Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: From Mahard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Hyde and Bloomberg's weld head quarters in New York.
Speaker 5: I'm Ed Lodlow in San Francisco. This is Bloomberg Technology.
Speaker 4: Coming up, we have an exclusive interview with the CEO
Speaker 4: of Micron, Sanjay Mahotra, is going to be joining us
Speaker 4: as shares surge to a record high. That's after the
Speaker 4: company boosted its outlook on AI growth.
Speaker 5: Plus, we push ahead to Reddit's long awaited IPO and
Speaker 5: sit down with reddits COO Jen Wong later this hour.
Speaker 4: And of course we go live to the Department of
Speaker 4: Justice as they announ an antitrust lawsuit against Apple.
Speaker 5: We're also thinking a lot about Micron. Shares of Micron
Speaker 5: at a record high, biggest jump since twenty eleven. The
Speaker 5: outlook for the fiscal third quarter a recovery and commoditized
Speaker 5: d RAM prices, but also a ramp in the next
Speaker 5: generation HBM three E that is the memory that supports
Speaker 5: the GPUs in training AI that is the conversation that
Speaker 5: we'll have. Let's dive right into microns earnings with CEO
Speaker 5: Sanjay Morotra as Sanja, good morning to you, and that's
Speaker 5: how i'd frame it. Let's get right to the outlook
Speaker 5: for the fiscal third way up the factors for us.
Speaker 5: Was this all about the recovery in d RAM traditionally
Speaker 5: commoditized or is this more about the ramp up in
Speaker 5: HBM THREEE that is going in support of things like
Speaker 5: the h two hundred from Nvidia.
Speaker 1: First of all, thank you Caroline and ED for having
Speaker 1: me on the show here. Our recovery is really driven
Speaker 1: by a demand related to AI with tight supply and
Speaker 1: actually demand that is strong across most of our end markets,
Speaker 1: particularly data centered driven demand. And Micron has a strong
Speaker 1: portfolio of products. Very excited about our latest offering of
Speaker 1: HV and three E that you refer to earlier. We
Speaker 1: have just begun shipments of this and we see strong
Speaker 1: growth in the several quarters that are ahead of us.
Speaker 1: And supply is tight, leading edge nodes in particular, and
Speaker 1: and tight supply that's leading to price increases as well.
Speaker 1: So as we look ahead at twenty twenty four, our
Speaker 1: year of recovery. We see increasing prices driven by the
Speaker 1: demand supply fundamentals, and we look at twenty twenty five
Speaker 1: to be a record year for Micron's revenue with significantly
Speaker 1: improved profitability as well.
Speaker 4: Twenty twenty five supply also mostly already allocated. You sold
Speaker 4: out on twenty twenty four. Say let's dig in on
Speaker 4: the high bandwidth memory because was it Jason Wyang over
Speaker 4: at in video calling this a technology miracle? Will it
Speaker 4: not get commoditized? Will prices remain elevated?
Speaker 1: First of all, our sr HBM product that is sold
Speaker 1: out for calendar year twenty four, and a vast majority
Speaker 1: of the supply for our twenty twenty five is allocated
Speaker 1: as well. This is a critical product. HBM three E
Speaker 1: is in very very early stages here and it's key
Speaker 1: enabler of what AI platforms, generative AI platforms are able
Speaker 1: to do. Just think about it. I mean the latest
Speaker 1: Blackwell platform that has been announced. It has sixty four
Speaker 1: die of memory in it, so tremendous amount of silicon.
Speaker 1: HBM is growing fast, expected to be about fifteen percent
Speaker 1: high teens, mid to high teens of the industry revenue
Speaker 1: over the course of next years compared to being just
Speaker 1: half of that last year. And as you look ahead
Speaker 1: at the new platforms being announced Nvidia earlier this week,
Speaker 1: Broadcom yesterday, they're all placing tremendous emphasis on the performance
Speaker 1: and the power of HPM memory. As AI becomes bigger,
Speaker 1: data becomes bigger, data lives in the products that Micron
Speaker 1: makes for AI applications, lives in the kind of products
Speaker 1: such as HPM three E, but high density DIM modules
Speaker 1: as well as other products that Micron makes DDD ARE
Speaker 1: five memory and data center SSDs. So AI is really
Speaker 1: driving tremendous growth trajectory. HBM THREEE is absolutely going to
Speaker 1: be critical. This is in very early innings and you know,
Speaker 1: even if there are any perturbations in supply, they will
Speaker 1: get absorbed over time. And what's important to understand is
Speaker 1: because HPM THREEE product is extremely silicon intensive across the industr,
Speaker 1: it is really leaving not enough supply for non HBM
Speaker 1: products and those are in tight supply, and that's what
Speaker 1: is driving tremendous strength in terms of demand supply fundamentals
Speaker 1: in pricing trajectory for memory.
Speaker 5: And the question is, Sanjay, how do you keep up
Speaker 5: right HBM THREEE running at five point two gigabits per second.
Speaker 5: You've already mentioned blackwell, you're going to have to bring
Speaker 5: that next generation HBM nine gigabits per second faster. Just
Speaker 5: walk us through the real term ramp of your products,
Speaker 5: getting them into the real world and when they show
Speaker 5: up in your financials in the near and medium term.
Speaker 1: Well, we talked about yesterday in our earnings call that
Speaker 1: we have begun shipments of HBM three E product. It's
Speaker 1: an industry leading product. It has the best performance in
Speaker 1: the lowest power in the industry, which you know for
Speaker 1: data center applications, power is critical. Thirty percent better power
Speaker 1: for our HBM three E product. So we have really
Speaker 1: long legs in this HP and three E product for
Speaker 1: foreseeable future here and HPM three E has begun shipments,
Speaker 1: and we mentioned in the call yesterday that it will
Speaker 1: be a creative to our gross margins and we'll have
Speaker 1: several hundred million dollars of revenue of this HPM three
Speaker 1: E product in our fiscal year which will end in
Speaker 1: August timeframe. And of course we look at significant growth
Speaker 1: ahead for HPM three E as well. Our production has begun.
Speaker 1: We are extremely focused on continuing to ramp this product.
