Speaker 1: This is Bloomberg business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Well,
Speaker 2: a big week of economic data and FED insights, coinciding
Speaker 2: with the first major spate of third quarter earnings, and
Speaker 2: yet safe to say, Tim, it was all overshadowed rightfully so,
Speaker 2: by the ongoing violence in the Middle East, with the
Speaker 2: Israel Hamas war now two weeks old.
Speaker 3: That's right, and I head this hour. We're going to
Speaker 3: be looking at the conflict from multiple angles, including a
Speaker 3: conversation with a former Israeli Special Forces soldier turns Silicon
Speaker 3: Valley entrepreneur Leoris Susan of Eclipse Ventures says he loves
Speaker 3: the Palestinian people and offers his views on how true
Speaker 3: peace can actually be achieved in the region.
Speaker 2: We'll also here from the head of software solutions from
Speaker 2: Cohesia on how geopolitical instability is impacting the Israeli tech sector. Meantime,
Speaker 2: we saw President Joe Biden make a brief but impactful
Speaker 2: visit to Israel this past week, somewhat controversial, I would
Speaker 2: say as well. He then delivered a primetime address from
Speaker 2: the White House Thursday, as Washington looks to maintain its
Speaker 2: strong support of Israel while also hoping to keep the
Speaker 2: violence from escalating further.
Speaker 3: The Israel and Moss conflict has put an end, at
Speaker 3: least for now, to a hopeful narrative of what was
Speaker 3: supposed to be a quote new Middle East, one that
Speaker 3: ended old enemities between Israel and the Arab world in
Speaker 3: the pursuit of stability, and is now looking like something
Speaker 3: else that's horribly familiar, and things may only get worse, Carol.
Speaker 2: Perhaps more so so, writes Sylvia Westall in the Remark
Speaker 2: section of the new issue of Bloomberg Business Week. Lots
Speaker 2: of talk about back with us as Bobby Ghost, He's
Speaker 2: Bloomberg opinion columnist.
Speaker 4: He covers culture.
Speaker 2: But you know, as a reminder, he spent many years
Speaker 2: covering foreign affairs, particularly from conflict zones in the Middle East,
Speaker 2: so much that he understands about the Middle East and
Speaker 2: the conflicts there.
Speaker 4: Bobby, good to have you back with us.
Speaker 2: A lot to try and keep abreast of Having said that,
Speaker 2: Sylvia Westol writes in the remark section and asks, can
Speaker 2: there ever be peace with the Palestinians?
Speaker 4: Can there?
Speaker 5: Well, it's a question that I've been asking myself for
Speaker 5: the best part of three decades now, and every time
Speaker 5: there seems even the slimmest hope that there might be
Speaker 5: some movement in that direction, something like what we've seen
Speaker 5: happen over the past eight or nine days happens and
Speaker 5: pushes that prospect back even further. The one thing we
Speaker 5: can say without any doubt now after trying for twenty
Speaker 5: five years that violence is not going to bring peace,
Speaker 5: that the statusco of Israel keeping Palestinians essentially cooped up
Speaker 5: in the world's largest prisoners some people have described it
Speaker 5: of Gaza. M that's not going That's not the solution.
Speaker 5: Other solutions ought to be tried. The idea of a
Speaker 5: nation two nation states living cheek by jow has been
Speaker 5: brought up every now and again, but has never really
Speaker 5: been given a chance to flourish. I think after the
Speaker 5: events that we are seeing unfold now, and it'll be
Speaker 5: a while before they've fully played out, perhaps we need
Speaker 5: to go back to.
Speaker 6: Trying that one.
Speaker 5: What would that look like, Bobby, Well, that would look
Speaker 5: like Palestinians having a bigger say in their future, having
Speaker 5: something like a state. That would look like the deal
Speaker 5: that was agreed between the two sides in the Oslo Accords.
Speaker 5: But for many reasons, and both sides have plenty of
Speaker 5: blame to share, never really got off the ground, never
Speaker 5: really got off the pages of the documents that was signed.
Speaker 3: It's increasingly complicated in this day and age, with settlements
Speaker 3: moving into the West Bank and also with the way that,
Speaker 3: as you mentioned, for the last at least fifteen years,
Speaker 3: Garsins have been treated.
Speaker 6: Yeah.
Speaker 5: Yes, the settlers complicated, think complicate things. Hamas sort of
Speaker 5: turning into a full blooded terrorist organization greatly complicates things.
Speaker 5: We were hoping that some of the deals that Israel
Speaker 5: has made with other Arab countries might help, and that
Speaker 5: hope was predicated on the notion that those Arab countries
Speaker 5: might now have greater influence on Israel's treatment of the Palestinians,
Speaker 5: but that has turned out not to be the case.
Speaker 2: Secretary of State Anthony Blincoln has said that Israel has
Speaker 2: the right to defend itself and ensure that this never
Speaker 2: happens again. President Biden has also made some comments to
Speaker 2: this effect. The Secretary of State said, how Israel does
Speaker 2: this matter?
Speaker 5: Oh, yes, it absolutely matters. President Biden has also made
Speaker 5: the case that as a democratic country, rather than as
Speaker 5: a terrorist organization, Israel must be held to much much
Speaker 5: higher standards than Hamas. It's not enough to say that, well,
Speaker 5: Hammas did this, and therefore it's okay for Israel to
Speaker 5: do that. Well is a member of the United Nations,
Speaker 5: of the Committee of Nations, and therefore is has to
Speaker 5: meet a higher bar, which is very difficult at this moment.
Speaker 5: We remember those of us who are old enough, We
Speaker 5: remember how this country felt like after nine eleven. You know,
Speaker 5: the rage and the desire for vengeance.
Speaker 4: Eye for an eye and I.
Speaker 5: For an eye And what does that do? Makes the
Speaker 5: whole world blind in the long run. And that's the
Speaker 5: It's very hard at this moment for Israel's friends, including
Speaker 5: President Biden, to council peace. But that's what friends have
Speaker 5: to do. I've said this before. Friends don't let friends
Speaker 5: commit war crimes.
Speaker 3: I'm curious about your thoughts on President Biden's trip, Bobby,
Speaker 3: I was surprised to see a sitting president go into
Speaker 3: a war zone such that Israel and Gaza are right now,
Speaker 3: even if for such a short time, even though security
Speaker 3: pers were taken, but it was also struck by the
Speaker 3: way that the Arab meetings were canceled with President Biden.
Speaker 3: What's the effect of that.
Speaker 5: Well, it means that his trip had to be curtailed,
Speaker 5: and he went out there to achieve a few things.
Speaker 5: Some of those things were not achievable if he didn't
Speaker 5: sit across the table from the King of Jordan, the
Speaker 5: President of Egypt, and the head of the Palestinian authorities
Speaker 5: when they backed off because of last night's bombing explosion,
Speaker 5: i should say, in the hospital in Gaza, when they
Speaker 5: backed off, the objectives that he had from that part
Speaker 5: of his trip simply went out the window. Now it
Speaker 5: was a short trip, it was, as you say, a
Speaker 5: dramatic demonstration of America's support for Israel. He didn't come
Speaker 5: back empty handed. He came back with an Israeli commitment
Speaker 5: for humanitarian aid to be sent into Gaza from the
Speaker 5: Egyptian side, obviously not from the Israeli side. We'll see
Speaker 5: how long the Israelis hold up their end of the bargain.
Speaker 5: We don't know what we may not know everything that
Speaker 5: was said in the off camera conversation that he had
Speaker 5: with bb netan Yahoo. Perhaps there was a discussion about
Speaker 5: holding back Israel's ground invasion and I imagine and actually
Speaker 5: he has set this out in the open that Israel
Speaker 5: should regard what the US did after nine to eleven.
Speaker 5: As we were just saying as a cautionary tail, don't
Speaker 5: go in without a plan. Remember that the world's sympathy
Speaker 5: can vanish very quickly. And remember that there are civilians,
Speaker 5: play ordinary human beings on both sides who are caught
Speaker 5: up in the middle of.
Speaker 2: The right there are extended costs to all those moves. Hey,
Speaker 2: you have an opinion piece out about Hollywood release and
Speaker 2: it's about the iconic Israeli Prime Minister golled to my
Speaker 2: ear to coincide loosely right with the fiftieth anniversary of
Speaker 2: the Yam Kippore War. How is it kind of watching
Speaker 2: that and then a movie but obviously based on real things,
Speaker 2: and then seeing what's going on currently.
Speaker 5: It was very, very strange to see that movie. You know,
Speaker 5: I've read so much about Goldemeyer and the Yam Kippour War,
Speaker 5: so It was always going to be a little odd
Speaker 5: to see that movie, but to see it happen right
Speaker 5: now while this war is raging, and we can make
Speaker 5: an educated guest that Hamas intended that invasion to coincide
Speaker 5: with the fiftieth anniversary of the Yom Kippo War, just
Speaker 5: as the makers of this movie intended its release to
Speaker 5: coincide with that war. It felt very strange to be
Speaker 5: watching that, and I kept trying to imagine how much
Speaker 5: of what I was seeing was echo was being echoed
Speaker 5: in the halls of power in Israel right now? How
Speaker 5: much was Bibi Netan Yahoo going through what Goldemeyer did.
Speaker 5: Now there are two very different characters. Their place history
Speaker 5: is very different, but they are facing in some ways
Speaker 5: exists very very difficult moments, great threats to their country,
Speaker 5: and they're very controversial characters amongst their own people.
Speaker 2: I keep thinking of, you know, what's past is prologue,
Speaker 2: and like, are we in any way learning from the
Speaker 2: pastor And I don't know, are we well se in
Speaker 2: the Middle East where there's so many tensions, and certainly
Speaker 2: between Israel and Palestine in.
Speaker 5: This case, the big sort of common factor between fifty
Speaker 5: years ago and now is complacency on the intelligence front.
Speaker 5: The war in nineteen seventy three began when the Israelis
Speaker 5: had gotten very complacent about their ability to eavesdrop on
Speaker 5: the Egyptians. And what happened this time the Israelis got
Speaker 5: very complacent about how much they knew was going on
Speaker 5: inside of Hamas.
Speaker 2: It's unbelievable. Thank you as always give us some very
Speaker 2: deep insight into everything that's going on. Of course, Bobby Ghosh,
Speaker 2: columnist covering culture for Bloomberg Opinion.
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Speaker 3: Yeah, very pleased. Up with us this afternoon. Lee Or
Speaker 3: Susan a former special forces agent for the Israeli military,
Speaker 3: also the founder and managing partner of Eclipse Ventures. It's
Speaker 3: a VC firm that invests in, as they note on
Speaker 3: their website, quote entrepreneurs rebuilding the world's physical industries. Leor
Speaker 3: joins us this afternoon on Zoom from Palo Alto, California.
Speaker 3: Lee are good to have you with us this afternoon.
Speaker 3: Just give us your view over the last week as
Speaker 3: somebody who served as a special forces agent in the
Speaker 3: Israeli military and how you're watching what's going on in
Speaker 3: Israel and Gaza.
Speaker 7: Thank you, folks, thanks for having me, and first of all,
Speaker 7: sending my pros to all of the families that lost
Speaker 7: the lot of ones on both sides. I was start
Speaker 7: by saying, people are talking about the Israeli Palestinian conflict,
Speaker 7: they must zoom out. This is not an Israeli Palestinian conflict.
Speaker 7: We are talking about the Western world fighting against the
Speaker 7: all It's not a coincident that the Hamas opened that
Speaker 7: terrible terror attacks on Israeli when the Saudiast was ready
Speaker 7: to sign historical peace process with Israel. That will change
Speaker 7: the Middle List. Look what happening in the Middle List
Speaker 7: with the golf countries, with Ue, with Egypt, with Jordans.
Speaker 7: There is a prosperity, There is a new way of
Speaker 7: living next to each other's focusing on building companies, focusing
Speaker 7: on innovation, focusing on technology. The reason that this war
Speaker 7: start is someone is feeling uncomfortable having peace in the
Speaker 7: Middle List, and it's connect to China, and it's connect
Speaker 7: to Russia, and of course it's connect to Iran.
