Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Amazon says it's cloud
Speaker 2: service is recovering after widespread outages affected customers like Zoom, Snapchat,
Speaker 2: and Coinbase.
Speaker 3: Plus US China trade talks resuming this week as President
Speaker 3: Trump lists Rare Earth among its top priorities.
Speaker 2: And IBM and Grock partner up to provide greater access
Speaker 2: to the full potential of enterprise AI. We'll discuss with
Speaker 2: them later this hour.
Speaker 4: My first I's check in on these markets.
Speaker 3: D I'm sat in London this week, but I can
Speaker 3: see from across the pond one point thirty percent on
Speaker 3: the nasat one hundred and a new record high. There's
Speaker 3: a risk on tone throughout the markets. We're looking towards
Speaker 3: those China US trade talks, but there are some notable
Speaker 3: gainers underneath the head YEP.
Speaker 2: Apple is a big points driver to the upside. At
Speaker 2: the index level, Apple has touched its first record high
Speaker 2: of twenty twenty five. That's the first record high since
Speaker 2: December of twenty twenty four. We have an upgrade at
Speaker 2: Loop to buy, like many recently siting trends in the
Speaker 2: iPhone upgrade cycle. We're gonna have a lot more on
Speaker 2: this story throughout the hour, but clearly this is a
Speaker 2: big jump for the company and it's really impacting markets
Speaker 2: to the macro level. We're also looking at Amazon, the
Speaker 2: parent of cloud computing AWS. The sock's actually up a
Speaker 2: percentage point. A massive outage overnight, principally around one US
Speaker 2: data center in North Virginia, the US East One site,
Speaker 2: but it has had repercussions for the public sector, the
Speaker 2: private sector, and technology companies of all types. Let's get
Speaker 2: out to Bloomberg'syajo's son, who's been reporting on this throughout
Speaker 2: the incident, very simply a Joe, what happened and what
Speaker 2: of the ramifications beenah ed?
Speaker 5: So this morning Amazon reported that they're experiencing operational failure
Speaker 5: across multiple services and its data center hub in northern Virginia.
Speaker 5: Even though the issue occurred in eastern the northeast of
Speaker 5: the United States, the impact was really fell far and wide.
Speaker 5: Some of the victims of this outage include trading platform
Speaker 5: Robin Hood Lloyd's the British Bank HMRC, the British Tax Authority,
Speaker 5: as well as Perplexity the AI platform. So the company
Speaker 5: said that the issue has been largely fixed, but there
Speaker 5: are residual effects. And this definitely gives me flashback of
Speaker 5: the CrowdStrike outage last year, which you might remember, a
Speaker 5: buggy update from CrowdStrike really paralyzed nearly half the world's
Speaker 5: computers and left people scrambling at airports and sent bankers
Speaker 5: home early because they simply couldn't turn out the computers.
Speaker 3: Yeah, Joe, it does remind us of the important of
Speaker 3: a very few, very powerful players when it comes to
Speaker 3: our tech infrastructure. It hasn't been that significant an incident
Speaker 3: for Amazon in and of itself for many years.
Speaker 4: Now is it twenty twenty one?
Speaker 3: But tell us about the learnings that Amazon's going to
Speaker 3: push forward for AWS.
Speaker 5: Yeah, I think this really speaks to the fragility of
Speaker 5: overdependence on the very few, you know, hyperscaler cloud operators
Speaker 5: that we have. AWS is the world's largest cloud provider.
Speaker 5: Its business surpasses Google and Microsoft's and I believe AWS
Speaker 5: analysts predict that this unit is going to brain about
Speaker 5: one hundred and twenty six billion dollars to the company.
Speaker 5: Amazon itself has said that the company is going to
Speaker 5: invest around one hundred billion or so into building data
Speaker 5: centers and model training. Given that you know, so much
Speaker 5: of our AI training inference is run on these data
Speaker 5: centers cloud computing services these days, I think Amazon will
Speaker 5: really have to think about business continuity so that this
Speaker 5: does not happen again.
Speaker 2: Yeah, Joe, Lots of our audience here on Bloomberg Tech
Speaker 2: are highly technical. It might be their job to deal
Speaker 2: with their cloud computing provider. Loads of people will be
Speaker 2: watching and be like, I don't understand any of this.
Speaker 2: I don't understand what happened. I spent a lot of
Speaker 2: time reading about DNS and reading about DINAMODB, the data
Speaker 2: center database that the AWS relies on. Have they actually
Speaker 2: answered the why of what happened? How could they let
Speaker 2: this happen?
Speaker 6: They have not answered why.
Speaker 5: So DNS is a system that translates web addresses to
Speaker 5: IP addresses so your apps and your websites can load.
Speaker 5: I think we will throughout the US day at the
Speaker 5: company will say exactly what happened, will probably let us know.
Speaker 5: But I think it's very I think it's it's very
Speaker 5: telling that a very small part of the digital infrastructure
Speaker 5: can create such a ripple effect throughout the global economy.
Speaker 5: And I think we will see if the company will
Speaker 5: say anything about how you know, if there will be
Speaker 5: what they will do to satisfy their customers going forward.
Speaker 3: And I'm sure you'll be the first one to help
Speaker 3: us report it out. Ya just and we so appreciate
Speaker 3: you jumping on today.
Speaker 4: Thank you. Let's get to the wider impact look.
Speaker 3: On the tech sector written large today we're in riscon
Speaker 3: mode and Rathmun's with us Grenadilla advisory founder and CEO
Speaker 3: and Anna, Look, we see these technical glitches and the
Speaker 3: realization and well maybe just re memorizing the idea that
Speaker 3: we do depend on a few very big players not
Speaker 3: just for our infrastructure, but for the market to go
Speaker 3: higher too.
Speaker 4: What do you make at the rally today?
