Speaker 1: From Marhart where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hide and Ed Lodlove.
Speaker 3: I'm Caroline Heyde of Bloomberg's World headquarters in New York,
Speaker 3: and I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 3: Coming up. Microsoft and labor Unions. They form a historic
Speaker 3: alliance on artificial intelligence. While the software giant's president says
Speaker 3: there's no guarantee that AI won't displace jobs, will break
Speaker 3: down the announcement, and.
Speaker 2: As global regulators examine Microsoft's thirteen billion dollar investment in
Speaker 2: Open AI, the company has a simple response, it doesn't
Speaker 2: own a stake. Will discuss the antitrust concern SLUS.
Speaker 3: The EU reaches a preliminary deal in what's seen as
Speaker 3: a key part of the word well's first comprehensive I
Speaker 3: guessed it artificial intelligence regulation. We'll discuss that and so
Speaker 3: much more throughout the hour.
Speaker 2: The big piece of news is Microsoft. Actually there were
Speaker 2: two pieces of news. Is news news On the one hand,
Speaker 2: this kind of relationship with afl CIO, a broad agreement
Speaker 2: with unions to cooperate on artificial intelligence. The other more
Speaker 2: specific piece of news is a case study involving a
Speaker 2: few hundred staff and a very specific video games unit
Speaker 2: where AI has been brought into the collective bargaining agreement.
Speaker 2: I want to bring in Bloomberg's Jackie Davlos. She is
Speaker 2: the host of AIRL on Bloomberg. Let's start with the
Speaker 2: video game unit. Tell us the details of what happened overnight.
Speaker 5: Well, the Communication Workers of America basically agreed with Microsoft
Speaker 5: that they will be allowed to incorporate some AI language
Speaker 5: into their collective bargaining agreement.
Speaker 3: And that move was really one.
Speaker 5: Of the first where you saw Microsoft agreeing to have
Speaker 5: some language in those contracts. And that goes hand in
Speaker 5: hand with that broader announcement that we saw today in
Speaker 5: collaboration with afl CIO. Now, many people may not realize
Speaker 5: that this labor organization encompasses over twelve point five million workers.
Speaker 5: That includes other affiliated unions like SAGAFTERRA, like the Writers Guilled,
Speaker 5: the Teachers' Union. So a real broad based organization coming
Speaker 5: together with Microsoft in one of the first partnerships of
Speaker 5: its kind that is tackling how to handle artificial intelligence
Speaker 5: impact on workers, what they can do to both come
Speaker 5: to the table and say where are workers being impact
Speaker 5: and how can we best prepare them?
Speaker 3: And to that end, we had, of course, President of Microsoft,
Speaker 3: Brad Smith saying, like, look, honestly, I cannot say that
Speaker 3: Joels won't be impacted and indeed become obsolete due to AI.
Speaker 3: How straight toolking. We'll see at the announcement Jackie.
Speaker 5: He was very candid because you had a room full
Speaker 5: of people who have serious questions. You had teachers who
Speaker 5: were wondering, how is this going to impact my students?
Speaker 5: Randy Weingarten, the president of the American Federation of Teachers, sorry,
Speaker 5: the Teachers' Union basically also they're in collaboration with Microsoft,
Speaker 5: saying we want to understand how the company is going
Speaker 5: to help us understand what artificial intelligence is doing to
Speaker 5: our teachers, to our students, what can we do to
Speaker 5: prepare them? And two things came out of this partnership.
Speaker 5: The first being you have Microsoft agreeing to basically host
Speaker 5: some training sessions for workers across the board. How is
Speaker 5: artificial intelligence being developed?
Speaker 3: How can it affect you?
Speaker 5: Basically kind of giving them the AI one oh one
Speaker 5: on what the technology is. The next being how can
Speaker 5: we incorporate your feedback into the room where developers are
Speaker 5: creating this technology. And the third is where can we
Speaker 5: team up on policy proposals. They said they want to
Speaker 5: quote join forces on putting forth legislation. When you have
Speaker 5: members of the Senate in Congress basically coming together and saying, well,
Speaker 5: we're accepting suggestions and the two want to create an
Speaker 5: alliance of sorts to put together some proposals that are
Speaker 5: the best interest of workers. Now, the other thing is
Speaker 5: that came out of this is basically saying, look, we
Speaker 5: Microsoft understand that the collective bargaining process is important and
Speaker 5: we don't want to stand in the way of that.
Speaker 5: And so the agreement also includes kind of this neutrality template,
Speaker 5: basically terms that can say we're not going to stand
Speaker 5: in the way of or people organizing. And that's a
Speaker 5: big step coming from a technology company. It really puts
Speaker 5: the spotlight on other companies like Amazon, which have not
Speaker 5: taken such a friendly approach when it comes to their
Speaker 5: workers organizing.
Speaker 3: Great context, Jackie Davilos, thank you so much on the
Speaker 3: world when it comes to Microsoft and the Laby unions.
Speaker 3: But meanwhile, Smith and Microsoft in general, they've been busy
Speaker 3: because of course having to defend that relationship with open
Speaker 3: Ai as well. It's been drawing a lot of scrutiny
Speaker 3: from global regulators, and the software giant has a simple
Speaker 3: argument when it comes to its investment in open Ai,
Speaker 3: and it hopes it will resonate with anti trust officials
Speaker 3: the messages it doesn't own a traditional stake in the
Speaker 3: startup with US. Now to discuss is Rebecca Allensworth, professor
Speaker 3: at Vanderbilt University Law School, And all of this comes
Speaker 3: about from Friday. We understand first the UK the CMA,
Speaker 3: they're wanting to start sort of requesting people's input as
Speaker 3: to whether or not de facto Microsoft controls open Ai
Speaker 3: more than would be well seen on the surface of things.
