Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Mahart where Innovation of Money and Power Collie in
Speaker 2: Silicon Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Lovelove.
Speaker 4: I'm Caroline Hyde at Bloomberg's World headquarters in New York.
Speaker 3: And I'm Ed Lovelow in San Francisco. This is Bloomberg Technology.
Speaker 3: We're back and coming up.
Speaker 4: The full market coverage ahead is Kathy Wood Sells into
Speaker 4: the video Frenzy by coming Hunt, SMC, Steak, rewaiting or
Speaker 4: something more details to come.
Speaker 3: Plus, the Supreme Court will hear challenges today on two
Speaker 3: laws that aim to prevent social media platforms from censoring posts.
Speaker 3: We'll have the latest and.
Speaker 4: Jeff Bezos and video and join open Ai to back
Speaker 4: in company developing human like robots. We'll discuss that and
Speaker 4: so much more throughout the hour, but first checking on
Speaker 4: these markets. Little Croquie, as is my voice, We're currently
Speaker 4: up about a ten tove percent. Look, we're clawing into
Speaker 4: a big macro week. We really revert our attention to
Speaker 4: FED speak to economic perspective when we get their core
Speaker 4: PCE details.
Speaker 3: Really, how is inflation.
Speaker 4: Going at the moment? Yesterday all about in vinear and
Speaker 4: in earnings. This week it is all about, of course,
Speaker 4: the eyes on macro. We're looking at socks European six hundred,
Speaker 4: actually just down off of its record high, so a
Speaker 4: little bit of course is training in Europe as well.
Speaker 4: Tenure years up three basis points as we look for
Speaker 4: that inflationary reader. Let's look at what's happening in the
Speaker 4: world at crypto though, because bitcoin as dollar basically flat
Speaker 4: on the day, Crypto is spiking up about two percentage points.
Speaker 3: Hopefull you got on the micro I'm signing the week
Speaker 3: with some m and a Monday. KKR is buying a
Speaker 3: software unit from broad Con for about four billion US dollars.
Speaker 3: This is a unit that basically provides the software for
Speaker 3: remote desktop connection. It's something that Broadcom got out of
Speaker 3: the VMware deal last year. You can see avgo the
Speaker 3: tick of Broadcom. It shares up almost a percentage point.
Speaker 3: Now kk are not doing much but an interesting way
Speaker 3: of starting the week. It's something that Bloomberg had previously reported.
Speaker 3: The other kind of mover story that we're looking at,
Speaker 3: as we always are at the moment, is in Vidia,
Speaker 3: but also the US ad rs or US listed shares
Speaker 3: of TSMC, both moving to the upside in video up
Speaker 3: one point two percent, TSMC hiring US trading four tenths percent.
Speaker 3: As you said, what we saw is our the innovational
Speaker 3: politics is have sell down its physician about nine thousand
Speaker 3: ADRs on TSMC. Now, you can kind of look at
Speaker 3: it as a rewaiting, but the main point is it's
Speaker 3: the first time they've offloaded TSMC shares since twenty twenty one.
Speaker 3: The story seems to be reduce exposure also to Nvidia
Speaker 3: because TSMC the lead contract manufacturer semeis globally, so much
Speaker 3: of the run up in the space has basically been
Speaker 3: the carry through from the AI hyper around in v
Speaker 3: year in the age one hundred. We can get deeper
Speaker 3: into that. It's something that I'm sure many money managers
Speaker 3: around the world care are having to deal with right
Speaker 3: now given the recent performance.
Speaker 4: Let's talk to one of them. So it does money
Speaker 4: with us head of longtime un Constrained Strategies at Martin
Speaker 4: Curry and Vidia largest holding among so is global long
Speaker 4: term unconstrained portfolios. So it is so good to have
Speaker 4: a focus like yours. After the week we've just had
Speaker 4: are you still committed to a name like in video
Speaker 4: when I know you talk about valuation discipline, What does
Speaker 4: one look at an evaluation perspective the forward pes or
Speaker 4: actually just the sheer scale of a two trillion number.
Speaker 1: Yeah, it's a good question, Caroline, Thank you very much
Speaker 1: for having me on your program. For us, it's still
Speaker 1: a case of looking at how the gross opportunity translates
Speaker 1: and how the gross profile for Nvidia comes through. So
Speaker 1: when you look at the AI basket that we follow
Speaker 1: over fifty stocks, there's been a rapid appreciation. So we've
Speaker 1: got over the last twelve months, sixty percent moving share
Speaker 1: prices on average for earnings that have only moved by
Speaker 1: seven percent. And you compare that to Nvidia over the
Speaker 1: last twelve months is up almost two hundred and eighty percent,
Speaker 1: but its earnings have been upgraded by three hundred and
Speaker 1: eighty percent plus, so you've had multiple contraction. So that's
Speaker 1: one aspect to highlight. We want to focus on companies
Speaker 1: that can monetize from AI and where there's more likely
Speaker 1: to be earnings momentum that really follows through.
Speaker 4: So as you've been reporting with the likes of a
Speaker 4: kathe word and a managed gtfare. Do you rewait on
Speaker 4: a more regular basis, Do you have to think about
Speaker 4: broadening your perspective away from an video at SMC to
Speaker 4: some of the other names that perhaps haven't been run
Speaker 4: up as quite so far so fast.
Speaker 1: Yeah, we still focused on companies that can monetize, which
Speaker 1: for us are the companies that provides a pix and
Speaker 1: shovels to the AI opportunity, So the enablers of AI
Speaker 1: or in other words, companies that will benefit from the
Speaker 1: significant investment spend that is going on both by the
Speaker 1: hyperscalers but also corporates will be spending more on AI,
Speaker 1: and so which are the companies that can monetize from that?
