WEBVTT - Micron's Earnings and Reddit's IPO 0:00:02.600 --> 0:00:10.080 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.760 --> 0:00:14.040 From Mahard where Innovation, Money and power Collie in Silicon Valley, NBN. 0:00:14.400 --> 0:00:18.440 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:32.080 --> 0:00:34.520 I'm Caroline Hyde and Bloomberg's weld head quarters in New York. 0:00:34.960 --> 0:00:38.080 I'm Ed Lodlow in San Francisco. This is Bloomberg Technology. 0:00:38.240 --> 0:00:42.040 Coming up, we have an exclusive interview with the CEO 0:00:42.080 --> 0:00:44.680 of Micron, Sanjay Mahotra, is going to be joining us 0:00:44.720 --> 0:00:47.080 as shares surge to a record high. That's after the 0:00:47.080 --> 0:00:49.519 company boosted its outlook on AI growth. 0:00:50.159 --> 0:00:53.400 Plus, we push ahead to Reddit's long awaited IPO and 0:00:53.479 --> 0:00:57.200 sit down with reddits COO Jen Wong later this hour. 0:00:57.280 --> 0:00:59.120 And of course we go live to the Department of 0:00:59.240 --> 0:01:02.720 Justice as they announ an antitrust lawsuit against Apple. 0:01:03.360 --> 0:01:06.319 We're also thinking a lot about Micron. Shares of Micron 0:01:06.680 --> 0:01:09.920 at a record high, biggest jump since twenty eleven. The 0:01:09.959 --> 0:01:13.240 outlook for the fiscal third quarter a recovery and commoditized 0:01:13.280 --> 0:01:16.000 d RAM prices, but also a ramp in the next 0:01:16.040 --> 0:01:21.000 generation HBM three E that is the memory that supports 0:01:21.040 --> 0:01:24.319 the GPUs in training AI that is the conversation that 0:01:24.440 --> 0:01:27.920 we'll have. Let's dive right into microns earnings with CEO 0:01:28.319 --> 0:01:31.080 Sanjay Morotra as Sanja, good morning to you, and that's 0:01:31.080 --> 0:01:33.319 how i'd frame it. Let's get right to the outlook 0:01:33.360 --> 0:01:36.240 for the fiscal third way up the factors for us. 0:01:36.360 --> 0:01:40.360 Was this all about the recovery in d RAM traditionally 0:01:40.400 --> 0:01:43.240 commoditized or is this more about the ramp up in 0:01:43.400 --> 0:01:46.560 HBM THREEE that is going in support of things like 0:01:46.600 --> 0:01:48.000 the h two hundred from Nvidia. 0:01:49.920 --> 0:01:53.000 First of all, thank you Caroline and ED for having 0:01:53.000 --> 0:01:57.080 me on the show here. Our recovery is really driven 0:01:57.440 --> 0:02:01.440 by a demand related to AI with tight supply and 0:02:01.480 --> 0:02:05.360 actually demand that is strong across most of our end markets, 0:02:05.680 --> 0:02:09.720 particularly data centered driven demand. And Micron has a strong 0:02:09.840 --> 0:02:14.160 portfolio of products. Very excited about our latest offering of 0:02:14.400 --> 0:02:17.280 HV and three E that you refer to earlier. We 0:02:17.360 --> 0:02:20.600 have just begun shipments of this and we see strong 0:02:20.720 --> 0:02:23.799 growth in the several quarters that are ahead of us. 0:02:24.240 --> 0:02:29.320 And supply is tight, leading edge nodes in particular, and 0:02:29.320 --> 0:02:32.919 and tight supply that's leading to price increases as well. 0:02:33.200 --> 0:02:36.239 So as we look ahead at twenty twenty four, our 0:02:36.320 --> 0:02:40.840 year of recovery. We see increasing prices driven by the 0:02:40.880 --> 0:02:44.120 demand supply fundamentals, and we look at twenty twenty five 0:02:44.280 --> 0:02:51.280 to be a record year for Micron's revenue with significantly 0:02:51.280 --> 0:02:53.280 improved profitability as well. 0:02:53.600 --> 0:02:57.840 Twenty twenty five supply also mostly already allocated. You sold 0:02:57.840 --> 0:03:00.840 out on twenty twenty four. Say let's dig in on 0:03:00.880 --> 0:03:04.120 the high bandwidth memory because was it Jason Wyang over 0:03:04.160 --> 0:03:07.760 at in video calling this a technology miracle? Will it 0:03:07.840 --> 0:03:10.840 not get commoditized? Will prices remain elevated? 