Speaker 1: We're from Bahard where innovation, money and power.
Speaker 2: Collie in Silicon Vallet Nbon.
Speaker 3: This is Bloomberg Technology with Caroline Hyde.
Speaker 4: And Ed Ludlow.
Speaker 5: I Meed Ludlow in San Francisco. Caroline hides off today.
Speaker 5: This is Blombow Technology. Coming up on the program, reports
Speaker 5: that open Ai CEO Sam Outman will meet with Samsung
Speaker 5: chip executives just days after our report on his plans
Speaker 5: to raise billions of dollars for AI chip FECh factories.
Speaker 5: Everything you need to know ahead, plus Sony scrapping its
Speaker 5: ten billion dollar deal for India's z after two years
Speaker 5: of drama and delay, Details on the CEO stalemate that
Speaker 5: led to the collapse, and a big week for big tech.
Speaker 5: We break down what to expect from the Benchmark's main drivers.
Speaker 5: Is they gear up to report earnings results, All that
Speaker 5: and so much more. There is a big story happening
Speaker 5: in the world of technology that we continue to track,
Speaker 5: and that is open AI CEO Sam Outman. Apparently he'll
Speaker 5: meet with Samsung chip executives in Seoul later this week.
Speaker 5: That all, according to Koreas may Ill, it's all about
Speaker 5: a discussion around AI chip production and supply, joining US
Speaker 5: with more is Bloomberg's Ian King, and I mean Ian.
Speaker 6: The timing of this.
Speaker 5: Report is interesting because Friday we myself Dina Bass reporting
Speaker 5: that the focus of Sam Oltman's initiative to raise tens
Speaker 5: of billions of dollars is for chip capacity factories fabs
Speaker 5: call it what you will, and now Samsung, Yeah.
Speaker 1: I mean, if you're going to do this, if you're
Speaker 1: serious about doing this, then you have to speak to
Speaker 1: the Koreans.
Speaker 2: Right.
Speaker 1: Obviously a lot of the focuses on TSMC. They are
Speaker 1: the market leader. But if there's a strong number two,
Speaker 1: it's not Intel, it's some song. They have the money,
Speaker 1: they have the resources, and they have the technology.
Speaker 5: So I think what's interesting here in is that there's
Speaker 5: always a big focus on TSMC because it's the big
Speaker 5: market incumbent.
Speaker 6: Right, it's the big market leader.
Speaker 5: Samsung is a heavyweight in the market for contract manufacturing
Speaker 5: chips in and of its own.
Speaker 6: Right, that's right. I mean, everybody focuses on them.
Speaker 1: Mary the memory guys. You know, memory is a commodity
Speaker 1: or you know, great, it's a big business. But no,
Speaker 1: they are the second biggest contract manufacturer they have had
Speaker 1: in the past, big customers like in video, like Apple,
Speaker 1: they have some serious capabilities and they are way ahead
Speaker 1: of where the third guys they're talking about it Intel
Speaker 1: would be at this point.
Speaker 5: So, you know, the basics of the story of a
Speaker 5: reported Friday is it's a lot of money because chip
Speaker 5: factories cost a lot of money to make in a
Speaker 5: very long time to make. But it's this anxiety that
Speaker 5: in the future the supply of AI specific chips won't
Speaker 5: be there to meet the demand. It's different from what
Speaker 5: we kind of previously reported, which was this idea Well
Speaker 5: wants to take on some of its bigger supplies. Like
Speaker 5: in video, it doesn't seem to be a design of
Speaker 5: their own chip. It's just guaranteeing that when the time comes,
Speaker 5: you can get your hands.
Speaker 6: On what we call day to day AI accelerators.
Speaker 1: Yeah, no, that's absolutely right open AI in Video, AMD.
Speaker 1: All of these chip designers have a shared interest, right,
Speaker 1: a shared goal. They believe that AI is going to
Speaker 1: be utterly pervasive in the world economy and in technology,
Speaker 1: and if according to some of the projections, it's going
Speaker 1: to need more chips, more of a certain type of chip,
Speaker 1: a very high end logic chip than we are currently
Speaker 1: on course to make. If you believe that scenario, then
Speaker 1: we need to start pouring concrete.
Speaker 5: So sam Otman's visits, career and soul is according to
Speaker 5: local reports from al but will continue to trace that
Speaker 5: story of Bloomberg, Z and King, thank you very much. Meanwhile,
Speaker 5: another big story overnight, Sony and Z Entertainment have officially
Speaker 5: called off a plan ten billion dollars meter media merger
Speaker 5: in India after two years of drama and delay. For
Speaker 5: more on what happened, I want to bring in Bloomberg's
Speaker 5: alex Web in London. I mean, we've done so much
Speaker 5: reporting alex around the idea this wasn't going to happen.
Speaker 5: The sticking point ultimately seems to have been who would
Speaker 5: have run this merged entity had it been closed?
Speaker 7: Yes, that's very much at the core of the issue.
Speaker 7: The CEO of Z, who is the son of the founder.
Speaker 7: He has been caught up in a regulatory investigation. He
Speaker 7: can word this very carefully for allegedly faking the recovery
Speaker 7: of loans to cover private financing deals by its founder.
Speaker 7: These allegations, of course, that he denies. Initially, there was
Speaker 7: an interim ruling saying he was not allowed to hold
Speaker 7: directorships and that was then subsequently reprieved.
Speaker 6: He was still.
Speaker 7: Allowed to hold this CEO position, but the investigation is ongoing.
