1
00:00:02,520 --> 00:00:14,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

2
00:00:14,040 --> 00:00:17,840
Speaker 1: from coast to coast with Caroline Hyde in New York

3
00:00:18,120 --> 00:00:20,120
Speaker 1: and ever though in San Francisco.

4
00:00:22,480 --> 00:00:24,080
Speaker 2: This is Bloomberg Tech Coming up.

5
00:00:24,120 --> 00:00:27,240
Speaker 3: Service now agrees to by cybersecurity startup Armists for seven

6
00:00:27,240 --> 00:00:31,640
Speaker 3: points seventy five billion dollars, its largest acquisition to date. Douz,

7
00:00:31,680 --> 00:00:36,479
Speaker 3: Invidia's biggest Southeast Asia buyer, faces a chip smuggling probe

8
00:00:36,520 --> 00:00:40,440
Speaker 3: despite the tech giants insistence that chip diversion doesn't exist.

9
00:00:41,080 --> 00:00:44,080
Speaker 3: And crypto's big year that wasn't a win for all

10
00:00:44,440 --> 00:00:48,120
Speaker 3: the billionaire's hit hardest by recent price drops. First rechecking

11
00:00:48,159 --> 00:00:50,519
Speaker 3: on those markets and bigcoin continues to be on the downside.

12
00:00:50,520 --> 00:00:53,279
Speaker 3: We're off five percentage twin eight, three and sixty one,

13
00:00:53,640 --> 00:00:56,560
Speaker 3: so once again another annual loss for the OG in

14
00:00:56,600 --> 00:00:57,480
Speaker 3: the crypto space.

15
00:00:57,680 --> 00:00:59,959
Speaker 2: But we're seeing risk on perpetuate a little bit.

16
00:01:00,000 --> 00:01:01,720
Speaker 3: And then as that one hundred, we're higher on the day,

17
00:01:01,720 --> 00:01:03,480
Speaker 3: we're higher on the month, and boy are we higher

18
00:01:03,520 --> 00:01:05,800
Speaker 3: on the year, up more than twenty percent. And of

19
00:01:05,840 --> 00:01:08,880
Speaker 3: course today's figures the US economy expanding at four point

20
00:01:08,880 --> 00:01:12,120
Speaker 3: three percent annualized pace. Maybe just easing back a little

21
00:01:12,120 --> 00:01:14,560
Speaker 3: bit of risk on feeling if indeed the FED doesn't

22
00:01:14,560 --> 00:01:17,240
Speaker 3: cut as much as I'm in anticipated because this economy.

23
00:01:17,120 --> 00:01:18,480
Speaker 2: Looks like it's doing fine.

24
00:01:18,840 --> 00:01:20,800
Speaker 3: Let's talk about some of the animal spirits in the

25
00:01:20,840 --> 00:01:22,840
Speaker 3: market right now, particularly when it comes to M and A.

26
00:01:22,880 --> 00:01:25,480
Speaker 3: And let's look at Service Now. We're currently trading lower

27
00:01:25,480 --> 00:01:26,440
Speaker 3: on that particular stock.

28
00:01:26,440 --> 00:01:27,039
Speaker 2: We're off by two and.

29
00:01:27,040 --> 00:01:29,320
Speaker 3: A half percent because well, they're going to use cash,

30
00:01:29,360 --> 00:01:32,440
Speaker 3: They're going to use debt for his biggest acquisition so far.

31
00:01:32,520 --> 00:01:34,720
Speaker 2: It's all about the world of cyber and it's actually.

32
00:01:34,480 --> 00:01:37,600
Speaker 3: A story that Bloomberg broke where ahead of the formal announcement.

33
00:01:37,680 --> 00:01:40,160
Speaker 3: Let's get to it at Bloomberg's Andrew Martin, and it

34
00:01:40,240 --> 00:01:42,800
Speaker 3: was last week that you made clear to the market

35
00:01:42,800 --> 00:01:45,039
Speaker 3: that Service Now was looking at this particular acquisition.

36
00:01:45,120 --> 00:01:46,200
Speaker 2: Why is it building up in.

37
00:01:46,160 --> 00:01:50,919
Speaker 4: Cyber Well, I think there's sort of following a path

38
00:01:51,040 --> 00:01:55,440
Speaker 4: that Microsoft and Google were already followed, which is, you know,

39
00:01:55,560 --> 00:02:00,840
Speaker 4: combining a enterprise software product and our cyber is sort

40
00:02:00,880 --> 00:02:03,280
Speaker 4: of a bonus. And so you know, Microsoft sort of

41
00:02:03,320 --> 00:02:04,360
Speaker 4: perfected this idea of.

42
00:02:07,000 --> 00:02:08,720
Speaker 5: Having a package of.

43
00:02:08,840 --> 00:02:11,960
Speaker 4: Their software offerings in the cloud and bringing in cyber.

44
00:02:12,440 --> 00:02:15,480
Speaker 4: Google bought Whiz to do something very similar and now

45
00:02:15,639 --> 00:02:20,440
Speaker 4: Service now, you know, is basically saying as we automate

46
00:02:20,480 --> 00:02:23,960
Speaker 4: you know, they basically automate it and personnel, and now

47
00:02:23,960 --> 00:02:26,360
Speaker 4: they're offering cyber is sort of a broader package to

48
00:02:26,480 --> 00:02:27,239
Speaker 4: entice customers.

49
00:02:27,240 --> 00:02:30,520
Speaker 3: So the safety of Agenda KI is crucial. Wise, armis

50
00:02:30,639 --> 00:02:33,440
Speaker 3: the right holding. Tell us about the founding team and

51
00:02:33,520 --> 00:02:33,880
Speaker 3: other reason.

52
00:02:34,320 --> 00:02:35,840
Speaker 5: Armist is an interesting company there.

53
00:02:36,520 --> 00:02:38,919
Speaker 4: Like a lot of cyber startups, it was started by

54
00:02:39,080 --> 00:02:42,720
Speaker 4: Israeli military veterans who had worked in one of their

55
00:02:42,760 --> 00:02:46,080
Speaker 4: elite cyber units. And what these guys do is they

56
00:02:47,040 --> 00:02:51,320
Speaker 4: they call it cyber exposure management. It's basically looking across

57
00:02:51,360 --> 00:02:54,880
Speaker 4: your whole digital footprint and finding in real time flaws

58
00:02:54,880 --> 00:02:57,920
Speaker 4: and vulnerabilities and fixing them quickly. And it's something that

59
00:02:58,080 --> 00:03:04,760
Speaker 4: really lends itself to AI see that being automated, and.

60
00:03:03,680 --> 00:03:07,040
Speaker 5: You know, the company has grown incredibly fast.

61
00:03:07,240 --> 00:03:10,440
Speaker 4: And uh you know, for for a company that uh

62
00:03:10,960 --> 00:03:15,200
Speaker 4: that that automates processes, automating cyber just makes sense as

63
00:03:15,240 --> 00:03:15,560
Speaker 4: part of that.

64
00:03:16,280 --> 00:03:18,080
Speaker 2: What's interesting is, as you said, this is part of

65
00:03:18,080 --> 00:03:18,560
Speaker 2: a theme.

66
00:03:18,880 --> 00:03:20,639
Speaker 3: The fact that the mega deal of the year was

67
00:03:20,720 --> 00:03:23,720
Speaker 3: Whiz with alphabet Are we expecting yet more and more

68
00:03:23,840 --> 00:03:26,880
Speaker 3: these platforms looking to bolt on cyber acquisitions.

69
00:03:26,880 --> 00:03:28,720
Speaker 4: It just makes sense, right, I mean, it just makes

70
00:03:28,760 --> 00:03:31,800
Speaker 4: sense to to offer cyber as part of a broader package.

71
00:03:31,840 --> 00:03:36,960
Speaker 4: And you know, among the big cyber players, Microsoft being

72
00:03:36,960 --> 00:03:41,800
Speaker 4: the biggest, Google, CrowdStrike, palom Alto, they're all trying to

73
00:03:41,840 --> 00:03:45,560
Speaker 4: build a bundle that can attract users with with sort

74
00:03:45,600 --> 00:03:47,520
Speaker 4: of one stop shopping and cyber.

75
00:03:47,920 --> 00:03:52,200
Speaker 3: That word platformization, which a horrible words, horrible word, but

76
00:03:52,240 --> 00:03:55,640
Speaker 3: they love it. Megs, Andrew Martin, we so appreciate you

77
00:03:55,680 --> 00:03:59,000
Speaker 3: coming on about the latest deal. Let's turn our attention

78
00:03:59,040 --> 00:04:02,040
Speaker 3: to another huge, huge piece of reporting by Bloomberg. In

79
00:04:02,160 --> 00:04:05,600
Speaker 3: Vidia's largest buyer in Southeast Asia, it's under investigation by

80
00:04:05,640 --> 00:04:09,240
Speaker 3: the US government over whether it smuggled advanced chips into China.

81
00:04:09,560 --> 00:04:13,720
Speaker 3: Now Singapore based Megaspeed imported at least four point six

82
00:04:13,760 --> 00:04:16,560
Speaker 3: billion dollars worth of in Vidio hardware through November since

83
00:04:16,560 --> 00:04:19,320
Speaker 3: it's founding back in twenty twenty three. The company wasn't

84
00:04:19,360 --> 00:04:23,039
Speaker 3: its obscure spinoff of a Chinese gaming enterprise could become

85
00:04:23,160 --> 00:04:27,040
Speaker 3: a prime example of Washington's fears of Beijing gaining access

86
00:04:27,080 --> 00:04:30,400
Speaker 3: to advanced chips For commercial and military uses. Megaspeed denies

87
00:04:30,480 --> 00:04:33,400
Speaker 3: any wrongdoing, says it abides by all regulations from the

88
00:04:33,480 --> 00:04:36,640
Speaker 3: US and elsewhere relevant to its operations. Let's get the

89
00:04:36,680 --> 00:04:39,320
Speaker 3: details on what was a very long running investigation for

90
00:04:39,400 --> 00:04:43,800
Speaker 3: Bloomberg's chips reporter Ian King and the deep dive the

91
00:04:43,920 --> 00:04:47,200
Speaker 3: reporters have done to understand whether we really understand how

92
00:04:47,240 --> 00:04:49,960
Speaker 3: many GPUs are going to megaspeed and where they're ending

93
00:04:50,000 --> 00:04:50,480
Speaker 3: up in.

94
00:04:50,440 --> 00:04:51,040
Speaker 2: Talk us through it.

95
00:04:52,200 --> 00:04:55,239
Speaker 6: Yeah, I mean there's a lot of evidence. It's important

96
00:04:55,279 --> 00:04:57,719
Speaker 6: to point out, as you already did that in Nvidia

97
00:04:57,800 --> 00:05:01,400
Speaker 6: says there's nothing going on here. Speed itself says there's

98
00:05:01,440 --> 00:05:05,320
Speaker 6: nothing going on here. But you know our colleagues reporting here, Caroline,

99
00:05:05,440 --> 00:05:09,719
Speaker 6: is that there is an investigation going on, and you

100
00:05:09,760 --> 00:05:13,640
Speaker 6: know Southeast Asian governments and also Washington are looking at

101
00:05:13,680 --> 00:05:16,920
Speaker 6: this and still trying to find out whether there has

102
00:05:17,000 --> 00:05:21,440
Speaker 6: been anything significant going on the go ahead.

103
00:05:21,440 --> 00:05:23,839
Speaker 3: Sorry, Well, from what we know, it's a Singapore based company,

104
00:05:23,960 --> 00:05:27,800
Speaker 3: Megaspeed operating fully in compliance, as they say, with applicable laws.

105
00:05:28,240 --> 00:05:31,240
Speaker 3: But what ultimately has had to spring up ever since

106
00:05:31,240 --> 00:05:34,240
Speaker 3: the Biden administration back in twenty twenty two was a

107
00:05:34,320 --> 00:05:36,919
Speaker 3: restriction on sophisticated chips kind of from Nvidia to China.

