WEBVTT - Nvidia Buyer Megaspeed Faces Smuggling Probe 0:00:02.520 --> 0:00:14.000 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:14.040 --> 0:00:17.840 from coast to coast with Caroline Hyde in New York 0:00:18.120 --> 0:00:20.120 and ever though in San Francisco. 0:00:22.480 --> 0:00:24.080 This is Bloomberg Tech Coming up. 0:00:24.120 --> 0:00:27.240 Service now agrees to by cybersecurity startup Armists for seven 0:00:27.240 --> 0:00:31.640 points seventy five billion dollars, its largest acquisition to date. Douz, 0:00:31.680 --> 0:00:36.479 Invidia's biggest Southeast Asia buyer, faces a chip smuggling probe 0:00:36.520 --> 0:00:40.440 despite the tech giants insistence that chip diversion doesn't exist. 0:00:41.080 --> 0:00:44.080 And crypto's big year that wasn't a win for all 0:00:44.440 --> 0:00:48.120 the billionaire's hit hardest by recent price drops. First rechecking 0:00:48.159 --> 0:00:50.519 on those markets and bigcoin continues to be on the downside. 0:00:50.520 --> 0:00:53.279 We're off five percentage twin eight, three and sixty one, 0:00:53.640 --> 0:00:56.560 so once again another annual loss for the OG in 0:00:56.600 --> 0:00:57.480 the crypto space. 0:00:57.680 --> 0:00:59.959 But we're seeing risk on perpetuate a little bit. 0:01:00.000 --> 0:01:01.720 And then as that one hundred, we're higher on the day, 0:01:01.720 --> 0:01:03.480 we're higher on the month, and boy are we higher 0:01:03.520 --> 0:01:05.800 on the year, up more than twenty percent. And of 0:01:05.840 --> 0:01:08.880 course today's figures the US economy expanding at four point 0:01:08.880 --> 0:01:12.120 three percent annualized pace. Maybe just easing back a little 0:01:12.120 --> 0:01:14.560 bit of risk on feeling if indeed the FED doesn't 0:01:14.560 --> 0:01:17.240 cut as much as I'm in anticipated because this economy. 0:01:17.120 --> 0:01:18.480 Looks like it's doing fine. 0:01:18.840 --> 0:01:20.800 Let's talk about some of the animal spirits in the 0:01:20.840 --> 0:01:22.840 market right now, particularly when it comes to M and A. 0:01:22.880 --> 0:01:25.480 And let's look at Service Now. We're currently trading lower 0:01:25.480 --> 0:01:26.440 on that particular stock. 0:01:26.440 --> 0:01:27.039 We're off by two and. 0:01:27.040 --> 0:01:29.320 A half percent because well, they're going to use cash, 0:01:29.360 --> 0:01:32.440 They're going to use debt for his biggest acquisition so far. 0:01:32.520 --> 0:01:34.720 It's all about the world of cyber and it's actually. 0:01:34.480 --> 0:01:37.600 A story that Bloomberg broke where ahead of the formal announcement. 0:01:37.680 --> 0:01:40.160 Let's get to it at Bloomberg's Andrew Martin, and it 0:01:40.240 --> 0:01:42.800 was last week that you made clear to the market 0:01:42.800 --> 0:01:45.039 that Service Now was looking at this particular acquisition. 0:01:45.120 --> 0:01:46.200 Why is it building up in. 0:01:46.160 --> 0:01:50.919 Cyber Well, I think there's sort of following a path 0:01:51.040 --> 0:01:55.440 that Microsoft and Google were already followed, which is, you know, 0:01:55.560 --> 0:02:00.840 combining a enterprise software product and our cyber is sort 0:02:00.880 --> 0:02:03.280 of a bonus. And so you know, Microsoft sort of 0:02:03.320 --> 0:02:04.360 perfected this idea of. 0:02:07.000 --> 0:02:08.720 Having a package of. 0:02:08.840 --> 0:02:11.960 Their software offerings in the cloud and bringing in cyber. 0:02:12.440 --> 0:02:15.480 Google bought Whiz to do something very similar and now 0:02:15.639 --> 0:02:20.440 Service now, you know, is basically saying as we automate 0:02:20.480 --> 0:02:23.960 you know, they basically automate it and personnel, and now 0:02:23.960 --> 0:02:26.360 they're offering cyber is sort of a broader package to 0:02:26.480 --> 0:02:27.239 entice customers. 0:02:27.240 --> 0:02:30.520 So the safety of Agenda KI is crucial. Wise, armis 0:02:30.639 --> 0:02:33.440 the right holding. Tell us about the founding team and 0:02:33.520 --> 0:02:33.880 other reason. 0:02:34.320 --> 0:02:35.840 Armist is an interesting company there. 