Is the AI hype justified or will the bubble ‘burst’?

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KEITH SHAW: Nvidia, Intel and AMD all announced new AI focused chips to accelerate the AI hype, while at the same time, others start shouting about how the AI bubble is about to burst. Meanwhile, Facebook tries to reach out to Gen Z to get them to start using Facebook, while Instagram wants to stick unskippable ads in their feeds, we're going to talk about these and other technology news of the week in this episode of today in tech. Hi everyone. Welcome to today in tech. I'm Keith Shaw, the guy behind the monitors, as always, is Chris. Hello, Chris. Hey. How's it going? Going well and joining us for the next few weeks as guest co host is Mike Elgin. He is a contributing columnist for computer world, and, in his words, a technology obsessed journalist, author, blogger, podcaster and digital nomad. Welcome to the show, Mike, you're like a rock star in these parts.
 
00:55
MIKE ELGAN: Thank you so much, Keith. Really appreciate it, and I'm just happy to finally be on the show. I've been a listener and viewer for a long, long time, and whenever I interject something, you can't hear me because I wasn't on the show. But now I finally can talk, which is really great. I'm super excited, and there's a bunch of people here that are also super excited to have you on the show.
 
SHAW: So let's just jump right into it. It was a big week at the CompuTech show in Taiwan this week, where all three of the major chip makers, Nvidia, Intel and AMD, all announced new things, and the big news yesterday from the stock market side of things was that NVIDIA has now passed apple and market cap as the second most valuable public US company. Investors are continuing to bet on the chip maker behind the AI boom, and it is now the second most valuable public company behind Microsoft Nvidia also hit a $3 trillion market cap milestone on Wednesday after shares rose over 5% at market close, Nvidia had a market value of $3.019 trillion versus Apple's, which stood at 2.9 9 trillion. Microsoft is the most valuable publicly traded company with a market cap of 3.1 5 trillion as of Wednesdays, Nvidia shares of river has risen more than 24% since the company first reported its first quarter earnings in May, and has been on its hair ever since last year. So all three of these companies announced products this week, and so like, what? What are your thoughts on all of these new AI chips. Is it just, you know, full steam ahead. Do you expect the other two companies? Because again, Intel and AMD all announced new chips because, you know that all have AI focused on them. What's your thoughts on this market?
 
02:34
ELGAN: Well, Nvidia is dominating this market, and I think they'll continue to do so. If you look carefully at what AMD and Intel actually announced. Essentially, what they said was it's almost as good as Nvidia, but a lot cheaper. And that's not really the dominant position you need to take when you're coming after a company like Nvidia, Nvidia, a lot of people look at this valuation, $3 trillion market cap, which was inconceivable for any company just a few years ago, and think, Wow. You know, compared to Apple, they're a nothing burger compared to Apple. Apple is Apple, right? But if you think about the the the need for a cut the valuation of company is based on its potential upside for future growth. Where does Apple go from here for massive future growth, sell more iPhones, sell more expensive iPhones. The path for Apple isn't really clear for some for some period of time, people thought, well, they're going to have, you know, they're going to take over the car market with the car, the Apple car, whatever that was, they're going to do with services like financial services, but there's not a clear path. And you know, Apple vision pro doesn't look like the path to right trillion dollars of growth either. The path for Nvidia is very, very clear, and the upside is very, very high. So I think not only does Nvidia sort of deserve their their new market capitalization, I think they're actually a little undervalued if people understood what they're working on, and they may leave apple in the dust for good. I mean, I think this is a company that is so well positioned for the next 10 years that I can't recall any company that's that well positioned, and I can go into the details about exactly what they're working on, if you like me to it's pretty fascinating.
 
04:27
SHAW: Yeah, yeah, go, go ahead the other Yeah, I guess I have another, another question after you do that. So yeah, what are you hearing that they're working on that impresses you?
 