Speaker 7: Sony appears to think that this regulatory overhang is a
Speaker 7: risk would only have be, according to the reporting, to
Speaker 7: close the deal if he was not leading the new company.
Speaker 7: The family would have owned about four percent of the
Speaker 7: new company. Sony would own fifty close to fifty one percent.
Speaker 7: So Sony very much is the bigger fish here and
Speaker 7: they weren't able to reach an agreement.
Speaker 6: The deal has fallen. The part.
Speaker 5: A lot of our audience around the world, Alex are
Speaker 5: going to say, why is Sony interested in doing a
Speaker 5: media deal in India with Z And the reality is
Speaker 5: that it's just a battle ground for eyeballs in the
Speaker 5: world's most populous country.
Speaker 6: Just explain what Z is.
Speaker 5: My understanding is it has a pretty decent catalog of content,
Speaker 5: but financially it's a bit shaky.
Speaker 6: Yeah, it is in slightly.
Speaker 7: Was The challenge is in India it is one of
Speaker 7: scale because of price sensitivity. So Z in this deal
Speaker 7: with Sony, they would have ended up with seventy five channels,
Speaker 7: as you say, a huge back catalog, but without that scale,
Speaker 7: it is quite hard to make the economics add up.
Speaker 7: You hear plenty of people saying, not least Tim Cook,
Speaker 7: that India is where China was maybe six, eight, ten
Speaker 7: years ago. That means that it could be quite attractive
Speaker 7: in a few years time. Right now, it isn't necessarily
Speaker 7: hyper attractive, but people are trying to get in on
Speaker 7: the ground floor ensure they have a decent market position,
Speaker 7: so that if the wealth that many expect to arrive
Speaker 7: does finally arrive in India, then you have quite a
Speaker 7: big market share. They would have had the combined Sony
Speaker 7: Z thirty seven percent market share by some estimates. Disney,
Speaker 7: which is merging its local business with Reliance, the local
Speaker 7: company Reliance, will actually be the biggest shareholder in that
Speaker 7: new entity would have had twenty four is going to
Speaker 7: have twenty four percent market share. So having gone from
Speaker 7: potentially a more dominant position of that thirty seven percent,
Speaker 7: now the separate Sony and Z are actually likely to
Speaker 7: be smaller than this new Disney Reliance entity. The streaming
Speaker 7: market in India was a store in twenty twenty three,
Speaker 7: and it seems like it's going to be a story
Speaker 7: in twenty twenty four as well. Bloomberg x Alex Ware
Speaker 7: about London, thank you very much. Earning season is here.
Speaker 7: We are excited.
Speaker 5: This week we get fourth quarter results from Netflix, Tesla, IBM,
Speaker 5: and Intel. While the market is super focused on what
Speaker 5: on earth happens with rates and the global economy in
Speaker 5: twenty twenty four, joining us now Janetmuie, head of market
Speaker 5: analysis at RBCBRA and Dolphin.
Speaker 6: And to look forward, you have to kind of look back.
Speaker 5: You know, the Magnificent seven, those megacaps accounted for so
Speaker 5: much of the index performance in twenty twenty three, and
Speaker 5: we go into this earning season saying they're probably going
Speaker 5: to account for the majority of profit growth as well.
Speaker 5: Is that how you look at it?
Speaker 3: Hi Ed, thanks for having me. I think that's entirely likely.
Speaker 3: As you mentioned, you you looked back last year the
Speaker 3: mane cent seven, It is the thirty percent of the SMP,
Speaker 3: but drove two thirsts of the return last year. How
Speaker 3: do you think that the busiasm for the Magnificent seven
Speaker 3: will continue given that? I think actually a lot of
Speaker 3: investors are just about neutral or even slowly underweight at
Speaker 3: the moment in terms of equities. So I think in
Speaker 3: terms of the momentum that is great the SMP five
Speaker 3: hundred region your highs, and I think the flows could
Speaker 3: be coming from the cash allocations from institutions or retail investors.
Speaker 3: And I do think that so far, if you look back,
Speaker 3: not just last year, but in the past five years, right,
Speaker 3: the compounded annual growth rates of these megacap tech companies
Speaker 3: has been great, you know, ranging from fifteen percent to
Speaker 3: even thirty percent for the EPs growth. So I do
Speaker 3: think that the earnings expectation is likely to be justified.
Speaker 3: They will still continue to deliver growth, of course, supported
Speaker 3: by these structural talent that is artificial intelligence.
Speaker 5: You have to differentiate between stock performance and then actual
Speaker 5: growth in earnings, right, I think the average estimate or
Speaker 5: the Bloomberg Intelligence forecast is across the Magnificent seven EPs
Speaker 5: growth of forty six percent, which is like slight deceleration
Speaker 5: from fifty three percent in the prior qorder. The only
Speaker 5: subsector that's comparable is utilities, And we know everything that's
Speaker 5: kind of going on in energy markets and geopolitically globally,
Speaker 5: what is it that the Magnificent seven are able to
Speaker 5: do to keep boosting the bottom line that the broader
Speaker 5: tech sector cannot.
Speaker 6: Well.