Speaker 2: Do you see a way forward that though ultimately where
Speaker 2: I don't want to say capitalism, but a better economic
Speaker 2: way for more actually wins out.
Speaker 7: There is no any other way around. Israel is not
Speaker 7: going anywhere, and the Palestinian is not going anywhere. We
Speaker 7: must find a way to live in peace next to
Speaker 7: each other, and there is zero chance that that's will happening. Well,
Speaker 7: a radical told organizations like comas controlling Gaza because they
Speaker 7: say actually on their foundation that their mission in the
Speaker 7: world is to wipe Jews in Israel is from the map.
Speaker 7: That's the only thing they believe in death, you cannot
Speaker 7: do business with people that wants you to die. But
Speaker 7: from a fundamental point of view, I love the Palestinians
Speaker 7: and have a lot of Palestinians friends, and we want
Speaker 7: to live next to each other in peace, focusing on
Speaker 7: building the next technology that will kill cancer. As someone
Speaker 7: that served and so the pain of war, there is
Speaker 7: nobody more incentive than I to go and fight against
Speaker 7: the hostail organizations to make sure that we can go
Speaker 7: and focusing on prosperity rather than fighting.
Speaker 3: You served in the Special Forces for the Israeli military.
Speaker 3: We see many many people going back to Israel to
Speaker 3: serve once again, as hundreds of thousands have been called up.
Speaker 3: Have you been called up? Are you going back?
Speaker 7: Unfortunately, I don't have the clearance that it's required anymore
Speaker 7: to solve for my country because I live in the
Speaker 7: United States for more than a decade. All of my
Speaker 7: friends wants me to be here right now to focusing
Speaker 7: and explaining the world that this is not a word
Speaker 7: between the Israeli and the Palestinian This is a war
Speaker 7: between democracy and a radical world, a radical that don't
Speaker 7: believe a freedom of speech, that don't believe a freedom
Speaker 7: of religion, and don't believe in prosperity and building businesses.
Speaker 7: So unfortunately, I need to serve my country from Palata
Speaker 7: right now.
Speaker 4: So talk to us.
Speaker 2: Though, I thought Lea, what was interesting, because I do
Speaker 2: think that many think it is a war between it
Speaker 2: is between Israel and Hamas. But I think there's a
Speaker 2: feeling too of conflict between Israel and Palestine or Palestinians.
Speaker 2: You say you work with them, talk to us about
Speaker 2: in your in your role as a founder of Eclipse Ventures.
Speaker 2: I'm assuming you're investing in all kinds of businesses. Talk
Speaker 2: to us little bit about that relationship that you are
Speaker 2: having with Palestinians.
Speaker 7: Yeah, let me give you a sad story of a
Speaker 7: close friend. His name is Al Waldman, and he was
Speaker 7: the founder of a company called Melanox that sold in
Speaker 7: a couple of billions of dollars to in Nvidia. Eyal
Speaker 7: was the first one to establish an RND centers in
Speaker 7: the West Bank as well in Gaza software engineers who
Speaker 7: support mel Ox, and trust me, he didn't receive a
Speaker 7: lot of love from the right wings in Israel by
Speaker 7: doing that. And he employed thousands of people in the
Speaker 7: West Bank and Gaza that will do software development for
Speaker 7: him because like me, he believed that the only way
Speaker 7: to fight the old is true business and true friendship.
Speaker 7: Ayal's daughter was one of those kids that being slaughter
Speaker 7: in that music festival. So how ironic is that that
Speaker 7: his daughter that was twenty three years old dance and
Speaker 7: music festival got slaughtered by Ramastel, while Ayal is the
Speaker 7: one that employed thousands of people on the Palestine inside.
Speaker 2: There's no words, There's absolutely no words. And I guess
Speaker 2: what I wonder too, is you know we think about
Speaker 2: this a lotly, or that we think finding an economic
Speaker 2: way out of things or capitalism ultimately will.
Speaker 4: Prevail and it lead it to a better way for everyone.
Speaker 8: Is I guess what?
Speaker 2: We're just trying to figure out that there's been conflict
Speaker 2: in this region, in this area in particular, for such
Speaker 2: a long time. So I hear what you say, So
Speaker 2: how do we get the way forward, especially when you
Speaker 2: still do have terrorists who are out there like Amas.
Speaker 7: I think it's a great example of me traveling to
Speaker 7: the UE ten times this year and doing amazing business
Speaker 7: and watching the highness leadership. It's a great example of
Speaker 7: how you interval. But which prosperity there is in Lebanon
Speaker 7: is physimalized? There to free the Lebanese? Is Hamasi is
Speaker 7: there to free the Palestinians? Is Isis is there to
Speaker 7: free the Surian people. Is al Qaeda was there to
Speaker 7: free Afghanistan. We all in the Western world needs to
Speaker 7: fight Tello so we can our kids can have a future.
Speaker 7: And I want my kids to have a future next
Speaker 7: to my Palestinians. There is no any other way around,
Speaker 7: and I will never stop fighting for it.
Speaker 3: Are you worried about a potential ground invasion of Gaza.
Speaker 3: After all, it's been days since Israel warned people in
Speaker 3: northern Gaza to move to southern Gaza, and do you.
Speaker 2: Think it's wrong considering what you just said about Palestinians.
Speaker 7: I'm sorry and sad about the situation that is happening there,
Speaker 7: but you need to understand that Israel is not going
Speaker 7: to sit aside and let the whole west of the country.
Speaker 7: Having thirteen hundred kids and womens that've been slaughter in
Speaker 7: one day, and more than one hundred and fifty people kidnapped,
Speaker 7: most of them civilians, some of them babies on the
Speaker 7: age of three months, Israel cannot continue to have the
Speaker 7: Hamas sitting in the south part of Israel shooting rockets
Speaker 7: when they feel comfortable with which prosperity happened in Gaza.
Speaker 7: Israel is out of Gaza thousand and five, Which prosperity,
Speaker 7: which startup is being built, which infrastructure, which a great
Speaker 7: innovation is happening there. Nothing can be born when there
Speaker 7: is a radical to organization control the old country. And unfortunately,
Speaker 7: unfortunately more people are going to lose their life both
Speaker 7: sides because of that organization or we have to.
Speaker 2: Leave it there, but I hope we can come back
Speaker 2: to you, and I hope we can come back to
Speaker 2: you at a time that's more peaceful, certainly in the
Speaker 2: in the Middle East at this point in Israel and
Speaker 2: Gaza specifically, were susan former special forces agent for the
Speaker 2: Israeli military, Founder and managing partner of Eclipse Ventures. They're
Speaker 2: an investor and they are investing in entrepreneurs who are
Speaker 2: rebuilding specifically the world's physical industries. So you can find
Speaker 2: more information at their website. But just great to get
Speaker 2: his perspective, a very unique one and I think a
Speaker 2: really important one.
Speaker 4: Joining us from Palo out of California.
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 4: All right, we'll get this.
Speaker 2: Global cybercrime costs are set to reach ten point five trillion,
Speaker 2: that's right, trillion, with the t trillion dollars each year
Speaker 2: by twenty twenty five. So that's up from three trillion
Speaker 2: in twenty fifteen, and that's according to data from Cybersecurity Ventures,
Speaker 2: and that was cited in a report out from EY
Speaker 2: last year.
Speaker 3: Just think about that recent computer hack that shut down
Speaker 3: many services at MGM's Casino hotels. The company said that
Speaker 3: that hack alone, Carol, is going to reduce third quarter
Speaker 3: profit by about one hundred million dollars. That's real money.
Speaker 4: Here, absolutely, so.
Speaker 2: Cybercrime and protecting data in the cloud is something our
Speaker 2: next guest knows a lot about. Sanjay Punin is the
Speaker 2: CEO at Cohesiity.
Speaker 9: It's a data.
Speaker 2: Security and data management platform. He's also the former CEO
Speaker 2: at the cloud computing and zation or virtualization tech company VMware.
Speaker 4: How are you?
Speaker 10: Thank you, Tim and Carol for having me on.
Speaker 2: Hey, listen before we get into kind of security, cybercrime,
Speaker 2: all that good stuff. It's interesting times for anybody who's
Speaker 2: running a company, whether it's the focus on geopolitical and
Speaker 2: the unrest and the concerns obviously first and foremost the
Speaker 2: impact on lives, but also the uncertainty that also creates
Speaker 2: about kind of the global outlook. There's also concerns about
Speaker 2: certainly here in the US about the rate, environment, the economy.
Speaker 2: From your vantage point, how would you describe the global
Speaker 2: outlook right now?
Speaker 11: I think it's a tremendous option for leadership. I think
Speaker 11: as a CEO and I was COO of VMware, we
Speaker 11: had thirty five thousand employees. As president SAP one thousand employees.
Speaker 11: Both were global companies. My company here is smaller, two
Speaker 11: thousand employees, but an important company cybersecurity. It's a time
Speaker 11: for leaders to lead with empathy. I have employees who
Speaker 11: have who are Israeli, friends who have in Israel, and
Speaker 11: I think in Israel everybody knows somebody who knows somebody
Speaker 11: who's affected, either who's a hostage or diet or somebody infected,
Speaker 11: and the other side of the debates also being affected
Speaker 11: now on gods, if you look what's happening. So this
Speaker 11: is a time where we get to lead, first off,
Speaker 11: condemning terrorism, but also leading with empathy. It's a tremendous
Speaker 11: opportunity for us to be as leaders empathetic, listening to
Speaker 11: our employees. And I always believe the great greatest companies
Speaker 11: are the ones who take care of the employees and
Speaker 11: take care of their customers and that's what I seek
Speaker 11: to do as CEO.
Speaker 3: It's also a business story and we're Bloomberg, so we
Speaker 3: got to talk about the business side of this. But
Speaker 3: we spent a lot of last week talking about Israel
Speaker 3: being a hub for cybersecurity. They made a lot of
Speaker 3: advances there and there are a lot of tech companies
Speaker 3: in Israel. There's prominent ones that have been bought by
Speaker 3: US companies. Do you have any exposure to Israel? Do
Speaker 3: you work with any Israeli companies right now?
Speaker 11: But absolutely we work with a lot of In fact,
Speaker 11: a big part of our cybersecurity strategy is partnership with
Speaker 11: many Israeli companies, big ID, Digs, Era, CenTra, folks in
Speaker 11: the cybersecurity of data security. There are companies who are
Speaker 11: physically located there. Wiz I talked to them and talks
Speaker 11: to me and the CEOs. I've sent them messages, checked
Speaker 11: to see how they're doing the heart of innovation of security.
Speaker 11: It's not a very big country in terms of population,
Speaker 11: a few million people, but they have an intense program
Speaker 11: by which people who've served in the Israeli defensive forces
Speaker 11: are often focused on security and then start companies. So
Speaker 11: we're working very closely with them, every one of them.
Speaker 11: This is a tough time for them and their attentions
Speaker 11: first to their families. But I do believe Israel'll be resilient.
Speaker 11: The innovation will continue to grow, and you know, the
Speaker 11: many of them do business with companies like us, We
Speaker 11: partner with them, So I expect it to be something
Speaker 11: that will be resilient over time.
Speaker 2: Sanjai, I mean they are used to, you know, instability
Speaker 2: in the region, no doubt about it. This takes it
Speaker 2: to a whole other level and another scale. And that's
Speaker 2: certainly what we've heard the feedback in terms of this
Speaker 2: latest conflict between Israel and Hamas. Having said that, when
Speaker 2: you had those conversations, we're leaders there saying we expect this, this.
Speaker 4: Is something different.
Speaker 2: This is going to be a longer period of instability
Speaker 2: or what are they saying, it's a.
