This is an AI Transcription. It’s pretty good, but please forgive any errors.

[00:00:00] Jonathan: Welcome to The Difference Engine, the show for tech founders, investors, and innovators.

So Paul, what's coming up today?

[00:00:13] Paul: Well, we'll be asking if the EU's tech police are losing control of our digital streets.

[00:00:18] Jonathan: And we'll be giving you a hands on guide on how to carve out your own category niche.

[00:00:23] Paul: But first, let's take a look at the battleground of the desktop AI category war. Right, the desktop AI category awards have warmed up again.

The leading PC manufacturers used the recent Vegas based US Jamboree, known as the Consumer Electronics Show, to showcase their latest lineup. Of inverted commas, AIPCs, what the hell. Um, and these are all powered by neural processing units. I'm sort of amazed

[00:00:49] Jonathan: that, uh, the CES still exists. I mean, it's, uh, it's sort of, you know, it's cockroach like, isn't it really?

It's pretty, pretty revolting. And as you say, it never dies, but it is still with us. Um, so. What we're interested in on this is that as tech changes fundamentally in the incumbents in any one category, all are separately searching for how to be relevant in a new game. So we're wondering how the arrival of AI is affecting the now uber mature PC category.

[00:01:26] Paul: Pivot, pivot, pivot, pivot.

[00:01:28] Jonathan: I don't think there's much pivoting going on, but we're about to explore that. So, what we've seen recently is NVIDIA deliberately grabbing the headlines pre CS with the launch of its Digits machine. That brings a sophisticated AI development platform to everybody's desktop. You know, it's easy to understand as a brand new category.

And you want

[00:01:49] Paul: one, right? You want one.

[00:01:50] Jonathan: Of course we do. I want one. When I move the whole thing forward, you know, we all want the personal AI supercomputer to move the industry forward. You know, it's not been done before and it is different, right? The fundamental category issue, it is different to anything else that's currently on offer.

So meanwhile. As this thing blasts its way into the public consciousness, the incumbent PC manufacturers, no doubt desperate to climb up to a new AI driven S curve, taking different approaches to, to integrating AI into their offer. So we saw announcements from, you know, the usual bunch, Acer, Asus, Dell, HP, Lenovo, but what they said stood out in different ways.

All right. So I think what was, was really interesting to start with was Acer absolutely following the Microsoft delivery platform with the new Copilot Plus lineup. By the way, for those of you not familiar with Copilot Plus, it's not to be confused with Copilot. Copilot Plus is a new Microsoft defined type of PC hardware, one which has been specifically designed for AI tasks.

And that is distinct from Copilot. Co pilot, uh, Microsoft sort of rather irritating generative AI chatbot. Um, anyway, these Acer machines, um, powered by AMD Ryzen AI 300 series processors using the AMD XDNA 2 NPU architecture and including AMD Radeon. 800M graphics, um, very AMD then. Very

[00:03:31] Paul: feeds and speeds.

Yeah,

[00:03:32] Jonathan: so just to be fair, of course, Acer has introduced, um, some Intel core powered, uh, machines, the SBAR SAI and the REVO are desktop devices with the same co pilot plus capabilities. Confusing branding though, right? Very confusing, very confusing architecture, very confusing branding. I'm quite an Acer fan, so don't take that personally, Acer.

So, cold comfort to Intel. With, uh, Acer leading out with AMD, uh, technologies is that, uh, HP unveiled the Z2 Mini and ZBook Ultra, um, which the company claims, inverted commas, engages users to engage in 3D design, render graphics intensive projects, and simultaneously work locally on LLM. Suck that copywriter.

Dreadful, isn't it? Yeah. Um, And much to Intel, I'm sure Chagrin, the new HP hardware is powered by a AMD Ryzen AI max PR processors. So that's interesting. I think, you know, AMD, at least two to Intel's one so far. Um, and coming in at the summit, Dell. Rather than chucking another piece of hardware into the environment, it's focused on adding value, um, in trying to simplify AI development on PCs.

Um, and it's launched a thing called, uh, Dell Pro AI Studio, which offers an AI toolkit with validating and models to help developers and, and, and IT administrators, don't leave out the IT administrators, to build and manage their software. Independent of the underlying silicon. Hmm. Software plague. Yeah, indeed.