108
00:05:37,040 --> 00:05:42,120
Speaker 3: So suddenly you saw other Asian countries become real areas

109
00:05:42,120 --> 00:05:44,920
Speaker 3: of focus for importing chips, so that Chinese companies could

110
00:05:44,920 --> 00:05:47,560
Speaker 3: actually do the workload, could do the compute outside of

111
00:05:47,560 --> 00:05:48,320
Speaker 3: their own country.

112
00:05:48,360 --> 00:05:52,400
Speaker 6: Correct, Yeah, now that's absolutely right. There's nothing illegal with

113
00:05:52,560 --> 00:05:57,080
Speaker 6: setting up a data center and serving Chinese customers, providing

114
00:05:57,160 --> 00:06:01,920
Speaker 6: those customers don't have links with a band entity in

115
00:06:01,960 --> 00:06:05,719
Speaker 6: the US, whether that's the military or some company which

116
00:06:05,760 --> 00:06:10,240
Speaker 6: the US government has decided serves China's military. However, there

117
00:06:10,320 --> 00:06:14,400
Speaker 6: is a suspicion about these links, about who's in control

118
00:06:14,480 --> 00:06:18,039
Speaker 6: of what. There is a you know, and this is

119
00:06:18,080 --> 00:06:20,719
Speaker 6: the problem that in Vidia has to face and in

120
00:06:20,800 --> 00:06:23,240
Speaker 6: video you know say, look that there's nothing to see here,

121
00:06:23,279 --> 00:06:23,880
Speaker 6: there's nothing.

122
00:06:23,720 --> 00:06:24,240
Speaker 5: To worry about.

123
00:06:24,279 --> 00:06:27,040
Speaker 6: But as you'll see from our story, there's a lot

124
00:06:27,200 --> 00:06:32,440
Speaker 6: of links between individuals in China. There are you know,

125
00:06:32,920 --> 00:06:36,320
Speaker 6: there's a lot of lack of clarity in the relationships,

126
00:06:36,360 --> 00:06:39,440
Speaker 6: which I think everybody is trying to work through to

127
00:06:39,480 --> 00:06:41,960
Speaker 6: make sure that there is nothing untoward going on.

128
00:06:42,040 --> 00:06:45,080
Speaker 3: Because Bloomberg didn't find evidence of any megaspeed in video

129
00:06:45,160 --> 00:06:49,279
Speaker 3: chips actually being divert into China. But there's all these inconsistencies,

130
00:06:49,320 --> 00:06:52,840
Speaker 3: as you say, in Megaspeed's Southeast Asia demand and ship

131
00:06:52,880 --> 00:06:55,640
Speaker 3: inventory and wherever all they all end up in.

132
00:06:56,160 --> 00:06:58,120
Speaker 2: What's so interesting is this is a moment.

133
00:06:58,240 --> 00:07:02,200
Speaker 3: Where maybe actually in we'll get more access to China.

134
00:07:02,440 --> 00:07:04,560
Speaker 3: H two hundreds have in theory or at least according

135
00:07:04,600 --> 00:07:07,320
Speaker 3: to a truth social post been allow it back into China.

136
00:07:07,360 --> 00:07:09,240
Speaker 2: The question is where the China wants them.

137
00:07:09,400 --> 00:07:12,400
Speaker 3: But also where the megaspeed will actually have Chinese demand

138
00:07:12,440 --> 00:07:14,800
Speaker 3: going forward if indeed we start to see access once

139
00:07:14,800 --> 00:07:16,960
Speaker 3: again to mainland Yeah.

140
00:07:16,800 --> 00:07:19,440
Speaker 6: I mean there's again we're in a kind of a

141
00:07:19,480 --> 00:07:23,120
Speaker 6: transition period where we're trying to find out exactly how

142
00:07:23,160 --> 00:07:25,200
Speaker 6: this will all play out. In Vidia wants to do

143
00:07:25,240 --> 00:07:28,480
Speaker 6: business directly in China, that's absolutely true. At the moment,

144
00:07:28,520 --> 00:07:32,800
Speaker 6: it cannot do that because of these restrictions. What we're

145
00:07:32,800 --> 00:07:34,680
Speaker 6: trying to find out is whether the Chinese want to

146
00:07:34,680 --> 00:07:39,040
Speaker 6: do business directly within VideA, and if that's the case,

147
00:07:39,120 --> 00:07:42,120
Speaker 6: what level of demand that they will be there. In

148
00:07:42,240 --> 00:07:45,000
Speaker 6: Vidia has really kind of had a good year in Washington.

149
00:07:45,040 --> 00:07:49,240
Speaker 6: It's gone from really restrictive rules to freeing up of

150
00:07:49,320 --> 00:07:52,520
Speaker 6: some of them. But again that has to translate into

151
00:07:52,680 --> 00:07:56,360
Speaker 6: shipments into that Chinese market, and we haven't seen that

152
00:07:56,440 --> 00:07:59,440
Speaker 6: yet and we don't know that that will actually happen. Clearly,

153
00:07:59,560 --> 00:08:02,280
Speaker 6: stories like this that there are suspicions about smuddeling that

154
00:08:02,360 --> 00:08:06,040
Speaker 6: we know perhaps should be more secure and more kind

155
00:08:06,040 --> 00:08:09,000
Speaker 6: of careful in how we deal with China and Chinese

156
00:08:09,160 --> 00:08:12,040
Speaker 6: entities don't help that case. So again, there's a lot

157
00:08:12,040 --> 00:08:14,240
Speaker 6: at stake here, and we really need a lot more

158
00:08:14,320 --> 00:08:16,800
Speaker 6: clarity about the details of how this is all going

159
00:08:16,840 --> 00:08:17,400
Speaker 6: to work out.

160
00:08:17,680 --> 00:08:20,880
Speaker 3: It's a very fairo incredibly complex story, and you broke

161
00:08:20,920 --> 00:08:23,880
Speaker 3: it down perfectly for us Bloomgazine, King, thank you very much. Indeed,

162
00:08:23,880 --> 00:08:27,600
Speaker 3: go read more about the Invidio supplier on your terminal

163
00:08:27,680 --> 00:08:30,760
Speaker 3: or online. But let's talk more now about chip and

164
00:08:30,800 --> 00:08:34,280
Speaker 3: trade news because the US it's actually accused today China

165
00:08:34,360 --> 00:08:37,760
Speaker 3: of engaging in unfair trade practices in the semiconductor sector,

166
00:08:38,040 --> 00:08:40,880
Speaker 3: but Washington won't place additional tariffs on chip imports till

167
00:08:40,920 --> 00:08:44,079
Speaker 3: at least mid twenty twenty seven. Chinese embassy in Washington

168
00:08:44,080 --> 00:08:46,520
Speaker 3: did not immediately respond to the request for comment. That's

169
00:08:46,520 --> 00:08:49,040
Speaker 3: going the details of blombgs, Jordan Fabian and so we

170
00:08:49,160 --> 00:08:53,880
Speaker 3: understand that USTR, that's the Office of US Trade Representative saying, look,

171
00:08:54,240 --> 00:08:55,560
Speaker 3: what they're doing isn't fair.

172
00:08:58,480 --> 00:08:58,960
Speaker 5: Exactly.

173
00:08:59,160 --> 00:09:04,040
Speaker 7: It's an interesting development. This investigation actually started under the

174
00:09:04,080 --> 00:09:07,560
Speaker 7: administration of former President Joe Biden, with the expectation that

175
00:09:07,600 --> 00:09:10,520
Speaker 7: Donald Trump, who talked tough on China during the campaign,

176
00:09:10,559 --> 00:09:13,080
Speaker 7: would follow up on it when he became president. But

177
00:09:13,200 --> 00:09:15,520
Speaker 7: in the interim he started a trade war with China.

178
00:09:15,840 --> 00:09:19,280
Speaker 7: He then struck a deal with Jijenping to take off

179
00:09:19,520 --> 00:09:23,000
Speaker 7: those tariffs. And so the US right now, if you

180
00:09:23,040 --> 00:09:25,760
Speaker 7: listen to what Jamison Greer, the Trade Representative, has said

181
00:09:26,040 --> 00:09:30,560
Speaker 7: other senior administration officials, they want a stable relationship with

182
00:09:30,720 --> 00:09:33,400
Speaker 7: China on trade, and so they're not going to look

183
00:09:33,440 --> 00:09:35,960
Speaker 7: to hike tariffs at the current moment, which is why

184
00:09:36,000 --> 00:09:39,040
Speaker 7: you have this odd outcome of an investigation saying the

185
00:09:39,080 --> 00:09:43,000
Speaker 7: obvious really, which is that China is using non market

186
00:09:43,040 --> 00:09:48,080
Speaker 7: practices to dominate the chip industry. But at the same time,

187
00:09:48,200 --> 00:09:50,120
Speaker 7: the US isn't really going to do anything about it,

188
00:09:50,240 --> 00:09:52,560
Speaker 7: at least not for the foreseeable future.

189
00:09:52,800 --> 00:09:56,480
Speaker 3: So ESDO was legally required to publish the outcome and

190
00:09:56,520 --> 00:10:00,760
Speaker 3: the investigation the three to Zho one investigation, but is

191
00:10:00,800 --> 00:10:03,200
Speaker 3: being thought of that China is up to in terms

192
00:10:03,280 --> 00:10:06,760
Speaker 3: of unfairly supporting its industry. They say, China's targeting in

193
00:10:06,800 --> 00:10:10,720
Speaker 3: the semiconductor industry for dominance is unreasonable and burdens or

194
00:10:10,720 --> 00:10:13,640
Speaker 3: restricts US commerce and thus is actionable.

195
00:10:13,679 --> 00:10:15,880
Speaker 2: Jordan, what are they being told or accused of.

196
00:10:18,400 --> 00:10:22,199
Speaker 7: You know, they're being accused of using non market practices

197
00:10:22,240 --> 00:10:26,240
Speaker 7: to bolster their domestic industry. You'll sell those chips that

198
00:10:26,640 --> 00:10:31,600
Speaker 7: perhaps below market rates into various countries to get them

199
00:10:32,000 --> 00:10:36,840
Speaker 7: hooked on the Chinese technology stack and thereby increasing the

200
00:10:36,880 --> 00:10:40,160
Speaker 7: market share of their chip industry. The irony is that

201
00:10:40,200 --> 00:10:43,280
Speaker 7: the US is pretty much trying to do the same thing,

202
00:10:43,440 --> 00:10:46,360
Speaker 7: which is basically doing a take it or leave it

203
00:10:46,400 --> 00:10:49,160
Speaker 7: deal with countries around the world, saying that you need

204
00:10:49,200 --> 00:10:52,760
Speaker 7: to use the US tech stack. We want to make

205
00:10:52,760 --> 00:10:56,400
Speaker 7: sure that countries are not on the Chinese tech stack

206
00:10:56,440 --> 00:10:59,000
Speaker 7: and had been for a while, you know, trying to

207
00:10:59,080 --> 00:11:03,240
Speaker 7: limit X worts to China to other countries that are

208
00:11:03,240 --> 00:11:08,320
Speaker 7: deemed unfriendly, and also crack down on the Chinese market.

209
00:11:08,400 --> 00:11:11,720
Speaker 7: So they're saying, essentially, you know, you know, China can't

210
00:11:12,000 --> 00:11:13,880
Speaker 7: try to dominate the market. We're going to try and

211
00:11:13,880 --> 00:11:17,280
Speaker 7: dominate the market. But right now they're again going to

212
00:11:17,400 --> 00:11:21,760
Speaker 7: sort of stand off our whole back on increasing terrorists

213
00:11:21,800 --> 00:11:24,880
Speaker 7: further on Chinese chips to address that.