Speaker 3: Then we have the UK, as the US as well
Speaker 3: regulators here looking into the relationship more broadly. From your perspective,
Speaker 3: from a legal perspective, how strong is the argument that
Speaker 3: Microsoft is some way acquired open Ai.
Speaker 6: I think we don't know the answer to that question
Speaker 6: because we don't know the terms of that deal. I mean,
Speaker 6: you'll notice that he said traditional steak. So what I
Speaker 6: want to know and I think what the FTC would
Speaker 6: want to know, and the CMA is well in what
Speaker 6: sense do they have a non traditional steak. There's some
Speaker 6: reporting that they have a non voting seat at the table,
Speaker 6: a position on the board. Is that going to be
Speaker 6: a situation where that member says, hey, I'm not voting
Speaker 6: on this, but if you vote for this, then I
Speaker 6: think Microsoft will pull out. That could be seen as
Speaker 6: de facto having some kind of control, and that could
Speaker 6: potentially raise antitrust problems.
Speaker 4: So here's what we know about the structure.
Speaker 2: Based on Boobog's reporting, the thirteen billion dollars to date
Speaker 2: did not equate to taking an equity investment. According to
Speaker 2: Boonbo's reporting, Rebecca, it was that Microsoft would derive half
Speaker 2: of the profits open Ai generates up into a capped
Speaker 2: limit due to its closed profit model. And that is
Speaker 2: the argument that Microsoft's saying it is not a state
Speaker 2: because it was not an investment in return for equity.
Speaker 2: The question is do regulators or will regulators by that.
Speaker 6: I think it's an open question that we don't really
Speaker 6: know the answer to. So anti trust law is not
Speaker 6: well positioned to challenge investments. It actually is specifically said
Speaker 6: in the Clayton Act that acquisitions that are merely an
Speaker 6: investment essentially that don't involve any decision making authority are
Speaker 6: not covered by that statute. And likewise, if we're going
Speaker 6: to talk about Section one of the Sherman Act or
Speaker 6: Section two of the Sherman Acts, other ways of challenging
Speaker 6: it under anti trust laws, I think the regulators would
Speaker 6: have to see this as some sort of merging of
Speaker 6: decision making authority, and I just don't think that we know.
Speaker 6: At the same time, the antrust laws are pretty flexible
Speaker 6: about determining whether or not there is some de facto
Speaker 6: decision making authority, so this won't be decided merely by
Speaker 6: the corporate form. This will be a fact intensive inquiry
Speaker 6: and the facts I think we don't have yet.
Speaker 3: When we have to. Therefore, try not to speculate on facts,
Speaker 3: but instead look at really what legal groundings. The FTC
Speaker 3: has pursued a number of well cases of late where
Speaker 3: ultimately they haven't won out, but they've been trying to
Speaker 3: sort of swing the perception of where regulators should start
Speaker 3: to get involved, what really consumer protection looks like. Over
Speaker 3: in the UK, we know the CMA sort of backed
Speaker 3: off from its original view of Microsoft and activision in
Speaker 3: but did force change on that particular deal. What do
Speaker 3: you think ultimately is trying to be got across here?
Speaker 3: Are they worrying about some sort of ultimate monopolization that
Speaker 3: could go into the world of artificial intelligence, and how
Speaker 3: do they get ahead of that curve?
Speaker 6: I think that's right, and I think the concern here is,
Speaker 6: like so many of the FTC's actions happening right now,
Speaker 6: which is a major deep pockets competitor, one might say
Speaker 6: a monopolist, although I think in this case that's a
Speaker 6: little bit of problematic. Holding an input that everybody needs
Speaker 6: to effectively compete, and that input here is the GPT model,
Speaker 6: and the idea would be this is going to become
Speaker 6: essential to compete in so many markets actually, and if
Speaker 6: it's controlled by one single entity that has the power
Speaker 6: to bring it to market and can exclude other people
Speaker 6: who might compete, that could be really bad for competition.
Speaker 6: As you point out, though, that theory of competition, which
Speaker 6: is not about head to head, it's not about Microsoft
Speaker 6: competes with the chat GPT.
Speaker 4: Product right now head to head.
Speaker 6: That makes it a little bit of a different type
Speaker 6: of challenge than the antitrust laws have been used to
Speaker 6: over the last forty years. It's not precluded by the statute,
Speaker 6: but it is a little bit unorthodox.
Speaker 2: How much weight do you think a regulator would give
Speaker 2: to the idea that there are now many companies offering
Speaker 2: similar foundation or large language models. They're not the same
Speaker 2: as GPT, but there are other models out there.
Speaker 7: So this is a great.
Speaker 6: Question because this has always been a problem in anti
Speaker 6: trust and what you're talking aout about it's basically market definition.
Speaker 6: Is the market the chat GPT model because it is
Speaker 6: so different, it is so important, it does not have
Speaker 6: a substitute that we're prepared to call that a market,
Speaker 6: or is the market as I'm sure Microsoft and open
Speaker 6: AI will be arguing artificial intelligence, which of course is
Speaker 6: broad and people have been using artificial intelligence, you know,
Speaker 6: for many, many years, and there's a lot of competitors
Speaker 6: within it. The question should be about substitution. Is there
Speaker 6: a substitutable product for open AIS technology? And I think
Speaker 6: that is a pretty good argument that the answer to that.
Speaker 8: Question is no.
Speaker 2: Oh thanks to Rebecca Allen's work, professor at Vanderbilt Law
Speaker 2: School there on potential interrust action against open Microsoft.
Speaker 4: Right coming up on the show, European.
