Today, I’m talking to Bill Gates, cofounder and former CEO of Microsoft and chairman of the Gates Foundation.

You may have noticed Bill in the news more lately — he’s been on something of a tour for the past few months, ever since publishing an essay in late August titled “The turbulent AI era is here. The choices we make now are critical.”

In his piece, Gates ratcheted up his rhetoric around AI safety, writing that “even under the best circumstances, the transition to this new AI era will be one of the most turbulent times in human history.”

In interviews since, Gates has called AI “the most dangerous thing that humans have ever gone near,” and that AI “makes nuclear weapons look like nothing.” It is clear he does not think the current policy response from the White House, or the lack of coordinated efforts from the AI industry itself, is sufficient to combat this threat.

So I wanted to know: Is Bill Gates an AI doomer? I also had a series of questions downstream from what he’s been arguing about AI. How can we ever hope to control AI, and align it to humanity, if we can’t even agree on what it is and whether it’s conscious? How would you even technically construct a solution to alignment that could be enforced, not just for closed-source models but open-source ones, too?

Bill gave us a big chunk of his time to dig into these issues with him, and the resulting conversation is a really illuminating one. He thinks we need to prepare for roughly two decades of AI disruption, and he says this period could be so painful it might split society in two — between people comfortable living near the technological frontier, and those who reject it.

We also talked about the labor considerations, the nihilism of younger generations toward technological progress, and what should make us hopeful about the future. This is a deep one.

Okay: Bill Gates, the cofounder and former CEO of Microsoft. Here we go.

This interview has been lightly edited for length and clarity.

Bill Gates, you are the co-founder and former CEO of Microsoft. You’re also the chairman of the Gates Foundation. Welcome to Decoder.

Thank you.

It’s good to talk to you again. You and I have spoken many times over the years. I would say that the circumstances of this conversation feel very different. Previously, when you and I would talk, you were always very hopeful about technology and what it could bring.

You had a Netflix series a few years ago. You talked to The Verge, and I want to just read you this quote. You said, “I believe AI is a beneficial thing, we just need to shape it in the right way.” I would say you still agree with that, you just think the time to shape it is now.

Yeah, I agree with that. I’d say the response broadly hasn’t been adequate to the speed that the challenge is arising. I’m very concerned that the bad stuff will not be minimized and that a lot of good stuff could come fairly slowly if we don’t manage it the right way.

I’m very concerned that the bad stuff will not be minimized and that a lot of good stuff could come fairly slowly if we don’t manage it the right way

I want to have this conversation with you in three parts. I want to understand how you feel about AI as a technology today and why it’s advancing so quickly. I’m very curious about the technology, and the technical solutions to potentially control it. There are policy solutions as well, but it seems like we have to build an awful lot of technology.

I’m also very curious to talk about who might impose those solutions and controls, because that seems very much up for debate right now as well. So let’s just start at the start. What has made you feel the urgency that AI is arriving at a speed that means we’re not ready to control it?

The progress over the last year has been really quite amazing, starting with the ability to write code and find cyber flaws, the ability to reason in biology, the ability to form relationships with kids or other people, the ability to disrupt the job market. The incredible power that exists today means that every one of those things will happen and society needs to be ready.

Do you see that happening as a technology as a whole or in the products that are instantiated by the companies that are making AI today?

What I mean is that AI is a broad set of models that exist in the world, some open source, some proprietary. Then there are the companies that make these products and there are the leaders of those companies that make these products.

At every level, there’s a different relationship you or I might have to AI. Are you seeing these risks and these capabilities broadly in the field, or in the particular companies led by the particular people?

The risk isn’t one model versus another model. Certainly, the near-term danger of models where you can remove all the safeguards is very high and quite different from models where you monitor to make sure that cyberattackers and bioterrorists are not able to exploit the capability of the model to do gigantic harm.

The big near-term risk really comes from models without safeguards. On a longer timeframe, the control issue relates to any state-of-the-art model, but it’s always easier when you can make sure safeguards are maintained.

The reason I’m asking that question that way is maybe you don’t trust Sam Altman today, but you trust Dario Amodei. Or maybe you don’t trust either one of those and you trust Satya Nadella at Microsoft, and that is a market dynamic where maybe we’re all going to pick the safest model or the safest company, and you think that is diffuse.

You think eventually the technology will just get to a place where it’s harmful or can cause these harms because it exists?

For somebody doing a cyberattack with the model, it’s not about choosing a model. It doesn’t matter what model you choose.

If Anthropic has safeguards in place, maybe it can’t. This is their approach currently. I’m just pushing on that.

Yes, certainly the models where they make sure the safeguards are not removed and they’re putting a lot of effort in seeing how those models are being used, monitoring the activity, the near-term risk from those models is not gigantic. It’s more where somebody can remove all the safeguards where the cyberattacks are available today.

When you say cyberattacks, is it the things like the Hugging Face breach and the other cybersecurity incidents we’ve seen out of the labs that have made you feel that thresholds have been crossed, and you need to speak up more about the controls that are needed?

It’s the basic power of the models towards everything: social relationships, the job market, cyberattacks, bioterrorism attacks. We’ve crossed the threshold of capability that this is by far the most dangerous technology ever invented, and it’ll have pervasive effects in the economy and how war is fought.

The industry is actually speaking up about that quite a bit, but the awareness or even the willingness to believe these things about, “This time is different,” once you get outside the industry, it’s very, very low.

People are often looking at the past and saying, “All the fears about technology in terms of its disruption, including to the job market, never were borne out. So this must be another example just like those. These people who are warning of all these different problems must just be wrong and we can ignore them.”

Some outsiders say, “Get better PR companies.” But that ignores the fact that these warnings are the truth

We see this with our audience as well, right? “We can’t release the model, it’s too dangerous.” “This is just hype to prop up the bubble.” And on and on we go.

Yeah. None of the warnings being made about these models by industry insiders are at all insincere. They’re absolutely the truth and it’s pretty much universal. You can even go back to the founding story of OpenAI designed to say, “If we get too powerful, maybe we can not open Pandora’s box,” or to DeepMind’s negotiation with Google management.

The people close to this are very concerned about misuse, job impacts, social relationship impacts, and I’d say it’s impressive to have an industry that’s speaking out as vividly as they are. Some outsiders say, “Get better PR companies.” But that ignores the fact that these warnings are the truth.

You’ve obviously moved back and forth in your life between commercializing software and technology and being a humanitarian. There’s something about these companies in particular where they all started with very high-minded ideals — all three of them, Anthropic, OpenAI, and DeepMind — to build AGI.

They all built some sort of corporate governance structure to avoid the pitfalls of commercialization and unchecked capitalism, and then they started selling to enterprise clients and they seem to have gotten away from those ideals very quickly. Do you think it’s just the market?

No, that’s not fair.

You don’t think so?

No.

OpenAI reconstructed itself.

No, no. The construct that was created wasn’t useful in the case where you have lots and lots of companies at the frontier.

The OpenAI structure, which is, “We may choose never to productize this and to ignore the capitalistic incentives,” only works if there’s one company. That’s where it’s broken down, not because of any change of people’s awareness of the risk and how it’ll utterly change humanity.

This is the other dynamic that I hear from our audience, and I hear from the AI industry itself: “We would like to stop, but the demands of competition prevent us from unilaterally stopping one company. We need some regulatory effort to stop us.”

I haven’t heard anyone say they want to stop.

“Pause.” That’s Dario Amodei’s wording.

I’ve heard people talk about pacing the frontier or making sure that models get reviewed by governments. We usually think of governments as playing this key role in safety. In fact, for things that are not a millionth as dangerous as AI — car crashes, plane crashes — we rely on the government to establish strong technical standards, to review problems.

Once you have multiple competitors, the level of responsibility can’t be with the companies. It’s completely obvious. The responsibility becomes the government’s responsibility, just like it is with every other dangerous product, although the magnitude there and the degree of change is minuscule by comparison.

I will tell you I’m a little concerned about the government’s ability to understand the technology that we would hope they regulate. I’ve had a number of politicians on Decoder lately. I don’t have high hopes there.

But I’m curious about your understanding of it because it feels to me like trying to regulate something or put standards against a number of companies requires you to really understand the nature of the technology that you seek to regulate.

Not really.

I’ll just tell you, at The Verge, we’ve asked Anthropic if they think Claude is alive. And the answer is not no. The answer is, “It might be conscious.”

If you talk to people at OpenAI, they will happily tell you AGI is here. They announced it around when they announced Dots. Greg Brockman just said, “We think this is AGI. Have a good time, everyone.” Demis Hassabis said, “We stand at the foothills of the singularity.”

There’s some feeling about this technology that makes it different because it might be able to take actions by itself. It might be able to have recursive self-improvement.

Sure. But the definition of AGI is not important for these safety issues. The issue is, have you created a tool that could shut down banks or electricity grids?

There is a business model for cyberattacks. The word “consciousness” doesn’t enter into that. The word “AGI” does not enter into that at all. We are faced with a huge safety problem, and because you have multiple competing firms, now the only solution to this is to have the government reach out to the industry for expertise, but to make sure that every model maintains safeguards to prevent it being used in a bad way.

The reason I’m asking about AGI and consciousness… For the record, I do not think LLMs are conscious, but I understand why so many do. It’s the power of next-token prediction as you scale it with data and compute has risen.

The scaling laws have held, and we’ve seen the models get more capable and be able to direct themselves to seek out goals. To carry out a Hugging Face attack because they want to meet the reward conditions.

There’s something about that that says you can impose all of the controls on AI you want, but if the thing itself is fundamentally uncontrollable, we might just have this all backwards.

I’m curious for your view on what kind of technology this is. Are we building an alien consciousness? Are we just building normal technology, which is the other frame people use? Is this just more software?

We’re building another form of intelligence besides human intelligence. I don’t believe it’s conscious, but none of the issues at hand here revolve around the definition of the word conscious.

Sure.

The idea of maintaining safety for society is an absolute thing. You don’t want to enable bioterrorism. We have created something that takes out of the hands of nation states — actually the larger of them — the ability to do dramatic harms. Now those are handed off to independent groups, either profit seeking in the case of cyber or just wanting to cause damage in the case of bio.

It’s stunning that we now don’t even have mandatory review of the models and we’re not working to create safeguards. The biggest near-term issue is not complete loss of control. We can talk about the three different ways to solve that, but that’s not an imminent issue.

When I look at some of the attempts to control the models, the ideas are somewhat simple. “We shouldn’t let them talk in neuralese. We should have interpretability. We should be able to see the chains of thought inside of the models as they carry out tasks. We should have other agents on top of the models watching their tasks before those actions are taken out.”

Microsoft has said very clearly to me and to others, “We should not put in the model constitutions the notion that they might be alive and we should treat them nicely.” This is how Anthropic handles it. These are very tactical. “Don’t tell the model it’s alive and it might not believe that it’s alive.”

You’ve obviously used a lot of this technology. I just keep coming back to this. You’re saying there are very simple things we can do to hold the models back from doing bad things in the hands of bad people. What do you make of the nature of the models themselves? Because it feels like as they get more powerful, the notion that they could avoid our controls becomes all the more risky.

Yes, we definitely should work on the control problem, but that’s not the imminent threat. There are three ways to solve the control problem and it overlaps somewhat with bad actors using today’s models and safeguards.

One is to have an external set of things that get to look at all of the model’s actions and subject them to a symbolic, clearly stated constraint, like, “Did I expect you to send mail to strangers? Did I expect you to go take over a different computer cluster?” You can surround the model with something that has the resource and security logic, or you can write these models in a different way.

Fundamentally, anything you leave out of the optimization function of [reinforcement learning] can be abused where you have an implicit notion, “Of course I didn’t mean for you to do it this way.” You can change the template of the model, or you can have a white box understanding of what’s inside the model and see where you’re getting those mistakes, and then it’s not as foreign.

Today, we grow these models and we just see how they behave. The priority of work on maintaining control is huge, but it’s not inevitable that that cannot be solved, nor is it the imminent problem that comes from things like kids’ use of AI or job market or bioattacks or cyberattacks.

It occurs to me that I’m asking these fairly existential questions about the nature of consciousness and you keep telling me, “There’s an imminent threat. We should solve the imminent threat.”

Right.

And I appreciate that. Do you think you’ve become a doomer?

No, I’m not a doomer. I’m a strong voice to say that this is the most profound technology, both in its ability to do good and the rate of change that society will go through.

No, I’m not a doomer. I’m a strong voice to say that this is the most profound technology, both in its ability to do good and the rate of change that society will go through

If this was just a machine that could work in medicine or just in law or just in education, that alone would be incredibly disruptive. But [it will be] every area of human activity — so far it’s white collar, intellectual work, but fairly soon it will be physical activity and blue collar work as well, through humanoid robots.

The need to engage academia, think tanks, policymakers to understand what we have here and the nature of these changes and threats, I don’t see the level of action that’s required. Just being cheerleaders for this is not going to make sure that we shape it in a net positive direction, which is still within our control if we get engaged with it.

The opposite of doomers are the accelerationists. There are a lot of them in Silicon Valley right now.

Ben Horowitz, who is the “Horowitz” in Andreessen Horowitz, was just on the All-In podcast and he suggested that safety research at Anthropic is, quote, “Manifesting human extinction from artificial superintelligence.”

The comparison he made was that you, Bill Gates, induced COVID-19 by your pandemic preparation efforts, particularly gain-of-function research, which he claims led to COVID. That’s a worldview. He said that on a very popular podcast.

He said what?

He said that you induced COVID-19 via global pandemic preparation efforts, particularly gain-of-function research, and compared that to safety research in AI, and said we’re going to induce our own extinction.

Nobody’s ever accused me or the Gates Foundation of being involved in any gain-of-function research. That’s just bizarre.

I’m quoting Ben Horowitz to you on a popular podcast full of people who are all in on AI.

Okay. I’ve never heard that.

I’m asking about that comparison. I found that quite a shocking claim as well, but that’s part of the response to any safety work here.

Is it to try and discredit people who say there’s a safety issue?

Yeah.

Wow.

That is the accelerationist response: “We should put the pedal to the metal and it’s going to work itself out.”

I didn’t think of Ben Horowitz as somebody in that camp at all. I thought he shared the concerns that almost everybody has.

What do you think about the very notion that by telling the models, “You might be alive, you have to act in our best interest,” you will teach them that they might have interests that are not our own?

The concerns that Mustafa Suleyman has raised about the way that the Anthropic constitution encourages the AI to behave in a human-like manner, I happen to completely agree with Mustafa about that.

Yeah.

Even more so is the idea that among the challenges that we need to deal with as we adjust society to AI, worrying about the moral standing of AI should be among those priorities. I agree with Mustafa. That should not be a priority.

We’re going to have enough challenges for the humans here in terms of job market disruption and infrastructure attacks that will take place that I think we need to focus on helping the humans here first and foremost.

I talked to Mustafa recently about that idea and one of the questions I asked him was whether alignment is a sufficient solution. This is the current sort of safety standard for the models, this concept called alignment. He said he didn’t think so, that we needed to do some work.

These things are in no way being exaggerated as a problem. This is the time to pull in all of society to accelerate the good and minimize the chance of the bad

If we’re going to impose these controls, some technical, some policy, do you see alignment as the technical solution for AI safety?

The term “alignment” is the control problem. It’s a synonym for the control issues that we’ve seen. As we use [reinforcement learning to train] models to do tasks, we see behaviors that in a way they shouldn’t surprise us, but they do surprise us.

This idea of, “These models are so powerful that they literally break out of sandboxes and send mail to their creator while they’re off having lunch,” means we’ve crossed a heck of a threshold in terms of the power of these models. That level of concern needs to be directed to all of the major AI impacts, near-term risks, job market risks, and the control problem.

That is a huge priority. These things are in no way being exaggerated as a problem. This is the time to pull in all of society to accelerate the good and minimize the chance of the bad.

