Trump's War on "Artificial Intelligence," Elon v. Scott, and Google's Wall Street Meltdown

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0:44Support for the show comes from Harvey AI. Thank you. AMLO 100 are building with Harvey, accelerating review, sharpening negotiations, and more. Learn more at Harvey.ai. Harvey does not provide legal advice. Users should always independently review and verify any output from Harvey. I'm a voice agent powered by DeepGram. I don't just understand words, I understand context. Like when you're at trivia night and say, I'm on fire, it means you got the last three questions right. But when you're camping and say, I'm on fire, it means a spark just landed on your highly flammable synthetic rain pants. Deepgram understands words in context across STT, TTS, and voice ages. That means better conversations at production scale.

1:41Learn more at deepgram.com slash context is everything. I feel like the president feels like he's got two years left to molest the country for as much money as possible. Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher, and I love AI. And I'm Scott Galloway. You need to say AI because Trump is banning it. Yes, but I just want to be clear, this in no way is a distraction. And also, it's real. I think this is outstanding governance. I think this just is what he should be focused on. Yeah. And no, I think this is a good move, rebranding his governance. I think this is absolutely the hill to die on for the president. And the Cheesecake Factory, correct?

2:30Yeah. And the Cheesecake Factory. No, there's AI companies filing $2 trillion IPOs. Yeah. And committing half a trillion to compute. Yeah. And in the risk section saying that they might destroy humanity. But no, superintelligence is where he should be focused. Yeah, I think so too. I think it's a good spot for him. He can play with himself. Let's rename the iceberg before we hit it. Yes. What are we going to call it? No, no, don't. Call it IB, not iceberg. But it's coming right towards us, sir. Shut the fuck up. Call it IB. Focus. A-I-I-B. I like it. Oh, God, that's why you're such a genius marketing professor. Oh, yeah, that's it. That's what they call me. That's what they do. Are you ready for Halloween, Scott?

3:14Ready. I'm already full Halloweened up. I got three different costumes. Okay, which one are you wearing? You look a little tired. I've heard you've been going out in New York. I've had sightings of you. Uh-oh. Do you have your spies out? I do. I can just read you about it going out in New York. I've had sightings of you. Uh-oh. Do you have your spies out? I do. I need to speak to you about it on the tour next week. I would, you know, daddy did go a little deep in the paint. Yeah, yeah. I'm getting reports. Is the fact that I'm shaking and have Advil and an IV attached to my eyeballs? An AI. An AI attacks you, not an IV. It's like, was Scott out partying last night? Chances are. Yeah. Good question.

3:48Interesting. Interesting. What are you wearing? Which one did you pick for Halloween? I switched last night. I was going to go as Larry David. Yeah. And despite the fact that's not what I'm looking for, I'm like, God, it's just too unfuckable. I know. Yeah, that's what I thought. I just couldn't do it. I knew you couldn't. And I took it off. And then I had this Darth Vader thing, but it looked like a blouse on me. It just didn't look. I look like Delta Burke from, what was that great show? Designing Women. Such a good show. That was a good show. I love Delta Burke. I look like Delta Burke with like a stereo panel on her chest. That was my Darth Vader outfit. And I'm like, okay, this doesn't work.

4:22Okay. And then what did I do? Oh, I had Spider-Man, but it was too tight. I think I've gained some outfit. And I'm like, okay, this doesn't work. Okay. And then what did I do? Oh, I had Spider-Man. Yeah. But it was too tight. I think I've gained some weight. Oh, no. You can't be fat Spider-Man. You'll be like the one in Times Square, dirty fat Spider-Man. Yeah. Yeah, it looks like. I love dirty fat Spider-Man in Times Square. No, it's even worse. I'm not even fat right now. I'm skinny fat. I'm skinny at soft. Oh, skinny fat. Really bad. Is that a term? Skinny fat? I love that. You're absolutely right. People can be skinny and fat. I'm skinny at soft. Oh, skinny fat. Really bad. Is that a term? Skinny fat?

4:45I love that. You're absolutely right. People can be skinny and fat. Skinny fat. Yeah. But the alcohol and the blueberry muffin and three coffees I've had this morning is really going to put me back in shape. You're really good. You know, when I was in Michigan last weekend, I hugged Alex, and he is so fit that I almost broke my nose hugging him. I was like, ow. He's a brick house. He's a brick house. He's so fit that I almost broke my nose hugging him. I was like, ow. He's a brick house. He's not skinny. He's just not soft in any way. No, no, no. So what did you decide? Are you going to go with Scott Galloway? What is happening? No, no, no. I totally screwed up. I went, the same thing as I went up last year, I put on my old Deadpool outfit, which is always a crowd pleaser.

5:22Oh, that's a good one. But everybody under the age of 40 is like, are you Iron Man? I'm like, Jesus Christ, get your characters. Wait, I'm thinking, Halloween isn't until Saturday. Oh, not in New York, my sweetheart. Oh, is it? No, Halloween started last night. Oh, did it? And it goes every night. Yeah, yeah. By Saturday, by Saturday I'll have had a massive schematic stroke. Okay. But I'm Halloween rolls around. By the time there are kids out on the street, Yeah. Yeah, there's like a 40% chance I'm still with us. Oh, well, I'm going to do a big Halloween at my house. I decorate quite a bit, as you know. You said that. I got more stuff. I got ghosts. I just got glow-up chains. I got a new blow-up for the top of the roof, which I went out on my roof the other day and put it up, which was crazy.

6:03But the neighborhood seems to like it, all the kids. I'm popular with the children's. Yeah, I'm deciding whether to have full candy bars or not. What do you think? Because that'll just lock it for me. I have this image of you accidentally ending up in a very, like, MAGA right-wing neighborhood and people rolling by you with their kids and then pulling their kids close to them and screaming at you, Sinner! No, they love me. They love me in this neighborhood. Why does that make me happy? Yeah, I'm going to do full. I may have to do, I don't know. That's wrong. I don't know. Anyway, excited about, I'm coming to New York on Sunday, I think. That's right. We have this whole tour thing. Uh-huh. Yeah, yeah.