Speaker 1: And for us, it's companies like Nvidia that's really well positioned,
Speaker 1: and we believe in Vidia is probably in the same
Speaker 1: position as ASML was ten fifteen years ago as a
Speaker 1: quasi monopoly and enabler of the AI opportunity. And then
Speaker 1: you have companies like Microsoft, which is really positioned across
Speaker 1: three fronts. Firstly their stake in open Ai, secondly their
Speaker 1: cloud provision, and thirdly the fact that they have a
Speaker 1: connection with enterprises. And we believe corporates are the most
Speaker 1: likely entities in the economy that will need to harness
Speaker 1: AI to ensure that they stay productive competitive, because ultimately,
Speaker 1: you don't get competed away by AI when you're a corporate,
Speaker 1: you get competed away by another corporate using AI better
Speaker 1: and faster than you do.
Speaker 3: ZERI. This is what Kathy would had to say on
Speaker 3: X the social media platform. You know, she's been in
Speaker 3: the name long time. She feels that she was early
Speaker 3: to the kind of ball fesis around AI. But our
Speaker 3: own Eric Bautunis, he's our Bloomberry intelligence specialists on ETF.
Speaker 3: She kind of makes the point that don't get bogged
Speaker 3: down and the selling on any given position, think about
Speaker 3: it from a waiting perspective, which Caroline mentioned. So this
Speaker 3: is the table right, and if you look at the
Speaker 3: waiting of TSMC, the ADRs at least and also in
Speaker 3: video within ARKQ, it's remained relatively constant. What you seem
Speaker 3: to have in common with her is that the ball
Speaker 3: thesis is intact, that there is going to be a
Speaker 3: big infrastructure build out. And this is something and I've
Speaker 3: been talking about for quite a long time now, where
Speaker 3: do you look for that infrastructure benefit? If you're an investor, Yeah,
Speaker 3: and that's right.
Speaker 1: I think we were here in September last year and
Speaker 1: at the time we discussed the Nvidia valuation and we
Speaker 1: felt that there was still a lot of support and
Speaker 1: since and the stock is up i think over eighty percent,
Speaker 1: so it's had a very strong run.
Speaker 2: For us.
Speaker 1: It's still about focusing on those companies as I mentioned,
Speaker 1: that can monetize, and NVDA is really well positioned for that.
Speaker 1: The debate will be what is a runway of growth
Speaker 1: and for us over the last twelve months, we've really
Speaker 1: just seen the tip of the iceberg in terms of
Speaker 1: spend being channeled in AI. If you look at some
Speaker 1: of the big tech companies, there's plans to increase capex
Speaker 1: visue by twenty two percent to about one hundred and
Speaker 1: eighty billion dollars when you add up the various big
Speaker 1: tech companies that we follow.
Speaker 3: Sarah, you mentioned Microsoft, You mentioned being able to monetize.
Speaker 3: Do you have the same attitude towards Google or Alphabet
Speaker 3: the parent of Google.
Speaker 1: We're actually one of the investors that is very underweight
Speaker 1: the Magnificence seven in terms of names. So of the seven,
Speaker 1: we only hold two companies in our global strategies, and
Speaker 1: these are Nvidia and Microsoft. So we do that through
Speaker 1: a fundamental assessment, which for US is an assessment of growth, returns,
Speaker 1: profile and valuation as well as taking into a kound
Speaker 1: of various fundamental risks.
Speaker 3: That we assess.
Speaker 4: You have such a global perspective, which we love, and
Speaker 4: in your notes you really talk about some of the risks,
Speaker 4: and one of those is geopolitical. How are you factoring,
Speaker 4: for example, a commitment coming from in video and Jason
Speaker 4: Jensen saying I will remain in China and want to
Speaker 4: still be owning that market when geopolitics or as they are.
Speaker 3: It's a really good question.
Speaker 1: The geopolitics is probably the most important risk that investors
Speaker 1: should focus on. Unfortunately, it's also the most difficult to quantify.
Speaker 1: So for us, as you and I discussed Caroline, we
Speaker 1: took the view that we wanted to reduce the geopolitical
Speaker 1: risk and move to the beneficiaries of technological and geopolitical fragmentation,
Speaker 1: which is when we switched out of TSMC into a SML.
Speaker 1: We believe SML will be a beneficiary of the fragmentation
Speaker 1: in production sites that's currently going on, with plans being
Speaker 1: built in the US, in Japan, and in Europe. So
Speaker 1: for US, when we then look at Nvidia, we believe
Speaker 1: that indeed it will have some challenges in operating in China,
Speaker 1: but it will be adapting its products to make sure
Speaker 1: to be on the right side of the regulation.
Speaker 3: Ziri. About ten days before in Video reported earnings, I
Speaker 3: spoke with Jensen Hwang about the idea of sovereign AI
Speaker 3: and he sees a world in which in Video starts
Speaker 3: doing more business directly with nation states, right countries. It's
Speaker 3: one of your top holdings, and I wondered if the
Speaker 3: analysts on your desk a sign in their models any
Speaker 3: future growth that comes from a purely government contract for
Speaker 3: h one hundreds away from the private sector.
Speaker 1: We believe there's upsite to our forecast from that angle,
Speaker 1: but we certainly agree with Jensen that there will be
Speaker 1: a growing demand coming from sovereign AI as well. There
Speaker 1: is an element of duo political angle to it, and
Speaker 1: Jensen has explained that very well on his earning school
Speaker 1: and we believe that that again create some element of
Speaker 1: tailwind to the earnings momentum, but also it highlights importance
Speaker 1: of making sure that when we forecast companies. We always
Speaker 1: use different type of scenarios and that those scenarios to
Speaker 1: capture some of those eventuality.
Speaker 3: S ried.
Speaker 4: It's always great to have you here. Thank you for
Speaker 4: popping in with us. Usmani of Martin Curry and.
Speaker 3: Some more news. Yeah, another story in the AI space.
