This week we talk about Yoon, martial law, and impeachment.

We also discuss the PPP, chaebol, and dictators.

Recommended Book: Starter Villain by John Scalzi

Transcript

In the wake of WWII, Korea—which was previously held by the recently-defeated Japanese Empire—was split into two countries, the north backed by the Soviet Union and the south backed by the United States and its allies.

North Korea had a guerrilla fighter and staunch Soviet-style communism activist, Kim Il Sung, placed at the head of its new government, while South Korea was to be led by a longtime local politician named Syngman Rhee, who had run the country earlier, from 1919 until 1925, at which point he was impeached, and then again in 1947-1948, as head of the country’s post-war provisional government.

Rhee was a hardcore Korean independence activist during a period when the Japanese were clamping down on their mainland holdings and doing away with anyone who caused trouble or sparked anti-colonial protests, so he spent some time in exile, in China, returned to the US, where he was educated, for a bit, and then the US military returned him to Korea to run that provisional government once the dust had settled and the Japanese had been ousted from the area.

Rhee was an ideal representative in the region by American standards, in some ways, as he was vehemently anti-communist, even to the point of killing and supporting the killing of something like 100,000 communist sympathizers during an uprising on South Korea’s Jeju Island. He was president when North Korea invaded, sparking the Korean War, and then refused to sign the armistice that would have formally ended the conflict in 1953, because he believed the only solution to the conflict between these nations was a military one, and he held out hope that the South would someday conquer the North and unify Korea as a nation, once more.

Rhee then won reelection in 1956, and changed the country’s constitution to allow him to remain in office, getting rid of the two-term limit—which was not a popular move, but it worked, and he was able to run uncontested in 1960, because his opponent died of cancer in the lead-up to the election—though his opposition protested the results, claiming a rigged voting process, and this led to a huge movement by students in the country, which became known as the April Revolution; students were shot by police while protesting during this period, and that ultimately led to Rhee stepping down that same year, 1960.

So Rhee was a western-educated, christian conservative who was vehemently anti-communist, though also living in a part of the world in which an aggressive communist dictatorship recently invaded, and was threatening to do so again—so it could be argued his paranoia was more justified than in other parts of the world that had similar frenzied moments and governments during the cold war, though of course the violence against innocent citizens was impossible to justify even for him and his government; his authoritarian rule was brought to an end following that shooting of student protestors, and that left a power vacuum in the country, and South Korea saw 13 months of infighting and instability before a General named Park Chung Hee launched a coup that put him in charge.

Park positioned himself as president, and he did pretty well in terms of economic growth and overall national development—at this point the South was way behind the North in pretty much every regard—but he was also an out-and-out dictator who ruled with an iron fist, and in 1972 he put an entirely new constitution into effect that allowed him to keep running for president every six years, in perpetuity, no term limits, and which gave the president, so himself, basically unlimited, unchecked powers.

The presence of a seemingly pretty capable, newly empowered dictator helped South Korea’s economy, manufacturing base, and infrastructure develop at an even more rapid pace than before, though his nearly 18-year presidency was also defined by the oppression he was able to leverage against anyone who said anything he didn’t like, who challenged him in any way, and who spoke out of turn against the things he wanted to do, or the constitution that allowed him to do all those things.

In 1979, he was assassinated, and there’s still a lot of speculation as to the why of the killing—the assassin was in Park’s orbit, and was seemingly doing okay as part of that all-powerful government entity—but alongside speculation that it might have been planned by the US, in order to keep South Korea from developing a nuclear weapon, that it might have been the result of political jealousy, and that if might have been just an impulsive act by someone who was done being pushed around by a bully, it’s also possible that the perpetrator was a democracy activist who wanted to get a successful and long-ruling dictator out of the way.

Whatever the actual catalyst was, the outcome was more political upheaval, which by the end of the year, we’re still in 1979, led to yet another military coup.

This new coup leader was General Chun Doo-hwan, and he implemented martial law across the whole of the country by mid-year, as he ascended to the role of president, and he cracked down on democracy movements that erupted across the country pretty violently.

Chun held onto power for nearly 8 years, ruling as a dictator, like his predecessor, until 1987, when a student democracy activist was tortured to death by his security forces.

This torture was revealed to the country by a group of pro-democracy catholic priests in June of that year, and that sparked what became known as the June Democratic Struggle, which led to the June 29 Declaration, which was an announcement by the head of the ruling party—so the head of the party the dictatorial president belonged to, the Democratic Justice Party—that the next presidential vote would allow for the direct election of the president.

That party leader, Roh Tae-woo, very narrowly won the election, and his term lasted from 1988 until 1993; and during his tenure, the country entered the UN, that was in 1991, and his presidency is generally considered to be a pivotal moment for the country, as while he was technically from the same party as the previous ruler, a dictator, he distanced himself and his administration from his precursor during the election, and he abided by that previously enforced two-term limit.

By 1996, things had changed a lot in the country, the government fully recalibrating toward democratic values, and those previous rulers—the dictator Chun and his ally-turned-democratic reformer, Roh—were convicted for their corruption during the Chun administration, and for their mass-killings of pro-democracy protestors during that period, as well. Both were pardoned by the new president, but both were also quite old, so this was seen as a somewhat expedient political maneuver without a lot of downsides, as neither was really involved in politics or capable of causing much damage at that point in their lives.

In the years since, especially since the turn of the century, South Korea has become one of the world’s most successful economies, but also a flourishing example of democratic values; there are still some remnants of those previous setups, including the government’s tight ties with the so-called chaebol, or “rich family” companies, which were business entities propped up by government support, which were often given monopoly rights that other businesses didn’t enjoy, as part of a government effort to pull the country out of agrarianism back in the mid-20th century; companies like Hyundai, Samsung, and LG thus enjoy outsized economic power, to this day, alongside a whole lot of political influence in the country, as a result of this setup, which is a holdover from those earlier, dictatorial times.

But South Korea has generally erred toward rule of law since the late-1990s, even to the point of punishing their most powerful elected leaders, like President Park, who was accused of corruption, bribery, and influence-peddling, by removing her from office, then sentencing her to 24 years in jail.

What I’d like to talk about today, though, is a recent seeming abuse of power at a pretty staggering level in South Korean governance, and the consequences of that abuse for the country and for the abuser.

—

In March of 2022, Yoon Suk Yeol, a conservative candidate of the People Power Party, who was hoping to oust the incumbent Democratic Party from office, won the narrowest victory in South Korea history.

In his previous role as the chief of the Seoul Central District Prosecutor’s Office, Yoon was partly responsible for convicting former President Park for her abuses of power, and his public disagreements with President Moon, who appointed him as Prosecutor General of the country in 2019, led to his popularity in conservative circles, in turn leading to his ascension as a candidate in 2021.

Yoon ran on a conservative platform that’s become familiar in elections around the world in recent decades; basically deregulation paired with culture-war issues, like doing away with government support for gender equality and other often politically liberal efforts of that nature.

He won the election by less than a percentage point, and his tenure is office has not been favorably reviewed by democratic watchdogs, which have noted various sorts of corruption and democratic backsliding under his watch, and economic and policy analysts consider his administration to have been a somewhat ineffectual one.

Yoon’s tenure, like his candidacy, was also plagued by gaffes and seeming missteps.

He tried to raise the country’s maximum weekly working hours from 52 to 69, though he pulled back on this idea after a huge wave of backlash from young people.

He was also criticized for having just three women in his government, and two among his vice-ministerial level officials. He added two more after those criticisms, but one of them quit about a month after being appointed, following her attempt to implement massively unpopular school system revisions—and the entire government’s approval rating collapsed around this time, due to that proposed revision, which was criticized as being half-baked and nonsensical, but it was also partly the result of her ascension to the government in the first place, as she had a record of drunk driving and academic plagiarism; the president brought in a woman to placate the masses, basically, despite that woman being just a really, really bad choice for the position, which by some estimates further demonstrated his disdain for and ignorance about the whole conversation about women in government.

Yoon also tried to create an agency that would provide more oversight of the country’s police force, but this led to protests by police, who saw it as an attempt to take control of law enforcement and use it against the president’s enemies; the president’s office then worsened matters threatened to punish protesting officers.

By 2024, leading into the country’s parliamentary elections, Yoon’s government was incredibly unpopular with just about everyone, because of those and other decisions and statements and gaffes. Even his wife has been under investigation for accepting bribes and having undo influence on who takes positions of power, alongside comments she’s made about seeking revenge against people who say not nice things about her, including journalists.

The opposition swept that 2024 parliamentary election, which had the practical impact of making Yoon’s government something of a lame duck, unable to get anything done, because his party only controlled 36% of the National Assembly. He then boycotted the inaugural session of this new National Assembly, seemingly because he didn’t like the outcome, becoming the first President to do so since democracy returned to the country in 1988.

All of which leads us to what happened on December 3, 2024.

Late that night, President Yoon declared martial law, which would give him, as president, wartime powers to do all sorts of dictator-like things.

He said he declared martial law to unfreeze a frozen government that was paralyzed by his opposition: Assemblymembers had stymied a lot of his efforts to pass laws favored by his party and constituents, and had tallied a large number of impeachment efforts against people in his administration, while he, in turn, used more vetos than any other democratically elected president in the country’s history—so the executive and legislative branches were at a standoff, and this was freezing the government, so he says he declared martial law to basically get things done.

The opposition, in contrast, says his move was unconstitutional, and that he tried to launch a coup.

That latter claim seems to be backed by the fact that Yoon accused his political competition of collaborating with North Korean communists and engaging in anti-state activities, which he said were intended to destroy the country—this seems to be based, again, on the fact that they didn’t approve the stuff he wanted to get approved.

As part of this martial law declaration, he also declared a prohibition on all political activities and all gatherings of the National Assembly and local representatives, and he suspended the freedom of the press.

He apparently also ordered the arrest of many of his political opponents, alongside some people within his own party who might oppose him and his seeming power-grab.

Both parties, his own included, opposed this proclamation, and there were some dramatic standoffs following his announcement at 10:30pm local time, as protestors took to the streets and legislators gathered at the National Assembly Proceeding Hall, where they do their job, because members of the military were ordered to stop them; there are videos of these soldiers standing in the way of these politicians, trying to keep them from entering the building where they could vote to do away with the martial law declaration, and in some cases pointing assault rifles at them. The legislators didn’t backing down, and in a few cases wrestled with the soldiers while thousands of citizens protested behind them against the military action.

Eventually, the Assembly members made it inside and voted to lift martial law; this happened at 4:30am that morning. And over the next few days they began impeachment proceedings against the president, saying they would keep doing so until he resigned.

A bunch of people resigned from Yoon’s administration following his seeming attempt at a coup and, and on December 7, a few days later, he issued a public apology, saying that he wouldn’t try to do that again, though on the 12th he backtracked and defended his declaration of martial law, saying that he had to protect the country from these anti-state forces, accusing his opponents, once more, of being on North Korea’s side.

On December 14, Yoon was impeached and booted from office, following another, failed vote; his party sticking with him for a while, though seemingly distancing themselves from him, following his doubling-down on the “my political opponents are communists” stance.

The leader of his party the PPP, stepped down shortly after that successful vote, having changed his vote from being against impeachment to supporting it, saying basically that there was no other way to remove Yoon from office, and Yoon’s Supreme Councilmembers all stepped down, as well.

South Korea’s Constitutional Court will now have to decide, within the next six months, whether Yoon will be formally and permanently removed from office, or if he’ll be reinstated.

In the two previous instances of a president being impeached, the court has taken 2 and 3 months to make their decision, and they reinstated one president, while allowing the impeachment to stand for the other.

If Yoon is removed by the court, the country will have to elect a new leader within two months, and in the interim, the country’s Prime Minister, the number 2 person in the government, is serving as president; Yoon has been stripped of his powers.

Yoon has a broad swathe of immunity against criminal charges due to his position as president, but that doesn’t apply to rebellion or treason, which could apply in this case.

He’s been banned from leaving the country, but there’s a good chance if he tries, he won’t be stopped, due to a potential conflict between state security forces and presidential security forces—it would be a bad look to have them fight and maybe kill each other.

Yoon’s presence was requested by prosecutors over the weekend, but he didn’t show up to be questioned, and there’s a chance that if this happens again, him deciding not to show up and ignoring these requests, he’ll be arrested—though that same issue with presidential security fighting with police forces applies here, too, so it’s an open question what will happen if he just ignores the whole process and keeps claiming he did nothing wrong.

A preliminary court hearing date has been set for December 27, and though the court only has six of its total nine members at the moment, it has said it’s fine to move forward with an incomplete court, though the government has said they’ll likely be able to get another three judges approved by the end of December.

So things are complicated in South Korea right now, the former president disempowered, but seemingly refusing to participate in the proceedings that will help a new government form, if his dismissal is upheld by the court, that is, and that means the interim government is even more of a lame duck than he was, at a moment in which the world is very dynamic, both in the sense of geopolitics and North Korea becoming more active and antagonistic, and in the sense that economics and tech and everything else is roiling and evolving pretty rapidly right now; a new paradigm seems to be emerging in a lot of different spaces, and South Korea is in a terrible spot to make any moves in any direction, based on that—and that seems likely to remain the case for at least a few more months, but possibly longer than that, too, depending on how the court case plays out, and how the potential next-step election turns out, following that court case.

Show Notes

https://en.wikipedia.org/wiki/2024_South_Korean_martial_law_crisis

https://www.nytimes.com/2024/12/03/world/asia/south-korea-martial-law.html

https://www.yahoo.com/news/heres-whats-going-south-korea-213322966.html

https://www.washingtonpost.com/world/2024/12/03/martial-law-south-korea-explained/

https://apnews.com/article/south-korea-protesters-photo-gallery-yoon-b17f96063a2635ebc87f35ed9ab5ac5b

https://www.nytimes.com/2024/12/14/world/asia/south-korea-president-impeached-martial-law.html

https://www.nytimes.com/interactive/2024/12/04/world/asia/south-korea-impeachment-vote-president-yoon.html

https://www.nytimes.com/2024/12/13/world/asia/south-korea-protest-feliz-navidad.html

https://www.nytimes.com/interactive/2024/12/14/world/asia/skorea-yoon-timeline.html

https://apnews.com/article/south-korea-martial-law-yoon-impeach-6432768aafc8b55be26215667e3c19d0

https://www.reuters.com/world/asia-pacific/south-koreas-yoon-faces-second-impeachment-vote-over-martial-law-bid-2024-12-14/

https://www.theguardian.com/world/2024/dec/14/south-korea-president-yoon-suk-yeol-downfall-analysis

https://www.wsj.com/world/asia/south-korea-president-yoon-suk-yeol-impeached-49b0779c

https://www.washingtonpost.com/world/2024/12/14/south-korea-yoon-impeachment-vote/

https://english.hani.co.kr/arti/english_edition/e_national/1054103.html

https://en.wikipedia.org/wiki/Yoon_Suk_Yeol

https://www.nytimes.com/2024/02/01/world/asia/south-korea-first-lady-dior.html

https://www.economist.com/europe/2024/12/12/why-romania-cancelled-a-pro-russian-presidential-candidate

https://www.koreaherald.com/view.php?ud=20241215050041

https://www.bbc.com/news/articles/cx2pl4edk13o

https://www.cnn.com/2024/12/14/world/video/south-korea-yoon-second-impeachment-watson-cnntm-digvid

https://www.theguardian.com/world/2024/dec/15/south-korea-president-yoon-suk-yeol-reportedly-defies-summons-in-martial-law-inquiry

https://apnews.com/article/south-korea-yoon-martial-law-investigation-constitutional-court-8ec38d61f0ea5c48b3bd1f683b5e9c8d

https://en.wikipedia.org/wiki/Syngman_Rhee

https://en.wikipedia.org/wiki/South_Korea

https://en.wikipedia.org/wiki/Assassination_of_Park_Chung_Hee

https://en.wikipedia.org/wiki/Coup_d%27%C3%A9tat_of_December_Twelfth

https://en.wikipedia.org/wiki/Chaebol

This week we talk about coups, the Arab Spring, and Bashar al-Assad.

We also discuss militias, Al Qaeda, and Iran.

Recommended Book: The Algebraist by Iain M. Banks

Transcript

In the early 2010s, a series of uprisings against unpopular, authoritarian governments spread across the Middle East—a wave of action that became known as the Arab Spring.

Tunisia was where it started, a man setting himself on fire in protest against the nation’s brazenly corrupt government and all that he’d suffered under that government, and the spreading of this final gesture on social media, which was burgeoning at the time, amplified by the still relatively newfound availability and popularity of smartphones, the mobile internet, and the common capacity to share images and videos of things as they happen to folks around the world via social media, led to a bunch of protests and riots and uprisings in Jordan, Egypt, Yemen, and Algeria, initially, before then spreading to other, mostly Arab majority, mostly authoritarian-led nations.

The impact of this cascade of unrest in this region was immediately felt; within just two years, by early 2012, those ruling Tunisia, Egypt, Libya, and Yemen had been toppled, there were attempts to topple the Bahraini and Syrian governments, there were massive protests in Iraq, Jordan, Kuwait, Morocco, Oman, Algeria, and Sudan, and relatively minor protests, which were still meaningful because of the potential punishments for folks who rocked the boat in these countries, smaller protests erupted in Djibouti, Western Sahara, Saudi Arabia, Palestine, and Mauritania.

Several rulers and their ruling parties committed to stepping down soon, or to not run for reelection—some of them actually stuck with that commitment, though others rode out this period of tumult and then quietly backtracked.

