Speaker 1: I met Lovelow in San Francisco. Caroline Hyde is off today.
Speaker 1: This is Bloomberg Technology coming up, Google's response to chat GPT.
Speaker 1: What we know about the conversational AI search engine named Bard,
Speaker 1: plus Dell the latest tech giants to announced layoffs, which
Speaker 1: have now topped sixty seven thousand industry wide already in
Speaker 1: and we dive into the China spy balloon story, which
Speaker 1: puts the spotlight on Beijing's global surveillance. Personal gets all
Speaker 1: of that this hour, but first alphabet pairing of Google
Speaker 1: jars briefly pairing some of their gainer spike after headlines
Speaker 1: that the company is releasing its rival to chat GPT,
Speaker 1: called Bard. That's too early testers. Bloomberg's junior Love joins
Speaker 1: us now with those details, Julia, what do we actually
Speaker 1: know about Bard? Yes? So it is um. We've all
Speaker 1: heard a lot of buzz about chat GPT, the chat
Speaker 1: bob that has taken the Internet by storm, and Bard
Speaker 1: is Google's answer to that product. It's It's It's a
Speaker 1: conversational AI service that users will also be able to
Speaker 1: turn to for simple queries such as planning a birthday party,
Speaker 1: you're buying your gift for a friend Julie is you know.
Speaker 1: I was on the phone last week with Ruth Poor
Speaker 1: at the CFO of Alphabet and I asked her about AI,
Speaker 1: and she was a little bit defensive, saying, actually, we've
Speaker 1: been working on AI for years and years and years.
Speaker 1: My question, why are we only sort of hearing about
Speaker 1: a roll out of it into the real world now?
Speaker 1: Why has it been so slow to react? Yeah, it's
Speaker 1: a fascinating question. You know, Google has been a leader
Speaker 1: in this field. It created many of the tools that
Speaker 1: underpin this technology, but the company has held itself to
Speaker 1: a higher bar in terms of rolling out these products. Um,
Speaker 1: the chat bots sometimes hallucinate, they sometimes deliver information that's incorrect,
Speaker 1: and Doodle has been very fearful about what might happen
Speaker 1: if that happened under the Google brand, And so that's
Speaker 1: why they're taking their time. Yeah, I guess it's it's
Speaker 1: an issue of competitive threat, right. You look at what
Speaker 1: Microsoft's doing with chat, GPT and the underlying tech. You know,
Speaker 1: there's already talk about how it's going to improve being
Speaker 1: the search engine. How much of a threat does Google
Speaker 1: see the other players to its core business? Well, Google
Speaker 1: still lives and dies by advertising, and so if users
Speaker 1: begin to turn to chat, GPT and other services for
Speaker 1: some of their everyday queries instead of with Google Search,
Speaker 1: that could over time to start to eat into Google's
Speaker 1: advertising business. All right, Bloomberg's Julia Love thank you terrific
Speaker 1: reporting this Monday. Now, as we mentioned earlier in the program,
Speaker 1: Dell has become the latest tech company to announce pretty
Speaker 1: significant job cards, to eliminate a little more than sixty
Speaker 1: six d jobs, about five of its global workforce. Splinberg's
Speaker 1: Brady Forward was the first to report that news and
Speaker 1: joins me from the New York studio give us the
Speaker 1: details of these cuts. Yeah, absolutely so. Anybody who's watched
Speaker 1: this show or any other show in the world the
Speaker 1: last couple of months knows that almost every large tech
Speaker 1: company has made cuts, right, so Dell is the most
Speaker 1: recent one. It's kind of about people. That's about five
Speaker 1: percent of the global workforce, significant number. Um And the
Speaker 1: big story here, in addition to investors calling for greater profit,
Speaker 1: is that PC demand has really just fallen. I was
Speaker 1: looking at the I d C data right from the
Speaker 1: last three months of two and there's a pretty sharp
Speaker 1: drop in PC shipments. But I think I'm right in
Speaker 1: saying that third party data was pretty ugly for Dell specifically,
Speaker 1: and and the first party data is pretty ugly too.
Speaker 1: I mean, they've been reporting for a while that, you know,
Speaker 1: PC shipments have gone down. In the pandemic, everybody needed
Speaker 1: a laptop, so everybody went out and bought, and then
Speaker 1: there was a semiconductor shortage, and so companies really bulked
Speaker 1: up their production of computers. And now they're sitting on
Speaker 1: all this inventory they can't sell and demand is really sinking.
Speaker 1: I mean, um, in the letter, you know, co CEOO
Speaker 1: Jeff Clark of Dell had some pretty harsh words about
Speaker 1: the eroding market conditions, about uncertainty and so, um, this
Speaker 1: is more than just a macro story. This is also
Speaker 1: about computers demand really going down. You mentioned that Dell's
Speaker 1: just one name among many who else has done layoffs?
Speaker 1: Where if we started this year in terms of the
Speaker 1: industry cutting bank and what was I guess probably some
Speaker 1: bloat from the pandemic era, right, Yeah, So obviously we
Speaker 1: had the huge ones, right, we had Amazon and Salesforce
Speaker 1: kickoff the year. But we're observing an interesting trend that
Speaker 1: last week a lot of these larger employers aren't as
Speaker 1: much household names. I'm talking about work Days, Splunk, Octa.
