Speaker 1: From Mahard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde.
Speaker 2: And Ed Ludlove a Meed Ludlow in San Francisco. Caroline
Speaker 2: Hyde is off. This is Bloomberg Technology coming up on
Speaker 2: the program. Facing mega fines, the European Union opens investigations
Speaker 2: into Apple, Google and Meta in the first probes under
Speaker 2: the Block's Digital Markets Act. We go live to Brussels
Speaker 2: Plus will take a deep dive into the Justice Department's
Speaker 2: lawsuit against Apple as her own. Mark German argues the
Speaker 2: case is missing an opportunity to address more pressing concerns,
Speaker 2: and Lucid getting a one billion dollar cash injection from
Speaker 2: its biggest investor provide the troubled electric car maker with
Speaker 2: a needed lifeline. Will discuss that and so much more
Speaker 2: through the hour. Let's get right to Lucid. Look at
Speaker 2: Lucid shared in the US session, now up eight percent
Speaker 2: that had been as high as around twenty percent following
Speaker 2: the market open. This is a private placement of convertible stock.
Speaker 2: It takes the Saudi PIF and its affiliates investments and
Speaker 2: Lucid to six and a half billion dollars all told.
Speaker 2: A lot more to discuss on that later in the program.
Speaker 2: These are the meggacap technology shares that we're watching in
Speaker 2: a session this Monday. They are all moving to the downside.
Speaker 2: Apple down a percentage point, It's down twelve percent year
Speaker 2: to date, Alphabet pairent of Google down more than a
Speaker 2: percentage point, Meta down seven ten to one percent. We
Speaker 2: have an EU probe of each of those companies under
Speaker 2: the Digital Markets Act. This is what EU Anti Trust
Speaker 2: chief Margreta Vesta said earlier today.
Speaker 3: These are serious cases. We've been able to solve that
Speaker 3: with merely a discuss. It would have been resolved by now.
Speaker 3: So we opened for good reasons because we find that
Speaker 3: if this invertise come at compliance solutions, if they persist,
Speaker 3: then consumers will not have the choice that they were
Speaker 3: promised by the Digital Markets Act.
Speaker 2: Let's go to Brussels and Bloomberg Samuel Stalton, Sam just
Speaker 2: outline the basics of these probes under the Digital Markets
Speaker 2: Act and how they relate to those US technology companies.
Speaker 4: Yeah, good afternoon here from Brussels, ED and indeed we're
Speaker 4: back here again the EU facing up to the dominance
Speaker 4: of big tech. And this is the news today that
Speaker 4: the European Commission has opened five Yes, that's five investigations
Speaker 4: under its new Digital Markets Act rules targeting Apple, Google
Speaker 4: and Meta. Now how serious is this really? Well, it's
Speaker 4: certainly a statement of intent from Brussels, but it clearly
Speaker 4: wants to enforce as robust as possible these new digital
Speaker 4: competition rules, which only took hold just eighteen days ago
Speaker 4: on March seventh.
Speaker 2: So we played that click from vest there and one
Speaker 2: of the questions she got in the press conference, which
Speaker 2: I'm assuming you were in, was is this a bit
Speaker 2: front run? Is this you moving quickly? And she basically said, no,
Speaker 2: you know, we are moving in a timely fashion. We're
Speaker 2: also showing the potential risks to these technology companies. This
Speaker 2: explain what finds if they were to be fined, these
Speaker 2: tech companies could be facing under an EU action.
Speaker 4: Yeah, So from today, the Commission will aim to conclude
Speaker 4: these investigations into Apple, Google and Meta within a period
Speaker 4: of about twelve months. At the end of that twelve
Speaker 4: month period it will adopt what's called a non compliance decision,
Speaker 4: and with that power, it has the capacity to find
Speaker 4: these companies up to ten percent of its global turnover
Speaker 4: for those types of breaches under the and also it
Speaker 4: has these additional powers in the case of repeated infringements
Speaker 4: to find these firms up to twenty percent of their
Speaker 4: global annual revenue or even mandates the breakup of some
Speaker 4: of these companies. So it's a very very serious matter.
Speaker 4: We're not quite at that stage yet. As I say,
Speaker 4: there's this twelve month period to go through and til
Speaker 4: the Commission comes to a decision, but that kicks off today.
Speaker 2: And for a little size and scope, Apple's revenue in
Speaker 2: twenty twenty three was three hundred and eighty three billion dollars,
Speaker 2: so twenty percent of that is a hefty chunker change.
Speaker 2: But in Samuel Stalton in Brussels, terrific reporting. Thank you.
Speaker 2: The euprobe isn't the only anti trust story coming out
Speaker 2: of Apple last week. The DOJ here in the US
Speaker 2: father suit accusing Apple of violating antitrust laws and suppressing
Speaker 2: competition in the culmination of what was a five year
Speaker 2: probe into the company. I want to speak to John Bergmeyer,
Speaker 2: legal director at Public Knowledge, and go a bit deeper
Speaker 2: on this. We were reflecting last week this was a
Speaker 2: big story. You know, from a market's perspective, it's rare
Speaker 2: that a stock shows the pressure of an antitrust action.
Speaker 2: What is your assessment of how strong the DOJ case
Speaker 2: is against Apple?
Speaker 5: I think it's very strong.
Speaker 6: They listed about five behaviors that are not intended to
Speaker 6: gather up all the different complaints that people have about Apple,
Speaker 6: but rather the five behaviors that they think most probably
Speaker 6: violate the law.
Speaker 5: So tho you know, God.
Speaker 2: No, I'm sorry, John, Please continue your thought.
Speaker 5: Yeah.
