Speaker 1: From Bhart where Innovation, Money and Power Collie in Silicon Valley,
Speaker 1: n Beyond. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: I'm scarletfu In for Caroline hide a Bloomberg's World headquarters.
Speaker 3: In New York, and I'm Alex Brinka and for Ed
Speaker 3: Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 2: Coming up, We'll hear from the CEO of TikTok as
Speaker 2: the company sues Montana following the state's decision to ban
Speaker 2: the popular app. What steps is TikTok taking to alleviate
Speaker 2: US scrutiny.
Speaker 3: Plus will sit down with the CFO of Zoom as
Speaker 3: the company faces growth hurdles when it comes to enterprise customers.
Speaker 2: And we'll be speaking to executives from Amazon and Adobe
Speaker 2: to discuss product launches, generative AI, and the state of
Speaker 2: the consumer. All that and more coming up, But first
Speaker 2: let's get you check on the financial markets.
Speaker 5: Here.
Speaker 2: It's another day of modest moves in US equities because
Speaker 2: it's really groundhog day when it comes to the big themes.
Speaker 5: Sailing talks.
Speaker 2: No agreement yet, even though we're about nine days away
Speaker 2: from that June first X date when Washington runs out
Speaker 2: of cash. We know that President Biden and Kevin McCarthy,
Speaker 2: the Speaker of the House, will be scheduled to speak
Speaker 2: and meet daily. They began meeting at about eleven am
Speaker 2: Eastern time. And of course the big question of whether
Speaker 2: we'll get a recession or no recession. Today's data showed
Speaker 2: that business activity grew the most in a year, so
Speaker 2: that's pointing to perhaps a soft landing. When you add
Speaker 2: it all up, we're looking at the yield on the
Speaker 2: tier moving up to towards four point four percent. At
Speaker 2: one point it did rise to that level. But the
Speaker 2: NASAC one hundred is down a quarter of one percent,
Speaker 2: still holding near.
Speaker 5: It's thirteen month high.
Speaker 2: The euro is losing ground, losing four tens of one
Speaker 2: percent after data show manufacturing Europe contracted the most in
Speaker 2: three years, basically since pandemic and I included the Topics index.
Speaker 2: The broad market measure in Japan down by two thirds
Speaker 2: of one percent after chip related names led the drop there.
Speaker 2: Now that the country is tightening its export controls starting
Speaker 2: in late July. Now, if you put everything into context,
Speaker 2: we know the rally in big tech has made the
Speaker 2: NAZAK one hundred, a star performer, and if we pull
Speaker 2: up a chart, what you'll see is that it's up
Speaker 2: twenty six percent this year alone. But that's got to
Speaker 2: be put into context here, right, because you go back
Speaker 2: to the end of twenty twenty one, start of twenty
Speaker 2: twenty two, and what you see is the NASAC, which
Speaker 2: is the blue line there, really playing catch up with
Speaker 2: the broader market, which is the white line, the SMP
Speaker 2: five hundred. At the start of twenty twenty three, which
Speaker 2: is right around here. Fund managers who were underweight tech
Speaker 2: because of their big losses last year, increase their exposure.
Speaker 2: They rebalance their portfolios. Then in March, when the banking
Speaker 2: crisis banking stresses began, small caps, which is the yellow line,
Speaker 2: really broke apart from the broader market, the white line,
Speaker 2: the SMP five hundred, and investors what did they do?
Speaker 5: They found safety.
Speaker 2: They found a haven in big tech because of their
Speaker 2: dominant market share, their free cash flow, and their robust
Speaker 2: balance sheets. Alex, what are you taking a look at.
Speaker 3: I'm looking at the biggest movers on the day today.
Speaker 4: First up, we have Zoom.
Speaker 3: It's sliding about seven percent. That's the biggest decline in
Speaker 3: almost six months after the company reported earnings last night
Speaker 3: that really disappointed the street. Their customers, their consumer customers,
Speaker 3: their business customers. Growth there has plateaued, and their big
Speaker 3: plan to grow sales with big enterprise customers might not
Speaker 3: happen as soon as the market expected. We'll have more
Speaker 3: on that later in the show. Next, I have Ali Baba.
Speaker 3: It's down one point five percent. That's pairing some earlier losses.
Speaker 3: The company said it's cutting seven percent of its staff
Speaker 3: in its cloud business. You'll remember this is a company
Speaker 3: that's planning to split itself up six ways. This would
Speaker 3: be one of the business units that it's eventually planning
Speaker 3: on spinning off.
Speaker 4: And taking public.
Speaker 3: Now we have a record high for Broadcom, the third
Speaker 3: stock i'm watching here. It's ticked up about two and
Speaker 3: a half percent today. It's the all time high because
Speaker 3: this chip maker has inked a multi billion dollar deal
Speaker 3: for five G radio frequency parts with Apple for Apple's iPhone.
Speaker 3: Now I want to take over to kind of our biggest.
Speaker 4: Rise on the day.
Speaker 3: That would be Yelp up flirting with ten percent.
Speaker 4: That's a six month high.
Speaker 3: It's been climbing on a report that an activist TCS
Speaker 3: Capital Management has come knocking the firm. TCS plans to
Speaker 3: deliver a letter to yup's board urging the site to
Speaker 3: potentially sell itself or look into strategic options. Investors seem
Speaker 3: to be down with that idea. And it's not the
Speaker 3: first time yelp has actually seen an activist if you
Speaker 3: rewind to twenty nineteen, as QN investors urge management to
Speaker 3: make changes, they did so, perhaps some bullishness on some
Speaker 3: potential for change here at yelp. If this new activist
Speaker 3: is successful, Scarlett.
Speaker 2: It's great context there and certainly something we'll be keeping
Speaker 2: an eye on now. Around the globe, the Cutter Economic
Speaker 2: Forum is currently underway where key global business and investment
Speaker 2: leaders are converging in the Middle East, and of course,
Speaker 2: our very own Caroline Hyde sat down with the CEO
Speaker 2: of TikTok and he spoke about how it's working with
Speaker 2: Oracle to review its code and oversee US user data.