Some nations saw long-lasting periods of unrest following this eruption; Jordan had trouble keeping a government in office for years, for instance, while Yemen overthrew its government in 2012 and 2015, and that spun-out into a civil war between the official government and the Iran-backed Houthis, which continues today, gumming up the Red Sea and significantly disrupting global shipping as a consequence.

What I’d like to talk about today, though, is another seriously disruptive sequence of events that have shaped the region, and a lot of things globally, as well, since the first sparks of what became the Arab Spring—namely, the Syrian Civil war—and some movement we’ve seen in this conflict over the past week that could result in a dramatically new state of affairs across the region.

—

In 1963, inspired by their brethren’s successful coup in nearby Iraq, the military wing of the Arab nationalist Ba’ath party of Syria launched a coup against the country’s post-colonial democratic government, installing in its stead a totalitarian party-run government.

One of the leaders of this coup, Hafez al-Assad, became the country’s president in 1971, which basically meant he was the all-powerful leader of a military dictatorship, and he used those powers to even further consolidate his influence over the mechanisms of state, which meant he also had the ability to name his own successor.

He initially planned to install his brother as leader when he stepped down or died, but that brother attempted to overthrow him when he was ill in 1983 and 1984, so when he got better, he exiled said brother and chose his eldest son, Bassel al-Assad, instead.

Bassel died in a car accident in 1994, though, so Hafez was left with his third choice, Bashar al-Assad, which wasn’t a popular choice, in part because it was considered not ideal for him to choose a family member, rather than someone else from the leading party, but also because Bashar had no political experience at the time, so this was straight-up nepotism: the only reason he was selected was that he was family.

In mid-2000, Hafez died, and Bashar stepped into the role of president. The next few years were tumultuous for the new leader, who faced heightened calls for more transparency in the government, and a return to democracy, or some form of it at least, in Syria.

This, added to Bashar’s lack of influence with his fellow party members, led to a wave of retirements and purgings amongst the government and military higher-ups—those veteran politicians and generals replaced by loyalists with less experience and credibility.

He then made a series of economic decisions that were really good for the Assad family and their allies, but really bad for pretty much everyone else in the country, which made him and his government even less popular with much of the Syrian population, even amongst those who formerly supported his ascension and ambitions.

All of this pushback from the people nudged Bashar al-Assad into implementing an increasingly stern police state, which pitted various ethnic and religious groups against each other in order to keep them from unifying against the government, and which used terror and repression to slap down or kill anyone who stood up to the abuse.

When the Arab Spring, which I mentioned in the intro, rippled across the Arab world beginning in 2011, protestors in Syria were treated horribly by the Assad government—the crackdown incredibly violent and punitive, even compared to that of other repressive, totalitarian governments in the region.

This led to more pushback from Syrian citizens, who began to demand, with increasing intensity, that the Assad-run government step down, and that the Ba’athists running the dictatorship be replaced by democratically elected officials.

This didn’t go over well with Assad, who launched a campaign of even more brutal, violent crackdowns, mass arrests, and the torture and execution of people who spoke out on this subject—leading to thousands of confirmed deaths, and tens of thousands of people wounded by government forces.

This response didn’t go over super well with the people, and these protests and the pushback against them spiraled into a full-on civil uprising later in 2011, a bunch of people leaving the Syrian military to join the rebels, and the country breaking up into pieces, each chunk of land controlled by a different militia, some of these militias working well together, unifying against the government, while others also fought other militias—a remnant of the military government’s efforts to keep their potential opposition fighting each other, rather than them.

This conflict was officially declared a civil war by the UN in mid-2012, and the UN and other such organizations have been fretting and speaking out about the human rights violations and other atrocities committed during this conflict ever since, though little has been done by external forces, practically, to end it—instead it’s become one of many proxy conflicts, various sides supported, mostly with weapons and other resources, though sometimes with training, and in rare instances with actual soldiers on the ground, by the US, Turkey, Russia, Iran, the Iran-backed group Hezbollah, Saudi Arabia, Qatar, Britain, France, Israel, and the Netherlands.

This conflict has demanded the country’s full attention for more than a decade, then, and it’s had influence even beyond Syria’s borders, as groups like the Islamic State, or ISIS has been able to grow and flourish within Syria, due to all the chaos and lack of stability, refugees from Syria have flooded across borders, fleeing the violence and causing all sorts of unintended disruptions in neighboring and even some further-afield countries where, in some cases, millions of these refugees have had to be taken care of, which in turn has influenced immigration-related politics even as far away as the European Union. Also due to that lack of internal control, crime has flourished in Syria, including drug-related crime. And that’s lets to a huge production and distribution network for an illegal, almost everywhere, amphetamine called Captagon, which is addictive, and the pills often contain dangerous filler chemicals that are cheaper to produce.

This has increased drug crime throughout the region, and the Syrian government derives a substantial amount of revenue from these illicit activities—it’s responsible for about 80% of global Captagon production, as of early 2024.

All of which brings us to late-2024.

By this point, Syria had been broken up into about seven or eight pieces, each controlled by some militia group or government, while other portions—which make up a substantial volume of the country’s total landmass—are considered to be up in the air, no dominant factions able to claim them.

Al-Assad’s government has received a fair bit of support, both in terms of resources, and in terms of boots on the ground, from Iran and Russia, over the years, especially in the mid-20-teens. And due in large part to that assistance, his forces were able to retake most of the opposition’s strongholds by late 2018.

There was a significant ceasefire at the tail-end of 2019, which lasted until March of 2020. This ceasefire stemmed from a successful operation launched by the Syrian government and its allies, especially Iran, Russia, and Hezbollah, against the main opposition and some of their allies—basically a group of different rebel factions that were working together against Assad, and this included groups backed by the Turkish government.

On March 5, 2020, Turkish President Erdogan and Russian President Putin, which were backing opposite sides of this portion of the Syrian civil war, agreed on a ceasefire that began the following day, which among other things included a safety corridor along a major highway, separating the groups from each other, that corridor patrolled by soldiers from Turkey and Russia.

This served to end most frontline fighting, as these groups didn’t want to start fighting these much larger, more powerful nations—Russia and Turkey—while trying to strike their enemies, though there were still smaller scuffles and attacks, when either side could hurt their opponent without being caught.

In November of 2024, though, a coalition of anti-Assad militias launched a new offensive against the Syrian government’s forces, which was ostensibly sparked by heavily shelling by those forces against civilians in rural areas outside Aleppo, the country’s second-largest city.

On the 29th of November, those forces captured most of Aleppo, and then plowed their way through previously government-held towns and cities at a fairly rapid clip, capturing another regional capitol, Hama on December 5, and securing Damascus, the capitol of the country, on December 8.

This ended the 13-year civil war that’s plagued Syria since all the way back in 2011; Bashar al-Assad fled to Russia, according to Russian and Iranian officials, and he resigned before he hopped on that flight; Russian state media is saying that Assad and his family have been granted asylum by the Russian government.

This is a rapidly developing story, and we’ll know more over the next few weeks, as the dust settles, but right now it looks like the Syrian government has been toppled by rebel forces led by a man named Abu Mohammad al-Jolani, a 42-year-old child of Syrian exiles who was born in Saudi Arabia, and who spent the early 2000s fighting against US occupation forces in Iraq as part of Al Qaeda.

He apparently spent a few years in an Iraqi prison, then led an Al Qaeda affiliate group, which evolved into its own thing when he broke ties with Al Qaeda’s leadership.

This new group that he formed, Hayat Tahrir al-Sham, tried to differentiate itself from groups like Al Qaeda by saying they didn’t want to play a role in the global jihad, they just wanted to reform the government in Syria. As part of that pivot, they started governing and building infrastructure across the chunk of Syria they claimed, even to the point of collecting taxes and providing civilians with identity cards; though throughout this period they were also known for ruling with an iron fist, and for being hardcore authoritarians, dedicated to implementing a hard-line version of Islamist ideological law.

In the midst of their blitz-like capture of Syria, though, representatives from this group have said they’ll implement a religiously tolerant representative government, and they won’t tell women in the country how to dress.

Following the capture of Damascus, Syria’s Prime Minister said that he would remain in the country, and that he was ready to work with whomever takes the reins as things settle down, happy to make the transition a smooth and peaceful one, essentially, whatever that might mean in practice.

The US military has taken this opportunity to strike dozens of Islamic State facilities and leaders across the country, marking one of the biggest such actions in recent months, and military leaders have said they would continue to strike terrorist groups on Syrian soil—probably as part of an effort to keep the new Syrian government, whatever its composition, from working with IS and its allies.

Russia has requested a closed-door meeting with the United Nations Security Council to discuss Syria’s collapse, and it’s been reported that they failed to come to Assad’s aid because they’re too tied up in Ukraine, and they weren’t able to move forces from North Africa rapidly enough to do much good; though there’s a chance they’ll still shift whatever chess pieces they can to the area in order to influence the composition of the new government, as it’s forming.

Iran has said they welcome whatever type of government the Syrian people decide to establish, though it’s likely they’ll try to nudge that formation in their favor, as Syria has long been an ally and client state of theirs, and they are no doubt keen to maintain that reality as much as possible, and bare-minimum to avoid the establishment of an enemy along their border.

And Israel has entered what’s supposed to be a demilitarized buffer zone in the Golan Heights because this zone is on the Syrian border; they’ve also captured a buffer zone within Syria itself. They’ve launched airstrikes on suspected chemical weapon sites in Syria, to prevent them from falling into extremist hands, they’ve said, and Israeli leaders said they want to keep any issues in their neighbor from impacting Israeli citizens. And Iraq’s government has announced that they’re doing the same along their shared border with Syria, so the whole region is bulwarking their potential weak points, just in case something goes wrong and violence spreads, rather than being tamped down by all this change.

Israel’s prime minister, and other higher ups in the government, have also claimed responsibility for Assad’s toppling, saying it was their efforts against Iran and its proxy forces, like Hezbollah, that set the stage for the rebels to do what they did—as otherwise these forces would have been too strong and too united for it to work.

Notably, the now-in-charge rebel group has been a longtime enemy of Iran and Hezbollah, so while there’s still a lot of uncertainty surrounding all of this, Israel’s government is no doubt generally happy with how things have progressed, so far, as this could mean Syria is no longer a reliable corridor for them, especially for the purposes of getting weapons to Hezbollah in southern Lebanon, along Israel’s northern border.

That said, this same group isn’t exactly a fan of Israel, and is backed by Turkey, which has been highly critical of Israel’s actions in Gaza and Lebanon.

So it’s an incredibly tumultuous moment in Syria, right now, and in this region, as a whole, because the conflict in Syria has been super impactful on everyone thereabouts, to varying degrees, and this ending to this long-lasting civil war could lead to some positive outcomes, like Syrian refugees who have been scattered across neighboring countries being able to return home without facing the threat of violence, and the release of political prisoners from infamous facilities, some of which have already been emptied by the rebels—but especially in the short-term there’s a lot of uncertainty, and it’ll likely be a while before that uncertainty solidifies into something more knowable and predictable, as at the moment, much of the country is still controlled by various militia groups backed by different international actors, including Kurdish-led forces backed by the US, and forces allied with Turkey in the north.

So this change of official governance may shuffle the deck, but rather than stabilizing things, it could result in a new conflict catalyzed by the power vacuum left by the Assad government and its allies, if rebel forces—many of which have been labeled terrorists by governments around the world, which is another wrinkle in all this—if they fail to rally behind one group or individual, and instead start fighting each other for the opportunity to become the country’s new dominant force.

Show Notes

https://www.nytimes.com/2024/12/08/world/middleeast/syria-hts-jolani.html

https://www.nytimes.com/2024/12/06/briefing/syria-civil-war-assad.html

https://www.wsj.com/world/middle-east/assads-rule-collapses-in-syria-raising-concerns-of-a-vacuum-95568f13

https://www.nytimes.com/2024/12/02/world/middleeast/syria-rebels-hts-who-what.html

https://www.washingtonpost.com/national-security/2024/12/07/syria-rebels-biden-intelligence-islamists/

https://apnews.com/article/turkey-syria-insurgents-explainer-kurds-ypg-refugees-f60dc859c7843569124282ea750f1477

https://apnews.com/article/israel-hamas-war-gaza-lebanon-news-7-december-2024-53419e23991cfc14a7857c82f49eb26f

https://apnews.com/article/syria-assad-sweida-daraa-homs-hts-qatar-816e538565d1ae47e016b5765b044d31

https://www.nytimes.com/2024/12/08/world/middleeast/syria-damascus-eyewitness-assad.html

https://www.nytimes.com/article/syria-civil-war-rebels.html

https://www.nytimes.com/live/2024/12/08/world/syria-war-damascus

https://en.wikipedia.org/wiki/Ba%27ath_Party

https://en.wikipedia.org/wiki/1963_Syrian_coup_d%27%C3%A9tat

https://en.wikipedia.org/wiki/Hafez_al-Assad

https://en.wikipedia.org/wiki/Syrian_revolution

https://www.cfr.org/article/syrias-civil-war

https://en.wikipedia.org/wiki/Syrian_civil_war

https://en.wikipedia.org/wiki/Bashar_al-Assad

https://en.wikipedia.org/wiki/Fenethylline

https://carnegieendowment.org/research/2024/07/border-traffic-how-syria-uses-captagon-to-gain-leverage-over-saudi-arabia?lang=en

https://en.wikipedia.org/wiki/Northwestern_Syria_offensive_(December_2019_%E2%80%93_March_2020)

https://en.wikipedia.org/wiki/2024_Syrian_opposition_offensives

https://www.bbc.com/news/articles/c8j99447gj1o

https://apnews.com/article/syria-assad-rebels-war-israel-a8ecceee72a66f4d7e6168d6a21b8dc9

https://www.nytimes.com/live/2024/12/09/world/syria-assad-rebels

https://www.nytimes.com/2024/12/09/world/middleeast/israel-assad-syria.html

https://apnews.com/article/iran-mideast-proxy-forces-syria-analysis-c853bf613a6d6af7f6aa99b2e60984f8

https://www.nytimes.com/2024/12/09/briefing/irans-very-bad-year.html

https://apnews.com/article/syria-hts-assad-aleppo-fighting-2be43ee530b7932b123a0f26b158ac22

https://apnews.com/article/syria-insurgents-aleppo-iran-russia-turkey-abff93e4f415ebfd827d49b1a90818e8

https://www.nytimes.com/2024/12/06/world/middleeast/syria-rebels-hama-homs.html

https://en.wikipedia.org/wiki/Syrian_civil_war

https://en.wikipedia.org/wiki/Arab_Spring

This week we talk about emissions, carbon credits, and climate reparations.

We also discuss Baku, COP meetings, and petrostates.

Recommended Book: The Struggle for Taiwan by Sulmaan Wasif Khan

Transcript

In 2016, a group of 195 nations signed the Paris Agreement under the United Nations Framework Convention on Climate Change, usually just called the Paris Agreement, which was negotiated the previous year, and which, among other things, formalized the idea of attempting to keep the global average temperature from increasing by 1.5 C, which is about 2.7 F, above pre-industrial levels.

The really bad stuff, climate-wise, was expected to happen at around 2 degrees C above that pre-industrial level, so the 1.5 degrees cutoff made sense as sort of a breakwater meant to protect humanity and the natural world from the most devastating consequences of human-amplified climate change.

This has served decently well as a call-to-arms for renewable energy projects and other efforts meant to reduce greenhouse gas emissions, and many nations have actually made really solid strides in that direction since this agreement was formalized, dramatically truncating their emissions in a variety of ways, while also laying the groundwork for long-term reductions by installing a whole lot of solar and wind, reviving old and building new nuclear power facilities, reinforcing and expanding their grids, including adding all sorts of large-scale battery storage, and figuring out ways to reduce energy consumption, which has allowed for the shut-down of coal and oil plants.

Shorter-term solutions, like replacing more polluting and emitting sources of energy, like coal, with gas, have also put a big dent in overall global emissions, especially for entities like the US and Europe; this isn’t ideal as a permanent measure, because there are still a lot of emissions associated with gas, especially its transport, because of leakage, and gas itself, in the atmosphere, has really significant greenhouse properties, but in the short-term this has proven to be one of the most impactful solutions for some nations and large corporations, and it’s increasingly being seen as a transitionary measure, even by those who oppose the use of any fossil fuels long-term.

Things have been going decently well, then, even if progress is still far short of where it needs to be for most countries to meet their Paris Agreement commitments, and far slower than many people who are watching this space, and analyzing whether we’ll be able to avoid triggering those much-worse climate outcomes, would prefer.

One issue we’re running into, now, is that those original commitments were a little fuzzy, as the phrase “preindustrial period” could mean many different periods, even if it’s commonly assumed to be something like 1850 to 1900, in the lead-up to humanity’s full-on exploitation of fossil fuels and the emergence of what we might call the modern era—society empowered by things like coal and oil and gas, alongside the full deployment of electrical grids.

Throughout this period, though, from the mid-19th century to today, the climate has experienced huge swings year to year, and decade to decade. The evidence showing that we humans are throwing natural systems way off their equilibrium are very clear at this point, and it isn’t a question of whether we’re changing the climate—it’s more a question of how much, how quickly, and compared to what; what baseline are we actually using, because even during that commonly used 1850 to 1900 span of time, the climate fluctuated a fair bit, so it’s possible to pick and choose baseline numbers from a range of them depending on what sort of picture you want to paint.

Research from the World Meteorological Organization in 2022 found that, as of that year, we were probably already something like 1.15 degrees C above preindustrial levels, but that it was hard to tell because La Niña, a weather phenomenon that arises periodically, alongside its opposite, El Niño, had been cooling things down and dampening the earth-warming impacts of human civilization for about three years.

