1
00:00:00,160 --> 00:00:07,720
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,680 --> 00:00:12,840
Speaker 2: This is the Bloomberg Daybreak Gisia podcast. I'm Doug Krisner.

3
00:00:12,920 --> 00:00:15,400
Speaker 2: You can join Brian Curtis and myself for the stories,

4
00:00:15,440 --> 00:00:18,520
Speaker 2: making news and moving markets in the APAC region. You

5
00:00:18,600 --> 00:00:21,439
Speaker 2: can subscribe to the show anywhere you get your podcast

6
00:00:21,520 --> 00:00:24,919
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

7
00:00:24,920 --> 00:00:26,120
Speaker 2: Bloomberg Business App.

8
00:00:27,360 --> 00:00:30,920
Speaker 3: Well. The US Justice Department sued Apple today, accusing the

9
00:00:30,960 --> 00:00:34,560
Speaker 3: iPhone maker of violating anti trust laws. The lawsuit allege

10
00:00:34,600 --> 00:00:37,680
Speaker 3: is that Apple has used its power over app distribution

11
00:00:37,800 --> 00:00:41,360
Speaker 3: on the iPhone to thwart innovations, innovations that would have

12
00:00:41,360 --> 00:00:44,920
Speaker 3: made it easier for consumers to switch phones. The suit

13
00:00:45,000 --> 00:00:47,640
Speaker 3: was filed in New Jersey federal court. It marks the

14
00:00:47,680 --> 00:00:51,640
Speaker 3: culmination of a five year DOJ probe into Apple and

15
00:00:51,760 --> 00:00:55,639
Speaker 3: some sixteen attorney generals. Well, we're joining in with this.

16
00:00:56,160 --> 00:01:01,040
Speaker 3: Bloomberg Intelligence Senior anti trust analyst Jennifer says it may

17
00:01:01,080 --> 00:01:04,840
Speaker 3: be tough for the DOJ to prove that Apple intentionally

18
00:01:04,880 --> 00:01:05,840
Speaker 3: limited competition.

19
00:01:06,400 --> 00:01:09,800
Speaker 4: It's very difficult to prove monopolization where a company has

20
00:01:09,880 --> 00:01:13,720
Speaker 4: legitimate pro competitive business justifications for its conduct. But you know,

21
00:01:13,760 --> 00:01:17,120
Speaker 4: we've already seen in another case against Apple by Epic Games,

22
00:01:17,400 --> 00:01:19,640
Speaker 4: a lot of that evidence flashed out and a judge

23
00:01:19,640 --> 00:01:22,400
Speaker 4: in that case decided that Apple did have pro competitive

24
00:01:22,480 --> 00:01:25,000
Speaker 4: justifications for its walled garden, and a lot of the

25
00:01:25,040 --> 00:01:27,000
Speaker 4: same evidence will be put on trial here.

26
00:01:28,040 --> 00:01:32,039
Speaker 3: Bloomberg Intelligence senior anti trust analyst Jennifer Reed shares in

27
00:01:32,120 --> 00:01:35,200
Speaker 3: Apple slid four point one percent today, erasing about one

28
00:01:35,280 --> 00:01:38,960
Speaker 3: hundred and thirteen billion dollars in market value. Joining us

29
00:01:38,959 --> 00:01:42,120
Speaker 3: now is Anna Edgerton. Bloomberg Seattle Bureau achieved to take

30
00:01:42,160 --> 00:01:44,520
Speaker 3: a closer look at this story. So there's a lot

31
00:01:44,560 --> 00:01:48,480
Speaker 3: of debate over this. Some support the notion that Apple's

32
00:01:48,560 --> 00:01:51,640
Speaker 3: not playing fair, but others say that Apple is doing

33
00:01:51,840 --> 00:01:55,200
Speaker 3: what a lot of companies do to protect their IP

34
00:01:55,320 --> 00:01:57,240
Speaker 3: What are you hearing from the people you've spoken to

35
00:01:57,360 --> 00:01:58,360
Speaker 3: about this lawsuit?

36
00:02:00,000 --> 00:02:02,640
Speaker 5: So it's hard for Apple because they really created the

37
00:02:02,680 --> 00:02:05,760
Speaker 5: smartphone market with the iPhone, and now you see how

38
00:02:05,800 --> 00:02:10,280
Speaker 5: other competitors who are offering cheaper options are winning over

39
00:02:10,320 --> 00:02:13,280
Speaker 5: a lot of consumers. And Apple's argument is that they

40
00:02:13,280 --> 00:02:15,760
Speaker 5: don't have a monopoly on the smartphone market in the US,

41
00:02:15,800 --> 00:02:18,320
Speaker 5: that they don't even have fifty percent of that market,

42
00:02:18,360 --> 00:02:20,840
Speaker 5: But what the Justice Department is trying to say is

43
00:02:20,880 --> 00:02:24,160
Speaker 5: that it doesn't necessarily matter what percentage of the market

44
00:02:25,000 --> 00:02:28,399
Speaker 5: a company has in order to engage in monopolistic behavior.

45
00:02:28,600 --> 00:02:30,880
Speaker 5: I mean, it's really interesting to see how the complaint

46
00:02:31,160 --> 00:02:34,760
Speaker 5: lays out specific instances where you have executives saying in

47
00:02:34,760 --> 00:02:38,160
Speaker 5: internal emails, we need to do this to keep people

48
00:02:38,160 --> 00:02:41,279
Speaker 5: from leaving the iPhone and leaving the Apple ecosystem.

49
00:02:41,600 --> 00:02:44,519
Speaker 2: So this sue marks the culmination of a five year

50
00:02:44,600 --> 00:02:49,280
Speaker 2: investigation into the company. So this obviously predates the Biden administration.

51
00:02:49,639 --> 00:02:52,120
Speaker 2: Having said that, I think we need to point out

52
00:02:52,200 --> 00:02:55,880
Speaker 2: that the Biden administration has been very, very tough when

53
00:02:55,880 --> 00:02:58,040
Speaker 2: it comes to antitrust.