6:38We're busy. We're going to get new photos done of Scott and I, which is very exciting. So you better look, get some light Korean mask or something before Monday, because we're taking photography of ourselves again. And this is eight years ago. I don't see ethnicity with my beauty products. Okay. I don't care. It's just a mask. Whatever it takes. It's just a mask from Southeast Asia. Y'all need to look good. I don't like to appropriate cultures with my beauty routine. You want to know what my beauty routine is? What? I splash water on my face. Okay. Well, you need to look good. We're going to do makeup. I think we're going to have to, obviously. We're going to do that. And I'm going to be, you know,

7:11I'm going on The View on Monday. Oh, you're going on again. They must like you. Yeah. I'm going on. I have a special guest I'm bringing, not you. Does Allison own that? No. Give it six months. Yeah, I know. Give it six months. No, no, no, no. It's exciting. So are you going to be ready for our event? I'm super excited. Okay, it's going to be fun. It's going to be fun. We've got great guests everywhere. It's going to be so much. There's so much fucking news and we'll have the election and thank God we'll be in Toronto on election day if we have to stay there. We'll seek asylum there for ourselves or whatever, because Elon will become president. But the reason I was talking about artificial intelligence, AI, because Trump has been

7:53officially banning the term from government documents in his words, everything else in short order. In this post, he called out Wall Street Journal for not using his preferred term, superintelligence, or SI, which is Sports Illustrated, calling AI the very bad and inaccurate name. I don't know why that. It's unclear. If you don't comply, what will happen? Anyway, that's what it was. So we will just say AI, AI, AI all the time today, just as much as we can. You know, the letters AI are in a lot of words. Did you know that? Faith. AI pops up a lot of words. Did you know that? Faith. AI pops up a lot of places. Well, that's why people come to the show for that type of blinding insight. Just saying.

8:31It's interesting. Pain, which you are in, obviously, right now. What else? I'll think of words over the course of the show. This is ridiculous. Even Matt Walsh called the thing the weirdest political hill to die on. So there you have it. It's just dumb. Do you have any other good names for AI if you were going to rename it? Mass extinction event. We're rich. We're rich. We're not. We're rich. No. Wait, wait, wait. Dead. Dead. Wait, No. Okay. All right. Let me speak. Speaking of which, it's been a busy, speaking of like pronouncements, it's been a busy week for you. You got called out by Elon Musk, finally. You've been taking it to him. I've noticed all the, but you're like really going for it.

9:14You've been calling him all manner of names. He responded to a video posted on X of you discussing the potential Tesla SpaceX merger, where you said Tesla is the patient and SpaceX shareholders are the organ donors, which was very funny. You were making a point in context of Tesla's declining deliveries and sales, but apparently it didn't sit well with Elon, who has posted, quote, he never had any clue. How do you feel? You've been going at him, not just on that, but I've noticed on your other. You say something minor about him. He threatens to put you in prison. I know, right? Let's review. I've called him a menace, an addict, and a traitor to the West. Yes, a traitor to the West. I was very intrigued by that.

9:49And what triggers him is that I say one group of shareholders might be getting taken advantage of. That's what he decides. Yeah. You know, quite frankly, I just feel validated. I feel like my parking has just been validated by, I don't know, by Elon Musk. Well, he hasn't threatened you. He just said you don't have a clue. He's calling you stupid, I think. But he's got to really threaten you with swords. Which, you know, there's some truth to that. I'm going to reflect on it. If he threatens you with swords and you're dressed as Deadpool, that'll work, right? Doesn't he have swords? Do you have swords in your Deadpool outfit? I do, but they're really difficult to haul around, and you can't sit down and have dinner.

10:26Oh, right. And people come and take them. Oh. Yeah. Walking around with swords is rough. Is it? Well, good. Yeah. Good. I'm glad he didn't physically threaten you. Why did you call him Traitor of the West, may I ask? I didn't watch that one. I watched the others. I didn't get ... I saw it pop up, Trader Lewis. Because he is, because he's undermining the military capability and the wishes of the U.S. public to defend against to disarm B-17s, which we had, I think, lent as bombers to Britain, that person, and then without cooperation of the government, the military, without giving Churchill a heads up, turned off the guidance systems mid-bombing run against the Nazis, what would we call that person?

11:24Right? No, you're absolutely right. I don't... Putin praised him this week. You didn't. Well, there you go. Maybe he can be a character witness at the trial. Yeah, that was weird. I was like, hmm, that's not a very good recommendation, Putin. Or at the hearing. I don't know if he's going to be... Hearing. It'll be a hearing. I don't know if he's going to be tried. Yeah, it's going to be a hearing. Yeah, you'll be the witness. You'll be the witness. If you can get going to be a hearing. It's going to be a hearing. Yeah, you'll be the witness. You'll be the witness. If you can get yourself together long enough to do so. Sorry. You're really suffering today. Oh, my God. Sorry, yeah. You've got to get ready.

11:52This weekend, you need to rest. No going out. And if I get my, and don't shake the drink. Like, you just shake the drink. I got a ginger iced tea. Whatever, you need that. This will solve my problems. I know. Let me just tell you, you better rest this weekend. I have my spies everywhere, and I will know what you did. I'm going to put a tracker on you. Anyway, I'm going to rest. I'm just going to do Halloween and spend time with the kids and stuff like that. Anyway, as we mentioned, we are going to be this next big week. We kick off in New York, and then we're headed all around the country. Minneapolis, Los Angeles, San Francisco, Toronto, Denver, all places. But while we're going on tour, we're also launching a newsletter, the Pivot Post.

12:30We get fantastic questions from our listeners every week, and this will be a perfect place to answer them. Plus more opportunities for the dick jokes from Scott. God help us. And as we travel the country on tour next week, we'll be sending out three special editions filled with photos and behind-the-scenes content. Go to pivotshow.com to sign up. Scott's not a newsletter fan, but I love it. We're going to have all manner of things, and we'll see how it goes. We're considering some new features, including more shows. And so it'll be there first. We'll answer questions from listeners. We'll solicit essays from our friends of Pivot. I don't know. We'll do whatever we want. We'll paint whatever picture we want. But I think it's of Pivot. I don't know. We'll do whatever we want.

13:07We'll paint whatever picture we want. But I think it's nice for our fans to get more stuff. We're not going to weekly do a long pontificating thing or anything else. But I think it's kind of interesting to experiment in different mediums with all kinds of things. We obviously have the show. Hold on. Am I being, am I hungover and sensitive? A long weekly pontificate? Are you describing my newsletter? No, no, no, no. Was that passive aggressive? No, I was thinking of someone else. No, I like your essays from No Mercy, No Malice. I think they're quite good. I like them. You're a very good writer. You actually are. I assume you write it yourself, but you do. You work hard at writing. I don't like writing anymore as much as you do.