Speaker 2: Regulators striking a landmark deal to regulate artificial intelligence. We'll
Speaker 2: discuss with Ashley Casavan, Managing director at the iapp's AI
Speaker 2: Governance Center. That's our conversation to next. This is Bloomberg technology.
Speaker 9: That we lose control of the machines I think to
Speaker 9: some extent, and the howser still very much being debated obviously,
Speaker 9: of having the fail safe mechanisms in place that humans
Speaker 9: can override the systems. That's probably the single largest thing
Speaker 9: I think and worry about, is that if the machines
Speaker 9: can be or the algorithms or there was being generated,
Speaker 9: can be developed in such a way that there is
Speaker 9: no fail safe mechanism that it can be overridden by
Speaker 9: a human.
Speaker 8: That's what worries me.
Speaker 2: Those Armed CEO Renee has speaking exclusively to Bloomberg back
Speaker 2: at the end of November about his concerns regarding generative AI.
Speaker 2: He shares concerns with European regulators, who over the weekend
Speaker 2: reached a deal to formally regulate the technology. Joining us
Speaker 2: now with more is as Casavan, Managing director of the
Speaker 2: International Association of Privacy Professionals AI Governance Center, one of
Speaker 2: the largest and most comprehensive resources for global privacy and information.
Speaker 2: There is a lot in this EUAI Act. The top
Speaker 2: lines as I see it, is the acceptable use policy,
Speaker 2: some disclosures about the data.
Speaker 4: Used to train models.
Speaker 2: What is your kind of takeaway on the depth of
Speaker 2: how this has been regulated in Europe?
Speaker 8: It's quite significant.
Speaker 10: This is definitely a landmark deal that has broad implications,
Speaker 10: not just for European companies, but companies all over the world.
Speaker 10: I think that the fact that they're really looking to
Speaker 10: align with international definitions or following and changing through these
Speaker 10: discussions to OECD definitions, indicates just how big of an
Speaker 10: impact this will have globally.
Speaker 3: The whole difficulty was on one side fostering innovation, on
Speaker 3: the other side, well, protecting the rights of people the user,
Speaker 3: and of course this is why what it was a
Speaker 3: thirty seven hours of negotiations that took place. Actually, from
Speaker 3: your perspective, does this in any way protect and ultimately
Speaker 3: innovation in Europe because many will worried about some of
Speaker 3: the startup's mistyle for example in France.
Speaker 10: Sure, I think that it's really to be determined how
Speaker 10: this is going to be enforced and the implications. But
Speaker 10: I do think that what's been drafted is really what
Speaker 10: we've seen from the dialogues, because we haven't actually seen
Speaker 10: the text of the final Act will be left to
Speaker 10: how it's enforced. That said, I do think that really
Speaker 10: relying on product safety assurance mechanisms like third party audience
Speaker 10: will hopefully provide that balance between innovation for companies and
Speaker 10: then protection of the public.
Speaker 3: What's notable, of course, is yes, we've had an EO
Speaker 3: here in the US. Yes we've had much talk of regulation,
Speaker 3: but ultimately this is the first time you get real
Speaker 3: fines being outlined. I mean, look, they only add out
Speaker 3: to about thirty five million euros, but that's a lot
Speaker 3: if you're a small company, and indeed it could be
Speaker 3: seven percent of global turnover for big companies. Jerry Breton,
Speaker 3: of course, key negotiator in all of this, trying to
Speaker 3: drive it across the line when it comes to the EU.
Speaker 3: He was talking about basically how much the EU is
Speaker 3: leading here, is it? And how much do you think
Speaker 3: this is going to set the scene for the global
Speaker 3: AI players here, because ultimately it's only open AI that
Speaker 3: seems to be affected thus far.
Speaker 8: It's a great question.
Speaker 10: It's funny that you're sharing that that post. I guess
Speaker 10: is what we're calling tweets now, and the reason why
Speaker 10: is because there's been a lot of conversations in nations
Speaker 10: all over the world.
Speaker 8: You mentioned the US's.
Speaker 10: Recent AI Executive Order that's really looking to understand the
Speaker 10: implications of these systems and drive some good guardrails around
Speaker 10: how to again kind of balance innovation, protect the public,
Speaker 10: but even really think through what different implications of these
Speaker 10: systems are, given that AI is not one specific thing,
Speaker 10: and I think that getting there was a lot of
Speaker 10: countries that wanted to get to the gate first did
Speaker 10: get some regulation out there, and so it's great that
Speaker 10: Europe did that. But I do think that there's actually
Speaker 10: a converging of a lot of these different guard rails
Speaker 10: in different formats all over the world.
Speaker 2: Actually, whether it's at the parliament or commission level in
Speaker 2: Europe or Congress here in America, do the people writing
Speaker 2: the rules and the regulation have a deep enough understanding
Speaker 2: of what it is that they're regulating.
Speaker 10: It's definitely going to be a resource implication in any
Speaker 10: country that's looking to over see some of these rules.
Speaker 10: That said, I don't think that they're doing it alone.
Speaker 10: We've seen how there's been a large amount of public
Speaker 10: participation in these processes, civil society organizations providing feedback on
Speaker 10: an ongoing basis, companies that are brought to the table
Speaker 10: through not just some of this drafting dialogue, but as
Speaker 10: we've seen with some of the voluntary codes that have
Speaker 10: come out and that we're even referenced in this through
Speaker 10: in the work from the Commission, the G seven Hiroshima process,
Speaker 10: that those companies are at the table providing inputs, and
Speaker 10: I think we'll start to see that through enforcements. And
Speaker 10: again there's a reliance on standards which are typically developed
Speaker 10: by industry.
Speaker 8: So I think it's a bit of a misnomer.
Speaker 10: To think that it's just going to be relying on
Speaker 10: resources provided by the government.
