WEBVTT - OpenAI Nears Deal for $100B in Funding

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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<v Speaker 1>from coast to coast, with Caroline Hyde in New York

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<v Speaker 1>and Va Low in San Francisco.

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<v Speaker 2>This is Bloomberg Tech coming up. Open ai is close

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<v Speaker 2>to finalizing the first phase of a new funding round

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<v Speaker 2>that could bring in more than one hundred billion dollars plus.

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<v Speaker 2>Mark Zuckerberg testified in a landmark social media trial and

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<v Speaker 2>said it is quote very difficult to enforce Instagram's age limits,

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<v Speaker 2>and the DOJ is taking a closer look at the

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<v Speaker 2>potential impact of a sale of Warner Brothers Discovery on

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<v Speaker 2>theater chains. We'll get the reaction from Netflix co CEO

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<v Speaker 2>Ted Sarandos at twelve thirty pm Eastern right here on Bloomberg.

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<v Speaker 3>Okay, let's get to the top story.

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<v Speaker 2>Open ai is close to finalize the first phase of

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<v Speaker 2>new funding that could bring in more than one hundred

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<v Speaker 2>billion dollars, according to sources, that could boost its valuation

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<v Speaker 2>to eight hundred and fifty billion dollars post money. The

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<v Speaker 2>first round of strategic investors include AI heavy hitters Amazon, SoftBank, Nvidia,

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<v Speaker 2>and Microsoft and Overnight. When we broke this story in Japan, trading,

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<v Speaker 2>SoftBank jumps as much as four percent end the up

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<v Speaker 2>closing down up sorry, two point six percent. I think

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<v Speaker 2>the usadrs are actually a little softer team effort that

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<v Speaker 2>led the way by Bloomberg, Surrey and Gafari, who's been

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<v Speaker 2>tracking this story for a little while. Now, I think

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<v Speaker 2>let's get into the details, right. It isn't that straightforward

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<v Speaker 2>to understand, so let's call it phase one, the strategic investors.

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<v Speaker 3>What do we need to know?

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<v Speaker 4>So phase one are the major companies that are going

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<v Speaker 4>to be partners investors in open AI. So names like Amazon,

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<v Speaker 4>which as we've reported, could invest up to fifty billion,

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<v Speaker 4>SoftBank up to thirty You also have Microsoft in Nvidia

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<v Speaker 4>and others. So that is the first kind of part

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<v Speaker 4>of this round, securing those allocations, and that could come

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<v Speaker 4>as soon as the end of this month. Then they'll

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<v Speaker 4>move on to the vcs, sovereign wealth funds and other

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<v Speaker 4>financial investors.

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<v Speaker 2>Yeah, I think you know the sources that I've been

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<v Speaker 2>speaking to in that next bucket, the sovereigns. The bench

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<v Speaker 2>CAFEUS is probably a line around the corner, so to speak,

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<v Speaker 2>of people who want an allocation. Here, there's some interesting

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<v Speaker 2>detail that I want to get to with you. So

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<v Speaker 2>like Amazon, for example, a first time investment at that

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<v Speaker 2>scale super interesting. But also there's some kind of technology

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<v Speaker 2>agreement as part of this, right.

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<v Speaker 3>That's right.

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<v Speaker 4>So part of the deal, as we reported, is that

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<v Speaker 4>this will involve an expansion of Opening Eyes partnership with

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<v Speaker 4>Amazon on using their cloud compute to run Opening Eyes products,

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<v Speaker 4>as well as the chips Amazon Trainingum chips to be

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<v Speaker 4>used in Opening Eyes development.

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<v Speaker 2>I think it's also important to be sort of transparent

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<v Speaker 2>with the audience. These numbers have moved around a little bit, right,

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<v Speaker 2>and so particularly like some of our reporting on what

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<v Speaker 2>the pre money valuation would be, how we're kind of

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<v Speaker 2>getting to that post money valuation of eight hundred and

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<v Speaker 2>fifty billion dollars. Again, just give us the specifics that

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<v Speaker 2>we need to know.

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<v Speaker 4>Sure, there's been a lot of numbers out there, and

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<v Speaker 4>of course with a deal this big that's been in

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<v Speaker 4>talks for months, right, things kind of can shift. But

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<v Speaker 4>you might have heard the seven hundred and thirty billion

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<v Speaker 4>number in terms of open AI's potential valuation in this round,

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<v Speaker 4>that is still the you know, as far as we

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<v Speaker 4>know it today. The pre money valuation being discussed for

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<v Speaker 4>open a eye. But with around this big once you

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<v Speaker 4>add in that money, obviously the post money valuation could

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<v Speaker 4>go up significantly. So what we're hearing is now that

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<v Speaker 4>once you add up all the you know, strategics, which

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<v Speaker 4>could easily top one hundred if things go well, and

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<v Speaker 4>then you have the financial investors, you could get to

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<v Speaker 4>that eight fifty post money valuation.

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<v Speaker 2>I just want to point out to the audience that

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<v Speaker 2>all of the companies we've mentioned either declined to comment

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<v Speaker 2>or didn't respond to our request for comment. And for

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<v Speaker 2>what it's worstren Overnight Bloomberg Seslan that Amin spoke to

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<v Speaker 2>Chris Lahane and put it to him our reporting about

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<v Speaker 2>this round, and he didn't answer the question. Frankly, what

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<v Speaker 2>is consistent is the broader context. Open ai has said

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<v Speaker 2>for a little while it's compute constrained, and in other words,

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<v Speaker 2>you know, if it had more access to compute, we

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<v Speaker 2>know about its ambitions to build more infrastructure, it could

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<v Speaker 2>do more things, It could release more products, it could

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<v Speaker 2>broaden API access, et cetera. Paint a little bit more

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<v Speaker 2>of a picture for us in that respect.

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<v Speaker 4>Yeah, if you think about it, open ai has hardware ambitions.

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<v Speaker 4>They have to build out all these data centers that

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<v Speaker 4>they promised with stargate. They have to go and train

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<v Speaker 4>these models that become bigger and bigger in terms of

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<v Speaker 4>the amount of compute needed to get to what they

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<v Speaker 4>want to you know, call it agi right, So I

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<v Speaker 4>think that there's there's obviously a lot of room for

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<v Speaker 4>them to expand and go beyond just chat GPT into

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<v Speaker 4>other business lines. With this as well as just this,

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<v Speaker 4>there's this fierce horse race to make the next big model.

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<v Speaker 5>They have the anthropic Google Xai.

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<v Speaker 4>Everyone is going after the same price here, so they

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<v Speaker 4>need to be constantly investing in the best development to

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<v Speaker 4>get a had and stay ahead.

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<v Speaker 2>Bloombag Shrien Gafari, thank you very much. Sticking with open ai,

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<v Speaker 2>the Chat GBT maker is partnering with Tata Group and

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<v Speaker 2>its tech services arm Tata Consultancy Services on a massive

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<v Speaker 2>deal that could then could speed up open AI's enterprises option.

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<v Speaker 2>As part of the deal, TCS will develop a one

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<v Speaker 2>hundred megawatt data center that may be expanded to one gigawa.

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<v Speaker 3>Tata would also.

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<v Speaker 2>Infuse Ai throughout its operations, and the pair will work

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<v Speaker 2>together to build agentic solutions for specific industries. The deal

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<v Speaker 2>was announced while Open AI CEO Sam Altman was in

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<v Speaker 2>New Delhi for the India AI Summit, where he told

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<v Speaker 2>the crowd early visions and versions of artificial general intelligence

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<v Speaker 2>may not be far off.

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<v Speaker 6>India's largest democracy is well positioned to lead an AI,

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<v Speaker 6>not just to build it, but to shape it and

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<v Speaker 6>decide what our future is going to look like. And

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<v Speaker 6>it's important to move quickly on our current trajectory. We

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<v Speaker 6>believe we may be only a couple of years away

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<v Speaker 6>from early versions of true superintelligence.

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<v Speaker 2>Altman wasn't the only tech leader making that kind of prediction.

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<v Speaker 2>Demisa Sabis, head of Google Deep Mind, said AGI could

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<v Speaker 2>be five years away. And if having all these AI

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<v Speaker 2>leaders in one place singing the praises of the technology

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<v Speaker 2>was giving you the impression of unity, think again. There

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<v Speaker 2>was this moment when former colleagues turned rivals Sam Altman

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<v Speaker 2>and Anthropic CEO Dario Amoday awkwardly refuse to clasp.

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<v Speaker 3>One another's hands.

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<v Speaker 2>It happened during a photo op orchestrated by India's Prime

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<v Speaker 2>Minister Neurendromodi.

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<v Speaker 3>Okay.

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<v Speaker 2>As trees race to keep pace with the AI boom,

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<v Speaker 2>investors are increasingly turning to energy as the next big opportunity.

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<v Speaker 2>Tortures Capital Senior portfolio manager Rob Dummel joins us now,

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<v Speaker 2>and actually, you know, let's go back to the top story.

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<v Speaker 2>You know, a one hundred billion dollar or more rounds

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<v Speaker 2>from open AI where the lead investors are Amazon, SoftBank,

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<v Speaker 2>Microsoft and Nvidia. You know where that capital is going

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<v Speaker 2>to go, right in terms of infrastructure as somebody that

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<v Speaker 2>is trying to seize the opportunity in the energy sector

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<v Speaker 2>supporting that build out.

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<v Speaker 3>Your reaction to the reporting, Yeah.

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<v Speaker 5>Thanks for having me.

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<v Speaker 7>So when we look at that at Tortoise, and we've

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<v Speaker 7>been focused on infrastructure for a long time, and when

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<v Speaker 7>we see more capital going into AI, you know who

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<v Speaker 7>who's going to win out of that? Well, AI fundamentally

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<v Speaker 7>it's two things. It's data and it's and it's energy.

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<v Speaker 7>And so so we created an AI Infrastructure Fund here

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<v Speaker 7>at Tortoise. It's an active ETF that focus is on

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<v Speaker 7>the data infrastructure. So, so who's going to win from perspective?

