Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: live from Coast to Coast with Caroline Hyde in New
Speaker 1: York and Vla Low in Sentrancisco.
Speaker 2: This is Bloomberg Tech coming up. Intel shares tumble after
Speaker 2: the CEO sparse concerns that he's more focused on cost
Speaker 2: cutting than innovation class.
Speaker 3: Tesla said to roll out it's robotaxi service in San
Speaker 3: Francisco this weekend, according to reports, But how robo is
Speaker 3: it with a person in the driver's seat?
Speaker 2: And the FCC approves Paramount's merger with sky Dance after
Speaker 2: a few concessions to appease the Trump administration.
Speaker 3: But first ed we check in on these markets after
Speaker 3: a week that has been a relatively turbulent one in
Speaker 3: the face of the micro that is the earnings story
Speaker 3: and the macro that is Japan trade deal, and what
Speaker 3: we see in terms of the Federal Reserve, whether it
Speaker 3: cuts or whether it doesn't, and that relationship between fedshare
Speaker 3: pal and Trump as he visits, of course, the new
Speaker 3: building site of the Federal Reserve. We're actually up eight
Speaker 3: tenths of percent over the last five trading days because
Speaker 3: big tech has managed to win out in the pot
Speaker 3: of the AI action plan some semiconductor outperformance. Move on
Speaker 3: to some of the individual names though, because some earnings
Speaker 3: on the semiconductor front have not been pleasant. But I
Speaker 3: also want to look what's happened in the world a
Speaker 3: crypto for you before you get to the micro ed
Speaker 3: I'm down three percent on bitcoin. That's more about the
Speaker 3: Fed story. That's more about the fact that maybe the
Speaker 3: Federal Reserve won't be cutting in the near term with
Speaker 3: pressure off of fedschare Pal's role. It seems Trump and
Speaker 3: him meet over the course of the last day or so.
Speaker 3: We're down three percent.
Speaker 2: What if you've got Yeah, Intel, Intel's probably our top
Speaker 2: tech story, and it's probably our top earning story. The
Speaker 2: stocks down more than nine percent, on track for its
Speaker 2: biggest drop since the first week of April. The print
Speaker 2: was fine, and we'll get into that in just the moment.
Speaker 2: But all it took was just a few words from
Speaker 2: lit Boutan on the earnings call. Basically a focus on
Speaker 2: cost cutting, not on the pro not an innovation. The
Speaker 2: result is after ours pre marketing. Now in the session, tumble, Caroline,
Speaker 2: bring us the details.
Speaker 4: Yeah, let's get all the results from Ian King, I
Speaker 4: have to say this almost felt like an emission of defeat,
Speaker 4: the fact that they're pulling back on their manufacturing, but
Speaker 4: they're also pulling back on almost innovating in Yeah.
Speaker 5: I mean this is the way that analysts have interpreted
Speaker 5: what he said, which is that this future production technology,
Speaker 5: this you know, this key to them being more competitive.
Speaker 5: Maybe we won't do it. Maybe we won't do it
Speaker 5: if we don't get commitments from outside customers, and that
Speaker 5: is not being taken well at Harbye analysts who have
Speaker 5: been listening to the company telling them, Hey, this technology,
Speaker 5: there's fourteen A, this is the key to our future.
Speaker 5: This gets us back in the game. And now maybe
Speaker 5: we're not going to do it. So there's a lot
Speaker 5: of a lot of like what's going on here sort
Speaker 5: of reaction to them.
Speaker 2: In the headline that's driving the stock lower is that
Speaker 2: the CEO is struggling to convince Wall Street that the
Speaker 2: turnaround is intact. You had some time on the phone
Speaker 2: with the CFO Daves Instare, and part of what you
Speaker 2: guys discussed was where they will pull back, probably in Europe,
Speaker 2: and where they'll continue to invest. What can you tell us?
Speaker 5: Yeah, I mean they under pat Gelsinger had all of
Speaker 5: you know, laid out a map of basically covering the
Speaker 5: world of all of these new projects that they were
Speaker 5: going to do that you know that they were going
Speaker 5: to make themselves this manufacturing powerhouse again Germany, Poland packaging
Speaker 5: facilities here there and where all of those are going, right,
Speaker 5: And even the keystone project of Ohio, which we already
Speaker 5: know has been delayed, is going to be delayed even further.
Speaker 5: So we're seeing a kind of a retreat on that building.
Speaker 5: And what they said was, look, we're not we're not
Speaker 5: going to build ahead of demand. We're going to wait
Speaker 5: until we get demand. And you know, they alerts a
Speaker 5: quite good well done, that's sensible. But then when we
Speaker 5: talk about future technology, then that's when things get tricky,
Speaker 5: and that's when people get.
Speaker 3: Concerned, concern that they're not going to build fourteen A
Speaker 3: until they get the commitments in. But what I'm really
Speaker 3: interested in is how this fits in the context of
Speaker 3: security of supply chain here in the United States. How
Speaker 3: can the federal government that wants an AI action plan
Speaker 3: and manufacturing here in the US just let Intel delay
Speaker 3: Ohio back to at least twenty thirty.
Speaker 5: Yeah, I mean probably more important than Ohio would be
Speaker 5: fourteen A, which because if they don't go to fourteen A,
Speaker 5: there's new production technologies, and they're effectively saying that's it,
Speaker 5: we're done, We're.
Speaker 6: Frozen in time.
Speaker 5: So US indigenous semiconductor leading edge capability grind, store, halt
Speaker 5: and doesn't advance. So clearly that would be a massive
Speaker 5: concern to the government were that scenario to unfold. And
Speaker 5: that's something which is obviously people are going to focus
Speaker 5: on very heavily.
Speaker 2: Bloombergsy and King who leads our semiconducts of coverage. Thank
Speaker 2: you very much. It's actually been a really busy week
Speaker 2: of tech earnings across the world of tech, software, hardware, chips,
Speaker 2: in some of the hyperscalers as well. Let's get out
Speaker 2: to Brent Hill Jeffrey's analysts, and it's been a week
Speaker 2: that's really interesting. I just got back from Washington, DC,
Speaker 2: right Brent for the AI action Plan. I listened to
Speaker 2: the President. I appreciate that Intel is not actually on
Speaker 2: your coverage list, but it was interesting that Intel wasn't
Speaker 2: in the room there in DC. Alphabet wasn't either. They
Speaker 2: had their earnings print. Would you say there's kind of
Speaker 2: one core lesson right now about what's happening in infrastructure
Speaker 2: in America and what the biggest result of this week
Speaker 2: has been from the administration.