Speaker 3: Public and private relationship one that you know well actually
Speaker 3: of course previously data and digital for the Government of Canada.
Speaker 3: So having to look around the AI and responsible AI
Speaker 3: a long time before all of this. Actually, Kasavan, sorry,
Speaker 3: we thank you so much, Managing director of the iapp's
Speaker 3: AI Governance Center.
Speaker 2: Time for talking tech and first stuff in the news.
Speaker 2: Apple said over the weekend that it shut down third
Speaker 2: party applications enabling Android devices to use I Message to
Speaker 2: communicate with iPhone users, citing significant risks to user security
Speaker 2: and privacy, and shares with the South Korean firm wider Planet,
Speaker 2: which uses AI to produce advertising, jumped sixty nine percent
Speaker 2: in two sessions after it said that Squid Games lead
Speaker 2: Star would become its biggest shareholder with three million shares plus.
Speaker 2: TikTok agreed to invest one point five billion dollars to
Speaker 2: combine its shopping businesses with Indonesia's go to group. TikTok
Speaker 2: gets a seventy five percent stay in that combination, which
Speaker 2: will run it shopping features in Indonesia, the company's biggest
Speaker 2: online retail market, Carrot.
Speaker 3: And let's talk about e commerce more broadly in the
Speaker 3: globalization of it because a little known PDD or pinto
Speaker 3: duo has been surging in China. Now it's Timu discounts app.
Speaker 3: It's rivaling Amazon and Walmart here in the United States.
Speaker 3: On Bloomberg's latest big take, we take a look at
Speaker 3: how the company's behind the addictive app is actually outpass
Speaker 3: outpacing Jack mars Ali Baba also in terms of market capitalization.
Speaker 3: Now it's even earning the celebrity CEO's praise. Bloomberg expensive
Speaker 3: Sofa joins us now for what has become a bit
Speaker 3: of an American addiction too. They might not know that
Speaker 3: PDD is a company behind it, but it feels like
Speaker 3: everyone's using Temu.
Speaker 11: Yeah, it's come on into the US by storm in
Speaker 11: a little over a year. Is really starting to gobble
Speaker 11: up spending in market share. It had its big Super
Speaker 11: Bowl advertising blitz back in February, you know, saying shop
Speaker 11: like a billionaire. You can can splurge as if you
Speaker 11: have a ton of money, even if you don't.
Speaker 4: It's really like.
Speaker 11: An online dollar General in your phone, you know, just
Speaker 11: a broad assortment of stuff, very very low prices, and
Speaker 11: then the sacrifice US shoppers have to make is waiting
Speaker 11: for delivery time.
Speaker 4: So that would be the downside.
Speaker 11: You're gonna you're gonna get prices you can't beat anywhere else,
Speaker 11: but you're gonna have to you have to wait for
Speaker 11: the stuff to come to your doorstep.
Speaker 2: Hey Spencer, what's the threat to your main beat company,
Speaker 2: Amazon dot Com?
Speaker 11: Well, I think right now that the threat is exactly
Speaker 11: that price sensitivity. Is it going to win some of
Speaker 11: the market share from Amazon, especially maybe like a stocking
Speaker 11: stuff from market share Amazon CEO A. D. Jasse has
Speaker 11: given interviews where he says, you know, their customers are
Speaker 11: still being pretty cautious. They're not buying big ticket items.
Speaker 11: They're buying the low cost things. They're buying the consumables.
Speaker 11: That's right where Timu is. You know, most of the
Speaker 11: products are are low cost ten twenty bucks. And then
Speaker 11: they also seem to kind to grab you a little
Speaker 11: more with a social element. They have a lot of
Speaker 11: games in the app. If you open it, it could almost
Speaker 11: be like overwhelming and jarring. It's like a like a
Speaker 11: casino in your phone with lots of spinning wheels and
Speaker 11: games about raising fish and farming. So they try to
Speaker 11: kind of suck you in and grab your attention and
Speaker 11: not just your money.
Speaker 2: Bloomberg expense is so for a part of the team
Speaker 2: with the big take and all the things findor Duo
Speaker 2: and Timu, thank you very much.
Speaker 3: Welcome back to Bluemore Technology. I'm Karen Hide in New
Speaker 3: York and.
Speaker 4: I met Love Low in San Francisco.
Speaker 2: Quick checking in the markets and two stories that have
Speaker 2: been driving moves to start in Europe with Worldline. This
Speaker 2: is a fintech company that closed up one point five
Speaker 2: percent after Bluebelt, which is basically an activist investor, said
Speaker 2: get rid of the chair and change the board. You'll
Speaker 2: remember Worldline, it was a stock that at the end
Speaker 2: of October fell sixty percent in a single day after
Speaker 2: it basically dramatically revised its growth for car and everyone said,
Speaker 2: what on earth is going on? Blue Bell saying let's
Speaker 2: bring some confidence and trust back to that name in
Speaker 2: the fintech space and calling for those changes, which investors
Speaker 2: responded to positively. The other one is an earning story.
Speaker 2: Oracle is put reporting earnings after the Bell, just a
Speaker 2: big focus on their data center business. It's about a
Speaker 2: third of revenue. But the story is can they get
Speaker 2: access to the high performance GPUs that they need to
Speaker 2: build out data center infrastructure relevant to the AI story
Speaker 2: both on the training and inference side. We have so
Speaker 2: many people on this show, Carr that come on and say,
Speaker 2: why are we not talking more about Oracle in the
Speaker 2: same context as the other hyperscalers.
Speaker 4: They can offer the same thing.
Speaker 2: There's a big addressable market out there for people who
Speaker 2: want to train foundation or large language models. Oracle just
Speaker 2: needs to build out its infrastructure.
Speaker 4: To support that.