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<v Speaker 7>You need more data storage, right, you need you need

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<v Speaker 7>more cabling, you need more liquid cooling. So the companies

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<v Speaker 7>that provide that to the data centers, and you're gonna

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<v Speaker 7>need more data centers as you highlight them, and you're

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<v Speaker 7>gonna build more of those. Those are the companies that

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<v Speaker 7>are gonna going to benefit from from this hundred billion

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<v Speaker 7>dollars of spend. Now, you also need energy, you need electricity, right,

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<v Speaker 7>and so's that's where the electrification infrastructure is going to

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<v Speaker 7>be really important. And so companies that have electric generation

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<v Speaker 7>in the areas where these data centers are going to

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<v Speaker 7>be built are going to win as well.

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<v Speaker 3>Rob.

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<v Speaker 2>Earlier this week, I had an extended conversation with Mary Daily,

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<v Speaker 2>president of the Federal Reserve Bank of San Francisco, very

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<v Speaker 2>focused on I guess the inflationary impact of what's happening

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<v Speaker 2>in the data center build out, the argument that the

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<v Speaker 2>hyperscale is PG and E right. The utility in Northern

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<v Speaker 2>California argue is it will lower electricity prices at the

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<v Speaker 2>wholesale level because those those mega cap tech names take

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<v Speaker 2>on the capital burden of modernizing the grid, but also

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<v Speaker 2>you know, paying up front.

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<v Speaker 3>Could you just weigh in on that.

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<v Speaker 7>Yeah, No, I think it's an absolutely valid point. Is

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<v Speaker 7>something we all need to keep our eye on. And

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<v Speaker 7>Mary has some great points, and you have some great

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<v Speaker 7>points as well. There's some really innovative solutions that are happening.

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<v Speaker 7>And right now, you know, we're investing in a company

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<v Speaker 7>like Williams Companies, who owns the largest natural gas pipeline

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<v Speaker 7>network in the US. They're actually helping to try to

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<v Speaker 7>reduce retail electricity prices by building electric generation to support

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<v Speaker 7>AI data center buildouts. But the contracts that they have

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<v Speaker 7>are between Williams, who's going to build electric generation, and

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<v Speaker 7>the Hyperscalers basically ultimately. And so why does that matter?

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<v Speaker 7>It matters because that from a cost perspective, the cost

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<v Speaker 7>of that electricity generation to develop AI is going to

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<v Speaker 7>be put upon the Hyperscalers, not the retail consumer, not

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<v Speaker 7>the retail electricity provider, whether you're in California or Texas

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<v Speaker 7>or where I am in Kansas City. And so you're

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<v Speaker 7>seeing a lot of those innovative solutions start to happen

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<v Speaker 7>and that but the goal is to not have this

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<v Speaker 7>AI build out and to win the AI race, We're

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<v Speaker 7>going to need a lot of electricity, but not have

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<v Speaker 7>that be paid for by the retail consumer and as

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<v Speaker 7>a result, have inflation rise because of that. The goal

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<v Speaker 7>is to have the Hyperscalers pay for that, and there's

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<v Speaker 7>multiple innovative solutions that are resulting in.

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<v Speaker 2>That Open ai raising more than one hundred billion dollars,

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<v Speaker 2>are going to go back to it with this kind

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<v Speaker 2>of bigger goal of a trillion dollars of commitments. Right,

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<v Speaker 2>you know if you try and top them all up,

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<v Speaker 2>how much of a risk is it that the center

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<v Speaker 2>of what's happening there is just this sort of single entity.

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<v Speaker 2>I'm not necessarily talking about circular financing. I'm talking about

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<v Speaker 2>the build out. The main tenant of that being one

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<v Speaker 2>single company. And of course you know Amthropic and an

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<v Speaker 2>xai and Google will factor into that, but increasingly it's

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<v Speaker 2>open AI and everything.

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<v Speaker 7>Yeah, I think we're going to world at autonomous everything, right,

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<v Speaker 7>and so and and and we'll see where that where

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<v Speaker 7>that ends up. Look, I have a lot of confidence

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<v Speaker 7>and you know, you you give the tech tools to

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<v Speaker 7>to the tech experts and what can they do? And

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<v Speaker 7>we've already seen it's been incredible in terms of the

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<v Speaker 7>opportunities in AI. And we're if you think about it,

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<v Speaker 7>we're just getting started. I mean as far as what

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<v Speaker 7>what opportunities there are for agenic AI and and and

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<v Speaker 7>other ways, Right, whether it's healthcare or or education or

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<v Speaker 7>just every area in our lives is going to be

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<v Speaker 7>impacted over the next several decades. And and so the

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<v Speaker 7>technology is there, we just need to get the energy there,

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<v Speaker 7>and we need to get the electricity consistent.

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<v Speaker 2>So how great is the risk that the supply of

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<v Speaker 2>energy will not catch up with where demand is currently

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<v Speaker 2>and where it will be.

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<v Speaker 7>Well, Look, I've been investing in the energy sector for

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<v Speaker 7>thirty years, and you know, you give these energy sectors,

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<v Speaker 7>this sector a challenge, and it always steps up to

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<v Speaker 7>the to the plate. And and I do think that

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<v Speaker 7>the sector will and and so so there are plans

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<v Speaker 7>in plays to continue to expand the US electricity grid.

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<v Speaker 7>And if you do that you mentioned earlier your discussion yesterday,

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<v Speaker 7>you can you can make the grid more reliable and

0:12:11.440 --> 0:12:13.319
<v Speaker 7>so so we I don't think there's gonna be a

0:12:13.360 --> 0:12:13.920
<v Speaker 7>big risk of that.

0:12:13.960 --> 0:12:17.160
<v Speaker 2>Actually, let me ask you just really quickly, Elon Musk

0:12:17.240 --> 0:12:19.880
<v Speaker 2>has this target of one hundred gig or what's of

0:12:19.920 --> 0:12:21.440
<v Speaker 2>solar capacity in this country?

0:12:22.400 --> 0:12:23.199
<v Speaker 3>Is that achievable?

0:12:23.280 --> 0:12:26.160
<v Speaker 7>Rob Well, I think you're gonna need all of the

0:12:26.160 --> 0:12:29.439
<v Speaker 7>above approach to meet that. So you're gonna need solar,

0:12:29.480 --> 0:12:32.120
<v Speaker 7>You're gonna need win. You're gonna need hydro, we're gonna

0:12:32.160 --> 0:12:35.520
<v Speaker 7>need nuclear. Obviously, we're gonna need more natural gas. And

0:12:35.559 --> 0:12:37.920
<v Speaker 7>so we've got to the US has got an advantage

0:12:37.920 --> 0:12:39.760
<v Speaker 7>and it's gonna win this global AI race because it

0:12:39.800 --> 0:12:41.880
<v Speaker 7>can provide low cost electricity. It's going to do that

0:12:42.400 --> 0:12:45.559
<v Speaker 7>by this all of the above approach that includes solar, wind, nuclear,

0:12:45.679 --> 0:12:47.960
<v Speaker 7>natural gas, and and and frankly, probably a little bit

0:12:47.960 --> 0:12:48.600
<v Speaker 7>of call as well.

0:12:49.760 --> 0:12:51.800
<v Speaker 2>Rob bunld Sours's Capital. Great to have you back on

0:12:51.840 --> 0:12:54.439
<v Speaker 2>the show, Thank you very much. Now coming up, door

0:12:54.520 --> 0:12:57.440
<v Speaker 2>Dash serves up a first quarter growth forecast. We break

0:12:57.480 --> 0:12:59.520
<v Speaker 2>down the food delivery giants latest earnings.

0:12:59.600 --> 0:13:01.400
<v Speaker 3>Next, this is Bloomberg Tech.

0:13:09.880 --> 0:13:13.080
<v Speaker 2>New York Governor Kathi HOCl has pulled a proposal that

0:13:13.120 --> 0:13:16.520
<v Speaker 2>would have allowed for commercial robo taxi services outside New

0:13:16.600 --> 0:13:19.680
<v Speaker 2>York City. This comes as a blow to Alphabet's Weimo,

0:13:19.760 --> 0:13:23.360
<v Speaker 2>which is looking to aggressively expand its driverless fleet this year.

0:13:23.400 --> 0:13:26.240
<v Speaker 2>A Waymos spokesperson said the company will work with the

0:13:26.240 --> 0:13:30.200
<v Speaker 2>state legislature to advance the issue and bring its service

0:13:30.440 --> 0:13:33.760
<v Speaker 2>to New York. That story was broken by our Consumer

0:13:33.760 --> 0:13:36.280
<v Speaker 2>Apps and Gig Economy reporter Natalie Lung, who joins us

0:13:36.320 --> 0:13:38.560
<v Speaker 2>now to break down some of the other earnings on

0:13:38.600 --> 0:13:40.439
<v Speaker 2>her beat, and you've been busy. I'm looking at shares

0:13:40.440 --> 0:13:43.040
<v Speaker 2>with door Dash up around six percent or five percent

0:13:43.120 --> 0:13:45.839
<v Speaker 2>right now. They had been as high as seven percent,

0:13:45.880 --> 0:13:48.640
<v Speaker 2>on track for their best day since April last year.

0:13:48.880 --> 0:13:52.760
<v Speaker 2>Company issuing a first quarter order growth forecast that tops estimates.

0:13:52.760 --> 0:13:55.679
<v Speaker 2>The food delivery platform beat estimates on gross order volume.

0:13:55.679 --> 0:13:59.160
<v Speaker 2>In the fourth quarter, earnings and revenues missed expectations. I

0:13:59.160 --> 0:14:01.080
<v Speaker 2>guess the way look at actually, if you take the

0:14:01.120 --> 0:14:03.800
<v Speaker 2>lid off the food type ofware in the delivery bag,

0:14:04.040 --> 0:14:05.920
<v Speaker 2>what's the story with door Dash here?