214
00:11:24,840 --> 00:11:28,600
Speaker 2: Problem complex trade web. Jordan Fabian, thanks so much for

215
00:11:28,640 --> 00:11:30,640
Speaker 2: talking us through it. We really appreciate you.

216
00:11:30,760 --> 00:11:34,480
Speaker 3: Meanwhile, coming up, thing about Larry Allison, his big bet

217
00:11:34,520 --> 00:11:38,000
Speaker 3: on paramount that could alter his vast Oracle fortune.

218
00:11:38,040 --> 00:11:40,120
Speaker 2: One on that. Next, this is Blomberg Tech.

219
00:11:53,640 --> 00:11:56,920
Speaker 3: Larry Alison no stranger to bold bets, but his biggest

220
00:11:56,960 --> 00:12:00,520
Speaker 3: one yet maybe in media. A potential personal guarantee more

221
00:12:00,520 --> 00:12:03,160
Speaker 3: than forty billion dollars to backstop paramounts all cash bid

222
00:12:03,160 --> 00:12:04,439
Speaker 3: for Warner Brothers Discovery.

223
00:12:04,640 --> 00:12:06,160
Speaker 2: He could dramatically we shape the.

224
00:12:06,120 --> 00:12:09,320
Speaker 3: Oracle founder's fortune and Meg's Dylan Sloane joins us for

225
00:12:09,400 --> 00:12:12,280
Speaker 3: more as we're picking apart how Larry Ellison is basically

226
00:12:12,280 --> 00:12:15,559
Speaker 3: helping his son, David Ellison potentially by Warner Brothers Discovery.

227
00:12:15,720 --> 00:12:18,400
Speaker 3: What's so extraordinary about your reporting on the billionaire is

228
00:12:18,440 --> 00:12:21,800
Speaker 3: that he has sold very little of Oracle stock over

229
00:12:21,800 --> 00:12:22,240
Speaker 3: the years.

230
00:12:22,320 --> 00:12:24,560
Speaker 8: He has Yeah, and even amongst the billionaires that we're

231
00:12:24,600 --> 00:12:27,160
Speaker 8: looking at on the Bloomberg billionis Index, he really stands out.

232
00:12:27,920 --> 00:12:30,040
Speaker 8: He's sold about seven and a half billion dollars worth

233
00:12:30,040 --> 00:12:32,560
Speaker 8: of stock lifetime, no more than a billion dollars in

234
00:12:32,600 --> 00:12:35,920
Speaker 8: a single year since twenty ten, So that pair that

235
00:12:35,960 --> 00:12:38,800
Speaker 8: really pales in comparison in looking at some other founders.

236
00:12:38,840 --> 00:12:41,120
Speaker 8: You know, he still earns about forty percent of the company,

237
00:12:41,360 --> 00:12:43,880
Speaker 8: which is, you know, multiples higher than a lot of

238
00:12:43,920 --> 00:12:46,480
Speaker 8: comparable tech founder peers. So his strategy in terms of

239
00:12:46,480 --> 00:12:48,880
Speaker 8: his wealth management has been to stick really closely to

240
00:12:49,280 --> 00:12:52,920
Speaker 8: holding his Oracle stock, not cashing out at any point,

241
00:12:52,960 --> 00:12:54,800
Speaker 8: which has been very successful for him as a stock

242
00:12:54,840 --> 00:12:57,199
Speaker 8: has done well. But it does raise some questions about

243
00:12:57,240 --> 00:12:58,800
Speaker 8: the cash that he has on hand and whether or

244
00:12:58,800 --> 00:13:01,480
Speaker 8: not he would be able to imediately meet those equity

245
00:13:01,520 --> 00:13:03,320
Speaker 8: financing comitment should he be called on to do so.

246
00:13:03,440 --> 00:13:05,880
Speaker 3: Yeah, because like forty billion in the grand scheme of things,

247
00:13:06,200 --> 00:13:07,880
Speaker 3: is actually not that much compared to his two hundred

248
00:13:07,880 --> 00:13:10,840
Speaker 3: and fifty two billion dollar net worth. But how liquid

249
00:13:10,960 --> 00:13:13,320
Speaker 3: is any of that? Where has money gone? What could

250
00:13:13,400 --> 00:13:14,640
Speaker 3: he sell to help out?

251
00:13:14,720 --> 00:13:16,240
Speaker 8: Yeah, And you raise a good point, which is it's

252
00:13:16,240 --> 00:13:18,079
Speaker 8: important to say that he can afford this. Of course

253
00:13:18,120 --> 00:13:20,080
Speaker 8: many times over third richest man in the world he

254
00:13:20,080 --> 00:13:20,960
Speaker 8: has got more than.

255
00:13:20,920 --> 00:13:23,800
Speaker 5: Enough assets to be able to cover this, but historically.

256
00:13:23,360 --> 00:13:26,760
Speaker 8: Ellison's has relied on debt to finance money of his investments,

257
00:13:26,800 --> 00:13:30,360
Speaker 8: his lifestyle purchases. Currently about thirty percent of his Oracle

258
00:13:30,400 --> 00:13:33,800
Speaker 8: stake is pledged to secure loans, which he uses to

259
00:13:34,120 --> 00:13:36,920
Speaker 8: raise cash and fund his many lifestyle purchases. He has

260
00:13:36,960 --> 00:13:39,800
Speaker 8: a really extensive real estate portfolio. You may remember even

261
00:13:39,840 --> 00:13:41,640
Speaker 8: earlier this year. It feels like a lifetime ago, but

262
00:13:41,679 --> 00:13:43,480
Speaker 8: he put up a big chunk of the equity for

263
00:13:44,080 --> 00:13:48,319
Speaker 8: his son David's acquisition of National Amusements, the acquisition of Paramount.

264
00:13:48,920 --> 00:13:51,079
Speaker 8: So should he need to raise cash down the line,

265
00:13:51,080 --> 00:13:53,439
Speaker 8: of course, selling shares would be one option if he's

266
00:13:53,480 --> 00:13:55,800
Speaker 8: called on to backstop this steal, which again would constitute

267
00:13:55,880 --> 00:13:58,480
Speaker 8: a pretty significant change from his his strategy over the

268
00:13:58,520 --> 00:14:02,360
Speaker 8: past few decades, or potentially increasing the size of those loans,

269
00:14:02,440 --> 00:14:05,200
Speaker 8: which is something that the Oracle board would need to

270
00:14:05,320 --> 00:14:07,439
Speaker 8: go through a review process of to give the okay.

271
00:14:07,480 --> 00:14:11,920
Speaker 3: Just like Tesla learn when El muskport now X was

272
00:14:11,960 --> 00:14:14,560
Speaker 3: Twitter Dolan sloan. It's great reporting, go and check it

273
00:14:14,600 --> 00:14:18,040
Speaker 3: out on all things billionaires. But let's talk a little

274
00:14:18,040 --> 00:14:21,920
Speaker 3: bit more about the potential bid or deal of Paramount, binding,

275
00:14:22,240 --> 00:14:26,000
Speaker 3: Water Brothers, Discovery, and indeed Netflix to the legal stakes

276
00:14:26,000 --> 00:14:29,720
Speaker 3: of the Megamedia mergers. Fiona Scott Morton, Professor of Economics

277
00:14:29,720 --> 00:14:32,120
Speaker 3: over at the Yale University School of Management and adjunct

278
00:14:32,120 --> 00:14:35,040
Speaker 3: professor of Yale Law School, is with us. Now let's

279
00:14:35,120 --> 00:14:38,080
Speaker 3: just go back to whether or not any of these

280
00:14:38,120 --> 00:14:42,680
Speaker 3: will get through regulatory approval. Let's start with Paramount buying

281
00:14:42,720 --> 00:14:43,640
Speaker 3: Warner Brothers Discovery.

282
00:14:43,680 --> 00:14:44,920
Speaker 2: Does it cut legal mustard?

283
00:14:44,880 --> 00:14:48,560
Speaker 9: Do you think, well, all three of the bidders, remember

284
00:14:48,600 --> 00:14:51,680
Speaker 9: there was Comcast in there to begin with, have overlapped

285
00:14:51,840 --> 00:14:54,800
Speaker 9: with Warner Brothers. If you think about three buckets of

286
00:14:54,920 --> 00:14:59,680
Speaker 9: say content, production, streaming, and then channels or networks, they

287
00:14:59,760 --> 00:15:03,360
Speaker 9: a overlap and Paramount in particular has a lot of

288
00:15:04,280 --> 00:15:08,720
Speaker 9: production studio kinds of assets, particularly because of course Paramount

289
00:15:08,720 --> 00:15:11,720
Speaker 9: merges with sky Dance first, so that's a big issue

290
00:15:11,720 --> 00:15:14,120
Speaker 9: for them, and they have a significant share of streaming

291
00:15:14,200 --> 00:15:14,640
Speaker 9: as well.

292
00:15:15,120 --> 00:15:17,960
Speaker 3: You served as Deputy Sistant Attorney General for Economic Analysis,

293
00:15:18,000 --> 00:15:20,600
Speaker 3: chief Economist, you can basically helped with anti trust division

294
00:15:20,640 --> 00:15:24,440
Speaker 3: in your time. When ultimately it comes down to it,

295
00:15:24,440 --> 00:15:27,600
Speaker 3: as courts are going to say, who's the competitor here.

296
00:15:27,880 --> 00:15:28,960
Speaker 2: Do you think it's right that.

297
00:15:28,880 --> 00:15:32,440
Speaker 3: They bulk in YouTube and new ways of consuming content,

298
00:15:32,480 --> 00:15:36,200
Speaker 3: even TikTok versus us all be on linear, certainly on cable.

299
00:15:37,520 --> 00:15:40,160
Speaker 9: Yes, I think this is the tricky thing for the

300
00:15:40,200 --> 00:15:44,320
Speaker 9: paramount BID. I mean, we all understand what producing content is,

301
00:15:44,360 --> 00:15:46,160
Speaker 9: and I think we have a pretty good grip on

302
00:15:46,320 --> 00:15:49,160
Speaker 9: who does that and why it's different and what sort

303
00:15:49,200 --> 00:15:53,760
Speaker 9: of market there is there. Streaming, however, is much trickier

304
00:15:54,000 --> 00:15:58,080
Speaker 9: because we have user produced funny cat videos, we have

305
00:15:58,240 --> 00:16:01,880
Speaker 9: user produced videos that actually sustain those users in terms

306
00:16:01,880 --> 00:16:05,920
Speaker 9: of income. We have professionally produced short things, professionally produced

307
00:16:05,920 --> 00:16:08,120
Speaker 9: long things, and so we're getting a kind of a

308
00:16:08,200 --> 00:16:13,480
Speaker 9: continuum of content, and that includes YouTube, as you point out,

309
00:16:13,560 --> 00:16:16,560
Speaker 9: which has a big chunk of that continuum. And it's

310
00:16:16,840 --> 00:16:18,880
Speaker 9: going to be very difficult to draw the line on

311
00:16:18,920 --> 00:16:21,240
Speaker 9: what is what we call the relevant market, which in

312
00:16:21,320 --> 00:16:24,440
Speaker 9: antitrust is what matters because that's where you get head

313
00:16:24,440 --> 00:16:25,400
Speaker 9: to head competitors.

314
00:16:25,600 --> 00:16:28,360
Speaker 3: It feels as though Netflix, for its part, which thus

315
00:16:28,400 --> 00:16:31,120
Speaker 3: far is meant to be the front runner for buying

316
00:16:31,800 --> 00:16:34,760
Speaker 3: Warner Brothers, or at least the streaming and the studio

317
00:16:34,840 --> 00:16:36,960
Speaker 3: side of it, they've tried to front run this sort

318
00:16:36,960 --> 00:16:40,680
Speaker 3: of argument by making clear they think the market competitors

319
00:16:40,680 --> 00:16:42,760
Speaker 3: are YouTube and they are TikTok and they are just

320
00:16:42,800 --> 00:16:45,520
Speaker 3: where are eyeballs at? Who do they need to convince

321
00:16:45,560 --> 00:16:47,720
Speaker 3: in this because many would say, oh, the Allisons have

322
00:16:47,760 --> 00:16:50,240
Speaker 3: got the air of the administration, but really it's the

323
00:16:50,320 --> 00:16:52,400
Speaker 3: courts that's right.