Speaker 11: Nine to eleven time moment. It's not anything close to,
Speaker 11: you know, anything they expected. So whether it was the
Speaker 11: first thing to feather and so on. But I think listen,
Speaker 11: you know, if you think about the threat, cybersecurity threat,
Speaker 11: it's different from you know, some of the ways in
Speaker 11: which we're seeing nation state actors. I think this is
Speaker 11: a focus on physical security. So if we come back
Speaker 11: to kind of some of the stats you led the
Speaker 11: show off with, that will continue. I don't see cyber
Speaker 11: criminals the nation state actors from which were which which
Speaker 11: are by the way, from a different set of countries.
Speaker 11: This isn't Hamas, It's it's Russia, it's China, it's North Korea.
Speaker 10: The past, we.
Speaker 11: Don't see that, which is I mean, the nation state
Speaker 11: actors are the biggest threat to cybersecurity, so the biggest China. Yeah,
Speaker 11: those countries are the ones are the ones mostly Russia
Speaker 11: at fact in the past, but and much of we
Speaker 11: haven't seen an uptick in that signal of those just
Speaker 11: because of the Hamas Amas is much more of a
Speaker 11: low It's not like Habas is doing cybersecurity threats against
Speaker 11: the US. They're focusing much more low tech you know,
Speaker 11: sort of bistiles and things of that kind. But I
Speaker 11: think we have to always stay vigilant because the bad
Speaker 11: guys are going to look for any moment first there
Speaker 11: they just have to be successful once wh I'm talking
Speaker 11: about cybercrime now, we have to be successful all the time.
Speaker 11: You look at you talked about.
Speaker 3: Yeah, you hear that. Hotel over again. Ye from cybersecurity experts.
Speaker 3: I mean they're talking about how you always have to
Speaker 3: be vigilant because they only have to be successful once.
Speaker 3: Switching geographies a little bit to talk about Russia, Ukraine.
Speaker 3: Russia the source of much cybercrime. What do you see
Speaker 3: on your platform from attempts at hacking from Russia?
Speaker 11: Yeah, there's twenty ransomware attempts every second. You talked about
Speaker 11: a few of the hotel chains that have been affected recently.
Speaker 11: I think every organization needs to build a prevention and
Speaker 11: detection mechanism and a recovering mechanism.
Speaker 10: I give an examty.
Speaker 11: There's a lot of analogies between fighting cybercrime and fighting disease.
Speaker 10: If someone told.
Speaker 11: You Tim, I'll never get a cold, You'll be like, well,
Speaker 11: give me some of your DNA. The more important question
Speaker 11: is how quickly can you recover from a cold. So
Speaker 11: what we advise our clients is to ensure that you
Speaker 11: have the best detection prevention. That's basically detective, do you
Speaker 11: have a cold? But then in our case, if you
Speaker 11: are one of those hotels that got affected, you want
Speaker 11: to recover really quickly because then if you get affected
Speaker 11: you've got all your data ready, and that's what we
Speaker 11: focus on, cyber recovery and cyber resilience.
Speaker 10: So while a lot of the prevention and.
Speaker 11: Detection technologies will be helpful and continue to be the
Speaker 11: ones that put out defenses up, you also want to
Speaker 11: be in place where if you do get hit, and
Speaker 11: it may sometimes not be a matter of if, but
Speaker 11: when you have a very fast recovery, and that's what
Speaker 11: we so assume you're going to hit, how would you
Speaker 11: recover quickly?
Speaker 10: That's the big part of what we help our clients with.
Speaker 4: So who are your typical clients.
Speaker 11: We have four thousand customers, some of the biggest Fortune
Speaker 11: one hundred customers. But these are companies like Nationwide, like Broadcom,
Speaker 11: like Nvidia, like Salesforce, many of the largest customers, and
Speaker 11: financial services has been extremely successful for us. And these
Speaker 11: are all companies who do invest in security, and cybersecurity
Speaker 11: is often a top priority of spending. So we fit
Speaker 11: in that mode of sort of, you know, protecting the
Speaker 11: world's data. Our mission is to protect the world's data
Speaker 11: from criminals.
Speaker 2: One thing I wonder, Sanjay, two things artificial intelligence and
Speaker 2: have you seen an uptick as a result of that
Speaker 2: and kind of creeping into our narrative and conversation in
Speaker 2: a big way this year. And then secondly, since the
Speaker 2: Hamas Israel conflict, have you seen an uptick in people
Speaker 2: calling you or upping some of what they some of
Speaker 2: the work that they do with you.
Speaker 11: Any world crisis is a moment where I think our
Speaker 11: vigilance needs to be higher. And we've not seen an
Speaker 11: exact correlation because of amoster nations, state crime, but I
Speaker 11: believe our vigilant should be higher. The last thing we
Speaker 11: want to do is let our guard down.
Speaker 10: That's absolutely the case.
Speaker 11: So my advice to people is, I mean, it's not
Speaker 11: just because of Hamas, but look at what happened with
Speaker 11: the Las.
Speaker 10: Vegas stair hotels. Just keep your vigilance high.
Speaker 2: But when you see something like that in the headlines,
Speaker 2: do you get an uptick or the I'm just curious
Speaker 2: if you see a director.
Speaker 11: We haven't seen a significant of just in the last
Speaker 11: remember it's last Saturday or two Saturdays go when this
Speaker 11: all start. We haven't seen a signama, But we are
Speaker 11: all vigilant. One of our board members is a gentleman
Speaker 11: named Kevin Mandieir, who's one of the biggest cyber fighters
Speaker 11: in the world. His company called Mandiance, sees a lot
Speaker 11: when something gets hit Congress, the government usually calls him,
Speaker 11: so he's on board. I called him, talked to him.
Speaker 11: We keep pretty close eye on it, and my perspective
Speaker 11: is stay vigilant because it could go up down. The
Speaker 11: point is that, I think on the other part of
Speaker 11: your question later AI, I think it's a tremendous opportunity
Speaker 11: for us to harness the best out of our artificial intelligence,
Speaker 11: especially Jenner of AI and treated a little bit like
Speaker 11: that age old question about a match stick. Is fire
Speaker 11: a blessing or a curse? Okay, a pyromatics? We could
Speaker 11: turn a house and fire, but it's going to keep
Speaker 11: us warm. We've got as the tech leaders in the industry,
Speaker 11: we've got to find the ways to put guardrails around this.
Speaker 10: We call it responsible AI.
Speaker 11: Put guardrails around it so that people can't do irresponsible
Speaker 11: things with it, but still harness its potential, which I
Speaker 11: think this is generally is the most fundamental innovation I've
Speaker 11: seen in twenty thirty years.
Speaker 2: I'm curious what a guardrail means. We're running out of
Speaker 2: time twenty seconds, twenty five seconds.
Speaker 4: What is a guard ridge?
Speaker 10: What keeps the train on tracks?
Speaker 11: Right, That's what a guardrail. It's a set of rails
Speaker 11: that ensures that technology can't be abused.
Speaker 2: So you can have a guardrail but still tap into
Speaker 2: a potential junction.
Speaker 11: Exactly what good responsible tech companies like US and Microsoft
Speaker 11: and Google and others are doing.
Speaker 10: And that's what we're focused on.
Speaker 11: Our gener AI technology is far ahead of everybody else industry,
Speaker 11: but we're guardrailing it with what we call a responsible
Speaker 11: AI framework.
Speaker 2: Interesting stuff, comeback soon, Thank you very We would love Sandi. Yeah,
Speaker 2: really interesting conversation. Sandrey Punin. He's the CEO at Cohesiity.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
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Speaker 1: or watch us live on YouTube.
Speaker 12: You love.
Speaker 2: Love Hey like it or not? Everybody facial recognition technology.
Speaker 2: It is everywhere. You may not realize it, but it
Speaker 2: is everywhere. It uses, you know, in terms of the
Speaker 2: applications vary from the mundane to well, you know, we
Speaker 2: use it right to open up our phone? Yeah, open
Speaker 2: up other stuff. But it also the uses can be
Speaker 2: downright controversial.
Speaker 3: I mean, just think about Madison Square Garden. Yes, you've
Speaker 3: heard about this. It reportedly uses facial recognition technology to
Speaker 3: weed out lawyers at firms that are suing the company
Speaker 3: and berefts them from going to concerts and shows at
Speaker 3: the arena.
Speaker 4: Welcome to the new reality.
Speaker 5: Yeah, that's what it is.
Speaker 3: What can go wrong though, when law enforcements or oppressed
Speaker 3: the governments get their hands on this technology. What happens
Speaker 3: when the technology gets so good that a company claims
Speaker 3: it can take a single photo of someone and then
Speaker 3: use that photo to find every detail of their life
Speaker 3: on the Internet.
Speaker 2: It's the promise of a new national best selling book
Speaker 2: by New York Times technology reporter Kashmir Hill. The book
Speaker 2: is called Your Face Belongs to Us, A secretive startups
Speaker 2: quest to end privacy as we know it and is
Speaker 2: no doubt about it. Tim A very timely conversation.
Speaker 3: Yeah. The book has been longlisted for the Ft and
Speaker 3: Schroeder's Business Book of the Year awards. Cashmir right now
Speaker 3: joins us on Zoom from New York. Kashmir has been
Speaker 3: covering the intersection of privacy and tech for around fifteen
Speaker 3: years before people were even thinking about privacy online. So
Speaker 3: very pleased to have her with us. KSh We are
Speaker 3: good to talk to you. The book centers around Clearview AI.
Speaker 3: It's the secretive startup which you've been writing about and
Speaker 3: following for years. It's got some pretty incredible technology. Tell
Speaker 3: us what they do?
Speaker 8: Yeah, Hi Tim, Hi Carol. Good to be here.
Speaker 13: So what CLEARVIEWI did was it went out and scraped
Speaker 13: billions of photos from the Internet from social media sites
Speaker 13: like Facebook, Instagram, LinkedIn, Venmo.
Speaker 8: It did that without anyone's consent.
Speaker 13: Now has a database of thirty billion faces, and it
Speaker 13: has this facial recognition app where you can take a
Speaker 13: photo of someone and it will bring up all these
Speaker 13: other places on the Internet where it's seen their face,
Speaker 13: along with a link to where it appears, so you
Speaker 13: can find out someone's name, you know, where they live,
Speaker 13: who they know, maybe.
Speaker 8: Photos they didn't even know we're on the internet.
Speaker 13: And they've been selling that app to police now for
Speaker 13: a few years.
Speaker 3: Okay, So that's a really important point. It's not like
Speaker 3: you can go download this app from the app store
Speaker 3: and just start, you know, looking at photos of your
Speaker 3: colleague and your friends on there. You've been able to
Speaker 3: see it in action, though, Kashmir from the company tell
Speaker 3: us what it's like to kind of experience that.
Speaker 13: Yeah, when I first started looking into Clearview AI, they
Speaker 13: were not happy about it, and they actually put an
Speaker 13: alert on my face so that they would know when
Speaker 13: police officers I was talking to, we're searching my face,
Speaker 13: and they blocked my face from having results.
Speaker 8: Which was which was a bit chilling.
Speaker 13: But eventually the company started talking to me, and its founder,
Speaker 13: Wanton Tat, has run searches on me several times over
Speaker 13: these years now that I've been talking to him for
Speaker 13: my reporting for The Times and for the book, and
Speaker 13: I just remember the first time he did this search
Speaker 13: of my face, and you know, it brought up photos
Speaker 13: I knew about, you know, you know, headshots that I
Speaker 13: have put out there in the world.
Speaker 8: But it was also photos I had never seen.
Speaker 13: Before, photos of me with a source that I was
Speaker 13: interviewing for a story. We were out at a public event,
Speaker 13: a photo where it was somebody standing in Washington, d C.
Speaker 13: With somebody walking by in the background. And when I
Speaker 13: first looked at the photo, I didn't think I was
Speaker 13: in it until I recognized the jacket the person in
Speaker 13: the background was wearing, and it was a very distinctive
Speaker 13: coat that I had bought in Tokyo. And so, you know,
Speaker 13: when this technology works, it can it can be incredible
Speaker 13: the photos that it's able to pull up.
Speaker 2: CASHU. I would say that I think we all realize.
