Speaker 1: From Mahard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and ed Blood Love.
Speaker 2: Now from New York and Las Vegas. This is Bloomberg Technology.
Speaker 2: This hour, we sit down with Open Aiyes, Sarah Frier,
Speaker 2: and anthropics Daniella Amode Nive and the Money twenty twenty conference.
Speaker 3: In Las Vegas.
Speaker 2: Plus a deep dive into how Russia is continuing to
Speaker 2: access powerful in video chips for a Mumbai farmer company,
Speaker 2: and Apple is planning a slew of announcements plus its earnings.
Speaker 2: This week, we push ahead to the Apple Intelligence rollout
Speaker 2: and it's Mac overhaul. But first we check out how
Speaker 2: Apple is helping push us higher on the NASDAC.
Speaker 3: We are at or thereabouts.
Speaker 2: Record highs once again for this particular tech heavy benchmark.
Speaker 2: All eyes on six tens percent higher. All eyes on
Speaker 2: the earnings that come out this week. Let's just dive
Speaker 2: into what we're expecting, because they come thick and fast. Friends,
Speaker 2: We've got the likes of course Reddit coming as soon
Speaker 2: as tomorrow, We're going to have the Juggernauts, that is,
Speaker 2: of course Alphabet AMD on the chip side, we push
Speaker 2: aboard so many more names than metas, the Microsofts, the Amazons, and.
Speaker 3: Of course the Apples.
Speaker 2: But first and foremost, we've got to be getting out
Speaker 2: to Las Vegas, where Ed is sat.
Speaker 3: For a very special guest.
Speaker 4: Welcome to our Bloomberg television and radio audiences around the world.
Speaker 5: We're live in Las Vegas.
Speaker 4: This is Money twenty twenty, and we're joined by open
Speaker 4: AI's CFO Sarah Fryer.
Speaker 5: And this is interesting.
Speaker 4: You have some history with Money twenty twenty, history with fintech,
Speaker 4: but that's kind of the point. And so much of
Speaker 4: the focus to date on open ai has been I guess,
Speaker 4: a personal use of chat GPT, But let's start with
Speaker 4: the banks and finances. How much of that is made
Speaker 4: up in your business?
Speaker 6: Yeah, I'll flank you out. So great to be here,
Speaker 6: and you're right, Money twenty twenty. I've seen it progress
Speaker 6: through the years. What an incredible event it is today,
Speaker 6: and we're here because our customers are here. AI is
Speaker 6: happening right now. It's not experimental. It's not something that
Speaker 6: people are just playing around with, banks, financial institutions, FinTechs.
Speaker 6: People are using it today in their business.
Speaker 4: There's the Morgan Stanley case study. Yeah, you know, this
Speaker 4: week alone or past week, Bank of America's talks about
Speaker 4: how many patents it's got in machine learning and artificial intelligence.
Speaker 4: But do you actually have a tangible sense of what
Speaker 4: it is those financial institutions are doing with your large
Speaker 4: language models.
Speaker 7: Yes, absolutely so.
Speaker 6: Morgan Stanley is a great example in their wealth management business.
Speaker 6: They're using our models both to help wealth advisors be
Speaker 6: more productive. They're using it as a way to create
Speaker 6: better financial advice and outcomes for customers. We're seeing folks
Speaker 6: like Klarna use it in a customer service. CEO of
Speaker 6: Clarina has been very loud and proud on this front.
Speaker 6: That's another great case study in terms of productivity improvements.
Speaker 6: And then we have banks like VBVA that are using
Speaker 6: it all across their business. And that's really our message here.
Speaker 6: It's just get started. Get enterprise chat, GPT, roll that
Speaker 6: to a organization, see what your people do with it.
Speaker 6: Help them just get started, whether they're in marketing, in
Speaker 6: finance and product everyone can have really interesting even.
Speaker 4: If we are just getting started. Can you help our
Speaker 4: audience understand how meaningful contribution the financial services sector fintech
Speaker 4: makes to open AIS revenue.
Speaker 6: Yes, so today if you look at our largest verticals
Speaker 6: areas like edu, education, healthcare, but financials is probably third.
Speaker 6: And again I think that's because they are typically early adopters.
Speaker 6: They're often willing to take that risk because they see
Speaker 6: the upside in terms of driving more revenue. But they
Speaker 6: also are very good at managing their cost and efficiency.
Speaker 6: And it's great when you get an early adopter like
Speaker 6: Morgan Stanley because it tends to lead the way. I
Speaker 6: can think of a wealth management client today that's not
Speaker 6: coming to us to say what do we need to do?
Speaker 7: How do we get started?
Speaker 4: Banks in particular can be sensitive to pricing. There's a
Speaker 4: lot of curiosity not just in sort of as a
Speaker 4: consumer how much I'm paying on a monthly basis for
Speaker 4: chat GPT access.
Speaker 5: But at the enterprise level as well.
Speaker 4: Reports are for example, at the corporate pay user level,
Speaker 4: you're thinking it about two thousand dollars per head? How
Speaker 4: are you managing us give us insight into the pricing strategy?
Speaker 6: Sure, so pricing is super interesting because we're really trying
Speaker 6: to think about value and what is this person getting
Speaker 6: from this tool? And I don't think I actually don't
Speaker 6: think we've done a great job of that yet ourselves.
Speaker 6: Despite that, we have two hundred and fifty million weekly
Speaker 6: active users and of that a you know, five six
Speaker 6: percent actually converted to be plus customers, so they're paying.
Speaker 6: But if you look at the value when we were
Speaker 6: rolling out oh one, our reasoning model, and this is
Speaker 6: a model that stops and thinks for you, it actually
Speaker 6: does hard problems. I was watching a lawyer in action
Speaker 6: using it to create a brief and at the end
Speaker 6: we said to them, what would you have paid for that?
Speaker 6: Like if you had a paralegal doing that thing is
Speaker 6: like easily one thousand to two thousand dollars per hour.