Speaker 1: Our target is to get our share in HBM three
Speaker 1: E equivalent to our DRAM industry share, and we're going
Speaker 1: to remain extremely disciplined key will be absolutely managing the
Speaker 1: supply and demand fundamentals overall for the DRAM industry. So
Speaker 1: we look at strong growth ahead for our HPM three E.
Speaker 1: Keep in mind that HBM is expected to have a
Speaker 1: KAGHER greater than fifty percent over the course of next
Speaker 1: a few years in terms of bit growth that HPM
Speaker 1: will be driving. Of course, it will be all the
Speaker 1: GENAI applications that we'll be driving this And I just
Speaker 1: want to add here that of course data center is
Speaker 1: a big driver of our growth. We are shifting our
Speaker 1: business more toward data center given the demand and the
Speaker 1: profitability profile of that part of the market. We are
Speaker 1: doing that with our DTA and products as well as
Speaker 1: with our SSDs. But just want to point out that
Speaker 1: other markets such as smartphones and PCs, they too are
Speaker 1: implementing AI enabled devices and you'll start seeing them coming
Speaker 1: out from later this year, and of course twenty twenty
Speaker 1: five will be the first full year of all these
Speaker 1: devices on the edge, such as smart AI enabled smartphones
Speaker 1: and PCs. They take much higher memory content than their
Speaker 1: prior generation devices. You're really, we're exciting about the opportunities
Speaker 1: for that AI enables for US enables for memory, which
Speaker 1: is at the heart of AI revolution in terms of
Speaker 1: from data center all the way to the edge.
Speaker 4: Going back though, to this high bandwidth memory and going
Speaker 4: back to that market share that you say you want
Speaker 4: to own, can you articulate exactly what that share is
Speaker 4: going to be for our audience right now when we
Speaker 4: have Heinex Samsung likely to.
Speaker 6: Be unveiling their products at the first half of this year.
Speaker 1: Our share in DAM today in the industry is approximately
Speaker 1: twenty three percent, and we are targeting that our HBM
Speaker 1: share would be in line with that DRAM industry share.
Speaker 1: Of course, it will be ramping gradually over time. Sometime
Speaker 1: in twenty twenty five if we expect to be getting
Speaker 1: to our shared in HBM equal in to DM share.
Speaker 1: It's a product that has greater profitability and as we said,
Speaker 1: it really will be a driver of our revenue and
Speaker 1: profit growth along with the rest of the market that
Speaker 1: has strengthening fundamentals well for a bloom bag television right
Speaker 1: and let me just point out the most important thing
Speaker 1: is that our product has leadership specs, and that's why
Speaker 1: it's getting a strong customer pull. Leadership products. Again in
Speaker 1: terms of performance, bandwidth being about ten percent better than
Speaker 1: other competitive products, power being thirty percent lower. Data centers
Speaker 1: today take up about three percent of the world's energy
Speaker 1: over the course of next several years, expected to continue
Speaker 1: to increase, getting to closer to high single digit percentage.
Speaker 1: That's where memory becomes extremely important in making sure that
Speaker 1: these accelerators for Jenai are running lower power, low power memory.
Speaker 1: Our thirty percent lower power solution is extremely attractive to
Speaker 1: our customers.
Speaker 5: Sanjay, for our Bloomberg television and radio audience worldwide, you
Speaker 5: can point out a lot of things. We have a
Speaker 5: lot of questions for you to bear with us. Let's
Speaker 5: go back to on device because you clearly want to
Speaker 5: talk about that. We talk about on device a lot
Speaker 5: on this program, the smartphone and PC context. You are
Speaker 5: saying that there is a tangible benefit that you're seeing
Speaker 5: in orders for that, but.
Speaker 7: Is that happening right now?
Speaker 5: There is a lot of skepticism that on device processing
Speaker 5: of llms and generative AI tools is somewhere away. Are
Speaker 5: you telling us that this is material now or you're
Speaker 5: predicting that it's coming soon.
Speaker 1: Well, earlier this year you saw Samsung S twenty four
Speaker 1: getting announced at Mobile World Congress, on it announced its
Speaker 1: Magic six Pro. And these are great examples where AI
Speaker 1: is being implemented, great examples of influencing on the edge.
Speaker 1: AI is being implemented, that's intent based, and that's really
Speaker 1: going to drive tremendous opportunity. Of course, these kind of
Speaker 1: high end next gen AI capabilities and PCs and smartphones
Speaker 1: will start getting to the marketplace later this year, twenty
Speaker 1: twenty five will become the first full year. Over the
Speaker 1: course of next few years, next few short years, we
Speaker 1: would see that AI enabled devices will be representing let's
Speaker 1: say about a third of smartphones and PC markets, and
Speaker 1: they take much more content anywhere from forty percent two
Speaker 1: hundred percent more content in flagship AI enabled PCs and
Speaker 1: smartphones versus flagship AI in PC devices today, Sanjai, we've
Speaker 1: got flagship smartphone and PC devices.
Speaker 4: Today, We've got a couple more key questions. We're going
Speaker 4: to keep it tight, fee, Sanjay, because we have been
Speaker 4: thinking about the CHIPSAC, We've been thinking about Intel getting
Speaker 4: that money. We've been thinking about you still building out
Speaker 4: in China and in India. Will you still be committed
Speaker 4: to putting money into Boise, into New York as well?
Speaker 4: Are you going to get the money from the government.
Speaker 1: Well, we'll respeak to the chips ACKed and are previously
Speaker 1: announced plans for leading edge memory manufacturing in Boise and
Speaker 1: in the Syracuse area. Our application for chips ACT is
Speaker 1: underprocessing with the chips Program Office making good progress there.
Speaker 1: Of course, we will make the announcements when that process
Speaker 1: is completed. Important thing is that chips ACT enables us
Speaker 1: to bring with CHIPSACKED grants sufficient level of CHIPSACK grants,
Speaker 1: investment tax credits, and local state government support. It helps
Speaker 1: bridge the cost gap with Asia operations. So it helps
Speaker 1: us bring leading edge memory manufacturing into semiconductors and of
Speaker 1: course that creates many jobs. It supports economic as well
Speaker 1: as national security, and memory is pivotal. We just talked
Speaker 1: about how pivotal memory is to AI applications. So think
Speaker 1: about it. Today, only two percent of world's memory total,
Speaker 1: world's memory production is here in the US. Of course,
Speaker 1: it's all by micron at our facility in Manassas Virginia.