0:02:36.520 --> 0:02:38.919 Like a lot of cyber startups, it was started by 0:02:39.080 --> 0:02:42.720 Israeli military veterans who had worked in one of their 0:02:42.760 --> 0:02:46.080 elite cyber units. And what these guys do is they 0:02:47.040 --> 0:02:51.320 they call it cyber exposure management. It's basically looking across 0:02:51.360 --> 0:02:54.880 your whole digital footprint and finding in real time flaws 0:02:54.880 --> 0:02:57.920 and vulnerabilities and fixing them quickly. And it's something that 0:02:58.080 --> 0:03:04.760 really lends itself to AI see that being automated, and. 0:03:03.680 --> 0:03:07.040 You know, the company has grown incredibly fast. 0:03:07.240 --> 0:03:10.440 And uh you know, for for a company that uh 0:03:10.960 --> 0:03:15.200 that that automates processes, automating cyber just makes sense as 0:03:15.240 --> 0:03:15.560 part of that. 0:03:16.280 --> 0:03:18.080 What's interesting is, as you said, this is part of 0:03:18.080 --> 0:03:18.560 a theme. 0:03:18.880 --> 0:03:20.639 The fact that the mega deal of the year was 0:03:20.720 --> 0:03:23.720 Whiz with alphabet Are we expecting yet more and more 0:03:23.840 --> 0:03:26.880 these platforms looking to bolt on cyber acquisitions. 0:03:26.880 --> 0:03:28.720 It just makes sense, right, I mean, it just makes 0:03:28.760 --> 0:03:31.800 sense to to offer cyber as part of a broader package. 0:03:31.840 --> 0:03:36.960 And you know, among the big cyber players, Microsoft being 0:03:36.960 --> 0:03:41.800 the biggest, Google, CrowdStrike, palom Alto, they're all trying to 0:03:41.840 --> 0:03:45.560 build a bundle that can attract users with with sort 0:03:45.600 --> 0:03:47.520 of one stop shopping and cyber. 0:03:47.920 --> 0:03:52.200 That word platformization, which a horrible words, horrible word, but 0:03:52.240 --> 0:03:55.640 they love it. Megs, Andrew Martin, we so appreciate you 0:03:55.680 --> 0:03:59.000 coming on about the latest deal. Let's turn our attention 0:03:59.040 --> 0:04:02.040 to another huge, huge piece of reporting by Bloomberg. In 0:04:02.160 --> 0:04:05.600 Vidia's largest buyer in Southeast Asia, it's under investigation by 0:04:05.640 --> 0:04:09.240 the US government over whether it smuggled advanced chips into China. 0:04:09.560 --> 0:04:13.720 Now Singapore based Megaspeed imported at least four point six 0:04:13.760 --> 0:04:16.560 billion dollars worth of in Vidio hardware through November since 0:04:16.560 --> 0:04:19.320 it's founding back in twenty twenty three. The company wasn't 0:04:19.360 --> 0:04:23.039 its obscure spinoff of a Chinese gaming enterprise could become 0:04:23.160 --> 0:04:27.040 a prime example of Washington's fears of Beijing gaining access 0:04:27.080 --> 0:04:30.400 to advanced chips For commercial and military uses. Megaspeed denies 0:04:30.480 --> 0:04:33.400 any wrongdoing, says it abides by all regulations from the 0:04:33.480 --> 0:04:36.640 US and elsewhere relevant to its operations. Let's get the 0:04:36.680 --> 0:04:39.320 details on what was a very long running investigation for 0:04:39.400 --> 0:04:43.800 Bloomberg's chips reporter Ian King and the deep dive the 0:04:43.920 --> 0:04:47.200 reporters have done to understand whether we really understand how 0:04:47.240 --> 0:04:49.960 many GPUs are going to megaspeed and where they're ending 0:04:50.000 --> 0:04:50.480 up in. 0:04:50.440 --> 0:04:51.040 Talk us through it. 0:04:52.200 --> 0:04:55.239 Yeah, I mean there's a lot of evidence. It's important 0:04:55.279 --> 0:04:57.719 to point out, as you already did that in Nvidia 0:04:57.800 --> 0:05:01.400 says there's nothing going on here. Speed itself says there's 0:05:01.440 --> 0:05:05.320 nothing going on here. But you know our colleagues reporting here, Caroline, 0:05:05.440 --> 0:05:09.719 is that there is an investigation going on, and you 0:05:09.760 --> 0:05:13.640 know Southeast Asian governments and also Washington are looking at 0:05:13.680 --> 0:05:16.920 this and still trying to find out whether there has 0:05:17.000 --> 0:05:21.440 been anything significant going on the go ahead. 