324
00:16:52,440 --> 00:16:55,080
Speaker 9: The president can say he wants the Ellisons to have it,

325
00:16:55,160 --> 00:16:58,200
Speaker 9: and he can say that about his friends or the

326
00:16:58,200 --> 00:17:01,360
Speaker 9: people who give him money, or silence the voices that

327
00:17:01,440 --> 00:17:04,560
Speaker 9: he doesn't want to hear. But ultimately, we have a

328
00:17:04,640 --> 00:17:07,000
Speaker 9: law in the United States that can be enforced not

329
00:17:07,040 --> 00:17:09,960
Speaker 9: only by the public, the federal public authorities, but the

330
00:17:10,000 --> 00:17:13,560
Speaker 9: states and actually buy private plaintiffs as well. And so

331
00:17:13,720 --> 00:17:16,199
Speaker 9: if there's some harm to competition and that can be

332
00:17:16,240 --> 00:17:19,600
Speaker 9: shown by a state or a private plaintiff, then they

333
00:17:19,600 --> 00:17:21,760
Speaker 9: can go to court and try to block the transaction

334
00:17:22,040 --> 00:17:24,560
Speaker 9: just like the federal government can. And indeed we have

335
00:17:24,680 --> 00:17:28,879
Speaker 9: seen states coalitions of states being very active and antitrust

336
00:17:28,960 --> 00:17:31,960
Speaker 9: lately when they have felt that the federal government is

337
00:17:32,000 --> 00:17:33,000
Speaker 9: not doing a good job.

338
00:17:33,560 --> 00:17:35,440
Speaker 3: Fear and a Scott Morton, I'm a feeling this story

339
00:17:35,520 --> 00:17:37,240
Speaker 3: is going to run. So we get to have you back,

340
00:17:37,320 --> 00:17:46,840
Speaker 3: Yale University School and Management. We appreciate your expertise. It's

341
00:17:46,880 --> 00:17:50,040
Speaker 3: been a wild year in crypto. Despite big regulatory wins,

342
00:17:50,280 --> 00:17:53,200
Speaker 3: hasn't been kind to everyone, even as prices and interest

343
00:17:53,280 --> 00:17:56,600
Speaker 3: surged early on. Billionaires tied to the space they're chatting

344
00:17:56,760 --> 00:17:59,440
Speaker 3: very different paths. Setting into twenty twenty six, let's state

345
00:17:59,480 --> 00:18:02,720
Speaker 3: the vinkle of twins. They saw their fortunes pressured as

346
00:18:02,760 --> 00:18:06,240
Speaker 3: Gemini Space Station continues to face losses after the exchange's

347
00:18:06,280 --> 00:18:09,879
Speaker 3: shares for one sixty percent following September IPO. On the

348
00:18:09,920 --> 00:18:13,119
Speaker 3: other side, Jeremy Elaire's Circle benefited from growing adoption of

349
00:18:13,119 --> 00:18:16,200
Speaker 3: its USDC stable coin, helped by clearer regulation, and the

350
00:18:16,240 --> 00:18:19,399
Speaker 3: shares have almost tripled since listening in June, although you

351
00:18:19,400 --> 00:18:22,720
Speaker 3: can see they're well off their previous highs. Meanwhile, let's

352
00:18:22,720 --> 00:18:26,639
Speaker 3: talk my novograts. Galaxy Digital has actually seen some sort

353
00:18:26,680 --> 00:18:30,200
Speaker 3: of a rebound alongside bitcoins gains earlier in the year,

354
00:18:30,240 --> 00:18:32,840
Speaker 3: but it has had a tough stretch. Then there's Michael

355
00:18:32,840 --> 00:18:36,320
Speaker 3: Saylor's wild ride as too, as the Strategy founder doubled

356
00:18:36,400 --> 00:18:39,800
Speaker 3: down on his high conviction bitcoin bet, further tying his

357
00:18:39,880 --> 00:18:42,160
Speaker 3: wealth to the token's price wings his net worth has

358
00:18:42,240 --> 00:18:47,080
Speaker 3: collapsed almost forty percent this year. So what next for

359
00:18:47,119 --> 00:18:48,560
Speaker 3: crypto in twenty twenty six?

360
00:18:48,720 --> 00:18:49,639
Speaker 2: Not just the billionaires.

361
00:18:49,840 --> 00:18:51,840
Speaker 3: Nisa Colleens, Stillmark Managing.

362
00:18:51,480 --> 00:18:53,920
Speaker 2: Partners, says she's going to see momentum.

363
00:18:54,240 --> 00:18:57,720
Speaker 3: She writes, we expect to continued progress through increased MNA activity,

364
00:18:57,720 --> 00:19:01,439
Speaker 3: expanded entrepreneurial innovation, and a deeper, more robust base of

365
00:19:01,480 --> 00:19:05,280
Speaker 3: both retail and institutional uses. She joins us Now, for you,

366
00:19:05,440 --> 00:19:08,320
Speaker 3: at least reflecting on twenty twenty five, what was the

367
00:19:08,359 --> 00:19:09,560
Speaker 3: biggest landmark move?

368
00:19:09,720 --> 00:19:11,000
Speaker 2: Was it institutional adoption?

369
00:19:12,960 --> 00:19:15,600
Speaker 10: Well, twenty twenty five was one of the most consequential

370
00:19:15,720 --> 00:19:20,000
Speaker 10: years in bitcoin's history, not because of price appreciation, but

371
00:19:20,119 --> 00:19:24,119
Speaker 10: because of structural progress, and that includes policy, product, and

372
00:19:24,320 --> 00:19:29,320
Speaker 10: institutional adoption. Across all of these fronts, Bitcoin moved meaningfully

373
00:19:29,359 --> 00:19:33,040
Speaker 10: into the mainstream as an embedded part of the financial system,

374
00:19:33,440 --> 00:19:35,919
Speaker 10: and twenty twenty six will be able to take advantage

375
00:19:35,920 --> 00:19:36,720
Speaker 10: of that foundation.

376
00:19:37,080 --> 00:19:41,480
Speaker 11: What does advantage look like, Well, what it looks like

377
00:19:41,800 --> 00:19:47,040
Speaker 11: is recent regulatory clarity and an effort by regulators and

378
00:19:47,080 --> 00:19:51,200
Speaker 11: policy makers to acknowledge bitcoin as part of the financial

379
00:19:51,240 --> 00:19:55,320
Speaker 11: system and to lay the foundational groundwork in terms of

380
00:19:55,400 --> 00:19:59,080
Speaker 11: policy so that the US can continue to lead both

381
00:19:59,080 --> 00:20:03,840
Speaker 11: in terms of innovation distribution as well as institutional adoption

382
00:20:03,920 --> 00:20:08,760
Speaker 11: that can provide efficiencies and gains for US based institutions

383
00:20:09,000 --> 00:20:11,880
Speaker 11: from bitcoin, the acid and bitcoin technologies at.

384
00:20:11,880 --> 00:20:14,440
Speaker 3: Least reminds us of that quickly, just remind us where

385
00:20:14,480 --> 00:20:18,080
Speaker 3: we are on policy. Because Genius Act tick, that helps

386
00:20:18,119 --> 00:20:22,440
Speaker 3: sable coins and pass through Congress. But the Clarity Act

387
00:20:22,560 --> 00:20:24,600
Speaker 3: what will that give us if India does get through

388
00:20:24,640 --> 00:20:25,000
Speaker 3: the Senate.

389
00:20:26,640 --> 00:20:29,359
Speaker 10: So in addition to the Genius Act passing this year,

390
00:20:29,359 --> 00:20:33,120
Speaker 10: we've seen advancement of the What the Clarity Act attempts

391
00:20:33,200 --> 00:20:35,560
Speaker 10: to do, or aims to do, I should say, is

392
00:20:35,600 --> 00:20:39,480
Speaker 10: to create a framework for bitcoin and other digital assets

393
00:20:40,240 --> 00:20:44,480
Speaker 10: can create clarity as well as consumer protection and can

394
00:20:44,520 --> 00:20:48,240
Speaker 10: offer definitions of what these digital assets are. So, for example,

395
00:20:48,280 --> 00:20:51,639
Speaker 10: we expect that bitcoin will be defined as a commodity

396
00:20:51,680 --> 00:20:56,000
Speaker 10: along with other decentralized assets under the purview of the CFTC,

397
00:20:56,720 --> 00:21:00,720
Speaker 10: and that will help drive institutional adoption both in terms

398
00:21:00,800 --> 00:21:04,199
Speaker 10: of institutionals institution's.

399
00:21:03,480 --> 00:21:05,480
Speaker 12: Own interaction with bitcoin, but.

400
00:21:05,520 --> 00:21:10,040
Speaker 10: Also institutions comfort with distribution bitcoin to their own clients.

401
00:21:10,640 --> 00:21:11,879
Speaker 2: We've got but a minute left.

402
00:21:11,960 --> 00:21:13,960
Speaker 3: But your put photo is so interesting because it's all

403
00:21:13,960 --> 00:21:17,720
Speaker 3: around the bitcoin ecosystem and one of us energy focused.

404
00:21:17,760 --> 00:21:20,240
Speaker 2: How is that playing and also this need for energy

405
00:21:20,320 --> 00:21:24,080
Speaker 2: and power in the AI era as well.

406
00:21:24,080 --> 00:21:24,560
Speaker 12: That's right.

407
00:21:24,760 --> 00:21:27,760
Speaker 10: So we began the year talking about bitcoin and the

408
00:21:27,800 --> 00:21:31,880
Speaker 10: intersection of bitcoin with other critical trends, and that included

409
00:21:31,920 --> 00:21:36,480
Speaker 10: AI and energy infrastructure. What we've seen as the year

410
00:21:36,560 --> 00:21:39,520
Speaker 10: comes to an end is an acknowledgment or recognition of

411
00:21:39,520 --> 00:21:43,240
Speaker 10: the opportunity at the intersection of bitcoin and energy. We've

412
00:21:43,280 --> 00:21:48,080
Speaker 10: seen this with large transactions such as those advanced by

413
00:21:48,720 --> 00:21:55,320
Speaker 10: major AI stakeholders seeking energy development and looking for a

414
00:21:55,359 --> 00:21:59,120
Speaker 10: way to drive efficiencies and especially in terms of pace

415
00:21:59,200 --> 00:22:04,760
Speaker 10: of development, including through partnership with bitcoin miners and bitcoin

416
00:22:04,840 --> 00:22:06,920
Speaker 10: mining development institutions.

417
00:22:07,560 --> 00:22:10,000
Speaker 3: At Least, it's been great as always getting your take

418
00:22:10,040 --> 00:22:11,960
Speaker 3: throughout the year of twenty twenty five and very much

419
00:22:11,960 --> 00:22:13,800
Speaker 3: looking forward to checking in with you in twenty twenty

420
00:22:13,840 --> 00:22:16,240
Speaker 3: six as well. And apologies for a technical glitch we

421
00:22:16,280 --> 00:22:18,280
Speaker 3: had throughout that interview at least Clean, We thank you

422
00:22:18,320 --> 00:22:26,000
Speaker 3: so much of still Mark, Welcome back to Bloomberg Tech.

423
00:22:26,080 --> 00:22:27,879
Speaker 3: Let's check in on these markets for you as we

424
00:22:28,000 --> 00:22:29,800
Speaker 3: head towards one is a very shortened week.

