Speaker 1: From Mahart.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Vallet NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
Speaker 3: I'm Caroline Hyder Bloomberg's World headquarters in New York, and I'm.
Speaker 4: Ed Lodlow in San Francisco. This is Bloomberg Technology coming up.
Speaker 3: Apple faces its worst start to the year in China
Speaker 3: that since the COVID pandemic, as new reports shows sales
Speaker 3: fell by nineteen percent in the first quarter.
Speaker 4: Plus the Senate is set to consider the ninety five
Speaker 4: billion dollar aid package that could lead to a nationwide
Speaker 4: ban on TikTok if not divested.
Speaker 5: We'll go on the ground to Washington and we.
Speaker 3: Put your head to Tesla earnings after the Bella's investors
Speaker 3: brace for Musk to nix the roll out of a
Speaker 3: cheaper model and refocus on developing a robotax shares already
Speaker 3: suffering their long routes is twenty twenty two. We'll discussed
Speaker 3: that and so much more throughout this hour. But even
Speaker 3: as we sit with much anticipation of the earnings to come,
Speaker 3: we managed to see some risk appetite in the market today.
Speaker 3: Maybe the bad news is good news from a macro
Speaker 3: perspective today, maybe some of that business activity actually cooling
Speaker 3: off more than the market anticipated means well we decide
Speaker 3: to go into equities as we think the Federals of
Speaker 3: maybe has more space to be cutting in the second
Speaker 3: half of the year. Now's THATAK currently off up one
Speaker 3: and a half percent, but remember we've been beaten up,
Speaker 3: particularly at the end of last week two year yield
Speaker 3: big auction sixty nine billion dollars worth record amount coming
Speaker 3: to the market, yet still yields managing to be falling today.
Speaker 3: That's so as we see money move into some of
Speaker 3: the havens we're seeing four point ninety three there are thereabouts,
Speaker 3: so interesting that we've got equities rallying and indeed Bob
Speaker 3: Market's rallying on this particular day. Stocks six hundred over
Speaker 3: in Europe also having a stellar run. On the moment,
Speaker 3: we're up a percentage point, notably UK call out for
Speaker 3: them the footsy one hundred crentyet a new record high.
Speaker 3: And that's actually as we see some of the haven
Speaker 3: stocks there actually do well amid some of the geopolitical tensions.
Speaker 3: We have a look overall at money moving into both
Speaker 3: risk asset classes, and indeed it's a good old bitcoin,
Speaker 3: but four ten percent at the moment, we're currently at
Speaker 3: sixty eight hundred and forty nine, so well off. The
Speaker 3: highs are still money coming in despite a relatively strong dollar.
Speaker 6: Ed.
Speaker 3: What for you've got coming up on the micro.
Speaker 4: Are earnings and a lot of individual individual tech names.
Speaker 4: Tesla's getting a boost ahead of earnings. After the bell,
Speaker 4: we will play Oh get ready to play Tesla Bingo.
Speaker 4: Tune in at the end of the show to find
Speaker 4: out what I'm talking about. Spotify swing to profit, strong
Speaker 4: sub subscriber growth, Bloomberg's actually Carmen's going to join us.
Speaker 4: This is a name that a lot of people watching.
Speaker 4: Look at the big jump in the shares and then
Speaker 4: Adobe's higher. It's the one year anniversary since Firefly was released.
Speaker 4: I think there's big questions about particularly text to video generation.
Speaker 4: We have a key interview with an Adobe executive. Then
Speaker 4: there's Apple, so Apple's interesting. We're now higher, maybe four
Speaker 4: tens one percent in the session. We had open lower,
Speaker 4: but basically we're trading at the same level on Apple
Speaker 4: we were one year ago. It has been a difficult start.
Speaker 5: To the year.
Speaker 4: Concern principally about China. Third party data Counterpoint Research shows
Speaker 4: that iPhone sales in China down nineteen percent one nine.
Speaker 4: More interesting, perhaps, is the other data outside of Apple
Speaker 4: showing domestic handset makers gaining market share. Apple has fallen
Speaker 4: to third and it's on par with Huawei, which is
Speaker 4: kind of resurgent at the higher end of the smartphone market.
Speaker 5: The data doesn't seem to be worrying.
Speaker 2: Anyone right now.
Speaker 4: We continue to push higher in the session, but big
Speaker 4: picture ahead of earnings later on next week, Apple in focus.
Speaker 4: Let's talk to none other than Bloomberg's chief Apple correspondent,
Speaker 4: Mark German. We stress third party data. It is not
Speaker 4: Apple telling us this, but there's a bit of concern
Speaker 4: that China is still the key battleground and the iPhone
Speaker 4: is losing ground mark.
Speaker 7: This is exactly what Wall Street and investors have been
Speaker 7: bracing for another big decline in China. As you know,
Speaker 7: Apple had its biggest decline in a cup of years
Speaker 7: last quarter related to overall China sales, and now it
Speaker 7: looks like you're going to see another decline in China
Speaker 7: given this data from Counterpoint Research. Now, as I typically say,
Speaker 7: these data points are typically not exactly on the money,
Speaker 7: but they're usually directionally correct. So if they're telling us
Speaker 7: that iPhone sales in China are down by a fifth,
Speaker 7: I would believe that iPhone sales in China are down
Speaker 7: quite considerably, not maybe as bad as nineteen percent, but
Speaker 7: in all likelihood they're going to be down, bringing down
Speaker 7: of the overall picture in China. Now, why is that
Speaker 7: partcurely interesting? Because even though China had about a two
Speaker 7: billion dollar decline in the prior quarter, Tim Cook on
Speaker 7: the earnings call said, that's not because of the iPhone,
Speaker 7: it's because of Apple's other products that they sell in China. Well,
Speaker 7: this timearound, it's likely because the iPhone. If these numbers
Speaker 7: are to be believed to be.
Speaker 3: Believed, let's talk about other products. Because we've kind of
Speaker 3: got signaling on all of this before IDC another third
Speaker 3: party data giving us a similar picture. What's new on
Speaker 3: day mark? Is it?
Speaker 2: Well?
Speaker 3: May seventh, we've got a new event and it's all
Speaker 3: around those new iPads.