0:05:21.440 --> 0:05:23.839 Sorry, Well, from what we know, it's a Singapore based company, 0:05:23.960 --> 0:05:27.800 Megaspeed operating fully in compliance, as they say, with applicable laws. 0:05:28.240 --> 0:05:31.240 But what ultimately has had to spring up ever since 0:05:31.240 --> 0:05:34.240 the Biden administration back in twenty twenty two was a 0:05:34.320 --> 0:05:36.919 restriction on sophisticated chips kind of from Nvidia to China. 0:05:37.040 --> 0:05:42.120 So suddenly you saw other Asian countries become real areas 0:05:42.120 --> 0:05:44.920 of focus for importing chips, so that Chinese companies could 0:05:44.920 --> 0:05:47.560 actually do the workload, could do the compute outside of 0:05:47.560 --> 0:05:48.320 their own country. 0:05:48.360 --> 0:05:52.400 Correct, Yeah, now that's absolutely right. There's nothing illegal with 0:05:52.560 --> 0:05:57.080 setting up a data center and serving Chinese customers, providing 0:05:57.160 --> 0:06:01.920 those customers don't have links with a band entity in 0:06:01.960 --> 0:06:05.719 the US, whether that's the military or some company which 0:06:05.760 --> 0:06:10.240 the US government has decided serves China's military. However, there 0:06:10.320 --> 0:06:14.400 is a suspicion about these links, about who's in control 0:06:14.480 --> 0:06:18.039 of what. There is a you know, and this is 0:06:18.080 --> 0:06:20.719 the problem that in Vidia has to face and in 0:06:20.800 --> 0:06:23.240 video you know say, look that there's nothing to see here, 0:06:23.279 --> 0:06:23.880 there's nothing. 0:06:23.720 --> 0:06:24.240 To worry about. 0:06:24.279 --> 0:06:27.040 But as you'll see from our story, there's a lot 0:06:27.200 --> 0:06:32.440 of links between individuals in China. There are you know, 0:06:32.920 --> 0:06:36.320 there's a lot of lack of clarity in the relationships, 0:06:36.360 --> 0:06:39.440 which I think everybody is trying to work through to 0:06:39.480 --> 0:06:41.960 make sure that there is nothing untoward going on. 0:06:42.040 --> 0:06:45.080 Because Bloomberg didn't find evidence of any megaspeed in video 0:06:45.160 --> 0:06:49.279 chips actually being divert into China. But there's all these inconsistencies, 0:06:49.320 --> 0:06:52.840 as you say, in Megaspeed's Southeast Asia demand and ship 0:06:52.880 --> 0:06:55.640 inventory and wherever all they all end up in. 0:06:56.160 --> 0:06:58.120 What's so interesting is this is a moment. 0:06:58.240 --> 0:07:02.200 Where maybe actually in we'll get more access to China. 0:07:02.440 --> 0:07:04.560 H two hundreds have in theory or at least according 0:07:04.600 --> 0:07:07.320 to a truth social post been allow it back into China. 0:07:07.360 --> 0:07:09.240 The question is where the China wants them. 0:07:09.400 --> 0:07:12.400 But also where the megaspeed will actually have Chinese demand 0:07:12.440 --> 0:07:14.800 going forward if indeed we start to see access once 0:07:14.800 --> 0:07:16.960 again to mainland Yeah. 0:07:16.800 --> 0:07:19.440 I mean there's again we're in a kind of a 0:07:19.480 --> 0:07:23.120 transition period where we're trying to find out exactly how 0:07:23.160 --> 0:07:25.200 this will all play out. In Vidia wants to do 0:07:25.240 --> 0:07:28.480 business directly in China, that's absolutely true. At the moment, 0:07:28.520 --> 0:07:32.800 it cannot do that because of these restrictions. What we're 0:07:32.800 --> 0:07:34.680 trying to find out is whether the Chinese want to 0:07:34.680 --> 0:07:39.040 do business directly within VideA, and if that's the case, 0:07:39.120 --> 0:07:42.120 what level of demand that they will be there. In 0:07:42.240 --> 0:07:45.000 Vidia has really kind of had a good year in Washington. 