Transcript for E171: DOJ sues Apple, AI arms race, Reddit IPO, Realtor settlement & more

Has anybody else seen due to an IMAX?

No, it is fantastic. And I want to see a dance. That's what I'm saying is that it's worth seeing.

He didn't say it. He didn't say it. He didn't say it.

There's like five great scenes. Sachs. The scene. All right, everybody, welcome to the all in podcast with me again, the chairman, dictator, come off, Polly, Hoppetea, David Sachs, the Rainmen, yeah, and Sultan of science. David, Freeberg, Detroit, J. Cow, here and we have. So much to go through. The DOJ dropped a Sherman X suit on Apple. Today, right as we were about to tape the program seems like Thursdays is the big news drop day now. So this DOJ suit outlines five alleged abuses and they claim, obviously, that those abuses reduce competition while limiting consumer choice and raising the prices that consumers pay for their iPhone. We talked about this actually just a couple of weeks ago and talked about peak Apple. The five categories are very quickly super apps cloud gaming apps, messaging apps, smartwatches, and digital wallets. If you don't know about super apps, that's the one that's maybe you haven't heard of if you're listening to this. In Asia, they mentioned how Ali Pay, we chat and pay TM are super apps. What does that mean? You get like five or six different functions in one app, social media, images, purchasing, getting rides, you know, all that stuff. And when you have that, you can move from one platform to another super easily. And when it comes to messaging apps, we've all experienced the green bubble friend. So the main argument of the lawsuit pretty interesting, they explain and it's really well written document I read at this morning that when Apple faces new competition instead of lowering prices for consumers or offering a better deal to developers, they would quote, meet competitive threats by imposing a series of sheet shifting rules and restrictions in its app store guidelines and developer agreements. I have faces every time I've invested in an app startup. They complain about the goal post moving by Apple and Apple shares down about 3% on the news today. I'm sure everybody's got some interesting thoughts on it. Shemap, you were talking about peak Apple just last week or the week before I think. What are your thoughts on the lawsuit dropped today?

Yeah, Jackson, do you get a chance to read it? Or do you have any loss generally speaking?

It's the normal world. Yeah, I would say Apple has completely abused their power every chance they get in order to capture this 30% from the app store. They blocked the ability for you to use audible or, you know, other marketplaces to buy books and media. They blocked the ability to use other media players like VLC, block the ability to use browsers. And if you leave Apple unchecked, they just keep abusing it. And so I think this is kind of one of those lawsuits. That's like, if we don't stop them, they'll just keep making it worse. And when people file complaints, then Apple will back down, which they did on media players. and they'll stand down. If you think about this from the PC era to now, then you can see how pretty much the server behavior is. When you buy a laptop, the idea that you would have to go through an app store and pay a $30 tax to put a piece of software on your computer would seem insane. 30% 30% 30% tax on your which we seem insane like if you buy a laptop you should be able to put whatever software you want on it but they did this magic trick where they said oh no if you want to put software on your phone it has to go through the app so it has to be 30% and that's really the anti-competitive thing here I think this will be settled and if you look at the different issues here I think this is going to be actually a huge win for Apple because if i message were to exist on Android, they would get all of those users to download eye message and they would have all those users. If they made the watch compatible, they would open up many more people to buy the watch and you would get more watches. I think that apples thinking way too short term about the lock in here and they should, you know, allow more of these apps, allow more watches and they should allow the gaming thing. I think that they're being petty.

I mean, there is the coin toss of what the Trump administration would do here. For sure, that's valid. But I think these things won't get settled. I think the settlement will be eye message releases. They allow the to think about the Apple Watch. It's not just sacks that they're allowing it on Android. It's would you allow Android watches to connect with the SDK directly into the iOS operation system, which they block you from doing. I think they should just have a little switch in your freedberg settings that allows you to flip it and say, I take responsibility for allowing third party stores. And I want to be able to load any software. It's your computer.

I think. Yeah.

I mean, price fixing and what content if like a group of people price fixed the price cost of a phone or like let's say the 30% from the app service just happens to be the same between two apps or is. Do you think price fixing is something valid for the government to come in that it's not the same. Do you think price fixing is something the government should come in on this question.

It sucks what you think the role of the government is here in terms of anti-competitiveness, especially in the case I'm sure that's on a do-opily. If you look at Google's search run-opily, pretty easy to understand, like, hey, they've got 90%. But here you've got two players who have roughly 50% of the market each or 60, 40 depending on where you are. So what is the proper role of government here and is this an overreach?

