(Preview) Meta’s New Restrictions for Teens, Nvidia’s Open Source Investments, Q&A on Netflix, Druckenmiller, Parameters and Performance

Welcome and slow summer news

0:00Hello, and welcome to a free preview of Sharp Tech.

0:09Hello, and welcome back to another episode of Sharp Tech. I'm Andrew Sharp, and on the other line, Ben Thompson. Ben, how you doing? I like to take issue with the tech industry. Too much news on Wednesdays. We've talked about this. The worst part is, and I'm always vaguely nervous about Sharp Tech because, of course, it's timely. We're recording on Thursday. We can talk about stuff that I haven't written about. On the other hand, it just reiterates, and this is sort of a propos of the conversations we've been having, the value of writing is that I feel fully confident

0:43I've thought through all my takes instead of going a little bit off the cuff. We're going off the cuff today. We're going to see how it goes. It is pretty funny because it didn't feel like summer until the past two weeks. The news cycle really started to slow down. Did you experience that writing Stratechery in the past couple of weeks? Oh, absolutely. I took my vacation earlier than usual in July. Usually, I take the vacation in the middle of August. And it was busy back then. In July, it was very busy. I'm hurting right now coming up with topics. I'm staying up later than

1:20usual to write, mostly because I'm just dilly-dallying trying to figure out what am I actually motivated to write about here. Squeeze some meaning out of all sorts of nonsense. But to the point, basically about yesterday, it started to feel like, okay, summer is drawing to a close. Maybe it's because my kid went to school this week. Who knows what it is? But yes, we are approaching the end. As of Wednesday, summer officially ended. So yes, we have a number of

Meta settlement and child safety rules

1:46news hits to work through this week. I will begin with news that came down Wednesday morning. And I'll read a tweet from Variety. Meta will enforce a two-hour daily limit on Instagram and Facebook for children as part of a record $17.1 billion settlement with 29 states over social media addiction claims. And behavioral remedies agreed upon as part of that settlement include productive pauses for children, including mandatory pauses after 15 minutes of continuous use. And again, at 60 and

2:2290 minutes to interrupt endless scrolling nighttime blocks, restricting children's access from 12 a.m. to 6 a.m. Limited school time access for children, eliminating push notifications on weekdays from 8 a.m. to 3 p.m. during the school year. Robust age assurance measures to more effectively verify the age of young users. Safer, age-appropriate content controls, including stronger safeguards against bullying, content-promoting eating disorders, and content related to suicide and self-harm.

2:53Stronger, more user-friendly parental controls. And limits on social comparison features, including beauty filters and visible light counts that have been linked to poor mental health outcomes in kids and teens. Both the implementation and effectiveness of the features will be regularly assessed by an independent auditor and the settling states. So this seems like a pretty big deal. What comes to mind when you see this news? Is it a big deal? Actually, what comes to mind, number one, this is the early

3:24call for feedback because I have a number of conflicting takes on this. And there's a real opportunity to sway me personally, I think, one side or the other around a number of these topics. So that's the challenge for the emailers for the next week and me. First up, I am, my tendency, my sort of default position is parents need to do their jobs. Like there's a certain implication of a societally sanctioned shift of responsibility to large faceless

4:00organizations for raising children that properly sits with the parents. And even if it's well intentioned or arguably necessary or whatever you might make the case, if you zoom out, there's a very disconcerting structural shift embedded in this entire topic. That's number one. Number two is a settlement like this is very much an end around the First Amendment. Okay. There's things in here about like, for example, and I'm going to use like their extreme examples

4:35because people care about them, but like limits on discussion about eating disorders, for example, or there's like a ban or like a limit on like some of the beautifying filters and stuff like that. All of those are pretty crystal clear fall under First Amendment protections. But because so you couldn't pass a law that bans those sorts of things. But in this case, you have this settlement between a private company and a bunch of AGs. It's going to basically have the force of law.