0:03:12.600 --> 0:03:16.520 First of all, our sr HBM product that is sold 0:03:16.520 --> 0:03:20.279 out for calendar year twenty four, and a vast majority 0:03:20.680 --> 0:03:24.799 of the supply for our twenty twenty five is allocated 0:03:24.880 --> 0:03:28.480 as well. This is a critical product. HBM three E 0:03:29.000 --> 0:03:32.280 is in very very early stages here and it's key 0:03:32.440 --> 0:03:37.200 enabler of what AI platforms, generative AI platforms are able 0:03:37.240 --> 0:03:40.480 to do. Just think about it. I mean the latest 0:03:40.560 --> 0:03:44.960 Blackwell platform that has been announced. It has sixty four 0:03:45.200 --> 0:03:48.720 die of memory in it, so tremendous amount of silicon. 0:03:49.800 --> 0:03:54.640 HBM is growing fast, expected to be about fifteen percent 0:03:55.160 --> 0:03:58.400 high teens, mid to high teens of the industry revenue 0:03:58.400 --> 0:04:01.840 over the course of next years compared to being just 0:04:02.000 --> 0:04:05.080 half of that last year. And as you look ahead 0:04:05.200 --> 0:04:08.800 at the new platforms being announced Nvidia earlier this week, 0:04:08.880 --> 0:04:14.560 Broadcom yesterday, they're all placing tremendous emphasis on the performance 0:04:14.960 --> 0:04:18.960 and the power of HPM memory. As AI becomes bigger, 0:04:19.320 --> 0:04:23.320 data becomes bigger, data lives in the products that Micron 0:04:23.440 --> 0:04:26.760 makes for AI applications, lives in the kind of products 0:04:26.839 --> 0:04:30.599 such as HPM three E, but high density DIM modules 0:04:31.040 --> 0:04:34.360 as well as other products that Micron makes DDD ARE 0:04:34.440 --> 0:04:38.360 five memory and data center SSDs. So AI is really 0:04:38.440 --> 0:04:43.440 driving tremendous growth trajectory. HBM THREEE is absolutely going to 0:04:43.480 --> 0:04:47.360 be critical. This is in very early innings and you know, 0:04:47.760 --> 0:04:50.479 even if there are any perturbations in supply, they will 0:04:50.520 --> 0:04:53.880 get absorbed over time. And what's important to understand is 0:04:54.200 --> 0:05:00.000 because HPM THREEE product is extremely silicon intensive across the industr, 0:05:00.600 --> 0:05:04.320 it is really leaving not enough supply for non HBM 0:05:04.360 --> 0:05:06.920 products and those are in tight supply, and that's what 0:05:07.040 --> 0:05:12.120 is driving tremendous strength in terms of demand supply fundamentals 0:05:12.160 --> 0:05:14.279 in pricing trajectory for memory. 0:05:15.600 --> 0:05:18.120 And the question is, Sanjay, how do you keep up 0:05:18.279 --> 0:05:21.600 right HBM THREEE running at five point two gigabits per second. 0:05:21.960 --> 0:05:24.080 You've already mentioned blackwell, you're going to have to bring 0:05:24.120 --> 0:05:29.080 that next generation HBM nine gigabits per second faster. Just 0:05:29.160 --> 0:05:32.000 walk us through the real term ramp of your products, 0:05:32.040 --> 0:05:34.480 getting them into the real world and when they show 0:05:34.560 --> 0:05:37.680 up in your financials in the near and medium term. 0:05:39.080 --> 0:05:41.520 Well, we talked about yesterday in our earnings call that 0:05:42.320 --> 0:05:46.080 we have begun shipments of HBM three E product. It's 0:05:46.120 --> 0:05:49.800 an industry leading product. It has the best performance in 0:05:49.839 --> 0:05:52.479 the lowest power in the industry, which you know for 0:05:52.560 --> 0:05:58.360 data center applications, power is critical. Thirty percent better power 0:05:58.360 --> 0:06:01.440 for our HBM three E product. So we have really 0:06:01.600 --> 0:06:05.480 long legs in this HP and three E product for 0:06:05.480 --> 0:06:09.800 foreseeable future here and HPM three E has begun shipments, 0:06:09.839 --> 0:06:12.640 and we mentioned in the call yesterday that it will 0:06:12.680 --> 0:06:15.960 be a creative to our gross margins and we'll have 0:06:16.000 --> 0:06:19.800 several hundred million dollars of revenue of this HPM three 0:06:19.839 --> 0:06:23.000 E product in our fiscal year which will end in 0:06:23.200 --> 0:06:27.120 August timeframe. And of course we look at significant growth 0:06:27.120 --> 0:06:30.560 ahead for HPM three E as well. Our production has begun. 