Speaker 1: We see them making cuts too. We see almost every
Speaker 1: large cap tech company taking this moment to cut some
Speaker 1: people off. I mean work Day even said hey, we
Speaker 1: don't need to do this. We're still growing headcount, but
Speaker 1: we're kind of going to take this moment to realign
Speaker 1: our priorities. And so you know, I'm really watching. I
Speaker 1: think gold of companies that maybe haven't announced yet are
Speaker 1: going to even if the scale is not what we're
Speaker 1: seeing from you know, Google, Meta companies like that. All right,
Speaker 1: Bloomberg's bready forward. Good job, and thank you very much
Speaker 1: for your reporting. I want to get to a story
Speaker 1: in the debt markets. Chip maker Micron is selling one
Speaker 1: point to five billion dollars in high grade US bonds,
Speaker 1: and notes will be sold in two parts, split across
Speaker 1: an existing tranche of notes due and new bonds the
Speaker 1: mature in ten years. That according to a Bloomberg source,
Speaker 1: the longer portion of the deal expected to yield around
Speaker 1: two five basis points above treasuries. According to that source,
Speaker 1: the sales were increased by fifty million and relaunched Monday,
Speaker 1: which is a pretty strong indicator of demand. It's clear
Speaker 1: that China doesn't want to act with restraint, and the
Speaker 1: Biden administration doesn't have much incentive to try to seek
Speaker 1: China's assurances that they will because there's no trust on
Speaker 1: the two sides. So so it could be used as
Speaker 1: a as a teachable moment, but I think the Biden
Speaker 1: administration really just wants to prevent the relationship from deteriorating
Speaker 1: into outright confrontation or even conflict. That was National University
Speaker 1: of Singapore research fellow Drew Thompson. They're giving his thoughts
Speaker 1: on the alleged or known Chinese surveillance balloon that had
Speaker 1: been flying over the mainland US. This of course now
Speaker 1: amid tensions that are rising between the US and China.
Speaker 1: Let's bring in Bloomberg's Ian Marlowe for d C on
Speaker 1: the latest in that the balloon is no longer with
Speaker 1: us UM But the decision was taken over the weekend
Speaker 1: to take it down. Why when and how did that happen? Yeah?
Speaker 1: US officials have been tracking this balloon for for the
Speaker 1: greater part of a week, and you know, Biden has
Speaker 1: said publicly he wanted to shoot it down as soon
Speaker 1: as he heard about it. His officials, his top general said, look,
Speaker 1: the payload hanging from that balloon is is bigger than
Speaker 1: two buses. It's it's thousands of pounds. If you shoot
Speaker 1: that down over land, you're going to have this massive
Speaker 1: debris field that stretches for miles and a NASA had
Speaker 1: actually done an analysis based on the size of the
Speaker 1: object how big the debris field would be on the ground.
Speaker 1: So even as this diplomatic tussle was was sort of
Speaker 1: going on, because this balloon was was kind of spotted
Speaker 1: on the on the eve of the Secretary of State's
Speaker 1: visit to China, they decided to wait until it was
Speaker 1: about six miles off the coast of South Carolina before
Speaker 1: they finally shot it down with an F twenty two.
Speaker 1: And we update our audience, of course, that the Secretary
Speaker 1: B Lincoln put that trip on pause. Uh, you know,
Speaker 1: after deliberations about the balloon. I guess the question is
Speaker 1: is what what are we going to learn from the payload.
Speaker 1: I think I'm right in saying the US has sent
Speaker 1: divers to recover what that the balloon was carrying. What
Speaker 1: are they expecting to learn? Yes, so they're there, I think,
Speaker 1: um really hoping to get a look, an up close
Speaker 1: look at the sort of sensors, the intelligence gathering equipment
Speaker 1: that is on this balloon. There's obviously been a lot
Speaker 1: of sort of debate out there about, you know, why
Speaker 1: are they using a balloon when they have low orbit
Speaker 1: low orbit satellites that are capable of taking you know,
Speaker 1: high definition imagery and all these other kind of things.
Speaker 1: There's a general sense that the balloons are able to
Speaker 1: sort of linger over sensitive military sites, potentially take higher
Speaker 1: definition shots or video from different angles sort of as
Speaker 1: they float in rome. Uh, you know, over these things
Speaker 1: obviously a much lower you know threshold than in space.
Speaker 1: So I think there's a lot of stuff. They've already
Speaker 1: been tracking the balloon for days, so they've been they've
Speaker 1: been looking to see how it kind of communicates back
Speaker 1: with wherever it's you know, the details are thin, but
Speaker 1: they've they've already gleaned a bunch of in eligence just
Speaker 1: from watching it over the last few days. And now
Speaker 1: they're actually going to get their hands on, you know,
Speaker 1: equipment used to spy on them by their main geopolitical competitors.
Speaker 1: So I think this is uh, you know, well, we'll
Speaker 1: see how much they get. But at the moment, it's
Speaker 1: it's it's looking. I mean, people are hopeful. Ian. You
Speaker 1: have a piece with Jen Jacobs on the Bloomberg which
Speaker 1: looks at what China and Chinese officials knew about this balloon.