Speaker 7: Yeah, I think the key takeaway is that the AI
Speaker 7: investment boom is still happening at a rapid rate.
Speaker 8: There's no slowdown.
Speaker 7: Google raised their entire CAPEX from seventy five to eighty
Speaker 7: five billion on their cloud business, not their AD business.
Speaker 7: So that's selling Google Cloud to enterprises, and I think
Speaker 7: it tells you that we're still in the infrastructure buildout.
Speaker 7: We continue to see the dirt, the energy, the power lines,
Speaker 7: the core servers. That's really been the focus. And the
Speaker 7: AI trade has not come to applications. That has not
Speaker 7: gone to Salesforce or Adobe, to many those names.
Speaker 8: They're not monetizing this.
Speaker 6: Yet.
Speaker 7: We think that happens, and that has to happen for
Speaker 7: AI to work. In our view, that we have to
Speaker 7: go up through the infrastructural layer of the application layer.
Speaker 7: And so I think that's the next chapter. But I'd
Speaker 7: say so far alive and kicking in doing very well
Speaker 7: in AI infrastructure. There's been no signs of slowdown. You
Speaker 7: heard Mark Zuckerberg talk about spending hundreds of billions of
Speaker 7: dollars in CAPEX. Just a couple of weeks ago, Google
Speaker 7: just raised their CAPEX by ten bill and then we've
Speaker 7: got Microsoft Amazon on deck, and we think that ultimately
Speaker 7: in our checks, the demand for hyperscale er infrastructure is accelerating.
Speaker 8: They we're seeing the terrifories starting to shake off.
Speaker 2: Brent. The AI Action Plan largely focuses on deregulation and
Speaker 2: expedited permitting. Of all of the companies that you cover,
Speaker 2: where that's relevant, how will it help them?
Speaker 8: Well, I think it should help the entire industry.
Speaker 7: If we have lower bars and lower regulation, we're going
Speaker 7: to see hopefully a lot more consolidation. I think the
Speaker 7: one thing we're seeing is there's a lot of companies
Speaker 7: that say their AI first. We saw this movie and
Speaker 7: the Internet boom in the nineties. We saw this in
Speaker 7: the cloud boom. There's going to be massive consolidation. So
Speaker 7: you're seeing already the beginning.
Speaker 8: Of an M and A wave.
Speaker 7: So I think it will help M and A, It
Speaker 7: should help the buildout, It should help protect the US
Speaker 7: in terms of what we're.
Speaker 8: Doing as a country in AI.
Speaker 7: So I think, you know, the President has this right,
Speaker 7: and certainly you look at our allies and building this.
Speaker 7: It's a collection of different technology companies and I think
Speaker 7: what we're we thought what happened at the beginning of
Speaker 7: AI is that we consolidate power to a few, and
Speaker 7: what we're finding is it's consolidating power to many, and
Speaker 7: so there's just not enough capacity. Everyone's capacity cans train.
Speaker 7: Google said their capacity constrain. Microsoft said they were going
Speaker 7: to be constrained. But what's happening now is that you're
Speaker 7: seen demand gets spread all over and that's actually good
Speaker 7: for the ecosystem and good for many vendors over time. Again,
Speaker 7: I think you're going to see a tremendous amount of
Speaker 7: cleanup in M and A, and that needs to happen
Speaker 7: because there's probably going to be too many comedies chasing
Speaker 7: this long term. But short term, I think, you know,
Speaker 7: there's no question we're an AI boom, and it's really exciting.
Speaker 6: And I think it's real.
Speaker 7: I don't think this is this is fake like we've
Speaker 7: seen in other tech trends.
Speaker 3: It's interesting service now. Bill mcdermin yesterday saying this is
Speaker 3: an existential issue for many in CRM who aren't on
Speaker 3: the AI bandwagon. I'm thinking about to IBM, and they
Speaker 3: look like they're selling well in terms of consulting into AI.
Speaker 3: The software bit was a little bit woolly, and people
Speaker 3: pulled back from what had been a ramp up in
Speaker 3: the stop Brent, just before we push forward to what's
Speaker 3: next week?
Speaker 8: What did you make of some of the.
Speaker 3: Weaker plays and how much do they get beaten.
Speaker 8: Up this week? I mean, IBM didn't have a phenomenal quarter.
Speaker 7: They introduced, you know, a new infrastructure cycle and that
Speaker 7: kind of possum man. They also are integrated and Ashi,
Speaker 7: which is a deal they did, and so the software
Speaker 7: business decelerated the point you know, it wasn't it wasn't terrible,
Speaker 7: but the stock could run up and is almost sitting
Speaker 7: at the same multiple that Microsoft was at. And I think,
Speaker 7: you know, IBM is a single digit grower. Microsoft is
Speaker 7: a double digit grower. So I think the stock got mismarked.
Speaker 7: We don't have a buy on IBM. We like what
Speaker 7: they're doing, We like Arvin's software centric strategy. So we're
Speaker 7: we're fundamental fans with stock. Just had a big move
Speaker 7: and it kind of didn't didn't make sense. Maybe where
Speaker 7: it was at based on the results.
Speaker 9: Yeah, so I don't.
Speaker 7: I went to look at IBM's results and say, you
Speaker 7: know that they're a proxy.
Speaker 8: Actually, the CEO upgraded the overall.
Speaker 7: Economy from cautiously optimistic to optimistic, and I said, well,
Speaker 7: what's next. Is there ludicrous feed or is there another
Speaker 7: speed above optimistic? But you know, Arvin, you know, has
Speaker 7: a pretty good lens and what he sees. And I
Speaker 7: think that was probably the most interesting thing, which is
Speaker 7: to us that that's a good telltale what's about happened
Speaker 7: next week?