Speaker 2: He also talked about the recent bill banning the platform
Speaker 2: in Montana.
Speaker 5: Take a listen.
Speaker 6: We believe that the Montana builder was recently passed is
Speaker 6: simply unconstitutional, and as you pointed out, we very recently
Speaker 6: filed a lawsuit to challenge this in the courts, and
Speaker 6: we are confident that we will prevail. Separately, you know,
Speaker 6: I've noticed that some of our creators have also filed
Speaker 6: a separate lawsuit challenging the same bill in the courts,
Speaker 6: and I do want to say that, you know, they
Speaker 6: care because TikTok is really important to them. And this
Speaker 6: is the part of the story that I think is
Speaker 6: the most important part you know of TikTok, which is
Speaker 6: that now that we have more than one hundred and
Speaker 6: fifty million Americans on our platform on a very active basis,
Speaker 6: more than a billion around the world. You know, people
Speaker 6: use TikTok as a place for expression. It's a very
Speaker 6: different experience as you may know from the other apps
Speaker 6: they are available in the market, and this is one
Speaker 6: for discovery, for expression, for free expression, and a lot
Speaker 6: of our users use TikTok to find their communities, to
Speaker 6: discover and to express themselves, you know. Moreover, you know,
Speaker 6: there are five million small businesses in the United States
Speaker 6: that depend on TikTok and millions more around the world,
Speaker 6: including here in this country and in the region. So
Speaker 6: I think, you know, ultimately it is about providing value
Speaker 6: to these users. And making sure that you know, we
Speaker 6: continue to provide them with a great service that benefits them.
Speaker 6: And that's some you know, our key focus at this moment.
Speaker 7: In time, expressing oneself.
Speaker 8: Was that quite hard to express yourself.
Speaker 7: Most recently when you're in Congress, when you are having
Speaker 7: to try and tell your story of why TikTok is
Speaker 7: important in the United States.
Speaker 6: I think it was a very important process and I'm
Speaker 6: very grateful for the opportunity to show up and to
Speaker 6: tell our side of the story.
Speaker 7: Would you tell your side of the story.
Speaker 6: Throughout the five hours? I believe I had time to
Speaker 6: do that, And I think it's a good opportunity for
Speaker 6: us to explain ourselves because there are some myths and
Speaker 6: misconceptions about our company out there.
Speaker 7: Dig into them, because the key issue that many would
Speaker 7: have is data and the concern the anxiety that ultimately
Speaker 7: the Chinese government can have access to US user data.
Speaker 7: That is why Montana is wanting to ban TikTok. What
Speaker 7: do you wish you could have said to make that
Speaker 7: land that that isn't going to happen, because it felt
Speaker 7: as though you didn't manage to prove that point well.
Speaker 6: TikTok is not available in inland China today. As we
Speaker 6: say it many times, the Chinese government has actually never
Speaker 6: asked us for US user data and we will not
Speaker 6: provide even if fast.
Speaker 9: Now.
Speaker 6: Beyond that we have built over the last two years
Speaker 6: something we call internally Project Taxes, and what it really
Speaker 6: is is to ensure that American data is stored on
Speaker 6: American soil by an American company and overseen by American personnel.
Speaker 6: And this is truly an unprecedented project that none of
Speaker 6: the other companies in our industry have ever attempted. And
Speaker 6: we believe that we have taken steps there above and
Speaker 6: beyond what our industry has done to protect the safety
Speaker 6: of US user data, which is very important.
Speaker 7: And where are you with Project Texas, Because there's been
Speaker 7: some reporting and I know that you've come out and said,
Speaker 7: very soon Oracle will have the unprecedented access to our
Speaker 7: data or indeed to your the ways in which of
Speaker 7: your source code.
Speaker 5: But that's not now.
Speaker 7: When will Oracle be able to enact this sort of
Speaker 7: unprecedented overseeing and transparency of your company.
Speaker 6: Project Texas is a very complicated project and a lot
Speaker 6: of the elements of the project is already in place
Speaker 6: and operational. For example, today, by default, all US data
Speaker 6: is stored in the Oracle Cloud service, already in Oracle
Speaker 6: Cloud infrastructure and no longer in our own service in Virginia.
Speaker 5: And seeing you've already run that transfer.
Speaker 6: It's already done by default correct. Separately, Oracle has begun
Speaker 6: to source the review of the code, although it's, as
Speaker 6: you can understand, you know, a complicated project that will
Speaker 6: take time for us to finish the details. So it's
Speaker 6: on track. Oracle and ourselves are working together with the
Speaker 6: US government to finalize the details of Project Texas.
Speaker 3: Bloomberg Technology co hosts Caroline hight is standing by with
Speaker 3: Mark Caroline lots of making his case. They're telling a story,
Speaker 3: or is your big takeaway from your conversation.
Speaker 7: While I was pressing in Alex on your reporting, because
Speaker 7: it was your story that really instigated this warrior as
Speaker 7: to whether the Oracle deal was really in place, and
Speaker 7: he did try and push back that that is on track,
Speaker 7: as you heard, and the fact that actually they've moved
Speaker 7: that data from their servers onto Oracles already. But ultimately
Speaker 7: the takeaway for me was this is also coming in
Speaker 7: a moment where Meta, where he was once on intern
Speaker 7: We've got to remember, is also being fined a record
Speaker 7: amount by the EU regulators at the moment.
Speaker 4: Why because US may.
Speaker 7: Be able to access EU data, They're worried ultimately about
Speaker 7: exactly what the US is worried about China can do.
Speaker 7: This is a global issue that is currently ongoing, and
Speaker 7: of course that's why they've not just got Project Texas,
Speaker 7: They've got Project Clover over in Europe where they're also
Speaker 7: trying to understand how they can protect user data. This
Speaker 7: feels to me like a moment of deglobalization and another
Speaker 7: level when it comes to technology and his key point.
Speaker 7: It felt like Alex was.
Speaker 5: Look, how can we do this?