Speaker 7: Yeah, as I've been saying on here and on power
Speaker 7: on the last several weeks, Apple is set to launch
Speaker 7: its biggest free damp to the iPad in over five years.
Speaker 7: You're going to see new versions of the iPad air
Speaker 7: in the iPad pro introduced on May seventh. They're going
Speaker 7: to play a video on their website. They're trying something
Speaker 7: new here, a video starting time of seven am versus
Speaker 7: the usual ten am, and they're announcing this video well
Speaker 7: in advance. They've been trying some different things lately. Their
Speaker 7: usual cadence is to announce these things seven days in advance,
Speaker 7: So now we're getting a full two weeks, which is
Speaker 7: quite interesting. Maybe they want a little bit more momentum
Speaker 7: leading into that they're trying to see for these smaller
Speaker 7: scale launches if more advanced notice brings in more people.
Speaker 7: So this is certainly going to look out for new
Speaker 7: iPad pro, new iPad Air, new Apple pencil, new Magic keyboards,
Speaker 7: all coming about one month before they announced their new
Speaker 7: AA initiatives at the Worldwide Developers Conference in early June.
Speaker 8: So this is going to be significant.
Speaker 7: In the hope, if you're on Wall Street or a
Speaker 7: shareholder of the company, is that this is going to
Speaker 7: boost iPad sales, which have been down quite considerably the
Speaker 7: last several quarters due to a lack of any updates
Speaker 7: across twenty twenty three.
Speaker 3: And they're in lines a lot of the issue, a
Speaker 3: lack of update and certainly weakness in China. Mark German
Speaker 3: always telling us as telling us at first reappreciate it. Meanwhile,
Speaker 3: let's continue the conversation now on basically where you should
Speaker 3: sit with Apple when you're an investor, Ioka, you're Yoshi Yoka. Sorry,
Speaker 3: get my words out today, portfolio manager over at Wealth
Speaker 3: Enhancement Group in the house with us, Ioka. When you're
Speaker 3: looking at Apple, when you've seen some of the weakness,
Speaker 3: the worries about product updates, about perhaps behind the curve
Speaker 3: when it comes to AI, is this still such a
Speaker 3: solid name that you cannot avoid but to remain allocated
Speaker 3: to it, would you start to take some risk off?
Speaker 9: It's a great question, Caroline. So you know, when we
Speaker 9: look at Apple, it is a great company. It's got
Speaker 9: a high quality balance sheet. There's so much cash on
Speaker 9: their balance sheet and that allows them.
Speaker 3: To buy back a lot of stock.
Speaker 9: It's a big position within the S and P five
Speaker 9: hundred index, so it is difficult to not own it.
Speaker 9: And yet we do start to see some of these
Speaker 9: issues with Apple in terms of innovation and then being
Speaker 9: able to really bring new products that can continue to
Speaker 9: grow at the pace that they have been growing over.
Speaker 3: The last several years. And I think this is some
Speaker 3: of the tension we're seeing across the so called Magnificent seven,
Speaker 3: those that are deemed less than magnificent for some still
Speaker 3: managing to do very well. When we're worried about a
Speaker 3: Tesla and Apple, which in many ways have very similar
Speaker 3: issues China weakness, competition coming from China, worries about ultimately
Speaker 3: a lack of an update from a product, is it more. Therefore,
Speaker 3: you have to look at valuations rather than trying to
Speaker 3: see a narrative as to when you get the next product.
Speaker 9: I think it's the combination of both valuation and then
Speaker 9: just future growth. I think both Apple and Tesla are
Speaker 9: suffering from, you know, the issues that you talked about,
Speaker 9: and that's dampening their overall growth going forward, and so
Speaker 9: valuation for that lower growth is a little bit higher
Speaker 9: than everybody would like to.
Speaker 5: Pay the OCO. If the megacaps don't beat, what happens.
Speaker 9: You know, I think there could be a little bit
Speaker 9: of another sort of sell off in the market. We
Speaker 9: saw it last week and a half, you know. Ever
Speaker 9: since the inflation print, and I think we do need
Speaker 9: to see a lot of these larger names Microsoft, Amazon, Google, Meta.
Speaker 9: They need to come out and show us that they
Speaker 9: can continue to grow at the pace that they can grow,
Speaker 9: and show that free cash flow growth so that people
Speaker 9: can continue to rely on them for that quality growth.
Speaker 5: Do you get this sense here?
Speaker 4: Okay, this is the quarter where we look past the
Speaker 4: AI height and we start again to look at fundamentals.
Speaker 4: Did you have earnings growth? How is your free cash flow?
Speaker 4: Boring things like that?
Speaker 9: You know, I think it's going to be a combination
Speaker 9: of both ed in terms of you know, you have
Speaker 9: to produce those numbers. Those fundamentals are going to matter,
Speaker 9: but everybody wants to look at the future and say, well,
Speaker 9: can you continue to produce those quality numbers that we've seen.
Speaker 9: So AI continues to be, you know, a tailwind that
Speaker 9: everybody wants to see production out of and further continuance
Speaker 9: of that revenue and earnings growth.
Speaker 3: When you are seeing such a run up in big
Speaker 3: tech of late, how much you thinking about the macro,
Speaker 3: thinking about the data that we got today.
Speaker 4: Oh?
Speaker 9: Absolutely, I think the macro always contributes to the overall
Speaker 9: market narrative. You know, the larger cap names just tend
Speaker 9: to be at the very top of the funnel, per se,
Speaker 9: and they are technically those long duration assets that everybody
Speaker 9: likes to talk about and are most impacted by higher
Speaker 9: interest rates, and so they are a a crucial part
Speaker 9: of how we look at the overall macro as well
Speaker 9: as the individual stocks.
Speaker 4: Let's do a case study, which is Spotify. It's an
Speaker 4: interesting subscriber and ad based platform, profit and user growth.
Speaker 5: What does that tell you?
Speaker 9: You know, Spotify has been on quite a tear over
Speaker 9: the last year. They've really focused on managing costs and
Speaker 9: you know, as you know everybody's seen with the results,
Speaker 9: those gross margin numbers were really eye popping, you know,
Speaker 9: seeing those. The guidance for gross margin to continue higher
Speaker 9: at twenty eight percent next quarter is definitely something that
Speaker 9: we can continue to see with Spotify really, you know,
Speaker 9: generating that revenue and the earnings growth and managing the
Speaker 9: costs while they do that.