And Dell is claiming the performance advantage, reducing development and deployment times by as much as 75%. So going from six months to a little over six weeks, should you want the capability of course.

[00:05:30] Paul: I am just struggling with all of this provability of any of that. Yeah,

[00:05:33] Jonathan: yeah. It's a bit yada yada, isn't it?

Yeah. Um, Lenovo. On the other hand, you know, formerly IBM's PC division, for those of you with a memory, um, they tried to go with user experience enhancement, um, available on the Intel. Hurrah! At last, core ultra powered Lenovo AI Now and Lenovo Aura Edition PCs. Um, you know, we've got The company's flagship ThinkPad X9.

It's offering what Lenovo calls an advanced on device AI assistant. Oh dear, to deliver real time intelligence to users. I'd actually really irritate them probably. Um, it's built on local language model, local large language model, and, but it's using Meta's LLAMA AI. 3. 0. Um, so what they're saying is it's storing all the data and processes locally.

Um, so of course, Lenovo is claiming that safeguards user information while delivering powerful AI capabilities. You're right to be cynical. I'm

[00:06:32] Paul: very cynical. I mean, it's just a load of, um, sort of people trying to make themselves seem relevant. In, in a new world, uh, and throwing a whole bunch of feeds and speeds at things.

I'm not seeing the differentiation that NVIDIA is showing.

[00:06:45] Jonathan: Absolutely not. And you know, uh, Asus, um, came in last, um, being a bit contrary here, um, unveiling a Qualcomm Snapdragon powered Zenbook, the A14. Sounds like a dreadful old. B Road or A Road in Essex, doesn't it? Um, so it offers to deliver high TDP performance along with neural processing capability, again, should you want it.

So, you know, as you have indicated already, Paul, what are we going to learn from this?

[00:07:16] Paul: Better, better, better is not different, different, different. It absolutely

[00:07:18] Jonathan: is. You know, it looks like the strategy of the PC makers is varying from mostly from, We must give a nod to some form of AI assistance feature to a more full on embracing of AI development capability with the software suites that Dell are coming out with.

Um, but this is absolutely not the full on blood and guts assault of NVIDIA's category creating personal AI supercomputer. You know, we did say at the beginning. That the wars are warming up and it's not hot. It looks like a few tepid internecine skirmishes to us. Um, I think with, with ASA running for cover firmly behind

[00:07:58] Paul: excited about any of these things.

And I would struggle to think that an, even the most avid PC fan and tech person with a need to replace. All of their PCs could get excited. No, you simply

[00:08:10] Jonathan: can't. It's just a whole bag of better, isn't it? Um, but I mean, just, just, uh, you know, in, in the defense of these people, we might appear to be having a go at, um, leading out a category doesn't make for a category.

NVIDIA is gonna need some competition. And it's

[00:08:27] Paul: pioneers get arrows in the back.

[00:08:28] Jonathan: Of course they do. But I think right now, except at the margins, that the PC bunch from Acer to Lenovo Aren't the competition, um, in fact, I think we'd probably wager that that NVIDIA's competition is likely to emerge from some plucky new player or players come from

[00:08:45] Paul: underneath from the chip players that are that are that are rivaling it and that will spawn real innovation.

Yeah, this ain't it. It's clear

[00:08:52] Jonathan: that we don't know yet. Who it is that's going to lead that assault but as you say probably from the chip players and probably from underneath so In the in the case of this fortune favors the brave or fools rush in where angels fear to tread We'll soon see sure. We'll be back to that

You've got to learn to earn So I thought I'd do some interrogation here of Professor Mar, um, on a subject that we've been working on quite extensively in recent months, um, with categorical clients. And it's really how to carve out a subcategory from an established category niche.

[00:09:35] Paul: So let's talk about that because, um, one of the things we do get asked about categories, what size is the category?