Speaker 7: How can we ensure we have data sovereignty without ultimately
Speaker 7: breaking the Internet and I'm sure without breaking his business
Speaker 7: because he really didn't seem to say in any way
Speaker 7: way that they have a plan B for if they
Speaker 7: get banned. He felt that they are here to stay
Speaker 7: when it comes to United States presence for TikTok, or.
Speaker 2: At least a Plan B that he intends to reveal
Speaker 2: for now. Caroline, you did a great job in pushing
Speaker 2: him on whether he actually got the chance to tell
Speaker 2: his story. I'm curious now that you're in Cutter, who
Speaker 2: else have you been talking with? What else did you
Speaker 2: glean from the executives who are attending the forum.
Speaker 7: Well, I think that globalization issue, worry about investment in
Speaker 7: China is ringing true throughout Molus CEO speaking to Francine
Speaker 7: a little bit about that. I was speaking interestingly with well,
Speaker 7: Peter Chen and he himself is a big investor in
Speaker 7: content Love is Blind anyone was He now owns the
Speaker 7: production company behind that. He of course ran Fox for
Speaker 7: fourteen years. We were talking really ultimately about how he's
Speaker 7: trying to be more globalized, trying to buy production and
Speaker 7: content in Mexico, in Turkey to ensure that actually the
Speaker 7: streaming companies they now become ultimately that much more powerful.
Speaker 5: He thinks bea by the.
Speaker 7: Way cable is done, that they be able to have
Speaker 7: natural language, new language, and access the emerging markets in
Speaker 7: that much more of a way. It was interesting, of course,
Speaker 7: AI has been front and center. I spoke to the
Speaker 7: CEO of TikTok shows you about out official intelligence about
Speaker 7: large language models. He wouldn't go there as to whether
Speaker 7: he himself are already creating an LLM for TikTok, but
Speaker 7: he certainly thinks it's going to galvanize video production. And
Speaker 7: I also spoke with Ursula Burns, who many will know
Speaker 7: her as basically the first African American woman to run
Speaker 7: a Fortune five hundred company. She run a tech company, Xerox,
Speaker 7: but she's also now the chair of Toeneo. She's also
Speaker 7: an investor with Integram. It's a private equity or investment
Speaker 7: company that invests in tech companies ultimately, and she's really
Speaker 7: excited by the opportunities in AI. Thinks it can be
Speaker 7: a real force productivity, but is also look worried about
Speaker 7: the regulatory environment.
Speaker 5: Just take a listen.
Speaker 10: This is a technology that is developing, right it's developing.
Speaker 10: We know that if we just leave it to everyone
Speaker 10: we generally leave it to, there'll be a huge amount
Speaker 10: of avnots small amount of habs. This is a place
Speaker 10: that we should have a community working towards, working together
Speaker 10: technical community, government, communities, education, not for NGOs or on
Speaker 10: this unbelievable gift right that we haven't trying to figure
Speaker 10: out a way to make it better good for.
Speaker 7: All that haves have not said something that actually, of
Speaker 7: course is core to U.
Speaker 5: Suli Burns.
Speaker 7: She's got a key focus on diversity at board level.
Speaker 7: We've got a key focus on AI and how that
Speaker 7: maybe just amplifies biases already in the system. So this
Speaker 7: is something she's looking at front and centive, but seems
Speaker 7: to be much more on the optimistic side the force
Speaker 7: for good that AI could ultimately be.
Speaker 2: Absolutely Caroline had great reporting Bloomberg's Caroline Hide at the
Speaker 2: Cutter Economic Forum, which is powered by Bloomberg, And of
Speaker 2: course Caroline will be back in New York later this week.
Speaker 3: Now moving on to Zoom, which released its first quarter
Speaker 3: earnings yesterday, sending shares down after posting mixed results, Let's
Speaker 3: bring in it's CFO Kelly Steckelberg for more. Kelly, when
Speaker 3: I look at the market reaction here today, it seems
Speaker 3: like folks are reading in to the guidance that there's
Speaker 3: some pressure on that really important enterprise business for you all.
Speaker 5: What seems to be.
Speaker 3: Kind of putting a dent in that kind of core
Speaker 3: selling into enterprise customers that you guys have been focused on.
Speaker 5: So Hi, nice to see you.
Speaker 11: We were really pleased with our results that we announced
Speaker 11: last night. We exceeded both the high end of our
Speaker 11: revenue guidance as well as our profitability metrics, and we
Speaker 11: were able to raise our outlook for the full year
Speaker 11: on both the top and the bottom line. Some of
Speaker 11: the key highlights of the quarter was we saw stabilization
Speaker 11: in our online business earlier than we expected this year,
Speaker 11: as well as peak gross margins at eighty point five
Speaker 11: percent and our Zoom Phone, which is our cloud PBX solution,
Speaker 11: crossing the ten percent of revenue threshold. We did talk
Speaker 11: of the fact that we had a reduction as well
Speaker 11: as a restructuring in our direct sales organization, and while
Speaker 11: we saw some traction in the SMB portion of that team,
Speaker 11: you know it's going to take a little bit longer
Speaker 11: for the rest of the organization as expected when you
Speaker 11: have such a significant transition to return to full productivity.
Speaker 11: And that all of that is reflecting in our guidance
Speaker 11: and what you're referring to now.
Speaker 3: Zoom during the pandemic obviously had kind of a growth moment.
Speaker 3: I think the market was looking at you guys as
Speaker 3: a growth stock under those conditions. As you're talking about
Speaker 3: this kind of online consumer piece of your business plateauing
Speaker 3: a little bit and some of this pressure through the
Speaker 3: sales org on your enterprise business, do you look for
Speaker 3: growth elsewhere? Is something like an acquisition or attack on
Speaker 3: something that you guys would consider to kind of juice
Speaker 3: that top line or find some growth out of those
Speaker 3: two key business units.