Speaker 4: The stock on track for its biggest jump since October
Speaker 4: twenty nineteen. Are you Yoshioka, portfolio manager a wealth enhancement group.
Speaker 5: Thank you.
Speaker 4: Let's get back to Spotify earnings now. After the audio
Speaker 4: streaming giants swung to profit in the first quarter. Bloomberg's
Speaker 4: actually Carmens here with the details swung to profit and
Speaker 4: subscriber growth?
Speaker 5: What were behind those two things?
Speaker 1: Over the past year, Spotify has really changed its business
Speaker 1: today and its earnings called Daniel like the CEO, called
Speaker 1: it the new Spotify. They reduced their costs significantly, particularly
Speaker 1: in their podcast business, which had been weighing on margins,
Speaker 1: and they've reduced their costs. They unfortunately did have to
Speaker 1: reduce their headcount quite a bit, but we're seeing that
Speaker 1: play out in that first quarter earnings for sure.
Speaker 3: I mean, phenomenal move in shares Ashley, and yet still
Speaker 3: some of the forecasts maybe behind where the market and anticipated.
Speaker 3: Is this just such a feel good factor around profitability?
Speaker 1: Finally, Yeah, I think the investors are really thrilled to
Speaker 1: see that they're still growing their user base and their subscribers,
Speaker 1: that profitability, and I mean it's worth noting that this
Speaker 1: is happening while they've reduced the number of people working
Speaker 1: from them, as well as increasing prices around the world
Speaker 1: with more price increases to come. So I think investors
Speaker 1: are just feeling like there's a lot of opportunity here.
Speaker 1: For them to continue growing and squeezing more revenue out
Speaker 1: of their users.
Speaker 4: Something that happened in the current period was Taylor Swift happened?
Speaker 4: I know, I listened to the entire thing on Friday.
Speaker 4: Did they talk about that?
Speaker 8: They did not.
Speaker 1: They did not talk about Taylor Swift, though I wish.
Speaker 3: But more what they perhaps are talking about is their
Speaker 3: focus on audio from the book's perspective. Sure, they've been
Speaker 3: pulling back in podcasting, but they still kept their heavy hitters.
Speaker 3: I think of Joe Rogan. But what then of the
Speaker 3: ability to charge more for audiobooks in full Ashley That
Speaker 3: seems to be working.
Speaker 1: Yes, so we had reported this last week, but Daniel
Speaker 1: Eck also mentioned this on the call today that basically,
Speaker 1: you know, they introduced fifteen hours of audiobook listening to
Speaker 1: subscribers in certain parts of the world, and of those
Speaker 1: users who have had the ability to play audiobooks, twenty
Speaker 1: five percent of them have taken advantage of their offering.
Speaker 1: So what they're really seeing is adoption and what they
Speaker 1: can do with that adoption. I mean, they could charge more,
Speaker 1: they can break out this audiobooks only tier which they launched.
Speaker 1: I think it's giving them a lot of room to
Speaker 1: potentially play with the different subscription tiers once again giving
Speaker 1: them flexibility with their users and the revenue that they
Speaker 1: can get from.
Speaker 3: Them as the opportunity. Investors love it. Ashley Carmen, thanks
Speaker 3: so much coming on talking us through what is a
Speaker 3: key mover today. Meanwhile, sticking with earnings and those that
Speaker 3: are companies over in Europe, SAP says it's current cloud
Speaker 3: backlog so as fastest growth on record. This comes as
Speaker 3: Europe's biggest software firm is actually seeking to my great
Speaker 3: customers from its legacy on premise software to the cloud,
Speaker 3: where of course it gets to offer business AI services too.
Speaker 3: Sweetened that deal. We spoke to the CFO a little
Speaker 3: earlier today.
Speaker 10: The advent of AI has clearly propelled the story of
Speaker 10: the transformation to the cloud. To move our customers from
Speaker 10: their on prem installations onto clouds are thing in an
Speaker 10: uptick on a constant currency basis, and all that is
Speaker 10: driven really by the core offering we have in the cloud,
Speaker 10: which is called the cloud ear Peacewite. That offering has
Speaker 10: actually generated in excess of thirty percent growth for nine
Speaker 10: quarters in a row.
Speaker 11: Now time for talking tech first up, Elon Musk's social
Speaker 11: network has been hit with an interim injunction by an
Speaker 11: Australian court to remove footage of a recent terrorist attack
Speaker 11: and hearing last night in Sydney, the Federal Court of
Speaker 11: Australia ordered x to hide all recordings of the attack
Speaker 11: until Wednesday.
Speaker 4: The court will then convene for a second hearing at
Speaker 4: a later date to determine the validity of a removal
Speaker 4: notice by the country's e Safety Commissioner. Meanwhile, ASML is
Speaker 4: weighing options to expand its presence in the Netherlands. The
Speaker 4: move comes after the government committed two point seven billion
Speaker 4: dollars to infrastructure and education spending in the region. The
Speaker 4: company said it's signed a letter of intent and the
Speaker 4: final decision is subject to ironing out a few crucial
Speaker 4: points and Perplexity Ai has raised about sixty three million
Speaker 4: dollars in a new funding round that values the company
Speaker 4: and more than one billion dollars. Perplexity offers an AI
Speaker 4: chatbot that summarizes search results, list citations for its answers,
Speaker 4: and helps users refine their queries to get the best responses.
Speaker 4: The financing doubles perplexities valuation from just three months ago, Caroline.
Speaker 3: AI still so hot. Let's talk about AI in the
Speaker 3: context of Adobe now, because it's bringing more generative AI
Speaker 3: tools to Photoshop powered by it's Adobe Fileflight, Image three
Speaker 3: Foundation model. Joining us now from their Maps Creativity conference
Speaker 3: over in London, David Wanjani, Adobe Digital Media President, Welcome,
Speaker 3: and you know, how is this incentivizing clients to pay
Speaker 3: more for Adobe? How are you seeing generative AI really
Speaker 3: bring about a revenue increase for the business?
Speaker 12: Great to be here, Caline, you know, I think we
Speaker 12: have to put everything we're doing with generative AI in
Speaker 12: the context of what we've been doing over the last year.