Speaker 3: French AI company Mistrau announced a strategic partnership with Microsoft
Speaker 3: today that includes making the startups latest artificial intelligence models
Speaker 3: available to customers of Microsoft's Azure cloud. The move comes
Speaker 3: as Microsoft faces mounting political scrutiny globally for its deep
Speaker 3: ties to Open Ai, which competes with miestrob. Today, the
Speaker 3: Supreme Court is hearing arguments over whether to state laws
Speaker 3: preventing so social media companies from moderating content violate the
Speaker 3: First Amendment. Here for more is Bloomberg's Emily Burnbam, You've
Speaker 3: got a fantastic quick take explaining what is a complicated
Speaker 3: legal situation. Let's start with the basics. What is this
Speaker 3: case about.
Speaker 2: So this case is a challenge from two of the
Speaker 2: tech industry's biggest lobbies. So that's net Choice in CCIA.
Speaker 2: They are challenging laws in Florida and Texas that are
Speaker 2: aimed at preventing social media companies from taking down certain
Speaker 2: kinds of political speech. So the question in the case
Speaker 2: is are the social media companies protected by the First Amendment?
Speaker 2: And the arguments are going on right now.
Speaker 3: When I'm reading your quick take, I'm reminded of what
Speaker 3: happened in twenty twenty the last election cycle when I
Speaker 3: was on the road. The content moderation or the policy
Speaker 3: from the tech companies kind of came as a reaction
Speaker 3: to what happened in that election cycle and the political story.
Speaker 3: To me, it seems like in certain sections of DC
Speaker 3: that they overdid it. That there's a feeling that conservative
Speaker 3: voices in particular were over censored. That is that the
Speaker 3: political story. Emily.
Speaker 2: Definitely, both the Florida and Texas laws were written and
Speaker 2: then ultimately passed in the wake of the biggest social
Speaker 2: media companies booting or suspending Trump from their services. So
Speaker 2: a lot of what we're seeing now is fallout from that.
Speaker 2: You know, should the social media companies be allowed to
Speaker 2: take such a prominent politician off their platform? Can you
Speaker 2: write a law that prevents them from doing it again,
Speaker 2: or do you ultimately sweep in all kinds of speech?
Speaker 2: That is you know, perfectly reasonable for them to have
Speaker 2: some editorial control over.
Speaker 3: It's hard on your beat, but I'll ask you anyway,
Speaker 3: what do you think the Supreme Court is likely to
Speaker 3: do with your crystal ball?
Speaker 2: Well, I've been listening to the arguments for the past hour,
Speaker 2: and there's so much skepticism already of.
Speaker 3: The Florida law.
Speaker 2: There are distinctions between the Florida and Texas laws, but
Speaker 2: basically the questions at the center of them are the same.
Speaker 2: We're hearing skepticism from the liberals and the conservatives, including
Speaker 2: some of those swing justices like Kavanaugh.
Speaker 3: They all are kind of confused about the law.
Speaker 2: They say, this is so broad sweeping, How does this
Speaker 2: even get implemented? Why are we even talking about this?
Speaker 2: So it's not looking very good for the States.
Speaker 3: It's just really great to have you on the show, Emily,
Speaker 3: But I do urge the audience go and check out
Speaker 3: Emily's quick take on the Bloomberg terminal Bloomberg dot com
Speaker 3: because you get a clear understanding of what is a
Speaker 3: complicated story. Thank you. Now, sticking with DC, we're actually
Speaker 3: waiting on some news from the Commerce Department. It could
Speaker 3: come at any time, potentially regarding grants from the Chips Act.
Speaker 3: Gina Romondo due to speak momentarily. Guess who's with us
Speaker 3: Bloombers Kaylee lines, we always have our eye on the
Speaker 3: flow of capital out of this key piece of law making.
Speaker 3: What do you think is going on? Well, we've already
Speaker 3: heard from.
Speaker 5: The Commerce Secretary, not today, but last week when she
Speaker 5: hinted there should be a drumbeat of bigger announcements related
Speaker 5: to allocating funds and loans from the Chips Act in
Speaker 5: the next six to twelve weeks. And Bloomberg's own reporting
Speaker 5: indicates they want to have many of these grants announced
Speaker 5: by the end of March. So the question is, could
Speaker 5: we get more hints from the Commerce Secretary when she
Speaker 5: speaks expected in just moments to give an update on
Speaker 5: Chips Act implementation. As you well know ed ed, we're
Speaker 5: talking thirty nine billion dollars in direct grants here another
Speaker 5: seventy five billion dollars in loan and loan guarantees. And
Speaker 5: among the companies that could perhaps getting access to these
Speaker 5: incentives next could be according to Bloomberg's reporting, Intel, TSMC,
Speaker 5: and Samsung, all of them are expected to be major recipients.
Speaker 5: Of course, the Intel CEO Pat Gelsinger last week said
Speaker 5: it could be coming soon, and Bloomberg has reported that
Speaker 5: Intel's incentive could be in the tune of ten billion dollars,
Speaker 5: which would be the largest any Chips Act funds granted
Speaker 5: so far as the Commerce Secretary is trying to do
Speaker 5: all these out and she's actually just beginning to speak
Speaker 5: now at the CSIS event, So of course we'll be
Speaker 5: watching for the headlines that she makes and bringing you
Speaker 5: off the latest on that news.