0:14:06.480 --> 0:14:09.920
<v Speaker 8>So the demand for on demand delivery is very strong,

0:14:09.960 --> 0:14:14.280
<v Speaker 8>as evidenced by Dordash's strong growth order forecast for the

0:14:14.320 --> 0:14:17.720
<v Speaker 8>first quarter, and then follows sort of the strong demand

0:14:17.720 --> 0:14:20.640
<v Speaker 8>out of that uber head earlier this month. But the

0:14:20.680 --> 0:14:24.200
<v Speaker 8>bigger story here for DoorDash is their investments into some

0:14:24.280 --> 0:14:28.120
<v Speaker 8>of the new products, including the UK business they acquired,

0:14:28.360 --> 0:14:30.840
<v Speaker 8>as well as like a back end system upgrade that

0:14:30.880 --> 0:14:33.160
<v Speaker 8>they're talking about to reconcile all of these new businesses

0:14:33.200 --> 0:14:34.640
<v Speaker 8>they've been building and acquired.

0:14:34.960 --> 0:14:37.600
<v Speaker 2>So the back end system upgrade is really interesting. Whenever

0:14:37.760 --> 0:14:39.560
<v Speaker 2>executives from the company come on the show. They always

0:14:39.560 --> 0:14:42.200
<v Speaker 2>talk about how good they are at software, in particular,

0:14:42.480 --> 0:14:44.120
<v Speaker 2>what is it that they're rebuilding here.

0:14:44.360 --> 0:14:46.400
<v Speaker 8>Yeah, so last year they went on this you know,

0:14:46.520 --> 0:14:51.880
<v Speaker 8>multi billion acquisition spree, including UK's Delivery, and earlier a

0:14:51.880 --> 0:14:55.320
<v Speaker 8>few years ago they acquired the Eastern Eastern European delivery

0:14:55.320 --> 0:14:58.600
<v Speaker 8>business Volte. And so now they have these three different

0:14:58.640 --> 0:15:02.680
<v Speaker 8>apps DoorDash, Volte and Delivery, and they all worked on

0:15:02.720 --> 0:15:07.000
<v Speaker 8>different systems, and so the CEO, Tony su wants all

0:15:07.080 --> 0:15:09.440
<v Speaker 8>these systems to work on the same platform so that

0:15:09.560 --> 0:15:12.400
<v Speaker 8>engineers can work on the same projects and analytics teams

0:15:12.640 --> 0:15:15.160
<v Speaker 8>can look at the same common data sets. And so

0:15:15.680 --> 0:15:19.080
<v Speaker 8>he says this is a painful but necessary exercise to

0:15:19.320 --> 0:15:22.320
<v Speaker 8>conduct this year, and they are having to invest a

0:15:22.320 --> 0:15:24.600
<v Speaker 8>lot into it that could weigh on profits.

0:15:25.440 --> 0:15:29.320
<v Speaker 2>You've also been looking at booking holdings stock down, you know,

0:15:29.360 --> 0:15:32.400
<v Speaker 2>relatively significantly. I don't know if some analysts are saying,

0:15:32.400 --> 0:15:36.120
<v Speaker 2>like global travel seems strong, that's supporting them. Others are

0:15:36.120 --> 0:15:39.480
<v Speaker 2>debating and questioning their growth forecast to interpret that.

0:15:39.800 --> 0:15:40.800
<v Speaker 3>What do you see?

0:15:41.120 --> 0:15:44.040
<v Speaker 8>So it's actually a similar story there in bookings. They

0:15:44.080 --> 0:15:46.840
<v Speaker 8>are it's going to be a big year for reinvestments

0:15:47.280 --> 0:15:51.440
<v Speaker 8>for them. Last year they talked about this transformation program

0:15:51.480 --> 0:15:54.680
<v Speaker 8>where they had to cut a few jobs and reorganize

0:15:54.720 --> 0:15:58.200
<v Speaker 8>some of their businesses, and now they're investing those savings

0:15:58.240 --> 0:16:02.280
<v Speaker 8>back into the company for AI. And they talked about

0:16:02.280 --> 0:16:06.320
<v Speaker 8>how customer service has been improved with AI, and so

0:16:06.440 --> 0:16:10.600
<v Speaker 8>there's always, you know, concerns or skepticism on how that

0:16:10.640 --> 0:16:12.400
<v Speaker 8>would play out for them.

0:16:12.640 --> 0:16:15.720
<v Speaker 2>Bloomberg's Natalie Lung terrific reporting all morning long. Thank you

0:16:15.800 --> 0:16:18.080
<v Speaker 2>very much. I just want to look at shares of Figma.

0:16:18.200 --> 0:16:21.680
<v Speaker 2>The company gave an annual revenue outlook that topped estimates

0:16:21.720 --> 0:16:24.680
<v Speaker 2>and it kind of eased Wall Streets anxiety over AI

0:16:24.840 --> 0:16:26.240
<v Speaker 2>threats to its own business.

0:16:26.320 --> 0:16:28.320
<v Speaker 3>It's up around seven percent, but.

0:16:28.280 --> 0:16:30.520
<v Speaker 2>Also, like I think, showed a lot of what it's

0:16:30.520 --> 0:16:33.800
<v Speaker 2>doing in the field of AI. Bloomberg's brody Ford is

0:16:33.880 --> 0:16:35.720
<v Speaker 2>on the other side of town from me, where it's

0:16:35.800 --> 0:16:38.560
<v Speaker 2>raining heavily. I've learned a lot this morning through your

0:16:38.560 --> 0:16:41.840
<v Speaker 2>reporting about what, on the face of its heres a

0:16:41.880 --> 0:16:45.960
<v Speaker 2>pretty boring term net dollar retention rate, but actually, like

0:16:46.440 --> 0:16:48.720
<v Speaker 2>if you kind of dig into it, it basically shows

0:16:49.120 --> 0:16:52.520
<v Speaker 2>Figma had a lot of existing customers it launched new products,

0:16:52.680 --> 0:16:55.000
<v Speaker 2>those existing customers were willing to pay for those new

0:16:55.000 --> 0:16:56.760
<v Speaker 2>products on top of what they already have.

0:16:58.080 --> 0:17:01.120
<v Speaker 9>That's exactly right, Yeah, and that's true that investors wanted

0:17:01.120 --> 0:17:03.200
<v Speaker 9>to see. I mean, Figma is one of these names

0:17:03.200 --> 0:17:06.439
<v Speaker 9>that's gotten caught up in the SaaS apocalypse, you know,

0:17:06.560 --> 0:17:09.480
<v Speaker 9>the fear that as it gets easier to build software,

0:17:09.640 --> 0:17:12.959
<v Speaker 9>these application leaders aren't going to have the pricing power

0:17:13.040 --> 0:17:16.439
<v Speaker 9>they once did. But Figma showed us they did because

0:17:17.000 --> 0:17:19.200
<v Speaker 9>on average, if I gave them a dollar last year,

0:17:19.240 --> 0:17:21.679
<v Speaker 9>I'm giving them a dollar thirty five this year. And

0:17:21.760 --> 0:17:26.640
<v Speaker 9>so that clearly shows that the amount of products customers

0:17:26.680 --> 0:17:28.000
<v Speaker 9>are buying is expanding.

0:17:29.040 --> 0:17:31.880
<v Speaker 2>We kind of zeroed in on by the way we're

0:17:31.880 --> 0:17:34.160
<v Speaker 2>showing the shares kind of over a longer time period

0:17:34.160 --> 0:17:37.520
<v Speaker 2>since the IPO in July of last year, down twenty

0:17:37.560 --> 0:17:41.160
<v Speaker 2>two percent. Basically, Pigma Make they basically said, like, here's

0:17:41.160 --> 0:17:42.080
<v Speaker 2>an AI tool that we have.

0:17:42.280 --> 0:17:44.320
<v Speaker 3>It is growing. What do we need to know?

0:17:45.640 --> 0:17:45.800
<v Speaker 8>Right?

0:17:45.920 --> 0:17:49.560
<v Speaker 9>Pigma Make is essentially the you type in a prompt

0:17:49.600 --> 0:17:52.639
<v Speaker 9>and it kind of gives you a pretty good app right.

0:17:52.640 --> 0:17:55.840
<v Speaker 9>I mean, it's in the vibe coding realm, and that

0:17:55.960 --> 0:17:58.560
<v Speaker 9>matters because there's a lot of these startups like Bolt

0:17:58.640 --> 0:18:01.280
<v Speaker 9>or Replet that problems to be able to vibe coaps

0:18:01.359 --> 0:18:04.120
<v Speaker 9>pretty well. And so it was really up to fig

0:18:04.240 --> 0:18:06.960
<v Speaker 9>O to show that, no, we are the incumbent here

0:18:06.960 --> 0:18:09.840
<v Speaker 9>and we're going to out innovate our peers. And you know,

0:18:09.880 --> 0:18:13.120
<v Speaker 9>at least last night they took a step towards convincing

0:18:13.160 --> 0:18:13.800
<v Speaker 9>the market of.

0:18:13.760 --> 0:18:17.800
<v Speaker 2>That doing those brody Ford terrific reporting. Thank you, Thank

0:18:17.840 --> 0:18:20.840
<v Speaker 2>you very much. A lot more coming up. Bike Dant

0:18:20.880 --> 0:18:23.840
<v Speaker 2>seems to compete with the world's leading US based AI

0:18:23.920 --> 0:18:26.480
<v Speaker 2>companies literally on their own turf. We have more on

0:18:26.520 --> 0:18:38.159
<v Speaker 2>that next. This is Bloomberg Tech. It's time for Talking

0:18:38.200 --> 0:18:41.320
<v Speaker 2>tech and first Start. The UK has proposed rules requiring

0:18:41.440 --> 0:18:45.560
<v Speaker 2>tech companies to remove abusive images within forty eight hours

0:18:45.640 --> 0:18:48.920
<v Speaker 2>all face fines of up to ten percent of global

0:18:49.000 --> 0:18:51.800
<v Speaker 2>revenue or even a UK service van. The move comes

0:18:51.840 --> 0:18:56.520
<v Speaker 2>amid investigations in Ireland, Spain and other countries over nonconsensual

0:18:56.600 --> 0:19:02.200
<v Speaker 2>undressed images created by Ex's AI Chatbotrock Plus Morgan Stanley's

0:19:02.240 --> 0:19:06.040
<v Speaker 2>cutting fees in half for clients trading private company shares

0:19:06.240 --> 0:19:09.520
<v Speaker 2>on its newly acquired equity Zen platform, charges for buyers

0:19:09.520 --> 0:19:12.240
<v Speaker 2>and sellers will be lowered to two point five percent

0:19:12.440 --> 0:19:16.560
<v Speaker 2>from five percent on most transactions, undercutting competitors as it

0:19:16.600 --> 0:19:19.920
<v Speaker 2>looks to take advantage of an expanding market. And finally,

0:19:20.240 --> 0:19:24.479
<v Speaker 2>Amazon has officially overtaken Walmart as the world's largest company

0:19:24.520 --> 0:19:28.080
<v Speaker 2>by revenue. The online retail giant posted seven hundred and

0:19:28.119 --> 0:19:31.679
<v Speaker 2>seventeen billion dollars in sales for twenty twenty five, edging

0:19:31.720 --> 0:19:34.720
<v Speaker 2>past Walmart's seven hundred and thirteen. A big driver of

0:19:34.720 --> 0:19:37.600
<v Speaker 2>that growth Amazon's cloud computing business AWS, and we.