Speaker 7: With chipsec support.
Speaker 1: As we expand our leading edge memory manufacturing in Boise
Speaker 1: and Syracuse next decade, Sometime in next decade, we'll be
Speaker 1: able to get to ten percent over ten percent of
Speaker 1: world's leading edge memory production here in the US. And
Speaker 1: that's really Sunji significantly moving the needle, and Micron of
Speaker 1: course is committed to.
Speaker 5: That, Sanjay, We're running out of time here. Bloomberg's reported
Speaker 5: that the US is considering restricting one of your Chinese rivals, CEXMT.
Speaker 5: My understanding is that Micron has been in support of that.
Speaker 5: Could you just outline Micron's position on the US restricting CXMT.
Speaker 1: Look, the governments make their own decision and we are
Speaker 1: not going to speculate or speak on behalf of any
Speaker 1: of the actions. What we can tell you is that,
Speaker 1: of course China is an important market for US, just
Speaker 1: like China is an important market for the entire semiconductor industry,
Speaker 1: and we are veil engaged with the customer ecosystem there
Speaker 1: in terms of bringing value of our leading edge products
Speaker 1: in memory and storage, helping them drive their innovation road maps.
Speaker 4: We want to thank you so much for your time
Speaker 4: today walking us through your numbers through the industry with
Speaker 4: which is growing at such pace. Micron CEO Sanjay Erroltra,
Speaker 4: thank you. Now turning our attention to the Department of
Speaker 4: Justice holding a key press conference as they announce their
Speaker 4: antitrust suit against Apple, which has been five years in
Speaker 4: the making. We just want to be dipping in and.
Speaker 6: Bringing you some of those headlines. Of course, Merrit Garland.
Speaker 4: The Attorney General, saying that Apple has monopoly power in
Speaker 4: the smartphone market. He's also been articulating that Apple has
Speaker 4: maintained power via exclusionary behavior at the moment, so to
Speaker 4: be turning our attention listening in to that press conference
Speaker 4: for a moment today.
Speaker 8: The Department alleges that Apple, one of the world's largest
Speaker 8: tech companies, cross the line from rigorous competition to anti
Speaker 8: competitive exclusion, unlawfully maintaining a monopoly in violation of the
Speaker 8: Sherman Act. The complaint makes clear that for years Apple
Speaker 8: has tightened its grip on the smartphone market.
Speaker 6: It has done so not through.
Speaker 8: Product improvements, but by maintaining a chokehold on competition, locking
Speaker 8: its customers in to the iPhone while locking its competitors
Speaker 8: out of the market. As a result, and, as the
Speaker 8: complaint details, Apple has gone from revolutionizing the smartphone market
Speaker 8: to stalling its advancement. This shift has smothered an entire industry,
Speaker 8: from users to app developers to the next generation of innovator.
Speaker 8: Apple's anti competitive conduct must stop. Sixteen other Attorneys General
Speaker 8: agree and have joined us in bringing this lawsuit against Apple.
Speaker 6: I want to thank the women and the.
Speaker 8: Men of the Anti Trust Division for their commitment to
Speaker 8: promoting competition and protecting consumers and workers in all of
Speaker 8: their work, and I want to thank Assistant Attorney General
Speaker 8: Canter for his leadership. Their work makes clear that no manual.
Speaker 4: Has how fast the Deputy Attorney General LA speaking Lisa Monaco.
Speaker 4: But meanwhile, there's more breaking news, all focused in on Apple.
Speaker 4: I just want to bring you the headlines that Apple
Speaker 4: and Google are likely to be hit by the first investigations,
Speaker 4: the first probes under the EU Digital Law. So of
Speaker 4: course there's the DMA which came into force just earlier
Speaker 4: this month, And of course there has been a keen
Speaker 4: eye on some of these labeled key gatekeepers as the
Speaker 4: EU singles out big tech, Apple and Google among them.
Speaker 4: The Digital Markets Act investigation could pay the way for fines,
Speaker 4: some big fines. Meta is also expected to be facing
Speaker 4: some scrutiny in the EU's big tech clampdown. So much
Speaker 4: to discuss from EU, and indeed, what's happening right here
Speaker 4: with of course, the Department of Justice and sixteen attorneys general.
Speaker 4: Let's bring in bloombergs Ana Edjuton and anaag Rana for
Speaker 4: more on this. Anna, I want to begin with you,
Speaker 4: and let's start with what has been the culmination of
Speaker 4: a five year investigation. The key takeaways is to where
Speaker 4: exactly Apple has been monopolistic and shutting out others in
Speaker 4: the market.
Speaker 9: Yeah, so we have been expecting this complaint for a
Speaker 9: long time. It started in twenty nineteen under the trub administration.
Speaker 9: And we see how Jonathan Cancer, the Assistan Attorney General
Speaker 9: for Anti trust, has really tried to tell a narrative
Speaker 9: with this complaint. He's really tried to not just lay
Speaker 9: out the facts of what he alleges as anti competitive
Speaker 9: behavior by Apple, but tell it in a compelling way
Speaker 9: so that it's not just being decided in a court
Speaker 9: of law, but it's also compelling to normal consumers who
Speaker 9: you know, love their iPhones, love their Apple products. They
Speaker 9: can look at this complaint and see that this is
Speaker 9: behavior that's in some cases causing them higher prices that
Speaker 9: could give them less choice. So that's really the goal
Speaker 9: of this complaint that you know, could also help its
Speaker 9: chases in the court of law.
Speaker 5: Let me bring in Bloomberg Intelligence senior analysts and rag
Speaker 5: Rana an Arag. I'm looking at the shares with down
Speaker 5: three point four percent the low of the session. That
Speaker 5: decline is three point eight percent, put Apple on track
Speaker 5: for its biggest decline since August of last year.
Speaker 7: You and I have talked about this for years.
Speaker 5: Is the markets finally starting to price in the antitrust
Speaker 5: threat that Apple is facing?
