WEBVTT - More Big Tech Results from Amazon, Snap 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.880 --> 0:00:21.479 I have to say on our planning call, when I 0:00:21.480 --> 0:00:23.520 heard that Bradstone was going to join us on Amazon, 0:00:23.560 --> 0:00:25.720 I was like, Okay, that's all I need, so let's 0:00:25.720 --> 0:00:28.240 get to it. Brad, as you know, he is Bloomberg 0:00:28.280 --> 0:00:31.360 New Senior Executive Editor of Global Technologies, the author of 0:00:31.400 --> 0:00:34.479 two books on Amazon, Jeff Bezos and The Innovation of 0:00:34.479 --> 0:00:37.440 a Global Empire, and of course The Everything Store. Brad 0:00:37.479 --> 0:00:39.760 is there on zoom in San Francisco. Brad, thank you 0:00:39.800 --> 0:00:41.440 so much. Luck going on, and I know you and 0:00:41.479 --> 0:00:45.160 your team have been busy this week Amazon. Where should 0:00:45.200 --> 0:00:46.839 we start? What do you think is the most important 0:00:47.200 --> 0:00:48.880 in this release so far? Yeah? 0:00:49.080 --> 0:00:52.159 I think the question that was lingering over the company 0:00:52.520 --> 0:00:56.160 was whether it had slimmed itself down enough to boost profits, 0:00:56.200 --> 0:00:59.360 whether with all the lafts nearly three thousand this year alone, 0:00:59.560 --> 0:01:02.200 it made any progress and its effort to cut costs 0:01:02.200 --> 0:01:05.800 and match this new era of slowing post pandemic growth 0:01:06.040 --> 0:01:08.240 and Carol, you can see from a twelve percent after 0:01:08.520 --> 0:01:11.240 market boost right now, investors are happy with what they're 0:01:11.240 --> 0:01:15.360 seeing on operating income, net income and the durability of AWS. 0:01:16.080 --> 0:01:19.840 Do you see the good results today feeding through for 0:01:20.080 --> 0:01:22.640 Amazon through the end of the year, particularly as you 0:01:22.680 --> 0:01:26.560 mentioned on the piece about cutting costs through cutting back 0:01:26.600 --> 0:01:29.959 on the workforce. How does Amazon sustain that growth this year? 0:01:30.840 --> 0:01:33.600 Yeah, I mean we don't know. I mean Amazon's performance 0:01:33.680 --> 0:01:37.319 is so tethered to the macroeconomic climate, and obviously with 0:01:37.360 --> 0:01:40.320 the growth report today, I mean, there are big questions 0:01:40.319 --> 0:01:42.640 about the health of the economy. I think you know 0:01:42.680 --> 0:01:46.440 what we're seeing with Jase's comments about machine learning making 0:01:46.440 --> 0:01:50.080 the AD business better and how the AWS business, they're 0:01:50.160 --> 0:01:53.480 really pitching it as a way to do AI deeper 0:01:53.480 --> 0:01:56.400 and more efficiently. You know, they're trying to set this 0:01:56.480 --> 0:01:58.480 company up not just for the next year, but for 0:01:58.600 --> 0:02:01.320 kind of this next era Silicon Valley and say like 0:02:01.360 --> 0:02:04.320 this is the smart play whatever happens to the economy, 0:02:04.560 --> 0:02:06.360 this is the long term smart play on AI. 0:02:06.760 --> 0:02:08.720 I mean, and the thing that we're highlighting on the 0:02:08.760 --> 0:02:11.320 Bloomberg brad you know, they're talking about that second quarter 0:02:11.320 --> 0:02:13.680 net sales one hundred and twenty seven two hundred and 0:02:13.680 --> 0:02:15.800 thirty three billion. The estimate out there is one thirty. 0:02:15.840 --> 0:02:19.080 I mean it's a sizeable, you know range there, but 0:02:19.160 --> 0:02:21.840 it's upbeat, And so you do wonder about what they 0:02:21.880 --> 0:02:24.120 are seeing about the outlook that gives them at least 0:02:24.320 --> 0:02:26.320 comfort in putting this out here, or how do you 0:02:26.360 --> 0:02:28.000 see it when they put out a forecast like that. 0:02:28.320 --> 0:02:31.560 I mean, they always leave their forecasts large enough to 0:02:31.639 --> 0:02:34.480 drive an Amazon delivery truck through, you know, so I 0:02:34.520 --> 0:02:37.120 don't ever put put that much stock in it. But look, 0:02:37.200 --> 0:02:39.480 I mean, this is like a beat across the board. 