Speaker 6: And this is someone who's using it. If it's an enterprise,
Speaker 6: perceeds probably sixty bucks per month. And this is someone
Speaker 6: who would have paid one thousand to two thousand dollars
Speaker 6: per hour. So I think that there's a lot of
Speaker 6: value that is in the product today, but we are
Speaker 6: just trying to make sure people can get started, can
Speaker 6: actually see the outcomes, and over time we believe that
Speaker 6: value to price will come into alignment.
Speaker 4: There's a balance right between what's of value to your customer.
Speaker 4: But also you know you have to account for open
Speaker 4: AIS spending. So we talked about endlessly, particularly on the
Speaker 4: compute side. What is that balance in what works best
Speaker 4: for you and your customer base?
Speaker 6: Yeah, so it our first and foremost what's most important
Speaker 6: to us is to stay on the frontier, building the
Speaker 6: frontier models, making sure that we are bringing ultimately agi
Speaker 6: to the benefit of humanity.
Speaker 7: To do that, it's expensive.
Speaker 6: We have to invest in large scale compute and so
Speaker 6: to me, there's.
Speaker 7: Really two ways to that.
Speaker 6: It's either through the free cash flows of the business
Speaker 6: spoken like a good CFO, or it's through raising equity
Speaker 6: and debt financing because investors can see the long term
Speaker 6: potential of this business. So on the former, on the
Speaker 6: cash flows of the business, we want to make sure
Speaker 6: we keep growing that business. I think we have been
Speaker 6: wowed at just the pace of growth, particularly on the
Speaker 6: consumer side. It's about seventy five percent of our business today.
Speaker 6: But even our enterprise businesses, they are young, but they
Speaker 6: are already doing an incredible amount of annualized revenue and
Speaker 6: we're real excited by the potential there.
Speaker 4: For all Blueberg television and radio audience worldwide. We're in
Speaker 4: Las Vegas at Money twenty twenty and we're speaking to
Speaker 4: the Open AI CFO Sarah Fryar, and you talk there.
Speaker 5: About the consumer business.
Speaker 4: Something very interesting is the future business model AD supported tiers,
Speaker 4: for example, very specifically segmented pricing.
Speaker 5: How do you think about that, Sarah, Yeah, so I.
Speaker 6: Think you always want to stay open to alternate business
Speaker 6: models or ways that you can layer a new business
Speaker 6: model on top. Now, the key for us is always access.
Speaker 6: How do we make sure as many people as possible
Speaker 6: get access to this tool? And that's on a global stage,
Speaker 6: by the way, And so to do that sometimes you
Speaker 6: do pivot away from just pure subscription models to models
Speaker 6: like ads. My last company was all ads, so I've
Speaker 6: definitely experienced this. I think ads have their place, but
Speaker 6: you have to be really mindful of where. I think
Speaker 6: in areas like commerce, ads are great. Right if I
Speaker 6: do a chat GPT prompt for black high heeled shoes,
Speaker 6: something I probably would do, I actually don't want a
Speaker 6: history of the black high heeled shoe. I want five
Speaker 6: stores I could buy from right now, probably e commerce.
Speaker 6: So that's why companies like Shopify are great customers of
Speaker 6: ours as well. But there are other places where actually
Speaker 6: the AD model doesn't make as much sense. You want
Speaker 6: to get the consumer to the answer they need as
Speaker 6: fast as possible, and I think that's where chat gipt
Speaker 6: is a really very different platform from say something like
Speaker 6: Google Search.
Speaker 4: You are still relatively early in this role, but it's
Speaker 4: been two years since the original deal with Microsoft was negotiated,
Speaker 4: and that compute relationship is critically important. Yes, all those
Speaker 4: terms change, are they fluid or are you just sticking
Speaker 4: to the contract that was on your desk when you arrived.
Speaker 6: Now and it's actually longer than two years. Microsoft and
Speaker 6: open ai have been partners, I think for actually almost
Speaker 6: five years, so they really came to us when we
Speaker 6: were a research lab and the deal that we've worked
Speaker 6: with them is they do provide compute exclusively and we
Speaker 6: give them the IP around artificial intelligence.
Speaker 7: So it's incredible.
Speaker 6: The products they're rolling out today are really built a
Speaker 6: top of open AI's AI. As we go forward and
Speaker 6: as we get bigger, we absolutely see am maturing in
Speaker 6: that relationship, and so for consumer benefit, we want to
Speaker 6: make sure consumers always get access to what they need.
Speaker 6: That will probably mean compute for more parties over time.
Speaker 6: We did discuss the Oracle deal or Oracle discussed it
Speaker 6: a few quarters back, and I think that's a good
Speaker 6: starting point for just how do we maximize compute so
Speaker 6: we maximize the impact for consumers.
Speaker 4: The catchphrase or buzz word of this year, I think
Speaker 4: has been ship products. You're the CFO, and so there's
Speaker 4: a tension between the cost of doing so and the
Speaker 4: need to move quickly. I think Sam has denied recently
Speaker 4: reports that the next model will be out by year end.
Speaker 4: What can you tell us about the path forward their
Speaker 4: the cadence of new models to come.
Speaker 6: Yeah, I mean I think you hit the nail on
Speaker 6: the head ship product product velocity.
Speaker 5: That is the.
Speaker 6: Mantra internally to open Aye. And it's something I've just
Speaker 6: been so wowed by since I started as just how
Speaker 6: fast we do ship products right? Even in my short tenure,
Speaker 6: I've seen oh one come on our reasoning model. That
Speaker 6: huge step forward from kind of what has been more
Speaker 6: the chatchipt model series. We've launched things like advanced speech
Speaker 6: back to the model itself.
Speaker 7: The O series four.
Speaker 6: O enough four Mini for example, four O Mini, which
Speaker 6: is our distilled model, is one one hundreds the cost
Speaker 6: of what the original CHATWPT four model was. That is
Speaker 6: incredible for developers, and that's why you see the API
Speaker 6: products be so successful. And again it goes back to
Speaker 6: how do we get this into the hands of many
Speaker 6: developers are a force multiplier and today I'm super proud.
Speaker 6: I think every single ai unicorn is built a top
Speaker 6: of open AI's API, and that will tell you how
Speaker 6: we are the frontier model.
Speaker 4: I think when I started covering open ai there was
Speaker 4: around five hundred people at the company.