Speaker 2: I think, as you know, products slow down antitrust risks.
Speaker 2: I mean, Apple doesn't have much going on right now,
Speaker 2: so it's going to be interesting to see what they
Speaker 2: pull out in June in terms of anything, JENNYI because
Speaker 2: other than that, I mean, it's going to be a
Speaker 2: very gloomy year for them in terms of sales growth.
Speaker 4: And I go want to follow up on that because
Speaker 4: this isn't just the US with its anti trust concerns.
Speaker 4: It's the EU as well with that and Google being
Speaker 4: hit potentially by the Digital Markets Act which come into force. Ultimately,
Speaker 4: Apple has at the edge has already been trying to
Speaker 4: change some of its business model, trying to appease with
Speaker 4: whether or not it's reducing certain payments that you're making
Speaker 4: for the app store, but it seems to be begging
Speaker 4: from Peter to pay Paul. How much do you think
Speaker 4: Apple can change its business model without impacting its margins
Speaker 4: too much?
Speaker 2: Yeah, I think the services business or the app store
Speaker 2: business will see some depression at least in the near dum.
Speaker 5: And let's get back to this DOJ situation. I think
Speaker 5: it's worth for you re explaining to audience the basics here.
Speaker 5: The DOJ has been looking at Apple for like five years.
Speaker 5: It's the third time in a decade that they filed
Speaker 5: a suit. What are the specific allegations here?
Speaker 9: This really focuses on the iPhone and the way the
Speaker 9: iPhone business runs and acts as a kind of moat
Speaker 9: around around the business. As a long suffering Android user
Speaker 9: who's always the green bubble in the family group chat,
Speaker 9: you know, you can see how there are certain things
Speaker 9: that you benefit iPhone users and being interoperable with other
Speaker 9: Apple devices. So that's really the behavior that this complaint
Speaker 9: lays out, and it's interesting that Biden's anti trust enforcers
Speaker 9: came in kind of pushing the balance of anti trust
Speaker 9: law and wanting to really look at the behavior of
Speaker 9: these big American especially tech companies. But when it comes
Speaker 9: down to this complaint, the harm that is really being
Speaker 9: laid out is consumer prices, which of course is classic
Speaker 9: anti trust. So there's an interesting balance between pushing anti
Speaker 9: trust law as far as it will go and really
Speaker 9: sticking to the arguments that they think will be successful
Speaker 9: in court.
Speaker 4: Anna, As you mentioned, this has been long anticipated and
Speaker 4: has been going on for a long time five years.
Speaker 4: It is under President Trump that this first investigation began.
Speaker 4: It's the third time, in fact, in fourteen years that
Speaker 4: Apple has been focused on in this anti trust way
Speaker 4: from the DOJ. How quickly are we likely to see
Speaker 4: any real actions taken, any real implication in response to Apples.
Speaker 9: Well, it's interesting that they file the case in federal
Speaker 9: court in New Jersey, so we'll learn more about why
Speaker 9: that was the case, but we know they do want
Speaker 9: to move quickly on this. If the Department of Justice
Speaker 9: has been a little frustrated with how slow their case
Speaker 9: against Google has gone. So the Justice Department also has
Speaker 9: more targets to finish.
Speaker 6: Up the rest of this year.
Speaker 9: They're working on another case against Google, so they have
Speaker 9: high ambitions. They want to take big swings, and Biden's
Speaker 9: first term is coming to an end, so there's definitely
Speaker 9: a big ambitions and limited resources and time to check
Speaker 9: all of those off.
Speaker 5: Anna Rag, you really see a threat of this getting
Speaker 5: to consume as a window to jump to Android from iOS?
Speaker 2: Oh No, I don't think that's going to be the case, frankly,
Speaker 2: because those things are extremely sticky from that point. I mean,
Speaker 2: I don't think one bubble is going to make a
Speaker 2: difference for people to jump from the other. Apple's really
Speaker 2: loyal customer base. What I'm concerned about is, you know,
Speaker 2: whether they can charge for the app store in the
Speaker 2: same frame book as they were before. I think that's
Speaker 2: going to be the bigger outcome in our view, rather
Speaker 2: than anything else.
Speaker 4: And so a just interesting from the perspective that we
Speaker 4: are seeing this share price reaction down some three percent.
Speaker 4: That's not nothing for the second most valuable company out there.
Speaker 4: So do you think more weakness has to be factored in?
Speaker 4: Even though they have a very loyal base that perhaps
Speaker 4: might not be shifting to an Android or competitor on
Speaker 4: any changes to business models.
Speaker 2: Yeah, I mean, as I said, services business is extremely
Speaker 2: important for them, both in terms of margin and diversification.
Speaker 2: If you compress those c it is going to have
Speaker 2: an impact on their boath, their top line as well
Speaker 2: as the bottom line. So this is a new overhang
Speaker 2: on the stock that you know, tops.
Speaker 7: Up what's happening in Europe.
Speaker 2: So there isn't much going on for Apple this year.
Speaker 2: You know, sales are growing, sales are not growing in
Speaker 2: terms of the products, and now the service is under pressure.
Speaker 2: So you know, that's really what's happening.
Speaker 5: Here in our view and behind every doc move and
Speaker 5: appleys down three point three percent, as I said at
Speaker 5: the session, low three point eight percent. There are some people,
Speaker 5: some human beings. Tell me about this DOJ team that
Speaker 5: was up on the stage one moment ago that are
Speaker 5: leading this anti trust initiative against Apple.
Speaker 6: Yeah, that's a great question.
Speaker 9: I mean, Jonathan Cancer came into the anti trust division
Speaker 9: being labeled you know, Google's foe.
Speaker 6: We knew that. You know, he had his.
Speaker 9: Site set on big tech and that's part of this
Speaker 9: kind of neo Brandisian school of anti trust that we
Speaker 9: see also at the FTC with Lena Khan, the commissioner there,
Speaker 9: So you know, they've in some cases really worked together
Speaker 9: to reshape the understanding of anti trust law and really
Speaker 9: try to show how corporate behavior, even corporations that are
Speaker 9: well loved that produce products that people really enjoy, their
Speaker 9: behavior results in higher prices for consumers. So you know,
Speaker 9: we see this also from the app developers like Spotify,
Speaker 9: Match Sonos who have complained for years that Apple's behavior
Speaker 9: puts them at a disadvantage competing with products like Apple Music.