Speaker 4: I mean, I've got.
Speaker 2: A security badge that I have to check into my office, right,
Speaker 2: I know that as I walk around the world out
Speaker 2: on streets, you know, you go over in Europe, like
Speaker 2: their cameras are everywhere. So I'm I have an awareness,
Speaker 2: and I think a lot of us do that. So
Speaker 2: much of what we do is being tracked digitally, right,
Speaker 2: we have these dossiers. Everything's being tracked. It's what people
Speaker 2: do with that information. I feel like we're at this
Speaker 2: era of trying to understand where that information goes, how
Speaker 2: it's used either you know, help or you know, more
Speaker 2: worrisome hurt us. So what is it about this company
Speaker 2: is worrisome about kind of maybe the use of that data?
Speaker 13: Yeah, I mean I think what's work some about it
Speaker 13: is this idea that we were all put.
Speaker 8: In this database.
Speaker 13: I mean, I'm sure the three of us are in here,
Speaker 13: and that We never got a choice in the matter
Speaker 13: that it was operating secretly, you know, until I came
Speaker 13: along and discovered it. We didn't even know police had
Speaker 13: a technology like this. You know, the algorithm that they
Speaker 13: were using hadn't been tested. We'd actually didn't know how
Speaker 13: accurate it was. And now that the technology is out there,
Speaker 13: I think it just raises concerns about our ability to
Speaker 13: kind of move anonymously in a public space and trust
Speaker 13: that people aren't going to know who we are. Clear
Speaker 13: UAI kind of broke this taboo. I write in the
Speaker 13: book it wasn't a technological breakthrough, is actually an ethical one,
Speaker 13: and we are going to see copycats and this will
Speaker 13: be available to all of us, and it will mean
Speaker 13: that you can't have a private conversation over dinner and
Speaker 13: trust that the people around.
Speaker 8: You can identify you.
Speaker 13: You can't buy something sensitive and a pharmacy and trust
Speaker 13: that somebody sees you, can't take your picture.
Speaker 8: And know who you are.
Speaker 13: It just could really change our ability to just have
Speaker 13: you know, private going goings on in the world where
Speaker 13: anybody can take our picture.
Speaker 2: Just think of the story the Bloomberg Business Week story
Speaker 2: about location services with Google right and police using those also.
Speaker 6: It's just it's terms of this.
Speaker 3: It's kind of the perfect segue to my next question
Speaker 3: for Kashmir, which is, Yeah, which is why Kashmir this
Speaker 3: is Clearview doing this and not Google or Facebook. You
Speaker 3: spent a big part of the book talking about that
Speaker 3: why it is Clearview even though technologically Google and Facebook
Speaker 3: could do this. I mean, think about all the pictures
Speaker 3: that Facebook has willingly from us, and Google, if we
Speaker 3: use Google Photos, has from us.
Speaker 7: Yeah.
Speaker 13: I mean when I first found out about clear Viewyi,
Speaker 13: I just assumed that they were super geniuses, that they
Speaker 13: had been able to accomplish this, this this thing that
Speaker 13: you know, Facebook and Google hadn't released, that governments hadn't built.
Speaker 13: But I did find out in my reporting for the
Speaker 13: book that Google to Google and Facebook both developed this
Speaker 13: kind of technology internally. Eric Schmidt as early as twenty
Speaker 13: eleven said it was the one technology that Google had
Speaker 13: developed and decided not to release.
Speaker 8: I watched this video of.
Speaker 13: Engineers at Facebook and twenty seventeen in this little conference
Speaker 13: room in men Lo Park with a smartphone on the
Speaker 13: brim of a baseball cap held in place by rubber bands,
Speaker 13: and when the person wearing it looked around at people
Speaker 13: in the room, it actually called out their names. And
Speaker 13: this was really striking to me because neither one of
Speaker 13: these companies released the product, and they just felt like
Speaker 13: it was too dangerous to put this out in the world,
Speaker 13: that it could be used in a bad way. And so, yeah,
Speaker 13: it is very striking that Clearview was the company to
Speaker 13: do it. And I think it's in part because those
Speaker 13: companies Facebook, Google, they're just under more scrutiny, they have
Speaker 13: more to lose, They've gotten in so much trouble over
Speaker 13: the years for privacy violations, whereas clear Views, this radical startup,
Speaker 13: you know, it has only only everything to gain by
Speaker 13: kind of putting this radical technology out into the world.
Speaker 2: I want to get into, like maybe the investigations in
Speaker 2: terms of security forces around the world that maybe have
Speaker 2: been looking into this company. Having said this, if you're
Speaker 2: not already freaked out, we have about a minute and
Speaker 2: a half and then we'll come back and talk some more.
Speaker 2: But tell us about some of the individuals that have
Speaker 2: somehow been connected with this company or behind this company.
Speaker 8: Yeah.
Speaker 13: So the main person I talked about before, Juantan Tat.
Speaker 13: He is the technical co founder, grew up in Australia,
Speaker 13: loved technology nineteen years old, dropped out of college, moved
Speaker 13: to San Francisco, was just kind of trying to make
Speaker 13: it in the tech world, the tech gold Rush in
Speaker 13: kind of the early two thousands, and he ended up
Speaker 13: moving to New York and really falling in with a
Speaker 13: more conservative crowd, people that were kind of on the
Speaker 13: alt right. He ended up partnering with Richard Schwartz, decades
Speaker 13: older than him, had worked for Rudy Giuliani in New
Speaker 13: York City when he was the mayor. Another person helped
Speaker 13: them in the early days, Charles Johnson, kind of well
Speaker 13: known on the internet as a conservative provocateur, a little
Speaker 13: bit of a troll of liberals, and they were working
Speaker 13: on this together. Peter Tiel was their first investor with
Speaker 13: two hundred thousand dollars for the company that became clear VIEWAI.
Speaker 8: It really kind of came out of those.
Speaker 13: Those kind of online right currents, or around the time
Speaker 13: that Trump was becoming president.
Speaker 2: All right, we're going to continue with the conversation. I've
Speaker 2: got to say, we're all just kind of hanging on
Speaker 2: each word because I think it's you know, this is
Speaker 2: the reality of our world, right now we have an
Speaker 2: understanding of it, but you begin to wonder, Okay, how does.
Speaker 3: It get used exactly? And when we come back, we're
Speaker 3: going to speak to Kashmir Hill, the author of this
Speaker 3: new book it's called Your Face Belongs to Us, A
Speaker 3: Secret of Startups, quest and Privacy as we know it.
Speaker 3: We're going to dive into the organizations that are using
Speaker 3: this technology, the law enforcement organizations, then also talk about
Speaker 3: how this technology is being used around the world by
Speaker 3: oppressive government.
Speaker 2: Right, we all kind of google ourselves, let's be honest,
Speaker 2: but like normal things pop up. But if you start
Speaker 2: to see all of sudden these pictures come up and
Speaker 2: you're like, where did that come from? That would freak
Speaker 2: me out? Hey, cashure what they were wondering, you know,
Speaker 2: and you get into this in the book is just
Speaker 2: you know, global forces, global regulators around the world. I feel,
Speaker 2: especially when you go outside the United States, you go
Speaker 2: over in Europe, they're really concerned privacy issues when it
Speaker 2: comes to individuals. So what kind of scrutiny and what
Speaker 2: kind of oversight has clearview kind of garnered from some
Speaker 2: of the regulators around the world.
Speaker 13: Yeah, how private your faces really varies depending on where
Speaker 13: you live. And so after I kind of expose the
Speaker 13: existence of CLEARVIEWAI, privacy regulators in Europe, Canada, Australia all
Speaker 13: announced investigations into the company, and they all came to
Speaker 13: the same conclusion, which is that CLEARVIEWAI violated their privacy
Speaker 13: laws by collecting all this data about their citizens, this
Speaker 13: kind of sensitive biometric information without their consent.
Speaker 8: They said, hey, this is illegal.
Speaker 13: Some of the privacy regulators find them, and Clearview had
Speaker 13: been offering, you know, its product to officers around the world,
Speaker 13: and this effectively kind of kicked a Clearview out of
Speaker 13: those countries.
Speaker 3: But not here in the US.
Speaker 8: No, here in the UNITS has been very different.
Speaker 13: We just do not have a federal law that really
Speaker 13: applies to what CLEARVIEWI is doing. There are some states
Speaker 13: that have privacy laws that give you the right to
Speaker 13: access the information that a company holds on you. So
Speaker 13: if you're in a place like California or Connecticut or
Speaker 13: Colorado or Virginia, you can actually go to clearview dot
Speaker 13: AI and request to know what they have in their
Speaker 13: database about you and ask that it be deleted.
Speaker 8: But the only state that has a.
Speaker 13: Very strong privacy law that's directly kind of about facial
Speaker 13: recognition technology is Illinois and this law passed in two
Speaker 13: thousand and eight, the rare law that moved faster than
Speaker 13: the technology. And I tell the history in the book,
Speaker 13: but it says that if you want to use someone's
Speaker 13: biome trick information, including their face print, you need to
Speaker 13: get their consent or pay up to five thousand dollars
Speaker 13: per use. And so there has been litigation against CLEARVIEWAI
Speaker 13: in Illinois. And you mentioned at the top of the
Speaker 13: program how Madison Square Garden uses facial recognition technology to
Speaker 13: bean lawyers anyone who works for a firm that sued
Speaker 13: the company, And they do that in New York City
Speaker 13: at Madison Square Garden and Beacon Theater and Radio City
Speaker 13: Music Hall. But Madison Square Garden also owns a theater
Speaker 13: in Chicago and they can't use the technology that way
Speaker 13: there because they can't use lawyers, you know, face prints
Speaker 13: in Illinois without their consent.
Speaker 2: How much when police enforcement here in the United States
Speaker 2: have used this that it's led to mistakes or erroneous arrests,
Speaker 2: if you will.
Speaker 13: So there are hundreds of police departments that have used
Speaker 13: clearviewai's technology. The Department of Homeland Security has a contract
Speaker 13: with them the FBI does I know of one case
Speaker 13: where this has gone wrong, and there may be others
Speaker 13: that haven't come to light. But in that situation, a
Speaker 13: man named Randall Karan Reid was pulled over the day
Speaker 13: after Thanksgiving in Atlanta, Georgia, and there are four police.
Speaker 8: Cars that pulled him over.
Speaker 13: They asked him to step out of his vehicle on
Speaker 13: the side of the highway and started to arrest him
Speaker 13: and told him there was a worn out in Jefferson
Speaker 13: Parish for him for larceny and he said, where's Jefferson
Speaker 13: Parish and they said it's in Louisiana. He said, I've
Speaker 13: never been to Louisiana in my life. And it turned
Speaker 13: out that he had been identified through running a surveillance
Speaker 13: still from a person who had been basically stealing purses
Speaker 13: in and around New Orleans and it had hit on
Speaker 13: Randall Reid. And when the police looked at his Facebook account,
Speaker 13: they said, wow, he has a lot of friends in
Speaker 13: New Orleans and basically based on that, they issued this
Speaker 13: warrant for his arrest. He was held in jail for
Speaker 13: a week awaiting extradition until this was cleared up, and
Speaker 13: it became clear he wasn't the same person. He basically
Speaker 13: took a lot of photos of his face in the
Speaker 13: video of his face, and when the police looked at it,
Speaker 13: they noticed he had a distinctive mole on his face
Speaker 13: that the person they were seeking did not have.
Speaker 3: Hey, Kashmi, Carol's died to get a question here. We
Speaker 3: have a couple of minutes left. I'm gonna get the
Speaker 3: stair to each other very very quickly. Talk a little
Speaker 3: bit about how oppressive governments have used this type of
Speaker 3: technology around the world.
Speaker 13: Yeah, so China and Russia are a bit further ahead
Speaker 13: of us in the deployment of facial recognition technology. And
Speaker 13: for example, Russia has rolled out kind of real time
Speaker 13: facial recognition on their surveillance cameras around Moscow, and they've
Speaker 13: been used to identify protesters against the war in Ukraine.