Speaker 12: We first introduced generative AI a year ago, and in
Speaker 12: that period of time, we've added imaging model, a vector model,
Speaker 12: which is another very important format for a creative professionals,
Speaker 12: a design model. We've enabled customization of that content for
Speaker 12: their specific design needs or their assets that they work on,
Speaker 12: and we've exposed that in Photoshop at our creative cloud applications.
Speaker 12: We've exposed it in Adobe Express for marketers and creative
Speaker 12: professionals and solentrepreneurs, and we've exposed it as APIs for
Speaker 12: a broad base of automation workflows, And what this has
Speaker 12: really done is it's supercharged content creation. If you're a
Speaker 12: creative pro, you can produce that content much more effectively
Speaker 12: and much more quickly. If you're trying to automate workflows,
Speaker 12: you can do that with your existing environments that you have.
Speaker 12: And if you're a marketer, you can react more quickly
Speaker 12: to anything that's happening on social really empowered businesses to
Speaker 12: operate at another level of scale.
Speaker 3: I want to talk about scale and the difficulty ultimately
Speaker 3: of feeding data into foundational models. At the moment, you've
Speaker 3: just been unveiling sort of the new foundational model, and
Speaker 3: I'm interested in is what's going in because what set
Speaker 3: you apart, particularly in the narrative of Adobe, is that
Speaker 3: you're safer because you are building basically upon your own data,
Speaker 3: your own well images that you own, your stock. But
Speaker 3: then there was some reporting, some bloomberg ultimately that you're
Speaker 3: having to use synthetic data which is sometimes used from
Speaker 3: rival AI well image generators. Can you just tell us
Speaker 3: about how clients are responding to really what your data
Speaker 3: is being trained on right now?
Speaker 12: Yeah, we are, I think, without a doubt, the most
Speaker 12: responsible training model in the market. We've been very clear
Speaker 12: that we have full license rights for everything that we've
Speaker 12: trained on. We have a process that we internally call
Speaker 12: ART which is about accountability, responsibility, and transparency. So everything
Speaker 12: we generate and any model before its hips goes through
Speaker 12: this process.
Speaker 13: We have.
Speaker 12: Basically a moderation system in place so that we make
Speaker 12: sure any content that comes in does not have or
Speaker 12: is not encumbered with any misappropriated IP rights. And so
Speaker 12: customers have been very very clear with us is that
Speaker 12: there's a lot of interesting work going on around the
Speaker 12: industry around AI models, but when it comes to true
Speaker 12: production systems, we're really at the top of the marks
Speaker 12: in terms of the ability to actually use this to
Speaker 12: create and ship content that's generated with these models.
Speaker 4: David, there is only one single question that's being directed
Speaker 4: at a Davy right now, which is when and in
Speaker 4: what form will you have a text to video generation
Speaker 4: platform akin to Sora.
Speaker 8: Yeah, I don't know.
Speaker 12: If you had a chance to see the announcements that
Speaker 12: we made last week at the National American Broadcast, there's
Speaker 12: a video series we announced and we talked about how
Speaker 12: we are We actually gave us sneak of our text
Speaker 12: of video capabilities as part of that, we also announced
Speaker 12: that we're working with Sora, that we're working with Runway
Speaker 12: and with Pika, and together all of these capabilities are
Speaker 12: going to be embedded in all of our creative applications.
Speaker 12: What's really exciting about all this text of video capability
Speaker 12: is that we have the ability now to look at
Speaker 12: this and say, all of this generative capabilities is analogous
Speaker 12: to more cameras in the world, and the more content
Speaker 12: that gets created, the more content comes into our systems
Speaker 12: for editing. We've also been just as clear our technology
Speaker 12: for video, the architecture and the research that's gone into
Speaker 12: it is very similar to what we see out of
Speaker 12: Sora and others, and that we expect to have our
Speaker 12: model in market later this year.
Speaker 4: The strategy in Premier, and when I was at Generalism School,
Speaker 4: i trained Premiere, So it's interesting full circle. You are
Speaker 4: going to use third party models, and so far Photoshop
Speaker 4: has not had the extension of that strategy. Just explain
Speaker 4: why and what you'll do going forward.
Speaker 12: We are going to embrace all models. You know Photoshop
Speaker 12: you will see again later this year.
Speaker 8: You will see.
Speaker 12: Support for any model that can be integrated into Photoshop
Speaker 12: will be integrated into Photoshop. But we also recognize that
Speaker 12: each model has its own personality, and at any given moment,
Speaker 12: what you generate in one model versus another model, there
Speaker 12: might be be varying preferences. The one thing that we
Speaker 12: know is that Firefly is going to be, you know,
Speaker 12: synonymous with the best quality of content, with the best
Speaker 12: detail of content, and with the most controllability of that
Speaker 12: content that's generated in particular, and that means that whatever
Speaker 12: we create with Firefly can get more deeply embedded in
Speaker 12: our tools. As Caroline mentioned, we just had an enormous
Speaker 12: set of announcements in terms of dozens of new capabilities
Speaker 12: of AI generation embedded in our tools and workflows, and
Speaker 12: it's because of the way we build Firefly, but we
Speaker 12: are embracing third party models and we anticipate and expect
Speaker 12: to integrate those in our tools as well.
Speaker 4: David Worldwhinnie, Adobe Digital Media President, Great to have you on.
Speaker 4: We're marking one year, believe it or not, since Firefly,
Speaker 4: appreciate it. Welcome back to Bloomberg Technology. Ed Ludlow in
Speaker 4: San Francisco.