They estimated, taking La Niña’s impact into consideration, that the world would probably bypass that breakwater 1.5 degrees C milestone sometime in the next four years—though this bypassing might be temporary, as global temperatures would increase for a few years because of the emergence of El Niño.

Adding to the complexity of this calculation is that aforementioned variability in the climate, region to region, and globally. The WMO estimated that through 2027, the world is likely to fluctuate between 1.1 and 1.8 degrees C above preindustrial levels—and that at that higher range, El Niño might tip things into the especially dangerous 2 degree C territory the Paris Agreement was supposed to help us avoid.

By late-2024, it was becoming increasingly obvious that the world had stepped past the 1.5 degrees threshold into unfamiliar climactic terrain.

Three of the five leading research groups that keep tabs on this matter have said that in addition to 2024 being the warmest year on record, it will also be the first year we’ve ever surpassed that 1.5 degree level.

Notably, simply popping up above 1.5 degrees doesn’t suggest we’re now permanently living in that long worried about climate nightmarish world: there are significant, normal fluctuations in this kind of thing, alongside those associated with the El Niño/La Niña patterns; there are a lot of variables acting upon our climate, in other words, in addition to the human variables that are pushing those averages and fluctuating ranges up, over time.

The concern here, though, even if we drop back down below 1.5 degrees C for a while is that this temperature band opens up a whole new spectrum of weather-related consequences, ranging from substantial, persistent, crop-killing, barely survivable heat and drought in some parts of the world, to things like larger, more frequent, and more difficult to predict storm systems, like the ones we’ve already seen in abundance this and last year, but bigger and wilder and in more areas that don’t typically see such storms.

What I’d like to talk about today is what happened at a recent climate-policy focused meeting, COP29, and the international response to that meeting.

—

The United Nations Conference of the Parties of the UN Climate Change Conference, or COP meetings, are held every year in a different host country, and they’re meant to serve as a formal space where governments can present their goals and boast of their climate-related accomplishments. They also serve as a platform for negotiations related to things like emissions standards and goal-setting, like that aforementioned 1.5 degrees C temperature level we’ve been trying to avoid hitting.

The most recent of these meetings, COP29, was held in Baku, the capitol of Azerbaijan, in mid- to late-November of 2024. And that location was pretty controversial from the get-go because Azerbaijan is a petro-state: its authoritarian government basically funded and sustained by the sale of oil and gas, all of which flows through a state-owned, corruption-laden, local elite-profiting energy company.

This isn’t the first time a full-on petro-state has hosted a COP meeting, as COP28 was held in Dubai, in the UAE, which was also controversial.

But this one was seen as a step even further toward what might read as the appropriation or capture of the COP meetings for the benefit of fossil fuel entities, as the meeting was partly hosted by so-called official partners, which were fossil fuel business interests directly owned by the country’s president, while others weren’t directly owned, but were connected to his family’s other businesses, all of them thus linked to both authoritarian corruption, and the wealth associated with fossil fuel focused economics.

As a result, there were allegations that this whole meeting was premised on providing a notorious source of greenhouse gas emissions, which has every reason to try to keep those emitting products available for as long as possible, a venue for greenwashing their efforts, while also giving them the power to moderate discussions related to global emissions targets and other climate change-oriented issues; a major conflict of interest, basically.

The Azerbaijani president, leading up to the meeting, countered that critiques of his country’s government and human rights record and prominence as a fossil fuel exporter were all part of a smear campaign, and that these unwarranted, preemptive criticisms wouldn’t stop those running COP29 from achieving their goal of helping the world “cope with the negative impacts of climate change.”

That statement, too, was criticized, as it implies fossil fuel are more interested in pushing the world to adapt to a climate change and its impacts, rather than attempting to halt the emissions that are causing said climate change; many such companies seem keen to keep pumping oil and burning coal and gas forever, in other words, and their efforts in this regard thus tend to orient around figuring out what the new, warmer, more chaotic world looks like, rather than entertaining the idea of changing their business model in any substantial way.

So leading up to this meeting, expectations were low, and by some estimates and according to some analysis, those low expectations were met.

Article 6 of the Paris Agreement was a big topic of discussion, for instance, as this article outlines how countries can cooperate with each other to reach their climate targets—and this collaboration is predicated on a carbon credit system.

So if County A reduces their emissions by more than the targets set by this group, they can sell the gap, the amount of carbon equivalents not emitted into the atmosphere, to Country B, which failed to reach its targets, but which can bring its emissions into accord by acquiring those credits, which according to such a system count as emissions reductions.

This same general concept applies to companies, like airlines and even fossil fuel producing energy companies, as well.

But while the agreement reached at COP29 does establish a UN-backed carbon credit trading body, which has been heralded as a key step on the way toward concluding Article 6 negotiations that could open up a bunch of new finance for smaller and poorer countries in particular—as they could sell their carbon credits to their wealthier, more emitting fellow COP members—despite that progress, the scaffolding that exists now is generally considered to be leaky and rife with abuse potential, as the UN body doesn’t really have the teeth to enforce anything or do much checking into claims made by governments and corporations. A lot of this system is basically on the honor system, and that means just like the stated goals presented by governments and corporations as to when they’re be net-zero and when they’ll reach the even further-off goal of zero emissions, these claims are often worth little or nothing because there’s no mechanism for punishing entities that fail to live up to their boasts and ambitions.

A company or government could say they plan to hit net-zero by 2035, then, but if they don’t do anything that would allow them to hit that goal in that lead-up to that year, they get to keep claiming to be part of the solution, without having to do any of the work to actually achieve anything. This grants them the veil of sustainability, and without any real consequence.

Also notable here is that this meeting’s progress on Article 6, establishing that UN body, was pushed through using a questionable procedural move that disallowed negotiation, despite this same proposal having been dismissed after negotiation at previous COP meetings.

So while it’s arguably good to see progress of any kind on these matters, that this component of Article 6 was voted down previously, but then forced through using what amounts to a technicality early on at COP29 is being side-eyed by a lot of COP watchers who worry about these meetings being coopted by forces that are keen to see this carbon system formalized not because it will help the world reduce emissions, but because it will create a new asset class worth hundreds of billions of dollars, which many of them hope to profit from.

It’s worth noting, too, that all of the carbon credit markets that have been tried, so far, have either collapsed or served as mechanisms for greenwashing emitting activities; less than 16% of carbon credits issued up till this point represent actual, provable emissions reductions, and most of them are basically just dressed-up money grabs. This new move, despite representing progress of a sort, isn’t being seen as substantial enough to change the current carbon credit paradigm, as those issues have not been addressed, yet.

All that said, the big news out of COP29 was a deal that requires wealthier nations make a big payout to poorer nations in the form of climate finance; so paying for renewable energy infrastructure, paying for flood walls, things like that, so that poorer countries can leap-frog the fossil fuel era, and so they can deal with and survive the consequences of climate change, which is something they bear a lot less responsibility for than wealthier, far more emitting countries.

Those on the receiving end, representing the nations that will receive payments via this plan, were aiming for a minimum of $500 billion, payable in full by 2035, and they were pushing for a lot more than that: something like $1.3 trillion.

The final sum was lower than the minimum target, though, weighing in at just $300 billion; which isn’t great in contrast to those hoped-for figures, though on the upside, it is three-times what was promised as part of a previously negotiated deal from 2009.

Representatives from poorer nations have expressed their discontentment with this agreement, saying that the sum is paltry compared to the challenges they face in trying to shift to renewables while also scrambling to defend against increasingly dangerous temperatures and weather patterns.

They’ve also criticized the meeting’s leadership for basically gaveling this version of the agreement through before it could be commented upon by those on the receiving end of these payouts.

Summing up the consequences of this meeting, then, a lot of money matters were discussed, which is important, and more money was promised to poorer nations by wealthy nations than at earlier meetings, which is also generally considered to be vital to this transition, and to overall fairness within this context—since again, these nations have contributed very little to the issue of climate change, compared to wealthier nations, and they bear a disproportionate amount of the negative consequences of climate change, as well.

There are serious concerns that some of these things were passed without the usual level of democratic consideration, and that some of the money talk, especially related to carbon credits, could represent basically a cash-grab by entities that aren’t super-interested in actually changing the status quo, but are very interested in making potentially tens or hundreds of billions of dollars from what amounts to a fabricated asset class that they can spin-up out of nothing.

There’s a chance that some of this, even the stuff that’s sparking the most concern at the moment, and which seems to be a cynical appropriation of this group and this whole process, could actually lead to more substantial agreements at future COP meetings.

COP30 will be based in Brazil, and Brazil’s current leadership at least has shown itself to be decently concerned with actual climate issues, as opposed to just the money associated with them. And previous meetings have tended to build upon the agreements of their precursors—so the establishment of a UN body for carbon credits could clear the way for an actually empowered, punishment-capable institution that holds companies and countries to their word on things, rather than simply serving as a symbolic institution that watches over a made-up asset class, which seems to be the case, currently. That asset class could become less prone to abuse and manipulation, and could help with this energy transition as it’s ostensibly meant to; but that’ll be determined in large part by what happens at the next couple meetings.

However this policymaking plays out, we’ve stepped into a world in which 1.5 C is no longer a far off concern, but a lived reality, at least periodically, and that could nudge things more in the direction of practical outcomes, rather than aspirations and fuzzy goals from this and similar bodies; though the consequences of this and the last few COP meetings have arguably led to luke-warm progress in that direction, at best.

Show Notes

https://www.wsj.com/articles/u-n-negotiators-take-key-step-to-global-carbon-deal-1e23433e

https://unfccc.int/process-and-meetings/the-paris-agreement/article-64-mechanism

https://en.wikipedia.org/wiki/Petroleum_industry_in_Azerbaijan

https://en.wikipedia.org/wiki/United_Nations_Climate_Change_Conference

https://www.semafor.com/article/11/24/2024/the-cop29-deal-is-even-more-disappointing-than-it-looks

https://apnews.com/article/united-nations-climate-talks-baku-azerbaijan-finance-8ab629945660ee97d58cdbef10136f35

https://www.theguardian.com/environment/2024/nov/24/cop29s-new-carbon-market-rules-offer-hope-after-scandal-and-deadlock

https://www.businessgreen.com/blog-post/4382153/cop29-baku-breakthrough-disappoints-trigger-fresh-wave-climate-finance

https://news.mit.edu/2023/explained-climate-benchmark-rising-temperatures-0827

https://www.theguardian.com/environment/2024/nov/18/climate-crisis-world-temperature-target

https://grist.org/economics/how-the-world-gave-up-on-1-5-degrees-overshoot/

https://www.washingtonpost.com/climate-environment/2024/11/27/global-warming-fight-paris-agreement-future/

https://en.wikipedia.org/wiki/Paris_Agreement

This week we talk about Mastodon, Threads, and twttr.

We also discuss social platform clones, user exoduses, and communication fractures.

Recommended Book: Invisible Rulers by Renée DiResta

Transcript

In 2006, a prototype of a software project called twttr, t-w-t-t-r, was developed by Jack Dorsey and Florian Weber, that name used because the full twitter.com domain, the word with all its vowels, was already owned and in use, and because the vowel-less version of the word only had five letters, which aligned with SMS short codes for the US, which were basically shorthand versions of telephone numbers that were used in lieu of such numbers by mobile network operators at the time.

Going without vowels was also super trendy in Silicon Valley back then, due to the flourishing of online success stories like Flickr.

Twitter, in that early incarnation, was meant to be a one-to-many SMS service, which means sending text messages from one phone to multiple phones, rather than one to one, which was the default.

This early prototype was used internally at Odeo, which was an early-2000s web-based media directory, founded by some of the same people who eventually founded Twitter as a company, and random fun fact, Kevin Systrom who eventually cofounded Instagram, was an intern at Odeo one summer, back in 2005, before the company was sold in 2007.

Twitter was spun out as its own company the same year Odeo was sold, and by 2009 it had become the hot new thing in the burgeoning world of the web—folks were sending tens of thousands of tweets, messages that were shared one-to-many, though online, on the web, instead of via SMS, by the end of 2007, and that was up to 50 million a day by early 2010.

The whole concept of Twitter, then, from its name, which was initially predicated on SMS short codes, to its famous 140-character limit, was based on earlier technology, that of text messages, and that sort of limitation—which has in the years since been messed with a bit, the company slowly adding more capabilities, including the sharing of images and videos and other media types—but those limitations have in part helped define this platform from its peers, as while Facebook expanded and expanded and expanded to gobble up all of its general-purpose social networking competitors, Instagram dominated the photo-posting space, and YouTube has locked down the long-form video world for more than a decade, twitter held its own as a less-sprawling, less successful by most metrics, but arguably more influential network because it was a place that was optimized for concision and up-to-the-minute conversation, as opposed to every other possible thing it could be.

This meant that while it didn’t have the same billion-plus user base, and it didn’t have the ever-growing ad-revenue that Meta’s platforms could claim, it was almost always the more culturally relevant network, its users sharing more up-to-date information, its communities generating more memes, which were then spread to other networks days or weeks later, and it became a hotbed of debate and exclusive information from journalists, politicians, and business owners.

A lot changed when Tesla and SpaceX owner Elon Musk bought the network in October of 2022, changing the name to X in mid-2023, and pivoting the company dramatically in basically every way: removing a lot of those earlier limitations, cutting the number of employees by something like 80%, and losing a lot of advertisers because of his many ideological statements and political stances—including his backing of former president and now president-elect Donald Trump in the 2024 election.

What I’d like to talk about today are the twitter clones that have popped up in recent years, and one in particular that, despite its still-small size and arguable underdog status, is being heralded as the possible successor of Twitter—in that original, influential and scrappy sense—and what makes this network, Bluesky, different from other would-be successors in this space.

—

The leadership at X, including owner Musk, recently promoted a new feature on the app that refocuses attention away from buttons like likes and shares in favor of views—a metric of engagement that some analysts have claimed is meant to conceal the fact that the network is seeing a lot less actual, human engagement, and because it feeds people posts it wants them to see, this change allows them to artificially inflate the seeming activity on these posts for advertising purposes: they can say, hey look how much attention these posts are getting, please buy some ads, and that allows them to charge a higher price than if they were using those more conventional engagement metrics, which are apparently collapsing.

As a company, X has been hemorrhaging money since Musk took over, its ad revenue, which makes up the majority of its income, dropping by nearly half from 2022 to 2023, and it lost another 24% from the first half of 2023 to the first half of 2024.

One estimate released in November of 2024 suggests that X may have missed out on nearly $6 billion in lost ad revenue since Musk took over in 2022, mostly because of all the decisions he’s made—including basically going to war with many of the company’s top advertisers, publicly criticizing and threatening them for not paying more and buying more ads—but also his many foot-in-mouth statements and, at times, support of extremist causes and characters.

He’s attempted to bring some of those advertisers back, with mixed success, as the ones that have returned after boycotts have usually invested far less than in the past, and most of the ad-buyers that have filled the gaps are paying a lot less per ad unit than before, and are generally of a lower quality: a lot of cheaply products from low-grade Chinese factories, scams of various sorts, and/or products sold by companies that are politically conservative culture-warriors, aimed at the network’s increasingly right-leaning and far-right audience; a bit like what we’ve seen on Fox News over the past decade or so, following waves of sexual assault and other scandals on that network, which led to similar advertiser exoduses.

It’s also been estimated that the network lost a substantial portion of its total user-base following Musk’s takeover, including something like a third of all users in the UK and around a fifth in the United States, all just in 2024, up till the month of September.

That loss of revenue and users was enough to cause Fidelity, which owns a multi-million-dollar stake in X, to write down the value of its investment by more than 75%; in July of 2024, it estimated the company, which was purchased for about $44 billion by Musk was only worth about $9.4 billion; a substantial loss for them and their investment, but also for all other shareholders.

All of which leads up to what happened in the wake of the US’s most recent presidential election, during which Musk shelled out more than $100 million to support Trump’s campaign, while also pulling out all the stops to promote the former president on X—something that many users weren’t too keen on, as the owners of other social networks have been criticized and threatened in the past for showing any hint of political bias in their business decisions or personal life, and this was incredibly overt.

This heavy-handed biasing of the network toward Trump, and that very public support of the candidate by X’s owner, sparked a new exodus from the platform, some people simply quitting social media entirely, at least for a while, but others looking for something of the same, and thus checking out the twitter-clones that have popped up over the past handful of years; the majority of which only actually gained real momentum in the wake of Musk’s takeover and rebranding of the network a few years ago.

One of those twitter-alternatives, Mastodon, attracted a lot of early attention because of what it offered that twitter, and other mainstream social networks, did not: an open source platform based on the ActivityPub protocol, which means it can connected to other ActivityPub-capable social networks.

So in theory at least, you can have a profile on a Mastodon instance—which a self-hosted Mastodon network, a social platform island of sorts that is connected to other such islands, the totality of the social network made up of a huge number of such instances, all interconnected in various ways, and each offering different rules and focuses—you can have that profile on that island function on other networks beyond Mastodon, as well.

And that’s interesting because it means your work, your posts and conversations, are all more portable, allowing you to move to different networks if you choose, without losing your history and connections and credibility, because it’s all compatible with other networks.

So it’s almost like having a Facebook profile that you can also use on Twitter and Instagram and YouTube, if all those networks played well together and shared information and post types between each other; that’s the promise of a protocol like ActivityPub and a network like Mastodon.