Are we looking for an Uber category? Are we looking for a subcategory? So. Category design in tech helps to differentiate companies one from another. This helps obviously with sales, marketing, building up a customer base of like minded buyers over time and partners, et cetera. It has a second role. Um, so when you build a category, this helps to position companies as leaders in markets, which can demonstrate growth and blue ocean future.

potential. In other words, large total addressable markets. Who loves that? Investors love it. And in this practical session, we're going to give you some real world examples to take you through big or how big or how small, uh, should your category be and when to opt. For a subcategory, a

[00:10:24] Jonathan: lot of things to try and integrate here.

Yeah,

[00:10:26] Paul: it's a lot of thinking to go through. And if you listen back to the Andy Cunningham episode, we did a while ago. You remember Andy is the lady that worked as number two to Steve jobs. She is a big fan of the subcategory Silicon Valley legend, Silicon Valley legend, uh, royalty. And so we've worked ourselves with some massive categories.

Um, you know, P2C product to consumer. That's a digital commerce category combining B2B. B to C and direct to consumer D to C. And so it was appropriate in that case to have a huge addressable market. Um, we've also worked at the other end on very, very niche, uh, categories, such as, uh, our work with Sphere on a category relevant just to a few thousand very specific people on Earth.

In this case, Oil traders. So the skill is determining how large the problem is. This is also a factor of how much of a pain the pain is to. Those feeling it.

[00:11:25] Jonathan: Yeah.

[00:11:25] Paul: So yeah, mega categories like Uber's transportation platform appeals to virtually everyone from disillusioned cab passengers to hungry families Because it covers uber eats and uber transportation But basically anybody that lives in a large metropolis, right?

[00:11:41] Jonathan: Sure Sure,

[00:11:42] Paul: and given its successful category enlargement from you know cabs to uber eats It's now Got a very strong network effect, which in retrospect seems obvious, but clearly wasn't at that time, the drivers feed capacity, which creates convenience, which creates buyers. And so it goes round and round and round.

It's a real flywheel, that one. An even bigger app, the Everything app. Um, there are only a handful of those in the world. WeChat,

[00:12:07] Jonathan: Amazon.

[00:12:08] Paul: Yeah, and perhaps soon Grok. Um, Elon has been advertising for engineers to join what he's. Openly saying is the everything app. Uh, where's he got the idea from? Well, the everything store is Bezos's idea and these super apps.

And you mentioned WeChat in China is probably the best known example. Have massive times, massive, massive times. Um, however, not all categories are like this and some categories are smaller and they allow for more focused category creation. And we've worked on categories which specifically address issues such as.

Perhaps 100, 000 folks in the world who make their living in international taxation assessment

[00:12:47] Jonathan: and reporting

[00:12:48] Paul: and reporting. No, we said, um, you know, taxation, not tax avoidance and definitely not tax evasion, definitely not tax evasion, definitely not sort of tax management. It's a smaller category. And so the point of view will reflect that the category name will reflect that.

Um, so sorry to say, you know, there's no simple answer to do I go for a big category or a small category? The answer is. It depends.

[00:13:12] Jonathan: It's interesting that we've been bumping up against some mega categories, um, certainly in cyber and certainly in the cyber training area, loosely cyber training.

[00:13:23] Paul: Yeah. So we've, uh, we're actually engaged in at the moment in a project.

We've done a fair amount of work. In the past on cyber, uh, which is the one evergreen and in fact, booming part of the tech market, even in these straightened times, uh, garden has seen, for instance, a 15 percent rise in spending, even above the billions. It's already being spent in cyber again this year. Um, the issue though.

is it's so large a category, it's hard to differentiate.

[00:13:50] Jonathan: But I guess on the flip side, you know, there's plenty of room to create new slices of the pie as that whole sector continues to innovate and new opportunities, in fact, do appear, new real opportunities. And I

[00:14:01] Paul: think this is part of the answer to people to say, is it worth building a category?

You know, people forget the pie grows. So is there space on the pie? Well, there's more space on the pie, so we can have more segments. We can have more subcategories. That's what you get in a growing market.

[00:14:18] Jonathan: Okay. So, um, I'm sure the listeners are listening for this with bated breath. You know, what really is our advice here for.

Should you subcategorize or should you not subcategorize? Well, I think

[00:14:29] Paul: there's three, three main areas we would, uh, give us advice. And the first one, um, which is quite obvious, but, uh, is done poorly in most cases, is to check out the opposition's stance and look for that white space.