Speaker 7: Yeah, the rally, I mean, especially for Amazon, it seems
Speaker 7: like there was no glitch today because Amazon is also
Speaker 7: up with the rest of the markets. As regards to Amazon,
Speaker 7: I do think that there is a concentration problem. Everyone
Speaker 7: about the stock market concentration, I mean, this is sort
Speaker 7: of the same thing. I think we have to start
Speaker 7: looking at digital infrastructure almost as utilities.
Speaker 6: You really can't.
Speaker 7: Live without it, and so from that standpoint, I think
Speaker 7: barriers it to entry are high, but we need to
Speaker 7: start thinking about sort of diversifying our exposure.
Speaker 6: With regards to the rest of the market.
Speaker 7: I think there is a lot of excitement, certainly not
Speaker 7: only in tech, but in other areas of the markets
Speaker 7: as well. I mean, last week we learned about Walmart
Speaker 7: and open Ai. Today we learned about Cleveland Cliffs and
Speaker 7: Rare Earth's exploration. I feel like what's happening now is
Speaker 7: something that investors have been waiting for for a long time,
Speaker 7: which is to see the expansion of the tentacles of
Speaker 7: AI reaching the different parts of the economy and different
Speaker 7: parts of the markets. And this makes us feel a
Speaker 7: lot better about the AI play and AI development because
Speaker 7: it's becoming stickier.
Speaker 6: We can't feel this off as easily.
Speaker 7: We can't just say, okay, those are the data centers
Speaker 7: that are going to go dark and we may not
Speaker 7: use it for ten years. This is becoming more of
Speaker 7: a real thing in our daily lives.
Speaker 3: So interesting you're talking about the broadening out effector in
Speaker 3: the markets. But let's just go back to the first
Speaker 3: point about the over focus. There are basically an oligopoli
Speaker 3: when it comes to cloud provision. I'm here in Europe
Speaker 3: because we've got our Tech summon in London, and one
Speaker 3: of the key debates is to be had is Europe's
Speaker 3: over dependence on other global players, the fact that they
Speaker 3: don't make their own chips, but they also don't have
Speaker 3: their own cloud providers. What do you make out her
Speaker 3: of whether that might indeed change as we all think
Speaker 3: about sovereign AI and sovereign cloud.
Speaker 7: Yeah, so I think the concentration risk we talked about earlier,
Speaker 7: it applies to everybody. This was a global event, right,
Speaker 7: and so you do need to think about diversifying your exposure.
Speaker 6: But we've had stuff.
Speaker 7: Like this in the past, maybe not as large as Amazon,
Speaker 7: but I think the previous speaker talked about christ Strike, CrowdStrike.
Speaker 7: It really it requires a massive amount of investment and
Speaker 7: a massive amount of effort to get that done, and
Speaker 7: so far the effort has been coming from a select
Speaker 7: few regions and countries. Certainly Europe probably needs to think
Speaker 7: about having their own infrastructure as well, but it's not
Speaker 7: as easy to do as it is to say.
Speaker 2: And Apple's just touched four percent in the session again,
Speaker 2: hitting a record high for the first time this year.
Speaker 2: It's a big factor at the index level. What do
Speaker 2: you make of all of these upgrades on optimism around iPhone?
Speaker 7: Yeah, so, especially with regards to the negotiations with China,
Speaker 7: it is really nice to see sales up in the
Speaker 7: United States because then it makes Apple look like less
Speaker 7: dependent on some of this rhetoric between China and the US.
Speaker 7: But I would also say that there is a little
Speaker 7: bit of a spending of pulling forward of thing. When
Speaker 7: you think that iPhones or anything's going to cost four
Speaker 7: or five percent more in a year, are you really
Speaker 7: going to wait for iPhone eighteen? No, You're going to
Speaker 7: buy it today, especially if you have an iPhone X
Speaker 7: or iPhone nine. I can't even remember the numbers anymore,
Speaker 7: but a lot of people have been keeping them, and
Speaker 7: if they're going to renew it, they're going to renew
Speaker 7: it now rather than waiting until next year. So I
Speaker 7: think we're seeing some of that pulling forward effect as well.
Speaker 2: The optimism in technology markets today seems to be around
Speaker 2: earnings in particular and what's to come this week, but
Speaker 2: trade negotiations are also to come this week. Balance those
Speaker 2: two risk factors for.
Speaker 7: US, well, earnings is fundamental and in my mind is
Speaker 7: much much more important. And I do think that the
Speaker 7: stock prices will react to earnings. With regards to trade talks,
Speaker 7: I mean, I feel like the Marcus rising. Ever since
Speaker 7: the first day when President Trump said that he may
Speaker 7: not meet with President she.
Speaker 6: It's been going it up.
Speaker 7: And I think that's the market basically calling bluff in
Speaker 7: both countries. China is an export dependent country. It needs
Speaker 7: to export rare earth minerals as much as we need
Speaker 7: to buy them. Us is a consumer based economy. We
Speaker 7: need to be able to import cheaper goods from China
Speaker 7: as much as you know China needs to export them.
Speaker 6: We need each other.
Speaker 7: So I think the markets are saying, Okay, the deal
Speaker 7: is probably going to get done.
Speaker 6: It's just a matter of time.
Speaker 2: Anna Rabin of grena Dela Advisory, Thank you very much.
Speaker 2: So coming up Meta, TikTok, Snap and many more Under Pressure,
Speaker 2: We're going to discuss why social media giants are about
Speaker 2: to face a mountain of litigation. That's next.
Speaker 4: This is bloobag Tech.
Speaker 3: Social media giants are about to face a wave of
Speaker 3: litigation matter, Snap Bite Downs Alphabet are set to a
Speaker 3: pair in court over two consolidated lawsuits accusing them of
Speaker 3: knowingly designing their platforms to addict users, resulting in depression, anxiety, insomnia,
Speaker 3: and self harm from all Bloomberg's Olivia Carvill it's been
Speaker 3: following these lawsuits, joins us now, and in one of
Speaker 3: the key lines in your story about this, Olivia, you
Speaker 3: talk about how one lawyer who's going to be representing
Speaker 3: the federal cases says, all told, this is a massive
Speaker 3: legal siege on the social media industry. Why is it
Speaker 3: all coming in this wave?
