WEBVTT - SoFi & ON Semi Earnings, AI Regulation in DC 0:00:01.520 --> 0:00:05.840 From Mahard where Innovation, money and power Collie in Silicon 0:00:05.920 --> 0:00:10.360 Vallet NBN. This is Bloomberg Technology with Caroline Hyde and 0:00:10.600 --> 0:00:11.200 Ed Ludlow. 0:00:24.960 --> 0:00:27.520 I'm Caroline Hide at Bloomberg's Welth headquarters in New York 0:00:28.000 --> 0:00:29.560 and I met Ludlow in San Francisco. 0:00:29.680 --> 0:00:31.080 This is Bloomberg Technology. 0:00:31.160 --> 0:00:33.320 Coming up, we'll talk the state of fintech and of 0:00:33.320 --> 0:00:36.240 course earnings with the CEO of SOFI as a company 0:00:36.240 --> 0:00:39.680 beats and raises its revenue forecast for the year plus. 0:00:39.720 --> 0:00:43.080 President Biden plans to issue a sweeping executive order on 0:00:43.200 --> 0:00:47.400 artificial intelligence. Today will break down the details and its impact. 0:00:47.200 --> 0:00:49.320 And we push ahead to the all important Apple event 0:00:49.400 --> 0:00:51.600 of the year. It's the last one they have and 0:00:51.640 --> 0:00:55.080 it's set to veil two new macs and processes later 0:00:55.200 --> 0:00:56.840 tonight at a scary fest. 0:00:56.920 --> 0:00:57.959 But first let's check in. 0:00:57.920 --> 0:01:00.000 On these markets, because look, there's a tug of war 0:01:00.120 --> 0:01:02.480 going on, whether it's geopolitics on the one side, whether 0:01:02.560 --> 0:01:05.600 or not it's well questions of whether direction of travel 0:01:05.600 --> 0:01:07.319 we saw off too far too fast when it comes 0:01:07.360 --> 0:01:10.320 to tech. We're actually seeing money move into stock markets today, 0:01:10.319 --> 0:01:12.600 particularly in the nasdac COAB a percentage point are the 0:01:12.640 --> 0:01:16.120 benchmarks well rallying off of what have been over sold territory, 0:01:16.440 --> 0:01:19.520 particularly as geopolitics still does swell and we're seeing some 0:01:19.560 --> 0:01:21.800 concerns about the conflict in the Middle East, but maybe 0:01:21.840 --> 0:01:23.760 not escalating the way that many had imagined. So we 0:01:23.840 --> 0:01:26.240 actually see perhaps a move out of some of the 0:01:26.240 --> 0:01:28.360 haven's of choice yields Actually pushing up on the ten 0:01:28.440 --> 0:01:30.680 year yield is notable though also we've got the all 0:01:30.680 --> 0:01:32.959 important fair and we've also got, of course what we 0:01:33.000 --> 0:01:35.400 see from the Treasury in terms of bondishments coming up 0:01:35.400 --> 0:01:36.040 for the last quarter. 0:01:36.080 --> 0:01:37.839 In the next year, we're looking at crude just. 0:01:37.760 --> 0:01:39.679 Off by three and a half percent, that really playing 0:01:39.720 --> 0:01:42.200 into perhaps some of the anxiety just pulling back, ever 0:01:42.280 --> 0:01:45.600 so slightly cautiously when it comes to of course Israel 0:01:45.640 --> 0:01:47.200 and Hamas. Let's move on and have a little look 0:01:47.240 --> 0:01:49.000 at oh, the riscacid a choice. When it comes to 0:01:49.040 --> 0:01:51.600 the blue Blag technology, we're looking at crypto look, actually 0:01:51.760 --> 0:01:54.040 not much volatility on a day. We're actually we've seen 0:01:54.280 --> 0:01:56.840 such buying in the previous week. There is still thin 0:01:56.880 --> 0:01:59.200 liquidity here ed but we're seeing thirty four thousand, a 0:01:59.280 --> 0:02:01.480 level that's being so stayed for now. That's as the 0:02:01.480 --> 0:02:02.640 dollar is on the downside. 0:02:03.440 --> 0:02:04.960 Yep. Three single names I'm watching. 0:02:05.000 --> 0:02:08.200 The first is Apple, Yeah, the scary fast event this evening, 0:02:08.240 --> 0:02:11.799 the expectation a new iMac and an updated higher end 0:02:12.120 --> 0:02:15.200 MacBook Pro, but also an emphasis on chips. We think 0:02:15.240 --> 0:02:18.880 they'll unveil the M three latest generation processor. The stock 0:02:18.880 --> 0:02:21.520 being supported up one percent. Then we get earnings on Thursday. 