WEBVTT - Deep Dive: Meta Invests $14.3 Billion in Scale AI 0:00:02.520 --> 0:00:08.840 Bloomberg Audio Studios, podcasts, radio news, The. 0:00:08.880 --> 0:00:13.160 Stock Movers podcast, your roundup of companies making moves in 0:00:13.200 --> 0:00:17.599 the stock market harnessing the power of Bloomberg Data. 0:00:17.720 --> 0:00:20.599 I'm Tim Stenebeck along with Carol Master. Let's take a 0:00:20.600 --> 0:00:23.959 look at some stocks. Meta Platforms taking a forty nine 0:00:24.040 --> 0:00:28.840 percent steak in scale AI with Alexander Wang, who's twenty 0:00:28.880 --> 0:00:31.760 eight years old, joining Meta as a top executive to 0:00:31.760 --> 0:00:33.159 build AI super intelligent. 0:00:33.280 --> 0:00:36.040 Mistake, Right, it's a steak's g ak. 0:00:36.760 --> 0:00:38.360 It's not an acquisition. 0:00:38.040 --> 0:00:40.920 Yet, Okay, If it walks like an acquisition. 0:00:40.560 --> 0:00:42.519 Dave Lie says, do not call it an acquisition for 0:00:42.560 --> 0:00:45.400 a host of reasons. Okay, yeah. Davely is US technology 0:00:45.400 --> 0:00:48.080 columnists for Bloomberg Opinion. He spent about fifteen years reporting 0:00:48.080 --> 0:00:50.720 on tech at the FT and BBC before joining Bloomberg. 0:00:50.720 --> 0:00:52.640 He joins us, here, do we just not call this 0:00:52.640 --> 0:00:54.760 an acquisition? Like? Why why are we not acquired? Why 0:00:54.760 --> 0:00:56.360 aren't companies not acquiring things right now? 0:00:56.440 --> 0:00:59.080 Because they're afraid. They're afraid that the courts are going 0:00:59.160 --> 0:01:02.640 to undo their acquisition. So at this time they're thinking 0:01:03.000 --> 0:01:07.160 probably too risky to complicated. If the stake was fifty 0:01:07.160 --> 0:01:09.160 percent as opposed the forty nine percent. That would of 0:01:09.160 --> 0:01:13.119 course be a takeover rather than an investment, and immediately 0:01:13.200 --> 0:01:15.640 that would trigger all kinds of reviews. They'd have to wait, 0:01:15.680 --> 0:01:17.880 they'd have to get clearances, not only in the US 0:01:17.920 --> 0:01:19.840 but also around the world different regulators. 0:01:20.360 --> 0:01:22.200 There's no time for that in the AI era. 0:01:22.280 --> 0:01:24.160 They've got they've got to get to work straight away. 0:01:24.560 --> 0:01:26.840 And so we're seeing this sort of new approach which 0:01:26.880 --> 0:01:29.440 I sort of likened in a column I wrote to 0:01:29.480 --> 0:01:31.600 sort sort of when a football team buys a great 0:01:31.640 --> 0:01:34.560 young prospect, you know, they pay a transfer fee to 0:01:34.640 --> 0:01:38.240 compensate wherever he's leaving. In this case, for Wang, it's about, 0:01:38.360 --> 0:01:40.760 you know, making investors whole at the scale AI the 0:01:40.800 --> 0:01:43.559 company he founded, and they bring on this young talent 0:01:43.600 --> 0:01:45.200 with the view that he's going to be, you know, 0:01:45.280 --> 0:01:45.720 the what. 0:01:45.880 --> 0:01:47.240 He's going to run a super. 0:01:47.000 --> 0:01:50.280 Intelligence team at Meta and this is obviously what Mark 0:01:50.360 --> 0:01:53.680 Zuckerbo thinks. He's needed to bring his team up to 0:01:53.800 --> 0:01:56.200 up to speed to compete against the other big teams. 0:01:57.080 --> 0:02:00.240 He's going to be sitting by. Mark Zuckerberg reportedly what 0:02:00.400 --> 0:02:01.480 is superintelligence? 0:02:01.520 --> 0:02:01.840 What is? 0:02:02.240 --> 0:02:07.320 And also scally Eyes not building its own superintelligence either of. 0:02:07.240 --> 0:02:10.560 That's what's danger. That's what's confusing to me. So Scale 0:02:10.680 --> 0:02:11.960 Eye is an interesting company. 0:02:12.000 --> 0:02:14.480 It's kind of right at the very early stages of 0:02:14.520 --> 0:02:18.040 AI development. It's about hiring humans to do data labeling 0:02:18.080 --> 0:02:20.520 and say that's a tree, that's a bus, and so forth. 