Speaker 3: Yeah, I mean Avin told me his he's really looking
Speaker 3: at M and A at the moment, and also that
Speaker 3: he's more optimistic about consulting for twenty twenty six in
Speaker 3: years about twenty twenty five push forward then for next week,
Speaker 3: and the optimism around what this means to Microsoft spend,
Speaker 3: what this means for Amazon spend, and how much their
Speaker 3: cloud units are growing.
Speaker 6: Yeah.
Speaker 7: So Microsoft, they're on acceleration path. They've said their capacity
Speaker 7: can train. They're accelerating the guide to an acceleration. We're
Speaker 7: now looking at a mid thirty percent Azure infrastructure build
Speaker 7: for Amazon. Last quarter they put up twenty percent backlog
Speaker 7: and that was up from fourteen, So their backlogs growing.
Speaker 8: Which is a sign of what was going to happen
Speaker 8: with revenue.
Speaker 7: So we continue to see right now continued acceleration across
Speaker 7: the board. And again I would highlight we haven't even
Speaker 7: seen AI hit these numbers in a big way. I
Speaker 7: mean for all those brand communies, it's less than five
Speaker 7: percent this whole revenue.
Speaker 2: Sorry, sorry to in trouble. We just have thirty second
Speaker 2: steft by When to ask that is Capex still the
Speaker 2: data point to watch or you want to see top
Speaker 2: line growth as a result of Capex the prior.
Speaker 7: Year booking bookings is number one revenue growth and then
Speaker 7: are Capex in that order.
Speaker 2: Brent Till Jeffrey, it's great to have you back on
Speaker 2: Bloomberg Tech. We really appreciate your time. Thank you very much.
Speaker 2: Now coming up, Tesla's reportedly set to expand its robotaxi
Speaker 2: roll out this weekend to the city of San Francisco.
Speaker 2: We'll find more on that next. This is Bloomberg Tech.
Speaker 3: Time now for Talking Tech and first up Lift and
Speaker 3: it has pants to deploy autonomous shuffles in the United
Speaker 3: States in late twenty twenty six. Because it tries to
Speaker 3: catch up to Uber's driverless Rise. Now Lift will partner
Speaker 3: with Austria based manufacturer has been Teller Group to test
Speaker 3: its pull on electric shuffles in cities and airports. Plus
Speaker 3: Alphabet Cio Sunda pitch Eye is now worth over one
Speaker 3: billion dollars according to the Bloomberg Billionaires Index. Now the CEO
Speaker 3: holds just zero point not two percent economic stake in
Speaker 3: the company. But how that has added more than eight
Speaker 3: trillion dollars in market value since twenty twenty three. ASPACEX
Speaker 3: is starlink satellite internet service network. Well, it's been restored
Speaker 3: over an hour's long outage. The Elon must lead unit
Speaker 3: said in a post on x that the issues had
Speaker 3: been resolved. We didn't say how widespread the issue was
Speaker 3: or how many subscribers were affected.
Speaker 2: Ed Okay, let's get to elsewhere. In Elon Inc. Tesla
Speaker 2: is reportedly set to plan a rollout or expansion of
Speaker 2: its robotaxi service to San Francisco beginning this weekend. That's
Speaker 2: according to a report from Business Insider. I want to
Speaker 2: bring in Bloomberg's Max Chaffkin, one of the Elon Inc. Team,
Speaker 2: and I find this interesting. The specifics are that it's
Speaker 2: planned for maybe today Friday. On the earnings call earlier
Speaker 2: in the week, which you participated in, Ashle Kelaswami, who's
Speaker 2: the Robotaxi chief, said that they were doing this anyway.
Speaker 2: But there some bits that we don't know what was
Speaker 2: in the Business Insider reports and what do you make
Speaker 2: of it?
Speaker 10: So the Business Insider report is based on a memo,
Speaker 10: an internal memo you know, within Tesla, promising a sort
Speaker 10: of robotaxi service, albeit one with a driver in the
Speaker 10: driver seed. So so I don't I'm not sure if
Speaker 10: you can really call it a robotaxi if there is
Speaker 10: a it's a driverless car that does have a driver.
Speaker 10: But you know, what they're saying is that they're testing this.
Speaker 10: The other thing I'll say is California has a pretty
Speaker 10: robust permitting system for driverless cars. In fact, you know,
Speaker 10: this has been around since like twenty eighteen. I believe
Speaker 10: the first company that had this permit was Zoukes, but Waimo, Cruz,
Speaker 10: lots and lots of companies for years have been operating
Speaker 10: these services with permits. As anyone who lives in the
Speaker 10: Bay Area knows, Tesla does not have any of these permits.
Speaker 8: Yet what they have is.
Speaker 6: Something called a TCP permit.
Speaker 10: This is basically a permit to operate a charter service
Speaker 10: with human drivers, so effectively like a black car service,
Speaker 10: a chauffeur service or whatever.
Speaker 2: And so my guess is that.
Speaker 10: Is how they're they're going to justify this, which is
Speaker 10: to say, you know, it's not really an autonomous car
Speaker 10: as far as the law is concerned. Of course, Tesla
Speaker 10: has blurred the lines between like what constitutes an autonomous
Speaker 10: car for years and years.
Speaker 3: We were just seeing the Tesla VP of AI software
Speaker 3: what he said about the rollout of robotaxing more broadly
Speaker 3: on the earnings call, and I'm really interested ultimately here
Speaker 3: Max as to how you get to this vision that
Speaker 3: by I think it's the second half of the year,
Speaker 3: half of Americans are meant to be able to access
Speaker 3: a robotaxing, But at the moment they're but a handful
Speaker 3: in Austin and maybe a few with a driver at
Speaker 3: the well at least a person that the driver's seat
Speaker 3: is starting to do San Francisco.
Speaker 10: I mean, look, Tesla doesn't really have a robotaxi service today.
Speaker 10: Like what it has is, you know, eleven or so
Speaker 10: cars in Austin that have a safety observer.
Speaker 8: And of course we know that there.
Speaker 10: As I said before, there are other companies that are
Speaker 10: operating actual robotaxi service. WEIMO has something like fifteen hundred
Speaker 10: vehicles in five cities without drivers. I think if it
Speaker 10: just all depends on how you define it, my guess
Speaker 10: is what they're going to say is they have these
Speaker 10: testing vehicles, they have relatively wide ranges.
Speaker 8: Maybe you do.