0:02:21.560 --> 0:02:24.239 Big week for Apple Meta actually some news. 0:02:24.000 --> 0:02:24.640 Out of Europe. 0:02:24.960 --> 0:02:26.680 Out of Europe, the stock up two and a half percent. 0:02:26.880 --> 0:02:30.200 We will have an ad free subscription based version of 0:02:30.240 --> 0:02:33.280 the Facebook app and Instagram that supported the stock in 0:02:33.320 --> 0:02:35.760 the session. One interesting name that we're watching is kind 0:02:35.760 --> 0:02:37.919 of the main one of the show is so Fi. 0:02:38.040 --> 0:02:40.640 This is an earning story. Were down one point seven percent. 0:02:41.200 --> 0:02:44.440 Following the open we were almost fifteen percent. That is 0:02:44.480 --> 0:02:46.960 a big swing now to the downside, down one and 0:02:47.000 --> 0:02:50.560 a half percent. Upgrading revenue guidance for the year, beating 0:02:50.639 --> 0:02:54.720 expectations on that front, deposits tripling from a year ago 0:02:54.760 --> 0:02:57.680 and coming in ahead of expectations. But this is a 0:02:57.720 --> 0:03:01.160 really interesting stock reaction, strange one. 0:03:00.560 --> 0:03:01.320 And funny enough. 0:03:01.320 --> 0:03:03.400 I'm pretty sure our next guest doesn't always want to 0:03:03.400 --> 0:03:05.080 talk about stock reaction. But we'll want to talk a 0:03:05.080 --> 0:03:07.440 bit more about the numbers. Let's bring in Sofi see 0:03:07.639 --> 0:03:10.360 Anthony Noto And I'm sure you're going to say, oh, 0:03:10.400 --> 0:03:12.600 we don't go by the day by day fluctuations. What 0:03:12.639 --> 0:03:15.160 do you make though of the optimism of release originally 0:03:15.160 --> 0:03:17.000 seen around the numbers? And what more do you want 0:03:17.000 --> 0:03:19.200 to say to an investor base that maybe just or 0:03:19.200 --> 0:03:21.079 maybe we'll take some profit on the day. 0:03:22.040 --> 0:03:23.480 Well, first, thank you for having me. 0:03:24.320 --> 0:03:27.720 What I'd say is we're really excited about the results 0:03:27.720 --> 0:03:30.680 that we delivered today. I think they're extraordinary in a 0:03:30.760 --> 0:03:34.240 number of different ways, and equally as positive on the outlook. 0:03:34.400 --> 0:03:37.360 There's very few companies that are driving durable growth the 0:03:37.360 --> 0:03:40.640 way we are. Plus twenty five percent revenue growth, really 0:03:40.640 --> 0:03:44.120 strong member growth at forty seven percent accelerated. We had 0:03:44.120 --> 0:03:47.400 a record number of new members added as well as products, 0:03:47.600 --> 0:03:50.280 which is a testament to the value proposition that we're delivering. 0:03:50.600 --> 0:03:52.560 Our profitability continues to improve. 0:03:53.280 --> 0:03:55.720 We now have all three of our business segments that 0:03:55.760 --> 0:03:59.480 are profitable, that being the lending products as well as 0:03:59.520 --> 0:04:03.160 tech plot form and now financial services. Sixty seven percent 0:04:03.200 --> 0:04:05.560 growth in are absolute dollars on a year year basis 0:04:05.600 --> 0:04:07.800 from non lending and that will continue to be the 0:04:07.880 --> 0:04:10.760 driver and growth of the company. And we meaningfully grew 0:04:11.040 --> 0:04:14.040 tangible book value over they're trailing twelve months of about 0:04:14.040 --> 0:04:16.560 one hundred and seventy million dollars. So I feel like 0:04:16.600 --> 0:04:20.200 we're executing across the board on both growth and profitability 0:04:20.279 --> 0:04:23.120 and shareolder value, and it's just a matter of time 0:04:23.120 --> 0:04:24.440 before that's reflected in the stock. 0:04:24.520 --> 0:04:26.440 We just have to keep delivering the way we have been. 0:04:27.520 --> 0:04:29.800 Anthony, it was this interesting to listen to you on 0:04:29.839 --> 0:04:32.160 the call. You kind of really talked up the non 0:04:32.279 --> 0:04:36.119 lending parts of the business, particularly going into twenty twenty four. 0:04:36.800 --> 0:04:38.840 Are those going to continue to be more of growth 0:04:38.920 --> 0:04:41.320 driver for you than the lending business? 