From Musk to Crypto to Meta, a Look at the Top Tech Stories

SARA SIDNER, INTERNATIONAL HOST: Now, we turn to a year-end conversation about the world of tech, from Elon Musk’s Twitter saga to Mark Zuckerberg’s Meta. Just two of many tech giants who recently laid off thousands of employees. As deputy editor of The Verge, Alex Heath, has been keeping track of it all and he joins our Hari Sreenivasan.

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HARI SREENIVASAN, CORRESPONDENT: Sara, thanks. Alex Heath, thanks for joining us. First, let’s start with perhaps the story that has consumed a lot of ink year, which is Elon Musk’s takeover of Twitter, and I should, say it is perilous to have a conversation about Elon Musk because while we are talking right now, he could be tweeting something completely opposite of what we think is the reality. But as of Tuesday, he said that he was going to step down based on — well, maybe based on polling that he had found from Twitter of people who didn’t want him to be CEO anymore. But when he said he was going to step down, he said, I am still going to run the servers and software which is kind of like saying, yes, you can drive a car but I will control the engine and the wheels.

ALEX HEATH, DEPUTY EDITOR, THE VERGE: Yes, or it’s like me leaving The Verge and saying I’m still going to control journalism. Elon has shown that he has this obsession with Twitter. He’s Twitters — I don’t think people, maybe, realize this, he’s Twitters most important user even before he bought the company. He is the most active with the most followers. And he uses it as his personal megaphone. And it’s very clear that it’s so deeply intertwined with, not only has business interest, but his personal interest that he can’t seem to let it go.

SREENIVASAN: You know, he has an ability that I would say is similar to the former president, which is to figure out ways to stay in the headlines every two to three days. And, you know, for people who are not journalists, who are not using Twitter that often, maybe we kind of step back a second and say, why is his ownership of this particular software platform such a big deal?

HEATH: Yes, Twitter is a relatively small social platform, much smaller than Facebook, even much smaller than Snapchat which people think of as being really small. Twitter has this outside influence in the way that news and politics is disseminated around the world. They have a very small user base. But a portion of that user base, which is mostly people in the media, politicians, people in business who produce most of the content must be in the prime example. And here you have, you know, the world’s richest, if not one of the richest men, with business ties in places like China, who’s getting involved in geopolitical issues in Ukraine, who now owns this incredibly vital news sources around the world. And so, I think that’s where a lot of the scrutiny is being focused. And also, just because it’s distracting him from Tesla and SpaceX. And we’ve seen that in recent weeks that those investors are starting to be fed up with the time that he spent on Twitter.

SREENIVASAN: Right, because he’s technically the CEO of those companies as well, right? I mean — the and Tesla shares have not done very well — I mean, the market as a whole has not done well. But when you look at the, maybe the point of when he announced these intentions to buy Twitter all the way down, the Tesla shares have really tanked?

HEATH: And the issue also is that he keeps selling Tesla stock. He sold billions upon billions since he announced that he was buying Twitter to fund the acquisition. Because even though he is technically one of, if not the richest man in the world, he is not cash rich. So, he had to sell Tesla stock, that’s where most of his net worth is tied up in to fund his Twitter acquisition which is a total, like, $44 billion. And that’s been weighing on Tesla stock because Elon has said repeatedly, I will be the last person out of Tesla as a stock. I will be in it until the very end. You can count on. And he hasn’t been doing that. He’s, selling.

SREENIVASAN: Yes.

HEATH: And so, if you are in this market and you’re looking at the founder who is so inextricably tied in the company doing that, you have concerns.

SREENIVASAN: Going from one billionaire to another that’s been in the news this year, Sam Bankman-Fried, who was the head of FTX. He, in the early part of the year, was making headlines for his philanthropic donations. He’s, sort of, a billionaire wunderkind. He really seems to be for crypto regulation as he went on Capitol Hill and told members of Congress, we need kind of these safety and guardrails. And at the end of the year, he was in the headlines for a completely different set of reasons. At this point, as we’re having this conversation, he’s supposed to be extradited to the United States. He’s been in the Bahamas. He is going to be under arrest and charged with a lot of different things including conspiracy to defraud people of billions and billions of dollars.

HEATH: Yes, and you can say that this is a crypto story because of the way that FTX was propping itself up with the synthetic crypto token that turned out to be utterly worthless. Really, at its core, FTX is a financial fraud story, right. You have basically at the highest level, them using customer funds for something they shouldn’t have. And then it all came tumbling down as the crypto market, more broadly, came tumbling down this year. And because of the amount of capital lost, the celebrities that were — like Tom Brady doing Super Bowl commercials for FTX. Just the sheer culture penetration that FTX had because of the way it was advertising in the way that Sam Bankman-Fried, like you said, was donating to politicians, it’s really stained the crypto as an industry. And so, we have this question now and tack of, can crypto survive? Can it come out stronger or will forever be weaker as a result? And I think with the jury still out on that.