Speaker 10: Some some math and and theoretically you can justify have
Speaker 10: it saying that half the population is covered. But I
Speaker 10: think by any normal person's definition that that just isn't
Speaker 10: going to be true, just because technically we are not
Speaker 10: that close to that being possible.
Speaker 2: The other big story out today is about Ultimus in March.
Speaker 2: This is how Ela Musk outlined the plan for Optimists
Speaker 2: in twenty twenty five. Listen to this Max.
Speaker 11: This year, we hopefully will be able to make about
Speaker 11: five thousand Optimist robots. We're technically we're aiming for enough
Speaker 11: parts to make ten maybe twelve thousand.
Speaker 6: But since it's a.
Speaker 11: Totally new product with totally new you know, like everything
Speaker 11: is totally new, I'll say like we're succeeding if we
Speaker 11: get to half of the ten you know, half of
Speaker 11: the ten thousand now, but even five thousand robots, that's
Speaker 11: that's the size of a Roman legion. If I which
Speaker 11: is like a little scary thought, like a whole legion
Speaker 11: of robuts, I'd be like, WHOA, Okay, but I think
Speaker 11: I think we'll literally both a legion at least one
Speaker 11: legion of robots this year.
Speaker 2: There's a report from the Information out today that disputes
Speaker 2: what Ela Musk outlined, that they actually nowhere near to
Speaker 2: five thousand.
Speaker 10: What do we know, Max, Yeah, this Information report, it's
Speaker 10: pretty it pours some cold water on the statements that
Speaker 10: that Musk has made. It talks about, you know, real
Speaker 10: difficulty manufacturing hearts of these robots, particularly the hands. I mean,
Speaker 10: one thing in that clip that's worth noting. Elon Musk
Speaker 10: is right when he says this is new, and this
Speaker 10: is hard, and so so you know, in a weird way,
Speaker 10: you know. Where whereas with robotaxis, there are lots of
Speaker 10: other companies that have been doing what Tesla is doing
Speaker 10: for for quite some time with optimists. If they were
Speaker 10: actually able to make this work or really get close
Speaker 10: to making it work. That would be amazing, that would
Speaker 10: be really impressive. But from this information story, you know,
Speaker 10: it seems like they're just not progressing where they are.
Speaker 10: Must talked about what was it a legion? I think
Speaker 10: where what the information said is they have something like
Speaker 10: fifty optimists optimize, you know, kind of walking around and
Speaker 10: picking stuff up and putting it down in the factory,
Speaker 10: not not doesn't sound like doing actual work yet. I
Speaker 10: don't know how many fifty is, but definitely less thann
Speaker 10: Allegian My.
Speaker 2: You know what Musk is somebody who.
Speaker 10: Is totally focused and his sort of expertise is getting
Speaker 10: investors to look at the future, not to look at
Speaker 10: the near here and now, but to look ahead. And
Speaker 10: so I think if you look at the timing of
Speaker 10: this robotaxi launch, one possible reason would be you have
Speaker 10: this information report coming out that makes this other futuristic
Speaker 10: thing look like it's much further out.
Speaker 8: So hey, let's let's speed up the robotaxis.
Speaker 10: Let's get investors excited about something.
Speaker 3: And I don't know what fifty is. Two soccer squads
Speaker 3: Bloomberg's match Chafkin, thanks so much, Brigade. Meanwhile, coming up
Speaker 3: less about OPTIMI and more about the US and China
Speaker 3: both pushing ahead to lead the global AI rights. We're
Speaker 3: going to speak with Teresa Carlson of the General Catalyst
Speaker 3: Institute on a conversation on how governments can support cutting
Speaker 3: edge check. This is Bloomberg Tech, Chinese tech leaders, government officials, investors. Well,
Speaker 3: they're headed to Shanghai this weekend for the World Ai Conference.
Speaker 3: It comes as Beijing looks to propel its AI ambitions
Speaker 3: forward in the face of the new AI Action Plan
Speaker 3: from Washington meant to cement US dominance in the space
Speaker 3: for more. We're joined by Teresa Carlson Fanning, president of
Speaker 3: the General Catalyst Institute. And you've been applauding this AI
Speaker 3: Action Plan. Is there enough there for startups as well
Speaker 3: as big tech?
Speaker 12: It's definitely got an amazing basis for it. It was
Speaker 12: it was broad, and it was reaching, and I've never
Speaker 12: seen an administration access quickly. And I think one of
Speaker 12: the biggest issues here is that we need to be
Speaker 12: ahead of China and all aspects. And the only way
Speaker 12: that this is going to occur if we have a
Speaker 12: public private partnership where you have both government ensuring that
Speaker 12: they're cutting all the regulatory tape, and you have private
Speaker 12: sector both developing and providing capital into these markets.
Speaker 2: Theresa, I've been trying to write down everything that I
Speaker 2: learned from being in the room and speaking to all
Speaker 2: those officials and CEOs, and the thing I keep writing
Speaker 2: down is no software people on stage. There were none
Speaker 2: of the frontier or model making names. Everything was about energy,
Speaker 2: chips and deregulation. Do you have a view on that?
Speaker 8: Yes, it really stood out.
Speaker 12: I was in that room with you and it was
Speaker 12: the one thing we were all talking about. But I
Speaker 12: actually thought it was very energizing because we backed over
Speaker 12: eight hundred startups at General Catalyst in all different areas
Speaker 12: from energy to finance, to defense to healthcare, and a
Speaker 12: lot of these companies now are way outside of their
Speaker 12: not just doing software. A lot of them are doing rebuilding,
Speaker 12: wire harnessing new capabilities that we're seeing that are really required.
Speaker 12: So for me, it was actually very energizing from a
Speaker 12: software you know, I've been doing software for twenty five years,
Speaker 12: so seeing more hardware capabilities and look, what do you
Speaker 12: need for true AI? You need energy, right, you need chips,
Speaker 12: you need land, you need all these capabilities we've got
Speaker 12: to rebuild American manufacturing in order to have AI dominance.
Speaker 12: So I believe that they did focus on the right
Speaker 12: things from that event on Wednesday.