0:04:42.279 --> 0:04:42.839 That's correct. 0:04:42.839 --> 0:04:45.680 They've reached the size in terms of their absolute scale 0:04:45.800 --> 0:04:49.880 where their absolute growth in dollars is meaningful at two 0:04:49.880 --> 0:04:52.359 thirds of the overall growth in dollars, and they're profitable, 0:04:52.400 --> 0:04:55.159 which means we can now start investing even more in 0:04:55.200 --> 0:04:56.720 them and have them grow faster. 0:04:56.520 --> 0:04:57.599 Than their lending businesses. 0:04:57.640 --> 0:04:59.840 And so the way we talked about the call is 0:04:59.839 --> 0:05:02.960 that I would expect tech platform and financial services to 0:05:03.000 --> 0:05:05.679 be the driver of growth and lending to be additive 0:05:05.760 --> 0:05:08.000 to growth, which is the opposite of what happened so 0:05:08.120 --> 0:05:08.760 far this year. 0:05:10.040 --> 0:05:12.919 The interest rate environment is really interesting because some of 0:05:12.960 --> 0:05:17.520 your sort of technology focused payers Lending Club being an example, 0:05:17.600 --> 0:05:20.200 is struggling. They've gone through a round of job cuts. 0:05:20.240 --> 0:05:24.240 For example, I look at deposits tripling from a year ago. 0:05:24.440 --> 0:05:27.640 What is the principal driver of that traction you're getting? 0:05:27.640 --> 0:05:31.160 Why are you able to perform when similar business models 0:05:31.160 --> 0:05:31.400 are not. 0:05:33.240 --> 0:05:35.400 The thing that we're benefiting from is that we have 0:05:35.560 --> 0:05:39.320 a great diversification because of our strategy. So our goal 0:05:39.400 --> 0:05:41.839 is to help our members on all the most important 0:05:41.920 --> 0:05:44.000 days in their lives and all the days in between. 0:05:44.040 --> 0:05:47.039 From a financial perspective, that results in us having nine 0:05:47.080 --> 0:05:49.960 different businesses. Some do really well on a high rate environment, 0:05:50.360 --> 0:05:52.400 some will do better in a low rate environment. 0:05:52.560 --> 0:05:53.320 Right now, the. 0:05:53.279 --> 0:05:56.839 Strength that we're seeing is behind our flagship products so far, Money, 0:05:57.400 --> 0:05:59.960 which is the best of checking and savings in one account. 0:06:00.560 --> 0:06:03.000 We give you all the great functionality that a digital 0:06:03.000 --> 0:06:07.680 operator can provide, in addition to additional benefits like two 0:06:07.720 --> 0:06:11.800 day early paycheck and then most significantly, a very unique 0:06:11.839 --> 0:06:15.880 interest rate at four point six percent apy no fees, 0:06:15.920 --> 0:06:18.560 and the ability to get a free certified financial planner 0:06:18.880 --> 0:06:21.720 end up to two million dollars of FDIC insurance. 0:06:21.720 --> 0:06:23.080 So it's a very unique product. 0:06:23.440 --> 0:06:25.919 It's helped us grow at the top of our funnel, 0:06:26.160 --> 0:06:28.480 and then we see great cross buying from that product 0:06:28.520 --> 0:06:31.479 as well as others. So the diversification we have is 0:06:31.480 --> 0:06:36.000 definitely helping. Having both lending businesses and depository businesses are 0:06:36.000 --> 0:06:38.840 also very unique. And then of course our investing business 0:06:39.200 --> 0:06:41.560 is a great cross buy product. On top of that, 0:06:42.000 --> 0:06:44.200 one thing a lot of investors don't know in the 0:06:44.240 --> 0:06:47.320 retail sector about SOFI is we have a third business, 0:06:47.320 --> 0:06:51.520 our technology platform business, which is leveraging the technology that 0:06:51.640 --> 0:06:54.680 we use to build SOFI for other partners. 0:06:54.680 --> 0:06:56.280 There's about one hundred and thirty. 0:06:56.000 --> 0:06:59.640 Five million accounts that sit on top of that technology platform. 