Speaker 8: I mean, we have been seeing these lawsuits filed in
Speaker 8: state and federal court over a number of years now.
Speaker 8: This all started back in twenty twenty two after Francis
Speaker 8: Hagen kind of blew the whistle on Facebook, releasing a
Speaker 8: trove of documents about how the social media giant was
Speaker 8: kind of impacting youth mental health. Following that, we saw
Speaker 8: plaintiff's attorneys really focus in on that and start to
Speaker 8: file lawsuits against these companies accusing them of harming children.
Speaker 8: And over the course of three years, all of those lawsuits,
Speaker 8: all the majority of them now have been consolidated into
Speaker 8: two different litigation tracks, and state court and in federal court.
Speaker 8: We're going to see these cases come to the courtrooms
Speaker 8: next year, and it's going to be, you know, as
Speaker 8: he mentioned in the story, a massive legal siege on
Speaker 8: the social media industry. We're expecting to see a number
Speaker 8: of trials next year and possibly thousands of plaintiffs waiting
Speaker 8: in the wings once those trials close.
Speaker 2: Olivia. A part of the reason that this litigation has
Speaker 2: been pending for quite a long time is that the
Speaker 2: social media companies have had this liability shield right that
Speaker 2: has protected them in some sense from user harm litigation.
Speaker 2: Explain that shield and why it's now not preventing these
Speaker 2: pieces of litigation moving forward.
Speaker 8: Yeah, that's right. I mean the Communications Decency Act. This
Speaker 8: is a federal law that has long protected social media
Speaker 8: platforms and really any internet place platform from facing user
Speaker 8: harm lawsuits.
Speaker 4: What that lawd does is it.
Speaker 8: Provides an immunity shield or a blanket that says you
Speaker 8: cannot file a lawsuit against these companies for the content
Speaker 8: that exists on their sites. What these cases are trying
Speaker 8: to do is sidestep that immunity blanket by saying this
Speaker 8: is not about the content that uses a posting to Facebook,
Speaker 8: to Instagram, Snapchat or TikTok. This is about the design
Speaker 8: of the platforms that these companies intentionally designed their platforms
Speaker 8: to try and addict young users and resulting in many
Speaker 8: harms to kids, from mental health harms like depression, anxiety
Speaker 8: all the way through to self harm and suicidal issues.
Speaker 4: Olivia.
Speaker 3: Often the markets ignore potential legal threats for big tech companies.
Speaker 3: It has been notable that actually a lot of companies
Speaker 3: have been trying to update the protections for children in particular.
Speaker 3: I think of Insta just last week. How have they
Speaker 3: set themselves up to really tackle this in a forward
Speaker 3: going way.
Speaker 8: Yeah, as these cases have been piling up in the courtrooms,
Speaker 8: we've seen almost every one of the defendants start to
Speaker 8: update their policies to really try and get better, stronger
Speaker 8: safeguards for kids. And you saw that recently with what
Speaker 8: Meta announced on Instagram. And that's certainly true. But at
Speaker 8: the same time, this litigation is not going away. These
Speaker 8: allegations stand in court, and I think what's remarkable about
Speaker 8: the kind of position that we're in right now is
Speaker 8: that as of next year, we're going to see the
Speaker 8: alleged victims of social media into the courtroom for the
Speaker 8: first time in the US. So these cases are going
Speaker 8: to be tried. Juries are going to hear testimony from teenagers,
Speaker 8: from experts, from company insiders as well about whether or
Speaker 8: not social media has actually harmed the mental health of youth.
Speaker 8: A lot of people have been asking that question, but
Speaker 8: a jury will have to face their question for the
Speaker 8: first time next year.
Speaker 3: Blom Ogs Olivia Carvill, We thank you very much for
Speaker 3: bringing us the latest. Now we turn our attention to
Speaker 3: talking tech.
Speaker 4: First up.
Speaker 3: Sales of Apple's iPhone seventeen are off to a strong
Speaker 3: start in the US and in China, but the latest
Speaker 3: iPhone model has outsold its predecessor in their respective first
Speaker 3: ten days by fourteen percent.
Speaker 4: It's all according to Counterpoint Research.
Speaker 3: The research firm atribute to the boost to an improved
Speaker 3: display more storage than they upgraded a nineteen chen plus.
Speaker 3: London based fintech Revolute has been cleared to launch banking
Speaker 3: operations in Mexico. It's the second regulatory green light in
Speaker 3: Latin America this month, after Columbia approved it to create
Speaker 3: a bank, so the region is central to Revolute's growth plans.
Speaker 3: And the company says it expects quote millions of people
Speaker 3: in Mexico, and China says it has irrefutable evidence of
Speaker 3: a US cyber attack on its National Timekeeping Agency dating
Speaker 3: back to twenty twenty two. Beijing accuses Washington of exploiting vulnerabilities,
Speaker 3: and the mobile phones used by the agency's employee is
Speaker 3: distilled sensitive data. The US National Security Agency didn't immediately
Speaker 3: respond to request for comment.
Speaker 9: One of the things I want is China's going to
Speaker 9: buy so I means I want China to stop with evento,
Speaker 9: nonald very, you know, normal things. I don't want them
Speaker 9: to play the rare Earth game with US.
Speaker 3: President Trump there aboard Air Force one, outlining his expectations
Speaker 3: for upcoming trade talks of China, discussions that could have
Speaker 3: major implications for the global tech supply chain and semiconductor industry.
Speaker 3: Grim Vagsinia Tech editor Mike Shepperd joins US now in
Speaker 3: the latest important conversations to strike up again in Malaysia
Speaker 3: this week.
Speaker 10: They certainly are Cara, and we're going to be watching
Speaker 10: exactly as you said, for what the US might be
Speaker 10: willing to give up in return for those three key
Speaker 10: areas that President Donald Trump outlined on Air Force One yesterday.