0:07:45.040 --> 0:07:49.240 It's gone from really restrictive rules to freeing up of 0:07:49.320 --> 0:07:52.520 some of them. But again that has to translate into 0:07:52.680 --> 0:07:56.360 shipments into that Chinese market, and we haven't seen that 0:07:56.440 --> 0:07:59.440 yet and we don't know that that will actually happen. Clearly, 0:07:59.560 --> 0:08:02.280 stories like this that there are suspicions about smuddeling that 0:08:02.360 --> 0:08:06.040 we know perhaps should be more secure and more kind 0:08:06.040 --> 0:08:09.000 of careful in how we deal with China and Chinese 0:08:09.160 --> 0:08:12.040 entities don't help that case. So again, there's a lot 0:08:12.040 --> 0:08:14.240 at stake here, and we really need a lot more 0:08:14.320 --> 0:08:16.800 clarity about the details of how this is all going 0:08:16.840 --> 0:08:17.400 to work out. 0:08:17.680 --> 0:08:20.880 It's a very fairo incredibly complex story, and you broke 0:08:20.920 --> 0:08:23.880 it down perfectly for us Bloomgazine, King, thank you very much. Indeed, 0:08:23.880 --> 0:08:27.600 go read more about the Invidio supplier on your terminal 0:08:27.680 --> 0:08:30.760 or online. But let's talk more now about chip and 0:08:30.800 --> 0:08:34.280 trade news because the US it's actually accused today China 0:08:34.360 --> 0:08:37.760 of engaging in unfair trade practices in the semiconductor sector, 0:08:38.040 --> 0:08:40.880 but Washington won't place additional tariffs on chip imports till 0:08:40.920 --> 0:08:44.079 at least mid twenty twenty seven. Chinese embassy in Washington 0:08:44.080 --> 0:08:46.520 did not immediately respond to the request for comment. That's 0:08:46.520 --> 0:08:49.040 going the details of blombgs, Jordan Fabian and so we 0:08:49.160 --> 0:08:53.880 understand that USTR, that's the Office of US Trade Representative saying, look, 0:08:54.240 --> 0:08:55.560 what they're doing isn't fair. 0:08:58.480 --> 0:08:58.960 Exactly. 0:08:59.160 --> 0:09:04.040 It's an interesting development. This investigation actually started under the 0:09:04.080 --> 0:09:07.560 administration of former President Joe Biden, with the expectation that 0:09:07.600 --> 0:09:10.520 Donald Trump, who talked tough on China during the campaign, 0:09:10.559 --> 0:09:13.080 would follow up on it when he became president. But 0:09:13.200 --> 0:09:15.520 in the interim he started a trade war with China. 0:09:15.840 --> 0:09:19.280 He then struck a deal with Jijenping to take off 0:09:19.520 --> 0:09:23.000 those tariffs. And so the US right now, if you 0:09:23.040 --> 0:09:25.760 listen to what Jamison Greer, the Trade Representative, has said 0:09:26.040 --> 0:09:30.560 other senior administration officials, they want a stable relationship with 0:09:30.720 --> 0:09:33.400 China on trade, and so they're not going to look 0:09:33.440 --> 0:09:35.960 to hike tariffs at the current moment, which is why 0:09:36.000 --> 0:09:39.040 you have this odd outcome of an investigation saying the 0:09:39.080 --> 0:09:43.000 obvious really, which is that China is using non market 0:09:43.040 --> 0:09:48.080 practices to dominate the chip industry. But at the same time, 0:09:48.200 --> 0:09:50.120 the US isn't really going to do anything about it, 0:09:50.240 --> 0:09:52.560 at least not for the foreseeable future. 0:09:52.800 --> 0:09:56.480 So ESDO was legally required to publish the outcome and 0:09:56.520 --> 0:10:00.760 the investigation the three to Zho one investigation, but is 0:10:00.800 --> 0:10:03.200 being thought of that China is up to in terms 0:10:03.280 --> 0:10:06.760 of unfairly supporting its industry. They say, China's targeting in 0:10:06.800 --> 0:10:10.720 the semiconductor industry for dominance is unreasonable and burdens or 0:10:10.720 --> 0:10:13.640 restricts US commerce and thus is actionable. 