0:06:30.640 --> 0:06:34.600 We are extremely focused on continuing to ramp this product. 0:06:34.839 --> 0:06:38.480 Our target is to get our share in HBM three 0:06:38.520 --> 0:06:42.400 E equivalent to our DRAM industry share, and we're going 0:06:42.440 --> 0:06:46.479 to remain extremely disciplined key will be absolutely managing the 0:06:46.520 --> 0:06:50.760 supply and demand fundamentals overall for the DRAM industry. So 0:06:50.800 --> 0:06:53.760 we look at strong growth ahead for our HPM three E. 0:06:54.240 --> 0:06:57.880 Keep in mind that HBM is expected to have a 0:06:57.960 --> 0:07:02.039 KAGHER greater than fifty percent over the course of next 0:07:02.360 --> 0:07:05.240 a few years in terms of bit growth that HPM 0:07:05.320 --> 0:07:07.760 will be driving. Of course, it will be all the 0:07:07.880 --> 0:07:11.000 GENAI applications that we'll be driving this And I just 0:07:11.040 --> 0:07:14.640 want to add here that of course data center is 0:07:14.800 --> 0:07:17.720 a big driver of our growth. We are shifting our 0:07:17.760 --> 0:07:21.080 business more toward data center given the demand and the 0:07:21.120 --> 0:07:24.960 profitability profile of that part of the market. We are 0:07:24.960 --> 0:07:27.440 doing that with our DTA and products as well as 0:07:27.520 --> 0:07:30.400 with our SSDs. But just want to point out that 0:07:30.560 --> 0:07:35.000 other markets such as smartphones and PCs, they too are 0:07:35.240 --> 0:07:39.440 implementing AI enabled devices and you'll start seeing them coming 0:07:39.480 --> 0:07:42.640 out from later this year, and of course twenty twenty 0:07:42.640 --> 0:07:45.280 five will be the first full year of all these 0:07:45.280 --> 0:07:49.120 devices on the edge, such as smart AI enabled smartphones 0:07:49.480 --> 0:07:54.000 and PCs. They take much higher memory content than their 0:07:54.080 --> 0:07:58.560 prior generation devices. You're really, we're exciting about the opportunities 0:07:58.600 --> 0:08:02.840 for that AI enables for US enables for memory, which 0:08:02.880 --> 0:08:07.360 is at the heart of AI revolution in terms of 0:08:07.400 --> 0:08:09.920 from data center all the way to the edge. 0:08:10.280 --> 0:08:13.360 Going back though, to this high bandwidth memory and going 0:08:13.360 --> 0:08:15.680 back to that market share that you say you want 0:08:15.720 --> 0:08:19.040 to own, can you articulate exactly what that share is 0:08:19.080 --> 0:08:20.720 going to be for our audience right now when we 0:08:20.800 --> 0:08:23.320 have Heinex Samsung likely to. 0:08:23.240 --> 0:08:25.440 Be unveiling their products at the first half of this year. 0:08:27.280 --> 0:08:30.640 Our share in DAM today in the industry is approximately 0:08:30.720 --> 0:08:33.760 twenty three percent, and we are targeting that our HBM 0:08:33.840 --> 0:08:37.840 share would be in line with that DRAM industry share. 0:08:37.920 --> 0:08:41.120 Of course, it will be ramping gradually over time. Sometime 0:08:41.280 --> 0:08:44.360 in twenty twenty five if we expect to be getting 0:08:44.400 --> 0:08:48.079 to our shared in HBM equal in to DM share. 0:08:48.360 --> 0:08:51.920 It's a product that has greater profitability and as we said, 0:08:52.240 --> 0:08:55.400 it really will be a driver of our revenue and 0:08:55.480 --> 0:08:58.160 profit growth along with the rest of the market that 0:08:58.240 --> 0:09:02.360 has strengthening fundamentals well for a bloom bag television right 0:09:02.559 --> 0:09:04.640 and let me just point out the most important thing 0:09:04.840 --> 0:09:09.160 is that our product has leadership specs, and that's why 0:09:09.200 --> 0:09:13.560 it's getting a strong customer pull. Leadership products. Again in 0:09:13.679 --> 0:09:18.040 terms of performance, bandwidth being about ten percent better than 0:09:18.080 --> 0:09:23.559 other competitive products, power being thirty percent lower. Data centers 0:09:23.640 --> 0:09:27.320 today take up about three percent of the world's energy 0:09:27.760 --> 0:09:30.520 over the course of next several years, expected to continue 0:09:30.520 --> 0:09:34.880 to increase, getting to closer to high single digit percentage. 