0:19:37.520 --> 0:19:40.520
<v Speaker 3>Stripped that out. It's not quite apples to apples.

0:19:40.720 --> 0:19:43.919
<v Speaker 2>Another story, Chinese tech giant bike Dance is hiring in

0:19:43.960 --> 0:19:47.360
<v Speaker 2>the US for nearly one hundred open roles within its

0:19:47.400 --> 0:19:49.840
<v Speaker 2>Ai division. The push comes after it announced the deal

0:19:50.119 --> 0:19:53.200
<v Speaker 2>to sell parts of its US TikTok business to non

0:19:53.320 --> 0:19:57.080
<v Speaker 2>Chinese owners to address US national security concerns. Bloomberg's social

0:19:57.119 --> 0:20:00.679
<v Speaker 2>media report Alex Lavine has the story, let's stop cis like,

0:20:00.840 --> 0:20:01.680
<v Speaker 2>what are these roles?

0:20:01.720 --> 0:20:02.679
<v Speaker 3>Where are these roles?

0:20:03.560 --> 0:20:06.879
<v Speaker 10>The roles are mainly in California and Washington. We have

0:20:06.960 --> 0:20:10.640
<v Speaker 10>them across Los Angeles, San Jose, and Seattle, which are

0:20:10.880 --> 0:20:15.119
<v Speaker 10>all cities that TikTok also has offices in and I

0:20:15.160 --> 0:20:18.359
<v Speaker 10>think what's so fascinating about these AI roles is really

0:20:18.400 --> 0:20:20.639
<v Speaker 10>just how much they run the gamut. You've got roles

0:20:20.640 --> 0:20:23.879
<v Speaker 10>that are focused on producing international data to feed to.

0:20:23.880 --> 0:20:25.040
<v Speaker 11>Buy dances llms.

0:20:25.080 --> 0:20:30.800
<v Speaker 10>You've got roles doing research to make AI more human like.

0:20:31.040 --> 0:20:33.880
<v Speaker 10>And you've also got these really interesting roles building science

0:20:34.520 --> 0:20:38.760
<v Speaker 10>science models that are really looking for talent in biology, chemistry,

0:20:38.760 --> 0:20:42.159
<v Speaker 10>and physics. And these are more roles focused on helping

0:20:42.160 --> 0:20:44.359
<v Speaker 10>buy dance pursue drug discovery and development.

0:20:45.160 --> 0:20:47.359
<v Speaker 2>So the reason this is a notable story, right, you

0:20:47.480 --> 0:20:49.919
<v Speaker 2>just said that these roles will be in proximity to

0:20:50.119 --> 0:20:55.000
<v Speaker 2>or in US TikTok's offices, right, But the broader thing is,

0:20:55.160 --> 0:20:58.600
<v Speaker 2>you know, Chinese parent hiring for roles in the field

0:20:58.600 --> 0:21:03.040
<v Speaker 2>of AI in the UNI States national security competition take

0:21:03.119 --> 0:21:03.440
<v Speaker 2>us there.

0:21:03.960 --> 0:21:07.240
<v Speaker 10>To clarify, these not necessarily in the same as the

0:21:07.280 --> 0:21:09.680
<v Speaker 10>TikTok offices, but they are in the same cities where

0:21:09.680 --> 0:21:12.439
<v Speaker 10>TikTok has a large footprint. And as you just mentioned,

0:21:12.440 --> 0:21:16.000
<v Speaker 10>these are also cities where some of the leading American

0:21:16.040 --> 0:21:19.199
<v Speaker 10>AI companies also have a lot of a lot of

0:21:19.320 --> 0:21:21.760
<v Speaker 10>talent and their own footprint. I think what's so interesting

0:21:21.920 --> 0:21:24.440
<v Speaker 10>is that to this point in the US, we've really

0:21:24.480 --> 0:21:27.199
<v Speaker 10>thought about byte Dance as a social media company. It

0:21:27.280 --> 0:21:30.000
<v Speaker 10>is also a dominant AI company, and it really seems

0:21:30.040 --> 0:21:31.800
<v Speaker 10>that that has been a bit lost on the US

0:21:32.080 --> 0:21:34.480
<v Speaker 10>until now. And I think the turning point has really

0:21:34.520 --> 0:21:38.639
<v Speaker 10>been over the last week since by Dance unveiled some

0:21:38.880 --> 0:21:42.520
<v Speaker 10>new AI models for video generation for example, an image

0:21:42.520 --> 0:21:46.240
<v Speaker 10>generation that has really caught on and raised concern especially

0:21:46.240 --> 0:21:47.280
<v Speaker 10>from Hollywood.

0:21:46.880 --> 0:21:47.640
<v Speaker 11>In a very big way.

0:21:48.520 --> 0:21:50.560
<v Speaker 2>All right, Bloomberg z AlCH Slovine, it's a must read

0:21:50.600 --> 0:21:53.160
<v Speaker 2>report on the Bloomberg about byte Dance building out AI

0:21:53.240 --> 0:21:54.560
<v Speaker 2>teams in the US.

0:21:54.640 --> 0:21:55.800
<v Speaker 3>Coming up, we're going.

0:21:55.720 --> 0:21:58.600
<v Speaker 2>To discuss what Mark Zuckerberg had to say about teen

0:21:58.720 --> 0:22:03.919
<v Speaker 2>social media use when the metase A CEO testified in

0:22:04.000 --> 0:22:06.919
<v Speaker 2>a landmark trial. We have those details coming up next.

0:22:07.440 --> 0:22:08.840
<v Speaker 2>This is Bloomberg Tech.

0:22:17.840 --> 0:22:19.160
<v Speaker 3>Welcome back to Bloomberg Tech.

0:22:19.480 --> 0:22:20.840
<v Speaker 2>We're just going to take a quick look at where

0:22:20.840 --> 0:22:22.440
<v Speaker 2>financial markets are right now. We had a lot of

0:22:22.480 --> 0:22:26.280
<v Speaker 2>economic data to pass through the morning. Our market's team

0:22:26.320 --> 0:22:28.360
<v Speaker 2>on the Bloomberg terminal and on dot com are really

0:22:28.400 --> 0:22:32.600
<v Speaker 2>emphasizing the geopolitical risk that's out there, also ongoing concerns

0:22:32.600 --> 0:22:35.399
<v Speaker 2>about inflation then as that one hundred very tech heavy,

0:22:35.880 --> 0:22:38.840
<v Speaker 2>modestly lower down three tenths of a percent, chip stocks

0:22:38.840 --> 0:22:41.880
<v Speaker 2>taking a breather, down eight tenths of a percent, and

0:22:42.080 --> 0:22:45.880
<v Speaker 2>then Bitcoin now further blows sixty seven US thousand dollars

0:22:46.000 --> 0:22:48.680
<v Speaker 2>to can remember it's a shorter week in the United States.

0:22:48.840 --> 0:22:51.119
<v Speaker 2>It was a holiday on Monday, but bitcoin trades twenty

0:22:51.119 --> 0:22:53.320
<v Speaker 2>four to seven, and we came back from that holiday

0:22:53.359 --> 0:22:56.080
<v Speaker 2>weekend with Bitcoin under pressure. One headline, by the way,

0:22:56.280 --> 0:22:59.520
<v Speaker 2>Goldman Sat CEO David Solomon saying he owns a very

0:22:59.600 --> 0:23:02.359
<v Speaker 2>modest amount of bitcoin, but remember he's long been a

0:23:02.359 --> 0:23:05.679
<v Speaker 2>cryptoskeptic and that's not doing much to support the asset

0:23:05.760 --> 0:23:08.480
<v Speaker 2>either way. We'll keep you posted. Another top story today,

0:23:08.520 --> 0:23:11.520
<v Speaker 2>Meta CEO Mark Zuckerberg took to the stand in the

0:23:11.600 --> 0:23:15.439
<v Speaker 2>Landmark social media addiction trial. Bloomberg's Riley Griffin was in

0:23:15.480 --> 0:23:18.760
<v Speaker 2>the courtroom for that testimony. And look, we were building

0:23:18.840 --> 0:23:22.520
<v Speaker 2>up to this on the program throughout the week. Take

0:23:22.600 --> 0:23:25.280
<v Speaker 2>us through the lines of questioning, and I guess the

0:23:25.280 --> 0:23:28.040
<v Speaker 2>top line of what mister Zuckerberg had to say in

0:23:28.080 --> 0:23:29.400
<v Speaker 2>response to those questions.

0:23:30.960 --> 0:23:32.040
<v Speaker 5>Yeah, ed, great question.

0:23:32.119 --> 0:23:34.879
<v Speaker 12>It was an intense day here in Los Angeles, and

0:23:34.960 --> 0:23:38.320
<v Speaker 12>yesterday we saw Mark Zuckerberg testify to a number of things.

