WEBVTT - AWS Races to Address Widespread Outage 0:00:00.080 --> 0:00:13.360 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live 0:00:13.400 --> 0:00:17.240 from coast to coast with Caroline Hide in New York 0:00:17.520 --> 0:00:19.520 and Eva Low in San Francisco. 0:00:22.840 --> 0:00:25.720 This is Bloomberg Tech coming up. Amazon says it's cloud 0:00:25.760 --> 0:00:30.800 service is recovering after widespread outages affected customers like Zoom, Snapchat, 0:00:30.880 --> 0:00:31.680 and Coinbase. 0:00:32.640 --> 0:00:36.400 Plus US China trade talks resuming this week as President 0:00:36.440 --> 0:00:39.720 Trump lists Rare Earth among its top priorities. 0:00:39.440 --> 0:00:42.680 And IBM and Grock partner up to provide greater access 0:00:42.760 --> 0:00:45.559 to the full potential of enterprise AI. We'll discuss with 0:00:45.560 --> 0:00:46.400 them later this hour. 0:00:47.360 --> 0:00:48.760 My first I's check in on these markets. 0:00:48.920 --> 0:00:50.879 D I'm sat in London this week, but I can 0:00:50.920 --> 0:00:53.120 see from across the pond one point thirty percent on 0:00:53.159 --> 0:00:55.560 the nasat one hundred and a new record high. There's 0:00:55.560 --> 0:00:58.440 a risk on tone throughout the markets. We're looking towards 0:00:58.440 --> 0:01:01.320 those China US trade talks, but there are some notable 0:01:01.360 --> 0:01:03.960 gainers underneath the head YEP. 0:01:04.040 --> 0:01:06.240 Apple is a big points driver to the upside. At 0:01:06.280 --> 0:01:09.240 the index level, Apple has touched its first record high 0:01:09.240 --> 0:01:12.120 of twenty twenty five. That's the first record high since 0:01:12.200 --> 0:01:15.000 December of twenty twenty four. We have an upgrade at 0:01:15.040 --> 0:01:19.160 Loop to buy, like many recently siting trends in the 0:01:19.200 --> 0:01:21.440 iPhone upgrade cycle. We're gonna have a lot more on 0:01:21.480 --> 0:01:24.080 this story throughout the hour, but clearly this is a 0:01:24.080 --> 0:01:26.959 big jump for the company and it's really impacting markets 0:01:26.959 --> 0:01:29.600 to the macro level. We're also looking at Amazon, the 0:01:29.680 --> 0:01:32.800 parent of cloud computing AWS. The sock's actually up a 0:01:32.840 --> 0:01:38.160 percentage point. A massive outage overnight, principally around one US 0:01:38.240 --> 0:01:41.160 data center in North Virginia, the US East One site, 0:01:41.240 --> 0:01:43.920 but it has had repercussions for the public sector, the 0:01:43.920 --> 0:01:47.920 private sector, and technology companies of all types. Let's get 0:01:47.920 --> 0:01:50.960 out to Bloomberg'syajo's son, who's been reporting on this throughout 0:01:51.000 --> 0:01:55.200 the incident, very simply a Joe, what happened and what 0:01:55.320 --> 0:01:59.640 of the ramifications beenah ed? 0:02:00.040 --> 0:02:05.280 So this morning Amazon reported that they're experiencing operational failure 0:02:05.320 --> 0:02:09.639 across multiple services and its data center hub in northern Virginia. 0:02:10.200 --> 0:02:13.600 Even though the issue occurred in eastern the northeast of 0:02:13.600 --> 0:02:16.800 the United States, the impact was really fell far and wide. 0:02:17.240 --> 0:02:22.200 Some of the victims of this outage include trading platform 0:02:22.320 --> 0:02:28.040 Robin Hood Lloyd's the British Bank HMRC, the British Tax Authority, 0:02:28.400 --> 0:02:33.680 as well as Perplexity the AI platform. So the company 0:02:33.680 --> 0:02:36.480 said that the issue has been largely fixed, but there 0:02:36.520 --> 0:02:41.600 are residual effects. And this definitely gives me flashback of 0:02:41.639 --> 0:02:44.760 the CrowdStrike outage last year, which you might remember, a 0:02:44.800 --> 0:02:49.920 buggy update from CrowdStrike really paralyzed nearly half the world's 0:02:49.919 --> 0:02:53.840 computers and left people scrambling at airports and sent bankers 0:02:53.840 --> 0:02:56.800 home early because they simply couldn't turn out the computers. 