0:09:35.280 --> 0:09:39.200 That's where memory becomes extremely important in making sure that 0:09:39.360 --> 0:09:45.040 these accelerators for Jenai are running lower power, low power memory. 0:09:45.080 --> 0:09:49.319 Our thirty percent lower power solution is extremely attractive to 0:09:49.400 --> 0:09:50.079 our customers. 0:09:50.800 --> 0:09:53.920 Sanjay, for our Bloomberg television and radio audience worldwide, you 0:09:53.960 --> 0:09:55.640 can point out a lot of things. We have a 0:09:55.679 --> 0:09:57.600 lot of questions for you to bear with us. Let's 0:09:57.600 --> 0:10:00.599 go back to on device because you clearly want to 0:10:00.640 --> 0:10:02.800 talk about that. We talk about on device a lot 0:10:02.840 --> 0:10:07.200 on this program, the smartphone and PC context. You are 0:10:07.280 --> 0:10:10.920 saying that there is a tangible benefit that you're seeing 0:10:11.400 --> 0:10:12.839 in orders for that, but. 0:10:12.880 --> 0:10:14.080 Is that happening right now? 0:10:14.120 --> 0:10:17.679 There is a lot of skepticism that on device processing 0:10:17.720 --> 0:10:21.800 of llms and generative AI tools is somewhere away. Are 0:10:21.840 --> 0:10:25.000 you telling us that this is material now or you're 0:10:25.040 --> 0:10:26.680 predicting that it's coming soon. 0:10:28.080 --> 0:10:31.680 Well, earlier this year you saw Samsung S twenty four 0:10:32.120 --> 0:10:35.920 getting announced at Mobile World Congress, on it announced its 0:10:36.400 --> 0:10:40.360 Magic six Pro. And these are great examples where AI 0:10:40.559 --> 0:10:45.319 is being implemented, great examples of influencing on the edge. 0:10:45.679 --> 0:10:49.560 AI is being implemented, that's intent based, and that's really 0:10:49.600 --> 0:10:53.920 going to drive tremendous opportunity. Of course, these kind of 0:10:54.120 --> 0:10:59.000 high end next gen AI capabilities and PCs and smartphones 0:10:59.160 --> 0:11:02.800 will start getting to the marketplace later this year, twenty 0:11:02.880 --> 0:11:06.000 twenty five will become the first full year. Over the 0:11:06.080 --> 0:11:09.840 course of next few years, next few short years, we 0:11:09.880 --> 0:11:13.920 would see that AI enabled devices will be representing let's 0:11:13.920 --> 0:11:19.200 say about a third of smartphones and PC markets, and 0:11:19.240 --> 0:11:22.560 they take much more content anywhere from forty percent two 0:11:22.679 --> 0:11:27.600 hundred percent more content in flagship AI enabled PCs and 0:11:27.679 --> 0:11:35.520 smartphones versus flagship AI in PC devices today, Sanjai, we've 0:11:35.520 --> 0:11:38.040 got flagship smartphone and PC devices. 0:11:37.679 --> 0:11:40.960 Today, We've got a couple more key questions. We're going 0:11:41.040 --> 0:11:43.760 to keep it tight, fee, Sanjay, because we have been 0:11:43.760 --> 0:11:46.439 thinking about the CHIPSAC, We've been thinking about Intel getting 0:11:46.440 --> 0:11:48.600 that money. We've been thinking about you still building out 0:11:48.600 --> 0:11:52.080 in China and in India. Will you still be committed 0:11:52.160 --> 0:11:55.080 to putting money into Boise, into New York as well? 0:11:55.559 --> 0:11:57.040 Are you going to get the money from the government. 0:11:58.559 --> 0:12:02.480 Well, we'll respeak to the chips ACKed and are previously 0:12:02.520 --> 0:12:07.760 announced plans for leading edge memory manufacturing in Boise and 0:12:08.440 --> 0:12:13.000 in the Syracuse area. Our application for chips ACT is 0:12:13.440 --> 0:12:17.600 underprocessing with the chips Program Office making good progress there. 