Speaker 6: Those include using the app store monopoly to prevent certain
Speaker 6: categories apps from competing, blocking banks from accessing the NFC
Speaker 6: chip and other matters, and those classic exclusionary behaviors where
Speaker 6: companies that have a dominant market share, market power, monopoly power,
Speaker 6: whatever you want to call it, they're usually prevented from
Speaker 6: doing things that block out competitors. I think the DJ
Speaker 6: put forward a very compelling narrative showing how Apple, for
Speaker 6: you US, has done just that.
Speaker 2: The Apple argument in this is essentially that the consumer
Speaker 2: does have choice right that they Apple are the maker
Speaker 2: of a creative market. Do you think that that a
Speaker 2: competitive market right in that they offer developers the opportunity
Speaker 2: to make a living, to make apps that are competitive
Speaker 2: with one another. Does that give them any chance of
Speaker 2: warding off this fight from the DOJ, I don't.
Speaker 5: I don't think so.
Speaker 6: If you're a developer, you have no choice but to
Speaker 6: develop for both iOS and Android. And I really doubt
Speaker 6: that the majority of iPhone customers buy iPhones because specifically
Speaker 6: of these exclusive practices. Apple makes excellent products. No one's
Speaker 6: denying that I have an iPhone and I love it.
Speaker 6: The question is not whether Apple makes good products and
Speaker 6: whether it competes, but whether it can use its product
Speaker 6: to control other markets like smartwatches or payment apps.
Speaker 2: John, you work at public knowledge, and I'm summarizing that
Speaker 2: the goal of public knowledge is to make sure that
Speaker 2: each part of the technology and its stakeholders have a
Speaker 2: say in the future.
Speaker 7: Right.
Speaker 2: One of the things that gets debated in the antitrust
Speaker 2: context is who is it serving? Who is it protecting?
Speaker 2: And the argument from the DOJ is that it is
Speaker 2: protecting the consumer. Right, it is making sure that it
Speaker 2: ends in a policy change at Apple that would allow
Speaker 2: for the consumer to have greater choice. But does that
Speaker 2: actually ever happen? Does that actually ever become the end result?
Speaker 6: I think it does very frequently with anti trust cases,
Speaker 6: they do take a long time to litigate, and antitrust
Speaker 6: is not the only tool that policymakers have to protect consumers.
Speaker 6: But here, you know, I repeat again Apple, The DOJ
Speaker 6: is not suing Apple for having products that are too
Speaker 6: good or too integrated. It's suing Apple for blocking competitors
Speaker 6: from doing the same thing on the Apple platform, which
Speaker 6: is so dominant that if you're a competitor, if you're
Speaker 6: a competitor, or if you're an Apple developer, you simply
Speaker 6: have no choice but to develop for the iPhone.
Speaker 2: You just mentioned there that it's not the only tool.
Speaker 2: We often talk about regulating through the courts, but there
Speaker 2: is also, of course lawmaking on Capitol Hill. Is there
Speaker 2: an avenue do you think for Apple to reach some
Speaker 2: kind of settlement with the DOJ where they could just
Speaker 2: work this out behind closed doors?
Speaker 6: You know, I really couldn't predict whether to be a settlement.
Speaker 6: Apple's going to file an answer to the DOJ's complaint.
Speaker 6: That's going to set forth east side of the story.
Speaker 6: And like I say, litigation often takes years to develop.
Speaker 6: In the meantime, though Congress is not sitting on its hands,
Speaker 6: and other regulators around the world are not sitting on
Speaker 6: their hands. Congress introduced a bill it did not pass
Speaker 6: a while ago, called the Access Act, which would have
Speaker 6: opened up the app store monopoly just a little bit.
Speaker 6: And as you've just reported in Europe, you know Europe
Speaker 6: is taking action.
Speaker 5: There's litigation in Australia.
Speaker 6: So it's going to be a very complicated situation, I
Speaker 6: think globally for Apple, and ultimately maybe it isn't their
Speaker 6: interest to try to settle and try.
Speaker 5: To resolve some of these disputes.
Speaker 6: But Apple so far has shown that it just wants
Speaker 6: to fight tooth and nail and resist any attempt to
Speaker 6: regulate over changes behavior.
Speaker 2: It is getting complicated. As you point out, Apple is
Speaker 2: facing antitrust scrutiny on two fronts, the DOJ in the
Speaker 2: US and under the digital market apps in Europe. And
Speaker 2: I just want to say, because it was REMISSI of
Speaker 2: me not to that. If you read the Bloomberg story,
Speaker 2: each of the companies Apple, Alphabet and Meta gave a
Speaker 2: pretty full response saying we are compliant with the DMA.
Speaker 2: So I encourage our audience to go and look at
Speaker 2: those responses. John Bergmeyer, legal director at Public Knowledge. Thank
Speaker 2: you very much now, sticking with Apple for a second,
Speaker 2: Apple CEO Tim Cook has revealed plans to invest further
Speaker 2: in supply chain, stores and research in China. State Media
Speaker 2: says he also made the promise in a meeting with
Speaker 2: Beijing's Commerce Minister. Cook also spoke at the annual China
Speaker 2: Development Forum, saying AI will be an essential tool for
Speaker 2: helping businesses reduce their carbon footprints.
Speaker 8: We would not be able to recover the level of
Speaker 8: material that we do today for recycling without AI. I
Speaker 8: mean it's already fundamental in our calculation, and I think
Speaker 8: it provides an enormous tool and the toolkit for every
Speaker 8: company that's wishing to be carbon neutral or to lower
Speaker 8: their emissions by substantial amount.