[00:14:42] Jonathan: Yeah. I mean, we, we, it's certainly in proven markets.

You know, we do see a lot of bunching. Uh, similar sounding rival points of view and frankly, even category names.

[00:14:51] Paul: Literally books have been written on, um, you know, how one finds the white space, uh, red ocean, blue ocean, et cetera. Yeah. Um, but you know, from our point of view, it's amazing. And it's perhaps a reason that marketing people don't often make the best leaders of a category project.

Is that You know, it's easy to be samey.

[00:15:11] Jonathan: Yeah.

[00:15:12] Paul: Um, and that's what you get when you get this bunching, uh, around certain categories. And certainly, um, certain analyst firms, uh, who shall remain nameless don't help here. Yeah, I think

[00:15:22] Jonathan: there is an issue that the marketing departments often get themselves on rails and start thinking like everybody else.

Um, and, um, Great thing. It is a great thing. And what they don't do is point out the difference. And of course, crucially, reframe the customer's expectations. Because they're so busy trying to point out bits of better, that they forget it's all about difference.

[00:15:44] Paul: And the more same it is, The bigger the opportunity is, is all, um, contention.

[00:15:49] Jonathan: Yeah. And we did some interesting work with Pantera in that security space on this, didn't we?

[00:15:52] Paul: Yes. So there's a lot of pen testing rivals who were talking about very similar issues, but missing the crucial white space. And that's about the validation of the security posture done continuously through lower cost automation, not one off testing, which was, you know, instantly outdated.

Um, in terms of, you know, being a valuable solution to a problem once you'd had your biannual very expensive pen test.

[00:16:17] Jonathan: Yeah, but that was just industry standard at the time, wasn't it? And, and just because it didn't work very well, it didn't, didn't mean that everybody Didn't do it.

[00:16:24] Paul: Yeah. Yeah. Very much group thing.

And pleasingly our automated security validation category, which Pantera forged, uh, was emulated in short order by all of its rivals. Um, then the analyst community and finally, even governments. And you can see automated security validation in this. In RFP tender documents at this point, that's leadership.

So, yeah,

[00:16:45] Jonathan: and they just had their second appearance on the great big Nasdaq screen in Times Square. Bless them. They're

[00:16:50] Paul: doing well. So

[00:16:51] Jonathan: impressed

[00:16:51] Paul: America is with Pentera. Fabulous execution. The second thing, apart from checking out the opposition's stance and looking for that white space is to examine Down at the ICP level, the ideal customer profile.

Um, who are, uh, you're going to deep dive into as ideal customers.

[00:17:09] Jonathan: Yeah. I mean, surprisingly, very few individual companies have exactly the same requirements. Yeah. And that's the challenge, right?

[00:17:16] Paul: So how do you have an ICP? sort of stereotypical profile of a customer when everybody's a bit different, right?

[00:17:23] Jonathan: We've been seeing, you know, talking about the groupthink again, you know, for too long, we've seen this sort of mantra of SaaS sameness and minimal viable product, you know, where they've tried to make horizontal apps where one size fits all, one size cannot fit all.

[00:17:39] Paul: And this is a tension. Right. At one point you want a minimal viable product because it's what they call product market fit and, uh, and looks good optically at the same time, if you overfit to a certain customer profile, that's going to take you away from having a big category.

You're going to niche where you don't need to niche. Um, so for some time now, though, the winds of change have been blowing and tech. It's bought in many enterprises, um, by a combination of different ICPs. So gone are the days where it's like, Oh, it's the IT department or a line of business. And they're fighting against each other as if only non tech dilettantes and amateurs assess the usefulness of tech for their own.

People know what they want. Yeah. Their problems are their problems. Right. And this realization has still not quite hit home with many of the tech products, marketing professionals and marketing teams who are convinced that. Segmentation just means, oh, right, there's a CIO and that's different from a CISO.

Yeah, and there's still way too

[00:18:37] Jonathan: much build it and they will come, and not enough listening to what the actual problems are of the people that are making the money to pay for the product in the first place.

[00:18:46] Paul: And if one was being philosophical, you could say that's because a few years ago, a lot of money was funding all ideas, right?