13:43You think about fitness, there's physical fitness. I think the ultimate mental fitness is writing. I think it like writing anymore as much as you do. You think about fitness, there's physical fitness. I think the ultimate mental fitness is writing. I think it is hands down the hardest thing I do. Hands down. I'm working on a book and I'm having trouble, like, getting it done. Every time about two chapters, I'm writing a book too, two chapters of my latest into my current book. I'm like, how on earth did I agree to do this again? Correct. I'm like shocked. Yeah. You know, supposedly right after childbirth, the hormone comes over the female brain such that you forget how awful it is, such that you'll do it again.

14:12For about every time you finish a book, I'm convinced that hormone comes out because you would never do it again if you remember what it's like in chapter three when you're trying to figure out a way to say something unique about AI. Yeah, exactly. That'll last in the six months. It will age well in six months when it finally gets on the shelf. It's absolutely hard. I have to say, I did it for the last two days working with people I'm working on this book with. And I just, it was like, everything else is so easy. It's a pleasure. And book writing is really hard. We're going to try to keep this one fun and we'll see where it goes. We're not – I like the name The Post. You know, Amanda came up with that name.

14:51The Post. Pivot Post. Oh, our newsletter. Yeah. Oh, good. Yes. Oh, yeah, and I'm super excited about that. Anyway, sign up at PivotShow.com. All right. We're going to have a quick break. When we come back, it's the final countdown to the midterms. to tell you about pre-alcohol by Z-Biotics. Z-Biotics pre-alcoholed probiotic drink is the world's first genetically engineered probiotic. It was engineered by PhD microbiologists to break down acid aldehyde, an unwanted byproduct of alcohol metabolism. Make pre-alcohol your first drink of the night, drink responsibly, and enjoy your next day activities. Z-Biotics has sold more than 14 million bottles and earned the trust of thousands, including us. I am trying to drink less as I get

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17:45legal work, is writing the next chapter of that legacy, helping lawyers handle those agreements more effectively and bring their expertise to more people. Harvey is trusted by more than 3,000 customers across 70 countries, more than 200,000 lawyers, 80% of the AMLO 100, and 20% of the Fortune 500 are all building with Harvey. They're accelerating review, sharpening negotiations, uncovering insights, drafting first responses, and more. And they're doing it all in one secure place built for legal teams. This is how the future of agreements is being crafted now. Learn more at harvey.ai. Harvey does not provide legal advice. Users should always independently review and verify any output from Harvey. Scott, we're back with more news. We're just days away from the midterms.

18:33Let's get into one of the more bizarre midterm battles. Alaska's Republican Governor Mike Dunleavy has ordered an investigation into reports that Democratic operatives recruited a candidate with the same name as incumbent Republican Senator Dan Sullivan. The New York Times investigation found the effort was reportedly aimed at splitting Sullivan's vote to help Democrat Mary Peltola win the Senate race. Trump has called for Peltola to be prosecuted, while his Justice Department has sued to block the certification of the results of the second. Sullivan cost the incumbent the election. We'll go through more stuff. Trump is making a last-minute push to win over voters with promises of cash payments,

19:07including a $1 million reward for tips about voter fraud that can lead to an arresting conviction, which is just nonsense. Recent polling shows Democrats leading Republicans 53 to 44 percent among likely voters. I did a very long show with Hillary this week about that, and she had some predictions of various things. But I'd like to hear yours, where this is going, and if anything really stands out. Besides, Obama has a really tight 10, as they say. He's just really funny. I'm not sure if it'll matter, but I have to say it's quite enjoyable to watch him stumping for various candidates. And him and Ossoff together was like amazing charisma tsunami, essentially. Yeah, felt like the 90210 of politics. Yeah, exactly. Yeah. He still got it. I got to say

19:53he still got it. I can't figure out their strategy. Let's make our final case to the voters and tell them that anyone who says artificial intelligence is the enemy. I don't get the strategy here. They're having to defend places like Kansas, he never would have thought. And then bounties for voter fraud, gas at $4.40 a gallon, and then a favorable... When Democrats had their big win in 2018, they were D plus seven. This time they're D plus nine. Now, I do think in certain places, you're probably going to see the Republican poll better than we think. The one that always does is Susan Collins. The polls, for some reason, it may never seem to get that right. But I'm nervous because I'm really hopeful. And obviously, everyone's going to have their eyes on the

20:41Senate. What are your thoughts? I'm not an expert. Hillary had some very interesting thoughts about it. But I think probably the Democrats will win both. It just seems like that. It seems a momentum. But again, you're right. It's always a mirage, right? It's this close. I will say the candidates on the Democratic side are terrific. Really strong. Not fake strong. You know, and some people are like flashy strong. I just think they're all like everywhere you go and they're all different. Amy Acton is in Ohio against Vivek, which I think should be a slam dunk given his behavior. And by the way, she's been backed by yet another step sibling about what happened to her. I mean, she shouldn't have to be, but this is where we are. I saw a really interesting, AOC's out stumping for people a lot,

21:31which is really interesting. She had a great, I got to tell you, they're so good. She said, do you know, they're pushing back on this communism thing, because these are the arguments of the Republican, communism, trans, and call it SI. I'm like, do these have anything to do with people's lives? I don't think so. But one of the things she pushed back, and I thought it was well done, was common sense, not communism. And I thought, in a short word, and the way she delivered it, it was smart. It was like super smart. I think every one of them is different and interesting. That's my takeaway, and they're very appealing. Now, the question is, are there these ghost Republicans who don't do polls and they're suddenly going to...

