Speaker 1: Bloomberg Tech is alive from coast to coast, with Caroline
Speaker 1: Hide in New York and Eva low into En frances Go.
Speaker 2: This is Bloomberg Tech coming up. Open Ai CEO Sam
Speaker 2: Altman says Meta offered his employees signing bonuses as high
Speaker 2: as one hundred million dollars.
Speaker 1: Plus it's a win for the crypto industry. After a
Speaker 1: stable coin bill passes the Senate, we discussed with the
Speaker 1: White House cryptos are David.
Speaker 2: Sachs and another extension for the sale of TikTok. We
Speaker 2: have Frank McCourt Jr. To talk through where his bid stands.
Speaker 1: Meanwhile, we talk about his market. The macro perspective, ED,
Speaker 1: is one of a FED decision in but a few hours,
Speaker 1: the fact that the Middle East tensions will we see
Speaker 1: outreach between the US in Iran. At the moment, we
Speaker 1: seeing a buying signal. We're up six percent on the NASAC.
Speaker 1: Most of those magnificent seven names training higher. But ED,
Speaker 1: you're focusing in on one particular name.
Speaker 2: Yeah, I'm looking at Meta shares a kind of like
Speaker 2: modestly higher up half a percentage point. Meta, open Ai,
Speaker 2: Scale i AI have all been in the news a
Speaker 2: lot recently. The headlight right now is because of this.
Speaker 3: They started making these like giant offers to you know
Speaker 3: a lot of people on our team, you know, like
Speaker 3: hund't mind our signing bonuses more than that comper years.
Speaker 4: And I'm actually it is crazy.
Speaker 3: I'm really happy that, at least so far, none of
Speaker 3: our best people have decided to take them up on that.
Speaker 1: Bloomberg has reached out to Meta, but we've not heard
Speaker 1: back on a request for comment. For more on Meta
Speaker 1: and the competition for AI talent, Bloomberg's Jackie Duellis joins us. Now, Jackie,
Speaker 1: what we didn't hear in the rest of that conversation
Speaker 1: with his brother in Uncapped He went on to really
Speaker 1: say some damning things, perhaps about Meta and the fact
Speaker 1: that they lack innovation and ultimately is not losing talent
Speaker 1: because they want to stay for the mission of Open AI.
Speaker 1: How fierce is it out there right now?
Speaker 5: Well, there's a few things that we can draw from
Speaker 5: his comments on the podcast. One, it confirms that there's
Speaker 5: this new chapter in the AI talent wars. It's always
Speaker 5: been fears, but it's reaching a new level now.
Speaker 6: One hundred million.
Speaker 7: Dollar bonuses is something we've never heard of before, and
Speaker 7: it's really telling of how much Meta is willing to
Speaker 7: pay to regain its edge in this AI race.
Speaker 8: Altman's comments also highlight, like you said, there is confidence
Speaker 8: that it's going to take more than just money to
Speaker 8: bring the best and brightest to your team. If you
Speaker 8: look at open AI's mission statement, they say that they
Speaker 8: think about their work for the benefit of humanity. That's
Speaker 8: really bold and large and purposeful. Whereas Meta I looked
Speaker 8: up their mission statement earlier and it says we're advancing
Speaker 8: AI for a more connected world to accelerate the potential
Speaker 8: future META products for the benefit of people. It's not
Speaker 8: as deep if you really dig into it, Jackie.
Speaker 2: A big part of the conversation that Sam Altman was
Speaker 2: having with the reasons why one hundred million dollars isn't
Speaker 2: enough to get open A employees to go to Meta.
Speaker 2: What was his argument.
Speaker 1: Part of the.
Speaker 8: Argument is this larger purpose and also that they're not
Speaker 8: as innovative that you know, people want to go to
Speaker 8: a place where they feel like they're going to be
Speaker 8: able to do their best work and some of that
Speaker 8: culture problem that we've seen with Meta, and you know
Speaker 8: they've also admitted in the past that they kind of
Speaker 8: have trouble with middle management and just kind of the
Speaker 8: almost internal bureaucracy of how you get things out there
Speaker 8: that doesn't exist to the same degree according to all
Speaker 8: men at Open AI. And so when you think about
Speaker 8: the people that are going to go over, they won't
Speaker 8: want to be able to have that assurance that their
Speaker 8: ideas are actually going to make it into reality.
Speaker 1: And Jackie, they want to be on the winning team.
Speaker 1: They want to get to AGI first, and that seems
Speaker 1: to be the point of this. There's no point coming second.
Speaker 1: You need to be at the business that leaves the charge.
Speaker 1: And interestingly, those pay packages have led on some significant
Speaker 1: talent to the superintelligence team from DeepMind, from sesame AI.
Speaker 8: That's right, it's but you know, we have to remember
Speaker 8: that they are working in a new kind of organization.
Speaker 2: Meta at the end of the day needs.
Speaker 8: To incorporate this technology into its products, which is, you know,
Speaker 8: the money maker they have shareholders they need to appease
Speaker 8: on a quarterly basis, and that kind of pressure could
Speaker 8: also affect the way the speed at which they work,
Speaker 8: how quickly they roll out these these tools. But AGI
Speaker 8: super Intelligence, this is new ground for Meta. They they
Speaker 8: haven't really shredded this sort of landscape before in the
Speaker 8: same way that open ai was really founded on these
Speaker 8: principles to to create a gi and so you know,
Speaker 8: you have the best and brightest, going, really intelligent people,
Speaker 8: but we've seen some uh friction, some tension and.
Speaker 1: You know going on in.
Speaker 8: Its own in its fair team, the the research team
Speaker 8: inside Mata, So they're not exactly going into a place
Speaker 8: that has this all figure it out.
Speaker 2: Bloomberg, Jackie de Ballas, thank you very much. Let's get
Speaker 2: to a story that broke in the last hour. Open
Speaker 2: ai is phasing out the work it does with scale Ai,
Speaker 2: cutting ties with that company just days after Meta's fourteen
Speaker 2: billion dollar investment. Bloomboath Rachel Metz joins us with more So,
Speaker 2: I think there's a very important distinction of what's happening here.
Speaker 2: Open i has existing contracts with scale Ai, but what
Speaker 2: we've learned is that that relationship is going to change
Speaker 2: in the future.
Speaker 9: Yes, open ai is phasing out the remaining work that
Speaker 9: is doing with scale Ai.