0:23:39.600 --> 0:23:44.160
<v Speaker 12>Questions about company documents that showed that Meta had been

0:23:44.240 --> 0:23:49.320
<v Speaker 12>focused on increasing time spent among young users. Questions about

0:23:49.480 --> 0:23:53.359
<v Speaker 12>the under thirteen demographic on the platform. Despite policies that

0:23:53.400 --> 0:23:56.280
<v Speaker 12>suggest they're not allowed to be, there still millions of

0:23:56.320 --> 0:24:00.639
<v Speaker 12>Americans under that age on the platform. Questions about decisions

0:24:00.680 --> 0:24:04.240
<v Speaker 12>he personally made regarding beauty filters. All of this came

0:24:04.280 --> 0:24:07.119
<v Speaker 12>to a head with him on the stand at times

0:24:07.200 --> 0:24:12.240
<v Speaker 12>rather uncomfortable, very subdued. He did score a couple of

0:24:12.280 --> 0:24:16.000
<v Speaker 12>wins here and there, but overall the picture was painted

0:24:16.080 --> 0:24:18.480
<v Speaker 12>of a company that made deliberate.

0:24:21.400 --> 0:24:25.199
<v Speaker 5>Could be user of health the youngest users.

0:24:26.040 --> 0:24:26.240
<v Speaker 3>Right.

0:24:26.720 --> 0:24:30.280
<v Speaker 2>You know, Instagram does have age limits and other tools

0:24:30.280 --> 0:24:33.840
<v Speaker 2>that already exist, and mister Zuckerberg basically splained it was

0:24:33.920 --> 0:24:36.440
<v Speaker 2>very difficult to enforce them. Did he go a step

0:24:36.480 --> 0:24:39.120
<v Speaker 2>for over and explain why it's difficult to enforce them.

0:24:39.400 --> 0:24:41.120
<v Speaker 2>I think he also talked a little bit about other

0:24:41.160 --> 0:24:43.919
<v Speaker 2>tools that they are being let's say proactive on.

0:24:45.600 --> 0:24:45.879
<v Speaker 3>Yeah.

0:24:45.920 --> 0:24:48.919
<v Speaker 12>So one of the cases that mister Zuckerberg made was

0:24:48.960 --> 0:24:52.720
<v Speaker 12>to say that for the youngest users, particularly those without

0:24:52.840 --> 0:24:56.480
<v Speaker 12>driver's license, it's really hard to verify age. He took

0:24:56.480 --> 0:24:58.560
<v Speaker 12>a line that has come up a lot these days,

0:24:58.600 --> 0:25:02.120
<v Speaker 12>particularly in lobbying afforts, which is to say that phonemakers

0:25:02.200 --> 0:25:04.840
<v Speaker 12>like Apple should do a little bit more to help.

0:25:04.680 --> 0:25:06.600
<v Speaker 5>With that age verification process.

0:25:07.480 --> 0:25:12.119
<v Speaker 12>In fact, an email was brought forth by Meta's defense

0:25:12.880 --> 0:25:14.800
<v Speaker 12>to show that he had made efforts to reach out

0:25:14.840 --> 0:25:17.720
<v Speaker 12>to Tim Cook in the past to look for efforts

0:25:18.119 --> 0:25:22.000
<v Speaker 12>that where they could collaborate on improving team safety.

0:25:22.119 --> 0:25:25.159
<v Speaker 5>So he said, it's an open secret.

0:25:25.240 --> 0:25:28.640
<v Speaker 12>They all know that many users are lying about their age.

0:25:29.440 --> 0:25:32.560
<v Speaker 12>The plaintiff's attorneys suggested that that Meta had not done

0:25:32.680 --> 0:25:35.520
<v Speaker 12>enough to enforce that, and there were some documents that

0:25:35.600 --> 0:25:38.439
<v Speaker 12>showed that Nick Klegg, for example, a former policy chief,

0:25:38.800 --> 0:25:42.560
<v Speaker 12>had said these policies were basically unenforceable and showed that

0:25:42.960 --> 0:25:45.919
<v Speaker 12>they weren't doing all that they could. So we saw

0:25:46.320 --> 0:25:48.840
<v Speaker 12>it go back and forth. But Mark Zuckerberg's take here

0:25:49.040 --> 0:25:53.600
<v Speaker 12>was that it's a really difficult challenge even as they

0:25:53.640 --> 0:25:58.160
<v Speaker 12>create proactive tools to remove under thirteen users and NICs.

0:25:58.240 --> 0:26:00.800
<v Speaker 2>Roddy Griffin, who is on the ground and will continue

0:26:00.840 --> 0:26:03.040
<v Speaker 2>to cover the trial, thank you very much. Let's discuss

0:26:03.320 --> 0:26:06.720
<v Speaker 2>the broader legal invocations of the case with Mary Anne Franks.

0:26:06.840 --> 0:26:10.200
<v Speaker 2>She's a professor at George Washington University Law School in

0:26:10.200 --> 0:26:14.120
<v Speaker 2>Intellectual Property, technology and Civil rights. And a moment ago,

0:26:14.200 --> 0:26:18.359
<v Speaker 2>the team was showing the data around what else is

0:26:18.400 --> 0:26:22.000
<v Speaker 2>happening in parallel with this specific trial? Right there are

0:26:22.040 --> 0:26:26.639
<v Speaker 2>three thousand such suits running in parallel. You also have

0:26:26.760 --> 0:26:31.720
<v Speaker 2>states attorneys general forty plus looking at this issue. But

0:26:31.840 --> 0:26:35.200
<v Speaker 2>in the here and now, with this specific legal proceeding,

0:26:36.000 --> 0:26:38.880
<v Speaker 2>could you just help us understand what is it question here?

0:26:39.520 --> 0:26:39.879
<v Speaker 3>Please?

0:26:41.920 --> 0:26:44.919
<v Speaker 13>The primary question that they're trying to address here is

0:26:45.280 --> 0:26:48.679
<v Speaker 13>are the harms that are being experienced by these plaintiffs?

0:26:48.680 --> 0:26:51.760
<v Speaker 13>And those are some really extensive and really serious ones,

0:26:51.840 --> 0:26:57.800
<v Speaker 13>including in some cases suicide, but depression, body anxiety, body dysmorphia.

0:26:58.080 --> 0:27:01.920
<v Speaker 13>Are these things attributable to the design of certain platforms

0:27:01.960 --> 0:27:05.480
<v Speaker 13>in particular things like Instagram and Facebook? And so really

0:27:05.480 --> 0:27:08.840
<v Speaker 13>the question is who is causing this harm? What is responsible?

0:27:09.240 --> 0:27:12.720
<v Speaker 13>Is it the content that these kids are seeking out

0:27:13.119 --> 0:27:15.480
<v Speaker 13>or is it the way that these platforms have designed

0:27:15.520 --> 0:27:19.119
<v Speaker 13>their tools and services to entice really vulnerable users to

0:27:19.160 --> 0:27:22.080
<v Speaker 13>stay on the platform for longer and longer periods of time.

0:27:23.720 --> 0:27:27.239
<v Speaker 2>It was mister Zuckerberg, who was giving testimony, and you know,

0:27:27.359 --> 0:27:31.199
<v Speaker 2>the I suppose top line of that testimony was that

0:27:31.280 --> 0:27:36.200
<v Speaker 2>it is difficult for Meta, in particular through the Instagram app,

0:27:36.600 --> 0:27:40.879
<v Speaker 2>to enforce what are existing rules. You know, how do

0:27:40.960 --> 0:27:45.359
<v Speaker 2>you feel that that argument will carry from him?

0:27:46.119 --> 0:27:49.040
<v Speaker 13>It's not really clear how well that's going to serve

0:27:49.160 --> 0:27:53.080
<v Speaker 13>I think the defense, because really what Zuckerberg seemed to

0:27:53.119 --> 0:27:55.760
<v Speaker 13>be reiterating was, well, we have all of these really

0:27:55.840 --> 0:27:58.760
<v Speaker 13>dangerous tools that we know can cause harm, and you know,

0:27:58.760 --> 0:28:00.359
<v Speaker 13>it's just really hard for us to keep them out

0:28:00.400 --> 0:28:02.320
<v Speaker 13>of the hands of certain individuals.

0:28:02.400 --> 0:28:04.640
<v Speaker 11>But that's just sort of accepting.

0:28:04.160 --> 0:28:06.920
<v Speaker 13>The premise that these kinds of products and services should

0:28:06.960 --> 0:28:10.600
<v Speaker 13>exist at all, and that it's just an intractable problem

0:28:10.640 --> 0:28:13.360
<v Speaker 13>about who's going to access them, when the question really

0:28:13.359 --> 0:28:15.480
<v Speaker 13>should be, you know, why are you creating these types

0:28:15.520 --> 0:28:18.320
<v Speaker 13>of features? What's the actual use of something like a

0:28:18.359 --> 0:28:20.440
<v Speaker 13>beauty filter that you know is going to be really

0:28:20.440 --> 0:28:23.119
<v Speaker 13>attractive to nine and ten year old girls. So I

0:28:23.160 --> 0:28:25.560
<v Speaker 13>think that he's very much trying to say, well, if

0:28:25.560 --> 0:28:27.719
<v Speaker 13>you assume a world where all of these things have

0:28:27.800 --> 0:28:30.480
<v Speaker 13>to exist, then it's really hard for us to control access.

0:28:30.600 --> 0:28:33.040
<v Speaker 13>That's true enough, but why do these things actually have

0:28:33.080 --> 0:28:34.040
<v Speaker 13>to exist.

0:28:34.320 --> 0:28:38.920
<v Speaker 2>We're showing a February eleventh statement from metas specifically tied

0:28:38.960 --> 0:28:41.800
<v Speaker 2>to this trial, and the back half of it says,

0:28:41.840 --> 0:28:46.240
<v Speaker 2>the evidence will show she a plaintiff, faced many significant

0:28:46.240 --> 0:28:50.120
<v Speaker 2>difficult challenges well before she ever used social media. I'm

0:28:50.120 --> 0:28:53.320
<v Speaker 2>just putting that that is Meta's statement. Prior to that

0:28:53.400 --> 0:28:56.440
<v Speaker 2>in November, you know, they had said they strongly disagree

0:28:56.440 --> 0:28:59.880
<v Speaker 2>with these allegations and confident the evidence will show our

0:29:00.040 --> 0:29:03.520
<v Speaker 2>longstanding commitment to supporting young people. I'm going to ask

0:29:03.600 --> 0:29:05.240
<v Speaker 2>the same question again in a slightly different way that

0:29:05.280 --> 0:29:08.560
<v Speaker 2>you have the CEO of the company defending what our

0:29:08.680 --> 0:29:12.960
<v Speaker 2>existing policies and practices, but explaining how difficult it.