0:07:00.040 --> 0:07:02.360 We often talk about it as the fintech of the 0:07:02.360 --> 0:07:06.360 awso fintech because we enable eight billion transactions a year 0:07:06.440 --> 0:07:07.720 across that platform. 0:07:08.040 --> 0:07:11.080 Let's talk about in that offering connector the natural Language 0:07:11.080 --> 0:07:14.320 AI driven I think it's like an intelligent digital assistant. Basically, 0:07:14.680 --> 0:07:16.880 how much has AI been a driver of getting clients 0:07:16.920 --> 0:07:18.440 excited of for your technology offering. 0:07:19.440 --> 0:07:20.440 It's a small piece. 0:07:20.480 --> 0:07:22.960 As you mentioned, we have a whole portfolio of products 0:07:22.960 --> 0:07:26.160 in our tech platform, one of which is a chatbot 0:07:26.320 --> 0:07:29.640 for customer service. It helps reduce the time to resolution 0:07:29.880 --> 0:07:32.920 and reduce the context per customer. It does leverage AI, 0:07:33.320 --> 0:07:36.239 natural language AI and answering the questions that our members 0:07:36.280 --> 0:07:39.960 have they really like the product and improve satisfaction. 0:07:40.400 --> 0:07:42.680 It's a product we're offering to financial institutions. 0:07:42.720 --> 0:07:46.360 We're also increasingly offering it to people that are not 0:07:46.520 --> 0:07:48.760 currently using some of our other products, so it's a 0:07:48.760 --> 0:07:50.400 standalone product that's in the cloud. 0:07:50.920 --> 0:07:53.720 What you're also offering in the retail side of your 0:07:53.760 --> 0:07:57.240 business in particular is IPOs. Of course, this has been 0:07:57.240 --> 0:07:59.960 an interesting thing that we've heard, particularly AI related store 0:08:00.360 --> 0:08:02.720 around on which I know that you were helping sell 0:08:02.760 --> 0:08:04.920 down to some retail investors, but also you're on the 0:08:04.920 --> 0:08:08.120 Instacart deal and oddity tech. How much will the IPO 0:08:08.200 --> 0:08:09.240 pipeline benefit you? 0:08:09.280 --> 0:08:12.960 Do you think the IPO pipeline has two benefits. 0:08:13.000 --> 0:08:15.280 The first is it's a direct revenue stream, which isn't 0:08:15.280 --> 0:08:18.160 that meaningful, But what is more meaningful is that this 0:08:18.200 --> 0:08:22.800 is a unique product that mainstream, main mainstream investors retail 0:08:22.840 --> 0:08:25.800 investors typically do not have access to, so we're giving 0:08:25.800 --> 0:08:29.160 them access to IPOs at ipo prices and that helps 0:08:29.240 --> 0:08:32.559 drive more desire to become a SOFI member as well 0:08:32.559 --> 0:08:35.720 as it increases aum in our invest business, so it 0:08:35.800 --> 0:08:39.720 indirectly drives the business in a unique way. We want 0:08:39.760 --> 0:08:42.600 to give our members an opportunity to invest over the 0:08:42.640 --> 0:08:45.959 long term, and giving them more selection like an IPO 0:08:46.040 --> 0:08:48.880 at IPO prices is one way to do that. We're 0:08:48.920 --> 0:08:53.360 working on alternative asset classes as well. We pioneered fractional shares. 0:08:53.440 --> 0:08:56.880 We also offer ETFs and robo accounts, so we're trying 0:08:56.880 --> 0:08:59.040 to be a one stop shop, not just overall as 0:08:59.080 --> 0:09:01.280 a company, but within verticals like investing. 0:09:02.720 --> 0:09:05.800 Anthony last week he sold one hundred million dollars of 0:09:05.920 --> 0:09:06.840 personal loans. 0:09:06.880 --> 0:09:09.880 He talked about it on the call. Who was the buyer. 