04:36
ELGAN: I wrote a piece for Computerworld last year, February, maybe a year, a couple months ago, about the digital twin concept. The digital twin concept is essentially, for those unfamiliar, is that you model physical things in virtual space, essentially virtual reality, but you don't do it in a general way. You do in a very specific way. So for example, if an airline. Airline, like American Airlines, wanted to do a digital twin model. They would have a specific virtual airplane for to match one on one with every airplane in their fleet, with the specific characteristics, the weight, the parts, the chairs, every single aspect of that plane would exist in a kind of virtual reality. And sensors throughout the real planes would actually affect the virtual planes. You could test things, you could stress wings. You could do all these kinds of things, figure things out safely without actually involving a real airplane. When when you develop a fix or a patch or an improvement, you then roll it out to the physical airplanes at lower cost, and so on. And so you can do this with factories. You can do this with anything sort of physical. Well, Nvidia has been on the forefront of the digital twin model. In fact, their own factories have a digital twin component. Customers are using this digital twin but then generative AI came along, and now they're applying generative AI to the digital twin concept, where they create something that that they call the Jensen Huang said, the CEO said, is called physical AI. So this is an AI virtual reality where the laws of physics are applied, and essentially where the AI understands and reacts to inertia, gravity, all these kinds of things that exist in the real world. And it's in this virtual playground where robots and other robotic systems can be tested, right and can learn so they can try, they can try things 10,000 times in a in a virtual factory without injuring any humans. And then when they find the three or four best ways to do something, then they just roll that software into the actual robot, right? And then the robot now has that knowledge. And this is a breathtaking system, man, you heavy manufacturing is a $50 trillion industry today, right? And so they're there. And the other thing that's really fascinating about Nvidia is that they're tackling this physical AI concept, and there's, there's no competition. Yeah, they, they likely own this space.
 
07:16
SHAW: Yeah, they were doing a lot of this, you know, digital twin work, like you said a couple years ago, and this was when, you know, they created their Omniverse platform. And when I was covering the robotic space, a lot of that in, you know, that was the manufacturing industry as well. And so digital, that was the one area of the metaverse that that people were all saying would succeed, versus the whatever image Mark Zuckerberg has with this whole, you know, you're going to have a virtual reality Ready Player, one kind of garbage that like that was, you know, that was so. So what's interesting is that NVIDIA is still doing that, but now they've added this generative AI component, plus they make these AI chips for all of these other companies that want to implement AI in whatever form that they have, and so they've got the chips that are that are going to be doing that, but so, but now apparently, just all over Mark Zuckerberg vision. His vision is essentially a virtual reality place where you escape the real world. It's a form of escapism for the most part, and you do it all the time, and you live in this fantasy world where you escape reality, whereas the digital twin idea uses a similar technology in part, and but the whole purpose of that is to improve the real world, not escape from it, to make the real world safer, more profitable, more efficient, more economically beneficial to humans and so. So even though they seem, they both seem like virtual reality of a kind. One is a kind of nihilistic escapism, and the other one is a way to accelerate improving the way things are manufactured, the way everything works.
 
08:54
SHAW: And I want to get back to the Apple part of this story. Does it say something that app, you know, Apple. They used to be in first place, and then Microsoft passed them, and now they're, they're, they're losing steam to Nvidia. Like you said, Nvidia's got that plan, you know, probably the five year plan going forward. And Apple just seems to be stuck in the mud here. They've got WWDC coming up later today. This is, this will be out on Monday, and you know, they've got their big developer thing, and all of the rumors are suggesting that they're going to have a whole bunch of AI announcements to kind of catch up. And you know, how Apple is, they'll, they'll say it's the greatest use of AI ever in their keynote. So Does, does? Does this? Does this kind of get them out of the mud in terms of their valuation, or does it have to be more than just kind of AI announcements?
 
09:46
ELGAN: The problem with Apple is that it's very difficult for them to differentiate themselves clearly in an area where every single thing that they sell, they have tons of competition. They're not unlike Nvidia. Which has basically no competition, very, very weak competition for chips manufacturing and almost no competition for the grand vision of physical AI Apple has Chinese and Korean companies can make smartphones that are almost as good, at least as good, maybe better than Apple's devices. They can do it for cheaper. There's not, you know, the number of people who are willing to spend 1200 $1,300 on a phone is limited. The number of people are going to spend, you know, 1000s of dollars for vision Pro is limited. So they, you know, AI is not going to move the needle for them. In fact, basically what they, you know, they're, they're basically, if you think of the major companies that are pushing AI, let's call it 10 companies, and Apple is the 11th company. A big push in AI on the iPhone is going to move them into, you know, the seventh place for AI companies. They're not going to do a big, huge, they're not going to roll out. They're not going to say, Okay, we're getting rid of iOS, and we're just going to have an going to have an AI operating system. Nothing of the sort is going to happen. There's rumors that they're making a deal with open AI, that Siri will have some open AI stuff in there. Of course, Apple has been using AI, different kinds of AI for different things. I'm wearing Apple AirPods right now. These use AI.
They’ve always been very good at subtle that slightly improve the user and experience. So So for them, you know, it's feels to me a little a little desperate. I hate to say that about a great company like Apple, yeah, but to be just partnering with OpenAI when they themselves, have been working on what they called, you know, what we in the press basically have called Apple GPT, you know, their own AI models. So it's not really clear what they can offer. Other than that, they already have aI processing power in iPhones. And so the best thing they can offer is, instead of large language models, small language models that run entirely in the smartphone. So if they can offer the privacy aspect that they can offer your own private AI, which is not hitting a cloud server, then that does two things for them. One, one, it lets them virtue signal about privacy, and also actually provide privacy, some of the security, some of the things they do, in fact, do really enhance users and user security. So hopefully no cost of the user, but it also it also gives you a reason to buy more expensive phones, because you're going to want a more powerful processor if AI is running directly from the phone.
 