Speaker 1: But my question is what has the response from China
Speaker 1: been officially to the balloon's origin and how it ended
Speaker 1: ended up over US space. Yeah, I mean, I think
Speaker 1: this is one of the most interesting parts of the story,
Speaker 1: and I think it's it's just coming out now just
Speaker 1: how confused and chaotic it was on the Chinese side,
Speaker 1: because the Chinese wanted this visit from from Secretary Anthony B. Linkeln.
Speaker 1: They wanted images of she shaking hands with him, everyone
Speaker 1: looking very statesman like the US China relationship on an
Speaker 1: even you know, even keel, everything going well, and then
Speaker 1: all of a sudden, this balloon popped out. So it
Speaker 1: looks like there's sort of you know, interagency communication errors
Speaker 1: here on the Chinese side. It looks like Chinese diplomats
Speaker 1: here in the US were surprised when the communication first started.
Speaker 1: The the Chinese side expressed regrets, you know, which is
Speaker 1: actually quite rare, I think especially when it comes to
Speaker 1: US China kerfuffles. But then as soon as the U
Speaker 1: S shot it down, I think, you know, both both
Speaker 1: the Biden administration and and Chi Jimping and China both
Speaker 1: have their own domestic constituencies. You know, they need to
Speaker 1: look like they're taking a firm stand, and so as
Speaker 1: soon as the U S shot it down, the Chinese
Speaker 1: sort of changed the tune a little bit, said that
Speaker 1: they you know, reserved the right to respond. And that
Speaker 1: was a total overreaction on the U S side. So
Speaker 1: it's going to be interesting because both sides were trying
Speaker 1: to set you know, bilateral ties back into a more
Speaker 1: normalized state, and then this balloon floated then to the
Speaker 1: middle of everything and kind of messed everything up. So
Speaker 1: it's it's kind of gone against the narrative that both
Speaker 1: sides have been talking about for ages. So it's it's
Speaker 1: kind of really embarrassing. It's inflated the news cycle, that's
Speaker 1: for sure. Bloomberg Z and Marla great report, sing, thank
Speaker 1: you very much. I actually want to stick with this conversation,
Speaker 1: particularly what it means now for the U S. China
Speaker 1: relationship with Strategy Risks founder and CEO Isaac Stonefish. Isaac,
Speaker 1: you you spend your whole life looking at China, the
Speaker 1: relationship between China and the United States, doing business in China.
Speaker 1: If you're a US technology executive waking up on Monday morning,
Speaker 1: how do you feel about the China opportunity? Given the
Speaker 1: weekend's events, you feel like you just want to go
Speaker 1: right back to bed. This must be very frustrating for
Speaker 1: folks who have for months, years waited for positive economic
Speaker 1: numbers coming out of China, waited for the opportunity to
Speaker 1: deploy large swaths of capital, and then see the news,
Speaker 1: see the tensions, and understand, both from a Beijing and
Speaker 1: a DC regulatory perspective, this is a bad time to play.
Speaker 1: You know, the context of the week, as we just discussed,
Speaker 1: is Secretary blink in and what would have been an
Speaker 1: opportunity for I don't want to say did ton't, but
Speaker 1: at least an in person meeting of significance that was
Speaker 1: then put on hold. What's more significant to you the
Speaker 1: idea that the balloon was shot down or that that
Speaker 1: meeting is for the time being not taking place. I
Speaker 1: would guess that the U side didn't want to have
Speaker 1: the meeting because they weren't getting what they wanted from
Speaker 1: the Chinese side, which is one of the reasons that
Speaker 1: this came out. I would say the most significant piece
Speaker 1: of this entire story is the spotlight it shines on
Speaker 1: Chinese espionage in the United States as well as globally
Speaker 1: and how okay, we're focusing on this giant balloon, but
Speaker 1: it's raising a lot of questions about Chinese brands like TikTok,
Speaker 1: like Lenovo, like Motorole handsets, and their potentials for espionage gathering.
Speaker 1: Let's talk about TikTok. Then, on Monday, President Biden was
Speaker 1: asked by the press pool about TikTok and whether the
Speaker 1: US will ban TikTok outright. President Biden said that he
Speaker 1: wasn't sure yet, they hadn't made a decision. He also
Speaker 1: added that he of course does not have TikTok on
Speaker 1: his own personal or federally issued cell phone. Where do
Speaker 1: we sit in this process, do you think that that
Speaker 1: the President Biden is basically not getting his cards away?
Speaker 1: And how the US government will handle TikTok in this country.
Speaker 1: There's a legal process and there's a political process. Politically,
Speaker 1: both sides have a very short window to ban TikTok
Speaker 1: before they alienate pens of millions of young American voters.