0:02:58.200 --> 0:03:00.680 Yeah, Joe, it does remind us of the important of 0:03:00.760 --> 0:03:03.160 a very few, very powerful players when it comes to 0:03:03.240 --> 0:03:07.240 our tech infrastructure. It hasn't been that significant an incident 0:03:07.320 --> 0:03:09.880 for Amazon in and of itself for many years. 0:03:09.919 --> 0:03:11.200 Now is it twenty twenty one? 0:03:11.240 --> 0:03:13.519 But tell us about the learnings that Amazon's going to 0:03:13.560 --> 0:03:15.560 push forward for AWS. 0:03:16.520 --> 0:03:19.640 Yeah, I think this really speaks to the fragility of 0:03:19.800 --> 0:03:25.320 overdependence on the very few, you know, hyperscaler cloud operators 0:03:25.320 --> 0:03:29.399 that we have. AWS is the world's largest cloud provider. 0:03:30.360 --> 0:03:35.760 Its business surpasses Google and Microsoft's and I believe AWS 0:03:36.120 --> 0:03:39.480 analysts predict that this unit is going to brain about 0:03:39.680 --> 0:03:42.040 one hundred and twenty six billion dollars to the company. 0:03:42.760 --> 0:03:45.480 Amazon itself has said that the company is going to 0:03:45.520 --> 0:03:50.000 invest around one hundred billion or so into building data 0:03:50.000 --> 0:03:55.040 centers and model training. Given that you know, so much 0:03:55.040 --> 0:03:58.120 of our AI training inference is run on these data 0:03:58.120 --> 0:04:02.440 centers cloud computing services these days, I think Amazon will 0:04:02.480 --> 0:04:07.360 really have to think about business continuity so that this 0:04:07.400 --> 0:04:08.360 does not happen again. 0:04:09.200 --> 0:04:11.640 Yeah, Joe, Lots of our audience here on Bloomberg Tech 0:04:11.680 --> 0:04:13.960 are highly technical. It might be their job to deal 0:04:14.000 --> 0:04:16.560 with their cloud computing provider. Loads of people will be 0:04:16.600 --> 0:04:18.880 watching and be like, I don't understand any of this. 0:04:19.040 --> 0:04:21.520 I don't understand what happened. I spent a lot of 0:04:21.520 --> 0:04:26.119 time reading about DNS and reading about DINAMODB, the data 0:04:26.160 --> 0:04:29.800 center database that the AWS relies on. Have they actually 0:04:29.839 --> 0:04:32.720 answered the why of what happened? How could they let 0:04:32.760 --> 0:04:33.200 this happen? 0:04:35.160 --> 0:04:36.559 They have not answered why. 0:04:36.960 --> 0:04:40.800 So DNS is a system that translates web addresses to 0:04:40.839 --> 0:04:44.479 IP addresses so your apps and your websites can load. 0:04:45.320 --> 0:04:48.320 I think we will throughout the US day at the 0:04:48.360 --> 0:04:51.640 company will say exactly what happened, will probably let us know. 0:04:52.480 --> 0:04:56.159 But I think it's very I think it's it's very 0:04:56.200 --> 0:05:00.000 telling that a very small part of the digital infrastructure 0:05:00.600 --> 0:05:04.080 can create such a ripple effect throughout the global economy. 0:05:04.240 --> 0:05:07.440 And I think we will see if the company will 0:05:07.480 --> 0:05:10.120 say anything about how you know, if there will be 0:05:12.120 --> 0:05:15.400 what they will do to satisfy their customers going forward. 0:05:16.800 --> 0:05:18.320 And I'm sure you'll be the first one to help 0:05:18.400 --> 0:05:20.440 us report it out. Ya just and we so appreciate 0:05:20.480 --> 0:05:21.800 you jumping on today. 0:05:21.839 --> 0:05:25.039 Thank you. Let's get to the wider impact look. 0:05:24.880 --> 0:05:26.880 On the tech sector written large today we're in riscon 0:05:27.000 --> 0:05:30.240 mode and Rathmun's with us Grenadilla advisory founder and CEO 0:05:30.400 --> 0:05:34.200 and Anna, Look, we see these technical glitches and the 0:05:34.839 --> 0:05:39.640 realization and well maybe just re memorizing the idea that 0:05:39.640 --> 0:05:42.080 we do depend on a few very big players not 0:05:42.120 --> 0:05:44.320 just for our infrastructure, but for the market to go 0:05:44.440 --> 0:05:44.920 higher too. 0:05:44.960 --> 0:05:46.200 What do you make at the rally today? 