425
00:22:30,280 --> 00:22:32,680
Speaker 2: We're up two tens percent on the Nasdaq one hundred.

426
00:22:32,720 --> 00:22:35,760
Speaker 3: At the moment, stock's actually driving near all time highs,

427
00:22:35,960 --> 00:22:37,880
Speaker 3: very close on the S and P five hundred as well,

428
00:22:37,920 --> 00:22:41,000
Speaker 3: four straight session agains. We've got some renewed appetite for

429
00:22:41,000 --> 00:22:43,520
Speaker 3: tech in particular. This is even as the US economy

430
00:22:43,600 --> 00:22:46,400
Speaker 3: span the fastest that we've seen in two years four point.

431
00:22:46,240 --> 00:22:47,440
Speaker 2: Three percent analyzed pace.

432
00:22:47,520 --> 00:22:49,640
Speaker 3: But does that mean the FED won't cut as much?

433
00:22:49,680 --> 00:22:52,200
Speaker 3: Maybe that's why Bitcoin's under pressure. We're off by five

434
00:22:52,280 --> 00:22:54,760
Speaker 3: ten percent on cryptot eighty eight hundred and twenty eight.

435
00:22:54,800 --> 00:22:57,880
Speaker 3: It's expected to have a down year. Telly what's also

436
00:22:57,920 --> 00:22:59,920
Speaker 3: had a down month, and also we're down on the day.

437
00:23:00,320 --> 00:23:02,280
Speaker 3: The last quarter has been pretty painful for some of

438
00:23:02,280 --> 00:23:04,639
Speaker 3: these neo clouds. Core we've off by three percent, but

439
00:23:04,680 --> 00:23:06,920
Speaker 3: off way almost forty percent in the last trading quarter.

440
00:23:07,040 --> 00:23:10,320
Speaker 3: Neibeus is another neocloud, basically these new types of companies

441
00:23:10,320 --> 00:23:13,480
Speaker 3: that come out to offer compute for the ever necessary

442
00:23:13,520 --> 00:23:15,800
Speaker 3: need for AI or off by two percent on NEBBEUS

443
00:23:16,000 --> 00:23:18,280
Speaker 3: alphabet though at one point two percent, as it's actually

444
00:23:18,359 --> 00:23:21,440
Speaker 3: really thinking about the energy side of this AI equation

445
00:23:21,520 --> 00:23:24,680
Speaker 3: and it bought, of course, a power company. We saw

446
00:23:24,920 --> 00:23:28,520
Speaker 3: yesterday intersect power to be able to offer more climate

447
00:23:28,560 --> 00:23:31,080
Speaker 3: friendly energy for its AI needs, and that's been a

448
00:23:31,080 --> 00:23:34,600
Speaker 3: big theme for the year, and data centers energy demands

449
00:23:34,680 --> 00:23:37,080
Speaker 3: is one that we keep on intersecting with Bloomberg. Josh Saul,

450
00:23:37,080 --> 00:23:40,520
Speaker 3: who covers energy, been highlighting the strain that it's all

451
00:23:40,520 --> 00:23:42,680
Speaker 3: wimputing on the power grid. So I'm interested as to

452
00:23:42,800 --> 00:23:45,760
Speaker 3: if you flect on twenty twenty five how energy markets

453
00:23:45,840 --> 00:23:49,680
Speaker 3: were disrupted by the AI glut gold market rush that

454
00:23:49,720 --> 00:23:50,040
Speaker 3: we saw.

455
00:23:50,359 --> 00:23:51,960
Speaker 5: It absolutely changed so much.

456
00:23:52,000 --> 00:23:56,119
Speaker 13: We've never seen so much money rushing into the power sector.

457
00:23:56,640 --> 00:23:58,919
Speaker 5: The numbers are are just wild.

458
00:23:58,960 --> 00:24:02,200
Speaker 13: I mean, the four biggest tech companies spending three hundred

459
00:24:02,200 --> 00:24:07,000
Speaker 13: and forty four billion dollars this year. The power sector

460
00:24:07,119 --> 00:24:10,960
Speaker 13: expects to invest one point one trillion over the next

461
00:24:11,000 --> 00:24:15,119
Speaker 13: five years on the power grid in order to both

462
00:24:15,240 --> 00:24:19,119
Speaker 13: work on decaying infrastructure but also to connect all these

463
00:24:19,200 --> 00:24:20,240
Speaker 13: new data centers.

464
00:24:20,720 --> 00:24:25,040
Speaker 3: And they will get the financing from the end need

465
00:24:25,520 --> 00:24:27,840
Speaker 3: or are they having to turn to the consumer.

466
00:24:27,400 --> 00:24:29,720
Speaker 2: As well to help finance all this infrastructure? Is the

467
00:24:29,760 --> 00:24:31,000
Speaker 2: government who pays.

468
00:24:30,720 --> 00:24:33,320
Speaker 3: For the one point whatever trillion dollars?

469
00:24:33,320 --> 00:24:34,080
Speaker 2: It is of improvement.

470
00:24:34,160 --> 00:24:36,680
Speaker 13: Tech companies kick in a lot of money, and utilities

471
00:24:36,800 --> 00:24:39,920
Speaker 13: especially have been good about setting up contracts where they

472
00:24:40,640 --> 00:24:43,639
Speaker 13: get paid whether or not the tech companies use that

473
00:24:43,720 --> 00:24:46,200
Speaker 13: much power over time, so there's some built in protection

474
00:24:46,320 --> 00:24:47,399
Speaker 13: for customers there.

475
00:24:48,200 --> 00:24:50,120
Speaker 5: But when tech drives up.

476
00:24:50,240 --> 00:24:54,119
Speaker 13: The wholesale cost of electricity, that cost is then passed

477
00:24:54,119 --> 00:24:56,840
Speaker 13: on to consumers, so they do see some upward pressure

478
00:24:56,880 --> 00:24:57,719
Speaker 13: on bills from that.

479
00:24:58,040 --> 00:25:00,240
Speaker 3: Many anticipating in the twenty twenty six midter this is

480
00:25:00,240 --> 00:25:02,000
Speaker 3: going to come a lot about that. You saw issues

481
00:25:02,040 --> 00:25:04,760
Speaker 3: in New Jersey, We've got it in Virginia those areas

482
00:25:04,760 --> 00:25:06,040
Speaker 3: of data center build up.

483
00:25:06,880 --> 00:25:10,560
Speaker 2: Are you seeing the utilities.

484
00:25:10,000 --> 00:25:14,440
Speaker 3: And power companies also trying to get an easy regulatory environment.

485
00:25:14,520 --> 00:25:16,440
Speaker 3: I mean, we've talked a lot about fast tracking of

486
00:25:16,480 --> 00:25:18,440
Speaker 3: these big projects. If they've got a lot to put

487
00:25:18,560 --> 00:25:19,119
Speaker 3: money into.

488
00:25:19,880 --> 00:25:22,879
Speaker 13: It's hard because utilities, for sure want to hook up

489
00:25:22,880 --> 00:25:23,600
Speaker 13: the data centers.

490
00:25:23,600 --> 00:25:25,120
Speaker 5: That's a huge new customer for them.

491
00:25:25,119 --> 00:25:27,600
Speaker 13: That's like seven hundred thousand people just moving to their

492
00:25:27,680 --> 00:25:30,840
Speaker 13: territory who wouldn't want that business. But it can be

493
00:25:30,960 --> 00:25:33,200
Speaker 13: tough for them because if it makes prices go up,

494
00:25:33,520 --> 00:25:38,120
Speaker 13: that gets consumers mad, that gets regulators and politicians focused

495
00:25:38,160 --> 00:25:40,440
Speaker 13: on the issue, and you can have what we saw

496
00:25:40,440 --> 00:25:44,320
Speaker 13: in Georgia where regulators are voted out and new regulators,

497
00:25:44,960 --> 00:25:47,600
Speaker 13: democratic regulators who are expected to be less friendly to

498
00:25:47,800 --> 00:25:49,280
Speaker 13: the power company are voted in.

499
00:25:50,040 --> 00:25:52,200
Speaker 3: Josh, So can I have a busy twenty twenty six

500
00:25:52,200 --> 00:25:53,920
Speaker 3: thanks of breaking down what has been a wild ride

501
00:25:53,920 --> 00:25:54,840
Speaker 3: for twenty twenty five.

502
00:25:55,119 --> 00:25:55,879
Speaker 2: Let's talk more.

503
00:25:55,760 --> 00:25:58,800
Speaker 3: About that impact of energy demand on the tech industry.

504
00:25:58,920 --> 00:26:02,080
Speaker 3: Jason Oxman's with US President CEO of the Information Technology

505
00:26:02,119 --> 00:26:05,199
Speaker 3: Industry Council. You represent some of the biggest players in

506
00:26:05,240 --> 00:26:07,800
Speaker 3: the AI domain. I'm thinking of video open AI, a

507
00:26:07,840 --> 00:26:10,280
Speaker 3: lot of the demand for compute or indeed the supplies

508
00:26:10,359 --> 00:26:12,679
Speaker 3: to compute. Jason, what are you seeing in terms of

509
00:26:12,720 --> 00:26:15,920
Speaker 3: the regulatory equation changing to help speed up some of

510
00:26:15,920 --> 00:26:17,000
Speaker 3: this infrastructure investment.

511
00:26:18,000 --> 00:26:19,679
Speaker 14: Well, great to be back with you, Carolina, and your

512
00:26:19,720 --> 00:26:22,600
Speaker 14: absolutely right. Policymakers are paying a lot of attention to

513
00:26:22,640 --> 00:26:26,280
Speaker 14: this issue and the demand created by the construction of

514
00:26:26,280 --> 00:26:30,800
Speaker 14: new data centers demands new access to energy sources. Look,

515
00:26:30,840 --> 00:26:33,960
Speaker 14: we've seen over the last few decades under investment in

516
00:26:34,000 --> 00:26:36,959
Speaker 14: the energy grid, under investment in alternative forms of energy,

517
00:26:37,160 --> 00:26:38,840
Speaker 14: and there are a lot of moves afoot here in

518
00:26:38,960 --> 00:26:41,400
Speaker 14: Washington to address those issues. The biggest one that I've

519
00:26:41,400 --> 00:26:43,520
Speaker 14: seen in recent weeks and that we're supporting, is something

520
00:26:43,560 --> 00:26:46,800
Speaker 14: called the Speed Act, which Congress moved through the House

521
00:26:46,840 --> 00:26:49,640
Speaker 14: on its last day here last week. The Speed Act

522
00:26:49,920 --> 00:26:53,320
Speaker 14: would invoke regulatory reforms to speed up the permitting process

523
00:26:53,320 --> 00:26:56,040
Speaker 14: for construction of new energy projects. It would reduce some

524
00:26:56,080 --> 00:26:59,520
Speaker 14: regulatory burden on those construction projects. It takes years and

525
00:26:59,640 --> 00:27:02,560
Speaker 14: years to put new energy on the grid. Those grid

526
00:27:02,600 --> 00:27:05,159
Speaker 14: modernization efforts take a lot of time and effort and

527
00:27:05,240 --> 00:27:07,919
Speaker 14: financial resource. The one piece that Washington is trying to

528
00:27:07,920 --> 00:27:10,800
Speaker 14: address is reducing the regulatory burden to make sure we

529
00:27:10,840 --> 00:27:12,920
Speaker 14: can make those investments that we need to make. Data

530
00:27:12,960 --> 00:27:15,560
Speaker 14: centers are not new. You mentioned Northern Virginia. They've been

531
00:27:15,600 --> 00:27:18,280
Speaker 14: a data center hub for decades. Two thirds of the

532
00:27:18,280 --> 00:27:21,119
Speaker 14: world's Internet traffic passes through Northern Virginia because it's been

533
00:27:21,160 --> 00:27:23,320
Speaker 14: a traditional hub. But we're seeing the new construction of

534
00:27:23,359 --> 00:27:26,160
Speaker 14: data centerplace new energy demands, and as you noted, policymakers

535
00:27:26,160 --> 00:27:28,240
Speaker 14: are trying to take action and make it move more quickly.