Speaker 1: We're not at election right now, but we're real, real close,
Speaker 1: and so I think both sides are trying to balance
Speaker 1: their worries about the national security implications of TikTok and
Speaker 1: the worries between losing a lot of people who could
Speaker 1: vote Republican or Democrat. We thank you. Strategy Risks founder
Speaker 1: and CEO Isaac stone Fish. Now coming up, why Apple
Speaker 1: is selling its latest iPhones at discounts of more than
Speaker 1: a hundred dollars in China. That's all next, and as
Speaker 1: we had to break, I want to take a quick
Speaker 1: look at Pinterest and some of the after hours reaction
Speaker 1: in shares down now five pairing some of the decline
Speaker 1: after fourth quarter sales, mised expectations. You can see some
Speaker 1: contagion or read through to Snap who shares also lower
Speaker 1: by one percent in after hours. We continue to track
Speaker 1: those as the calls get underway. This is Bloomberg deals
Speaker 1: and discounts over in China, more than a hundred the
Speaker 1: price carts on Apple's latest iPhones. But why, let's ask
Speaker 1: Bloomberg intelligence. Is Anna Agrana anag you cover this stock
Speaker 1: so closely. I think the point made in the reporting
Speaker 1: is they're offering a discount so soon after launching the
Speaker 1: latest generation of handset. What's your read on it? So
Speaker 1: I think, you know, they do offer this in China
Speaker 1: every once in a while. They I think they really
Speaker 1: want to get jumped start the Chinese market, which has
Speaker 1: so far had been plagued by a number of things
Speaker 1: over the last few months, with you CORVID restrictions and
Speaker 1: then you know opening some of that up and China
Speaker 1: is an important part for it appens, revenues comes from China.
Speaker 1: So I think if they're trying to jump start from
Speaker 1: demanding bad area um last week there on earnings, you know,
Speaker 1: they said that they were looking at improved for traffic
Speaker 1: back in December, so well, you know, maybe it's just
Speaker 1: trying to keep the moment and up at this point. Well,
Speaker 1: I want to jump on that. So Tim Cook on
Speaker 1: the call said two things. One they would have seen
Speaker 1: growth in the first quarter for handsets had it not
Speaker 1: been been for supply chain constraints. And two, as you
Speaker 1: point out that they did see improved demand once China's
Speaker 1: reopening really got underway. Do you take Tim Cook at
Speaker 1: face value on that well, I think so. I mean,
Speaker 1: so you have to remember last year the smartphone shipments
Speaker 1: really wrote bad in China, but Apple didn't do as
Speaker 1: bad as the rest of the vendors. Remember, Apple is
Speaker 1: a very high price strodict. I think it is a
Speaker 1: lot less susceptible to big consumer ships, but nevertheless it
Speaker 1: is susceptible. Now as far as Chinese concerned, we think
Speaker 1: whenever the reopening happens in a big broader way, the
Speaker 1: Chinese were the Chinese you know, consumer will go out
Speaker 1: and buy Apple products at that time. So we think
Speaker 1: if it's not in the first half, we think they
Speaker 1: can happen. Is going to be very strong for Apple.
Speaker 1: Your company outlook on the Bloomberg terminal talks about the
Speaker 1: broader Apple ecosystem as being a good platform for growth.
Speaker 1: What is your outlook for twenty three and beyond and
Speaker 1: what what drives it? Yeah, so as part of the
Speaker 1: product growth is concerned, you know, we are coming to
Speaker 1: a point when Apple is not going to grow in
Speaker 1: double digits. In our view, it has grown twelve percent
Speaker 1: revenue in the last five years. We think that the
Speaker 1: view in our view is over the next three years.
Speaker 1: You know, think about a six to eight percent revenue
Speaker 1: growth rate coupled with that a little bit of margin expansion,
Speaker 1: and then buy backs. I think that's the Apple's financial
Speaker 1: model for the next two years. And I'm not so
Speaker 1: sure how many you know investors out there are ready
Speaker 1: to you know, admit that's the going to be the
Speaker 1: case for Apple. In our last segment and I Rag,
Speaker 1: we were talking about the U. S. China relationship in
Speaker 1: geo politics. You also notes g O place call issues
Speaker 1: is a headwind potentially to Apple going forward. What is
Speaker 1: your concern there? I think the biggest concerning that almost
Speaker 1: you know, most of their products are assembled in China,
Speaker 1: and we have seen some diversification over the last couple
Speaker 1: of years, but I think it's going to take at
Speaker 1: least a decade for us to see any meaningful diversification now.
Speaker 1: Like be for Apple, they have done well to you know,
Speaker 1: skirt this issue all the way back from the tariff
Speaker 1: wars a few years ago with China to the most
Speaker 1: recent you know again you know, the big issues about semiconductor.
Speaker 1: But having said that, I think they are not immune
Speaker 1: to any of these events directly. Hey, anaag really quit,
Speaker 1: are you excited? About Apple's a r VR headset, So
Speaker 1: I think that you know, from our side, I think
Speaker 1: I want to see an application that can be used
Speaker 1: on the phone the headset itself. It's going to be
Speaker 1: very good in terms of publicity and how it can
Speaker 1: showcase the cool stuff Apple can do, but financially it's
Speaker 1: not going to have that big of an impact because
Speaker 1: these things don't move the needle. Given how dependent Apple
Speaker 1: is on the iPhone, I do want to see what
Speaker 1: kind of apps, you know, come for the iPhone for
Speaker 1: more of the augmented reality stuff, because that's where the
Speaker 1: ecosystem is very large. Bin Bag Intelligence is Ana rag
Speaker 1: Bran always get to catch out. Thank you very much,
Speaker 1: Welcome back to Bloomberg Technology. I'm med Lodlow in San Francisco. Now,
Speaker 1: there was a corner of the market where there was
Speaker 1: some green on the screen this Monday, and that's probably
Speaker 1: putting it mildly. AI related stocks continue to see momentum.