Speaker 1: The company has.
Speaker 9: Branched out a lot over the past few years as
Speaker 9: its data needs have expanded vastly, and also changed based
Speaker 9: on the kinds of models that it's building. So at
Speaker 9: this point Scale represents the companies puts as a very
Speaker 9: small fraction of its business, but over time it's going
Speaker 9: to now be totally phasing that out.
Speaker 4: Chill.
Speaker 1: These two stories, yours and Jackie's, are linked the narratives
Speaker 1: because of course Alexander Wang goes to the superintelligence team
Speaker 1: over at Meta and indeed takes a lot of the
Speaker 1: talent from SCALEAI. There other companies, perhaps not just open Ai,
Speaker 1: start to move away from SCALEAI. Are you hearing it
Speaker 1: elsewhere that maybe these contracts get undone in the future.
Speaker 9: We are definitely hearing that companies that provide data and
Speaker 9: data services. It's a very fractured, fragmented space.
Speaker 1: And there are a lot of companies.
Speaker 9: That are much less known than Scale but that are
Speaker 9: also worked with by these companies like open Ai Andthropic,
Speaker 9: Google and many others. And I know they're seeing a
Speaker 9: surge of inbound interest and they also are hearing from
Speaker 9: some nervousness from some of their customers. Companies tend to
Speaker 9: work with a bunch of players, and it is possible
Speaker 9: that this tie up, even the Scale has said it
Speaker 9: will remain as an independent business.
Speaker 1: It will make people nervous.
Speaker 2: We should say that Scale ai did decline to comment
Speaker 2: on the story, just as Meta declined to comment on
Speaker 2: the Sam Outman claims on comp The history of Scale
Speaker 2: is interesting because there's an element of manual work that
Speaker 2: they're doing and they relied on this kind of army
Speaker 2: of contractors. Just explain that the basics of that, because
Speaker 2: my reading of your story is the open AI was
Speaker 2: thinking about the relationship over the past year before a
Speaker 2: lot of this happened.
Speaker 9: Anyway, Yes, so Scale ai at You're absolutely correct. It
Speaker 9: started out as a business that had a large number
Speaker 9: of contractors that were paid to label data for AI models.
Speaker 9: Over time, though, the AI market has shifted and shifted
Speaker 9: quite rapidly, so at this point, while it still has
Speaker 9: that legacy human data labeling business, it's also expanded into
Speaker 9: a few other areas, and one of them is increasingly
Speaker 9: hiring experts, experts that might work a few hours on
Speaker 9: the nights or weekend, someone with a PhD or a
Speaker 9: law degree, and instead of labeling data directly, what they're.
Speaker 2: Doing is coming up with difficult tasks for EI models
Speaker 2: to solve.
Speaker 9: And that's also something that's become increasingly important to open AI,
Speaker 9: but it seems like skill is opening. I felt that
Speaker 9: skill was not quite up to the level that it
Speaker 9: needed to support its products with this kind of work.
Speaker 1: Remokes Rachel Mets. We appreciate it, thank you. Let's just
Speaker 1: talk about Emil Musk's AI startup now xai. It is
Speaker 1: burning through one billion dollars a month, with expected losses
Speaker 1: of thirteen billion in twenty twenty five due to the
Speaker 1: high costs of building advanced AI models.
Speaker 3: Now.
Speaker 1: This is all according to sources, who say that to
Speaker 1: cover the gap, musk start up is currently trying to
Speaker 1: raise nine point three billion dollars in debt in equity.
Speaker 1: But even before the money is in the bank, the
Speaker 1: company has plans to spend more than half of it
Speaker 1: is the next three months alone it Amazon CEO Andy
Speaker 1: Jesse says he expects his workforce to shrink as a
Speaker 1: handles more tasks. In an email to employees yesterday, Jasi
Speaker 1: wrote that over the next few years, Amazon expects to
Speaker 1: quote reduce our total corporate workforce. Is the later CEO
Speaker 1: to warn of AI's impact on headcount. Now Amazon had
Speaker 1: over one and a half million employees at the end
Speaker 1: of March, mostly though in warehouse jobs ed.
Speaker 2: Another company that's warned about the impact of AI on
Speaker 2: the workforce is Klana, embracing generatorve AI tools, though with
Speaker 2: some change of heart on hiring for customer services. Today,
Speaker 2: the startup, known for its buy and now pay Lada service,
Speaker 2: is entering the mobile market with plans to launch a
Speaker 2: thirty dollars per month service in the US, with plans
Speaker 2: to expand into the UK and Germany later this year.
Speaker 2: Klana's CEO Sebastian Schmierkowski joins us now welcome to the
Speaker 2: world of Mvno. It was a headline I didn't expect
Speaker 2: to see, Sebastian. I mean, the simple question for claner
Speaker 2: is why why do this?
Speaker 10: It comes back actually to the fact that we do
Speaker 10: believe the future is a digital financial assistant that helps
Speaker 10: you save time, save money. And in this case, if
Speaker 10: we not only identify that one of our customers can
Speaker 10: save money using this, but we can actually put it,
Speaker 10: bundle it together and offer it by this seamless experience
Speaker 10: of just a button say yes, I would like to
Speaker 10: get a better price or a better offer, and here
Speaker 10: it is and it's live on my phone with virtual
Speaker 10: SIM cards. Now you can get it live very very quickly.
Speaker 10: That makes a lot of sense. So it's just a
Speaker 10: way for us to kind of bundle more services and
Speaker 10: value to our existing customer base.
Speaker 2: The mechanism, right is that this is on the AT
Speaker 2: and T network forty dollars a month. Does Klana make
Speaker 2: any money on that arrangement?
Speaker 10: We do, But most importantly this adds value to our
Speaker 10: customer base.
Speaker 4: I think also, like one of my beliefs is that
Speaker 4: if you have if.
Speaker 10: We're going to have truly digital financial assistance that can
Speaker 10: recognize can come to you and wake you up in
Speaker 10: the morning and say I can save you on the
Speaker 10: carrier bill, I can save you on electricity bill. The
Speaker 10: only thing you need to do is say yes, and
Speaker 10: I'll take care of all the switching. I'll do everything,
Speaker 10: you all the paperwork. So you're just going to save
Speaker 10: ten dollars a month or whatever it is.
Speaker 4: The point is.