0:05:47.440 --> 0:05:50.160 Yeah, the rally, I mean, especially for Amazon, it seems 0:05:50.200 --> 0:05:53.120 like there was no glitch today because Amazon is also 0:05:53.279 --> 0:05:57.200 up with the rest of the markets. As regards to Amazon, 0:05:57.360 --> 0:05:59.760 I do think that there is a concentration problem. Everyone 0:06:00.200 --> 0:06:02.719 about the stock market concentration, I mean, this is sort 0:06:02.760 --> 0:06:05.559 of the same thing. I think we have to start 0:06:05.560 --> 0:06:09.480 looking at digital infrastructure almost as utilities. 0:06:09.480 --> 0:06:10.760 You really can't. 0:06:10.520 --> 0:06:14.120 Live without it, and so from that standpoint, I think 0:06:15.000 --> 0:06:17.960 barriers it to entry are high, but we need to 0:06:17.960 --> 0:06:21.160 start thinking about sort of diversifying our exposure. 0:06:21.240 --> 0:06:23.080 With regards to the rest of the market. 0:06:23.720 --> 0:06:26.960 I think there is a lot of excitement, certainly not 0:06:27.040 --> 0:06:29.640 only in tech, but in other areas of the markets 0:06:29.680 --> 0:06:32.480 as well. I mean, last week we learned about Walmart 0:06:32.520 --> 0:06:36.640 and open Ai. Today we learned about Cleveland Cliffs and 0:06:36.839 --> 0:06:40.000 Rare Earth's exploration. I feel like what's happening now is 0:06:40.000 --> 0:06:42.839 something that investors have been waiting for for a long time, 0:06:43.120 --> 0:06:46.039 which is to see the expansion of the tentacles of 0:06:46.120 --> 0:06:49.680 AI reaching the different parts of the economy and different 0:06:49.680 --> 0:06:53.080 parts of the markets. And this makes us feel a 0:06:53.120 --> 0:06:56.920 lot better about the AI play and AI development because 0:06:57.240 --> 0:06:58.520 it's becoming stickier. 0:06:59.279 --> 0:07:01.320 We can't feel this off as easily. 0:07:01.360 --> 0:07:03.320 We can't just say, okay, those are the data centers 0:07:03.360 --> 0:07:04.680 that are going to go dark and we may not 0:07:04.800 --> 0:07:06.919 use it for ten years. This is becoming more of 0:07:06.920 --> 0:07:09.840 a real thing in our daily lives. 0:07:09.840 --> 0:07:12.480 So interesting you're talking about the broadening out effector in 0:07:12.560 --> 0:07:14.360 the markets. But let's just go back to the first 0:07:14.360 --> 0:07:19.320 point about the over focus. There are basically an oligopoli 0:07:19.400 --> 0:07:21.520 when it comes to cloud provision. I'm here in Europe 0:07:21.520 --> 0:07:23.720 because we've got our Tech summon in London, and one 0:07:23.760 --> 0:07:26.320 of the key debates is to be had is Europe's 0:07:26.480 --> 0:07:30.160 over dependence on other global players, the fact that they 0:07:30.160 --> 0:07:32.320 don't make their own chips, but they also don't have 0:07:32.360 --> 0:07:34.720 their own cloud providers. What do you make out her 0:07:34.760 --> 0:07:37.320 of whether that might indeed change as we all think 0:07:37.320 --> 0:07:40.440 about sovereign AI and sovereign cloud. 0:07:41.600 --> 0:07:45.239 Yeah, so I think the concentration risk we talked about earlier, 0:07:45.400 --> 0:07:49.400 it applies to everybody. This was a global event, right, 0:07:49.480 --> 0:07:53.720 and so you do need to think about diversifying your exposure. 0:07:54.280 --> 0:07:56.000 But we've had stuff. 0:07:55.680 --> 0:07:57.920 Like this in the past, maybe not as large as Amazon, 0:07:57.960 --> 0:08:01.960 but I think the previous speaker talked about christ Strike, CrowdStrike. 0:08:02.680 --> 0:08:06.200 It really it requires a massive amount of investment and 0:08:06.240 --> 0:08:09.320 a massive amount of effort to get that done, and 0:08:09.440 --> 0:08:12.520 so far the effort has been coming from a select 0:08:12.600 --> 0:08:17.400 few regions and countries. Certainly Europe probably needs to think 0:08:17.440 --> 0:08:21.000 about having their own infrastructure as well, but it's not 0:08:21.440 --> 0:08:24.320 as easy to do as it is to say. 0:08:25.760 --> 0:08:28.880 And Apple's just touched four percent in the session again, 0:08:29.080 --> 0:08:31.040 hitting a record high for the first time this year. 0:08:31.720 --> 0:08:34.920 It's a big factor at the index level. What do 0:08:34.960 --> 0:08:38.840 you make of all of these upgrades on optimism around iPhone? 