5:07It's going to be like referred to. It's going to be a basis for these sorts of things without actually being a law. And it's that so it makes you sort of uncomfortable on principle. It makes me it makes me uncomfortable. The counter to all of this is it's stuff is hard and difficult. Like I worry about my son being on Instagram reels too much. Right. I would say on the parenting point,

5:37that would be one counter is make parents jobs easier across the country. Right. Because it does seem very, very difficult to just constantly monitor how your kids are using cell phones. Right. I mean, he does go to a school where they have these pouches that every kid is assigned one at the beginning of the year. When they get there, they have to put the phone in the pouch and the pouch like automatically locks when they when they go into school or right or something like same pouch you use when you go to a Dave Chappelle comedy show. It seems like a no brainer as far as I'm

6:08concerned. I think they're I think it's awesome. Like I like especially in the context of my son moving back to America, going to a new school. You could imagine those first few weeks in particular. It would be so easy to just sort of retreat to a corner. Yeah. Yeah. And like talk to your friends back in Taiwan or just be on Instagram reels. Whereas you're there, you kind of have no choice but to talk to others. And I've referenced this in passing about this being sort of, I think, a challenge that my daughter had going to college where it's just so easy to stay in touch with your

6:41old friends that you don't have the I have no choice but to make new friends sort of pressure that we had in college. And this is why it's a hard thing to talk about, because I could definitely see both sides. I could definitely be a hypocrite. And then overarching all of it is business analyst Ben, which is like regulatory capture and met up burying all the bodies at once and locking in how much they're gonna have to pay and basically try to set the rules of the road

7:13going forward. Right. And pressuring their competition to make all these same changes themselves, which will be interesting. And it's sort of a topic unto itself in terms of whether this is a big deal. I do think it's a fair question, because one thing I'm keeping in mind before declaring this as some kind of watershed moment for our relationship to technology, Australia banned social media for kids under 16. And the early returns on that experiment are not great, because basically kids have found ways to work around the ban. And right, the 86% of children surveyed reported using at least

7:48one age restricted platform before the ban. Three months later, that figure remained above 81%. So not a huge change down there in Australia. So I'm taking a wait and see approach in terms of what this actually means and how teens will use meta platforms. But well, the other thing to know is that a lot of the sort of quote unquote research, or I don't know why I said quote unquote, but a lot of the about the harms that come from smartphones and social media is heavily confounded by changing definitions in the exact

8:21same time period. Okay, I believe it was related to Obamacare generally, but the the definitions and it also sort of returns on prescribing certain conditions was the same time smartphones became a bit this wise 2012 or around that sort of sort of time period. And that is just this is something people it's worth looking into before you start accepting a lot of these quantitative figures where people point to a specific time period. And there's very legitimate and real things that

8:55would significantly change the numbers, where a seemingly shock one time shift, be like, oh, there's the smartphone, you can see it. Yeah, it's like, well, the smartphone was 2007. Why is it 2012? Well, like, just that is something that over is sort of overarching here. And I bring this up, not that I want to litigate this point. Other than there's a lot more uncertainty around this, and there's really is an aspect of all you ultimately have to go on to some extent is lived experience. I was gonna say, yeah, optimistic way to frame this is, and I think you mentioned this

9:31before, I just want to build on the point you said, to the extent it helps parents parent, it's a positive thing. So for example, if you have these limitations are there by default, right? Or it's just like, everyone's doing like, I've, there's a collective action problem with social media among children. Well, not just that, but sometimes laws are useful in the extent they sort express societal disapproval, right? This is where I'm not a libertarian around things like legalized

10:02drug use, for example, or sports gambling. Like there was, I think, a real push amongst a certain cohort of people who like to sort of, you know, smoke a joint on the weekend in college, always felt vaguely guilty about that because they knew where they're breaking the law and were motivated by the sense of relieving their guilt to make it legal, not thinking about the implication of you getting like industrial grade weed that people can get and are smoking every single day and you walked on New

10:32York City and it stinks, right? Like there's, there's some aspect here of even if the reality is it's kind of gray and ambiguous, and maybe this is my living in Taiwan background. I've talked about the context of like US, China and Taiwan. Sometimes gray is good. It's okay to be there. We don't have to make everything black and white. And there's a drive here. Like we had to make it clear. This is legal. Cause I felt bad kind of breaking the law. Actually sometimes no gray's good. Right. And like, is there an aspect of this here where society broadly signaling that it's okay to police your