Speaker 10: What that means is the excess profits that have existed
Speaker 10: in utilities, in banking and all these things will have
Speaker 10: to come down because we are predominantly stuck with our
Speaker 10: existing providers, not because we love them, not because they're awesome,
Speaker 10: but because we hate switching and we hate leading reading
Speaker 10: boring legal terms.
Speaker 4: To realize is this offer really better or not? Right?
Speaker 10: So the point is that, like we believe that their
Speaker 10: marginsy in these services will be significantly lower going forward.
Speaker 4: And that's why. Also it's smarter of us to who are.
Speaker 10: A new entrance into this industry, to come in with
Speaker 10: a very attractive offer from day one, rather than believe
Speaker 10: that we can lure people into some long, lengthy contracts
Speaker 10: and make too much money on them over time.
Speaker 1: New entrants that already serve twenty five million active users
Speaker 1: here in the United States, many users who associate you
Speaker 1: really would buy now, pay later. How is that narrative shifting?
Speaker 1: How were starting to see you as everything happ instead?
Speaker 4: Well, definitely a neo bank at least.
Speaker 10: I think that the neo banking concept again comes back
Speaker 10: to that digital financial assistant, that we want to help
Speaker 10: people save time, save money, and have them not worry
Speaker 10: about their finances. We want to help them with all
Speaker 10: of that, and that is kind of what banking was
Speaker 10: supposed to do. But at some point in time that
Speaker 10: banker got a little bit too smart realized you didn't
Speaker 10: really have that good understanding of your own stuff and
Speaker 10: put you in some pension funds where they were charging
Speaker 10: you to I fees on it.
Speaker 4: Like that has to change.
Speaker 10: We have to come back and be in customer obsessed
Speaker 10: and offer it the greatest value at the lowest you know,
Speaker 10: in the highest quality, at the most affordable price.
Speaker 4: So that is what we're doing.
Speaker 10: And to us, it's everything related to you know, your
Speaker 10: every day spending, and phone is part of your everyday spending, right,
Speaker 10: It's a every day.
Speaker 4: Cost for you. So this this falls very naturally into that.
Speaker 1: You the Trump organization, everyone is getting into the phone companies.
Speaker 1: But I'm interested, Sebastian, and you say your customer obsessed.
Speaker 1: To be customer obsessed, you have to be employee obsessed.
Speaker 1: I'm interested on the shift you've made when it comes
Speaker 1: to customer services. You've come on the show before and
Speaker 1: said we're all in on general to AI, I could place,
Speaker 1: I could replace myself as CEO. I'm replacing customer services.
Speaker 1: I don't need to add in terms of people and headcount.
Speaker 1: But you've changed your mind on that.
Speaker 10: Well, Partially what we've said is that, like, look, I
Speaker 10: think in many countries you'll see that in the last
Speaker 10: ten to twenty years, our doctors and nurses have spent
Speaker 10: less and less time with patients and more and more
Speaker 10: times on administrative tasks. In addition to that, the cost
Speaker 10: of administration in healthcare has risen much faster than the
Speaker 10: amount of money spent on actual doctors, nurses and being
Speaker 10: available to patients. So what this AI technology can enable
Speaker 10: us to do is to again take all the administrative
Speaker 10: burdens out, make those be processed by AI and allow
Speaker 10: doctors and nurses to be available and actually spend time
Speaker 10: on patients. And this is the same for us as
Speaker 10: a company. We can use ais AT technology so that
Speaker 10: when people want to speak to us and if they
Speaker 10: want to speak to a human, which we want to
Speaker 10: make sure that everyone who wants to speak to human
Speaker 10: should always be able to do so, we also want
Speaker 10: to make sure that those humans have less administrative task
Speaker 10: and can actually spend more time. So to me, the
Speaker 10: value of human connection rises in the world of AI.
Speaker 4: It becomes more valuable.
Speaker 10: It becomes more expected that you have people that have
Speaker 10: time to talk to you properly, not rushed in the
Speaker 10: customer service center, that can actually sit down with you
Speaker 10: and resolve your errands and so to us two things
Speaker 10: can be so true. At the same point of time,
Speaker 10: we can use AI to take and automate the boring
Speaker 10: and mundane task away, and we at the same point
Speaker 10: of I must recognize that people will expect a human
Speaker 10: connection Sebastian.
Speaker 2: Being an everything app or everything platform is a goal
Speaker 2: and vision you share with others. X has similar ambitions,
Speaker 2: particularly in finance, right, But Uber would also say there
Speaker 2: are elements of its platform that in the future it
Speaker 2: can move into the areas you're talking about. Where do
Speaker 2: you see yourself sitting and who are your rivals in
Speaker 2: that domain?
Speaker 10: It's the billion dollar question, my friend, in the silicon
Speaker 10: value right now, will there be one assistant to serve all,
Speaker 10: one ring to forge them all or will there be
Speaker 10: multiple assistants?
Speaker 11: Right?
Speaker 4: And the answer is nobody knows.
Speaker 10: I at least for one, need to know that our
Speaker 10: assistant digital financial system needs to be the best in
Speaker 10: the world at what it does for our customers, and
Speaker 10: hopefully people want to use it for that now. On
Speaker 10: the other hand, as much as some people are yeah,
Speaker 10: of course, it's just going to be one. I've been
Speaker 10: around twenty years long enough to remember in two thousand
Speaker 10: and seven, when Facebook was supposed to be where all
Speaker 10: of Internet happened, and all of Internet was going to
Speaker 10: happen inside Facebook, that didn't.
Speaker 4: Actually materialize that way.
Speaker 10: So I'm still probably in the camp that there will
Speaker 10: be a few really smart assistants that help you on
Speaker 10: different topics and that you trust more on specific topics
Speaker 10: than others.
Speaker 4: But this is the billion dollar question.
Speaker 1: And we're old enough to remember that Klan is older
Speaker 1: than Facebook Meta. So the IPO not happening this year,
Speaker 1: mind it next year.
Speaker 10: Well, I would say market conditions look brighter than they
Speaker 10: did back in April, but now, as you know, I
Speaker 10: can't comment on.
Speaker 4: That, so I'm sorry.
Speaker 10: I would love to say something more than that, but
Speaker 10: I think at least it's great to see that markets
Speaker 10: look better.
Speaker 1: Sebastian is always great talking to you. Thank you, Knnescio.
Speaker 1: Sebastian instrum Kowski.