Speaker 13: I've heard about doppelgangers who get stopped on the street
Speaker 13: because they look like somebody who's wanted. In China, it's
Speaker 13: also been used to identify, you know, protesters in Hong
Speaker 13: Kong to to keep track of weaker Muslims there, and
Speaker 13: China's also used it for kind of these these wild
Speaker 13: use cases like people who wear pajamas in public in
Speaker 13: one city were identified with facial recognition and named and
Speaker 13: shamed on social media. If you jay walk there, you
Speaker 13: might just automatically get a ticket.
Speaker 2: One thing that stuck at struck me in your book.
Speaker 2: The Chinese government has also started collecting DNA and tracking phones,
Speaker 2: layering multiple systems in an attempt to create and all
Speaker 2: seeing eye on its population of one point four billion.
Speaker 2: We know that this is what China is doing when
Speaker 2: you look at this and we've just got about.
Speaker 4: A minute left.
Speaker 2: More broadly, I mean I do my fingerprint multiple times
Speaker 2: a day to check in.
Speaker 4: I mean, we've given up so much.
Speaker 2: What is the big concern about kind of where this
Speaker 2: goes beyond is it all about police arresting you falsely
Speaker 2: or what is it?
Speaker 13: I would just say I start in many ways, that's okay,
Speaker 13: that's many ways in which facial recognition technology can be beneficial,
Speaker 13: and that we want to use it in our lives.
Speaker 13: But I think that we should have the ability to
Speaker 13: take what we want and not be forced.
Speaker 14: To accept it as being ubiquitous in our lives, that
Speaker 14: we're tracked all the time, that we just have no
Speaker 14: privacy I think that's very dystopian and that we should
Speaker 14: be able to choose the future that we want and
Speaker 14: not just let what's possible with the technology determine it.
Speaker 2: It's safe to say we're living in a surveillance state already,
Speaker 2: it's just how it's all used and where it goes
Speaker 2: from here. What a fascinating book and so glad we
Speaker 2: could have you with us.
Speaker 3: Yeah, in your time, Technology port Kashmir Hill. Her book
Speaker 3: is called Your Face Belongs to Us, A Secret of Startups,
Speaker 3: Quest to end Privacy as we know it. The book
Speaker 3: is out now. Also, we went to graduate school together
Speaker 3: and it's so cool to see all the success that
Speaker 3: Kashmir has had. Congrats on just a great book, Kashmere.
Speaker 3: Really appreciate Kashmere taking the time to join us.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship York station, Just
Speaker 1: Say Alexa, Play Bloomberg eleven thirty.
Speaker 2: There's a common refrain that if an app is free,
Speaker 2: you are the product that's certainly been true for years
Speaker 2: with Meta platforms. Despite the tech giants collection of social
Speaker 2: media apps, including Facebook and Instagram, along with a slew
Speaker 2: of high end hardware and software products, a whopping ninety
Speaker 2: eight point four percent of Meta's revenue comes from personalized advertising.
Speaker 3: Yet The Wall Street Journal reports that Meta has told
Speaker 3: European Union regulators that it plans to charge EU users
Speaker 3: around fourteen dollars per month for access to an ad
Speaker 3: free mobile version of Facebook, and about half that for Instagram.
Speaker 3: A story in the Technology section of the new double
Speaker 3: issue of Bloomberg BusinessWeek magazine explains Meta's flirtation with ad
Speaker 3: free services and why rivals are following suit. We get
Speaker 3: more from Businesswek columnist Max Chafkin and the editor of
Speaker 3: the magazine, Joel Weber.
Speaker 4: So, Jeel, lots of things going on.
Speaker 6: Not just advertising. That ninety eight point four percent figure personalized.
Speaker 3: Personalize, personalize, that those ads that follow you around.
Speaker 6: Yeah, and so that ad tracking is a hallmark of
Speaker 6: Max Chafkins reporting it's not just Meta. He's also pointed out,
Speaker 6: you know, Google in the past has had some big
Speaker 6: numbers like this.
Speaker 12: Facebook would not say it was creepy. They would say,
Speaker 12: it's very useful that, as Mark Zuckerberg says that, so
Speaker 12: there's that that they like, person that people like personalized advertising.
Speaker 12: You'd be a huge loss if this if this one away.
Speaker 2: But raise your hand in the studio if you like
Speaker 2: personalized and advertising.
Speaker 13: You know.
Speaker 2: Sometimes sometimes nobody raised their hands.
Speaker 6: Sometimes it's so much halfway, you.
Speaker 13: Know your halfway.
Speaker 6: My favorite is you know on Amazon, when you buy
Speaker 6: something and then it's like an ad for the thing
Speaker 6: that you bought already. It's like, come on, you want to.
Speaker 12: Remember the pair of shoes that you had in your
Speaker 12: cart the day before.
Speaker 6: But but Max walk us through what this experiment looks
Speaker 6: like and how and what it really means for a minute, right.
Speaker 12: So, basically, in twenty eighteen, the EU passed the thing
Speaker 12: called GDPR. It's a big, complicated set of privacy rules
Speaker 12: that essentially require companies to ask for consent before showing
Speaker 12: personalized ads. And Facebook has been in this kind of
Speaker 12: long running battle with European regulators, which kind of reached
Speaker 12: a culmination this summer with a court ruling that essentially
Speaker 12: is forcing them to finally go ahead and do this.
Speaker 6: And the way they want.
Speaker 12: To do it is by offering a paid version of
Speaker 12: the service with no advertising in Europe. So the EU
Speaker 12: is sort of asking, hey, you're going to if you're
Speaker 12: in to personalized ads, you got to offer people a
Speaker 12: way out. Facebook is saying, well, our way out is
Speaker 12: no ads at all, and we're going to charge you
Speaker 12: for it. And the amount of money they're talking about
Speaker 12: charging is relatively high. It's around twenty dollars a month,
Speaker 12: nineteen euros a month, twenty dollars a month, which is,
Speaker 12: you know, probably more than most people are willing to pay.
Speaker 12: You know, it's more, as we point out the story,
Speaker 12: it's more than a lot of gym memberships and mobile
Speaker 12: phone plans and so on, and certainly more than many
Speaker 12: other subscriptions like you know, Disney Plus and Netflix that
Speaker 12: people get a lot of value out of.
Speaker 3: I kind of think that, you know, people will not
Speaker 3: opt to pay for the services.
Speaker 12: I think that's that's exactly the plan.
Speaker 6: And and that's like would you pay for you?
Speaker 3: I would pay, I would like pay to not use it. Really,
Speaker 3: how much do I have to pay in order to
Speaker 3: keep me off Instagram?
Speaker 12: They should consider they should be interesting revenue stream for UH,
Speaker 12: for meta platforms.
Speaker 6: UH.
Speaker 12: The so I think the intent basically is that most
Speaker 12: people will not pay for it. If you if you
Speaker 12: look at the statement that they put out there, which
Speaker 12: is in our story, which essentially says, you know, we
Speaker 12: still believe in personalized advertising. We just want to work
Speaker 12: with regulators. You read between the lines, are basically saying
Speaker 12: regulators are making us do this. We don't expect anyone
Speaker 12: to take them up on it.
Speaker 5: You know.
Speaker 12: On the other hand, a lot of companies are playing
Speaker 12: around with this. Uh you know, we've seen obviously Elon
Speaker 12: Musk and Twitter and kind of very loud fashion offer
Speaker 12: his own subscriptions.
Speaker 3: You pay, you tweet a lot or post a lot?
Speaker 3: Do you pay for it? I have not yet paid
Speaker 3: for ex Premium either, have I? And I feel like
Speaker 3: my tweets are getting lost as a result. Well yeah, sorry,
Speaker 3: this is like a totally different time.
Speaker 12: Well so, and that's where it gets a little bit
Speaker 12: complicated because, among other things, Elon Musk has talked about
Speaker 12: this as a way to see fewer ads, but he's
Speaker 12: also created all these other enticements, including you know, basically
Speaker 12: pay to play, and even so x Premium is not
Speaker 12: doing very well despite the much lower price points about
Speaker 12: half of that proposed figure that Mark Zuckerberg is, which
Speaker 12: I love Facebook.
Speaker 6: You're talking about if you can't have a cage fight,
Speaker 6: you just have a cage fight and you know, in
Speaker 6: the marketplace and go, you know, have half price or
Speaker 6: double the price.
Speaker 12: Yeah, the app store is basically the cage fight of
Speaker 12: social media. Snap is also playing around is, as we
Speaker 12: report in the story, is testing an ad free version.
Speaker 12: TikTok has done this.
Speaker 6: You know.
Speaker 12: I think part of it is that we don't actually
Speaker 12: know what the market is. I think there are a
Speaker 12: lot of people who do not like seeing advertising obviously.
Speaker 12: I mean, it's it's coming to play with cable television
Speaker 12: and other markets.
Speaker 4: Absolutely.
Speaker 12: On the other hand, and this is where the real problem.
Speaker 6: Is, it's annoying.
Speaker 12: It is such a good business, you know, as Joel's
Speaker 12: intro pointed out, it's it's not just as a percentage.
Speaker 12: It's just like the raw numbers we're talking about, you know,
Speaker 12: more than one hundred billion dollars a year for Facebook
Speaker 12: when you do it, when you break down a per
Speaker 12: user basis, if they wanted to do this in the US,
Speaker 12: you know, they would need to reclaim about two hundred
Speaker 12: twenty dollars per person per year who opts out of this,
Speaker 12: So you know that that works out to almost twenty
Speaker 12: dollars a month. And when you when you consider the
Speaker 12: fact that not everyone would pay, that you'd lose some users.
Speaker 12: The real price probably have to be actually a bit higher.
Speaker 12: So it's it's a you know, it's a problem that
Speaker 12: a lot of big established businesses have had when they
Speaker 12: try to like look at different models. Not all that
Speaker 12: different from the cord cutting conversation with cable television.
Speaker 6: So if this worked, how lucrative could it be? Like,
Speaker 6: what's the math have to kind of work out to
Speaker 6: where you're obviously going to probably not get everybody to
Speaker 6: do it. It could actually just be a very small
Speaker 6: percentage of people who opt into it, But like you
Speaker 6: could have a pretty loyal group of people here who
Speaker 6: are willing to you know, pay that.
Speaker 12: Annual Again, I think people, I think, I mean, well,
Speaker 12: it's not coming to the US at least, Facebook is
Speaker 12: meta is signaling that it won't. That this is a
Speaker 12: this is a europe only thing, This is you know,
Speaker 12: a thing they're gonna you know, this has to do
Speaker 12: with regulation, not not with what they think the market wants.
Speaker 12: And I do I do think. I mean, I'm sure
Speaker 12: they would like to have more revenue. There is a
Speaker 12: problem though, if you if you start eating into this
Speaker 12: network of personalized advertisements.
Speaker 6: You know, one of the uh.
Speaker 12: Source I talked to you for this story was saying
Speaker 12: that essentially that you know, this is a network business.
Speaker 12: Part of what makes this network valuable is all the people.
Speaker 12: Right now, Facebook has all this data about you that
Speaker 12: collects across the Internet and essentially rents it out to advertisers.
Speaker 12: If you start pulling people out of that data set,
Speaker 12: that data set arguably becomes less valuable. And you could
Speaker 12: imagine a situation where advertisers stop feeling like Facebook is
Speaker 12: a must stop destination and you know that is there.
Speaker 12: The dynamics are a little bit different. But that's what's
Speaker 12: happened to Twitter. You know, as Elon Musk has offered
Speaker 12: this new revenue stream, he's had huge difficulties with advertisers.
Speaker 12: And so I think the challenge what Facebook really like
Speaker 12: is to create new revenue streams while also continuing to
Speaker 12: show personalized advertisements to you know, three billion people a year.
Speaker 6: I also think so you're saying you get the cake
Speaker 6: and eat.
Speaker 12: It too, that's the goal.