54
00:02:57,480 --> 00:03:01,000
Speaker 5: Right absolutely. And you know, this really fits with the

55
00:03:01,080 --> 00:03:04,200
Speaker 5: kind of neo Brandisian new school of anti trust that

56
00:03:04,240 --> 00:03:08,320
Speaker 5: we see really embodied by CIL Trade Commissioner Lena Kahn,

57
00:03:08,560 --> 00:03:12,160
Speaker 5: by Jonathan Cancer at the Anti Trust Division, who helps

58
00:03:12,200 --> 00:03:15,359
Speaker 5: put together the complaint that we had today, and I

59
00:03:15,400 --> 00:03:17,520
Speaker 5: know from people from talking to people within the Justice

60
00:03:17,520 --> 00:03:20,560
Speaker 5: Department that can who took a very personal interest and

61
00:03:20,720 --> 00:03:23,239
Speaker 5: how this was written and how the complaint was put

62
00:03:23,280 --> 00:03:26,240
Speaker 5: together and kind of the narrative that was created and

63
00:03:27,120 --> 00:03:29,200
Speaker 5: kind of presents it to the public, so it doesn't

64
00:03:29,240 --> 00:03:33,520
Speaker 5: read just like a bunch of legal language citing century

65
00:03:33,560 --> 00:03:35,720
Speaker 5: old anti trust law. They're really trying to tell a

66
00:03:35,760 --> 00:03:39,800
Speaker 5: story of Apple's conducts that were results they allege in

67
00:03:40,560 --> 00:03:44,040
Speaker 5: less choice and higher prices for consumers.

68
00:03:45,240 --> 00:03:48,960
Speaker 3: Yeah, in many cases, charging Apple with actually trying to

69
00:03:49,080 --> 00:03:54,160
Speaker 3: hurt the competition and to destroy that competition from gaining

70
00:03:55,560 --> 00:03:59,520
Speaker 3: I'm curious whether or not Apple is countering by saying

71
00:03:59,520 --> 00:04:01,720
Speaker 3: that private see is a big part of this, that

72
00:04:01,720 --> 00:04:07,040
Speaker 3: they're trying to keep the iPhone system, the iPhone ecosystem safe.

73
00:04:08,000 --> 00:04:10,040
Speaker 5: Yeah. Absolutely. I mean that has always been one of

74
00:04:10,080 --> 00:04:13,160
Speaker 5: Apple's big selling points, is that you know, they take

75
00:04:13,440 --> 00:04:16,839
Speaker 5: privacy and encryption really seriously, trying to draw a contrast

76
00:04:16,880 --> 00:04:20,640
Speaker 5: with other big tech companies like Google, and so this

77
00:04:20,760 --> 00:04:23,720
Speaker 5: is definitely an argument we expect to hear as this

78
00:04:24,040 --> 00:04:28,440
Speaker 5: case goes through. But it's interesting the anecdotes that they

79
00:04:28,600 --> 00:04:30,440
Speaker 5: use in this complaint. And one that really caught my

80
00:04:30,480 --> 00:04:35,719
Speaker 5: attention was a user worth talking specifically to Tim Cook,

81
00:04:35,800 --> 00:04:38,080
Speaker 5: the company CEO, and he said, you know, I've been

82
00:04:38,120 --> 00:04:40,680
Speaker 5: trying to send my mom these videos. They come out

83
00:04:40,680 --> 00:04:43,320
Speaker 5: all grainy, which of course is a familiar problem for

84
00:04:43,320 --> 00:04:45,440
Speaker 5: anyone who has an Android and tries to send a

85
00:04:45,520 --> 00:04:49,880
Speaker 5: video to an iPhone user, and Tim Cook's responsibles, well,

86
00:04:49,920 --> 00:04:53,000
Speaker 5: you should buy your mom and iPhone, and that kind

87
00:04:53,040 --> 00:04:55,800
Speaker 5: of you know, that kind of comment from an executive,

88
00:04:55,880 --> 00:04:59,039
Speaker 5: especially from the CEO, certainly sounds like monopolistic behavior.

89
00:04:59,360 --> 00:05:02,200
Speaker 2: This is a two two point six trillion dollar company.

90
00:05:02,360 --> 00:05:05,280
Speaker 2: They've got obviously very very deep pockets. When you look

91
00:05:05,279 --> 00:05:07,640
Speaker 2: at the litigation, how many years is it going to

92
00:05:07,720 --> 00:05:10,640
Speaker 2: take to resolve this complaint? This lawsuit?

93
00:05:11,640 --> 00:05:13,479
Speaker 5: You know, these things do take a long time. And

94
00:05:13,520 --> 00:05:16,120
Speaker 5: I've talked with several people in kind of the anti

95
00:05:16,120 --> 00:05:19,840
Speaker 5: trust law space today, and you know, I've heard from

96
00:05:19,880 --> 00:05:22,520
Speaker 5: several people that they're frustrated that Congress was not able

97
00:05:22,560 --> 00:05:25,480
Speaker 5: to pass this anti trust legislation last year that they

98
00:05:25,480 --> 00:05:28,240
Speaker 5: were considering that would have addressed exactly this kind of

99
00:05:28,600 --> 00:05:33,000
Speaker 5: gatekeeper authority and would have given the administration's anti trust

100
00:05:33,040 --> 00:05:36,320
Speaker 5: enforcers kind of a stronger statute to stand on and

101
00:05:37,200 --> 00:05:40,039
Speaker 5: bringing these kind of cases. You know, that legislation is

102
00:05:40,040 --> 00:05:41,920
Speaker 5: not in place. That makes it a little bit more

103
00:05:42,080 --> 00:05:45,320
Speaker 5: of a you know, ambitious case to bring. So I

104
00:05:45,400 --> 00:05:49,120
Speaker 5: think there's a lot writing on this to see how

105
00:05:49,279 --> 00:05:52,840
Speaker 5: courts interpret this kind of argument for this kind of company.

106
00:05:53,680 --> 00:05:56,479
Speaker 3: In some of these cases, we see multi billion dollar fines,

107
00:05:56,520 --> 00:05:58,800
Speaker 3: but then the companies just move on and go about

108
00:05:58,839 --> 00:06:04,159
Speaker 3: their business. Is are we expecting from this to see

109
00:06:04,200 --> 00:06:07,359
Speaker 3: Apple being forced to change the way it does business?