We pulled this chart up last week, but in the US, 50, 40 US now, it might be 55, 45 right now. Yeah, something like that. The issue is the cat and mouse that Apple is really good at playing. They will push their advantage. And so we see the five things that the Justice Department wants to go after here, but the app store is obviously one of them. And before that, I mentioned some of the other categories where they do the subuse of power. They basically keep it up as much as they can until they get checked. And I think interoperability is actually in the long term going to be in their best interest. They use interoperability when they need it. So Apple music and iTunes, they allow you to use windows and Android. It's only when they see an advantage and that's really the hypocrisy of Apple. And I think it's a really important that. the industry stand for more interoperability and the ability for you to load any software that you want on your device. This is a compute platform. The ability for them to block you from installing your own apps on it.

Somebody did it. They asked Jim Cook to do it. And Jim Cook said, pound salt by a phone for your mom.

They would have controlled the internet. And they were actively. You left out a big piece of it. Sachs, which you'll remember the second I say it. They were trying to break HTML and open standards by creating active acts and using.

And so you have to understand these companies. Well, if you give them an inch, they'll take the mile. And that's exactly what Apple does consistently. They consistently try to squeeze. I think it's great. Sachs is right. Tactics is the way to where to this companies. These are five recent tactics. I think the government's going to win changing free of these. And that's win.

Well, Google wanted to maintain its search monopoly. Let's be honest.

They knew for users or be there.

And they wanted to be the developer browser in the app, which is what you have to agree to, by the way. So if you don't want to talk about pre-niciousness and have a hand in this, if you have an Android, and you want to use the Android update correct Google.

No, you have to give the bundle of apps. If you want the updates and support from Google, You can forget everything you don't get their support, which then breaks your phone. If you want their version, that's right.

So they, you know, there's a little cleverness here, I think.

And I think we're preparing 1,600 of phone now. Yeah. How will we paying 1,600 of phone?

Do you remember how they were getting the browser built in? They were going to the OEMs, the delves of the world, the HPs and saying, if you want this price for Windows, you have to include the browser on the desktop. It has to load, it has to ask for your credentials all this time. Or you could pay $150 for Windows. And if you want it without the browser bundled, so they use this pricing to get the OEMs to bundle it. And that was worth it.

If you're willing to put up with all these headaches and these content operating system update operating system, yeah, it's exactly what they're doing. So anyway, I think three out of five of these gets settled and it'll be good for consumers. Ultimately, I would not find an actual advice, but I think that Apple is going to be able to manage this by the stock. I may buy more of the stock. I think that this will be good for them long term. All right, listen, going even deeper into Apple and the school relationship, big questions emerge this week as Bloomberg reported that Apple was speaking to both Google and open AI about powering certain AI features on iOS specifically according to the article. This deal between Apple and Google seems much more likely than the open AI one and could happen this year. As you know, we've talked about it on this show before Google has been the default search engine on iPhone for I think over a decade now and Google pays Apple 20 billion a year. That's pure profit for Apple. It's unclear what features they would power. with Google Gemini. Maybe it's like the search deal and Google Gemini's on there. Maybe it's built in and Apple has been building its own LLM. It's called Ajax. They've been doing some other open source stuff called Maggie. What do you think, Shemoth? You were talking about this on Twitter. You get a pretty good tweet and a pretty strong position. If Apple is, going to use Gemini, what does that say to you about Apple and their view of the future?

Freeberg, we're thoughts on this potential deal. We don't know what features this would power. I don't know if it's Siri or it's just image editing or search or an extension of search. Maybe giving an answer.

I think it's the Apple philosophy program.

Sure. Show me the president of the United States.

I'm so excited today to launch Gemini on stage here at iOS. 27. Oh my god, can you imagine how much stage doing searches?

probably people knocking on each other's doors.

I mean, you got to think Apple Vision is a big piece of that, right? Chips. I guarantee you, like, half of it is like the industry.

What if they took Project Titan, the car, car deal, that was 10 billion, supposedly they had spent on that. And if they put that towards AI,

I mean, I guess the question here is Apple capable of building on a culture basis freeberg this type of software. They're hard work company.

Yeah, you have all the Apple photos. I wonder if in their terms. So that's the thing is their terms of service is so privacy based. I wonder if they could even use that information.

What's going on here? What are we watching?

Oh, she's control. The weather was however outweighed to me.