Speaker 11: So we have really been investing in innovating across the
Speaker 11: platform and we are so when you look forward to
Speaker 11: not only Zoom Phone, but also Zoom Contact Center that
Speaker 11: was released last year. We announced in March some new
Speaker 11: beta features around zoom Iq, which is levering AI to
Speaker 11: be a smart companion to do things like chat or
Speaker 11: email composition, to do meeting summaries, or even think about
Speaker 11: summarizing a long chat thread that maybe you missed earlier
Speaker 11: in the day. We also have announced just in lat
Speaker 11: q one, an acquisition of work Vivo, which will bring
Speaker 11: front and Center a collaborative employee data hub that leverages
Speaker 11: both you know, social as well as intranet. So we
Speaker 11: have an amazing platform that has continued to grow and
Speaker 11: that is what we're looking for to drive the future
Speaker 11: growth of the company.
Speaker 2: I appreciate your answering that, but just to follow on
Speaker 2: what Alex was asking, looks like you've made two acquisitions
Speaker 2: this year.
Speaker 5: Last year six acquisitions.
Speaker 2: The biggest was one hundred and twenty five million dollars.
Speaker 2: Perhaps users are looking for a bigger transformative purchase.
Speaker 5: How are you thinking about that?
Speaker 11: Yeah, we always watch what's available in the market, and
Speaker 11: as you indicated, we've done Solvy and wor Vivo this year,
Speaker 11: both really helping us accelerate the development of parts of
Speaker 11: our platform. And you know, there's three caricteria that we
Speaker 11: look for. We look for technology, we have a very
Speaker 11: high bar. We look for cultures, We want to make
Speaker 11: sure that it would be a great addition to our team.
Speaker 11: And then of course we look to valuation, which you know,
Speaker 11: given what's happening in the market, has.
Speaker 5: Become more attractive over time.
Speaker 11: But we want to make sure that any acquisition we
Speaker 11: would do would really benefit our customers, and that's what
Speaker 11: we look for. How would it transform the customer experience
Speaker 11: and we keep watching for those opportunities.
Speaker 2: I got to ask you about your competition as well,
Speaker 2: because we hear more about companies consolidating their software onto
Speaker 2: Microsoft teams.
Speaker 5: Does this concern you? How do you counter that?
Speaker 11: So you know, Microsoft is a great partner to us.
Speaker 11: We always, again think about things through the customer's viewpoint,
Speaker 11: and what we do is we work with our customers
Speaker 11: to help them leverage whatever products they want. Sometimes they
Speaker 11: want to use Zoom phone and Zoom contact Center or
Speaker 11: Zoom meetings and couple that in with potentially another Microsoft products,
Speaker 11: So we have seamless integrations with them. And we saw
Speaker 11: one of the ways that I measure the strength in
Speaker 11: our business is through our renewals. Q one is our
Speaker 11: largest renewal period, trending all the way back to that uptick.
Speaker 11: We saw the early stages of the pandemic and we
Speaker 11: saw very strong renewals in Q one and very little
Speaker 11: logo trem which tells me that customers might be right sizing,
Speaker 11: but they're sticking with Zoom as they know and love us.
Speaker 2: Kelly, really appreciate your joining us. Kelly Steckelberg is the
Speaker 2: CFO of Zoom.
Speaker 5: Thank you so much.
Speaker 2: Now, coming up on Bloomberg Technology, we're watching shares of
Speaker 2: Apple and Broadcom after the true signed a multi billion
Speaker 2: dollar deal. More details on that next. This is Bloomberg
Speaker 2: and some breaking news here. Jpal, the Chairman of the
Speaker 2: Federal Reserve, has arrived on Capitol Hill. He's meeting with
Speaker 2: House Democrats, the New Democratic Coalition. This was a long
Speaker 2: planned meeting and according to the NBC, the organization, it
Speaker 2: has nothing to do with the debt limit discussions. So
Speaker 2: once again, Jpal at Capitol Hill, we'll keep you posted
Speaker 2: if there are any developments out of that meeting. Let's
Speaker 2: go back to the tech sector, because we looked at
Speaker 2: Apple and it is just signed a multi year, multi
Speaker 2: billion dollar deal with Broadcom to develop five G radio
Speaker 2: frequency components. The stock is lower on the day, Broadcom
Speaker 2: is moving up two and a half percent. Let's get
Speaker 2: some more contexts on this and bring in on Grana
Speaker 2: of Bloomberg Intelligence An. What's interesting here is that Apple
Speaker 2: has a relationship clearly with Broadcom. It is one of
Speaker 2: Broadcom's biggest customers, but they have a contentious relationship. What
Speaker 2: does this deal do when it comes to that contentious relationship.
Speaker 12: Yeah, I think when you look at Apple, I think
Speaker 12: this is a little bit more diversify, you know, away
Speaker 12: from qualcong is. I think what I'm reading more into
Speaker 12: this because for Apple's you know case, it needs to
Speaker 12: diversify not just from you know, one region, which is Asia.
Speaker 12: It needs to broaden its you know, partnership partner network
Speaker 12: as well when it whereas sourcing parts across the world.
Speaker 3: Now anurag, I have to think about Apple's kind of
Speaker 3: big push to bring in homegrown chips and ask the question,
Speaker 3: does this mean that these specific chips, these radio frequency
Speaker 3: chips for five G that Apple Bloomberg's reported is considering
Speaker 3: bringing in house for the creation Does this mean that
Speaker 3: maybe that effort by Apple is not necessarily going as
Speaker 3: well as they had initially thought.
Speaker 12: Now, remember, Apple is never going to do these things
Speaker 12: just for cost alone. It's going to always go for
Speaker 12: the best part that's out there, you know. At the
Speaker 12: same time, and again I say not for cost freeson,
Speaker 12: but for performance. It is designing all sorts of parts
Speaker 12: internally so that the next generation for or next generation
Speaker 12: device that's coming up with can achieve what it wants
Speaker 12: to achieve. Sometimes the partners are not able to provide that.
Speaker 12: I mean, I cannot say that you know whether the
Speaker 12: in house efforts are not you know, going as planned
Speaker 12: or not. But it's just again as I said, it
Speaker 12: is just planned, you know way of looking at things
Speaker 12: and say, I don't want to be dependent on one
Speaker 12: supplier for all my needs. I want to go. You know,
Speaker 12: across the board, the.
Speaker 3: Ever consistent front of me is in tag honorag Run
Speaker 3: of Bloomberg Intelligence. Thank you for breaking that down for us.