0:10:13.679 --> 0:10:15.880 Jordan, what are they being told or accused of. 0:10:18.400 --> 0:10:22.199 You know, they're being accused of using non market practices 0:10:22.240 --> 0:10:26.240 to bolster their domestic industry. You'll sell those chips that 0:10:26.640 --> 0:10:31.600 perhaps below market rates into various countries to get them 0:10:32.000 --> 0:10:36.840 hooked on the Chinese technology stack and thereby increasing the 0:10:36.880 --> 0:10:40.160 market share of their chip industry. The irony is that 0:10:40.200 --> 0:10:43.280 the US is pretty much trying to do the same thing, 0:10:43.440 --> 0:10:46.360 which is basically doing a take it or leave it 0:10:46.400 --> 0:10:49.160 deal with countries around the world, saying that you need 0:10:49.200 --> 0:10:52.760 to use the US tech stack. We want to make 0:10:52.760 --> 0:10:56.400 sure that countries are not on the Chinese tech stack 0:10:56.440 --> 0:10:59.000 and had been for a while, you know, trying to 0:10:59.080 --> 0:11:03.240 limit X worts to China to other countries that are 0:11:03.240 --> 0:11:08.320 deemed unfriendly, and also crack down on the Chinese market. 0:11:08.400 --> 0:11:11.720 So they're saying, essentially, you know, you know, China can't 0:11:12.000 --> 0:11:13.880 try to dominate the market. We're going to try and 0:11:13.880 --> 0:11:17.280 dominate the market. But right now they're again going to 0:11:17.400 --> 0:11:21.760 sort of stand off our whole back on increasing terrorists 0:11:21.800 --> 0:11:24.880 further on Chinese chips to address that. 0:11:24.840 --> 0:11:28.600 Problem complex trade web. Jordan Fabian, thanks so much for 0:11:28.640 --> 0:11:30.640 talking us through it. We really appreciate you. 0:11:30.760 --> 0:11:34.480 Meanwhile, coming up, thing about Larry Allison, his big bet 0:11:34.520 --> 0:11:38.000 on paramount that could alter his vast Oracle fortune. 0:11:38.040 --> 0:11:40.120 One on that. Next, this is Blomberg Tech. 0:11:53.640 --> 0:11:56.920 Larry Alison no stranger to bold bets, but his biggest 0:11:56.960 --> 0:12:00.520 one yet maybe in media. A potential personal guarantee more 0:12:00.520 --> 0:12:03.160 than forty billion dollars to backstop paramounts all cash bid 0:12:03.160 --> 0:12:04.439 for Warner Brothers Discovery. 0:12:04.640 --> 0:12:06.160 He could dramatically we shape the. 0:12:06.120 --> 0:12:09.320 Oracle founder's fortune and Meg's Dylan Sloane joins us for 0:12:09.400 --> 0:12:12.280 more as we're picking apart how Larry Ellison is basically 0:12:12.280 --> 0:12:15.559 helping his son, David Ellison potentially by Warner Brothers Discovery. 0:12:15.720 --> 0:12:18.400 What's so extraordinary about your reporting on the billionaire is 0:12:18.440 --> 0:12:21.800 that he has sold very little of Oracle stock over 0:12:21.800 --> 0:12:22.240 the years. 0:12:22.320 --> 0:12:24.560 He has Yeah, and even amongst the billionaires that we're 0:12:24.600 --> 0:12:27.160 looking at on the Bloomberg billionis Index, he really stands out. 0:12:27.920 --> 0:12:30.040 He's sold about seven and a half billion dollars worth 0:12:30.040 --> 0:12:32.560 of stock lifetime, no more than a billion dollars in 0:12:32.600 --> 0:12:35.920 a single year since twenty ten, So that pair that 0:12:35.960 --> 0:12:38.800 really pales in comparison in looking at some other founders. 0:12:38.840 --> 0:12:41.120 You know, he still earns about forty percent of the company, 0:12:41.360 --> 0:12:43.880 which is, you know, multiples higher than a lot of 0:12:43.920 --> 0:12:46.480 comparable tech founder peers. So his strategy in terms of 0:12:46.480 --> 0:12:48.880 his wealth management has been to stick really closely to 0:12:49.280 --> 0:12:52.920 holding his Oracle stock, not cashing out at any point, 0:12:52.960 --> 0:12:54.800 which has been very successful for him as a stock 0:12:54.840 --> 0:12:57.199 has done well. But it does raise some questions about 0:12:57.240 --> 0:12:58.800 the cash that he has on hand and whether or 0:12:58.800 --> 0:13:01.480 not he would be able to imediately meet those equity 0:13:01.520 --> 0:13:03.320 financing comitment should he be called on to do so. 0:13:03.440 --> 0:13:05.880 Yeah, because like forty billion in the grand scheme of things, 0:13:06.200 --> 0:13:07.880 is actually not that much compared to his two hundred 0:13:07.880 --> 0:13:10.840 and fifty two billion dollar net worth. But how liquid 0:13:10.960 --> 0:13:13.320 is any of that? Where has money gone? What could 0:13:13.400 --> 0:13:14.640 he sell to help out? 0:13:14.720 --> 0:13:16.240 Yeah, And you raise a good point, which is it's 0:13:16.240 --> 0:13:18.079 important to say that he can afford this. Of course 0:13:18.120 --> 0:13:20.080 many times over third richest man in the world he 0:13:20.080 --> 0:13:20.960 has got more than. 0:13:20.920 --> 0:13:23.800 Enough assets to be able to cover this, but historically. 