Speaker 10: One of them, of course, is rare earths. That matters
Speaker 10: a lot for the tech industry, all those critical minerals
Speaker 10: going into so many different products, but not just in tech,
Speaker 10: they go into autos, They even go into defense equipment.
Speaker 10: So this is something that is crucial for the US
Speaker 10: to reach an agreement on. After China moved to start
Speaker 10: to impose export controls on sales of those critical materials
Speaker 10: to buyers here in the US, that really hit a
Speaker 10: nerve with US negotiators. But another sore point, Carol, and
Speaker 10: while it's not exactly tech, it is important, perhaps in
Speaker 10: a connected way, and that is soybeans. The President has
Speaker 10: been disgruntled, along with his advisors, that China is not
Speaker 10: buying any soybeans from US producers this year, and that
Speaker 10: is taking aim at a key source of political support
Speaker 10: for the president here in the US, and he wants
Speaker 10: China to start buying those soybeans again. That was twelve
Speaker 10: billion dollars in purchases in twenty twenty four. It has
Speaker 10: zeroed out this year. So again it's on the table.
Speaker 10: But Carol, the question is what will the US give
Speaker 10: up in return? And does that mean a relaxation of
Speaker 10: some of those export controls on critical technology that Beijing
Speaker 10: has chafed against for the past several years. Will it
Speaker 10: meet a relaxation of limits on exports of AI chips
Speaker 10: or perhaps semiconductor manufacturing equipment like what we see made
Speaker 10: by ASML and Tokyo Electron. This will be all on
Speaker 10: the table later this week when Scott Besse meets with
Speaker 10: his Chinese counterpart in Malaysia later this week.
Speaker 2: Mike Covid Night, a lot of headlines on Nespiria. Can
Speaker 2: you just help us understand what's happening in that case
Speaker 2: study scenario, what the US government is aggrieved about relative
Speaker 2: the Dutch.
Speaker 10: Well, this is a fascinating sideshow really to the broader
Speaker 10: conflict between the US and its allies and China over technology.
Speaker 10: But in this case it all boils down to one
Speaker 10: company based in the Netherlands Nextperia, the US is concerned
Speaker 10: that its parent company, Wingtech, has a plan to siphon
Speaker 10: critical chip making technology out of European hands and into
Speaker 10: China to bolster the domestic industry, and it put pressure
Speaker 10: on Dutch authorities to seize control and replace the CEO,
Speaker 10: which happened at the end of last month. We learned
Speaker 10: about this all last week through court filings in the Netherlands,
Speaker 10: and China is responding forcefully. It has imposed restrictions on
Speaker 10: exports of Nexperia products that were made in China, and
Speaker 10: we've also seen messages in we chat to Nexperia employees
Speaker 10: in China saying that they do not have to listen
Speaker 10: to the new management running Nextperia based in the Netherlands.
Speaker 10: So this is something we will want to watch closely
Speaker 10: as we see the Dutch taking on the world's second
Speaker 10: largest economy over the fate of this companies, which also
Speaker 10: I will say it provides a lot of semiconductors legacy chips,
Speaker 10: mind you, but still to the auto industry and consumer
Speaker 10: electronics producers.
Speaker 2: But Bess, Mike Shepard, thank you very much. Another story, advisor,
Speaker 2: Glass Lewis is urging Tesla shareholders to vote against Elon
Speaker 2: musk potentially trillion dollar pay package, the second major proxy
Speaker 2: firm to do so ahead of Tesla's November sixth and
Speaker 2: your meeting. Let's get out to Bloomberg's Global Autos are
Speaker 2: Craig Trudel. I'm reading the Glass Lewis note, and they're
Speaker 2: worried about, I think shareholder dilution. But just summarize why
Speaker 2: they're proposing and recommending voting against this compackage.
Speaker 11: Yeah, I think you put the nail on the head
Speaker 11: there in terms of dilution being an issue, I think,
Speaker 11: and this goes back to, you know, sort of criticism
Speaker 11: that you know, the judge in Delaware sort of level
Speaker 11: that at the initial paid package that Tesla's border range
Speaker 11: from USK back in twenty eighteen. This is a case
Speaker 11: of a CEO who's already quite aligned with the future
Speaker 11: of his company by virtue of the substantial stake that
Speaker 11: he has in the company. And there is a q
Speaker 11: on the part of of you know, the these proxy
Speaker 11: advisors of just you know, to what degree is it
Speaker 11: is it necessary or appropriate to hand over more control
Speaker 11: of this company and issue so many shares that would
Speaker 11: dilute the current shareholder base of Tesla.
Speaker 3: Now, Tesla Craig has said that the Glass Lewis recommendation
Speaker 3: is quote misguided in an ex post and they're talking
Speaker 3: about the recommendations attempting to override the mandate of our
Speaker 3: shareholders delivered to Elon and ignore the staggering financial results
Speaker 3: that were delivered under Elon's leadership. Just what is the
Speaker 3: argument coming from the business right now?
Speaker 6: Yeah.
Speaker 11: I think it's interesting because you know, you you sort
Speaker 11: of at some points hear Tesla, you know, talk about
Speaker 11: the idea that they're more than just a car company.
Speaker 11: And yet it's interesting that they sort of compare their
Speaker 11: performance versus other car companies, and they're by virtue of
Speaker 11: doing that comparison, you know, make them look, you know,
Speaker 11: awfully different from from these companies that for a long
Speaker 11: time they've said, you know, we shouldn't be compared with
Speaker 11: those with those companies. So of course there is you know,
Speaker 11: some some some reason to sort of celebrate the returns
Speaker 11: that this company has managed under Musk. We should acknowledge
Speaker 11: that as well.
Speaker 3: We'll see if that's celebrating Amazon Wednesday with their ownings.
Speaker 3: Come Blie most Crowdridel, We thank.
Speaker 2: You, Welcome back to Bloomberg Tech. The vibe in tech
Speaker 2: markets right now is a lot of anticipation around earning season.