0:02:40.000 --> 0:02:43.520 Even a physical store sales were a beat online store 0:02:43.560 --> 0:02:46.000 sales or a beat, you know. So I think that 0:02:46.160 --> 0:02:48.320 you know they're they're seeing not just to kind of 0:02:48.320 --> 0:02:50.560 recover from the top line, but all the things they 0:02:50.560 --> 0:02:54.440 have been working on for so many years, shorter delivery times, 0:02:54.440 --> 0:02:57.080 more fulfillment centers closer to customers, that these things are 0:02:57.120 --> 0:03:00.800 finally beginning to make a difference for customers and are 0:03:00.800 --> 0:03:04.640 a little bit more of a differentiator for Amazon fast 0:03:04.720 --> 0:03:07.240 oncoming competitors like Walmart, dot Com, et cetera. 0:03:07.760 --> 0:03:09.880 Talk to me about the AI piece we have in here. 0:03:10.440 --> 0:03:13.960 Some I see six on the word count for AI here. 0:03:15.320 --> 0:03:17.600 Does that feel like enough to you? Does it feel 0:03:17.639 --> 0:03:20.040 like they're leaning into AI in this earnings report? 0:03:20.560 --> 0:03:23.400 I mean every company is right now, and I expect 0:03:23.400 --> 0:03:25.600 it on the media call at the bottom of the 0:03:25.639 --> 0:03:27.560 hour and the analyst call at the top of the hour. 0:03:27.680 --> 0:03:30.600 It's going to be you know, I AI like all 0:03:30.680 --> 0:03:33.320 these calls this week. But I mean the one explicit 0:03:33.440 --> 0:03:37.160 thing that they don't have is a consumer facing you know, 0:03:37.840 --> 0:03:42.640 arge language model that BOT help customers. You know, Alexa 0:03:42.720 --> 0:03:45.560 with a version of that, but it's a little generation old. 0:03:45.840 --> 0:03:50.000 And so they're pitching these these services to developers, like 0:03:50.160 --> 0:03:53.520 one is called Bedrock, where you know, you can come 0:03:53.560 --> 0:03:56.120 and like tailor your own So they're really seeing it 0:03:56.160 --> 0:03:58.880 as a part right now at least of AWS and 0:03:58.920 --> 0:04:02.680 making their business and their AWS customers business more efficient. 0:04:02.960 --> 0:04:04.760 You know, we'll see how much of that is like 0:04:04.840 --> 0:04:07.400 AI washing and how much is a real difference for 0:04:07.440 --> 0:04:09.560 competitors for their customers. 0:04:09.680 --> 0:04:11.320 I am blown away by the numbers, and I'm going 0:04:11.360 --> 0:04:13.520 to go back to physical stores. I mean, I guess, 0:04:13.600 --> 0:04:15.280 you know, because we all think about Amazon, we disorder 0:04:15.280 --> 0:04:17.719 and it just shows up, you know, miraculously on a doorstep. 0:04:18.160 --> 0:04:21.719 Four point now almost five billion dollars in sales. I mean, 0:04:21.960 --> 0:04:24.440 is this something that they continue to invest in and 0:04:24.480 --> 0:04:26.839 build out or is it just again very cautiously, but 0:04:27.120 --> 0:04:28.039 that's some real money. 0:04:28.720 --> 0:04:31.160 I mean, if anything, Carol, it's the reverse. I mean, 0:04:31.200 --> 0:04:33.480 they've closed all the physical stores. So the number you're 0:04:33.520 --> 0:04:36.719 seeing here is whole foods, I mean, by and large, 0:04:36.800 --> 0:04:39.839 so you know they've been they've been cutting that business 0:04:39.839 --> 0:04:42.320 a little bit. They've closed some stores. I think I 0:04:42.320 --> 0:04:45.000 think that number shows like maybe some stability, like the 0:04:45.440 --> 0:04:49.000 bookstores they've closed, the four Star stores. Amazon Go has 0:04:49.040 --> 0:04:51.480 been whittled down to like a shadow of its former self, 0:04:51.600 --> 0:04:55.200 so you know they're done cutting, and perhaps that's reflective 0:04:55.240 --> 0:04:57.839 of maybe an overall sort of revival in just the 0:04:57.880 --> 0:04:58.960 supermarket category. 