Mastodon was made public in 2016 as a nonprofit, has basically the same feature-set as pre-Musk twitter, and while it had already gained a steady stream of users from previous upsets at networks like Twitter, Facebook, and Tumblr, among other more mainstream networks, it attained a huge number of new users in 2022 on the news that Musk would be taking over Twitter, hitting around 2.5 million monthly active users by the end of that year.

That number has since dropped to just under a million as of September 2024, suggesting that the initial wave of enthusiasm has crested; though the platform continues to see a lot of support within some online communities, and its interactivity with other networks, including Meta’s Threads, which has also added ActivityPub functionality, means that its numbers will always be a little weird, as folks can read Mastodon content and interact with Mastodon users from other, connected networks.

Speaking of which, Threads is a twitter-clone that was released by Facebook and Instagram parent-company Meta in July of 2023, and it attained more than 100 million users in just five days, which set a new record for the rate of user-attainment.

It took a little while for the network to be released beyond the US, especially in the EU, due to regulatory concerns, and an earlier version of the app was more of a Snapchat-clone, but that one did badly enough with users that the company pulled it from app stores and reused the brand for this new app a few years after that failed experiment.

Threads was able to achieve that high adoption rate in part because it promoted the app heavily on Instagram and Facebook, and in part because of Musk’s takeover of, and changes to Twitter. Folks looking for a Twitter-alternative, but who didn’t want to deal with the comparable complexity of something like Mastodon flooded into this new network, and Meta’s decision to push politics and other serious discussions to the algorithmic back-burner made it a friendly space for brands and influencers who didn’t want to be associated with the chaotic forces that were swirling around the newly rebranded X.

So Threads is similar to Twitter, but it supports ActivityPub, like Mastodon, and has similar community guidelines to other Meta products—which means there’s a lot less nudity, and fewer references to illegal things, like drugs.

It was recently announced that Threads has surpassed 275 million monthly active users, which puts it within spitting distance of independent assessments of X’s monthly active user figure, which Musk recently said was around 600 million, but Sensor Tower says is closer to 318 million, as of October of 2024.

There’s been some hubbub about the possibility that Threads might be seeing losses in activity on the network, though, including a drop in how much time users spend on it. This is potentially the result of that decision to keep controversial stuff more or less hidden, and to heavy handedly, compared to other networks, at least, curate the feeds of users, who have very limited power over what they see in their feeds.

The company announced they would be adjusting the algorithm significantly in the near-future, in order to allow more breaking news and other such posts to rise to the forefront, and it’s thought that this might be a response to the recent success of another twitter-clone called Bluesky.

Bluesky was founded in 2021, and it was originally, back in 2019, an initiative by Twitter to see if decentralizing the network might be possible—making Twitter just one network in a fediverse of networks, basically. As a result, it’s perched atop an open communication protocol it developed called the AT Protocol, which is distinct from, but similar in utility to ActivityPub, in that it allows social platforms to link up and interact with each other, despite being different networks.

Bluesky is superficially similar to pre-Musk twitter, but one of its killer apps, one of the things that distinguishes it from most other options in this space right now, alongside the AT Protocol, is the ability to choose your own algorithm, so that rather than having Meta decide what you see in your feed, and rather than just seeing a chronological list of posts from people you follow, you can also choose to follow curated lists of people, to tweak the word and content filters you use, the way posts are arranged, and an abundance of other options; it’s pretty versatile, and you can easily flip between different filters to peruse different sorts of content filtered in different ways.

The network launched on an invite-only basis in 2023, and was fully opened to the public in February of 2024, at which point it had already attracted more than 3 million users.

Shortly after that launch, Jack Dorsey—the co-founder of Twitter and Bluesky—left Bluesky’s board, saying that the company was making all the mistakes Twitter made and that he was stepping aside to focus on another decentralized social network he founded, Nostr, instead.

Bluesky continued to gain users though, relatively slowly most of the time, though whenever Musk did something controversial they would typically see a larger influx, as was the case for all twitter-clones.

In October of 2024, several changes to Twitter, including one that basically rendered its block feature useless, and another that said the company could use all posted content for AI training purposes, led to a surge in Bluesky adoption, bringing in more than 1.2 million users in just two days.

That paled in comparison to what happened in November, following the election, though, when Bluesky started to grow by about a million users a day, catapulting its user base to more than 20 people million as of November 20—a surge that rocketed the app to the top of the app charts. And for context, the company only has about 20 employees, as of late-November, so that’s a huge employee-to-user ratio.

Bluesky is not without controversy, as the company’s leadership has already been criticized for taking investment money from Blockchain Capitol, which could change its incentives, and though it’s approaching 25 million users as of the day I’m recording this, up from a small fraction of that just a month ago, that’s less than 10% of what Threads and X have, and that growth is almost certain to slow sometime soon, once the post-election flight from X has subsided; so it’s possible this surge could be similar to what Mastodon saw not too long ago—a big surge in users, followed by a ebb in activity as people stop using the network for various reasons.

The company has also been experiencing growing pains, in terms of tech, because of that sudden, much larger scale, but also in terms of culture.

All those newbies joining the network all at once are changing the platform’s makeup, accidentally trampling Bluesky’s traditions and folkways, while also changing the conversational mores and topics and trends from how they were, pre-user-flood.

Bluesky is currently the one the beat in terms of growth rate, in other words, and it seems to have achieved significant cultural resonance following the election, especially for people on the left of the political spectrum who no longer feel welcome or comfortable on X.

But both Mastodon and Threads have represented the same in recent years, too, though their growth largely the consequence of X’s failure, not necessarily the result of their own accolades and advantages.

It’s possible what we’re seeing here, then, is not a struggle to become the next Twitter, but rather the emergence of a fractured text-based social media ecosystem, each platform offering something the others don’t, or favoring some groups and their needs over those of others, and that, in turn, leading to a more fractured communication ecosystem, and maybe reinforced filter bubbles, as well.

Show Notes

https://www.fastcompany.com/91230935/the-website-tracks-how-fast-bluesky-is-growing-in-near-real-time

https://techcrunch.com/2024/10/18/bluesky-surges-into-the-top-5-as-x-changes-blocks-permits-ai-training-on-its-data/

https://en.wikipedia.org/wiki/Threads_(social_network)

https://news.sky.com/story/the-x-exodus-could-bluesky-spike-spark-end-of-elon-musks-social-media-platform-13254722

https://www.newsweek.com/elon-musk-hides-x-engagement-figures-user-exodus-1990065

https://www.cnbc.com/2024/10/31/metas-threads-app-now-has-275-million-users-zuckerberg-says.html

https://www.odwyerpr.com/story/public/21747/2024-08-27/ad-revenue-freefall-continues-at-x.html

https://www.warc.com/content/paywall/article/warc-curated-datapoints/counting-the-cost-xs-59bn-in-lost-ad-revenue-since-its-2022-takeover/en-gb/157583

https://www.euronews.com/my-europe/2024/11/21/are-users-leaving-elon-musks-x-en-masse-and-where-are-they-heading

https://www.euronews.com/next/2024/10/01/x-has-lost-75-of-its-value-since-elon-musk-took-over

https://www.cnn.com/2024/11/06/business/elon-musk-election-bet/index.html

https://anderegg.ca/2024/11/15/maybe-bluesky-has-won

https://www.nytimes.com/2024/11/17/technology/bluesky-growing-pains.html

https://thenextweb.com/twitter/2011/07/15/5-years-ago-today-twitter-launched-to-the-public/

https://www.businessinsider.com/how-twitter-was-founded-2011-4?op=1

https://www.nytimes.com/2010/10/31/technology/31ev.html

https://en.wikipedia.org/wiki/Twitter

https://en.wikipedia.org/wiki/X_Corp.

This week we talk about neural networks, AGI, and scaling laws.

We also discuss training data, user acquisition, and energy consumption.

Recommended Book: Through the Grapevine by Taylor N. Carlson

Transcript

Depending on whose numbers you use, and which industries and types of investment those numbers include, the global AI industry—that is, the industry focused on producing and selling artificial intelligence-based tools—is valued at something like a fifth to a quarter of a trillion dollars, as of halfway through 2024, and is expected to grow to several times that over the next handful of years, that estimate ranging from two or three times, to upward of ten or twenty-times the current value—again, depending on what numbers you track and how you extrapolate outward from those numbers.

That existing valuation, and that projected (or in some cases, hoped-for growth) is predicated in part on the explosive success of this industry, already.

It went from around $10 billion in global annual revenue in 2018 to nearly $100 billion in global revenue in 2024, and the big players in this space—among them OpenAI, which kicked off the most recent AI-related race, the one focusing on large-language models, or LLMs, when it released its ChatGPT tool at the tail-end of 2022—have been attracting customers at a remarkable rate, OpenAI hitting a million users in just five days, and pulling in more than 100 million monthly users by early 2023; a rate of customer acquisition that broke all sorts of records.

This industry’s compound annual growth rate is approaching 40%, and is expected to maintain a rate of something like 37% through 2030, which basically means it has a highly desirable rate of return on investment, especially compared to other potential investment targets.

And the market itself, separate from the income derived from that market, is expected to grow astonishingly fast due to the wide variety of applications that’re being found for AI tools; that market expanded by something like 50% year over year for the past five years, and is anticipated to continue growing by about 25% for at least the next several years, as more entities incorporate these tools into their setups, and as more, and more powerful tools are developed.

All of which paints a pretty flowery picture for AI-based tools, which justifies, in the minds of some analysts, at least, the high valuations many AI companies are receiving: just like many other types of tech companies, like social networks, crypto startups, and until recently at least, metaverse-oriented entities, AI companies are valued primarily based on their future potential outcomes, not what they’re doing today.

So while many such companies are already showing impressive numbers, their numbers five and ten years from now could be even higher, perhaps ridiculously so, if some predictions about their utility and use come to fruition, and that’s a big part of why their valuations are so astronomical compared to their current performance metrics.

The idea, then, is that basically every company on the planet, not to mention governments and militaries and other agencies and organizations will be able to amp-up their offerings, and deploy entirely new ones, saving all kinds of money while producing more of whatever it is they produce, by using these AI tools. And that could mean this becomes the industry to replace all other industries, or bare-minimum upon which all other industries become reliant; a bit like power companies, or increasingly, those that build and operate data centers.

There’s a burgeoning counter-narrative to this narrative, though, that suggests we might soon run into a wall with all of this, and that, consequently, some of these expectations, and thus, these future-facing valuations, might not be as solid as many players in this space hope or expect.

And that’s what I’d like to talk about today: AI scaling walls—what they are, and what they might mean for this industry, and all those other industries and entities that it touches.

—

In the world of artificial intelligence, artificial general intelligence, or AGI, is considered by many to be the ultimate end-goal of all the investment and application in and of these systems that we’re doing today.

The specifics of what AGI means varies based on who you talk to, but the idea is that an artificial general intelligence would be “generally” smart and capable in the same, or in a similar way, to human beings: not just great at doing math and not just great at folding proteins, or folding clothes, but pretty solid at most things, and trainable to be decent, or better than decent at potentially everything.

If you could develop such a model, that would allow you, in theory, to push humans out of the loop for just about every job: an AI bot could work the cash register at the grocery store, could drive all the taxis, and could do all of our astronomy research, to name just a few of the great many jobs these systems could take on, subbing in for human beings who would almost always be more expensive, but who—this AI being a generalist and pretty good at everything—wouldn’t necessarily do any better than these snazzy new AI systems.

So AGI is a big deal because of what it would represent in terms of us suddenly having a potentially equivalent intelligence, an equivalent non-human intelligence, to deal with and theorize over, but it would also be a big deal because it could more or less put everyone out of work, which would no doubt be immensely disruptive, but it would also be really, really great for the pocketbooks of all the companies that are currently burdened with all those paychecks they have to sign each month.

The general theory of neural network-based AI systems, which basically means software that is based in some way on the neural networks that biological entities, like mice and fruit flies and humans have in our brains and throughout our bodies, is that these networks should continue to scale as the number of factors that go into making them scale: and usually those factors include the size of the model—which in the case of most of these systems means the number of parameters it includes—the size of the dataset it trains on—which is the amount of data, written, visual, audio, and otherwise, that it’s fed as it’s being trained—and the amount of time and resources invested in its training—which is a variable sort of thing, as there are faster and slower methods for training, and there are more efficient ways to train that use less energy—but in general, more time and more resources will equal a more girthy, capable AI system.

So scale those things up and you’ll tend to get a bigger, up-scaled AI on the other side, which will tend to be more capable in a variety of ways; this is similar, in a way, to biological neural networks gaining more neurons, more connections between those neurons, and more life experience training those neurons and connections to help us understand the world, and be more capable of operating within it.

That’s been the theory for a long while, but the results from recent training sessions seem to be pouring cold water on that assumption, at least a bit, and at least in some circles.

One existing scaling concern in this space is that we, as a civilization, will simply run out of novel data to train these things on within a couple of years.

The pace at which modern models are being trained is extraordinary, and this is a big part of why the larger players, here, don’t even seriously talk about compensating the people and entities that created the writings and TV shows and music they scrape from the web and other archives of such things to train their systems: they are using basically all of it, and even the smallest payout would represent a significant portion of their total resources and future revenues; this might not be fair or even legal, then, but that’s a necessary sacrifice to build these models, according to the logic of this industry at the moment.

The concern that is emerging, here, is that because they’ve already basically scooped up all of the stuff we’ve ever made as a species, we’re on the verge of running out of new stuff, and that means future models won’t have more music and writing and whatnot to use—it’ll have to rely on more of the same, or, and this could be even worse, it’ll have to rely on the increasing volume of AI-generated content for future iterations, which could result in what’s sometimes called a “Habsburg AI,” referring to the consequences of inbreeding over the course of generations: and future models using AI-generated content as their source materials may produce distorted end-products that are less and less useful (and even intelligible) to humans, which in turn will make them less useful overall, despite technically being more powerful.

Another concern is related to the issue of physical infrastructure.

In short, global data centers, which run the internet, but also AI systems, are already using something like 1.5-2% of all the energy produced, globally, and AI, which use an estimated 33% more power to generate a paragraph of writing or an image, than task-specific software would consume to do the same, is expected to double that figure by 2025, due in part to the energetic costs of training new models, and in part to the cost of delivering results, like those produced by the ChatGPTs of the world, and those increasingly generated in lieu of traditional search results, like by Google’s AI offerings that’re often plastered at the top of their search results pages, these days.

There’s a chance that AI could also be used to reduce overall energy consumption in a variety of ways, and to increase the efficiency of energy grids and energy production facilities, by figuring out the optimal locations for solar panels and coming up with new materials that will increase the efficiency of energy transmission. But those are currently speculative benefits, and the current impact of AI on the energy grid is depletionary, not additive.

There’s a chance, then that we’ll simply run out of energy, especially on a local basis, where the training hubs are built, to train the newest and greatest and biggest models in the coming years. But we could also run out of other necessary resources, like the ginormous data centers required to do said training, and even the specific chips that are optimized for this purpose that are in increasingly short supply because of how vital this task has become for so many tech companies, globally.

The newest concern in this space, related to future growth, though, is related to what are called scaling laws, which refer to a variety of theories—some tested, some not yet fully tested—about how much growth you can expect if you use the same general AI system structure, and just keep pumping it up with more resources, training data, and training time.

The current batch of most powerful and, for many use-cases, most useful AI systems are the result of scaling basically the same AI system structure so that it becomes more powerful and capable over time. There’s delay between new generations because tweaks are made, all that training and feeding has to be done, but also because there are adjustments required afterward to optimize the system for different purposes and for stability.

But a slew of industry experts have been raising the alarm about a possible bubble in this space, not because it’s impossible to build more powerful AI, but because the majority of resources that have been pumped into the AI industry in recent years are basically just inflating a giant balloon predicated on scaling the same things over and over again, every company doing this scaling hoping to reach AGI or something close to AGI before their competitors, in order to justify those investments and their sprawling valuations.

In other words, it’s a race to a destination that they might not be able to reach, in the near-future, or ever, using the current batch of technologies and commonly exploited approaches, but they can’t afford to dabble in too many alternatives, at least not thoroughly, because there’s a chance if they take their eyes off the race they’re running, right now, one of their many also-super-well-funded opponents will get there first, and they’ll be able to make history, while also claiming the lion’s share of the profits, which could be as substantial as the entire economy, if you think of those aforementioned benefits of being able to replace a huge chunk of the world’s total employee base with equally capable bots.

The most common version of this argument, that the current generation of AI systems are hitting a point of diminishing returns—still growing and becoming more powerful as they scale, but not as much as anticipated, less growth and power per unit of resource, training time, size of dataset, and so on, compared to previous generations—and that diminishment means, according to this argument, we’ll continue to see a lot of impressive improvements, but should not longer expect the doubling of capability every 5 to 14 months that we’ve seen these past few years.

We’ve picked the low-hanging fruit, in other words, and everything from this point forward will be more expensive, less certain, and thus, less appealing to investors—while also potentially being less profitable, and thus, the money that’s been plowed into these businesses, thus far, might not payout, and we could see some large-scale collapses due to the disappearance of those resources that are currently funding this wave of AI-scaling, as a consequence.

If true, this would be very bad in a lot of ways, in part because these are resources that could have been invested in other things, and in part because a lot of hardware and know-how and governmental heft have been biased toward these systems for years now; so the black hole left behind, should all of that disappear or prove to be less than many people assumed, would be substantial, and could lead to larger-scale economic issues; that gaping void, that gravity well made worse because of those aforementioned sky-high valuations, which are predicated mostly on what these companies are expected to do in the future, not what they’re doing, today—so that would represent a lot of waste, and a lot of unrealized, but maybe never feasible in the first place, potential.