Speaker 2: Okay, So, Lucid trading up around five to six percent
Speaker 2: right now at its session. Higher have been up twenty
Speaker 2: one percent as the company received a one billion dollar
Speaker 2: cash injection from its biggest investor, in affiliate of Saudi
Speaker 2: Arabia's public Investment Fund, providing electric car maker Frankly with
Speaker 2: a further lifeline. Here to discuss his Bloomberg's Global Auto's
Speaker 2: editor Craig Throudew and London, I mean you and I
Speaker 2: have been following Lucid a long time, well before the
Speaker 2: reverse merger with this fact that took them public. But
Speaker 2: the point of that is that we've also tracked the
Speaker 2: billions of dollars that the PI, the PITH, PIF and
Speaker 2: its affiliates have put in. Just bring us on to
Speaker 2: speed on how much cash Saudis have put into Lucid
Speaker 2: so far.
Speaker 9: Yeah, I mean this is you know, people talk about
Speaker 9: the Federal Reserve put, you know, the FED put. This
Speaker 9: is the PITH put, if you will. This is another
Speaker 9: billion that the Saudis are putting into Lucid. This is
Speaker 9: on top of a five point four billion that that
Speaker 9: Lucid has said has already been put in by their
Speaker 9: biggest shareholder, and it really was necessary. I mean, it's
Speaker 9: it may be the case that this is not the
Speaker 9: last capital race that we see this year, because this
Speaker 9: is a company that, you know, going into twenty twenty
Speaker 9: four had only a little bit over four billion on
Speaker 9: its balance sheet and there were some expectations among animal
Speaker 9: us that you know, roughly all of that could be
Speaker 9: accounted for in cash burn this year. And so you know,
Speaker 9: Lucid has been a company that you know, when it
Speaker 9: was going public through a reverse merger was looked at
Speaker 9: as you know, a potential Tesla challenger. It's really struggled
Speaker 9: to live up to those expectations and get you know,
Speaker 9: manufacturing going right. I think it let a lot of
Speaker 9: investors down, with their outlook for this year being really
Speaker 9: just a small increase from last year's production.
Speaker 2: Yeah, that seems to be the story of Lucid, right.
Speaker 2: I think they're guiding to nine thousand units this year.
Speaker 2: It's a premium price point they needed eighty five hundred
Speaker 2: last year. But at the same time, there's an EV
Speaker 2: problem generally. Where does Lucid sit within that?
Speaker 9: Yeah, I mean I think there is some hope that
Speaker 9: maybe moving into a new segment into sport utility vehicles
Speaker 9: with the gravity would be you know, a big help
Speaker 9: for them. They to your point, are playing at the
Speaker 9: higher end, and the level of competition there is particularly high.
Speaker 5: In the US.
Speaker 9: I think we've seen you know, so much more you know,
Speaker 9: fighting up at the upper ends of the market where
Speaker 9: we haven't really seen as we have in China, you know,
Speaker 9: cutthrough competition among you know, cheap evs, and so you know,
Speaker 9: when you have when you have to go up against
Speaker 9: more established players like the Mercedes you know and BMW's
Speaker 9: of the world. It's really tough, and Lucid has compelling
Speaker 9: product that the issue that they've had is not being
Speaker 9: able to make enough of it and to be able
Speaker 9: to to make U you know, their their evs without
Speaker 9: losing a ton of money. Uh, you know, the more
Speaker 9: they're making, the more they're losing. And that's not a
Speaker 9: trend that can be sustained.
Speaker 2: As Elon Musk has teased them about in the past,
Speaker 2: prose types of easy production is hard. Overnight, Bloomberg News
Speaker 2: spoke to the CEO c at L, the world's biggest
Speaker 2: maker of batteries for evs. What were the main takeaways
Speaker 2: from that interview.
Speaker 9: I think one of the big ones, of course, was
Speaker 9: an exclusive that ed you were a part of earlier
Speaker 9: this year. This idea that c at L did have
Speaker 9: some equipment that was idle in China that Tesla is
Speaker 9: going to make use of by making more batteries at
Speaker 9: its factory in Nevada. I think this is a company that,
Speaker 9: you know, is really sort of pressing ahead in spite
Speaker 9: of the fact that we're seeing an ev slowdown and
Speaker 9: you know, sort of vowing to continue to add capacity,
Speaker 9: and I think we're seeing this sort of you know,
Speaker 9: broader trend, whether it's c at L on the battery
Speaker 9: side or by D which makes both EV's and batteries.
Speaker 9: You know, the real dominant players in China are sort
Speaker 9: of pressing their advantages over the others and you know,
Speaker 9: continuing to add capacity, cut price, and you know, the
Speaker 9: question is going to be, you know, how much longer
Speaker 9: some of the you know, lesser companies in China can
Speaker 9: sustain themselves, you know, in the face of the big
Speaker 9: getting bigger and getting all the more aggressive to sort of,
Speaker 9: you know, drive out the players who can't keep up.
Speaker 2: Bloomberg's Global Cars editor Craive Trudell. Great to have you
Speaker 2: on the program. Thank you. Now coming up here on
Speaker 2: Bloombog technology, a shakeup at Stability AI and it's c suite,
Speaker 2: more on the resignation of CEO m A. Musqut. Next,
Speaker 2: we're also taking a look at shares of Boeing. You
Speaker 2: must have seen this story up eight ten to one percent,
Speaker 2: way off session highs. CEO Dave Calhoun will step down
Speaker 2: at the end of this year. There are pretty sweeping
Speaker 2: overhauls of leadership Larry Kellner will not stand for reelection
Speaker 2: as chairman and stand deal the guy on the right
Speaker 2: hand side of you the screen, the guy that led
Speaker 2: the commercial business in the commercial airplane division is also
Speaker 2: departing with immediate effect. That is the big story out
Speaker 2: of the aerospace industry this Monday. This is Bloomberg Technology. Okay,
Speaker 2: it's time for talking tech and in the news. Match
Speaker 2: Group is naming two directors to its board following talks
Speaker 2: with activist investors. Elliott Management, the owner of dating apps
Speaker 2: Tender and Hinge, will add Instacart chief marketing officer Laura
Speaker 2: Jones and Zillo co founder Spencer Raskoff to its board immediately.