0:09:11.679 --> 0:09:15.440 We don't disclose the individual buyers were very pleased with 0:09:15.480 --> 0:09:19.040 the demand we're seeing for our assets, especially with the 0:09:19.040 --> 0:09:21.120 fact that rates are starting to hit a ceiling and 0:09:21.160 --> 0:09:23.800 would likely come down. We've been able to pass on 0:09:23.880 --> 0:09:28.160 the higher benchmark rates and higher rates for our loans 0:09:28.160 --> 0:09:31.520 and that's providing really attractive yields, especially given the fact 0:09:31.520 --> 0:09:34.160 that we have prime customers with an average FYCO score 0:09:34.440 --> 0:09:36.960 in our loans in the seven to fifty range and 0:09:37.080 --> 0:09:40.240 really high yield. So we've had a number of counter 0:09:40.280 --> 0:09:43.719 parties that were now making partners, and one of them, 0:09:43.760 --> 0:09:45.600 as was mentioned in the call, was from one hundred 0:09:45.600 --> 0:09:48.800 million dollar deal that will evolve into a two billion 0:09:48.840 --> 0:09:51.960 dollar forward flow. In addition to that, we filed a 0:09:52.000 --> 0:09:55.440 securitization with Blackrock for three hundred and seventy five million dollars, 0:09:55.440 --> 0:09:57.840 So a lot more to come on the loan asset 0:09:57.880 --> 0:10:00.360 side of the equation, but coming out of rates that 0:10:00.360 --> 0:10:02.680 are pre attractive to our roles into our balance sheet. 0:10:03.480 --> 0:10:06.200 All right, So FI CEO, Anthony Noeso, good to catch up. 0:10:06.200 --> 0:10:17.360 Thanks for joining us on this busy earnings morning. Okay, 0:10:17.440 --> 0:10:20.959 Later today President Joe Biden will sign an executive Order 0:10:21.080 --> 0:10:25.600 on Artificial Intelligence regulation, his most significant action yet to 0:10:25.679 --> 0:10:28.800 rein in the emerging technology. For more on the details, 0:10:29.000 --> 0:10:31.040 let's bring in Bloomberg's a Kayla Gardener. 0:10:31.160 --> 0:10:32.520 So what's in this, CEO? 0:10:35.000 --> 0:10:37.079 Yeah, this EO, as you mentioned, is a lot more 0:10:37.120 --> 0:10:39.840 sweeping than we were expecting. We initially thought it was 0:10:39.920 --> 0:10:43.000 just going to govern how the government uses AI. This 0:10:43.080 --> 0:10:46.160 is going to have wide reaching impacts on the private sector, 0:10:46.400 --> 0:10:49.679 on civil society. And the biggest takeaway here is the 0:10:49.679 --> 0:10:52.320 White House is using a law called the Defense Production 0:10:52.480 --> 0:10:56.920 Act to basically force major developments to submit to safety 0:10:56.960 --> 0:10:59.680 test so they will have to submit those tests to 0:10:59.760 --> 0:11:02.960 the government before they can be used for public release. 0:11:03.000 --> 0:11:04.079 Now this is not everyone. 0:11:04.160 --> 0:11:07.600 This is only powerful systems that are above a certain 0:11:07.640 --> 0:11:11.599 threshold and that could potentially pose risk to national security, 0:11:12.120 --> 0:11:14.800 pose economic risk, and that's going to have a big 0:11:15.040 --> 0:11:19.439 impact on companies like Amazon, Google. And another major takeaway 0:11:19.440 --> 0:11:22.120 that will be very familiar to people at home is 0:11:22.280 --> 0:11:25.760 they're also instructing the Commerce Department to start developing technology 0:11:26.040 --> 0:11:28.720 for water marking. So when you see those deep fakes 0:11:28.840 --> 0:11:31.600 video audio even they want there to be some sort 0:11:31.640 --> 0:11:35.000 of signal to American people that this is authentic, that 0:11:35.040 --> 0:11:37.480 this is a piece of AI, and they should know 0:11:37.520 --> 0:11:40.560 that they this is not disinformation or misinformation. So those 0:11:40.600 --> 0:11:43.880 are the biggest major takeaways, certainly sweeping, but will certainly 0:11:43.880 --> 0:11:46.600 depend on these agencies to enforce some of these targets. 0:11:46.720 --> 0:11:50.680 It's interesting you mentioned the world signaling signaling to well. 0:11:50.920 --> 0:11:53.800 At the moment, the voter is the people, but there's 0:11:53.840 --> 0:11:56.600 signaling to companies here, there's signaling indeed that the little 0:11:56.600 --> 0:11:59.240 of the heavy lifting does fold upon the agencies. Once again, 0:11:59.360 --> 0:12:01.120 that's about what fifteen companies going to be there at 0:12:01.120 --> 0:12:01.560 the signing. 0:12:01.640 --> 0:12:03.400 What have the reaction really been there? 