Speaker 3: Yeah, that Chips Act money is one of the key
Speaker 3: pillars of Pat Gelsinger in Intel's smart capital approach, particularly
Speaker 3: on the foundry business. Bloombergs key lines sticking across those
Speaker 3: headlines are coming up here on the program. Some of
Speaker 3: the biggest names in tech are investing in a business
Speaker 3: developing humanoid robots. It might not be the one that
Speaker 3: you think. More on that next. The news keeps coming
Speaker 3: at a DC we're looking at shares of discover and
Speaker 3: Capital one. A group of lawmakers led by a Senator
Speaker 3: Elizabeth Warren and also Representative Alexandria Ocasio Cortes are urging
Speaker 3: the FED the OCC to block this deal that broke
Speaker 3: last week. When I was on VACA a big one
Speaker 3: in the financial technology and consumer credit card space. The
Speaker 3: share is not really reacting to that kind of push
Speaker 3: back in DC both up a tenth of percent. This
Speaker 3: Bloomberg Technology. Okay, it's time for talking tech and first
Speaker 3: up in the news. Mark Zuckerberg will travel across Asia,
Speaker 3: with stops in Japan, South Korea, and India as the
Speaker 3: Meta CEO works on artificial intelligence services and forges ties
Speaker 3: with businesses and government leaders across Asia. In Seoul, Zuckerberg
Speaker 3: will meet with partners, and according to sources, he's tentatively
Speaker 3: scheduled to meet with South Korea's president. Local media also
Speaker 3: report that Zuckerberg will meet Samsung chairman Jy Lee to
Speaker 3: discuss cooperation in AI and LGCEO to talk about joint
Speaker 3: development of an extended reality headset. And A group outbid
Speaker 3: Citadel Securities for Credit Swee's investment bank venture in China.
Speaker 3: The surprise move there'll be subject to close regulatory scrutiny.
Speaker 3: The bid by the Jackmar backed fintech giant to build
Speaker 3: a securities business using Credit Swiss's operations will face a
Speaker 3: thorough review, as China favors of foreign buyer UBS group
Speaker 3: which now owns Credit Suisse, will have to choose between
Speaker 3: the higher local bid from ANT or the lower Citadel
Speaker 3: offer that's more likely to win government approval. All of
Speaker 3: that is according to Bloomberg sources. Plus, following an inquiry
Speaker 3: from the US SEC, Ali Barber disclosed a wider web
Speaker 3: of Chinese government states in its business units than previously known,
Speaker 3: with state ownership in more than twelve business units. In
Speaker 3: the notice, the company said the disclosures were made in
Speaker 3: response to certain comments from the staff of the SEC
Speaker 3: as an amendment to its earlier filing from July. The
Speaker 3: filings come as China's ruling Communist Party says it will
Speaker 3: play a bigger role in steering the country's technology and
Speaker 3: science development. Another big story Jeff Bezos and Nvidia and
Speaker 3: other big tech names investing in a business developing human
Speaker 3: like robots. The startup figure Ai, also backed by Open Ai, Microsoft,
Speaker 3: is raising about six hundred and seventy five million dollars
Speaker 3: in funding that carries a pre money valuation of about
Speaker 3: two billion dollars. That's all according to Bloomberg's sources, and
Speaker 3: that was reported by Bloomberg's Mark German, who joins US
Speaker 3: now humanoid robot. You think Tesla an optimist, but I've
Speaker 3: been digging in to this company. It's an interesting round.
Speaker 3: The numbers are big. What have you learned?
Speaker 6: Yeah, figure, this is an alternative to optimists. What Elon
Speaker 6: Mask is building. This company, like you said, is building
Speaker 6: humanoid robots. And the idea here is one to address
Speaker 6: labor shortages in the labor market at some point, but
Speaker 6: also to substitute for humans for more dangerous jobs, perhaps
Speaker 6: on production lines and such. And what we're told is
Speaker 6: that there could be an announcement this week for a
Speaker 6: slew of funding topping six hundred and seventy five million dollars,
Speaker 6: like you said, at that two billion or about two
Speaker 6: billion premium evaluation. And you have a lot of big
Speaker 6: names in one funding round, which is quite rare. You
Speaker 6: have Jeff Bezos's personal investment firm Explore. You have Intel
Speaker 6: coming in with a twenty five million dollar investment, in
Speaker 6: Nvidia coming in at a fifty million dollar investment, Amazon's VCRM,
Speaker 6: Samsung's VCRM, lg'svcr plus, Microsoft coming in with ninety five million,
Speaker 6: open Ai coming in at five million. So certainly you
Speaker 6: have the who's who they're of companies interested in artificial intelligence,
Speaker 6: robotics and these types of future technologies. So this is
Speaker 6: going to be quite interesting to see how it all develops.
Speaker 3: You know, the Nvidia piece is interesting. You know, they've
Speaker 3: invested all over the place privately, and as we learned
Speaker 3: in the thirteen FS, in some public companies as well.
Speaker 3: I think I'm right in saying at one point open
Speaker 3: Ai thought about just buying figure ai outright, What can
Speaker 3: you tell me about the company's progress? Do they have
Speaker 3: anything to show for their work in humanoid robotics so far?
Speaker 6: You know, before Sam Altman was ousted as CEO last year,
Speaker 6: there were some pretty deep negotiations regarding an acquisition a
Speaker 6: figure by open Ai. There were also more extensive conversations
Speaker 6: around bigger investments, and the open Ai investment ultimately came
Speaker 6: down to only five million dollars. And I say, only
Speaker 6: you compare to the fifty million from Nvidia, one hundred
Speaker 6: million from Bezos, you have one hundred million from a
Speaker 6: venture capital firm called Parkway. So certainly the open Ai
Speaker 6: deal sort of really fell apart amidst the whole Sam
Speaker 6: Altman situation last year in terms of the progress that
Speaker 6: figure has made. You know, they've published some videos and
Speaker 6: some specifications on their website. It's unclear who's further ahead,
Speaker 6: Figure or you know, Elon Musk's optimist, but clearly they're
Speaker 6: selling the goods to these investors and getting enough money
Speaker 6: from them. You can see the video they're playing. It's
Speaker 6: unclear if that's real or some sort of you know,
Speaker 6: AI created markup or you know, preview of what's to comet.
Speaker 6: Certainly it's going to be years or even a decade
Speaker 6: plus before what you've seen that video is a reality.
Speaker 6: But clearly these companies have enough money to put in
Speaker 6: you know what is what amounts to change under their couch,
Speaker 6: to play some bets here and there and hope that
Speaker 6: figure works out for them.