Speaker 5: It's probably near two thousand now.
Speaker 6: Yeah.
Speaker 4: Part of that is the CFO is to keep talent,
Speaker 4: long serving talent happy. My understanding is that tenders will
Speaker 4: be a big part of that, giving employees liquidity. What
Speaker 4: will be the cadence and sort of increments of that
Speaker 4: going forward?
Speaker 6: Sarah, Yeah, So we are a company that has done
Speaker 6: tenders to date, and part of that is because we
Speaker 6: are in a competitive market, particularly for research talent. When
Speaker 6: I think about what keeps you on that front edge
Speaker 6: of the best models out there, it is compute, but
Speaker 6: more importantly.
Speaker 7: It's people. It's great researchers.
Speaker 6: And so in order to compete with companies that have
Speaker 6: liquidity already in their stock public companies, we have taken
Speaker 6: this approach to tenders a little bit like others in
Speaker 6: the space.
Speaker 5: SpaceX is a great bax one we've covered closer, yes.
Speaker 6: And so we want to be able to keep doing that.
Speaker 6: We want to do it thoughtfully and mindfully, knowing that
Speaker 6: the other rule one is to keep it on the field,
Speaker 6: make sure we have money for compute. So it's always
Speaker 6: a balance, but we do think it's important to give
Speaker 6: our researchers that access for.
Speaker 4: A Bloomberg television and radio audience all around the globe.
Speaker 4: We're in Las Vegas and we're speaking to the open
Speaker 4: Ai CFO Sarah Fryar. Open Ai is a software company,
Speaker 4: or it was now a lot of the focuses on
Speaker 4: Sam and the team's ambitions with safeguarding infrastructure. How involved
Speaker 4: are you in that talking about the sort of construction
Speaker 4: of five gig data centers and the financing of such things.
Speaker 5: Yeah.
Speaker 4: Was that a surprise to come in and sort of think, Okay,
Speaker 4: I need to get a handle on that project.
Speaker 6: Not a surprise, but definitely a stretch.
Speaker 7: It's new Taiar.
Speaker 5: It's very stretch from a capital perspective, stretch.
Speaker 6: From a capital and also just my own learning. Frankly,
Speaker 6: I think we're all learning in this space. Infrastructure is destiny.
Speaker 6: It's this wonderful phrase that Chris Lane has managed to
Speaker 6: get up there in the world, and we do think
Speaker 6: that this build is important.
Speaker 7: It's important for.
Speaker 6: US competitiveness, it's important for world productivity. It's important even
Speaker 6: with a national security lens. And so you are right.
Speaker 6: One of the key jobs I need to do is
Speaker 6: to figure out that capital allocation story. It's going to
Speaker 6: be both a working with partners, it's going to be
Speaker 6: raising financing, but it's always making sure that we are
Speaker 6: staying ahead of what will be required. Call it two
Speaker 6: three years out, because you can't just turn on compute
Speaker 6: today if you need it, you actually have to have
Speaker 6: thought about it, probably about three years ahead on that,
Speaker 6: if I may.
Speaker 4: One of the things I heard from some of your
Speaker 4: investors is you did a very good job early in
Speaker 4: explaining the basics of the plan, but the ultimate goal
Speaker 4: is AGI.
Speaker 7: That's correct.
Speaker 4: How confident do you feel you have that sort of
Speaker 4: into infrastructure in place or a plan to have it
Speaker 4: for AGI.
Speaker 6: I think we have the plan in place. I think
Speaker 6: if Sam we're sitting on the seat, he would tell
Speaker 6: you AGI is closer.
Speaker 5: Than most think, But what would you say?
Speaker 7: I would agree based on what I'm seeing.
Speaker 6: Like one of the best meetings I get to go
Speaker 6: to once in a while is the research meeting, And
Speaker 6: it would blow your mind to see what's already coming
Speaker 6: and what as we have learned how to take reasoning
Speaker 6: models like one preview yes on top of GPT models
Speaker 6: and the interplay between those, you're now really starting to
Speaker 6: see some incredible outcomes. PhD level outcomes where you have
Speaker 6: in your pocket human intelligence that is PhD level and
Speaker 6: physics and biology and chemistry in English literature, like whatever
Speaker 6: the job is you need to do if you're a
Speaker 6: healthcare researcher, if you're a banker, if you're an education
Speaker 6: the tool that you are now caring the power there
Speaker 6: blows my mind.
Speaker 4: You touched on it a moment ago, financing the needs
Speaker 4: to raise capital. You've just done a pretty astonishing large round.
Speaker 4: But a follow on, I mean you must have a
Speaker 4: good sense of the cadence of needing to raid funds
Speaker 4: on an annual basis. I don't know how you plan it.
Speaker 7: Yeah, so it goes back.
Speaker 6: To what you said, which is really understanding in your plan,
Speaker 6: what are your big expenses compute is the biggest, but
Speaker 6: we also need to run a company, so we have
Speaker 6: real operating expenses. We're right in the guts right now
Speaker 6: of FY twenty five planning. That is usually a three
Speaker 6: year outlook in most companies, and for us it needs
Speaker 6: to be because we have to make those compute decisions.
Speaker 6: And with that comes then, Okay, what is our balance
Speaker 6: sheet going to look like? What's our cash burn rate?
Speaker 6: At what point can we generate enough free cash flow
Speaker 6: to actually fulp the business? Not ready to tell you
Speaker 6: that today. That's for the next time we talk. And
Speaker 6: then on top of that, how do I help keep
Speaker 6: bringing our syndicative investors along?
Speaker 7: I called them with us.
Speaker 4: We are less than a week from the election, and
Speaker 4: I think about my own use of four to H
Speaker 4: not used it related to the elections searching for information,
Speaker 4: But are you preparing for that election and what impact
Speaker 4: might it have on open AI?
Speaker 7: Yeah, we absolutely are.
Speaker 6: We have to be very mindful from a safety perspective today.
Speaker 6: If you do searching around the election, you'll actually see
Speaker 6: that often we will not return a response or will
Speaker 6: return with a caveat. That says to be mindful of
Speaker 6: your sources. And I think I learned a lot of that. Frankly,
Speaker 6: yet nextdoor right, you cannot need to be careful of
Speaker 6: not being paternalistic or paternalistic around people. People need to
Speaker 6: be able to find information make their own educated decisions.