Speaker 3: I mean, your expertise and experience is so important here
Speaker 3: because you've led large businesses. I think is splunk. I
Speaker 3: also think of the startups like Flexboot, but you've been
Speaker 3: in house in Microsoft in AWS and I'm really interested as
Speaker 3: to whether or not some of the startups that you
Speaker 3: helped now back and invest in are going to be
Speaker 3: able to get a direct line into federal government. Are
Speaker 3: they going to be selling more easily in this environment.
Speaker 12: We actually just took We've had two what we call
Speaker 12: fly ins at the General Kellos Institute. March, we took
Speaker 12: six of our top healthcare AI companies in to both
Speaker 12: meet government agencies, the White House and Congress. Two weeks ago,
Speaker 12: we took seven defense and industrial startups in to meet
Speaker 12: DoD the White House and congressional leaders and it was fantastic.
Speaker 12: They were amazing. They are very commercial, very business like.
Speaker 12: They are getting the red tape. We do need them
Speaker 12: to do more, especially ensuring that not just traditional partners
Speaker 12: and vendors have access but the startups. But I can
Speaker 12: see that they're working to make this connection and they
Speaker 12: also yes, just.
Speaker 2: Really quick, so we only have twenty seconds. Your assessment
Speaker 2: of the President and his handle on AI, just real quick.
Speaker 12: Well, you know, we were very excited to see him
Speaker 12: take this stance. I think he made it very clear
Speaker 12: this is top of mind for him. He also made
Speaker 12: it clear by having all of his cabinet members on
Speaker 12: stage and talking about this, and he was very direct
Speaker 12: with everybody on Wednesday what needs to occur, and he
Speaker 12: gave federal mandates for his agencies to get going. So
Speaker 12: we are very excited about it.
Speaker 2: So, mister Zelden of the EPA, the most important guy
Speaker 2: in the room. Theresa Carlson, founding president of General Catalyst Institute,
Speaker 2: thank you very much. Like coming up Meta stop selling
Speaker 2: political ads in the EU. We're gonna have more in
Speaker 2: that story next. Stay with us.
Speaker 13: We will be right back.
Speaker 2: This is Bloomberg Tech. Welcome back to Bloomberg Tech. It's
Speaker 2: been a good week in financial markets, particularly for technology investors.
Speaker 2: Then as that one hundred up a percentage point, but
Speaker 2: I think Karen noted earlier in the show and has
Speaker 2: all week then as that one hundred is kind of
Speaker 2: my go to index because there's such a high concentration
Speaker 2: ATTACH continuing to push record highs. Some single names also
Speaker 2: continue to push record highs. Think about what's happened this
Speaker 2: week in video in particular ending the week pushing a
Speaker 2: fresh record high but front and center in the President's
Speaker 2: speech in the AI action plan out of DC Wednesday,
Speaker 2: A and D also having a good session and a
Speaker 2: strong week. Then we push ahead, right you know, Alphabet
Speaker 2: was the earning story this week where we AI fueled
Speaker 2: growth kind of story. Will Meta is also interesting, Like
Speaker 2: there's been a lot of ad hoc talk from Mark
Speaker 2: Zuckerberg about what they're going to do in infrastructure with
Speaker 2: a superintelligence group. But actually I get excited about earnings,
Speaker 2: as you know, Carora, and I think that there's a
Speaker 2: really exciting in print around the corner.
Speaker 3: Yeah, we wonder what happens in terms of capital expenditure.
Speaker 3: But more on Meta elsewhere right now, because it's set
Speaker 3: to stop selling political and issue focused ads in the
Speaker 3: EU now, the social media giant is citing new regulations
Speaker 3: that create quote an untenable level of complexity and legal uncertainty.
Speaker 3: Meta is to just found the business. Beginning in early October,
Speaker 3: for more blue most kut Wagner joins US, and then
Speaker 3: now it just seems again and again the EU regulation
Speaker 3: is just in friction and combat with big tech here
Speaker 3: in the United States.
Speaker 14: This is just the latest Caroline. It's been a pretty
Speaker 14: steady stream of combative, you know, back and forth between
Speaker 14: Meta and regulators in the EU. Obviously, the latest, as
Speaker 14: you mentioned, has to do with targeting.
Speaker 6: Of political ads.
Speaker 14: Meta there is no regulation I believe it's coming online
Speaker 14: in October that makes it very difficult to target without
Speaker 14: getting very direct data source from the user themselves with
Speaker 14: permission to target.
Speaker 6: Them with political ads.
Speaker 14: And Meta has obviously decided that juice is not worth
Speaker 14: the squeeze here.
Speaker 6: In that regard, and so they're going to just get
Speaker 6: rid of that business entirely.
Speaker 2: Well, I'd like to ask a little bit more about that.
Speaker 2: More than four hundred and fifty million people in the
Speaker 2: European Union, so on paper, it's a big market. But
Speaker 2: I think that Meta and specifically the CFO Susan Lee,
Speaker 2: have talked about how generally political advertising isn't that material
Speaker 2: or contributed to revenue anyway.
Speaker 6: Yeah, you're absolutely right.
Speaker 14: At the beginning of last year or so At the
Speaker 14: beginning of twenty twenty four, as we were heading into
Speaker 14: the US election cycle, Susan Lee, the CFO of Meta,
Speaker 14: was asked on an earnings call about, you know, the
Speaker 14: political ad business.
Speaker 6: She basically said, it's not material.
Speaker 14: I believe in twenty twenty it wasn't even in the
Speaker 14: top ten categories in terms of advertising spend on.
Speaker 6: Various platforms.
Speaker 14: So you can see why they're willing to walk away
Speaker 14: here from that business because it does not, you know,
Speaker 14: it is not a material revenue growth driver for them anyways.
Speaker 3: What it all sets us up for KAT is also
Speaker 3: seeing how alphabet I think Google had already pulled away
Speaker 3: in terms of their focus on political ads. But when
Speaker 3: we're thinking in the context of the AI action Plan
Speaker 3: in the US and what that means for EU regulation
Speaker 3: and trying to lead the charge, it really feels as
Speaker 3: though the US is just walking away from the EU
Speaker 3: in many ways, like they have done with their generative
Speaker 3: AI offerings in the EU as well when it comes
Speaker 3: to Meta.
Speaker 14: That's right, I think we're seeing, you know, two very
Speaker 14: different paths between regulators and the US regulators in the EU.