Speaker 9: So that's all a part of this equation and is
Speaker 9: all going to be tried now in a court of
Speaker 9: law and we'll we'll see how it comes out.
Speaker 4: I want to just return to you, Ana Rag for
Speaker 4: a moment and just think about ultimately where Apple has
Speaker 4: to stay from now in terms of its oval prioritizations.
Speaker 4: As you said, there's a worry about general to AI
Speaker 4: and being behind the curve there, will that stymey any
Speaker 4: relationship that it's trying to be brokering with Google. Will
Speaker 4: we still see sort of the ongoing build up of
Speaker 4: Apple and its presence in general to AI and still
Speaker 4: trying to refocus the business when it is having to
Speaker 4: be distracted in this way.
Speaker 2: Yeah, I think that's going to be the biggest thing
Speaker 2: that we find out over the next few months. If
Speaker 2: they are able to pull off this, you know, you
Speaker 2: could say deal with Google. It's going to be symbiotic
Speaker 2: and beneficial for both the companies and that has the
Speaker 2: potential to improve iPhone sales in the second half of
Speaker 2: this year. You know, botting that there isn't much going
Speaker 2: on Apple at this point, both in terms of current
Speaker 2: status as well as you know the outlook for second half.
Speaker 4: Anna Agrana, fantastic analysis. Thank you for being there at
Speaker 4: the moment. Rerumkexana Egerton as well with a breakdown of
Speaker 4: this anti trust move and the years that it's taken
Speaker 4: to get here.
Speaker 3: Apple actively encourages banks, merchants, and other parties to participate
Speaker 3: in Apple Wallet, but it simultaneously exerts its monopoly power
Speaker 3: to block these same partners from developing alternative payment products
Speaker 3: and services for iPhone users.
Speaker 4: Eric Garland, Attorney General, that is, as the DOJ in
Speaker 4: sixteen attorneys general weigh in bringing enforcement to Apple at
Speaker 4: the moment, announcing an antitrust lawsuit against Apple, and of
Speaker 4: course ed this is as we see the share price
Speaker 4: really being not by this off by more than three percent.
Speaker 4: It is the second most valuable company out there, So
Speaker 4: that knocks some twenty ninety two billion off of its
Speaker 4: market capitalization overall on the day training at the lowest
Speaker 4: that we've seen since the start of the year. And
Speaker 4: all of this ultimately should have been expected.
Speaker 6: It's a five year investigation, That's.
Speaker 7: The observation I've made.
Speaker 5: Though, So at the session low, the stock was down
Speaker 5: three point eight percent, putting Apple on track for its
Speaker 5: biggest decline since August last year. Bloomberg reported all these
Speaker 5: details last night, and yet when the press conference came
Speaker 5: and the official confirmation came, the stock continued to slide.
Speaker 5: And if you go on your Bloomberg terminal look at
Speaker 5: the street wrap.
Speaker 7: There is an acknowledgment of.
Speaker 5: A regulatory overhang, which every time you and I talk
Speaker 5: about anti trust over the last few years, it never
Speaker 5: shows up in the stock.
Speaker 4: Yeah, and then you have to add in on that
Speaker 4: the other bloomberg scoop that came within this time of
Speaker 4: the fact that the EU is now weighing a full
Speaker 4: blown investigation on its part as well into Apple and
Speaker 4: Google when it comes to the digital markets app. So
Speaker 4: this is an antitrust global fixation on Apple right now.
Speaker 7: Yeah.
Speaker 5: The one point on that EU reporting is that I
Speaker 5: think the EU is looking at a lot of people
Speaker 5: alphabet and all, so we're reporting meta and that eventually
Speaker 5: that could lead to fine. So that is a story
Speaker 5: out of Europe that will continue to watch. There is
Speaker 5: another big story happening we may have forgotten. Let's turn
Speaker 5: to Reddit listing day. Here's some video of them ringing
Speaker 5: the bell at the NYC earlier. Have a great listener,
Speaker 5: I would say that, I say them, I don't think
Speaker 5: that's Steve Huffman in a mascot.
Speaker 7: Suit, but I'm sure he was there.
Speaker 5: That was Reddit ringing the ny Stock Exchange bell earlier
Speaker 5: this morning. Let's get some of the key numbers with
Speaker 5: Bloombo's Katie Ruth, and we have an indication of where
Speaker 5: Reddit might open.
Speaker 10: Yeah, so we don't know exactly where it's going to
Speaker 10: open just yet, but last night it priced at thirty
Speaker 10: four dollars a share at the top of the range,
Speaker 10: which was, you know, a positive indication based on the
Speaker 10: road show and showing where you know, the street thinks
Speaker 10: it's going to open at you know, right now. What
Speaker 10: they're doing is they're sorting out the book. They're figuring
Speaker 10: out precisely, you know, for the very very first trade
Speaker 10: to the public where it should trade at, because the
Speaker 10: IPO is actually just for insiders, and so a lot
Speaker 10: of ours are watching Reddit. There's been a dearth of
Speaker 10: tech IPOs in recent years. I mean, twenty twenty one
Speaker 10: is a very active year with over one hundred, and
Speaker 10: then in twenty twenty two there were nine, and then
Speaker 10: last year we only saw instacart, klaviow an arm, you
Speaker 10: know for the big ones. And this week with Reddit
Speaker 10: in Astera, people are hoping might finally open that tech
Speaker 10: ipo window.
Speaker 5: Just looking at this headline crossing the Bloomberg terminal that
Speaker 5: Reddit shares indicated to open between forty two and forty
Speaker 5: six dollars a share, clearly a premium on that thirty
Speaker 5: four dollar IPO pricing.
Speaker 7: There is interest in this one, right.
Speaker 5: It's been a long road because we thought they might
Speaker 5: go twenty twenty one, as you said, was an excellent
Speaker 5: year for US IPOs, and they didn't.