110
00:06:08,400 --> 00:06:12,200
Speaker 5: Yeah, We've definitely seen tech companies in the past kind

111
00:06:12,200 --> 00:06:14,560
Speaker 5: of write those linds off as part of doing business.

112
00:06:14,600 --> 00:06:17,520
Speaker 5: You Meta Platforms is a good example on paying some

113
00:06:17,600 --> 00:06:19,600
Speaker 5: of those European Well, even.

114
00:06:19,360 --> 00:06:21,839
Speaker 3: With EPIC, I mean, even with Epic, it found a

115
00:06:21,839 --> 00:06:24,440
Speaker 3: way to almost put the same charges in but just

116
00:06:24,640 --> 00:06:25,520
Speaker 3: label it differently.

117
00:06:26,680 --> 00:06:29,600
Speaker 5: Yeah, And you know, I think one thing that's going

118
00:06:29,600 --> 00:06:33,640
Speaker 5: to be important for anti trust enforcers to do is

119
00:06:33,680 --> 00:06:37,040
Speaker 5: to actually change the business practices. And that's one thing

120
00:06:37,080 --> 00:06:39,599
Speaker 5: that we heard from Jonathan Cancer today at the press

121
00:06:39,600 --> 00:06:43,200
Speaker 5: conference and presenting this case, is that he's not satisfied

122
00:06:43,240 --> 00:06:46,080
Speaker 5: by the kind of whack a mole remedies as he

123
00:06:46,279 --> 00:06:49,839
Speaker 5: presented it, where you know, Apple promises to change this

124
00:06:49,880 --> 00:06:52,720
Speaker 5: little behavior and this little behavior, you know, tweak this

125
00:06:52,839 --> 00:06:55,679
Speaker 5: fee in order to respond to the complaints from especially

126
00:06:55,680 --> 00:06:58,479
Speaker 5: anti trust enforcers in Europe. What he wants to see

127
00:06:58,640 --> 00:07:01,039
Speaker 5: is kind of a different approach their business model, and

128
00:07:01,640 --> 00:07:05,240
Speaker 5: that has reverberations across big tech, you know, especially these

129
00:07:05,560 --> 00:07:08,640
Speaker 5: companies that are characterized in the anti trust world as

130
00:07:08,640 --> 00:07:11,600
Speaker 5: the gatekeepers of such an important industry to the global economy.

131
00:07:11,680 --> 00:07:14,120
Speaker 2: Well, I think we can credit the Europeans with the

132
00:07:14,800 --> 00:07:18,720
Speaker 2: win in allowing Apple or forcing Apple to change the

133
00:07:18,760 --> 00:07:21,320
Speaker 2: design of the charging port on the latest phone. Right,

134
00:07:21,680 --> 00:07:24,800
Speaker 2: that was one of the things that the European Union

135
00:07:24,880 --> 00:07:27,360
Speaker 2: wanted to see. And we know now that the European

136
00:07:27,400 --> 00:07:30,520
Speaker 2: Commission is gearing up to announce more investigations not only

137
00:07:30,560 --> 00:07:33,200
Speaker 2: into Apple but Google as well. What does it do

138
00:07:33,840 --> 00:07:37,520
Speaker 2: to the Justice Department's case when the zeitgeist seems to

139
00:07:37,560 --> 00:07:40,440
Speaker 2: be that we are holding big tech companies to a

140
00:07:40,520 --> 00:07:43,840
Speaker 2: higher standard when it comes to you know, even flirting

141
00:07:43,920 --> 00:07:49,480
Speaker 2: with the idea of infringing on competition or maybe outright

142
00:07:49,760 --> 00:07:51,360
Speaker 2: violating antitrust law.

143
00:07:52,400 --> 00:07:57,120
Speaker 5: Yeah, you mentioned the European Commission investigation that Plumberg reported today.

144
00:07:57,120 --> 00:08:01,080
Speaker 5: We're going to see has it started against Apple and Google.

145
00:08:01,200 --> 00:08:04,520
Speaker 5: And you know, as the Digital Markets Act was being

146
00:08:04,560 --> 00:08:07,560
Speaker 5: discussed in Europe, as that was being passed, there was

147
00:08:07,640 --> 00:08:11,280
Speaker 5: a lot of frustration from US tech companies that the

148
00:08:12,040 --> 00:08:15,080
Speaker 5: Biden administration wasn't doing more to stand up for US

149
00:08:15,160 --> 00:08:18,640
Speaker 5: companies against what they saw as clear trade discrimination. You

150
00:08:18,640 --> 00:08:22,320
Speaker 5: know this. You know, they would argue that this legislation

151
00:08:22,440 --> 00:08:26,720
Speaker 5: was written pretty specifically to target the biggest US tech companies.

152
00:08:26,800 --> 00:08:28,680
Speaker 5: You know, they're the only ones that kind of have

153
00:08:28,840 --> 00:08:33,120
Speaker 5: this position in the tech ecosystem, and you know, now

154
00:08:33,120 --> 00:08:35,280
Speaker 5: we're going to see kind of the consequences of that,

155
00:08:35,320 --> 00:08:37,840
Speaker 5: and the penalties are big. You know, the penalty for

156
00:08:37,960 --> 00:08:41,560
Speaker 5: violating the DMA is ten percent of global revenue. So

157
00:08:42,160 --> 00:08:44,240
Speaker 5: you know, there's a lot at stake here, you know,

158
00:08:44,360 --> 00:08:47,000
Speaker 5: not just for the fines, as we've discussed, but also

159
00:08:47,160 --> 00:08:49,880
Speaker 5: for the business model these companies going forward.

160
00:08:50,160 --> 00:08:53,760
Speaker 3: So this is the Justice Department along with sixteen attorneys general.

161
00:08:53,960 --> 00:08:57,000
Speaker 3: Is there anything in this? Does it say anything that

162
00:08:57,040 --> 00:08:59,920
Speaker 3: there was some thirty four or thirty five other jurisdics

163
00:09:00,080 --> 00:09:02,040
Speaker 3: instead chose not to be involved.