Speaker 14: As you mentioned, Caroline in the beginning of this conversation
Speaker 14: constantly in a combative mode with EU regulators.
Speaker 6: Meta is not so much here in the US.
Speaker 14: Obviously they are still dealing with antitrust related stuff and
Speaker 14: the FTC and all of that, but generally a much
Speaker 14: more friendly regulatory environment in the US, a lot of self.
Speaker 6: Regulation from these tech companies.
Speaker 14: Europe is not really taking that same stance, and it
Speaker 14: feels like it's getting wider and more dramatically different, you know,
Speaker 14: by the month here.
Speaker 2: Were we best kut Wagner on the latest side of
Speaker 2: Europe for Meta, thank you very much. Is stay on Meta.
Speaker 2: The biggest tech companies clashing with the social media giant
Speaker 2: over ultimately who's responsible for age checks meant to protect
Speaker 2: children online. Metas arguing that app stores from the likes
Speaker 2: of Apple and Google should be the ones to verify
Speaker 2: a user's age bloombergs Emily Bernbaum joins us, Now, this
Speaker 2: is something Caroline I were talking about before the show.
Speaker 2: Has kind of been a thing for a while, but
Speaker 2: clearly there is a point of difference on approach and
Speaker 2: even philosophy between what Meta believes and what other big
Speaker 2: tech company believes. Could you just explain the differences of opinion.
Speaker 13: Yes, absolutely so.
Speaker 15: Over the last year or so, we've seen this rise
Speaker 15: of child safety bills. But in order to take care
Speaker 15: of children online, to give them a different experience, you
Speaker 15: need to verify that they are minors.
Speaker 13: So basically that's.
Speaker 15: The hurdle that all of these state legislatures are grappling with.
Speaker 15: And until very recently, the idea was social media platforms
Speaker 15: themselves would be responsible for verifying children's ages.
Speaker 13: Now Meta has taken that debate.
Speaker 15: Into its own hands, and it says, actually, the app
Speaker 15: stores are better positioned to do this kind of age verification.
Speaker 13: And so there's a there's an analogy there's sort of
Speaker 13: sparring over.
Speaker 15: So Meta says that Apple and Google are analogous to
Speaker 15: the liquor store, essentially that they should be responsible for
Speaker 15: checking IDs. And then Apple and Google say the analogy
Speaker 15: is a little off, and actually, you know, maybe Meta
Speaker 15: is maybe Meta is just the mall and you know
Speaker 15: Apples the mall.
Speaker 3: Yeah, I love this. On analogy, the Apple is the
Speaker 3: male and then metas the liquor store. And it just
Speaker 3: depends on what point you're ideing people basically, but Meta
Speaker 3: would respond saying, look, on average, young people have about
Speaker 3: forty apps, and it's exhausting for parents and for children.
Speaker 3: I like to permanently be getting signed off on each
Speaker 3: and every app. It's easier on an app store basis,
Speaker 3: But obviously Alphabet and Apple would dispute that. I'm just
Speaker 3: interested em andy as to what this means the states.
Speaker 3: Who is winning out in this argument, because there is
Speaker 3: a lot of regulatory change going on from a state level.
Speaker 15: I think right now, when you look at the broader landscape,
Speaker 15: there are more laws that would hold Meta accountable for
Speaker 15: these kinds of age checks. But Meta has successfully convinced
Speaker 15: three different states since the beginning of this year to
Speaker 15: pass their vision of legislation putting the onus on app stores.
Speaker 15: So I think the debate is really shifting right now.
Speaker 15: So many of these laws are tied up in court.
Speaker 15: There is also a pending uh, there's something pending at
Speaker 15: the Supreme Court asking the Supreme Court to weigh in
Speaker 15: on the constitutionality of age verification at all. So they're
Speaker 15: almost neck and neck right now, and I think Meta
Speaker 15: has successfully created a big pivot in the conversation.
Speaker 3: We'll see how that conversation continues. How many Van boun
Speaker 3: It's a great story. I urge people to go read it. Meanwhile,
Speaker 3: let's talk hardware because as Bloomberg Tech Asia took a
Speaker 3: deep dive into South Korea's biggest conglomerate and it's also
Speaker 3: the world's largest electronics empire, and it's Some Sung and
Speaker 3: an exclusive interview with some Sung president and mobile division
Speaker 3: chief would you enjoy well?
Speaker 2: He weighed in on.
Speaker 3: The context of US Harris and talked about how some
Speaker 3: Sung thinks about competition in the smartphone market.
Speaker 16: You know, rather than focusing on competition, I think we
Speaker 16: have been focusing on our consumers. What are the experience
Speaker 16: that we can bring to the consumers and how complete
Speaker 16: they are. So we've been focusing on those and I
Speaker 16: think a healthy competition with other companies I think will
Speaker 16: bring more innovations and then bring more venefies to consumers.
Speaker 2: So we are welcoming.
Speaker 16: Others to join this category which we created back in
Speaker 16: two thousand ninety.
Speaker 17: When we see the pressure on Samsung semiconductors and we
Speaker 17: see the success in mobile, does that change you're thinking
Speaker 17: about how heavy your shoulders are at this point.
Speaker 16: No, I mean our pressure has been there for all
Speaker 16: the time. I mean nothing has changed, and I think
Speaker 16: there's a you know, I think one of the someting
Speaker 16: is one of the companies who has every aspect of
Speaker 16: this supply chain, not only from I mean not only
Speaker 16: from the components to all the way to the devices
Speaker 16: and also application and services. So we believe there would
Speaker 16: be a big synergy we can we can have across
Speaker 16: all these differ different business units and that will continue
Speaker 16: to kind of utilize this this complete ecosystem that we have.
Speaker 17: Let's talk a little bit about the tariff concerns around
Speaker 17: the world, because President Trump says that potentially there could
Speaker 17: be a twenty five percent tariff on some song zhones
Speaker 17: not produced in the United States. How are you preparing
Speaker 17: for that?
Speaker 16: Very good question and tough fun. So some song has
Speaker 16: long it's stabis, multiple manufacturing facilities in key regions around
Speaker 16: the world that kind of give us US a flexibility
Speaker 16: in dealing with or responding to any changes in other
Speaker 16: countries kind of trade passes, not.