Speaker 2: Robotaxi firm Zekes has opened a production facility in the
Speaker 2: Bay Area that says has the capacity to turn out
Speaker 2: ten thousand robotaxes a year. The Amazon unit's been testing
Speaker 2: its purpose built robotaxis that have no steering wheel wall
Speaker 2: pedals in locations across San Francisco and Las Vegas.
Speaker 4: Zooks.
Speaker 2: CEO I S. Evans joins us from the new facility,
Speaker 2: and the obvious question is, like ten thousand robotaxes a
Speaker 2: year at full scale, it's a lot of potential, But
Speaker 2: what's the reality. I've always known you to be very pragmatic.
Speaker 2: Give me the sort of target for this year and
Speaker 2: next year for what we'll roll off the line.
Speaker 11: Yeah, the reality is really, first of all, thanks for
Speaker 11: having me ed.
Speaker 2: Good to see you.
Speaker 11: The reality is that we're just ready. We are, as
Speaker 11: you know, we're very excited. We're finally headed to our
Speaker 11: commercial lounge in starting in Las Vegas. Ladis is here
Speaker 11: and from there you have more and more robot taxis
Speaker 11: coming in than we have San Francisco. Right after that
Speaker 11: Austin and Miami coming up, and so we're gearing up
Speaker 11: to basically be ready because as you know, with our
Speaker 11: robot taxi it's purpose built serial production in the United States,
Speaker 11: So putting the capacity in place and then turning it
Speaker 11: on little by little as we go city by city.
Speaker 2: The ten thousand numbers important in the context of federal rules.
Speaker 2: Right right now, there's a limit on the number of
Speaker 2: vehicles that can be on public roads that have no
Speaker 2: driver controls, just like your vehicle. But Nitza's looking at it.
Speaker 2: How are those talks going with nitzer And do you
Speaker 2: think you'll get that exemption to really scale up in
Speaker 2: the coming year or two.
Speaker 11: So, as you know, we want the self certification route,
Speaker 11: that's all that was available at the time. I have
Speaker 11: to say we're very grateful to the administration for the
Speaker 11: progress in this innovation is happening worldwide and so making
Speaker 11: sure the US is prepared is really key. And the
Speaker 11: talks aren't going really well. I've always said that this
Speaker 11: is a huge transformation in transportation and working hand in
Speaker 11: hand with the regulatory authorities is key. And really really
Speaker 11: impressed with the speed so far.
Speaker 1: How about Amazon support as well? How much are they
Speaker 1: loosening the purse strings? How much budget have you got Asia.
Speaker 11: So I don't know about loosening the first string. We
Speaker 11: want to be every day. Were still a startup. We
Speaker 11: have a lot of work to do. This is very
Speaker 11: expensive and so what I can say is that Amazon
Speaker 11: has been very supportive. They ask us good questions, they
Speaker 11: support us, and you know, of course we come in
Speaker 11: with a budget.
Speaker 2: We discuss it.
Speaker 11: We come in with what we have to what we
Speaker 11: say we commit to doing, we have to do it.
Speaker 11: And if we don't do with their questions as there
Speaker 11: should be. But frankly, super super happy. It's been five years,
Speaker 11: so way past the dating period and a greatful to Amazon.
Speaker 1: Full of relationship. What's interesting is they're also eyeing others
Speaker 1: on the block. I'm sure the competitors just tell us
Speaker 1: about the robo taxi competition weaimo and particularly from Tesla.
Speaker 1: Is this narrative good for you? How much has that
Speaker 1: impacted the government?
Speaker 11: Look, we've always said this is a huge market right
Speaker 11: at scale after a sort of shelter meaning homes, apartments
Speaker 11: and dwellings. Transportation is one of the most important and
Speaker 11: also costly things. We know that it could be a
Speaker 11: lot safer than it is right now on the road,
Speaker 11: and so it's a big market, it's a big industry.
Speaker 11: It's good to have multiple players. I've been a public
Speaker 11: that we're super proud of way Moore, especially if you
Speaker 11: live in the areas they serve. I live in the
Speaker 11: San Francisco Bay area and I call them the cute
Speaker 11: Casper ghosts. They are roaming around and as far as Sessler,
Speaker 11: I've also said the more the merrier, I know they
Speaker 11: have their own path. I don't like to comment or
Speaker 11: criticize others. I'm sure they have their path laid out,
Speaker 11: and we all have to be on the same roads,
Speaker 11: and we're all subject to the same regulatory authorities.
Speaker 2: I'm sure I've taken the Zoo's vehicle on the strip
Speaker 2: in Las Vegas, right, and you're inching towards commercial service,
Speaker 2: But I think people would really appreciate the literal understanding
Speaker 2: of what you'll do. Number of zoos vehicles on that strip,
Speaker 2: the pricing in charging fares for all of those tourists.
Speaker 11: All right, So in terms of numbers right now, we
Speaker 11: have over a dozen or so roaming around the strip.
Speaker 11: I mean, you know, people could count them, so there's
Speaker 11: no point in not telling you the number. And they
Speaker 11: write every day because we have to learn it's not
Speaker 11: just self driving is the underlying technology. But at the
Speaker 11: end of the day, what the customer cares about is
Speaker 11: a wonderful experience that makes them feel special, that they
Speaker 11: are picked up where they want it to be picked up,
Speaker 11: dropped off where they wanted to be dropped off, and
Speaker 11: that it took a reasonable amount of time and they
Speaker 11: have a great experience while doing it, and then you
Speaker 11: also have operations behind that.
Speaker 4: So you can expect us to be just.
Speaker 11: You know, adding tens and tens and tens and serving
Speaker 11: the market and then controlling that relative to the demand.
Speaker 11: As far as pricing, obviously, I'm not going to get
Speaker 11: into the details of pricing, but customers are already used
Speaker 11: to a certain pricing, and we intend to be competitive,
Speaker 11: and we also intend to be ready for what happens
Speaker 11: at scale.
Speaker 4: Ay.
Speaker 1: Sure, Evans, it's great to talk to you. The CEO
Speaker 1: of Zoos or a backdrop, Welcome back to Blomberg Tech.
Speaker 2: I'm Caroline hid in New York and I met Love
Speaker 2: Love in San Francisco. I wan look at the chip
Speaker 2: sector real quick, because there's bits and pieces of news
Speaker 2: driving markets. Two names I'm looking at are Marvel and Intel.