164
00:09:03,200 --> 00:09:05,040
Speaker 5: You know, I feel like we can't read too much

165
00:09:05,040 --> 00:09:07,720
Speaker 5: into it, especially with a Justice Department complaint. You know,

166
00:09:07,960 --> 00:09:11,280
Speaker 5: just for some inside baseball, the Federal Trade Commission, when

167
00:09:11,280 --> 00:09:13,920
Speaker 5: they bring a complaint and ask attorney general attorneys general

168
00:09:13,920 --> 00:09:16,400
Speaker 5: to join, if there's a little bit more back and

169
00:09:16,440 --> 00:09:20,000
Speaker 5: forth and revealing the contents of the complaint. The Justice Department,

170
00:09:20,040 --> 00:09:22,720
Speaker 5: on the other hand, generally, you know, writes the complaint.

171
00:09:22,760 --> 00:09:25,040
Speaker 5: It's more of an in house process, and then they

172
00:09:25,200 --> 00:09:28,120
Speaker 5: take it to the States right before to say would

173
00:09:28,120 --> 00:09:30,480
Speaker 5: you like to join? They may or may not do that.

174
00:09:31,760 --> 00:09:34,120
Speaker 3: Great information there, Anna, thank you very much for joining

175
00:09:34,200 --> 00:09:37,320
Speaker 3: us here live on the program. Anna Edgerton, Bloomberg, Seattle,

176
00:09:37,440 --> 00:09:38,200
Speaker 3: euro Chief.

177
00:09:45,440 --> 00:09:48,240
Speaker 2: Let's take a closer look now at this Reddit IPO,

178
00:09:48,480 --> 00:09:51,920
Speaker 2: the stock rallied fifth check that forty eight percent on

179
00:09:52,000 --> 00:09:54,480
Speaker 2: its first day of trading here in the US, the

180
00:09:54,520 --> 00:09:57,120
Speaker 2: company and the shareholders raising about seven hundred and forty

181
00:09:57,160 --> 00:10:00,800
Speaker 2: eight million dollars. That based on a price four a share,

182
00:10:00,840 --> 00:10:03,000
Speaker 2: which was at the top end of the marketed range.

183
00:10:03,200 --> 00:10:06,040
Speaker 2: Let's check in now with Amy or Bloomberg Equity Capital

184
00:10:06,080 --> 00:10:08,800
Speaker 2: Markets reporter, joining us from here in New York City.

185
00:10:09,000 --> 00:10:11,240
Speaker 2: Thanks for making time for us, Amy. What are we

186
00:10:11,360 --> 00:10:14,120
Speaker 2: to make of this? It seems like a pretty good splash.

187
00:10:14,160 --> 00:10:16,600
Speaker 2: But the IPO market has been kind of dry for

188
00:10:16,640 --> 00:10:17,559
Speaker 2: a while, hasn't it.

189
00:10:18,520 --> 00:10:22,640
Speaker 6: Yeah, it's been very slow, and despite the fact that

190
00:10:22,679 --> 00:10:25,960
Speaker 6: we're actually at the end of March, we've only seen

191
00:10:26,000 --> 00:10:28,600
Speaker 6: eight point seven billion and then most of the action

192
00:10:28,760 --> 00:10:31,200
Speaker 6: or most of the excitement has been over this past

193
00:10:31,280 --> 00:10:33,960
Speaker 6: week with as sary Laps. And also we've read it

194
00:10:33,960 --> 00:10:34,800
Speaker 6: definitely today.

195
00:10:36,400 --> 00:10:38,480
Speaker 3: It's interesting read. It's been around a long time, it

196
00:10:38,520 --> 00:10:40,199
Speaker 3: took a long time to come to market. It's not

197
00:10:40,320 --> 00:10:45,360
Speaker 3: making money, but it appears to investors I think that

198
00:10:45,360 --> 00:10:47,600
Speaker 3: that ready can flip a switch and do so. So

199
00:10:48,040 --> 00:10:51,080
Speaker 3: what is involved in flipping a switch to finally start

200
00:10:51,280 --> 00:10:52,280
Speaker 3: churning out the profit?

201
00:10:53,640 --> 00:10:55,680
Speaker 6: I would not say that it's flipping a switch. Is

202
00:10:55,800 --> 00:10:58,040
Speaker 6: really long time incoming. So the company has been in

203
00:10:58,080 --> 00:11:02,400
Speaker 6: operation for eighteen nineteen years and then but it actually

204
00:11:03,000 --> 00:11:06,200
Speaker 6: I don't know whether the fact that they've been waiting

205
00:11:06,240 --> 00:11:08,600
Speaker 6: for the market to come around and or the fact

206
00:11:08,640 --> 00:11:11,920
Speaker 6: that they actually chose the right time to go public,

207
00:11:11,960 --> 00:11:15,080
Speaker 6: because this is right at the moment where they actually

208
00:11:15,080 --> 00:11:20,280
Speaker 6: turn profitable for the fourth quarter last year, and technically

209
00:11:20,320 --> 00:11:23,199
Speaker 6: they are looking at this year to break even as well.

210
00:11:23,480 --> 00:11:27,840
Speaker 6: And it's also because last year, before this year, they've

211
00:11:27,920 --> 00:11:32,559
Speaker 6: only been relying on advertising revenue, but this year onwards

212
00:11:32,679 --> 00:11:38,000
Speaker 6: they're looking at additional revenue stream including licensing deals with

213
00:11:38,360 --> 00:11:43,080
Speaker 6: AI companies to teach AI models to learn from the

214
00:11:43,200 --> 00:11:47,600
Speaker 6: vast Reddit threats that it's been accumulating for eighteen nineteen years.

215
00:11:47,640 --> 00:11:49,160
Speaker 2: Yeah, I was just going to make that point. I mean,

216
00:11:49,200 --> 00:11:53,120
Speaker 2: you create or gather a lot of data in eighteen

217
00:11:53,200 --> 00:11:56,319
Speaker 2: years time, eight billion dollar market cap. I mean, how

218
00:11:56,320 --> 00:11:57,320
Speaker 2: does that seem to you?

219
00:11:58,960 --> 00:12:02,360
Speaker 6: It seems it's like a dream. Definitely. I have to say,

220
00:12:02,440 --> 00:12:06,280
Speaker 6: like for a person covering the ipo market, I don't

221
00:12:06,400 --> 00:12:09,640
Speaker 6: hope it to flop, but there are signs that it might.