Yeah. In fact, there are two, um, complementary and often overlapping rules, uh, roles in many cases. The, the Skill is to figure out what it is that's going to appeal to the ICP and figure out how many ICPs you need to cover. Um, in reality, they may share a lot of the issues, desires, and they may even share the budget.

So in the work we do, we do look at professional roles, both at the higher level and the lower level of needs or desires, by which we mean, um, Yeah. Is this something that's explicit? Is it something that's implicit? Um, and this is sort of standard fare in the, in the world of B to C, you know, categories there are developed specifically for ICPs or biopersonas, which are nothing to do with what people do for a living.

Cause they're in the world of B to C. So for instance, you might overweight on pensioners if you're selling, um, you know, investment products, you might over index on pregnant women or anxious new parents with, you know, baby products. The emphasis here is less on who you are and more about the position you are in, which is what we argue you should do with B2B categories.

[00:20:02] Jonathan: It's how the user, people that's going to use your product, how they feel and how they react and how they behave. You know, it's, it's a deeper dive. It's a

[00:20:11] Paul: much, much deeper dive. So from the other end of the lens, where you want to have a very huge TAM, it may be that what unites a bunch of cohorts of seemingly different different ICPs is in fact radically different.

[00:20:26] Jonathan: Yeah, I mean, we've done some work in the application management software space.

[00:20:30] Paul: We did with, uh, with one of our guests on here, Mr. Karai. Uh, and what we came up with that was the never ending to do list. Quite a simple, simple concept based off the fact that there's a long set of tasks, which every day the IT operations.

Folks and the, um, networking folks and perhaps a networking engineer or a CISO or even the engineer in charge of all comms on an oil tanker, they have that problem and never ending to do list

[00:20:58] Jonathan: adds to, adds to, and

[00:20:59] Paul: adds to, yeah. So all category here can be larger because that is a. Larger set of needs with more ICPs.

It's a common problem. It's a common problem. Look for the common problem. Yeah. And in both cases, both the, you know, the higher view and the low view of the issues, that's what goes into your problem statement. That becomes your category point of view. Uh, and that gives you the benefits at the appropriate scale for the market.

The key to getting this right is to honestly assess at which level your ideal world solution is valuable to the customers. And that's

[00:21:32] Jonathan: the point of view is look at things as a customer, not somebody selling to a customer. And there's a real difference. It's

[00:21:39] Paul: where art and science collide. And dare I say it, we're a bit of third party objective external help.

Can be very useful. I think they collude and one important caveat though in coming up with all of this ICP work is To push hard and imagine the future luckily for us tech change is fast But just because some solutions are valued today It's no guarantee they're going to be valued in the future

[00:22:02] Jonathan: because there may be some external Circumstances that are fought at forcing change over which you have no control but to which you can react So, you know think about you know Dial up modems compared to an omnipresent 5G.

Yeah. I mean, that's, you know, clippy versus the AI co pilots. Although, frankly, they both seem to have being very annoying in common. Yeah. But there is a wonderful rate of change, which, which constantly pervades in tech.

[00:22:30] Paul: And another piece of advice here is pay special attention to intermediaries in your market.

Tech is all about automation. That's losing as many intermediaries as possible. And as we build out categories, we like to test. Uh, how the role of people within an ecosystem, a current ecosystem may change. And that is

[00:22:47] Jonathan: also rooted in the idea of distribution. But so you have to think about the way value added resellers have become managed service providers as, as cloud has taken old, you know, travel agents just became portals.

Yeah. News agents have become drop off spaces for e commerce parcels and returns. And, you know, bank tellers have just become phone apps. Just on our phones.

[00:23:10] Paul: That is an additional piece of work that one should do in addition to figuring out your ICPs, who are the future ICPs. The third and final thing we talk about is to remember, if possible, to keep the category as broad as you can.

We talked about niching down, but Keep the category broad for future expansion and to avoid sameness.

[00:23:30] Jonathan: Yeah, so they really do need to be as large as possible. Now that may sound contradictory to previous advice to go niche where it makes sense, but a category of one is not a category. No categories,

[00:23:40] Paul: yeah.

