The twist in the Ticketmaster antitrust fight

I'm your friend David Pierce and I am doing one of my favorite things to do every year which is

“update the software on my giant stack of iPads.”

This is the six iPads that I find myself using on any given day and I just reviewed the new M4 iPad Air. We have a bunch of Apple reviews coming out this week. The iPhone 17E, the MacBook Neo, which is one I'm very excited about. We're going to talk a bunch about that on Friday. But what I have to do is just test a bunch of chips against each other because all iPads updates are now as new chips and so I have to update all the software and then I have to sit there and

just do the same things on a bunch of screens over and over because this is the glamorous life of the tech reporter. Anyway, on today's show, we're not here to talk about iPads. We're going to do

two things on today's show. First, I'm going to talk to the Virges Lauren Finer about the live

nation ticket master trial which had a week of testimony and then a really, really surprising and kind of fascinating development. We're going to get into that. Then Hayden Field is going to come on and talk about what's going on between Anthropic and the Department of Defense and Open AI. We've had 10 days of just absolute chaos between those two companies and that agency about who

“gets to use AI and who gets to be in charge and I think there's something bigger happening there”

that's going to have ramifications for how we think about AI in general. All of that is coming up

in just a second. But first, I have to go plug in just like a bunch more iPads. Thank God they're

all USB-C now. This is the Virges cast. We'll be right back. Support for the show comes from Laurel Group, the global beauty leader, defining the future of beauty through science and technology. Laurel Group, create the beauty that moves the world. This is not the future we'll promise. Like hell that out for a tagline for the show. From the BBC, this is the interface. The show that explores how tech is rewiring your week and your

world. This isn't about quarterly earnings or about tech reviews. It's about what technology is actually doing to your work and your politics your everyday life and all the bizarre ways people are using the internet. Listen on BBC.com or wherever you get your podcasts. All right. We're back. The Virges Lauren Finer is here. Hi Lauren. Hey. So a delightful bit of inside baseball. You and I have already recorded this section of the podcast. We did it on Friday

at 4 p.m. Eastern. The latest we could have possibly done this and then we came back on Monday

morning and everything had changed. So we're just going to do all of this again. But first,

I want you to tell me what your day today, Monday, has been like because today has been the story we are about to tell. Tell me about your day. Yeah, today I woke up. I saw that there was a Bloomberg report saying that a settlement might be announced in this case this week. The U.S. First's live nation took a master. Then I saw there was a political report saying that the settlement might be announced today and I was like, oh, I really got to get to court on time.

Really hoping there wasn't a line for jury selection or something like that because when I got there Friday there was a huge line for naturalization at the court. So fortunately there was no line. I got in before anything happened. The room was a lot more full than it was last week at the end of the week. Lots of attorneys from different states and presumably from defense council all sorts of people there to watch. And yeah, then the judge came in and the attorney said that they had

stricken a deal between DOJ and live nation. And then that's kind of where everything began for the rest of the hearing. Fascinating day. So as we record this, it's it's 230 on Monday, March 9th. bunch of stuff might change again, but we're not recording this podcast again. So as far as it stands right now, it seems like what we know is this deal between the DOJ and live nation to get

“master. And we're going to get into what this trial is about because I think the trial in”

some ways is not over. And I want to get to the ways in which it is not over, but this particular

to explain that to me. Plus a couple of requirements to, I would say not break up live nation to get master, but take little tiny pieces out of it. What are some of the stipulations here? What does live nation take a master have to do as part of this settlement? What I have seen about the settlement is from what I've seen in other reports because I was already in court when they did

a background briefing on this settlement, but basically it sounds like they're going to, they agreed that

“if all of the states were to join the settlement, they would pay up to, I believe, 280 million”

in damages. In this case, they would agree to sell a bunch of amphitheaters, which was something that the DOJ was saying, they controlled the monopoly share of, basically, they would agree to let some other ticketers to get at venues they work out, so they wouldn't have exclusive contracts in those venues, and they would have a cap on certain ticket fees. So those are some of the stipulations in the settlement, as we know about it right now. I think that's a useful place to start here,

actually, because that gets at a lot of what this trial has been about, and I want to, we're going to wind backwards, and then at the end of this, I'm going to ask you if this feels like live nation ticket master got off easy, and I have a very clear opinion about this, but let's work up to that. Backing all the way up a little bit, this trial has been a long time coming this fight between ticket master, live nation, and the government, and frankly, people who want to

by concert tickets has been going on for a long time, but can you just start by sort of explaining

the basic allegation of the case against live nation ticket master? Yeah, so basically the case here,

and the claims that proceeded to trial basically center around two markets. One is the market for

“I believe it's for venues, like major concert venues like arena's, for example,”

that host a lot of concert events in that, a lot of times they have to go through ticket master to get live nation shows. That was the allegation there, that live nation ticket master makes it really hard to use a different ticketing platform, and to also get its concerts, which are a big deal to venues that rely on concert revenue as a major revenue stream for them. And the other part of it was about amphitheaters and how live nation controls a lot of the amphitheaters in the

US, basically all except one of the larger amphitheaters, and that it allegedly conditions use of those venues on using live nation promoters, or the people that do the marketing and everything around leading up to the concerts. Okay, so yeah, if I if I understand the accusation correctly and they use the word flywheel in the accusation, which is a thing you hear a lot in these antichrist cases, is basically they have built a system by which every part helps all the other parts,

and which is impossible to get into. It's basically like live nation ticket master controls some of the biggest artists in the world, some of the biggest venues in the world, especially in the US and a ticketing system that buy and large everybody hates. But it premises getting any of those

“things on using all of those things. And so in order to book a very important artists, you have to”

play by a bunch of other live nation ticket master rules, and you have to use their platform and accept their fees and all of this stuff. And the people who lose then are anybody who wants to use any other part of the system, right? And they will hold these things up as threats, essentially, like you wrote a story last week about the I think it was the Parkly Center in New York, right? That was basically felt like they were bullied into not using another ticket provider by these

very like mafia style threats to be like, well, maybe we'll just take our artists and go somewhere else,

and maybe we'll never work with you ever again. Like, wouldn't it be a shame if our great

relationship went away because you decided to sign a deal with SeatGeek? And this seems to be at least in the allegation against this company, just how live nation ticket master operates, where they're just like, we have control of everything. What are you going to do about it? Right? And I think the other part of this is that it allegedly erects these kind of barriers to entry for other rivals to enter the market. And that was how we heard from the SeatGeek CEO on Friday about how they

started offering live nation retaliation insurance, so that they could pay back a renazzar stadiums

And these were not really the most lucrative deals for SeatGeek, but they felt like that's what they needed to do to even get a foothold in this market. Interesting. Yeah, how damning was the test to money, would you say last week? We heard from like you said the SeatGeek CEO, it was the what the guy who ran the company that controlled the parkly center, the like corporate structures of all of

this are so insane to me, but basically some some venue people, some ticketing companies and SeatGeek.