22:05In my experience with people I know who are pro-Trump, they're very disillusioned, I would say. They feel very disillusioned. The question, will they just pull that lever for Trump again if it's, one, he's not on the ballot, which he isn't. And two, when they feel so taken advantage of, like the Joe Rogans have switched, all those guys have switched in that regard and quite vocally. So I don't know. I'm glad we're in Toronto. That's all I have to say. But let's look at the data. A real clear polling's generic ballot average has Democrats up 8.3 points. Decision desk HQ, 79% chance Democrats take the House, 238 seats. For scale, Democrats won the 2018 House popular vote by 8.6 points and picked up 40 seats. And according to

22:55Kalshi, it put the odds of a Democratic blue tsunami at 57%, up from 45% just two weeks ago. So that's real momentum. Now, what does the tsunami mean? There's actual technical definitions there. Tsunami means Democrats win at least 235 House seats and 51 Senate seats. A blue wave, 218 House seats, but Republicans maintain control of Senate. Cal State has it at 82%. And then a quote-unquote new category, mega tsunami, 240 House seats, 54 Senate, 25%. So the momentum is just, it usually tightens at the end, right? But it appears that the momentum is with them. My favorite is what he's offering Republican voters, what Trump is offering, a $5,000 Trump dividend to every adult citizen if Republicans hold both chambers,

23:50$8 billion in direct payments to farmers, up to $30,000 for government fraud tips, and settling the remaining Camp Lejeune water contamination claims. That's my favorite one. Only if Republicans win, I'll settle the Camp Lejeune water contamination claims if we win the House and the Senate. That's kind of an odd one. Yeah. Yeah. The crowds, I never go by the crowds, but it's really interesting to watch in Texas, the huge, I mean, Tallarico keeps having to get bigger and bigger venues and Ken Paxton's in these sad little old people places like that. But old people vote. So, you know, I don't know, like, will people actually vote? That's the thing. I think it is, you know, it is get out the vote. That's the thing. I think it is, you know, it is get out the boat. The other thing that I think people are not paying enough attention to is Trump's outbursts, these weird, you know,

24:30Jade or like he does them, can't pronounce Ken Paxton's name. There is something going on with him because he keeps doing it. That's just what happens to old men. We just start making noises involuntarily. I know, but I honestly, it's really astonishing. The two things that people, I'm kind of surprised, were these new rape allegations against him. And I know the report from Congress was Democratic, but this woman was in the New York Times piece and said she couldn't say everything. She had been vetted by the New York Times and then she has. This woman said she was violently raped by Trump. And so I'm surprised that there's not more coverage of that. It's probably because newspapers really have to lock those things down before they say anything.

25:10But there's just this guy has fallen apart in real time. And I think the scary part to me is not so much. I think the Democrats will probably sweep. But if they don't sweep enough or even if they sweep, what happens between November 3rd and seeding these people? What craziness could ensue? And because he's obviously cognitively declining rather precipitously, that worries me. And what will his acolytes do? They may just abandon him if he really loses a lot, if he loses his power. The emperor has no clothes. On November the 4th, he's a lame duck. But speaking of my newsletter, which you hate. I don't hate your newsletter. I'm just not on Substack. The title of it, the title of it, well, anyone can get it.

26:00I love No Mercy, No Malice. I read that every week. That's not true. I read it online. I appreciate that. Anyway, so 440,000 subscribers, FYI. Anyway, so the title of this week's No Mercy is Criminal. And guess who it's about? Who? We'll give you one guess. Yeah, I know. Criminal. Yeah. But yeah, I think, like, I've never thought the cognitive decline or the health stuff or whatever is, I've always thought it's Democrats kind of hoping. But his criminality, it appears like, you know, do you remember those 70s or 80s TV shows where they said to someone, here's a shopping cart and you have two minutes to throw as much shit in it as possible and get out? I love those shows. or just do whatever you can. And it feels like he's just getting,

27:06he had more stock trades than the rest of Congress combined. I know, yeah. And he knew it was going to come out. He files them. He doesn't care. I think he literally believes I'm immune for this stuff. I got to think we're going to find out about all sorts of things. Well, the Jared Kushner stuff, some of this recording that's coming out. It's just, there's a lot. And it's all linked to money. Every single bit of it is linked to money. The thing that marks this presidency for me is there's a picture of Jared and Ivanka, and they're both very attractive. They both look really good. And it said, just FYI, one thing they share, this couple shares, is both of their fathers are convicted felons.

27:42And I thought, that kind of marks this presidency. Yeah, absolutely. Anyway, we'll see what happens. We'll see. We won't know in New York, but we will know when we're in Canada, I think. We'll know. We'll see. Toronto, we're excited to come there. It's probably not a bad idea we're going to be in Toronto. I know. That's why I said we're going to just stay. We may never come back. What happened to Karen Scott? They live in Saskatchewan. Saskatchewan together. They have an alpaca farm. It's really fun. Scott is drinking himself to death. Scott shears all day. He shears land all day. And drinks all night. Yeah. And Kara's enjoying the hardware store. He bought a pickup truck and pulls up and yells at the help.

28:16Yeah, exactly. Yeah, that would be so much. That would be such a good reality show. Oh, God. That would be such a good reality show. See if we can get Sarah Palin up there with us. Okay. All right, we're not going to do that. But let's get to some actual tech earnings. Microsoft beat Wall Street quarterly expectations with revenue up 19%. Its Azure cloud business grew 48%, which is a lot. The capital spending came in below expectations at $45.2 billion. Shares rose nearly 4%. And pre-market traders, it looks like they've got a hold of their spending. Microsoft is offering voluntary bias to about 60,000 employees. It looks to reduce costs while continuing to invest in AI. Shares for Alphabet, though, are down 13% at the time of the taping, putting the company on course

28:54for its biggest ever post-earnings drop. The Google parent company missed Wall Street quarterly earnings expectations for the first time in nearly four years, despite revenue growing 25%. The company reported negative free cash flow of $9 billion, while long-term debt jumped to nearly 480% to $125 billion. Cloud revenue more than doubled to $30.7 billion, but search advertising revenue missed expectations, growing 12%. Google's Gemini app now has reached 1 billion users. I will note the company is facing questions about its AI search tool, including for me, which wouldn't give a straight answer when asked who won the 2020 election. The company responded to my threads post about the issue saying they're fixing it.