No, I think it was the point that they were making is they were trying to do a skit about like how they're doing less packaging and including that that skit was to tell you that you're not getting a charger in your next iPhone because they they don't they want to say it was cringe It was super cringe, but yeah. I do appreciate that they are doing sustainable products and not putting as much stuff in landfill. So I think they should get a lot of credit for that. What I do think about this deal that's really interesting is it's sort of cementing the Google and the Apple. alliance against Microsoft and Microsoft has big, you know, AI ambitions. So this is kind of interesting. If you walk in the duopoly of Google and Apple and then you lock in Google search monopoly and you start fighting Microsoft, I think that's what I think that's what's probably going on here is they're trying to figure out how do we keep Microsoft away from running away with this. We covered that huge NAR lawsuit back in December and there has been a settlement big news for the National Association of Realtors. They've agreed to pay for $18 million in a settlement last week and federal jury found that the NAR and several large real estate brokerages conspired to artificially inflate agent commissions. The settlement is pretty, pretty big deal. People are freaking out about it. As you know, the seller of a home pays the buyer's agent's commission. So you have a buyer and a seller, 6% fee typically, sometimes it's five, but they split that 3% to the buyer and the seller, but the seller is paying that 3% to the buyer. Now that can't be listed in the MLS anymore, and that deal cannot be done ahead of time, buyers. are responsible for paying their agents, commissions going for it. So if you bought a million dollar house and you were the buyer, you would pay 30,000 to your buyers agent or you would choose to not have an agent or you would choose to negotiate it and you have to have a signed contract. This is a crazy just. shocking shock to the system according to most people who are in it. I've seen a lot of real estate folks who are saying this is going to be healthy because you have to have this conversation between the buyers agent and the buyer. But commissions in the United States are $100 billion a year and one analyst projected the lawsuit lead to a 30% reduction in commission payments. And that would eliminate about half of the 1.6 million active NRE members from the industry. You had a lot of feelings on this freed bird when we talked about a couple of months ago. What are your thoughts on this settlement? Is anything going to change? Is this as groundbreaking and shocking as people seem to think it is?

profitability of a realtor pretty meaningfully right both realtors won't be able to be a business right I think the sellers will do fine and they might capture more of it because they'll lose they'll my understanding is the set the the seller will maybe do both sides of the transaction no that's not what's going to happen and there's also going to be limits on that but but here's what I will say if you look at the the number of people there are 1.4 million

Yeah, you know, it's interesting this, the sellers are going to be faced with buyers who just show up, having seen something on Redfin and don't have a buyer's representation. And so they think from the stuff I've been reading that the sellers agent might be pointing them to, hey, go to these services and be acting as like one broker, essentially representing both sides. That's what people are saying is the potential downside.

They just won't take your business. The seller will not represent you.

Here's what I did, one of the, some charge in hourly fees, a buyer's agent. They will be doing that, Jake, out $200 an hour, $300 an hour.

I mean, a lot of people will not list their home or sell it because that's 6% might. put them under water. So if it's now now down to two or three. Totally.

They should get compensated no matter the outcome should be that you get a flat rate, $10,000. at a million and then you get 10% over a million or something. You could give just like the salesperson.

I mean, you could say, if you said 1% up to a million, so that's 10k and then 10% for the next 100k and then 20% for the next 100k. So you would, you know, that 1.2 million is really hard to get. Yeah. If you 20% of that incremental 100, that would be a much better deal. You'll be getting paid for the actual performance. So really interesting.

Absolutely. They should do an ad where they have the first cast of people. And that diverse cast could talk about like putting sustainable, forestry around it.

Absolutely, purchasing one right. They can change.

Yes, absolutely. All right, let's keep the train moving here. The AI landscape shifting yet again, Microsoft is just did. Another one of these shadow aqua hires this time of inflection AI bizarre deal. Microsoft has hired most of the team at inflection AI including the CEO Mustafa. who everybody knows. I just actually had them on this weekend startups. He was the co-founder of DeepMind. He worked at Google for years. And now he's going to be the CEO of a new company called Microsoft AI. It's essentially the consumer AI division of Microsoft, but they did give him the CEO title. For background inflection, he raised 1.5 billion over the last two years. It was one of these giant funding that occurred to build a foundational model. like OpenAI is doing, like in profit is doing. They had a chat bot called PIE, very similar to chat GPT. It was supposed to remember your history and build a relationship with you. That's all getting shut down. Read Hoffman who is a major investor in this company and who's on the board of Microsoft and who's so linked into Microsoft. It played an important role in the steel according to reports and the inflection investors included Bill Gates, Eric Schmidt and a bunch of other interesting folks. But this was an aqua hire, which is the weird thing from up. They hired all the employees. They leave the shell of a company. The company is going to go do some enterprise stuff. And investors get to keep their equity inflection. But I guess that might be worthless. There's something going on here that we don't know about this deal structure. When you saw this deal, and you see Satya taking the entire team like he threatened to do with opening eye if you remember the same exact kind of thing. I'll acquire everybody if you don't take the deal. What is your take of what's going on here? Why did this occur like this instead of just buying the company?