Speaker 2: Welcome back to Bloomberg Technology.
Speaker 3: I'm Scarlett Foo in New York and I'm Alex Marinkan
Speaker 3: in San Francisco. All right, we've got about three and
Speaker 3: a half hours to go before the market close here
Speaker 3: in New York, so let's going to check on what's
Speaker 3: going on. Debt ceiling debate talks, ongoing negotiations still wing
Speaker 3: on the market here with the S and P five
Speaker 3: hundred losing a third of one percent, led by materials
Speaker 3: companies and tech companies. Notably to point out that oil
Speaker 3: prices are moving higher to w RETI up by one
Speaker 3: point eight percent after Saudi Arabia's energy minister issued awarding
Speaker 3: to short sellers telling them to watch out. That was
Speaker 3: at the Cutter Economic Forum, where our very own Caroline
Speaker 3: Hide currently is at. And of course because of the
Speaker 3: rise and oil prices, we're looking at XL, the ETF
Speaker 3: that tracks big cap energy names also moving up by
Speaker 3: two percent. Now a couple of individual company names to
Speaker 3: highlight here because we're at the tail end of the
Speaker 3: US earning season when retailers in particular report on their results,
Speaker 3: and what we're seeing is Low's moving up by two
Speaker 3: point four percent, even though it cut its full Your
Speaker 3: outlook saying that it sees a slowdown in spending on
Speaker 3: home improvement. The difference here is that it's reporting gains
Speaker 3: among professional contractors and in some ways and by some measurements,
Speaker 3: doing better than its large arrival Home Depot, which last
Speaker 3: week pretty much said the same thing that it's lowering
Speaker 3: its full your forecast because of broad based spending cutbacks
Speaker 3: by its consumers, by its customers and Home Depot, both
Speaker 3: and Lows both up fight lead two percent on the
Speaker 3: day alex Well. Ten years after the launch of its
Speaker 3: first tablet, Amazon is releasing its newest, the Firemax eleven,
Speaker 3: and what the company is calling its biggest and most
Speaker 3: powerful tablet yet. Joining us now is David Limp, Amazon's
Speaker 3: Device and Services Senior vice president, David I have to
Speaker 3: ask you, guys have been pretty strong in kind of
Speaker 3: the lower price point market for a tablet. This Firemax
Speaker 3: eleven has a higher price point. It feel looks and
Speaker 3: feels a little bit more premium.
Speaker 4: Who are you trying to capture with this latest tablet.
Speaker 13: Well, I think we've really found a place with our
Speaker 13: tablet products where we build premium tablets but at non
Speaker 13: premium prices. And as customers have demanded more from tablets,
Speaker 13: they've increasingly said they wanted larger screens. We have had
Speaker 13: ten inch screens for a while, so like bringing out
Speaker 13: the eleven inch now it's a real big difference for
Speaker 13: us because we did go to an all aluminum design,
Speaker 13: it's thinner. It's really a great opportunity for customers to
Speaker 13: have a.
Speaker 9: Large tablet form factor.
Speaker 13: That can also be used for productivity as well as entertainment,
Speaker 13: but also be able to do it at an incredibly
Speaker 13: affordable price.
Speaker 9: It's just two hundred and twenty nine dollars.
Speaker 5: Right, and this one is definitely geared.
Speaker 2: It seems to increase productivity for workers. But I noticed
Speaker 2: that a lot of your products have a kids version
Speaker 2: the Echo Show five Kids that are designed for kids,
Speaker 2: or they're designed for kids like the now canceled Amazon Glow.
Speaker 2: How do you think about incorporating and building out generative
Speaker 2: AI and LLLM when it comes to serving the kids,
Speaker 2: Because there's a privacy factor obviously that is critical to retaining,
Speaker 2: to building, to preserving that trust with your customer base.
Speaker 13: Yeah, and we've been We've had a version of our
Speaker 13: kids products, as you said, for a long time.
Speaker 9: Now.
Speaker 13: We have it for Kindle, we have it for our tablets,
Speaker 13: we have it for our echos, and even for our TV.
Speaker 13: And the key around that is we really try to
Speaker 13: build a kind of a sandbox that the parents can
Speaker 13: ensure they feel safe putting their kids in that environment.
Speaker 13: For example, on our tablets, all apps that are available
Speaker 13: through Kids Plus don't have any embedded advertising in them.
Speaker 13: And I think the same thing's true with Alexa and
Speaker 13: Generative AI, that the AI has to be aware of
Speaker 13: the age group that it is talking to. So if
Speaker 13: a child that's six years old asked where do babies
Speaker 13: come from, it's going to give a different, more parent
Speaker 13: friendly answer than if an adult asked that question.
Speaker 3: I know chatbots are certainly having their moment. Generative AI
Speaker 3: seems to be the phrase we can't stop talking about.
Speaker 3: But you guys with Alexa, with the echoes, chatbots have
Speaker 3: been around with you for a minute. I'm curious what
Speaker 3: you think at this moment, in time of all the
Speaker 3: calls for regulation around Generative AI and chatbots is an
Speaker 3: industry that you guys have clearly been in and I
Speaker 3: think I remember Amazon asking for regulation around facial recognition software.
Speaker 4: What's your take on AI these days?
Speaker 3: Are you going to go to Congress and say, hey,
Speaker 3: you need to help us out here.
Speaker 9: Yeah.
Speaker 13: I think there's a wide spectrum of what AI can deliver,
Speaker 13: and you know, on one end of the spectrum, when
Speaker 13: you start talking about these generative AI techniques and assistance
Speaker 13: and things like that, I think there's very much room
Speaker 13: for regulation and we think that we want that to
Speaker 13: happen as Amazon, there are other sides that are just
Speaker 13: not as risky, and think about things like fraud detection
Speaker 13: and then those kinds of places you probably want to
Speaker 13: have less regulation so you can keep the speed of
Speaker 13: invention happening and protect consumers with those AI techniques.
Speaker 9: But in the long run, we think for the.
Speaker 13: More complicated use scenarios that regulation is needed and we're
Speaker 13: big supporters.