0:08:40.280 --> 0:08:45.200 Yeah, so, especially with regards to the negotiations with China, 0:08:45.520 --> 0:08:47.640 it is really nice to see sales up in the 0:08:47.760 --> 0:08:51.040 United States because then it makes Apple look like less 0:08:51.080 --> 0:08:54.360 dependent on some of this rhetoric between China and the US. 0:08:54.600 --> 0:08:57.000 But I would also say that there is a little 0:08:57.000 --> 0:09:01.000 bit of a spending of pulling forward of thing. When 0:09:01.040 --> 0:09:04.440 you think that iPhones or anything's going to cost four 0:09:04.480 --> 0:09:06.920 or five percent more in a year, are you really 0:09:06.960 --> 0:09:09.679 going to wait for iPhone eighteen? No, You're going to 0:09:09.720 --> 0:09:12.440 buy it today, especially if you have an iPhone X 0:09:12.559 --> 0:09:15.680 or iPhone nine. I can't even remember the numbers anymore, 0:09:16.160 --> 0:09:18.360 but a lot of people have been keeping them, and 0:09:18.400 --> 0:09:20.000 if they're going to renew it, they're going to renew 0:09:20.040 --> 0:09:22.640 it now rather than waiting until next year. So I 0:09:22.640 --> 0:09:25.400 think we're seeing some of that pulling forward effect as well. 0:09:26.600 --> 0:09:29.960 The optimism in technology markets today seems to be around 0:09:30.000 --> 0:09:32.800 earnings in particular and what's to come this week, but 0:09:33.000 --> 0:09:36.560 trade negotiations are also to come this week. Balance those 0:09:36.600 --> 0:09:38.240 two risk factors for. 0:09:38.240 --> 0:09:42.880 US, well, earnings is fundamental and in my mind is 0:09:43.000 --> 0:09:45.480 much much more important. And I do think that the 0:09:45.520 --> 0:09:50.720 stock prices will react to earnings. With regards to trade talks, 0:09:51.080 --> 0:09:53.840 I mean, I feel like the Marcus rising. Ever since 0:09:53.880 --> 0:09:56.439 the first day when President Trump said that he may 0:09:56.480 --> 0:09:57.880 not meet with President she. 0:09:59.480 --> 0:10:00.400 It's been going it up. 0:10:00.520 --> 0:10:03.120 And I think that's the market basically calling bluff in 0:10:03.200 --> 0:10:07.120 both countries. China is an export dependent country. It needs 0:10:07.120 --> 0:10:09.440 to export rare earth minerals as much as we need 0:10:09.480 --> 0:10:13.440 to buy them. Us is a consumer based economy. We 0:10:13.480 --> 0:10:15.880 need to be able to import cheaper goods from China 0:10:15.960 --> 0:10:18.760 as much as you know China needs to export them. 0:10:18.920 --> 0:10:19.800 We need each other. 0:10:20.160 --> 0:10:22.880 So I think the markets are saying, Okay, the deal 0:10:22.960 --> 0:10:24.240 is probably going to get done. 0:10:24.640 --> 0:10:25.839 It's just a matter of time. 0:10:27.440 --> 0:10:30.440 Anna Rabin of grena Dela Advisory, Thank you very much. 0:10:30.480 --> 0:10:34.679 So coming up Meta, TikTok, Snap and many more Under Pressure, 0:10:34.880 --> 0:10:37.040 We're going to discuss why social media giants are about 0:10:37.080 --> 0:10:40.839 to face a mountain of litigation. That's next. 0:10:41.040 --> 0:10:41.959 This is bloobag Tech. 0:10:56.520 --> 0:10:59.400 Social media giants are about to face a wave of 0:10:59.440 --> 0:11:02.640 litigation matter, Snap Bite Downs Alphabet are set to a 0:11:02.720 --> 0:11:05.760 pair in court over two consolidated lawsuits accusing them of 0:11:05.840 --> 0:11:10.800 knowingly designing their platforms to addict users, resulting in depression, anxiety, insomnia, 0:11:10.840 --> 0:11:13.920 and self harm from all Bloomberg's Olivia Carvill it's been 0:11:13.960 --> 0:11:16.360 following these lawsuits, joins us now, and in one of 0:11:16.360 --> 0:11:19.120 the key lines in