Speaker 1: Big Bear has taken all of the headlines up another
Speaker 1: eighteen percent this Monday, rising for a fourth consecutive day.
Speaker 1: BuzzFeed and C three AI buzz Feed more sort of
Speaker 1: tangentially linked, but it's continuing to catch a beard. C
Speaker 1: three AI another AI player that's up in a just
Speaker 1: crazy way year today. In fact, let's change up the
Speaker 1: board and show some of the year to day performance
Speaker 1: of these stocks, because well it's just astonishing. Big Bear
Speaker 1: up more than eight hundred percent so far in three
Speaker 1: C three I AI a more modest one percent plus.
Speaker 1: But investors are trying to find and weed out the
Speaker 1: most promising names that could be a potential rival to
Speaker 1: open ai and chat GPT. Public markets real lee starting
Speaker 1: to put some money into this area, whether speculatively or not.
Speaker 1: Google is getting its own chat GPT competitor ready as well,
Speaker 1: a new conversational AI service called bard. It will be
Speaker 1: opening up to trusted testers and readying the service for
Speaker 1: the public in the coming weeks. And ever since its
Speaker 1: own maturit rise Chat GPTs competition, well, it's coming in fast,
Speaker 1: with companies big and small getting in on the race.
Speaker 1: I want to bring in Bloomberg's Dina Bass, who has
Speaker 1: written about this this Monday. Those competitors big and small.
Speaker 1: It's quite the list you put together, Dinah. Yeah, we
Speaker 1: wanted to take a look at who was competing with
Speaker 1: open Ai, not just with chat GPT, but with open aiyes,
Speaker 1: larger language model systems. And you know the thing about
Speaker 1: open ai because we're talking a lot about generative AI lately,
Speaker 1: but a lot of the startups in this space are
Speaker 1: making applications that are built on other people's foundational models.
Speaker 1: Open ai and some of the competitors we talked about
Speaker 1: today make these, you know, things called foundational models. They're broad,
Speaker 1: general purpose models that can be used in a lot
Speaker 1: of different ways rather than focusing on discrete, specific, narrower uses.
Speaker 1: And open ai itself has made some products you mentioned
Speaker 1: chat GPT that work off of these general models. Dolly
Speaker 1: also works off of its general language model. But there
Speaker 1: are other companies in this space as well. I heard
Speaker 1: you talking about Google. Google was one of the pioneers
Speaker 1: of this, uh this space. There's a number of startups
Speaker 1: and they're attracting more and more attention in terms of
Speaker 1: funding from venture capitalists as well as other techn companies,
Speaker 1: also including Google, and so we looked at some of them.
Speaker 1: They include Anthropic cohere, um Ai, twenty one, Stability AI.
Speaker 1: And if these names sound familiar to your listeners, because
Speaker 1: a number of them have been linked with large funding
Speaker 1: grounds in the last couple of weeks, you broke the
Speaker 1: story what seems like months ago now, but it was
Speaker 1: weeks on this ten billion dollar investment from Microsoft into
Speaker 1: open Ai, and then you know, the companies confirm and
Speaker 1: multibillion dollar investment. But what followed was what seemed like
Speaker 1: a series of quick steps for Microsoft to kind of
Speaker 1: ingest the underlying technology into its own offerings. What are
Speaker 1: some of the highlights of what Microsoft's actually done with
Speaker 1: its investment into open ai so far. So, they already
Speaker 1: have a programming tool called Copilot, which uses an open
Speaker 1: Ai again another subset of GPT, which is meant for programmers.
Speaker 1: Last week, they announced a product that's meant to write
Speaker 1: emails for salespeople using the language generation capabilities of open Ai.