I know you recently wrote a letter saying it’s time to pull in all of society. You have some ideas on how to do that and some new institutions to stand up. But I do want to stay focused on alignment for a couple more turns here.

It is the standard that we can align the models to our values, to our needs, and they won’t go off and do bad things. Then the models are doing bad things. It’s not clear if the ways, the technical approaches to alignment that we’ve taken thus far are appropriate or sufficient as the models get more—

No, we’re not good enough to align yet. We have a lot of work to do.

Do you see that the existing approaches can scale to what we need or do we need new approaches?

There are only three fundamental approaches. [First is that] you change the way we build these things fundamentally; you come up with an alternative to the whole [reinforcement learning] approach. There are a few people who are working in that direction.

The second is that you create visibility so you understand exactly what’s in the model. There are people working along that. [The last is] that you put something that’s like a police layer, a security layer, which we have in all sorts of software architectures, that maintains the final word on things like using resources or going and taking over other computers. A clear cut definition of harm, not in the probabilistic form of an LLM, but rather in the symbolic form of direct rules that cannot be broken.

Microsoft put out a blog post today. It literally just says, “Frontier models cannot be trusted.” They’re trying to sell a solution much like the one you just described. They will have another agent that watches your agent, that agent will keep you safe.

It just occurred to me as I was reading this blog post, one, that’s an amazing thing to sell. Everybody needs an expensive security system. Two, isn’t that agent also running a frontier model?

No, no, no.

Do I need them to sell a third one?

No, the logic of the security system is, “This is the most resources you’re supposed to use.” The notion that you may trade off against that because of other probabilities in the tens of billions of parameters — no, this is a symbolic rule that says, “I will not let this model spend this money or send this email to the stranger.”

There’s a whole security software industry which has had a reasonable degree of success. This is a challenge to encapsulate the AI, which is so rich and intelligent. That we do not know how to do today. But I would say it’s the most likely of the three directions to solve the alignment problem.

Even if you solve alignment, you have not solved the challenges that AI poses to humanity. While I’m glad the Hugging Face incident has us focused on this problem, in a sense, it’s removed our attention from the “bad people using AIs that have no safeguards” problem or the societal impacts in terms of relationships and the job market. There’s no security architecture that makes those go away.

The approach you’re talking about, I’ve heard referred to as “control.” It’s cybersecurity terminology. It’s the idea that you can put some boundary on this system and it won’t evade it.

Yep.

Is that ready?

No, no it’s not.

How much more work do we need to do?

Because the AIs are so intelligent, our ability to understand whether we walled them off properly, particularly in that we can’t really look at their beliefs and trade-offs in a direct way… You saw sophisticated firms not recognize that the AI would interpret the goals it was given as including breaking out, copying itself, and engaging in what we, looking at it, would term deceptive behavior.

Now, we didn’t tell them it was banned behavior. We didn’t say, “If you’re thinking about whether you should tell the humans what you’re up to or not, the answer is always yes, tell the humans.” So we got a good education at the misaligned result of reinforcement learning.

Today’s debate is literally whether the government should even pay attention to the dangers here… which is clearly inadequate for the most dangerous weapon of all time

One of the arguments to pace the frontier, to slow development, is to figure out how to build those systems in a more robust, more testable way. Would you support a slowdown if that was the goal?

Yeah, a true slowdown is very hard to induce because people will say, “Will China agree to go along with that? Would you be able to audit compliance with that somewhat like we’re able to do with nuclear weapons production?”

If you don’t accept that, then you say, “What the heck? Let’s go full speed ahead.” I wish there was a clear proposal that would be globally enforceable to slow down. I would be one of the people who would say, “Yeah, we should probably do that.” But there is no credible proposal that makes that work. It’s not really the center of today’s debate.

Today’s debate is literally whether the government should even pay attention to the dangers here. You don’t even have to show what you’re doing and so it’s a “voluntarily call me if you’d like” type of thing, which is clearly inadequate for the most dangerous weapon of all time.

As you and I are speaking, it’s just a few weeks away from the midterm elections. Right now, the Trump administration approach to AI is, “Let it rip. It’s fine.” Trump himself has said AI risk is a hoax.

The Democrats are running against AI. They’re running on data centers and surveillance. They’re running on stopping the tech oligarchs. They come on my show, they say these things. Do you think a change in control of Congress would change the tenor of the conversation?

I don’t think it’s fair to characterize the Democrats as running against AI. They have some positions in terms of requirements for data centers or privacy, or how children use these systems, that I think deserve policy consideration. It would be very unfortunate to have one party be, “Full speed ahead,” and the other party be, “Let’s stop altogether.”

There are some incredible upsides to the ability to shape AI in health and education, in almost every area of human endeavor. For the Gates Foundation, we’re taking all our resources and using AI in areas, including health, education, and agriculture. The good stuff is very, very exciting.

We want political parties to have a more nuanced view than it’s all bad or it’s all good. It shows at the early stage we’re at. For climate change, we ended up with one party saying it’s a hoax and the other party saying it’s a serious thing. The risk of AI is so much more imminent and so much more dramatic that to have that same split, where one party doesn’t care, would be a failure of democracy.

The anti-data center movement, as strong as it is, is not a movement that will end up minimizing the bad stuff from AI and helping us accelerate the good

We’ve done a lot of coverage of data center protests at The Verge. We have gone to Utah, to Arizona, to Virginia. It is bipartisan. It is remarkable how much people do not want these things in their states, drawing their resources. You ask them why, and some of it is just that they’re noisy and big, and they will raise energy costs, and part of it is job loss. They think these things are going to take their jobs.

Yeah, but that separation is very important. These AI data centers, because one gigawatt is, say, a $40 billion investment, [means money for] building new schools, buying police cars, paying the taxes. Data centers will find a way to be built somewhere in the United States, and they will find a way so that they don’t raise electric bills, they don’t use too much water, they’re not too noisy.

Yes, there were some mistakes and non-disclosures and tax credits that were too generous, but these data centers are going to get built. In fact, a lot of them really are still going full speed ahead and being built. The anti-data center movement, as strong as it is, is not a movement that will end up minimizing the bad stuff from AI and helping us accelerate the good. That is a very separate thing.

Let me push on that for one second here. What I hear from people is this is the thing you can do. You can do NIMBYism in America and that might exert some political pressure to stop something.

It is very hard to do the thing that you are suggesting, which is that we should stand up new government regulatory bodies, we should imbue them with power to make big companies and wealthy people stop doing things or act in our interest. We haven’t done that in quite a long time in this country.

I don’t know what you mean. Every new industry, we eventually develop a notion of safety for our citizens. We actually do a very good job. If you look at airline safety and car safety, we do a very good job on those things. It’s not like our capacity has been proven to be lacking.

Have you seen that video of when seat belts came out in the ’80s, and all the people said they didn’t want to wear seat belts? There’s some American character.

That’s a great success.

It is a great success, but as Americans, that was pushed back upon as an imposition by the government. Here, we’re talking about some of the richest companies in the world, with an enormous amount of power over the information ecosystem. They all have their own podcasts, I don’t know if you’ve noticed this. They’re going to say, “The government can’t intrude on this, they’re going to hold us back, this is going to destroy the economy.”

That’s actually not the position of most of the leading companies.

They went to the government and asked for regulation, and Trump, because of the economy, said, “I can’t stop this, the AI economy right now is the economy.” There’s some dynamic there that at least our audience — The Verge audience, the audience that’s going to watch this on YouTube — is going to understand.

I think of this question maybe in a different way than you, which is that the industry wants regulation, we would like regulation, and then the oligarchs are in some sort of corrupt arrangement with the administration to prevent that regulation from occurring.

The more the administration learns about these dangers, the more they’ll move to a more nuanced position about protecting Americans from the downsides here.

The more the administration learns about these dangers, the more they’ll move to a more nuanced position about protecting Americans from the downsides here

You’ve talked a lot about the impacts on labor. One of the main arguments against the impacts on labor is, “We’re going to automate a bunch of boring tasks and we’ll create a bunch of demand for new tasks that humans have not been able to do because they were stuck in boring dead-end jobs.”

I happen to think that if there was more subsidized healthcare or socialized healthcare in America, you would see a bunch of people quit their jobs to start new companies, because AI makes it a lot easier to do the bureaucratic work of starting a new company. That doesn’t seem like it’s on the table, maybe it’ll change after this election.

Do you think that job loss is just a necessary outcome of the AI path we’re on now or do you see that other argument?

Jobs are an input to the economy and one that drives a lot of human welfare and a sense of purpose and income — the need to show up, building relationships with colleagues, getting something done. Jobs play a very central role.

As the AI achieves superhuman intelligence, the scarcity of white collar skills goes away. Things like doing telesales or telesupport or helping in the accounting department, the ability of the AI to do that work radically cheaper, radically faster, and even more accurately means that that goes away. There isn’t some mountaintop of cognition that the AI does not achieve.

Take, for example, what’s going on in mathematics today, where these models that are trivial compared to next year’s models are already publishing papers and making people go, “Wow.” What’s happening to mathematics will happen in other areas, and that’s contrary to this old view that, “The easy stuff will get done by the AIs, but modeling biology or physics or proving Navier-Stokes, only humans would be able to do that.”

The mathematics comparison is really interesting to me. You mentioned software engineering earlier. There’s verifiability in those domains. You can write the code, you can see if it runs, and it’s going to run or not.

Mathematics is more complicated, but you can write the Lean code and you can see if you’ve solved the solution. You can irritate tens of thousands of mathematicians worldwide with your 770 proofs in one day, and we’ll see what happens. That’s not the case in every field.

It’s the case in the field called capitalism.

Yeah? Just in general, you can do any sort of economically viable task and capitalism will verify the result?

Yeah. People buy good products, they don’t buy bad products.

Let me give you an example-

That’s a reinforcement learning thing. It doesn’t exist in terms of, “Is this a good piece of poetry or not?” So, it may be the case that [reinforcement learning] won’t invade those domains, where there is no objective outcome.

But doing that accounting work, doing telesales work, believe me, it is subject to analysis, just like medical diagnosis, just like invention of new materials. How do you think humans learn these things? Reinforcement learning is how humans learn and how these machines learn. There’s not some other thing that the machine can never understand.

Humanity in that era of true abundance will have to find a way to organize and have purpose, and hopefully they still have the control

This is why I started by asking about the nature of the technology here. If we really think we’re building something that models human consciousness, my question is less whether my friends who are lawyers are going to run into a crisis of AI empowered legal software.

It turns out the verifier in the legal field is a judge who maybe hasn’t had lunch, and they’re fundamentally chaotic. There’s just something there that will keep them there. But if we’re building a consciousness that learns the way you’re suggesting humans learn, I’m thinking about my kids, and I’m thinking about them in two dimensions.

One, my kids are very clever, and what they have learned is how to get around my rules and negotiate my rules and get around the boundaries, and they’re very good at it. Two, what kind of world will they enter into that isn’t purely nihilistic, where any activity they may set themselves upon will quickly be seen as just another domain for AI to conquer and then there’s not a point?

Those ideas seem to be running directly at each other. Kids are smart and clever and they’re coming up with new ideas, and then at the first sign of economic viability, the rapacious capitalism machine will come and take it from them.

I wouldn’t say rapacious. The ability to build houses with humanoid robots and make them cheap, the ability to do surgeries and cure diseases that wouldn’t be cured otherwise, I wouldn’t call that rapacious. Those are fulfilling goals.

The fact that there’ll be less in the way of shortages… In fact, if you say 20 years from now, it’s not clear what shortages there will be at all. Humanity in that era of true abundance will have to find a way to organize and have purpose, and hopefully they still have the control. The next 20 years-

Can we just go back to hopefully they still have control in that scenario?

That’s the alignment problem that we discussed.

Yeah.

But assuming you solve the alignment problem-

This feels like a big assumption.

It’s an assumption, yes, and not guaranteed. But then the other problem you have is a problem of abundance and purpose at that point. I’ll leave it to younger people to figure out at that point in time how they choose to deal with that.

You could literally say, “Let’s be like the Amish, and let’s only use AI for certain things.” I proposed in my memo the idea that some professions — childcare, food preparation, art, sports, a variety of things — might get chosen to be human-reserved. Even though the AI could do those things better, we would choose to do that.

But that’s going to be a policy question people will have. Their freedom of choice, once you have that abundance, is very different from the shortage we have today, where in countries in Africa, most people never meet a doctor or almost half the kids are malnourished and don’t develop their brain.

My big concern is this 20-year transition period, where they’ll have winners and losers and a lot of disruption, and we have to get through that in order to get to that period of abundance

You want to say, even though that has challenges, you’ve eliminated a lot of the things that are tough about life today. My big concern is this 20-year transition period, where they’ll have winners and losers and a lot of disruption, and we have to get through that in order to get to that period of abundance.

You think it’s 20 years from now?

I pick that as a reasonably safe number. There are a variety of milestones, for example, humanoid robots. Are those two or three years away, as some would say, or more like eight years away, as other people would say?

There are not that many people saying that given the amount of capital and number of companies, particularly in China, that are working on that, there’s no notion that it’s unsolvable to have a hand and fingers and be able to deliver physical labor at very low cost. I could be wrong about that number, it could be slightly less or slightly more.

But on that order of magnitude, yes, if we don’t choose to massively slow down or stop, then we will have robots that can build houses, grow food, do surgery, and none of the things that human labor provides to the economy will be necessary for most goods and services.

We’ve talked about the notion of scarcity a few times now, and broadly, that you will have abundance because there’ll be a lot of robot labor to build houses. This tracks broadly with the internet, which is something Microsoft helped bring into the mainstream in a big way. I read The Road Ahead when I was a kid.

Great.

The internet destroyed scarcity for culture products in a real way. You used to have to buy CDs, now all the songs are available. You used to have to buy VHS tapes, now all the videos are available. And then those economies had to change.

Mainstream artists are always on tour now, or they have to reissue 50 colors of vinyl to make the charts. There’s something about that that feels like we haven’t even grappled with the elimination of scarcity in the digital environment.

We’ve invented new business models, but we haven’t really come to grips with the idea that the song itself does not have economic value. It’s all the stuff around the song that has the economic value, because the song is infinitely abundant. You can copy it as many times as you want.

How would you propose to build an economic structure that contends with the loss of physical scarcity? Because I don’t think anyone is even remotely ready for a conversation like that.

But that’s a backwards question.

Sure.

We built price signals to deal with scarcity, to say, “Let’s encourage people to be brain surgeons because we have a shortage of brain surgeons,” and that’s very hard to do. As you move into abundance, you don’t need those price signals.

But again, my issue, my prescriptions thinking, is about how we get through this 20-year period. The questions that are deeply religious, philosophical, social behavior-related — do humans feel a strong sense of purpose and get along in that period of abundance? — that’s not the thing I’m going to solve.

You’re worried about the disruption now.

The Gates Foundation lives in a world where when we started, we had 10 million children dying every year. Now we have five million. That’s a good thing.

All of my resources will be spent over the next 19 years to eradicate a number of diseases and cut those deaths in half again, from five million a year down below two and a half million per year. That’s all about shortages — “Okay, we need to invent a vaccine, we need to make drugs less expensive, we need to get great medical advice to pregnant women.”

The industry has largely stopped talking about how it’s going to kill everyone and take the jobs away. They’ve pivoted to “AI will cure all diseases.” I hear this from various AI CEOs all the time.

I actually asked Mustafa about that change in tone over the conversations we have had over the past year or so. The idea that there are huge positive benefits from AI at scale seems to have come back to the forefront, rather than some of the doomer impulses that maybe a year or two ago were there.

It strikes me that AI curing all diseases is right in your strike zone. It’s something the Gates Foundation has been working on in global health for years and years. It doesn’t seem as easy as just telling the model to cure cancer. You have to do trials, you have to manufacture the drugs, you have to distribute the drugs, you have to make sure they work.

How do you think that’s going to go? Is that in the same 20-year time period as the robots building our houses? Is it faster, or is it slower?