Speaker 6: Yeah, but maybe things go exceptionally well in Europe and
Speaker 6: you have, you know, a three year experiment and you
Speaker 6: take all those learnings and roll it into a US
Speaker 6: that's more favorable by this.
Speaker 12: I do think. And you know, there's another point making
Speaker 12: the story if you look at all that's wrong with
Speaker 12: social media, things that people actually don't like about it,
Speaker 12: the fact that it kind of makes us feel enraged,
Speaker 12: that it throws all this information at us to try
Speaker 12: to get us to stay engaged, which like a lot
Speaker 12: of these things have to do with this advert with
Speaker 12: the way they make money, and if they made money
Speaker 12: in a different way, you know, maybe social media could
Speaker 12: be a little different. They wouldn't necessarily have to have
Speaker 12: such a you know, sort of difficult relationship with news publishers.
Speaker 12: Right Like at the moment, Facebook and other social networks
Speaker 12: are at pains to keep you from reading content off site,
Speaker 12: which creates all sorts of issues with misinformation, and it
Speaker 12: makes publishers mad and so on. If you're just paying
Speaker 12: them a monthly fee, right they could just refer you
Speaker 12: to the best content. If you're paying them a monthly fee,
Speaker 12: maybe they wouldn't have to you know, cause you to
Speaker 12: argue with your aunt, you know, for for like several
Speaker 12: months over like.
Speaker 3: It sounds like you have familiarity with us.
Speaker 9: Why don't they just.
Speaker 2: I mean, they can't give away the tracking, let the
Speaker 2: ads come through, but get rid of the trade.
Speaker 12: So yeah, privacy ad everybody would yeah, right that there's
Speaker 12: like a middle ground and that's and they don't want
Speaker 12: to do this, which is where they could just change
Speaker 12: their advertising and make it less personalized, or or make
Speaker 12: it not personalized at all and just show you contextual
Speaker 12: ad which is kind of like how Google works. Google
Speaker 12: does a lot of personalization now at this point too.
Speaker 12: But any case, just change the advertising and continue to
Speaker 12: show you ads, and then maybe there would be a
Speaker 12: less expensive sort of middle tier payment like five dollars
Speaker 12: a month, which.
Speaker 6: Might be more within reach.
Speaker 12: Again, this the main businesses that they have is really good,
Speaker 12: and so it's really a question of are they going
Speaker 12: to be forced to do this or is there some
Speaker 12: way where demand is much greater than we expect and
Speaker 12: as a result, it's more economical than it would seem
Speaker 12: at first.
Speaker 6: Clients in a you know, if you're a product manager,
Speaker 6: I think one way you would describe this is that
Speaker 6: you're gonna ab test in real time and you're going
Speaker 6: to have this europe experiment while the rest of the
Speaker 6: world does its other way. I'm curious, do we have
Speaker 6: any indications if this is going to change how the
Speaker 6: algorithms implement and kind of like work your feeds, right,
Speaker 6: because in theory, like a mainstay of what appears in
Speaker 6: your feed are ads, and if you're suddenly changing that,
Speaker 6: it would just lead you believe that maybe the rest
Speaker 6: of the the algorithm might change too.
Speaker 10: Well.
Speaker 6: Sure, Yeah, And one of the arguments different kind of engagement.
Speaker 12: Over the years, people have asked Marks about this a lot,
Speaker 12: and what he says I sort of allude to this
Speaker 12: the beginning is that you know, at Facebook, at Meta,
Speaker 12: they see ads as part of the content, just as
Speaker 12: valuable as as the as your aunts or your you know,
Speaker 12: your friends engagement photos or whatever, which I think maybe
Speaker 12: strains a little bit of credulity. Of course, it's something
Speaker 12: you might say if you're an advertiser. But yeah, I mean,
Speaker 12: the the experience is going to be really different. We
Speaker 12: don't know how it's gonna look. And one of the
Speaker 12: reasons we don't know how it's gonna look is because
Speaker 12: right now Meta is negotiating with European regulators on this,
Speaker 12: and so they're not really saying much because Europe has
Speaker 12: not given it, you know, the seal of approval basically
Speaker 12: again those little notifications that you see when you go
Speaker 12: on websites sometimes that say like, you know, do you
Speaker 12: consent to whatever? Meta has resisted that because I think
Speaker 12: they're worried that people are gonna say no, I don't consent.
Speaker 12: It's gonna mess up their business. So this is their
Speaker 12: latest basic basically effort to get around that. If if
Speaker 12: if you're offered a paid version that you opt out,
Speaker 12: then then you're effect effectively opting in by it by
Speaker 12: not paying.
Speaker 2: We talked so often about the tech and I feel
Speaker 2: like the world in general on different in different areas.
Speaker 4: That we follow kind of what the EU is.
Speaker 2: Doing or the Europeans are doing when it comes to oversight,
Speaker 2: especially with technology or California, like if you get into
Speaker 2: climentators of it right right.
Speaker 3: Same with tech though with child privacy laws.
Speaker 2: So should we assume that this is coming this way
Speaker 2: at some point or I mean like Washington, Kank she
Speaker 2: was a speaker or anything, get.
Speaker 12: Things done, you know, it's possible. But over the last
Speaker 12: decade or so, efforts to to really rain in tech
Speaker 12: have have not gone super well. And there are reasons
Speaker 12: for that, some of which have to do with the
Speaker 12: fact that, you know, Facebook is seen by by many
Speaker 12: lawmakers and and and Facebook has sort of made an
Speaker 12: effort to present itself this this way as an area,
Speaker 12: as a national champion, and that you know, whenever efforts
Speaker 12: to kind of rein in meta come up. You know,
Speaker 12: the counter argument from Mark Zuckerberg is, you know, other
Speaker 12: social networks, primarily TikTok, this Chinese social network is not
Speaker 12: gonna follow these rules, and like, you know, we as
Speaker 12: a country have to protect our national champions, and that
Speaker 12: has to some extent worked. I also think, you know,
Speaker 12: meta has been very effective at just like parrying regulation
Speaker 12: and confusing things. And and the truth is, the last
Speaker 12: point I'll make is like, yeah, we can all sort
Speaker 12: of say we don't like Facebook or we don't like
Speaker 12: seeing ads on Facebook, but a lot of people love
Speaker 12: this thing, and you know, hundreds of millions of people
Speaker 12: use it. And if you said, hey, we're gonna we're
Speaker 12: gonna pass this new law and make your social media
Speaker 12: this this thing that you use to to talk to
Speaker 12: your friends, and sure you make fun of it a lot.
Speaker 12: We're gonna make that now cost twenty dollars a month,
Speaker 12: or now cost ten dollars a month, or now you
Speaker 12: have to pay any amount of money.
Speaker 10: People are gonna be mad about that.
Speaker 12: That's not you know, that's not necessarily gonna be popular
Speaker 12: and stuff. And yeah, and so you know, the tech companies,
Speaker 12: the big tech companies and and Meta in particular, have
Speaker 12: been really really good at kind of you know, resisting
Speaker 12: efforts even during the Trump presidency where he was very
Speaker 12: hostile to the Silicon Valley in certain ways to rain
Speaker 12: them in, and I'd expect that to continue.
Speaker 3: Well, Max, oh well, I'll just go ahead, Joel.
Speaker 6: One more thing. What's the timeline for all of this?
Speaker 6: Because the EU decision was out over the summer, right,
Speaker 6: so what's how does this unfold?
Speaker 12: We think it's it's a matter of months, maybe even sooner.
Speaker 12: So I would expect to happen before the end of
Speaker 12: the year, although if regulators didn't go along with it,
Speaker 12: I don't know. I suppose it could drag out further
Speaker 12: because basically, like the regulators have to say that this
Speaker 12: is you know, an acceptable way to address the court's ruling.
Speaker 12: And if they said it wasn't, then you know, Meta
Speaker 12: would have to come back and think of something else.
Speaker 3: Hey, Max, very briefly, just in the last minute that
Speaker 3: we have, you make the point that that also sells
Speaker 3: some hardware, and after all, it's called metaplatforms. Would they
Speaker 3: like to sell enough Oculus quest or metaquest threes to
Speaker 3: offset significantly the portion of revenue they got from advertising.
Speaker 6: I don't think. I don't think that's the business model.
Speaker 12: I think the business model is to sell these headsets,
Speaker 12: probably you know, at break even or maybe even a loss.
Speaker 12: I mean the division Reality Labs, which the main thing
Speaker 12: they do is make this these headsets, has lost something
Speaker 12: like forty billion dollars over the last couple of years.
Speaker 3: That's a lot of money for face.
Speaker 12: So yeah, I don't think this is like necessarily a
Speaker 12: money making thing.
Speaker 6: And when you listen to.
Speaker 12: How Mark Zuckerberg talks about it, it's more about creating
Speaker 12: a new platform to kind of apply the old business
Speaker 12: model to and I think in certain ways, right, that's
Speaker 12: the genius of this, of this metaverse thing, if you
Speaker 12: really squint and look for it, is that maybe they
Speaker 12: could take the personalized advertising business, the amazing dominance that
Speaker 12: Facebook has over certain parts of the small and bring
Speaker 12: it to a new computing platform. And if they did that,
Speaker 12: of course, it'd be an even more valuable company.
Speaker 4: Yeah, where's the decimal point? Another in their favor?
Speaker 2: Great story Bloomberg, Bloomberg's Max Chafkin, of course, with Joe
Speaker 2: Weber and this story. It will be in the new
Speaker 2: issue of BusinessWeek magazine, out on Thursdays on newstands, already
Speaker 2: online and on the Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business app and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 15: We're about to go on a little adventure together, and
Speaker 15: that adventure is going to span seventeen years of music.
Speaker 12: How does that sound?
Speaker 9: Are you ready for it?
Speaker 13: All?
Speaker 5: Right?
Speaker 2: Everybody? Well, the adventure is definitely underway the right. The
Speaker 2: concert film released just last week, breaking in more than
Speaker 2: one hundred million in advanced sales that's expected to double
Speaker 2: within Weeks. We just talked about that moments ago. We
Speaker 2: also have talked about just anything. It feels like Taylor
Speaker 2: touches tim just turns to gold.
Speaker 3: It certainly includes the re recording of her albums. And
Speaker 3: that brings us to a story in the current screen
Speaker 3: time issue of Bloomberg Business Week. It's on newstands, it's
Speaker 3: online at Bloomberg dot com, Slash BusinessWeek, and of course
Speaker 3: always on the Bloomberg terminal. The story by Ashley Carmen.
Speaker 3: She covers podcasts the music industry creators at Bloomberg News.
Speaker 3: She's with us right now in our Bloomberg Interactive Brokers
Speaker 3: studio along with the editor of Bloomberg BusinessWeek, Joel Weber.
Speaker 6: Joel, can we talk about Taylor?
Speaker 3: Yeah, the answer to that question is always yes. I'm
Speaker 3: just waiting for the screen time Taylor's Taylor edition of
Speaker 3: Business Weeks, you know, might be a thing. You know, Look,
Speaker 3: you would be a great guest editor. Noah, Thanks Joel,
Speaker 3: you're a great editor of the magazine.
Speaker 6: You can get too swift to edit this magazine. I
Speaker 6: will take the week off maybe longer. It's what a force, right,
Speaker 6: and you know, just a little personal page out of
Speaker 6: my life. I'll be going to see this movie on Friday.
Speaker 6: Don't give away the ending. Ending she's probably a billionaire.
Speaker 3: But hold on, what's the occasion?
Speaker 6: This is great Friday night and I could get tickets
Speaker 6: like three weeks ago, and I was like, I'm better
Speaker 6: book this now. So yeah, I will do this hit
Speaker 6: there on Friday, and then I will take my son
Speaker 6: and my wife to a movie called The Aras to her.
Speaker 6: So what's incredible about this is that it just totally
Speaker 6: has taken I think pop culture and just like taking
Speaker 6: it to a whole other level. Obviously, what she's been
Speaker 6: able to do at live shows is one thing. Now
Speaker 6: she's able to do it in movie theaters. But the
Speaker 6: best part, and as Ashley wrote in our screen Time issue,
Speaker 6: is actually when you think about what she's done with albums,
Speaker 6: it actually sets up just how powerful of a force
Speaker 6: Taylor Swift actually is. So this is not a news story.