0:02:20.600 --> 0:02:22.360 It doesn't sound like super intelligence to me. 0:02:23.080 --> 0:02:25.640 The crucial thing and a colleague, one of my colleagues, 0:02:25.680 --> 0:02:28.720 Ellen who Hewitt, wrote this fantastic piece about Alexander Wang 0:02:28.760 --> 0:02:33.120 today sort of talking about how this guy knows everybody 0:02:33.160 --> 0:02:36.040 in AI and he knows everything that's going on. And 0:02:36.080 --> 0:02:38.440 one of the things about SCALEI that makes it particularly 0:02:38.480 --> 0:02:41.720 useful for Meta is that it's a company that other 0:02:41.720 --> 0:02:43.960 companies would go to when they needed data. So they 0:02:43.960 --> 0:02:46.160 were working with open Ai, they were working with Google, 0:02:46.240 --> 0:02:48.760 They're working with several other companies, and so they have 0:02:48.840 --> 0:02:51.200 a bit of an insight into what those companies are 0:02:51.240 --> 0:02:53.280 working on and what sort of data they were needing 0:02:53.320 --> 0:02:56.800 to have. So now Mark Zuckerberg gets a bit of 0:02:56.800 --> 0:02:59.240 that intelligence as we want what you. 0:02:59.240 --> 0:03:02.120 Have, We want to we want what you know about 0:03:02.120 --> 0:03:04.840 what kind of the whole landscape is doing when it 0:03:04.880 --> 0:03:05.480 comes to AI. 0:03:05.600 --> 0:03:07.920 What have these companies come to you for yeah, exactly. 0:03:08.000 --> 0:03:11.800 And also Alexander Wung is just known as a great networker, right, 0:03:11.840 --> 0:03:14.280 and so when so much of this AI race is 0:03:14.320 --> 0:03:18.360 about talent and bringing people on, we're hearing Zuckerberg is 0:03:18.600 --> 0:03:21.639 emailing people personally and saying, come and join us. I'll 0:03:21.639 --> 0:03:24.600 give you ten million bucks if you do it. This 0:03:24.680 --> 0:03:28.040 is this is just a signal of how fierce the 0:03:28.080 --> 0:03:28.639 AI rate. 0:03:28.919 --> 0:03:30.959 Different type of signing bonus. 0:03:30.720 --> 0:03:36.520 Right, like a smart star, but considerably bigger in terms 0:03:36.560 --> 0:03:37.280 of the numbers. 0:03:37.720 --> 0:03:41.000 What's the promise, though, I mean, what is this super 0:03:41.040 --> 0:03:43.680 intelligence that they're working toward. What is the world Dave 0:03:44.400 --> 0:03:48.400 that Meta Platforms wants to build and be ready for. 0:03:48.880 --> 0:03:50.800 I'm not sure I want to imagine it, frankly, but. 0:03:50.880 --> 0:03:51.760 It's you and me both. 0:03:51.760 --> 0:03:54.000 I mean, there's various names for it. 0:03:54.040 --> 0:03:54.200 Now. 0:03:54.240 --> 0:03:57.480 Superintelligence or artificial general intelligence is. 0:03:57.600 --> 0:04:00.360 Very a g I and super intelligence are the same thing. 0:04:00.400 --> 0:04:01.640 It's all basically the same goal. 0:04:01.720 --> 0:04:04.800 This idea that you can create this essentially one machine 0:04:05.080 --> 0:04:07.680 or you know, one technology that people can use for 0:04:08.040 --> 0:04:10.480 whatever sort of varied us as they want an AI 0:04:10.600 --> 0:04:10.920 to do. 0:04:11.400 --> 0:04:14.480 And there is this feeling that somebody will get there first. 0:04:14.840 --> 0:04:18.120 Right now, I'm of the view personally that there'll be 0:04:18.160 --> 0:04:20.520 several players doing this and that's how it's going to 0:04:20.640 --> 0:04:23.720 the land's going to turn out. However, I think there 0:04:23.760 --> 0:04:25.320 is a sort of panic to make sure that we've 0:04:25.320 --> 0:04:28.160 got to be you know, first, or very very close. 0:04:27.920 --> 0:04:28.839 Behind, to be fair. 0:04:29.320 --> 0:04:31.680 I mean Microsoft has done some similar moves right to 0:04:31.760 --> 0:04:35.080 try and position themselves by acquiring you know, either different 0:04:35.080 --> 0:04:39.000 people that seem to have certainly some AI insight or 0:04:39.040 --> 0:04:41.560 know how. I think Alphabet has done the same thing right, 0:04:41.600 --> 0:04:43.160 So they're all kind of jocking for position. 0:04:43.320 --> 0:04:45.599 They're all truking a position, and they're also taking the 0:04:45.600 --> 0:04:48.200 same approach of we can't be seen to be acquiring 0:04:48.320 --> 0:04:51.080 companies so we can try and acquire people. 0:04:51.279 --> 0:04:51.400 Now. 0:04:51.480 --> 0:04:53.960 I think they're not as clever as they think in 0:04:54.000 --> 0:04:56.800 this regard. I think the Federal Trade Commission, the Department 0:04:56.839 --> 0:05:00.919 of Justice, they know what's happening here. This is competition, 0:05:01.080 --> 0:05:03.719 just in a different form. Because if you've got companies 0:05:03.720 --> 0:05:07.360 that are spending crazy money on wages, does that mean 0:05:07.400 --> 0:05:10.720 a smaller company just can't compete for talent? I guess not, right, 0:05:10.800 --> 0:05:13.920 So there's going to be and we already know the 0:05:13.960 --> 0:05:15.679 FEC is looking into some of these deals. 