Speaker 10: Yeah, they announced in twenty twenty one they had filed
Speaker 10: for IPO in twenty twenty two. I broke that they
Speaker 10: had hired bankers, and they did. It just took a
Speaker 10: little while for them to actually do it. But you know,
Speaker 10: I think it's it's a matter of are people interested
Speaker 10: at what price? You know, they priced at something that
Speaker 10: valued them above six billion, but they were last valued
Speaker 10: at ten billion in twenty twenty one, and so yes,
Speaker 10: there is interest in Reddit at this price, it looks like,
Speaker 10: especially if it's popping, But it's a matter of, you know,
Speaker 10: will it will it be able to sustain that price?
Speaker 10: Will it be able to achieve the price it had
Speaker 10: in twenty twenty one at market highs at.
Speaker 4: My named seeing a blue bug intelligence saying, yes, a
Speaker 4: ten billion valuation is really where Reddit should be, Katie.
Speaker 4: But I'm interested in the allocation and where it went
Speaker 4: when it was priced. To course, money flowing into institutional hands,
Speaker 4: but also into the retail investor and into the redditors themselves.
Speaker 4: How much volatility might this add well, I.
Speaker 10: Think it depends on whether these longtime Reddit users that
Speaker 10: got access at the IPO price are are willing to
Speaker 10: stay Reddit stockholders. Part of the idea behind some of
Speaker 10: these consumer facing companies giving access to their top users
Speaker 10: at the IPO price. Is the idea that these would
Speaker 10: be long term stockholders. The IPO is only given to insiders,
Speaker 10: so people that are close to the banks normally and
Speaker 10: they get there's expected to be a pop on day one,
Speaker 10: and so it's seen as a gift that they get
Speaker 10: access to those games on day one. And so this
Speaker 10: is meant to be a good thing for Reddit shareholders,
Speaker 10: Reddit users, and also for Reddit.
Speaker 4: Yeah, Katie Roof has been across this IPO, We thank
Speaker 4: you so much for bringing it to us and ed,
Speaker 4: I mean there's a question of course future drive growth
Speaker 4: drivers not just being advertising but AI too.
Speaker 5: Yeah, that's the idea sell the very unique user data
Speaker 5: to the companies building large language models. And BI has
Speaker 5: this very wide range saying thirty to eight of Reddit
Speaker 5: users only use Reddit, they don't use other social media platforms.
Speaker 4: And really it's that focus on the desire to be
Speaker 4: engaging there and what it means for some of these
Speaker 4: large language models as well for a future direction of
Speaker 4: travel when it comes to a diversification of revenue. Now,
Speaker 4: we want to welcome to our Bloomberg TV and radio
Speaker 4: audience worldwide. Reddits listing day, it's arrived.
Speaker 6: Let's bring in.
Speaker 4: Reddit's chief operating officer, Jen Wong for more on the
Speaker 4: big day, live from the New York Sock Exchange. Jen,
Speaker 4: it's a day to remember, and I'm interested as to
Speaker 4: really for you how much you are excited about redditors
Speaker 4: having part of the process here or worried a bit
Speaker 4: about the volatility to come.
Speaker 6: Thanks for having me today.
Speaker 11: It's been our dream, our dream to have our users
Speaker 11: and our communities to be able to be shareholders in Reddit.
Speaker 6: Everything on Reddit is built.
Speaker 11: By our users and communities, so having them be owners
Speaker 11: makes a lot of sense.
Speaker 6: We're so excited about that.
Speaker 5: Jane, good morning, it's ed in San Francisco. What's the
Speaker 5: main benefit of the IPO. You know, we always talk
Speaker 5: about the money raise, the doll evaluation, but I always
Speaker 5: reflect an IPO gets your name out there. Not everyone
Speaker 5: is on Reddit, not everyone is a redditor. How do
Speaker 5: you weigh up the pros and cons of listing?
Speaker 11: Well, it's certainly a lot of press on a day
Speaker 11: like today. It is a special day, but becoming a
Speaker 11: public company has just made us a better company. We've
Speaker 11: actually been in this process longer than most almost two
Speaker 11: years actually, and that process has made us more disciplined,
Speaker 11: more operationally rigorous, and actually allowed us to get to
Speaker 11: know investors better and tell our story. And so this
Speaker 11: whole process has made us a better company, and we're
Speaker 11: prepared to be a public company. I think it's actually
Speaker 11: been really good for us, and I think companies that
Speaker 11: you can go public it's sort of a duty. It's
Speaker 11: part of the process of maturing as a company.
Speaker 6: And then the benefit of having.
Speaker 11: Our sharehold our employee employees have liquidity which we promise
Speaker 11: in them, and in addition, have our communities and users
Speaker 11: be able to be shareholders makes a lot of sense
Speaker 11: for Reddit.
Speaker 7: Jen.
Speaker 5: The evolution of the story is for you moving away
Speaker 5: from a solely advertising based business model to one way
Speaker 5: you license your user data to the companies that are
Speaker 5: building large language models. I just asked if you could
Speaker 5: explain to our audience how that works in practice, how
Speaker 5: you're going to grow that business.
Speaker 11: Yeah, well, just ahead of addressing that, I just wanted
Speaker 11: to provide context. One of the things that's so special
Speaker 11: about Reddit is that we play in three big addressable markets.
Speaker 6: We have this core advertising business. Adds is a great business.
Speaker 11: It's still early we have great traction and momentum. That's
Speaker 11: our core business. We have an emerging data licensing business
Speaker 11: that we built the foundations for last year because reddits
Speaker 11: corpus of information is incredibly important to the training of
Speaker 11: large language models and also for insights for different kinds
Speaker 11: of businesses.
Speaker 6: And the third is a.
Speaker 11: User economy where our communities go beyond conversation into being able.
Speaker 6: To transact with each other.
Speaker 11: Now you asked about the data licensing business, which we've
Speaker 11: built the foundations for last year. That has two pieces
Speaker 11: to it. It is a piece that's sort of well established,
Speaker 11: where there's social listening for marketing for companies who want
Speaker 11: to understand what's happening on reddits and for marketing campaigns.
Speaker 11: There's also financial services companies who are interested in that.