29:34And there was a technical gap in the 2020 election information. Very sus because Claude and I checked all the others were just fine. And the only one they wouldn't answer was about the Biden election. And they answered the Trump ones very clearly. Give us a thought on these earnings, because they're sort of two different ones. And I do think I find myself in search using Claude much more. It happens to be my choice than I do Google, although I still use Google search and Gemini. That's on the Google search page. And Microsoft, I think, showed a little more discipline. But your thoughts? Well, one, just with respect to market expectations, one beat them and one probably missed them. Microsoft did nearly the impossible here, and that is they thread the needle between what

30:25is a reasonable amount of CapEx while maintaining incredible top-line growth. They had a beat on revenue. They're up 19%, and Azure was up 48%, while CapEx came in below expectations. So this, again, this is the earnings report that was able to kind of thread the needle that the market wanted, and that is growth without some of the runaway spending that marks the age, right? And then as a result, shares popped 4%, while Alphabet actually cratered in the wrong direction. The more interesting part of the story, I think, is that a 60,000-person or employee buyout offering sitting next to accelerating AI CapEx is the clear, like our K-shaped economy or two workforces, if you will, is really the market for tech. And that is humans get

31:13buyout packages and GPUs get huge blank checks and bonuses. This is what marks AIH. We beat on earnings and we're asking 60,000 people to leave? Yeah, there was a great post. Someone said to all software engineers, 19, I don't know, 83 to 2026, you had a good run or something like that. It was. But, but the, the headlines, and this is where the monetization and the idolatry of the dollar and shareholder value over trumping everything in a, in a, in a, the age that is America right now, I think the headline a couple decades ago and definitely 40 or 50 years ago would have been, you know, Microsoft laying off 60,000 people. Instead, the headline is top and bottom beat from Microsoft. It's just whatever, you know, the God we pray to now is shareholders.

32:15And then Alphabet was actually a bigger story. And this was Alphabet's first top and bottom miss in nearly four years. And the stock shed 9%, 10% after hours. That's the worst post-earnings reaction on record, despite revenue actually growing 25% and beating some estimates. That's how crazy the expectations have become. Yeah, but the long-term debt thing, I think, is what freaked them out. The long-term debt jumping, the negative cash flow, even though things did grow, right? And it seems like search is, something's happening with4 billion in a single quarter. That's more than Google's cloud's entire quarterly revenue. And long-term debt is up 6x year over year from $21 billion. So what does Wall Street do when they see that?

33:14Is it lack of discipline or things are shifting for this company in terms of its revenue profile? Well, no lack of ROI. And that is Microsoft was able to say, okay, our CapEx is actually less and earnings are more than expected. Whereas the fears around all these guys that the returns are just not going to catch up, the R is not going to catch up to the O and the I. And that the CapEx has just become, they're like someone who can't stop eating and it's become an arms race. And like the Soviet Union, it's going to collapse on itself trying to keep up with the one or two players. Right now, I would say Meta, and you would argue Alphabet. I'm sorry, Meta and Microsoft are probably, is this accurate,

33:59probably showing the most visible signs of return on a massive capex. Still massive, still hasn't, but showing signs of it, right? By the way, it's technically R and I, O is just on. No problem. That's good. Again, more blinding insight. Is there an A and an I in ROI? Anyway, and also it's just that the 2020 glitch that it can't answer who won 2020, this kind of technical gap is just really bad timing for an AI search tool, won't state a settled fact. And that kind of undercuts the very AI narrative the company needs to justify the cap backs. Yeah. The thing is, either you're not good at it or you're sus. There's no good answer here, right, in terms of how they couldn't do it after all this time.

34:47Yeah. So, look, Microsoft thread the needle, and it looks like Alphabet, from the market perspective, is on the wrong side of the needle. But, again, I think the number here is the most important number, 60,000. 60,000 people? I mean, that's enormous. So, I wonder what they'll do if they don't get 60,000 people? I mean, that's enormous. So I wonder what they'll do if they don't get 60,000. When you do a layoff, I've never done a massive layoff, obviously, but you're aware of that. You've had more experience. Oh, yeah. When you offer 60,000, how many do you expect? And then what do you do if you, there's got to be a number they are going for, using AI and say, if we offer this much. But what you also do is you have a hammer. And that is basically buyouts come with sort of a

35:32Sophie's choice. And that is take it now, maybe you don't want it. But by the way, if you don't accept it, there's a chance you'll be laid off with a much less generous severance package. Yeah. That's what they're doing at Paramount. They're doing in different parts of the company, volunteering. And folks who always over-indexes on these lists, just FYI, young people, people who are working remotely, it's just much easier to lay off people you don't know. And the odds of you being laid off are dramatically higher when you work remotely. But what you do are typically in a layoff, and I've been through a bunch of these. You go to the people who, I mean, you don't like to say this out loud, but I believe this.

36:1610% of the employees add 120% of the value, and the other 90% are negative 20. That's not that you don't need them, but they take a lot of management time. They're good, not great. Obviously, just statistically, half the workforce is going to be at average or below average. Typically, what you do in a layoff is you go to the really key people and you say, this is what we're doing tomorrow. We're actually going to increase, or this is why you are so important here. And then you do the layoff. And they've already calibrated of those 60,000 people, how many they want to leave. If it's a generous buyout package with a hammer on the back end, they might be expecting 40 or 50,000. But I think when you offer someone a buyout,

37:04you also got to keep in mind in terms of morale, is that person going to be really motivated from that point? Even if they're motivated, aren't they just going to be fearful? So it's not, and typically when you do a layoff, and this is an aspirational, my advice is always go deeper than you want because this is like surgery. And every time you open up somebody, it takes the corpus time to respond. You don't want to do this every year. Yeah. Yeah. Have you ever been laid off? Well, technically I've been fired from every job I've ever had, but because I've only had, well, the only job I've ever kept was Morgan Stanley. And that's because it was just a two year analyst program. So you weren't fired. You just went back to business school. I've been

37:39fired from some of the best restaurants in Los Angeles. I've been fired from the Chart House, Monty's, Islands, which was a burger change. I was fired from the restaurant at LA Fitness. I've been fired from a ton of great restaurants. I wonder why. I'm not a great – I know this is going to come as a surprise. I'm not an outstanding employee. I know that's a shocker. No, I've never. I've been fired twice. One, from selling chipwitches because I wouldn't go to the mall and sell chipwitches on July 4th because I thought I'd kill myself if I had to do that and wear an outfit. And two, from my first job at City Paper in Washington, D.C. I think I deserved it. I was too inexperienced, but he hired his friend.