Speaker 2: Match also said its signed an information sharing agreement with
Speaker 2: Elliott in an effort to quote facilitate ongoing collaboration towards value.
Speaker 2: The company plans to update shareholders on its strategy at
Speaker 2: an upcoming investor day. Plus AI chips startup Elian raises
Speaker 2: sixty million dollars in a Series B funding round led
Speaker 2: by Samsung and Tiger Global. The company provides tech that
Speaker 2: unifies semiconductors to work more smoothly and faster. The funding
Speaker 2: comes as the leader of a semi conductors in Nvidia
Speaker 2: put forward its path of combining chips to work as one,
Speaker 2: relying on the work of companies like Elian to help
Speaker 2: realize their goals, and this is a big one. Stability
Speaker 2: AI CEO M. A. Mustik has resigned. The move comes
Speaker 2: amid quarrels with investors and waves of senior staff departures
Speaker 2: at the British AI startup. In a blog post released Friday,
Speaker 2: Stability AI said it's COO and CTO will serve as
Speaker 2: interim co CEOs. The company's best known for his image
Speaker 2: generation tool Stable Diffusion, and it helped kick off the
Speaker 2: AI frenzy, reaching a value of one billion dollars in
Speaker 2: twenty twenty two. I want to bring in somebody who
Speaker 2: was at the heart of the reporting on this story,
Speaker 2: Bloomberg's Rachel Metz, and I don't say that lightly. You
Speaker 2: covered every single step in this story. But ultimately Emmad
Speaker 2: has resigned.
Speaker 7: What do we know well, we know that he said
Speaker 7: that he is stepping down to work on solving the
Speaker 7: concentration of.
Speaker 10: Power in AI.
Speaker 7: We had been thinking for a while that he may
Speaker 7: be stepping down, and we'd heard rumors about it. We
Speaker 7: were aware that some of the people behind the original
Speaker 7: version of stable Diffusion, who had been in the company
Speaker 7: for quite a while, we're leaving the company. So perhaps
Speaker 7: this helped shift his decision. It's a little bit unclear
Speaker 7: at this point.
Speaker 2: What I've learned over the last few months of you're reporting, Rachel,
Speaker 2: is that there's the company that can all cannot be
Speaker 2: well known, and then there's the tool, right, the generative
Speaker 2: AI tool. In this case, stable diffusion works well, doesn't
Speaker 2: it It isn't well known and leading piece of technology.
Speaker 10: That's correct. It is well known.
Speaker 7: It is a leading piece of technology. It was originally
Speaker 7: developed by a handful of researchers in Germany, and imaed
Speaker 7: stepped in and offered to pay for compute to further
Speaker 7: train this existing model. Previously it was called latent diffusion.
Speaker 7: They renamed it stable diffusion, and IMA decided to spread
Speaker 7: it far and wide, essentially through Stability AI, and that
Speaker 7: helped bring it to the public and popularize it and
Speaker 7: really touched off a lot of what we're seeing now
Speaker 7: in terms of the generative AI boom.
Speaker 2: So, what's left at Stability AI, or should I say
Speaker 2: who is left at Stability AI?
Speaker 7: This is a good question, and we're trying to figure
Speaker 7: out some of this now.
Speaker 10: I mean in terms of like top.
Speaker 7: Tier researchers, I'm not sure if there are that many
Speaker 7: people left there.
Speaker 10: Some of the best best people just left.
Speaker 7: Trying to we have, like you know, we're trying to
Speaker 7: figure out, like who on this list of names from
Speaker 7: some of their biggest research papers is actually still there.
Speaker 7: We're going to have to take a look and see
Speaker 7: what's happening very soon.
Speaker 2: You have to remember who put the companies in these
Speaker 2: positions right used to get their name out there. Here
Speaker 2: are some of the investors behind stability AI.
Speaker 7: CO two and light Speed, and then there's also a
Speaker 7: bunch of smaller and individual investors as well that went
Speaker 7: through like multiple rounds. I mean, it's important to remember
Speaker 7: also that stability AI didn't just emerge fully formed in
Speaker 7: the summer of twenty twenty two.
Speaker 10: It was originally created.
Speaker 7: As a way to use I think it was AI
Speaker 7: to help with COVID related research or rounding up COVID
Speaker 7: related research, if memory serves, and then it sort of
Speaker 7: shifted gears at a.
Speaker 10: Certain point, probably in early twenty twenty two.
Speaker 2: All right, Bloonbose, Rachel Mets who as I say, you
Speaker 2: have been all across the spilid Tai story for months,
Speaker 2: and we appreciated reporting.
Speaker 11: After years in the making, the United States Department of
Speaker 11: Justice has filed its antitrust lawsuit against Apple, threatening its
Speaker 11: underlying business model. The government is taking aim at Apple's
Speaker 11: policies surrounding super apps, cloud gaming services, messaging, tap to pay,
Speaker 11: and support on the iPhone for third party smart watches.
Speaker 11: While Apple has clearly had a negative impact on partners
Speaker 11: like component suppliers and app developers, the first iteration of
Speaker 11: the DOJ's case doesn't really.
Speaker 5: Prove about Apple has harmed consumers.
Speaker 11: Apple has already addressed several of the DOJ's complaints, pledging
Speaker 11: to adopt rcs to enable better texting between iPhones and
Speaker 11: Android devices, and the company has shown that it will
Speaker 11: add new features for developers in the cloud gaming in
Speaker 11: super app spaces. The DOJ is right that the Apple
Speaker 11: Watch is favored over third party smart watches and that
Speaker 11: Apple blocks third party apps from using the NFC chip
Speaker 11: in the iPhone.