0:04:59.600 --> 0:05:01.960 Is there a anything else that you think Amazon needs 0:05:02.000 --> 0:05:04.560 to do this year to control costs? Or does this 0:05:04.880 --> 0:05:08.719 earnings outlook read to you as a company that can 0:05:08.880 --> 0:05:11.200 happily continue to pour money back into itself. 0:05:11.680 --> 0:05:14.120 I mean, we're you know, we're right in the middle 0:05:14.160 --> 0:05:16.600 of the layoffs. I think this week was when they 0:05:16.640 --> 0:05:20.800 started the aw A AWS layoffs, and the head of 0:05:20.800 --> 0:05:23.640 AWS described it as one of the worst days for 0:05:24.000 --> 0:05:26.880 the company. So I think they've probably announced most of 0:05:26.960 --> 0:05:30.320 the cost cutting they're going to do. It's ongoing, it'll 0:05:30.360 --> 0:05:32.720 it'll take place throughout the quarter, and at this at 0:05:32.720 --> 0:05:35.039 this point, you know, and also yesterday, by the way, 0:05:35.200 --> 0:05:38.120 they canceled another product, the Halo wristband, so one of 0:05:38.120 --> 0:05:41.520 their health initiatives. So I think at this point, most 0:05:41.520 --> 0:05:44.240 of the blood's probably on the floor. And you're right 0:05:44.320 --> 0:05:46.279 that from from here on out it's going to be 0:05:46.320 --> 0:05:49.240 a you know, maybe a more careful and curated set 0:05:49.240 --> 0:05:49.960 of bets, you. 0:05:49.880 --> 0:05:51.880 Know, or Ed Ludlow pointing out, and this caught my 0:05:52.200 --> 0:05:53.800 uh caught me too when I was reading through the 0:05:53.800 --> 0:05:58.520 press release. In terms of advertising, their advertising services business 0:05:58.760 --> 0:06:01.920 sales coming in at twenty three percent year over year, 0:06:02.000 --> 0:06:04.560 a thirty five and a half percent help performance relative 0:06:04.600 --> 0:06:08.600 to consensus. You know, we keep worried about anything AD related, 0:06:08.640 --> 0:06:11.560 AD connected. What is it that they are doing just 0:06:11.640 --> 0:06:14.200 so writers it just because they are so huge, there's 0:06:14.279 --> 0:06:17.320 such a big part of everybody's world, and they reach 0:06:17.560 --> 0:06:20.520 so many individuals, if you will, that that makes sense 0:06:20.520 --> 0:06:22.040 that they're really outperforming there. 0:06:22.880 --> 0:06:25.920 Well, what they have said and what they want us 0:06:25.920 --> 0:06:29.479 to believe is that their investments in machine learning help 0:06:29.680 --> 0:06:33.440 match better matchup ads with customers when they're searching in 0:06:33.480 --> 0:06:36.880 the Amazon search box. You know, my view as an 0:06:36.880 --> 0:06:40.599 Amazon customer is that they're simply just flooding the zone. 0:06:40.800 --> 0:06:43.520 I just think that they have thrown open the search 0:06:43.560 --> 0:06:47.920 results to you know, to paid results to the highest bidder. 0:06:48.279 --> 0:06:50.520 And maybe there's a little machine learning there, but it's 0:06:50.520 --> 0:06:54.960 the increasing willingness in the post Jeff Bezos era to 0:06:55.080 --> 0:06:58.239 really self search to the highest bidder that is mainly 0:06:58.400 --> 0:06:59.880 powering that line. 0:07:00.520 --> 0:07:04.320 Brad fast forward for me, which is a bummer for us, then, yes, 0:07:04.800 --> 0:07:07.600 but anyway, but good for them, sorry, Maddie, No, no, no, no, no, it's. 0:07:07.600 --> 0:07:10.440 It's an excellent point, Brad, fast forward to me for 0:07:10.560 --> 0:07:12.840 me to the end of this earning season. Here when 0:07:12.840 --> 0:07:15.800 we look at these Amazon earnings, is this going to 0:07:15.840 --> 0:07:20.000 be the quote unquote bell weather for big tech fueling 0:07:20.360 --> 0:07:23.520 continued gains in the S and P, you know, as 0:07:23.520 --> 0:07:24.880 we wrap up this earning season. 