“I think as far as I understand it from your coverage is like the main alternative being considered”

here, right? That it's like if it weren't for this monopoly, more people would be using SeatGeek. And that seems, I don't know, maybe not dubious, but certainly not like sort of a slam dunk argument so far, but coming out of last week, what was your feeling about how the early testimony was going in this trial? Yeah, I mean, I guess coming out last week, I felt like there was some strong testimony for the government there. You know, we're in their case and

chiefs, so we're hearing from their witnesses. This is like, you know, they're running the show so far. Live nation will get to make it a case later. But, you know, I thought these were some strong witnesses for the government. That said, you know, there are certain things that the jury might say undermines their credibility. The X-Barkly CEO was fired at the end of their contract. And he said that was for an unrelated reason, but, you know, that might cut to his credibility.

That was after he brought in SeatGeek, you know, SeatGeek obviously has a vested interest in

“having live nation brought under fire in this case. So, I think there's, you know,”

reason to question their credibility, but also I thought they gave some pretty strong testimony. Yeah, I do think there is some significance in the fact that this settlement happened now, because another piece of the strangeness of this case is that there was all of this unrest in the DOJ's anti-trust division before this case even started. You've been covering that, too.

I mean, I think there was, there was some inkling for a while that this case might never even go

to trial in the first place, right? Yeah, exactly. So, yeah, there was kind of all of this, you know, a people at the Justice Department a few months ago, over an entirely different deal, some top deputies at the anti-trust division were fired for what the department said was in

“subordination, one of them later went public and said that, you know, there was kind of a scandal”

within the department brewing. Then we saw right before this case started, the then anti-trust chief Gale Slater, depart the agency and she announced this from her personal ex-account. It was very strange. She's a pretty widely respected figure in anti-trust law, so to see her departs so close to trial just kind of raised even more flags about what would happen with this case. Yeah, but then it goes to trial. It appears this is a real thing and then we get a settlement after

five days. It sounds like from the way you describe it, this may have been a giant surprise to just about everybody. Was it? Yeah, it sounds like it was a surprise to the judge and it was even a

surprise in some way to the lead DOJ council on this case. So yeah, basically when this was announced

in court, the judge was pretty upset at the parties that this hadn't really come up earlier and he asked what date was on the signed executed term sheet that has the details of the deal and it was March 5, which was last Thursday. That was a day before he had a conference in his chambers with the parties and he said no, the council didn't let him know that there was this settlement breach. So then we ended up with Friday, a witness who was only part-way done being examined

by the DOJ and now DOJ is no longer on this case if this all moves forward. So it leaves the whole case in a really difficult position. So he was kind of upset that no one had brought this up earlier and then the lead DOJ council, David Dawquist said that he only learned about the signed term sheet this morning when the judge did and the judge seemed pre-surprised at that too. So bizarre. Yeah. So what do you make of this? Is this, I mean one easy read here would be

live-nature take of Asher took one good look at this and decided, this isn't going well. Let's get out of touch. But this is where it comes back to the how good a deal is this for live

are, it's going to be forced to pay some amount of money to the states. I would say even even if it's $280 million that the maximum that is essentially $5. That's nothing, meaningfully to that company that is nothing. The bigger things as I understand them would be they would have to open up parts of the platform of ticket master to other ticketing companies. The way I think political frame is that Seeky could be able to list tickets directly through ticket master,

which is a thing I have one million products questions about. But strikes me as the sort of thing

that these companies love to do that never actually works out. Like you and I have both covered

Google search trials that you were at the Google ad tech trial. Like this very much rhymes with

“that to me where it's like, oh, well, what you have to do is you have to let other people have”

access to some of your technology. And they're like, tight, we have all the branding, all the distribution, all of the other advantages we've already always had. This is going to cost us nothing. Then I can imagine a world in which they have to sell a bunch of venues and that's a meaningful change. But I don't know, does this all add up too much for you? Does it, does it feel like live nation got a good deal here? Or that it saw how bad this might get and decided to just get out?

I mean, I think it's hard to know exactly without having seen the actual term sheet. So that big

caveat. But I will say that it sounds like live nation and the DOJ were having these talks since before the trial started. So I don't think it's like they just suddenly realized, oh, this is bad. I think it was January 29th. They said there was a preliminary proposal exchange between the parties. But at that point, it sounded like they were pretty far apart still. So it sounds like they have gotten closer as this trial has gone on. So yeah, definitely possible that they saw that this

was going a direction they didn't want. But that said, if the DOJ felt confident they were going to get a verdict that they wanted, maybe they would have kept going. So it's hard to know exactly how to read it. But certainly, you know, the terms that have been disclosed so far sound like they fall below what we would have expected that they would advocate for, should they have reached reliability finding? Was the government asking to just split the company, to force live nation to

get rid of ticket master? Was that essentially the idea? I'm not sure if they articulated it that specifically yet, because often, you know, it'll be in the next phase if they get a finding

“of liability where they'll say exactly what they want. But certainly, you know, I think it was”

Margarland when he first announced this case said that they wanted to break up live nation to get master. Yeah. So what do you think the people who have been advocating for this are going to think? Like one, one group of people, I think everybody is going to think a lot about right now, it's Taylor Swift fans. Because there is, I don't know if you can draw an exactly straight line from that time, everybody tried to buy eras tour tickets to this. But those two things

certainly seem to get lumped together that like, ticket master crashed because ticket master sucks. Like, so to be so clear, ticket master is a bad consumer product that no one likes and this is where

we are because this company is so powerful. Is that group of people going to look at this and be like,

okay, we've we've made some progress. This thing is going to work. We've pride open the market a