Speaker 2: Eighty five percent of the S and P five hundred
Speaker 2: has already beaten profit expectations, and as that one hundred
Speaker 2: is up one point four percent. A big factor is
Speaker 2: good vibes around Apple and also other names pushing higher
Speaker 2: despite negative news headlines. Let's get out so some of
Speaker 2: the top stories of the day with Bloomberg Equities reporter
Speaker 2: Nora Melinda. Let's start or with Amazon and AWS.
Speaker 12: Yes, lots to keep an on right now ed and
Speaker 12: pertaining to Amazon here. Of course, we know this has
Speaker 12: been a discussion all day long about the widespread outage
Speaker 12: that was seen here, this disruption from AWS that affected
Speaker 12: a lot of different companies including Roadblocks, Fortnite, Snapchat, a
Speaker 12: few others here. So we are seeing shares currently rebounding,
Speaker 12: but we were seeing some weakness earlier in the trading
Speaker 12: session as it was really falling behind, lagging a lot
Speaker 12: of its mag seven peers. But if you look about
Speaker 12: a year to date basis here looking at shares of
Speaker 12: Amazon down about two percent here, So definitely something to
Speaker 12: keep an eye on as we just think about the
Speaker 12: broader landscape of this company.
Speaker 3: And it's also notable that it's one of the key
Speaker 3: points additions.
Speaker 4: But not the one but Apple.
Speaker 3: Let's switch Gibbs to a company that's in a new
Speaker 3: record high helping the index from an undona bocus today,
Speaker 3: no one.
Speaker 4: Took us through Apple and why it is routing.
Speaker 12: Yes, Apple shares down just shy of five percent year
Speaker 12: to date, but really seeing some green on this green today.
Speaker 12: Of course, this comes after the fact that we did
Speaker 12: see over the first ten days of the sale of
Speaker 12: the iPhone seven teen series, we are seeing that it
Speaker 12: outsold the iPhone sixteen by about fourteen percent. So you
Speaker 12: did see Luke Capital upgrading the stock to buy from hold,
Speaker 12: of course, underscoring the positive iPhone demand trends. But we
Speaker 12: are seeing shares of Apple, as you mentioned Caroline rallying
Speaker 12: for a record.
Speaker 4: High today, really strong today as well.
Speaker 3: Absolutely starting to see that four percent add to now
Speaker 3: a four percent rally on the here finally breaking into
Speaker 3: positive territory bluevegs Normalinda, We thank you so much. Let's
Speaker 3: shift gears to other areas that are rallying. In particular
Speaker 3: crypto and crypto stocks are actually doing better this Monday
Speaker 3: than underlying bitcoin is. We're looking at bitcoin miners in particular,
Speaker 3: they're outperforming in general the original cryptocurrency as they expand
Speaker 3: further into AI data centers. I can tolches with us
Speaker 3: August co CEO and co founder to discuss all things crypto,
Speaker 3: but I just want to dwell on that for a moment.
Speaker 3: This desire for compute has seen companies pivot core Weave
Speaker 3: once upon a time was a crypto minor, and now
Speaker 3: it's a key neo cloud. What are you making of
Speaker 3: others trying to ride that wave and hiring key executives
Speaker 3: to do so.
Speaker 13: Look, at the end of the day, you're going to
Speaker 13: go where you know, whoever pays you the most and
Speaker 13: where you can sell the highest price. And to your point,
Speaker 13: the bitcoin miners have a secured grid power. It gives
Speaker 13: them that strategic advantage if you think about data center space,
Speaker 13: and so I think right now they're definitely coming out
Speaker 13: as a favorite, and you're seeing that demand across the board.
Speaker 13: So it's going to be very interesting. You know, today
Speaker 13: bitcoin isn't used Bitcoin blockchain isn't used for processing transactions,
Speaker 13: but it'll be interesting to see if that has any
Speaker 13: effect online.
Speaker 2: In recent weeks, it's been very interesting to track how
Speaker 2: bitcoin's behaved in the moment. Sometimes it can seem severe
Speaker 2: in the context of risk headlines about trade, the president's
Speaker 2: relationship with China, but I think you could give us
Speaker 2: some historical context that things are actually more calm through
Speaker 2: the bitcoin lens than at least the headlines might suggest.
Speaker 6: Absolutely.
Speaker 13: On October tenth, we had our newest bitcoin block Friday,
Speaker 13: which saw nineteen billion and roughly liquidations across a number
Speaker 13: of exchanges. You know, it was a very large move,
Speaker 13: but relative to your point ed, you know, bitcoin only
Speaker 13: moved the price moved twelve percent, and if we had
Speaker 13: looked at you know, call it twenty twenty or twenty eighteen,
Speaker 13: we probably would have seen that move over forty percent.
Speaker 13: And so, you know, the maturation of the space is
Speaker 13: definitely here. The liquidations were clearly isolated to a number
Speaker 13: of exchanges, but it did show that while there was
Speaker 13: price maturation in terms of the technology that actually exists
Speaker 13: in the space, there's a lot of work that needs
Speaker 13: to happen for it to reach the level of a
Speaker 13: New York Stock Exchange or CEME. And so we're really
Speaker 13: looking forward to that level of progress in the industry.
Speaker 4: Okay, what has to happen.
Speaker 13: Yeah, it's a number of things, I would say, you know,
Speaker 13: first off, it's a level of coordination, and so if
Speaker 13: you think about you know, what happens in circuit breakers,
Speaker 13: for example, when something happens in the market you don't
Speaker 13: necessarily have, you know, an uncore native circuit breaker. You
Speaker 13: have a number of different exchanges that are speaking to
Speaker 13: one another. The second is also if you think about inventory,
Speaker 13: and so there's never really an instance, for example, where
Speaker 13: you can't move from one exchange to another, which you
Speaker 13: see very often happen in crypto. When an exchange goes down,
Speaker 13: then someone can't necessarily send funds into the exchange to
Speaker 13: top up on margin calls, and so you see this
Speaker 13: level of cascading liquidations, which is exactly what we saw.