0:12:17.720 --> 0:12:20.600 Of course, we will make the announcements when that process 0:12:20.679 --> 0:12:24.600 is completed. Important thing is that chips ACT enables us 0:12:24.920 --> 0:12:29.640 to bring with CHIPSACKED grants sufficient level of CHIPSACK grants, 0:12:29.960 --> 0:12:34.920 investment tax credits, and local state government support. It helps 0:12:34.960 --> 0:12:38.959 bridge the cost gap with Asia operations. So it helps 0:12:39.040 --> 0:12:44.000 us bring leading edge memory manufacturing into semiconductors and of 0:12:44.040 --> 0:12:47.839 course that creates many jobs. It supports economic as well 0:12:47.840 --> 0:12:52.079 as national security, and memory is pivotal. We just talked 0:12:52.080 --> 0:12:55.960 about how pivotal memory is to AI applications. So think 0:12:56.000 --> 0:13:01.199 about it. Today, only two percent of world's memory total, 0:13:01.320 --> 0:13:04.400 world's memory production is here in the US. Of course, 0:13:04.440 --> 0:13:09.080 it's all by micron at our facility in Manassas Virginia. 0:13:08.679 --> 0:13:09.840 With chipsec support. 0:13:10.000 --> 0:13:15.160 As we expand our leading edge memory manufacturing in Boise 0:13:15.360 --> 0:13:19.520 and Syracuse next decade, Sometime in next decade, we'll be 0:13:19.559 --> 0:13:22.880 able to get to ten percent over ten percent of 0:13:22.960 --> 0:13:27.160 world's leading edge memory production here in the US. And 0:13:27.200 --> 0:13:31.200 that's really Sunji significantly moving the needle, and Micron of 0:13:31.200 --> 0:13:32.280 course is committed to. 0:13:32.240 --> 0:13:36.480 That, Sanjay, We're running out of time here. Bloomberg's reported 0:13:36.520 --> 0:13:43.040 that the US is considering restricting one of your Chinese rivals, CEXMT. 0:13:43.280 --> 0:13:46.880 My understanding is that Micron has been in support of that. 0:13:47.280 --> 0:13:51.760 Could you just outline Micron's position on the US restricting CXMT. 0:13:53.280 --> 0:13:56.199 Look, the governments make their own decision and we are 0:13:56.280 --> 0:13:59.640 not going to speculate or speak on behalf of any 0:13:59.679 --> 0:14:02.480 of the actions. What we can tell you is that, 0:14:02.960 --> 0:14:06.520 of course China is an important market for US, just 0:14:06.559 --> 0:14:10.199 like China is an important market for the entire semiconductor industry, 0:14:10.559 --> 0:14:13.320 and we are veil engaged with the customer ecosystem there 0:14:13.440 --> 0:14:17.520 in terms of bringing value of our leading edge products 0:14:17.559 --> 0:14:21.800 in memory and storage, helping them drive their innovation road maps. 0:14:22.800 --> 0:14:25.040 We want to thank you so much for your time 0:14:25.080 --> 0:14:27.840 today walking us through your numbers through the industry with 0:14:27.880 --> 0:14:31.840 which is growing at such pace. Micron CEO Sanjay Erroltra, 0:14:32.320 --> 0:14:36.320 thank you. Now turning our attention to the Department of 0:14:36.480 --> 0:14:39.560 Justice holding a key press conference as they announce their 0:14:39.640 --> 0:14:42.960 antitrust suit against Apple, which has been five years in 0:14:43.000 --> 0:14:44.800 the making. We just want to be dipping in and. 0:14:44.760 --> 0:14:47.840 Bringing you some of those headlines. Of course, Merrit Garland. 0:14:47.520 --> 0:14:51.040 The Attorney General, saying that Apple has monopoly power in 0:14:51.080 --> 0:14:54.280 the smartphone market. He's also been articulating that Apple has 0:14:54.400 --> 0:15:00.200 maintained power via exclusionary behavior at the moment, so to 0:15:00.200 --> 0:15:02.840 be turning our attention listening in to that press conference 0:15:02.880 --> 0:15:04.880 for a moment today. 0:15:04.920 --> 0:15:08.480 The Department alleges that Apple, one of the world's largest 0:15:08.840 --> 0:15:13.440 tech companies, cross the line from rigorous competition to anti 0:15:13.520 --> 0:15:19.360 competitive exclusion, unlawfully maintaining a monopoly in violation of the 0:15:19.360 --> 0:15:24.200 Sherman Act. The complaint makes clear that for years Apple 0:15:24.280 --> 0:15:27.320 has tightened its grip on the smartphone market. 0:15:27.760 --> 0:15:29.680 It has done so not through. 