Speaker 3: I think there are both cyclical and structural aspects. In
Speaker 3: terms of second coal, we're actually quite constructive on the
Speaker 3: semiconductor sector. That's primal because there is evidence that that
Speaker 3: infratructory cycle has come to an end, particularly if you
Speaker 3: look at the guidance from TSMC. There's further evidence that
Speaker 3: the destock kit is over and you're starting to see
Speaker 3: that you pick up in the global semiconductor orders. I
Speaker 3: think one that is lagging is probably autole semiconductors. There's
Speaker 3: still some inventry drag there, but generally if you talk
Speaker 3: about the hardware upgrade for phones, that's a three year
Speaker 3: cycle and I think we're starting to get a recovery
Speaker 3: from there, and so I think the cycle call uplift
Speaker 3: for those companies would be pretty good. And structurally, of course,
Speaker 3: it's the artificial intelligence boom that to us is still
Speaker 3: pretty much in the early stages. You're talking about first
Speaker 3: of all the pext and shovels play, which is slightly
Speaker 3: could you do well, but broader speaker, I think it
Speaker 3: is going to broaden out to the other applications, which
Speaker 3: is still in the very early stages, and there's this
Speaker 3: creating this completely new demand for these high performance AI
Speaker 3: chips for instance.
Speaker 5: That makes for an interesting week. You said that your
Speaker 5: firm kind of constructive on semis. You know, the one
Speaker 5: that we're watching closely on the show is Intel Thursday,
Speaker 5: and we'll speak to the CEO on Friday. But within
Speaker 5: that you also have Texas Instruments, which is kind of
Speaker 5: the other end of the excitement gauge, right, more analog
Speaker 5: device is a much wider range of end market.
Speaker 6: Do you care more.
Speaker 5: About learning about the health of the end markets or
Speaker 5: the forward looking commentary on how AI is going to
Speaker 5: change the game to these companies?
Speaker 3: To be honest, I think it's both really So for
Speaker 3: the more boring kind of areas of semiconductors, it was
Speaker 3: really dragged by the infantry d stocking for our films
Speaker 3: for the laptop, for example, because we had such a
Speaker 3: boom during the pandemic, right, So, as I said, there's
Speaker 3: just more evidence of that coming to an end, and
Speaker 3: so the mexicoical outlooks could last one and a half
Speaker 3: years plus. So I think that's pretty exciting. So I
Speaker 3: think a bit of that is about that is very
Speaker 3: important and of course the AI commentary would be very important, right.
Speaker 3: I think investors will be continuing looking for evidence that
Speaker 3: this ordest growth is indeed very robust and will continue
Speaker 3: to justify the share price.
Speaker 5: Janet, we're about fifteen minutes away from the close of
Speaker 5: trading in Europe. Something interesting happened today. As it stands, ASML,
Speaker 5: the chip equipment maker, is going to leap frog Nesle
Speaker 5: you see just at the right hand bottom of your screen,
Speaker 5: to become the third most valuable European stock behind lvmh Nova. Notice,
Speaker 5: and it got me thinking about European tech. The SML
Speaker 5: story is caught up in the geopolitics of the US
Speaker 5: China relationship and in the context of AI. But with
Speaker 5: ASML jumping up the value chain, how do you view
Speaker 5: them and how do you view European tech in twenty
Speaker 5: twenty four.
Speaker 3: We actually we have ASML on our individual equity list,
Speaker 3: so we're constructive on the launcher prospect for ASML, primarily
Speaker 3: because it is a monopoly for these advanced set making
Speaker 3: and I think that you are for European tech. Arguably,
Speaker 3: there's not a lot of choices if you look at
Speaker 3: the megacap TAC space, so I finger ASMAN is one
Speaker 3: of the few options there that would deliver promising prospects.
Speaker 3: And I think in terms of the dual politics, I
Speaker 3: think the China risk is in the background, but I
Speaker 3: think a large part of it has already been digested
Speaker 3: by investors. A lot of bad news have already been
Speaker 3: the past. We already know that they're not going to
Speaker 3: send the high end chips to China, right. I think
Speaker 3: that there has been some sensus steadably to the stock price,
Speaker 3: but we have already digested it. And I think the
Speaker 3: long term demount, the structural demound globally it's China is
Speaker 3: still very exciting, and I think that may not be
Speaker 3: fully reflected in the stock price yet. Then we do
Speaker 3: have a continual constructive view on ASML and generally the
Speaker 3: global ship manufacturing sector.
Speaker 5: Janet, there are times on this program where I sound
Speaker 5: like a bit of a broken record. I'm going to
Speaker 5: say the same thing again. We're looking at the FED
Speaker 5: and we're looking at rates because higher rates discount the
Speaker 5: present value of future cash flows. In the context of
Speaker 5: big tech, you know, there is an interesting inflation happening
Speaker 5: around the world, and there's a question in the market
Speaker 5: of whether we are getting our rates expectations wrong.
Speaker 6: Are we getting it wrong? Janet?
Speaker 3: I think there is a possibility, given that we initially
Speaker 3: expect sex, I mean, the marketing expects sex, and then
Speaker 3: now they have to tribute to five rate cut expectations.
Speaker 3: But interestingly, during this period of recalibrating interest rate expectation,
Speaker 3: the markets continue to go up in the US. I
Speaker 3: think it's not saying that this interest rate cut expectations
Speaker 3: doesn't matter. It matters, but for these quality companies, for
Speaker 3: these merrical companies, I think they demonstrated they actually managed
Speaker 3: to do well last year in the rising interest rate
Speaker 3: and bone new environment. And I think we may get
Speaker 3: it wrong right. It could be two recoup, three racous.