12:41
SHAW: I'm going to get to your smartphone column in a second, but I wanted to ask as well as, should we be paying attention to Intel and AMD and their announcement is, you know, will there be a chip war? Will there, you know, will you start seeing maybe some price considerations, or will it be something where, if a company can't wait for an NVIDIA chip. Then they'll, they'll, then they'll, like, Okay, well maybe we'll consider some of these other, these other companies, or is it just like they're so far ahead that that it won't even matter whatever these other companies are doing?
 
13:15
ELGAN: No, I think what they're doing is actually worth paying attention to, and it's highly valuable. You have to understand that basically, what Nvidia does is it provides the the processors for former GPUs that they're they're pivoting into AI processors, which are used for training AI, and then they're used for delivering AI. So when you you know, when you go to chatgpt and you ask a question, it's hitting Nvidia chips somewhere. And it's doing that, that processing, we're entering in a world. We're entering a world where there are, I mean, there are already 1000s of llms out there, and there will soon be many 10s of 1000s of individual llms. There'll be small language models, there'll be aI running everywhere, on everything. And so we, you know, Nvidia can't supply all of the processors for everything that's going to have a high and so I think, you know, I think Intel and AMD are, you know, they're serious contenders for, not leadership, but, but they, they, they're going to be, they're going to find a lot of customers, I guess, is the way to put that, because there's going to be such, you know, a need for that kind of processing everywhere,
 
14:25
SHAW: Okay. And I want to move into our next, our next topic around at the same time, while all this hype is going on around it, you know, Nvidia, Intel and AMD and all these new chips, at the same time, we're starting to see some, some articles out there about the AI bubble and continue continued concerns around AI. This week, Christopher Mims, a Wall Street Journal's columnist, wrote that quote, significant disappointment may be on the horizon in terms of AI, in terms of what it can do and the returns it will generate for investors. This is another quote, the rate of improvement for AIS is slowing, and there appears to be fewer. Applications and originally imagined for even the most capable of them, it is wildly expensive to build and run AI. New competing AI models are popping up constantly, but it takes a long time for them to have a meaningful impact on how most people actually work. Now, obviously, since this came out in November 2022 with generative AI, there's been stories. We've done episodes here too about whether this AI bubble is about to burst. And there's, you know, it goes in cycles too, with with the media, where it's like, hype, pipe, pipe, and then down, down, down, you know, and then, like, Okay, we got to burst the bubble. And so, you know, take this with a grain of salt. But then, you know, when you combine, again, the Wall Street Journal, and then this columnist, who's written about AI for a long time, he doesn't raise some interesting points about, you know, there's a lot of use cases where people just aren't using it yet. Business users, the general business knowledge workers, you know, are not paying for copilot, and they're not, they're not embracing all of the hype that a lot of these companies are putting out there. I, you know, even, even I, I'm a big supporter of a lot of these, these tools, but even I don't even go on chat GPT every day. I, you know, I have to tell myself, oh yeah, let's try to draw another picture, or do another music song, or something goofy. But it's not being integrated into my work as much as Google and Microsoft want me to do this. So, you know. So we're going to see this. And in the business world, I see a lot of these things happening, where at some point, all of the money that's getting invested by business end users is going to the accountants, at some point are going to go, where's the ROI? And if they can't prove an ROI on some of these projects that they're doing, you're going to see interns go away, or until the next big shiny thing happens. So, you know, where are we in terms of, is it, is it our fault for hyping this up too much? Or, you know, where's the middle ground, where, where AI currently is?
 