0:15:29.520 --> 0:15:35.440 Product improvements, but by maintaining a chokehold on competition, locking 0:15:35.520 --> 0:15:40.280 its customers in to the iPhone while locking its competitors 0:15:40.360 --> 0:15:44.440 out of the market. As a result, and, as the 0:15:44.480 --> 0:15:48.880 complaint details, Apple has gone from revolutionizing the smartphone market 0:15:49.160 --> 0:15:55.280 to stalling its advancement. This shift has smothered an entire industry, 0:15:55.720 --> 0:16:00.000 from users to app developers to the next generation of innovator. 0:16:01.040 --> 0:16:06.920 Apple's anti competitive conduct must stop. Sixteen other Attorneys General 0:16:07.240 --> 0:16:11.760 agree and have joined us in bringing this lawsuit against Apple. 0:16:12.680 --> 0:16:14.280 I want to thank the women and the. 0:16:14.200 --> 0:16:17.360 Men of the Anti Trust Division for their commitment to 0:16:17.480 --> 0:16:22.560 promoting competition and protecting consumers and workers in all of 0:16:22.640 --> 0:16:25.600 their work, and I want to thank Assistant Attorney General 0:16:25.640 --> 0:16:31.400 Canter for his leadership. Their work makes clear that no manual. 0:16:31.200 --> 0:16:35.440 Has how fast the Deputy Attorney General LA speaking Lisa Monaco. 0:16:35.640 --> 0:16:38.640 But meanwhile, there's more breaking news, all focused in on Apple. 0:16:38.680 --> 0:16:40.360 I just want to bring you the headlines that Apple 0:16:40.400 --> 0:16:42.880 and Google are likely to be hit by the first investigations, 0:16:42.880 --> 0:16:47.400 the first probes under the EU Digital Law. So of 0:16:47.440 --> 0:16:50.560 course there's the DMA which came into force just earlier 0:16:50.600 --> 0:16:52.760 this month, And of course there has been a keen 0:16:52.760 --> 0:16:56.040 eye on some of these labeled key gatekeepers as the 0:16:56.040 --> 0:16:59.040 EU singles out big tech, Apple and Google among them. 0:16:59.040 --> 0:17:02.480 The Digital Markets Act investigation could pay the way for fines, 0:17:02.640 --> 0:17:06.080 some big fines. Meta is also expected to be facing 0:17:06.160 --> 0:17:09.400 some scrutiny in the EU's big tech clampdown. So much 0:17:09.440 --> 0:17:12.080 to discuss from EU, and indeed, what's happening right here 0:17:12.400 --> 0:17:15.840 with of course, the Department of Justice and sixteen attorneys general. 0:17:15.920 --> 0:17:19.919 Let's bring in bloombergs Ana Edjuton and anaag Rana for 0:17:20.040 --> 0:17:22.200 more on this. Anna, I want to begin with you, 0:17:22.600 --> 0:17:24.679 and let's start with what has been the culmination of 0:17:24.720 --> 0:17:27.960 a five year investigation. The key takeaways is to where 0:17:28.119 --> 0:17:32.040 exactly Apple has been monopolistic and shutting out others in 0:17:32.119 --> 0:17:32.560 the market. 0:17:34.840 --> 0:17:37.359 Yeah, so we have been expecting this complaint for a 0:17:37.359 --> 0:17:40.240 long time. It started in twenty nineteen under the trub administration. 0:17:40.760 --> 0:17:44.440 And we see how Jonathan Cancer, the Assistan Attorney General 0:17:44.520 --> 0:17:47.120 for Anti trust, has really tried to tell a narrative 0:17:47.160 --> 0:17:50.000 with this complaint. He's really tried to not just lay 0:17:50.000 --> 0:17:53.359 out the facts of what he alleges as anti competitive 0:17:53.400 --> 0:17:56.120 behavior by Apple, but tell it in a compelling way 0:17:56.240 --> 0:17:59.080 so that it's not just being decided in a court 0:17:59.119 --> 0:18:01.920 of law, but it's also compelling to normal consumers who 0:18:02.000 --> 0:18:04.239 you know, love their iPhones, love their Apple products. They 0:18:04.240 --> 0:18:06.879 can look at this complaint and see that this is 0:18:06.920 --> 0:18:09.879 behavior that's in some cases causing them higher prices that 0:18:10.200 --> 0:18:12.399 could give them less choice. So that's really the goal 0:18:12.680 --> 0:18:14.800 of this complaint that you know, could also help its 0:18:14.880 --> 0:18:15.840 chases in the court of law. 0:18:16.800 --> 0:18:19.159 Let me bring in Bloomberg Intelligence senior analysts and rag 0:18:19.200 --> 0:18:21.040 Rana an Arag. I'm looking at the shares with down 0:18:21.080 --> 0:18:23.920 three point four percent the low of the session. That 0:18:24.000 --> 0:18:26.440 decline is three point eight percent, put Apple on track 0:18:26.760 --> 0:18:29.120 for its biggest decline since August of last year. 0:18:29.160 --> 0:18:30.800 You and I have talked about this for years. 