0:07:25.720 --> 0:07:28.760 I think it's consistent, Maddie, with what we've seen from Meta, 0:07:28.840 --> 0:07:31.120 with what we've seen from ALPHAVT. Maybe I haven't been 0:07:31.120 --> 0:07:34.280 paying attention. I'm curious about Snap earnings today. But you 0:07:34.320 --> 0:07:37.160 know that we've been through a brutal period of you know, 0:07:37.240 --> 0:07:40.679 regression in big tech stocks and a lot of cost cutting, 0:07:40.840 --> 0:07:45.800 high unemployment now in Silicon Valley, or at least increasing unemployment, 0:07:46.160 --> 0:07:49.320 and you know, a readjustment. Then maybe this this quarter 0:07:49.400 --> 0:07:51.880 is going to mark kind of the turning point here 0:07:51.960 --> 0:07:54.120 where where as I said, you know, most of the 0:07:54.160 --> 0:07:56.800 pain has been endured, and these companies now with their 0:07:56.840 --> 0:08:00.160 big bets on AI, are beginning to rekindle some They 0:08:00.160 --> 0:08:00.960 were a momentum. 0:08:01.000 --> 0:08:04.080 Brad, you mentioned Snap down twenty two percent in the aftermarket, 0:08:04.240 --> 0:08:07.400 reported its first ever decline in quarterly revenue after making 0:08:07.400 --> 0:08:10.960 some major changes to its advertising tools. So quarter first 0:08:11.000 --> 0:08:14.120 quarter revenue fell seven percent to nine eighty eight point 0:08:14.120 --> 0:08:16.559 six million, So it missed the average at analyst estimate 0:08:16.560 --> 0:08:19.840 of about a billion. So yeah, not not good at all. 0:08:19.800 --> 0:08:22.400 Very different, perhaps not consistent with the overall team. 0:08:22.480 --> 0:08:25.040 Then it makes me wonder what Snap and Pinterest are 0:08:25.040 --> 0:08:28.400 doing differently because they did not perform well, but Amazon, 0:08:28.480 --> 0:08:32.080 Microsoft Meta all performed great about twenty second spread Any 0:08:32.080 --> 0:08:34.400 thoughts on that, Well, it's. 0:08:34.240 --> 0:08:38.880 A good question. There might it's probably the lack of 0:08:38.960 --> 0:08:42.560 kind of topline user growth, I mean meta at Facebook 0:08:42.559 --> 0:08:45.720 and Instagram added user. Snap has struggled with that and 0:08:47.559 --> 0:08:49.960 you know, perhaps a little less global exposure than some 0:08:50.000 --> 0:08:50.800 of their competitors. 0:08:50.880 --> 0:08:52.920 Yeah, Snap had three hundred and eighty three million users 0:08:53.000 --> 0:08:56.280 daily in the first quarter, in line with analyst estimates. Bradstone, 0:08:56.360 --> 0:08:58.320 your gem I know you're busy, I know your team is. 0:08:58.360 --> 0:09:01.440 We love it when you can join us. Bradstone there 0:09:01.720 --> 0:09:04.840 in San Francisco or San Francisco bureau, joining us via Zoom. 0:09:05.120 --> 0:09:07.120 Jeff Bezos and the Invention of a Global Empire and 0:09:07.120 --> 0:09:09.800 the Everything stort. He knows so much about this company. 0:09:09.960 --> 0:09:12.400 Those are two books he's written. Check it out Amazon's 0:09:12.400 --> 0:09:13.200 app nine percent. 0:09:13.440 --> 0:09:17.000 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:17.000 --> 0:09:20.360 live weekday afternoons from three to six Eastern Listen on 0:09:20.440 --> 0:09:24.480 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:09:24.760 --> 0:09:27.040 or watch us live on YouTube. 0:09:28.360 --> 0:09:31.480 He did also mentioned Snap, which is getting hammered. It's 0:09:31.720 --> 0:09:34.000 off its lows in the aftermarket, but still down about 0:09:34.040 --> 0:09:37.959 nineteen percent. Let's get to it because some disappointments, certainly, 0:09:38.040 --> 0:09:41.280 as you can see by the share trade here. Let's 0:09:41.280 --> 0:09:43.640 get to it with Bloomberg News Technology Report to Alex Birinka. 