This space is maybe propped up by hype and outlandish expectations, in other words, and the most recent results from OpenAI and their upcoming model seem to lend this argument at least some credibility: the publicly divulged numbers only show a relatively moderate improvement over their previous core model, GPT4, and it’s been suggested, including by folks who previously ran OpenAI, that more optimizing after the fact, post-training, will be necessary to get the improvements the market and customers are expecting—which comes with its own unknowns and additional costs, alongside a lack of seemingly reliable, predictable scaling laws.

For their part, the folks currently at the top of the major AI companies have either ignored this line of theorizing, or said there are no walls, nothing to see here, folks, everything is going fine. 

Which could be true, but they’re also heavily motivated not to panic the market, so there’s no way to really know at this point how legit their counter-claims might be; there could be new developments we’re not currently, publicly aware of, but it could also be that they’re already working those post-training augmentations into their model of scaling, and just not mentioning that for financial reasons.

AI remains a truly remarkable component of the tech world, right now, in part because of what these systems have already shown themselves capable of, but also because of those potential, mostly theorized, at this point, benefits they could enable, across the economy, across the energy grid, and so on.

The near-future outcomes, though, will be interesting to watch, as it could be we’ll see a lot of fluffed-up models that roughly align with anticipated scaling-laws, but which didn’t get there by the expected, training-focused paths, which would continue to draw questions from investors who had specific ideas about how much it would cost to get what sorts of outcomes, which in turn would curse this segment of the economy and technological development with more precarious footing than it currently enjoys.

We might also see a renewed focus on how these systems are made available to users: a rethinking of the interfaces used, and the use-cases they’re optimized for, which could make the existing (and near-future) models ever more useful, despite not becoming as powerful as anticipated, and despite probably not getting meaningfully closer to AGI, in the process.

Show Notes

https://arxiv.org/abs/2311.16863

https://www.weforum.org/stories/2024/07/generative-ai-energy-emissions/

https://epochai.org/blog/will-we-run-out-of-ml-data-evidence-from-projecting-dataset

https://www.semafor.com/article/11/13/2024/tiktoks-new-trademark-filings-suggest-its-doubling-down-on-its-us-business

https://arxiv.org/abs/2001.08361

https://archive.ph/d24pA

https://www.fastcompany.com/91228329/a-funny-thing-happened-on-the-way-to-agi-model-supersizing-has-hit-a-wall

https://futurism.com/the-byte/openai-research-best-models-wrong-answers

https://en.wikipedia.org/wiki/Neural_network_(machine_learning)

https://en.wikipedia.org/wiki/Neural_scaling_law

https://futurism.com/the-byte/openai-research-best-models-wrong-answers

https://futurism.com/the-byte/ai-expert-crash-imminent

https://www.theverge.com/2024/10/25/24279600/google-next-gemini-ai-model-openai-december

https://ourworldindata.org/artificial-intelligence?insight=ai-hardware-production-especially-cpus-and-gpus-is-concentrated-in-a-few-key-countries

https://blogs.idc.com/2024/08/21/idcs-worldwide-ai-and-generative-ai-spending-industry-outlook/

https://explodingtopics.com/blog/chatgpt-users

https://explodingtopics.com/blog/ai-statistics

https://www.aiprm.com/ai-statistics/

https://www.forbes.com/advisor/business/ai-statistics/

https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai

https://www.researchgate.net/profile/Gissel-Velarde-2/publication/358028059_Artificial_Intelligence_Trends_and_Future_Scenarios_Relations_Between_Statistics_and_Opinions/links/61ec01748d338833e3895f80/Artificial-Intelligence-Trends-and-Future-Scenarios-Relations-Between-Statistics-and-Opinions.pdf

https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide

https://en.wikipedia.org/wiki/Artificial_intelligence#Applications

This week we talk about the Double Reduction Policy, gaokao, and Chegg.

We also discuss GPTs, cheating, and disruption.

Recommended Book: Autocracy, Inc by Anne Applebaum

Transcript

In July of 2021, the Chinese government implemented a new education rule called the Double Reduction Policy.

This Policy was meant, among other things, to reduce the stress students in the country felt related to their educational attainment, while also imposing sterner regulations on businesses operating in education and education-adjacent industries.

Chinese students spend a lot of time studying—nearly 10 hours per day for kids ages 12-14—and the average weekly study time for students is tallied at 55 hours, which is substantially higher than in most other countries, and quite a lot higher than the international average of 45 hours per week.

This fixation on education is partly cultural, but it’s also partly the result of China’s education system, which has long served to train children to take very high-stakes tests, those tests then determining what sorts of educational and, ultimately, employment futures they can expect. 

These tests are the pathway to a better life, essentially, so the kids face a whole lot of pressure from society and their families to do well, because if they don’t, they’ve sentenced themselves to low-paying jobs and concomitantly low-status lives; it’s a fairly brutal setup, looked at from elsewhere around the world, but it’s something that’s kind of taken for granted in modern China.

On top of all that in-class schoolwork, there’s abundant homework, and that’s led to a thriving private tutoring industry. Families invest heavily in ensuring their kids have a leg-up over everyone else, and that often means paying people to prepare them for those tests, even beyond school hours and well into the weekend.

Because of all this, kids in China suffer abnormally high levels of physical and mental health issues, many of them directly linked to stress, including a chronic lack of sleep, high levels of anxiety, rampant obesity and everything that comes with that, and high levels of suicide, as well; suicide is actually the most common cause of death amongst Chinese teenagers, and the majority of these suicides occur in the lead-up to the gaokao, or National College Entrance Exam, which is the biggest of big important exams that determine how teens will be economically and socially sorted basically for the rest of their lives.

This recent Double Reduction Policy, then, was intended to help temper some of those negative, education-related consequences, reducing the volume of homework kids had to tackle each week, freeing up time for sleep and relaxation, while also putting a cap on the ability of private tutoring companies to influence parents into paying for a bunch of tutoring services; something they’d long done via finger-wagging marketing messages, shaming parents who failed to invest heavily in their child’s educational future, making them feel like they aren’t being good parents because they’re not spending enough on these offerings.

This policy pursued these ends, first, by putting a cap on how much homework could be sent home with students, limiting it to 60 minutes for youngsters, and 90 minutes for middle schoolers.

It also provided resources and rules for non-homework-related after-school services, did away with bad rankings due to poor test performance that might stigmatize students in the future, and killed off some of those fear-inducing, ever-so-important exams altogether.

It also provided some new resources and frameworks for pilot programs that could help their school system evolve in the future, allowing them to try some new things, which could, in theory, then be disseminated to the nation’s larger network of schools if these experiments go well.

And then on the tutoring front, they went nuclear on those private tutoring businesses that were shaming parents into paying large sums of money to train their children beyond school hours.

The government instituted a new system of regulators for this industry, ceased offering new business licenses for tutoring companies, and forced all existing for-profit businesses in this space to become non-profits.

This market was worth about $100 billion when this new policy came into effect, which is a simply staggering sum, but the government basically said you’re not businesses anymore, you can’t operate if you try to make a profit.

This is just one of many industries the current Chinese leadership has clamped-down on over the past handful of years, often on cultural grounds, as was the case with limiting the amount of time children can play video games each day. But like that video game ban, which has apparently shown mixed results, the tutoring ban seems to have led to the creation of a flourishing black market for tutoring services, forcing these sorts of business dealings underground, and thus increasing the fee parents pay for them each month.

In late-October of 2024, the Chinese government, while not formally acknowledging any change to this policy, eased pressure on private tutoring services—the regulators in charge of keeping them operating in accordance with nonprofit structures apparently giving them a nudge and a wink, telling them surreptitiously that they’re allowed to expand again—possibly because China has been suffering a wave of economic issues over the past several years, and the truncation of the tutoring industry led to a lot of mass-firings, tens of thousands of people suddenly without jobs, and a substantial drop in tax revenue, as well, as the country’s stock market lost billions of dollars worth of value basically overnight.

It’s also worth noting here that China’s youth unemployment rate recently hit 18.8%, which is a bogglingly high number, and something that’s not great for stability, in the sense that a lot of young people, even very well educated young people, can’t find a job, which means they have to occupy themselves with other, perhaps less productive things.

But high youth unemployment is also not great for the country’s economic future, as that means these are people who aren’t attaining new skills and experience—and they can’t do that because the companies that might otherwise hire them can’t afford to pay more employees because folks aren’t spending enough on their offerings.

So while it was determined that this industry was hurting children and their families who had to pay these near-compulsory tutoring fees, they also seemed to realize that lacking this industry, their unemployment and broader economic woes would be further inflamed—and allowing for this gray area in the rules seems to be an attempt to have the best of both worlds, though it may leave them burdened with the worst of both worlds, as well.

What I’d like to talk about today is another facet of the global tutoring industry, and how new technologies seem to be flooding into this zone even more rapidly than in other spaces, killing off some of the biggest players and potentially portending the sort of collapse we might also see in other industries in the coming years.

—

Chegg, spelled c-h-e-g-g, is a US-based, education-focused tech company that has provided all sorts of learning-related services to customers since 2006.

It went public on the NYSE in 2013, and in 2021 it was called the “most valuable edtech company in America” by Forbes, due in part to the boom in long-distance education services in the early days of the Covid-19 pandemic; like Peloton and Zoom, Chegg was considered to be a great investment for a future in which more stuff is done remotely, as seemed likely to be the case for a good long while, considering all the distancing and shut-downs we were doing at the time.

In early 2020, before that boom, the company was already reporting that it had 2.9 million subscribers to its Chegg Services offering, which gave users access to all sorts of school-related benefits, including help with homework, access to Q&As with experts, and a huge database of solutions for tests and assignments.

The company then released a sort of social-publishing platform called Uversity in mid-2021, giving educators a place to share their own content, and they acquired a language-learning software company called Busuu, which is a bit like Duolingo, that same year for $436 million.

In May of 2023, though, the company’s CEO said, on an earnings call, that ChatGPT—the incredibly popular, basically overnight-popular large-language-model-powered AI chatbot created by OpenAI—might hinder Chegg’s near-future growth.

The day after that call, Chegg’s stock price dropped by about 48%, cutting the company’s market value nearly in half, and though later that same month he announced that Chegg would partner with OpenAI to launch its own AI platform called Cheggmate, which was launched as a beta in June, by early November the following year, 2024, the company had lost about 99% of its market valuation, dropping from a 2021 high of nearly $100 per share, down to less than $2 per share as of early November.

This isn’t a unique story: LLM-based AI tools, those made by OpenAI but also its competitors, including big tech companies like Google and Microsoft, which have really leaned into this seeming transition, have been messing with market valuations left and right, as this collection of tools and technologies have been evolving really fast—a recent five-year plan for Chegg indicated they didn’t believe something like ChatGPT would exist until 2025 at the earliest, for instance, which turned out to be way off—but they’ve also been killing off high-flying company valuations because these sorts of tools are by definition multi-purpose, and a lot of the low-hanging fruit in any industry is basically just providing information that’s already available somewhere in a more intuitive and accessible fashion; which is something a multi-purpose, bot-interfaced software tool is pretty good at doing, as it turns out.

Chegg’s services were optimized to provide school-related stuff to students—including test and homework answers those students could quickly reference if they wanted to study or cheat—and serving up these resources in a simple manner is what allowed them to pay the bills.

ChatGPT and similar AI tools, though, can do the same, and for practically or literally—for the end-user, at least—free. And it can sometimes do so in a manner that’s even more intuitive than the Cheggs of the world, even if these AI offerings are sometimes jumbled along the way; the risk-reward math is still favorable to a lot of people, because of just how valuable this kind of information provided in this way can be.

Other companies and entire industries are finding themselves in the same general circumstances, also all of a sudden, because their unique value proposition has been offering some kind of information intuitively, or in some cases they’ve provided human interfaces that would do various things for customers: they would look up deals on a particular model of car, they would write marketing copy, they would commentate on sporting events.

Some of these entities are trying to get ahead of the game, like Chegg did, by basically plugging their existing services into AI versions of the same, replacing their human commentators with bots that can manage a fair approximation of those now-unemployed humans, but at a fraction of the cost. Others are facing a huge number of new competitors, as smaller businesses or just individuals are realizing they can pay a little money for AI tokens and credits, plug an API into a website, which allows that AI to populate content on their site automatically, and they can then run the same sort of service with little or no effort, and vitally, little or no overhead.

This creates a race-to-the-bottom situation in many such cases, and often the bots are nowhere near as good as the humans they’re replacing, but especially in situations where human jobs have been optimized so that one human can be replaced with another human relatively simply, it has proven to be fairly easy to fire people and then replace them with non-humans that seem human-enough most of the time.

So blog-writing and video-making and inventory-organizing and, yes, school-tutoring and similar services are increasingly being automated in this way, and while, sure, you could pay a premium to stick with Chegg and access these AI tools via their portal for $20 a month, the bet many investors are making is that folks will probably prefer to get what amounts to the same thing cheaper, or even free, directly from the source, or via one of those other lower-end intermediaries with fewer overhead costs.

Chegg has lost about $14.5 billion in market value since early 2021, and the company is now expected to collapse under the weight of its debts sometime in the near-future; the shift in fortunes brought about by the deployment of generally capable, if not perfectly capable, chat-interface accessible AI tools has been that sudden.

None of which means this is a permanent thing, as entities in industries currently being challenged by AI equivalent or near-equivalent tools might push back with their own, difficult to replicate offerings, and there’s a chance that the small but burgeoning wave of vehemently non-AI tools—those that wave their human-made-ness, their non-AI-ness like a flag, or like an organic, cruelty-free label—might carve out their own sustainable, growable niche. That becomes their unique value proposition in place of what these AI-focused companies stole from them.

But this kind of disruption sometimes leads to an extinction-level event for the majority of operators in a formerly flourishing space.

Chegg, for their part, decided to revamp their AI offering, moving away from the Cheggmate name and working with Scale AI instead of OpenAI, to build a few dozen AI systems optimized for different academic focuses; which could prove to be a valuable differentiator for them, but it could also fall flat in the face of OpenAI’s own re-skinned versions of ChatGPT, called GPTs, which allow users to do basically the same thing, coming up with their own field focused experts and personalities, rather than using the vanilla model of the bot.

There’s a chance this will also help Chegg deal with another AI-related issue—specifically, that ChatGPT was providing better answers to some students’ questions than Chegg’s human-derived offerings; they’re trying to out-bot OpenAI, essentially, doing the homework-AI thing better than ChatGPT, and there’s a chance that offering a demonstrably higher quality of answers might also serve as a survival-enabling differentiator; though their ability to consistently provide better answers in this way is anything but certain.

It’s also worth noting that what we’re talking about here, so far, isn’t the sci-fi dream of a perfect digital tutor—something like the Young Lady’s Illustrated Primer from Neal Stephenson’s novel The Diamond Age, which is something like an AI-powered storybook that adapts its content to the reader, and which then teaches said reader everything they need to know to flourish in life, day by day. Chegg and ChatGPT serve up tools that help students cheat on tests and homework, while also helping them look up information a lot easier when they decide not to cheat, and to practice various sorts of assignments and exams beforehand.

So this is a far easier space to compete in than something more complex and actually tutor-like. It may be, then, that moving in that direction, toward tools that focus more on replacing teachers and tutors, rather than helping students navigate schoolwork, might be the killer app that allows some of these existing tutoring-ish tools to survive and thrive; though it may be that something else comes along in the meantime which fulfills that promise better—maybe ChatGPT, or maybe some new, more focused version of the same general collection of tools.

It’ll probably be a few years before we see how this and similar bets that’re being made by at-risk companies facing the AI barbarians at the gate turn out, and at that point these tools will likely be even more powerful, offering even more capabilities and thus disrupting, or threatening to disrupt, even more companies in even more industries, as a consequence.

Show Notes

https://www.wsj.com/tech/ai/how-chatgpt-brought-down-an-online-education-giant-200b4ff2

https://openai.com/index/introducing-gpts/

https://ai.wharton.upenn.edu/focus-areas/human-technology-interaction/2024-ai-adoption-report/

https://www.weforum.org/stories/2024/07/ai-tutor-china-teaching-gaps/

https://en.wikipedia.org/wiki/Double_Reduction_Policy

https://journals.sagepub.com/doi/full/10.1177/20965311241265123

https://www.sciencedirect.com/science/article/abs/pii/S0738059324000117

https://archive.ph/VKkrL

https://www.japantimes.co.jp/news/2023/07/22/asia-pacific/china-private-tutoring/

https://www.nbcnews.com/news/world/chinas-youth-unemployment-hits-fresh-high-economic-slowdown-restrictiv-rcna172183

This week we talk about peat, pig iron, and sulphuric acid.

We also discuss the Industrial Revolution, natural gas, and offshore wind turbines.

Recommended Book: Deep Utopia by Nick Bostrom

Transcript

This episode is going live on election day here in the US; and this has been quite a remarkable election season for many reasons, among them that there’s been just a boggling amount of money spent on advertisements and events and other efforts to claim attention and mindshare, and in part because the vitriol and tribalism of the past several elections—an evolved, intensified version of those things—has almost completely dominated all those messages.

And as someone who’s based in a swing-state, Wisconsin, I can tell you that it’s been a lot. It’s been a lot everywhere, as US elections also claim more than their fair-share of news reportage in other countries, but in the US, and in the relatively few states that are assumed to be the kingmakers in this election, it’s been just overwhelming for months, for basically a year, actually. So instead of doing anything on the election, or anything overtly political—there’ll no doubt be time for that in the coming weeks, once the dust has settled on all this—let’s talk about coal. And more specifically, British coal.