Speaker 3: Bloomberg'smark going, by the way, check out Mark's latest power
Speaker 3: on as well for a great photograph of you wearing
Speaker 3: the next generation of smart glasses, just putting it out there.
Speaker 3: Check it out. Okay, welcome back to Bloomberg Technology, Ed
Speaker 3: Ludlow here in San Francisco. It's Monday's go. It's a
Speaker 3: very business one. Let's start with some markets. This is
Speaker 3: more of like a PSA from last week. But Amazon
Speaker 3: has replaced Walgreen's Boot Alliance on the Dow Jones Industrial Average.
Speaker 3: Remember that's an index where waitings are done on a
Speaker 3: share price basis, not on a market capitalization basis. Something
Speaker 3: that was announced last week after Tuesday's market close, but
Speaker 3: I was on vacate I missed it. The point being
Speaker 3: it's effective as of Monday sessions. So if you look
Speaker 3: on your Bloomberg terminal, you'll see at Amazon flat, Walgreens
Speaker 3: Boots Alliance down two percent. What precipitated it was actually
Speaker 3: a three for one stock split, not by Walgreens but
Speaker 3: by Walmart, which had a reshuffle for the whole of
Speaker 3: that index. Another stock that we're watching closely to the
Speaker 3: downside is Alphabet, parent of Google. There has been so
Speaker 3: much discussion, particularly on x about the image generator on Gemini.
Speaker 3: An update from Google out in literally the last hour
Speaker 3: or so. The company plans to resume the image generator
Speaker 3: on Gemini, which it had paused at some point in
Speaker 3: the next two weeks. Remember that Alphabet pulled the image
Speaker 3: generator of Gemini last week because of criticism over the
Speaker 3: inaccurate historical depictions of race. You will have seen that
Speaker 3: Elon Musk in particular, has been very vocal about this
Speaker 3: issue of the Gemini and image generation on Gemini in
Speaker 3: the last twenty four to four day eight hours, Okay,
Speaker 3: a slur of states have been targeting AI deep fakes
Speaker 3: ahead of the November election, and now that also includes
Speaker 3: New York State. New legislation from Democratic Governor Kathy Hochel
Speaker 3: would make New York the first in the nation to
Speaker 3: explicitly empower voters to file lawsuits against AI made political
Speaker 3: deep fakes. I want to bring in Zach Williams from
Speaker 3: Bloomberg Law, who's been writing about this. This would be
Speaker 3: New York going first on something. What is the proposal
Speaker 3: that's on the table here.
Speaker 7: So Governor Kathy Hockel is proposing in the state budget
Speaker 7: do April first, that New York State take action against
Speaker 7: deep fakes on a number of fronts, intimate images, child pornography,
Speaker 7: and of course deep fakes in elections within sixty days
Speaker 7: of election day. Now, what's so interesting about this one
Speaker 7: compared to the handful of states that have of current
Speaker 7: laws or those considering similar legislation, is the enforcement mechanism.
Speaker 7: There's no civil or criminal penalties for creating a deep fake.
Speaker 7: Under Hocal's proposal, but she would empower voters to actually
Speaker 7: file lawsuits of their own seeking injunctive relief. They see
Speaker 7: a deep fake, whether or not it concerns them personally,
Speaker 7: they can sue to have it, to have someone remove
Speaker 7: it from online or anywhere else that they see it.
Speaker 3: When you look at the language in the build, there
Speaker 3: are some similarities with other states, right, I think first
Speaker 3: of all of Arizona, but broadly, even though New York
Speaker 3: is kind of getting early at this, there is momentum
Speaker 3: behind the same initiative in other parts of the country. Yeah,
Speaker 3: a big.
Speaker 7: Issue facing states is not only just how to enforce
Speaker 7: these laws, but the type of behavior to actually cover.
Speaker 7: You know, five states currently have existing laws against AI
Speaker 7: created deep fakes, and most of them apply to you know,
Speaker 7: people that are or trade or to political candidates specifically.
Speaker 7: You know, the New York proposal and a few others
Speaker 7: before states out there you know, really get at, you know,
Speaker 7: defikes that arguably try to influence a voter or influence election,
Speaker 7: which is a much wider type of behavior. You know,
Speaker 7: think of you know, the AI deep fake of Joe
Speaker 7: Biden in New Hampshire. You know, that's very specific to
Speaker 7: a candidate. You know what Hocals proposal and some others
Speaker 7: across the country might do is actually, you know, make
Speaker 7: any type of AI phony, you know, material illegal, whether
Speaker 7: or not it shows a real person.
Speaker 3: All right, Zach Williams of Bloomberg Law. Great to have
Speaker 3: you on the program for Morbany. Keeping across that in
Speaker 3: the coming weeks and months, Let's keep the conversation going
Speaker 3: with Denver Riggleman. He's the founder of the security firm
Speaker 3: Rogoman Information and Intelligence Greeve. He's also former Republican congressman
Speaker 3: for Virginia's sixth district. Served as an Air Force intelligence
Speaker 3: Officciety's also the co author of The Breach, The Untold
Speaker 3: story of the investigation into January sixth. Denver Rigman joins
Speaker 3: US now at Denver. We just heard from our reporter
Speaker 3: about at the state level action on deep Face. We
Speaker 3: heard earlier in the program from our reporter in DC
Speaker 3: about the Supreme Court's consideration of content moderation. Leaning on
Speaker 3: your own work, research and your political career, how big
Speaker 3: an issue is content going to be in this election
Speaker 3: cycle twenty twenty four.
Speaker 8: You know everybody's saying it is a massive issue what
Speaker 8: it is. But there's that flip problem righted on the
Speaker 8: other side when you're looking at technologies that people believe it.