your story about this, Olivia, you 0:11:19.160 --> 0:11:21.800 talk about how one lawyer who's going to be representing 0:11:21.840 --> 0:11:24.480 the federal cases says, all told, this is a massive 0:11:24.600 --> 0:11:28.400 legal siege on the social media industry. Why is it 0:11:28.440 --> 0:11:29.520 all coming in this wave? 0:11:30.600 --> 0:11:33.560 I mean, we have been seeing these lawsuits filed in 0:11:33.640 --> 0:11:36.640 state and federal court over a number of years now. 0:11:36.760 --> 0:11:40.199 This all started back in twenty twenty two after Francis 0:11:40.240 --> 0:11:44.760 Hagen kind of blew the whistle on Facebook, releasing a 0:11:44.800 --> 0:11:48.240 trove of documents about how the social media giant was 0:11:48.320 --> 0:11:51.880 kind of impacting youth mental health. Following that, we saw 0:11:51.920 --> 0:11:55.600 plaintiff's attorneys really focus in on that and start to 0:11:55.640 --> 0:11:59.640 file lawsuits against these companies accusing them of harming children. 0:12:00.080 --> 0:12:03.400 And over the course of three years, all of those lawsuits, 0:12:03.600 --> 0:12:06.880 all the majority of them now have been consolidated into 0:12:07.160 --> 0:12:11.319 two different litigation tracks, and state court and in federal court. 0:12:11.520 --> 0:12:14.439 We're going to see these cases come to the courtrooms 0:12:14.720 --> 0:12:16.959 next year, and it's going to be, you know, as 0:12:17.000 --> 0:12:19.400 he mentioned in the story, a massive legal siege on 0:12:19.440 --> 0:12:23.560 the social media industry. We're expecting to see a number 0:12:23.600 --> 0:12:27.840 of trials next year and possibly thousands of plaintiffs waiting 0:12:27.840 --> 0:12:29.920 in the wings once those trials close. 0:12:31.120 --> 0:12:33.640 Olivia. A part of the reason that this litigation has 0:12:33.679 --> 0:12:36.720 been pending for quite a long time is that the 0:12:36.760 --> 0:12:41.160 social media companies have had this liability shield right that 0:12:41.240 --> 0:12:44.439 has protected them in some sense from user harm litigation. 0:12:45.040 --> 0:12:49.160 Explain that shield and why it's now not preventing these 0:12:49.200 --> 0:12:50.880 pieces of litigation moving forward. 0:12:51.200 --> 0:12:54.240 Yeah, that's right. I mean the Communications Decency Act. This 0:12:54.320 --> 0:12:57.960 is a federal law that has long protected social media 0:12:58.000 --> 0:13:01.800 platforms and really any internet place platform from facing user 0:13:01.840 --> 0:13:02.800 harm lawsuits. 0:13:03.280 --> 0:13:04.800 What that lawd does is it. 0:13:04.720 --> 0:13:08.360 Provides an immunity shield or a blanket that says you 0:13:08.440 --> 0:13:12.360 cannot file a lawsuit against these companies for the content 0:13:12.640 --> 0:13:16.320 that exists on their sites. What these cases are trying 0:13:16.400 --> 0:13:20.160 to do is sidestep that immunity blanket by saying this 0:13:20.200 --> 0:13:23.680 is not about the content that uses a posting to Facebook, 0:13:23.679 --> 0:13:27.440 to Instagram, Snapchat or TikTok. This is about the design 0:13:27.559 --> 0:13:32.839 of the platforms that these companies intentionally designed their platforms 0:13:33.200 --> 0:13:37.480 to try and addict young users and resulting in many 0:13:37.559 --> 0:13:42.679 harms to kids, from mental health harms like depression, anxiety 0:13:42.840 --> 0:13:46.640 all the way through to self harm and suicidal issues. 0:13:48.240 --> 0:13:49.080 Olivia. 0:13:49.400 --> 0:13:53.520 Often the markets ignore potential legal threats for big tech companies. 0:13:54.320 --> 0:13:56.360 It has been notable that actually a lot of companies 0:13:56.400 --> 0:13:59.080 have been trying to update the protections for children in particular. 