Coal has been used throughout the British Isles for a long time, with early groups burning unrefined lumps of the substance to heat their homes, though generally only when their local, close-enough-to-the-surface-to-be-gathered source for the stuff was pure enough to beat-out other options, like peat and wood, which was seldom the case in most of these areas.

It was also used to create lime from limestone, the lime used for construction purposes, to make mortar, and it was used for metal-shaping purposes by blacksmiths.

Beyond that, though, it was generally avoided in favor of cleaner-burning options, as coal is often accompanied by sulphur and other such substances, which means when burned in its natural form, it absolutely reeks, and it can make anyone unlucky enough to be caught in the smoke it creates tear-up, because the resulting sulfurous gas would react with their eye-moisture to create sulphuric acid; not pleasant, and even though it was generally better than peat and wood in terms of the energy it contained, it was worse in basically every other way.

Earlier groups of people had figured out the same: there were folks in China as early as 1000 BC, for instance, who used these rocks as fuel for copper smelting, and people in these same early-use areas, where coal veins were exploitable, were really leaning into the stuff by the 13th century AD, when Marco Polo visited and remarked that the locals were burning these weird black stones, which granted them wild luxuries, like being able to take “three hot baths a week.”

Groups in Roman Britain were also surface mining, using, and trading coal at a fairly reasonable level by around 200 AD, though it was still primarily used to process things like grain, which needed to be dried, and to work with iron—as with those Chinese groups, coal has long been appreciated for its smelting capabilities, because of its high energy density compared to other options.

In the British Isles, though, coal was largely imported to major cities by sea, until around the 13th century when the easily accessed deposits were used up, and shaft mining, which granted access to deeper deposits via at times long tunnels that had to be dug and reinforced, was developed and became common, including in areas that hadn’t previously had surface sources that could be exploited.

In the 16th century, this and similar innovations led to a reliable enough supply of coal that folks living in the city of London were able to largely replace their wood- and peat-burning infrastructure with coal-burning versions of the same.

It’s thought that this transition was partly the consequence of widespread deforestation that resulted from a population boom in the city—more lumber was needed to build more buildings, but they also required more burnable wood fuel—though some historians have argued that what actually pushed coal to the forefront, despite its many downsides compared to wood and peat, is the expansion of iron smelting and the increasing necessity of iron for Britain’s many wars during this period, alongside England’s burgeoning glass-making industry.

Both of these manufacturing processes, making iron and glass, required just a silly amount of fuel—making just one ton of the lowest-grade cast iron, so-called pig iron, consumed something like 28 tons of seasoned wood, and glass was similarly wood-hungry.

What’s more, that combination of city expansion and the King’s desire to massively build-out his Navy meant timber resources were continuously being strained anywhere industry popped up and flourished, so those industries would then expand to areas where wood was still cheap, over time making wood it more expensive there, too. Eventually, wood was costly pretty much everywhere, and coal thus became comparably cheap in these regions, and you could use a lot less of it to achieve the same ends.

Even if that subbing-in led to bad smells and burning eyes and clouds of dense, black smoke wherever it was burned, then, the cost differential was substantial enough to make using coal the better option in many such cases and areas.

This boom in coal usage was amplified still further by the rapid clearing of forests due to the expansion of farm- and pastureland.

It was determined, by the late 17th century, that an acre of farm- or pastureland was worth a lot more than woodland used for timber or other purposes—around three-times as valuable—so there was a large-scale deforestation effort to basically claim as much value from these forested lands as possible, dramatically changing the landscape of the British Isles over the course of just a few decades; this transition in part enabled and powered by coal.

Around the year 1700, about five-sixths of all coal that was mined, globally, was mined in Britain, and that helped power the empire’s industrial revolution later that century, beginning in something like 1760, as the majority of clever devices that arose during that period were powered by coal, and the global industrial revolution that eventually created what we might consider technological modernity arose, initially—at least in this manifestation of the concept—from coal-powered Britain.

What I’d like to talk about today is a remarkable coal-related milestone, considering that history, that Britain recently marked, and what it might mean for this and other fuel-types, moving forward.

—

In 1882, the first-ever coal-fired power station opened in London—a thermal power station that uses coal as its fuel, which basically means you refine the stuff, break it into tiny, semi-uniform pieces, and then feed those pieces into a coal-fired boiler. In that boiler the coal is burned to generate heat, and that heat boils water, the resulting steam spinning turbines which turn generators that produce electricity.

Coal-fired power stations are massively inefficient, with modern versions of the model only boasting a 34-ish% efficiency, meaning about 34% of the total energy contained in the fuel source is ultimately converted into electricity—the rest, about 66% of the energy contained in the coal that’s burned, is lost along the way.

That’s not uncommon for power plants, though other fossil fuel-burning plants are somewhat more efficient on average, with oil-powered plants weighing in at about 37% efficiency, and gas-powered versions managing something like 50-60% at their most modern and sophisticated, though simpler variations of the design only achieve about the same as coal.

All fossil fuel-powered power stations emit greenhouse gases into the atmosphere as a byproduct of their operation, which has been shown to stoke climate change, and they all have pollutant-related byproducts, as well, though there’s a spectrum: gas is relatively clean-burning compared to its kin, while coal is the absolute worst, releasing all sorts of pollutants into the air with at times severe health consequences for anyone in the general vicinity; oil plants are somewhere in between those two extremes, depending on the type of oil used and the nature of the plant.

Those downsides are part of why newer technologies like large-scale wind turbines and solar panel arrays have been replacing fossil fuel-based power plants in many locales, and quite rapidly, though the infrastructure in many areas is optimized for these older-school options, which means there are the plants themselves, which are often quite large and real-estate-spanning, but there’s also all the mines, there’s the shipping facilities, the processing capacity for the coal or oil or whatnot—it’s a nation-spanning network of buildings and machinery and businesses, not to mention all the people who work jobs related to these vital, energy-creating industries.

Coal was already beginning to decline in the UK 100 years after that first plant was built, so by the 1990s, as gas, often called natural gas as a sort of branding effort by gas companies to make it sound cleaner and more desirable, was at that point already beginning to replace coal in many electricity-generating facilities.

Gas has done the same in many countries—especially those with vast natural sources of it, and the US has opened up a lot of new markets for this fuel type in recent decades, and in the past decade in particular, as it mastered the means of compressing gas into a liquid, often called LNG, and shipping it to ports in Europe around the same time Russia’s invasion of Ukraine was fundamentally rewiring the energy mix on the continent.

So gas has played a role in disrupting coal’s hold in many previously coal-happy areas, including the US. But it was renewables that really turned the tide against coal in the UK, with a combination of solar and wind making up about 6% of Britain’s electricity in 2012—compared to 40% for coal, at the time—but just over a decade later, in 2023, renewables were making up a whopping 34% of the UK’s energy mix, mostly due to the widescale deployment and success of offshore wind farms.

This, paired with the emergence of increasingly efficient appliances and lighting, which sip energy compared to previous-generation bulbs and kettles and refrigerators, meant the UK was able to deplete its coal-usage, even as energy demand increased—because that demand was less than anticipated, due to those efficiencies, and enough new renewables and gas facilities were coming online to meet that reduced demand.

At the tail-end of September this year, 2024, the UK witnessed the shut-down of its last remaining coal power plant, which was built 57 years ago.

This was a meaningful moment, as it marked the first time in about 142 years that coal wasn’t contributing to the UK’s electrical grid, and it has global significance, as while 23 European countries have announced that they will phase out coal in the relatively near-future, and while Belgium was the first previously coal-burning European nation to go fully coal-free, back in 2016, the UK is the first G7 nation to do so—the rest of the G7 having committed to accomplishing the same by 2035.

Decommissioning the plant will take about two years, and that will include the task of reallocating the plant’s 170-or-so employees to other positions within the power network, and going through the many steps required to clean up the area after decades of voluminous pollution, while also getting the area ready for other types of development.

In many cases right now, globally, that means swapping in some other piece of energy infrastructure; in some cases coal-fired plants can be replaced with gas-fired plants, which is still not ideal in terms of emissions, but much better than coal, and in some cases it’s a more significant change, like building-out grid-scale battery arrays, which allow nearby wind turbines and solar panels to store the excess energy they generate when the wind is blowing and sun is shining, so that none of that energy goes to waste, and so it can be used when the wind and sun aren’t cooperating.

The British government is also planning to expand its nuclear power capacity, quadrupling its currently five-strong nuclear power plant holdings by 2050, which is a choice that comes with a lot of its own consequences, including, often, very high price tags on building and operating such facilities. But because of the nature of nuclear power plants—specifically, that they produce high levels of consistent, reliable, emissions-free electricity—that additional expense is often okay, because that steady consistency nicely blends with the inconsistent output of solar and wind.

It’s worth noting that coal-heavy nations elsewhere around the world, like Russia, are currently having trouble with the stuff, Russia’s coal industry reportedly experiencing its worst crisis in 30 years due in part to sanctions, in part to a lack of demand from previous customers that’re transitioning away from coal, and in part due to issues within the industry, itself.

Coal production in Russia dropped by 6.7% year on year in July of 2024, marking the lowest output since the height of the covid pandemic, and it’s estimated that they’ve lost around 27% of monthly output compared to recent peaks.

There are different types and grades of coal, so those numbers are averages, and not all coal-exporting nations are having as much trouble as Russia right now. Australia is the world’s foremost exporter of coal, for instance, and while China is going through some economic complications right now—which is an issue for Australia, because they shipped the majority of their coal to China until just recently—India has been stepping in to pick up the majority of that slack. 

Australia has still cut its coal export outlook by 6% because of those and other geopolitical ripples, and there’s a chance their sales could continue to drop due to the transition to renewables on one hand, and the move toward gas-powered plants on the other.

But some types of coal remain the cheapest form of energy production in some countries, so there’s a good chance that rising stars like India, and possibly Indonesia and other Southeast Asian booming economies, as well, could step in and grab what they can, despite all the downsides of coal, because they can get it at a discount; which won’t be great for coal companies that are used to higher prices, but it likely will allow them to keep operating at something close to their previous capacity for longer than would otherwise be the case, lacking these rising nations that need cheap fuel, whatever the consequences of using it.

In the UK, though, coal is gone, and the remnants of its use are slowly being wiped away: the land cleaned up and repurposed, more of the grid being optimized for cleaner production types.

We’ll probably see a few other big nations accomplish the same over the next decade, but because of all that aforementioned geopolitical turmoil, there’s also a chance those planned end-dates will be pushed: the cheap, dirty needs of the present overshadowing these nations’ cleaner, healthier next-step ambitions.

Show Notes

https://www.eia.gov/tools/faqs/faq.php?id=107&t=3

https://e360.yale.edu/digest/uk-last-coal-plant

https://ourworldindata.org/grapher/electricity-mix-uk?stackMode=absolute&facet=none

https://www.wsj.com/us-news/coal-ash-cancer-epa-north-carolina-b39ddf6a

https://beyondfossilfuels.org/europes-coal-exit/

https://www.npr.org/2024/09/30/nx-s1-5133426/uk-quits-coal-climate-change

https://www.theguardian.com/business/2024/sep/30/end-of-an-era-as-britains-last-coal-fired-power-plant-shuts-down

https://www.epa.gov/sites/default/files/2016-06/documents/4783_plant_decommissioning_remediation_and_redevelopment_508.pdf

https://www.gisreportsonline.com/r/peak-coal/

https://www.moscowtimes.ru/2024/10/07/samii-tyazhelii-krizis-za30-let-vrossii-nachala-rushitsya-dobicha-uglya-a144209

https://interactive.carbonbrief.org/coal-phaseout-UK/index.html

https://www.bbc.com/news/articles/c5y35qz73n8o

https://www.nytimes.com/2024/09/30/climate/britain-last-coal-power-plant.html

https://www.washingtonpost.com/climate-environment/interactive/2024/uk-coal-power-exit/

https://www.theguardian.com/business/2024/sep/30/the-deep-history-of-british-coal-from-the-romans-to-the-ratcliffe-shutdown

https://www.reuters.com/markets/commodities/uks-last-coal-plant-shutdown-bodes-well-us-lng-exports-maguire-2024-10-01/

https://www.wired.com/story/uk-no-coal-fired-power-plants-first-time-in-142-years/

https://www.statista.com/statistics/371069/employment-in-coal-mining-industry-in-the-united-kingdom-uk/

https://apnews.com/article/high-court-rejects-uk-coal-mine-whitehaven-83b9b7ceedebee1b70927667987b4dd7

https://www.bbc.com/future/article/20240927-how-coal-fired-power-stations-are-being-turned-into-batteries

https://www.reuters.com/sustainability/climate-energy/britain-become-first-g7-country-end-coal-power-last-plant-closes-2024-09-29/

https://www.nytimes.com/2024/09/30/opinion/england-coal-wind-power.html

https://en.wikipedia.org/wiki/Coal-fired_power_station

https://en.wikipedia.org/wiki/Coal_in_Australia

https://en.wikipedia.org/wiki/Industrial_Revolution

https://en.wikipedia.org/wiki/Coal

This week we talk about Joe Rogan, Call Her Daddy, and podcast monetization.

We also discuss Kamala Harris, Donald Trump, and double-haters.

Recommended Book: You Sexy Thing by Cat Rambo

Transcript

In the world of US politics, double-haters are potential voters who really just don’t like the candidate from either major political party, and thus they decide whether and how to vote based on who they dislike least—or in some cases who they would like to hurt, the most.

This isn’t a uniquely American concept, as voters in many global democracies face similar situations, but it seems to be an especially pressing issue in this year’s upcoming US Presidential election—and election day is a week away as of the day this episode goes live—because the race is just so, so close, according to most trusted polls.

In that same context, swing states are states that could swing either way, theoretically at least, in terms of who their votes go to, and because these swing states contain enough electoral college votes to allow even the candidate who doesn’t win the popular vote to win the presidency, that makes them especially vital battlegrounds.

So there’s a scramble going on right now, for both parties, to muster their existing bases, to shore-up some of the demographic groups they’re relying upon in this election, and to get their messaging in front of as many of those double-haters and other undecideds as possible so as to maybe, possibly swing this neck-and-neck race in their direction.

Toward that end, we’ve seen simply staggering sums of money pulled in and spent by both major parties’ campaigns: it’s looking likely that this will be the most expensive election season in US history, with just under $16 billion in spending across federal races, alone—which is up from just over $15 billion in 2020, according to nonpartisan group Open Secrets; that actually means this election will probably end up being just a smidgeon cheaper than 2020’s election, if you adjust for inflation, rather than comparing in absolute dollar terms, but both of these races will have been several times as expensive as previous elections, weighing in at about double 2016’s cost, and triple what these races tended to cost previously, in the early 2000s.

For perspective, too, US elections were already quite a lot more expensive than elections held in other wealthy countries.

According to a rundown by the Wall Street Journal, Canada’s 2021 election only cost something like $69 million in inflated-adjusted dollars, and US elections tend to cost about 40-times more, per person—so this is a population-scaled figure—than elections in the UK and Germany.

The cost of local elections in the US have been increasing, as well, in some cases substantially, and that’s part of why unpaid exposure and promotion is becoming increasingly valuable: it takes a lot of communications oomph to puncture the hubbub of commercial marketing messages in the US, and while pulling in a lot of money to buy ads and fund other promotional efforts is one way to do that, it’s also possible to approach the problem asymmetrically, going to people where they already are, basically, and getting some of that valuable face-time without having to spend a cent on it.

And that’s what I’d like to talk about today—specifically, efforts by candidates to get on popular podcasts, and why this medium in particular seems to be the go-to for campaigns at a moment in which the electoral stakes are historically high.

—

Podcasts, by traditional definition, are audio files delivered using an old-school, open technology called RSS.

In the years since they first emerged, beginning in the early days of the 2000s, the transmission mechanisms for these audio files have become a bit more sophisticated, despite being based on essentially the same technology. They’ve been joined, though, by utilities that allow folks to stream undownloaded audio content, to ping the servers where these audio files are stored more regularly, and to attach all kinds of interesting and useful metadata to these files, which add more context to them, while also providing the fundaments of basic micropayment schemes and the capacity to include video versions of an episode, alongside audio.

That video component has been pushed forward in part by the success of content-makers on YouTube, where for a long while podcasters have promoted their audio shows with visualized snippets, behind-the-scenes videos, and other such add-on content. Over the past handful of years, though, it has also become a hotbed of original video podcast content, some podcasters even using YouTube as their native distribution client—and that, combined with Spotify’s decision to start offering video podcasting content alongside audio podcasting content, in part to compete with YouTube, has pushed video-podders to the forefront of many charts.

Multi-person conversational and interview shows have maybe benefitted most from that shift toward video, as being able to see the people recording these shows, and to watch their body language, all the little microexpressions and other components of conversation and social dynamics that are left out of pure audio shows, has helped them attract more listeners / viewers, while also making these shows an even more potent source of parasocial camaraderie—which was especially valuable during the lockdown-heavy phase of the covid-19 pandemic, but which is also arguably a valuable thing to provide at a period in which a lot of people across all demographics are suffering from intense loneliness and a perceived lack of connection; the sense of familiarity that folks felt listening to a familiar voice in their ear on a regular basis has been emphasized still-further by the ability to see those people on their phones, TVs, and laptops in the same way, and at the same regular cadence.