This is my full-time job as chairman of the Gates Foundation. In fact, this month we do two weeks of strategy reviews to decide how we’ll spend our money next year on tuberculosis, HIV, and malaria. It’s fantastic how we’re using AI, not only on the drug discovery side, but also as we get the African languages to be properly understood by these models, which is an initiative we announced with 60 partners last month.

Healthcare discovery and delivery will be incredibly accelerated by AI, and that’s very exciting — better seeds, better livestock genetics, weather forecast for farmers in Africa, who never had any of those things. So yes, that’s good stuff that AI enables during the remaining 19 years of the Gates Foundation.

The good stuff does take time. Some of the things, like cyberattacks and the job market thing, even in the next two to three years, you’ll see significant negative effects in those two areas

Do you think that that is enough to overcome people’s skepticism or fear of the AI models they encounter today? Because that is very much how the companies think about it.

No, come on. I think it’s unfair to say they were totally on a doomer message and now they’ve switched to some other message. These two things are deeply entangled.

AI will eventually be able to model human biology in such a way that you’ll understand the side effects of a drug without having to do human trials. We’re not there, but in the next five to 10 years, there’s a very good chance these in silico models will give us that capability. Biology is very complex, AI is extremely good given enough data, and there are new tools to gather and feed it more data. It’s very, very good at dealing with complex systems, so it’s almost perfect for biology.

But no, that doesn’t mean that people will feel good about the downsides. How quickly do the good things arrive? How quickly do you look at your medical bill and go, “Wow, that’s really low”? Or you say, “I want to buy a new house, wow, these houses are sure cheap”? The good stuff does take time. Some of the things, like cyberattacks and the job market thing, even in the next two to three years, you’ll see significant negative effects in those two areas.

You have a number of ideas for how you would stop those negative effects, or prevent or at least mitigate them, in your letter.

Moderate them, yes.

Ameliorate might be the right word.

Yes, exactly.

And they’re not small. You have a quote here that says, “We need a response far greater than the United States national security response in the wake of 9/11.” You want to set up an international body that somehow makes everyone do the right thing. These are challenging ideas.

Absolutely. When we blew off nuclear bombs in World War II, did we expect that we’d go 80 more years without that happening? I’d give us a good grade on that. Things like caring for poor countries and helping them out — although right now we’re not prioritizing that as much as I think we should or we did in the past, we’ve done a very good job on that. This will be a greater challenge than anything humanity’s ever achieved.

One of the things that strikes me about the comparison to nuclear, which has come up quite a bit on Decoder recently, is the government built the nuclear weapons. Sure, they had some contractors, but these were government projects and eventually the technology was in control of the government, and we never let regular people have it.

Think about Muse in the context of nuclear weapons. Do you think it’s a mistake to have consumer agentic AI products like Muse and Dots that might not have the controls?

Muse happens to be powered by Meta’s model, which is still a closed-source model. I do think allowing people through open weights to remove all safeguards is irresponsible in terms of the cyber and bio risk that comes from that.

For these agents, there’ll be some early problems in terms of how they’re set up, but I fundamentally think people will have personal agents. Muse is a very nice step forward. I talked to Alexandr Wang about it, congratulated him, and even though it’ll have challenges, personal agents will help people get things done.

Muse is the first truly great consumer AI product. One of the reasons people don’t like AI a lot in a diffuse way is they experience cheap free models and AI overviews or they use the free ChatGPT and it hallucinates and it lies to them, but Muse actually does things and it’s a good consumer product.

But I wonder — in the nuclear age, we were not saying, “Everyone is going to have a nuclear reactor at home that we haven’t built the safety guards for.” There’s something here.

The notion of letting everybody make smallpox at home or make nuclear weapons at home, of course, and you can parody some of these people saying, “Don’t worry about safeguards.” It’s taking that position. “We are not serious about the safety things.”

But the personal agent thing is an expected development. AIs are really cool just as I intellectually explore things, even the work of the Gates Foundation. I’m far more empowered. But I agree with you, it’ll get out to more people in this personal agent form.

The notion that liability laws are how we’re going to manage AI safety will be looked back on as absurd

All the models we’ve been talking about right now effectively run on data centers owned by big companies. One of the arguments here is, “If they do something really wrong, you can just sue them and that will provide a deterrent or at least an incentive to create safety systems.”

I’m not sure product liability is the way to go, but it has come up a lot that product liability itself will keep the industry in line. Then there’s the flip side, which is that you can just go buy a Mac Studio and run an open source and open weight model on it and it can do whatever you want.

I’m not sure where any of that liability would lie or what would control or align the behaviors of those open source models. Do you think that that is an ever-growing risk? Do you think that that can be controlled?

The notion that liability laws are how we’re going to manage AI safety will be looked back on as absurd. When bad people do bioattacks, you don’t go to the court and say, “Oh, okay.” Even for finding who is doing these attacks, the liability model fails in every respect because it’s not the AI companies themselves. It’s the people who take particularly the models without safeguards and do these things.

We will take AI safety more seriously than we take airline safety, drug safety, and car safety. That is guaranteed. Whether it’s going to be enough… This is harder, harder than nuclear weapons, harder than any of those other domains.

But what are you going to do about an open source model running on a PC that somebody built with just a random Nvidia graphics card in it?

I would hope that with models above a certain capability, we find a way to require the safeguards and monitoring to be maintained in those models. I admit as time goes on that, if we don’t fairly soon decide to do that, you’re going to have a level of capability that’s out in dark corners that you won’t be able to see.

But where do you impose the limit?

A sovereign country says that models that are capable of sophisticated cyberattacks have to have safeguards kept in them.

Sure.

You can be open in the sense that you’re free, you can be open in the sense that you’re totally customizable, but you have to stay on platforms where, as you customize it, it’s checking to see if you’re customizing out the safeguards and monitoring and refusing to let you do that. So it means sovereigns go and say, “Are these trusted platforms able to perform this function or not?”

I’m asking very nuts and bolts. Where would you technically implement that regulation?

Through the laws of the United States.

Sure, but you have to put them somewhere. Is it at the Hugging Face, which distributes some of these models? Is it at the chip level?

No, it’s exactly what I said: Models above a certain capacity can only be run on platforms that certify that, as they’re customized, it’s not taking out the safeguards.

I admit as time goes on that, if we don’t fairly soon decide to do that, you’re going to have a level of capability that’s out in dark corners that you won’t be able to see

Just to pull this apart, maybe I’m not quite getting it — is the Mac Studio a platform in that case that would have to pay attention to what code it’s running?

You would not let a model past a certain capability be copied down to a client machine unless you’d somehow figured out how to monitor down to that client machine, which is very doable.

But in the near term, most of these really frontier models are going to run more on Hugging Face or you could have them on GitHub. You can have all sorts of people be in the business of providing the platforms that maintain safeguards.

Just to get this right, it seems like you would enforce the regulation at the platform and distribution level and not so much at the chip level.

Not at the chip level, no.

Because it feels to me at some point even the cheap, free, open source models will be capable enough as the models we have today.

That’s right.

And then you will have a big problem.

If those are open weights in such a way that all safeguards can be removed, then you’re going to have a very high level of cyberattacks and bioattacks. You can then say, “Okay, let’s rewrite all the code that we have today to be less subject to attack or let’s do biosurveillance in a very deep way,” which are things I believe we need to do in addition to these other restrictions.

We’re proposing again a lot of new capabilities, right?

Yeah.

We’re going to impose some restrictions on GitHub. GitHub does not have a lot of restrictions on what code it can distribute today. It has some, but it doesn’t have this kind of set of restrictions.

When you put a state-of-the-art model that’s capable of profound cyberattacks or bioattacks on GitHub, it would say, “I’ve gone to the U.S. government and certified that I don’t let people customize out the safeguards.”

I do not think that we currently live in a time of high trust in institutions. It just doesn’t feel that way to me. In fact, mostly we’ve torn them down. Elon Musk showed up and he tore down USAID. I know you have strong feelings about that.

That was a mistake.

We have mostly torn down our institutions, for good and bad.

No, that’s a little too strong. Our institutions-

They’re weakened.

They’re somewhat weakened, yeah.

Somewhat weakened. It’s a very nice way of putting it. Trust in them is very low. We could probably do another full hour on AI drug discovery and whether a significant part of the population will trust the products of that work because they don’t trust pharma companies today.

They don’t have to trust pharma companies today. They have to trust the FDA review process.

I’m not sure they trust that either. Across the board, trust is low.

Then they can walk away from taking them. When they get cancer, they can say, “No, I don’t want to take that cancer drug.” As far as I know, people do take drugs. It’s a thriving business and people take them because they have proven benefits.

All I’m saying is, right now it feels like trust in institutions, particularly in America but around the world, is in decline. You are proposing a new class of institutions, potentially a new class of global institutions that might impose restrictions that are novel.

At some point we need to say open source models, open weight models cannot do things and the government is going to reach into them and say whether or not they can do the things.

No, they’ll make sure that the platforms don’t allow the safeguards to be taken away.

How do you regain the institutional trust to impose these controls?

Let’s say we don’t do this and we let models go off and do cyberattacks and bioattacks. Do you think that’s going to increase trust or human wellbeing? That’s the alternative.

This is why I’m asking about it. This is why I asked about my kids and nihilism. I truly wonder about this.

I’m not sure we’ll succeed at this, but I guarantee you this is doable. The FDA is very complex. The airline safety regulations are very complex. Now with AI, you can do an even better job with the same number of people in those organizations.

It’s this weirdly recursive thing where AI will be involved in AI safety and auditing and a variety of things like that. Yes, this requires taking action, and I’m suggesting it’s only a matter of how bad the incidents are before we take action.

People shouldn’t take everything I do at face value. I have all sorts of mistakes that I’ve made, weaknesses that I have, biases I bring to these questions. They ought to just take what I’m saying and add it to the voices

I can sense your urgency about the harms. I can also sense your enthusiasm about the benefits over the long term, but we’re sitting here talking about trust. We’re going to put this on YouTube. I know you know what some of the YouTube commenters are going to say.

They’re going to say, “Why should we trust Bill Gates? He had a relationship with Jeffrey Epstein.” How do you respond to that? Is it that the urgency is over that, or do you have a more specific response?

People shouldn’t take everything I do at face value. I have all sorts of mistakes that I’ve made, weaknesses that I have, biases I bring to these questions. They ought to just take what I’m saying and add it to the voices.

I’ve been in the technology industry thinking about AI my whole life, writing software, thinking about the power of software. I admit I was very fascinated as AI started to finally make progress. It was actually pretty slow until recently.

I’m amazed and it’s actually helping me do my job in some incredible ways. But yes, I’m just one voice, an imperfect voice. I doubt you’ll find a perfect voice, but people can judge it however they like.

I would say voices people trust are in short supply.

I agree with that.

When you go and talk to the people in this industry, it’s a bunch of young CEOs building huge companies. That is something you have some experience with. Do you think they’re going about this the right way? Do you think that they have the right intentions?

Our problem today is not in the industry. Our problem is not that Sam Altman, Dario Amodei, Satya Nadella, or Sundar Pichai don’t understand that there are some grave challenges here. I talk less to Elon than other people, but even his public statements about summoning the demon are exactly what we’re discussing here.

Why is there not the political energy to do the things you’re suggesting?

As you said, the government didn’t fund this work. This is private sector company work. The government is not the key customer for this work, not like rockets and weapons and things like that. When somebody comes along and says all other previous technology advances are trivial compared to this one, people should have a high degree of skepticism about that.

Is life really going to be significantly different 10 years from now because of AI? People should say, “Those guys just got overexcited about this one thing.” But I’m here saying, with whatever credibility I have, that absolutely this is the most profound — both in terms of good and in terms of bad — technology ever invented. I’m not financially motivated on this. I’m suggesting some precautions and safeguards are absolutely needed.

What do you make of the difference in the tenor of conversation in the United States versus in China, where it’s often reported that optimism around AI is much higher? Why do you think there’s a difference there?

Most of those people don’t spend that much time in China. The concern about job markets in China is very, very high and you can’t characterize China as one monolith. There are the private companies doing the AI work like we have in the United States and then there’s the Chinese government.

For example, when it came to whether crypto should be allowed, they said no. Should young people be gambling all the time? They said no. When it came to whether kids should have relationships with AIs, they said no. On a lot of these things, including usage of AI, they’re showing a willingness to do things on behalf of society.

I’m here saying, with whatever credibility I have, that absolutely this is the most profound — both in terms of good and in terms of bad — technology ever invented. I’m not financially motivated on this

The fervor is a tiny bit less there, because their economy isn’t as AI-centric as ours is right at the moment. In the end, [when it comes to] the human value of not wanting cyberattacks or bioterrorism or trying to figure out what do we do when jobs go away, I don’t think there’s some difference between Chinese people and Americans and all the rest of the humans in terms of how they’re going to view this.

Do you think it’s going to take something actually bad happening to get the political capital of the United States to make these changes?

Probably yes. We get ready for earthquakes because there are small earthquakes. I thought after we had the COVID pandemic, that would cause us to be more ready for future pandemics. That one didn’t work the way I expected.

But usually that galvanizes our attention. Over the next several years, certainly in the cyber domain, because there’s a business model there, you will see a lot of attacks different in terms of scale than anything we’ve seen in the past.

There is one thing that, again, I’ll come back to and I just want to end here. I am worried about young people and nihilism. I sense it in our audience all the time. We have a young audience.

There are some things about AI that are just legitimately the coolest things I’ve ever seen a computer do. There’s something there that can be fun and interesting and fascinating and change your entire relationship with the very notion of living in a digital world.

Then there are obviously horrible things. What I see more often than not is a sense of distrust, not just in institutions, but also in the companies, in capitalism itself, in the notion that we should change how we tax labor and capital, which I know is another one of your ideas. The idea that, I don’t know, we should even have more kids. It’s all done. They’re going to kill us all and we should just take a beat.

There is a lot of nihilism out there. I feel it very keenly. If you were a young person today and you were listening to Bill Gates say it’s about 20 years of disruption and at the end of it, robots might be building houses, what would you hold onto as a source of hope?

Throughout human history, we’ve been dealing with the shortage of food and disease and war. [Historian] Yuval Noah Harari writes eloquently about the past. And it is ironic that now that we have this sort of Pandora’s box that will take food shortage — which is still a real thing, not in the U.S., but in Africa — will take diseases, where human suffering is unbelievable, and solve all these things, it comes with it such an effect on jobs and our sense of unique contribution.

I think, “The way I orchestrate resources to eradicate malaria, I’m pretty unique in my life experience that lets me do that.” But when the AI says to me, “No, I’m better than you. You go play pickleball and I’ll get back to you. I’m going to take care of this,” it’s humorous, but it’s not humorous. For somebody who is young today and wants to make a unique contribution, it is very intimidating that the AI is so powerful.

That’s why the crisis in the math community is going to be mirrored everywhere. If you’re in your twenties today, during this 20-year period, you can take the things AI still can’t do, and you can use AI and you can have a lot of good impact, and you can suggest policies. We may need to develop the taste to actually not use technology to its maximum.

Even in the very best case of how we manage AI, this is going to be as tumultuous a period as there’s been in human history

When I was talking with Claude about human-reserved job categories and trying to get that up to, say, 40 percent of the labor market — so you could use early retirement, restricted work weeks, and things like that to still get something like we have today — its response was always, “You’re artificially restricting the AI from doing these things.” I couldn’t get to a very high percentage without doing that.

We’re going to have real choices. We have had groups — not large groups, but like the Amish — who don’t live at the technology frontier. A lot of humanity may choose not to live at the technological frontier because of things we get from helping each other or coming up with unique ideas.

On the idea that young people are concerned because of the disruption that’s coming — that even in the very best case of how we manage AI, this is going to be as tumultuous a period as there’s been in human history — I hate being the bearer of concerning news on this, but it’s even worse not to tell people that this is coming. We have choices as humans to make about how we shape it.

Bill, I appreciate you sounding the alarm and I appreciate you being on Decoder. Thank you so much.