So is it because of antitrust?

Freeberg is at your take. This is a bailout, or do you think this is a new interesting and run around anti trust where, hey, if Adobe wants to buy the next Figma, just buy the team, do a license of Figma, some Fakaka lunacy, or do you think this is a bailout? What's your theory here? Freeberg, what does it say about Microsoft's approach to the AI space?

All right. They have a folks in other related news. The Saudis are planning a $40 billion A high fund according to the New York Times reps from the public investment fund in Saudi. have spoken to a number of firms about partnering on it. This would be the second largest venture fund of all time behind soft banks, $100 billion vision fund one, which you remember it was also backed by the Saudis and some other folks in the Middle East region. This new fund would reportedly invest in AI startups, chip companies, and data centers. So we thought we'd do a little quiz here. If you were given the 40 billion David Sachs, how would you allocate the 40 billion in AI in today's market 2024 going on? If they put you in chart of this 40 billion RA fund, AI fund, where would you deploy it? Same question will come around the horn to you freeberg and then you come up.

Saxony did a good job of sort of showing the four layers of the stack. I think open source, the application layer and specifically robotics are a huge opportunities that are under invested in right now. So I take the top open source projects, I'd find those top contributors, take the top 20 or so open source projects and back them to the tune of You know, significant money, 50 million, 100 million whatever it takes and try to own the top 20 or have insights into those top 20 open source models and own those teams. Look for the top contributors, really easy to do on GitHub and hugging phase and replicate in other places where they're active and empower those. Then obviously there's verticals we're working on people who are doing screenplays and tax just like URSax and that's a fantastic place to deploy money. But then I think robotics is going to be super, super compelling here and that takes a lot of money. And so you do have the capital as a weapon. And, you know, the 20 year view of this and making a general person purpose robot like Elon's doing with optimists or figure AI's doing with their robot. I think robotics is a major place. You could probably buy, I don't know who owns Boston Dynamics now. I know Google sold it. So you could probably buy some robotic companies and then put the AI on them and really take a 20 year view of robotics. Free bird gear of thoughts. How would you deploy the 40 million?

Trim off. You're bad and clean up here. You got to hear everybody's answers before giving your own. What are your thoughts on your other besties answers and what's your plan to deploy 40 billion for the kingdom of Saudi Arabia is public investment.

Simple agreement for future equity. This should be the Saudi. I love it. That's what they said. Well, there you have it. Yes, the all in KSA $40 billion or fund. Give us a call. We'll fire it up and we'll deploy the $40 billion for you. I can't baby.

Another way to answer your questions, Axis. Which is the most crap which spaces are the most crowded already and so obviously chips are super crowded lots of incumbents lots of people going after it and the foundation models are very crowded as well and the application lab will is yet to sort of be built out right because we're in year zero or year one of that. So I do think application levels where there's a lot of value, but I also think the hosting and the development of these various niche models is going to be a huge opportunity. So just once again, those open source models being put into cloud computing environments and optimized, that could be a whole new level of AWS's and Google Cloud. And Azure's. So there's an opportunity for somebody to compete with those incumbents by just being better at those models that are open source and having the team that's doing those updates and then optimizing their cloud. So I would go with the cloud level for those open source models and providing that as a service like VMware does or other folks do where it possibly a tiny example of an open source project like that. And then I just something tells me this robotic space, which has been a fall start over and over and over again. I think this is the time where actually it's going to work. And so I love that hardware robotic space.

I mean, the idea that you would just talk to a computer or in a chat interface and you wouldn't use an app interface. You would just ask questions that would give you answers. Ask questions and give you answers. Give it a task and give you a result. This is very compelling.