0:13:23.360 --> 0:13:26.760 Ellison's has relied on debt to finance money of his investments, 0:13:26.800 --> 0:13:30.360 his lifestyle purchases. Currently about thirty percent of his Oracle 0:13:30.400 --> 0:13:33.800 stake is pledged to secure loans, which he uses to 0:13:34.120 --> 0:13:36.920 raise cash and fund his many lifestyle purchases. He has 0:13:36.960 --> 0:13:39.800 a really extensive real estate portfolio. You may remember even 0:13:39.840 --> 0:13:41.640 earlier this year. It feels like a lifetime ago, but 0:13:41.679 --> 0:13:43.480 he put up a big chunk of the equity for 0:13:44.080 --> 0:13:48.319 his son David's acquisition of National Amusements, the acquisition of Paramount. 0:13:48.920 --> 0:13:51.079 So should he need to raise cash down the line, 0:13:51.080 --> 0:13:53.439 of course, selling shares would be one option if he's 0:13:53.480 --> 0:13:55.800 called on to backstop this steal, which again would constitute 0:13:55.880 --> 0:13:58.480 a pretty significant change from his his strategy over the 0:13:58.520 --> 0:14:02.360 past few decades, or potentially increasing the size of those loans, 0:14:02.440 --> 0:14:05.200 which is something that the Oracle board would need to 0:14:05.320 --> 0:14:07.439 go through a review process of to give the okay. 0:14:07.480 --> 0:14:11.920 Just like Tesla learn when El muskport now X was 0:14:11.960 --> 0:14:14.560 Twitter Dolan sloan. It's great reporting, go and check it 0:14:14.600 --> 0:14:18.040 out on all things billionaires. But let's talk a little 0:14:18.040 --> 0:14:21.920 bit more about the potential bid or deal of Paramount, binding, 0:14:22.240 --> 0:14:26.000 Water Brothers, Discovery, and indeed Netflix to the legal stakes 0:14:26.000 --> 0:14:29.720 of the Megamedia mergers. Fiona Scott Morton, Professor of Economics 0:14:29.720 --> 0:14:32.120 over at the Yale University School of Management and adjunct 0:14:32.120 --> 0:14:35.040 professor of Yale Law School, is with us. Now let's 0:14:35.120 --> 0:14:38.080 just go back to whether or not any of these 0:14:38.120 --> 0:14:42.680 will get through regulatory approval. Let's start with Paramount buying 0:14:42.720 --> 0:14:43.640 Warner Brothers Discovery. 0:14:43.680 --> 0:14:44.920 Does it cut legal mustard? 0:14:44.880 --> 0:14:48.560 Do you think, well, all three of the bidders, remember 0:14:48.600 --> 0:14:51.680 there was Comcast in there to begin with, have overlapped 0:14:51.840 --> 0:14:54.800 with Warner Brothers. If you think about three buckets of 0:14:54.920 --> 0:14:59.680 say content, production, streaming, and then channels or networks, they 0:14:59.760 --> 0:15:03.360 a overlap and Paramount in particular has a lot of 0:15:04.280 --> 0:15:08.720 production studio kinds of assets, particularly because of course Paramount 0:15:08.720 --> 0:15:11.720 merges with sky Dance first, so that's a big issue 0:15:11.720 --> 0:15:14.120 for them, and they have a significant share of streaming 0:15:14.200 --> 0:15:14.640 as well. 0:15:15.120 --> 0:15:17.960 You served as Deputy Sistant Attorney General for Economic Analysis, 0:15:18.000 --> 0:15:20.600 chief Economist, you can basically helped with anti trust division 0:15:20.640 --> 0:15:24.440 in your time. When ultimately it comes down to it, 0:15:24.440 --> 0:15:27.600 as courts are going to say, who's the competitor here. 0:15:27.880 --> 0:15:28.960 Do you think it's right that. 0:15:28.880 --> 0:15:32.440 They bulk in YouTube and new ways of consuming content, 0:15:32.480 --> 0:15:36.200 even TikTok versus us all be on linear, certainly on cable. 