And we always want not just our partners and customers to adopt a category. We need Uh, and this is why we do strikes, analysts, the skeptics in the media and the competition to adopt our category and the language that we pioneer to that way, we leverage a way wider community community than ourselves.

And that is genuinely. Something that makes people nervous, but that is the game.

[00:24:04] Jonathan: It's a valid concern for many, and not considering how to keep a category as mainstream as possible from the start is an easy mistake to make. A lot of this is rooted in people's desire to keep hold of the category. That's not what you do.

Your job is to get that category. Out into the mainstream

[00:24:25] Paul: hard. Yeah. So bear in mind the ways in which your category could grow. We talked about, um, future ICPs, et cetera. Think about new entrants, think about pivoting rivals who are joining your category, think about the intermediaries that might start to offer new services based on your success that could help with your category.

[00:24:42] Jonathan: But I think the other thing is, is when you start thinking like this, you know, don't let this. Seemingly, almost sheer impossibility of such a test, be it off putting, you know, it does take tremendous effort to start

[00:24:55] Paul: rolling a rock. Once it's moving, it gathers momentum, and only at the end of the journey, uh, as it speeds down the slope, uh, is this momentum fully appreciated.

[00:25:04] Jonathan: Yeah. And that's all when you ask the question, you know, how did we ever manage without this XX category? What did we do before Uber? Yeah.

[00:25:11] Paul: You know, who knew what we were, how communication was going to go when, before we had Slack, et cetera, et cetera. Yeah.

[00:25:17] Jonathan: That's when you know, you've created a new category.

[00:25:19] Paul: So what,

[00:25:20] Jonathan: can you summarize what we, what we have learned here then? Overall, we think that building a category within another category It's smart, but there's no way to identify and build a subcategory that's particularly easy. You know, it does require a broad overview. It's got to be an identification and, uh, of, of an opportunity and the chance to do things differently.

And you really, really have to go and exploit it. And it often helps to have an external perspective on this. Yeah. We would say that wouldn't we would, but think about the many times in your life when you've got stuck in a way of thinking and somebody else had said something and you almost slap your forehead and go, why didn't I think of that?

[00:26:04] Paul: So whether your categories, the largest category imaginable, uh, you know, another everything app or something much more niche, it all sparks from a compelling proposition. One that frees customers from legacy thinking. An idea that you, once you've understood, you can't forget and creates this momentum for change.

[00:26:23] Jonathan: Yeah, I mean, it's got to be something with a remorseless logic. And that's why we spend so much time developing points of view. You know, it's that remorseless logic that means it would be remiss for a potential customer not to investigate.

[00:26:36] Paul: Yeah, it's, it's a spark that promises significant advantages on everything else out there.

And which brings everything together. It's the North Star of category design. And it's something that requires real focus and, um, as we know, to our cost. Multiple iterations to get it right. All of which is because. It's ultimately worth designing your own category so you can lead it.

[00:26:58] Jonathan: And because of the sheer value and market domination that a category breakthrough brings.

What does the future hold? Let's look into our crystal ball.

[00:27:14] Paul: All right then Jonathan, what do you see in the crystal ball?

[00:27:17] Jonathan: I think the crystal ball is showing us at the moment that it could be all over for the EU as the world's tech police. Now I say this because not one but two Financial Times articles recently on consecutive days made us think it may be time that the EU stopped pretending it's going to be granted the gig as the world's AI cops.

You know, having said that, To be fair, the regis legislators have had a fair run at this.

[00:27:44] Paul: Yeah, the EU has absolutely led the way globally. The General Data Protection Regulation, also known as GDPR, has been well received globally. Um, it was so well received, it became the North Star of data privacy across the world from, uh, Istanbul, but, uh, Turkey's got its own version of GDPR.

And, uh, even as far as California. So this is where the EU has affected us policy. Definitely a strong piece of legislation.

[00:28:10] Jonathan: Yeah. And I also am frankly, very glad that my, my new iPhone has a micro USB charger on it. I mean, it's clearly going to be saving landfill from an awful lot of. Cast off cables.

[00:28:21] Paul: So, so more good that the EU did with this legislation.