Speaker 3: Anan had anyw York. Let's get a quick check on
Speaker 3: your markets, because oh I got a little bit of
Speaker 3: money back into the tech sector after what has been
Speaker 3: beaten up over the last few training days. Money one
Speaker 3: point four percent higher on the Nasdaq one hundred. We
Speaker 3: are all bracing for the earnings narrative that comes out
Speaker 3: thick and fast for the rest of the week, and
Speaker 3: so far we're seeing a little bit of buying the
Speaker 3: dip that we've seen in some of the tech names
Speaker 3: have been beaten up, certainly from Friday into Monday. Now Tuesday,
Speaker 3: now's that one hundred higher. We're seeing the two year
Speaker 3: yield auction. We're looking at two year ye'l currently down
Speaker 3: by almost four basis points ahead of that all important
Speaker 3: sixty nine billion dollar auction of two year bonds foot
Speaker 3: instead of record high Europe having a good day to
Speaker 3: moving on, have a look at some of the individual
Speaker 3: movers as we do anticipate some big earnings narratives for
Speaker 3: this week. Want to shine out on Nvidia. Yes, it
Speaker 3: was down ten percent on Friday, but Monday got bought
Speaker 3: the dip. Tuesday they're buying the dip again. We're up
Speaker 3: three point seven percent, so managing to whittle weigh some
Speaker 3: of those losses that extended to more than two hundred
Speaker 3: billion dollars worth of market cap lost on Friday. I'm
Speaker 3: looking also what's happening in Microsoft at one point four percent. Yes,
Speaker 3: we get their earnings later, but we also anticipating while
Speaker 3: still they're focused on artificial intelligence of their own building,
Speaker 3: They've got a smaller model that they've announced today, built
Speaker 3: by Microsoft's own AI researchers, and that's going to be
Speaker 3: able to be adopted. Finational model, use more on your
Speaker 3: actual devices. What does that mean? It's an open source
Speaker 3: model as well, so interesting as they continue to basically
Speaker 3: create even with their close relationship with the likes of
Speaker 3: Mistra and indeed of course of open AI. I'm looking
Speaker 3: what's happening on Instacart down heavily, down by more than
Speaker 3: seven percent. This is, as we understand, Amazon is going
Speaker 3: to be well getting into the world a grocery delivery.
Speaker 3: It's not always worked that well before ed, but still
Speaker 3: this is the bread and butter of Instacart. It is
Speaker 3: feeling some of the competitive threat, even though amast say, look,
Speaker 3: there's room enough for more. A what if you've got
Speaker 3: in the micro.
Speaker 4: Away from some of the public names, is a private
Speaker 4: name that is top of mind for everyone and that
Speaker 4: is TikTok and the legislation involving TikTok, which would bar
Speaker 4: the Social Platform from operating in the US if it's
Speaker 4: China based owner doesn't sell its stake within a year.
Speaker 4: Bloomberos Kielyons is here from DC for more on the
Speaker 4: bill on its way to the Senate. So my understanding
Speaker 4: today that there's kind of a next procedural step.
Speaker 5: Before the kind of main event what's going to happen.
Speaker 3: Yeah, and that's exactly right.
Speaker 14: This is the United States Senate and which procedure does
Speaker 14: loom large. So what really needs to happen in order
Speaker 14: to get to a final passage vote is first it
Speaker 14: must pass the closure vote that will begin later this
Speaker 14: afternoon votes beginning around one pm Eastern times. Sixty votes
Speaker 14: will be needed in order to advance this and then
Speaker 14: it's going to be a question of how much debate
Speaker 14: there is of this package, which yes, does include the
Speaker 14: TikTok divestor band bill, but it's part of a much
Speaker 14: wider bill that has ninety five billion dollars in four
Speaker 14: and aid for US allies. So that is why a
Speaker 14: lot of Senators may end up voting for this bill,
Speaker 14: whether or not. They've been advocates for this kind of
Speaker 14: legislation around TikTok in the past. Keep in mind that
Speaker 14: a very similar bill that didn't have TikTok included already
Speaker 14: had passed the Senate by a vote of seventy four
Speaker 14: months ago, so it's highly likely that this ultimately will
Speaker 14: pass during final passage. It really is just a question
Speaker 14: of when how much disruption we can see from the
Speaker 14: likes of Republican Senator Ran Paul or even Democratic Senator
Speaker 14: Bernie Sanders. But the way the procedure goes is once
Speaker 14: this closure vote happens, there will be a maximum of
Speaker 14: thirty hours of debate after that. So this is highly
Speaker 14: likely to pass the Senate, if not today, by Wednesday
Speaker 14: at the latest.
Speaker 3: It's worth keeping in mind that.
Speaker 14: They are supposed to be on recess this week, so
Speaker 14: it's likely that a lot of Senators are eager to
Speaker 14: get out of Washington and to go actually take their
Speaker 14: time off in their districts. But then, of course, it
Speaker 14: becomes a question of what happens after this gets President
Speaker 14: Biden's signature, because not only does this give TikTok potentially
Speaker 14: a year to work on this divestiture. It also, we
Speaker 14: understand plans to fight this in court. There is likely
Speaker 14: to be a long legal battle that will play out,
Speaker 14: and then a lot of remaining questions, including whether or
Speaker 14: not China would actually sign off on any divestiture of
Speaker 14: by Dance and the TikTok Us operation, what help happens
Speaker 14: to the algorithm, who will be able to buy this
Speaker 14: business without running into anti trust issues? A lot of
Speaker 14: questions will still remain after today.
Speaker 3: Caroline, Kaymie, and I therefore ask a question on the
Speaker 3: sentiment you're hearing from the people you speak to on
Speaker 3: Capitol Hill about what this means for China in the US,
Speaker 3: what this means for other Chinese businesses looking to will
Speaker 3: continue to expand in the US. I think a PDD
Speaker 3: and TIMU.
Speaker 14: Yeah, that's a very real concern, Caroline. Those who were
Speaker 14: more opposed to this legislation when it first passed the
Speaker 14: housekeeping in mind that initially it was a bill that
Speaker 14: would see TikTok need to be invested within a six
Speaker 14: month period. You did have some critics, including the chair
Speaker 14: of the Senate Commerce Committee, Senator Maria campt Well, talking
Speaker 14: about how that timeline seemed unrealistic, There were also others
Speaker 14: who were calling attention to the fact that this is
Speaker 14: a piece of legislation targeting a private business and what
Speaker 14: kind of precedent that may set if the US is
Speaker 14: suddenly pursuing that kind of policy. By and large, though,
Speaker 14: it does seem that, especially among the intelligence and national
Speaker 14: security community, they are much more concerned with those national
Speaker 14: security issues around data privacy, the way in which the
Speaker 14: Chinese government may be access user data from the well
Speaker 14: over one hundred million Americans who are on this platform,
Speaker 14: and also on the propagation of mis or disinformation that
Speaker 14: could be on this platform in the run up to
Speaker 14: the election. And it's worth keeping in mind with the
Speaker 14: timeline that is set in this new piece of legislation,
Speaker 14: which would be divestiture between nine months up to a
Speaker 14: year should the President choose, that will take us well
Speaker 14: beyond the vote in November.