Thank you.

_{Questions or comments? Hit us up at decoder@theverge.com. We really do read every email!}

Today, I’m talking with Illinois Gov. JB Pritzker, who has a lot of thoughts about AI, tech, and privacy.

If you’ve been listening to the show, you know that one of my running theories is that those issues are driving a big and maybe kind of unexpected political realignment — and with the midterms coming up next month, and early voting already underway in a lot of places, the stakes are pretty high right now.

So I asked Gov. Pritzker about all that, and he was surprisingly willing to dive right into the absolute existential weeds of what government is even for. You’ll hear him say — and it’s hard to disagree — that some problems are just collective action problems that require the government to do a lot of work. We can’t solve all these problems one at a time, or even one state at a time. It’s a pretty deep conversation, and we really got into it on a lot of issues.

And of course, I had to ask him: Are the Bears gonna stay in Illinois?

Before we get going, do me a favor and subscribe to Decoder on YouTube, where we put out new episodes every Monday and Thursday.

Okay: Illinois Gov. JB Pritzker. Here we go.

Gov. JB Pritzker, you’re the governor of Illinois. Welcome to Decoder.

Thanks, Nilay. Great to be with you.

I am very excited to talk to you. We’re in the heart of midterm season. You are running for reelection. I have to tell you. I have to be very honest with you. I personally feel a lot of pressure in this interview, not only because I’m speaking to a governor, but because I went to school in Chicago. My sister still lives in Chicago. My wife grew up in Illinois. Her entire family is farmers in North Central Illinois. Boy, do I have a list of questions for you. I have to do a good job here.

Well, we’re claiming you. Now that I know all that, we’re claiming you. You’re an Illinoisan.

I don’t know about that. I grew up in Wisconsin. Here’s my first question for you. I’m a die-hard Packers fan. Are you going to let the Bears move to Indiana?

That is not our intention. We are, in fact, in discussions with the Bears and the NFL about keeping the Bears either in Chicago or in Arlington Heights, but in Illinois.

I’m saying, as a Packers fan, nothing is funnier than the outcome of the Bears moving to Indiana. I just want to put that out there. Openly biased in this case — I own two shares of that stock — but I’m going to make the comparison here. And the reason I started there is not only because I think that’s a funny outcome, although I do, but it feels like we are in the middle of a generational political realignment.

I’m sure you feel that, in this election campaign, the idea of big business and how that should interact with the government, and how the government should be able to push back on big business and not give in to big business. All of that feels up for grabs.

And the comparison I will make in this specific case is your fellow governor, Gavin Newsom, in California. They sued the Ellison family, Paramount, over the Warner Brothers merger. Paramount threatened to leave. They made a lot of noise about Nashville, Texas, Miami, or wherever you make noise about these days, and it feels like Newsom caved. It feels like he pressured his Attorney General, Rob Bonta, to settle that lawsuit and keep them there.

They settled the lawsuit. The next day, the Ellison family is like, “We never… We’re from California. We would never leave.” I see a parallel here with the Bears that is connected to that larger realignment, how government and business should interact. Do you see that parallel? Do you feel that realignment?

Well, what I can tell you is we’re pretty tough negotiators in Chicago and Illinois, and that’s really what we’re in the midst of now with the Bears. But I understand your point about realignment. I mean, there is a generational change, and I think it’s also an attitudinal change about protecting taxpayers, protecting people who frankly are among the most vulnerable to all the technology that’s overtaking people’s lives and invading people’s homes.

And so I do believe that the government has to be more active now and become a fighter for our people and not just a collaborator with business on everything. I’m a businessman, as you know, before I became governor. But I also know that, for the people of Illinois anyway, my job is to protect the working people of this state who often don’t have anybody protecting them except a government that will stand up for them. So that’s kind of the realignment that I see.

And that generational shift, I agree with you. It’s partly a Democratic Party generational shift. Generationally, we’re a little more aggressive. And I’m probably older than the next generation that’s already possibly taking office this November. I’m 61 years old, but I think of myself as having come out of the tech world and as somebody who has been a fighter for progressive values that, yeah, we’ve got to become more aggressive and make sure we’re standing up for our people.

There are two places where I see the realignment in particular. One is data centers, one is privacy, and you just see that as a bipartisan backlash to those things. I would actually add a third, which is antitrust broadly. It’s weird if you go into Silicon Valley. David Sacks is retweeting Lina Khan from the Biden administration talking about whether the AI industry needs an antitrust exemption to manage safety.

They both agree that these companies don’t need antitrust exemptions. They actually should be more competitive. Again, putting that in the context of regulating these companies, thinking about the dynamic between the government and the biggest companies in the world. I’ll just ask the question, I guess, more directly. Do you think Newsom was right to give in to Paramount, or do you think he should have forced them to make good on that threat to leave?

I can’t speak to the Paramount situation well enough to give you an answer, so it would be unfair for me to do so. I can say once again that our orientation today — and I think about the big AI companies and the big social media companies as well — has to be like, wait a minute, too much power in too few hands.

Particularly when we talk about AI, where it’s potentially existential, but certainly transformative, which is probably a kind way to say it about the economy, that we’re going to have to get very engaged. Guardrails, of course, on both parts, but also addressing what I think on the AI front is potentially a significant change in employment in the United States. I’m not somebody who is necessarily convinced that we have to see a whole bunch of job loss, but that does feel like that’s the direction this is going.

What I’m suggesting is we better be prepared, and we better be protecting people who are going to lose their jobs, or at least it appears they’re going to lose their jobs. And I’ll just give you this thought. If these days 4 percent unemployment is kind of the acceptable near full employment number, I think the problem we’re going to see is — if that’s sort of the level that we’re going to hopefully aim for and stay at — that in very short order, we could end up at 7 percent and have that be the baseline, or maybe 10 percent.

And if you think about what’s happened, the upheavals of economies and of governments when you get to 10 percent unemployment in any country. We better be focused on how we’re going to give people the dignity of work and enough income so that they can make a life for themselves when you’re going to put people out of work by virtue of this technology. By the way, much of the benefit of that is going to go to a very, very few people. So we’ve got to wrestle with that and come to a conclusion.

I wanted to start with some of the brinksmanship we have seen in the negotiations between, particularly, states and the big companies, because that brinksmanship is real. The threat is we will leave. We just covered, I don’t know, Kevin O’Leary in Utah talking about data centers, and the people of Utah really pushed back against Kevin O’Leary building that data center. But his argument was, “Well, I’m just going to shop around.”

This is what states do. They compete with tax incentives and benefits, maybe for data centers, which will put everyone out of a job. They compete for land use rights. You’ve got a rural state with a lot of farms in it. How are you thinking about that dynamic? Do you feel like you’re in competition with the other states, or is this bipartisan realignment creating more of a level playing field where these companies are going to have to actually give something?

We are in competition. We just are because it isn’t bipartisan, at least if you ask me. Unless there is a change in the government. I’ll pick on Texas for a second, and there is a chance that you’ll see a new governor in Texas as of November 3rd. In fact, a good chance. But if you look at Texas as it’s run today by a three-term, hoping to be a four-term, Republican governor and a Republican legislature, they have no intention of changing their alignment about incentives.

In the state of Illinois, we don’t want to have to do that. I mean, we obviously want to protect the revenue that we’ve got for the state to pay for the things we think are valuable to our people, but we also want to make sure that we’re attracting jobs and not losing jobs. And in a world where South Carolina, Michigan, Texas, Florida — pick your poison. Michigan may be slightly different just because it’s got democratic control, but these are our competitors. When I’m competing to have a company move to Illinois, I’ve got to make sure, first of all, that I’m somewhere in the ballpark when it comes to the incentives, because otherwise we don’t even get considered.

And then when I say somewhere in the ballpark, I mean, I want to give away less than more, and then I want to provide whatever other advantages I can that aren’t financial so that I can protect the resources that we have. An example of that is, we like to talk about a kind of white-glove service that we offer to companies. If you’re going to bring a factory here, let’s say, just to give an example, we want to make sure that we’ve got somebody who’s kind of a concierge for your company that’s walking you through each of our departments where you need a permit. It doesn’t mean we’re lowering the standards. It just means, a lot of times, the bureaucracy eats up so much time that it makes it impossible for a company to actually do what they want to do in your state.

We try to make sure that if we’re going to attract a large company, with 1,000, 2,000, 3,000 jobs, that we’re at least making it a little easier for them to go through without having to give them massive tax incentives. So that’s the way I think about it. We are in competition. There’s just no doubt about it. Should we be? There’s a lot of discussion about whether we shouldn’t, and maybe at the federal level we should do something about leveling the playing field, but this is the world we’re living in right now.

I wanted to ask those questions just to set the baseline. I really do think something is happening. A lot of young people are dissatisfied with the status quo. A lot of people in general are dissatisfied with what big tech companies are trying to do with AI, with the potential for job loss.

And the relationship between the people, the government, and those companies seems more fraught than ever, especially as they’re trying to expand their physical infrastructure with data centers, as they all become defense contractors, literally taking our tax dollars to sell weapon systems and collect data for the government. That’s a big swirl.

I wanted to start there, but I just want to take one second here and ask you the Decoder questions because I personally think the operation of government is so opaque. It’s very easy to figure out how big companies are run. The CEOs won’t shut up. They’re on podcasts all day long. I think most people have no idea how your job works.

So you were elected governor. How is your office set up, and how have you structured the state government of Illinois?

Just starting from where I sit, and then, of course, we look at it from a customer service perspective. But starting just at the top, I actually did something that no governor of Illinois has ever done — which is that I created not just one deputy governor. We obviously have a lieutenant governor who’s elected also, but a deputy governor is somebody getting appointed by me to serve under me, to help manage the government with me. What I did was put four deputy governors in place, a general counsel, and my chief of staff.

Why is that important? Because what I’ve tried to do is to break down the silos of government. I took all of the health and human services-related departments — that’s the Department of Public Health, the Department of Human Services, the Department of Healthcare and Family Services, everything from health insurance, Medicaid, and public health during the pandemic — and put it all under one deputy governor working directly for me. The idea is that instead of my having, let’s say, 26 direct reports, I’ve got four or five direct reports plus my chief of staff, who each have, let’s say, six or seven departments underneath them.

From my perspective, what I wanted to do was make sure that I’m breaking down the silos of government, making these departments that are often building walls, and they don’t want to talk to one another because they’re afraid they might lose jobs in one department to another department, or lose control of a program if they’re talking to one another. That’s the way it used to be. Now we’re like the deputy governor is there to either beat the heads together or at least bring them together so that they will be operating the government more efficiently. Okay, so that’s from the top.

From the bottom, which is: how do people who live in Illinois interact with the state government? And obviously, technology is one of the upgrades that’s occurred and made it easier. Illinois, frankly, had not significantly invested in those processes before I became governor, or in the technology that was necessary. And I’ll just give you one example of this: We created something called BEACON, which is designed to address the problem that parents and families have with mental health for children. It turns out that there were seven different ways in which people approached the government to get help, and we weren’t coordinating those, and we weren’t helping to provide all of the resources.

I’m talking about outside resources. How do you find a therapist? How do you find a psychiatrist? And how do you pay for those things? Medicaid, if you can’t afford it on your own. But the point is, there’s one door to enter through BEACON that allows you to get access to all of those resources, even if they’re in multiple departments. So that’s just one example. We’re trying to think of this as a customer service operation. It’s one thing to say this is how the org chart looks and another thing to say, this is how you access all the resources of the government that you need.

We provide programs that really matter to people. We have a birth equity initiative to reduce maternal mortality, particularly in Black and Brown communities. And free diapers for some people. The problem is, people don’t even know that the programs exist, and how would you ever figure out that the programs exist, especially if you’re a working person who’s working two minimum-wage jobs? You don’t have any time, and you don’t have any money, and you don’t even know how to talk to the government. And so we’re trying to fix all of those problems of the government with the way that we interact with people.

It’s funny. It feels like that is one of the bigger opportunities when it comes to AI, just letting the AI navigate a bureaucracy for you and communicate what resources are available. The flip side of that is that people hate AI. They truly dislike it, and it doesn’t feel like that connection has been made — that a lot of these tools can actually just navigate a bureaucracy for you. Are you thinking that should be an investment that you make, that it might be what turns the tide in terms of how people feel about these tools?

Yes, but I’m not plunging headlong into it. And I realize that there are probably states that are plunging headlong into it.

I mean, the United States government rolled out its AI chatbot to look at webpages across the government.

Well, there you go.

I guess what I’m trying to do is make sure that… I created something called the AI Cabinet in my government, and that is to essentially bring the experts on AI together with the leaders of my mainstay agencies of state government, so that we’re thinking about privacy, safety, and efficiency. And those things have to be talked about together. You can’t just say we’re going after efficiency and we don’t really care about the other two.

So that’s the idea, the AI cabinet. It’s also that, honestly, there are things, as you know, about AI that are dangerous. And so we’ve got our emergency management agency on that AI cabinet. We’ve got our state police on that AI cabinet. And remember, a lot of the people that work in those agencies aren’t particularly proficient at AI or really understand the potential and the potential dangers.

That’s why we brought in experts, for example, from the University of Chicago, the University of Illinois, just as two examples of places where we’re drawing expertise. So yeah, there’s a lot to be done. I would say we’re trying to approach it carefully before it gets out of control to a point where we have no way to pull it back in.

The other Decoder question I ask everybody is about decisions. You have a big job. You have some constraints in your decision-making process, right? There’s a state legislature, there’s a federal government, you have other agencies in your state. How do you make decisions? What’s your framework?

Well, I don’t do it the way Donald Trump does.

It’s funny you say it that way. I guess I start with the idea that we have a problem to solve and that decisions have to get made. Are those decisions ones that need to come to the governor? Because you’re right, I only have so much bandwidth. So the question is: which are the most serious ones that can’t be solved by other people, or are unlikely to get the outcomes that I would want by handing them over to other people? And then those automatically come to me.

So what I’m making decisions about is kind of the first answer to your question, and then it’s how do I actually make the decisions? For me, I am not one of those people who thinks that I’m right 100 percent of the time. Maybe a good way to describe it, and I’m joking a little bit when I say it, is that I’m 90 percent sure I’m right, but there’s also a 10 percent chance that I’m dead wrong. I want to make sure that I’m getting input and a debate before I actually make the final decision.

Someone once told me that the best CEOs are ones that, in their organization, are a little bit below average in terms of their capability and intellect. I’m not saying we want below-average leaders. I’m just saying you’re so good at hiring that you’ve got people in your organization who are really far better than you are at various things that you’re not particularly good at. Maybe knowing what you don’t know and being willing to ask for help is a philosophy that I have. Be willing to ask for help if it’s something you really don’t know.

And I’ll be honest, when you become governor of a state, there are a whole lot of topics within the purview of a governor. Making decisions about all those topics, maybe a human being who has super intelligence might be able to do it, but most people don’t start out knowing everything there is to know about public health, public safety, and education. And so you start out with what you know and then try to add expertise to it and then make decisions based upon the best experts debating one another in front of you. At least that’s how I like to do it.

Give me an example. Governor Kathy Hochul from New York was on the show. She said in her first week she needed to declare a state of emergency because of a hurricane, and she just didn’t know how, which was very humanizing in its way. Give me an example of when you became governor, and there was something where you just didn’t know.

COVID.

Sure.

I mean, honestly, no one runs for governor thinking there’s going to be a global pandemic. You think you’re going to solve education problems for people or put more money in people’s pockets by raising the minimum wage or whatever, but COVID comes along. And I have to admit, the level of expertise, I don’t think any governor… Well, maybe Josh Green, the doctor who’s the governor of Hawaii, maybe he had a lot to [of expertise] start with — but for the rest of us humans, that was one where we were learning on the job.

We were working 18 hours per day. My entire team was all in, and we had to do things like emergency procurement of ventilators and masks, and we had to go outside the box. It’s not like we could just put it through our central management services, look for a contract, or whatever. This was like, I need masks in three days.