Speaker 2: Marvel best performer and then that's that one hundred and
Speaker 2: the socks. The news well, it's just been talking up
Speaker 2: its competence in AI at a conference. Frankly, Marvel does
Speaker 2: ace right custom silicon, but that's a significant gain and
Speaker 2: a lot of sales siders coming out and saying we
Speaker 2: like what we're hearing about Marvell and where it's going
Speaker 2: to fit in in that custom silicon landscape. Then you
Speaker 2: have Intel up two percent or so, a restructuring, new
Speaker 2: engineering leadership, new chief revenue officer, and the market's cheering it,
Speaker 2: although in a more muted way, probably carried than Marvell's getting.
Speaker 2: But always keeping an eye on the semiconductor space.
Speaker 1: Now you are. We're also always keeping an eye on
Speaker 1: TikTok because the US deadline to divest or be banned,
Speaker 1: it's got a third count them, third extension from President Trump,
Speaker 1: the administration delaying the ban by another ninety days, allowing
Speaker 1: the social media app just keep on operating in the
Speaker 1: United States as it proceeds with negotiations. For more on
Speaker 1: the future of TikTok, Project Liberty founder long time bidder
Speaker 1: for TikTok, Frank mccott, JO Junior joins US. Now, Frank,
Speaker 1: this is a never ending story, is it not?
Speaker 12: Well, it just yeah, it does seem that it's it's
Speaker 12: taking a long time to get a deal made here.
Speaker 12: You know, you had the two hundred and seventy days
Speaker 12: and then the two seventy five day extensions, and now
Speaker 12: another ninety days. So yeah, it's been a while, but
Speaker 12: you know, I've learned to be very patient, hang around
Speaker 12: the hoop.
Speaker 6: A lot of good things get done when that happens.
Speaker 12: And you know, my sense is and this is not
Speaker 12: a you know, this is pure, purely my opinion, but
Speaker 12: I think this is the last extension. I think ninety days,
Speaker 12: not seventy five days, is significant, and I think something
Speaker 12: gets done within the next ninety days or not.
Speaker 1: But does it involve you. Have you been on the
Speaker 1: phone with the Vice president? Have you been involved in
Speaker 1: the negotiations.
Speaker 12: You know, we were very much involved during the first
Speaker 12: extension and less so during the second.
Speaker 6: Things have been relatively quiet as a.
Speaker 2: Matter of fact.
Speaker 12: So I don't know if I should, you know, draw
Speaker 12: any inferences there, but it's been fairly quiet overall. Look,
Speaker 12: I still love our chances, Caroline, because look, the legislation
Speaker 12: is very very clear on what is mandated. Our bid,
Speaker 12: as far as I know, is the only bid that
Speaker 12: actually qualifies, that actually meets the criteria in that legislation
Speaker 12: where we completely disentangle from.
Speaker 6: The Chinese technology.
Speaker 2: So, Frank, I want to get really detailed on this
Speaker 2: because on the other side of the table in this
Speaker 2: bidding process, there is a coalition of different individuals and
Speaker 2: technology companies whose proposals I understand it is outside what's
Speaker 2: legislated for, in other words, some element of collocation of
Speaker 2: data and licensing the algorithm. Would you just explain how
Speaker 2: your bid is distinct from that. Yeah, well, and I
Speaker 2: think you've hit the nail on the head. And what
Speaker 2: we are we're.
Speaker 6: Not looking to co host the data or to use
Speaker 6: the Chinese algorithm.
Speaker 12: Project Liberty is about empowering individuals, not exploiting them. So
Speaker 12: we're not interested in scraping people's down to surveilling them, right,
Speaker 12: spying on them, scraping their data, aggregating it, and then
Speaker 12: micro profiling people and then using a black box algorithm
Speaker 12: to manipulate them.
Speaker 6: That's not what we're interested in.
Speaker 12: And that's why TikTok is so attractive to us, because
Speaker 12: we can not only solve the national security issue, but
Speaker 12: we can move the user base in the data onto
Speaker 12: this new, clean, made in America stack, which doesn't rely
Speaker 12: on Chinese technology, doesn't surveil on people, and as a
Speaker 12: matter of fact, empowers people to permission the use of
Speaker 12: their data and get paid for it.
Speaker 6: This is going to be the new Internet. It's going
Speaker 6: to happen sooner or later.
Speaker 12: How many more days can go by where we're going
Speaker 12: to read about another horror story that is occurring with
Speaker 12: the current Internet technology, which is highly exploitive and highly predatory.
Speaker 12: The current model is not sustainable. In my opinion, it's
Speaker 12: going you change, we bring the sooner it change is
Speaker 12: the better, Frank.
Speaker 2: As the extensions keep coming and the process continues, does
Speaker 2: the price for TikTok go up or down or stay
Speaker 2: the same?
Speaker 12: Well, from our perspective, it stays the same because what
Speaker 12: we were buying, assuming the user base stays the same
Speaker 12: and there's no change in the numbers. As far as
Speaker 12: the value to others, I can't, I really can't comment
Speaker 12: on that, and I'd only be speculating. But you know,
Speaker 12: our view is we can put a really clear value
Speaker 12: on TikTok, the US TikTok, with the current user base,
Speaker 12: with the data, with the brand, without the algorithm.
Speaker 1: Frank, we asked you, and we thank you for being
Speaker 1: so transparent about your conversations with the administration. What about
Speaker 1: with China? What about with byte dance, Because we understand
Speaker 1: much of the elongation of the process is they don't
Speaker 1: want to let go of the algorithm and they want
Speaker 1: to keep it INtime.
Speaker 12: Caroline, I think that's a really important question you're asking.
Speaker 12: I don't think any of us know what China is
Speaker 12: ultimately going to do here, and I think it's a
Speaker 12: big if in this whole transaction. If I think, one
Speaker 12: thing we do know is they're not going to let.
Speaker 6: Us TikTok go with the algorithm or with the IP.
Speaker 12: So any chance of a deal, in my opinion, would
Speaker 12: be a deal that disentangles from their technology. And the
Speaker 12: deal that disentangles from their technology, I mean, why not
Speaker 12: make the deal then? Because if there's not going to
Speaker 12: be a deal and the only option to shut down,
Speaker 12: why not sell.
Speaker 6: The pieces and parts for.
Speaker 12: A lot of money and achieve their objective, which is
Speaker 12: no sharing of their technology.
Speaker 6: So I think that we just don't.