Speaker 3: Articularly put Katie lines with all the procedural events and
Speaker 3: indeed what this has impact longer term. We thank you.
Speaker 3: Let's get more of a deep dive on all of this.
Speaker 3: Doug Kelly US is with US. He's former chief of
Speaker 3: staff to Senator Amy Klobashaw and now a fellow at
Speaker 3: the Harvard Belfer Center, where he focuses on US tech policy,
Speaker 3: in particularly, you're thinking around thoughtful AI policy with Americans
Speaker 3: responsible innovation, Doug. I'm interested is to the nuance here
Speaker 3: of promoting innovation at the same time as promoting safety
Speaker 3: and will this ultimately see less social media competition here
Speaker 3: in the US and what does that mean for innovation.
Speaker 15: I think the TikTok is really a unique case. You know,
Speaker 15: it's a case we're looking at. You know, most policymakers
Speaker 15: want a foster competition. They also have great respect for
Speaker 15: First Amendment rights of free expression. But on both sides
Speaker 15: of the aisle, you've seen the argument me that TikTok
Speaker 15: is a unique national security threat, and I think when
Speaker 15: the intelligence community comes together and makes the case that
Speaker 15: this is a step that needs to be taken for
Speaker 15: national security policy makers, buy a largele listen. I also
Speaker 15: think it's likely that this type of BAM or holt
Speaker 15: up in the courts for that very reason.
Speaker 8: But time will tell.
Speaker 5: Doug.
Speaker 4: In the divestent ban, let's go with the band scenario.
Speaker 4: You are a student of US technology policy. You have
Speaker 4: a CV that shows you understand the organs of government.
Speaker 4: You explain to me how you get one hundred and
Speaker 4: fifty million Americans to not use TikTok in a twelve
Speaker 4: month timeline.
Speaker 15: You know, the way that the legislation works, it wouldn't
Speaker 15: be an immediate on off switch. You would have the
Speaker 15: app store beyond able to update the app. And what
Speaker 15: makes TikTok so great is that it's so user friendly,
Speaker 15: so over time it would degrade and people wouldn't move
Speaker 15: to other things. I agree that if there is no
Speaker 15: divestiture and this moves to a ban, there'd be a
Speaker 15: large public outcry, but I believe that Congress will be
Speaker 15: able to make the case.
Speaker 8: Okay, we gave a full year of notice.
Speaker 15: We made it so everything was in place for a divestiture,
Speaker 15: and they've tried to make this painfully clear. And if
Speaker 15: there isn't a divestiture, the question is why. I think
Speaker 15: there will definitely be buyers. There may be anti trust concerns,
Speaker 15: but I believe that anti trust regulators would be cognizant
Speaker 15: of the fact that this is a forced sale and
Speaker 15: really try to he can do to it to making
Speaker 15: it had in. It seems likely that the Chinese government
Speaker 15: has said that they are not going to be okay
Speaker 15: with this, and they're going to stand in the way.
Speaker 15: And if the Chinese Communist Party is standing in the
Speaker 15: way of a divestiture, then I think that just makes
Speaker 15: the case for the law even more clear, and Congress
Speaker 15: really will have winter that's back in terms of public opinion.
Speaker 8: But I agree it could be messy.
Speaker 15: There are a lot of people who really rely on
Speaker 15: TikTok for their livelihood and if there isn't a divestiture
Speaker 15: and a band goes through, there's gonna be a lot
Speaker 15: of pain. But there are other options, and I think
Speaker 15: this is something that Congress beliefe is worth it in
Speaker 15: the long run, even though it could be difficult.
Speaker 3: Doug talk to us about the other options and whether
Speaker 3: there are enough of them. Some of the sudden question
Speaker 3: marks about how swiftly a potential ban or divest would
Speaker 3: go through was because former President Trump suddenly highlighting concerns
Speaker 3: around Meta ultimately becoming more powerful in his mind's eye
Speaker 3: without TikTok? Is that a concern for you? Do you
Speaker 3: think there's enough competition out there? Do you think just
Speaker 3: more will be bred?
Speaker 8: That is a concern.
Speaker 15: I believe that with Instagram and with Facebook, you know,
Speaker 15: Meta really does have you know, a major position here,
Speaker 15: and they will be well poised to consolidate control if
Speaker 15: TikTok is taken off the table. And I think that's
Speaker 15: something that a lot of policymakers don't want to see.
Speaker 15: But here because the national security concerns they're willing to
Speaker 15: countenance not possibly happening. There are other also competitors in
Speaker 15: the space. We could see things spring up. I think
Speaker 15: that you know, TikTok's really became a phenomenon because its
Speaker 15: algorithm is so good and it gave users what they wanted.
Speaker 8: But that's not secret now.
Speaker 15: I mean, the algorithm itself is secret, But what they're
Speaker 15: using to try to drive engagement and really make it
Speaker 15: fun and easy to use and very social are things
Speaker 15: that other social platforms can copy. Now, and TikTok were
Speaker 15: no longer a competitor than I think you would see
Speaker 15: other apps spring up to try to do the same thing.
Speaker 4: Doug, finally, go back to your experience of advising a
Speaker 4: senator put that hat on. What is the benefit to
Speaker 4: a lawmaker going strong on the anti China rationale of
Speaker 4: doing this if their constituents are saying, hey, I love TikTok.
Speaker 4: I use TikTok.
Speaker 5: They have to then go back and.
Speaker 4: Explain why they're doing this, all told ahead of an
Speaker 4: election cycle.
Speaker 15: He's right, that's difficult, and I think the reason it
Speaker 15: works is because the leading lawmakers all held hands and said,
Speaker 15: this is something we really care about. The bill came
Speaker 15: through the House committee unanimously with no one posing. That
Speaker 15: almost never happens, and that shows how broad the support
Speaker 15: it is. The vote in the House was very strong.
Speaker 15: You had some members on the far right and the
Speaker 15: far left to a pose, but most of them voted
Speaker 15: for it.
Speaker 8: And you're going to see a similar thing here in
Speaker 8: the Senate.