536
00:27:28,440 --> 00:27:30,800
Speaker 3: Well, what about the checks and balances than are needed?

537
00:27:30,840 --> 00:27:32,960
Speaker 3: Because I think very much we've been reporting a lot

538
00:27:32,960 --> 00:27:36,080
Speaker 3: about new players coming on the scene, companies that have

539
00:27:36,240 --> 00:27:37,800
Speaker 3: never built data centers before.

540
00:27:37,840 --> 00:27:39,720
Speaker 2: I mean, boy Oracle itself.

541
00:27:39,480 --> 00:27:42,680
Speaker 3: I mean, one of the biggest data center infrastructure investors

542
00:27:42,720 --> 00:27:45,240
Speaker 3: out there at the moment, has never actually formally built

543
00:27:45,720 --> 00:27:46,879
Speaker 3: a data center of its own.

544
00:27:47,359 --> 00:27:49,760
Speaker 2: So how do get a lot of other ownerships?

545
00:27:50,000 --> 00:27:52,399
Speaker 14: You know, a lot of partnerships are happening. You'll recall

546
00:27:52,440 --> 00:27:55,840
Speaker 14: in January on day two of the Trump administration, project Stargate,

547
00:27:55,880 --> 00:27:59,840
Speaker 14: which Oracle was involved in, also involved SoftBank, open A

548
00:28:00,480 --> 00:28:03,959
Speaker 14: other companies that are more traditional investors in these kind

549
00:28:04,040 --> 00:28:06,920
Speaker 14: of projects. Data centers have been around for a long time,

550
00:28:06,960 --> 00:28:08,679
Speaker 14: but a lot of new companies are getting into it.

551
00:28:08,720 --> 00:28:11,800
Speaker 14: As your graphic and your conversation with Josh showed, only

552
00:28:11,800 --> 00:28:14,200
Speaker 14: about eighteen percent of the current demand for data centers

553
00:28:14,280 --> 00:28:17,200
Speaker 14: is from the tech industry. Financial services other related industries

554
00:28:17,440 --> 00:28:20,280
Speaker 14: are also building data centers, and I think, as you noted,

555
00:28:20,280 --> 00:28:22,960
Speaker 14: there's a lot of attention being paid by consumers to

556
00:28:23,000 --> 00:28:24,720
Speaker 14: this issue. They don't want to see their power bills

557
00:28:24,760 --> 00:28:27,560
Speaker 14: go up as a results of these investments in data centers,

558
00:28:27,560 --> 00:28:30,760
Speaker 14: and that's why we're pursuing these alternative projects. You've seen

559
00:28:31,080 --> 00:28:34,280
Speaker 14: tech companies like Microsoft invest in nuclear power. We're trying

560
00:28:34,320 --> 00:28:37,560
Speaker 14: to move forward with small module reactors that can power

561
00:28:37,600 --> 00:28:40,040
Speaker 14: these data centers. And I do think it's important for

562
00:28:40,280 --> 00:28:41,800
Speaker 14: consumers to understand.

563
00:28:41,400 --> 00:28:44,000
Speaker 12: The value to the US economy, the value to job growth.

564
00:28:44,000 --> 00:28:46,240
Speaker 14: It was this great report that Vanguard put out last

565
00:28:46,280 --> 00:28:50,000
Speaker 14: week that said that job growth in AI affected industries

566
00:28:50,080 --> 00:28:52,640
Speaker 14: is one point seven percent, job growth in non AI

567
00:28:52,640 --> 00:28:55,840
Speaker 14: affected industries zero point eight percents, so twice the job

568
00:28:55,880 --> 00:28:57,280
Speaker 14: growth in AI effected industries.

569
00:28:57,440 --> 00:28:59,680
Speaker 12: This has an enormous economic benefit.

570
00:29:00,000 --> 00:29:01,800
Speaker 14: Need to make sure these data centers are constructed, that

571
00:29:01,800 --> 00:29:05,240
Speaker 14: AI can continue to power the US economy, power wage

572
00:29:05,240 --> 00:29:08,040
Speaker 14: growth and the like. But there are some things that policymakers,

573
00:29:08,120 --> 00:29:10,320
Speaker 14: like the Speed Act can do to help move these

574
00:29:10,320 --> 00:29:11,000
Speaker 14: projects forward.

575
00:29:11,160 --> 00:29:13,320
Speaker 3: Well, many would say that actually that job's growth is

576
00:29:13,440 --> 00:29:15,440
Speaker 3: short term in nature. You need a lot of engineers

577
00:29:15,440 --> 00:29:17,360
Speaker 3: a lot of builders to build them, but actually don't

578
00:29:17,360 --> 00:29:19,880
Speaker 3: mean that many people to manage a data center, which

579
00:29:20,040 --> 00:29:22,200
Speaker 3: once it's up and running, And there's that short term,

580
00:29:22,240 --> 00:29:24,160
Speaker 3: long term perspective as well, when you think about the

581
00:29:24,160 --> 00:29:27,760
Speaker 3: inclimate impact, how much are the big tech companies really

582
00:29:27,800 --> 00:29:30,560
Speaker 3: realizing the responsibility when they're having to bring up all

583
00:29:30,600 --> 00:29:31,760
Speaker 3: this compute and power.

584
00:29:31,840 --> 00:29:33,840
Speaker 2: They're also seeing their emissions go up into the right.

585
00:29:34,760 --> 00:29:36,720
Speaker 14: Well, I think you're right about the long term versus

586
00:29:36,800 --> 00:29:39,160
Speaker 14: the short term. It does create a lot of construction jobs,

587
00:29:39,200 --> 00:29:41,840
Speaker 14: a lot of jobs to build these data centers, and

588
00:29:41,960 --> 00:29:45,640
Speaker 14: there are also jobs created in the data centers themselves.

589
00:29:45,840 --> 00:29:47,840
Speaker 12: But I think the long term effect.

590
00:29:47,560 --> 00:29:51,040
Speaker 14: Is really what does AI mean for improving productivity and

591
00:29:51,120 --> 00:29:53,680
Speaker 14: creating not only the job growth but also the wage growth.

592
00:29:53,720 --> 00:29:56,480
Speaker 14: That Vanguard report that came out last week that I

593
00:29:56,560 --> 00:30:00,000
Speaker 14: mentioned also noted that wage growth in AI related industries

594
00:30:00,000 --> 00:30:03,400
Speaker 14: this was three point eight percent versus point seven percent

595
00:30:03,480 --> 00:30:07,680
Speaker 14: in non AI related industries. That wage growth is enormously important.

596
00:30:07,720 --> 00:30:10,239
Speaker 14: It's what's made possible by the data center. So you're right,

597
00:30:10,280 --> 00:30:12,920
Speaker 14: the data centers themselves create a lot of construction jobs.

598
00:30:12,960 --> 00:30:15,160
Speaker 14: We're going to see that continue to move forward. But

599
00:30:15,200 --> 00:30:18,920
Speaker 14: it's what the data centers do. They're buildings that contain

600
00:30:19,160 --> 00:30:22,600
Speaker 14: the future of technology for the country, and the AI

601
00:30:22,720 --> 00:30:24,560
Speaker 14: servers that are in there and the services that are

602
00:30:24,600 --> 00:30:28,360
Speaker 14: powered for consumers and for productivity for businesses is really

603
00:30:28,360 --> 00:30:30,000
Speaker 14: what we need to be focused on going forward, and

604
00:30:30,000 --> 00:30:30,720
Speaker 14: that's the real.

605
00:30:30,520 --> 00:30:31,520
Speaker 12: Benefit of all of this.

606
00:30:32,240 --> 00:30:36,080
Speaker 3: It's a global theme, and we're seeing servers and the

607
00:30:36,120 --> 00:30:39,680
Speaker 3: GPUs that go inside them being put up everywhere. Now

608
00:30:39,720 --> 00:30:42,480
Speaker 3: there's a story, a really deeply reported story out today

609
00:30:42,520 --> 00:30:46,320
Speaker 3: from Bloomberg around Nvidia and the potential that we are

610
00:30:46,320 --> 00:30:51,000
Speaker 3: seeing chips GPUs from Nvidia get into China's hands, maybe

611
00:30:51,040 --> 00:30:54,640
Speaker 3: through middle parties, And there's some concerns that Megaspeed in particular,

612
00:30:54,720 --> 00:30:58,040
Speaker 3: it's a single, poor based company might have been making

613
00:30:58,080 --> 00:31:02,400
Speaker 3: that able. Jason, how much your companies thinking about diversion

614
00:31:02,400 --> 00:31:04,160
Speaker 3: of chips and how much are they comping down on it?

615
00:31:05,080 --> 00:31:07,520
Speaker 14: Well, I think it's important to remember that in the

616
00:31:07,640 --> 00:31:10,320
Speaker 14: reporting that you're talking about, that in Vidia didn't do

617
00:31:10,400 --> 00:31:12,800
Speaker 14: anything wrong, that there was no actual evidence that any

618
00:31:12,880 --> 00:31:15,560
Speaker 14: chips were diverted. But it's an investigation of one of

619
00:31:15,640 --> 00:31:19,719
Speaker 14: Nvidia's customers, which I think will play out by government.

620
00:31:19,760 --> 00:31:21,800
Speaker 14: But the broader question that you asked is an important one.

621
00:31:21,800 --> 00:31:25,400
Speaker 14: This is the question of national security and economics security

622
00:31:25,440 --> 00:31:28,320
Speaker 14: and where they overlap. The Biden administration took a very

623
00:31:28,320 --> 00:31:30,480
Speaker 14: clear approach to this, which I think was the wrong approach,

624
00:31:30,560 --> 00:31:32,760
Speaker 14: quite frankly, and that was to cut off access to

625
00:31:32,800 --> 00:31:35,800
Speaker 14: the world to US technology. What Trump administration has done

626
00:31:36,040 --> 00:31:38,840
Speaker 14: has recognized that there are enforcement matters that will occasionally

627
00:31:38,880 --> 00:31:41,520
Speaker 14: arise that they need to look into, and they will

628
00:31:41,560 --> 00:31:44,360
Speaker 14: do that. But as a general matter, the US economy

629
00:31:44,360 --> 00:31:47,400
Speaker 14: benefits in the US consumers benefit if the world can

630
00:31:47,440 --> 00:31:50,840
Speaker 14: buy American technology. This is a race against China, and

631
00:31:50,920 --> 00:31:55,480
Speaker 14: cutting off China and denying China access to technology really

632
00:31:55,520 --> 00:31:58,160
Speaker 14: just provides an incentive for China to bypass the US

633
00:31:58,280 --> 00:32:01,400
Speaker 14: market and build its own technology for the world. Denying

634
00:32:01,760 --> 00:32:04,360
Speaker 14: US companies the access to the global market is the

635
00:32:04,400 --> 00:32:07,480
Speaker 14: wrong approach. There are certainly national security questions that need

636
00:32:07,520 --> 00:32:09,320
Speaker 14: to be answered. They are enforcement matters that need to

637
00:32:09,320 --> 00:32:13,040
Speaker 14: be addressed on occasion. But as a broader matter, the

638
00:32:13,160 --> 00:32:15,720
Speaker 14: idea as the Biden administration did, and I think did wrong,

639
00:32:16,080 --> 00:32:19,800
Speaker 14: of cutting off the world's access to American technology, not

640
00:32:19,880 --> 00:32:21,240
Speaker 14: just China, but the rest of the world. That was

641
00:32:21,280 --> 00:32:24,040
Speaker 14: what the Biden administration did. That's the wrong approach. We

642
00:32:24,080 --> 00:32:26,800
Speaker 14: need to make sure that we recognize that the success

643
00:32:26,880 --> 00:32:31,160
Speaker 14: of American economic activity, the success of American technology, is

644
00:32:31,200 --> 00:32:33,680
Speaker 14: dependent on America having access to the rest.