0:18:31.400 --> 0:18:35.680 Is the markets finally starting to price in the antitrust 0:18:35.760 --> 0:18:37.160 threat that Apple is facing? 0:18:38.640 --> 0:18:41.760 I think, as you know, products slow down antitrust risks. 0:18:41.760 --> 0:18:44.000 I mean, Apple doesn't have much going on right now, 0:18:44.320 --> 0:18:46.200 so it's going to be interesting to see what they 0:18:46.200 --> 0:18:49.240 pull out in June in terms of anything, JENNYI because 0:18:49.280 --> 0:18:50.760 other than that, I mean, it's going to be a 0:18:50.800 --> 0:18:53.240 very gloomy year for them in terms of sales growth. 0:18:53.920 --> 0:18:55.720 And I go want to follow up on that because 0:18:55.720 --> 0:18:58.520 this isn't just the US with its anti trust concerns. 0:18:58.520 --> 0:19:00.600 It's the EU as well with that and Google being 0:19:00.680 --> 0:19:04.680 hit potentially by the Digital Markets Act which come into force. Ultimately, 0:19:04.760 --> 0:19:06.680 Apple has at the edge has already been trying to 0:19:06.760 --> 0:19:08.960 change some of its business model, trying to appease with 0:19:09.000 --> 0:19:12.479 whether or not it's reducing certain payments that you're making 0:19:13.520 --> 0:19:17.760 for the app store, but it seems to be begging 0:19:17.800 --> 0:19:20.320 from Peter to pay Paul. How much do you think 0:19:20.359 --> 0:19:23.320 Apple can change its business model without impacting its margins 0:19:23.400 --> 0:19:23.800 too much? 0:19:24.600 --> 0:19:26.880 Yeah, I think the services business or the app store 0:19:26.880 --> 0:19:33.880 business will see some depression at least in the near dum. 0:19:32.000 --> 0:19:34.760 And let's get back to this DOJ situation. I think 0:19:34.800 --> 0:19:38.120 it's worth for you re explaining to audience the basics here. 0:19:38.359 --> 0:19:40.560 The DOJ has been looking at Apple for like five years. 0:19:40.600 --> 0:19:43.160 It's the third time in a decade that they filed 0:19:43.200 --> 0:19:46.080 a suit. What are the specific allegations here? 0:19:47.640 --> 0:19:49.800 This really focuses on the iPhone and the way the 0:19:49.840 --> 0:19:52.880 iPhone business runs and acts as a kind of moat 0:19:53.000 --> 0:19:56.080 around around the business. As a long suffering Android user 0:19:56.080 --> 0:19:58.600 who's always the green bubble in the family group chat, 0:19:58.680 --> 0:20:01.320 you know, you can see how there are certain things 0:20:01.359 --> 0:20:05.240 that you benefit iPhone users and being interoperable with other 0:20:05.280 --> 0:20:09.400 Apple devices. So that's really the behavior that this complaint 0:20:09.480 --> 0:20:13.280 lays out, and it's interesting that Biden's anti trust enforcers 0:20:13.320 --> 0:20:16.560 came in kind of pushing the balance of anti trust 0:20:16.600 --> 0:20:20.080 law and wanting to really look at the behavior of 0:20:20.119 --> 0:20:24.120 these big American especially tech companies. But when it comes 0:20:24.160 --> 0:20:26.640 down to this complaint, the harm that is really being 0:20:26.680 --> 0:20:29.479 laid out is consumer prices, which of course is classic 0:20:29.520 --> 0:20:33.240 anti trust. So there's an interesting balance between pushing anti 0:20:33.240 --> 0:20:35.439 trust law as far as it will go and really 0:20:35.440 --> 0:20:38.879 sticking to the arguments that they think will be successful 0:20:38.880 --> 0:20:39.280 in court. 0:20:39.920 --> 0:20:42.840 Anna, As you mentioned, this has been long anticipated and 0:20:42.880 --> 0:20:44.840 has been going on for a long time five years. 0:20:44.880 --> 0:20:47.800 It is under President Trump that this first investigation began. 0:20:48.560 --> 0:20:50.760 It's the third time, in fact, in fourteen years that 0:20:50.880 --> 0:20:54.400 Apple has been focused on in this anti trust way 0:20:54.480 --> 0:20:57.560 from the DOJ. How quickly are we likely to see 0:20:57.600 --> 0:21:01.199 any real actions taken, any real implication in response to Apples. 