Speaker 15: And you know, if there's one thing that lawmakers like,
Speaker 15: it's political covering. And when they can actually hold hands
Speaker 15: and do something difficult altogether, it makes it much easier
Speaker 15: for each one of them go back to their district
Speaker 15: and set of the constituents.
Speaker 8: Is something that needed to be done.
Speaker 4: From the political to the tech policy. Doug, I think
Speaker 4: you were well placed to explain all of that to us.
Speaker 4: Stud kalidas part of a Belfa Center fellow, of course,
Speaker 4: chief of staff for Amy Klovich previously Okay, coming up
Speaker 4: Apple sales in China slide in the country as the
Speaker 4: company faces it's worst starts the year since COVID. That's
Speaker 4: according to some third party data. We'll talk about that
Speaker 4: again next character.
Speaker 3: Let's just look at shares of other social media companies
Speaker 3: right now, Trump Media and Technology in particular. Now we
Speaker 3: understand the blank check deal has brought Donald Trump's media
Speaker 3: startup Public is now going to give him another one
Speaker 3: point three billion dollars in stock after meeting certain targets.
Speaker 3: Now these sources of weakness, they're common and as part
Speaker 3: of the special purposition purpose acquisition companies the spack deals,
Speaker 3: but ultimately with thirty six million in additional shares in
Speaker 3: mark for him, bring a total position to nearly one
Speaker 3: hundred and fifteen million shares, currently down by some nine
Speaker 3: percent on Trump Media and Tech. This is Blue Medtechnology.
Speaker 5: Okay, let's get back to Apple.
Speaker 4: I find sales fell in China by nineteen percent during
Speaker 4: the March quarter, worst performance in that market since twenty twenty,
Speaker 4: according to data from independent research firm Counterpoint Bloomberg Intelligence.
Speaker 4: And this Amak Grana is here to give his thesis.
Speaker 4: I'd note that the stock actually even with the perceived
Speaker 4: negative headline, isn't reacting negatively. I guess maybe that's because
Speaker 4: it's a situation we've been aware of for a little while.
Speaker 5: Yeah, I know absolutely So.
Speaker 13: One of the numbers I will you know, request you
Speaker 13: to remember is IDC came out a little while ago,
Speaker 13: a couple of weeks ago and said the global shipments
Speaker 13: are down about ten percent for Apple. So I think
Speaker 13: a lot of what we see today is already accounted
Speaker 13: for in that big number. So it's going to be
Speaker 13: fun to see what happens next week when Apple reports,
Speaker 13: and our eyes are mostly on the guidance for three
Speaker 13: Q or the next quarter more than what's happening in
Speaker 13: the current quarter.
Speaker 3: Interesting, for the current quarter, just to remind our viewers,
Speaker 3: we're expecting what a five percent decrease in overall revenues.
Speaker 3: That's according to our earning expectations over at Bloomberg when
Speaker 3: they consolidate all of the analysts. But for the next
Speaker 3: quarter after that, there's going to be growth two percent
Speaker 3: growth there or thereabouts.
Speaker 4: Right.
Speaker 3: What drives that is this the new unveiling of certain
Speaker 3: iPads that we're likely to get May seventh.
Speaker 13: So that's where we think there could be you know,
Speaker 13: maybe a little bit of a risk in terms of
Speaker 13: estimates coming down because when you look at estimates right now,
Speaker 13: iPhone estimates for the current quarter or the results that's
Speaker 13: coming out next to next week. Is iPhone revenue down
Speaker 13: eleven percent? Now, we think if the shipments were down
Speaker 13: ten percent, then the iPhone revenue may be slightly better
Speaker 13: than that in a sense that it could be down,
Speaker 13: you know, eight nine percent or so, because we all
Speaker 13: know that the Promax model is doing well and it
Speaker 13: has higher price, so the ASP goes up for next quarter.
Speaker 13: We are looking at iPhone, you done just two percent. Now,
Speaker 13: if the stuff that's happening in China continues, then that
Speaker 13: number could go down. I think that's weird, a little
Speaker 13: bit of a riskers in terms of forward estimates for Apple.
Speaker 13: And that's going to be the biggest thing that we
Speaker 13: follow is what is company going to say about the
Speaker 13: reception of the phone in you know for the next quarter.
Speaker 3: May second love that you push us forward to that
Speaker 3: and the earnings after the boll Anna Agrana on Roomberg,
Speaker 3: Intelligence and all things Apple. We so appreciate his expertise.
Speaker 4: Quick news story Elon Musk's social platform x is launching
Speaker 4: a TV app, pushing deeper into video as it takes
Speaker 4: on the likes of YouTube. X didn't confirm a date
Speaker 4: for the platform's released, but said it would be quote
Speaker 4: coming soon to most smart TVs. The company also talks
Speaker 4: about the ability to cast video from smartphones to bigger
Speaker 4: TV screens through the app, a move that, of course
Speaker 4: Google and Amazon have made in recent months as well.
Speaker 3: Carolyn, Yeah, let's stick on all things in a muster amendment.
Speaker 3: Is time for Tesla earnings Bingo card game from the
Speaker 3: Elon Inc. Podcast team over at Business Week and here
Speaker 3: with us for more than other than Bloomberg Business Weeks,
Speaker 3: Max Chafkin, we're doing it again. You did it in
Speaker 3: the previous earnings and there were all sorts of fun
Speaker 3: things that you had to sort of shout Bingo. Whether
Speaker 3: he's saying union, whether he's saying Tesla is an AI company,
Speaker 3: whether he's saying dojo. This time, I'm pretty sure Robotaxi
Speaker 3: is gonna be one of those keeping co works.
Speaker 6: Robotaxi is there. We've got We've got a few others.
Speaker 6: We've got Horse up there. I believe it's in oh one,
Speaker 6: which is a reference to the fact that Elon said
Speaker 6: owning a horse, sorry, owning a non ROBOTAXI will be
Speaker 6: like owning a horse in fifteen years.
Speaker 2: We'll see if he says.
Speaker 6: That on the earnings call, it should be you know,
Speaker 6: it's obviously this is a huge earnings day for Tesla.
Speaker 6: A lot of dark news going on, but we're trying to.
Speaker 2: Keep it light.
Speaker 5: Max.
Speaker 4: I think we should be honest with the audience that
Speaker 4: you and I have come in for a bit of
Speaker 4: stick on social media about some of the selections we made.