Speaker 1: And they also announced that the top tier of their
Speaker 1: team's chat product, which is the one that competes with Slack,
Speaker 1: that that's also going to start using open Ai technology
Speaker 1: in order to provide meeting notes after the meeting. Now
Speaker 1: you mentioned before, Google is getting into the chat GPT
Speaker 1: space with its bard There is also a Microsoft event
Speaker 1: tomorrow that was announced today. Microsoft will not say what
Speaker 1: it's out, but the you know, the belief people people
Speaker 1: feel that it is likely to be, you know, potentially
Speaker 1: an announcement of their own use of chat GPT in
Speaker 1: being searched. So we're waiting to see if that's work
Speaker 1: turns up tomorrow. Well beyond the specifics, I saw Sam
Speaker 1: Altman tweet a selfie with Microsoft's chief, So I'm guessing
Speaker 1: that that you're on the right track. I guess we'll
Speaker 1: find out in twenty four hours time. Bloomberg's Dina Bass
Speaker 1: terrific reporting. Thank you very much. Now, what impact would
Speaker 1: generative AI have on your jobs? While AI is expected
Speaker 1: to eventually replace some jobs in financial services, media, legal
Speaker 1: technology sectors, respondents of Bloomberg's latest m Live pulser, they
Speaker 1: say not so soon. More than two thirds of almost
Speaker 1: three respondents, mainly in the financial sector, themselves, didn't view
Speaker 1: their own jobs at being at risk anytime soon. Results
Speaker 1: were also pretty split on whether respondents were even interested
Speaker 1: in investing in this new tech at work. Most investors
Speaker 1: appear not to use any kind of AI and are
Speaker 1: not even considering using AI to help them invest. Twelve
Speaker 1: percent said they used one, and just twenty seven percent
Speaker 1: of respondents said that they were planning to. So let's
Speaker 1: keep the conversation going and bringing David Leslie because I
Speaker 1: want to talk about the ethical side of the AI
Speaker 1: conversation it's role in moving technology forward. David Leslie is
Speaker 1: the director of Ethics and Responsible Innovation Research at the
Speaker 1: al Ensuring Institute, a kind of mainstay of the UK's
Speaker 1: work around artificial intelligence. M let's start off with the
Speaker 1: year so far. Are you waking up every morning energized
Speaker 1: about what's happening in AI or are you yourself losing
Speaker 1: sleep because of the potential concerns When we consider what's
Speaker 1: happened with chat gpt or the last few months, we
Speaker 1: really do need to take part about the hastiness, the
Speaker 1: speed before safety that's really kind of driven the release
Speaker 1: of UH chat Gypt into the into the world. UH.
Speaker 1: We we know that researchers have easily gotten around the
Speaker 1: preventative content filters of chat Gypt to produce a cyber
Speaker 1: security threats such as new strands of polymorphic malware. They've
Speaker 1: been able to create fraudulent fishing campaigns and info steelers. UM.
Speaker 1: We've also seen the potential for chat chypt and other
Speaker 1: large language models too in a sense create fire hoses
Speaker 1: disinformation and propaganda. UH and that that can flood the
Speaker 1: digital public square with lies and alternative float facts. And
Speaker 1: so I would say, there's a lot of exciting things
Speaker 1: going on, but there's a lot of reason to uh
Speaker 1: for us to be concerned. We're showing on the screen, uh,
Speaker 1: just how rapid the rollout is from research to develop
Speaker 1: and then too new product launch across a number of
Speaker 1: names and platforms in the world of AI. You know,
Speaker 1: it's been astonishing tracking the headlines of how quickly new
Speaker 1: products and new names are born. Is that pace dangerous
Speaker 1: or is that just the reality of innovation? I would
Speaker 1: hesitate to say it's the reality of innovation. I would
Speaker 1: say that we really do need to avoid what's been
Speaker 1: going on, which is this kind of shock and awe
Speaker 1: irresponsibility of bringing things to the market with with with
Speaker 1: increasing speed. Uh. We we've seen the move, move fast
Speaker 1: and break things attitude before, but this attitude um is
Speaker 1: becoming perhaps more of a concern as the scale of
Speaker 1: the potential consequences become wider and deeper into society. And
Speaker 1: I think that we we really need to we need
Speaker 1: to press the pause button a bit when it comes
Speaker 1: to uh, the acceleration of the technologies so I guess
Speaker 1: that the debate moves to who should police this? You know,
Speaker 1: when you reflect on the Alanturing Institute's work around this area,
Speaker 1: your work in ethics. What's interesting is how many papers
Speaker 1: have been published by the likes of open AI guidelines
Speaker 1: that the industry themselves are put forward. Should they be
Speaker 1: the ones to do that or is there a need
Speaker 1: for very quickly a conversation around third party oversight. We
Speaker 1: absolutely need third party oversight when it comes to these systems,
Speaker 1: especially these highly impactful systems that will affect large populations.
Speaker 1: Now that's not to say that the practices of the
Speaker 1: innovators in designing, developing, and deploying these systems shouldn't involve
Speaker 1: strong exc anti practices of impact, assessment of transparency, of
Speaker 1: end to end accountability of mitigation. But these things simply
Speaker 1: must be subject to the oversight of third party bodies
Speaker 1: now regulators and perhaps certification schemes. All right, Thanks to
Speaker 1: David Leslie, director of Ethics and Response to Innovation Research
Speaker 1: at the Allen Touring Institution, coming up, micro Strategy weighs
Speaker 1: deepening It's Bitcoin bet with a Future's Play. Bloomberg's exclusive
Speaker 1: interview with the executive chairman Michael Sailor, that's all. Next,
Speaker 1: this is Bloomberg Finance, the world's largest cryptocurrency exchange, said
Speaker 1: it's temporarily suspending deposits and withdrawals of US dollars using
Speaker 1: bank accounts. The suspension will start Wednesday, according to a
Speaker 1: Finance spokesperson. No reason was given for the suspension, and
Speaker 1: bank transfers using other fiat currencies such as euros, will
Speaker 1: not be impacted. The spokesperson says Finance will work to
Speaker 1: restart the service for US dollars soon. Sticking with crypto
Speaker 1: micro strategy, chairman and co founder Michael Sailor says bitcoin
Speaker 1: will outperform other asset classes and says his company is
Speaker 1: a levied bitcoin play for crypto enthusiasts. Earlier, Bloomberg's Katie
Speaker 1: Greifeld and Remained Bostick spoke with Sailor about his business.