Speaker 1: For tap to pay.
Speaker 11: Apple should absolutely address both concerns, but for now it
Speaker 11: seems likely that the entire lawsuit will take a few
Speaker 11: years to result in major changes. Still, I ultimately expect
Speaker 11: Apple to crack the iPhone open in the same vein
Speaker 11: as it is doing in the European Union because of
Speaker 11: the Digital Markets Act. All of that being said, the
Speaker 11: DOJ is still distracting from some real issues by focusing
Speaker 11: on result matters, including making frivolous claims that Apple is
Speaker 11: behind the downfall of the Amazon firephone.
Speaker 2: A decade ago.
Speaker 11: Still, things can change quickly, especially when new evidence emerges
Speaker 11: in a trial. Ultimately, the lawsuit seems a bit frivolous,
Speaker 11: But there is a lot that Apple has changed, and
Speaker 11: there's a lot that it can still change. I'm Markerman
Speaker 11: for Bloomberg News.
Speaker 2: That was this week's Power On with Boomers. Mark German.
Speaker 2: Let's take a quick look Apple shares with down more
Speaker 2: than a percentage point in the session. There the probe
Speaker 2: by the European Commission in Europe in the context of
Speaker 2: the Digital Markets Act. When we covered the DOJ suit
Speaker 2: last week, the stockfell four percent Thursday, biggest drop since August,
Speaker 2: but the entirety of its decline year state's about twelve percent.
Speaker 2: It's a stock that's starting to feel the antitrust pressure.
Speaker 2: We talked about that in two fronts, just real quick
Speaker 2: on the DMA, and Apple spokesperson did tell Bloomberg that
Speaker 2: Apple feels it is fully compliant with the DMA. This
Speaker 2: is bitcoin, and you noticed that jump just before we
Speaker 2: came on air, back up towards seventy thousand US dollars
Speaker 2: per token. There is a calendar moment coming up. Bitcoin
Speaker 2: is approaching its highly anticipated halving event, which was lower
Speaker 2: the supply of newly minted bitcoin from minors. Bitcoin of
Speaker 2: course hit records after each of the last three harvings
Speaker 2: got a good guest view. Let's bring in Strike CEO
Speaker 2: Jack Mallers, who I have discussed this with before. But Jack,
Speaker 2: just give me your thoughts on the harving.
Speaker 1: What's going on? Ed, I miss you brother.
Speaker 2: You look good.
Speaker 1: The bitcoin having, yeah, of course, man, the.
Speaker 2: Having is a huge deal.
Speaker 12: So just to be clear, everyone is aware of the
Speaker 12: fixed supply of bitcoin. There will only ever be twenty
Speaker 12: one million, but not all twenty one million have been
Speaker 12: issued to the world yet, and so bitcoin is on
Speaker 12: a fixed issuance schedule. Satoshi programmed when he launched he
Speaker 12: or she here they launched bitcoin on how those would
Speaker 12: be issued out.
Speaker 1: We're at about.
Speaker 12: Nineteen million out of twenty one so far. In every
Speaker 12: ten minutes, more and more get issued, and the having
Speaker 12: is when that issue ince schedule gets cut in half.
Speaker 12: So the supply, the forced sellers, those that pay money
Speaker 12: to produce bitcoins, which then have to sell it to
Speaker 12: pay for their costs, that's.
Speaker 1: Going to be halved.
Speaker 12: And so the really simple way to think about it,
Speaker 12: ed is if demand remains the same and the bitcoin
Speaker 12: sold gets cut in half, should have an impact on
Speaker 12: the price to the upside. So it's a big event
Speaker 12: and we're all pretty excited about it.
Speaker 2: Jack, have a healthy and robust debate here, but just
Speaker 2: give me a moment to outline a counterpoints, because you've
Speaker 2: been in the camp for a while, right that there
Speaker 2: is only ever going to be twenty one million bitcoin
Speaker 2: and so prices have to go up. That's kind of
Speaker 2: the argument you've made, if you'll just give me that,
Speaker 2: and you've talked about in the context of hyperinflation, don't
Speaker 2: be holding dollars, But I would point out that the
Speaker 2: market doesn't see further inflation, it doesn't see more inflation
Speaker 2: to come. And if you'll allow me, if you look
Speaker 2: at this morning's trading in terms of liquidity. I think
Speaker 2: thirty to forty billion dollars worth of bitcoin was out
Speaker 2: there in the market. So there are counterpoints to the
Speaker 2: thesis that you've outlined. Is that the end of your point,
Speaker 2: end of my point, Please proceed, Okay.
Speaker 1: Yeah, I was trying to be played. I mean, let's
Speaker 1: dumb it down.
Speaker 12: The problem with central planning money, which is such a
Speaker 12: core technology to society working.
Speaker 1: Think about it, Ed.
Speaker 12: You go to work every single day and you pour
Speaker 12: your blood, sweat and tears all of the time you
Speaker 12: spend on this planet in exchange for what.
Speaker 1: Money.
Speaker 12: So the central planning of money convolutes and complicates so
Speaker 12: much of the inner workings of society.
Speaker 1: Let's go back to basics. Our government is in debt, right,
Speaker 1: yes or no? The US government? That is what all governments. Right.
Speaker 1: Our government's in debt. Okay.
Speaker 12: Traditionally, Ed, if I owed you twenty bucks, I'd have
Speaker 12: two options. I'd one have to default on that and say,
Speaker 12: you know what, Ed, I hope you still consider me
Speaker 12: a good friend, but I'm not going to make hole
Speaker 12: on that twenty dollars.
Speaker 1: The other is I could pay it back.