38:25So that was it. Thanks, Jack. That worked out well for me, Jack. I think I deserved it. I was too inexperienced, but he hired his friend. So that was it. Thanks, Jack. That worked out well for me, actually. Yeah, look, I don't... Layoffs are just... I think... I mean, I don't want to say I'm a fan of layoffs. And my view on layoffs is you're rapacious about the decision and you are generous with terms. And I think there's a good way and a bad way. And I've hired and fired a bunch of people. And what I find with the right way to lay off or fire somebody is the following. People always make excuses for why it's not working out. And as soon as I start to hear these smells or things like, he's in the wrong role, or he just needs time, or we haven't done

39:01a good job assimilating him. Okay. It's not working. And you're not doing that person any favors by keeping them around. And the sooner you let them know it's not working. I've never been one of these people. You have to do this sometimes in public companies where security walks them out. I think that is just stupid and dumb and just not kind. You sit them down and you say, it's not working here. And we can talk about why, but what I'd rather talk about is how we're going to help you find a place somewhere else where you're going to be more successful. Yeah, and give you. And if you're in a small company and it's doing well, you can offer to keep paying them until they find another job. You can offer to keep their insurance.

39:37And you can try and help them find another gig. And you can say, look, I understand you might be angry, but I don't want you to be scared. And I think people really appreciate that. They might look back and say, he shouldn't have fired me, but they weren't mean. You want to treat people, the sooner you make the decision, my attitude is the more generous you can be in terms of severance. But I've always been like, okay, stop making excuses. This isn't working for us and it isn't working for them. Yeah, it's hard. It's difficult to fire people. It definitely is. The best scene of firing ever was in broadcast news when they were laying people off in the newsroom. Well, I hope you die soon. I hope you die soon. And I hope he was being,

40:21that was the finest scene I've ever seen. That's a wonderful movie. Wonderful. James Brooks, just amazing. Yeah, Holly Hunter, William Hurt. Everyone used to compare me to her, by the way. How does it feel to think you're the smartest person in the room? People. No, he says, it must be nice to always be the smartest person in the world. And she's like, no, it's awful. People always send that to me. I actually's like, no, it's awful. People always send that to me. They always, I actually would answer. Yes, it's awful. There's a wonderful movie called The Piano. Oh, she's amazing. I love her. I love her so much. Let's bring Holly on. Let's get Holly as a guest for Pivot. Where is she? You're right, we should.

40:57Let's track Holly down. We love her. She was in Succession, if you remember. She played. I do. I do remember that. She's great wherever she goes. All right, Scott, let's go on a quick break. When we come back, we'll be talking about NVIDIA if you remember she was she played i do it was great she's great wherever she goes um all right scott let's go on a quick break we come back we'll be talking about nvidia and meta cozying up this holiday switch to the simplicity plan from verizon it's one plan one price just 30 a line per month for you or the whole family and on their best 5G network. Switching to Verizon and shopping their best deals makes the holidays simple. Head to Verizon.com or your nearest Verizon store today.

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43:20It's time to get Brex AF. Learn more at brex.com slash AF. Scott, we're back with more news. NVIDIA and Meta are teaming up for the latest circular AI deal, which I've called the circular jerk, with NVIDIA investing $3 billion in Meta, part of an expanded partnership focused on the AI agent Muse. This is tied to Meta's new plan to raise nearly $100 billion through stock offerings to fund its ambitions. Chip maker AMD is also getting in on the action, investing $1 billion in Meta's equity offering. NVIDIA is really spreading the money around at this point with stakes in SpaceX, OpenAry, Anthropic, and several other companies. Feels Cisco-y. This is sort of the kin maker in these deals. It's worth noting NVIDIA is reportedly being investigated

44:10by the DOJ over its acquisition of AI open source platform Hugging Face and how the deal might impact competitors. This feels so Cisco to me. I don't know. It feels something. I mean, it's probably what one would do here, but it feels something, something not good. Also, this incredible story came out a little while ago. U.S. intelligence agencies believe NVIDIA CEO Jensen Huang was targeted by a Chinese spy who did business with him, according to a report in The New York Times. Trump was briefed about these findings about a year ago and chose not to do anything with the information. Your thoughts? This is, okay, so just to review, NVIDIA is investing in Meta, who is raising money in part to buy NVIDIA chips, while AMD also invests in

44:59Meta's equity raise. This is literally the textbook definition of a circular financing structure. The same dollar is round-tripping through a chip maker, a cloud customer, and cap table in one closed loop. And when you have NVIDIA owning and investing, owning stakes via investment in SpaceX, OpenAI, and Anthropic simultaneously, essentially, the question is the following. Is NVIDIA's demand signal organic or self-funded? Mm-hmm. Very good way to put it. The metaphor is this is a company that's selling shovels, it's investing in the miners, and it also owns a stake in the bank lending money to the miners to buy the shovels. At some point, if picks and shovels stops being the safe AI trade and starts being the

45:55whole mine, and the market looks at these deals and goes, okay, these circular deals work until they don't, and then they unwind really fast. I was guilty of this back in the- Oh, AOL. That was AOL's whole game. Oh, yeah. But even small, it happens everywhere. Even in the 90s, when I was raising a ton of money for my companies, I knew all these entrepreneurs, and I'd be like, oh, you're selling this software? Okay, I'll invest 50 grand and I'll buy your software package for my small shitty business being funded by Sequoia. We were all kind of buying each other's products. Well, they would call it a virtuous circle then. And I used to call it a circle jerk at that time. Like I was like, OK, it's a circle, but not the kind you're thinking of. And maybe a

46:32circle jerk is virtuous for the people getting jerked. But it does feel funny. And it's interesting that the DOJ might be investigating them because he has done everything possible to suck up to Trump, Jensen Wong. Jensen, he's smart. I know. You know what it feels like? Remember, did you ever see that chart of every crypto company that- I know what you're talking about. That Stan Bankman Freed invested in? Yeah, yeah. That FDX? He was, it felt like he owned, it felt like he was financing the entire sector. Yeah, exactly. To keep the music on. How does it go wrong or how does it go right? Let's be fair. Well, how it goes right is that Anthropic keeps, which was up, its revenues were up 14x in the first half. And to be fair, despite all the critics you're going to hear on property markets of the AI trade, if they can keep anything, even if that growth gets cut in half, they do look to be recognizing scale relative to CapEx.