0:09:43.920 --> 0:09:48.080 She's on zoom in our La bureau covers his space. Alex, 0:09:48.160 --> 0:09:49.920 A lot of disappointment. Want to walk us through the 0:09:50.000 --> 0:09:52.480 quarter and why investors are so disappointed here? 0:09:53.240 --> 0:09:56.240 Definitely a lot of disappointment, and I think that disappointment 0:09:56.280 --> 0:10:00.000 really is kind of floating around this top line revenue 0:10:00.080 --> 0:10:02.760 line for the first time ever for this company that's 0:10:02.760 --> 0:10:05.400 always been seen kind of as a growth company. And 0:10:05.600 --> 0:10:08.000 you know, there's a little bit of surprise here too, 0:10:08.200 --> 0:10:11.160 because even though the company had guided for a revenue decrease, 0:10:11.800 --> 0:10:15.120 they guided for a decrease in the first quarter. The 0:10:15.559 --> 0:10:19.080 forecastle're giving for the second quarter is another consecutive quarter 0:10:19.200 --> 0:10:22.760 of sales declines. Some of this is self inflicted too. 0:10:22.960 --> 0:10:26.000 Snap told us three months ago that they're making a 0:10:26.000 --> 0:10:29.320 lot of changes to their advertising tools and that would 0:10:29.400 --> 0:10:32.600 impact revenue for the quarter. They didn't say that it 0:10:32.640 --> 0:10:34.080 was going to kind of drag on for a while, 0:10:34.080 --> 0:10:37.480 which seems like is what's happening here, And when you 0:10:37.520 --> 0:10:41.640 kind of dig into layers deeper on the results I'm 0:10:41.679 --> 0:10:45.080 seeing here, another really important number for investors is users. 0:10:45.440 --> 0:10:48.040 User growth came in right an analyss essment, so there's 0:10:48.040 --> 0:10:51.040 no kind of upside to offset that downside that you're 0:10:51.040 --> 0:10:52.160 seeing on the top line. 0:10:52.440 --> 0:10:55.760 Talk to us about the ad space and specifically Snap 0:10:55.840 --> 0:10:58.720 kind of tweaking the design of its direct response ads. 0:10:58.760 --> 0:11:02.360 You mentioned the impact of that. To what extent are 0:11:02.400 --> 0:11:07.280 these earnings and the market reaction about the ad space 0:11:07.320 --> 0:11:08.560 in particular for Snap. 0:11:09.520 --> 0:11:12.719 For Snap, it's all about that ad space. They are 0:11:12.800 --> 0:11:15.120 a smaller player in the ad world. They have much 0:11:15.200 --> 0:11:18.160 less share than say Alphabet or Meta, but the vast 0:11:18.200 --> 0:11:21.960 majority of their dollars come from advertising revenue, and historically 0:11:22.040 --> 0:11:25.640 Snap has been stronger in something called brand advertising, which 0:11:25.679 --> 0:11:28.000 is kind of telling the big picture story of your brand, 0:11:28.000 --> 0:11:30.600 and less on what you mentioned, which is direct response ads, 0:11:30.800 --> 0:11:32.840 those ads where you see something, you click on it, 0:11:32.840 --> 0:11:35.760 and you buy it right there. In the current economic environment, 0:11:35.880 --> 0:11:39.319 marketers are really preferring those direct response ads because they 0:11:39.320 --> 0:11:42.400 can directly tie return on investment. They can prove out 0:11:42.480 --> 0:11:45.920 saying somebody clicked on this dress video and bought this 0:11:46.040 --> 0:11:48.720 dress versus you know, someone likes the brands better because 0:11:48.760 --> 0:11:51.760 of the brand advertisement. So to have Snap kind of 0:11:51.800 --> 0:11:54.760 playing around with those direct response ads, a lot of 0:11:54.760 --> 0:11:56.920 marketers have backed away, and it's clear that they're not 0:11:56.960 --> 0:11:59.719 spending on the platform now. The company will say they 0:11:59.800 --> 0:12:02.640 have to make these changes, this will improve their business 0:12:02.679 --> 0:12:05.640 in the long run. But it does seem like there 0:12:05.720 --> 0:12:08.200 is quite a bit at least twenty percent downward pressure 0:12:08.240 --> 0:12:11.320 on the stock of Impatients from investors in terms of 0:12:11.360 --> 0:12:12.640 the story that they're telling today. 0:12:12.760 --> 0:12:15.240 All right, So, as you note in your story, and 0:12:15.280 --> 0:12:17.400 I'm looking at this was a stock that back in 0:12:17.440 --> 0:12:20.000 September of twenty twenty one was above eighty three dollars 0:12:20.040 --> 0:12:22.600 a share. We're now just under eleven dollars. Okay, so 0:12:22.960 --> 0:12:27.560 a very different world and certainly in terms of market value. 