Speaker 12: Those are classically the two options that anyone in debt
Speaker 12: has right now. The government, because they centrally plan and
Speaker 12: control our currency, unfortunately, has a third and that's that
Speaker 12: they can print more money, devalue the debt that they
Speaker 12: have and that they owe, and allocate more capital to themselves.
Speaker 12: So our government can't default. The US, the United States
Speaker 12: of amer cannot default on debt. It would collapse the
Speaker 12: entire planet. We also cannot afford to pay it back.
Speaker 12: So if you just like listen, I didn't even go
Speaker 12: to college, brother, this is just one oh one basics
Speaker 12: how the world works. If we can't default and we
Speaker 12: can't pay it back, what's the only option that they
Speaker 12: have to do, no matter what they sit and tell
Speaker 12: you at the FED chair meetings and all of the economists.
Speaker 1: They have to issue more dollars.
Speaker 12: And so if there's going to be more pieces of
Speaker 12: green paper, you want them competing for the most fixed thing. Right,
Speaker 12: there's more dollars that are competing for a fixed amount
Speaker 12: of bitcoin. And yes, real estate's going to go up
Speaker 12: too because there's more dollars competing for real estate. But
Speaker 12: they can make more real estate, they can find more gold,
Speaker 12: they can't make any more bitcoins.
Speaker 1: And that's just. I mean even a college dropout can
Speaker 1: understand that.
Speaker 2: My friend da let me jump in and again just
Speaker 2: reistrate your The basic argument is that they are only
Speaker 2: ever going to be twenty one million bitcoin and the
Speaker 2: finality of that, what am I trying to say? The
Speaker 2: supply constraint on that is what we'll provide up with momentum.
Speaker 2: I have many questions for you. I think, put your
Speaker 2: Strike CEO hot on and let's talk about payments. Give
Speaker 2: me an update on the state of crypto payments. We've
Speaker 2: got a lot of questions about this about real world
Speaker 2: adoption because we kind of over the market mechanics of bitcoin.
Speaker 6: Now.
Speaker 2: I think, at this point, what are you saying out
Speaker 2: there globally?
Speaker 12: I think the biggest I don't know if it's tension,
Speaker 12: the biggest story is stable coins for sure. Here's my
Speaker 12: personal take. A Bitcoin is the only neutral value transfer.
Speaker 1: Protocol for the world.
Speaker 12: We view it at Strike as the single value transfer
Speaker 12: protocol for planet Earth. Now that sounds like a lot
Speaker 12: of gobblygook. What I actually mean by that is bitcoin
Speaker 12: is the only physical digital instrument. So a stable coin
Speaker 12: is just an IOU for a bank deposit. It's like
Speaker 12: an innovation to AH but you have counterparty risk with
Speaker 12: the issuer, with regulators, with where the bank posit is
Speaker 12: held at that bank, what if they're fractional reserve. So
Speaker 12: bitcoin's the only physical instrument on the Internet that we
Speaker 12: can move globally, so we view it as the way.
Speaker 12: It's like the TCPIP of value transfer to the web.
Speaker 12: But the problem, I think is that consumers around the
Speaker 12: world prefer stable coins because of their relative stable value
Speaker 12: to bitcoin. So when you have emerging markets like in Africa,
Speaker 12: like Latin America, all through Latin America.
Speaker 1: They find it difficult to stomach the volatility.
Speaker 12: If you're living paycheck to paycheck, bitcoin can be an
Speaker 12: intimidating asset. So where we are spending a lot of
Speaker 12: our time is trying to meet the consumer demand of
Speaker 12: Africa of Latin America, where bitcoin the technology is just
Speaker 12: so far ahead of everything else, but the dollar value
Speaker 12: is valuable to consumers in these regions. So I think
Speaker 12: that's going to be a lot of the payments innovation
Speaker 12: over the next few years is the marrying of those
Speaker 12: two counts.
Speaker 2: Well, just a quick follow up on that. So geography
Speaker 2: was one of the other questions that we got so
Speaker 2: for example, you know, how's the l Salvador HQ going
Speaker 2: as one example, But you mentioned I think Africa in
Speaker 2: Latin America, do you kind of have we only have
Speaker 2: a few second chatter. Do you have a specific list
Speaker 2: of countries to which you've actually expanded service.
Speaker 1: Yeah, we just launched Strike Africa.
Speaker 12: I think Listen, every single person on the planet is
Speaker 12: dealing with Fiata basement is dealing with What I explain
Speaker 12: is the fact that their government has to issue more
Speaker 12: of their currency.
Speaker 1: So access to bitcoin is paramount.
Speaker 12: Is the killer use case because it's the only thing
Speaker 12: that no one on the planet can create more of.
Speaker 12: And then for payments, we think it's fascinating to disrupt
Speaker 12: cross border payments. I mean, the fact that I can
Speaker 12: move something physical like a water bottle or my iPhone
Speaker 12: from here to Nigeria but it's a bitcoin is crazy, man.
Speaker 12: The cost should really come down there. So Africa we've launched.
Speaker 12: Europe is up next, Latin America after that. We're on
Speaker 12: a war path to bring a bitcoin focused consumer experience
Speaker 12: to the world no alt coins, and we're doing well.
Speaker 1: I'm curious to see where this goes.
Speaker 2: Jack, I actually have a question for you in real
Speaker 2: time through the ib on. The Bloomberg terminon is going
Speaker 2: to read it to you, Jack. How can the blockchain
Speaker 2: sustain itself if the miners who are validating the transaction
Speaker 2: mine less and less new coins. That's a direct question
Speaker 2: to you for more audience.
Speaker 12: Yeah, So the miners get paid fees, so every single
Speaker 12: transaction is a fee associated with it, So miners in
Speaker 12: theory collect revenue. There's been blocks as of recent where
Speaker 12: the fees actually are more than the issuance reward.