Speaker 6: But yet it's not nearly over yet, is it?
Speaker 16: Actually it is not over yet? Yeah, So should we
Speaker 16: maybe back up and talk a little bit about what
Speaker 16: the situation is.
Speaker 3: I mean, I need to start at the beginning. I
Speaker 3: actually don't know why she how Scooter Brown got hold
Speaker 3: of these these the rights to this right.
Speaker 16: So when Taylor was an up and coming, you know,
Speaker 16: a known name, she was on a label group called
Speaker 16: Big Machine label group that.
Speaker 6: Was never a thing. She was always known.
Speaker 16: To the day she was born, right exactly. Eventually Big
Speaker 16: Machine sold to Scooter Bron's management company, and so when
Speaker 16: they did that, Taylor's master recordings went with that deal.
Speaker 3: And is this typical, like artists don't have control over
Speaker 3: these two versions of rights.
Speaker 16: Yeah, so okay. So the master recordings, which is the
Speaker 16: literal like recording of a song, that specific song in
Speaker 16: this case and in many cases, is owned by her
Speaker 16: former record label. What they did not own, because she
Speaker 16: was a songwriter on all of her songs, is the composition,
Speaker 16: so that is, you know, the lyrics, the note, the melody,
Speaker 16: all of that. So that set her up when when
Speaker 16: Scooter took over her records for the first he was
Speaker 16: doing the rights of the first six albums that she
Speaker 16: put out. They have a very long history of not
Speaker 16: liking each other. It's definitely not worthing was.
Speaker 6: She was vocal about it, going very vocal about it.
Speaker 6: Don't want to happen exactly.
Speaker 16: She didn't trust him with these recordings, and so when
Speaker 16: that happened, she decided to kind of go with the
Speaker 16: nuclear option, which is to re record all of these albums.
Speaker 16: And she can do that because she still has the
Speaker 16: rights to this composition.
Speaker 6: And so that's what you know, who you don't want
Speaker 6: to see go nuclear?
Speaker 2: Taylor Swift, Yeah and shame they didn't do well?
Speaker 16: Right, Yeah, So she has been on this mission to
Speaker 16: re record these albums. She's released a few already and
Speaker 16: she's going to be releasing nineteen eighty nine. And you
Speaker 16: can tell when these are the re recorded versions because
Speaker 16: in parentheses they'll say Taylor's version that is set to
Speaker 16: come out later this month.
Speaker 3: How different? Sorry, Joel, I keep cutting it. Go ahead, Sorry,
Speaker 3: when it's Taylor.
Speaker 6: You're in charge, You're in charge.
Speaker 3: How different?
Speaker 6: I'll go scorre stars later.
Speaker 3: How different? This is my last question, I've pronest. How
Speaker 3: different is the Taylor's version versus a I don't want
Speaker 3: to call it Scooter Brown version of Big Machine version compared.
Speaker 4: I haven't just did a you know, twelve year old
Speaker 4: in your house.
Speaker 6: What you wouldn't want to do is listen to the
Speaker 6: non Taylor's version. If you're a Swifty because then you're
Speaker 6: only listening to the Taylor version.
Speaker 16: That gets into why she's been I think so successful.
Speaker 16: But as far as you know, did she stick to
Speaker 16: the original recording style? Yes, like she has really tried
Speaker 16: to basically recreate those original albums. There's been a couple
Speaker 16: of tweaks here and there, a couple of lyric change.
Speaker 16: She's released like new bonus tracks with different artists, so
Speaker 16: she's added on but no, broadly speaking, like these are
Speaker 16: meant to replace those original albums.
Speaker 4: And she's done really well with them.
Speaker 10: Okay, Tim's been mut.
Speaker 6: But this is this is where well, that gets to
Speaker 6: the heart of it, right, because if you're on say Spotify,
Speaker 6: and you're gonna listen to Taylor Swift, guess what album
Speaker 6: comes out first? It's the new ones, right, So every
Speaker 6: time she releases the Taylor's version, the old version goes
Speaker 6: lower and lower and lower. And you know, the guy
Speaker 6: that she didn't want to have control of any control
Speaker 6: of anything, makes less and less money on it.
Speaker 16: Well, so actually she so Scooter no longer owns these recordings,
Speaker 16: we should say Scooter sold them to Shamrock and now
Speaker 16: they hold onto these But regardless, I mean she wants
Speaker 16: control of her own tracks, and she has been extremely successful.
Speaker 16: I can tell you guys a little bit of a
Speaker 16: stat here. So, as of July one of her album's,
Speaker 16: Fearless Taylor's version had earned a one point four to
Speaker 16: seven billion on demand song streams since its release. Okay,
Speaker 16: in that same amount of time the original Yeah, in
Speaker 16: the same amount of time the original albums, and the
Speaker 16: non Taylor's version received six hundred and eighty point four million,
Speaker 16: so obviously still substantial, but much much smaller than what
Speaker 16: she's receiving on that new album. And then since it's
Speaker 16: November twenty twenty one release, Red Taylor's version had reached
Speaker 16: two point eighty six billion on demand streams, while the
Speaker 16: non Taylor version earned four hundred and seventy six point
Speaker 16: five millions. So people are widely choosing to listen to
Speaker 16: Taylor's version, and kind of like what Joel was talking about,
Speaker 16: in some ways, this has become almost an ethical conversation,
Speaker 16: like who are you going to support this artist who
Speaker 16: has been very public about her disputes over her rights
Speaker 16: and her ownership. Are you going to support her? Are
Speaker 16: you going to support you know, the investors who have
Speaker 16: bought this in different ways.
Speaker 2: Well, I will say my daughter, who's been a fan
Speaker 2: for a long time, she's but took that evil Scooter
Speaker 2: Braun Like it's like, what, how do you even know
Speaker 2: who Scooter Braun is? And it's just interesting how she
Speaker 2: has really, as you say, it's an ethical decision in
Speaker 2: terms of what music you choose to play.
Speaker 6: Has she written lyrics about Scooter.
Speaker 16: Bron There is speculation.
Speaker 6: History of Taylor going scorched earth on ex boyfriends, you know,
Speaker 6: like Jake jillen Hall once had a career and then
Speaker 6: became a victor. It's a great stuff of some songs,
Speaker 6: right like, so so there is this history. Has she
Speaker 6: gone there?
Speaker 16: There is definitely speculation that some of the songs she
Speaker 16: has written are about Scooter. I don't know that she
Speaker 16: has ever confirmed.
Speaker 13: Or to not.
Speaker 10: I don't know.
Speaker 6: I mean neither with Jake Jillenhall either.
Speaker 3: It's just it just googled that, Like I didn't know
Speaker 3: they dated.
Speaker 16: Okay, yeah, not Scooter.
Speaker 6: I don't know.
Speaker 3: I'm sorry, where have you been exactly?
Speaker 2: No, it is, but you know we've been kind of laughing,
Speaker 2: not laughing, but I feel like we talk about the
Speaker 2: financial markets and Taylor Swift comes up, like, it's just
Speaker 2: whether the economic impact. You know, we were all out
Speaker 2: of screen time on the West Coast and how many.
Speaker 4: Conversations people want to talk about with Taylor.
Speaker 2: Swift, like and Beyonce to be fair, one thing though
Speaker 2: that you know, in terms of what you did, like, she.
Speaker 4: Can do this? Can anybody else do this? And other
Speaker 4: artists have tried.
Speaker 16: Other artists have definitely tried. I'm sure we are all
Speaker 16: not familiar with Deaf Leopard's attempt to re record some
Speaker 16: of their songs over are you?
Speaker 3: I know?
Speaker 10: Check?
Speaker 16: Yeah, okay, Deaf Leopard had tried to do this. Prince
Speaker 16: has tried to do this. Other artists have tried to
Speaker 16: do this. But I would say it's interesting because Taylor's version, Yeah,
Speaker 16: they're not Taylor's version. And this is also uniquely a
Speaker 16: era of streaming. So in the past, you might have
Speaker 16: bought an album once you had it on vinyl or
Speaker 16: CD or tape, and that was your copy of the
Speaker 16: record and that's what you listen to. But now in streaming,
Speaker 16: you are constantly making a decision which one do I
Speaker 16: want to listen to, and that totally changes the economics.
Speaker 6: You know what else changes the economics being able to
Speaker 6: sell out stadiums for one thousand dollars a ticket, you.
Speaker 3: Know, take your family to a tailor, Swift, Yeah, okay,
Speaker 3: well you're taking him to a movie.
Speaker 6: I was able to buy three tickets for like thirty
Speaker 6: less than thirty bucks each, twenty bucks.
Speaker 3: Each instead of three thousand dollars.
Speaker 6: So let me do that math for you. And I
Speaker 6: was like, that'll be Friday at a movie theater. Is
Speaker 6: good enough for the Weber household. But the other thing
Speaker 6: that speaks to, though, is like, if you're an artist,
Speaker 6: now you do those live shows and that is where
Speaker 6: the money is, right. But for Taylor, it's like all
Speaker 6: of these other.
Speaker 10: Things are also where the money is.
Speaker 6: Because she's such a horse, right right. She is the
Speaker 6: other thing I love about Taylor, which is my last.
Speaker 2: Tangent Weather Weber and I love Taylor Swift.
Speaker 6: I'm forced to listen to a lot of but she
Speaker 6: turns her vulnerabilities into the magic that dreads your business
Speaker 6: that actually speaks to exactly what we're talking about. With
Speaker 6: the Taylor's version. It's like somebody tried to pull a
Speaker 6: fast one on her.
Speaker 16: It's a story and it's a story that all the
Speaker 16: fans can participate in. And that gets down to even
Speaker 16: the friendship bracelets that we've seen people wearing to her
Speaker 16: shows that came from a lyric that she wrote that
Speaker 16: fans read into and were like, oh, we should wear
Speaker 16: friendship bracelets and shows. They just it is a participatory experience.
Speaker 16: It's not just one of fan and then artists and
Speaker 16: then the fan consumption. It's actively we're looking for clues
Speaker 16: from her.
Speaker 4: You know, it's like the Chiefs, right, we didn't talk
Speaker 4: about that. I can't wait for the song, right?
Speaker 16: Sorry?
Speaker 3: Is there a chance the history Taylor Swift could buy
Speaker 3: back the catalog?
Speaker 16: I mean this point, she's committed so much time to
Speaker 16: the re recordings, but I you know, I don't.
Speaker 2: Know the early stuff, which if you listen to her, right,
Speaker 2: she's got a different tone certainly early on. So like
Speaker 2: you do wonder if at some point she wants to
Speaker 2: own that where her sound was a little different.
Speaker 4: I'm just gonna say, yeah.
Speaker 16: I mean she has, obviously, as we all have, aged
Speaker 16: and voice changes over that time. So as much as
Speaker 16: she is doing what she can to make them identical,
Speaker 16: of course, there's always going to be moments where you can.
Speaker 6: Tell is there any sense of like when the when
Speaker 6: the next releases will come out, or what the sequence
Speaker 6: is it always? Is it always chronological or.
Speaker 16: It is not chronological? So nineteen eighty nine is next,
Speaker 16: and then I believe there are yeah, two more after that,
Speaker 16: and I don't think she has shared what that order
Speaker 16: will be. I for this story did go deep on Reddit,
Speaker 16: and there are some fan theories about what the order
Speaker 16: is and why.
Speaker 17: But always theories though, right, yeah, or the like, there's
Speaker 17: always like all these things abound everything she does in
Speaker 17: terms of her releases, right or when it comes out
Speaker 17: or the date and time, like it's crazy.
Speaker 4: Yeah, I'm just gonna say.
Speaker 6: So, when are you gonna get When are you going
Speaker 6: to go to the theater?