SREENIVASAN: Moving on to my third billionaire, Mark Zuckerberg and Facebook this year. Meta came into ’22, rebranding their entire company, calling it — instead of Facebook, calling it meta. And I wonder is the metaverse losing steam?

HEATH: I interviewed him about this this year and he told me that, you know, he is preparing to go into this trough of disillusionment period with the metaverse where people got really excited. And now, it’s kind of a wait and see to wait for what will actually become. You know, they released this high-end expensive headset called a Quest Pro today. you know, our side at The Verge, we didn’t give it a good review. It’s not a good product. They had to lay off about, you know, 20 percent of its workforce. And so, you just have this really huge reckoning that they have had to go through. And, you know, showing that the metaverse is not really here yet and we don’t really know what it will be. Because the devices that you need to access with these headsets, they’re just not ready for everyday people yet. They are really still niche toys.

SREENIVASAN: How does this impact what was supposed to be kind of one of the futures of the web? This idea of web three, of — you know, these tokens. A different way of, kind of, the internet of digital coming into the real world when it comes to how you can start ascribing actual value to digital art and how you can start to transmit documents, kind of, more securely and with value-added?

HEATH: I think what it shows is that there are hills and valley to all of this intact. And we are in a really deep valley right now. But you could look at things like Fortnite, Roblox, these virtual worlds that young people especially are spending a lot of time in, and you can see how that translates to when headsets get good enough. Those experiences being compelling. And I do think that, you know, you can’t totally write that off. Because of the way that teenagers especially are so used to just hanging out as avatars with their friends, either playing games or socializing as they really are doing in these games. And that, to me, is the strongest signal that this whole metaverse idea of living in a virtual world may actually be here to stay. This may take longer than we think.

SREENIVASAN: Speaking of networks that are not losing consumers, TikTok had been in the news all year this year, not just for its meteoric growth. I mean, I don’t know the exact numbers, but there are more people — or I should say there are more minutes of TikTok watched than there are minutes of pretty much anything else or everything else combined, it seems. And at the same time, TikTok has also been under a lot of scrutiny from state and federal regulators. Taking a look at whether or not this is a national security threat. What happens to this company?

HEATH: It’s a big question in Washington right now, right? As we speak, Congress is trying to push through a law that would ban the use of TikTok on government phones. And I think that just goes to show the amount of fear and uncertainty that has corrupt into the averment in U.S. politics about TikTok Chinese ownership. They are owned by a China tech conglomerate called ByteDance. And I do think we’ll see some kind of separation. I don’t think, necessarily, a complete spinoff but a pretty strict separation from TikTok and its parent company in 2023. I think we’ll have to given the rhetoric, especially on the Republican side that is out there against TikTok. And that’s because, what you said, you know, “The Washington Post” had a great headline about how TikTok basically ate the internet this year. It has become where culture is created. It is where young people are flocking to. And there’s concern that, you know, that is giving the Chinese government either valuable data about us, or allowing them to potentially influence what people see through TikTok’s, you know, powerful algorithm. Because when you’re on TikTok, you’re really at the mercy of the algorithm. There is no — you can follow people but is not the main experience. And there is just a lot of mystiques around that. I don’t think it’s necessarily as nefarious as people may assume it is, but there’s definitely a need for transparency that is not there.

SREENIVASAN: You know, the combination of these, not just stories that we’ve talked about, but the market correction that we have been in and maybe coming off the pandemic. Some of the companies that were maybe a little bit overvalued deciding to cut back. We have seen lots and lots and lots of layoffs. I mean, tens of thousands of people in just — whether it’s Facebook, or Amazon, or Twitter for different kinds of reasons have been laid off. Are there more layoffs coming?

HEATH: I think so. A lot of it depends on interest rates, what the Federal Reserve does in the new year. A lot of business leaders, CEOs that I hear from in tech are expecting a pretty severe recession. Unclear how long will last, but that seems to be the consensus among the — you can say, techno elite class. Elon Musk has been tweeting about it openly for example. This was the big reckoning for tech in the sense of all of these CEOs thought that the pandemic and the trends in the pandemic, whether that was online shopping, streaming video, social media, how we are all glued to our devices because we didn’t have any else to go. That somehow that behavior would extend past lockdowns lifting. It turns out, that wasn’t the case. People are going back to movie theaters. People are traveling again. People are buying things in the real world. And so, a lot of hiring that these companies did because their stock prices were so inflated and cash was so available, it — they’re not feeling the pain of that because now that the market is saying, we want to see profits. We don’t really necessarily see just growth. And so, that’s why everyone is adjusting. Companies like you mentioned, all making cuts. And, yes, if the economy continues to go the direction it is, I think we will see more cuts.