Speaker 1: But the bitcoin protocol also auto.
Speaker 12: Adjusts itself, and the difficulty required to mind blocks changes
Speaker 12: by how many people are money as well.
Speaker 1: So the protocol is built to sustain itself.
Speaker 12: And this is also a problem that is way out
Speaker 12: in the future. I think sometimes when people get stressed out, listen,
Speaker 12: the bitcoin price is outpacing the havings.
Speaker 2: Right.
Speaker 12: Bitcoin is going up multiples more than the issuance is
Speaker 12: being had. Bitcoin's already up over one hundred percent in
Speaker 12: the last calendar year.
Speaker 2: Right.
Speaker 12: So I think that this is an anxiety inducing problem
Speaker 12: that we may face in twenty thirty, forty fifty, one
Speaker 12: hundred years. But the answer is Sutoshi's intention was transaction
Speaker 12: fuse is that people pay for block space, pay to
Speaker 12: get transaction finality and that should sustain the network.
Speaker 2: Plenty Stroke CEO Jack Mallis, thank you for fielding my questions.
Speaker 2: Thank you for fielding audiences questions. We'll get you on
Speaker 2: in the near future. Now coming up on the show,
Speaker 2: Frontline Ventures wants to accelerate transatlantic expansion for B to
Speaker 2: B software companies in both the US and Europe with
Speaker 2: a brand new fund. We're going to talk more about
Speaker 2: that next for Frontline Ventures partner Zoe Chambers. Stick with us.
Speaker 2: This is Blion by Technology. Okay. Frontline Ventures recently raised
Speaker 2: two hundred million dollars across two new funds with a
Speaker 2: goal of accelerating transatlantic expansion for B to B software
Speaker 2: companies that's in both the US and Europe. I want
Speaker 2: to bring in Frontline Ventures partner Zoe Chambers for today's
Speaker 2: VC Spotlight. So what qualifies then as a transatlantic B
Speaker 2: to B software company? What would a startup or founder
Speaker 2: have to offer you to get a check out of
Speaker 2: those funds?
Speaker 9: Well?
Speaker 13: Absolutely, First of all, thanks so much for having me
Speaker 13: this morning, ed As you mentioned my name, Zoe Chambers
Speaker 13: and I'm one of the partners here at Frontline for Ventures.
Speaker 13: So we have two complimentary strategies. We have a European
Speaker 13: early stage fund that looks to be the first institutional
Speaker 13: check into startups that really are globally ambitious and look
Speaker 13: to want to accelerate their market entry into the States.
Speaker 13: And then we have a growth stage fund which invests
Speaker 13: Series B to D and looks at helping those companies
Speaker 13: enter into the European market. And we have done that
Speaker 13: so far with companies that include Mosaic mL which is
Speaker 13: now part of Data Bricks, Van to Lattice, Attentive, and Navan.
Speaker 2: I find that really interesting. Does it reflect a deficit
Speaker 2: of talent or a deficit of companies operationalized in one
Speaker 2: market versus another, or is it just the opposite that
Speaker 2: if you want to grow a really good software or
Speaker 2: SaaS company, you kind of need to be in those markets.
Speaker 2: That's exactly it.
Speaker 10: It's that point.
Speaker 13: So fundamentally, seventy percent of global software spend comes from
Speaker 13: the US in Europe, and in fact, seventy percent of
Speaker 13: benure capital dollars is also in those two markets. So
Speaker 13: our whole fund strategy centers around the core belief that
Speaker 13: you have to access and win in both the US
Speaker 13: and Europe if you truly want to be, you know,
Speaker 13: a category leader and go on to IPO.
Speaker 10: So it's more about the.
Speaker 13: Most talented want to have a foothold in both of
Speaker 13: those geographies because they are just so important.
Speaker 2: So when Frontline is looking for this talent that the
Speaker 2: founders tell me about the firm and how it's set up,
Speaker 2: do you have people transatlantic as well in terms of
Speaker 2: your offices.
Speaker 10: We absolutely do.
Speaker 13: So we have folks in San Francisco, in New York,
Speaker 13: in Dublin, and in London, and that kind of follows
Speaker 13: not only kind of where talent is, but equally the
Speaker 13: key for landing spots when you are a US company
Speaker 13: who expands into Europe tends to be London, Dublin, Amsterdam
Speaker 13: and Berlin and then the other way around. You know,
Speaker 13: San Francisco, New York absolutely too, very strong, mature ecosystems,
Speaker 13: and so of course we have partners.
Speaker 2: On the ground there Frondline Ventures partner Zori Chambers. Two
Speaker 2: new funds two hundred million dollars going after the transatlantic startup.
Speaker 2: Thank you for joining us, appreciate it so Instagram users
Speaker 2: are taking to rival platforms, for example x to voice
Speaker 2: some outrage. The parent company Meta quietly rolled out a
Speaker 2: feature that limits political content by default when it comes
Speaker 2: to suggested posts. I want to bring in Bloomberg's Kaylee
Speaker 2: lines out of DC. This is an interesting one. It
Speaker 2: is like user protests just explain the story to me.
Speaker 14: Well, this is interesting ed because actually both Instagram and Threads,
Speaker 14: of the two platforms here, had announced that these changes
Speaker 14: were coming in a blog post back in February, essentially
Speaker 14: saying they were no longer going to be proactively recommending
Speaker 14: political content. They said at the time that if you
Speaker 14: decide to follow accounts that post political conduct, they don't
Speaker 14: want to get between you and their posts. But they
Speaker 14: also don't want to proactively recommend content from accounts that
Speaker 14: you don't follow. So this isn't about who you follow,
Speaker 14: it's about who you don't and that not coming up
Speaker 14: in your explore page, explore page for example, or reels
Speaker 14: when it relates to political content. So now it's the
Speaker 14: default setting that you won't see that political material in
Speaker 14: less you select to. In response, some have said maybe
Speaker 14: this is a way to reduce misinformation or inflammatory content
Speaker 14: being circulated in an election year, but others are saying
Speaker 14: that they could limit political discourse in an election year.