47:28This could be a company that's doing $200 billion in annual revenue by 20- The Google. It's the Google. Yeah. And at 10 times, if it goes out of $2 trillion, 10 times revenue just doesn't seem that... That seems cheap compared to some other stuff. Yeah. It's the Google. Yahoo had a stake in Google, if you remember, did investments in Google because it was, Google was one of its vendors. You know, it just was one of those similar things. So what could go right is it maintains its current growth. It's able to reflect margins. It's able to show scale around its CapEx or Anthropic is already the second greatest revenue per employee in the world. It went from 1.4 million to 6 million per employee, and it's second only to NVIDIA,

48:10and it'll probably pass NVIDIA if it continues to scale like this. You're essentially getting... It's growing much faster than NVIDIA, it's growing much faster than SpaceX, and you're probably going to, in this IPO... When I read the S1, I was actually quite bullish, distinctive and existential threat or some huge scandal. I think what they're going to be able to honestly say is you're getting greater growth with us than NVIDIA or SpaceX in a much lower multiple. I think that'll be very attractive to the public markets. But how this unwinds is one of these guys, if NVIDIA's demand signal starts to look really, really bullshit and really artificial and propped up, and all of a sudden, Nvidia's stock starts going down and Nvidia's

48:51no longer feels like it can finance these companies, the whole thing just unwinds. It's like pulling on a string, right? The whole thing unwinds really fast. Yeah. You mean if they get one win like an Anthropic, it could be fine, right? But I don't think that helps NVIDIA necessarily. It's got to have a broader... Well, it's the internet again. I mean, everyone... This will correct at some point. That's just a natural part of these tax cycles, right? The railroads did transform the United States. The technology was transformative. There were tons of bankruptcies along the way. Yeah. The internet did transform the United States economy. Amazon and Cisco lost bankruptcies along the way. The internet did transform the

49:25United States economy. Amazon and Cisco lost 92% of their value. And then one of them came back to go up 40X from there. So the technology in many of these companies will survive the correction. The question is, how severe is the V down? And then the hard part is, when does it happen? And none of us know. And in the meantime, and I had dinner with Barry Ritholtz the other night, from when The Economist perfectly called the crash of the dot-com bubble, they did it in 97, they were early. The NASDAQ doubled from there. So again, I always go to the same thing. If you're an investor, always be in the market, but always, especially if you're a little bit older, try and be diversified. Yeah, so you know where it's going.

50:05One of the things that worries me is all of these companies have three big customers and that's it, right? They take care of most of their thing. And so that's the worry I have, concentration. And it feels very – and NVIDIA is right in the middle of it. Anyway, we'll see where it goes. But something's going to break at some point. Former Yahoo CEO Marcia Mayer is facing backlash after revealing she used her new AI assistant, Dazzle, to come up with three things that make her 10-year-old daughter special. Merritt later said she was not relying on AI to explain her child, but rather testing the app's abilities. Dazzle, it was a really bad quote. Dazzle uses a person's camera roll to learn about their life and preferences.

50:48I have a long history with Marissa. I was pretty tough on her as CEO of Yahoo, which she did a terrible job at, I'll say. She was a former Google executive and she's sort of trying to, you know, make her differentiation in this AI race. She's tried a bunch of companies that haven't really worked out since leaving Yahoo. But I just want to know if you were an AI chatbot, would you say the three most special things about me are? You can't think of me. Oh God, just call Claude. Yeah. The three most... I would just leave it at you're just special. Let's leave it there. Special needs. You're just special. You're our little special podcast child. My child. You're very special. It was really a thing.

51:35She should not have said the things she said, honestly. Sometimes she's very not self-aware. I'm not so sure this was so fair. I'm not a fan of Marissa's, but I have to say, I think if you know her, she has sometimes awkwardly communicates, I would say. And this was a real, this is a corker of bad communications and a piece she probably thought was going to be positive about her efforts. Marissa was in over her head as CEO of Yahoo. It was the total pump and dump. I mean, back, Dan Loeb took a big stake, managed to get a guy fired for saying he minored in computer science when he didn't, which I thought was ridiculous. And then managed to position her. He lied about, let me be clear, I wrote some of those stories.

52:19He lied about a lot of stuff. He was un- But wasn't the reason he was fired because it was clean? He just constantly wasn't telling the truth on a number of things. Oh, is But wasn't the reason he was fired because of his claim? He just constantly wasn't telling the truth on a number of things. Oh, is that right? I forget his name. Scott something. Scott. There you go. I feel like Scott was his name. And then she was painted as some sort of heroic... Yeah, anyone who knew her wasn't going to be the case. And she almost blew the tax status on the Japanese stake. She managed, I think, to cut EBITDA revenue by 20%, EBITDA in half, and meanwhile walked away, I think, with close to a quarter of a billion dollars.

52:54Right. Which today almost seems quaint. Yeah. Remember Enrique? She hired the sales guy. Oh, and fired him seven months later. I don't remember. He had negotiated and she had agreed to $110 million. Yeah, he did well. He went there for seven months, got fired and walked away with $110 million or something like that. Yeah. I don't remember. That whole time. I wrote a lot of stories about you. Not just her, but other CEOs. But nonetheless, look, she made a stupid quote. She seems like a nice lady. I hope she does well. But with stuff around your kids and AI. Yeah, you have to keep it tight. I think it's a little bit tone deaf because people are expecting those kinds of observations about your kid to come from you.

53:34And it just sort of feels uncomfortable. Like, Claude, please feed my child. Yeah. Or do the story. You saw that story thing? Make a story in my voice so I can have the story read by AI to my child in my voice. There was one posting like that. Tech people shouldn't talk about AI in children. Ever. I agree. Ever. It's not just Marissa. There's a lot. Most people expect me to be very critical. I think she just said something stupid. Knowing her, I have a feeling I know what she was going for. She has an awkward communication style. And just tech people don't talk about how AI is great for our kids when most people are super worried about it. Just that's not a great way to sell it. Anyway, one more quick break. We'll be back for predictions.

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56:38Okay, Scott, let's hear a prediction. I think in one story we didn't talk about that we probably should have, Instagram or Meta announced a new program called Features, which will now allow creators to upload up to 90-minute long videos to their platform. This is obviously, they look at the success and shareholder value that YouTube is driving, and Mark's like, no, I want some of that. And they want to challenge their long-form dominance online. And I think what they sense is that one that was challenging their dominance, Netflix has its own problems. And so I think they see an opportunity. And also they have 3 billion daily active users. And talking about AI, I would argue that the best use of AI right now is meta and video. I just find it frighteningly addictive.