Speaker 3: And boy hasn't just AI sucked all the oxygen out
Speaker 3: of this show and likely the entirety of twenty twenty
Speaker 3: three when it comes to investment, and let's just go
Speaker 3: from those public market types of investments to the private
Speaker 3: the bench Capital side Green is on today's at VC Spotlight.
Speaker 3: He is a founding managing partner of lead Edge Capital
Speaker 3: growth equity firm five billion dollars in assets under management,
Speaker 3: investing across public private tech companies and also looking for
Speaker 3: areas of liquidity when it comes to the secondary market. Mitchell,
Speaker 3: I'm interested as to how much you think AI is
Speaker 3: just going to be the play for twenty twenty four,
Speaker 3: whether it's buying on the secondary market or indeed investing
Speaker 3: in early rounds.
Speaker 8: Thanks so much for having me. And I think that
Speaker 8: there's gonna be a lot of things going on. It's
Speaker 8: not just AI.
Speaker 12: You know, there's a lot of interesting software companies being
Speaker 12: built right now, and I think it's a function of
Speaker 12: lots of different industries are going to be you know,
Speaker 12: the top of the town is just AI in Silicon Valley,
Speaker 12: but there's a lot of people build an interesting software
Speaker 12: companies outside of AI.
Speaker 4: Mitchell.
Speaker 2: The Friday lunch time that Sam Outman was fired by
Speaker 2: the then board of open AI. I don't think many
Speaker 2: of us will forget, but the story I was looking
Speaker 2: into that week was the shocking liquidity on the secondaries
Speaker 2: market for open ai shares, largely through SPV transactions, some
Speaker 2: of which blocks of shares or units of SPVs. We're
Speaker 2: valuing open AI at one hundred billion dollars. I don't
Speaker 2: think our audience knows just how liquid markets for shares
Speaker 2: of open AIS SpaceX are. Which names do you expect
Speaker 2: to be in this big twenty twenty four market that
Speaker 2: you've outlined.
Speaker 12: I think you're going to see in an area in
Speaker 12: a world where investors, so people who invest in funds
Speaker 12: are limited partners, they are you know, demanding investors private
Speaker 12: equity funds give capital back to their investors, in which
Speaker 12: case people are going to look to secondary markets to sell.
Speaker 12: I think you're going to see, you know, continue to
Speaker 12: see increase in companies, you know, turning into selling stuff
Speaker 12: through SPVs or secondary markets. You're going to see a
Speaker 12: lot of continuation funds. Anything that drives DPI, which is
Speaker 12: money back to LPs on that basis, is going to
Speaker 12: be a focus.
Speaker 8: It because it's it's funds trying to.
Speaker 12: Return money to their LPs, and you know, with a
Speaker 12: slow IPO and M and a market that's just going
Speaker 12: to be exaggerated.
Speaker 4: Well that's my question.
Speaker 2: Is all this activity in the secondary's market a precursor
Speaker 2: or leading indicator that we will start to see more
Speaker 2: primary rounds and more listings or exits in twenty twenty four.
Speaker 12: I don't think it's a h think. I don't think
Speaker 12: it's a precursor to it. I think it is a
Speaker 12: it's a result of not having an IPO market right now.
Speaker 8: Why I've seen it.
Speaker 12: That being said, they'll go going all the way back
Speaker 12: to you know, Facebook and Ali Baba and Twitter and Uber.
Speaker 12: There's been secondary markets for a lot of these big companies,
Speaker 12: even in robust IPO markets.
Speaker 8: I think you need to FED.
Speaker 12: I think investors need to get confident that the FED
Speaker 12: is done raising rates. I don't think they need to
Speaker 12: lower them a bunch for the IPO market to happen,
Speaker 12: but I think are to pick up.
Speaker 8: But I do think they need to get a sense
Speaker 8: that rate rising is done, which you know, who knows.
Speaker 12: I expect we'll see more tech IPOs in twenty twenty
Speaker 12: four than we saw on twenty twenty three.
Speaker 8: But that's not very hard to do. You don't need many.
Speaker 3: Well said Mitchell. I'm interested because you, of course that
Speaker 3: lead edged capital do take part in the liquidity movement
Speaker 3: and buying up on the secondary market. And one of
Speaker 3: the valuations that we're looking at, I mean, we were
Speaker 3: hearing of the top evaluations. It's still getting for an
Speaker 3: open AI. But while a lot of these gps are
Speaker 3: going to be under stress from their LPs to be
Speaker 3: well selling out, perhaps at evaluation that isn't as high
Speaker 3: as it was previously.
Speaker 8: Yeah, so I think twenty twenty four will be.
Speaker 12: Or maybe not twenty twenty four, twenty twenty four, twenty five,
Speaker 12: twenty six will be. You're going to see a lot
Speaker 12: of down round IPOs and that doesn't mean anything. That
Speaker 12: just means a handful of fools who paid a higher
Speaker 12: price in the last round are now paying you know,
Speaker 12: are now having a down round.
Speaker 8: Doesn't really affect the company they raised. The company is
Speaker 8: actually really smart.
Speaker 12: They raised money at X and when they decided to
Speaker 12: list the shares they became lower than XT.
Speaker 8: That's fine, there's nothing wrong with that.
Speaker 12: But you know, and very few of these investors have
Speaker 12: blocks on these IPOs. So I actually think you're going
Speaker 12: to see a lot of down round IPOs start to happen.
Speaker 8: It's going to take time. Now again we've seen them before.
Speaker 12: Stripe was like a down round IPO, and by the way,
Speaker 12: down ound ipo.
Speaker 8: Doesn't mean anything.