Speaker 8: You know, when we look at the point of origin
Speaker 8: of these videos, which is why I started my company,
Speaker 8: was to look at where this disinformation line actually comes
Speaker 8: from or what the deepets actually have as far as
Speaker 8: radicalizing language, is that people believe it. I mean a
Speaker 8: lot of people were actually radicalized with memes and que drops,
Speaker 8: So does that mean with deep pigs and AIS. I
Speaker 8: just don't know what the enforcement mechanism is going to
Speaker 8: be on satire. I don't know how the enforcement matanism
Speaker 8: is going to work if you know, people are actually
Speaker 8: doing it because they think the AI deep pakes are
Speaker 8: actually effective, you know, and actually making fun of these
Speaker 8: candidates or asking for violence against candidates or violence in general.
Speaker 8: So it's just going to be interesting to see how
Speaker 8: this comes down as far as the legal methodology of this.
Speaker 8: But as far as AI deep pikes are concerned, you know,
Speaker 8: I've seen Biden deep pakes with actually him on video.
Speaker 8: I'm actually working with a company on deep fakes and
Speaker 8: licensing the AI for each particular individual who wants to
Speaker 8: use AI for themselves. And I have to tell you, Ed,
Speaker 8: I'm very worried that it's not just the fact that
Speaker 8: the deep fakes are being generated, it's that the populace,
Speaker 8: there's a credulous populast tens of millions that are going
Speaker 8: to believe this because they don't understand the technology and
Speaker 8: they're ignorant about actually what's happening on social media and
Speaker 8: ignorant about what's happening with AI.
Speaker 3: Denver, in the body of work that your current firm
Speaker 3: is doing, do you see any specific focus or center
Speaker 3: of activity either across the two parties will focus on
Speaker 3: any specific candidates.
Speaker 8: Yeah, I think what you're going to see with AI,
Speaker 8: which you see in the generating AI already from the
Speaker 8: far right, I think right now, I don't think independent
Speaker 8: center right Republicans or Democrats really have any idea about
Speaker 8: how effective AI can be if it's in the hands
Speaker 8: those specific individuals that have no moral boundaries. And that's
Speaker 8: the thing that really does worry me, Ed, is the
Speaker 8: lack of moral boundaries and the fact that technology is
Speaker 8: widely available. This is not something hard to do. I mean,
Speaker 8: you can hire firms to do AI, you can do
Speaker 8: some of it yourself. It's just not that difficult. So
Speaker 8: what we're seeing also is that the foreign disinformation campaigns
Speaker 8: could be very effective with AI, with deep fake specifically,
Speaker 8: but with other type of things, just like audio. I mean,
Speaker 8: AI audio is so easy. So now you have this
Speaker 8: ability to do deformation on a massive scale that'll make
Speaker 8: memes and drops and videos just sort of I would
Speaker 8: say pass a AI and deep fake specifically coming from
Speaker 8: foreign enemies or threats, but from people who have no
Speaker 8: moral boundaries. I think it's going to be something that
Speaker 8: could cause a lot of violence starting in the spring
Speaker 8: and summer, late spring, early summer of twenty twenty four,
Speaker 8: which is my biggest worry.
Speaker 3: Denver, you say it's not difficult to do, I think
Speaker 3: what you're saying is in the context of content moderation, right,
Speaker 3: the actions of the platforms themselves. We talked about this
Speaker 3: earlier in the program, that what came out of the
Speaker 3: twenty twenty presidential election cycle was content moderation policies, and
Speaker 3: now the political argument is that those resulted in the
Speaker 3: over censorship, particularly of conservative views. Tie that then to
Speaker 3: the deep fakes issue. You know, either the tech companies
Speaker 3: take action or they don't. Should it solely rest with
Speaker 3: them to be responsible.
Speaker 8: You know, we're to a point where it might soorely
Speaker 8: rest with them based on the enforcement mechanisms, if you
Speaker 8: you know, I've done enough investigations now that government has
Speaker 8: a very tough time moving at speed against new technollogies.
Speaker 8: So when you're talking about these large companies are going
Speaker 8: to have to be some kind of ability to self moderate,
Speaker 8: you know, when you're looking at actually these AI deep fakes.
Speaker 8: You know, my biggest fear ed you know, is that AI,
Speaker 8: as far as being able to radicalize people in a
Speaker 8: way we can't even imagine at this point, is something
Speaker 8: that we're gonna have to fight with forever. I mean, really,
Speaker 8: the information war is the forever war. So I think
Speaker 8: that's the issue that we have in these large tech companies.
Speaker 8: There's going to have to be some responsibility on how
Speaker 8: these e these AI deep fakes are actually promulgated. I
Speaker 8: just I don't see with the massive amount of AI
Speaker 8: of platforms. You know, what do you have forty major
Speaker 8: maybe social media platforms, hundreds of minor platforms. You have emails,
Speaker 8: you still have Facebook, you have private groups, you have
Speaker 8: so much stuff out there. I don't know how you
Speaker 8: actually do it unless the tech companies actually take some
Speaker 8: responsibility for deep fakes or for AI generated content.