Speaker 3: We don't know, But generally we saw that rates have
Speaker 3: picked and that provides a stable anchor for investors. And
Speaker 3: it's still more likely than not we are going to
Speaker 3: see a couple of rate pass this year. So I
Speaker 3: think in general investors are still very much focused on
Speaker 3: this stoft blending direction, which we saw more your data confirmation,
Speaker 3: especially from last Fridays the University of Michigan confidence or
Speaker 3: it you the best of data right, Low inflation expectation,
Speaker 3: higher consumer confidence. So I think I think the soft
Speaker 3: lending direction is actually driving more of that market movement
Speaker 3: compared to that expectation.
Speaker 5: Hey, there's something refreshing in the honesty of saying we
Speaker 5: just don't know. Janet Mouly, headed market analysis at RBCB
Speaker 5: and Dolphin. Great to have you on the program and
Speaker 5: coming up here on Bloomberg Technology, Elon Musk's AI company
Speaker 5: gets a five hundred million dollars boost. Get those details
Speaker 5: coming up next. This is Bloomberg Technology. Okay, time for
Speaker 5: talking tech and in the news and video. Co founder
Speaker 5: Jensen Wang celebrated the Chinese New Year with staff during
Speaker 5: a trip to China, is first in four years, a
Speaker 5: low key tour that coincided with frankly growing concerns about
Speaker 5: Beijing's ability to get around US chip restrictions, and speaking
Speaker 5: of which, as firms wrapped up investment to try and
Speaker 5: get around those restrictions, China's imports of chip making machines
Speaker 5: jumped fourteen percent last year to almost forty billion US dollars,
Speaker 5: the second largest amount on record since twenty fifteen. Plus,
Speaker 5: the US Supreme Court asked the Biden administration to respond
Speaker 5: to an appeal by Elon Musk, who is seeking to
Speaker 5: overturn an agreement he reached with the SEC to have
Speaker 5: his social media posts about Tesla screen in advance the
Speaker 5: Twitter sidter if you remember. And in other Musk news,
Speaker 5: his artificial intelligence company Xai has secured five hundred million
Speaker 5: dollars in commitments from investors, the end goal being one
Speaker 5: billion dollars. That all according to Bloomberg sources. I want
Speaker 5: to bring in Bloomberg's KD Ruth for more and K
Speaker 5: you and I reported this story together, and let's get
Speaker 5: right to it. After we published the story, Elon Musk
Speaker 5: said on x the platform for me known as Twitter,
Speaker 5: that this is fake news. But what are the details
Speaker 5: that we reported?
Speaker 6: Sure?
Speaker 4: Yeah, so it's not clear what part of the story
Speaker 4: he's denying. But a number of sources have told us
Speaker 4: that there have been conversations about a new fundraising round.
Speaker 4: There's actually even been a filing about this, that they
Speaker 4: are seeking roughly a billion dollars for XAI, his AI platform,
Speaker 4: and we've heard that they've received maybe five hundred million
Speaker 4: in commitments so far. But to be clear, these are
Speaker 4: what I would call soft commitments because the valuation is
Speaker 4: still being set they have discussed numbers that include fifteen billion,
Speaker 4: twenty billion, but they actually haven't decided and so it's possible.
Speaker 4: That's what he is alluding to here, is that the
Speaker 4: valuation hasn't been set in stone.
Speaker 5: You know what I heard from my sources, what you heard,
Speaker 5: and Lizette Chapman, who we reported this with, heard as well.
Speaker 5: It's like there's a lot of interest of getting in
Speaker 5: on this round and investing in a Musk led company.
Speaker 5: What's interesting to me is like a billion dollars doesn't
Speaker 5: really seem that much if you look at some of
Speaker 5: the vast sums the other leading makers of the l
Speaker 5: lms and generative AI tools of rais, how do these
Speaker 5: things normally shake out?
Speaker 8: Right?
Speaker 5: It's a number of weeks that the rounds are often oversubscribed, sure, and.
Speaker 4: So the target size of around can and often does
Speaker 4: change a lot of times. Usually it's actually not completely
Speaker 4: set until they know the valuation because it's hard to know,
Speaker 4: you know, if you don't know the sheer price, it's
Speaker 4: hard to know what people are going to pay and
Speaker 4: how much you know, how much they're going to invest.
Speaker 4: So we could see the number go up, and we
Speaker 4: can also see the number go down. It's also possible
Speaker 4: they'll do another round in a few months at a
Speaker 4: different share price. So I wouldn't see this as an
Speaker 4: end goal that they'll only raise a billion dollars. They
Speaker 4: could someday raise many billions.
Speaker 5: Ultimately, we know the aim was to raise money and
Speaker 5: up to a billion dollars because of a regulatory filing
Speaker 5: that Musk and Xai made. There's two interesting parts here.
Speaker 5: One the X Corps or x the company formerly known
Speaker 5: as Twitter investors seem to be those most likely to participate.
Speaker 5: And one element we reported. Instead of getting equity, something
Speaker 5: being discussed is having access to computes in lieu of equity,
Speaker 5: which is an interesting situation for an investor to find
Speaker 5: themselves in.
Speaker 4: Sure right now, you know, obviously there's it's very competitive
Speaker 4: to get in on the next big AI business, and
Speaker 4: so anything they can do to leverage their technology that
Speaker 4: could be used maybe for other startup investments that investors
Speaker 4: are making, or you know, help you know, potential strategic
Speaker 4: you know, we have relationships with Microsoft and OPENINGI for example,
Speaker 4: anything that any sort of partnerships that add value to
Speaker 4: a company could be mutually beneficial for XAI.