11:09kids? Parents can point to the law. They can realize that the default is limiting exposure, not as opposed to the other way where the default is whatever you may do. I mean, it's almost a very small C conservative view of this, right? This is like a, it's not a right left debate. This is like a conservative libertarian debate is kind of like what this question is, is coming down to in many respects. Yeah. Yeah. And I would add in terms of what you were talking about with our own lived

11:42experience. I do think that's why a lot of people identify with research that links social media use and phone use to, um, poor mental health outcomes. I think a lot of people look at their own experience using these tools and are not a fan of how it makes them feel. And they project that experience on society. Uh, just another thing on here, by the way, the U S numbers vary wildly from the rest of the world, which adds credence to the definition was definitional change that that's, that sort of

12:12happened. But to your point, how many of us have looked up from two hours on real feels true. If you've used a smartphone over the last 15 years, but I also, you know, from a social perspective, I do think it's a small C conservative position to say, regulating human behavior to optimize for productivity and a healthy society that became taboo over the last 20 or 30 years, but there are healthy arguments in favor of laws that do that. Um, and again, if Twitter just shut off for me

12:45after one hour every day, I would definitely be better off and I should make that change. Yeah. There's a real, I think this is going to be probably increasingly important where, um, uh, Scott Alexander wrote a piece a long time ago about like gray tribe versus blue tribe, or, you know, it was really compelling and sort of framing. Actually, the reason why the gray tribe, blue tribe hate each other is because don't even think about the red tribe. That's like, that's the way out there, but there is a bit where people, the distinction on the, that's about, that was about a distinction on the left. That was like early. If you read Scott Alexander,

13:17you saw a lot of the rationalists and EA stuff. Cause he's a very, you know, brilliant writer and a very sort of foundational figure, uh, with, with a lot of that stuff. But on the right, the distinction between conservative and libertarian is actually a fairly massive golf chasm, whatever it is. Right. Uh, and I can see that distinction actually coming to the fore more and more and it being somewhat, a lot of people being somewhat oblivious to it just because they're not even

13:48aware of sort of the distinction fighting. And this is this, no, but this is a great example

Age verification and regulatory strategy

13:53to your point. Like, like the, the, I mean, another example of this is, uh, maybe I don't know how much this maps, but another issue I have a really hard time talking about because I can't decide is the age verification question. Yeah. On one hand, if we must have age verification, I do think that should be Apple and Google's responsibility. They're the already, they have so much trust. We've talked about this. You trust your smartphone provider the most. They have root

14:27access. They see everything. Apple's entire sort of like privacy proposition is predicated on the fact that trust us and we'll take care of everything else in this context, them verifying who you are and giving an API. Are they above age or not feels much more scalable, usable and preferable than Facebook having to sort of, or each app in this future, having to jerry rig their own age

15:00verification process. It just doesn't seem very mandated. Right. They're being, no, not just that they're being mandated to pry ever more deeply into understanding who you are so that they don't break the law. Which we all complained about for 10 years. Right. So yeah, exactly. No, it's funny how stuff changes, right? On the other hand, this is the libertarian side. It's like, who are you to be verifying who I am? Granular data. Yeah, sure. And to have an API that can be abused,

15:31you know, used in ways it wasn't intended to, to ascertain who I am. Sure. It's bad that Facebook can guess pretty well. We're going to make it binary. Yes or no. Right. Like you sort of really understand deeply who you are fundamentally intention. And so I think I come down on Apple and Google should provide this API just because the current of society is going in this direction. And if we're going to do it, let's do it. Well, even while I reserve the right to object

16:06to the overall doing it as we go. Fair enough. Well, and it will be interesting to the extent this could be a watershed moment for social media and how America uses social media. I think the way we get there is this is a framework that then is codified by Congress going forward. And that's not going to happen. It can't be, though. Number one, there's First Amendment violations. Number two, like this is just another end around our broken legislative process. Like this is going to become