16:56
ELGAN: Yeah, I mean, I tend to think that, from a financial point of view, there's definitely a bubble that will definitely burst. But let's look at what that means. When people talk about bubbles bursting, there's sort of a reflexive notion that, let's say the AI bubble bursts, and then all the companies go out of business. Now we don't have aI anymore. Nothing of the sort will ever happen. If you look at the dotcom bubble burst of, you know, 1999 2000 it was really about ecommerce. So the idea of shopping online and buying things online was kind of reaching a level of hype that was hitherto unimaginable at that time. And it was just a huge craze where all the, all the, all the venture funding just went into E commerce plays, okay, and we lost a lot of good sites. We lost pets.com and we lost, you know, whatever, that grocery, you know, the grocery delivery, groceries and all that stuff. But guess what? Amazon survived. And yeah, we still, we still buy everything online, like E commerce is vastly larger now than it was at the height of the E commerce pipe and bubble. Yeah, so bubbles burst, but that doesn't mean anything goes away. Nvidia is not going anywhere. AMD, all these companies open AI isn't going going anywhere. Facebook and Google are not going to stop development in AI. What's going to happen is, there'll be a correction. Right now, it's, it's really a bad situation, because if you're if you're a have a startup, if you're an entrepreneur and you have a non AI company, forget about it. You're not going to get any funding. You have to slap the AI label on everything. And everybody does that. All you have to do is, all you have to do is appoint your product at an API that is owned by open AI or some other company, and then you can slap AI on it, and you might get funding so that the sort of AI washing the whole kind of hype, we've seen it with other things in the past, and now we're seeing with AI, all that stuff is going to be the craze. Aspect of it, I think, is going to go away. And then once it's boring and sort of ubiquitous, then we'll know it's really working, and it's really doing us some good, because it's not, you know, this whole idea that it's a kind of a search engine or a chat bot that's not a particularly like you say, you know, it was like, Who even thinks to go and, you know, ask, you know, have a conversation with chatgpt, yeah, but, but the way it's going to help in science, in education and in medicine, software development is right, right? It's going to have a huge boon in all kinds of business software. It's going to be baked in to good effect and to bad effect. Hopefully the bad companies will go away, the good ones will rise and and become more dominant. But there's, there's so many things that AI can improve. And the really exciting thing about AI has chat bots. Okay, yeah. Yeah, you're less concerned about enterprise is, is the super knowledgeable personal assistant and my friend, Steve Gibson, who's, who has a podcast called security now, has a really interesting theory that once you hear it, you think, yeah, that's got to be it. So if Microsoft announced their co pilot PCs, right, which essentially what they what these devices do is they take a snapshot of your screen every few seconds, right? Yeah, the recall feature, yeah. And they save, and they save that data in AI so they don't actually take screenshots, but they're sort of like the most likely scenario is that they're intercepting the information going to the to the graphics processor, and then they're saving that in very small form, just a few K It's like the tiny little thing. So they're able to save everything you see and everything you do on your laptop until the end of time. And then, why are they doing this? And they're pushing it as defaults, if it's very irresponsible from a security perspective. But why would why would Microsoft do this? And Gibson's conclusion is that they want to build a super assistant that knows everything about what you do with your computer, with your PC. And could you imagine such a thing? So this thing would be like a Siri like thing, except it knows exactly what you were thinking about when you were taking notes in a meeting, exactly who you interacted with six months ago in a chat session. It knows everything about you. And this would be a incredibly powerful assistant. These assistants are moving to other devices, like smart glasses, augmented reality glasses, what I like to call AI glasses. Yeah. And so the you know, it's only a matter of months where a very large number of people, and only a matter of years before just about everybody is walking around talking to their glasses or getting information from their glasses and and AI is going to do most of the heavy lifting, but interpreting what you see, what you hear, And then turning that into into some valuable input, suggestions, advice, yeah, directions, whatever you let us.
 
22:05
SHAW: Mike, you led us write into the next the next topic, which is the the article that you wrote for Computerworld, which was how AI was going to kill the smartphone. Chris, if you want to bring that up, yeah. So this was an article you wrote this week on or last week on computer world. And basically, it's a great it's a great piece where you're talking about how smartphone makers could be in trouble if they don't adopt this idea of AI will be, will be software, and the smartphone as we know it, may go away into these AI glasses. So continue discussing why you think this will happen. Because it does feel this. This is not going to happen immediately. This is now, right. What are you talking 510, years that this, that this movement may happen?
 