0:29:12.960 --> 0:29:14.120
<v Speaker 3>Is to enforce them.

0:29:14.840 --> 0:29:19.160
<v Speaker 2>Would you just help us understand, you know, what pressure

0:29:19.160 --> 0:29:21.600
<v Speaker 2>will be put on him as the CEO of that company,

0:29:22.160 --> 0:29:25.200
<v Speaker 2>or what changes or what outcome the court could affect

0:29:25.760 --> 0:29:27.320
<v Speaker 2>how that company does business.

0:29:29.400 --> 0:29:31.800
<v Speaker 11>Yes, so a lot of things could happen at this point.

0:29:31.840 --> 0:29:35.120
<v Speaker 13>Because this isn't just about whether liability is found in

0:29:35.160 --> 0:29:38.840
<v Speaker 13>these particular cases. This is also the first moment that

0:29:38.880 --> 0:29:41.920
<v Speaker 13>we're really seeing the general public get a look at

0:29:41.960 --> 0:29:44.640
<v Speaker 13>what did Mark Zuckerberg know and when did he know it?

0:29:45.000 --> 0:29:47.800
<v Speaker 13>And so even if an individual cases, it's an uphill

0:29:47.880 --> 0:29:51.480
<v Speaker 13>battle to show absolute causation for these injuries. Now we've

0:29:51.480 --> 0:29:53.720
<v Speaker 13>got information in the hands of the public, in the

0:29:53.760 --> 0:29:57.040
<v Speaker 13>hands of regulators, in the hands of policymakers, and you've

0:29:57.080 --> 0:29:59.480
<v Speaker 13>already seen that this kind of attention is causing these

0:29:59.520 --> 0:30:02.680
<v Speaker 13>companies change some of their practices. So they've been giving

0:30:02.720 --> 0:30:05.520
<v Speaker 13>the kind of pr propaganda about how well we're doing

0:30:05.520 --> 0:30:06.040
<v Speaker 13>our best.

0:30:06.080 --> 0:30:07.280
<v Speaker 11>But it's really challenging.

0:30:07.720 --> 0:30:11.400
<v Speaker 13>But every time there's serious consequences that might loom over

0:30:11.560 --> 0:30:15.120
<v Speaker 13>these platforms, they do start making some changes, although usually

0:30:15.120 --> 0:30:16.680
<v Speaker 13>they're a little too little, too late.

0:30:18.280 --> 0:30:20.760
<v Speaker 2>We put in writing that this trial will run through

0:30:20.800 --> 0:30:23.120
<v Speaker 2>the end of March, and again it's in parallel with

0:30:23.160 --> 0:30:26.080
<v Speaker 2>a number of other legal proceedings that involve other parties.

0:30:26.960 --> 0:30:29.680
<v Speaker 2>How much does one trial influence all the others that

0:30:29.760 --> 0:30:31.720
<v Speaker 2>may happen after very quickly.

0:30:32.960 --> 0:30:35.160
<v Speaker 13>Quite a bit these This is a Bellweather trial, and

0:30:35.200 --> 0:30:37.400
<v Speaker 13>the entire reason why it's been chosen is because it's

0:30:37.440 --> 0:30:39.800
<v Speaker 13>supposed to give both parties a sense of how this

0:30:39.840 --> 0:30:41.800
<v Speaker 13>is going to play out. And so if it looks

0:30:41.800 --> 0:30:43.880
<v Speaker 13>as though things are going badly for the defense, that

0:30:43.920 --> 0:30:46.880
<v Speaker 13>could really have an effect on settlements and possibly agreements

0:30:46.920 --> 0:30:49.120
<v Speaker 13>going forward to have safer products and platforms.

0:30:49.960 --> 0:30:52.600
<v Speaker 2>Mary Anne Franks from George Washington University Law School, thank

0:30:52.600 --> 0:30:55.520
<v Speaker 2>you very much. What about the business impact? MINDA Smiley

0:30:55.640 --> 0:30:58.400
<v Speaker 2>c the analyst that eMarketer has been looking into teen

0:30:58.520 --> 0:31:01.080
<v Speaker 2>social media use and enjoy us now and again, going

0:31:01.120 --> 0:31:04.600
<v Speaker 2>back to mister Zuckerberg's testimony, his argument was that this

0:31:05.480 --> 0:31:10.200
<v Speaker 2>category or demographic is a small part of the Instagram business.

0:31:10.440 --> 0:31:12.440
<v Speaker 3>Does your research support that?

0:31:14.240 --> 0:31:15.920
<v Speaker 14>Yeah, I mean I think the reality is a little

0:31:15.960 --> 0:31:18.000
<v Speaker 14>bit murkier than that, right, I mean, I do think

0:31:18.040 --> 0:31:20.880
<v Speaker 14>he maybe has some points when he says they're not

0:31:20.960 --> 0:31:24.440
<v Speaker 14>a demographic is majorly monetized, and that they maybe don't

0:31:24.440 --> 0:31:26.400
<v Speaker 14>bring in a ton of ad revenue, but that does

0:31:26.400 --> 0:31:27.560
<v Speaker 14>not mean they're not significant.

0:31:27.600 --> 0:31:30.400
<v Speaker 5>I mean, when you look at our a Marketer data, we.

0:31:30.320 --> 0:31:33.440
<v Speaker 14>See that in the US at least about eleven percent

0:31:33.640 --> 0:31:36.680
<v Speaker 14>of Instagram users are under the age of eighteen, and

0:31:36.760 --> 0:31:40.760
<v Speaker 14>so again not a huge majority, but that's a significant percentage.

0:31:40.800 --> 0:31:43.640
<v Speaker 14>And also, I think, you know, the numbers tell one story,

0:31:43.640 --> 0:31:46.040
<v Speaker 14>but the reality is these platforms gain a lot by

0:31:46.120 --> 0:31:49.080
<v Speaker 14>you know, essentially hooking these users young because the younger

0:31:49.120 --> 0:31:50.840
<v Speaker 14>that they get on these platforms, the more likely they

0:31:50.880 --> 0:31:52.479
<v Speaker 14>are to continue using them in the future.

0:31:52.680 --> 0:31:54.960
<v Speaker 5>So again you can look at the numbers.

0:31:54.960 --> 0:31:56.600
<v Speaker 14>You can look at maybe how much they how much

0:31:56.640 --> 0:31:59.479
<v Speaker 14>revenue they're generating from teens per year, but really it's

0:31:59.480 --> 0:32:02.880
<v Speaker 14>about setting these behaviors early and benefiting in the long term.

0:32:03.840 --> 0:32:08.800
<v Speaker 2>Mister Zuckerberg stated that teams equate to one percent of revenue,

0:32:08.800 --> 0:32:13.720
<v Speaker 2>which I thought was an interesting data point. This question

0:32:14.360 --> 0:32:16.920
<v Speaker 2>about the future of Instagram in particular, but you know,

0:32:17.120 --> 0:32:20.280
<v Speaker 2>the other meta family of apps is well, what would

0:32:20.280 --> 0:32:22.960
<v Speaker 2>they change? You know, And part of the discussion in

0:32:23.000 --> 0:32:26.680
<v Speaker 2>the testimony was the tension on the rules they have

0:32:26.760 --> 0:32:29.640
<v Speaker 2>in place and the privacy of the individuals that are

0:32:29.680 --> 0:32:33.680
<v Speaker 2>signing up for them. Does that tension have any pairing

0:32:33.680 --> 0:32:35.280
<v Speaker 2>on how they do business going forward?

0:32:36.760 --> 0:32:39.400
<v Speaker 14>Yeah, I mean I think it's still really early to say,

0:32:39.480 --> 0:32:41.560
<v Speaker 14>but I mean, for sure, I think depending on how

0:32:41.560 --> 0:32:43.479
<v Speaker 14>these lawsuits play out, if they end up having to

0:32:43.560 --> 0:32:47.719
<v Speaker 14>fundamentally change how their platforms work, whether it's whether it's

0:32:47.760 --> 0:32:50.920
<v Speaker 14>the algorithms or AutoPlay and infinite scroll, whatever it might be,

0:32:51.280 --> 0:32:53.400
<v Speaker 14>that will in turn have an impact on how teenagers

0:32:53.520 --> 0:32:56.040
<v Speaker 14>use these platforms. And something we've noticed is that, you know,

0:32:56.360 --> 0:32:58.360
<v Speaker 14>it was interesting to see him really kind of downplay

0:32:58.400 --> 0:33:01.680
<v Speaker 14>to what extent meta is really prioritized time spent as

0:33:01.680 --> 0:33:04.000
<v Speaker 14>a metric when our numbers show and just you know,

0:33:04.240 --> 0:33:06.720
<v Speaker 14>paying attention to the company in general, and we know

0:33:06.760 --> 0:33:10.200
<v Speaker 14>that time spent is definitely a crucial metric for formata

0:33:10.240 --> 0:33:12.800
<v Speaker 14>and all social networks. And we have seen time spent

0:33:12.920 --> 0:33:17.000
<v Speaker 14>among teenagers specifically rise year over year on Instagram, and

0:33:17.040 --> 0:33:20.560
<v Speaker 14>so we do see that, you know, anything that would

0:33:20.600 --> 0:33:22.520
<v Speaker 14>kind of hi away that time spent if they would

0:33:22.520 --> 0:33:24.200
<v Speaker 14>have to make changes to the platform, what would have

0:33:24.200 --> 0:33:25.160
<v Speaker 14>an impact.

0:33:25.520 --> 0:33:29.080
<v Speaker 2>But your research shows that teams are spending significantly more

0:33:29.080 --> 0:33:32.760
<v Speaker 2>time on TikTok than on Instagram. I think I'm correct

0:33:32.800 --> 0:33:34.800
<v Speaker 2>in saying right. I just want to point out that

0:33:35.520 --> 0:33:39.600
<v Speaker 2>with this trial, TikTok and also Snap and not parties

0:33:39.640 --> 0:33:42.560
<v Speaker 2>to the case because they had settlements prior to it.