The business model of podcasting has also contributed to the expansion of this type of show, as while podcasting has never been as big and spendy an industry as comparable broadcast mediums, it has been growing, with most shows leaning on some combination of ads, sponsorships, memberships, patronage models, and subscriptions to keep their operations in the black.

Some shows make use of many or all of these income-generation approaches, and many of them have varied their business models based on the boom and bust phases the industry has seen over the years; so when ad revenue plummets, formerly ad-heavy shows will pivot to memberships, and when the listener membership well grows shallow, they might shift to some kind of featured sponsor model.

As of early 2024, there are more than half a billion regular podcast listeners, globally, and ad spending in this space, globally, reached over $4 billion for the first time this year.

That aforementioned shift toward video has tilted a lot of listening in that direction, with about a third of all podcast listeners in the US also watching at least one podcast, rather than just listening to it.

That watchability component has also nudged YouTube and Spotify into the lead in terms of podcast delivery, alongside Apple, which didn’t invent the podcast, even though the medium is named after their iPod product, but they did bring it to the forefront and make it widely available—Apple’s relative lack of investment in this space, for years, left the doors open for those other competitors, and again, their decision to feature video podcast content alongside pure audio shows has shifted the landscape of this industry substantially, raising questions about what a podcast even is, if any old YouTube show could also theoretically be categorized as such; it’s a blurry distinction at this point, a bit like the debate over whether audiobooks should be considered books, or if only written, visual versions should bear that label.

Also worth noting here is that nearly half, about 47%, of all US citizens ages 12 and up listen to a podcast at least once a month, and 34% listen every week.

11% of that demographic’s daily audio-time is spent listening to podcasts, which is quadruple the figure a decade ago, in 2014, and 23% of weekly podcast listeners in the US spend 10 or more hours with these shows each week, though the average listening time each week is also pretty high, weighing in at 7.4 hours.

Podcasts have diverse audiences and hit a range of economic classes and people of varying education levels—though it leans slightly higher than the average in terms of both educational attainment and income—and interestingly, folks seem to be especially influenced by podcast recommendations, 46% of weekly podcast listeners reporting that they purchased something based on a recommendation or advertisement they heard on a show.

All of which points at why podcasts, and especially interview podcasts, and even more especially video-heavy interview podcasts, have become such highly desired media real estate in this year’s US presidential election; these sorts of shows aren’t always the most desired medium for brands, because tracking return on investment, money earned per dollar spent, is difficult with podcasts compared to, for instance, buying ads on streaming TV shows or social media, but they’re great for raising awareness and general brand-building efforts, which is exactly what these candidates and their parties are aiming for.

So more people are listening to these things, people tend to trust what they hear on podcasts more than on other types of media, and the demographics these shows reach are highly desirable, politically.

This is why, over the past few weeks, candidates Kamala Harris and Donald Trump have appeared on some of the biggest podcasts in existence, right now: Call Her Daddy for the former, and the Joe Rogan Experience for the latter.

Both of these appearances were ostensibly pretty risky, as podcast interviewers tend to color outside the lines compared to hosts on conventional television or radio shows, but the potential upsides were huge for both, as Alex Cooper, the host of Call Her Daddy, which is kind of a comedic advice show, has become a massive force in the world of women’s issues, and she recently became one of the best-paid and most influential podcasters in the world by leaving Spotify for SiriusXM, that change beginning in 2025, for a reported $100 million.

Joe Rogan, in contrast, has consistently been the number one podcast in the world for years, and his audience skews toward the people Trump wants to reach: the listening base is 80% male, more than half of those listeners are ages 18-34, more than a third identify as Independents, politically, and a little over a quarter are Democrats who might be convinced to switch sides for this election, because of Rogan’s somewhat conservative-leaning, independent stance on most things.

Trump recorded a 3-hour podcast interview with Rogan, leaning into the host’s chilled-out, but often heavy and asymmetric-question laden format, and that was blasted out to the show’s 14.5 million Spotify followers and 17.5 million YouTube subscribers.

Call Her Daddy is the second-biggest podcast on most networks after Rogan’s show, and while it has a comparably meager 5 million weekly listeners, the show’s demographics lean heavily toward women, and especially young women, which is seemingly favorable to the messaging Harris wants to megaphone at this point in her campaign; she’s rounded-out that appearance with appearances on other shows, like All The Smoke, which is hosted by a pair of NBA stars, and The Breakfast Club, which is hosted by the popular personality, Charlamagne Tha God.

Trump has appeared on quite a few podcasts of late, as well, though they’ve largely been in the same demographic vein as Joe Rogan—Trump went on YouTuber Logan Paul’s show, Impaulsive, for instance, alongside This Past Weekened with Theo Von and the Lex Fridman Podcast—all shows that lean heavily toward the young, male demographic, and which skew somewhat conservative and/or the libertarian side of independent.

Like many aspects of this election, we don’t really know if these bets will pay off for these candidates and their campaigns. There’s a lot to suggest that folks trust podcasts and podcasters, and that this industry may therefore be an excellent means of blasting a message to the right people, allowing politicians to realize a huge return on the time they invest preparing for their appearances and recording these interviews.

On the other hand, there’s a chance that, like many supposed means of reinforcing brand awareness and identity, that the numbers are kind of fuzzy and don’t necessarily reflect the reality many people think they reflect: it could be that folks tune in, listen, and then don’t do anything with what they learn; a more passive means of engagement that results few, if any, real-world conseqences.

It could also be that one or the other, or both of these parties aimed at the wrong audiences, or at the wrong influencers to help them reach those audiences, which could result in the same outcome, but with their demographic assumptions to blame, rather than the nature of the medium.

We won’t know for sure until after the election, and even then it’ll still be an open question, because it’s difficult to definitely link action to outcome when it comes to this facet of the political world.

That said, it does seem pretty likely, that for the next few elections, at least, podcasters will carry somewhat higher credibility and weight, and consequently attract even more attention, and probably ad-dollars, too, because it’s becoming more and more difficult to reach the right people, the right potential voters, and podcasts are still new and wild westy enough that they could break through the hubbub, even when other content types struggle to do so.

Show Notes

https://www.bbc.com/news/articles/cy8nn0913e8o

https://backlinko.com/podcast-stats

https://www.insideradio.com/free/candidates-embrace-podcasts-but-is-it-working-here-s-what-one-survey-shows/article_b8858d76-92a8-11ef-9063-13e0c716cedd.html

https://www.npr.org/2024/10/27/nx-s1-5162304/politics-chat-trump-gives-3-hour-joe-rogan-interview-harris-leans-on-fascist-label

https://www.aljazeera.com/news/2024/10/23/trump-harris-turn-to-podcasts-and-maybe-joe-rogan-for-us-election-boost

https://www.elle.com/uk/life-and-culture/culture/a62526922/kamala-harris-call-her-daddy/

https://www.quillpodcasting.com/blog-posts/podcast-stats-and-facts-2024

https://soundsprofitable.com/research/the-podcast-landscape-2024/

https://www.edisonresearch.com/the-podcast-consumer-2024-by-edison-research/

https://finance.yahoo.com/news/alex-cooper-lands-100-million-143000863.html

https://en.wikipedia.org/wiki/Call_Her_Daddy

https://www.edisonresearch.com/the-race-to-rogan-who-will-candidates-reach-on-americas-top-podcast/

https://www.washingtonpost.com/elections/2024/10/25/trump-joe-rogan-podcast-interview/

https://time.com/7099104/presidential-podcast-media-tour-donald-trump-kamala-harris/

https://www.hollywoodreporter.com/business/digital/alex-cooper-interview-call-her-daddy-1236023570/

https://apnews.com/article/trump-election-lies-rogan-interview-ballots-voting-c8c06eb608c1b1ae8ca0e93ec1022b02

https://www.wsj.com/politics/elections/elections-cost-us-highest-spend-b8475961

https://www.politico.com/news/magazine/2024/10/21/meet-the-worlds-double-haters-00184634

https://www.washingtonpost.com/politics/2024/10/25/wisconsin-swing-state-undecided-voters-trump-harris/

This week we talk about DJT, Polymarket, and Kalshi.

We also discuss sports betting, gambling, and PredictIt.

Recommended Book: Build, Baby, Build by Bryan Caplan

Transcript

Trump Media & Technology Group, which trades under the stock ticker DJT, has seen some wild swings since it became a publicly tradable business entity in late-March of 2024.

The Florida-based holding company for Truth Social, a Twitter-clone that was released in early 2022 following former President Donald Trump’s ousting from Twitter—that ousting the result of his denial of his loss in the 2020 presidential election—is a bit of an odd-bird in the technology and media space, as while it’s ostensibly an umbrella corporation for many possible Trump-themed business entities, Truth Social is the only one that’s gotten off the ground so far, and that platform hasn’t done well in traditional business or even aspirational tech-business terms: a financial disclosure in November of 2023 indicated that the network had tallied a cumulative loss of at least $31.5 million since it was launched, and the holding company’s numbers were even worse: when they filed their regulatory paperwork in March of 2024, they noted that Trump Media & Technology Group had lost $327.6 million, while making a mere $770,000 in revenue.

Those kinds of numbers, the company hemorrhaging money, would be a huge problem if DJT was a typical media business, or business of any kind, really. But for most people who invest in the company’s stock, this entity seems to be less a traditional stock holding, like you might buy shares of NVIDIA or Coca-Cola, hoping to earn dividends or see the value of the stock increase over time based on the performance and assumed future performance of the company in question, but instead it seems to operate as a means of betting on Trump and his political aspirations: many people who have been asked why they’re buying the stock of a clearly fumbling company say that they do it because they like Trump and what he stands for, and some have suggested they assume the stock will do much better if and when he’s back in office.

Other entities, especially those who oppose Trump and his politics, have pointed out that this publicly traded business provides foreign and US entities an easy, and easily deniable means of basically bribing Trump—or getting on his good side, if you want to use less charged language—as they could simply, and legally pick up a large number of shares, raising the price of the stock, which in turn increases the size of Trump’s fortune, which he could then, if he so chooses, cash out of at some point, but in the mean time this allows him to do the more typical rich person thing and just borrow money against the non-money, stock assets he owns.

All of which would be difficult to prove, which is part of why this would, in theory, be an excellent means of funneling money to someone who might hold the reins of power in the near-future, if one were so inclined to do so.

But at the moment that’s all speculation, and with ongoing investigations into other purported bribery schemes on the part of Trump and his campaign, it’s not clear that Trump would need DJT in order to get money into his coffers, as more direct approaches—like simply depositing ten million dollars into his campaign account from Egypt’s state-run bank, seem more straightforward, and just as unlikely to result in any kind of pushback from the US’s oversight panels, based on how they’ve addressed that particular accusation so far, at least.

Of course, some people are simply looking for points of leverage anywhere they can find it, not for political or regulatory manipulation purposes, but to earn money by gambling on assets that change value in dramatic and seemingly predictable ways.

For day traders and other arbitrage-seekers, then, a stock that goes up and down based on the perceived successes and failures of a public figure who’s constantly saying and doing things that can be construed in different ways by different people is an appealing target, even lacking a political motivation for tracking (and perhaps even influencing, to a limited degree) those numbers.

What I’d like to talk about today is another type of political betting, and how a recent court case may make politics in the US a lot more tumultuous, maybe more measurable, and possibly more profitable, for some.

—

In mid-2021, a New York-based online prediction market called Kalshi launched in the US, and this service was meant to serve as a platform through which users could place bets—in the form of trades—on all sorts of things, ranging from when the Fed would next cut interest rates, and by how much, to who would win various global awards, like the Nobel in chemistry.

Bets can only be placed on yes or no questions, which shapes the nature of said questions, and delineates the sorts of questions that can be asked, and in general the platform pays out a dollar for each winning contract—so if you buy one contract saying the Republican party will control the House after November’s election, and they do, you would win a dollar, but if they don’t, you would lose whatever money you spent to buy that contract—and these contracts can be purchased for sums that are based on how likely the event is currently expected to be: so if there’s a low chance, based on all available variables, that the Republicans will take the House, that contract might cost substantially less than a dollar to purchase, whereas if it’s likely they’ll take it, it would cost close to a dollar—so the payout is larger for events considered to be unlikely.

The original idea behind Kalshi, and similar platforms, of which there are many, operating in many different places around the world, was to provide investors with a hedge against events that are otherwise difficult to work into one’s asset portfolio.

It’s relatively simple to have a bunch of bets that will pay out big time if the US economy does well, for instance, and simple enough to buy counter-bets that will pay out decently well if it does badly—many investors buying some of each, so they’re not wiped out, no matter what happens—but there are all sorts of things that can mess with one’s otherwise well-balanced investment strategies, like the emergence of global pandemics and the surprise decision of the UK to leave the European Union.

If you can place bets that will pay out big-time when unlikely things happen, though, that can help re-balance a financial loss that arises from the occurrence of said unlikely events; if you lose a bunch of money from your stock portfolio because the UK voted for Brexit, but you also bought a bunch of contracts on this kind of market that would pay out substantially if Brexit was successful, you’ll reach a kind of equilibrium that isn’t as simple to achieve using other markets, because of how difficult it can be to directly link a stock or bond with that kind of not-directly-financial event.

So Kalshi pitched itself as that kind of alternative asset market, predicated on bets, but while they had a license from the US Commodities Futures Trading Commission, or CFTC, to function as a contract market in the States, acquired the year before they launched, their proposal to start a political prediction market, which would allow folks to bet on which party would control the US congress, was denied by the CFTC in September of 2023, the agency claiming that allowing such bets would create bad incentives in the electoral process, and that offering these sorts of contracts would violate US market regulations for derivatives.

A judge ruled in Kalshi’s favor a year later, in September of 2024, saying that the agency had exceeded its authority in banning this type of contract-issuance by Kalshi, and while the CFTC attempted to stall that component of their market’s implementation, on October 2 of this year, a federal appeals court ruled in Kalshi’s favor, and the platform was thus formally allowed to offer contracts that served as a betting market for US politics on which actual money could be lost and earned.

That last point is important, as throughout this process, and even before Kalshi was launched, other betting markets have been common, including those that have allowed bets on US political happenings.

It’s just that the majority of them, and the ones that have persisted and grown in the US in particular, haven’t allowed folks to bet actual money on these things: they’ve allowed, in some cases, the betting of on-platform tokens, which represent credibility, not money, though a few money-trading entities, like PredictIt, have been on the agency’s radar, but in PredictiIt’s case, it was granted what amounts to a “we won’t take action against you, despite what you’re doing being questionable” letter from the CFTC, which until Kalshi’s case turned out in their favor, meant PredictIt was one of the few, large-scale, reputable real-money political prediction markets available in the US.

Not all such markets have been so lucky, but that luck has been highly correlated with their approach to handling money, the structure of the company, and the degree to which they’ve been willing to play ball with the CFTC and other interested agencies.

All that said, we’ve reached an interesting point in which these markets have conceivably become more serious and useful, because rather than relying on not-real tokens that have no actual value to anyone—so you could create an account on one of these sites, bet all your tokens on a silly position that makes no sense, and suffer no consequences for that bet—we now have platforms that allow folks to put their money where their beliefs are, which in turn should theoretically make these markets more reliable in terms of showing what a certain segment of the population actually believes; how likely different candidates are to win, different parties are to hold Congress, and how likely various bills are to be passed into law.

Interestingly, though, that theory may already be destined for the dustbin, as one of the larger betting platforms, Polymarket—which allows folks to place bets on all sorts of things using a crypto asset called USDC, and which isn’t regulated by the CFTC because its operations are not based in the US—is experiencing what looks like market manipulation, possibly meant to sway poll forecasts that take these sorts of markets into account.

What that means in practice is that of the nearly $2 billion in bets that have been placed on the outcome of the upcoming US presidential election on Polymarket, as of the day I’m recording this, about $30 million seems to have been recently bet by just four accounts, all of which have behaved so similarly that a report from the Wall Street Journal posits that they might be the same person, or a collection of people operating alongside each other.

In any case, the net-impact of this investment, which landed in late-October, was to bump Trump’s odds of winning to 60% from where it was previously, at 53.3%.

There’s a chance, of course, that this is just the result of a person or some people with money wanting to earn what they consider to be an easy buck, betting on the candidate they think is most likely to win, and there’s also a chance that they’re plowing that money into this bet in order to show support for their favored candidate.

But there’s also a chance that this is the first example, at this scale at least, of betting market manipulation that’s sizable enough to shift the balance of polls that take betting market numbers into consideration.

Some of the poll predictions you in see in the news work these numbers from these betting markets into their formulae alongside the findings of more conventional polling entities, basically, so if you have tens of millions of dollars to throw into this kind of market, you can bump your favored candidate’s seeming chances significantly higher, which then in turn can make it seem like that candidate has achieved a surge in support more broadly—despite that seeming support actually just having been bought and paid for by one or a few enthused supporters on this kind of market.

So if it does turn out that this is a conscious effort on someone’s part to shift perceptions of the election—maybe big-time Trump fans, maybe someone affiliated with him or one of the PACs trying to get him elected—that could be a big deal, especially considering that Trump and his people have said that they won’t accept the outcome of the election if they don’t win, and if they can show strong expectations, or seeming expectations in the shape of favorable poll numbers that their candidate was meant to win, that could be a point of seeming evidence in favor of their argument that there was voter manipulation by their opponent; this of course wouldn’t be the case, but because of how the news, and even more so social media platforms, sometimes present superficial versions of what’s actually happening, seeing the candidate who had 60% support lose could seem like a valid argument at a highly charged post-election moment, despite all the other evidence to the contrary.

One more important point to make here is that election markets don’t actually represent probabilities—they represent a relatively small population of people’s expectations or hopes about what will happen.