“little bit. Is this going to feel like a win to the Swifties? From the statements that I've seen so”

far, it doesn't seem like that. So they're going to take it. That said, you know, the other part of this is that they're still 27 states and DC that are planning to pursue this trial. We'll see how that goes. Basically today, one of their representatives that they will they ended up filing for a mistrial because, you know, how all of this happened, they're worried that it's going to prejudice the jury and that there's kind of these logistical issues of transferring experts from the DOJ to the

states and getting enough counsel on board and, you know, just transferring all of the information that they need to have for trial is going to take some time. So they've kind of paused the trial for about a week, but we'll see how exactly they move forward with this. But those states have indicated they very much plan to go forward in litigating this case beyond what the DOJ has reached an agreement on. Is that a sign that all of those other parties don't feel like this is enough that the

DOJ struck is just not enough of a remedy to solve their problem? Absolutely. I mean, some of them have said as much, yeah, they are really still in pursuit of a broader, finding a liability and

forward with this case. But that said, live nation is also looking for a broader settlement and

you know, maybe they'll offer more to see if they can get some of these other states on board. Okay, so at the risk of asking an impossibly broad question here, one of the reasons I was

“really interested in this case at the beginning, and I think one of the reasons we've covered it a”

lot is that it is a very sort of straightforwardly understandable monopoly trial, right? And we've been through a lot of these anti-trust trials, and I just forever feel bad for you having this city in the Google ad tech one, which is, again, a relatively straightforward case, but a really hard one to figure out how to unwind. And we dealt with the same thing with Google search words, like, okay, Google lost that case. Like it's very important to remember, Google keeps losing

anti-trust cases, and it keeps winning at the remedies because the remedies are just sort of nonsense for the most part, at least have been so far. This one felt like it had a very straightforward case with a very straightforward outcome, right, which is that actually the power of this company is because it does this, this, and this, and because it does those things, it controls all the pieces, and it can leverage them against each other. And if you just peel it apart, that leverage

disappears in a really useful and important way. So it felt like this is the kind of thing that might be not an open and shut case, but a very sort of straightforward way to look at how we think about monopoly power in the United States right now. How do we look at that coming out of this settlement? The DOJ has fought, and one of these cases has, we're still in the remedies phase on a bunch of things. What do you look at coming out of court today about how the Trump administration

“thinks about anti-trust at this moment in time? Yeah, I mean, I think there's still a lot more”

reporting that will come out about how exactly this settlement came to be. But I think it's a big question, would this same settlement, would this have happened under a gale slater or under Jonathan Cantor? I'm not sure that it would. I mean, it's hard to know what they would have done under these terms, and you know, it's a safer bet to get a settlement than to wait on a jury, to figure out a verdict. But, you know, it seems like there's a different kind of strategy coming out

here, and you know, the state of intentions at the beginning of this case were to break up live nation ticket master, and that's not really what we're seeing under the settlement that seems to be in play right now. Yeah, there's a lot left to come out, but I will say the most sensible version of all of this would be that this particular deal has been in the works for a very long time,

and that actually the DOJ as constituted maybe never thought it was going to finish this case.

Like, it's just the simplest way to explain this whole thing to me. And maybe it's not that, but it is that strikes me as these sort of Occam's razor explanation of this that a deal almost got done before trial and didn't, because it seems very unlikely to me that a settlement like this gets done between testimony on Friday and this morning. Yeah, I mean, they were definitely working on this since before the trial started, and I think that's part of why the judge was so

frustrated that they in paneled a jury, they had these people, you know, have to step away from work for the past week and thinking they're going to have to go to a courtroom all the time. Yeah, most importantly, I had to be in the court. They did this to you personally. Yeah,

“exactly. I think you should be very mad about it. Yeah, as I'm sure the judge was mad on my”

behalf as well. So what is your sense of what happens next to this? They're going to take a break. And do they in theory come back and just continue the trial a pace just with new lawyers asking questions? So here's where we're at. Today, after, you know, all this initial discussion was had the judge called in the jury, told them there's been a resolution between the DOJ and

live nation, but you basically, like, don't look at the news still, don't take that into account,

you know, there are some states that are pushing forward here. And so, you know, this has nothing to do with their claims, basically. So then he let them go until Monday. So no jury until Monday. But tomorrow, he wants to hear from live nation CEO, Michael Repino, and the current anti trust chief at the DOJ omit a seffy who signed this term sheet. And he wants to hear from them about what's in this deal, how they got to it. So I think we're going to have a lot more

interesting stuff come out of that tomorrow. Okay. So in a real way, this may not be over. Yeah. I mean, in theory, the case could continue on Monday. I think it's a big question mark.

states, you should have realized that a settlement was a real, a real thing that could have happened

“here and be ready to take this over. But there are some logistical issues there for the states.”

They have to retain counsel. They have to make sure that they're able to retain the DOJ's expert witness, which if they can't do it's a big problem because you already wrote a whole report for the for this case. So there are some logistical questions there that could maybe result in a longer stay or even a new trial where they have to in panel a new jury. So there's a lot of questions marks here still. Okay. But whatever it's going to be, it's going to take a while.

Yes. As always is the case. We hurry up and we wait. And you don't get to be in a courtroom for a while.

This is so exciting. Well tomorrow, I'm back there to season with the fireworks meter. All right. Well good luck. You'll have to report back. Thank you for doing this again. And I'm sure we'll be doing it again soon. Thanks for having me back again. All right. We guys take a break and then we're going to come back and we're going to talk about Anthropic and the DOD because everything is complicated right now. We'll be right back.