0:15:37.520 --> 0:15:40.160 Yes, I think this is the tricky thing for the 0:15:40.200 --> 0:15:44.320 paramount BID. I mean, we all understand what producing content is, 0:15:44.360 --> 0:15:46.160 and I think we have a pretty good grip on 0:15:46.320 --> 0:15:49.160 who does that and why it's different and what sort 0:15:49.200 --> 0:15:53.760 of market there is there. Streaming, however, is much trickier 0:15:54.000 --> 0:15:58.080 because we have user produced funny cat videos, we have 0:15:58.240 --> 0:16:01.880 user produced videos that actually sustain those users in terms 0:16:01.880 --> 0:16:05.920 of income. We have professionally produced short things, professionally produced 0:16:05.920 --> 0:16:08.120 long things, and so we're getting a kind of a 0:16:08.200 --> 0:16:13.480 continuum of content, and that includes YouTube, as you point out, 0:16:13.560 --> 0:16:16.560 which has a big chunk of that continuum. And it's 0:16:16.840 --> 0:16:18.880 going to be very difficult to draw the line on 0:16:18.920 --> 0:16:21.240 what is what we call the relevant market, which in 0:16:21.320 --> 0:16:24.440 antitrust is what matters because that's where you get head 0:16:24.440 --> 0:16:25.400 to head competitors. 0:16:25.600 --> 0:16:28.360 It feels as though Netflix, for its part, which thus 0:16:28.400 --> 0:16:31.120 far is meant to be the front runner for buying 0:16:31.800 --> 0:16:34.760 Warner Brothers, or at least the streaming and the studio 0:16:34.840 --> 0:16:36.960 side of it, they've tried to front run this sort 0:16:36.960 --> 0:16:40.680 of argument by making clear they think the market competitors 0:16:40.680 --> 0:16:42.760 are YouTube and they are TikTok and they are just 0:16:42.800 --> 0:16:45.520 where are eyeballs at? Who do they need to convince 0:16:45.560 --> 0:16:47.720 in this because many would say, oh, the Allisons have 0:16:47.760 --> 0:16:50.240 got the air of the administration, but really it's the 0:16:50.320 --> 0:16:52.400 courts that's right. 0:16:52.440 --> 0:16:55.080 The president can say he wants the Ellisons to have it, 0:16:55.160 --> 0:16:58.200 and he can say that about his friends or the 0:16:58.200 --> 0:17:01.360 people who give him money, or silence the voices that 0:17:01.440 --> 0:17:04.560 he doesn't want to hear. But ultimately, we have a 0:17:04.640 --> 0:17:07.000 law in the United States that can be enforced not 0:17:07.040 --> 0:17:09.960 only by the public, the federal public authorities, but the 0:17:10.000 --> 0:17:13.560 states and actually buy private plaintiffs as well. And so 0:17:13.720 --> 0:17:16.199 if there's some harm to competition and that can be 0:17:16.240 --> 0:17:19.600 shown by a state or a private plaintiff, then they 0:17:19.600 --> 0:17:21.760 can go to court and try to block the transaction 0:17:22.040 --> 0:17:24.560 just like the federal government can. And indeed we have 0:17:24.680 --> 0:17:28.879 seen states coalitions of states being very active and antitrust 0:17:28.960 --> 0:17:31.960 lately when they have felt that the federal government is 0:17:32.000 --> 0:17:33.000 not doing a good job. 0:17:33.560 --> 0:17:35.440 Fear and a Scott Morton, I'm a feeling this story 0:17:35.520 --> 0:17:37.240 is going to run. So we get to have you back, 0:17:37.320 --> 0:17:46.840 Yale University School and Management. We appreciate your expertise. It's 0:17:46.880 --> 0:17:50.040 been a wild year in crypto. Despite big regulatory wins, 0:17:50.280 --> 0:17:53.200 hasn't been kind to everyone, even as prices and interest 0:17:53.280 --> 0:17:56.600 surged early on. Billionaires tied to the space they're chatting 0:17:56.760 --> 0:17:59.440 very different paths. Setting into twenty twenty six, let's state 0:17:59.480 --> 0:18:02.720 the vinkle of twins. They saw their fortunes pressured as 0:18:02.760 --> 0:18:06.240 Gemini Space Station continues to face losses after the exchange's 0:18:06.280 --> 0:18:09.879 shares for one sixty percent following September IPO. On the 0:18:09.920 --> 0:18:13.119 other side, Jeremy Elaire's Circle benefited from growing adoption of 0:18:13.119 --> 0:18:16.200 its USDC stable coin, helped by clearer regulation, and the 0:18:16.240 --> 0:18:19.399 shares have almost tripled since listening in June, although you 0:18:19.400 --> 0:18:22.720 