22:55
ELGAN: It's hard to say so. So first, let's take the 10,000 foot view. Right now, smartphones are the most important device we have. That's our main, most people's main interface to the internet, to each other, etc, and it's a really central device in their life. So you can either believe that we'll have smartphones for the next 500 years, or they're about to become obsolete, or somewhere in between, I have, I tend to think that smartphones as the central device for most people, as like you say, 510, years globally, and probably three to five years for people like you and me, who are tech enthusiasts and so forth. So here's what I think is going to happen, the value proposition of an AI phone, and, for that matter, an AI laptop. But let's talk about the ai ai phones is that you AI enables you to move beyond apps, right? So if you want to take a picture, you want to take a selfie at a concert with an iPhone, you will load, you launch an app. You tap on an app, and it loads, and then you sort of like, focus it, or whatever you're going to do, and you hold it up and you take a picture. AI can do that very easily. You can just say, hey, take a picture of me and it'll just, you know, no app, right? You can imagine an AI operating system that does all the things that apps do without apps. It just using AI, okay? So once you get to that singularity, you can have high end companies like Apple, like Samsung and others who are going to want to put it all on the phone. That's going to make the phone expensive. It's going to make the phone pretty warm, actually, from all the processing, and it's going to be expensive. And that's what those kinds of companies are going to want to do. But it's also an opportunity for for budget phone makers to say, hey, we're, you know, we're going to develop an AI operating system. It's going to do AI in the cloud. So it's going to hit a cloud AI server. And the phone could cost $200 or $150 because everything's happening in cloud. It's essentially a, it's essentially like, you know, like a, like, a Chromebook or something, but on a phone, and so. Yeah, I think the, I think the phone market will sort of fork in that in that direction with more expensive, more secure, more powerful devices and less expensive, less secure, less powerful devices work working with AI in the cloud. And then once you get to that point, you realize that, you know, how do you upgrade a phone like that? Well, you just get, get the new software, or you it just upgrades itself, because the cloud service has been improved, because now it's, it's, you know, chat, GPT, 12.5 or whatever it's going to be in the future, right? So that's sort of like just, just deflates the motivation to get a new physical phone right, and then I'm very sure that we are going to start using other devices, especially smart glasses. So the smart glasses connect to the phone like Ray Ban metaglasses, like any number of others, light engines will put screens in front of our eyes. The speakers will whisper in our ears. We'll talk to it. It will see what we see through its camera, and it will use AI to interpret the world give us information using multimodal AI with video, which is what Ray Ban meta cannot do right now, but it'll just process. It'll just take in the visual spectrum of what you see, and you'll be able to say, you know, hey, what was the name of that store 10 minutes ago when I was oh, here's the name of the store, yeah, stuff like that, you have instant recall through these phones, and at that point, the way to improve the experience is to upgrade the glasses, not the phone, yeah? The phone now just becomes a server in your pocket, and with the inexorable miniaturization of electronics, is only a matter of time before you don't need the phone at all. It's all in the glasses,
 
26:40
SHAW: isn't  this he goal of that R1 Rabbit device, or the was the name of the other one, the pin? The Humane pin, yeah. Like, that was the idea. And both of those, you know, to be honest, probably failed miserably. I think that they might still be around, but nobody, you know, again, everybody kept thinking that that AI would just be an app on your phone and and I like how you're thinking that it'll be integrated into the operating system, where we all need these apps and you can just talk to it voice and voice recognition is certainly the main driver of that that you know, right? Like, again, if I'm at a concert and I'm wearing glasses, and I try to tell my glasses to take a picture of me, it might not hear me because of the right, the noise of the concert. So Right? And again, that's why I feel like this is probably way down the road, versus, you know, happening next week or next year?
 
27:36
ELGAN: Yeah, well, there are other glasses. In fact, the Ray Ban glasses, you can also take a picture by just pressing the button. So pressing the button. And so there are other interfaces that let you deal with loud environments. But the reason you main pin and the rabbit device failed, I think one of the main reasons is that they weren't glasses. I mean, a pin who pins electronics to their clothing, there they were demanding a radically new behavior, yeah, what about my down jacket? I'm gonna put a pin through my down jacket? Yeah, I don't think so. And then the rabbit thing was just a phone that didn't do most of the things that a phone could do, yeah, essentially. And so who wants that that's gonna carry a phone? And that thing like, Why? Why would you do that? Glasses are amazing for multimodal AI, because they can put a speaker within an inch of your ears, they can put a microphone within four inches of your mouth, and they can put a screen right over your eyes, right hands free, you can interact with with AI, and it can show you things on a much bigger screen, psychologically, bigger screen than a smartphone can and so there is no device in in the short term that can compete with glasses for interacting with multimodal AI.
 