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rely on a Wix for their websites and go to wix.com/harmony. That's wix.com/harmony. All right, we're back. The Verge Senior AI reporter Hayden Field is here. Hi Hayden. Hey, great to be here. So we were debating when we wanted to record something about Anthropic and the Department of Defense and Open AI and all of this stuff and basically it was like let's leave this as long as we possibly can because it seems like a lot of stuff is

for like two weeks now and it feels like it just keeps happening. Pure chaos around here. So I want to start kind of by reminding just a little bit. We've talked about this kind of in in bits and pieces on the show, but just to catch everybody up, you've been tracking Anthropics relationship with the Pentagon and the government for a while now. And just to ask sort of the dumbest version of this question, just to kick us off, how did it come to be that Anthropic

was such an essential company to the government? Oh, it seems like Anthropic has occupied

sort of a special space with the Department of Defense in particular. How did that happen? Absolutely. So yeah, like you said, Anthropic has a really interesting and unique relationship with the DRD and the Pentagon does rely on this company's technology more than it does historically any other. So they were the first to deploy their models in the U.S. government's classified networks and they were also the first one to deploy them at the National Laboratories and basically the

first to provide like personalized custom models for national security customers too. So the Department of Defense has like extensively used Claude across a ton of different use cases,

“you know, right now it's being used in Iran. They have a pretty deep relationship. So that's what I”

think is interesting throughout this whole, you know, weeks long saga. Sometimes it's oversimplified

to look like Dario Anthropic CEO doesn't want their technology to be used by the DRD, which in actually it's kind of the opposite, you know, they have been very, very into being used by the DRD. They just have a very niche small to red lines. But yeah, they have been pretty gung-ho about being used, you know, in war, they're being used in Iran right now and they also, you know, have worked pretty closely with the DRD for years. Right. I will say,

I'm not sure those two red lines are things I would classify as small and niche and we should come to that. But I think like the fact that actually all of these companies are extremely eager to work with the government, I think is fascinating. And it's sort of a cultural piece of what's

“happening that I think is really interesting. Right. And what I mean by small and niche is not like,”

oh, it's not important. What I mean is compared to the rest of the stuff they're open to doing, it's pretty, it's not a lot to ask for. It's like, yeah, we all we want is just these two things that everyone should pretty much maybe agree on. And you guys, we're giving you every other thing, we're fine with everything, we're fine with partial on time as well as we'll come to a later. But yeah, what I mean by small and niche is it's really not that much to ask for most people think

they're doing everything else that they could possibly want. Yeah, I was reading something about anthropic bidding on a contract for like AI power swarms of lethal drones. It's like it is useful to start with the premise of actually every AI company is very excited about the idea of working with the military. And I think that is such a radical shift from where the tech industry was even

“let's say in the first Trump administration that I think is worth spending a little bit of time.”

So let's get back into that. But basically these negotiations between anthropic and the Pentagon

come to ahead and they end essentially with I would say two things happening sort of more or less simultaneously. The Trump administration is like kind of in a very real way trying to destroy anthropic as a result and turning around and signing a deal with Open AI. Let's take those things kind of in turn. Just walk me through very quickly as it stands right now what the government has said about what it is planning to do to anthropic. It made sort of two separate designations of

what anthropic is, right? Right. And so right now the latest seems to be that anthropic was designated a supply chain risk officially. The government did tell them that that was the case. And so they had to start mobilizing and officially putting a lot of processes into place. They communicated to all their clients. Hey, this has happened. But here's how you can still work with us. And now a lot of their biggest clients have come out and said, okay, here's how we're handling this.

So for example, Microsoft has confirmed it looks like we can still use cloud for everything we want except in our direct work with the military. It seems like that is what all the clients have kind of concluded in the communications from some of the Department of War officials. They had said, it seemed to imply that if you worked with the military at all, you wouldn't be able to use

the Pentagon. So you know, you just have to keep a lot of barriers involved if you're going to be working with both. But you know, it seems like a lot of their biggest clients have already put those processes and barriers into place. And they don't seem to have a problem with it. Andthropic has said that it's going to challenge the designation in court. But it's also said that it's really not as as big of a deal. So to speak, as they may have originally thought because they can still keep

most, if not all of their clients, as long as those clients agree to, you know, kind of abide by these

barriers. Okay. So yeah, I mean, because the original reaction to this was basically that this is the

“Department of Defense and the Trump administration trying to kill anthropic. And I think there”

is an argument to be made that that is still what the Trump administration is trying to do. That's going to play out over the next six months. I think, but there was an idea that like, okay, if you say, no company that does business with the Department of Defense can also do business with Anthropic, that is essentially every company that Anthropic realized on for money, like Google does business with the Department of Defense. Microsoft does every defense contractor and like you said, Anthropic

has made real moves in the like defense military community. And so unwinding a huge amount of this would require taking away an enormous part of Anthropics business. And again, these companies already lose just essentially infinite amounts of money. So like, maybe all of these numbers are pretend and it doesn't even matter. But there was a real sense in which it seemed like the government was trying to essentially destroy Anthropic. But you're saying now a week later after that, it

looks like even if that is the intention, that's not what's going to happen. Right. I think that they may still very well be trying to do that. But it turns out that, you know, what people may be tweeting from the administration and what may actually be legal and happening is a little bit different. So that's weird. That's not happening before. What a new phenomenon with the Trump administration. Right. So some of the threats that I was seeing were much more wide ranging than what we're

actually seeing playout. And I think that's literally just because with supply chain risk designation,

“yeah, the whole point is you can't like kind of mix and match. You have to stay really stable with”

what you're doing and what's involved with the actual Pentagon and what isn't. And they can't really control what Microsoft is doing in its own time. They can only control what Microsoft is doing and it's work with the Pentagon, for example. So, you know, if Microsoft wants to use Claude, you know, across other parts of its business, they can't really control that. You know, that's the good news for Anthropic is that it seems like they're able to keep all their biggest clients.

It seems like have come out and said, hey, yeah, we're just, you know, making some adjustments, but it's not too crazy. But Dario has said that he is going to still fight this designation in court. Got it. Okay. So let's go to the open AI side of this because almost immediately after

all this goes down with Anthropic, Sam Altman just comes out and tweets basically. We've made a

deal with the Department of Defense. How exciting isn't this so great. And is basically like we, we made a great deal. Everybody's super happy about it. And the immediate reaction is, well, why would the Department of Defense have given you these exceedingly reasonable things that it didn't give to Anthropic. And we should say, I don't think we've said this out loud yet. The two things as I understand it are basically Anthropic had a really hard line against using Claude for any kind of

“mass surveillance and for any kind of autonomous killing weapons. Right? Is that, is that right?”