Speaker 1: Our strategy is to acquire a whole bitcoin. We do
Speaker 1: it through cash flows and through equity and debt issuance.
Speaker 1: And that's that's amount of to about a four billion
Speaker 1: dollar investment on our part over the past two and
Speaker 1: a half years. So my role is the executive chairman,
Speaker 1: is to oversee our capital markets activity or bitcoin strategy,
Speaker 1: and a lot of education, investor relations, some evangelism. The
Speaker 1: CEO of find Lee was my number two for many,
Speaker 1: many years, and he runs the enterprise software business which
Speaker 1: sells enterprise software to thousands of large corporations in twenty
Speaker 1: seven countries. So let's talk about actually accumulating more bit
Speaker 1: line from here, because if we look at the end
Speaker 1: of twenty two, micro Strategy had about forty four million
Speaker 1: dollars in cash. So when it comes to actually getting
Speaker 1: your hands on more bitcoin, is that probably going to
Speaker 1: tilt towards debt and equity issuance. You know, we we've
Speaker 1: tried different things. We've issued a senior debt junk bonds
Speaker 1: when we thought that was a creative. We've done convertible bonds,
Speaker 1: two of them when that was a creative. We've issued equity.
Speaker 1: We currently have a five hundred million dollar at the
Speaker 1: market shelf registration that's open, and we sold about forty
Speaker 1: four million dollars worth of equity and so some of
Speaker 1: something as we do that, and we've also borrowed against
Speaker 1: the bitcoin. We have more than a hundred thousand dollars
Speaker 1: a hundred thousand bitcoin that are unpledged that we can
Speaker 1: borrow against, and we use some of that to borrow
Speaker 1: twitter million from sober Gate and a bitcoin back long Michael,
Speaker 1: obviously a lot of attention on your company because of
Speaker 1: this full ray into crypto. A lot of folks have
Speaker 1: embraced it, but there are a lot of folks are
Speaker 1: also wondering why buy micro Strategy in the place of
Speaker 1: just buying bitcoin or the crypto in and of itself.
Speaker 1: What's the advantage of going through you. Well, a lot
Speaker 1: of institutional investors aren't able to own bitcoin is property,
Speaker 1: and they don't have broker dealer relationships that will allow
Speaker 1: them to buy the underlying digital commodity. So for them,
Speaker 1: they could buy micro Strategy and a couple of minutes
Speaker 1: and a phone call and they can do it for
Speaker 1: their prime broker. And our stock is marginalble. So some
Speaker 1: some people are using us as a gateway because it's
Speaker 1: just a simple way for them to get exposure, although
Speaker 1: others are interested in the capital structure because the company
Speaker 1: has a levered bitcoin play. Because we've got about two
Speaker 1: point four billion dollars of debt at a blended interest
Speaker 1: rate of just a couple of percent so it's a
Speaker 1: it's a cheap effective way to get levered bitcoin exposure.
Speaker 1: Some people just want to trade the volatility, and so
Speaker 1: if you want to go along bitcoin where a choice.
Speaker 1: If you want to go short bitcoin, you're a choice.
Speaker 1: If you want to trade or arbitrage. All the derivatives
Speaker 1: were a simple choice. And I have gone through the
Speaker 1: steps of k y seeing with the bitcoin exchange it
Speaker 1: could take you three months to actually get the account
Speaker 1: to trade and by the underlying asset, so UH and
Speaker 1: and some people have don't have a mandate even own
Speaker 1: the commodity. So we really meet a need for institutional
Speaker 1: investors that want to trade securities with exposure to the
Speaker 1: crypto market. Have you given any consideration or had any
Speaker 1: meaningful discussions about whether it would be more appropriate to
Speaker 1: effectively spin off this crypto side of the business from
Speaker 1: the software side of the business. Well, it's really we're
Speaker 1: the only operating company UH that has actually got a
Speaker 1: bitcoin strategy. So the fact that we have an operating concern,
Speaker 1: a going concern that generates cash flows and stable revenue
Speaker 1: that is not correlated to the crypto space is a benefit.
Speaker 1: We're able to use our stable enterprise software business as
Speaker 1: a basis to borrow billions of dollars that weren't able
Speaker 1: to invest in bitcoin. So combining an enterprise software company
Speaker 1: with stable cash flows with a bitcoin strategy is fairly unique.