0:12:27.760 --> 0:12:29.760 You write a new story, though, Alex. You talk about 0:12:29.760 --> 0:12:33.480 how they have also been looking for new streams of revenue, 0:12:33.960 --> 0:12:37.240 and there's things about you know, trying and close virtually 0:12:38.280 --> 0:12:42.280 and other things. Is this something that could ultimately move 0:12:42.360 --> 0:12:45.679 that revenue needle and be a big driver of growth 0:12:45.720 --> 0:12:46.360 going forward? 0:12:47.120 --> 0:12:50.280 It potentially could. I actually chatted to Snap CEO about 0:12:50.280 --> 0:12:54.240 a year a week ago, talking at his product conference, 0:12:54.920 --> 0:12:57.720 you know, saying, hey, Snap looks like a very different company. 0:12:57.720 --> 0:12:57.880 Now. 0:12:57.920 --> 0:13:01.040 They're doing things like selling subscription, and they're doing things 0:13:01.080 --> 0:13:04.800 like selling software to businesses. It's a really interesting moment 0:13:04.840 --> 0:13:06.800 for them. So there's potential there. But these things are 0:13:06.880 --> 0:13:09.319 so early days that they're not upsetting the losses they're 0:13:09.320 --> 0:13:10.439 seeing from the ad business. 0:13:11.480 --> 0:13:14.560 I want to talk about the Meta piece because they 0:13:14.600 --> 0:13:16.640 had a big win yesterday, and they also had a 0:13:16.640 --> 0:13:19.559 big win when it came to their ads and their 0:13:19.600 --> 0:13:22.040 AD revenue, which was critical to watch as it was 0:13:22.080 --> 0:13:25.520 with Snap today. Does the win for Meta yesterday make 0:13:25.840 --> 0:13:30.640 the results today from Snap even worse for investors? 0:13:30.640 --> 0:13:32.960 Sort of? So Meta story is a little bit different 0:13:32.960 --> 0:13:35.440 because of how big they are. They have certainly been 0:13:35.559 --> 0:13:40.040 challenged by kind of the general dismalness of the ad business, 0:13:40.040 --> 0:13:42.760 by marketers pulling back spending, But their business is so 0:13:42.920 --> 0:13:45.720 much bigger, and Snap is so much more of a 0:13:45.840 --> 0:13:49.720 kind of real true growth company that that's all Snap 0:13:49.840 --> 0:13:52.160 kind of has the ability to rely on. Snap has 0:13:52.200 --> 0:13:54.440 also cut costs, They've done a lot of the things 0:13:54.480 --> 0:13:57.640 we've seen from the bigger players. But because folks really 0:13:57.760 --> 0:14:00.120 kind of bet on them for that kind of all 0:14:00.160 --> 0:14:03.760 in growth one hundred percent quarter over quarter in past years, 0:14:04.120 --> 0:14:06.360 to see that number fall makes it a little bit 0:14:06.440 --> 0:14:09.079 challenging With Meta, you know, the big question for them 0:14:09.160 --> 0:14:11.920 has been Okay, you have this big core ad business, 0:14:12.080 --> 0:14:14.079 are you spending enough time there to make sure it's 0:14:14.080 --> 0:14:17.079 still going well in this challenge ad environment? And also 0:14:17.160 --> 0:14:19.720 what else are you spending on? This whole metaverse thing 0:14:19.800 --> 0:14:22.400 is not something that we will realize in the next 0:14:22.440 --> 0:14:25.160 decade or so, And are those dollars actually going to 0:14:25.200 --> 0:14:27.120 things that are going to increase the value of the business. 0:14:27.160 --> 0:14:30.680 So kind of similar kind of wins affecting both of 0:14:30.720 --> 0:14:33.080 those companies, But I think they're just kind of size 0:14:33.480 --> 0:14:35.800 and status in the ad market makes it a little 0:14:35.840 --> 0:14:36.960 bit of a different tale. 0:14:37.160 --> 0:14:39.600 Well, you know, alex, I always think about, you know, 0:14:39.880 --> 0:14:42.960 more broadly, what's going on in social media and just 0:14:43.280 --> 0:14:46.400 all the things, whether it's apps, whether it's streaming services, 0:14:46.440 --> 0:14:49.760 everything competing for our attention. At some point there's got 0:14:49.800 --> 0:14:51.280 to be