Totally. So the two objections are domestic mass surveillance. So using AI to conduct surveillance on American citizens at a super large scale. And fully autonomous weapons, which

basically means unsupervised AI systems used being used to, you know, control the whole

kill chain. So carry out any type of commands like that with zero human involvement, no human in the loop. Also, interestingly enough, Dario isn't against that forever. He said, look, I'm open to this in the future. The technologies just not there yet. Hey, DOD let us work with you on R&D so that we can get the technology to the place where I feel comfortable doing that. And the DOD are saying now. Right. Yeah. It doesn't seem like Anthropics only kind of moral stance here

is on the domestic mass surveillance stuff, which, again, like, there is such a long and complicated history about what kind of surveillance is legal to do. We'll put some links in the show notes.

like a particular version of this story. This is all very messy. And I think I want to avoid getting like too deep into litigating what is in is not domestic mass surveillance just for our purposes here. But I want to go back to the Sam Altman of it all because it seems like the minute Sam Altman tweets that the backlash to him and to open AI and to essentially what this company stands for and will allow and believes in comes like swift and fast and fierce. Now with with a

little bit of remove. What do you make of that backlash? How intense has the sort of push back to open AI been since that announcement? That's a great question. It has been very intense and I don't think Altman predicted this at all. You know, I remember when he sent that tweet. It was absolutely immediate backlash. Like you said, I mean, it was across the whole industry and then it started trickle out into other industries. I mean, he could not, you know, wait from the bad

press for a week plus even now. But, you know, I mean, it is a remarkable self-owned to be like, to be like, oh, this company said they wouldn't do a deal that allows autonomous weapons to kill people and domestic mass surveillance. And we signed a deal. That's like, well, hold on. I just, there's no way you look good in doing that a few hours after Anthropics takes this grand moral stand against bad things. And it wasn't even just a self-owned because also even

Trump administration officials tweeted out like, oh, just to be clear, yeah, we didn't do anything special here. We still can use it for any awful here. So like not only did he kind of own himself, but also even Trump administration was like, no, just to be clear, we didn't give them anything special.

“Like he's, you know, don't like, don't think that we did. So yeah, it was crazy. I think he did not”

anticipate that one, people would really push back on the why of it all, why would the DOD, you know, give them special permissions answer they wouldn't. And then he also, I think didn't anticipate that people would be so upset that they kind of swooped in and, and, you know, undercut Anthropics a little bit because a lot of people on both sides of the aisle were very upset about the supply chain

risk designation and threat of that designation because, you know, and it basically means,

hey, if you don't agree with the current administration, could you lose your business maybe. So, you know, on both sides of the aisle, people were very upset and it looked like Altman was just kind of not caring about that and just saying, you know what, like, there's a gap and who's making money here, we'll take it, like, you know, no worries to anyone else. So, he had to walk that back. Oh, you know, a few days a week later, he had to say, oh, I'm so sorry if this looked

to opportunistic, this was a mistake on my part. And then he still kind of doubled down saying, hey, you know, and now we're going back to the negotiation table with the DOD, we're going to get those permissions, we're we're going to be able to, you know, make some headway on bands for potentially, like domestic master balance and fully up on his weapons. No, they can't. He came out with the new terminology that they agreed on. It's still allowed for the same thing all

“awful years by the DOD. So, I think that he is really trying to double down on, hey, we have”

the same red lines as anthropic, you know, and even his own employees were asking a lot of good questions when he came out with both of these things with the new update where he said, this is the new legal terminology. We've made a lot of progress here. Some of his own employees were calling

on X for like, you know, what they called independent legal expert red teaming, which basically

means hey, you know, I'm like a random lawyer who isn't involved in this at all. Tell me if my CEO is full of it, you know, yeah. Yeah, I mean, I think part of the reason I'm so interested in this particular back and forth is that it seems like kind of a microcosm of the biggest question in front of AI in general right now, which is who is responsible for this, right? Like this is the question we've been asking about self driving cars for forever. It's like if you're

self driving car gets in an accident, who is responsible? We just have not solved so many of these problems. And I think with this, you've used the phrase now, any lawful use a couple of times,

“right, which I think has become kind of a key phrase in these negotiations. And what the government”

is saying is anything that is legal, any lawful use, we should be able to do with your AI tools. And Thropic's argument is essentially, well, that's a super squarely phrase that has in the past

been used to do a lot of horrible things to Americans. It's also an incredible moving target.

And we think as the creator of this technology that we have some responsibility to control how it's deployed. And the government says the hell you do, we are the government. And then opening AI, like Sam Alvin has said over and over essentially, I think he said in one of his tweets,

I think the sort of battle lines of this, right, is like, on the one hand of the argument here,

you have all these people saying, who the hell is Dario Amade to decide how the US government operates? He is not an elected official. He is a man who runs a business. He doesn't get to decide how the democratically elected government of the United States operates. And there are a bunch of other people saying, well, look at what this government is doing. This is a disaster. We have a long history of dubious legal stuff being done by the government. Maybe the people who should be responsible

are the people who have created this technology should be the ones ensuring that it's not used for bad things. Right. This just feels like the AI story to me. Right. Yes. How this ends in some ways is going to be the way that we think about and regulate and litigate AI forever and ever and ever to me. Yeah. Absolutely. That is the real, it all comes down to this, the any lawful use and who is

“responsible. That's why I worked, you know, all last week and on this because it's just I'm passionate”

about the fact that this is such a question of our times and this is going to set a lot of precedent. So what I think also is that people are asking the right questions when it comes to what the government has done under any lawful use in the past and how those laws have changed. So that's been one of the craziest parts of this. You know, this has made people look back at that Edward Snowden era. They've made it's made people look back at how has the US government

changed laws in the past to kind of fit their own devices and how have they introduced new laws to kind of further whatever they're working on at the time and even if it's an era where, you know,

maybe master balance is more warranted than another era. Those laws are pretty much never rolled

back. So it's like once you enter into a frontier like this and, you know, maybe global like domestic master balance is, you know, made legal under some intent and purpose, it's going to be legal pretty much forever. It's it's hard to come back from that and, you know, when I looked at all the ways that this could, you know, it's one thing to think, oh domestic master balance, you know, some people listening might say, oh, well, you know, the government and everyone else already knows

everything about me, TikTok's, you know, collecting all my data, what's the difference? I can tell you there is a huge difference when AI is involved legally and collecting all this stuff on you. So the amount of profiles that can be made in the depth of those profiles, you know, I was just studying what those might look like and it's very much more than what's currently happening. So yeah,