Speaker 12: Know if they're even going to let us TikTok go
Speaker 12: without the algorithm.
Speaker 6: We're betting they will, and that's been our bet from
Speaker 6: day one, But we'll see.
Speaker 1: And what about the moon music of the user base.
Speaker 1: When this all first came to light under the Biden administration,
Speaker 1: there was fierce opposition from many of those users, but
Speaker 1: actually the US public at large actually wanted to get
Speaker 1: rid of TikTok. But now it feels as though we've
Speaker 1: moved the other way. Where is general public consensus on
Speaker 1: whether we want to kick out TikTok or not?
Speaker 6: You know, I think it shifts and moves. I think
Speaker 6: right now what's happened is that because you know that.
Speaker 12: This is the third extension, people are a bit anesthetized,
Speaker 12: and you know, you're not sure what's going to happen,
Speaker 12: and so are kind of not as it's it's not
Speaker 12: as front and center on the minds of the user
Speaker 12: base as it was when it was.
Speaker 6: Threatened to be shut down with the legislation.
Speaker 12: By the way, I believe us TikTok is going to
Speaker 12: be sold a shut down. The legislation is very clear,
Speaker 12: and something's going to give here. And I you know
Speaker 12: again I said earlier, and I have no I please,
Speaker 12: I have no proof of this, but I just have
Speaker 12: a gut feel this is the last extension.
Speaker 6: Something's going to happen during this ninety days.
Speaker 2: So Frank, sorry to interrupt you. So you've also you
Speaker 2: basically opened the door to a third path, which we
Speaker 2: discussed less, which is that the President could indeed decide,
Speaker 2: you know what, I don't want to go with. I've
Speaker 2: a bidder, and I will shut down US TikTok or
Speaker 2: TikTok in the US just explain, you know how you've
Speaker 2: You've been transparent. Contact with the administration has been limited
Speaker 2: in this period. But that seems a possibility.
Speaker 6: Yeah, I think it is a third possibility.
Speaker 12: And this is again I've said from the beginning, I
Speaker 12: think when push comes to shove, or when this process
Speaker 12: has come to a conclusion, TikTok will be sold without
Speaker 12: the algorithm.
Speaker 6: But you're quite right, it may be shut down on
Speaker 6: the US.
Speaker 12: Side and and or China may just not allow it
Speaker 12: to be sold. These are all distinct possibilities. So there
Speaker 12: is uncertainty here. But look, Project Liberty is continuing to
Speaker 12: build the technology onboard users and create this alternative Internet,
Speaker 12: which we think is we need now that the bottom
Speaker 12: line is we have an Internet that's that's broken, but
Speaker 12: nobody's not going to use.
Speaker 6: It until there's an alternative.
Speaker 12: So our goal is to build that alternative and then
Speaker 12: and then actually migrate users and build and by the way,
Speaker 12: build new apps in this new world, and to create
Speaker 12: user base there. So who would not be given the
Speaker 12: choice of an Internet that surveils you, scrapes your data,
Speaker 12: and it basically exploits you, versus an Internet where you're
Speaker 12: permissioning the use of your data. You get paid for
Speaker 12: your data if it's a commercial use case that it's
Speaker 12: used for, and you're in charge of you Again, you're
Speaker 12: at the center right now. We have an Internet, We
Speaker 12: have the platform at the center. Were are all just commandities?
Speaker 12: We need an Internet? Well, we're at the center.
Speaker 6: We have agency. Again, we're in charge and we're respected
Speaker 6: quite frankly.
Speaker 2: Frank McCourt, junior Project Liberty, one of the bidders as
Speaker 2: well of course for us TikTok. Thank you very much.
Speaker 1: This is Bloomberg Tech and you are looking at a
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Speaker 1: of Bloomberg Tech Europe this Friday, where we'll dive into
Speaker 1: all the key tech stories from across the pond. This
Speaker 1: is the bloemerg.
Speaker 2: The US Senate voted to pass the Genius Act late yesterday,
Speaker 2: moving the country's first crypto legislation forward. A rare moment
Speaker 2: of bipartisanship in the Senate However, Republicans did block Democratic
Speaker 2: efforts to bar the president from profiting from crypto efforts
Speaker 2: he's affiliated to while he's in office. White House, AI
Speaker 2: and Cryptos are David Sachs joins us now in an
Speaker 2: exclusive conversation. David, good morning, Thank you for being back
Speaker 2: here on Bloomberg Tech. I think that the immediate question
Speaker 2: is the immediacy of how quickly the bill passes to
Speaker 2: the President's desk and how you see that happening.
Speaker 13: Well, thanks ed, glad to be here. So the next
Speaker 13: step year is for the House to take it up,
Speaker 13: and I think the House is considering its options, but
Speaker 13: I think we're basically at the finish line here. The
Speaker 13: House already passed a similar version of the bill called
Speaker 13: the Stables Act, and I think that we're very close
Speaker 13: here to having a bill that can go to the
Speaker 13: President's desk.
Speaker 2: There is also a lot of parallel interest from our audience,
Speaker 2: in particularly in the market structure efforts that are underway.
Speaker 2: Do you believe or see that the President considering packaging
Speaker 2: them together the Stable Coain legislation with market Structure.
Speaker 13: Well, like I said, I think the House is still
Speaker 13: considering its options. The issue with packaging them together. Is
Speaker 13: that is that the Market Structure Bill has never been
Speaker 13: taken up by the Senate. It did pass the House
Speaker 13: and the last Congress, but it never passed the Senator
Speaker 13: or was even taken up by the Senate. And so
Speaker 13: you could say that the market structure bills on the
Speaker 13: ten yard line, whereas the whereas the Market Structure Bill
Speaker 13: is really just a few yards away from becoming laws.
Speaker 13: So I think there are different stages of the process,
Speaker 13: and if they were packaged together, it would slow down
Speaker 13: the stable Coin Bill, But those decisions still have to
Speaker 13: be made.
Speaker 1: Let's just talk about what this could unleash. If it
Speaker 1: does go forward. Stable coins could swell to its high
Speaker 1: as three point seven trillion dollars by twenty thirty, that's
Speaker 1: according to City. But are we seeing perhaps a delay
Speaker 1: in regulation elsewhere that could stymy that sort of growth,
Speaker 1: Zizy saying, Look, if we don't see others getting on
Speaker 1: the bandwagon here, it could be limited to just five
Speaker 1: hundred billion dollars.