16:39the law, which, by the way, to the business point, is probably why Meta is not too upset about this. Okay. They got to negotiate their outcome and how this will work. Yeah. They're still going to have lawsuits going on, but I would expect most courts to defer to this settlement going forward. If people are, there's going to be a whole parlor game and suing everyone else in social media and pointing to this settlement and expecting the same thing. Meta gets to come in. They get to say, oh, like there's a requirement in there about like responding within nine hours at 90%,

17:13something that requires a lot, like a lot of resources, right? Like the classic regulatory capture. We can handle this. Oh, and by the way, we can handle $18 billion or whatever it is paid over 10 years. And oh, we only have to pay if like YouTube and TikTok sign up as well. Not even a drop in the bucket, a molecule in the bucket for Meta over the next 10 years. And then they put this to bed. This has been an overhang on the stock like for a while. And it's like, even if overall they think it's, they didn't admit fault, right? Even if they think it's unfair, it's not right. The measurement's all wrong. Large corporations are political animals.

17:48And this is where the politics are going. And in that, from a business management analysis perspective, very smart. They're getting ahead of it. They're putting it entirely to bed. They got to negotiate it around their preferred parameters. They get to layer on this, like, oh, sorry, we have to, we really have to profile you because the age requirement requires us to. It's so sad. But if you're going to get there, best to get there on your terms. And that is kind of what

18:20Meta did. Yeah, I agree. You know, and I, the only note that I would add on the potential for legislation, you're right. Betting on Congress, getting its act together in this area and passing any legislation is usually a bad bet. However, I do think you could overcome some of the First Amendment concerns because you're talking about children and child safety as a compelling interest alongside the First Amendment concerns. I don't know exactly how that would be resolved. But I do think that there's political will to go that direction. So it'll be interesting to track over

18:53the next several years here. As far as the competition and Meta's competition, Mike Isaac on Twitter shared an open letter that Meta has written to fellow social media giants, YouTube and TikTok, imploring them to implement these changes as well. That letter ran as a full page print ad in the Washington Post, LA Times and the New York Times on Thursday. Isaac, he noted that Snap was not even mentioned, which is an amusing indication of where that platform stands. Many have compared that to Don Draper saying that he'll no longer represent tobacco companies. Do you like

19:29that comparison for Meta there? I mean, it's one of those things make lemons out of or make lemonade out of lemons, right? Like, just like we are the leaders in this. We've done all these sorts of things. Well, I mean, have you thought about whether YouTube and TikTok would ever comply with Meta's demands there and make these changes unilaterally themselves without prodding from litigants? I think there's a good chance they will. Basically, I don't, you're the lawyer, you can tell me. This case is not like precedent setting, like Supreme Court precedent. But there's

20:01like a whole nother arena of the political culture around court cases where this is de facto precedent setting. And like, I'm sure there's probably like a thousand lawsuits fired yesterday. Well, courts who are dealing with these novel issues are going to look, how did other courts handle this? How did it get resolved? So it's going to be a pretty persuasive tentpole that people look to. Right. And so probably the question facing Google and TikTok is, do we want to wait for the inevitable lawsuit that is probably going to be settled on the exact same lines as this? Or do we want to get ahead of it?

20:36Yeah. And go there ourselves. OK, well, we'll see. We'll see. I can imagine. I guess my my instinct is that Google will move first and TikTok will try to skate by for a while. But then again, TikTok has been very eager to like be seen as following the law. Yeah, I'm going to reverse that. I think maybe TikTok will move first. OK, I don't know. Well, time will tell. Final note, Sagar and Jetty tweeted on Wednesday, is there any good argument for why the meta changes for teens shouldn't be universal for all adults? I wouldn't have a problem if they went that direction for reasons stated previously.

21:10If we're nominating classes of people who need to be regulated, though, I would like to nominate boomers and their social media use being regulated before all of society. Right. We do need age limits. The age limits are just all in the wrong direction. Exactly. Anyone over 65 strict limits.

Preview conclusion and subscription info

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