222
00:12:09,840 --> 00:12:13,000
Speaker 6: So it's great that it didn't because it's in a

223
00:12:13,040 --> 00:12:16,320
Speaker 6: sense it's Reddit, but it's also more than Reddit. For

224
00:12:16,480 --> 00:12:18,959
Speaker 6: the time being, everyone is looking at Reddit as the

225
00:12:19,080 --> 00:12:23,199
Speaker 6: indicator of if a company that is not fully profitable

226
00:12:23,320 --> 00:12:26,040
Speaker 6: for the whole year last year. This is what has

227
00:12:26,080 --> 00:12:28,880
Speaker 6: been found on because everyone is looking at a very

228
00:12:29,000 --> 00:12:32,840
Speaker 6: jittery ipo market. Investors really want to actually make their

229
00:12:33,480 --> 00:12:36,439
Speaker 6: dollars count. If you look at last year, you can

230
00:12:36,559 --> 00:12:39,440
Speaker 6: just put money at any well at any of the

231
00:12:40,160 --> 00:12:42,880
Speaker 6: magnifms in seven and then you can actually always just

232
00:12:42,920 --> 00:12:44,760
Speaker 6: put it in the index and you can get twenty

233
00:12:44,840 --> 00:12:48,280
Speaker 6: four percent return or even more if you put it

234
00:12:48,320 --> 00:12:51,640
Speaker 6: in the SEC instead of the SMP. So like people

235
00:12:51,679 --> 00:12:55,720
Speaker 6: are looking at IPOs with a very great skep system,

236
00:12:55,800 --> 00:12:58,480
Speaker 6: because do I really want to put money in risky

237
00:12:58,520 --> 00:13:02,160
Speaker 6: assets and what are the tonses that I can actually

238
00:13:02,200 --> 00:13:05,200
Speaker 6: make money out of it. For the beginning of the year,

239
00:13:05,320 --> 00:13:10,120
Speaker 6: the two ones that had opened the market wasn't really

240
00:13:10,520 --> 00:13:13,559
Speaker 6: to the great effect like we've seen for the past

241
00:13:13,559 --> 00:13:16,920
Speaker 6: week or so. But si lap went up seventy percent

242
00:13:17,080 --> 00:13:21,280
Speaker 6: and then also read it nearly fifty percent, So these.

243
00:13:20,960 --> 00:13:24,520
Speaker 3: Two are massive. Yeah, pretty incredible. I think one of

244
00:13:24,520 --> 00:13:28,000
Speaker 3: the issues with Reddit, as you highlighted, was advertising is

245
00:13:28,000 --> 00:13:31,240
Speaker 3: a little difficult, with redditors being somewhat opposed to that.

246
00:13:31,320 --> 00:13:35,120
Speaker 3: It's something that hasn't been a lot of advertising that's

247
00:13:35,160 --> 00:13:38,480
Speaker 3: interfered with what you get on Reddit. But now these deals,

248
00:13:38,520 --> 00:13:42,679
Speaker 3: like particularly with Google the search deal, that would seem

249
00:13:42,679 --> 00:13:45,840
Speaker 3: to be a big deal. But then also I'm kind

250
00:13:45,840 --> 00:13:49,920
Speaker 3: of curious because there's a lot of content on Reddit

251
00:13:50,040 --> 00:13:52,760
Speaker 3: that is just sort of the opinions of people that

252
00:13:52,840 --> 00:13:55,520
Speaker 3: are you know, pretty wild opinions with a lot of

253
00:13:56,160 --> 00:13:58,880
Speaker 3: sort of difficult language and everything. How is that going

254
00:13:58,920 --> 00:14:02,360
Speaker 3: to be parsed through by these AI users.

255
00:14:03,480 --> 00:14:05,720
Speaker 6: I think it's a very mom I kind of question.

256
00:14:06,080 --> 00:14:08,439
Speaker 6: You either like it to the point that you really

257
00:14:08,440 --> 00:14:11,400
Speaker 6: devoted to you to Reddit, or you don't like it

258
00:14:11,440 --> 00:14:13,960
Speaker 6: at all. I'm not a Reddit user, so I don't

259
00:14:13,960 --> 00:14:17,720
Speaker 6: really have a lock in. For people who have particular interests,

260
00:14:17,760 --> 00:14:21,920
Speaker 6: either for running, for gardening, for whatever, they really value

261
00:14:21,960 --> 00:14:23,800
Speaker 6: the fact that you can actually drill all the way

262
00:14:23,840 --> 00:14:26,160
Speaker 6: deep down. If I'm really into running shoes, I can

263
00:14:26,240 --> 00:14:28,560
Speaker 6: actually know how long does it take to break my

264
00:14:28,640 --> 00:14:31,280
Speaker 6: shoes in and in what way I can break it faster.

265
00:14:31,680 --> 00:14:34,400
Speaker 6: Those are the things that sometimes it's great for people

266
00:14:34,400 --> 00:14:36,760
Speaker 6: who have like consistent interest like on a day to

267
00:14:36,880 --> 00:14:39,360
Speaker 6: day basis, but sometimes I just want to know, like

268
00:14:39,440 --> 00:14:43,080
Speaker 6: what color lipstick suits me best, And then sometimes I

269
00:14:43,200 --> 00:14:45,800
Speaker 6: won't even like see the ads on Reddit, which is

270
00:14:46,000 --> 00:14:49,160
Speaker 6: probably some of the problems that it needs to tackle

271
00:14:49,480 --> 00:14:52,160
Speaker 6: because a lot of the users who go on Reddit

272
00:14:52,200 --> 00:14:56,000
Speaker 6: actually just search on Google and through Google led to Reddit.

273
00:14:56,200 --> 00:14:59,160
Speaker 6: So these are not the kind of revenue streams that

274
00:14:59,200 --> 00:15:02,440
Speaker 6: it can totally capture, and this is the problem or

275
00:15:02,440 --> 00:15:05,320
Speaker 6: the challenge that it has to tackle going forward in

276
00:15:05,440 --> 00:15:08,600
Speaker 6: order to contain to continue with a twenty percent kind

277
00:15:08,640 --> 00:15:10,320
Speaker 6: of revenue growth rate going forward.