Speaker 13: No, I mean, I think that the stable Coin Bill
Speaker 13: is very helpful, provides regulatory clarity and stability for the
Speaker 13: stable coin industry. Like you were saying, there's already something
Speaker 13: like two hundred and fifty billion dollars in float of
Speaker 13: stable coins, and that's out without there being a true
Speaker 13: regulatory framework in the United States. Right now, the number
Speaker 13: one issuer stable coins is offshore. And what this bill
Speaker 13: would do is provide like I said, the regulatory clarity
Speaker 13: and safety would bring the whole stable coin industry on shore.
Speaker 13: It would enhance consumer protection. The issuers of stable coins
Speaker 13: would have to get audited on a quarterly basis. Consumers
Speaker 13: could be confident that their dollar based stable coins were
Speaker 13: reserved on a one to one basis with actual dollars
Speaker 13: in US bank accounts, and I think this would increase
Speaker 13: confidence in the industry. And I think that you would
Speaker 13: also see banks getting into the act. I think you'd
Speaker 13: see traditional financial players getting involved in it, and that's
Speaker 13: why the float is expected to grow from call it
Speaker 13: roughly two hundred and fifty billion to trillions of dollars,
Speaker 13: and that would create more demand for the US dollar Internationally,
Speaker 13: I think you could see other economies start to dollarize
Speaker 13: the bottom up, as their citizens would prefer to use
Speaker 13: US digital dollars as opposed to whatever fiat currency they're using,
Speaker 13: and that would create potentially trillions of dollars of new
Speaker 13: demand for US Treasury. So I think this bill is
Speaker 13: a is a major piece of legislation. I think it is.
Speaker 13: It's a fantastic bill just on its own. I think
Speaker 13: that the House would go ahead and take it up,
Speaker 13: and I think they will take it up and lots
Speaker 13: that they're going to put it on the President's desk
Speaker 13: very soon.
Speaker 1: What about businesses taking it up? As you say, people
Speaker 1: waiting in the wings reports Amazon, Walmart wanting to have
Speaker 1: their own stable coin issuance? What is the regulatory oversight
Speaker 1: kind of be like you say, of course it's put
Speaker 1: in stone in terms of the law, What about the
Speaker 1: resources for their regulation, because there's going to be a
Speaker 1: lot to analyze.
Speaker 13: It feels like, yeah, so it's going to stable coins
Speaker 13: will be under the purview of the banking system, and
Speaker 13: banking regulators will look at that, and stable cooin insurers
Speaker 13: will have to go through a regulatory process and they'll
Speaker 13: get approved and like I said, they'll be quarterly audits.
Speaker 13: And I think that the bill will provide the framework
Speaker 13: that will give confidence to a lot of traditional financial
Speaker 13: players to enter the space. And so I think you're
Speaker 13: going to see new stable coin products, and I think
Speaker 13: you'll also see stable coins.
Speaker 4: Being used as payments.
Speaker 13: I think this is one of the really exciting things
Speaker 13: about the bill is that blockchain infrastructure will be used
Speaker 13: as a new kind of dollar based payment system. Yes,
Speaker 13: that's faster, it's more efficient, smoother, It's a payment system
Speaker 13: of the future. It's kind of ironic that when the
Speaker 13: crypto industry really started with bitcoin about fifteen years ago,
Speaker 13: what was anticipated is that you would get a new
Speaker 13: kind of currency, you get a non fiat currency. But
Speaker 13: as it turns out, a really important use case of
Speaker 13: blockchains has been to support digital dollars, to support tokenized dollars.
Speaker 13: And I think you'll see the extension of that payment
Speaker 13: system online with that legislation, and that's a really exciting thing.
Speaker 13: We don't want this being driven offshore right now. Like
Speaker 13: I said, the leading staple coin issure is offshore. I
Speaker 13: think that you will see this be a new US
Speaker 13: based payment system that emerges online.
Speaker 2: David, I'm looking at it, for example, shares of coinbase
Speaker 2: and Circle and basically the market hearing the passage of
Speaker 2: the bill, you're basically talking about dollarization, and I wondered
Speaker 2: if you'd just reflect for a minute of how you
Speaker 2: feel that the final sort of composition of this legislation
Speaker 2: supports the goals, the bigger picture goals that you and
Speaker 2: the President had hoped for when you set out to
Speaker 2: do it.
Speaker 13: Sure so, when the President first took office, and even
Speaker 13: before he took office, when he was on the campaign trail,
Speaker 13: he promised to make the United States the crypto capital
Speaker 13: of the planet and to replace the approach of the
Speaker 13: Biden administration, which was essentially regulation through prosecution. I mean,
Speaker 13: the Biden administration was doing everything it could to driveto
Speaker 13: companies offshore, and he promised to change that approach and
Speaker 13: make and provide regulatory clarity so that the innovation could
Speaker 13: happen in the United States. And I think that you know,
Speaker 13: the Trump administration has done that. Even before this bill,
Speaker 13: the President had signed in an executive order to make
Speaker 13: bitcoin a strategic reserve asset, providing I think a kind
Speaker 13: of legitimacy for the industry that it had been seeking.
Speaker 13: We also have formed a President's Working Group on Digital
Speaker 13: Assets that's been systematically hunting down and eliminating some of
Speaker 13: these war on crypto regulations that have been impeding in
Speaker 13: the industry. The bottom line here is that we just
Speaker 13: want a fair approach. What founders and entrepreneurs been asking
Speaker 13: for is just tell us what the rules are and
Speaker 13: will abide by those rules. So we've been trying to
Speaker 13: provide that regulatory clarity. But at the end of the day,
Speaker 13: if you want to make sure that the rules stay
Speaker 13: stable for founders, you need to enshrine them in law.
Speaker 13: And it's great when you can get the various agencies
Speaker 13: and departments the government to change their rules to take
Speaker 13: up better rulemaking, and we've done that. But again, the
Speaker 13: way that you provide long term protection against certain of
Speaker 13: you know, a new Garriginsler or something like that, just
Speaker 13: do you enshrining them into law. And that's what this bill,
Speaker 13: the Genius Act, would do, and it's also what the
Speaker 13: Market Structure legislation would do, and we want to keep
Speaker 13: that up.