Speaker 6: But at the same time you also need.
Speaker 7: To be very aware.
Speaker 6: When you have a platform that today services two hundred
Speaker 6: and fifty million people every single week, we have to
Speaker 6: recognize that they're going to want to do things, and
Speaker 6: we need to provide avenues but in a safe and
Speaker 6: secure way.
Speaker 4: Open AI CFO Sarah Fryar here live in Las Vegas.
Speaker 4: Thank you very much. Thanks actually back to you.
Speaker 3: Ed, we thank you.
Speaker 2: Coming up in video, chips are still winding their way
Speaker 2: to sanctioned Russia. We discuss the alleged shipments of servers
Speaker 2: optimized for artificial intelligence via India. Meanwhile, we want to
Speaker 2: bring you some movement in Alphabet's shares, parent company of Google.
Speaker 2: Of course, there is a report from the Information saying
Speaker 2: that Meta Platforms, of course, owner of Facebook and Instagram,
Speaker 2: is trying to keep pace with the likes of open
Speaker 2: AI in developing AI. But they're also looking at a
Speaker 2: search engine that is going to crawl the web to
Speaker 2: provide conversational answers about current events to people using meta AI. Basically,
Speaker 2: they want to rely less on being and Google Search.
Speaker 2: We're up sixteen percent, but we did fade those rallies earlier.
Speaker 3: On that headline. This will be mad Technology.
Speaker 2: Quick check on Apple shares for you, because we know
Speaker 2: that they're showing us the latest max and the price
Speaker 2: points we are seeing. Of course, the iMac desktop new
Speaker 2: twenty four inch is going to be faster AI focused
Speaker 2: M four processor inside it one and ninety nine price
Speaker 2: points same as the prior model is faster, and it
Speaker 2: has an enhanced neural engine basically to help with his
Speaker 2: AI tasks. We're also, of course getting updated to the
Speaker 2: finally some access to Apple Intelligence its first iteration. Anyway,
Speaker 2: we're currently hired by almost a percentage point. Meanwhile, we
Speaker 2: turn our attention to today's big take. It focuses on
Speaker 2: some trade tracking data which shows that Indian farmer firm
Speaker 2: Shreya Life Sciences is selling top end Dell servers optimized
Speaker 2: for artificial intelligence to Russia. Bloomberg's Victoria dendrinum Co wrote
Speaker 2: the story, joining us, now, so is this new that
Speaker 2: we're starting to see India as a way of accessing
Speaker 2: in Nvidio chips for Russia, for example.
Speaker 1: So I think the roll of India has certainly come
Speaker 1: into focus for the West, so for Europe and the US.
Speaker 1: Over the past couple of years, they've been looking at
Speaker 1: various trees in Asia as trendshipment hubs where these goods
Speaker 1: can essentially come from subsidiaries, vendors, as tributors. These goods
Speaker 1: primarily manufactured by Western companies and primarily US companies actually,
Speaker 1: So the role of India is kind of I guess
Speaker 1: the magnitude of the role of India as a hub
Speaker 1: has certainly become much greater over the last few months.
Speaker 2: And why have they become such prominent actors in what
Speaker 2: is basically Russia trying to navigate barriers to accessing US tech.
Speaker 1: So there's a lot of reasons, I mean, partly when
Speaker 1: we talk to officials in the US and Europe about it,
Speaker 1: one thing they point to is that India has been
Speaker 1: buying a lot of Russian oil, and Russia has a
Speaker 1: lot of rupees at its disposal, so it's been using
Speaker 1: these rapeats to it's been spending them essentially buying these goods.
Speaker 3: Out of India.
Speaker 1: So that's one part, a big part driving this increase
Speaker 1: of this trade. Another reason is also that you know
Speaker 1: where Western officials in US and Europe have put a
Speaker 1: lot of effort into cracking down on other trendshipment hubs.
Speaker 1: For example, the earlier part of last year there was
Speaker 1: a big focus in the UAE, Turkey, Central Europe, Central Asia,
Speaker 1: sorry as areas where these goods were being sent to Russia.
Speaker 1: So I think a large part is the rupees that
Speaker 1: Russia has to spend. But another one is that they're
Speaker 1: cracking down. The West is cracking down on other areas
Speaker 1: where these goods were originally shipped from.
Speaker 2: Now these in video ships are in Dell servers known
Speaker 2: as power Edge XC nine six eighties, and Dell has said, look,
Speaker 2: since ever the sanctions came into place, they stopped shipments
Speaker 2: to Russia. But I'm interested in whether ultimately any of
Speaker 2: this is actually illegal.
Speaker 1: Well, technically it's not illegal in that India is not
Speaker 1: bound by US or European sanctions. And in terms of
Speaker 1: the companies, I mean it's true, you know, a chip
Speaker 1: produced by a company in the US, I mean it's
Speaker 1: it's trade cycle. I guess around the world it's impossibly
Speaker 1: difficult to track because you have vendors, distributors, subsidiaries, all
Speaker 1: these other kind of companies or you know, people that
Speaker 1: take part in the trade route. So in terms of
Speaker 1: legal responsibility is it's almost impossible to place that on
Speaker 1: someone sortily in the US who would be liable. But
Speaker 1: what could happen next post is that which has been happening,
Speaker 1: is that the US could, for example, designate a lot
Speaker 1: of these companies or a lot of these intermediaries around
Speaker 1: the world who do participate in the trade of these goods.
Speaker 2: It's a fascinating deep dive into the role of this
Speaker 2: one particular pharmaceutical company in India and the shipments that
Speaker 2: it's currently making. Victoria, thank you for bringing it, Victoria Trendino.
Speaker 3: Time now for talking tech.
Speaker 2: First up, Hong Kong is outland its first policy guidelines
Speaker 2: dedicated to the use of artificial intelligence in finance, and
Speaker 2: it's actually floated a tax break for crypto assets too
Speaker 2: the Hong Kong University of.
Speaker 3: Science and Technology.