Speaker 2: Just the US.
Speaker 16: So we heavy sturbis that kind of a flexible system.
Speaker 2: That was Samsung President and Mobile division chief one June
Speaker 2: choice along with Bloomberg's Sherry On and you can catch
Speaker 2: the full episode the Bloomberg Tech Asia online at Bloomberg
Speaker 2: dot com. Okay, coming up, Steve Jenks and Kindred Benchers
Speaker 2: joins us to talk about M and A and Meta's
Speaker 2: recent deal for Kindred's portfolio company, play Ai. That's next.
Speaker 2: This is Bloomberg Tech. The USFCC approved Paramounts merger with
Speaker 2: sky Dance after the Trump administration extracted concessions on the
Speaker 2: company's political coverage and diversity practices for more and what
Speaker 2: those concessions were, Bloombers. Chris Palmery, our entertainment editor, joins us. So, Yep,
Speaker 2: it's happened. It's over the line. What did the parties
Speaker 2: have to do to get us there?
Speaker 18: Chris, Well, goodbye to all those diversity equity inclusion programs. Paramount,
Speaker 18: like a lot of companies, was trying to get more
Speaker 18: people of color, more diverse people on screen behind the scenes.
Speaker 18: All of that effort is gone. Another big changes in
Speaker 18: the newsroom at CBS. There's going to be an omboodsman
Speaker 18: who's going to handle claims of media bias. This is
Speaker 18: a company that just this month settled a sixteen million
Speaker 18: dollar lawsuit which President Trump over alleged bias at sixty minutes.
Speaker 13: So this will be a person sort of in.
Speaker 18: The newsroom poking around for a couple of years to
Speaker 18: come at least.
Speaker 3: I mean, the fallout continues about the Late Show with
Speaker 3: Stephen Colbert. There's a lot that has been swallowed bitter
Speaker 3: pills or not. Chris remind us of the prize, why
Speaker 3: they're doing this and what the future looks like.
Speaker 18: Yeah, so end of an error for the Redstone family,
Speaker 18: which has controlled this media empire, is assembled by some
Speaker 18: of the redsphone over decades.
Speaker 13: So we're talking about.
Speaker 18: MTV, Nickelodeon, the CBS Network, Paramount Pictures, Film Studio, all
Speaker 18: wonderful brands, but in trouble. And so there's a reason
Speaker 18: the Redstones gave up. Essentially, David Ellison, who's injecting a
Speaker 18: lot of his father's money and his own media assets
Speaker 18: in here, has work to do from day one. The
Speaker 18: traditional cable channels are shrinking in double digits, and the broadcast.
Speaker 13: Network and as people switch to streaming.
Speaker 18: But their streaming business, Paramount Plus is still losing money.
Speaker 18: And their movie studio, as Gloria says it is, is
Speaker 18: barely profitable and really and also ran compared to the Baggies,
Speaker 18: Warner Brothers, Disney and Universal.
Speaker 13: So he's going to have to deal with all this.
Speaker 3: And buy some cloud from his father, Larry Ellison, it
Speaker 3: seems Chris cal Mary, it's great to have some time
Speaker 3: with you. Thanks for spelling it out.
Speaker 2: Now, let's get more for you.
Speaker 3: On the M and A space. But from the venture
Speaker 3: capital perspective now, Steve Jang is the managing partner and
Speaker 3: founder of kin Adventures, which has been backing early stage
Speaker 3: AI startups since well twenty nineteen, long before Chatchibt. Steve,
Speaker 3: your investments also include uber Coinbase. But in the AI space,
Speaker 3: we think of Perplexity. We also think of Playai, and
Speaker 3: let's just talk about that because it's recently been purchased
Speaker 3: by Meta, which is on the hunt for deals. It's
Speaker 3: on the hunt to lead in super intelligence.
Speaker 2: Are we going to get more of that? Steve?
Speaker 9: Sure, Yeah, good question, and thanks for having me on.
Speaker 19: You know, I think what's happening right now is, you know,
Speaker 19: in Meta's case, is that they're looking to completely overhauled
Speaker 19: all their AI research team and also their research engineering team,
Speaker 19: and so you know, I think with data centers on
Speaker 19: the rise in terms of investment, you see some major hyperscalers, Amazon.
Speaker 9: Azure and GCP Google's Cloud.
Speaker 19: You also see Oracle, who was just mentioned prior on
Speaker 19: the show, and then Meta and Meta is an interesting case.
Speaker 19: Meta has one of the largest data center networks, as
Speaker 19: one of the largest buyers of GPUs and is expected
Speaker 19: to be the largest buyer GPUs moving forward over the
Speaker 19: next eighteen months. They are trying to also build the
Speaker 19: largest AI front tier lab and they're competing with open
Speaker 19: a on that front. And what I think you're going
Speaker 19: to see not only from them, but from every other
Speaker 19: private AI front tier lab like open Ai and Anthropic
Speaker 19: is it's a talent war.
Speaker 9: And the Playai purchase means several things.
Speaker 19: So number one teams that have both a research scientist
Speaker 19: aspect to it as well as a research engineering and
Speaker 19: product engineering capability, they're going to be really sought after
Speaker 19: in this market. And we're seeing a lot of that
Speaker 19: already among our portfolio and outside our portfolio, and so
Speaker 19: you're going to see continuous acquisition hunts. The second thing
Speaker 19: that's really interesting about this acquisition of Playai is that
Speaker 19: it's really it's really the leading signal in what's happening
Speaker 19: in the space MULTIMODALBS. The inclusion of video and audio
Speaker 19: and images on how lms work like cheat, GPT and
Speaker 19: even applications like perplexity is super important. It's going to
Speaker 19: be ever increasingly more important, especially with generative media models,
Speaker 19: with video, generative video, generative images becoming more and more important.
Speaker 19: So that wave of generative media is going to be,
Speaker 19: in our estimation, going to be as large and as
Speaker 19: important in society and economy as elms. And so with
Speaker 19: these two trends happening with voice AI in particular in
Speaker 19: PLAYAIS case, this is going to be a harbinger of
Speaker 19: a lot of things that are going to come down
Speaker 19: the line over the next two years in terms of
Speaker 19: multimodal as well as generative media and AI, and I.