Speaker 12: It can still be a great opportunity to buy the
Speaker 12: stock over the long term. That just means at that
Speaker 12: point in time, somebody at one point was going to
Speaker 12: by a higher price. I think you're going to continue
Speaker 12: now in the secondary markets, it just depends. I think
Speaker 12: the price of open Ai probably is a bit nutty,
Speaker 12: but what do I know. Look, there are interesting opportunities,
Speaker 12: and are in a world where gps need to you know,
Speaker 12: people that run funds need to get liquidity.
Speaker 8: There's probably interesting.
Speaker 12: And I've been sitting on positions for a long time,
Speaker 12: probably you know, interesting opportunities out there. We just bought
Speaker 12: something at less than fifteen times EBITDA and it's a
Speaker 12: rule of sixty business, which means it grows you know,
Speaker 12: twenty five and had thirty five percent ebitdet margians. That
Speaker 12: doesn't seem crazy to us at all.
Speaker 3: So maybe if people are looking to be getting into
Speaker 3: stripe at evaluation that they find slightly more digestible. They're
Speaker 3: going to be able to do that in the secondary
Speaker 3: market right now or indeed better in twenty twenty four.
Speaker 3: Who are those buyers at the moment, and indeed, who
Speaker 3: do you tend to be the sellers in this particular
Speaker 3: type of market.
Speaker 8: Yeah, that's a great question.
Speaker 12: So on the on the cell side, it typically could
Speaker 12: be an early a fund that was an early investor
Speaker 12: in it. It could be a late investor that just
Speaker 12: needs to get liquidity to their LPs, your crossover hedge
Speaker 12: fund or something. It could be an early employee or
Speaker 12: a former employee, an early angel investor, and it just
Speaker 12: think abouting that own stock at my own liquidity. On
Speaker 12: the buy side, you know, depending on the type of company,
Speaker 12: there are a lot of secondary funds set up to
Speaker 12: do this, whether it's Globe and Sachs's secondary fund, you know,
Speaker 12: Blackstone secondary fund, Lexington Collie, or there's a bunch of them. Also,
Speaker 12: people like Industry A Ventures, We obviously participated in secondaries. Additionally,
Speaker 12: existing investors in the company often have you know, writer
Speaker 12: first refusals to buy stock in these businesses, and if
Speaker 12: the prices are attractive. They often do you know, and
Speaker 12: then other other venture firms and if they want exposure
Speaker 12: to a company, that's another you know.
Speaker 8: We we've become big.
Speaker 12: Through a business called transfer Wise, and it was primarily
Speaker 12: through company facilitated secondary because there are two types of
Speaker 12: secondary transactions.
Speaker 8: I mean there's multiple year involved, so it.
Speaker 12: Could be company facilitated or just like you know, one
Speaker 12: off rogue and rogue isn't bad.
Speaker 8: It's just different ways.
Speaker 12: This depends on sometimes their company organized secondaries.
Speaker 2: Mitchell, quickly, what was it the name that you bought
Speaker 2: at fifteen times E?
Speaker 4: Does I make?
Speaker 8: I can't think that it's just a software company.
Speaker 12: I would assure you that not one of your viewers
Speaker 12: has ever heard of the company.
Speaker 8: It makes time tracking software.
Speaker 4: Interesting. We'll dig into it.
Speaker 2: Michaell Green founding, a managing partner of lead Edge Capital.
Speaker 2: Deep dive on the secondaries market. We're doing that more
Speaker 2: and more on the show. Thank you very much. Now,
Speaker 2: coming up, Elon Musk reinstates Alex Jones's account on X
Speaker 2: after a five year fan We have the details. Next,
Speaker 2: this is Bloomberg Technology appsent websites that use AI to
Speaker 2: undress women in photos.
Speaker 4: Are soaring in popularity.
Speaker 2: In September alone, twenty four million people visited undressing websites.
Speaker 2: That's according to the social network analysis company Graphica. It's
Speaker 2: all part of a worrying trend known as deep fake pornography.
Speaker 2: Bloomberg's Margie Murphy joins me on set with her reporting.
Speaker 2: At the center of that reporting is also data around
Speaker 2: the volume of advertising behind those apps and sites and
Speaker 2: where they're being advertised.
Speaker 13: Right, So one of the big problems here is that
Speaker 13: these app developers are getting a load of free marketing
Speaker 13: using social media platforms. So we saw a two four
Speaker 13: hundred percent increase from last year according to Graphica of
Speaker 13: referral links on x and Reddit, and you can see
Speaker 13: if you just search keywords that are associated with these
Speaker 13: kind of apps that the adverts pop up their accounts.
Speaker 13: Underneath them there are pictures of women all kind of
Speaker 13: teasing and winking at you, saying come come.
Speaker 3: If you follow this link, you'll get to this app.
Speaker 13: And it's just a free way for them to provide
Speaker 13: their services. But the social networks since her reporting came out,
Speaker 13: have said that they're cracking down on it, but it's
Speaker 13: they've kind of had free marketing for a good year now.
Speaker 3: I mean some of them have also paid for sponsored
Speaker 3: content on Google's YouTube, for example, and a Google spokesperson
Speaker 3: so the company doesn't allow ads that contain sexually explicit content.
Speaker 3: But Margie, the also really worrying thing is a lot
Speaker 3: of the people who are being sort of undressed don't
Speaker 3: realize ultimately. And also, I mean, of course it's a
Speaker 3: deep fake, so it's not actually real, but there's no
Speaker 3: sort of legal recourse to this from a federal level
Speaker 3: at the moment.