28:54
SHAW: So, you know, is it going to be the apples and the Metas of the world that start developing these?
 
29:02
ELGAN: it's up to it's up to them like, you know, it's, you know, Facebook and meta. Meta worked with Luxottica to develop the Ray Ban Meta glasses. There are other companies that essentially just go to major sunglasses brands and say, You know what? We'll do, the temple part. You do the front and you do the you do the styling. We'll do a temple, and the temple will have the batteries there, antennas, all the things you need. So there are multiple ways to do it. I think that. I think Apple might come out with really great AI glasses at some point in the future, I'm sure, like everything else, are going to be pretty far behind. And they'll basically wait till it's a till the market is really ready for it. Yeah, really ripe for it. And that means there'll be other competitors on the market already with things like that. But if you look at the progress of Ray Ban meadows, they used to be called something else that. Remember the previous name, but the progression from glasses, nobody wanted to glasses that, hey, these sound really good. And these, like these are really fantastic to, you know, they and, you know, the meta AI agent is pretty good to now they have multimodal AI well, that you can snap a picture and they tell you what it sees.
 
30:18
SHAW: All I can imagine is the first is the first car accident that happens when someone's driving with these things.
 
30:28
ELGAN: But what we'll get to a point where the glasses will prevent you from getting an accident, and that will be powerful, too.
 
30:36
SHAW: I just want my self driving car. Exactly, at some point, or the flying car it was promised me, you know, 40 years ago. All right, I want to, I want to jump, because we are talking about meta, and this is a weird story came out late last week, was meta and its flagship app, Facebook, is attracting its highest number of young adults in three years as it tries to shake the platform's reputation as the bastion of an older generation more than 40 million US and Canadian adults aged 18 to 29 now check Facebook daily and basically Mark Zuckerberg, who turned 40 last month, marked its 20th anniversary this year, the growth reflects the company's efforts in the last few years to recapture the attention of young adults who have been flocking to short video app Tiktok, which is owned by China's bytedance, and at a New York event aimed at highlighting how people use the app, young people use the app. The head of Facebook, his name is Tom Allison, said the anniversary prompted executives to realize that Facebook needed to evolve to stay relevant for the next generation. And this is a quote, who is Facebook for? Is it for my parents? Citing questions that he said that he had heard from young adults, this always makes me feel of like, you know that that episode or that meme where it's Steve Buscemi and he's dressed up like, Hey, hello fellow kids and and hang out with me. And basically, Facebook is probably my generation and the older generation above me, we've been the ones who use Facebook all the time. The most active people I see on Facebook are all, you know, doing goofy posts and, you know, pictures of their kids, pictures of events in their life, all that other garbage that Facebook is doing to try to get ads. And, I mean, that irritates me to no end. I just don't, you know, I think most generations understand the cynicism when when a company tries to do this. But do you think that this will bring people back to the platform? I mean, they already got Instagram, so I don't understand why they're doing this, other than to just try to get more active users and so that they can throw ads in their face, right?
 
32:39
ELGAN: I mean, I, you know, I understand they want to kind of future proof their social network a little bit. And part of what they're doing, so they're essentially doing two things to attract younger people. One is that they're being Tiktok, essentially. And so it's a really a war between Facebook's reels, or whatever they call it, you know, the little quick video? Yeah, real. Their algorithm to show you what you want, and tiktoks algorithm to show you what you want. Facebook's probably still isn't nearly as powerful as tiktoks, but unlike Tiktok, Facebook is more of a social network. And what I mean by that is that most, the way most people use tick tock is there's no loyalty. It's not really about following specific people. For the most part. You hit that algorithm and you start flipping right, and whoever is is whoever the the algorithm is showing you. That's what you're paying attention to, yeah. Whereas Facebook is kind of a little both. So you get that, you get the flip through the quick video entertainment thing, but also you're actually following people that you know, right? So, so it's and you're really kind of, you're confronted with the posts of people that you already know, that might be family members, that might be friends, it might be whomever it might be, celebrities or whatever. The other thing they're doing is they're integrating with Instagram. So, you know, some people want to follow their friends who are posting things on Instagram, or other people that are posting on Instagram, and they want the Tiktok like thing. Facebook is a place where you can get basically both Instagram and Tiktok in one place, yeah. And so
 
34:18
SHAW: I've been finding them on my Facebook that's what they're doing. Yeah, on my Facebook feed, I find that more people, when I post a photo and talk about something, or I put a little video up, I get more engagement in interaction on Instagram, because it then copies over from Facebook, over to Instagram, and then I get more discussions and more likes and things like that, mainly from my Instagram feed, because I probably have younger people that follow me on that usually it's people that are following me are either my kids or my friend, the friends of my kids, and then I get more interaction from them than I do with, you know, the people that I have on Facebook, and they get a couple of comments, that's about it.
 