Speaker 5: All right, bombers. Katie Ruth one of the co by
Speaker 5: lines with me on that one. It's a big week
Speaker 5: for technology earnings, Netflix, Tesla, IBM, and Intel towards the
Speaker 5: end of the week. But there's still a debate about
Speaker 5: what the Fed will or will not do in the
Speaker 5: context of when they'll cut rates, if they'll cut rates,
Speaker 5: and how deeply they'll cut rates. And at the same time,
Speaker 5: still a debate about the strength of the global economy
Speaker 5: soft landing here in the US versus entering into a recession.
Speaker 6: Same stuff as last year.
Speaker 5: We carry on the conversation that reflected kind of in
Speaker 5: the movement in yields as well US tenure just below
Speaker 5: four point one percent. It is an election year and
Speaker 5: my goodness did that show itself over the weekend.
Speaker 6: Let's turn to politics.
Speaker 5: Ronda scentists dropping out of the race on X in
Speaker 5: a video.
Speaker 6: Interesting his choice to do that on that platform.
Speaker 5: Let's go out to New Hampshire and join Kaylee Lions,
Speaker 5: who's live on the ground ahead of that primary. Kayley,
Speaker 5: what did you make of the DeSantis timing the announcement
Speaker 5: but also specifically choosing X as the platform to make
Speaker 5: that announcement?
Speaker 9: Well at The timing certainly was interesting, as he just
Speaker 9: last week came in second in Iowa and had been
Speaker 9: saying he was focusing his energy and resources on South
Speaker 9: Carolina but still was going to compete in New Hampshire
Speaker 9: and before we even got to primary day. Now he's
Speaker 9: out of the race. It does seem like a fitting end, though,
Speaker 9: that this ultimately came on that platform, because remember it
Speaker 9: was also on x that DeSantis launched his candidacy in
Speaker 9: a first place in the first place through a spaces
Speaker 9: in which it was a little glitchy, and they tried
Speaker 9: to say that they broke the Internet, but it didn't
Speaker 9: really seem like it went off without a hitch. And
Speaker 9: then in this video yesterday announcing the end of his campaign,
Speaker 9: essentially what he said was if there was something he
Speaker 9: could have done to have a more favorable outcome, more campaigning,
Speaker 9: more interviews, he would have done so, but he did
Speaker 9: not just see a path to victory. So that makes
Speaker 9: tomorrow the first in the nation primary all the more
Speaker 9: interesting because now it really is a two person race
Speaker 9: between former President Donald Trump, who is the front runner,
Speaker 9: and former UN Ambassador Nikki Haley. And the polling we're
Speaker 9: getting the latest this morning shows Trump is leading Haley
Speaker 9: by a pretty significant margin, depending on what poll you
Speaker 9: look at. We're talking nineteen points in the Suffolk University
Speaker 9: in Boston Globe Pole or eighteen points in the Monmouth
Speaker 9: University Washington Post poll. And what is interesting about that
Speaker 9: poll is it actually shows that four voters who were
Speaker 9: going to support DeSantis, keeping in mind he was pulling
Speaker 9: in the low single digits here in New Hampshire, so
Speaker 9: wasn't that much of a factor anyway, But those voters
Speaker 9: are twice as likely to say that their second choice
Speaker 9: is Trump. So the thinking goes, now that DeSantis is
Speaker 9: out of the race, the vast majority of those votes
Speaker 9: he would have gotten will be going to the former president.
Speaker 5: Blue moos Kyliones part of the big team on the
Speaker 5: ground there in New Hampshire. Really looking forward to your coverage.
Speaker 5: Be sure to tune into the team and New Hampshire.
Speaker 5: Thank you so much. Look, let's move on to the election,
Speaker 5: but specifically for because on misinformation. Because even as AI
Speaker 5: tools have been made to make it easier to create
Speaker 5: false content, social media giants have become reluctant to step
Speaker 5: in to counter it. I want to bring in Bloomberg's
Speaker 5: and Edguton, who's been writing about this for Bloomberg this morning.
Speaker 6: That's where we stand.
Speaker 5: It's an election year, it's easier than ever to create
Speaker 5: fake content or misinformation, and the approach from a policy
Speaker 5: perspective of these social media companies and their platforms is
Speaker 5: the main focus of your story.
Speaker 6: That's right.
Speaker 8: I mean, what it seems like these social media companies
Speaker 8: have decided is that it's hard to decide what's true.
Speaker 8: And that's especially the case when it comes to political information.
Speaker 8: They can be very opinionated. In some cases, they've gotten
Speaker 8: burned from the past for trying. You know, for example,
Speaker 8: during the COVID pandemic, they were trying to respond in
Speaker 8: real time to changing health guidance, and it was very
Speaker 8: hard to monitor information to curtail misinformation in that environment.
Speaker 8: Going into an election year, they're saying, we don't want
Speaker 8: to be the arbiters of political truth. We're just going
Speaker 8: to let content be on the platform, will take down
Speaker 8: what's legal, what violates our policy, but we want to
Speaker 8: have a more open debate and allow more room for
Speaker 8: Americans to express their political opinions.
Speaker 5: Let's go specific then, you know, I think back to
Speaker 5: twenty twenty when I was on the road for that election.
Speaker 5: The micro focus on policy for the Facebook platform and
Speaker 5: Instagram versus policy for X. What are some of the
Speaker 5: key grounds that they have set out if any Well,
Speaker 5: you know, it's.