Speaker 2: I want to go back to products for a moment,
Speaker 2: because I'm so glad that Alex brought up Alexa and
Speaker 2: you did as well. When you talk about generative AI,
Speaker 2: can you give us a sense of what capabilities are
Speaker 2: going to be first through the door as you try
Speaker 2: to upgrade Alexa and make it more prevalent in people's lives.
Speaker 2: What are you doing to make Alexa smarter? Essentially?
Speaker 9: Yeah, well, the first thing we hit a big milestone.
Speaker 13: We've now sold well over half a billion Alexa enabled devices,
Speaker 13: and last week we announced the Echo pop here. This
Speaker 13: is the first product I've ever brought home that my
Speaker 13: daughter said was adorable, So I'm very proud of the
Speaker 13: team's ability to do that. But with over a half
Speaker 13: a billion end points, we have a great access to
Speaker 13: customers and we are using generative AI techniques to improve
Speaker 13: it every day. And I'll give you an example, which
Speaker 13: is on the back end, we have a large language
Speaker 13: model that runs that takes multiple pieces of information from
Speaker 13: various parts of the web and own our own repositories.
Speaker 9: And comes up with a concise answer.
Speaker 13: So if if a child asks a homework question or
Speaker 13: a parent asked a question, then we give a better
Speaker 13: answer than we did just weeks ago. And this is
Speaker 13: all because of the power of these large language models.
Speaker 13: And over the course of time, you're going to see
Speaker 13: us roll out even more and alex is just going
Speaker 13: to get more proactive and more conversation.
Speaker 3: David, I have to ask about Astro, the adorable home
Speaker 3: robot that was released as a prototype. Is everyone going
Speaker 3: to be able to get their hands on Astros? Their
Speaker 3: water release coming up for that product.
Speaker 13: We continue to make progress on Astro. We're shipping a
Speaker 13: lot of them every week now. We've kind of ramped
Speaker 13: up the manufacturing, but we're still an invite. There's still
Speaker 13: a few areas that we're working on in terms of navigation,
Speaker 13: but it seems like it's a pretty tractable problem right now,
Speaker 13: and I would anticipate it to go into wide release
Speaker 13: over the course of the not too far in the
Speaker 13: distant future, as we get through the last of the issues.
Speaker 13: But I will tell you that customers are loving the product.
Speaker 13: We've had over three hundred thousand people request invites. We're
Speaker 13: shipping lots every week, and customers have kind of if
Speaker 13: there was a spectrum of products on your phone was
Speaker 13: on one end and PET was on the other, Astro
Speaker 13: is kind of closer to the PET end of the
Speaker 13: spectrum that it is pure iPhone good stuff.
Speaker 5: David really appreciate it.
Speaker 2: Talking products with David Limp, we talked about Astro, the Echo,
Speaker 2: and of course they are a new fire tablet as well.
Speaker 5: Thank you so much.
Speaker 2: Coming up, Generative AI in Creative Cloud. We're going to
Speaker 2: speak with Adobe's president of Digital Media Business about its
Speaker 2: new feature for users of Photoshop. But before we go
Speaker 2: to break, let's take a look at how Adobe shares
Speaker 2: are performed right now. Little change on the day off
Speaker 2: just largely this is Bloomberg.
Speaker 4: It's time now for talking tech.
Speaker 3: First up, yealf shares are on track to rise the
Speaker 3: most since August, since a Wall Street Journal report that
Speaker 3: an activist investor has called for the company to look
Speaker 3: into a sale and other strategic options. TCS Capital Management
Speaker 3: plans that deliver a letter to Yelp's board today to
Speaker 3: make the case for a sale, arguing that the firm
Speaker 3: could fetch more than double its current share price plus.
Speaker 3: Ali Baba's cloud division has begun a round of job
Speaker 3: cuts that could reduce its staff by about seven percent.
Speaker 3: It's all a part of its overhaul of the business
Speaker 3: at preparing the once fast growing unit for a spinoff
Speaker 3: and an eventual IPO, China's largest cloud service, has begun
Speaker 3: in forming affected staff on the layoffs and is offering
Speaker 3: several employees or transfers to other parts of the Alibaba empire,
Speaker 3: and Apple clashing with the European Union over a fourteen
Speaker 3: billion dollar tax deal. The iphonemaker and Ireland hitting back
Speaker 3: at the EUSE anti trust watchdog, saying they made legal
Speaker 3: errors when they concluded Apple was given vast amounts of
Speaker 3: unfair tax aid from Ireland and issued an order to
Speaker 3: repay that money.
Speaker 2: All right, let's talk about Adobe alex because it is
Speaker 2: taking its generative aim models to the next level by
Speaker 2: integrating the Generative Fill tool into its popular Photoshop software.
Speaker 5: Users will now.
Speaker 2: Have a creative code pilot to help with precision and
Speaker 2: speed up production when they use Photoshop. For more on this,
Speaker 2: we're joined by David Wadwani. He is Adobe's president of
Speaker 2: Digital Media Business. David good to speak with you. Let's
Speaker 2: just start with the generative Phill tool and if you
Speaker 2: could tell us how in practice it would work and
Speaker 2: how would meaningfully change the end product and perhaps create
Speaker 2: demand for new uses of the software.
Speaker 14: Absolutely, Scarlett, thank you for having me on. Today's a
Speaker 14: big day for Adobe with the introduction of generative technology
Speaker 14: going into Photoshop for the first time. We actually launched Firefly,
Speaker 14: which is our core generative capabilities seven weeks ago as
Speaker 14: a standalone capability, so people could create images, they could
Speaker 14: create text effects. Today, the massive step forward for us
Speaker 14: and the industry is that we've taken that and we've
Speaker 14: natively integrated it into our Creative Cloud applications, starting with
Speaker 14: Photoshop first. So now someone working in Photoshop can, as
Speaker 14: you see on the screen here, start to affect the
Speaker 14: images and save hours of work simply by using text
Speaker 14: to help generate and fill information around it. And we
Speaker 14: do that in a way that leverages all of the
Speaker 14: authoring capabilities of Photoshop, including its layers, so that the
Speaker 14: work enables a lot more iteration, a lot more exploration,
Speaker 14: and a lot more productivity because of the way people
Speaker 14: are able to use it in their existing work flows.