0:12:05.520 --> 0:12:08.280 Yeah, something that's interesting about this EO is it largely 0:12:08.320 --> 0:12:12.880 builds off of voluntary commitments that fifteen major companies made 0:12:12.880 --> 0:12:17.480 this summer. That's Amazon, Facebook, Google, all of these major 0:12:17.520 --> 0:12:20.800 technology companies signed on to basically commit to some of 0:12:20.840 --> 0:12:23.040 the things that are already in this EO. And we're 0:12:23.040 --> 0:12:25.840 going to see all of these companies standing alongside the 0:12:25.880 --> 0:12:29.440 President today as he signed this EO, really signaling that 0:12:29.520 --> 0:12:31.880 they want to be a part of this process and 0:12:31.960 --> 0:12:34.720 ultimately they could be preventing themselves more harm down the 0:12:34.760 --> 0:12:37.800 line if they show now that they are willing to cooperate, 0:12:37.880 --> 0:12:41.000 that they're willing to put safeguards on this type of technology. 0:12:41.040 --> 0:12:42.839 And I think that's exactly what we're going to see today. 0:12:43.360 --> 0:12:45.280 We thank you, Okaynat God who's going to be getting 0:12:45.320 --> 0:12:48.079 back to that EO all important signing and really, well 0:12:48.120 --> 0:12:51.920 this means for Corporate America global viewpoints on AI and 0:12:51.960 --> 0:12:54.199 the gudrails that are being put into place. Let's talk 0:12:54.200 --> 0:12:56.520 about it more with Rama Anu, a senior director of 0:12:56.679 --> 0:13:01.000 Society and Intellectual Property the Special Competitive Studies. Previously, you 0:13:01.040 --> 0:13:03.280 served as director of Research Analysis and the National Security 0:13:03.320 --> 0:13:08.319 Commission on Artificial Intelligence. Therefore, I'm a perfect voice from 0:13:08.440 --> 0:13:10.600 the perspective that this is America trying to say that 0:13:10.600 --> 0:13:13.400 they are taking the biggest steps thus far by the 0:13:13.440 --> 0:13:16.439 world in terms of putting guardrails on the future development 0:13:16.440 --> 0:13:16.800 of AI. 0:13:16.880 --> 0:13:18.880 Do you think that this really is showing that. 0:13:20.679 --> 0:13:25.200 This is a historic moment for our country. America is 0:13:25.280 --> 0:13:29.280 leading and cutting edge frontier AI models and now we're 0:13:29.360 --> 0:13:33.360 leading an AI governance. So it's a signal domestically and 0:13:33.520 --> 0:13:37.120 globally that we are committed to AI governance and not 0:13:37.320 --> 0:13:38.560 stifling this innovation. 0:13:39.600 --> 0:13:42.559 Some of the directives aren't enforceable, as we're hearing. I mean, 0:13:42.600 --> 0:13:45.760 a lot of the overall legwork, heavy lifting is going 0:13:45.800 --> 0:13:48.880 to be done by some of these agencies, and indeed. 0:13:48.600 --> 0:13:50.839 Perhaps yet further legislation. 0:13:50.400 --> 0:13:52.679 Is really needed to come from Congress, particularly when it 0:13:52.760 --> 0:13:56.559 comes for privacy. From your perspective, does this have real 0:13:56.600 --> 0:13:58.600 teeth or is this more about signal? 0:14:00.720 --> 0:14:01.560 I think it's both. 0:14:01.920 --> 0:14:03.640 This is definitely a great start. 0:14:04.240 --> 0:14:07.480 The EO will have time lines on when departments and 0:14:07.520 --> 0:14:12.400 agencies need to work and implement these directives, and so 0:14:12.559 --> 0:14:14.840 I think that is where the hard work is going 0:14:14.920 --> 0:14:19.160 to start, is when we are implementing and enforcing this directive. 0:14:21.040 --> 0:14:21.360 Rama. 0:14:21.680 --> 0:14:25.760 The principal mechanism that the Executive Order outlines is that 0:14:25.840 --> 0:14:29.760 any company building a next generation large language model as 0:14:29.760 --> 0:14:32.960 opposed to one that's currently in existence, has to submit 0:14:33.000 --> 0:14:36.280 it to the government for safety review before it's put 0:14:36.320 --> 0:14:40.680 into the public domain. Is that an effective tool to 0:14:40.720 --> 0:14:44.360 your mind to meet the goals of this administration in 0:14:44.400 --> 0:14:45.080 the field of AI. 0:14:46.680 --> 0:14:50.080 Absolutely, But first we need standards and metrics to audit 0:14:50.120 --> 0:14:52.120 those AI systems. 