0:33:43.360 --> 0:33:46.680
<v Speaker 2>But if we look bigger picture at the industry, how

0:33:46.720 --> 0:33:49.320
<v Speaker 2>will these other players be looking at this trial, do

0:33:49.360 --> 0:33:49.720
<v Speaker 2>you think?

0:33:51.120 --> 0:33:51.320
<v Speaker 3>Yeah?

0:33:51.360 --> 0:33:53.520
<v Speaker 14>I mean I think they're all probably looking at it

0:33:53.600 --> 0:33:56.360
<v Speaker 14>through through a similar lens. I know YouTube is trying

0:33:56.400 --> 0:33:58.960
<v Speaker 14>to really make the case that it operates very differently

0:33:58.960 --> 0:34:01.720
<v Speaker 14>than than a meta than a TikTok than a snapchat,

0:34:01.800 --> 0:34:06.360
<v Speaker 14>and so I think, you know, that could potentially see see.

0:34:06.200 --> 0:34:07.640
<v Speaker 5>YouTube play out a little bit differently.

0:34:07.680 --> 0:34:11.240
<v Speaker 14>But I think in general, yes, especially a company like TikTok,

0:34:11.280 --> 0:34:14.200
<v Speaker 14>which is kind of you know, it's really equated with

0:34:14.280 --> 0:34:16.839
<v Speaker 14>teenage use. Right, A large part of why it became

0:34:16.880 --> 0:34:19.000
<v Speaker 14>so popular in the US in the first place was

0:34:19.040 --> 0:34:21.319
<v Speaker 14>because of young people, because of teenagers.

0:34:21.360 --> 0:34:23.799
<v Speaker 5>So and like as you said, yes, our figures do.

0:34:23.840 --> 0:34:26.920
<v Speaker 14>Show that teenagers spend a ton of time on TikTok,

0:34:26.960 --> 0:34:29.760
<v Speaker 14>definitely more than Instagram. Although we are see that seeing

0:34:29.760 --> 0:34:31.960
<v Speaker 14>that time spent you know, come down a little bit

0:34:32.000 --> 0:34:35.200
<v Speaker 14>year every year, which kind of suggests that TikTok isn't

0:34:35.239 --> 0:34:37.399
<v Speaker 14>maybe the shiny new object it was, you know, five

0:34:37.480 --> 0:34:38.200
<v Speaker 14>six years ago.

0:34:39.920 --> 0:34:43.399
<v Speaker 2>The difficult question, I mean, there's is what happens next, right,

0:34:43.440 --> 0:34:47.239
<v Speaker 2>and your your research others point to law makers, you know,

0:34:47.400 --> 0:34:50.880
<v Speaker 2>putting out a new set of rules. Is their momentum

0:34:50.960 --> 0:34:52.360
<v Speaker 2>behind that pathway?

0:34:54.080 --> 0:34:57.880
<v Speaker 14>So yes, and no, I think there is momentum at

0:34:57.880 --> 0:35:00.920
<v Speaker 14>the state and the federal level. We are seeing lawmakers

0:35:00.960 --> 0:35:04.360
<v Speaker 14>and regulators try try to address a lot of these concerns.

0:35:04.560 --> 0:35:08.719
<v Speaker 14>Independent of this lawsuit, These lawsuits. That being said, they're

0:35:08.760 --> 0:35:11.440
<v Speaker 14>running up, running up against a lot of challenges.

0:35:12.160 --> 0:35:13.680
<v Speaker 5>For one is big tech lobbying.

0:35:13.719 --> 0:35:16.000
<v Speaker 14>I mean, these companies are lobbying against a lot of

0:35:16.040 --> 0:35:17.600
<v Speaker 14>these bills and laws.

0:35:18.239 --> 0:35:20.440
<v Speaker 5>There's challenges happening in court, and.

0:35:20.400 --> 0:35:22.640
<v Speaker 14>Then even you know, generally this tends to be a

0:35:22.640 --> 0:35:25.680
<v Speaker 14>bipartisan issue. I mean, we see lawmakers on both sides

0:35:25.680 --> 0:35:27.600
<v Speaker 14>of the aisle want to kind of reign in the

0:35:27.640 --> 0:35:30.760
<v Speaker 14>power of these platforms and reign in what they perceive

0:35:30.880 --> 0:35:31.520
<v Speaker 14>to be harms.

0:35:31.920 --> 0:35:34.239
<v Speaker 5>But the way they want to go about.

0:35:33.960 --> 0:35:37.440
<v Speaker 14>It often differs, and so that's another challenge. Enforcement is

0:35:37.440 --> 0:35:39.480
<v Speaker 14>a challenge. We're seeing that play out in Australia with

0:35:39.520 --> 0:35:42.400
<v Speaker 14>the ban under sixteens. You know, they're having a lot

0:35:42.400 --> 0:35:44.200
<v Speaker 14>of success in some ways, but they are having some

0:35:44.320 --> 0:35:47.520
<v Speaker 14>enforcement challenges and actually getting people under sixteen to completely

0:35:47.560 --> 0:35:50.600
<v Speaker 14>say off these platforms, and so it's a messy area

0:35:50.640 --> 0:35:51.160
<v Speaker 14>to regulate.

0:35:52.680 --> 0:35:55.080
<v Speaker 3>Mind Smiley emocs to senior analysts. Thank you.

0:35:55.120 --> 0:35:57.600
<v Speaker 2>Now, coming up, we're going to hear from Microsoft president

0:35:57.680 --> 0:36:01.240
<v Speaker 2>Brad Smith on the company's relationship with open AI.

0:36:01.480 --> 0:36:03.520
<v Speaker 3>That's next. This is Bloomberg Tech.

0:36:11.840 --> 0:36:14.680
<v Speaker 2>Microsoft president Brad Smith says the company is on track

0:36:14.760 --> 0:36:18.280
<v Speaker 2>to spend fifty billion dollars by twenty thirty to expand

0:36:18.280 --> 0:36:21.400
<v Speaker 2>AI infrastructure to the global South. He sat down with

0:36:21.440 --> 0:36:24.640
<v Speaker 2>Bloomberg's has Linda Ahmin on the sidelines of India's AI

0:36:24.680 --> 0:36:27.000
<v Speaker 2>Impact Summit. He also weighed in on the state of

0:36:27.080 --> 0:36:29.839
<v Speaker 2>Microsoft's partnership with open ai Take a listen.

0:36:30.840 --> 0:36:35.080
<v Speaker 15>I think it remains a critically important partnership for Microsoft.

0:36:35.160 --> 0:36:39.480
<v Speaker 15>We bet on each other, but it's not as exclusive

0:36:39.920 --> 0:36:43.680
<v Speaker 15>as it was, say a few years ago. OpenAI uses

0:36:43.760 --> 0:36:46.640
<v Speaker 15>our compute, they train models in our data centers, but

0:36:46.680 --> 0:36:50.799
<v Speaker 15>they work with other companies as well. We critically rely

0:36:50.960 --> 0:36:55.320
<v Speaker 15>on open AI's frontier models. They are among the best,

0:36:55.560 --> 0:36:58.120
<v Speaker 15>and many days they are the best in the world.

0:36:58.480 --> 0:37:01.200
<v Speaker 15>But we have a relationship with him thropic. We use

0:37:01.239 --> 0:37:04.759
<v Speaker 15>open source models, We're developing our own models, so on

0:37:04.920 --> 0:37:09.279
<v Speaker 15>both sides we work with more partners. But I think

0:37:09.320 --> 0:37:12.600
<v Speaker 15>the partnership between the two of us remains an imperative.

0:37:12.640 --> 0:37:15.080
<v Speaker 15>It's a huge priority for us at Microsoft.

0:37:15.160 --> 0:37:17.319
<v Speaker 16>The question is why is it a hedge, is it

0:37:17.360 --> 0:37:21.360
<v Speaker 16>a strategic pivot? How would you describe that move looking

0:37:21.400 --> 0:37:23.280
<v Speaker 16>at alternative partners.

0:37:23.080 --> 0:37:26.080
<v Speaker 15>Well, look, if you want to think about the partnership

0:37:26.160 --> 0:37:28.560
<v Speaker 15>between open AI and Microsoft. All you have to do

0:37:28.640 --> 0:37:32.960
<v Speaker 15>is ask one question, would any of this generative AI

0:37:33.120 --> 0:37:36.480
<v Speaker 15>sector even exist if the two of us had not

0:37:36.640 --> 0:37:40.920
<v Speaker 15>come together. Open Ai created something that no one else

0:37:41.040 --> 0:37:46.400
<v Speaker 15>even understood was possible when they launched chat GPT, and

0:37:46.520 --> 0:37:51.120
<v Speaker 15>open Ai could never have created that without Microsoft's compute

0:37:51.480 --> 0:37:55.719
<v Speaker 15>and really frontier data centers on which to train that.

0:37:56.080 --> 0:38:00.520
<v Speaker 15>We built something special. We'll each do special things on

0:38:00.560 --> 0:38:03.560
<v Speaker 15>our own. Will each do special things with other companies?

0:38:04.120 --> 0:38:08.080
<v Speaker 15>Will each do I think, very special things with each other.

0:38:08.800 --> 0:38:11.560
<v Speaker 16>Just one funnel question, because we're running out of time, apparently,

0:38:12.000 --> 0:38:13.840
<v Speaker 16>copilot is it losing traction?

0:38:14.239 --> 0:38:17.600
<v Speaker 15>I don't think so. It's gaining ground. It's getting better

0:38:17.680 --> 0:38:20.359
<v Speaker 15>every week, it's getting better every month. I say this

0:38:20.520 --> 0:38:24.680
<v Speaker 15>as a user, not just a M three sixty five copilot,

0:38:24.680 --> 0:38:28.360
<v Speaker 15>but our consumer copilot, our researcher agent, our other agents.