Speaker 2: Right, And I know that Adobe is all about serving
Speaker 2: the creative community. I know also that Adobe ignited some
Speaker 2: anger earlier this year for potentially training AI models on
Speaker 2: user files by default.
Speaker 5: I know that that's been resolved. What did you learn
Speaker 5: from that episode?
Speaker 9: Communication is key.
Speaker 14: We've never trained on user files that are part of
Speaker 14: Creative Cloud. We've been incredibly transparent through throughout this process
Speaker 14: and in fact, I think we've taken industry leading position
Speaker 14: on this. Everything that we've used to train our models,
Speaker 14: we have absolute right to use it, so it's you know,
Speaker 14: and we are we have the complete origin of that content,
Speaker 14: so that we've been able to be completely transparent with
Speaker 14: everyone how our models are trained. We've also been able
Speaker 14: to you know, to announce that because we know where
Speaker 14: the content is coming from, principally Adobe Stock. We are
Speaker 14: also going to be compensating the contributors for the benefits
Speaker 14: that we get and the industry gets from the content.
Speaker 14: So we're very excited about how this can be positive.
Speaker 3: For creators now, David, I think that incident is a
Speaker 3: good example of just how sensitive folks are approaching the
Speaker 3: use of AI in creation of assets. When I think
Speaker 3: about kind of the impact outside of Adobe of what
Speaker 3: your customers are using your products for, I have to
Speaker 3: ask the question that I think a lot of folks
Speaker 3: are asking these days when it comes to AI misinformation,
Speaker 3: when it comes to tools to creating that misinformation, Where
Speaker 3: is the role of folks like yourself in making sure
Speaker 3: that we don't have kind of AI generated misinformation out
Speaker 3: in the world. How is Adobe thinking about what I'm
Speaker 3: sure will continue to be a tricky issue as generative
Speaker 3: AI really gets into the hands of people at large.
Speaker 14: Yeah, I think we all in the tech industry you
Speaker 14: need to take a very lenient position on working with
Speaker 14: governments and regulators to address this issue. So our position
Speaker 14: has been and we've worked with both the White House
Speaker 14: and Capitol Hill. We've also been very involved with the
Speaker 14: You with their AI Bill of Rights, and we believe
Speaker 14: that the right approach she here is to do something
Speaker 14: called content credentials. What content credentials effectively does is it's
Speaker 14: a nutrition label for every piece of content you see online.
Speaker 14: And we make sure that anything that flows through our products,
Speaker 14: whether it's the AI generated capabilities of Firefly or whether
Speaker 14: it's our core flagship applications like Photoshop, have the providence
Speaker 14: are the origin of all that content in it, so
Speaker 14: that when someone sees it ultimately on a website, they
Speaker 14: can go and look at it and say, well, what
Speaker 14: was this and how was it generated, so they can
Speaker 14: use their own judgment about whether this is content that
Speaker 14: they want to depend on or content that they don't trust.
Speaker 3: So I spent a lot of time in the social
Speaker 3: media space. I spend a lot of time with creators
Speaker 3: and advertisers.
Speaker 4: They're trying to move really fast.
Speaker 3: They are looking at things like cap cut, some of
Speaker 3: your competitors, Canva. There's a slew of new kind of
Speaker 3: startups who are pushing in and seemingly trying to take
Speaker 3: some of Adobe's traditional creations. How are you facing competition
Speaker 3: from these kind of younger players who perhaps not providing
Speaker 3: that digital provenance that you guys are committing to.
Speaker 14: Well, first of all, you know, the Adobe core business
Speaker 14: for creative and our business overall continues to grow. I
Speaker 14: think we as you probably saw on our last earnings call,
Speaker 14: we had a great quarter, we beat and then we
Speaker 14: raised our guidance for the year. So the core machinery
Speaker 14: continues to grow, both in terms of what we're doing
Speaker 14: for creative professionals, but also this massive and growing population
Speaker 14: of creativity for all everyone that's part of the creator economy.
Speaker 14: That are the younger generations and students that are looking
Speaker 14: to add more content that stands out. So we're benefiting
Speaker 14: from all of that. At the foundation, you know, we
Speaker 14: think innovation is key, and we think the way that
Speaker 14: works is having a set of products from Firefly which
Speaker 14: you can use just for fun and enjoy yourself to
Speaker 14: Adobe Express, which is perfect for knowledge workers and creator
Speaker 14: creator professional creator economy all the way to photoshop and
Speaker 14: then enable everyone to sort of create along that continuum
Speaker 14: and enable them to work together on that. So we
Speaker 14: feel very good about the breadth of offerings and the
Speaker 14: onboarding that users have into those offerings.
Speaker 2: Well, speaking of startups, of course, you led the purchase
Speaker 2: of the design startup Figma not so long ago, and
Speaker 2: the US government is preparing a lawsuit to potentially block it,
Speaker 2: and we know the UK has already done. So your
Speaker 2: CEO has said that you're working to convince authorities that
Speaker 2: it's not not anti competitive.
Speaker 5: How's that going very quickly.
Speaker 14: We're cooperating and sharing all the information that we have
Speaker 14: with the regulators around the world. Our core belief and
Speaker 14: continues to be that the substance of the case is
Speaker 14: that this is an adjacency that's good for the industry
Speaker 14: and good for consumers. We see a lot of potential
Speaker 14: benefits and we're confident in the case and we just
Speaker 14: have to let the process play out.
Speaker 3: David Wadwani, president of Digital Media Business for Adobe, Thank
Speaker 3: you more.
Speaker 4: Next, this is Bloomberg.
Speaker 6: TikTok is not available in midland China today. As we
Speaker 6: said many times, the Chinese government has actually never asked
Speaker 6: us for US use of data and we will not
Speaker 6: provide even a vast.
Speaker 4: That was TikTok.
