashtag ad, but also they only said they were going to recommend things they really believe in. So it's okay that it's an ad. It's like these mental gymnastics that people have to do to figure out what is really a trustworthy recommendation these days. What is going to convince people that an AI recommendation is trustworthy if it can be bought? So I think that's something that these companies are really going to have to reckon with.

6. 38:20

   you know, the Chat2BD ads blowback was huge. And OpenAI had to say, look, it's going to be a clearly disclosed ad underneath your query, not influencing your query. So, I mean, if you're using Muse to shop, and it's an undisclosed, like, potential, you know, meta customer that's you're being redirected to to buy those shoes instead of these other ones, I feel like so many people aren't going to use it to shop. So I get it on the meta side. I understand why they would think about monetization that way. They're a consumer company. This is a consumer product.

7. 38:58

   They know the second they charge even a dollar for it, the uptake will drop precipitously. So they got to keep it free. And then a bunch of people are going to want to shop and go buy me a new iPhone cable. You know, at the end of the day, it's all just the same Amazon garbage anyway. So whatever. And then they can run an auction on the back end to be like, who wants to pay us meta the most for the privilege of selling an unbranded usbc cable to this customer and they'll run some auction and that will in its way just sort of maximize the money that gets turned around and that is broadly how advertising works today that that's how the google search results page worked until recently when it's full of ai and they're probably going to do the same thing meta can do that because they already have a giant advertising business that

8. 39:42

   Prince money. They can give away a consumer product. Mark Zuckerberg has been shown willing to blow money trying to win a market like he did with Reality Labs for years and years and years, and they can just run it till it works. OpenAI, even at $100 a month, is probably not making money on those customers. In fact, I think we know they're not making money on those customers. They don't have any monetization. And when they do try to turn on ads, people get mad at them.

9. 40:08

   how can they keep up with Zuck? Only via enterprise. I think that's why they are pushing this so hard. You know, we saw a ton of enterprise discussion, demo videos, customer feedback, tons of stuff at DevDay. And that's why they're pushing this so hard,