0:13:59.160 --> 0:14:02.320 I think of Insta just last week. How have they 0:14:02.400 --> 0:14:04.800 set themselves up to really tackle this in a forward 0:14:04.840 --> 0:14:05.640 going way. 0:14:06.200 --> 0:14:09.480 Yeah, as these cases have been piling up in the courtrooms, 0:14:09.520 --> 0:14:13.520 we've seen almost every one of the defendants start to 0:14:13.640 --> 0:14:18.079 update their policies to really try and get better, stronger 0:14:18.160 --> 0:14:21.520 safeguards for kids. And you saw that recently with what 0:14:21.720 --> 0:14:26.080 Meta announced on Instagram. And that's certainly true. But at 0:14:26.120 --> 0:14:29.360 the same time, this litigation is not going away. These 0:14:29.400 --> 0:14:33.400 allegations stand in court, and I think what's remarkable about 0:14:33.440 --> 0:14:36.360 the kind of position that we're in right now is 0:14:36.360 --> 0:14:39.280 that as of next year, we're going to see the 0:14:39.320 --> 0:14:42.520 alleged victims of social media into the courtroom for the 0:14:42.520 --> 0:14:45.680 first time in the US. So these cases are going 0:14:45.720 --> 0:14:49.600 to be tried. Juries are going to hear testimony from teenagers, 0:14:49.640 --> 0:14:53.920 from experts, from company insiders as well about whether or 0:14:54.040 --> 0:14:57.960 not social media has actually harmed the mental health of youth. 0:14:58.320 --> 0:15:00.800 A lot of people have been asking that question, but 0:15:00.880 --> 0:15:03.040 a jury will have to face their question for the 0:15:03.080 --> 0:15:04.120 first time next year. 0:15:05.280 --> 0:15:07.600 Blom Ogs Olivia Carvill, We thank you very much for 0:15:07.600 --> 0:15:10.880 bringing us the latest. Now we turn our attention to 0:15:11.360 --> 0:15:12.000 talking tech. 0:15:12.320 --> 0:15:12.840 First up. 0:15:13.200 --> 0:15:15.960 Sales of Apple's iPhone seventeen are off to a strong 0:15:16.000 --> 0:15:18.360 start in the US and in China, but the latest 0:15:18.400 --> 0:15:21.840 iPhone model has outsold its predecessor in their respective first 0:15:21.880 --> 0:15:23.200 ten days by fourteen percent. 0:15:23.240 --> 0:15:25.040 It's all according to Counterpoint Research. 0:15:25.360 --> 0:15:27.560 The research firm atribute to the boost to an improved 0:15:27.560 --> 0:15:31.280 display more storage than they upgraded a nineteen chen plus. 0:15:31.400 --> 0:15:34.120 London based fintech Revolute has been cleared to launch banking 0:15:34.160 --> 0:15:36.800 operations in Mexico. It's the second regulatory green light in 0:15:36.840 --> 0:15:39.840 Latin America this month, after Columbia approved it to create 0:15:39.880 --> 0:15:42.800 a bank, so the region is central to Revolute's growth plans. 0:15:43.000 --> 0:15:45.480 And the company says it expects quote millions of people 0:15:45.920 --> 0:15:50.080 in Mexico, and China says it has irrefutable evidence of 0:15:50.120 --> 0:15:53.880 a US cyber attack on its National Timekeeping Agency dating 0:15:53.880 --> 0:15:57.640 back to twenty twenty two. Beijing accuses Washington of exploiting vulnerabilities, 0:15:57.640 --> 0:16:00.160 and the mobile phones used by the agency's employee is 0:16:00.440 --> 0:16:05.000 distilled sensitive data. The US National Security Agency didn't immediately 0:16:05.040 --> 0:16:06.600 respond to request for comment. 0:16:09.320 --> 0:16:11.120 One of the things I want is China's going to 0:16:11.160 --> 0:16:13.960 buy so I means I want China to stop with evento, 0:16:14.040 --> 0:16:17.680 nonald very, you know, normal things. I don't want them 0:16:17.680 --> 0:16:19.520 to play the rare Earth game with US. 0:16:21.200 --> 0:16:24.400 President Trump there aboard Air Force one, outlining his expectations 0:16:24.440 --> 0:16:27.120 for upcoming trade talks of China, discussions that could have 0:16:27.240 --> 0:16:30.720 major implications for the global tech supply chain and semiconductor industry. 0:16:30.920 --> 0:16:33.520 Grim Vagsinia Tech editor Mike Shepperd joins US now in 0:16:33.560 --> 0:16:37.720 the latest important conversations to strike up again in Malaysia 0:16:37.760 --> 0:16:38.240 this week. 0:16:39.080 --> 0:16:41.360 They certainly are Cara, and we're going to be watching 0:16:41.560 --> 0:16:44.040 exactly as you said, for what the US might be 0:16:44.160 --> 0:16:47.800 willing to give up in return for those three key 0:16:47.880 --> 0:16:52.440 areas that President Donald Trump outlined on Air Force One yesterday. 