can see they're well off their previous highs. Meanwhile, let's 0:18:22.720 --> 0:18:26.639 talk my novograts. Galaxy Digital has actually seen some sort 0:18:26.680 --> 0:18:30.200 of a rebound alongside bitcoins gains earlier in the year, 0:18:30.240 --> 0:18:32.840 but it has had a tough stretch. Then there's Michael 0:18:32.840 --> 0:18:36.320 Saylor's wild ride as too, as the Strategy founder doubled 0:18:36.400 --> 0:18:39.800 down on his high conviction bitcoin bet, further tying his 0:18:39.880 --> 0:18:42.160 wealth to the token's price wings his net worth has 0:18:42.240 --> 0:18:47.080 collapsed almost forty percent this year. So what next for 0:18:47.119 --> 0:18:48.560 crypto in twenty twenty six? 0:18:48.720 --> 0:18:49.639 Not just the billionaires. 0:18:49.840 --> 0:18:51.840 Nisa Colleens, Stillmark Managing. 0:18:51.480 --> 0:18:53.920 Partners, says she's going to see momentum. 0:18:54.240 --> 0:18:57.720 She writes, we expect to continued progress through increased MNA activity, 0:18:57.720 --> 0:19:01.439 expanded entrepreneurial innovation, and a deeper, more robust base of 0:19:01.480 --> 0:19:05.280 both retail and institutional uses. She joins us Now, for you, 0:19:05.440 --> 0:19:08.320 at least reflecting on twenty twenty five, what was the 0:19:08.359 --> 0:19:09.560 biggest landmark move? 0:19:09.720 --> 0:19:11.000 Was it institutional adoption? 0:19:12.960 --> 0:19:15.600 Well, twenty twenty five was one of the most consequential 0:19:15.720 --> 0:19:20.000 years in bitcoin's history, not because of price appreciation, but 0:19:20.119 --> 0:19:24.119 because of structural progress, and that includes policy, product, and 0:19:24.320 --> 0:19:29.320 institutional adoption. Across all of these fronts, Bitcoin moved meaningfully 0:19:29.359 --> 0:19:33.040 into the mainstream as an embedded part of the financial system, 0:19:33.440 --> 0:19:35.919 and twenty twenty six will be able to take advantage 0:19:35.920 --> 0:19:36.720 of that foundation. 0:19:37.080 --> 0:19:41.480 What does advantage look like, Well, what it looks like 0:19:41.800 --> 0:19:47.040 is recent regulatory clarity and an effort by regulators and 0:19:47.080 --> 0:19:51.200 policy makers to acknowledge bitcoin as part of the financial 0:19:51.240 --> 0:19:55.320 system and to lay the foundational groundwork in terms of 0:19:55.400 --> 0:19:59.080 policy so that the US can continue to lead both 0:19:59.080 --> 0:20:03.840 in terms of innovation distribution as well as institutional adoption 0:20:03.920 --> 0:20:08.760 that can provide efficiencies and gains for US based institutions 0:20:09.000 --> 0:20:11.880 from bitcoin, the acid and bitcoin technologies at. 0:20:11.880 --> 0:20:14.440 Least reminds us of that quickly, just remind us where 0:20:14.480 --> 0:20:18.080 we are on policy. Because Genius Act tick, that helps 0:20:18.119 --> 0:20:22.440 sable coins and pass through Congress. But the Clarity Act 0:20:22.560 --> 0:20:24.600 what will that give us if India does get through 0:20:24.640 --> 0:20:25.000 the Senate. 0:20:26.640 --> 0:20:29.359 So in addition to the Genius Act passing this year, 0:20:29.359 --> 0:20:33.120 we've seen advancement of the What the Clarity Act attempts 0:20:33.200 --> 0:20:35.560 to do, or aims to do, I should say, is 0:20:35.600 --> 0:20:39.480 to create a framework for bitcoin and other digital assets 0:20:40.240 --> 0:20:44.480 can create clarity as well as consumer protection and can 0:20:44.520 --> 0:20:48.240 offer definitions of what these digital assets are. So, for example, 0:20:48.280 --> 0:20:51.639 we expect that bitcoin will be defined as a commodity 0:20:51.680 --> 0:20:56.000 along with other decentralized assets under the purview of the CFTC, 0:20:56.720 --> 0:21:00.720 and that will help drive institutional adoption both in terms 0:21:00.800 --> 0:21:04.199 of institutionals institution's. 0:21:03.480 --> 0:21:05.480 Own interaction with bitcoin, but. 0:21:05.520 --> 0:21:10.040 Also institutions comfort with distribution bitcoin to their own clients. 0:21:10.640 --> 0:21:11.879