278
00:15:10,360 --> 00:15:12,240
Speaker 2: Yeah, I think we can agree it's a very unique

279
00:15:12,320 --> 00:15:17,080
Speaker 2: social media community. But we referenced earlier that this IPO

280
00:15:17,120 --> 00:15:20,760
Speaker 2: would raise a seven hundred and forty eight million. Shareholders

281
00:15:20,800 --> 00:15:24,400
Speaker 2: may be cashing out, so the insiders, maybe some users

282
00:15:24,520 --> 00:15:27,480
Speaker 2: have the opportunity to make a little money. Is the

283
00:15:27,480 --> 00:15:31,440
Speaker 2: company going to deploy any of this capital back into

284
00:15:31,880 --> 00:15:34,520
Speaker 2: the company to try to do something special maybe that

285
00:15:34,560 --> 00:15:35,280
Speaker 2: we haven't seen.

286
00:15:37,280 --> 00:15:41,280
Speaker 6: It's really funny because the deployment of capital is one

287
00:15:41,320 --> 00:15:44,480
Speaker 6: thing that we haven't actually seen a lot of talk on.

288
00:15:45,680 --> 00:15:47,880
Speaker 6: To be honest, there isn't a lot. It's not like

289
00:15:47,960 --> 00:15:51,880
Speaker 6: software company that or semiconductor company that there's a lot

290
00:15:52,000 --> 00:15:56,640
Speaker 6: of capital that is needed. So like for other kind

291
00:15:56,640 --> 00:15:59,640
Speaker 6: of tech companies there's a lot of capital burn or

292
00:15:59,720 --> 00:16:04,240
Speaker 6: count burn. For Reddit, it's actually pretty normal to maintain it,

293
00:16:04,280 --> 00:16:06,160
Speaker 6: and then it doesn't actually need a lot of like

294
00:16:06,240 --> 00:16:10,640
Speaker 6: people to actually run it because people just organically go

295
00:16:10,760 --> 00:16:13,280
Speaker 6: on to actually go on the forums and then they're

296
00:16:13,280 --> 00:16:16,600
Speaker 6: moderators who've volunteers to help it. So it's more about

297
00:16:16,640 --> 00:16:20,520
Speaker 6: maintaining it, and I think that's the challenge. It needs

298
00:16:20,560 --> 00:16:23,560
Speaker 6: to motivate the people to continue what they've been doing.

299
00:16:23,760 --> 00:16:26,240
Speaker 6: But also on the other hand, they have to really

300
00:16:26,320 --> 00:16:30,160
Speaker 6: market the content they have right now in order to

301
00:16:30,200 --> 00:16:32,480
Speaker 6: capture that AI licensing deals.

302
00:16:32,240 --> 00:16:34,480
Speaker 2: All right, Amy, A pleasure to have you on the program,

303
00:16:34,520 --> 00:16:37,920
Speaker 2: to share and sharing your perspective on the Reddit ipo.

304
00:16:38,000 --> 00:16:42,040
Speaker 2: Today stock pops forty eight percent its first day of trading, Amy.

305
00:16:42,120 --> 00:16:45,080
Speaker 2: Or by the way, Bloomberg Equity Capital Markets reporter.

306
00:16:51,680 --> 00:16:54,560
Speaker 3: Joining us now is Mary Nicola, who is Bloomberg Game

307
00:16:54,600 --> 00:16:57,840
Speaker 3: Live strategist to take a closer look at markets. So, Mary,

308
00:16:57,960 --> 00:17:02,880
Speaker 3: are investors and even central banks getting comfortable now with

309
00:17:02,920 --> 00:17:06,600
Speaker 3: the notion of inflation settling at a higher level. And

310
00:17:06,640 --> 00:17:08,360
Speaker 3: if so, is that a good thing or a bad thing?

311
00:17:09,600 --> 00:17:12,439
Speaker 1: It's a combination of the two, because it needs to

312
00:17:12,480 --> 00:17:16,160
Speaker 1: be accompanied by strong growth. So if inflation remains high,

313
00:17:16,600 --> 00:17:20,400
Speaker 1: then that's okay to some degree as long as there's

314
00:17:20,480 --> 00:17:23,440
Speaker 1: disinflation coming through, which we're seeing and let's say the

315
00:17:23,600 --> 00:17:27,600
Speaker 1: US in the UK. But it also if they do

316
00:17:27,680 --> 00:17:31,040
Speaker 1: stay that higher for longer. What's good for equities is

317
00:17:31,160 --> 00:17:33,920
Speaker 1: the data coming through as robusts, just like we saw

318
00:17:34,000 --> 00:17:36,800
Speaker 1: last night in the US, where all the data is

319
00:17:36,880 --> 00:17:40,199
Speaker 1: proving that Goldilock scenario. So we need to see that

320
00:17:40,280 --> 00:17:45,320
Speaker 1: Goldilock scenario continue to unfold through the data that's coming

321
00:17:45,359 --> 00:17:47,600
Speaker 1: through in the US and the rest of the globe.

322
00:17:47,720 --> 00:17:50,919
Speaker 2: So to stay with that metaphor, if one of the

323
00:17:50,920 --> 00:17:56,520
Speaker 2: bears in that house becomes aggravated, what would likely drive

324
00:17:56,640 --> 00:17:59,600
Speaker 2: that change, What would be kind of propelled the bear

325
00:17:59,680 --> 00:18:02,840
Speaker 2: to really become a bear at this point, Yeah.

326
00:18:03,119 --> 00:18:06,800
Speaker 1: It'll really come down to if inflation remains a little bit.

327
00:18:06,880 --> 00:18:09,880
Speaker 1: Let's say we see a reacceleration in inflation for one thing.