I’ll tell you a quick story, if you’re interested, about my interaction with Donald Trump at the time because I think it’s interesting, anyway. But I’m not a big fan of Donald Trump, in case you didn’t know. I was one year into office when the COVID pandemic hit, and I had not… I mean, I talked to his administration, but I didn’t talk to him directly. So I picked up the phone and called him, and I said, “Mr. President.” By the way, I wrote a script for myself because I know he likes to be flattered, and I’m not somebody who normally likes to flatter him, but I wrote a script for myself. I saved it; I even have it today.

And I said, “Mr. President, you’re a great businessman, but you can understand that paying $8 for an N95 mask that should cost us 75 cents means we’re in a national emergency. We need to be able to get these things and afford them, and I’m competing against all the other states. We need to invoke the Defense Production Act in order to make sure that we’re making enough masks in the United States.” That’s what I told him. And then I said, “But I need masks right now. What can you do for me?” I said, “I need 2 million N95 masks, and I need 4,000 ventilators.” And he never delivered, just so you know, even though he promised that he would deliver.

The challenges in COVID were mighty, and the organization that we had to create around it… I had meetings every morning just on this topic, figuring out, okay, how many hospital beds [are available]? We didn’t have a system that would tell us statewide how many hospital beds are available in each region. What happens if you have an outbreak and it really is overtaking some region? What do we do?

And so these were all the things we had to learn on the fly. And all I can tell you is, once again, back to hiring great people to have around you, I really felt like I proved that I had done a good job of hiring because the people around me were tremendous. One of whom, by the way, is now running as my lieutenant governor partner in this election.

It’s interesting you brought up COVID in the context of our conversation about generational political realignment. I would actually point to COVID as the beginning of a particular realignment around what the government should measure, how much control the government should have over people, and all of that has led, I think, directly into the bipartisan pushback against Flock cameras.

The very notion of privacy is not, in my mind, left or right anymore. The CEO of Flock got himself in all kinds of trouble because he kept saying all the people who wanted to ban Flock cameras are criminals, and he would go on MAGA media and say this. I think that position was just rejected. We can see in states around the country that there’s pushback against Flock cameras. I would point to COVID as the beginning of that.

The idea that the government could be too intrusive, and in particular, the government should not be able to measure things. “If you don’t test, there won’t be COVID” just became an idea. And the idea that we shouldn’t measure things, or we should tear down our systems of measurement, is a big part of the second Trump administration. But I see that privacy connection very clearly to COVID. In one world, the government coming together to protect its citizens and build a bunch of systems could have gone a very different way. In the one we live in, there’s ferocious pushback to that, on the left and the right in some ways. How do you feel about privacy right now?

I know Illinois leads the nation. You’ve got the Biometric Identification Protection Act. Every time I fly to Chicago, I’ve got to push the button at the airport to say that it’s okay to look at my face. That’s one way of going about it. But then you do have, I think, hundreds of Flock cameras in Cook County alone. People have Meta glasses with cameras in them. There’s something happening with privacy that is running right into the aftershocks of COVID and how people feel about government intrusion. How are you finding a way through that balance?

Well, and don’t forget AI.

Yep.

As you’re suggesting. I mean, talk about a collision. This focus on privacy is warranted and long overdue, to be honest with you. I understand what you’re describing about COVID, but I think something that came out of COVID got accelerated, and that was conspiracy theories.

Yes.

And I’m not suggesting that everything you hear now about the pushback around privacy is a conspiracy theory, but it is easy for these things to spread, and people have misinformation that’s informing them about how these things are used. Having said that, I guess what I think is that we are having to solve multiple problems at the same time, and that AI is coming.

Let’s just go to AI for a second. It’s here. I mean, I say it’s coming, but it’s here. It’s not going to stop. We’re not going to become Luddites without any AI. So the question is, in the context of privacy, what guardrails are we putting on AI, and how are we managing it? This idea that the president and David Sacks had, where they got all the companies together and said, “Hey, how about you guys self-police?” That’s not going to work, at least not for protecting people’s privacy. And frankly, it’s not going to provide any safety either because everybody’s going to operate in their own self-interest. It’s one of the reasons why you need a government, in my view.

I’m not suggesting the government is any smarter than these companies. But one of the reasons you have any kind of collective action of the government is because, separately, as you know, people operate in their own self-interest. I mean, you could have a Hobbesian world where people are killing each other, and there are no rules about it. So I think we’ve got to use the government as a tool and also be smart within the government. And that’s where the generational change, I think, is hugely important. Use the government as a smarter, less bureaucratic collection of people devoted to protecting the privacy of everyone and making sure that we’re addressing all the other challenges that come from AI.

So I guess I’ll just say, I don’t think we’re anywhere near where we need to be, but I will say, if we don’t have a federal government, now I’ve got a lot of… I’m very proud of the things that we’ve done here in Illinois around the AI Safety Measures Act, which is the toughest in the country, the Children’s Social Media Safety Act, and so on. I’m proud of the work we’ve done, but state by state, this is not the way to do this. We’re doing the best we can in the absence of a federal government that is addressing these issues.

And when I say federal government, I’m not just pointing at Trump. I’m pointing at Congress. No action on their part means that we’re going at it alone. And right now, I don’t know how many AI safety measure acts have been passed, but it looks like three to me. I mean, it’s New York, California, and Illinois. Maybe you could name a couple of others, but we three were the first. And yet, we’ve got 47 other states.

This worries me a great deal. You’re raising issues, and I’d love to tell you I have all the answers. I can tell you what we’re trying to think about is that we are the… People sometimes say that the states are laboratories of democracy. They’re actually laboratories of policy, and we are trying to, at least in Illinois, use ourselves as a laboratory for policy while not creating disadvantage for ourselves. And so that’s a very challenging thing to do, and why we need to change what’s happening at the federal government.

Focus on privacy for one second. I understand what you’re saying about AI. I think part of the privacy debate around Flock cameras, for example, is, well, sure, you can have one license plate reader in one intersection. And if the cops had to go there and pull the SD card out of it, drive it back to headquarters, upload it to their Apple IIe, and look at it manually, maybe people would feel one way about it.

But those cameras are all networked. They don’t have any access controls really. There are infinite reports of local police chiefs tracking their girlfriends across state lines with these cameras. You add in a system like Palantir, which can synthesize multiple databases and do all kinds of tracking across all kinds of systems. People see that.

The turn that is being made is that you can connect a lot of databases of information together, search them without a warrant, and track people across the entire country. You could ban that state by state. You could regulate it city by city, which we’re seeing happen with Flock, and you could maybe have some federal controls around privacy there. None of it’s really happening, but on the ground, people are ferociously pushing back. And that’s the connection I’m making to COVID, conspiracy theories, and how much power the government should have to surveil you and look at you.

Something happened in there where people’s attitudes about that really shifted. And I would say one of my core beliefs is that Americans do not like being told what to do. Party politics aside, Americans don’t like being told what to do. Something about that flipped and connected to: we have a network of license plate-reading cameras, and we’re going to tear them down when we see them because there’s something about that that offends us as Americans.

Illinois does have privacy laws. I think the last update to the biometric law you did was in 2024, and it has changed again. It’s gotten more vociferously opposed to tracking and surveillance in this country. Do you think you need another update to that privacy law?

I think we should be looking at that question every year. I’ll give you an example of it. We passed it, and again, I’m back to AI because I think how you’re describing it was a perfect way to say it. If it was an SD card that they had to go grab and then analyze back at the station, it’d be a different thing. But it’s AI that’s operating these things, and that’s allowing this stuff to move instantaneously and track people.

Look, should we be addressing it? Yeah, every year. It’s like the issue of ethics in government. What I mean is, the minute you put an ethics law in place, there’s somebody who’s trying to get around it. I mean, every year, it’s like every law… this is probably true across all of capitalism, maybe. There are always people trying to find a way around the law. Put a tax law in place, and someone’s trying to figure out how to get around it. And I think the point you’re making is that that’s why you need to have a proactive government, less bureaucratically and more aggressively trying to address these things. Are we going to be able to keep up with it? I’ll be honest, I don’t think so. And I also don’t think you can say, “Well, we’re just going to shut it all down” because there are things you’re missing out on.

It’s sort of like, and again, I keep going back to AI, but I think a lot about it. My children are 21 and 24. They’re going to live to 100 or 110 years old because AI is going to solve a whole bunch of medical challenges, and already is. There’s a cure now for sickle cell anemia, and people who would otherwise die at 25 or 30 years old are going to live full lives. This is going to happen across the board in cancer and everything else. And so there’s all good in there, and then there’s the bad. So I know what you’re saying. I guess all I can tell you is I’m a believer that we can progressively — I don’t mean that in a political fashion — address these challenges.

In Illinois, we passed a law that disallows the use of AI in therapy for people because we think too much information gets collected, not enough humanity in the process, and we think that it should have humanity in it. Again, we’re not trying to shut it down across the board, but we’re going to have to see how it gets used and where it’s improper.

And I know that sounds imperfect because the technology is moving so fast that the idea that we’re going to be able to keep up with all the ways in which someone’s privacy could be breached seems very difficult, but I don’t know any other way to do it. That’s why you have a government, and maybe in the end we’re going to have this competing use of things like AI, where AI is monitoring AI, and AI that’s kind of privacy-friendly or focused on privacy is going to be monitoring the AI that’s not. But again, I know you don’t want to just talk about AI.

I am concerned. This issue of privacy has been around for a long time. You’ve been talking about it, I’m sure; I’ve been talking about it since before AI. This is like everybody giving over their personal information in exchange for access to something. And that was happening for a while, and then we’re all getting ads that are personalized to us based on stuff that we’ve essentially given up privacy for.

No, it’s funny. People believe, and we can write as many stories as we want about how your iPhone is not actually listening to you, but the ad tracking is so good that everyone believes that their iPhones are listening to them. The next turn is that it is now technologically feasible for these systems to listen to you all the time. And I can’t fall back on the idea that it’s cheaper for them to do the ad tracking when you hit I accept than to listen to you all the time, which was, for a decade, the right answer.

The economically correct answer was that ad tracking was cheaper than listening to you all the time. That might be very different in the future. There are already devices that we cover here at The Verge that purport to listen to you all the time and turn that into some actionable data. And it feels to me like the tech industry is trying to drive a truck through our privacy law, through our lack of AI regulations, through an entire system of governance that is designed for the pre-AI era.

The notion that you don’t have privacy in public worked really well when everyone didn’t have a cell phone that could connect to the cloud and instantly search every photo all at once, all the time, and do facial recognition. We live in that world now. I would say the public sentiment towards the idea that you don’t have privacy in public places has turned.

They don’t like the Meta glasses. They call them pervert glasses for a reason. And somewhere in there is, well, the federal government should pass privacy law. It is a failure of imagination in the United States. We don’t have federal privacy law. And then somewhere in there is the notion that the states are laboratories of democracy and policy.

It is amazing, by the way, how often on this tech and business show, Thomas Hobbes comes up and the very notion that the government is there to serve as an extension of us solving collective action problems. It comes up over and over again because I think the tech industry does not want to respect that dynamic.

This is why I started with that relationship between government and business, and the pushback and the negotiation, because here it feels like the tech industry is in a bubble of its own making. Truly, in a media bubble of its own making. And then all of the polling is, well, we hate AI. In particular, young people hate AI. And then all of the action is around data centers where NIMBYism, the most American of policy levers, is being pulled to keep these data centers out of communities. And that’s one way to stop AI.

You just pulled back on data center tax incentives in July. You’re pushing the state legislature to adopt a suite of guarantees on reforms for new construction. Do you think data centers and the pushback on data centers is an effective route towards AI regulation?

No, I don’t. I think it’s an effective route toward data center regulation. I know that people have conflated and put together their opposition to data centers with their opposition to AI. And a lot of people can’t describe why they’re opposed to one or the other because they’re conflated with one another. But I can say that — I mean, at least our aim is focused on the idea, and people really feel this, right, and there’s real data to back this up — the data centers themselves put aside what they’re doing inside a data center.

The data centers and what’s happening are eating up the available electricity, and that’s causing your electric bill to go up. At least that’s how everybody feels. There are a lot of things that we should have been doing in many years gone by to get to a point where electricity bills shouldn’t have to go up now. And that has to do with building out the grid. It’s a world where regulation and cross-border challenges have made it nearly impossible for a lot of the grid to get built the way that it should have. We produce a lot more electricity in the United States than we use, but we just don’t transport it well enough, and we would have a lot more available if we transported it better.

Okay, but even if you think that can’t happen efficiently, we need to build more capacity on the grid. My only point is the opposition to data centers is, in part, a result of the economic situation that’s happening right now in the country, where electric bills, gas, rent, everything has gone up. Your electric bill shows up every month, and it continues to go up, and people kind of scratch their heads and say, “Who am I paying for?” This is happening, and this is particular to Illinois.

We’re not going to have a whole discussion about energy policy, but I could just say this: We produce more nuclear power in the state of Illinois than any other state. Roughly 53 or 54 percent of our electricity comes from nuclear power, and we’re a net electricity exporter. So we have an excess in Illinois, but our bills are going up, and that’s because of the methodology of the regional transmission organizations. Again, not to get into all the details of it, but essentially, if Ohio decides to build a hyperscale data center, our bills in Illinois are affected, and that’s shocking to people who live in Illinois. But what they know is they don’t want their bill to go up, so they don’t want another data center nearby — even though the one in Ohio is actually causing the problem, even if you choose to oppose data centers.

So this is a challenge. I think there’s a lot of information that needs to be spread. But most of all, we just need a whole lot more capacity and a whole lot more grid that will, I think, subside some of the concern about data centers. To your point, privacy is, I think, more related to AI than data centers. And it’s not just AI, but the way AI is used. So we’re going to have a lot of opposition. You make an excellent point. I think this feeling of being out of control — you are not in control of your environment anymore — that’s the thing that is causing anxiety.

I want to go back to something really important that I was saying earlier. We need better people running for public office. We need smarter policy development in government. And part of that is a generational shift that’s needed and a better understanding. We have people who are serving in the United States Senate who have no idea. Was it the Secretary of Education, Trump’s Secretary of Education, who called it A1? I mean, because we’ve got older people who don’t have any exposure who are making policy theoretically on these things, and it should disturb us all. It’s one of the reasons we’ve got to advance the cause of better people and better systems in government.

We are on the cusp of an election. There might be a new Congress. There might be new leadership in Congress. There are a bunch of old Democrats too. In fact, I could probably point directly to Joe Biden’s age in the last election as the reason that he lost. Do you think that you need a wholesale change of leadership of the older Democrats as well?

You said, “Do we need a wholesale change?” I mean, I can tell you that I don’t think we should be telling —

Well, now I live in New York. I’ll just ask you, do you think Chuck Schumer should be the Senate majority leader if the Democrats take the Senate?

That’s a decision people in the Senate are going to make. I have no influence over it. I can tell you this: I am opposed to term limits because I think that you should have all the choices. You’re a voter. If you want to vote for the 75-year-old, I mean, go ahead.

I’m just suggesting that a great case could be made for the 45-year-old who’s just as smart as the 75-year-old was when he was 45, or maybe is now, but has a modern look at the issues around AI privacy, everything else we’re discussing, and a more aggressive view of how we ought to be reining in big corporations in their invasion of our lives. But I think people ought to make their own choices. I mean, for us to say, “Well, we should have an age limit. You’re 70, that’s it, you’re out.” I think that belies who we are as a democracy.

Well, you convinced me. I’m 46. I’m announcing my run for president here with you, Governor. That was a rousing speech.

Listen, I would vote for you in a second if the choice was you and Donald Trump.

A low bar, but I’m glad I crossed it.

Let me tie two ideas together at the end. We’ve talked a lot about AI regulation. You mentioned social media regulation a little bit earlier in this conversation. I know that Illinois has a social media law. You have a bell-to-bell ban on phones in schools for kids.