0:14:51.880 --> 0:14:56.000 So that I expect that the Executive Order will put 0:14:56.040 --> 0:14:59.080 out a directive to the National Unis to come up 0:14:59.120 --> 0:15:03.320 with those standards metrics for auditing AI systems before they're 0:15:03.440 --> 0:15:05.560 adopted across. 0:15:05.120 --> 0:15:06.400 Departments and agencies. 0:15:07.560 --> 0:15:08.600 So I do think it will. 0:15:08.440 --> 0:15:11.000 Be effective, but we still have a lot to work 0:15:11.040 --> 0:15:11.280 to do. 0:15:12.880 --> 0:15:16.760 What's the intellectual property story here? If you're getting government 0:15:16.800 --> 0:15:19.760 oversight and your directing agencies to put water marks on 0:15:19.840 --> 0:15:24.920 content made by a private entity. 0:15:23.800 --> 0:15:24.960 So AI is going to have a. 0:15:24.880 --> 0:15:28.200 Lot of implications on our existing systems like our patent 0:15:28.240 --> 0:15:32.600 regime and our copyright regimes, and as you said, for 0:15:32.920 --> 0:15:35.240 standards for province and authenticity. 0:15:35.720 --> 0:15:39.440 So, for example, I think that the AI. 0:15:39.200 --> 0:15:41.720 Implications on the pattern regime means that we have to 0:15:41.880 --> 0:15:45.840 see what implications this has for our existing pattern regime 0:15:45.840 --> 0:15:48.520 and our existing laws to see what we may need 0:15:48.560 --> 0:15:51.600 to change, and the same for the copyright regime. And 0:15:51.840 --> 0:15:56.960 also there are harms when we don't know whether information 0:15:57.080 --> 0:15:59.520 in the digital domain is real, or if it's been 0:15:59.600 --> 0:16:01.840 generated AI, or if it's authentic. 0:16:02.240 --> 0:16:03.880 So we do need safety. 0:16:03.520 --> 0:16:07.120 Mechanimisms to make sure that when AI, when information is 0:16:07.200 --> 0:16:10.520 generated by AI, or when AI has been used, that 0:16:10.640 --> 0:16:12.080 we know that that's what's happening. 0:16:12.640 --> 0:16:16.160 Rom your own project, the Special Competitive Studies project is 0:16:16.200 --> 0:16:18.880 a fascinating one and in many ways led by Eric Schmidt, 0:16:18.880 --> 0:16:21.120 and the whole idea is sort of ways in which 0:16:21.200 --> 0:16:25.840 you can strengthen America's own competitiveness within technological developments, particularly 0:16:25.880 --> 0:16:26.680 in the world of AI. 0:16:27.440 --> 0:16:29.120 When it comes to competitiveness, how. 0:16:29.040 --> 0:16:31.800 Much do you think it will be fostered or stifled 0:16:32.080 --> 0:16:33.840 by the fact that it's not just America, but we 0:16:33.880 --> 0:16:36.600 also need guardrails put in place globally. We've got the 0:16:36.680 --> 0:16:39.240 UK about to have its AI summit, for example. Is 0:16:39.280 --> 0:16:41.840 there going to have to be some competitiveness given up 0:16:42.240 --> 0:16:42.920 for safety? 0:16:44.800 --> 0:16:47.040 Well, I think we need we definitely need our partners 0:16:47.040 --> 0:16:49.040 and allies in this tech competition. 0:16:49.160 --> 0:16:50.479 We can't do it alone. 0:16:50.800 --> 0:16:54.240 So there needs to be alignment with our existing safeguards 0:16:54.240 --> 0:16:57.640 on trustworthiness, on safety and security, making sure that these 0:16:57.680 --> 0:17:02.760 technologies are fair and responsible. So I think that our nations, 0:17:02.760 --> 0:17:05.040 our partners and allies do need to work together to 0:17:05.160 --> 0:17:08.159 make sure that our governance mechanisms do align so that 0:17:08.240 --> 0:17:11.840 we do have mechanisms for data flows, so that we 0:17:11.920 --> 0:17:14.520 have mechanisms to reach each other's markets. 0:17:15.880 --> 0:17:19.879 And in that sense there's healthy. 0:17:18.560 --> 0:17:20.080 No, so please finish your thought. 