328
00:18:10,080 --> 00:18:13,520
Speaker 1: Let's say we see some cracks in the in the

329
00:18:13,280 --> 00:18:17,800
Speaker 1: in the labor market. That does signal some sort of eat,

330
00:18:18,080 --> 00:18:19,920
Speaker 1: some sort of easing from the FED. But at the

331
00:18:20,000 --> 00:18:23,919
Speaker 1: same time, it makes a little bit more reluctant because

332
00:18:23,920 --> 00:18:27,760
Speaker 1: if inflationary pressures are increasing and yet growth is trying

333
00:18:27,800 --> 00:18:30,720
Speaker 1: to starting to show signs of weakness, then you get

334
00:18:30,720 --> 00:18:35,240
Speaker 1: concerns about stagflation, right, and that's not something that's positive

335
00:18:35,280 --> 00:18:39,320
Speaker 1: for equity markets. It's not positive for bond markets. Basically,

336
00:18:39,600 --> 00:18:42,600
Speaker 1: no one wants. It puts investors on the sidelines and

337
00:18:42,680 --> 00:18:45,320
Speaker 1: just a little bit more wary. So it's really about

338
00:18:45,359 --> 00:18:49,040
Speaker 1: that it needs to be the economy needs to be

339
00:18:49,280 --> 00:18:52,280
Speaker 1: hot in all the right places and cooler in all

340
00:18:52,359 --> 00:18:54,000
Speaker 1: the places where it needs to be.

341
00:18:55,359 --> 00:18:57,920
Speaker 3: It's interesting because in the US dock market, we are

342
00:18:57,960 --> 00:19:01,199
Speaker 3: seeing the broadening in particular. We've seen a lot of

343
00:19:01,200 --> 00:19:04,560
Speaker 3: industrials and financials do well of late, and yet it's

344
00:19:04,560 --> 00:19:07,320
Speaker 3: puzzling because it's happening at a time that we actually

345
00:19:07,359 --> 00:19:13,040
Speaker 3: do think growth is slowing. I suppose it matters about valuations,

346
00:19:13,480 --> 00:19:15,679
Speaker 3: So let's talk a little bit about that. Do you

347
00:19:15,720 --> 00:19:17,359
Speaker 3: expect that broadening to continue?

348
00:19:18,320 --> 00:19:20,320
Speaker 1: Well, a lot of them has been ketchup, right, So

349
00:19:20,359 --> 00:19:23,160
Speaker 1: if you look at let's say, what are the big returns,

350
00:19:23,200 --> 00:19:25,840
Speaker 1: and everyone's been talking about the Magnificent seven and how

351
00:19:25,880 --> 00:19:30,200
Speaker 1: they've really been the key leaders in this equity drive.

352
00:19:30,600 --> 00:19:33,840
Speaker 1: So for a lot of financials industrials, it's more about ketchup.

353
00:19:33,920 --> 00:19:37,120
Speaker 1: It's more about seeing that there's a broadening out in

354
00:19:37,200 --> 00:19:40,800
Speaker 1: growth and that it's not just particular to one particular sector,

355
00:19:41,200 --> 00:19:44,520
Speaker 1: and that will help these other sectors really come through.

356
00:19:45,359 --> 00:19:48,200
Speaker 1: And again it has to be that growth remains robust

357
00:19:48,480 --> 00:19:52,040
Speaker 1: and the data still points to that Goldilock scenario.

358
00:19:52,480 --> 00:19:54,600
Speaker 2: I don't know when you started in this business, but

359
00:19:54,680 --> 00:19:57,000
Speaker 2: can you imagine that we're talking about a n K

360
00:19:57,040 --> 00:19:58,919
Speaker 2: two twenty five and forty one thousand?

361
00:19:59,200 --> 00:20:03,840
Speaker 1: Does that impress It does, actually, because when you think

362
00:20:03,880 --> 00:20:07,760
Speaker 1: about it, you know, everyone got excited about when Abe

363
00:20:07,880 --> 00:20:10,800
Speaker 1: came through, and then you had the Three arrows and

364
00:20:10,840 --> 00:20:13,280
Speaker 1: that was the last time everyone really got excited about

365
00:20:13,320 --> 00:20:16,280
Speaker 1: Japan stocks. And then you think about it now and

366
00:20:16,320 --> 00:20:21,200
Speaker 1: it's it's it's a whole new vigor right which comes through. So, yes,

367
00:20:21,240 --> 00:20:26,360
Speaker 1: the boj has hiked, they exited negative interest rate policy,

368
00:20:26,800 --> 00:20:29,639
Speaker 1: but you know, there's still catalysts that are going to

369
00:20:29,680 --> 00:20:33,800
Speaker 1: continue to drive equity markets in Japan. So for one,

370
00:20:33,880 --> 00:20:37,120
Speaker 1: you still have a week end that's important. You still

371
00:20:37,160 --> 00:20:40,239
Speaker 1: have global markets doing really quite well. And then the

372
00:20:40,280 --> 00:20:43,880
Speaker 1: third thing is that you have this focus on improving

373
00:20:44,640 --> 00:20:48,919
Speaker 1: corporate profitability, you have this reform the aspect of reforms

374
00:20:48,960 --> 00:20:51,959
Speaker 1: that are still coming through that they're emphasizing. Remember they

375
00:20:51,960 --> 00:20:55,280
Speaker 1: were talking about just looking at some of the companies

376
00:20:55,320 --> 00:20:59,080
Speaker 1: that have to pay out more dividends for example. That's

377
00:20:59,119 --> 00:21:01,880
Speaker 1: a big thing for for Japan equities. And if that

378
00:21:02,040 --> 00:21:06,520
Speaker 1: sort of reforms continues, that's going to continue to push

379
00:21:06,640 --> 00:21:09,760
Speaker 1: the n K higher and of course and just make

380
00:21:10,040 --> 00:21:11,520
Speaker 1: people more positive on Japan.

381
00:21:12,240 --> 00:21:14,960
Speaker 3: It's very interesting that the broadening out we talked about

382
00:21:15,000 --> 00:21:20,560
Speaker 3: before is happening globally because we've seen the MSCI All

383
00:21:20,560 --> 00:21:25,040
Speaker 3: Country World Index rate get up or rise about twenty

384
00:21:25,040 --> 00:21:28,960
Speaker 3: five or so percent since November or something like that,

385
00:21:29,400 --> 00:21:31,359
Speaker 3: and it brings us to China because that hasn't been

386
00:21:31,359 --> 00:21:34,560
Speaker 3: a good period for China. We note though that now

387
00:21:34,560 --> 00:21:38,200
Speaker 3: the CSI three hundred is up around fifteen percent from

388
00:21:38,560 --> 00:21:41,040
Speaker 3: a low it hit last month, but it's getting close

389
00:21:41,080 --> 00:21:42,840
Speaker 3: to the two hundred day moving average. What are you

390
00:21:42,840 --> 00:21:44,400
Speaker 3: seeing with China stocks now.