Lovely. Uh, and let's not forget where it all kicked off and where the GDPR kicked off with Max Schrampp and the others, uh, notably the, uh, data privacy folks in Ireland, working through the European courts for years to force big tech, notably metal Facebook, as it was then to admit it was a modern day, robber baron, corrupting all of our data.

in exchange for a, you know, merely a way to share pictures and messages on the internet. And this helped us all realize that the surveillance economy came at the price of our privacy. And it was a global wake up call. And it caused the techlash. Do you remember that? I do remember the techlash, actually.

Didn't like it at the time, did we? We didn't like it at the time, but it seems a bit quaint now. It's really weird. Because there's a massive techlash going on.

[00:29:08] Jonathan: Though, having said all this, you know, I think one could claim, uh, Somewhat of an overreach by regulators of late. Got a bit big for their boots.

Yeah, UK online safety bill. Disaster. Franken regulation, um, broke the model, ticked the scales against big tech in Europe. Years in the making, with its huge fines, confused objectives. Um, I mean, frankly, is it about paedophiles, or control of the entire population?

[00:29:33] Paul: This is when bad regulation gives the tech cops, or the regulators, a bad name.

Um, this law has gone wrong. Thank you. And, um, it's threatening a disproportionate intrusion into our privacy in the UK. Um, and, um, If they can, that's even if they can ever make the so called client side scanning that CSS, uh, work. And that's something that Imperial College just wrote a paper about recently.

One of our most tech savvy institutions. And it's on record that is Imperial College. It's saying this turns smartphones into. Into surveillance devices. What's that got to do with pedophiles?

[00:30:09] Jonathan: I don't know, but anybody that doesn't think smartphones are already some form of surveillance device is deluded.

I mean, you know, just say something about a product that you're never going to buy and just watch those ads appear on your social and news feeds.

[00:30:26] Paul: That's right. So, um, you know, lots of examples of this. Uh, people talking about babies and their nappy adverts coming up. Um, famously, uh, this was thought to be causing legal issues because people were, um, looking at, you know, maybe things about contraception pills and their parents finding out this is dodgy, dodgy surveillance, this Franken bill, um, which entirely justified families, like the family, for instance, of Molly Russell thought was going to help out, um, you know, anti pedophiles.

And she was tragically a victim of social media, Pressure it pushed all lawmakers into extending and extending and and grabbing more of our freedom And this has consequences for all of us, especially the law abiding citizens that are accidentally caught up in this stuff

[00:31:10] Jonathan: Here we are now. It looks like things are changing

[00:31:14] Paul: So all political leaders have this desire to be law makers not law takers.

I think that's an actual quote from our current leadership But this could be coming to a crashing end. Would

[00:31:25] Jonathan: that be something to do with what's happening across the pond?

[00:31:28] Paul: The re emergence of the Donald. And his merry band of techvangelists has got the EU and all the other lawmakers reeling.

[00:31:37] Jonathan: Now we've been thinking about this quite a lot recently, haven't we?

And we're really not sure whether to celebrate this or be very, very worried.

[00:31:44] Paul: Yeah, well certainly the bureaucrats are very spooked. And back to your Financial Times articles. Oh yes. Uh, the first one. Was entitled EU reassesses tech probes into Apple, Google, and Meta. But let's think about this. So the EU, the definition of European.

Reassesses its tech probes, in other words, it's huge swinging finds that it's been giving to Apple, Google and Meta. What do you notice? They're all American. This is the makings of a proper good old trade war. Yeah, it's all going to be very tribal, I think. And this story, of course, is sourced from two unnamed sources.

Oh, how very EU. How EU does that sound? Oh, we'll just leak this. It quoted one of the unnamed sources as follows. It's going to be a whole new ball game with these tech oligarchs so close to Trump and using that to pressure us Oh, do you reckon? Do

[00:32:34] Jonathan: you think this is payback for all those eye watering fines?

Oh, I

[00:32:36] Paul: think it might be. Later in the same piece, Stephanie Yonkerton, an MEP who was heavily involved in drafting the tech rules, was reported as sending a letter to the president of the EU Ursula Vander Leiden imploring her not to be taken hostage. The language is ramping up, isn't it? It

[00:32:55] Jonathan: it, it, it is very imploring.