Speaker 3: All right, Denvi Wrigelman, founder of Information and Intelligence Group,
Speaker 3: great conversation. Come back in the next few weeks and
Speaker 3: months as we progress this election cycle, and we'll keep
Speaker 3: the conversation going. Some breaking news crossing the Bloomberg terminal
Speaker 3: back out with DC COMMA Secretary Gina Romondo is speaking
Speaker 3: about the applications to the Chips Act for grant. She
Speaker 3: is saying that leading edge firms are seeking over seventy
Speaker 3: billion dollars from the Chips Act. You're looking at live
Speaker 3: pictures of that event where RAYMONDA is speaking. She's talking
Speaker 3: about the US going to prioritize Chips projects that can
Speaker 3: be operational by twenty thirty. We spoke earlier with Kaylee
Speaker 3: about Intel as an example that in their smart capital approach,
Speaker 3: they are relying on access to the Chips Act grants
Speaker 3: to operationalize and build out, particularly their foundry business. The
Speaker 3: last point is RAYMONDO giving a forecast in the US
Speaker 3: is going to make twenty percent of leading edge chips
Speaker 3: by the end of the decade, and what we're talking
Speaker 3: about in the context of leading edge chips. Is those
Speaker 3: higher performance GPUs, the ones that Ian King comes on
Speaker 3: the show and talks about so often. Will continue to
Speaker 3: monitor the event that Ramondo's speaking about. But there is
Speaker 3: actually some significant news headlines coming out from those comments,
Speaker 3: all right, coming up here on Bloomberg technology. The twin
Speaker 3: strikes were a hot topic of conversation at the SAG
Speaker 3: Awards this past Saturday, and saga after a President fran
Speaker 3: Drescher bought one of the union's major concerns from over
Speaker 3: the summit to the show, Artificial intelligence will have Nick
Speaker 3: Lyons is the co CEO and co founder of Flawless,
Speaker 3: a company that uses generative AI to correct out of
Speaker 3: sync dubbing and more, with his thoughts on that relationship
Speaker 3: between AI and Hollywood. Coming up next, this is Bloombog technology.
Speaker 3: At the SAG Awards this past Saturday, the Twins strikes,
Speaker 3: the actors and writers strike, We're a major topic of conversation.
Speaker 3: Sagafter President Fran Dresher brought one of the union's biggest
Speaker 3: concerns to the stage, saying, quote, AI will entrap us
Speaker 3: in a matrix where none of us know what's real
Speaker 3: let's bring in Nick Lions, co CEO and co founder
Speaker 3: of Flawless, a company that uses generative AI to correct
Speaker 3: out of sync dubbing and does a lot more. It's
Speaker 3: in his thoughts about what is an evolving relationship Nick,
Speaker 3: between Hollywood and AI. Just real quick on Miss Dresher's
Speaker 3: statement there about being caught in a limbo where you
Speaker 3: don't know what is real and what is you're building
Speaker 3: AI that directly impacts this world. What's your take?
Speaker 9: Well, thanks for having me on the show, Ed, Yeah,
Speaker 9: it's I think that the reality is is we have
Speaker 9: to be careful and I think the approach that we've
Speaker 9: taken is to be Actually one of the reasons probably
Speaker 9: we're willing to come on the show is that we've
Speaker 9: been talking to Sagafra for a number of years now,
Speaker 9: have been cooperating with them and working with them to
Speaker 9: work out, you know, what the best application and uses
Speaker 9: are for this technology. You know, we have from day
Speaker 9: one we made a stance around data that we would
Speaker 9: not you know, we wouldn't trample on artistic rights or
Speaker 9: commercial data ownership rights. I mean we've built technologies that
Speaker 9: support that, so you know, I think it's a collaboration,
Speaker 9: and I think it's a mechanism to move forward to
Speaker 9: enable an industry to re energize and go into you know,
Speaker 9: the next decade.
Speaker 3: Let's talk a little bit about flawless and understand the
Speaker 3: work you're doing in the context of those concerns. So
Speaker 3: using generative AI to amend or correct out of saint dubbing,
Speaker 3: how does that work?
Speaker 6: Well?
Speaker 9: You know, you look at recent news, you know, around
Speaker 9: Warner and Paramount, and you know there's a lot of
Speaker 9: highlighting of you know, audiences under pressure, et cetera, and
Speaker 9: a lot of debt. But I think that the fundamental
Speaker 9: problem is actually production costs. You know, in people when
Speaker 9: the big studios and streamers and other production companies around
Speaker 9: the world are investing heavily in productions, it's very very
Speaker 9: heavy carbon footprint and it's also very physical and consequently
Speaker 9: very costly.
Speaker 3: You know.
Speaker 9: So one of the benefits that AI is going to bring.
Speaker 9: Gen AI is going to bring is the ability to
Speaker 9: be able to reduce those production costs. But also, you know,
Speaker 9: if you imagine that a proxy for a reduction of
Speaker 9: production costs is enabling a global audience dumbing and subtitling,
Speaker 9: has you know, been the mechanism for localization now for
Speaker 9: you know, one hundred years, and you know, unfortunately, there's
Speaker 9: a lot of people that don't like that, and that's
Speaker 9: represented in the value when you're selling films and TV
Speaker 9: series into other language territories. So the enabled the ability
Speaker 9: to have a global audience and have allow audiences to
Speaker 9: consume content in a way that's digestible and enjoyable. It
Speaker 9: just is going to also enable these same companies to
Speaker 9: be able to benefit from you know, distribution at a
Speaker 9: level that you know it will be game changing for them.
Speaker 3: You just spoke to kind of the economics of what,
Speaker 3: frankly was one of the biggest technology stories of the
Speaker 3: year so far. When open ai released Saurra and I
Speaker 3: saw an interview my co host Caroline heid and I
Speaker 3: were talking about Tyler Perry and the Hollywood reporter saying
Speaker 3: that he had put plans for an eight hundred million
Speaker 3: dollar studio expansion on hold when he saw the results
Speaker 3: of saura And you know, I made a quip on
Speaker 3: x that most of it is just sixty second clips
Speaker 3: of dogs or puppies doing stuff. But when they released
Speaker 3: those images that are generative AI text to video pieces
Speaker 3: of content. There was a big reaction from your industry.
Speaker 3: What was your reaction?
Speaker 9: Yeah, well, you know, I think pauses the operative word
Speaker 9: there because I think once what were quite interesting and
Speaker 9: exciting videos, once the people understand that it's still a
Speaker 9: long long way off from perfect you know, professional production.
Speaker 9: You know, if you look at it, yes, it's sixty
Speaker 9: second scenes, you know, it's not particularly looking around corners.
Speaker 9: There's not a lot of actual performance in there, you know,
Speaker 9: and there's also not editing tools attached. But I think
Speaker 9: most importantly we're talking about these these these videos are
Speaker 9: created from unclean data.