0:05:16.080 --> 0:05:17.080 I'm looking at what they're going to do. 0:05:17.200 --> 0:05:19.120 Yeah, what's going on when it comes to innovation at 0:05:19.120 --> 0:05:21.880 these huge companies. I mean, I read your calm and 0:05:21.960 --> 0:05:23.920 I think to myself, this is turning into like a 0:05:24.680 --> 0:05:28.080 PEPSI buys Poppy for two billion dollars type of thing, 0:05:28.120 --> 0:05:30.920 because we want to let the startups duke it out 0:05:30.920 --> 0:05:33.840 for shelf space. When it comes to probiotic soda, we're 0:05:33.880 --> 0:05:37.359 not going to develop it ourselves. Is that happening? A 0:05:37.440 --> 0:05:41.080 decade ago, I thought Facebook killed the startup ecosystem. 0:05:41.560 --> 0:05:43.680 Well, I mean, look, I guess it's a question of 0:05:44.040 --> 0:05:46.920 the shifting purpose of the ecosystem to those big companies, right. 0:05:46.960 --> 0:05:48.760 I mean it used to be if you started a startup, 0:05:48.800 --> 0:05:53.120 you had several exit opportunities U IPO, you get acquired. 0:05:53.480 --> 0:05:56.920 You know, both of those channels have almost been closed off. 0:05:56.920 --> 0:05:59.200 We're not seeing so many tech companies IPO anymore. That's 0:05:59.240 --> 0:06:02.080 really dried up, and it's becoming much harder for tech 0:06:02.080 --> 0:06:06.279 companies to acquire companies at all. But at the same time, 0:06:06.360 --> 0:06:10.640 the startup ecosystem still has this fantastic ability to work 0:06:10.720 --> 0:06:13.560 quickly and bring out new ideas. And I wrote in 0:06:13.640 --> 0:06:16.240 that Columny reference that, you know, I'm not sure if 0:06:16.279 --> 0:06:20.479 Alexander Wang joins Meta as like a junior engineer, I'm 0:06:20.480 --> 0:06:22.320 not sure he writeses through the ranks. 0:06:22.000 --> 0:06:22.800 That becomes this guy. 0:06:22.880 --> 0:06:24.800 I think that's only something you could do outside of 0:06:24.839 --> 0:06:28.200 the company, and that's just the nature of startups. And 0:06:28.279 --> 0:06:30.760 one of the sort of moments of real reflection in 0:06:30.800 --> 0:06:33.799 Silica Value was when open ai came along and launched 0:06:33.839 --> 0:06:36.520 chat GBT and everyone's going, well, hold on a second, 0:06:36.560 --> 0:06:39.240 why Google's been working on this for years? You know, 0:06:39.839 --> 0:06:42.320 Microsoft's been doing it. Apple, you know, you'd think would 0:06:42.320 --> 0:06:44.240 have been doing it, and it just wasn't at all really, 0:06:44.680 --> 0:06:46.760 So there is this sort of understanding that the way 0:06:46.800 --> 0:06:48.840 to incubate a lot of this talent, particularly of AI, 0:06:48.920 --> 0:06:53.039 which is so talent and engineering driven, it's easier to 0:06:53.080 --> 0:06:55.400 find that in the ecosystem rather than spend all your 0:06:55.440 --> 0:06:57.680 own R and D for you know, ideas that might 0:06:57.720 --> 0:06:58.480 come toughing. 0:06:58.520 --> 0:07:00.200 It's funny, I was thinking about Amazon when they used 0:07:00.200 --> 0:07:01.920 to just buy all these companies. I feel like kind 0:07:01.960 --> 0:07:03.840 of almost a catch and kill kind of thing, right 0:07:03.920 --> 0:07:06.880 to make sure that they didn't kind of lose out 0:07:06.960 --> 0:07:09.400 on a marketplace. This sounds like it's kind of catch 0:07:09.440 --> 0:07:11.280 and not miss out as well when it comes to 0:07:11.320 --> 0:07:15.040 AI a little bit right, they want to make sure 0:07:15.080 --> 0:07:17.640 that rather, you know, rather than take something out so 0:07:17.640 --> 0:07:19.760 that it's not competitive. It's to like, wait, what am 0:07:19.800 --> 0:07:22.840 I missing with people who really might have some insight 0:07:22.840 --> 0:07:23.240 into this? 0:07:23.400 --> 0:07:26.239 Just quickly, Yeah, I think it's it's they're not worried 0:07:26.280 --> 0:07:28.800 that these smaller companies are going to steal their lunch, 0:07:29.040 --> 0:07:31.040 worried that these smaller companies might go and help. 0:07:31.120 --> 0:07:32.560 Somebody else they steal that lunch. 0:07:32.640 --> 0:07:37.760 Check the Stock Movers podcast from Bloomberg Radio. 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