Speaker 13: Absolutely, there's no federal law at the moment that prohibits
Speaker 13: non consensual deep fake pornography. And it's something that people
Speaker 13: I've interviewed about this research is experts in AI are
Speaker 13: really concerned about because we've heard for years about celebrity
Speaker 13: deep fake pornography, which is awful, but now we're really
Speaker 13: seeing normal people becoming part of this story. BusinessWeek we
Speaker 13: had a cover story recently about these awful story about
Speaker 13: some high schoolers in Levittown and they were deep faked.
Speaker 13: They actually found the person who deep faked them. But
Speaker 13: it's just one story that I think will just keep happening,
Speaker 13: and we're just going to see more of it because
Speaker 13: there's no legal recourse for victims and the technology is
Speaker 13: just kind of spiraling out of control.
Speaker 3: Really extraordinary reporting that both you and Olivia and the
Speaker 3: team of Bloomberg continue to do on it, Margaret Murphy,
Speaker 3: and we thank you for breaking that particular really unnerving
Speaker 3: story down for us. Meanwhile, sticking with the world of
Speaker 3: social media, Elon Musk has restored the account of right
Speaker 3: wing conspiracy theorist Alex Jones on X after users themselves
Speaker 3: voted for his reinstatement, and of course it was what
Speaker 3: some five years after his initial ban, Luma's Kurt Wagner
Speaker 3: joins us for more and not only was he reinstated,
Speaker 3: he then was well put onto the X platform. In
Speaker 3: an audio recording with Elon Musk plus Alex Jones plus
Speaker 3: others some lawmakers to well discuss his return. What did
Speaker 3: you make of it all.
Speaker 14: Cut, Yeah, this is a kind of what Elon has
Speaker 14: been doing since he took over the company, right, is
Speaker 14: that he's been kind of rescinding a lot of these
Speaker 14: rules and punishments that Twitter one point zero had put out,
Speaker 14: and not only that, but welcoming these people back with
Speaker 14: open arms, giving them a platform. You know, by Elon
Speaker 14: showing up on that spaces chat with Alex Jones really
Speaker 14: you know, kind of bringing his audience along to Jones's
Speaker 14: you know, rhetoric and message, right. And so I think
Speaker 14: this is all part of Elon's plan to sort of
Speaker 14: drastically change what he views as X versus Twitter and
Speaker 14: to you know, reimagine what this company is.
Speaker 4: Supposed to look like.
Speaker 2: As Caro outlined, Musk did a poll, right, asked the
Speaker 2: user base vote on this. I think it's worth reminding
Speaker 2: our audience the origin story why Alex Jones was removed
Speaker 2: in the first place.
Speaker 4: Yeah, so he was banned back in twenty eighteen.
Speaker 14: He had been a repeat rules violator under Twitter's prior management.
Speaker 14: You know, I believe the last straw is ultimately that
Speaker 14: he had come out and sort of attacked or been
Speaker 14: attacking members of the media. If I recall, I think
Speaker 14: he even said something in a video of his around
Speaker 14: you know, get your battle rifles ready for the media, right.
Speaker 14: And so he was banned ultimately for violating the rules
Speaker 14: around you know, harassment and glorifying violence, and so, you know,
Speaker 14: those are the types of things of course that Musk
Speaker 14: has sort of said he doesn't care much about right.
Speaker 14: As long as something is not illegal, he thinks it
Speaker 14: should be fine. And so that's why we're seeing a
Speaker 14: lot of these people that Twitter one point zero had
Speaker 14: banned or punished start to return to X.
Speaker 3: I mean, of course Elon did say I vemently disagree
Speaker 3: with what he said about Sanny Hook, but as a
Speaker 3: platform that believes in freedom of speech, or are we not?
Speaker 3: But what's notable is November twenty twenty two he posted
Speaker 3: saying and this of course is an emotive subject. For
Speaker 3: crucially elonam anymore, his firstborn child died in his arms.
Speaker 3: I felt this last heartbeat. I'm no mercy for anyone
Speaker 3: who would use deaths of children for gain politics of fame.
Speaker 3: So we sort of did in about turn. Now what's
Speaker 3: interesting in all of this, and we make a sort
Speaker 3: of a movement here to a different story that's occurring
Speaker 3: on X, is that another voice has taken actually sort
Speaker 3: of off the platform to start a different version of
Speaker 3: subscriber growth for himself. And I just want to ask
Speaker 3: you about Tucker Carlson. Of course, we understand he's not
Speaker 3: launching a new news service on X, when in fact
Speaker 3: he's doing a streaming service of his own, called Tucker
Speaker 3: Carlson Network, and it seems as though it's he explored
Speaker 3: launching on X but it didn't work outcut.
Speaker 14: Yeah, well, I mean, the thing is that there's a
Speaker 14: reason that X is not TV, right, And we saw
Speaker 14: them try to do this. You may recall many many
Speaker 14: years ago in twenty sixteen, they kind of tried to
Speaker 14: make Twitter a streaming service, right, They got the NFL
Speaker 14: on there, they got a bunch of deals with other
Speaker 14: media publishers, and it just didn't work. And so I
Speaker 14: think that Twitter or now X obviously usually serves best
Speaker 14: as a compliment to TV. And my guess is that
Speaker 14: Tucker Carlson probably figured that out himself as he was
Speaker 14: trying to build up this new platform. And so I
Speaker 14: have no doubt, given his relationship with Elon and the
Speaker 14: fact that they seem to be buddy buddy, I have
Speaker 14: no doubt that X will continue to be sort of
Speaker 14: an important distribution channel for him. But you know, x's
Speaker 14: nonve video or TV service, and despite Elon's ambitions, you know,
Speaker 14: they haven't been able to turn it into one yet.