Speaker 3: Carol, find me a babysitter. I'll go absolutely not mine.
Speaker 3: But yeah, I was gonna say thanks for the invites
Speaker 3: of the FIDA.
Speaker 6: Ever there three seats not together. I was like, Okay,
Speaker 6: are they really you couldn't get seats together? Mine's off
Speaker 6: in the corner.
Speaker 4: Yes, you know, we just talked about that.
Speaker 2: How she's on her way to becoming America's youngest self
Speaker 2: made female billionaire and one of the few. I'm reading
Speaker 2: from the story magnet millennials, who hasn't made her fortune
Speaker 2: from memestocks and cryptocurrency. But you do wonder, like what's
Speaker 2: her next step, like her power in terms of philanthropy,
Speaker 2: because she has such an incredible stage whatever she does.
Speaker 16: Yeah, I mean, it really does feel like anything she's
Speaker 16: going to put her weight behind.
Speaker 6: Not Crypto famously was like hard.
Speaker 3: Yes, right, she looks pretty good in hindsight.
Speaker 6: You know what you know?
Speaker 3: What is soz?
Speaker 4: She said, no, right, that's what.
Speaker 3: She produces so much music. She writes so much music she.
Speaker 4: Is tim hasn't heard, Yeah, but I meanidding.
Speaker 3: And she has so many collaborations with artists who I
Speaker 3: love too. I mean she's prolific. It's pretty amazing. Like
Speaker 3: her output is remarkable.
Speaker 16: Yeah, no, one hundred percent. And she tends to just
Speaker 16: drop these albums when you're least expecting them, and I
Speaker 16: think that also keeps the fans engaged. And she does
Speaker 16: elevate other voices as well, and has kind of you know,
Speaker 16: we talked about Travis Kelcey, a bit new her new
Speaker 16: man who also who is an NFL player, but.
Speaker 4: She came along to help him, right.
Speaker 16: Yes, But you know, you could just see the ripple
Speaker 16: effects from her presence on other people. She has been hanging.
Speaker 6: Like what the NFL got cool real quick, right.
Speaker 16: And she's been hanging out with Sophie Turner, who has
Speaker 16: her own marital things happening. But it's like she has
Speaker 16: been able to associate herself with the people she wants
Speaker 16: to and raise them up in a way that she wants.
Speaker 2: I do feel like, you know, right, she kind of
Speaker 2: relates in this kind of crazy way.
Speaker 6: Taylor Swiss World, you're just living.
Speaker 3: I'm okay with it.
Speaker 6: That's cool, really cool stuff.
Speaker 4: Ashley Carmen, thank you so much, really appreciate it.
Speaker 2: Covering podcasts, music industry creators at Bloomberg News and check
Speaker 2: this out. It's in the current issue of Bloomberg BusinessWeek.
Speaker 2: Our thanks to Joe Weber Tayka Fan.
Speaker 1: By the way, you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six Eastern
Speaker 1: Listen on Bloomberg dot com, the iHeartRadio app, and the
Speaker 1: Bloomberg Business app, or watch us live on YouTube.
Speaker 4: Let's get to this story.
Speaker 2: Medison Muller is a health reporter for Bloomberg News on
Speaker 2: the ozempic beach. He writes in the forthcoming issue of
Speaker 2: Bloomberg Business Week, which is on newstands tomorrow, and she
Speaker 2: talks about the success of ozepic and what it could
Speaker 2: mean in terms of some of the rivals story as
Speaker 2: we said on the terminal though, and also at Bloomberg
Speaker 2: dot com slash BusinessWeek here in our studio, Madison, So,
Speaker 2: I mean Blockbuster Drugs, tell us a little bit about
Speaker 2: the success.
Speaker 15: Yeah, I mean, it's amazing what these drugs can do.
Speaker 15: Helps with diabetes, helps with weight loss. Now we're learning
Speaker 15: that they might help with much more than that. I mean, obviously,
Speaker 15: we know that there are health conditions that are related
Speaker 15: to obesity and diabetes. Kidney disease can be caused by diabetes.
Speaker 15: You know, heart disease is obviously linked to obesity. But
Speaker 15: scientists and the companies that make these drugs think that
Speaker 15: there might be even more far reaching effects like Alzheimer's
Speaker 15: potentially even alcohol use disorder. Like it's sort of amazing
Speaker 15: and not so amazing for some of the other healthcare
Speaker 15: companies in this space though, that make treatments for these
Speaker 15: other health conditions.
Speaker 3: Okay, I want to get to that in just a second.
Speaker 3: But let's take a big step back here, because we're
Speaker 3: talking about medicines known as GLP one receptor agonists. I
Speaker 3: took that right from your story because.
Speaker 4: I find a book every time you talked about that.
Speaker 3: I have no idea what that means either. How do
Speaker 3: these things work?
Speaker 15: So GLP one is a gut hormone, and when scientists
Speaker 15: first discovered it back.
Speaker 9: In the eighties, they were like.
Speaker 15: Okay, cool in rats and in rodents that we see
Speaker 15: that this stimulates glucose and it can bring down insulin levels.
Speaker 15: But it wasn't for years, I mean really until like
Speaker 15: the last few decades that we figured out, Okay, this
Speaker 15: is a drug that can help with diabetes. Beyond that,
Speaker 15: this is a drug that can help with weight loss,
Speaker 15: Like this wasn't. I was talking to Daniel Drugger, who's
Speaker 15: one of the co discoverers of the GLP one hormone,
Speaker 15: and he was saying that, like forty years ago, we
Speaker 15: had no idea that any of this was possible. You know,
Speaker 15: we thought this was a pretty cool discovery, but like
Speaker 15: he was telling me, it was a really lonely time
Speaker 15: for those scientists because no one cared what they were doing,
Speaker 15: and now everyone cares what they're doing, and.
Speaker 2: Why is it so revolutionary, Like why is it just
Speaker 2: such a different yea of drugs? It seems well, I
Speaker 2: think the potential. Like I spent to Tim before you
Speaker 2: got in, I'm like, is this just going to solve
Speaker 2: everything that ails us?
Speaker 9: I think?
Speaker 15: I mean when it comes to weight loss, Like for
Speaker 15: years scientists tried to find something that was actually effective
Speaker 15: for weight loss, and like we've had drugs over the
Speaker 15: years for weight loss, I mean fen Fen people probably remember,
Speaker 15: which was ended up being not so good, horrible, yeah,
Speaker 15: and actually linked to heart problems. But there are other
Speaker 15: drugs that are on the market that are just not
Speaker 15: super effective. And this is the first time that we've
Speaker 15: really had something like this.
Speaker 2: So it has to get first of all, the drug
Speaker 2: approved for all these different uses, right, and that's something
Speaker 2: that the drug makers have to go through. Safe to say, though,
Speaker 2: one of the things too, when you look at a
Speaker 2: drug like this, it's expensive.
Speaker 4: Yeah, talk to us about that. Yeah, that's a hurdle.
Speaker 9: Yes, that's a hurdle.
Speaker 15: And that's sort of one of the things that could
Speaker 15: impede these this expansion into other usages because the drugs
Speaker 15: are over one thousand dollars a month, insurance is not
Speaker 15: covering them widely. Right now, that's something that's sort of
Speaker 15: still gearing up. Ensure is our kind of like, oh
Speaker 15: is this worth it?
Speaker 9: Is it worth us?
Speaker 6: You know?
Speaker 9: Is weight loss?
Speaker 15: They're still trying to decide if weight loss is actually
Speaker 15: like worth covering.
Speaker 9: Is it something that is it not?
Speaker 3: Because as you said at the top of our segment, Madison,
Speaker 3: I mean over like, obesity contributes to so many ailments
Speaker 3: in this country.
Speaker 15: Right and so I think that, I mean that's part
Speaker 15: of this too, is the drug makers they think want
Speaker 15: to prove that it that treating weight loss helps with
Speaker 15: all of these other things.
Speaker 2: So much hinges off of that, like how many times
Speaker 2: did you go to your doctor?
Speaker 4: Are you right?
Speaker 2: You think about just healthcare talk in general, like if
Speaker 2: you can lose weight, that it usually leads to a
Speaker 2: better health outcome for you.
Speaker 3: But what if and Carolyn and I were talking about
Speaker 3: this before the break, before you got in here, actually
Speaker 3: does it lead to habit changes? Like let's say, you know,
Speaker 3: we've a big part of the conversation has been when
Speaker 3: it comes to the weight loss side of this has
Speaker 3: been what's happened to companies that have come out and
Speaker 3: said we're concerned that people will eat less. Fast food companies,
Speaker 3: snack makers. We've seen share slide if snack makers as
Speaker 3: a result of this. I mean, are people going to
Speaker 3: immediately start eating like plant based veggie meals if they
Speaker 3: start taking ozepic. No, they're not going to.
Speaker 6: So do we know?
Speaker 3: Yes, they might lose weight, but if they're not making
Speaker 3: those those healthy habit changes, are we still going to
Speaker 3: see the long term benefits from not being obese?
Speaker 9: Yeah? I mean that's a good question. Like that was
Speaker 9: I was just telling you both.
Speaker 15: I was just at you know, the annual Obesity Week
Speaker 15: conference in Dallas with all of the top obesity experts
Speaker 15: you know, Eli, Lilly, Novo, Nordisk, they were there, and
Speaker 15: that was a question that was being asked, is sort
Speaker 15: of like, we have these drugs, they work really well,
Speaker 15: what do we know about long term you know, weight management,
Speaker 15: healthy lifestyle changes, Like there's sort of still this question
Speaker 15: mark of what comes next and whether people are going
Speaker 15: to need to do different exercises to sort of preserve
Speaker 15: their lean muscle mass after they're losing so much weight
Speaker 15: or if there are different diets that should be used
Speaker 15: in conjunction with these drugs to you know, help improve
Speaker 15: nutrition things like that. Like those are questions scientists are
Speaker 15: asking right now and trying to figure out.
Speaker 4: And long term effect.
Speaker 2: If it's if you have to take the drug forever, yeah,
Speaker 2: to keep the weight off, right.
Speaker 4: Like we don't do we don't.
Speaker 2: We don't really know the long long, long term effects,
Speaker 2: do we, Right?
Speaker 15: Yeah, I mean these drugs have been used for twenty
Speaker 15: years in diabetes, and so we do know that they're safe.
Speaker 15: But the problem is that with the shortage is happening
Speaker 15: right now, like people are just going on and off
Speaker 15: the drugs all the time, and it's it's not good.
Speaker 3: I mean, why if these drugs have been used for
Speaker 3: twenty years for diabetes, why are they just catching the
Speaker 3: moment of weight loss?
Speaker 15: Yeah, I mean they've scientists have kind of known that
Speaker 15: there was this weight loss effect, but it's really only
Speaker 15: sort of taken off and like entered the public consciousness
Speaker 15: I think recently.
Speaker 9: Like it's crazy. So it's it's pretty amazing.
Speaker 15: And obviously with the success of wigov, which is Nova
Speaker 15: Nordisk's you know, higher dose ozempic that's used for weight loss. Specifically,
Speaker 15: all of all of the drug makers, biotech companies are
Speaker 15: now trying to sort of like get a slice of this.
Speaker 3: Uh ten seconds. Are they going to make a pill
Speaker 3: version of this?
Speaker 9: Yes, that's what they're trying to do right now.
Speaker 4: Unbelievable.
Speaker 2: But you think about all the clinical trials Alzheimer's sleep apnea.
Speaker 9: Like it's like I said, this is alcohol use disorder.
Speaker 4: I mean, is this the drug that just cures it
Speaker 4: all for us?
Speaker 9: We will see, all right.
Speaker 4: Come back soon. That's an incredible story.
Speaker 2: Madison Mueller something we talk about all the time, but
Speaker 2: you really kind of put it all together if.
Speaker 3: We told you she's on the ozempic Bee.
Speaker 2: She's health reporter for Bloomberg News on the ozempic Beat.
Speaker 1: This is the Bloomberg Business Week podcast of a Little Apple,
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