Speaker 3: Think a foul in your portfolio companies. It's all about
Speaker 3: the ability to be making generative media now before we
Speaker 3: get into the back clash as to whether this creates
Speaker 3: slop and what that ultimately means also for a business case,
Speaker 3: so meta going forward, Steve, I just want to go
Speaker 3: to another portfolio company that's been in the I for
Speaker 3: M and A, and that's Perplexity.
Speaker 17: That would you ever see perplexity.
Speaker 3: Being brought up by one of these big cloud players,
Speaker 3: or even buy an Apple.
Speaker 19: Yeah, I think you know, whenever there's a company that
Speaker 19: creates a sort of singular space and name for themselves
Speaker 19: in an important area in technology, there's always m and
Speaker 19: a interest. You know, we've seen some rumors about that
Speaker 19: in the news. I'm not describing anything new that you
Speaker 19: don't know about there. But what you are seeing right
Speaker 19: now at this moment is a switchover. And the switchover
Speaker 19: is there are legacy companies with platforms and distribution and
Speaker 19: great products, but the AI wave itself has sort of
Speaker 19: left them flat footed. And I think a company like Perplexity,
Speaker 19: you know, it started from AI answers right competing with
Speaker 19: the legacy and traditional search and bringing AI search into
Speaker 19: the consumer's eye. And now what you're seeing with their
Speaker 19: new commt browser is saying, how do we create a
Speaker 19: browser that not only brings in knowledge and answers, but
Speaker 19: also lets you take actions. So an agentic browser that
Speaker 19: allows you to create Spotify playlists, that allows you to
Speaker 19: deeply research your Robinhood portfolio as you're surfing it on
Speaker 19: the web, and really, if you think about it, browsers
Speaker 19: and websites.
Speaker 9: Those are old school terms.
Speaker 19: All of your SaaS, all of your applications are coming
Speaker 19: from through a web browser, and so perplexity is really
Speaker 19: an interesting agentic browser.
Speaker 2: Steve. Yeah, let me jump in there because because that's
Speaker 2: what I found so interesting about your LinkedIn post when
Speaker 2: the play deal was announced, Perplexity evolved and it grew organically,
Speaker 2: right and in the history that you outline in the
Speaker 2: LinkedIn post about plai, you guys did the seed round
Speaker 2: a year ago. They grew so quickly, but ultimately they
Speaker 2: just got engulfed. They took their core tech and became
Speaker 2: part of something else. And as somebody that backs founders
Speaker 2: and kind of instructs them on what to do, that
Speaker 2: kind of seems like the future in this domain.
Speaker 19: Yeah, I think the I think what you're seeing is
Speaker 19: the multimodality is really important here. What you're seeing is
Speaker 19: that you know, if you have voice, what you want
Speaker 19: is you want that to be part of a lego
Speaker 19: block system with an m A language model, and that's
Speaker 19: really the ultimate expression or the ultimate product there.
Speaker 9: And so that's what was happening with play ai.
Speaker 17: You know.
Speaker 19: Play Ai was was hosted on foul and Foul was
Speaker 19: providing the generative media inference for their speech models, and
Speaker 19: you know, com merging that speech model technology with a
Speaker 19: speech to speech model in their case, with something that
Speaker 19: was really exciting for Meta and Meta.
Speaker 9: You know, metas push is to create very personal AI.
Speaker 19: Mark Zuckerberg has talked about that publicly, and if you
Speaker 19: think about what they're building, play Ai represented a really
Speaker 19: interesting aspect of saying, how do we create multimodal ll ms,
Speaker 19: how do we create voice AI in this personal AI
Speaker 19: vision that Meta has. And so it's a really unique
Speaker 19: purchase because most of the other things that most of
Speaker 19: the other acquisitions that Mark is executed have been higher, right,
Speaker 19: these one hundred million plus hires, but play Ai is
Speaker 19: the one company acquisition where he is not only a
Speaker 19: great team of researchers and engineers, but also of models,
Speaker 19: and so I think that's a really big push to
Speaker 19: multi model l for beta.
Speaker 2: Regrettably, Steve Jang, we got to go. There's never enough time.
Speaker 2: Fly back from Hawaii, come to San Francisco, sit in
Speaker 2: the studio and we'll have at it. Managing partner and
Speaker 2: founder who can revenge of Steve Jang? Thank you very much.
Speaker 2: Coming up startups are spending really big on defense manufacturing
Speaker 2: in the US, but are they getting too far ahead
Speaker 2: of the demand. We have a deep dive next. This
Speaker 2: is Bloomberg Tech. Silicon Valley investors are betting big on
Speaker 2: the reindustrialization of the US defense space, and the startups
Speaker 2: they're backing are spending billions to bring that vision to life.
Speaker 2: Bloombos Lazette Chapman has the reporting. There are a series
Speaker 2: of eos. You have the big beautiful bill now act
Speaker 2: and build, Baby Build, But it's the defense sector and
Speaker 2: startups in that domain that are responding.
Speaker 20: There are a number of different responses, and to your point,
Speaker 20: this is part of a much larger push to reindustrialize
Speaker 20: many of the areas that the US offshore for decades.
Speaker 20: So there's this big push now by private capital to
Speaker 20: back the defense startups in expanding their manufacturing capacity. Now,
Speaker 20: a lot of these have been around for about a decade,
Speaker 20: but they're just getting to the point now where they're.
Speaker 2: The leaders who are some of the big.
Speaker 20: Names, andrel is building to one. They're investing over one
Speaker 20: billion dollars into a new manufacturing facility in Ohio called
Speaker 20: Arsenal One. We've got Saronic that's looking to invest two
Speaker 20: point seven billion total into a series of different projects
Speaker 20: called Port Alpha, which is going to be a modernized
Speaker 20: software defined shipyard to build massive autonomous ships.
Speaker 3: Is that the question is the demand that let's see
Speaker 3: if it works out. Is that Chapman's great analysisco readas story. Meanwhile,
Speaker 3: that does it for this edition of Boomberg Tech End.
Speaker 2: Yeah, don't forget to check out the podcast. You know
Speaker 2: where to find it from San Francisco and New York City.
Speaker 2: This is Bloomberg Tech