Speaker 2: Meanwhile, it's also going to make a homegrown large language
Speaker 2: model available to the local financial services industry.
Speaker 3: Plus Japan's Olympus, which.
Speaker 2: Manufactures and distributes medical precision machines and instruments. Of course,
Speaker 2: previously famed for its cameras, It's pushed out at CEO
Speaker 2: less than two years into after investigating an allegation he
Speaker 2: purchased illegal drugs. The company's shares, as you can see,
Speaker 2: was declining some seven percent on Monday, the biggest in
Speaker 2: today slide.
Speaker 3: In almost three months.
Speaker 2: And Robin Hood is joining competitors in allowing retail traders
Speaker 2: to bet on election outcomes before next week's US.
Speaker 3: Vote for president.
Speaker 2: The company is rolling out contracts pegged to specific events,
Speaker 2: including whether a particular candidate will win an election. This
Speaker 2: as Elon Musk appeared at a New York Trump rally
Speaker 2: yesterday saying he could save the country two trillion dollars.
Speaker 8: Take a listen, how much do you think we can
Speaker 8: rip out of this wasted six point five trillion dollar
Speaker 8: Paris Biden budget.
Speaker 5: Well, I think we're can do at least two trillion.
Speaker 2: Welcome back to Blue Mega Technology and Karen Hyder, New York.
Speaker 3: Quick check on these markets for you, because we.
Speaker 2: Have been coasting hired to once again near those record
Speaker 2: highs for the NASDAG. Now's that one hundred still off
Speaker 2: of that high that we met back in July, we're
Speaker 2: still up three tens of percent.
Speaker 3: All eyes on the.
Speaker 2: Huge amount of earnings coming out when it comes to
Speaker 2: big tech. Of course, tomorrow we anticipate the likes of Alphabet,
Speaker 2: of Reddit, of AMD and then of course the metas
Speaker 2: the apples throughout the rest of the week. Have a
Speaker 2: quick look on what's moving in terms of under the
Speaker 2: hood of the Nasdaq one hundred right now, Looking though
Speaker 2: at what is a European name also traded in terms
Speaker 2: of its ADRs here in the United States. Phillips Electronics
Speaker 2: down by some sixteen percent. It finished shop Training down
Speaker 2: seventeen percent in Europe. Why key lack of demand coming
Speaker 2: from China. It's weighing on ge healthcare technologies today that's
Speaker 2: also off by some three percent.
Speaker 3: That company also.
Speaker 2: Caused Medical Equipment had already signaled they were seeing a
Speaker 2: lack of demand in the summer coming from China.
Speaker 3: But we look at Alphabet, still up sevent tens percent.
Speaker 2: It took a dip into negative territory earlier as the
Speaker 2: Information reported that Meta AI might be trying to reduce
Speaker 2: its dependence on Google Search and being and is still
Speaker 2: instead build its own method of scraping the internet for
Speaker 2: current answers to meta AI prompts. But now we're currently
Speaker 2: up to seven tens percent. All lies on their earnings
Speaker 2: later in the week. But now let's return to the
Speaker 2: juggernaut that is Apple as well helping lead the benchmarks
Speaker 2: high today. It's got a week full of announcements as well.
Speaker 3: As its earnings. Let's just go through what we've already
Speaker 3: heard today.
Speaker 2: Among the new products we understand, of course, has been
Speaker 2: this new iMac starting in two and ninety nine dollars.
Speaker 2: It's coming with that M four chip. All about of
Speaker 2: course AI. There an upgraded camera, Apple Intelligence as well,
Speaker 2: coming online as soon as today. Let's get to it
Speaker 2: with Ana rag Rana, and we're all trying to work
Speaker 2: out at the moment Anarag, how we're going to be
Speaker 2: using Apple Intelligence in our various Apple products. But how
Speaker 2: important are these announcements, particularly the MacUpdate.
Speaker 9: Yeah, see when you look at the mackup dates, I
Speaker 9: think its announcement is important from a tech point of view,
Speaker 9: just to showcase how good Apple is when it comes
Speaker 9: to the chip technology, how far it has come in
Speaker 9: the last four to five years. I think it's probably
Speaker 9: important from that more point of view than financial because
Speaker 9: as you can as you know, you know, Mac account
Speaker 9: for more less than ten percent of total sales for Apple,
Speaker 9: so financially not so much, but it's an important from
Speaker 9: a tech point of view.
Speaker 2: What's also been grinding everyone is the hopes that Apple
Speaker 2: Intelligence will of course make us all use and depend
Speaker 2: on artificial intelligence that much more. But the fact that
Speaker 2: it's not coming until December of the operating system update
Speaker 2: really to make it useful for us. How much has
Speaker 2: that been an issue for you from a perspective on
Speaker 2: Apple as a buy.
Speaker 9: Now when you look at it from a you know,
Speaker 9: just a product refresh cycle, we think this is a
Speaker 9: good catalyst, but for the long run, which means over
Speaker 9: the next few years, we will see this basically force
Speaker 9: customers or consumers who have Apple products to go out.
Speaker 5: And buy new things.
Speaker 9: I don't think it's going to have people rush out
Speaker 9: and get things over the next you know, six months.
Speaker 9: And I think that's where our discussion is slightly different
Speaker 9: than some of the other analysts are looking for. Is
Speaker 9: an iPhone supercycle. We don't think that's going to happen
Speaker 9: this year. We think that could be more of a
Speaker 9: phenomena with the iPhone seventeen launch.
Speaker 2: Yeah, I love the title of your latest react. You
Speaker 2: go to the Boomberg and mattnaged to get it, the
Speaker 2: Bloomberg Intelligence, and it says the launch.
Speaker 3: Is a long term driver for products.
Speaker 2: In the short term, there's some interesting news that's been
Speaker 2: broken around a key development of Apple being rolled out
Speaker 2: or not rolled out, it would seem in certain countries.
Speaker 2: Can you talk to us about Malaysia and whether or
Speaker 2: not it's important that iPhones won't be accessible there.