Speaker 11: Those are well established markets. And then there's the new
Speaker 11: emerging market of AI where large language models need data
Speaker 11: to train on. And when you look at Reddit's corpus
Speaker 11: nineteen years of human experience organized by topic with well
Speaker 11: moderation and relevance, that's incredibly important to building both a
Speaker 11: chat capability and the freshness of information. So that's an
Speaker 11: area where you know we see opportunity. I think what
Speaker 11: that signals, you know, whether it shows up honestly in
Speaker 11: our revenue or what it shows up in the value
Speaker 11: of Reddit is how valuable.
Speaker 6: Reddit is, you know, the more that we move.
Speaker 11: Toward this AI world, that corpus and that knowledge and
Speaker 11: refreshment of human experience becomes more valuable.
Speaker 4: To our TV and radio audience. We are speaking with
Speaker 4: Reddit Chief operating Officer Gen Wong and to that ongoing
Speaker 4: value of your data to AI and to the large
Speaker 4: language models being developed. I mean those llms, the models
Speaker 4: are being.
Speaker 6: Built in new and different ways.
Speaker 4: This actual technology also develops. I'm interested as to really
Speaker 4: whether this goes on in perpetuity. Do you see this
Speaker 4: sort of licensing being steady and secure for ten years
Speaker 4: from now?
Speaker 11: What I'd say is this is so early in this
Speaker 11: emergence of this technology, it's hard to see far out.
Speaker 11: The way I think about it, the way we think
Speaker 11: about it, is this the read its corpus of data
Speaker 11: is incredibly valuable, and it gets more valuable because as
Speaker 11: there's more more content that's generated maybe by AI or computers,
Speaker 11: original human thoughts and ideas increase in value. Right if
Speaker 11: you think about it, a new car comes out who's
Speaker 11: going to review it.
Speaker 6: A real life family of six.
Speaker 11: Can actually tell you what it's like to drive that car.
Speaker 11: That's always going to be valuable, and so you know,
Speaker 11: whether that shows up in data licensing or in the
Speaker 11: products that Reddit builds, it is valuable.
Speaker 4: Let's talk about a community that has been very valuable
Speaker 4: at times and extraordinary at others.
Speaker 6: To wool Street more broadly.
Speaker 4: Has been the reditors who are very active on wool Street.
Speaker 4: We go back to woll Street bets. We just think
Speaker 4: about what happened to GameStop for example. There is a
Speaker 4: double edged sword here for you involving your.
Speaker 6: Editors as investors.
Speaker 4: How secure are you that you won't become a meme
Speaker 4: frenzy yourself to the up and to the dam.
Speaker 11: Look, I love the ethos of that community in all
Speaker 11: of our investing communities, and who knows, I mean, it's
Speaker 11: it's Reddit, right, I mean, who knows what's going to happen,
Speaker 11: So we'll see.
Speaker 6: I mean it's hard to say, but in the end, I.
Speaker 11: Think having our users and communities be shareholders is a
Speaker 11: good thing and I think ultimately will be judged on
Speaker 11: our performance, and that'll take time for people to know
Speaker 11: but ultimately I think that's what investors Judge Judge.
Speaker 9: Us on.
Speaker 5: Jen we're awaiting the opening trade Bloomberg reporting. The indication
Speaker 5: is the stock will open somewhere between forty two or
Speaker 5: forty six dollars a share. It's quite a premium on
Speaker 5: the IPO price. You're one of the biggest shareholders as well.
Speaker 5: Just give me your personal feeling in this moment.
Speaker 6: You know, it's kind of like a wedding day.
Speaker 11: I guess lots of different emotions, joy, relief, jitters, all
Speaker 11: of it in one I haven't even processed it, frankly,
Speaker 11: but it is a special moment. It is one milestone
Speaker 11: in a history of a nineteen year company that I
Speaker 11: think has a lot of runway. You know, we're nineteen
Speaker 11: years old, but we're really young as a company, and
Speaker 11: this is sort of the start of the next chapter.
Speaker 7: Read it.
Speaker 5: Chief operating Officer Gem Wong, live from the NYC. We're
Speaker 5: grateful for your time on listing Day.
Speaker 6: Thank you.
Speaker 7: Okay, time for VC Spotlight and.
Speaker 5: Sequoia has just wrapped up its AI Ascent event right
Speaker 5: here in San Francisco, which brought together some of the
Speaker 5: best and biggest minds in artificial intelligence. Let's bring it
Speaker 5: SCOA Capital partner Constantine Butler to explain who was there?
Speaker 5: There were big names in the building. Why did you
Speaker 5: do that?
Speaker 12: Well, first, ad Caroline, thank you so much for having
Speaker 12: me again.
Speaker 7: You're right.
Speaker 12: Yesterday we had one hundred of the leading minds in AI.
Speaker 12: We brought them together because we want to discuss the
Speaker 12: state of.
Speaker 5: The AI industry, just portfolio companies or the community, the
Speaker 5: whole community, right, not just portfolio companies.
Speaker 12: We're talking the leading minds in AI. We wanted to
Speaker 12: talk about the state of the industry today, but also
Speaker 12: where we're going, what's next, and.
Speaker 7: What was the conclusion.
Speaker 12: Well, one thing I think will surprise your audience is
Speaker 12: that everybody knew that we had to be patient in
Speaker 12: this process. It feels like we started the AI process
Speaker 12: as a sprint, but everyone knows this is a marathon.
Speaker 12: So what's ahead of us is the long haul, and
Speaker 12: every everyone's getting ready for that long haul.
Speaker 4: Custinton, I'm sure a topic of conversation must have been inflection,
Speaker 4: basically going in house to Microsoft and yes, licensing some
Speaker 4: of its technology. At the same time you're speaking with
Speaker 4: the likes of the co CEO of Anthropic, which has
Speaker 4: a deal with Amazon. You're also talking with Mistrale, which
Speaker 4: is of course got a deal with Microsoft. How is
Speaker 4: that whole ecosystem ultimately building itself? There seems to be
Speaker 4: it'll be some very interesting partnerships that end up looking
Speaker 4: like MNA. How do you feel as someone who's putting
Speaker 4: money into these businesses.
Speaker 7: Caroline, You're exactly right. There was a lot of talk
Speaker 7: about that.