645
00:32:33,560 --> 00:32:33,960
Speaker 1: Of the world.

646
00:32:34,400 --> 00:32:36,880
Speaker 3: Very briefly, what about the approach being taken from federal

647
00:32:36,960 --> 00:32:40,320
Speaker 3: versus state regulation of AI. The actual large language models

648
00:32:40,760 --> 00:32:43,600
Speaker 3: new Act here in New York and in California.

649
00:32:43,720 --> 00:32:45,760
Speaker 2: But are we ever going to getting clarity from a

650
00:32:45,760 --> 00:32:46,360
Speaker 2: federal level.

651
00:32:47,400 --> 00:32:50,360
Speaker 14: Yeah, there were more than one hundred AI laws adopted

652
00:32:50,400 --> 00:32:52,479
Speaker 14: at the state level this year, and there are more

653
00:32:52,520 --> 00:32:55,840
Speaker 14: than one thousand bills pending heading into twenty twenty six. Look,

654
00:32:55,880 --> 00:33:00,600
Speaker 14: technology is best deployed not with fifty different regulatory regimes applicable,

655
00:33:00,840 --> 00:33:03,320
Speaker 14: but one common regime. And this is another thing that's

656
00:33:03,320 --> 00:33:06,880
Speaker 14: on our twenty twenty six roadmap. President Trump just signed

657
00:33:06,880 --> 00:33:11,240
Speaker 14: an executive order tasking the administration with proposing legislation to

658
00:33:11,320 --> 00:33:16,240
Speaker 14: Congress that will replace those fifty potential separate regimes with

659
00:33:16,400 --> 00:33:18,440
Speaker 14: one federal regime. We think that's the right way to

660
00:33:18,440 --> 00:33:22,480
Speaker 14: go because technology doesn't necessarily need to stop at state borders.

661
00:33:22,840 --> 00:33:25,120
Speaker 12: We want to have one uniform.

662
00:33:24,880 --> 00:33:28,360
Speaker 14: National regime rather than a patchwork of fifty regimes. That'll

663
00:33:28,360 --> 00:33:30,320
Speaker 14: be better for the technology, it'll be better for consumers

664
00:33:30,360 --> 00:33:32,880
Speaker 14: and businesses that want to make use of that technology.

665
00:33:33,000 --> 00:33:35,320
Speaker 12: That something we're really helping happens in twenty twenty six.

666
00:33:35,720 --> 00:33:38,080
Speaker 3: Jason Nxman, come join us again in twenty twenty six.

667
00:33:38,160 --> 00:33:39,800
Speaker 2: Until then, have a very happy holiday.

668
00:33:40,040 --> 00:33:48,760
Speaker 3: CEO of Information Technology Industry Council, we thank you. One

669
00:33:48,760 --> 00:33:51,520
Speaker 3: of the biggest questions facing investors in twenty twenty six

670
00:33:51,560 --> 00:33:54,640
Speaker 3: and beyond is whether the billions being spent on AI.

671
00:33:54,440 --> 00:33:55,840
Speaker 2: Infrastructure will pay off.

672
00:33:56,040 --> 00:33:58,600
Speaker 3: Bank of America CEO Brian Monorhans But yesterday with my

673
00:33:58,600 --> 00:33:59,400
Speaker 3: colleague David.

674
00:33:59,280 --> 00:34:02,120
Speaker 2: Weston said it was starting to see the impacts kickin.

675
00:34:03,600 --> 00:34:05,640
Speaker 15: The A investment has been building during the year. It

676
00:34:05,680 --> 00:34:08,280
Speaker 15: is probably a bigger contributor next year in the years beyond,

677
00:34:08,360 --> 00:34:10,880
Speaker 15: and so if you look at the data center build out,

678
00:34:10,920 --> 00:34:13,000
Speaker 15: which is one of the ways that evidence itself, that's

679
00:34:13,000 --> 00:34:16,040
Speaker 15: a big deal. If you look at customer client spending,

680
00:34:16,160 --> 00:34:19,080
Speaker 15: like US spending on AI, that's higher it was last year.

681
00:34:19,120 --> 00:34:22,879
Speaker 15: But frankly, overall spending levels are shifting towards that not

682
00:34:22,920 --> 00:34:27,720
Speaker 15: necessarily growing at a mid single digit rate type of numbers.

683
00:34:27,760 --> 00:34:30,359
Speaker 15: So I think that's part why the reason we feel

684
00:34:30,360 --> 00:34:33,040
Speaker 15: constructive for next year. We think AI spending continues. We

685
00:34:33,120 --> 00:34:38,759
Speaker 15: think there's benefits the American taxpayer from tax rebates, lower

686
00:34:38,840 --> 00:34:41,600
Speaker 15: taxes due to the tax built going through and being

687
00:34:41,600 --> 00:34:45,120
Speaker 15: effective for next year. And we think the expense expensing

688
00:34:45,120 --> 00:34:48,000
Speaker 15: and other bonuses for businesses are good. So all that

689
00:34:48,080 --> 00:34:50,400
Speaker 15: leads to our confidence that we go from basically at

690
00:34:50,400 --> 00:34:53,960
Speaker 15: two percent type of growth letter level this year plus

691
00:34:54,000 --> 00:34:56,640
Speaker 15: or minus up to two point four percent, which is

692
00:34:56,680 --> 00:34:58,600
Speaker 15: all due to that. And AI is kicking and more

693
00:34:58,600 --> 00:35:00,880
Speaker 15: and more, and so it's not only tributable to AI,

694
00:35:01,000 --> 00:35:03,320
Speaker 15: but that's having a marginal impact. That's pretty strong.

695
00:35:03,440 --> 00:35:05,800
Speaker 16: So much of the American economy is supported by the consumer,

696
00:35:05,840 --> 00:35:08,239
Speaker 16: and you at Back of America have a really powerful

697
00:35:08,400 --> 00:35:11,719
Speaker 16: viewpoint into the American consumer. How's the American consumer doing?

698
00:35:11,760 --> 00:35:13,880
Speaker 16: Because it has been very strong. There have been some

699
00:35:13,960 --> 00:35:15,719
Speaker 16: people saying it's starting to slow down.

700
00:35:15,880 --> 00:35:16,640
Speaker 5: You have to step back.

701
00:35:16,680 --> 00:35:19,919
Speaker 15: We look at American consumers, seventy million consumers putting four

702
00:35:19,920 --> 00:35:22,640
Speaker 15: and a half trillion dollars plus into the American economy

703
00:35:22,640 --> 00:35:25,080
Speaker 15: every year, and we've tracked the way that goes in

704
00:35:25,120 --> 00:35:27,480
Speaker 15: the American county for many years. And so in the

705
00:35:27,560 --> 00:35:30,160
Speaker 15: third quarter it was up about five percent of last year.

706
00:35:30,480 --> 00:35:32,439
Speaker 15: As we look at the fourth quarter here so far

707
00:35:32,480 --> 00:35:34,200
Speaker 15: in October November, i'd say it in a four to

708
00:35:34,200 --> 00:35:36,239
Speaker 15: four and a half percent, which is very consistent with

709
00:35:36,280 --> 00:35:39,480
Speaker 15: a very solid growing economy. You know, at the end

710
00:35:39,520 --> 00:35:42,640
Speaker 15: of the day, it's going to work against wage growth

711
00:35:42,640 --> 00:35:45,640
Speaker 15: and we see in the underlying consumers we have wage growth.

712
00:35:45,680 --> 00:35:48,280
Speaker 15: I either paychecks are going up, and so the labor

713
00:35:48,320 --> 00:35:50,319
Speaker 15: markets flattened out a little bit in terms of job

714
00:35:50,360 --> 00:35:54,120
Speaker 15: growth and things like that. It's normalizing in terms of unemployment,

715
00:35:54,160 --> 00:35:56,520
Speaker 15: but you still see underlying wage growth. So the American

716
00:35:56,560 --> 00:36:00,920
Speaker 15: consumer spending a fours percent more November this year versus

717
00:36:00,920 --> 00:36:04,080
Speaker 15: November last year is a very solid backdrop. The credit

718
00:36:04,120 --> 00:36:07,000
Speaker 15: quality American consumer is strong. And then you hear a

719
00:36:07,040 --> 00:36:10,520
Speaker 15: lot about this discussion about different rates of growth among

720
00:36:10,560 --> 00:36:12,200
Speaker 15: different income tursiles or third.

721
00:36:12,320 --> 00:36:13,280
Speaker 5: So we look at the.

722
00:36:13,360 --> 00:36:16,920
Speaker 15: Bottom third, middle third, and top third American income people

723
00:36:16,960 --> 00:36:18,919
Speaker 15: in the Bank of American customer base, we do see

724
00:36:18,920 --> 00:36:22,240
Speaker 15: differences either higher income and middle income or growing faster.

725
00:36:23,280 --> 00:36:26,960
Speaker 15: But even the lower income third is still growing. And

726
00:36:27,000 --> 00:36:29,439
Speaker 15: that's all good. And that means why is that true?

727
00:36:29,520 --> 00:36:32,640
Speaker 15: Companies are employing people, they're paying people. Now, the labor

728
00:36:32,680 --> 00:36:34,640
Speaker 15: market's got a little soft and as we look forward

729
00:36:34,680 --> 00:36:38,239
Speaker 15: to four point five four point six unemployment that is

730
00:36:39,200 --> 00:36:41,000
Speaker 15: gotten worse so to speak. You know, it was the

731
00:36:41,000 --> 00:36:42,440
Speaker 15: beginning year. But frankly, this.

732
00:36:42,440 --> 00:36:44,000
Speaker 5: Goes back to the normalization question.

733
00:36:44,040 --> 00:36:46,560
Speaker 15: If you look at the tenure average unemployment a twenty

734
00:36:46,640 --> 00:36:48,719
Speaker 15: year to thirty year or forty year it's five and

735
00:36:48,800 --> 00:36:51,040
Speaker 15: six percent, you know, as you go back through time,

736
00:36:51,120 --> 00:36:53,160
Speaker 15: and so a four and a half to four point

737
00:36:53,239 --> 00:36:57,319
Speaker 15: six unemployment rate is a very strong relative unemployment rate.

738
00:36:57,400 --> 00:36:59,520
Speaker 15: It's just a lot of years it's been below four

739
00:36:59,520 --> 00:37:01,319
Speaker 15: and a half percent, has actually been in the last

740
00:37:01,320 --> 00:37:03,560
Speaker 15: ten years. So people are very used to numbers now

741
00:37:03,880 --> 00:37:06,239
Speaker 15: which were part of the tightness and labored in the

742
00:37:06,320 --> 00:37:10,400
Speaker 15: twenty seventeen eighteen nineteen era, and you had the pandemic

743
00:37:10,440 --> 00:37:13,560
Speaker 15: and it retightened, and so it's normalizing. But we feel

744
00:37:13,560 --> 00:37:16,320
Speaker 15: good about all that in the consumers in pretty good shape.

745
00:37:16,600 --> 00:37:17,320
Speaker 2: Thankry Macaci.

746
00:37:17,440 --> 00:37:20,520
Speaker 3: Obrian Weynhan speaking to bluemeg's David Weston and coming up

747
00:37:20,800 --> 00:37:24,239
Speaker 3: new details and the decisions behind Tesla's door design. Those

748
00:37:24,280 --> 00:37:26,839
Speaker 3: electric doors are now in a spotlight following at least

749
00:37:26,920 --> 00:37:29,160
Speaker 3: fifteen fatalities or.

750
00:37:29,120 --> 00:37:47,040
Speaker 17: On that next a blue meg Tech, a decision made by.