Speaker 2: The mess Kurtwagner, good to have you back after a
Speaker 2: few weeks and months away from the show, Kurt Wagner,
Speaker 2: they're out in Denver, Okay. So today's going viral. We're
Speaker 2: looking at Apple, the iPhone maker, offering incentives to artists
Speaker 2: and record labels to produce music using a spatial audio
Speaker 2: technology that surrounds listeners in sound. Starting next year, the
Speaker 2: company plans to give added waiting to streams of songs
Speaker 2: that are mixed in Dolby Atmos technology. According to Bloomberg sources,
Speaker 2: that could mean higher royalty payments for artists who are
Speaker 2: the first to embrace the technology made by Dolby Laboratories.
Speaker 3: Caroline, let's stick with Apple and well turn our attention
Speaker 3: to health to wellness. In twenty twenty four, Bloomberg reportedly
Speaker 3: showed that Apple is planning on an updated watch that
Speaker 3: will tech to tect potentially blood pressure, sleep, ATNA, and
Speaker 3: much more. For us to just discuss that where we
Speaker 3: are with wearables, where we are with digital fitness, how
Speaker 3: we're consuming it. It's a CEO of future. It's a
Speaker 3: company that pairs users with coaches and is backed by
Speaker 3: investors such as Clena Perkins, Coase ad Ventures, found Us, Fun,
Speaker 3: and many more. But please to welcome, Rishie Mandel. Great
Speaker 3: to have you here. And ultimately we are seeing this
Speaker 3: new type of relationship with us and our fitness and
Speaker 3: actually knowledge of our own wellness at this moment. How
Speaker 3: much that being driven by wearables, VR and the like.
Speaker 1: Yeah, there's one hundred million plus wearables out there now
Speaker 1: and better than ever.
Speaker 7: We can understand each individual.
Speaker 1: What's interesting is the history of health understanding in the
Speaker 1: Western world is actually based on men recruited study small populations,
Speaker 1: and so imagine a world where now we're getting inputs
Speaker 1: about every individual, how women's health might change and evolve.
Speaker 1: That's really exciting to see. As you said, the consumers
Speaker 1: thinking a lot about health and fitness, and in an
Speaker 1: AI world, oftentimes the biggest winners are those who have
Speaker 1: the largest proprietary data sets. And so you think about
Speaker 1: a company like Apple, now not just has how you're
Speaker 1: moving through the world, and maybe blood glucose and certain
Speaker 1: types of markers bridging across all that information can help
Speaker 1: tailor to an individual better what they should be doing, when, why,
Speaker 1: and then you can build really innovative delivery mechanisms on
Speaker 1: top of that.
Speaker 3: Yeah, I mean, I've been sort of a guinea pig
Speaker 3: to certain extent got a wearable ring because it was
Speaker 3: meant to be a better for women tracking cycles and
Speaker 3: the like, But ultimately I haven't found it that good
Speaker 3: at it. It didn't realize I had COVID. I have no
Speaker 3: idea if the calorie content is actually true from what
Speaker 3: I'm currently monitoring point, but I am interested in your perspective.
Speaker 3: How many therefore are using you from women versus men?
Speaker 3: What are the demographics who are coming to your platform
Speaker 3: when wanting this one on one sort of service at
Speaker 3: the moment.
Speaker 1: Yeah, no, And I love what you're talking about about
Speaker 1: the lack of accuracy or frankly, a lot of that
Speaker 1: data is just hard to parse through on your own.
Speaker 1: So with future, we match every single person with a coach.
Speaker 1: Now that coach is AI assisted able to sift through
Speaker 1: so much data, not because they're manually doing it, but
Speaker 1: rather we've built some technology to allow them to spot trends,
Speaker 1: interpret different markers about you. And so right now what
Speaker 1: we see is a lot of AI is rudimentary in health,
Speaker 1: and what we're going to see over the next five
Speaker 1: years I think is an explosion of this idea of
Speaker 1: augmented intelligence taking your physician and making sure they're backed
Speaker 1: by the latest and greatest armed with that information, taking
Speaker 1: a radiologist, maybe double checking a scan to make sure
Speaker 1: they don't miss something.
Speaker 7: But there's still that human there.
Speaker 1: And with Future, that's what we see is with fitness,
Speaker 1: we give you a coach.
Speaker 7: That coach is highly assisted.
Speaker 1: And building your program, your training program, whether you're running outside,
Speaker 1: working out in a gym, at home, or all three,
Speaker 1: which is very common. And then we actually use a
Speaker 1: lot of AI to help augment for that coach. What's
Speaker 1: hav a day to reach out to Caroline and what's
Speaker 1: the right thing to say and what are the trends
Speaker 1: that we're observing. That augmentation I think is really powerful.
Speaker 1: And to answer your question, it's about fifty to fifty
Speaker 1: men and women who reach out to get a coach
Speaker 1: on future.
Speaker 4: Hey, Ritchie, real quick.
Speaker 2: Is it fitness that's going to be the driver of
Speaker 2: wearables adoption or is it health data that's going to
Speaker 2: be the principal driver?
Speaker 1: You know, the reason we started with fitness is because
Speaker 1: there is a daily and very common interaction with fitness.
Speaker 1: People typically who are engaging with it are doing it
Speaker 1: daily weekly. That kind of cadence. And what I was
Speaker 1: saying earlier is the biggest winners in an AI world
Speaker 1: are those We have the largest proprietary data sets, and
Speaker 1: so when we interact with a member every single day,
Speaker 1: we can come to understand their life in a fulsome way.
Speaker 1: Our average member will trade three text messages every single
Speaker 1: day with their coach one thousand a year. Lay that
Speaker 1: on top of the biometrics we get from wearables. Lay
Speaker 1: that on top of the understanding of your behaviors, and
Speaker 1: now you have a really big picture.
Speaker 3: Rishi Mandaw wish we had longer future CEO there. That
Speaker 3: is it from this edition of Bloomberg Technology