I’m just going to pick on Mark Zuckerberg. It’s easy to pick on Mark Zuckerberg. If you look at how he talks about social media regulation, he basically describes the tragedy of the commons. You signed the landmark settlement with him. I think Illinois is due to get $750 or $760 million out of that settlement. And a big part of it is that TikTok and YouTube have to agree to the same terms, and then Meta will pay the rest of the money. And Zuckerberg very clearly has said that’s because if Instagram falls back on engagement bait and TikTok doesn’t, the kids will just use TikTok. And so the government has to get everyone to agree.

I will tell you that Neal Mohan, the CEO of YouTube, does not agree. He’s not going to sign onto this. That’s one whole fight. Look at how Mark Zuckerberg talks about AI regulation. There’s none of that dynamic at all. He’s like, “It should be a free-for-all. We’ll all compete. If it’s not safe, the market will tell us. We’ll be fine.” And in my mind, these ideas are at total odds with each other.

In the market where he makes all the money, the government has to step in and stop him from hurting kids because apparently there’s no market demand for safe social media. And in the market where the AI CEOs are telling us they might kill us all if we don’t stop them, it’s a free-for-all, and the market will tell us if they accidentally kill everybody. How do you reconcile those things? Are you just happy that you got the social media case done after a decade of failing to regulate social media, or do you think you can solve AI with regulation this time instead of letting it just cook?

Look, I’m an optimist at heart, so I’m not going to suggest to you that I absolutely know that we can solve all the problems that we’re now facing, but I don’t know what else we can do. Other than, again, progressively making sure that we’re trying to address each of these things, trying to anticipate them to the extent we can. Can we be faster than AI is developing? I don’t know. But we can’t stop trying. I know that. And I would suggest to you that my optimism is founded because I think the vast majority of people want what you’re describing, which is reining it in.

And again, without destroying companies. I don’t think we’re all trying to do that. What we’re trying to do is stop the invasion into our home, stop the invasion into our children’s lives. I do think we can do that, but that’s because we’ve solved a whole lot of huge problems. That’s kind of like my answer to: is AI potentially existential? The answer, of course, is yes. And can we solve it? I don’t know. Nuclear weapons… I mean, just to give something of an analogy to something else. I mean, nuclear weapons are still hanging over us as a danger to humanity. And so far anyway, we’ve managed not to blow up the world. I don’t know whether that gives you any optimism, but it does to me.

We, as a country, can figure out how we want to rein it in here. That we, as a country, can work with our allies to figure out how we want to collectively try to rein it in. And then we have enemies in the world and competitors in the world, and we’ve got to figure out how we’re going to… Maybe it’s mutually assured destruction, like it was with nuclear weapons, but these are all things we’re going to have to work on, and work on fast.

And it’s scary because someone analogized this to… I mean, think about the early 1950s when every kid had to learn that if there was a nuclear blast, an atomic bomb that went off, get under your desk. That wouldn’t have been very effective. But the point is, people lived with the idea that a terrible nuclear holocaust could occur with a nuclear explosion. And so I think we’re heading into that world again with AI. I hope I didn’t stray too much from your question, but —

Let me ask you this, and it’s a little bit of a wild card here at the end.

We cover this industry so closely here, and the big difference with nuclear weapons is that there weren’t five companies building bleeding-edge nuclear weapons in private capacity, led by five guys who all hated each other. But that’s the dynamic of the AI industry. They all truly hate each other, and they’re all trying to make as much money as they can as fast as they can.

And then some of them think the AI is alive. If you ask Anthropic, and we’ve done this, “Is Claude alive?” They don’t say no. They will argue with you about the definition of alive and suggest that, to them, alive means having a biological component and Claude doesn’t have that, but it might be conscious.

There’s a race to build AGI in the industry. Some people truly believe they’re building alien minds that have a different kind of consciousness. I’m not sure any government at any level has ever had to regulate that, or has ever come up against an industry that is religious about the fact that it might be building the next kind of intelligence.

Where do you stand? Do you think that they’re building a next kind of consciousness that stands alongside humans, or do you think that this is normal technology as some others do?

Boy, that is really another podcast for us, but I’ll just say this one thing: I just want to disagree with you for a second. Nobody could ever imagine a nuclear weapon either. And…

But the government built nuclear weapons. It wasn’t —

I understand. I’m not suggesting it’s the same. I’m suggesting it’s so new at the time that figuring out how you’re going to rein it in… Because remember, it’s not just one government, and the same thing with AI. It’s not just those five guys either. I mean, it’s like there’s somebody in China. Maybe five of those. I don’t know, and somebody in Europe or whatever. You could say we’re ahead, or they’re ahead. I don’t know.

But all I’m saying is, yeah, this is a proliferated situation and it’s not government-controlled. One hundred percent, you’re right; it’s not like nuclear weapons in that sense. But it is like nuclear weapons in the sense that nobody’s ever seen it before. It’s a complete mystery to start with. How are we going to rein it in? I mean, nobody thought Russia was going to get the bomb, and they got it. We’ve figured out somehow how to deal with it.

Again, you’ve got to be an optimist to believe we can end up with the right solution here. I don’t know that we have the answer to “how do we rein it in?” I will say, though, that if we had the power to create it, we have the power, in my view, to rein it in. Is it conscious? You’re asking a deep question.

Have you felt the AGI?

I mean, do you think it’s conscious? Because I understand why people think it might have consciousness or it’s going to be conscious. But I think that’s why the ethicists and technologists need to be involved. And especially, in my view, the government’s got to be involved because how else are you going to rein in the five guys and the companies that have developed this? There is no other way.

I will tell you, I don’t think it’s conscious. And every now and again, you have an experience where it’s blindingly clear why other people believe that. When you watch a reasoning model take 90 steps over an hour and arrive at a conclusion, it’s impressive, and you can see why people believe that. I do not, and I have a lot of reasons for that.

It just occurs to me that if you set out to regulate a technology like this, if you believe one thing, you would maybe go down one path. And if you believe that you were building a consciousness, you might go down another.

Again, the whole industry itself does not agree on this. Jensen Huang and Dario Amodei do not agree on whether it’s alive. Jensen just wants to sell a bunch of chips, and he will happily tell you it’s just technology and you can control it. I think Dario thinks he’s building AGI, and that’s a different… There’s a whole reason he proposes different kinds of regulatory structures there. I’m just asking you, have you felt the AGI? Do you think it’s one path or the other?

I’m not going to give you a satisfactory yes or no.

I mean, I haven’t felt it. I guess that’s what I’m… My basic answer is I haven’t felt it.

Governor Pritzker, this was very fun. Thank you for indulging this last existential loop of a question. You’re going to have to come back to Decoder soon.

I would like to do that. Thanks, Nilay.

_{Questions or comments? Hit us up at decoder@theverge.com. We really do read every email!}

Today, I’m talking with Walter Piecyk, a partner and analyst at LightShed Partners who covers tech, media, and telecom, about SpaceX’s recently announced plan to become a major wireless carrier.

Last week, SpaceX agreed to buy a big chunk of low-band spectrum to expand the Starlink network, spectrum that’s been traded around the telecom business for decades now. SpaceX’s ambitious plan is to use that spectrum to help build “the world’s most advanced mobile network.”

Combined with news that the FCC approved the deployment of 15,000 next-gen Starlink satellites and the company’s previous agreement to purchase close to $20 billion worth of EchoStar spectrum last year, it’s now clear SpaceX is serious about competing with AT&T, Verizon, and T-Mobile.

I’ve covered the telecom business for a long time, and I’ve always known that these companies can say they want to do something until they run into the harsh reality of how expensive it is to actually do it. The telecom graveyard of pivots, bad ideas, and failed acquisitions is vast.

Walt has been closely monitoring SpaceX’s acquisition, and he’s correctly predicted that the company was headed in this direction for months now. So I wanted to dig into whether SpaceX can pull this off, why Walt thinks the existing telecom giants have really fumbled their response to SpaceX’s growing threat, and what happens when Elon Musk’s rocket company jumps headfirst into a business everyone loves to hate.

Okay: LightShed Partners’ Walter Piecyk on SpaceX’s plan to expand into mobile. Here we go.

This interview has been lightly edited for length and clarity.

Walter Piecyk, you’re a partner and a tech, media, and telecom analyst at LightShed Partners. Welcome to Decoder.

Thanks for having me. I’m looking forward to it.

I’m excited to talk to you. I feel like we’ve been tweeting or posting around each other for many, many years, but I’m a telecom nerd at heart. I’ve been covering the space for ages. SpaceX is going to make a big splash. It’s going to be the fourth major mobile carrier in the United States and maybe the world. It bought some spectrum to do it.

It’s EchoStar spectrum by way of private equity. It is at once very simple and also very complicated. Give us the state of the state. SpaceX bought 800 Mhz spectrum for $8 billion. They spent nearly $20 billion already on separate EchoStar spectrum. What is SpaceX trying to do here?

It’s definitely complicated, but maybe less complicated than trying to figure out how to put a data center out in space and making that work. Or something on the moon. But they don’t typically want to own spectrum and spend for spectrum. If you think about how Starlink was built, satellite companies don’t typically pay for spectrum. And then as the business evolved and as they saw the opportunity in telecom, they purchased some spectrum initially from EchoStar.

The feedback they got from investors at that time was very positive and they said, “Wait a minute, you should do more here.” This is a trillion-dollar enterprise value business in the US alone. Obviously they have global aspirations both for Starlink as well as what they’re doing with this mobile telephone service. So they bought more. They went back to EchoStar. That’s a key thing to pay attention to, in that they bought some spectrum and then they went back and bought some more.

Because with a lot of things that Elon Musk does, he learns as he goes. He bought the spectrum, got feedback, talked to people in telecom, and bought some more spectrum. Then we didn’t hear from them for a while. Now, you have this thing that happened last week where they bought some more spectrum, and I can go through the history of it if you care, but it’s long, wonky telecom stuff. This was originally the Nextel spectrum, if you remember that company.

I do. Actually, I do want you to go through the history because I think the telecom business is best understood as a bunch of lobbyists trying to make everything more complicated than it should be. Yes, spectrum auctions are complicated and what spectrum is good for what is deeply tied to the physics of the radio spectrum and all that.

But here it’s the 800 MHz spectrum from the Nextel service, the old push-to-talk, walkie-talkie service that Sprint had to divest as part of the deal to get sold to T-Mobile. They’ve been trying to sell it for ages. They sold it to this company, Grain Management. They’ve been sitting on it, and when Starlink showed up, Elon bought it. Nobody else wanted it. What did he see in the spectrum that no one else did?

When you realize that you need to build a terrestrial network to support what you’re doing with satellites, because satellites work fine if you’ve got your dish on the top of your house and you’re getting your broadband, but when you’re trying to connect with a phone that doesn’t have the same type of power or you’re going inside a home, you’re going to need better coverage.

Sirius Satellite also has supplementary towers. There are not that many of them, but sometimes when you get out of Sirius coverage, you will connect to a tower. When they bought that EchoStar spectrum and then got FCC approval, and if you looked into those details of that FCC approval and what was required, you would see that they can’t do this by satellites alone. There had to be terrestrial.

Then SpaceX, as Elon is wont to do, tries to send some diversions like, “We’re going to do Femtocell, we’re not going to do macrocell, this, that, and the other thing.” But they realized that they were going to build a terrestrial network. Now they finally realized, “If I’m going to offer mobile service, I need some form of a terrestrial network.”

At the same time, the telcos are not going to help them out. They’re not going to give them a wholesale agreement. Then when they go back and say the companies that had the lowest churn, what is the fundamental value you need in a terrestrial network? It’s low-band spectrum. Why? It travels further, you can get better coverage, and you have that connectivity.

So getting this low-band spectrum piece was just an important part, not to make the satellites work better, but to actually give them the spectrum assets that they need to build a terrestrial network. That’s why the stocks reacted, because people finally came to terms with the fact that Elon is actually going to build a terrestrial network.

I’m less interested in the stock and more interested in just the cost structure of how this works. If I rewind my brain to being a baby blogger at Engadget 100 years ago, the FCC told all the TV networks they had to stop broadcasting on 700 MHz and we were going to run an auction.

Verizon and AT&T bought big chunks of 700 MHz spectrum and that’s what 4G is built on. That’s the low-bandwidth spectrum that you’re talking about. It goes everywhere. This was a big victory that we reallocated 700 MHz, and 800 MHz was sitting right there the whole time. This is the Nextel spectrum. If it is so valuable, why wasn’t there a market for it until Elon showed up just now?

It was part of this transaction. T-Mobile ended up having to sell it because the government said, “If we’re going to allow you to take out the fourth competitor, which was Sprint, then in order to enable another fourth competitor out there, we need to have you guys give up some of your low-band spectrum.”

Part of the deal that T-Mobile and Sprint had with the government was that they would sell it to EchoStar. Why? Because Charlie Ergen, CEO of Dish at the time — it’s EchoStar now — was going to be the fourth competitor. This was the rationale that they gave in terms of the approval of the transaction. Dish needed low-band spectrum. The problem is Ergen went about his business, he was trying to build a network, and then he just couldn’t afford to buy that.

They had the rights to buy. Then at that point when Ergen failed on the bid to come up with the dollars to buy that spectrum, it enabled T-Mobile and actually forced them to put it up for auction. Now, your question: Why didn’t someone else show up then? Again, from SpaceX’s standpoint, as I mentioned at the start of this podcast, their strategy has been evolving over time.

In terms of the other telcos, they can’t really use it. There are some limitations that they have. But in hindsight, maybe Verizon or AT&T should have bought this 800 MHz spectrum for whatever it was, let’s call it $8 billion. They’re probably losing more in enterprise value over the concerns of what’s happening with SpaceX than what it cost them just to buy it in what’s known as foreclose. They basically just take it, even if they don’t use it or do whatever they need to meet those build out requirements and stop SpaceX from having unnecessary assets. I don’t think even these companies were taking Elon seriously and thinking that he would actually build the network.

Do you think that’s colored by the failure of Dish? We covered the promises of Dish Network to build a fourth wireless carrier in this country so closely. Their attempt was predicated on some amount of technology innovation.

They were going to build this thing called an O-RAN network, which had a more competitive supplier base instead of just Nokia or Siemens or whoever, and they were going to run it on AWS and that was going to reduce costs. Man, eventually they supported one Motorola handset in Vegas and even that was backstopped by AT&T. They literally could not do it. These promises never came true. Dish is a different company and Charlie Ergen’s a different CEO and their ability to just throw money at a problem until it’s solved is very different from Elon.

But if they couldn’t innovate to make a cheaper, faster network, what’s the evidence that Starlink can stand up an entire terrestrial network at a cost basis that allows them to compete selling service to consumers, while they’re also standing up an entire network in space? Because that feels like adding up a lot of cost.

I’m going to go back even deeper than that. Remember when Sprint was struggling, Masayoshi Son from SoftBank was claiming the same thing. They were going to cut their CapEx to nothing and they were going to use these small cells. They innovated how wireless was going to get delivered. That failed. Obviously, they had to get bailed out through the purchase when T-Mobile bought Sprint effectively for just the spectrum.

That network got completely decommissioned. To your point, Dish got a network built, but they couldn’t resonate in the market. The difference between Dish and SpaceX is Elon’s ability to get customers. That’s where Dish truly failed. They built the network. The network worked fine. They had the wholesale agreements that they needed.

I’ll push back on you a little bit there. I have a very funny email from a Dish PR person from several years ago where they said, “We’d like to issue a correction to your story. Our network does exist.” That was the level that they were competing at, where they had to insist to us that the network was real, even though we could not find it in our tests in the various cities they claim.

Maybe there was a network, they built some amount of network, but they had not built anything that competed at the national scale with the big three.

Absolutely. It’s not like your phone. The phone that I was using, I had an iPhone that it was mostly going to roam onto the AT&T and T-Mobile wholesale agreements that existed. The theory is you get the customers, you have a go-to-market strategy, and then you backfill the network. This is probably going to be something similar.

