Former Google CEO Eric Schmidt on AI potential: American businesses will change because of this

Joining me right here in Washington, DC to talk about artificial intelligence, the tech race, competition with China and so much more. Eric Schmidt is here. He’s the former Google Executive, Chairman and CEO, Co founder of Schmidt Futures and Co founder of the Special Competitive Studies Project. Good morning to you. Good to be here. You’re one of the most read in people when it comes to the the world of AI right now. And I think we’re all trying to understand really almost if you could stack rank all of these models and all of these companies for us, I think we’re all trying to understand who’s ahead, who’s behind, where is Google stand relative to Meta with Llama to Open AI and Microsoft. How do you see all of this? Well first I hate to tell you but I think this stuff is under hyped, under hyped, not over hyped because the arrival of intelligence of a non human form is really a big deal for the world and you think it’s here, it’s coming, it’s here, it’s about to happen. It happens in stages. If you look how, how, how quickly though I mean we used to say 20 years now within five, within five. And the reason is the scaling laws for these systems are continuing to go up without any loss or degradation of power. So what happened was open AI in this generation invented this category. It was fought with their Microsoft partnership. They’re going to spend thirty $200 billion on this. Google invented it and then was a late arrival as now is in the game. I’m assuming the numbers are similar. You have other entrants that are incredibly interesting. So for example, Meta has just released a 400 billion model called Llama 3IN open source form, which allegedly is as close to GPT 4, which is from a year and a half ago. So the open source industry is following the closed source. The big winner right now is still NVIDIA. And the reason is that they have a virtual monopoly on the software stack between the hardware and the software that everybody’s using. So everybody’s buying their chips. Would you buy other chips, by the way? I mean, do you think that AMD and do you think Intel will ever get into this game in the right way? Well, it’s really important. NVIDIA have a competitor, but NVIDIA is so far ahead that they have very good software support for their chips and the other guys are trying to catch up, right. Everybody I know is trying to use the other chips, but they’re still primarily buying NVIDIA for a while. Can the folks that you have not mentioned, Apple, Amazon, which is trying to build their own large language model, can some of these other companies catch up? They can. Amazon has a deep partnership with a company called Andropic, which is super important disclosure. I’m an investor there. The if you look at Apple, Apple always goes its own way and Apple always makes a better user interface than anyone else, and I’m sure that’s what they’re doing. What do you make? Anthropic has a partnership with Google. Also with Amazon, you’ve seen the open AI partnership with Microsoft. Microsoft has participated in this Aqua hire of inflection. We’re here in Washington. A lot of these deals if you will, strategic partnerships in a, in a, in a in a different world would be acquisitions. I think the big companies would love to buy these companies. The FTC and Lena Conn are looking at a number of these deals and saying actually maybe they actually are mergers. We’re they’re just not being called that. What do you think? Well look, first place the DOJ is suing all of the big tech companies for something. So I guess that’s the new season here and I obviously don’t agree with that. I think you should regulate, not not litigate these things. But in any case, from the standpoint of scale, the fastest way to run, because this is happening so quickly, is to find the partnerships and pour in money. The amounts of money that are going into these companies are insane. There are rumors that Elon Musk for X dot AI has has had an infinite amount of billions of dollars of demand for the six or so billion that he’s rumored to be raising. People want to invest in this and they want to win. X dot IA is still small, but his pitch is the combination of Twitter X and the Tesla geographic information gives him a leg up. We just don’t know. The reason I’m saying it’s under hyped is you’re seeing the future of reasoning, the future of human interaction, the future of research, the future of planning is being invented right now. There’s something called agents. When an agent is basically a large language model that can do something, there’s something called infinite context windows, which means that you can. It’s like having an infinite short term memory, which I certainly don’t have, where you can basically keep feeding it information and it keeps learning and it keeps changing, gives you recipes. This stuff is happening at a corporate level very, very fast. American businesses will change because of this. We’re the losers. And I think one question that people have is what happens to Google. Google has owned what’s called the blue link economy. And by the way, the blue Link economy is not just Google’s, but everybody else who’s benefited from folks searching on Google for stuff, clicking on the blue link, and then going back to all sorts of different websites. In a world where the device, the the the AI provides the answer and doesn’t necessarily need to send you to 12 places where you’re going to go find it yourself, what happens to all of that disclosure Google shareholder here? It’s pretty important to understand that Google is not about blue links, it’s about organizing the world’s information. What better tool than the arrival of AI to do that better? Do you think you can monetize that? You betcha. Much of the early work that I did when I was there was using early versions of advertising AI to make the advertising more effective. So unless you think advertising is going to go away, which I don’t think AI makes it more powerful, not less powerful, how scared should we be of all of this? And I asked. Becky and I were both in Omaha over the weekend and and Warren Buffett issued a warning, if you will, about AI and the dangers of it and just the ability to manipulate people in ways that I’m not sure everybody has thought about. Well, there’s lots of ways to influence people, right? You’re seeing that in in disinformation and so forth. People are going to have to learn to be more critical. The information presented to you may be generated by something not a human, and they may be fooling you a society. We will adapt to that. I’m not afraid at all of this. I’m beyond excited to cure cancer, to solve climate change, new material sciences, advances in science and transportation, and so forth. All the things that bedevil us as humans will make progress on. We can solve these things with the right tools and the right attitude and the right regulations. You mentioned climate change. One of the big questions about AI is whether we’re going to have enough energy to power all of these chips that need to be firing 24/7. I I keep reminding people think Canada, they’re very nice, they’re very smart, they’re very near us and they have a lot of hydropower. But more seriously, these systems, the the net return for building these things makes energy much more efficient. I put my money in the data centers to make Overall, you wouldn’t be buying energy companies right now. I would buy energy companies that are going to make the transition to more sophisticated distribution networks. Remember that AI allows better allocation of resources. Basically, it allows you better planning, you save money, you become more efficient. This is true in the media industries. It’s true in the energy industries. There’s every reason to think that the use of AI will make our businesses more efficient. Therefore let just literally waste less money. That’s good. It’s good for economics. Big The other big topic here in Washington is China and the US relationship with China. We just saw the TikTok decision. Well, before we even go on, what do you make of the TikTok decision? Well, I I’m in general in favor of regulation, regulation, not banning and not litigation. So again, the government has made this decision and from my perspective, the law is now in place. China has indicated it’s unlikely that they’re going to release the code. So we’ll see lots of people making proposals along those lines. So what do you think happens? What do I do? You think that Tiktok is going to exist in the United States a year from now? Assuming the legal challenges are it survives illegal challenges, then the effect is Tiktok will be banned.