SREENIVASAN: You mentioned streaming services. Has the golden age of streaming media kind of behind us? Is it an a between stage?

HEATH: Yes, we are entering the age of rebundling which is something media goes through over the — over decades. This has been the history media. It unbundles and it rebundles. In the last several years, we were experiencing the unbundling, right? And you now have seven different streaming services. So, if you’re like me, you have seven different streaming services you pay for. You’re not really sure which one you actually need or what show is on which service anymore. And so, now the next phase is kind of re-aggregating all that into these super streaming apps, right. So, that’s what Warner Discovery is trying to do with their merger. Apple is going that route. Amazon. Everyone is jacking (ph) to be, can we be that one or two tile that you have to have to access all your shows? And I think we’re going to go back to a place where people are paying cable level praises for a bundle of channels, right. And it’s just — the difference is that they’re streaming and they’re not over cable. And that’s — just kind of that history of media cycle that we see over it over again. And if you say the golden age was the unbundling, then you are right. We are leaving that way. I do think shows are still — really good shows are still getting made. And the internet has allowed for more diverse voices in that sense. But in terms of what consumers are paying, it is definitely trending back to what it was pre-streaming.

SREENIVASAN: You know, as we wrap up here, what are — late in the year we had several instances of artificial intelligence entering a much more accessible format for end consumers. They didn’t have to know anything about this crazy stuff that was happening at the back end and all the computational power and all the magic. They just had to take a selfie and all of a sudden, they could import themselves into some other phase, or some other — they could create images from nothing. They could have paragraphs written for them. What are you seeing in how fast that space is evolving. What are we going to start seeing in terms of the types of used cases for these different A.I.s?

HEATH: This is one of the most interesting, fast-moving spaces in an all of tech right now. I would call it, and others would call it, generative A.I. A.I. that can make things for you. And so, yes, we saw — the company that exemplifies this is a startup called OpenAI that Elon Musk actually co- founded to bring this all full circle. He’s — happens to be in everything, it seems. And people, kids even, or teenagers are using OpenAI’s chatbot called GPT- 3, that’s A.I. where you can just give it a prompt and it spits out paragraphs of texts for you. To literally write exams in classes. So, this is already happening. And this thing was released less than two or three months ago, I think. So, we’re already seeing how this could affect society. And I think in 2023, it will be — I wouldn’t be surprised to see Senate hearings about this eventually because what it’s going to do to the labor market, what it is going to do to whole classes of jobs. It’s going to be transformational because all a sudden, you can just have this A.I. spit this thing out for you. So, we’re definitely heading a very interesting sci-fi direction with that. And there’s a lot of unknowns. And all the big tech companies like Google are working on this as well. And so, we could see this interest things like Google search, which would be really interesting.

SREENIVASAN: So, what do you and your editors, when you’ve get together virtually or possibly in person at the end of this year, what are you looking forward to in 2023 from kind of the different beats that you guys all cover.

HEATH: There’s this really — I mean, the biggest story is Twitter and Elon Musk, and I think — and what happens there. Not just because of what it means for Twitter but because what it means for Elon and the rest of his companies and kind of how we look at who is considered to be in kind of the greatest tech innovator of our day right now and how he handles this company. I would say, you know, what we touched on, you know, the metaverse. What is it actually going to be? Can we actually tangibly experience it? Have we put the cart before the horse there? I think the answer is probably yes, but like we’ll see the ramifications of that in the new year, I think. And this generative A.I. thing that seems to be taking the industry by storm. What are the copyright ethical when it — implications of this? When an A.I. spits out an answer in like a it was as a search results, it says – – it does it confidently, but as it right? Is it — is what it saying true? And, you know, are people all of a sudden going to be basing, you know, what they know off of things like this and it may not be totally accurate because it’s A.I. You know, this isn’t perfect, and OpenAI, the company says this. So, just kind of reckoning with these trends and then with crypto, it’s like can there actually be utility here beyond this kind of speculative financial Ponzi schemes that FTX and others kind of were exemplifying. So, will crypto actually be something that everyday people want to use? That’s still an open question in 2023.

SREENIVASAN: Alex Heath of The Verge, thanks so much.

HEATH: Thanks for having me.