All right, ready. When public today, they have 800 million in revenue, company is worth over $8 billion in trading. It's a 50% what do you think? Chumathas is the opening of the IPO window. Again, so so one off, get Striped coming and what do you take from it, popping 50% on the first day?

There's definitely a lot of gambling in the system as we've seen. And we're recording this on Thursday. So who knows what the stock price will be tomorrow?

Yeah, we saw crypto go bonkers last couple of weeks. Yeah, what you're taking on all this sacks is there's a feel like people are in gamble mode again, and does that concern you, I guess, after what we just experienced?

Absolutely. And it's looking like Biden has a clear path to victory based on the lowest unemployment of our lifetimes and this boring stock market records. Yeah, it's just an easy Biden victory. Freeboard, what do you think? about the risk on.

It's pretty amazing how horrible a job he's doing that. He's made Trump look like a better candidate to some people. That is an extraordinary achievement by Biden. And we'll have to agree there.

Is that extended pretend strategy that you're seeing there?

Yeah, kicking the can down the road. Nobody wants to take the medicine.

Freeberg, you had a science corner here. A couple of different things came up. The Hubble telescope. Pretty printed. Organs, what do you want to go with this?

100% in sacks needs to use the low.

I love science, quarter. Let's do it. Pre-bark is your time to shine to shine.

It's dead set on it. We're dead.

He's just going to drop it in in your reddish jokes. I hear him giggling with his camera. He's with his riders. He just went to the riders room to get an update on the Uranus jokes.

And so we can actually roll a moment of the big bang.

That was awesome. Yeah, he described it as he was playing chess and he said like I love playing chess and I've learned to use my mind to move pieces around and he said like it's like having the course.

It's pretty amazing and there's more amazing stuff coming there making significant progress. So when they're starting to somebody who works there and you know, it's it's it's going to be Yeah, it's going to be a process, but they're making significant progress and they're going to have, I think even bigger announcements in the coming year, they're getting it done.

It's also not so crazy. That down lemon interview like there was actually some really interesting topics discussed, but I felt like this was like this was the perfect like baton passing between old media and a new media where he was constantly trying to do a gotcha journalism thing and you know I was trying to engage in good faith and like an interesting discussion and then every time they're discussing that interesting he kept trying to go back to like sensational gotcha journalism and it was a totally wasted opportunity if you had just gone lemon had just stayed in the moment and and like engaged in good faith instead of trying to get this like clip it was it really bad performance by down lemon I thought It was really getting interesting at moments in time.

I mean, he got paid out in full, like 20, 30 million bucks. And by the way, those jobs are not, they don't exist anymore. Like Tucker and him were like the last of that generation to get those huge pages.

I think CNN, the report was CNN paid out as full contract. The same thing happened, I think with Tucker, they both got paid their full contracts, whoever negotiated those contracts with the networks over the last couple of decades is awesome because it's pay, it's pay for play like whether you are on air or not, you get paid and then they don't let you go to a competitor. That's why both of them are doing internet stuff. X or whatever carved out some just wanted to get a shout out here at the end of the pod for the guys at all in talk Chris and Spencer didn't amazing job the team over there from good future media of creating just that amazing fan account now that we're growing up here over at all in and we'll have a CEO announcement at some point. We have taken over the accounts that we're starting to make our own clips, so thanks to them for supporting us and helping grow it. If you want to see the four of us, go to YouTube and type in all in podcast and then subscribe. We're almost at 500,000 subscribers and we decided that if we hit 1 million subscribers by the end of the year, we're going to throw a party. And y'all will be invited. Well, I was many people at the party as possible. So go ahead and find us on TikTok, LinkedIn, and Instagram. Just do a search for all in and you can search for all of us, Jamoth, David Friedberg, David Sachs, and Jason Calacanis. Thanks again to the super fans for helping us build up this amazing audience. couldn't have done it without you. And yeah, which we're just posting clips. I think every other day on the YouTube channel. And so if you go in there, you can subscribe and then right next to it, there's a little alarm bell. You hit the bell. You'll get in the alert and you get to see our faces and note we look like we also put a lot of graphics. So if you hear us referring to charts, that's all on the YouTube channel. Four David Sachs. Come up. I hope it's a David Freeberg. I am Jason Calacanis. And we will see more of you boys for the moderator.

And uh, the host of this week in startup, so search for my podcast. This week in startup split interview startup. We're just getting a plug-in for that. No, some people don't know why have another podcast. So please search for this week in startups and subscribe to that as well. We'll see you all next time. Bye-bye. Love it, boys.