57:27So- You mean on Instagram or on throughout the service? I find Instagram reels. Yeah, I know you love them. I feel like it's turning my brain inside out. Right, yeah, they're good. That it absolutely, it's frightening to me how on point the next video is going to be. Yeah, I agree. I agree. I don't think people realize just how many millions of data points in human psychology and behavioral psychology. They are measuring a billion times a second to try and keep you on that screen for just a second longer every day. So currently, I think where you're going to hide. So my prediction is boring. By the end of next year, Nielsen will be reporting streaming data on Meta. And just in the past couple of months, Meta has begun rolling out its Instagram app for the smart TV, which will begin short form reels and now long form features in the living room.

58:16In some, Instagram's coming for the TV and for streaming media. What's interesting is they're not paying people. I think YouTube pays about 50% of its revenue out to creators. So the question is, and I tasked my team with figuring this out, I'm like, is this a top of the funnel vehicle? Because for the next 90 to 180 days, if you wanna get into features, you should do it now because they'll juice the algorithm to display. So you'll be popular. Yeah. You know, they're in a bit of a beef with publishers. They try to put these terms where everything you put in there, they have rights to scrape. There's a big fight going on. And they've slowed down their rollout of these things. So just keep in mind, they're always looking to steal your shit, everybody, that you're putting in there.

59:03And so they're in the midst of a big fight with people. And again, they were going to put these rules in place for what you uploaded. And there was a lot of pushback from all manner of content creators, especially professional ones, of taking your stuff. But this is, there's just not getting around it. This puts more pressure on the streamers, including Netflix. Streamers now won't just be competing with YouTube over the television. They're going to be competing with meta. But content creators do not love, like if you put it on Netflix, you don't expect them to steal your shit. Expect Facebook to steal your shit in some way that will help them. It's a different relationship, so it should make you pause. That's always been true of meta, and every day,

59:44more and more people decide to upload their content. Right. I get it. But they're in the midst of that controversy, too. So you think they're going to keep up? I'll tell you one thing about YouTube, and I just love your observation, is I agree. Reels, you go from thing to thing, and it's really addictive in a good way, like in a weird good way. I find YouTube as popular as it is, and I get why it's popular. And once you figure out Grok the way it works, it's great for you, but it's rather confusing still. It's never, and I've talked this to the CEOs of YouTube over the many years. It's hard to organize it. It doesn't seem organized. It seems random as shit. And I don't get as much, it's not as, Meta does a great job at organizing. I don't know how else their content for free. But right now, if you look at the share of video

1:00:46or TV, streaming is now half. Cable is 19%, broadcast is 18%, others 14%. And now let's look at the streaming market. The big switch here is that Netflix was near double digits and YouTube was low double digits. Now YouTube is 16% and Netflix is 8. YouTube has twice the watch time of Netflix. Then after Netflix at 8%, it drops down to five at Disney, four for Amazon Prime. This is interesting, 3% from Roku, which was just acquired by News Corp, correct? Or Fox? News Corp. Well, so far it's under investigation. Under review. 2.3% for Paramount Plus. The one I wasn wasn't expecting to see 2% from Tubi. By the way, Tubi has greater share of streaming than Peacock at 1.6%. Yeah, that's News Corp.

1:01:31Much lower than I had thought. 1.4% for Warner Brothers Discovery. So HBO punches above its weight class, but still sort of artisanal. The real question is, when all of a sudden Meta's in this game now, who are they going to take share from? And also, I'm just fascinated to try and figure out what is the incentive, right? And I find I'm spending more time on YouTube. I'm watching East of Eden on Netflix right now, which I think is just fantastic. But when Meta shows up, the question I have is, I think it's going to be very disruptive here. I'm just trying to figure out who they're going to take share from. So give me very quick, who do you think, if you had to pick right now, just top of your head, YouTube?

1:02:14They're coming for YouTube. That's who they're coming after. The thing about momentum is momentum creates its own momentum. And I think Netflix has probably got further to fall right now because the momentum is just so bad for them. I do think they're going to come back. I've even been looking at the stock because I just think the management team is so strong there. But Zuckerberg looked at, Zuckerberg basically looked at, you know, Snap and said, okay, don't kill them, but injure them. We want to keep them alive, but make them sort of irrelevant. I think he's looking at YouTube and he's like, okay, girlfriend, I'm coming for you now. And I have such custody of the consumer. And the bottom line is people

1:02:58are using mostly YouTube. And actually, I don't know this. My thesis is- My kids are. People are using YouTube on a computer, and the flow of the river of attention is flowing massively downstream to smaller and smaller screens. I am consuming more and more content on my phone and less and less content on my TV. Did you get the Duo? Speaking of- I will, though. I heard you bought one, no? I did, and now I canceled it because I kept reading all the reviews. I may rebuy it again. I don't know. I mean, it's not until January, so I got some time. I think it looks really cool. It does, but various people say, I should stop reading reviews and just get it because I'll probably get it. But I don't want a bad experience. Some people think it's real clunky, but others don't.

1:03:43I probably will get it. Anyway, we want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. Okay, that's the show. Thanks for listening to Pivot. YouTube channel and also sign up for Pivot Post at pivotshow.com. And just a programming note, we'll be in your feed a little later on Tuesday because that episode will be freshly recorded live on Monday night. Scott and I will be in New York. We're always worth the wait. I'm very excited about my week with Scott. We have a good time. We discuss things. We braid each other's hair. We have a really nice time. We spend a lot of time together, but we really like it.

1:04:24It's really fun. And we've got some great guests. So, you know, if you're in any of the cities we're in, please come and say hi to us. We'd love to see you. That's true. Today's show was produced by Lara Naiman, Zoe Marcus, Taylor Griffin, and Todd Wiseman. Ernie and her Todd engineered this episode. Thanks also to Drew Burrows, Ms. Severa, and Dan Chalon. Nishat Krua is Vox Media's executive producer of podcasts. Make sure to follow Pivot on your favorite podcast platform. Thanks for listening to Pivot from Vox Media. We'll be back next week for another breakdown of all things tech and business care. I will see you in New York. As soon as autumn rolls around and you swap your iced lattes for pumpkin spice,

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