Speaker 13: Another thing that happens is, you know, even if you
Speaker 13: think about margin calls or the standardized risk metrics typically
Speaker 13: in traditional finance, that's completely standardized across all of these exchanges.
Speaker 13: And today we think about institutional overseas exchanges as almost
Speaker 13: isolated islands of risk. Each one has their own methodology,
Speaker 13: and so when some of this happens in the market,
Speaker 13: when you get this level of volatility, it's very very
Speaker 13: hard to track, you know, across all of the different
Speaker 13: venues that you're trading, and so you get this level
Speaker 13: of liquidations. I mean, nineteen billion is a number we
Speaker 13: haven't seen historically before. But again bigcoin performed quite well
Speaker 13: relative to that, as did you know some of the
Speaker 13: other ETFs you know x orpth Encelona.
Speaker 3: Let's talk about those ETFs because you are definitely the
Speaker 3: voice we want to hear about settlement about management of software.
Speaker 3: You're thinking about the ways in which the underlying infrastructure
Speaker 3: is going to support the growth here aire. But when
Speaker 3: we think about regulation that could see the SEC. I
Speaker 3: think it's got one hundred and thirty ETF applications on
Speaker 3: its desk. If the government ever opens back up again,
Speaker 3: they'll be able to start allowing them to go through.
Speaker 3: There is a lot of particularly leveraged versions or very
Speaker 3: indiosyncratic old coins.
Speaker 4: Is that the way you want to see the industry progressed?
Speaker 13: Look at the end of the day, I think access
Speaker 13: is the most important, but I agree with you there's
Speaker 13: there's definitely a point where there's just a tension deficiency,
Speaker 13: and so you can't look at and underrate one hundred
Speaker 13: of these different structures. And so the biggest thing when
Speaker 13: I think about some of these structures and teams is
Speaker 13: really who is in the management behind some of these
Speaker 13: and what's the underlying risk in terms of the strategies.
Speaker 13: You know you're seeing some of the digital asset treasuries
Speaker 13: or ETFs. They might just be buying the underline, they
Speaker 13: may just be staking. But to your point, care line,
Speaker 13: you're seeing some of these others that are taking on
Speaker 13: leveraged looping and other levels of risk, and you know,
Speaker 13: you just want to make sure that you have some
Speaker 13: level of understanding of the underlying structure. And so I
Speaker 13: would say for some of these it is a little
Speaker 13: bit gray. You know, we are pretty excited of this
Speaker 13: level of access going into you know, whether it's Avalanche Athena,
Speaker 13: you know, there's the access really opens it up to
Speaker 13: a net new market where people are willing to pay
Speaker 13: for that premium in order to get access. But you
Speaker 13: are right, the underlying risk is not the same for
Speaker 13: all of them.
Speaker 2: All Right, it's been a while since we've had you
Speaker 2: on the show and we've spoken. I just wanted to
Speaker 2: get your reflection on this administration's legislative efforts across crypto
Speaker 2: and the work that David Sachs has been doing and
Speaker 2: how you feel it has or hasn't worked.
Speaker 13: Without a doubt, it has been night and day relative
Speaker 13: to you know, previous conversations that we've had we have
Speaker 13: been able to hire in the United States across the
Speaker 13: board and tell people that we work in crypto and
Speaker 13: you know, historically, if you think about a year ago,
Speaker 13: that was just not possible and we were thinking about,
Speaker 13: you know, moving the company offshore, hiring overseas, and so
Speaker 13: if you know, relative to conversations that we've had with
Speaker 13: folks even in Asia, we're seeing a lot of focus
Speaker 13: transition back to the United States. And that is just
Speaker 13: incredibly compelling as someone who's building here in the US,
Speaker 13: and we're really really excited about the communication and support
Speaker 13: that we're getting from this administration.
Speaker 4: Just very quick.
Speaker 2: Do you support the dollarization thesis that David and others
Speaker 2: are trying to put in place?
Speaker 13: Yes, absolutely, And you're seeing a lot of that, you know,
Speaker 13: happening with some of these stable coin legislation, where it
Speaker 13: is going to strengthen the dollar by having a lot
Speaker 13: of these global stable coins be back by the US
Speaker 13: dollars the underlying and so you know, I do think it,
Speaker 13: you know, leads to a stronger US dollar, but it
Speaker 13: you know, it will see what the administration can do
Speaker 13: within now in the next three years and whether they're
Speaker 13: able to get everything over the finish.
Speaker 2: Line, Hya Cantorovich of August. Great to have you back
Speaker 2: on the show, Thank you very much. IBM and GROC
Speaker 2: are announcing a strategic partnership to give clients ultra high speed,
Speaker 2: low latency AI capabilities via Grock's inference technology. For more
Speaker 2: and how this partnership is going to provide greater access
Speaker 2: to the full potential of enterprise AI. We're joined by
Speaker 2: Rob Thomas, Senior Vice president of Software and Chief Commercial
Speaker 2: Officer at IBM, and Jonathan Ross, CEO and founder of GROC.
Speaker 2: And Jonathan, I want to start with you. You know, the
Speaker 2: way that I look at this is it's a very
Speaker 2: interesting go to market channel for you, a sales channel.
Speaker 2: Think about all of the clients that IBM has and
Speaker 2: how you've tried to grow the company. Explain how people
Speaker 2: will access LPUS through this or through the cloud matrix.
Speaker 14: Absolutely, it's an extraordinary opportunity for both of us. IBM
Speaker 14: is going to have their sellers sell a Rock Skew
Speaker 14: and so now you'll be able to directly access our
Speaker 14: speed the advantages that we offer. You could think of
Speaker 14: it a little bit like offering broadband in the era
Speaker 14: where dial up wasn't fully rolled out and people were
Speaker 14: still trying to connect to the internet. Our lpus are
Speaker 14: just significantly faster, but we also keep the cost down.
Speaker 14: Just imagine if you were to offer broadband and you
Speaker 14: charged more per bit of data that was sent over
Speaker 14: the line, it would be on economical Broadband increases a demand.