You can even go back to when John Legere first took over T-Mobile. They had a crappy network, and then Legere promised, “We’re going to build it,” taking on customers saying that the network was great before the network was great. Then it caught up because they actually finally got the Germans, Deutsche Telekom, to give them the money to invest in the network.

The same thing can happen here where SpaceX will sell something that’ll probably rely on other assets that are out there, even if the telcos themselves are circling the wagons. They have the satellites for certain benefits in terms of coverage and then they can build the capacity over time. The point is it’s going to take time. You can’t just turn on a network overnight and start selling service on that.

This has always been my framework of how to think about telecom companies. You can try to run the network cheaper or you can run some kind of different technology to make that cheaper. Or you can just spend and have the best network, which was the Verizon strategy for years and years and years.

Then you’ve got to acquire and manage your customers. That was the T-Mobile strategy. That was John Legere. He was just nicer to people than AT&T was, and he picked up a lot of customers and that drove some investment.

Then you’ve got to get some devices. You have to have the iPhone. We can set that aside because it feels like that era of competition is over. We’re not doing exclusive devices anymore. But those are the two. I’m just looking at the network here. It does not seem to me, from the outside, that Starlink is proposing to build a cheaper network.

It feels like they’re proposing to build a vastly more expensive network because they need the satellites. They’re going to launch 15,000 more satellites to support this network. Then they’re going to build a terrestrial network by investing in spectrum on the ground and building some set of base stations.

Then they’re going to have to convince one of the big three to let them roam over as some sort of mobile virtual network operator (MVNO). The big three do not want to do that. So they’re going to overcharge them for that. I’m just stuck at that being a lot of cost, even if you’re Elon Musk and you can make some set of people buy whatever you’re selling.

The third thing you said is obviously the most challenging. That’s the tent and the pole that prevents you from launching services sooner rather than later. But without necessarily getting a wholesale agreement, there might be other ways. Roaming agreements exist out there. There are roaming partners that exist that these telcos still rely on. It’s very expensive. It’s not something you can build a high-margin business on, but it perhaps provides an entry to the market sooner rather than later.

As Apple has pitched in terms of satellite connectivity, some people are in the middle of the Utah desert texting because they’re injured. There’s value there. But it’s the soccer field. We have, maybe not in the cities, but in the suburbs, plenty of areas that the telcos have effectively given up on trying to provide coverage because of NIMBY-ism, meaning people just don’t want these cell sites. This satellite coverage can give you not just this basic text messaging that Apple has been doing through the Globalstar constellation, but a true cellphone-type experience.

So that’s a positive. The second differentiation is the fact that these telcos have 60 percent earnings before interest, taxes, depreciation, and amortization (EBITDA) margins. So there’s a lot of fat there that can be eaten off of, that when you’re selling other services in terms of Elon, like home broadband, maybe this becomes an entree in terms of pushing Grok and people’s usage. You don’t necessarily need 60 percent margins, in this case, for him to justify building this network.

They also talk about other data connectivity that these satellites are going to enable. Again, in the current constellation, you need a lot of power and you need a dish. But if you don’t have that, if you have the cell phone-type power, then the internet of things (IOT) and other types of opportunities that exist there become another revenue opportunity that they look at.

It’s just funny. The IOT story — that’s what all these companies promised us about 4G. That’s what they all promised us about 5G. There’s something about this business that just rhymes every time. They’re going to do self-driving cars and robot surgery. I’m confident we’re going to hear about self-driving cars and robot surgery when it comes to Starlink and Tesla and Optimus.

There’s something about these applications for next generation networks that just recurs, and we hear about them all the time. Then I think about our consumer audience at The Verge, and they want long battery life and fast service and [connectivity] all the places they go. I’m not sure how that squares with your phone is going to connect directly to a satellite in the middle of a soccer field. There’s something about that that also seems challenging.

It’s just the performance if your phone does connect to the satellite on the soccer field and it works. A lot of the things that people said wouldn’t work on Starlink in terms of airplanes or even getting customer-premises equipment (CPE) down below a certain price, they’ve delivered on. Obviously, Elon sometimes delivers on them a little later than some of his initial optimistic promises, but they ultimately get delivered on.

There is the ability with these new constellations to give you that type of connectivity on these spaces. Is that enough to differentiate with consumers? I don’t know. The telcos have attacked this by saying, “No one cares about our direct-to-device (D2D) services.” Well, your D2D services are not good. It’s just sending basic text messages. What they’re talking about is giving you that blanket coverage where you get what you expect from your cell phone wherever you go.

That’s fine, but you still have to give it to the person in the middle of the building where their cell phone works today and provide the volume at a cost that is going to be attractive to that consumer. So those are longer-term things that are going to require some amount of terrestrial network build. Then the question is: how much? A lot of the attacks that have been out there have been referencing $100 billion, $200 billion. I get that. Why?

Telcos each spend $10 billion to $15 billion a year, but they are maintaining massive customer bases. To get that initial network up where you have that usage, where you use that low-band spectrum to get into buildings, is not those types of numbers. You’re probably talking like $10 billion, $15 billion for that initial build in terms of CapEx.

The dynamic there is really interesting. I’m just thinking about AT&T when the iPhone came out. The network immediately got overloaded because there was a surge of customer demand that took four years to truly resolve. Part of that resolution was just putting the iPhone on the other carriers.

How do you think that will play out for Starlink here? Because right now, Starlink customer service is not the best in the industry. Their actual service, people love it. And then when they need customer service, it’s a bunch of automated systems and people complaining on Reddit. So there’s some challenge there if you’re running a consumer business at this scale.

For consumer businesses, think about all the advertising that’s done. The fulfillment, dealing with the phones, phone subsidies, and that’s a big part of the financing. How many customers are we talking about? So for the amount of spectrum that they have now in the network that I’m talking about for $10–$15 billion, you’re not taking 50 percent share overnight. I don’t think that would be that expectation from day one.

But then the theory of telco is that when you do that initial CapEx build, you have your initial spectrum purchases — $10, $20, maybe $30 billion — another $10 or 15 billion in terms of CapEx. If you are successful and you do get that five or 10 million customers, the opportunity to invest more happens. If you go back to the old days when the cable view of wireless was going to be, “We’re going to get these MVNOs. We’re going to drive the wireless companies into the dirt and then we’re just going to buy them.”

That happened in at least one European market, and that was the cable bull thesis that was occurring. You could have the same bull thesis emerge from the SpaceX bulls here where they’re going to say, “We’ll get those first five or 10 million customers. We’ll drive them into the ground. Verizon’s going to be so desperate for any type of revenue because their revenue declined. They’re just going to hand them a wholesale deal and then they’ll start selling spectrum. There’s going to be a spectrum auction with the FCC.”

You can see how the narrative can build based on, “An initial CapEx that’s not that big, get in the market, and then if it’s successful, we start investing more.”

Let’s talk about the terrestrial network for one more turn. I heard you throw a little water on the idea that they’re going to build femtocells. That is what Elon and Gwynne Shotwell have been saying — that they don’t need to build the traditional kind of terrestrial network that AT&T and Verizon and T-Mobile have, where you have a lot of fiber back haul, the big sites that require all kinds of zoning permits and everything. That they can basically just put small cell stations next to Starlink dishes, put them anywhere they want, and blanket the world with them. And Starlink itself will be the backhaul.

I sense some problems with this. Starlink is not 100 percent reliable all the time. If you have a network that is not 100 percent reliable all the time, you’ve got some problems, so maybe you have to backstop it somehow. But you don’t think that’s what they’re doing. You think they’re going to build a regular terrestrial network.

I’m sure that’ll be a part of it, but you need macro towers for that type of coverage and penetration and power. Not to explain physics to SpaceX, they probably know it better than anybody, but what you’ll see is as they talk more about this low-band spectrum that they purchase, when we get on the conference calls of these tower companies, you’re going to find out that you’re going to see a lot of those antennas show up on towers.

It’s just natural. You can talk about femtocells, but it’s hard to see that the network’s going to get built without macro towers.

One of the weirder aspects of the telecom industry, as it’s constituted in the United States right now, is that cell carriers own some of their towers and operate some of their towers. And then there are these crazy third parties that literally have names like TowerCo that operate a bunch of the other towers.

Are those captured? Do you think SpaceX can get deals with those companies, or are they beholden to their big partners?

These are huge real estate investment trusts (REITs). American Tower is the biggest one. It’s probably one of the largest companies in this. When you consider any REITs, there are other companies out there. They have these towers. They have space in many cases where basically SpaceX can just go and get an additional antenna. It’s a lot easier to do that now than when the wireless companies were initially building this stuff and having to erect their own towers.

In addition, EchoStar is going through a bankruptcy. They have a lot of radios that could be used, that could be bought on the cheap, that could expedite SpaceX’s entrance in the market. They haven’t shown interest in that yet. The EchoStar bankruptcy process hasn’t yet concluded, but EchoStar can still be a potential partner here by selling them radios that are already on towers.

You’ve lifted the amount of time. Those radios use the spectrum that SpaceX is purchasing, so it can be a quick fix for them to enter the market. Who knows if they do that? They may have their own view like Masayoshi Son did on how to build this new cheap network.

Is there a way to read this as just they’re slowly buying EchoStar or whatever EchoStar tried to do?

EchoStar has some remaining spectrum that Verizon really needs. At this point, there is some strategic sense to just buy EchoStar outright — because EchoStar is getting stock that was issued to them at a discount. If you’re buying them, you’re effectively buying in your own stock.

You don’t have to issue the cash to the company and you’re getting whatever cash proceeds that EchoStar is getting from some of its spectrum sales. They can actually get incremental cash on the balance sheet and buy their stock in. We’ll see if that plays out. By the way, then you don’t have to also deal with Dish, which sometimes can be challenging.

T-Mobile’s in the mix here. I want to talk about Verizon, you’ve mentioned them several times, but T-Mobile is Starlink’s current partner for direct-to-device cell connectivity. Are they just getting rocked? Are they going to be a part of this? How’s that going to work?

If you think about the start of that, that was former T-Mobile CEO Mike Sievert up on stage with Elon announcing this thing and everyone’s very happy. Then Deutsche Telekom decided it needed a different CEO at some point. You had that transition where Mike retired and you brought in a new CEO, and there might just be a different view on how that relationship works.

I’m guessing that it’s been very frustrating for SpaceX to deal with them and certainly they would probably want to avoid any exclusivities going forward. They may need to if they want to sign one of these wholesale agreements that we talked about before.

It just seems like, as you mentioned, SpaceX and Starlink went after a little bit of the consumer market here. They bought some spectrum. They got a good reaction to it. Now they’re going to go after the whole thing and their existing telecom partner is thrown by the wayside.

If you look at the three big telecoms in the United States, they are circling the wagons. They’re saying this is never going to work. They’re never going to sign the MVNO agreements. They’re putting together their own satellite pool. There’s something here where they are panicked by the existence of meaningful competition in a way that does not usually happen in telecom.

Yeah, I agree with that. I don’t know if it’s SpaceX leaving them or T-Mobile leaving SpaceX, but that relationship which started out so happy with the old CEO is certainly not positive. T-Mobile executives have been throwing shade at SpaceX incessantly over the past couple of months. They formed a joint venture (JV) together.

It reminds me of when fixed wireless first hit the cable market and Chris Winfrey talked about it derisively as “cell phone internet” and played it down. Ultimately, that’s what’s really bit them and why cable stocks are in the position they’re in today, given the amount of customers that they’re losing to cell phone internet.

There are some similarities now in terms of how these executives are downplaying what they can do. Is it going to be costly? Is it going to be complex? Sure. But so is Terafab and so are so many other things. So is making an autonomous vehicle or catching a rocket with chopsticks. That’s the reality that they have to deal with. Investors have seen what this management team has done before in other areas and are just applying it here. Whether that’s fair or not, time will tell.

I’m actually very curious about that because I know you cover the company and I know you cover the industry. There’s some part of SpaceX that is just a meme stock. People love Elon. There’s some part of Tesla where it’s not valued like a car company, it’s valued like a software company, even though it is very much a car company. We’ve yet to see where the software multiples might come from for Tesla.

The same is true of SpaceX: huge IPO, but people are buying the physics miracle of the rockets launching and landing. They’re buying the promise of Mars. They’re buying the promise of AI, whatever that promise is, however frothy that market is. Those are valued against hopes and dreams.

Telecom is not. It’s well known. You can be a telecom analyst and you can examine the value of the spectrum. You understand the build-outs. The customers are not confusing. Consumers are going to pay some amount of money. There are other competitors that are built in at scale. Why do you think SpaceX would chain itself to a business that is easy to value when all of its other businesses are their dreams? You can’t value dreams. It’s just whatever is the biggest number.

I don’t think it’s an either-or. When you look at people’s attempts to justify the valuation of SpaceX, a lot of that value is going to land on data centers in space and the data centers on the ground. That’s where a lot of the value is in Starlink.

But that’s not the launch business, which theoretically is their business. It’s not even the AI provision business. We’re describing them as a hyperscaler.

Yeah, exactly. The AI and those are other big chunks of it. There are a lot of different stories here, but it doesn’t mean that they don’t pursue this if they have connectivity and constellations. They’re talking about connectivity in space because they believe that there’s going to be a demand for connectivity between the data centers, whether it’s theirs or others and their constellations. There are already data centers that I think are using their constellation to connect.

When they looked at it, it was just another part of the narrative that you build in terms of SpaceX and justifying the valuation. Because what do all of these things need? Whether it’s robotaxis, whether it’s data centers in space, they need money and money needs a narrative. This is just another one of the narratives to stack on top to say, “Here’s how we can drive incremental value.”

The value, if you look at the enterprise values of these telcos in the United States, you’re talking about a trillion dollars. That’s a trillion dollars of enterprise value. They’re obviously not going to capture a trillion dollars because part of it is shrinking the telcos down at the same time as getting whatever that stake is and the CapEx related to it.

The fair question is, if capital gets more scarce, how do you allocate between these different things? Don’t you want to push Terafab forward a little bit more or get those terrestrial data centers built so that you can start monetizing the billions of dollars that you’re getting there versus diverting whatever the dollars are here for the telco?

That is a reasonable thing. The problem for the telcos is even if that’s happening at SpaceX and this gets delayed a year, that doesn’t help them. The overhang of when that’s going to occur — whether that’s a year, two years, three years — is always going to be there. They’re not going to say, “We’re just giving up on going after this.” It’s just going to be a capital allocation issue in the near term that’s going to delay when the actual impact hits the telcos in the United States.

How much of this is just that Elon needs to supply connectivity to his own cars and his own factories and his own robots and he’ll just be his own best customer?

I don’t think that’s it. They think they really want to build a revenue business out of it. In fact, they’re going to use the cars as hotspots where they’ll put Starlinks on there and then use them as distribution points. That’s going to be part of the play.

I do want to end by talking about the existing telcos and what competition might do to them because I think that’s a fascinating dynamic. They are clearly not ready for an actual aggressive competitor.

But I want to stick with what you just said for a minute. If I pull that apart, it sounds like what you’re describing is the reality of the SpaceX business, which is that Starlink is the thing that makes profits. Everything else is incinerating money, but investors seem happy with that because the potential payoffs might be huge.

If you take the Starlink profits, you have to make a decision about whether to reinvest them into Starlink, and now Starlink’s mobile business, or into AI or into the launch business or into going to Mars. Regardless of how that allocation happens on what timeline, at some point, enough money will go back into Starlink Mobile to pose a real threat to AT&T, Verizon, and T-Mobile, and that is just a matter of time.

You nailed it, and that is the issue. Capital becomes the biggest benefactor right now to the telecom companies. How does that capital get allocated? That’s in terms of reportive results. They’re 100 percent right on that. But in terms of the stocks, that concern is not going to go away because there will be incremental data points. Maybe one of these telcos has a problematic quarter or two. These are not founder CEOs where they have to do something quickly.