0:17:21.600 --> 0:17:22.000 Thank you. 0:17:22.280 --> 0:17:24.800 In that sense there is healthy competition, right, so we 0:17:24.840 --> 0:17:28.720 want everyone to operate according to the rules of the road. 0:17:28.880 --> 0:17:30.600 That's only when that's when we. 0:17:30.520 --> 0:17:34.280 Can get healthy competition, competition and make sure that we're 0:17:34.320 --> 0:17:36.440 innovating the way that we want to be innovating. 0:17:37.119 --> 0:17:39.520 Well, hey, come those rules of the road we see 0:17:39.720 --> 0:17:41.760 rama alu, thank you so much for some time. Special 0:17:41.760 --> 0:17:44.800 Competitive Studies project. We think of adjoining, I mean, while 0:17:44.800 --> 0:17:47.000 coming up we look at the California Governor Gavin Newsom 0:17:47.040 --> 0:17:50.240 wraps up hey China trip with a tour of Testas factory. 0:17:50.480 --> 0:17:53.080 We'll have more on that next and look you're watching the. 0:17:53.040 --> 0:17:56.760 Shes Yeah tested down more than four percent, on track 0:17:56.800 --> 0:17:59.639 for its biggest drop in a couple of weeks, lowest 0:17:59.720 --> 0:18:02.760 levels since May. Two pieces of news Panasonic kind of 0:18:02.800 --> 0:18:05.840 indicating through their first loss in three quarters that there's 0:18:05.880 --> 0:18:09.520 pretty lackluster demand for Models and Model X, translating through 0:18:09.560 --> 0:18:12.800 to their cell demand, but also byd big competitor of 0:18:12.800 --> 0:18:16.520 Tesla's in the China market having strong financial results. This Monday, 0:18:16.760 --> 0:18:19.200 both those things weighing on Tesla's shares down four percent, 0:18:19.400 --> 0:18:20.240 their lowest. 0:18:19.960 --> 0:18:30.560 Level since May. This is Bloomberg Technology. 0:18:39.640 --> 0:18:40.760 It's time for talking tech. 0:18:40.840 --> 0:18:44.199 First up, California Governor Gavin Uson wrapped up his China 0:18:44.280 --> 0:18:47.639 tour with a visit to Tesla's Shanghai factory. Newsom was 0:18:47.640 --> 0:18:51.680 accompanied by his delegation and China based Tesla executives. The 0:18:51.680 --> 0:18:55.560 Shanghai plant accounts for more than half of Tesla's global production, 0:18:55.840 --> 0:18:59.920 plus Panasonic's automotive batteries operations fell to their first law 0:19:00.240 --> 0:19:04.080 in three quarters on lackluster demand four Tesla's models and 0:19:04.119 --> 0:19:07.879 Model X cars. Demand shifted to Tesla models priced below 0:19:07.960 --> 0:19:12.199 the eighty thousand dollars threshold eligible for tax incentives, hurting 0:19:12.240 --> 0:19:14.080 the Japanese supplies profitability. 0:19:14.280 --> 0:19:15.400 In the September quarter. 0:19:15.280 --> 0:19:19.080 Plus, Meta will offer users in Europe add free access 0:19:19.080 --> 0:19:22.520 to Facebook and Instagram for a subscription fee, after courts 0:19:22.520 --> 0:19:25.000 in the region began cracking down on the way social 0:19:25.080 --> 0:19:29.040 media companies treat data. The subscription will cost nine ninety 0:19:29.119 --> 0:19:31.639 nine euros a month on the web or twelve euros 0:19:31.720 --> 0:19:35.680 ninety nine cents a month on iOS and on Android Caroline, And. 0:19:35.680 --> 0:19:39.080 In many ways that's responding to well European views on 0:19:39.960 --> 0:19:43.840 control and indeed some strength in the market that certainly 0:19:43.840 --> 0:19:45.840 Meta has, and that's an ongoing narrative here in the 0:19:45.920 --> 0:19:48.480 US as well ed because today Google CEO so No 0:19:48.600 --> 0:19:52.439 Pishai is testifying today in the company's antitrust trial. We 0:19:52.520 --> 0:19:54.000 just want to get you up to see what's happening, 0:19:54.000 --> 0:19:56.120 because the star witness is giving testimony. 0:19:56.160 --> 0:19:57.840 Bloomberg's Todd Shields is here with. 0:19:57.760 --> 0:20:00.280 More and really this is about so No Pishi is 0:20:00.840 --> 0:20:05.160 push to try and convince basically amid the trial that 0:20:05.320 --> 0:20:08.359