Speaker 14: With agentic use cases, it's particularly important to reduce the speed.
Speaker 14: You don't want to ask a question, wait ten minutes
Speaker 14: later and come back. You'd rather get the answer under
Speaker 14: a minute.
Speaker 2: Rob Under this arrangement with Jonathan, does IBM make any
Speaker 2: sort of financial investment into GROC or is there some
Speaker 2: kind of sales or revenue split? Explain the economics of
Speaker 2: this deal for you guys.
Speaker 4: Big pictures.
Speaker 15: We have a lot of momentum in AI with Watson X,
Speaker 15: as we said on our earnings last quarter seven and
Speaker 15: a half billion dollars as a book of business, and
Speaker 15: we're trying to solve the client problem of how do
Speaker 15: they deploy AI faster. So this partnership is all about
Speaker 15: what Jonathan said, which is five x performance at twenty
Speaker 15: percent of the cost. We've seen it with Watson X
Speaker 15: running on GROC and so we will be distributing GROC
Speaker 15: as part of our go to market, and there's a
Speaker 15: revenue share as part of that. We are really excited
Speaker 15: because we've seen clients already getting an impact to how
Speaker 15: they're deploying AI because of the integration of our technology together.
Speaker 4: Let's talk about that, Rob a little bit more.
Speaker 3: Because you're the man who's in charge of the software business,
Speaker 3: you're also really responsible for the world revenue and profitability
Speaker 3: of your company. So help us understand why grow was
Speaker 3: the obvious choice. How is it helping your clients get
Speaker 3: outs as faster?
Speaker 4: On the inference side of things.
Speaker 15: We looked at every possibility in the market, and the
Speaker 15: clients are looking for significant performance, so some of that
Speaker 15: changes how your call center operates or how your supply
Speaker 15: chain runs. And then you combine that with a fraction
Speaker 15: of the cost. Suddenly the economics make sense. AI does
Speaker 15: have a cost problem, and we think this breaks through that.
Speaker 15: And IBM we've said we're going to drive four and
Speaker 15: a half billion of productivity by the end of this year.
Speaker 15: That's another example of AI truly having an impact. And
Speaker 15: the number one question I get from clients now is
Speaker 15: how are you doing that? At IBM and can you
Speaker 15: help us do that? And we think the combination of
Speaker 15: IBM and GROC can make this a reality for any company.
Speaker 3: Well, let's dig into that a little bit now with you, Jonathan.
Speaker 3: Because the integration with what's the next orchestraate? What does
Speaker 3: that look like on your side? How does that happen
Speaker 3: and happen seamlessly?
Speaker 14: So the wantsonex API is available for anyone to use today.
Speaker 14: It'll be invisible to most users. It'll simply work. We
Speaker 14: have a compatible by API and this is something we've
Speaker 14: been working on. We will also work on some lower
Speaker 14: level integrations with VLM, which is a technology that IBM
Speaker 14: is very deeply involved in. But it should just be transparent.
Speaker 14: You should just get more speed. Just imagine one day
Speaker 14: you come home, you had dialog and now you have
Speaker 14: broadband in a cost less.
Speaker 2: Rob where's the demand coming from on your side, like IBM,
Speaker 2: Granite or some other agentic workload that they want to
Speaker 2: run using the GROC lpus. Are these public sector names?
Speaker 2: Are they private sector SMEs? I'm trying to understand who
Speaker 2: you're serving with it.
Speaker 15: As often happens, I would say financial services have been
Speaker 15: early adopters. But the thing that has changed in the
Speaker 15: market in the last six months is everything is moving
Speaker 15: to multimodel. We have IBM models that we open source,
Speaker 15: which are the Granite models. We announced the partnership with Anthropic,
Speaker 15: We have a partnership with Mistraw and Lama, just.
Speaker 4: To name a few.
Speaker 15: What is incredible about what Jonathan and team have built
Speaker 15: is any model can run and get instant improvement running on.
Speaker 4: The lpused from ROCK.
Speaker 15: So I think this is a combination of a multimodel
Speaker 15: world accelerating inference with ROCK. I think this is a
Speaker 15: great combination.
Speaker 2: Jonathan, does this capacitority exist or are you supply constraints still?
Speaker 2: You've got to go out and build it either in
Speaker 2: Saudi Finland here in the States.
Speaker 14: So the entire world is supply constrained, and I would
Speaker 14: actually expect that to continue for at least the next
Speaker 14: five to ten years when it comes to AI. Our
Speaker 14: advantage is that we have a supply chain that actually
Speaker 14: ramps much faster, so customers will be able to come
Speaker 14: to IBM put in an order and we will be
Speaker 14: able to fulfill that faster than you would be able
Speaker 14: to with other technologies. But the supply constraints that are real,
Speaker 14: and this is another reason to start working with IBM. Sooner,
Speaker 14: the sooner you get access to that capacity, the sooner
Speaker 14: you're going to have it. I can't tell you how
Speaker 14: many stars come to us and other companies come to
Speaker 14: us and they are looking for capacity because some of
Speaker 14: them are actually growing ten, twenty, or even thirty percent
Speaker 14: per week or per month, which is an astronomical growth rate.
Speaker 14: But by approaching us early, we can build to your needs.
Speaker 3: You were just mentioning Rob about all the partnerships you
Speaker 3: have when it comes to llms and the offerings that
Speaker 3: you're intertwining within yours. Will you go to others to
Speaker 3: ensure that inference is as fast as possible or is
Speaker 3: it this exclusive with GROC.
Speaker 15: We are open to working with anybody in the ecosystem
Speaker 15: of AI around what we're doing specifically on the acceleration
Speaker 15: with GROC. We want to lean into this partnership. That's
Speaker 15: why this is the one that we've announced today, because
Speaker 15: we have confidence working together with GROC. As Jonathan mentioned,
Speaker 15: we're also enabling some of the lower level technologies and
Speaker 15: open source like VLM, so this is the right place
Speaker 15: to be when it comes to inference. But when you
Speaker 15: think oddly about what's happened in AI, we have many
Speaker 15: companies working with us on agents. Last week we announced
Speaker 15: SMP Global is now running on watsnext Orchestrate as an example.