Speaker 9: So when you look at it, the launch of Apple
Speaker 9: Intelligence features that will be staggered throughout now as far
Speaker 9: as some of the emerging markets are concerned. Those are
Speaker 9: really important in markets. And I saw the same news
Speaker 9: releases you saw, and there was some investment decision that
Speaker 9: Apple did not make that mark. But you know, I'm
Speaker 9: fairly confident over the next twelve months or so, Apple
Speaker 9: will take care of that from its end. But the
Speaker 9: biggest market, or the most important thing for us going
Speaker 9: into the quarter is what's going really happening in China.
Speaker 9: And I think that, you know, people really forget how
Speaker 9: important that market is for Apple. And I think that's
Speaker 9: where some of the disappointment may be there, so I.
Speaker 3: Mean and I correct myself.
Speaker 2: Indonesia is blocking Apple from selling its later siphones.
Speaker 3: This is more a quarrel.
Speaker 2: About how much investment the company is making within Indonesia,
Speaker 2: feeling that not enough has been made. More broadly, how
Speaker 2: resolute is the emerging markets? How necessary is it for
Speaker 2: new markets to continue.
Speaker 3: To evolve Apple?
Speaker 9: See, it's incredibly important when you look at a market
Speaker 9: like the US, Let's say the population size of three
Speaker 9: hundred odd million, three hundred fifty million somewhere around that.
Speaker 9: Indonesia is the same size. So longer term, as those
Speaker 9: countries become more richer or more affluent, they will be
Speaker 9: looking at Apple products in order to you know, be
Speaker 9: a big part of that ecosystem. So, whether it's China,
Speaker 9: whether it's India, whether it's Brazil or Indonesia, all of
Speaker 9: these markets are extremely important for Apple.
Speaker 2: Anna Rag, we thank you so much Formegan Intelligence breaking
Speaker 2: it down with their latest Apple announcements. We push ahead
Speaker 2: to its numbers of course, coming to the market on Thursday.
Speaker 3: Meanwhile, coming up in.
Speaker 2: The here and now, we're going back to Money twenty
Speaker 2: twenty to sit down with Anthropic president Danielle am Ode
Speaker 2: That conversation up next, but first let's just check in
Speaker 2: on a stop that continues to rally hard.
Speaker 3: We are looking at former President.
Speaker 2: Donald Trump's social media startup DJT as it's known or
Speaker 2: Trump Media. Five week surge that's pushed the stock up
Speaker 2: by some two hundred and seventy percent. It's up nineteen percent,
Speaker 2: of course, unprofitable, worth about nine billion dollars. But this
Speaker 2: is after Trump held that very high profile event in
Speaker 2: Madison Square Garden on Sunday. This is retail investors perhaps
Speaker 2: backing ahead of the all important election next week.
Speaker 3: This is Brummet technology.
Speaker 4: This has been most technology, and we're live in Las
Speaker 4: Vegas and Money twenty twenty. It's really a fintech focus conference,
Speaker 4: but AI is front and center, and we're joined right
Speaker 4: now by Amthropic President Daniellamoday. And it's interesting you have
Speaker 4: a background in fintech pre AI. Now you're in AI
Speaker 4: and you're doing a lot of business with banks financial
Speaker 4: services companies. One point of difference with Anthropic maybe is
Speaker 4: you really focus on the enterprise customer, and you did
Speaker 4: it early. But give me a sense of the split,
Speaker 4: you know how much business you're doing with the banks
Speaker 4: and other financial services groups.
Speaker 10: Well ed, great to see you again, Thanks so much
Speaker 10: for having me on the program. So Andropiic really has
Speaker 10: the opportunities to support enterprises really across a wide array
Speaker 10: of different industries. So healthcare, legal services, financial services have
Speaker 10: really all been early enterprise customers for us, and we
Speaker 10: really believe this is in large part because of our
Speaker 10: focus on really building for businesses. Financial services has always
Speaker 10: been a cornerstone pillar for Anthropic as we have really
Speaker 10: built and expanded the cloud.
Speaker 4: Models, how our banks or investment firms using your large
Speaker 4: anguage models.
Speaker 10: So so much of what we'd seen, especially over the
Speaker 10: course of the past year is really these companies becoming
Speaker 10: more sophisticated about how they are integrating a tool like Claud.
Speaker 10: In particular, we're seeing many of these financial services and
Speaker 10: fintech companies using Quad for things like fraud detection, financial analysis,
Speaker 10: really partnering with their analysts on a wide array of
Speaker 10: different complex financial tasks. Customer support is also a use
Speaker 10: case that is really applicable across a wide array of
Speaker 10: financial services companies, as well as administrative support and so
Speaker 10: businesses like Jane Street, Bridgewater into it. Stripe and Coinbase
Speaker 10: are all customers that make use of quaud for many
Speaker 10: of the applications.
Speaker 7: That that I just mentioned.
Speaker 4: Stripe somewhere used to work something I know, not something
Speaker 4: known to you. What I understand from speaking to a
Speaker 4: lot of those that either working in banking or in
Speaker 4: investment or asset management is you have the sort of
Speaker 4: data security component and then a regulatory component. Why is
Speaker 4: it that they trust you with both of those pieces.
Speaker 10: So Anthropic has always had a very strong stance on trustworthiness, reliability,
Speaker 10: privacy and security of the systems that we are developing.
Speaker 10: And something we feel very strongly about is that privacy
Speaker 10: of data is an incredibly critical component of companies feeling
Speaker 10: comfortable using generative AI. So we have never trained on
Speaker 10: customer data by default, and we have always worked to
Speaker 10: integrate closely with our partners at AWS and GCP on
Speaker 10: the security side as well.
Speaker 4: In terms of regulation, there has been used in the
Speaker 4: past week, which is the UK's Competition of Markets Authorities
Speaker 4: looking at Googles partnership or investment in Anthropic, how are
Speaker 4: you working with the CMA to address their concerns.
Speaker 10: So we are fully cooperating with the CMA to share
Speaker 10: all requested information and fundamentally and dropic is an independent company.
Speaker 10: We operate in this new generative AI space and offer
Speaker 10: our models non exclusively on our first party via our
Speaker 10: consumer app, on Google GCP via Vertex, and also on
Speaker 10: Amazon Bedrock denna.