0:38:29.040 --> 0:38:34.520
<v Speaker 15>We're seeing usage grow. We will continue to add features

0:38:34.560 --> 0:38:38.640
<v Speaker 15>and functionality. I personally think it is an important part

0:38:38.800 --> 0:38:41.840
<v Speaker 15>not just a Microsoft's past and present. It is a

0:38:42.040 --> 0:38:44.799
<v Speaker 15>key part of our future. It is a key part

0:38:44.840 --> 0:38:49.839
<v Speaker 15>of I think making everyone more creative, more productive. I

0:38:49.880 --> 0:38:52.399
<v Speaker 15>certainly find that in my own work each and every

0:38:52.480 --> 0:38:53.799
<v Speaker 15>day that.

0:38:53.840 --> 0:38:57.160
<v Speaker 2>Was Microsoft fvicechair and President Brad Smith, along with Bloomberg's

0:38:57.360 --> 0:39:00.440
<v Speaker 2>has end Amen. In other news out of the Summitcrosoft

0:39:00.440 --> 0:39:03.400
<v Speaker 2>co founder Bill Gates backed out of a keynote address

0:39:03.840 --> 0:39:07.160
<v Speaker 2>just hours before he was due to speak, replaced instead

0:39:07.440 --> 0:39:10.680
<v Speaker 2>by the president of the Gates Foundations Africa and India offices.

0:39:10.719 --> 0:39:14.120
<v Speaker 2>The Foundation explained the decision as an effort to ensure

0:39:14.160 --> 0:39:18.200
<v Speaker 2>the focus remains on the conference, without elaborating. The withdrawal

0:39:18.200 --> 0:39:22.400
<v Speaker 2>follows criticism of gates relationship with convicted sex offender Jeffrey

0:39:22.400 --> 0:39:27.080
<v Speaker 2>Epstein and speculation about whether that link could overshadow the

0:39:27.120 --> 0:39:32.000
<v Speaker 2>Foundation's broader mission. Coming up, there is more drama around

0:39:32.040 --> 0:39:35.320
<v Speaker 2>the sale of Warner Brothers Discovery. We'll discover that next.

0:39:35.680 --> 0:39:48.360
<v Speaker 2>This is Bloomberg Tech. Hollywood is no stranger to a

0:39:48.440 --> 0:39:51.160
<v Speaker 2>plot twist. Take the latest development in the saga to

0:39:51.200 --> 0:39:55.560
<v Speaker 2>purchase Warner Brothers Discovery. According to sources, the Justice Department

0:39:55.560 --> 0:39:58.799
<v Speaker 2>has summoned some of the country's largest theater chains to

0:39:58.880 --> 0:40:01.840
<v Speaker 2>discuss the potential impact active a sale to either Netflix

0:40:01.920 --> 0:40:04.719
<v Speaker 2>or Paramount Skuydance. This coming on the heels of Warner

0:40:04.719 --> 0:40:08.520
<v Speaker 2>Brothers reopening deal talks with Paramount. Now all this drama

0:40:08.680 --> 0:40:12.120
<v Speaker 2>should be seen as one twist too many for Netflix,

0:40:12.400 --> 0:40:15.520
<v Speaker 2>according to Bloomberg Intelligence, Let's bring in the aufer of

0:40:15.520 --> 0:40:16.440
<v Speaker 2>that research b I.

0:40:16.520 --> 0:40:18.359
<v Speaker 3>Seen around this. KEITHA. Angerath and.

0:40:20.080 --> 0:40:23.080
<v Speaker 2>Investors have voiced this, right there is this idea that

0:40:23.160 --> 0:40:25.520
<v Speaker 2>now might be the time for Netflix to walk away

0:40:25.840 --> 0:40:28.360
<v Speaker 2>from some corners of the market. I think last weekend

0:40:28.400 --> 0:40:31.719
<v Speaker 2>Korra came out in favor of that. But you at

0:40:31.760 --> 0:40:35.440
<v Speaker 2>BI have some pretty clear reasons why you think Netflix

0:40:35.440 --> 0:40:36.160
<v Speaker 2>should walk away.

0:40:36.239 --> 0:40:37.439
<v Speaker 3>Just outline them for us.

0:40:38.480 --> 0:40:39.279
<v Speaker 11>Yeah, absolutely.

0:40:39.280 --> 0:40:42.759
<v Speaker 17>I mean this has been a major distraction ed now

0:40:42.840 --> 0:40:44.960
<v Speaker 17>for you know, over a couple of months right now,

0:40:44.960 --> 0:40:46.560
<v Speaker 17>and we've seen that even you know, as a reflection

0:40:46.600 --> 0:40:48.759
<v Speaker 17>in the stock price. But they're really you know, it

0:40:48.880 --> 0:40:51.719
<v Speaker 17>just kind of really muddies a really clean narrative for

0:40:51.840 --> 0:40:54.960
<v Speaker 17>the company. And I think from our perspective, yes, we

0:40:55.040 --> 0:40:57.279
<v Speaker 17>do see that. You know, Netflix obviously has a lot

0:40:57.280 --> 0:41:01.080
<v Speaker 17>of financial firepower. They are an absolute cash flow machine.

0:41:01.200 --> 0:41:03.160
<v Speaker 17>They're probably going to generate about eleven billion in free

0:41:03.160 --> 0:41:04.360
<v Speaker 17>cash flow this year, there's.

0:41:04.200 --> 0:41:05.000
<v Speaker 11>No doubt about that.

0:41:05.560 --> 0:41:07.800
<v Speaker 17>But there is going to be the question of leverage.

0:41:07.840 --> 0:41:09.880
<v Speaker 17>So if they do take up their offer, it's currently

0:41:09.920 --> 0:41:12.640
<v Speaker 17>about twenty seven dollars and seventy five cents their risk,

0:41:12.719 --> 0:41:15.440
<v Speaker 17>pushing close to almost four times leverage. As they go

0:41:15.600 --> 0:41:18.520
<v Speaker 17>up to maybe thirty dollars thirty two dollars, we don't

0:41:18.520 --> 0:41:20.960
<v Speaker 17>know what that final number is going to be. And

0:41:21.000 --> 0:41:23.400
<v Speaker 17>then you know you're going to deal with how do

0:41:23.440 --> 0:41:26.600
<v Speaker 17>you reduce debt, So it just becomes a big problem there.

0:41:26.600 --> 0:41:28.680
<v Speaker 17>And then of course you just have the general concerns

0:41:28.719 --> 0:41:33.359
<v Speaker 17>with integration risk, execution risk. And remember with this, you know,

0:41:33.400 --> 0:41:36.200
<v Speaker 17>Netflix is really acquiring a business that they always wanted

0:41:36.200 --> 0:41:39.520
<v Speaker 17>to stay away from. They're acquiring a traditional Yes, they

0:41:39.520 --> 0:41:43.600
<v Speaker 17>do get the library, the fantastic IP, the HBO library,

0:41:43.600 --> 0:41:45.000
<v Speaker 17>which is one of a kind when it comes to

0:41:45.040 --> 0:41:48.960
<v Speaker 17>scripted you know, dramas, But then you also really are

0:41:49.120 --> 0:41:51.719
<v Speaker 17>increasing your dependence on Hollywood. And the whole reason that

0:41:51.760 --> 0:41:55.000
<v Speaker 17>Netflix has done so well ed is because they have

0:41:55.160 --> 0:41:58.359
<v Speaker 17>been a global powerhouse. They have not just depended on

0:41:58.440 --> 0:42:01.720
<v Speaker 17>Hollywood for content. They have gone to so many different

0:42:01.800 --> 0:42:05.919
<v Speaker 17>local markets. International has been such a big deal for them.

0:42:06.760 --> 0:42:09.040
<v Speaker 17>But you know, as we kind of see the union

0:42:09.080 --> 0:42:11.319
<v Speaker 17>contracts kind of coming up, you know, we think that

0:42:11.440 --> 0:42:14.319
<v Speaker 17>increasing the dependence on Hollywood is actually more of a

0:42:14.360 --> 0:42:16.239
<v Speaker 17>negative than a positive for Netflix and.

0:42:16.320 --> 0:42:19.800
<v Speaker 2>Just very quickly getha the stocks down more than thirty

0:42:19.840 --> 0:42:23.400
<v Speaker 2>percent since this started. Is that a signal or is

0:42:23.440 --> 0:42:24.920
<v Speaker 2>it real pressure on management?

0:42:26.280 --> 0:42:27.759
<v Speaker 17>So a couple of different things. I think a lot

0:42:27.760 --> 0:42:29.719
<v Speaker 17>of it hinges on what the outcome of this whole

0:42:29.760 --> 0:42:31.840
<v Speaker 17>Warner Brothers Discovery deal is going to be. But then

0:42:31.920 --> 0:42:34.560
<v Speaker 17>Netflix also has some problems. They have shown that they

0:42:34.560 --> 0:42:36.960
<v Speaker 17>haven't really been able to grow engagement and a lot

0:42:36.960 --> 0:42:39.080
<v Speaker 17>of people have argued that maybe that is why that

0:42:39.120 --> 0:42:42.200
<v Speaker 17>they're pursuing Warner Brothers Discovery in the first place. So,

0:42:42.440 --> 0:42:44.440
<v Speaker 17>you know, they have a couple of things to do

0:42:44.520 --> 0:42:47.200
<v Speaker 17>in terms of increasing their operating margin in terms of

0:42:47.400 --> 0:42:50.200
<v Speaker 17>boosting engagement, and if they do that, then I think

0:42:50.400 --> 0:42:53.000
<v Speaker 17>management has a pretty good story why they don't need

0:42:53.040 --> 0:42:54.120
<v Speaker 17>Warner Brothers Discovery.

0:42:54.719 --> 0:42:57.480
<v Speaker 2>Keither rang enough from Bloomberg Intelligence. Thank you very much,

0:42:57.520 --> 0:43:01.320
<v Speaker 2>and we will be speaking with Netflix coc Ted Surundos

0:43:01.440 --> 0:43:04.319
<v Speaker 2>is in about thirty minutes time, so stick around. That

0:43:04.400 --> 0:43:07.359
<v Speaker 2>does it for this edition of Bloomberg Tech Recap. What

0:43:07.600 --> 0:43:11.160
<v Speaker 2>was an incredible news show on the podcast you know

0:43:11.200 --> 0:43:13.120
<v Speaker 2>where to find it. This is Bloomberg Tech