Speaker 12: And one of the major trends that I think will
Speaker 12: surprise your audience is that the leaders we're talking about
Speaker 12: how ais are gonna actually work together. So we're talking
Speaker 12: about this concept of networks of ais, not just so
Speaker 12: you're gonna have one AI, but you're gonna have multiple
Speaker 12: ais that are good at different tasks, and they're gonna
Speaker 12: work together, cooperate and compete. I'll give you a very
Speaker 12: tangible example. I use a product called dust. It also
Speaker 12: happens to be a wonderful Sequoia portfolio company. It allows
Speaker 12: me to call both GPT four and mistraw large, and
Speaker 12: also Claude three from Anthropic in parallel. I can have
Speaker 12: the models compete against each other, I can have them collaborate,
Speaker 12: and this yields an even better outcome.
Speaker 7: That's the future of AI.
Speaker 12: It's gonna be many models working together in a network.
Speaker 4: Another portfolio company being hugging face, which are cool. So
Speaker 4: allays bring together the entire ecosystem in that manner. And
Speaker 4: there must be an awful lot of debate ultimately about
Speaker 4: well open versus closed. You've got open AI, and many
Speaker 4: would argue that open AI ain't that open anymore, and
Speaker 4: some would say for good reason, how are you seeing
Speaker 4: the overall AI community divide itself on how open large
Speaker 4: language models should be.
Speaker 7: I'll tell you what we heard yesterday.
Speaker 12: We heard a lot of enthusiasm about open source. And frankly,
Speaker 12: it wasn't just from the builders. So a lot of
Speaker 12: the builders, of course want open source so that they
Speaker 12: can run these models in their own clouds, but it
Speaker 12: was also.
Speaker 7: From the application layer.
Speaker 12: We had CJ the COO and president of service Now,
Speaker 12: and he talked about how service now is using AI
Speaker 12: internally to deflect twenty percent of tickets that's for it
Speaker 12: stuff like ordering a laptop, that's for HR, stuff like
Speaker 12: leave and he made it very clear, we need the
Speaker 12: open source because that's going to help us drive costs down.
Speaker 12: That's going to help us preserve margin. So customers want this.
Speaker 12: We've heard it from customers. We've also heard it from
Speaker 12: the founders and the builders.
Speaker 5: Just a headline on the Bloomberg to make our audience
Speaker 5: where reddit share is now indicated to open at forty
Speaker 5: four to forty eight dollars to share a premium on
Speaker 5: the thirty four dollars that they price the IPO at.
Speaker 5: We were just talking to gen want at redit the
Speaker 5: idea that they are in an available data set for
Speaker 5: training large language models.
Speaker 7: The difference in the.
Speaker 5: Data is the focus of reddits. They only use Reddit, right,
Speaker 5: was that something you've discussed about the availability of data
Speaker 5: and Reddit?
Speaker 7: I mean, what are people saying about that? Absolutely? First
Speaker 7: of all, we're so happy for Reddit.
Speaker 12: This is an amazing milestone and Junge just seve it
Speaker 12: and IPO is an important milestone in the journey.
Speaker 6: And this is an.
Speaker 12: Example of how the fact that they created an online community,
Speaker 12: a true community where they were actually working together, is
Speaker 12: going to pay off, not just for advertising that's the
Speaker 12: obvious business, but for data.
Speaker 7: We know they have a.
Speaker 12: Big partnership with Google and we're going to see a
Speaker 12: lot more businesses like this that have accumulated that data
Speaker 12: advantage being partners for.
Speaker 7: Great AI products that need to train on that data.
Speaker 5: It's core capital partner Constemula. Great to have you back
Speaker 5: in the studio, San Francisco. What a day it's been carried.
Speaker 5: This for now is been big technology. Thanks ed, Thanks Jian.
Speaker 3: We oglage that Apple has employed a strategy that relies
Speaker 3: on exclusionary anti competitive conduct that hurts both consumers and developers.
Speaker 3: For consumers, that has meant fewer choices, higher prices and fees,
Speaker 3: lower quality smartphones, apps and accessories, and less innovation from
Speaker 3: Apple and its competitors.
Speaker 4: Attorney General Garland there of the Department of Justice, speaking
Speaker 4: earlier today, Apple facing global anti trust allegations, of course
Speaker 4: not known from the US, but also the EU. We
Speaker 4: understand they're going to do a full probe Google and Apple.
Speaker 4: You commissioned a EVP, Margravestdaya told us this earlier in
Speaker 4: the month.
Speaker 13: We see an illegal abuse that has been ongoing for
Speaker 13: a number of years, which has made it, you know,
Speaker 13: virtually impossible for customers to choose if they want the
Speaker 13: payment service in app by Apple paying the fee, or
Speaker 13: they would want to go, for instance, to a website
Speaker 13: and have a cheaper subscription price.
Speaker 4: Bags margam and for more What's apples take.
Speaker 14: Yeah, Apple certainly disagrees across the board on this lawsuit,
Speaker 14: implying that the lawsuit is not legal, saying the iPhone
Speaker 14: is not a monopoly, and pushing back heavily on the
Speaker 14: bevy of claims The Department of Justice is going after
Speaker 14: Apple from everything from green Bubbles to car play to
Speaker 14: how iCloud storage integrated, blaming Apple for hurting consumers, hurting choice,
Speaker 14: hurting developers. Certainly, Apple has squashed developers and made it
Speaker 14: difficult for developers to.
Speaker 7: Compete in some instances.
Speaker 14: On the other hand, a lot of this comes down
Speaker 14: to user interface and philosophical decisions Apple made many years
Speaker 14: ago about its integrated experience. So we'll have to see
Speaker 14: where Apple is willing to meet the DOJ how they
Speaker 14: can work together to create some solutions here to keep
Speaker 14: the iPhone still a secure, integrated platform, but certainly it
Speaker 14: needs to get a bit more open and a bit
Speaker 14: more competitive for third party developers and accessory makers.
Speaker 4: The man who can explain the Apple philosophy, Mark German.
Speaker 4: We thank you so much for jumping in on the.
Speaker 6: News and boy that does it for
Speaker 4: This extremely busy edition of Blue meg Technology