Speaker 1: The software business has benefited because our employees have stock
Speaker 1: options and are and so they've benefited financially. Our turnover
Speaker 1: has never been lower, so more rallides really good, and
Speaker 1: awareness of the software business has never been higher. But
Speaker 1: of course, as a bitcoin acquisition vehicle, we have a
Speaker 1: lot of flexibility that you wouldn't have as an e
Speaker 1: t F because that's an SEC forty company and we're
Speaker 1: an operating business. We can take on leverage, we could
Speaker 1: trade volatility, we can sweep cash flows, we can issue
Speaker 1: junk bonds, etcetera. So we wouldn't We would would not
Speaker 1: want to separate the two strategies. It would be deluded
Speaker 1: to either. So I want to get to the software
Speaker 1: business itself, but I want to talk a little bit
Speaker 1: more about the bitcoin holdings because something interesting happens. At
Speaker 1: the end of December, you actually sold bitcoin for the
Speaker 1: first time. It was a very small amount, and I
Speaker 1: believe that you bought back that amount and then some
Speaker 1: just a couple of days later. So have a two
Speaker 1: part of gear. First, all, why did you sell in
Speaker 1: December and do you have any more sales plans? Well,
Speaker 1: we were, you know, with bitcoin, because it's property, you
Speaker 1: could sell it and then you could buy it back
Speaker 1: the next day and you're not subject to wash trading
Speaker 1: rules that would be applied to securities. So it's a
Speaker 1: more favorable tax treatment. As of now, we had some
Speaker 1: tax taxable gains and we're able to generate about a
Speaker 1: thirty four million dollar tax loss which we take to
Speaker 1: carry back against known capital gains, and so that would
Speaker 1: be a tax benefit to the company to the extent
Speaker 1: we can apply that. Um If you have billions of
Speaker 1: dollars of an asset on your balance sheet, you're thinking,
Speaker 1: what are the tax benefits if you were to able,
Speaker 1: if you were able to harvest those tax losses, would
Speaker 1: they be good for the shareholders? And theoretically we have
Speaker 1: billion dollars or more of tax losses we might harvest
Speaker 1: in the future. That was my Crow Strategy executive Chairman
Speaker 1: Michael Sailor time for going viral. The Grammys have been
Speaker 1: trending worldwide on social media, proving that the awards shows
Speaker 1: that's still relevant, but that's not necessarily the case. During
Speaker 1: the event, we pulled our Twitter followers and how they
Speaker 1: watched the Grammys last night, and well, respondents said they
Speaker 1: didn't watch. Here with the actual data, Bloomberg's Lucas Shure,
Speaker 1: who leads our coverage of the entertainment industry, I mean,
Speaker 1: Lucas is interesting. We were expecting potentially a rebound for
Speaker 1: the Grammys from the pandemic era. Did we get one.
Speaker 1: We we got a slate rebound. So the preliminary figures
Speaker 1: are about twelve million people watched the Grammys. That's up
Speaker 1: from more in the in between nine and ten million
Speaker 1: last year, and up from a lower couple of years
Speaker 1: ago of about nine million um, but well below where
Speaker 1: they were before. You know, prior to the pandemic, I
Speaker 1: think the edition had about eighteen million viewers. As recently
Speaker 1: as five or six years ago, you had about twenty
Speaker 1: five million people watching. So the audience for the Grammys is,
Speaker 1: you know, half what it was many years ago. You
Speaker 1: saw the results of our poll. That's one audience, right,
Speaker 1: respondents saying they didn't watch at all, but the other
Speaker 1: options were cable or streaming. I guess then the conversation
Speaker 1: goes to how on networks and platforms kind of adapting
Speaker 1: to seize on how people are actually consuming events like
Speaker 1: the Grammys. Well a couple of ways. One is that
Speaker 1: the these awards shows now tend to be available both
Speaker 1: on live TV and on streaming. So it was on
Speaker 1: a CBS, but it's also on Paramount Plus, so if
Speaker 1: you're someone who who does not pay for cable or satellite,
Speaker 1: you can get it that way. Of course, Paramount Plus
Speaker 1: not as big as as Netflix or Disney Plus, but
Speaker 1: it has tens of millions of subscribers. And the other
Speaker 1: thing is is obviously clips and moments from these events
Speaker 1: spread across social media, so that's you know, Twitter, YouTube,
Speaker 1: TikTok and the like you probably had, you know, our
Speaker 1: our own Astley Carmen, who was who was in the
Speaker 1: press room asked um god him blanking on his name
Speaker 1: is embarrassing, but he asked producer Jack Anthon Off a
Speaker 1: question about Live Nation, and that got shared all across
Speaker 1: social media this afternoon. Actually, Common also writing about Beyonce
Speaker 1: breaking the record for Grammy's wins, but she didn't win
Speaker 1: a top award. Yeah, look, this has been a trend
Speaker 1: with the Grammys, particularly with black artists in that kind
Speaker 1: of fall under hip hop and R and B, as
Speaker 1: they they win a ton of awards in the genre
Speaker 1: specific categories. In Beyonce's case, she won both in R
Speaker 1: and B and Electronic and Dance, but they don't win
Speaker 1: the Big Three, which our Album of the Year, Record
Speaker 1: of the Year, in Song and the Year. So remember
Speaker 1: with Beyonce, she now has won more Grammys than any
Speaker 1: artist in the history of the of the event, yet
Speaker 1: she has only won one of those Big Three awards,
Speaker 1: Song of the Year, and she won it once. You
Speaker 1: compare that to an Adele who's won Album of the
Speaker 1: Year twice. Alright, blame Banks Lucas. Sure a busy Sunday
Speaker 1: night for you and the team. Thank you well. That
Speaker 1: does it for this edition of Bloomberg Technology Tuesday, we
Speaker 1: have Microsoft's corporate vice president and consumer Chief marketing officer
Speaker 1: joining us on the program. Don't forget check out our podcasts.
Speaker 1: So much to recap from the show. This is Bloomberg