391
00:21:44,960 --> 00:21:47,680
Speaker 1: Yeah, there has been a clear divergence between what we're

392
00:21:47,720 --> 00:21:50,879
Speaker 1: seeing globally and what we've seen in China, and there

393
00:21:50,920 --> 00:21:53,840
Speaker 1: has there's some reports that we had done on the

394
00:21:53,920 --> 00:21:56,360
Speaker 1: m Live blog where it shows that there had been

395
00:21:56,400 --> 00:22:01,120
Speaker 1: a break, you know, around twenty twenty two, twenty three,

396
00:22:01,600 --> 00:22:05,199
Speaker 1: where there was a divergence between the MSCI and China

397
00:22:05,280 --> 00:22:08,640
Speaker 1: and the implications of China on the rest of the globe.

398
00:22:08,920 --> 00:22:11,840
Speaker 1: And that, of course has could be because of the

399
00:22:11,840 --> 00:22:14,679
Speaker 1: fact that China has been marred by property issues and

400
00:22:14,720 --> 00:22:17,800
Speaker 1: the property sector and it has been in the doldrums

401
00:22:17,880 --> 00:22:20,840
Speaker 1: on that for that reason. So there's been a lot

402
00:22:20,880 --> 00:22:23,760
Speaker 1: of pessimism on China. There's been a lot of pessimism,

403
00:22:23,880 --> 00:22:27,120
Speaker 1: especially on the private sector, whether it really can come

404
00:22:27,160 --> 00:22:31,440
Speaker 1: back with a strong vigor. And that's actually been positive

405
00:22:31,440 --> 00:22:33,600
Speaker 1: in the sense that it's not weighing on the rest

406
00:22:33,640 --> 00:22:36,479
Speaker 1: of the world. What really has been the key driver

407
00:22:36,960 --> 00:22:39,119
Speaker 1: for let's say, the MSCI AQUI and for a lot

408
00:22:39,160 --> 00:22:42,600
Speaker 1: of emerging market indices has been the S and P.

409
00:22:43,160 --> 00:22:47,320
Speaker 1: And if that continues to go and US growth continues,

410
00:22:47,520 --> 00:22:54,000
Speaker 1: then that should should propel the MSCI, AQUI and EM equities.

411
00:22:54,000 --> 00:22:55,399
Speaker 1: More broadly, so, if you.

412
00:22:55,560 --> 00:22:59,639
Speaker 2: Use fundamental analysis and you look at industries within China,

413
00:23:00,119 --> 00:23:04,040
Speaker 2: may represent some type of opportunity right now, given how

414
00:23:04,080 --> 00:23:08,080
Speaker 2: badly they've been beaten down. Is there anything that's on

415
00:23:08,119 --> 00:23:11,080
Speaker 2: your radar right now where you would advise an investor,

416
00:23:11,280 --> 00:23:14,480
Speaker 2: not necessarily to jump in, but to take a very

417
00:23:14,560 --> 00:23:15,480
Speaker 2: very close look.

418
00:23:16,640 --> 00:23:19,920
Speaker 1: I think overall, the market's still going to remain cautious

419
00:23:19,960 --> 00:23:24,280
Speaker 1: on China, and we ourselves are in that same boat

420
00:23:24,400 --> 00:23:27,399
Speaker 1: because of the fact that you haven't seen fundamentals play out.

421
00:23:27,640 --> 00:23:30,840
Speaker 1: You haven't seen strong fundamentals come through, whether it's on

422
00:23:30,880 --> 00:23:33,359
Speaker 1: the economic side or whether it's in the private sector.

423
00:23:33,640 --> 00:23:37,600
Speaker 1: So it's really hard to pinpoint a specific sector on

424
00:23:37,640 --> 00:23:43,160
Speaker 1: that basis because overall there hasn't been a real remedy

425
00:23:43,280 --> 00:23:46,160
Speaker 1: for the property sector. You still have issues coming through

426
00:23:46,240 --> 00:23:51,040
Speaker 1: from Vanky, you still have the unwind from Evergrand So

427
00:23:51,119 --> 00:23:55,160
Speaker 1: there's still too much to consider for really to jump

428
00:23:55,200 --> 00:23:55,600
Speaker 1: back in.

429
00:23:56,320 --> 00:23:59,439
Speaker 3: All Right, tough question for you. What's one thing you're seeing,

430
00:23:59,480 --> 00:24:00,840
Speaker 3: Mary that others are not.

431
00:24:05,600 --> 00:24:08,520
Speaker 1: I think the main thing that we've been focused on

432
00:24:08,680 --> 00:24:12,919
Speaker 1: is just the broader implications of what is happening with

433
00:24:13,040 --> 00:24:17,199
Speaker 1: the FED on emerging markets and how that's going to

434
00:24:17,320 --> 00:24:21,000
Speaker 1: unfold and potentially put emerging markets on the sidelines.

435
00:24:21,560 --> 00:24:24,119
Speaker 3: Excellent. I knew I could ask you a tough question

436
00:24:24,280 --> 00:24:27,200
Speaker 3: and you would just kill it. Thanks so much, Mary Nicola.

437
00:24:27,240 --> 00:24:29,639
Speaker 3: There Bloomberg in Live Strategists with this slide.

438
00:24:30,119 --> 00:24:33,080
Speaker 2: This has been the Bloomberg Daybreak Asia podcast, bringing you

439
00:24:33,119 --> 00:24:36,240
Speaker 2: the stories making news and moving markets in the Asia Pacific.

440
00:24:36,760 --> 00:24:39,880
Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

441
00:24:39,920 --> 00:24:43,520
Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

442
00:24:43,560 --> 00:24:47,320
Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen,

443
00:24:47,440 --> 00:24:50,520
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

444
00:24:50,560 --> 00:24:51,640
Speaker 2: Bloomberg Business app.