Speaker 8: An easy call. For example, when you have a post
Speaker 8: that says you don't actually have the vote on election day,
Speaker 8: you can vote the following day, that's not true. It's
Speaker 8: interfering with an election that is not allowed on any platform.
Speaker 8: But then you have other information that could make claims
Speaker 8: about a candidate that is in many cases allowed. Meta
Speaker 8: platforms even allows paid advertisements to express things that aren't true.
Speaker 8: And as this comes to as you said, you know,
Speaker 8: an environment where you have generative AI making it and
Speaker 8: ever more easy to create content that's not true, we
Speaker 8: could have just a flood of information that makes it
Speaker 8: really harder voters to parse what's real and what's not.
Speaker 5: All right, Bloomberg exaner edgit him with a very significant
Speaker 5: look ahead to this year's election in the context of
Speaker 5: social media. Let's keep the conversation going with Mark Joblanowski,
Speaker 5: Managing Partner, Chief Technology Officer, DS Political, a digital advertising
Speaker 5: company for Democratic candidates and progressive Causes, which has come
Speaker 5: up with its own ad targeting technology, and Mark, thank
Speaker 5: you for your time here on Bloomberg Technology.
Speaker 6: Let's just set the scene.
Speaker 5: How do you see social media as a battleground for
Speaker 5: this election cycle in twenty twenty four?
Speaker 10: Thank you for having me. This is going to be
Speaker 10: an unbelievably consequential presidential election, and it is going to
Speaker 10: be more difficult for citizens to understand what is true
Speaker 10: and not based on the platforms social media platforms, regulations
Speaker 10: and take down policies for content. So when you bring
Speaker 10: in the generative AI capabilities that is widespread now with
Speaker 10: the high stakes campaigns that we're going to see this year,
Speaker 10: it really is going to be a new frontier for
Speaker 10: campaigns to have to deal with this new type of misinformation.
Speaker 5: We're showing a chart right now which sets out pretty
Speaker 5: clearly where Americans go to consume their news. The source
Speaker 5: of that data is the Pew Research Center. We're focused
Speaker 5: so much on x formerly known as Twitter, but Facebook
Speaker 5: is a big, big platform here thirty percent, if Pew
Speaker 5: is to be believed, how do you view the safety
Speaker 5: of the Facebook platform. When I say Facebook, we're talking
Speaker 5: about Facebook dot com and the Facebook app.
Speaker 10: Yeah, I think Facebook has as well as other platforms,
Speaker 10: really pulled back a lot of the sensible protections that
Speaker 10: they put into place after the January sixth insurrection and
Speaker 10: during the COVID pandemic. Some of these productions still exist
Speaker 10: in the paid media space. It's but on the organic side,
Speaker 10: you really are having a world where they're not wanting
Speaker 10: to police what's true or not anymore, and that really
Speaker 10: could pose some serious threats.
Speaker 5: The newspeg is DeSantis choosing to drop out of the
Speaker 5: race in a video that was posted on x first
Speaker 5: before it was posted anywhere else. You know, you largely
Speaker 5: are on the Democratic side of this election and debate,
Speaker 5: but do you see any clear strategic difference in how
Speaker 5: GOP candidates and that party use social media versus the
Speaker 5: Democratic Party.
Speaker 10: Well, you've seen Twitter X really welcome back a lot
Speaker 10: of people that had previously been banned from the platform
Speaker 10: and creating this safe free speech haven that really is
Speaker 10: anything goes. And you have a certain type of candidate
Speaker 10: that is going to race messaging on a platform that
Speaker 10: is that open, versus on the other side of the aisle.
Speaker 10: And so I think X is a really great example
Speaker 10: of a platform that was trying to do the right thing,
Speaker 10: and then under new ownership, had a change of heart
Speaker 10: and decided to really just let the floodgates open.
Speaker 5: There's the tech and policy side of this, so Meta's
Speaker 5: view and you can see it and anegs and stories
Speaker 5: that they lead the industry in their review of.
Speaker 6: Content and safety.
Speaker 5: Elon Musk has disclosed that X got rid of the
Speaker 5: election Integrity team for reasons that he's put out there.
Speaker 5: And then there's the political side of it, in other words,
Speaker 5: the political pressure these companies are under from DC.
Speaker 6: How do you view that tension.
Speaker 10: Well, you're seeing certain Republican lawmakers really try and take
Speaker 10: a view that any sort of content moderation is censorship
Speaker 10: that is detrimental to the Republican Party. And so you
Speaker 10: are seeing subpoenas and you're seeing just hugely burdensome requests
Speaker 10: from members of Congress trying to put a stop to
Speaker 10: the platforms preventing fake information from from getting out there. So, really,
Speaker 10: what I worry about our generative AI created likenesses of campaigns,
Speaker 10: candidates and what is going to be able to be
Speaker 10: ultimately proven or disproven about what is said with them,
Speaker 10: And the real issue is not going to be probably
Speaker 10: as much on the top of the ticket, where you're
Speaker 10: seeing a lot of capability and capacity to combat real
Speaker 10: time information with trackers and video cameras that are always
Speaker 10: on both yourself and the opponent. But one step down
Speaker 10: below that where it's really still a consequential election, but
Speaker 10: you don't have the same resources to ultimately fact check
Speaker 10: and disprove something that is going viral online that may
Speaker 10: or may not be true.