“I think that's why it's the one red line that, um, Dario and, you know, others have kind of stood”

by more than any other. Yeah, I think I think at some point, you and I are going to like disappear into some government documents and then come back and try to do an explainer on what the government is allowed to collect about people because the more I learn, the messier it gets and yes, it feels like a thing that I learned is that the government can buy a bunch of data from a data broker and then use it for whatever it wants and that is a perfectly legal use and that is

terrifying and is a thing that can just happen. But that is, again, I want to, I want to come back to that because it's a fast changing thing that feels worth spending time on later. The last thing I want to get into while we're here is what happens next for both of these companies because I think it seems to me that anthropic is is a loser in the sense of it lost a 200 is it is, you know,

being run out of the government a very real way and had a big $200 million contract that seems like

it's going to go away. But it is kind of in the court of public opinion, the big winner of this

“story, open AI, of course, the opposite further integrated into the government continues, I think”

in a pretty real way to lose the fight for who is going to responsibly handle this technology in the future. What's the next turn here? Is there is something going to change? Is this just this where we are now in the space? I think that, yeah, this is where we are, but it's interesting because, you know, someone thing about this industry that I think is really fascinating and worrying and one of the reasons I'm an AI reporter is that I want to shed light on how few people in this

industry are controlling all of it. It's like, you know, a group of few guys and they're running, you know, whether what's going to happen with the technology that affects all of us. Now, in this case, since so few people are involved in controlling it all, and the power is concentrated so narrowly, people are actually looking at the people who are in charge and if you can trust them. Can you trust any of them? We don't know. But one thing that's come out of this whole thing is that

people have been looking at a Sam Alments background and saying, okay, well, he's had a lot of allegations of, you know, kind of being a chameleon, a manipulator, people have worked with him or who have

depending on who's in the room. Now, that's something that a lot of people are asking questions about

now based on his, you know, that kind of timeline of his tweets after the last two weeks, you know, he says, one thing he implies another when he really get down to it and boil things down, it's really not the case. So, you know, a lot of his own employees have been saying, okay, like,

“you know, can someone tell me what's really the case here? What is the thing I'm building being used for?”

And we're seeing some open AI employees actually resign and protest and leave for anthropic. So, you know, we're seeing a lot of that. It's, yeah, the court of public opinion and the court of like the AI industry itself are really, you know, pretty squarely in anthropics court. Right now, but I will say, Dario has apologized deeply for something that happened last week

where, you know, that kind of moved the needle back a little bit. He, um, leaked memo or like a

leaked speech of his, uh, shared that he was calling open AI employees kind of like, goalable, um, and he was like, you know, that he just made a couple of statements that he apparently was not proud of and, you know, that swung the needle back a little bit, but, yeah, there's a lot of big personalities here and there's a lot of insults being traded and, you know, it's all major team. Totally. So, and, and for anthropic, um, what is your sense of how big a deal

it is to be essentially thrust out of the government like this, right? Like next to all of this, there is this thing where these companies just keep losing money handed over fest. And at some point, for any of this to work, they're going to have to figure out how to make a lot of money very quickly and historically speaking, one very good way to make a lot of money very quickly is to get gigantic defense contracts that is, that is, that is a thing tech companies have done for forever,

but for anthropic, if you're looking at this as, okay, we are in theory about to be shut out of the

“government for the foreseeable future. Is this sort of an existential business crisis for anthropic?”

I think it may be. It kind of depends on what stands up in court. A lot of people think that the supply chain risk designation won't hold up. And they also have, remember, Claude Gov, their government products. So, you know, can other agencies use it? We don't really know a lot of the specifics. And so, depending on how wide ranging this designation is and how much it affects them, yeah, I think it could be a huge crisis right now. They're surviving on a lot of their enterprise contracts, you know,

Katy Perry is buying the $200 a month subscription. You know, people are trying to support it. They did become like the number one app and app store. You know, there's a lot of grass roots support for them along with the enterprise stuff. So, we don't know how long that's going to last. You know, I think they're kind of probably triaging it all the back. And right now, being like, how much can we survive what this hit might become. So, it's going to be really interesting. I

open AI. They needed the money quicker. It seems like, you know, I've never seen some moments.

So, we're going to about turning a profit this year, specifically as they prepare to potentially

“IPO. So, I think, you know, that's why Open AI, you know, jumped at the chance to get some more money”

here pretty immediately. Um, XAI same thing. And Google, you know, it should be side Google and XAI agreed to these terms. And so, did Open AI and Thropic's only one kind of holding out. So, yeah, there's a lot of potential, uh, bottom line problems here, especially since AI companies lose so much money. And they're all being looked at pretty closely by investors this year. As they prepare to potentially go public and Thropic included. So, yeah, it's going to be really

really strange. The other part of this is the trust involved. Um, you know, when I did my story on cloud code, uh, a lot of, um, people I spoke with were like, you know, we are going within Thropic because of the brand trust aspect of it all. We feel like, you know, they're the most, like adult in the room. AI company. We're not worried about, um, you know, crazy stuff impacting our brand. And so, you know, I think that does help them business wise. Um, but, you know, we'll

see how it plays out. Yeah. Okay, last thing, the, you keep covering this in a way that keeps bringing up this sort of culture war happening right now because like you were just describing the, the big win for Anthropica here has been sort of in the court of public opinion, but also like these incredibly rare and high priced people are are starting to choose to work at Anthropica, which is a big and meaningful thing, right? You've spent a lot of time on the war for talent in AI and if anybody

who can win that by being the good guy stands to win in a pretty important way. But also there is this ongoing shift in this whole industry towards happily, actively, proactively working with the government. And I, I feel like a bunch of the people that you've talked to are really reckoning with what does it mean to work for a company at really important frontier technology

this space a while, paying attention to like for the longest time, you go back to like giant google

“protests over comparatively relatively benign government interactions to like we are going to use AI”

to make lethal killing machines. Like there's it has changed and so has the relationship to the government. What are you seeing in that space? Are our sort of everyday employees in tech changing their minds or are we do for some new reckoning over text relationship with the government? Yeah, that's a great question because I've spoken to people at so many companies opening AI included and it seems like it depends on where you work. You know, when I spoke to some people that had worked at XAI,

they kind of felt like it was an inevitable. Um, they said, you know, I feel like there's no way to really survive without these types of contracts. It is what it is, I don't like it, but it is what it is, was kind of the the implication. When I spoke to people at other AI companies, they felt like there was a way to thread the needle. Like there's got to be a way to balance this. And the public letters that are being signed by thousands of tech workers are saying the same

“thing. They're saying, look, we know you need to make money, but there's a way to do this in a way”

that's the best possible for everyone and it's not this. Um, so I also think that they're realizing they have a lot more power than they may think. Um, you know, as the work for talent, like intensifies and the fact that, you know, people that are entry or mid-level at these companies are the ones actually building the technology and maintaining it. You know, they have a set and what they want to build and they're kind of trying to use it. So we're seeing it work a little bit so far.