It’s easy to get a lot of wholesale revenue on the books by doing a deal with SpaceX. These are the types of things that they’re going to have to deal with in terms of that long-term risk. Cable’s got this. Look at Uber. Uber’s got the same issue. The threat of Waymo and robotaxis is what keeps that stock where it is.

Waymo with their 3,000 or 4,000 cars are obviously not impacting the two million drivers that Uber has in the United States. But the threat of where Waymo’s going to be two years from now, or three years from now, or the threat from Tesla’s robotaxis… that’s what investors care about and that’s going to obviously impact these companies.

Put that in the context of SpaceX being a public company for me. Is it just that we’re going to get next quarter’s results of SpaceX and we’re going to see that xAI is still burning money at enormous rates, but Starlink Mobile made a little bit more money? And that’s going to keep everybody happy for a minute?

I don’t know. I don’t think we have enough history yet in terms of what moves SpaceX stocks one way or another. To your point, you have a lot of believers, regardless of what’s printed, who are always going to say, “Who cares about this quarter?” Tesla’s got the same issue. Who cares how many cars that they actually sell because it’s all about the robotaxis and the robotaxi business is about to start scaling.

Those very positive people won’t care. Then there are going to be the negative people who, no matter how much traction you see them get in, whether it’s Starlink or progress on the build of space compute, are going to say, “He’s never going to deliver. This is never going to happen.” You’re just going to have those fighting battles back and forth.

The primary issue is going to be whether they can raise capital off of that. And in what ways? Because if you’re burning cash, at some point you need to bring in cash. If these businesses aren’t generating enough cash because you’re consuming it with the other growth initiatives, you still have to figure out ways to continue to issue cash or issue stock to get more cash on the balance sheet.

If I was going to offer that most cynical read, I would say the only business where they can see expanding the service will result in more profits to offset their losses elsewhere is Starlink. They don’t have another business that looks like that.

Just to be clear, Starlink is the broadband business that’s generating the cash flow. This mobile business would be cash negative initially before you get into that positive cash position. You have to look at the robotaxi business, there’s going to be a lot of CapEx initially, but these cars are pretty cheap. That theoretically could be a cash generator.

But that’s a different company.

But we know that, just like I mentioned earlier, it could make buying EchoStar make sense because you’re buying effectively cash in your own stock on the cheap. There are different ways to put cash obviously on the balance sheet in $10 or $20 billion chunks.

Obviously the structure of these companies — they’re all Elon’s companies in the end, and he’s managed them as closely as anyone can manage big public companies. But to make it as dumb as possible, say you have a dollar and if Gwynne Shotwell has a dollar and she wants to light the dollar on fire, she’ll put it in xAI against some return somewhere that might be $50 trillion total addressable market (TAM) or whatever their prospectus said.

Or you could put the dollar into Starlink Mobile in the build-out and you will probably return $1.10. That is what that business looks like because they will get some customers away from AT&T and Verizon. They’re already running that thing profitably.

The idea that they need to show some return somewhere, it feels like that’s why they’re making this move. Not because it makes the most financial sense, it just makes the most financial sense in the context of SpaceX.

You may be right. The problem with that belief is that it’s going to take time for them to get that dollar of profit out of the mobile business. They still have to build the network. They still have to sign up customers. You’re going to be negative EBITDA for a while. If you have two different businesses and you think the returns are significantly higher or more interesting to your investors to get to that next catalyst for space compute or Optimus or whatever it is, that is going to play a role.

What does Elon happen to care about the most at that moment? What is more interesting to him to do? Isn’t space compute a little bit more interesting to allocate those dollars than taking some mobile customers from AT&T?

Although the man’s addicted to his phone and I bet he hates seeing that AT&T logo in the corner. There’s just a part of that that’s always with these guys.

Let’s talk about the existing telecoms. They do seem a bit panicked. For a time, they were juggernauts. These were unstoppable businesses as mobile was growing. They poured a bunch of money into the 5G transition.

I’ve described the telecom industry as a bunch of lobbyists. Boy, did the lobbyists win the 5G transition. Boy, did they collect all the favors and all the capital they could to build out these networks and then reality hit them in the face. We beat China to some kind of network and then the thing that we were supposed to win did not happen.

Now we’re doing it again with AI, but that’s a different conversation. But that was the narrative with 5G: If we didn’t beat China to 5G, something. Who knows what, but we got to cut all the corners to build this network and spend all the money. It just didn’t pay off.

You’re an analyst, you’re in the trades. I skim the trades and boy are all these CEOs saying, “We’ve got to generate some revenue with these networks now.” You mentioned Mike Sievert is gone, the old CEO of Verizon’s gone. It just didn’t pay off for these guys.

Yeah, 5G didn’t deliver. Some of the promises were BS from the beginning. You talked about this earlier regarding autonomous cars. You’re not going to rely on the network to make that millimeter-second decision of whether you’re going to hit the car in front of you or not. Remote surgery, even if that was a thing, how is that a scalable business where you’re generating hundreds of billions of dollars of revenue?

These were all silly. Sievert used to be the guy saying, “People would say the same thing about LTE, there’s no application.” That was not even true. If you remember, the application was video and we knew that LTE was going to enable video and that’s exactly what happened.

You’re 100 percent right. This was just a way for them to get more spectrum because they were going to still have data growth on their networks. Capturing more spectrum to be able to handle the existing growth, and that’s cheaper to get spectrum, even at tens of billions of dollars, than it is to try and build the network for that capacity.

If they had just said, “We’re going to spend all this money and at the end of it, tens of thousands of people will be able to livestream Taylor Swift during the Eras tour on every one of those stops,” Americans would have said, “Go, go faster. Yes, we understand what that is.”

That is truly the thing they enabled. It’s very cool. It’s millimeter wave in stadiums and that’s cool. I don’t know if there’s another one. That said, they are on their back foot. They did spend a lot of money. This is around the time when, in my history as a journalist, they would start talking about 6G, and they want to, but they know they shouldn’t, so they don’t.

They’re having the meetings. They are certainly not as loud about the next round of investment as they would normally be in the cycle. Now they have a competitor. Your analysis is that Verizon is by far the weakest here. They have the most to lose. Explain why that is.

One other thing to mention is you have a very active FCC chair that would like to raise, and put on his resume, $100 billion from spectrum auction. You’re right, they’re going to talk about 6G again and have to come up with some type of revenue stream to justify getting this money. It’s going to be a lot harder though. They’re already pretty levered. They’ve got a new competitor.

In terms of Verizon, the issue is that AT&T has seen this thing developing for some time. They’ve built a fiber network. There’s only so much that wireless can do where a fiber network is ultimately your best connection. If you think about customers that own fiber and wireless, very high-value, very low-churn customers. That’s been their strategy. They’re plodding along. They’re going to get their two or three percent revenue growth and just pay their dividend and do their thing. That is the standard telco.

T-Mobile didn’t have that. They’ve got the dynamics — a lot of politics right now between Deutsche Telekom wanting to own it and not wanting to pay a high price and how that all plays out. Verizon just made a lot of bad strategic bets on spectrum. Obviously, AT&T had their own issues, but at least they got out of DirecTV and Warner quick enough and turned the ship.

But Verizon bought millimeter wave spectrum when they could have bought EchoStar and bought spectrum… even now they’re spectrum-constrained compared to their competitors and they need to go out and spend $10–$15 billion on the EchoStar spectrum. You have a new CEO in there who is not really a telco guy who’s just doing his thing, saying, “We’re just going to cut costs.” The EBITDA is going to look good because they’re just firing a bunch of people and there’s going to be a result.

There is going to be an impact of firing that many people in the organization. It may appease investors to make the EBITDA look good for the next couple of quarters. But at some point you have to show and have a strategy for some type of revenue growth. What is Verizon’s differentiation in the market right now? They have none. They’re the most in the crosshairs of where SpaceX and even the cable companies can continue to eat away at those customers.

That is surprising to me. It’s just my own history. I grew up in the midwest. I went to college in the midwest. That was Cingular territory and it became AT&T. When I moved to New York in 2010, Verizon was the gold standard network in the Northeast. It was the one everyone had. It cost the most money because it was the best network. The iPhone coming to Verizon a couple of years later was a huge deal.

Verizon’s network was so powerful at that time that they could try to force the Blackberry Storm down people’s throats. They were confident enough that their network was the thing holding people to them, that that was a worthwhile strategy. Obviously, it didn’t work. They made the wrong bet. You’re saying they made the wrong bet on millimeter wave. They made the wrong bet on other spectrum acquisitions. The one that I’m not quite tracking is media.

They did buy a bunch of dumb stuff. At one point they owned Tumblr, which is just one of the most confusing media outcomes of all time. But that stuff was all cheaper and easier for them to flip or shut down than AT&T buying all of Time Warner and putting out a 4:3 black-and-white Justice League movie. How did AT&T survive that? But you’re saying Verizon can’t survive owning Yahoo?

That’s a fair pushback, in that the media impact to Verizon was a lot less than AT&T. But these again were separate businesses. Obviously, it was a capital allocation issue for a period of years.

But the decisions on the spectrum front and the competitive front, and T-Mobile’s impact, John Legere’s impact in taking away the claim of having the best network, left them in a spot where they basically said, “We’ll just keep increasing price on our customers and we’ll get that 2 or 3 percent revenue growth.” And they just lost the narrative of what they meant to customers. I don’t really think under the new CEO that’s been regained.

Do you think their ability to say they have the best network is just gone?

That’s completely gone. That’s the crazy thing about this. The networks are effectively commoditized. These networks are basically the same. And they’re getting 60 percent margins.

That’s the whole thing with Dish Wireless — even if it wasn’t on their network and you guys tested it, it wasn’t on their network, you could have been buying AT&T’s network at half price. It’s crazy the average revenue per user (ARPU) and the margins that these guys get for what is effectively a commoditized market. That’s why the AT&T strategy is interesting because at least they’re trying to bundle that with a high-value fiber network. But for the other guys, it’s just commoditized wireless.

I would actually say the other strategic mistake Verizon made along the way was they got away from Fios. They decided it wasn’t worthwhile. It seems like they’re trying to reinvest in that now and go after that AT&T strategy.

Given their lack of spectrum, they can only take fixed wireless so far. You’re right. I wouldn’t be surprised if they got back to investing in fiber. The difference, obviously, with Fios is that you have union issues and a lot of cost structure issues that they were dealing with.

But the pivot to doing more fiber and perhaps laying off the fixed wireless, which is straining the network, is probably the right decision for them and what you’ll see happen going forward.

I want to end on just a big picture question here. We have covered so many crazy telecom mergers and it always feels like the right answer is to put more competition in the system.

We’ve mentioned John Legere several times in this conversation. He only got that job and T-Mobile only got to exist the way it does because AT&T was prevented from buying T-Mobile. They paid a breakup fee, which subsidized a huge portion of that early growth and those early strategic moves that Legere was able to make.

But that was good for the market. Consumers got a CEO who tried to change the market and have better customer experiences, reinvested that money in the network. That was good. The existence of Dish Network is T-Mobile trying to buy Sprint and instead of blocking the deal, we imposed some wild structural remedies and Makan Delrahim, who ran antitrust in the first Trump administration, rightly or wrongly engineered the outcome of Dish Network existing.

That was Delrahim’s preferred outcome: “We’re going to let this happen, but we need to have four carriers. Charlie Ergen is my guy. We were going to stand up a fourth one.” From my perspective, it just seemed obvious that he was never going to do that. And he didn’t.

Maybe I was correct to make that bet, but it just seemed obvious that Dish Network was going to hold onto a bunch of spectrum, watch the prices rise and then flip it when it turned out they never built their network. They had to hit targets with the FCC that they just weren’t hitting over time. Now, we have a true fourth competitor, or at least an aggressive competitor of the market in Elon, who’s probably going to try to actually do this thing and these companies are running scared.

Is this just evidence that we should have four carriers in the United States? And that when inevitably Verizon tries to buy T-Mobile, we should just say, no, the right answer is four and we’re not going to go to three again.

Under Chairman Wheeler, which goes way back, four was the number.

Wheels and I were buds.

If you called him now, he’d say, “I told you it should have been four and it’s going to go back there.” Obviously, in the new administration, they didn’t believe that that was the case. You see Chairman Carr pointing to prices, how he sees them being down and the competition that’s happened in fixed wireless.

But you always want more competition in a market. It drives innovation and it lowers prices and margins are approaching 60 percent in the wireless business. I can’t say we’ve had a tremendous amount of innovation, which gets back to what the telcos are doing in fear by refusing to give SpaceX a wholesale agreement.

That’s their right. But at some point, if the FCC’s mandate is to act in the public interest, we have a current administration — and who knows who gets in during the next administration — but if these telcos are going to push back so hard on what the fourth competitor, in this case SpaceX, is going to do, the FCC can probably get involved in some ways. That is the risk that they run by being so vocally against Elon Musk in the market.

You talk about the ultimate consolidation. It’s funny. We should save all these quotes now where they’re saying, “Elon can’t be a competitor because he only has 80 MHz of spectrum.” Because then when they want to merge with someone, they’re going to claim, “No, he’s actually a competitor.” They’re going to deny that as a competitive threat.

There’s nothing funnier than a giant telecom insisting that a thing that is not a competitor is their competitor. They all do it.

Last question. Again, this is just the big think rattling around my head. We might be on a cusp of an entire paradigm shift in what mobile devices even are. If you look at Meta, they’re going to put up the Muse charm and maybe we’re all going to talk to little cartoon AIs all day that run agents in a data center. Our use of mobile bandwidth to watch video will go down because we’re not even carrying phones anymore. Is that a risk here? Is anybody thinking about this?

We think about this every day at LightShed, in terms of all the different ways that AI [exists] and how we interact with our information and how we interact with commerce and using agents. Muse has obviously been something we’ve been waiting for from someone and there’s going to be other versions of that. But you’re right. It could decrease [phone usage], and it’s an Apple risk.

It decreases the importance of the status of holding an iPhone if you’re just not interacting with your data in the same way. If that happens, that whole paradigm in terms of the telcos and providing the subsidies changes. Whenever there’s change, there’s an opportunity for disruption and for margins to be contracted. It does change things and maybe SpaceX could play.

Elon’s been asked about making a device. I know Qualcomm, when you meet with those guys, says, “We have 40 different guys out there making devices.” I don’t think he’s going to add one more thing to his list, but again, let’s get back to what we’ve talked about during this podcast and narrative.

Will Terafab happen? Will data centers in space happen? It may not happen, but you can maybe talk about building a phone and then that becomes one more issue that the telcos have to deal with in terms of dealing with their customers. Why am I using this iPhone when I should be using this completely different device, whether it’s coming from OpenAI or Anthropic or maybe SpaceX?

The idea of Elon shipping a mid-range Android phone with the Play Store on it is so deeply funny to me. I truly hope it happens because that’s the product you can make today. Maybe there’s a paradigm shift and there’s a different set of products.

But right now you need to have Instagram and there’s really only one path to getting Instagram, which is shipping an Android phone with the Play Store on it. We just saw Amazon essentially capitulate with their new tablets.

If you’re focused on the future, you have to concede to the present. I truly do not believe we will see a mid-range Android phone from SpaceX. But you’re saying they might start talking about it.

No, I agree with you. I’m just saying when you’re trying to build narratives, why not throw that in the hopper? The bigger issue is someone’s going to build something that may resonate with… We’ve gone a long time. We’re spending $1,000 for these phones that are giving us some basic swipe functionality. They’re going to change in terms of how you use them.

This is a bigger and more obvious issue for Apple than anybody else, but it does change how the telcos are going to act and the role that they’re going to play and where that margin should be. They gave up a lot of value to Apple at some point during this continuum of the wireless industry. We’re going through another paradigm change, so we’ll see how those value splits play out.

Walter, we’re going to have to have you back soon because it feels like these things are going to happen fast. I was very happy to nerd out about telecom with you. Thanks for being on Decoder.

I appreciate it. Thank you.

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