Speaker 3: You know.
Speaker 9: We made a decision to build a business that was
Speaker 9: based on clean data, where everything within our models and
Speaker 9: within our production system has enabled, has been signed off,
Speaker 9: and is commercially and artistically clean. And I think that
Speaker 9: there's like mixing these things together and then it's exciting
Speaker 9: for the future because it shows the power of the technology.
Speaker 9: And I think, yes, there will be a benefit here
Speaker 9: in reduced production costs. But I think Tyler's going to
Speaker 9: find very quickly that I think the film industry is
Speaker 9: probably going to go through actually a boom time over
Speaker 9: the years that come with the reduction in production costs,
Speaker 9: and with the same tools that allow for those reductions
Speaker 9: in production costs, giving more creative control and more iterative storytelling,
Speaker 9: we're going to see an increase in the percentage of
Speaker 9: commercially successful projects. And I think consequently for that it
Speaker 9: becomes like, you know, quite a wise investment to be
Speaker 9: investing in film, which is correctly I think some people
Speaker 9: have been cynical about so I think really what we're
Speaker 9: looking at is, you know, yes, there might be some
Speaker 9: people initially sort of a little bit scared when they're
Speaker 9: looking at something like that, but I think really it
Speaker 9: represents boom times.
Speaker 3: Flawless co CEO, co found in it lies. Just great
Speaker 3: to have you on the program after the SAG Awards
Speaker 3: at the weekend where this was a front and center issue.
Speaker 3: Really appreciate your time. Okay, some more news here on
Speaker 3: Bluebog Technology is time for the VC Roundup, First up interview.
Speaker 3: Kickstart has raised ten million dollars from Bloom Ventures to
Speaker 3: expand a library of courses in fields from machine learning
Speaker 3: to data sciences, demand for which is surging alongside global
Speaker 3: development in AI. The fledgending firm, co founded by early
Speaker 3: box engineer so A Meta and Excel Partners. Alarm Ryan
Speaker 3: Valors aims to help supply the skilled engineers needed to
Speaker 3: support a boom in artificial intelligence and deep Exco is
Speaker 3: close to raising ninety million dollars in a funding round
Speaker 3: to accelerate production and bankroll global expansion. The South Korean
Speaker 3: firm has secured forty five million dollars from Skylake Equity Partners,
Speaker 3: as well as twenty two point five million from existing
Speaker 3: backer Timefolio Asset Management. The AI chip startup is also
Speaker 3: in final discussions with another investor to secure an additional
Speaker 3: tranche of money by next month. That all, according to sources,
Speaker 3: the US used artificial intelligence to identify targets that were
Speaker 3: then hit by air strikes in the Middle East this month.
Speaker 3: That's according to a defense official, and Bloomberg's Katrina Manson
Speaker 3: spoke with them and did that reporting. She joins US
Speaker 3: now with more details. This is interesting. You have to
Speaker 3: be clear on what the AI was used for, right, Katrina,
Speaker 3: And it was to identify the targets. But that's where stops.
Speaker 3: That's right.
Speaker 10: These are computer vision algorithms that the Pentagon has been
Speaker 10: developing really since twenty seventeen, but they are now using
Speaker 10: them operationally, and sent COOM that's Central Central Command that
Speaker 10: runs US forces in the Middle East, confirmed to me
Speaker 10: that they had identified more than eighty five targets are
Speaker 10: for the strikes on February the second. Those are against
Speaker 10: seven facilities in Iraq and Syria, and they had used
Speaker 10: AI to help narrow down those targets that were subsequently
Speaker 10: struck using fighter aircraft and bombers.
Speaker 3: The other way of looking at it is that sent
Speaker 3: COM in its I guess experimentation, found very clearly that
Speaker 3: there are limitations to the use of the technology, and
Speaker 3: those immediately obvious ones are the order of attack and
Speaker 3: which weapon the US should or shouldn't use.
Speaker 10: They've been experimenting with AI and exercises for more than
Speaker 10: a year now, and Skyler Moore, whose chief technology officers
Speaker 10: at sen Com, she told me that AI is not
Speaker 10: ready to make recommendations. They worked with an AI recommendation engine,
Speaker 10: and humans are generally faring much better than AI at
Speaker 10: the moment on that, but they are using AI for
Speaker 10: computer vision algorithms and really integrating this targeting effort into
Speaker 10: the entire flow of operations, so it's not just intelligence anymore.
Speaker 10: It really is delivering weapons with the help of AI
Speaker 10: targeting and to turning.
Speaker 3: It very quickly. Is there any element of human verification here?
Speaker 3: In other words, did a human check the work that
Speaker 3: the AI proposed? Yes?
Speaker 10: Absolutely, The targeting is making a series of recommendations. Humans
Speaker 10: then verify it. And I was told that it's pretty
Speaker 10: obvious when it's off, So humans are correcting it, giving
Speaker 10: that feedback, that classic way of iterating the algorithm before
Speaker 10: they go forward. And this is something that the National
Speaker 10: Geospatial Intelligence Agency, which now runs MAVAN, is really trying
Speaker 10: to improve the capabilities of Bloomberg.
Speaker 3: Katrina Manson just terrific reporting out in New York. Thank
Speaker 3: you so much. That does it for this edition of
Speaker 3: Bloomberg Technology. Look, last week when I was off, I
Speaker 3: listened to the show as a podcast. I know so
Speaker 3: many of you download and listen to the pod on
Speaker 3: your way into work. We're on Apple, We're on Spotify,
Speaker 3: we're on iHeart, and we really appreciate the feedback about
Speaker 3: the show and so many of you listening to it
Speaker 3: in audio format. But again we're also everywhere else on
Speaker 3: YouTube and on your television screen. As I speak from
Speaker 3: San Francisco, this is Bloomberg Technology,