Speaker 14: There is also a lot of concern about how exactly
Speaker 14: the companies are defining political content, what exactly that means,
Speaker 14: and how they're categorizing it. In that same blog posts
Speaker 14: Instagram put out last month, they suggested it could be
Speaker 14: potentially related to things like laws, elections.
Speaker 1: Or social topics.
Speaker 14: Obviously that's a pretty broad basket, and so in response,
Speaker 14: you're getting users on all ends of the political spectrum
Speaker 14: that seem to be unhappy with this. Right landing users
Speaker 14: have suggested this could be yet another example they see
Speaker 14: of efforts to censor conservative speech in particular, but even
Speaker 14: some on the right say they see this as an
Speaker 14: attempt by the platform to limit pro Palestinian conflict. So
Speaker 14: it's just another example of the difficulty between policing content,
Speaker 14: making sure misinformation doesn't circulate, but also abiding by First
Speaker 14: Amendment rights granted with the right to free speech.
Speaker 2: It's an interesting case study in the election year because Meta,
Speaker 2: the parent of Facebook, Instagram and Threads, is kind of
Speaker 2: being proactive saying well, here's a new policy, but the
Speaker 2: user base doesn't like it. Has the company updated its
Speaker 2: messaging or said anything more recently that suggests they might
Speaker 2: make a change, not that I have seen ed.
Speaker 14: Now it becomes a question of whether a change could
Speaker 14: be enforced in terms of policing this content. We have
Speaker 14: seen just last week, for example, the Supreme Court hearing
Speaker 14: arguments in the Murphy versus Missouri case, essentially a lawsuit
Speaker 14: that was brought against the Biden administration arguing that the
Speaker 14: Biden agencies, like the CDC for example, went too far
Speaker 14: in their efforts to pressure platforms, including what was then
Speaker 14: Twitter even Meta, to take down information related to the
Speaker 14: twenty twenty election, for example, the validity of the results,
Speaker 14: the efficacy of COVID nineteen vaccines. We're still going to
Speaker 14: away of ruling from the Supreme Court in that case,
Speaker 14: but it could have actually pretty sweeping ramifications for the
Speaker 14: way that these social media platforms police their content.
Speaker 5: So it's a question of whether laws could.
Speaker 14: Actually enforce any kind of change on the part of
Speaker 14: these platforms, not just whether they'd left to change policy themselves.
Speaker 2: All right, Bloomer's Kaylee lines out of DC really appreciate
Speaker 2: the reporting. Let's talk markets again after last week's public listings.
Speaker 2: Could the us IPO window finally be reopening like properly.
Speaker 2: Next in line is Ibota, the consumer tech company which
Speaker 2: offers cash back rewards on various purchases through the Ibota
Speaker 2: Performance Network, mobile app and website. Guesses on the story
Speaker 2: Bloombo's Katie ruth I, remember you guys reporting last week
Speaker 2: about the banks involved in this one. Update me on
Speaker 2: where this name's at.
Speaker 15: That's right? So we had you know, scoop that they
Speaker 15: had hired bankers late last year, and then last Friday
Speaker 15: the filing came out that they revealed their financials indicating
Speaker 15: that they planned to go public in the coming weeks.
Speaker 2: Okay, so Ibota, am I saying that right? Ibota? I
Speaker 2: think that's right.
Speaker 15: Ibota, as I bought a thing.
Speaker 2: That's what the company told me. Oh rather than Robot,
Speaker 2: I bought a thing. Okay, tell me the basics of
Speaker 2: the business, Like, is this one we're hyped about? Is
Speaker 2: this an exciting tech name?
Speaker 15: So it almost hails from the Groupon era, It's from
Speaker 15: more than a decade ago. It's coupon related, although it
Speaker 15: is different than Groupon, but you can get cash back
Speaker 15: at you know, a lot of different retailers particularly groceries.
Speaker 15: They have a large partnership with Walmart. Walmart is a
Speaker 15: strategic investor here and so yeah, they help, you know,
Speaker 15: users make money while shopping, or at least get a
Speaker 15: portion of the money they're spending back.
Speaker 2: Valued at one billion dollars Series D Round twenty nineteen.
Speaker 2: Another IPO for us to be excited about. Blimber's Katie Ruth,
Speaker 2: great reporting, Thank you very much. So that does it
Speaker 2: for this edition of Bloomberg Technology. It was going to
Speaker 2: be a slow Monday, and it became a very busy
Speaker 2: news heavy Monday. Recap the show on the podcast. Wherever
Speaker 2: you're getting your podcasts, we're publishing it to the Bloomberg
Speaker 2: platforms like the Bloomberg Terminal on websites, but we're also
Speaker 2: putting in podcasts on Apple Spotify, and iHeart why because
Speaker 2: lots of people listen to podcasts on platforms like that,
Speaker 2: and I know that Joe Rogan's up there, but Bloomberg
Speaker 2: Technology it's a pretty good podcast too. This is a
Speaker 2: short week. Remember it's a market's holiday at least in
Speaker 2: the US. This Friday earnings has kind of been and gone,
Speaker 2: so we're still continuing to follow what's going on in
Speaker 2: the antitrust context. What's going on with crypto markets, in
Speaker 2: particular Bitcoin from San Francisco because Carros out, this is
Speaker 2: Bloomberg technology. Have a great day.