0:16:52.800 --> 0:16:55.280 One of them, of course, is rare earths. That matters 0:16:55.280 --> 0:16:58.400 a lot for the tech industry, all those critical minerals 0:16:58.480 --> 0:17:01.800 going into so many different products, but not just in tech, 0:17:02.040 --> 0:17:04.920 they go into autos, They even go into defense equipment. 0:17:05.160 --> 0:17:07.440 So this is something that is crucial for the US 0:17:07.520 --> 0:17:11.399 to reach an agreement on. After China moved to start 0:17:11.440 --> 0:17:15.800 to impose export controls on sales of those critical materials 0:17:16.040 --> 0:17:18.600 to buyers here in the US, that really hit a 0:17:18.640 --> 0:17:22.359 nerve with US negotiators. But another sore point, Carol, and 0:17:22.520 --> 0:17:25.840 while it's not exactly tech, it is important, perhaps in 0:17:26.800 --> 0:17:30.440 a connected way, and that is soybeans. The President has 0:17:30.480 --> 0:17:33.399 been disgruntled, along with his advisors, that China is not 0:17:33.520 --> 0:17:37.359 buying any soybeans from US producers this year, and that 0:17:37.440 --> 0:17:40.720 is taking aim at a key source of political support 0:17:40.840 --> 0:17:43.880 for the president here in the US, and he wants 0:17:43.960 --> 0:17:47.399 China to start buying those soybeans again. That was twelve 0:17:47.440 --> 0:17:51.120 billion dollars in purchases in twenty twenty four. It has 0:17:51.240 --> 0:17:54.080 zeroed out this year. So again it's on the table. 0:17:54.280 --> 0:17:56.360 But Carol, the question is what will the US give 0:17:56.520 --> 0:17:59.439 up in return? And does that mean a relaxation of 0:17:59.480 --> 0:18:03.920 some of those export controls on critical technology that Beijing 0:18:04.160 --> 0:18:07.760 has chafed against for the past several years. Will it 0:18:07.880 --> 0:18:11.320 meet a relaxation of limits on exports of AI chips 0:18:11.720 --> 0:18:15.760 or perhaps semiconductor manufacturing equipment like what we see made 0:18:15.760 --> 0:18:19.280 by ASML and Tokyo Electron. This will be all on 0:18:19.320 --> 0:18:22.320 the table later this week when Scott Besse meets with 0:18:22.359 --> 0:18:25.080 his Chinese counterpart in Malaysia later this week. 0:18:26.119 --> 0:18:29.480 Mike Covid Night, a lot of headlines on Nespiria. Can 0:18:29.480 --> 0:18:33.000 you just help us understand what's happening in that case 0:18:33.000 --> 0:18:37.040 study scenario, what the US government is aggrieved about relative 0:18:37.359 --> 0:18:37.879 the Dutch. 0:18:39.320 --> 0:18:43.960 Well, this is a fascinating sideshow really to the broader 0:18:44.000 --> 0:18:48.920 conflict between the US and its allies and China over technology. 0:18:49.119 --> 0:18:51.040 But in this case it all boils down to one 0:18:51.119 --> 0:18:55.280 company based in the Netherlands Nextperia, the US is concerned 0:18:55.280 --> 0:18:59.400 that its parent company, Wingtech, has a plan to siphon 0:18:59.520 --> 0:19:04.240 critical chip making technology out of European hands and into 0:19:04.320 --> 0:19:07.840 China to bolster the domestic industry, and it put pressure 0:19:07.880 --> 0:19:11.880 on Dutch authorities to seize control and replace the CEO, 0:19:12.080 --> 0:19:15.560 which happened at the end of last month. We learned 0:19:15.600 --> 0:19:19.080 about this all last week through court filings in the Netherlands, 0:19:19.240 --> 0:19:23.280 and China is responding forcefully. It has imposed restrictions on 0:19:23.520 --> 0:19:27.639 exports of Nexperia products that were made in China, and 0:19:27.640 --> 0:19:31.240 we've also seen messages in we chat to Nexperia employees 0:19:31.359 --> 0:19:34.080 in China saying that they do not have to listen 0:19:34.160 --> 0:19:39.160 to the new management running Nextperia based in the Netherlands. 