34:58
ELGAN: Facebook Has always been pretty good with dark patterns, especially the use of color, so that if you see red anywhere on a Facebook thing, that means there's a thing screaming at you, saying there's something waiting for you on the other side of this button, or whatever. And they're also bringing, you know, they also tell you on Instagram that you have, you know, 12 messages or 12 posts or 12 somethings, notifications on threads. And so this whole, the whole threads, instagram, facebook, Whatsapp, industrial complex that they have going on is, is, really, if they want to channel people who are using one of those, or two of those, the three of those are all four of those. They can do it. They got a they got a bunch of ways to sort of direct people to whichever service they think will really grab people and keep them there. But you think about, you know, I Americans are weird because we we do things differently than everyone else. Like, for example, we don't really use WhatsApp, or people do use whatsapp more now than they used to. But, man, I live abroad most of the time right now, I'm in Sicily. Everybody in Europe uses WhatsApp. Everybody in Europe, 90% of the people I know in Europe use they use WhatsApp. They use Instagram, and they use Facebook, and they don't use anything else ever. So, okay, it it's pretty, and it's pretty, it's pretty dominant. You know, meta is super dominant in Latin America as well. So, yeah, but so
 
36:32
SHAW: Maybe I shouldn't think about this from a US perspective only that you have to think, Well, I
 
36:37
ELGAN: We have to do that too, because, because Americans are the biggest and most lucrative market, and we're also tend to be outliers in our social media use. But you know, one way or the other, Facebook has a lot of I guess the point is that Facebook has a lot of resources. So the global user base is actually a resource for Americans, even if they don't use some of these other services. The fact that they have threads and WhatsApp is a great resource for Instagram and Facebook and vice versa. So it's like they really have a, you know, I don't want to say it's a monopoly, but they have a really strong position. They have a lot of nets out there to catch you if you happen to be falling through any particular crack.
 
37:18
SHAW: I also think that they're doing this too, because of what's going on with Tiktok and the US, you know, the ban that's coming, and you know, or may not come, who knows what's going on there. But I think they're prepping for an idea of, like, well, all of these people that are on Tiktok might want to go to another place, and they're like, Well, hey, we've got all this stuff here on Facebook, and obviously they have Instagram and WhatsApp, and they have those other, those other avenues and threads. But, you know, again, I'm more of a cynic on the whole threads thing. So, you know, you mentioned Instagram, and there was another story this week that is causing me some, some concern. So Instagram is testing ad breaks that will force you to stop and look at an ad for a period of time before you continue scrolling several exit Reddit users reported seeing the feature, and Instagram spokesperson Matthew Ty confirmed to the verbs that ad breaks are being tested, basically saying that they would provide updates should the test result in any formal product changes. Basically, if you're scrolling through your stories and posts after a certain amount of time, Instagram will prevent them from going further and from going further until they looked at an ad. There was a screenshot that basically said, Instagram is displaying an ad break icon with a countdown timer that shows how long until you can start scrolling again. And basically you'll have to either stop or watch the ad or do something else to interact with this advertisement before you continue. But this just seems like insanity to me, only because I've seen how people use Instagram. I know how I use Instagram. You scroll. This is it's the Doom scrolling effect. You scroll. You watch. Either you watch or you don't. To insert an ad here. It's like the early days of that YouTube ad skip thing, where you couldn't skip out of it. If you give users a choice, they're gonna say no a lot of the time. So I don't understand why they're doing this, other than it's just again, another potential money grab for Instagram and Facebook, and they're not really caring about the users. Mike, do you have any thoughts on that?
 