Speaker 5: Now, Mark, we have thirty seconds. How is your technology
Speaker 5: going to make the ads you do in support of
Speaker 5: democratic candidates safe and clear.
Speaker 10: We make sure that we're reviewing the content of the
Speaker 10: ads that we run for factual information, making sure that
Speaker 10: we're working with only people that we know who are
Speaker 10: actually purchasing the ads. We make sure that we are
Speaker 10: working with all of the state and local regulatory environments,
Speaker 10: which has become increasingly complex, and ultimately we try and
Speaker 10: make that in a turnkey package that allows democratic candidates
Speaker 10: and causes to run effective media campaigns.
Speaker 5: All right, Mark Jablonowski, Managing Partner, Chief Technology Officer, a
Speaker 5: DS Political Thank you for your time on the show. Now,
Speaker 5: keeping an eye on shares of Rumble, the video platform
Speaker 5: jumping eighteen twenty percent, now up twenty six percent, biggest
Speaker 5: in today jump since March of last year, after announcing
Speaker 5: a partnership with Barstools for advertising and cloud services. This
Speaker 5: is interesting in the context of how many eyeballs these
Speaker 5: video platforms slightly more conservative right leaning Rumble may get
Speaker 5: in the course of twenty twenty four That stock up
Speaker 5: twenty six percent.
Speaker 6: Now coming up on the.
Speaker 5: Program, we're going to be speaking with former Deputy Director
Speaker 5: of the NSA, George Barnes about his new VC role
Speaker 5: and investing in earlier stage cyber firms.
Speaker 6: More on that.
Speaker 11: Next, we have reports of an enormous fluffy pink monster
Speaker 11: struttling its stuff through Downtown.
Speaker 6: Fluffy Bird in downtown weird. Let's switch the setting to
Speaker 6: something more comming.
Speaker 5: That was an AI generated piece of voice content from
Speaker 5: eleven Labs, the startup that uses artificial intelligence to replicate
Speaker 5: voices in more than twenty four languages, which just raised
Speaker 5: a new round of funding that places the two year
Speaker 5: old company's valuation more than a billion dollars. The company
Speaker 5: said today that it raised eighty million dollars in funding
Speaker 5: led by the Venture Fund and Dreesen Horowitz, as well
Speaker 5: as Sequoia, Smash Capital, and s v angel. The company
Speaker 5: has raised one hundred and one million dollars to date. Now,
Speaker 5: former Deputy director of the NSA, George Barnes has a
Speaker 5: new job president of the cyber practice at VC firm
Speaker 5: Red Cell Partners. This makes him the latest ex government
Speaker 5: official to join the tech world is investing in defense
Speaker 5: and security. Technology startups has real momentum right now, and
Speaker 5: I'm delighted to say George Barnes joins us now to
Speaker 5: talk more about his new position. This is happening, this
Speaker 5: kind of move from the public to private sector. They
Speaker 5: are concerns shared by both about cyber and other threats
Speaker 5: we face in twenty twenty four. Welcome to the program.
Speaker 5: Why did you make this move?
Speaker 2: Thanks so well, I'm really great to be here here.
Speaker 2: So Number one, I spent my whole adult life in
Speaker 2: national security at the NSA. I was there at thirty
Speaker 2: six and a half years, the last six and a
Speaker 2: half of which I was deputy director, and that gave
Speaker 2: me a unique knowledge and position on what's happening in
Speaker 2: our world, the threats that are posed against us, most
Speaker 2: of which many of which are cyberborn. Now, my job
Speaker 2: was to try to understand the nature of those threats
Speaker 2: from foreign adversaries, and then also to help position NSA
Speaker 2: to defend against those and not just NSA but our nation.
Speaker 2: And so coming out of that experience and figuring out
Speaker 2: what to do next, I wanted to stay engaged. I'm
Speaker 2: an engineer by education and an initial trade of my career,
Speaker 2: and so I like the fact of the order of
Speaker 2: building things. Being involved in emerging tech has always been
Speaker 2: something that I've reveled in with respect to my NSA career,
Speaker 2: because that's the only way we stayed Bible is to
Speaker 2: really stay at that bleeding edge of technology. So the
Speaker 2: combination of emerging tech, my experiences, and then knowing Grant
Speaker 2: for standing for many years read Sell and knowing the
Speaker 2: platform he's creating, the culture he's establishing, and the connections
Speaker 2: in areas that really matter healthcare, defense, national security across
Speaker 2: the board of cybersecurity, as we all know, is a
Speaker 2: big deal.
Speaker 5: The threat has been made clear by the events of
Speaker 5: the weekend. Microsoft, who shares down three tenths of a
Speaker 5: percent in the session disclosing that a Russia Link group
Speaker 5: was able to get access to a small percentage of
Speaker 5: employee emails. I find this so interesting because one it
Speaker 5: is a nation state actor as the threat. But number two,
Speaker 5: Microsoft is the most valuable company in the world and
Speaker 5: they are still vulnerable.
Speaker 6: What do you make of that?
Speaker 2: I think what we all have to realize is number one,
Speaker 2: Russia is extremely sophisticated. They have three different services, the SBR,
Speaker 2: the GRU and the FSB, all training their sites on
Speaker 2: things like Microsoft. Because Microsoft is a global company, they
Speaker 2: and China expend many, many resources. With highly sophisticated people,
Speaker 2: tools and techniques they have, they will continue to find
Speaker 2: fissures in vulnerabilities in any globally used operating system or capability.
Speaker 2: And so while it's bad, I'm not surprised at all.