Speaker 4: That's okay, is specific to this earning school. You and
Speaker 4: I have been trying to guess the likely outcome the row.
Speaker 4: You're thinking right now, please, well, I.
Speaker 5: Think you got to.
Speaker 2: You gotta look at the central square.
Speaker 6: That's the free space, of course for for regular bingo players.
Speaker 6: I think the in line going down looks pretty promising.
Speaker 6: You've got interest rates obviously been a huge issue groc
Speaker 6: Elon Musk has has mentioned the possibility of integrating Twitter's
Speaker 6: AI assistant in the Tesla cars reasonably optimistic.
Speaker 2: He says that all the time, and of course.
Speaker 6: Advertising, which has been a big issue of for Tesla
Speaker 6: late because they've had these demand challenges.
Speaker 2: So that's my pick your pick.
Speaker 3: I mean, I want to know how close anyone came
Speaker 3: last time. It wasn't. It wasn't an out and out
Speaker 3: win on some of the choices. Which ones are you
Speaker 3: a little bit more concerned than my not coming up?
Speaker 2: We Yeah, we got pretty close last time.
Speaker 6: I think in a good bingo game, you want some
Speaker 6: You don't want it to be a gimme, you want
Speaker 6: you want a little bit of tension, you know. I
Speaker 6: think balls to the wall, which was Elon Musk's phrase
Speaker 6: for how they're approaching Robotaxi.
Speaker 2: I would be surprised if that.
Speaker 6: Appears during this earnest call, although Elon Musk loves these
Speaker 6: kind of extremely hardcore, these metaphors that convey just how
Speaker 6: hard he's pushing, so you never know. That would be
Speaker 6: I five for those who are playing at home.
Speaker 4: By the way, okay, let's look at the bingo carda
Speaker 4: final time. But there is a serious point to this
Speaker 4: that actually investors have a lot of questions and there
Speaker 4: is a lot of unknown you and I tried to
Speaker 4: go over this on the Elon inc Podcast due out
Speaker 4: this afternoon, and Robotaxi is at the heart of it.
Speaker 4: I get the sense Max that Musk has been busy
Speaker 4: for a few months. He's come back to Tesla, and
Speaker 4: he's decided to focus having realized that things weren't to.
Speaker 5: His liking at that company.
Speaker 6: You'll take please, yeah, absolutely, I think that is certainly
Speaker 6: what's going on. I mean, just looking at his social
Speaker 6: media handle, you can see that his attention has been elsewhere,
Speaker 6: and it's you know, it's understandable that he'd come back
Speaker 6: or sort of snap in focus and see a company
Speaker 6: that in many ways seems to be in crisis. You know,
Speaker 6: we've seen the stock fall pretty dramatically over the first
Speaker 6: few months of the year. You know, these huge issues
Speaker 6: with inventory piling up, questions about demand, so there are
Speaker 6: things to worry about, and he is leaning into robotaxes,
Speaker 6: as you said, ed, because of course that is this
Speaker 6: kind of like huge bet which Elon Musk likes, that
Speaker 6: could potentially turn this whole thing around, that could really
Speaker 6: separate Tesla from some of these other electric cars that
Speaker 6: are coming to market right now and that you know,
Speaker 6: people are getting excited about, are also getting good reviews.
Speaker 4: Max for our millions of Bloomberg Technology audience members around
Speaker 4: the world make the case for why they should follow
Speaker 4: us along during earnings and how they can follow along
Speaker 4: this evening.
Speaker 6: So you can follow along on the Bloomberg dot com
Speaker 6: live blog on the terminal. Ed and I will be
Speaker 6: playing this game, you know, like crazy on social and
Speaker 6: hopefully offering, you know, while we have fun, offering some
Speaker 6: you know, half decent commentary to help you.
Speaker 2: Is this because of course this is a huge company.
Speaker 2: This is a big issue.
Speaker 6: This is one of the largest companies in the world
Speaker 6: by market cap and where.
Speaker 2: Elon Musk goes from here is going to affect us all.
Speaker 2: So we'll be paying attention to that as well.
Speaker 3: Surning with share prices so well under pressure to say
Speaker 3: the very least, this year all important for those investors
Speaker 3: being them. Business Week's master chef can making light of
Speaker 3: what will be a very serious earnings called the Elon
Speaker 3: in podcast drops later today. Go check it out with
Speaker 3: our own Ed Ludlow on it. Meanwhile, some breaking news
Speaker 3: from you coming regarding TikTok. This is about Ed the
Speaker 3: EU focus on TikTok.
Speaker 9: Now.
Speaker 3: EU had issued TikTok basically twenty four hours to be
Speaker 3: able to send over a risk assessment for its new app.
Speaker 3: That's TikTok Light, which it had issued in Spain and France.
Speaker 3: Now we understand that bike Dance says it has sent
Speaker 3: a TikTok Light risk assessment report to the EU. All
Speaker 3: of this just highlighting the ongoing regulatory focus for this
Speaker 3: particular social media company that opened a new probe the
Speaker 3: EU had on Monday basically threatening fines of up to
Speaker 3: light one percent of total annual income if they didn't
Speaker 3: give a particular risk assessment for TikTok like they say,
Speaker 3: it potentially violated the block's new content law when it
Speaker 3: was launched. Overall, remember this is kind of like a
Speaker 3: less heavy from a memory perspective version of TikTok, but
Speaker 3: also it pays you to play, and there was some
Speaker 3: addiction worries coming from Thierry Breton over in the EU.
Speaker 3: So all eyes on TikTok later today here in the
Speaker 3: United States as well. That olimportant discussion in the Senate.
Speaker 3: But for now, that does it for this edition of
Speaker 3: Blue Meat Technology.
Speaker 4: Yet, don't forget to recap on the podcast earning seasons
Speaker 4: kicked off in Ernest. I know we're very excited about
Speaker 4: the megacat names in Tesla, but Spotify my goodness, what
Speaker 4: a great report from Ashley Carmen out in New York City.
Speaker 4: We're publishing the pod to Apple, Spotify, iHeart, and of
Speaker 4: course all of the Bloomberg platforms from San Francisco and
Speaker 4: New York City.
Speaker 5: This is Bloomberg Technology.