[00:32:56] Paul: The second article from the Ft. Made for even glimmer reading for the regular art. Irregular art. But we just made that up. It's not very good. You heard it here first, folks. Yeah. Maybe. And only, yeah. Never again. So the so-called big read article in the ft uh, don't worry we've spared you the trouble, um, was from, uh, and I'm gonna knacker this, uh, Maria Shaka.

That's atrocious. I think you need to work on your Dutch there. She is though, a fellow of the Human Centered Artificial Intelligence and the Cyber Policy Center at Stanford University in California. So she probably knows what she's talking about. The article is entitled, Europe's Super Regulator Role is Under Threat.

[00:33:35] Jonathan: And that's all about Silicon Valley and Washington are merging.

[00:33:39] Paul: That's literally what the angle is. And um, she said, It is time European leaders overcame their idle hope and memories of corporation.

[00:33:49] Jonathan: Ouch! The author of one of the FT pieces also points to Mark Zuckerberg's Damascene conversion to all things Trump.

Oh yeah. Including his announcement of a massive Cue screeching breaks and tires. You turn on content moderation in the face of rampant free speech movement and and this comparison of EU antitrust remedies to Tariffs.

[00:34:15] Paul: This Damascene conversion has to concern European leaders. Certainly has. She doesn't report and this is alleged only, uh, alleged, uh, his dissing of his former best female friend, Cheryl Sandberg.

Of course, she was his loyal second in command until recently. She's being thrown under the bus, it would seem like, and that's not even mentioning old Cleggie, our former deputy prime minister, who we threw under the bus. Earlier. So we did note that, uh, she also quotes in the same piece, us Vice President, JD Vance.

Mm. Um, he's willing apparently to leverage security guarantees, whatever they are. Yeah. Um, to threaten Europe. If it legislates Musk's companies including X, oh my God, X versus nato. Ooh, that sounds like a championship fight. , you heard it here first. Um, and this is the quote, I think, which encapsulates all of these issues about regulation and the EU's aspirations the best.

[00:35:08] Jonathan: This one, everything the EU has been working on for the past five years as a self declared super regulator will soon be challenged from its ambitions, of greater strategic autonomy, to digital sovereignty, improving digital competition, and shoring up responsibilities of corporate content moderation.

[00:35:28] Paul: Wow.

It's all, it's all gone, guys. Well, um, that's a pretty clear slap on the wrist, or some would say a slap up the, upside the head. Upside the head. I mean, the backdrop of this, as we all know, is the move against mainstream politicians in several places in the US and the EU. Now, the politicians need votes, and Interestingly enough, the public are not massively pro some of these regulations, right?

What about the ban on TikTok? I mean, people surely should know better. I mean, I, I think we all know people who are, who wouldn't say they're addicted to TikTok, but sort of are, and um, don't really care in the same way that our EE regulators do. about their privacy. And so that's not going down particularly well, it has to be said.

Um, so where does this, where does this all leave us?

[00:36:13] Jonathan: Well, Trump is in power now and let's face it, China and the US are fighting for the future domination of AI. He

[00:36:20] Paul: doesn't need some flies buzzing around his head from the EU about regulation. No, there'll be little sympathy for those wanting to build regulatory moats,

[00:36:28] Jonathan: uh, even in

[00:36:28] Paul: the EU.

So that's sort of the, it could be the end of an era and, and our crystal ball, uh, predicts a toning down. from the EU, um, as this becomes a bit more apparent, really. Turning down the idea of being a lawgiver with a much more pragmatic view. Interestingly enough, where we land on this in our crystal ball is, this could be a good thing.

[00:36:50] Jonathan: Weirdly, after we thought it through, we think it could be a good thing. And it could lead to the EU adopting tech innovation at the pace dictated by the new US regime. Um, I guess what many see, uh, this is a lack of sovereignty, both in, in, in, from a data point of view and a legal point of view. It could, it could, we think, usher in a new era of innovation.

The danger is that we over rotate and become bitter losers though, isn't it?

[00:37:17] Paul: I think we want to be, uh, part of a group of countries where the young talent that we have aspires to succeed. Not just to be regulators and lawyers, but maybe creators, engineers, and those who create categories. Yeah,

[00:37:32] Jonathan: so letting it rip could actually be a good thing for EU Tech.

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