a little bit of a bust I think 0:14:51.320 --> 0:14:54.640 of this. I caught up with Alexis Ohanian this week, right, 0:14:54.720 --> 0:14:57.360 the co founder of Reddit, you know, and he too said, 0:14:57.400 --> 0:15:00.640 you know, social media, you know, culturally made be going 0:15:00.720 --> 0:15:02.880 to go through a rethink, if you will, how do 0:15:02.960 --> 0:15:05.600 you look at it? And so is it a case 0:15:05.640 --> 0:15:07.200 of some of the smaller guys are going to fall 0:15:07.240 --> 0:15:09.720 to the wayside, or I don't know, how do you 0:15:09.760 --> 0:15:12.720 think of a big picture and then how do investors 0:15:12.760 --> 0:15:14.560 need to think about it? Maybe for some shifts that 0:15:14.640 --> 0:15:15.760 might be to come. 0:15:16.640 --> 0:15:19.200 It's a really interesting moment, and I'll actually use metas 0:15:19.200 --> 0:15:22.160 Earnings to kind of illustrate this. For you know, as 0:15:22.160 --> 0:15:24.640 long as we've had social it's really been about who 0:15:24.680 --> 0:15:27.880 follows you and kind of developing that following and choosing 0:15:27.880 --> 0:15:30.560 the people you follow. When TikTok kind of smashed on 0:15:30.600 --> 0:15:32.680 the scene, they changed the game. They made it about 0:15:32.920 --> 0:15:35.920 what content is best and what content's going to resonate 0:15:36.240 --> 0:15:39.400 with the user's interests instead of with the people that 0:15:39.400 --> 0:15:44.000 that user will follow. Meta YouTube they've all copied kind 0:15:44.040 --> 0:15:47.280 of that TikTok idea, where now your feed is full 0:15:47.360 --> 0:15:49.400 of things they think you might be interested in that's 0:15:49.400 --> 0:15:52.880 selected for you by an algorithm less so your friends 0:15:52.960 --> 0:15:55.920 and family, and so Meta and alphabet have been trying 0:15:55.960 --> 0:15:58.880 to kind of figure out how to match ads with 0:15:58.960 --> 0:16:02.000 those interest groups on this new kind of world where 0:16:02.040 --> 0:16:04.520 a snap has taken a little bit of a different approach. 0:16:04.920 --> 0:16:07.680 They have always had kind of the core feature of 0:16:07.760 --> 0:16:11.040 Snapchat being person to person communication, that kind. 0:16:10.840 --> 0:16:11.800 Of closed loop. 0:16:11.920 --> 0:16:14.480 But I will say it's really interesting. In the last 0:16:14.520 --> 0:16:16.760 few weeks here, Snap has announced that more people can 0:16:16.760 --> 0:16:20.600 now post content publicly, so you're seeing some kind of changes, 0:16:20.640 --> 0:16:22.760 And I think there's this really interesting tension right now 0:16:22.800 --> 0:16:25.920 between folks wanting to stay connected with friends and family 0:16:26.000 --> 0:16:28.200 and a lot of the platforms starting to move away 0:16:28.240 --> 0:16:30.600 from that in favor of showing you things that are 0:16:30.640 --> 0:16:34.320 maybe more entertaining, maybe more in the taking screen time 0:16:34.360 --> 0:16:36.760 from the Netflixes and Hulas of the world. But it's 0:16:36.840 --> 0:16:39.400 less about you know, your your aunts in Texas or 0:16:39.400 --> 0:16:40.840 your friend who's living in New York City. 0:16:40.960 --> 0:16:43.640 Yeah that's really funny. Yeah, no, it's so true, and 0:16:43.760 --> 0:16:45.240 spending a little bit like for the first time, I'm 0:16:45.240 --> 0:16:47.240 finally like checking out TikTok. I know I'm a little 0:16:47.240 --> 0:16:49.120 bit slow to the game, but kind of playing around 0:16:49.160 --> 0:16:51.760 with that more than like sitting down for hours, you know, 0:16:52.320 --> 0:16:53.520 binging on a series. 0:16:53.720 --> 0:16:55.880 Yeah no, I do it sometimes when I don't have 0:16:55.880 --> 0:16:58.320 the energy to pick a show. Alex, I want to 0:16:58.440 --> 0:17:01.080 end on your story about big tech being obsessed with 0:17:01.120 --> 0:17:04.080 cost cutting, except for when it comes to AI, tell 0:17:04.080 --> 0:17:05.000 me what's going on there? 