Speaker 4: I would say from a technology perspective, many are obsessed
Speaker 4: with agents at the moment. In your agentic tool is
Speaker 4: computer use, It's different. Why did you take that approach
Speaker 4: to basically having an agent that can look at what's
Speaker 4: on your screen, the actual hardware in front of you,
Speaker 4: and then engage with it.
Speaker 10: We really feel, first of all, that this technology is
Speaker 10: an incredible sort of potential leap forward for what these
Speaker 10: models will eventually think be able to do. And we've
Speaker 10: been very open that we think this is still in
Speaker 10: beta right.
Speaker 7: We've very much sort of shared there's.
Speaker 10: Still limitations of the technology, but we thought it was
Speaker 10: really important to release it to our customers today because
Speaker 10: there's so much potential for computer use to really transform how.
Speaker 7: People use a tool like claud.
Speaker 10: Right, you can imagine this much more complex assistant that
Speaker 10: is able to really partner with you, either by taking
Speaker 10: more complex actions on your computer or on the web.
Speaker 7: You can imagine this eventual.
Speaker 10: Virtual coworker really expanding what is humanly possible for people
Speaker 10: to achieve.
Speaker 4: There is a great gathering here in Vegas of your customers,
Speaker 4: some of them will be in the room later today,
Speaker 4: but also investors, people that are users of Clawed in.
Speaker 5: The various products you've shipped.
Speaker 4: How active are you and running the business of anthropic
Speaker 4: right now, Daniella? Raising money yourself, managing the compute costs
Speaker 4: versus pricing on your enterprise products.
Speaker 10: So anthropic, you know, like every company that is sort
Speaker 10: of operating in this space, requires a huge amount of
Speaker 10: compute to be able to really do the transformative research
Speaker 10: that we do, and so our researchers are constantly working
Speaker 10: to help optimize our compute and make sure that we're
Speaker 10: using the hardware as efficiently as possible.
Speaker 5: Cost of a new model the cost.
Speaker 7: Of a new model exactly.
Speaker 10: And we're really finding ways, you know, in this sort
Speaker 10: of incredible research field to help optimize how we're using
Speaker 10: these models, coming up with new research innovations that are
Speaker 10: really driving the pace of the generative AI innovation in general.
Speaker 5: Can we anticipate you raising more money as is.
Speaker 10: The case I'm sure you can imagine we are always,
Speaker 10: you know, looking to have conversations like that, but not
Speaker 10: actively fundraising right now.
Speaker 4: Less talked about is Anthropic also has a unique company structure.
Speaker 5: Are you happy with that structure? Do you envisage it
Speaker 5: evolving over time?
Speaker 10: So Anthropic is a public benefit corporate and a little
Speaker 10: bit different but pretty close. A public benefit corporation is
Speaker 10: actually a pretty well established corporate entity. It's very similar
Speaker 10: to sea corporation. It is a form of sea corporation,
Speaker 10: but it enables a company like Anthropic to be able
Speaker 10: to also prioritize its social impact mission in addition to
Speaker 10: all of the normal corporate activities.
Speaker 7: That we engage in.
Speaker 4: We are about a week away from election in this country.
Speaker 4: How is Anthropic preparing for that? But also do you
Speaker 4: have a sense of how customers, consumer customers or enterprise
Speaker 4: customers actually use some of the underlying models or tools
Speaker 4: they build on top of it in the context of
Speaker 4: the election. Maybe they don't.
Speaker 10: So Anthropic recently released a blog post really detailing all
Speaker 10: of the work that we are doing on election integrity.
Speaker 10: This is a topic where Anthropic has really been an
Speaker 10: industry leader. We have been working on election integrity and
Speaker 10: anti misinformation efforts for well over a year, and in
Speaker 10: the course of doing that work, we have partnered very
Speaker 10: very closely with both other industry actors but also civil
Speaker 10: society groups, really experts in this incredibly important area that
Speaker 10: we aim again to sort of be an industry leader
Speaker 10: in sort of setting the waterline.
Speaker 5: For Anthropic President Daniella m Oday.
Speaker 4: We will talk later today in a longer conversation on stage,
Speaker 4: but for now, Caroline, back to you in New York.
Speaker 3: Another brilliant conversation. We thank you.
Speaker 1: Ed.
Speaker 3: An Italian private equity outfit called.
Speaker 2: Bending Spoons already owns popular apps like Everanoe we Transfer,
Speaker 2: and they could be coming for your favorite app next.
Speaker 2: As Bloomberg's Mark Bergen writes, Bending Spoons has a type
Speaker 2: distressed businesses with a steady cash flow that sells subscription software.
Speaker 2: Mark berg enjoins us now, and you call it a
Speaker 2: new kind of private equity for the app generation.
Speaker 11: What is it that they're doing, mak Their term is
Speaker 11: they said if private equity had a baby with Google.
Speaker 11: I think the idea here is it's sort of like
Speaker 11: this this roll up private equity that we've seen and
Speaker 11: we have Constellation Software, which is in Canada. That sort
Speaker 11: of rolls up these pretty successful software businesses that they
Speaker 11: may not be going gangbusters, don't necessarily an IPO, but
Speaker 11: they are kind of printing money. What bending Spoon does
Speaker 11: is they kind of then they can them over to
Speaker 11: teams of new managers, researcher engineers and coders and data scientists,
Speaker 11: and then they allocate resources depending on which one's doing well.
Speaker 11: And so you've seen them sort of buying up more
Speaker 11: prominent ever Note was the most prominent one we transfer recently.
Speaker 11: We reported earlier this year they went after Vimeo, which
Speaker 11: is a public company. In our reporting and our story today,
Speaker 11: it looks like they're willing to spend upwards of one
Speaker 11: to two billion dollars on acquisition. So I think it's
Speaker 11: a name that people are going to become more and
Speaker 11: more familiar with.
Speaker 2: And Luca Ferrari, the guy in charge of it all,
Speaker 2: who's managed to get some celebrities to give him their money.
Speaker 2: What's interesting is you spoke with the former founder of
Speaker 2: ever Note, Phil Lebbin, who's now not part of the business,
Speaker 2: but he thinks some of the energy being put towards
Speaker 2: this business is perhaps a good thing, even if it
Speaker 2: means some job cuts.