39:15
ELGAN: Or do we lose them? Well, it seemed like sort of a process on all platforms, where, for example, Google a lot of times, you know, I don't run an ad blocker on on YouTube, for example. And it used to be that, you know, you see part of an ad five seconds go by, then you skip the ad and go right into your content. That's still the case. Sometimes, sometimes you watch a whole ad here in Europe, sometimes it's a whole ad, then another whole ad, and then you can watch your content. But they always seem to be pushing, how, you know, testing how much people will tolerate. And in fact, the tolerance level for advertising keeps going up. Once they get people to accept a certain level of intrusive advertising, they think, well, maybe we can nudge that up a little bit. And I think Instagram is is trying to do that. It's kind of an odd time to do it, because the. The competition from Tiktok must be pretty intense, but I think that essentially what they want to do, and again, they were testing this, they haven't rolled it out for real. But the whole point of the test is not to see if the tech works, is to see if the users will accept it, yeah. And, and if they do, well, Ka Ching, you know, it's like more money from advertising. And by the way, the ad the ad market, is tough out there for anybody trying to sell ads, anybody trying to sell ad space on social platforms. And so, you know, I think it's probably in part, a response to the difficulties in actually coming up with revenue from the advertising business.
 
40:42
SHAW: do I mean gut feeling? Do you think that they'll do this at some point, or are they just gonna, well, we're willing to take a 1% 5% drop in our in our user base, because we can make that up with the sales of all of these types of ads, versus just having a regular sponsored post or thing like things like that.
 
41:01
ELGAN: No, I think they'll do it. And the thing that I have to say about Instagram is that my, anecdotally, my own experience of Instagram is they do contextual advertising better than anyone I scroll. You know, the current advertising scheme where you sort of, like, go through some posts and and 50% of the time the thing they're advertising is something I really want. There's the thumbs up and, you know, it's almost it's like, wow, how do they know that's exactly what I wanted? They do that much better than even other meta platforms. And so if they are interrupting you with highly contextualized advertising things you really, like a lot of people say, for example, follow a lot of fashion icons or the fashion industry on Instagram if they're showing you clothing that you really love, or so, you know, you know, accessories or whatever. A lot of people, you know, some will reject it, but somewhat may welcome those intrusions, because it'll feel like the kind of content they really want.
 
42:00
SHAW: Again, I'm probably more of a crank than, than, than some tech optimists out there. I like my user experience being a good user experience, rather than having things thrown in my face with advertising.
 
42:15
ELGAN: So then what are you doing on Instagram?
 
42:17
SHAW: I know, I know. I Yeah. I mean, again, I've accepted the and again, maybe this is, again, an example of me accepting the fact that they've tried this thing where they throw in a sponsored post. I usually skip it. But again, it's that that one to two seconds where it hit my eyeballs and that was acceptable at one point, rather than just, you know, again, I usually it tells myself maybe I just need to get off this platform, you know, just stop, put the phone down and go.
 
42:44
ELGAN: Let me ask you something quick as a bit of an aside. But which, which social network or networks do you prefer? Do you wish everybody you knew was on so you didn't have to go anywhere else?
 
42:54
SHAW: That's a really good one. That's a good question. How boring do I sound if I say LinkedIn at the moment, like that's the least, least bothersome one for me at this point, because they do have a direction of this is supposed to be business type of social interaction. I like Facebook for just talking, you know, seeing what's going on with my friends and family. I don't like all of the other BS that gets put in there, whether it's look at all these other groups, and I've got friends that have fallen into that trap of, oh yeah, we're going to share all these things from other pages that have nothing to do with my interests or and again, I'm not looking for Facebook for to find articles around classic television, which I get all the time because I've watched shows and I don't know. I maybe YouTube. Maybe YouTube is the closest one that I wish everyone was on, because I this is where the show is.
 
43:47
ELGAN: It's nice to have a social component underneath your actual show.
 
43:54
SHAW: Yeah, maybe they should bring back Google Plus and or, or MySpace should come back.
 
44:00
ELGAN: Could  you imagine Google Plus with with AI?
 
44:02
SHAW: Oh boy, yeah. Okay, that's, that's terrifying. Hey, Mike, we're at the end of the show. We did have a couple of technical glitches where we'll, hopefully we'll work on that for the for the next couple of episodes. So again, thanks for joining us from Sicily, and we'll get into the whole digital nomad thing next week with you.
 
44:20
ELGAN: Wonderful. Thank you so much for having me, Keith.
 
44:22
SHAW: That's all the time we have for today's episode. Don't forget to like the video, Subscribe to the channel and add any comments that you have below. Join us every week for new episodes of Today in Tech. I'm Keith Shaw, thanks for watching.