It's not working as quickly as it did in 2018 when I was covering, you know, maybe even protests and things like that. It's a lot different, but it's at least making these CEOs start to realize they have to at least say something about what they're doing. They have to kind of reckon with their decision. They're staying silent for a while. And, you know, yeah, I think it's going to be interesting to see how much power these tech workers have. I think they have more than they think

and they're starting to realize that and kind of mobilize and, you know, sign a lot of public letters, um, organize collective action, things like that and just kind of try to work together on what that line might be for themselves. And then we're also seeing some of them just, yeah, completely moved to a company that more aligns with their values. So for some of them, that's anthropic. For some of them, you know, they're quitting altogether and just being like, you know,

I don't want to be involved in this at all. Yeah. Yeah, you're making me realize that between this being the year that Anthropica and OpenAib both try to go public. This is a midterm election year. This is a clearly a year of huge military unrest around the world. All of this is about to come to a head in a bunch of really messy, really public, really complicated. Like the next nine months in this space are going to be truly, truly insane because everybody is going to have to

reckon with all of this stuff in public in front of other people in a variety of ways. Well, be talking every week. Your job is going to be so, so fun. Can't wait. Some day we're going to talk about AI wedding planning. That's we're just going to take a break from all of this and we're going to talk about AI wedding planning. Oh, my, can you even imagine? I hope, like, I hope that things are slow enough, like, and a couple of months that we're like, yeah, let's talk, like, you know, I hope that, yeah,

“I hope that that's the only thing going on. It's going to be great. I'm very much looking forward to it.”

All right, Hayden, thank you as always. We're going to take a break and then we're going to go

back to a question from the first cast hotline. We'll be right back. Support for this show comes from LinkedIn ads. When you're running your own business, every decision could feel like make her break and you can't afford to waste a penny. So if your B2B marketing is still falling short, it may be because you're preaching to the wrong choir, whether you know it or not. If you want to reach the right professionals, use LinkedIn ads.

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[email protected]. We love all of your questions. I've been promising this for a while and

we're way over due on doing a hotline episode where we just barrel through a bunch of questions.

“We're going to do that really soon. So if you have big questions, I think particularly right now”

if you have questions about the Verge and the Vergecast or the future of media or how we think about journalism and the creator economy and ethics and all of this stuff. This is the kind of thing we get a lot of questions about and is fun to just stick in one place and talk about. So I think at some point here in the near future, Nealine, I are just going to get on the show and talk about our feelings about all of that. So a few of questions about that or anything else, send them

in, call them in. We love hearing from you. Today we have a question about my favorite subject right now, which is different shapes of phones. Here it is. Hi, David. And I'm thinking Alison Johnson. I have a smartphone question in specifically a foldable thought as you have been talking about this smartphone journey that you're going on trying out all these smartphones. I am in a lifelong iPhone user as many people are. I'm one of the few iPhone Air users, but that is an aside. When it comes

to clamshell photo foldables, which you have talked about a lot as being the correct answer

unfoldable, I have agreed with you for a long time. I've picked up the Samsung Slip and I've always

thought like this is the answer. I want to phone the get smaller not a phone that gets bigger. However, with all of the rumors swirling and I know they're still rumors about the iPhone fold, the rumors have come out that it would be the more passport thing that smaller than your average iPhone Air or iPhone Pro Max when closed, but then gets to an iPad mini size and iPad mini aspect ratio when open. And that's actually really, really intriguing to me. And I know that's a

similar formula that the pixel fold, the original pixel fold, tried to use with this kind of squadier aspect ratio when closed and then a more wide screen inner screen when open. I just I want to know why that failed. I want to know why they didn't work and why they went to the same aspect ratio sort of candy bar, wind closed, and sort of square screen when open that we see with

“the z fold and things like that. Because I truly think that I want my phone to be smaller when”

closed is a really really interesting selling point, but then also I have an iPad mini when open. And it's actually wide screen because I think the square inner screen under the fold is useful because all of your screen spaces wasted when watching media. Okay, so as you may know, if you've been listening to the show recently, I've been going through this experiment where I'm not a phone reviewer anymore. So I'm kind of out of the phone reviewer

lifestyle of constantly having different phones and going through the process and you get used to what it means to switch phones and you sort of build an ecosystem around having different phones all the time. I'm out of that game, but I still can convince companies to send me phones. So this is what I've been doing. I've been testing lots of different phones. I've been bouncing between, trying new stuff, switching phones is awful. It's awful. And that is a story for another day.

But the thing that I've realized, I've been using normal phones like the Pixel 10 Pro,

I've been using phones like this guy, the unit hurts Titan, which is basically a giant

blackberry clone with a physical keyboard. I have a pixel fold. I have a Motorola Razor flip phone. I have just all kinds of different ideas about phones. And I've developed a theory, which is that if you just want to do basic phone things, then this, the sort of candy bar phone that we've had since the iPhone, is essentially right. It is the most jack of all trades form factor that we've found. It's a screen. It has speakers. It sort of fits in one hand. It does just about everything

“pretty well. And I think we're at a point where if you want to deviate from that, you have to make”

a really good case. And I mean, I don't mean case in terms of the thing you put on your phone. Those are helpful. But you have to explain to users what this is for. And I think to the question about foldable phones here, my biggest theory here is that foldable phones in general have not explained to you what you get with all this additional screen. I think Samsung argues that you can have two apps side by side, which is something, but I think in general, it's just not how people use their phones.