Speaker 3: CEO show too there, speaking during a Bloomberg interview at
Speaker 3: the Qatar Economic Forum in Doha. Now, let's continue that
Speaker 3: conversation about rising US China tensions around tech and AI
Speaker 3: with Linda Moore, President and CEO of tech Net, a
Speaker 3: bipartisan network of tech CEOs and senior executives promoting the
Speaker 3: growth of innovation in this economy. Now, Linda, when I
Speaker 3: think about kind of the dialogue that's gone on between
Speaker 3: the US and China, it's verged from contention to kind
Speaker 3: of techno nationalism. But I think at the end of
Speaker 3: the day, I have a big question as to when
Speaker 3: we will actually see some kind of regulation happen that
Speaker 3: protects the US if that's what lawmakers want.
Speaker 8: What's your take on that specifically on AI.
Speaker 15: Federal policymakers and state policymakers are in fact finding mode
Speaker 15: right now, working closely with them and all of our
Speaker 15: member companies at tech net to make sure they understand
Speaker 15: that the technology can be rolled out in a safe,
Speaker 15: responsible way. We saw an instance yesterday that was very unfortunate.
Speaker 15: We certainly want to avoid that anytime going forward, and
Speaker 15: I think that Twitter probably learned some things from that
Speaker 15: instance and we'll hopefully safeguard it going forward. But all
Speaker 15: of the companies that I work with, and all the
Speaker 15: federal policy makers I work with, understand the great potential
Speaker 15: of AI, especially in the medical realm, and so we
Speaker 15: don't want to, you know.
Speaker 8: Not take advantage of that.
Speaker 15: It can help us solve a lot of issues and
Speaker 15: a lot of problems that we face. But it will
Speaker 15: take some time for federal policy makers to put some
Speaker 15: regulations in place. I think that we'll see that in
Speaker 15: the coming year.
Speaker 3: And you know, Congress has been nothing if not reactive
Speaker 3: when it comes to regulating tech.
Speaker 4: There have been.
Speaker 3: Industries like social media where we've seen whistleblower after executive
Speaker 3: touted down to Capitol Hill with big concerns but no
Speaker 3: actual regulation. Do we need a big moment, a big
Speaker 3: scary moment, for that kind of fact finding mode to
Speaker 3: end and for actual regulation to take place.
Speaker 15: Well, I think that policy makers at the federal level
Speaker 15: are being very wise and that they don't know all
Speaker 15: that they need to know about the technology, and I
Speaker 15: think that they're taking that very seriously. We've seen a
Speaker 15: huge uptick in hearings and people appearing in Congress.
Speaker 8: You saw Sam Altman just recently.
Speaker 15: Others will continue to meet with Majority Leader Schumer and
Speaker 15: also other committee chairs, and also the White House and
Speaker 15: the agencies are also putting forward their own task forces
Speaker 15: on this. I do hope that it's not a big
Speaker 15: scary moment that does, you know, cause everyone to clamp
Speaker 15: down on this.
Speaker 8: I think that all.
Speaker 15: Of our American technology companies are very focused on safe,
Speaker 15: responsible rollout of artificial intelligence. It is already being used
Speaker 15: and used well in lots of instances, and we just
Speaker 15: want to increase that activity and apply it to a
Speaker 15: lot of different really great applications. And policymakers are wisely
Speaker 15: trying to really understand what they don't right now about
Speaker 15: how it can be used and used well.
Speaker 2: Right, we certainly need the right policies in place to
Speaker 2: move forward on that. Sometimes it's easier to identify the
Speaker 2: wrong policies. What would be an example of the wrong
Speaker 2: policy when it comes to regulating, potentially regulating.
Speaker 15: AI well I think that you know, in some instances,
Speaker 15: if you saw just a complete clamp down on there
Speaker 15: will be no use of AI at all, and we
Speaker 15: will be looking for companies to prosecute if that happened.
Speaker 8: That's an extreme situation. I don't see that happening.
Speaker 15: But you know, policy makers, as I mentioned before, they
Speaker 15: very much understand the wonderful potential of AI, how it's
Speaker 15: being used right now to increase output. For example, the
Speaker 15: Madrona vaccine for COVID that was found so rapidly because
Speaker 15: AI can find so many tests and solutions to a problem.
Speaker 15: So there are wonderful applications of this technology, and I
Speaker 15: think that policy makers are wisely under standing that and
Speaker 15: are wanting to take it slow and make sure they
Speaker 15: understand exactly all the things that they don't know, good
Speaker 15: and bad for how it can be used. And American
Speaker 15: technology companies take that very seriously too.
Speaker 8: You've seen all kinds of.
Speaker 15: Frameworks put out, especially by Google and Microsoft that really
Speaker 15: lays out the responsible and safe use of artificial intelligence,
Speaker 15: and I think that that's the right way to go.
Speaker 2: In the meantime, there's a lot of talk of perhaps
Speaker 2: maybe putting together a federal data privacy law that would
Speaker 2: protect the databall consumers and businesses, give people some certainty
Speaker 2: to what extent is europe a model for what to
Speaker 2: do or what not to do?
Speaker 15: Yeah, you know, there are a lot of good things
Speaker 15: to learn from the European model. First of all, they
Speaker 15: made sure that there was one national standard for the continent.
Speaker 15: Right now, we have nine states already that have enacted
Speaker 15: their own privacy laws. California was the first, but a
Speaker 15: to others have followed, And just this year alone we
Speaker 15: had twenty eight states that introduce fifty six different privacy laws.
Speaker 15: TECH that is very involved with federal policymakers on a
Speaker 15: daily basis advocating for one national standard.
Speaker 8: We want one.
Speaker 15: National privacy law that will give all businesses in America
Speaker 15: the rules of the road that they need to adhere
Speaker 15: to their responsibilities and also so consumers will know their
Speaker 15: data is protected and they know exactly what to expect.
Speaker 5: Thank you so much.
Speaker 2: Linda Moore is president and CEO of TechNet in San Francisco.
Speaker 2: And that does it for this edition of Bloomberg Technology.
Speaker 3: Don't forget to check out the Bloomberg Technology podcast. You
Speaker 3: can find it on the terminal online, on apples, Spotify,
Speaker 3: and iHeart this is Bloomberg.