Speaker 15: So we're always open to new partnerships.
Speaker 3: And let's just talk about Jonathan the go to market strategy.
Speaker 4: Here of teaming with the age.
Speaker 3: Old Juggernau, that is IBM, that has so many deep
Speaker 3: relationships across global enterprises. But is that how you're going
Speaker 3: to work this going forward? It is teaming up with
Speaker 3: companies that have those legacy relationships, or do you still
Speaker 3: go out there and win the business yourself.
Speaker 14: So I would say this is a peanut butter and
Speaker 14: jelly sort of relationship in the sense that oftentimes when
Speaker 14: we meet with sea level executives, those sea level executives
Speaker 14: turn to their tech teams and ask them to evaluate GROC.
Speaker 14: And I've been in meetings where the CTO did that
Speaker 14: and the response from the person is I already use GROC.
Speaker 14: It's my default for everything. So we already have the
Speaker 14: bottoms up. We have two point three million developers already
Speaker 14: building on us. For comparison, Opening Eye has four million
Speaker 14: now going to those deep relationships from IBM and the
Speaker 14: fact that IBM is a trusted partner who's been delivering
Speaker 14: for decades. You put those two together and that's an
Speaker 14: amazing go to market motion.
Speaker 3: Well, it's been great having you both on to talk
Speaker 3: about the go to market strategy. Jonathan Ross, CEO Grock,
Speaker 3: of course, Rob Thomas of Senior Vice president of Software
Speaker 3: over at IBM. We thank you both very much. Indeed,
Speaker 3: now coming up, we're going to be diving into Amazon's
Speaker 3: souring relationship with its contract delivery firms. And also we've
Speaker 3: got to remind you what's happening in the moment. President
Speaker 3: Trump planning critical minerals agreements with the Prime Minister of Australia.
Speaker 4: Can catch more on Live Go. This is BLUEBGG Tech.
Speaker 2: President Trump, speaking in a bylap with Australian leaders, says
Speaker 2: that China may pay a one hundred and fifty five
Speaker 2: percent tariff if there is no deal made by November one.
Speaker 2: He's also saying that he is expecting to meet with
Speaker 2: G in a couple of weeks. He will meet with
Speaker 2: G in South Korea in a couple of weeks. The
Speaker 2: headline's not doing much to move markets in the.
Speaker 3: Moment, Cara, Oh, we're not, but we'll keep everyone abreast
Speaker 3: of it, and they can tune in on a live
Speaker 3: go as well if you want to see it throughout.
Speaker 3: But right now, we're about to talk about how we're
Speaker 3: taking a look inside Amazon's deteriorating relationship with its contract
Speaker 3: delivery firms, which have tangled with Amazon for years, often
Speaker 3: over what they consider unreasonable delivery target set and one
Speaker 3: into twenty four to seven by AI now. Tensions flared
Speaker 3: earlier this year when the company passed along some big
Speaker 3: bills to repair aging delivery vans worgs. Amazon reporter Spencer
Speaker 3: Soper took this deep dive for us, and you really
Speaker 3: hone in on certain individuals who decided to become entrepreneurial
Speaker 3: in spirit teaming with Amazon, and then the profits just
Speaker 3: fell away.
Speaker 4: Talk us through it.
Speaker 16: Yes, So Amazon has what they call delivery service partners.
Speaker 16: They've got forty five hundred of them globally. These are
Speaker 16: basically small businesses that lease vans, hire drivers and get
Speaker 16: those packages to your doorstep. And so it's almost like
Speaker 16: a franchise, but it's technically not a franchise. And so
Speaker 16: a lot of them are saying Hey, listen, the cost
Speaker 16: of art of doing business are going up faster than
Speaker 16: Amazon is paying us for these packages. They're in these
Speaker 16: lapsided agreements, they don't have any negotiating power. They basically
Speaker 16: have to take what Amazon offers them. And then so
Speaker 16: some of them are taking the ultimate step of quitting.
Speaker 16: And when they do that, they realize, hey, I've been
Speaker 16: doing the seven years that I don't really.
Speaker 6: Have anything, Spencer.
Speaker 2: Amazon did recently hike the proportion that these guys get
Speaker 2: on a per package basis. But on your reporting, what's
Speaker 2: the direction of travel here? Where are we headed?
Speaker 6: Well?
Speaker 16: The direction of travel is that logistics is a high
Speaker 16: risk business. If you have a bunch of car collisions
Speaker 16: or dog bites or anything that's going to push up
Speaker 16: your vehicle insurance rates or your workers' compensation rates, you're
Speaker 16: going to have a difficult time. And if you don't,
Speaker 16: you will, you will make money. And so some of
Speaker 16: that is going to be your operational practices, and some
Speaker 16: of that's going to be.
Speaker 2: Luck Bloomberg, Spenser Sopa, thank you very much. Just real
Speaker 2: quick caring update on AWS. They're saying that the root
Speaker 2: cause overnight was an internal subsystem, but they're not saying
Speaker 2: any more than that, other than there are issues still remaining.
Speaker 2: That does it for this edition of Bloomberg Tech and
Speaker 2: what an addition it was.
Speaker 4: And so much more to come.
Speaker 3: And I'm sat here in London because it's the Bloomberg
Speaker 3: Tech Summit. It's kicking off tonight. In fact, I'm hosting
Speaker 3: a debate on Europe's future in the Chip Wars. But
Speaker 3: then tomorrow we're going to be tuning into the summit
Speaker 3: as it goes live over in Moregate, conversations with leaders
Speaker 3: in te kN Ai in VC. You don't want to
Speaker 3: forget to check out all of that. Also on the podcast.
Speaker 3: You can find it on the terminal as well as
Speaker 3: online on Apple, Spotify and iHeart from San Francisco from London.
Speaker 3: From the next day or two, this is Bloomberg Tech