0:17:05.600 --> 0:17:05.879 Yeah. 0:17:06.040 --> 0:17:08.000 I kind of made the argument in our newsletter today 0:17:08.000 --> 0:17:10.439 that AAI is coming for your jobs, just not the 0:17:10.440 --> 0:17:14.720 way you thought. Meta, Alphabet, Microsoft, They've all come out 0:17:14.800 --> 0:17:16.119 kind of promising. 0:17:15.640 --> 0:17:17.639 These big cost cuts while. 0:17:17.440 --> 0:17:20.880 Also kind of emphatically reminding investors that they're spending tons 0:17:20.920 --> 0:17:23.800 of money on AI. So where is that money coming from? 0:17:24.320 --> 0:17:26.919 You can look back to the forty thousand positions that 0:17:26.960 --> 0:17:30.239 they've eliminated over the past few months to kind of 0:17:30.400 --> 0:17:34.600 keep those savings and reinvest those funds into artificial intelligence. 0:17:34.640 --> 0:17:37.199 So in this kind of big AI arms race that 0:17:37.240 --> 0:17:39.959 we're in right now, a lot of that's being interestingly 0:17:40.000 --> 0:17:42.879 funded by big tech from the dollars that are not 0:17:42.960 --> 0:17:45.439 going to headcount, that are not going to offices, that 0:17:45.480 --> 0:17:47.399 are only going to kind of the products that are 0:17:47.400 --> 0:17:51.000 getting folks really excited and leaving a lot of former 0:17:51.040 --> 0:17:52.640 employees kind of out to drive. 0:17:53.440 --> 0:17:57.320 Good to be a programmer right now? Really, you know, hey, 0:17:57.720 --> 0:18:00.520 really quickly fifteen seconds, what would you ask Snap on 0:18:00.560 --> 0:18:01.280 the earnings call? 0:18:02.240 --> 0:18:04.439 I want to know at what point revenue turns around 0:18:04.520 --> 0:18:06.840 the changes that they're making, when do those kick in, 0:18:06.920 --> 0:18:09.959 and when do they start luring advertisers to keep that 0:18:10.480 --> 0:18:12.359 top line from continuing to slip? 0:18:12.400 --> 0:18:15.120 All right, great stuff, as oways our Alex Birinka, Bloomberg 0:18:15.119 --> 0:18:19.399 News Technology reporter there in La and check out her newsletter. 0:18:19.560 --> 0:18:22.640 You can find it Bloomberg Tech Daily Newsletter. Just sign 0:18:22.720 --> 0:18:24.560 up at Bloomberg dot com Slash Technology. 0:18:26.359 --> 0:18:29.960 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:29.960 --> 0:18:34.000 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:18:34.200 --> 0:18:37.480 the Bloomberg Business app, and YouTube. You can also listen 0:18:37.560 --> 0:18:40.680 live on Amazon Alexa from our flagship New York station. 0:18:41.119 --> 0:18:43.919 Just say Alexa play Bloomberg eleven thirty. 0:18:45.720 --> 0:18:48.400 Pressure is building on President Buying to respond after House 0:18:48.440 --> 0:18:50.919 Republicans unified on a set of demands to vert a 0:18:50.920 --> 0:18:54.480 contest a catastrophic US debt default in the coming weeks. 0:18:54.920 --> 0:18:57.720 So there's pressure on the President to really sit down 0:18:57.720 --> 0:19:01.560 with Speaker Kevin McCarthy. Well, Bloomberg watched correspondent Amory Hordern 0:19:01.840 --> 0:19:03.840 did sit down at the Speaker of the House to 0:19:03.840 --> 0:19:05.960 talk about where we are. Check it out, everybody. 0:19:07.119 --> 0:19:09.719 Many people doubted you were going to be able to 0:19:09.800 --> 0:19:12.560 get this bill passed through the floor. You prove them wrong. 0:19:12.600 --> 0:19:15.600 You successfully got it through the floor two hundred and 0:19:15.640 --> 0:19:19.120 seventeen voting in favor of you. Parsident Biden, though, says 0:19:19.160 --> 0:19:21.560 he's only going to meet with you if you separate 0:19:22.119 --> 0:19:26.240 the fiscal spending, cuts the budget with the debt ceiling. 0:19:26.320 --> 0:19:27.720 So what comes next. 0:19:28.160 --> 0:19:30.520 Well, I don't know, because it was eighty five days ago. 0:19:30.560 --> 0:19:33.240 I sat down with the President February first, talking about 0:19:33.280 --> 0:19:36.639