Speaker 5: Yeah, I was actually a bit surprised.
Speaker 11: You know, typically there's obviously this sort of when you
Speaker 11: start a company and you leave it and you kind
Speaker 11: of feel like this parent, and I mean it was
Speaker 11: most striking to me. Started the story, Phil Ribbin, who
Speaker 11: ran every note for eight years, had never heard of
Speaker 11: Bending Spoons when he was kind of come over and
Speaker 11: he was asked as a shareholder to sign away the
Speaker 11: company to this Italian app developer. He told me, you know,
Speaker 11: two years in, he's been pleasantly surprised by the progress.
Speaker 5: He still uses it every day.
Speaker 11: Anecdotally he sees people using the features more often. On
Speaker 11: the flip side, you know, it's pretty easy to find.
Speaker 11: There's a lot more competition forever note It was kind
Speaker 11: of pretty dominant at one point in that kind of
Speaker 11: note taking apps, and there are people that have have
Speaker 11: left because of the price increases. But the company makes
Speaker 11: the argument that they've actually made it better and that
Speaker 11: they're not like private equity where they sort of are
Speaker 11: trying to flip these assets, but they claim to buy
Speaker 11: these companies and sort of hold on them for life.
Speaker 2: Even referencing Warren Buffett the Oracle of Omaha is perhaps
Speaker 2: someone that they see themselves akin to in terms of
Speaker 2: a business model. Mark Bergen. It's a brilliant story, we are.
Speaker 2: It's all in BusinessWeek. Go see it. We thank you Mark. Meanwhile,
Speaker 2: let's just turn our attention to the German juggle all
Speaker 2: that is Volkswagen. It's announcing plans to cut expenses in
Speaker 2: an effort to become even more competitive. But the automaker
Speaker 2: plans to close at least three frack factories in Germany,
Speaker 2: cut wages by ten percent, and the plan could also
Speaker 2: lead to tens of thousands of job cuts in Europe's
Speaker 2: largest economy. Another car company also looking to cut costs
Speaker 2: here in the United States, Forward, currently trading up two percent.
Speaker 2: They're set to report their third quarter earnings after the bell.
Speaker 2: Stefan Nikola is with us at from Berlin to really
Speaker 2: hone in on Volkswagen. First and foremost, this is an
Speaker 2: ev story, a competition with China story, and an extraordinary
Speaker 2: move to be shutting factories.
Speaker 3: Autely.
Speaker 12: This is a big move, and it really suggests that
Speaker 12: the golden years are over for this ind industrial juggernaut
Speaker 12: in Germany. Sales are slowing in Europe, the main VW
Speaker 12: brand that brought us iconic models like the Golf and
Speaker 12: the Beadle is struggling. It's struggling at home, but it's
Speaker 12: also struggling in China where local manufacturers like BYD are
Speaker 12: taking over, and that is really a big problem and
Speaker 12: management knows they need to make cuts.
Speaker 2: What's also, of course a weak point is not only
Speaker 2: their ability to penetrate China, but also a lack of
Speaker 2: demand at home in Europe.
Speaker 12: Yeah, absolutely absolutely, and the German economy, as we know,
Speaker 12: is stagnating, but car sales are down in Europe as
Speaker 12: a whole. The European car market is still a fifth
Speaker 12: below pre pandemic levels, so it has never caught back
Speaker 12: up with the time before the pandemic, and that really
Speaker 12: means there's overc opacity. And you know, at least three
Speaker 12: factories to be closed in Germany, while there's negotiations about
Speaker 12: that is still ongoing. Of course, that is a big
Speaker 12: number and it's yeah, it's leading to big headlines in
Speaker 12: Germany here.
Speaker 2: What then, of other automakers, we think of Mercedes Benz
Speaker 2: for example, really the refined side of automaking German based
Speaker 2: as well. How have they managed to navigate China or
Speaker 2: not release the competition in evs too.
Speaker 12: Yeah, they're all struggling in China. All the Western carmakers
Speaker 12: are struggling. Maybe Tesla is a small exception, but BMW, Porsche, Mercedes,
Speaker 12: they're all struggling because the market there is shifting rapidly
Speaker 12: to evs and the local customer seems to favor Chinese
Speaker 12: evs at the moment. And we also have the problem
Speaker 12: that there is a luxury slow down in China. We
Speaker 12: have the real estate crime is still so people are
Speaker 12: holding off purchases. So that is just bad news in
Speaker 12: general for all these Western luxury carmakers.
Speaker 2: Look, there's a lot of pre announcements to digest from Volkswagen,
Speaker 2: but we also are anticipating their numbers, their earnings, which
Speaker 2: aren't going to be pretty. We also sit here in
Speaker 2: the US eyeing what Ford is going to be telling us,
Speaker 2: and we're anticipating actually some decent growth in from an
Speaker 2: earnings per share basis, But if I look at the
Speaker 2: whare the revenue is expected going to be flat. Stefan,
Speaker 2: can you give us a taste of what to expect
Speaker 2: in some of these earnings?
Speaker 12: Yeah, I mean We've had several profit warnings over the
Speaker 12: past weeks and months from basically every major European car maker,
Speaker 12: and you know the fave earnings, the Volkswagen earnings on
Speaker 12: Wednesday are not going to be good.
Speaker 5: We know that they're.
Speaker 12: Going to be reporting declining sales and profitability. That's already expected.
Speaker 12: The question is what will they say about twenty twenty five.
Speaker 12: Is there a light at the end of the horizon,
Speaker 12: will things improve? That's what in West we'll want to hear.
Speaker 2: And indeed, German employees to Stefan Nikola, we thank you
Speaker 2: so much, coming live from Berlin. Meanwhile, that does it
Speaker 2: for this edition of Bloomberg Technology. You don't want to
Speaker 2: forget to check out our podcast, all those incredible conversations
Speaker 2: from Open Ai of course, from the likes of Daniella
Speaker 2: Mode as well and Anthropic.
Speaker 3: Don't miss it. This is Blomberg Technology.