Allison came on the show a couple of weeks ago and talked about the ability to use it with a keyboard as essentially a portable laptop. That's something, but I still think pretty niche. Fundamentally, what Samsung and all of these other companies are trying to sell you is the idea that you have a big screen that you hold in your hand. And then you open it. It creates a bigger screen that does something. And I think the answer to what that something is is very complicated.

The reason I think people are excited about Apple doing this is that I think a Apple has a reputation

as true as I think it once was, but the idea of Apple being able to sort of engineer features

into form factors is a thing that that company has been very good at for a very long time. So that's

“thing number one. But thing number two is I just haven't seen it in Android. I think really what”

you need if you're going to make a foldable phone as you need a bunch of developers to have different ideas about how this stuff works. And frankly, I don't know what the right answer is. It's like slack, just to name one example. Should it be a vertical app and then you fold it open and you get sort of the two pane desktop app? Is that how it's supposed to work? Should you use a mobile browser on the outside and like a full on desktop browser on the inside? Should the apps

work differently? Should they be different apps? I don't know. Like the reason I'm more compelled by flip phones than foldable phones is that the difference makes a lot of sense to me. Right? If you have a big open screen like this, this does phone things and then you close the screen and to me, tiny screen on the outside just screams watch like interfaces, right? Like deliver me a little bit to information. Make it very easy for me to do very basic kinds of input and make it easy for me to

put my phone down. I want to check my calendar. That is a thing you can make very functional and very

easy on a small screen that is very useful. I have a harder time figuring out what the answer is

other than bigger mobile video on a larger screen. And realistically, we've already pivoted so much of mobile video into vertical that it's not actually that much bigger on a foldable screen.

“So to me, there just isn't yet an obvious killer app and I think that is partly up to the”

hardware manufacturers to figure out it's partly up to Google as the Android Maker and Apple at the iOS Maker to figure out how this transition is supposed to work. And then it's up to developers. Somebody has to be the one to say, here is the new thing that is available to you now that you have more screen real estate. This has been the question with the iPad forever, right? And Apple has just decided to lean into the iPad being a Mac as the answer to what do you do with more screen.

I'm not sure that's the correct answer, but it is at least an answer. And I'm curious to see what happens with all of these other companies. One example I'm thinking a lot about is Black Grace, like Blackberries from 20 years ago that had a physical keyboard. And in part that was because we hadn't really, you know, solved multi-touch and on-screen keyboards. And that just idea hadn't really appeared yet. But the Blackberry understood really deeply that it had a physical keyboard in

ways that I really liked. Not only is it what you use to type, so you had this very familiar interface for typing. But also if you were on the Blackberry's home screen and you just started typing, you didn't have to open a menu, you didn't have to go search you didn't have to do anything. You just started typing. It would basically try to figure out what app you were trying to launch just from the keys. That to me is a perfect example of how you take a hardware thing and turn it

into features, right? This became a universal search launcher because it was a keyboard that was always

there. And the the team at Research and Motion in the Blackberry was like, hey, how do we make this more than just a thing that you do in text boxes? That to me is what I want to see from all of these other device types. How do you make this more than just more screen? Or how do you make this more

“than just less screen? This question of what do I do with this hardware change? I think has not been”

answered yet by any of these questions. I will say also to the specific idea here. I think the idea of smaller iPhone opens up into iPad mini is a mistake. I think the double pane iPhone Air, I think is actually a reasonably good idea as an iPhone fold idea because then you get pretty big phone into pretty big iPad. That all seems fine to me. But I think like small phone opens up into small tablet actually ends up kind of solving no problems. You've made your phone a little worse

in service of what would amount to a slightly bigger phone. And I'm just not sure that's the thing. I think it's been fun to see even at MWC this year. A lot of companies have a lot of different ideas about what a phone is supposed to look like and the exact aspect ratio of a fold. So it would be fun to see Apple try something different in this way. But I'm not at all convinced by the idea that the sort of passport-sized thing that folds into an iPad mini is the right idea. You want

something that works when it's closed by default. And that thing is not a smaller iPhone. People keep telling us that they don't want smaller iPhones. People keep buying bigger iPhones. So I think to make it smaller in service of also making it bigger just doesn't make sense to me. We'll see. I've been wrong before. Sometimes Apple has ideas about how to make these things work that I find deeply fascinating. But we'll see. I'm very curious about all of this. And also, truly, if you have identified

something that feels like even a gesture at this killer app for foldables or flip phones or how to make this interaction between smaller screen and large screen work, tell me about it. I want to

made. Tell me all about them. I'm continuing this experiment. I will say so far. I'm sort of landing

“in the most boring place, which is that I think the Pixel 10 is really great. And I mean,”

they're going to land there or go back to the iPhone because the iPhone just has better apps. Like, if I had to pick a takeaway, I'd like Android better than iOS, but I like iOS apps better than Android apps. And that's where I am so far. But my experiment is not done. I want to hear all of your thoughts. All of your feelings. If you think I'm just dead wrong about foldable phones, I've been on this screen for a while. If you think I'm just dead wrong, I want to hear

“all of that. For now, as always, the hotline is 866111, the email is VergecastTheVerge.com.”

Thank you to everybody. Census message is called in. Anyway, that's it for the show for now.

Thank you to Hayden and Lauren for being here. Thank you as always for watching and listening.

The Vergecast is Verge production and part of the box media podcast network. This show is produced by Eric Gomez, Brandon Kiefer, and Travis Larchock. Nealine, I'll be back on Friday with more news to talk about, because good Lord does their

“keep being news to talk about. We're also, I think, going to have some Apple reviews to talk about,”

lots of stuff going on. The MacBook Neo is still the main thing I care about. We have a lot to talk about. We'll see you then, right now. You can say that you can say that you're a hero. You're a hero, right? But you don't believe it. That's right. It's just a challenge. You're just a hero. And if you work, you'll be able to do it.

- That's right. - Safe. How is it? - You're going to be a hero. - Now, let's try it out.

First of all, it's time for one year. In one package, for a fixed price.

So, it's time for about 75% cost and in every time there are flexibles. Now, let's take a look at stepstown.de/alljobs. Stepstown, simply the right talent for all jobs. Coplar Registry has a lot of unfally tables through a system with automatic validation and audit trail.

More of coplar.com. COPLR.com