0:19:39.280 --> 0:19:41.280 So this is something we will want to watch closely 0:19:41.280 --> 0:19:43.840 as we see the Dutch taking on the world's second 0:19:43.880 --> 0:19:47.480 largest economy over the fate of this companies, which also 0:19:47.560 --> 0:19:51.000 I will say it provides a lot of semiconductors legacy chips, 0:19:51.040 --> 0:19:53.800 mind you, but still to the auto industry and consumer 0:19:54.320 --> 0:19:55.600 electronics producers. 0:19:56.800 --> 0:20:00.600 But Bess, Mike Shepard, thank you very much. Another story, advisor, 0:20:00.640 --> 0:20:04.399 Glass Lewis is urging Tesla shareholders to vote against Elon 0:20:04.520 --> 0:20:08.840 musk potentially trillion dollar pay package, the second major proxy 0:20:08.880 --> 0:20:12.000 firm to do so ahead of Tesla's November sixth and 0:20:12.080 --> 0:20:14.399 your meeting. Let's get out to Bloomberg's Global Autos are 0:20:14.480 --> 0:20:18.240 Craig Trudel. I'm reading the Glass Lewis note, and they're 0:20:18.280 --> 0:20:23.840 worried about, I think shareholder dilution. But just summarize why 0:20:23.880 --> 0:20:27.400 they're proposing and recommending voting against this compackage. 0:20:28.720 --> 0:20:31.520 Yeah, I think you put the nail on the head 0:20:31.520 --> 0:20:33.720 there in terms of dilution being an issue, I think, 0:20:33.880 --> 0:20:36.760 and this goes back to, you know, sort of criticism 0:20:36.840 --> 0:20:41.080 that you know, the judge in Delaware sort of level 0:20:41.119 --> 0:20:45.680 that at the initial paid package that Tesla's border range 0:20:45.680 --> 0:20:49.680 from USK back in twenty eighteen. This is a case 0:20:49.720 --> 0:20:53.359 of a CEO who's already quite aligned with the future 0:20:53.400 --> 0:20:57.040 of his company by virtue of the substantial stake that 0:20:57.080 --> 0:20:59.800 he has in the company. And there is a q 0:21:00.359 --> 0:21:02.959 on the part of of you know, the these proxy 0:21:02.960 --> 0:21:06.200 advisors of just you know, to what degree is it 0:21:06.240 --> 0:21:10.680 is it necessary or appropriate to hand over more control 0:21:10.880 --> 0:21:13.920 of this company and issue so many shares that would 0:21:13.960 --> 0:21:17.280 dilute the current shareholder base of Tesla. 0:21:18.640 --> 0:21:22.000 Now, Tesla Craig has said that the Glass Lewis recommendation 0:21:22.200 --> 0:21:24.920 is quote misguided in an ex post and they're talking 0:21:24.920 --> 0:21:28.199 about the recommendations attempting to override the mandate of our 0:21:28.240 --> 0:21:32.240 shareholders delivered to Elon and ignore the staggering financial results 0:21:32.280 --> 0:21:35.320 that were delivered under Elon's leadership. Just what is the 0:21:35.480 --> 0:21:37.320 argument coming from the business right now? 0:21:38.880 --> 0:21:39.120 Yeah. 0:21:39.400 --> 0:21:42.800 I think it's interesting because you know, you you sort 0:21:42.800 --> 0:21:46.600 of at some points hear Tesla, you know, talk about 0:21:46.600 --> 0:21:48.760 the idea that they're more than just a car company. 0:21:49.080 --> 0:21:53.200 And yet it's interesting that they sort of compare their 0:21:53.240 --> 0:21:57.639 performance versus other car companies, and they're by virtue of 0:21:57.680 --> 0:22:01.280 doing that comparison, you know, make them look, you know, 0:22:01.359 --> 0:22:04.040 awfully different from from these companies that for a long 0:22:04.080 --> 0:22:07.119 time they've said, you know, we shouldn't be compared with 0:22:07.160 --> 0:22:11.600 those with those companies. So of course there is you know, 0:22:11.680 --> 0:22:16.680 some some some reason to sort of celebrate the returns 0:22:16.760 --> 0:22:19.680 that this company has managed under Musk. We should acknowledge 0:22:19.680 --> 0:22:20.200 that as well. 0:22:21.280 --> 0:22:23.480 We'll see if that's celebrating Amazon Wednesday with their ownings. 0:22:23.480 --> 0:22:25.160 Come Blie most Crowdridel, We thank. 0:22:25.000 --> 0:22:34.280