0:21:02.200 --> 0:21:04.439 Well, it's interesting that they file the case in federal 0:21:04.440 --> 0:21:06.760 court in New Jersey, so we'll learn more about why 0:21:06.800 --> 0:21:08.560 that was the case, but we know they do want 0:21:08.560 --> 0:21:10.760 to move quickly on this. If the Department of Justice 0:21:10.760 --> 0:21:12.960 has been a little frustrated with how slow their case 0:21:12.960 --> 0:21:17.439 against Google has gone. So the Justice Department also has 0:21:17.800 --> 0:21:20.200 more targets to finish. 0:21:20.000 --> 0:21:20.920 Up the rest of this year. 0:21:21.000 --> 0:21:24.399 They're working on another case against Google, so they have 0:21:24.480 --> 0:21:28.080 high ambitions. They want to take big swings, and Biden's 0:21:28.080 --> 0:21:31.400 first term is coming to an end, so there's definitely 0:21:31.520 --> 0:21:35.000 a big ambitions and limited resources and time to check 0:21:35.040 --> 0:21:35.680 all of those off. 0:21:37.000 --> 0:21:39.920 Anna Rag, you really see a threat of this getting 0:21:39.920 --> 0:21:42.600 to consume as a window to jump to Android from iOS? 0:21:43.680 --> 0:21:45.800 Oh No, I don't think that's going to be the case, frankly, 0:21:45.880 --> 0:21:49.080 because those things are extremely sticky from that point. I mean, 0:21:49.119 --> 0:21:50.600 I don't think one bubble is going to make a 0:21:50.640 --> 0:21:53.639 difference for people to jump from the other. Apple's really 0:21:53.680 --> 0:21:56.960 loyal customer base. What I'm concerned about is, you know, 0:21:57.000 --> 0:21:58.919 whether they can charge for the app store in the 0:21:58.920 --> 0:22:02.120 same frame book as they were before. I think that's 0:22:02.119 --> 0:22:04.480 going to be the bigger outcome in our view, rather 0:22:04.520 --> 0:22:05.320 than anything else. 0:22:06.640 --> 0:22:10.720 And so a just interesting from the perspective that we 0:22:10.840 --> 0:22:14.639 are seeing this share price reaction down some three percent. 0:22:14.800 --> 0:22:18.359 That's not nothing for the second most valuable company out there. 0:22:18.760 --> 0:22:21.800 So do you think more weakness has to be factored in? 0:22:22.000 --> 0:22:24.320 Even though they have a very loyal base that perhaps 0:22:24.560 --> 0:22:26.960 might not be shifting to an Android or competitor on 0:22:27.000 --> 0:22:28.439 any changes to business models. 0:22:29.240 --> 0:22:31.640 Yeah, I mean, as I said, services business is extremely 0:22:31.680 --> 0:22:34.919 important for them, both in terms of margin and diversification. 0:22:35.320 --> 0:22:37.320 If you compress those c it is going to have 0:22:37.320 --> 0:22:40.280 an impact on their boath, their top line as well 0:22:40.280 --> 0:22:42.960 as the bottom line. So this is a new overhang 0:22:43.000 --> 0:22:45.520 on the stock that you know, tops. 0:22:45.240 --> 0:22:46.600 Up what's happening in Europe. 0:22:46.760 --> 0:22:49.520 So there isn't much going on for Apple this year. 0:22:49.720 --> 0:22:52.000 You know, sales are growing, sales are not growing in 0:22:52.080 --> 0:22:54.719 terms of the products, and now the service is under pressure. 0:22:55.080 --> 0:22:57.159 So you know, that's really what's happening. 0:22:56.920 --> 0:23:00.600 Here in our view and behind every doc move and 0:23:00.680 --> 0:23:03.239 appleys down three point three percent, as I said at 0:23:03.240 --> 0:23:06.359 the session, low three point eight percent. There are some people, 0:23:06.560 --> 0:23:10.639 some human beings. Tell me about this DOJ team that 0:23:10.840 --> 0:23:13.199 was up on the stage one moment ago that are 0:23:13.280 --> 0:23:15.840 leading this anti trust initiative against Apple. 0:23:17.040 --> 0:23:18.040 Yeah, that's a great question. 0:23:18.080 --> 0:23:21.320 I mean, Jonathan Cancer came into the anti trust division 0:23:21.880 --> 0:23:23.879 being labeled you know, Google's foe. 0:23:24.000 --> 0:23:25.280 We knew that. You know, he had his. 0:23:25.280 --> 0:23:27.480