It’s in the interest of these markets to imply that there’s substantial meaning and real-deal data in their numbers, but that’s mostly marketing copy to try to get more people involved; at the end of the day, these markets are often wrong, are populated by outliers who don’t represent the voting public, and in many cases they’re heavily biased in all sorts of directions—some of them more popular with folks on the left, some more popular with folks on the right, and some more popular with folks who just love making big bets that feel like gambling, and in some cases creating chaos or funny outcomes just for laughs.

On that final point, it’s worth mentioning that sports gambling has recently become legal, to some degree at least, across much of the United States, and this has already become a huge industry, representing an expected $14.3 billion in 2024, alone, with an anticipated annual growth of something like 10%, which is astonishing for something that was mostly illegal until just recently—the Supreme Court decision that paved the way for it as a nation-spanning market was only made in 2018.

So there’s a chance that these prediction markets will boom, as there’s clearly an appetite for betting on stuff in the US, as a form of entertainment, as a means to try to get ahead, and potentially as a way to put one’s money where one’s mouth is.

Though all of these incentives and purposes could potentially make these markets less valuable for political researchers hoping to better understand odds, as the incentives may or may not align with those that lead to more accurate predictions, and there’s no way to really know how those post-money-injection numbers will align with actual voting tallies, or fail to do so, until we have more data about this and other near-future elections’ outcomes.

Show Notes

https://www.wsj.com/finance/investing/how-investors-are-betting-on-the-election-from-utility-stocks-to-djt-c2b9e838

https://www.yahoo.com/news/hes-sale-trump-djt-stock-001901595.html

https://www.cnbc.com/2024/09/03/trump-egypt-democrats-letter.html

https://en.wikipedia.org/wiki/Truth_Social

https://www.axios.com/2024/09/10/prediction-markets-election

https://stanfordreview.org/kalshis-court-victory-a-turning-point-for-prediction-markets-2/

https://www.politico.com/news/2024/10/04/harris-trump-election-betting-00182432

https://en.wikipedia.org/wiki/Prediction_market

https://www.investopedia.com/terms/p/prediction-market.asp

https://www.axios.com/2024/09/16/prediction-markets-election

https://asteriskmag.com/issues/05/prediction-markets-have-an-elections-problem-jeremiah-johnson

https://www.chapman.edu/esi/wp/porter_affectingpolicymanipulatingpredictionmarkets.pdf

https://www.ft.com/content/82199ea0-9707-4d37-b4c4-b65a65d17ecb

https://worksinprogress.co/issue/why-prediction-markets-arent-popular/

https://www.wsj.com/finance/betting-election-pro-trump-ad74aa71

https://www.washingtonpost.com/technology/2024/10/19/election-betting-trump-harris-odds-polymarket-predictit/

https://www.wsj.com/finance/investing/how-investors-are-betting-on-the-election-from-utility-stocks-to-djt-c2b9e838

https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-10-03-2024/card/betting-markets-on-the-presidential-race-set-to-go-live-NnRne85QCyVAnc9nZy8z

https://www.wsj.com/finance/regulation/are-you-ready-to-bet-on-u-s-elections-a-judges-ruling-opens-the-door-556abc73

https://en.wikipedia.org/wiki/Kalshi

https://www.coindesk.com/policy/2024/09/13/kalshis-new-political-prediction-markets-halted-as-cftc-appeals-loss/

https://www.brookings.edu/articles/how-betting-platform-predictits-legal-struggle-could-hamper-regulators-and-hurt-regulated-firms/

https://www.wsj.com/finance/betting-election-pro-trump-ad74aa71

https://en.wikipedia.org/wiki/Polymarket

https://www.statista.com/outlook/amo/online-gambling/online-sports-betting/united-states

This week we talk about the HoloLens, the Apple Vision Pro, and the Meta Ray-Ban Smart Glasses.

We also discuss augmented reality, virtual reality, and Orion.

Recommended Book: The Mountain in the Sea by Ray Nayler

Transcript

Originally released as a development device in 2016—so aimed at folks who make software, primarily, not at the general public—the HoloLens, made by Microsoft, was a fairly innovative device that looked like virtual reality headgear, but which allowed folks to interact with graphical elements overlayed on a transparent surface so that they seemed to be positioned within the real world; so-called augmented reality.

This functionality relied upon some of the tech Microsoft had developed for its earlier Kinect accessory, which allowed Xbox owners to play games using their bodies instead of more conventional controllers—it used a camera to figure out where people, and their arms, legs, and so on, were in space, and that helped this new team figure out how to map a person’s living room, for instance, in order to place graphical elements throughout that room when viewed through the HoloLens’ lenses; so stuff could appear behind your couch, pop out of a wall, or seem to be perched atop a table.

The HoloLens was not the only option in this space, as several other companies, including other tech titans, but also startups like Magic Leap, were making similar devices, but it was arguably the most successful in the sense that it both developed this augmented reality technology fairly rapidly, and in the sense that it was able to negotiate collaborations and business relationships with entities like NASA, the US Military, and Autodesk—in some cases ensuring their hardware and software would play well with the hardware and software most commonly used in offices around the world, and in some cases showcasing the device’s capabilities for potential scientific, defense, and next-step exploratory purposes.

Like many new devices, Microsoft positioned the HoloLens, early on, as a potential hub for entertainment, launching it with a bunch of games and movie-like experiences that took advantage of its ability to adapt those entertainments to the spaces in which the end-user would consumer them: having enemies pop out of a wall in the user’s kitchen, for instance, or projecting a movie screen on their ceiling.

It was also pitched as a training tool, though, giving would-be astronauts the ability to practice working with tools in space, or helping doctors-in-training go through digital surgeries with realistic-looking patients before they ever got their hands dirty in real life. And the company leaned into that market with the second edition of the headset, which was announced and made available for pre-order in early-2019, optimizing it even further for enterprise purposes with a slew of upgrades, and pricing it accordingly, at $3,500.

Among those upgrades was better overall hardware with higher-end specs, but it also did away with controllers and instead reoriented entirely toward eye- and hand-tracking options, combined with voice controls, allowing the user to speak their commands and use hand-gestures to interact with the digital things projected over the real-world spaces they inhabited.

The original model also had basic hand-tracking functionality, but the new model expanded those capabilities substantially, while also expanding upon the first edition’s fairly meager 30 degrees of augmented view: a relatively small portion of the user’s line of sight could be filled with graphics, in other words, and the new version upgraded that to 52 degrees; so still not wall to wall interact-with-able graphics, but a significant upgrade.

Unfortunately for fans of the HoloLens, Microsoft recently confirmed that they have ended production of their second generation device, and that while they will continue to issue security updates and support for their existing customers, like the US Department of Defense, they haven’t announced a replacement for it—which could mean they’re getting out of this space entirely.

Which is interesting in the sense that this is a space, the world of augmented reality, which some newer entrants are rebranding as mixed reality, that seems to be blowing up right now: two of Microsoft’s main competitors are throwing a lot of money and credibility into their own offerings, and pitching this type of hardware as the next-step in personal devices.

Some analysts have posited, though, that Microsoft maybe just got into this now-burgeoning arena just a little too early, investing in some truly compelling innovations, but doing so at a moment in which the cost was too high to justify the eventual output, and now they might be ceding the space to their competition rather than doubling-down on something they don’t think will pay off for them, or they may be approaching it from another angle entirely, going back to the drawing board and focusing on new innovations that will bypass the HoloLens brand entirely.

What I’d like to talk about today are the offerings we’re seeing from those other brands, and what seems to be happening, and may happen in the near-future, in this augmented-reality, mixed-reality segment of the tech world.

—

I did an episode on spacial computing and the Apple Vision Pro back when the device was made available for purchase in the US, in February of 2024.

This device was considered to be a pretty big deal because of who was making it, Apple, which has a fairly solid record of making new devices with unfamiliar interfaces popular and even common, and because the approach they were taking: basically throwing a lot of money at this thing, and charging accordingly, around $3,500, which is the same price the second HoloLens was being sold for, as I noted in the intro.

But because of that high price point, they were able to load this thing up with all sorts of bells and whistles, some of which were fundamental to its functionality—like super-high-density lenses that helped prevent nausea and other sorts of discord in their users—and some that were maybe just interesting experiments, like projecting a live video of the user’s eyes, which are concealed by the headset, on the front of the headset, which to me is a somewhat spooky and silly effect, but which is nonetheless technically impressive, and is something that seems aimed at making these things less anti-social, because you can wear the Vision Pro and still see people, and this projection of their eyes allows them to see you and your facial expression at the same time.

I’ve actually had the chance to use this device since that episode went live, and while there are a lot of weird little limitations and hindrances to this device going mainstream at the moment, the technology works surprisingly well right out of the box, with the eye- and hand-tracking elements working shockingly, almost magically well for relatively early-edition tech; Apple is pretty good at making novel user-interfaces intuitive, and that component of this device, at least, seemed like a slam dunk to me—for casual use-cases, at least.

That said, the company has been criticized for that high price point and their seeming fixation on things like putting the users’ eyes on the outside of the headset, rather than, for instance, investing in more content and figuring out how to make the thing more comfortable for long periods of time—a common complaint with basically every virtual reality or mixed-reality headset ever developed, because of the sheer amount of hardware that has to be crammed into a finite, head-and-face-mounted space, that space also needing to be properly balanced, and it can’t get too hot, for perhaps obvious reasons.

Those criticisms related to price are the result not of comparison to HoloLens, as again, the pricing is basically the same between these two devices, but instead the result of what Meta has done with their mixed-reality offerings, which are based on products and technology they acquired when they bought Oculus Labs; they’ve leaned into providing virtual reality devices for the low- and mid-market consumer, and their newest model, the Meta Quest 3S is a stand-alone device that costs between about $300 and $400, and it has mixed-reality functionality, similar to the Vision Pro and HoloLens.

While Meta’s Quest line doesn’t have anywhere near the specs and polish of the Vision Pro, then, and while it didn’t arrive as early as the HoloLens, only hitting shelves quite recently, it does provide enough functionality and serves enough peoples’ purposes, and at a far lower price point, that it, along with its other Quest-line kin, has managed to gobble up a lot of market share, especially in the consumer mixed-reality arena, because far more people are willing to take a bet on a newer technology with questionable utility that costs $300 compared to one that costs them more than ten-times as much.

Interestingly, though, while Meta’s Reality Labs sub-brand seems to be doing decently well with their Quest line of headsets, a product that they made in collaboration with glasses and sunglasses company EssilorLuxottica, which owns a huge chunk of the total glasses and sunglasses global market, via their many sub-brands, may end up being the more popular and widely used device, at least for the foreseeable future.

The Ray-Ban Meta Smartglasses looks almost exactly like traditional, Ray-Ban sunglasses, but with slightly bulkier arms and with camera lenses built into the frames near where the arms connect to them.

If you’re not looking carefully, then, these things can be easily mistaken for just normal old Ray-Bans, but they are smartglasses in that they contain those two cameras on the front, alongside open-air speakers, a microphone, and a touchpad, all of which allow the wearer to interact with and use them in various ways, including listening to music and talking on the phone, but also taking photos of what they’re looking at, recording video of the same, and asking an AI chatbot questions like, what type of flower is this, and getting an audible answer.

These things cost around what you would pay for a Quest headset: something like $300-400, but their functionality is very different: they don’t project graphics to overlay the user’s view, in that regard they function like normal sunglasses or prescription glasses, but if you want to snap a photo, livestream whatever it is you’re seeing, or ask a question, you can do that using a combination of vocal commands and interacting with the built-in touchpad.

And while this isn’t the mixed-reality that many of us might think of when we hear that term, it’s still the same general concept, as it allows the user to engage with technology in real-life, in the real-world, overlaying the real world with digital, easily accessed, internet-derived information and other utilities. And it manages to do so without looking super obtrusive, like earlier versions of the same concept—Google’s Google Glass smartglasses come to mind, which were earlier versions of basically the same idea, but with some limited graphical overlay options, and in a form factor that made the wearer look like an awkward, somewhat creepy cyborg.

Snap, the parent company of Snapchat, has a similar offering which originally leaned into the same “these look just like glasses, but have little camera lenses in them” strategy, though with their newest iteration, their Spectacles smartglasses product has reoriented toward a look that’s more akin to a larger, clunkier version of the free 3d glasses you might use at the movie theater—not exactly inconspicuous, though offering much of the same functionality as Meta’s Raybans, alongside some basic graphical overlay functions: a lightweight version of what the Vision Pro and Quest offer, basically, and in a much small package.

These new Spectacles are only available for folks who sign up for the company’s developer program at the moment, however, and are purchased not as a one-off, but for $99/month, with a minimum commitment of 12 months—so the price tag is quite a bit higher than those Quests and Raybans, as well.

Interestingly, Meta’s Reality Labs recently held an event in which they showed off an arguably more advanced version of Snap’s Spectacles, called Orion.

These things are being pitched as the be-all, end-all mixed-reality solution that every company is trying to develop, but which they can’t develop yet, at least not at scale. They look like giant, cartoony glasses—they’re shaped like glasses, but comically oversized ones—and they provide many of the same benefits as today’s Quest headset, but without the large, heavy headset component; so these could theoretically be used in the real-world, not just in one’s living room or office.

The company announced this product along with the caveat that they cannot make it on scale, yet, because cramming that much functionality into such a small device is really stressing the capacity of current manufacturing technologies, and while they can build one of these glasses, with its accompanying wristband and a little controller, both of which help the glasses do what they do, in terms of compute and the user interface, for about $10,000 per unit, they could not, today, build enough of them to make it a real, sellable product, much less do so at a profit.

So this was a look at what they hope to be doing within the next decade, and basically gives them credibility as the company that’s already building what’s next—now it’s just a matter of bringing down costs, scaling up production, and making all the components smaller and more energy efficient; which is a lot of work that will take years, but is also something they should theoretically at least be able to do.

To be clear, most other big tech companies should be capable of build really snazzy, futuristic one-offs like the Orion, as well, especially if they, like Meta, offload some of the device’s functionality into accessory hardware—the Vision Pro has offloaded its battery into a somewhat clunky, pocketable appendage, for instance, and most of these devices make use of some kind of external controller, to make the user interface snappier and more accurate.

But Meta is attempting to show that this is the direction they see wearable technology going, and maybe our engagement with the digital world more holistically, as well. It’s easy to imagine a world in which we all have these sorts of capabilities built into our glasses and wristbands and other wearables, rather than having to work with flat, not-mixed-reality screens all the time, especially once you see the tech in action, even if only as a not-for-sale example.

One aspect of this potential future that Meta is forecasting is already leading to some soul-searching, though.

Some students at Harvard modified a pair of Meta Ray-Bans to use facial recognition and reverse-image search technology so they could basically look at a stranger, then learn a bunch of stuff about them really quickly, to the point that these students were able to do this, then pretend to know the that stranger, talk about their work, find their spouse’s phone number—a bunch of details that made it seem like they knew this person they’d only just met.

All of which is pretty wild and interesting, but also potentially frightening, considering that this is basically doxing someone on demand, in public, and it could be used—like many other tech innovations, granted—to enable and augment stalking or kidnapping or other such crimes.

None of which is destiny, of course. Nor is the success of this product type.

But there does seem to be a lot of interest in what these gadgets seem like they might offer, especially as the prices drop, and as more entrants carve out space in that relatively lower-cost space—which is a space Apple is reportedly planning to enter soon, too, with a new edition of their Vision Pro that would cost maybe something like half as much as the first one, and possibly smart glasses and maybe even Airpods with cameras meant for release over the next couple of years.

So it may be that the early divulgence of these next-step devices, showing us where these things might go with these higher-priced, smaller audience initial editions, could allow us to predict and prepare for some of their negative externalities before they go completely mainstream, so that when they finally arrive in their finished form, we’re a bit more prepared to enjoy the benefits while suffering fewer (though almost certainly not zero) of their potential downsides.

Show Notes

https://en.wikipedia.org/wiki/Spatial_computing

https://en.wikipedia.org/wiki/Apple_Vision_Pro

https://en.wikipedia.org/wiki/Meta_Quest_3S

https://en.wikipedia.org/wiki/Meta_Platforms

https://www.reddit.com/r/RayBanStories/comments/1e3frhc/my_honest_review_of_the_rayban_metas_as_everyday/

https://en.wikipedia.org/wiki/Ray-Ban_Meta

https://www.spectacles.com/spectacles-24?lang=en-US

https://en.wikipedia.org/wiki/Spectacles_(product)

https://forums.macrumors.com/threads/students-add-facial-recognition-to-meta-smart-glasses-to-identify-strangers-in-real-time.2438942/

https://archive.ph/6TqgF

https://www.theverge.com/24253908/meta-orion-ar-glasses-demo-mark-zuckerberg-interview

https://about.fb.com/news/2024/09/introducing-orion-our-first-true-augmented-reality-glasses/

https://www.reddit.com/r/augmentedreality/comments/1frdjt2/meta_orion_ar_glasses_the_first_deep_dive_into/

https://appleinsider.com/articles/24/10/13/cheaper-apple-vision-headset-rumored-to-cost-2000-arriving-in-2026

https://www.uploadvr.com/microsoft-discontinuing-hololens-2/

https://www.theverge.com/2024/10/1/24259369/microsoft-hololens-2-discontinuation-support

https://www.theverge.com/2022/6/7/23159049/microsoft-hololens-boss-alex-kipman-leaves-resigns-misconduct-allegations

https://en.wikipedia.org/wiki/Microsoft_HoloLens