Speaker 2: Next to be sure, sorry to interrupt you, what is
Speaker 2: missing from the bill and what Democrats push for, What
Speaker 2: specific controls on the president and president's family in their
Speaker 2: ability to move within the corners of the crypto market
Speaker 2: with which they're affiliated. There's a lot of concern that
Speaker 2: that wasn't done. Is the concern justified.
Speaker 13: I don't think so. I mean, so, first of all,
Speaker 13: you should ask them what they're doing, because I'm not
Speaker 13: involved in any particular company's products. I'm just an innovation advisor.
Speaker 13: But my understanding is that what they've said is the
Speaker 13: president's assets are in a blind trust. His sons are
Speaker 13: not in the government. They're adults, and they're allowed to
Speaker 13: engage in business, and they have a company. And I
Speaker 13: think that these are unrelated things.
Speaker 1: You're an innovation expert, not just in crypto but in
Speaker 1: AI too. We shift there a little bit because you've
Speaker 1: hunted down rules that perhaps weren't serving some in the
Speaker 1: business entrepreneurship in a US, for example, the diffusion rule.
Speaker 1: But what follows it?
Speaker 13: David Well, I think it's a good question about what
Speaker 13: comes next. I think the problem with the diffusion rule,
Speaker 13: this was the Biden difusion rule that was dropped at
Speaker 13: the eleventh hour by the Biden administration something like five
Speaker 13: days before the end of their term. I don't think
Speaker 13: it was really thought through. It was overly burdensome, and
Speaker 13: what it did is it required every sale of a
Speaker 13: GPU worldwide, it required a license from the Commerce Department
Speaker 13: or one of several narrow exemptions that also had to
Speaker 13: be lawyered, and so this was just incredibly burdensome. I
Speaker 13: think it impeded the global the US semiconduct business and
Speaker 13: the US data center business. I think it hampered its
Speaker 13: a market share worldwide, which should be an important objective
Speaker 13: of US policy is for the US to win the
Speaker 13: AI race by becoming the dominant tech stack internationally. So
Speaker 13: the diffusion rule I think would have shot our technology
Speaker 13: industry in the foot out of a concern to prevent
Speaker 13: chips from going to China. To be sure, I think
Speaker 13: that the leading American semiconductors should not go to China,
Speaker 13: but we have export controls on that, and I don't
Speaker 13: think we need a new global licensing regime on every
Speaker 13: single GPU transaction to achieve that objective.
Speaker 2: David Jensen Wong was on the show very recently and
Speaker 2: he expressed his concern that Huawei has technology that is
Speaker 2: as performances in Vidia's H two hundred. There had been
Speaker 2: a lot of focus on AG twenty. I know that
Speaker 2: the Commerce Department has issued some assessment of how much
Speaker 2: Huawei can produce. I think they said two hundred thousand
Speaker 2: GPU capacity, but there are concerns, and actually that their
Speaker 2: ability to export to markets outside of America is much
Speaker 2: greater than that. What is your assessment of how China
Speaker 2: can compete with its own GPUs in markets outside of America.
Speaker 13: Well, it is true that today China is supply constrained
Speaker 13: on how many GPUs they can produce, but I would
Speaker 13: expect that to change pretty rapidly because China has proven
Speaker 13: adept at working around our restrictions, and you saw that
Speaker 13: back in January. We had this Deep Seek moment where
Speaker 13: before Deep Seek people thought that Chinese AI models were
Speaker 13: years behind, and then Deepseak launch, we realized that maybe
Speaker 13: they're more like three to six months behind. I think
Speaker 13: today China is maybe one and a half to two
Speaker 13: years behind US in chip design, but Huawei is moving
Speaker 13: fast to catch up, and even before they fully caught up,
Speaker 13: I think you will see them exporting their chips for
Speaker 13: the global market. For example, there was a story out
Speaker 13: of Malaysia that they were creating a sovereign data center
Speaker 13: with Wawei send chips, and that story got walked back
Speaker 13: because because I think the government was afraid of the
Speaker 13: US reaction. But it was a minister of the government
Speaker 13: who did announce that they were creating a sovereign data
Speaker 13: center using Huawei chips, So I think that we do
Speaker 13: have to be concerned about Huawei competing on the global market.
Speaker 13: They may not fully be there yet, but I would
Speaker 13: expect that to change in the future. And I think
Speaker 13: that if we're overly restrictive in terms of US sales
Speaker 13: to the world, I think there'll be a time where
Speaker 13: we're kind of kicking ourselves saying, you know, when we're
Speaker 13: in all of a sudden, Huawei is everywhere, We'll be saying, well, wait,
Speaker 13: when we had this whole market to ourselves, why didn't
Speaker 13: we take advantage of that opportunity and lock in the
Speaker 13: American tech stack. I think it's very important that when
Speaker 13: we think about our goals here with respect to AI,
Speaker 13: we want the American tech stack to win. We wanted
Speaker 13: to become the global standard. We want to have the
Speaker 13: largest market share we can. We want all to be
Speaker 13: the partner of choice for the world. And I think
Speaker 13: it's a valid policy objective to prevent our leading edge
Speaker 13: seming conductors from going to China, but at the same time,
Speaker 13: we don't want to restrict them from going to our
Speaker 13: friends and allies. To be sure, we should name our
Speaker 13: security requirements, but our friends and allies are eager to
Speaker 13: comply with those security requirements.
Speaker 4: So I think we can.
Speaker 13: Achieve our objective here, our dual objective of preventing leading
Speaker 13: chips from going to China while also making the United
Speaker 13: States the global standard.
Speaker 1: David Sachs, it's great to have you back on the show.
Speaker 1: Me thank you. Of course, the White House, AI and
Speaker 1: cryptos are meanwhile. That does it for this edition at
Speaker 1: Bloomberg Tech. What a wide ranging conversation with David Sacks.
Speaker 1: Have plenty of others. We've talked to autonomous vehicles, We've
Speaker 1: talked AI within super apps as well.
Speaker 2: Yeah, and there's an intense focus on that bill, right,
Speaker 2: so I think go back and recap what David said
Speaker 2: about what happens next? That is the question. Recap it
Speaker 2: on the podcast. You can find the Bloomberg Tech Pod
Speaker 2: on the terminal all the Bloomberg platforms, as well as
Speaker 2: online on Apple, Spotify, I and on iHeart. From San Francisco,
Speaker 2: New York City, this is Bloomberg Tech.
Speaker 9: Mm hmmmmmmmm mmmm