Speaker 2: I remember at NSA we really tried to focus on
Speaker 2: identifying such vulnerabilities and tipping off Microsoft when we found them,
Speaker 2: because collectively we wanted our security to be as good
Speaker 2: as it could be. But we're always going to find weaknesses.
Speaker 5: You know, Microsoft cyber practice is a twenty billion dollar
Speaker 5: a year or security practice twenty billion dollar a year business.
Speaker 5: JP Morgan Analysts have this note out, saying that this
Speaker 5: could be an example of some of Microsoft's competitors getting
Speaker 5: a bit of a leg up in offering their services.
Speaker 5: You are now in the investment world.
Speaker 6: How do you apply the.
Speaker 5: Events of the weekend to your thesis going forward in
Speaker 5: which startups want to target?
Speaker 2: Sure, So, number one, we have many companies that are
Speaker 2: providing cybersecurity services. We have, of course, all of our
Speaker 2: companies that are globally distributed and providing services IT and
Speaker 2: communication services around the world. Cybersecurity is something that is
Speaker 2: going to be a continuous struggle really for our society.
Speaker 2: It's not something we can fix and be done. And
Speaker 2: so my effort here at red CEL will be looking
Speaker 2: at what are those areas that have been underserved or unappreciated.
Speaker 2: Where are combination punches that we can deliver with new
Speaker 2: companies but also new companies joined up with existing companies
Speaker 2: to bring extra differentiating horsepower to problems that continue to
Speaker 2: manifest themselves with every passing day.
Speaker 5: There are many startups out there working on all sorts
Speaker 5: of tools. The common message that I get is the
Speaker 5: threat actors have the same access to AI technology that
Speaker 5: we do in building the defense. How will you use
Speaker 5: your experience at the NSA to kind of help them
Speaker 5: on the strategy side build out a business think about
Speaker 5: how they're thinking about the threats.
Speaker 2: One of the neat things that I am able to
Speaker 2: bring is the mindset of hunting. So NSA is both
Speaker 2: intelligence and cybersecurity. So part of my role at NSA
Speaker 2: was trying to learn the psyche of trying to penetrate
Speaker 2: foreign adverssary systems.
Speaker 6: And so bringing that psyche.
Speaker 2: It's very hard to defend, it's much easier to attack,
Speaker 2: and so bringing that experience looking at things from a
Speaker 2: different angle, understanding how to align talent with different perspective
Speaker 2: is something that I think I bring and I'm hopeing
Speaker 2: to bring. We have a broad landscape of very highly
Speaker 2: technical people in government, in industry, and so how can
Speaker 2: we bring them together in different ways with different experiences
Speaker 2: that I bring to the table.
Speaker 6: They call him the Hunter.
Speaker 5: George Barnes, President of Red Cell Partners Cyber Practice, thank
Speaker 5: you for your time here. Tensions brewing for Apple as
Speaker 5: developers decide not to dive headfirst into the Vision Plobe
Speaker 5: prus three of the world's most popular streaming services, Netflix, YouTube,
Speaker 5: and Spotify already signaling they won't be enabling their iPad
Speaker 5: apps to run on the Vision pro Bloombo's Mark Gunman
Speaker 5: has the latest in the latest edition of Power On,
Speaker 5: and I noticed over the weekend, Mark you were tallying
Speaker 5: all of the Vision Pro specific apps, but also noting
Speaker 5: that many iPad apps run on it. It's just it's
Speaker 5: more complicated and intense than it should be.
Speaker 12: Right, It's an interesting situation that Apple's created for the
Speaker 12: Vision Pro. So there's basically three types of applications. You
Speaker 12: can run your existing iPad apps, right, you can run
Speaker 12: your existing iPhone apps, or you can run new native
Speaker 12: applications created for the Vision Pro Operating System vision OS.
Speaker 12: So you're going to have about a million iPad and
Speaker 12: iPhone apps. They'll run in the system, they'll float as
Speaker 12: a window, but they're.
Speaker 6: Not optimized for the price of the device.
Speaker 12: What you really want are applications that are completely native,
Speaker 12: and so far it seems there's going to probably be
Speaker 12: between two hundred and fifty and four hundred native Vision
Speaker 12: OS apps at launch. Now you can compare that to
Speaker 12: the two thousand iPad apps they hit at the launch
Speaker 12: of the iPad app Store, where the five hundred iPhone
Speaker 12: apps they had at the launch of the original app
Speaker 12: store back in two thousand and eight. But for twenty
Speaker 12: twenty four having only a few hundred native apps, that's
Speaker 12: not so significant. And if you look at which applications
Speaker 12: are going to be launching from the get go, a
Speaker 12: lot of them are from independent developers. These are not
Speaker 12: established applications. But you're also getting some core apps from Microsoft,
Speaker 12: from Slack, from Zoom, from Cisco's WebEx. You have a
Speaker 12: few apps for augmented reality. There's a full app from Jkru.
Speaker 12: There's an app from low where you can sort of
Speaker 12: design where you want furniture in your home. But like
Speaker 12: you said, this is an entertainment device from the get go.
Speaker 12: That's at least how Apple's portraying it. In missing YouTube, Netflix,
Speaker 12: and Spotify from the get go. That's not great, And
Speaker 12: I underscore some of the texts you're seeing between Apple
Speaker 12: and developers lately.
Speaker 5: Bluembos Mark German and lays power on thank you. That
Speaker 5: does it for b tech