751
00:37:46,920 --> 00:37:50,319
Speaker 3: Tesla executives a decade ago. It's being linked to fatalities

752
00:37:50,360 --> 00:37:53,759
Speaker 3: in car crashes now. The incidents have prompted increased scrutiny

753
00:37:53,800 --> 00:37:56,680
Speaker 3: of Tesla's electric doors, triggering lawsuits over whether.

754
00:37:56,560 --> 00:37:59,800
Speaker 2: The design can leave passengers trapped. Take a look.

755
00:38:01,320 --> 00:38:08,360
Speaker 18: Tesla for years has built its reputation on being a cool, safe,

756
00:38:09,400 --> 00:38:11,520
Speaker 18: good looking car maker.

757
00:38:11,920 --> 00:38:14,120
Speaker 19: Tesla's engineered to be the safest card in the world,

758
00:38:14,200 --> 00:38:16,520
Speaker 19: and to be fair to them, they have done very

759
00:38:16,560 --> 00:38:20,480
Speaker 19: well on US crash tests. They often get five star ratings.

760
00:38:21,160 --> 00:38:23,440
Speaker 19: Flush door handles were very much part of the aesthetic

761
00:38:23,880 --> 00:38:26,400
Speaker 19: and the engineering. You know, it looks very cool.

762
00:38:28,280 --> 00:38:29,120
Speaker 2: For so many years.

763
00:38:29,160 --> 00:38:33,239
Speaker 18: People who drive Tesla's love their Tesla's. They think their

764
00:38:33,239 --> 00:38:38,680
Speaker 18: cars are safe, but these accidents reveal that there's actually

765
00:38:38,760 --> 00:38:39,759
Speaker 18: something bigger going on.

766
00:38:41,560 --> 00:38:44,239
Speaker 20: When you push this button, says it sagal to the

767
00:38:44,680 --> 00:38:47,960
Speaker 20: twelvel barriers say okay, pop the door opened. Now, if

768
00:38:47,960 --> 00:38:50,239
Speaker 20: you have no TWELEVEO power, the first thing you're going

769
00:38:50,280 --> 00:38:52,560
Speaker 20: to do is push this button over and over again.

770
00:38:52,760 --> 00:38:54,640
Speaker 20: You're going to stop freaking out and realize this thing

771
00:38:54,719 --> 00:38:58,279
Speaker 20: isn't working. In my opinion, this isn't terribly obvious that

772
00:38:58,320 --> 00:39:00,960
Speaker 20: this opens the door. This is not a physical lever.

773
00:39:01,320 --> 00:39:04,440
Speaker 20: This does not pull a cable. The actual way that

774
00:39:04,480 --> 00:39:09,280
Speaker 20: you open a Tesla is you use this unmarked square

775
00:39:09,400 --> 00:39:11,640
Speaker 20: right here. That's how you open it.

776
00:39:11,680 --> 00:39:13,960
Speaker 12: Is that the same on every model of Deeslo.

777
00:39:14,480 --> 00:39:15,320
Speaker 20: It is not the same.

778
00:39:15,680 --> 00:39:16,760
Speaker 12: What if you're in the backseat.

779
00:39:17,239 --> 00:39:18,920
Speaker 20: Now, the backseat is a scary part.

780
00:39:19,880 --> 00:39:23,520
Speaker 18: So in the front seat there by the handle. In

781
00:39:23,560 --> 00:39:27,360
Speaker 18: the back seats, they might be under the rug, or

782
00:39:27,560 --> 00:39:30,880
Speaker 18: behind a speaker grill, or behind the trim on the

783
00:39:30,920 --> 00:39:34,399
Speaker 18: door or I actually found one in a model. Why

784
00:39:34,480 --> 00:39:37,400
Speaker 18: it was in the door pocket under a plastic flap.

785
00:39:38,400 --> 00:39:40,719
Speaker 2: A lot of Tesla owners themselves.

786
00:39:40,360 --> 00:39:43,120
Speaker 18: Don't know that these manual releases exist.

787
00:39:43,680 --> 00:39:46,040
Speaker 19: You can design the best vehicle in the world, but

788
00:39:46,080 --> 00:39:49,239
Speaker 19: you have to also think about what happens to a

789
00:39:49,320 --> 00:39:54,319
Speaker 19: human being after a crash. You are panicking and you're

790
00:39:54,360 --> 00:39:56,640
Speaker 19: going to go to that muscle memory. And for most

791
00:39:56,640 --> 00:39:59,439
Speaker 19: of us, muscle memory is like an old car where

792
00:39:59,480 --> 00:40:03,760
Speaker 19: you just open the door.

793
00:40:08,760 --> 00:40:11,480
Speaker 3: And we now have more reporting on that decision making

794
00:40:11,520 --> 00:40:15,560
Speaker 3: process behind the dual design. According to multiple accounts from sources,

795
00:40:15,680 --> 00:40:18,560
Speaker 3: the electric door handle was demanded by Tesla CEO in

796
00:40:18,560 --> 00:40:20,480
Speaker 3: a musk despite safety warnings.

797
00:40:20,719 --> 00:40:22,000
Speaker 2: Let's get more on this. We've been about.

798
00:40:22,000 --> 00:40:26,640
Speaker 3: BusinessWeek columnist Max Chafkin goes back a decade and it

799
00:40:26,719 --> 00:40:29,920
Speaker 3: really goes back to almost this era of very sleep

800
00:40:30,000 --> 00:40:31,520
Speaker 3: design where less is more.

801
00:40:31,920 --> 00:40:35,480
Speaker 21: Yeah, and this is a design aesthetic that comes from

802
00:40:35,520 --> 00:40:40,200
Speaker 21: Elon Musk. So in certain ways, it's very interesting that

803
00:40:40,280 --> 00:40:43,840
Speaker 21: he was involved in these conversations because this looks like

804
00:40:44,080 --> 00:40:45,640
Speaker 21: a mistake in retrospect, we're.

805
00:40:45,480 --> 00:40:46,360
Speaker 5: Seeing these deaths.

806
00:40:47,360 --> 00:40:51,760
Speaker 21: You know, Tesla's has said it's working on redesigns, there

807
00:40:51,800 --> 00:40:54,759
Speaker 21: are inquiries and so on. It's not surprising that Musk

808
00:40:54,880 --> 00:40:57,279
Speaker 21: was involved in this, because he's involved in sort of

809
00:40:57,320 --> 00:40:59,880
Speaker 21: all aspects of the cars design. On the other hand,

810
00:41:00,600 --> 00:41:03,759
Speaker 21: it's interesting because you do because again this is this

811
00:41:03,840 --> 00:41:06,320
Speaker 21: kind of undercuts some of the claims that the company

812
00:41:06,320 --> 00:41:08,080
Speaker 21: has made about the safety of its vehicles.

813
00:41:08,560 --> 00:41:11,000
Speaker 3: There's this line in the story that basically is what

814
00:41:11,440 --> 00:41:14,600
Speaker 3: Mars said is the best part is no part, right,

815
00:41:14,600 --> 00:41:18,960
Speaker 3: And so this desire for something that was good looking

816
00:41:19,160 --> 00:41:20,879
Speaker 3: and sophisticated and sci fi.

817
00:41:21,440 --> 00:41:22,919
Speaker 2: But it's not just test as I have them.

818
00:41:23,000 --> 00:41:25,480
Speaker 3: Everyone else talked to this designs ecesthetic as well.

819
00:41:25,560 --> 00:41:28,120
Speaker 21: Yeah, this has spread to the entire auto industry. You've

820
00:41:28,120 --> 00:41:30,080
Speaker 21: seen in a lot of higher end cars, many evs,

821
00:41:30,120 --> 00:41:33,799
Speaker 21: as well as some gas cars. It's not only you know,

822
00:41:33,880 --> 00:41:36,240
Speaker 21: sort of attractive from a design point of view, although

823
00:41:36,280 --> 00:41:37,040
Speaker 21: I think people have.

824
00:41:36,960 --> 00:41:37,759
Speaker 2: Different points of view.

825
00:41:37,800 --> 00:41:41,480
Speaker 21: It's also less expensive because fewer parts you know, means

826
00:41:41,520 --> 00:41:43,239
Speaker 21: you know, less cost and that's one of the things

827
00:41:43,239 --> 00:41:46,279
Speaker 21: that Tesla has been very successful at making cars with

828
00:41:46,480 --> 00:41:49,680
Speaker 21: much fewer parts. They have this famously vertically integrated you know,

829
00:41:49,760 --> 00:41:52,760
Speaker 21: manufacturing system. It's help, it's allowed them to cut costs. Obviously,

830
00:41:52,800 --> 00:41:56,240
Speaker 21: you see their their their potential problems when you diverge

831
00:41:56,239 --> 00:41:58,680
Speaker 21: from the way the auto industry has done things for

832
00:41:58,680 --> 00:41:59,399
Speaker 21: a really long time.

833
00:41:59,719 --> 00:41:59,919
Speaker 2: Now.

834
00:42:00,160 --> 00:42:02,600
Speaker 3: Chief designer has been on Bloomberg and said that they're

835
00:42:02,640 --> 00:42:04,239
Speaker 3: looking to change things up.

836
00:42:04,600 --> 00:42:07,920
Speaker 2: How quickly will that get into new models? And what

837
00:42:08,000 --> 00:42:09,319
Speaker 2: about the old models.

838
00:42:08,960 --> 00:42:11,800
Speaker 3: That usually we see an update through software upgrade?

839
00:42:12,120 --> 00:42:14,680
Speaker 21: Right, Well, so Tesla has said, you know, unlike other men,

840
00:42:15,040 --> 00:42:19,160
Speaker 21: unlike other automakers, they're continuously updating their cars. So in theory,

841
00:42:19,280 --> 00:42:22,080
Speaker 21: I suppose they could get this done pretty quickly. Though again,

842
00:42:22,120 --> 00:42:25,480
Speaker 21: this is not as simple as a software update. This

843
00:42:25,560 --> 00:42:28,120
Speaker 21: is going to require tooling, It's going to require factories,

844
00:42:28,160 --> 00:42:34,000
Speaker 21: retrofits potentially in cars. The Stumber story Bloomberg Bran earlier today,

845
00:42:34,360 --> 00:42:38,080
Speaker 21: you know, mentions a similar example around the shifter in

846
00:42:38,280 --> 00:42:40,440
Speaker 21: I believe it was the Model X or the Model Y,

847
00:42:40,840 --> 00:42:44,000
Speaker 21: where they took away the column that you used and

848
00:42:44,080 --> 00:42:47,160
Speaker 21: replaced it with a button that didn't work out. They

849
00:42:47,200 --> 00:42:50,080
Speaker 21: had to retrofit that so you could see something similar here.

850
00:42:50,160 --> 00:42:51,839
Speaker 21: Although this is not something that's going to be taken

851
00:42:51,840 --> 00:42:52,760
Speaker 21: care of overnight.

852
00:42:53,520 --> 00:42:56,279
Speaker 3: Mean Well shares no record highs as it seemed more

853
00:42:56,320 --> 00:43:00,360
Speaker 3: of a robotaxi humanoid robot kind of a company right now. Max,

854
00:43:00,440 --> 00:43:02,560
Speaker 3: great to get your take on what has been a

855
00:43:02,719 --> 00:43:05,960
Speaker 3: theme throughout twenty twenty five. This deep investigation into teslatle

856
00:43:06,000 --> 00:43:08,879
Speaker 3: handles by Bloomberg. Now, that does it for this edition

857
00:43:08,960 --> 00:43:11,320
Speaker 3: a Bloomberg Tech. Don't forget to check out our podcast

858
00:43:11,640 --> 00:43:14,360
Speaker 3: hand on the terminal, as well as online on Apples, Spotify,

859
00:43:14,600 --> 00:43:17,680
Speaker 3: and iHeart from New York, This is Bloomberg