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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive

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Speaker 1: from coast to coast with Caroline Hyde in New York

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Speaker 1: and Va Low in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: Microsoft and open Ai have agreed to drop exclusivity rights

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Speaker 3: on AI models, opening the doors for rivals to make

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Speaker 3: new deals. Plus China blocks metas two billion dollar deal

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Speaker 3: for AI startup Manners and a surprise move that unwinds

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Speaker 3: a controversial deal. And Elon Musk and Sam Altman head

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Speaker 3: to court with the Tesla CEO alleging that the open

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Speaker 3: Ai founder abandoned its founding mission. Let's get to our

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Speaker 3: top story of the day, and this is an interesting one.

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Speaker 3: Microsoft shares are now basically flat, but when youws hit

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Speaker 3: that they had ended their exclusivity packs with open Ai

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Speaker 3: to stop was down four percent in pre market. Amazon

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Speaker 3: shares shot off on the logic it would benefit all

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Speaker 3: of that has been undone. It is a complicated story.

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Speaker 3: Bloombergs Brody Ford joins us on set in San Francisco.

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Speaker 3: The bits that are new are there are changes in

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Speaker 3: the structure of the agreement between Microsoft and open Ai.

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Speaker 2: Let's start there.

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Speaker 3: What do we need to know what can open Ai

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Speaker 3: now do that it couldn't do twenty four hours ago.

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Speaker 4: So the big headline of what has changed is that

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Speaker 4: the OAI models for a long time were exclusive on

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Speaker 4: Microsoft Azure, and that was really kind of the last

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Speaker 4: bit of exclusivity in this storied partnership that helped us

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Speaker 4: share in the AI era that now is kind of

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Speaker 4: going away. And so this is meaningful for open ai

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Speaker 4: because they're in a world where compute is constrained. They

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Speaker 4: need as much as they can get, and they want

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Speaker 4: to be able to distribute their products onto all the

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Speaker 4: major platforms.

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Speaker 3: Microsoft still gets access to the models through twenty thirty two,

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Speaker 3: it's just open Ai can sell them and make them

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Speaker 3: available in other places. So you and I were talking

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Speaker 3: before the show, who benefits or Amazon in the first

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Speaker 3: instance where it shares jump in pre market. Now I

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Speaker 3: think they're lower again. But that's the idea. This is

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Speaker 3: hot on the heels of a deal between open Ai

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Speaker 3: and AWS, which I think was in January, maybe February.

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Speaker 4: Yeah, in recent months, you know, OAI and AWS have

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Speaker 4: been working together to distribute on that platform, which is

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Speaker 4: still the leading cloud infrastructure platform. Microsoft reportedly was not

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Speaker 4: super happy about that.

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Speaker 5: We have to.

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Speaker 4: Imagine the changes today are downstream of those discussions, or

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Speaker 4: at least discussions like that. And what Microsoft gets in

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Speaker 4: a return here is that they're no longer paying a

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Speaker 4: revenue share.

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Speaker 2: Yeah.

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Speaker 4: Effectively they're saying, look, you can go and hang out

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Speaker 4: with other people, but I'm not going to pay you

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Speaker 4: to do it.

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Speaker 3: So this is really interesting and again complicated. Basically, Microsoft

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Speaker 3: was paying open ai a revenue share from revenues where

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Speaker 3: it used open ais technology in some form, right. But

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Speaker 3: the bit that's hard to understand is open ai is

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Speaker 3: still a customer of Microsoft. They basically pay them for

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Speaker 3: various reasons. Open ai pays Microsoft, and at the same time,

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Speaker 3: Microsoft is the biggest investor in open ai.

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Speaker 2: Explain me it's.

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Speaker 4: Right, because it all stems from that original partnership with

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Speaker 4: Microsoft and OI were for a long time folks saw

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Speaker 4: as OI was almost a part of Microsoft. Right, So

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Speaker 4: Microsoft gets access to these OI models everybody else has

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Speaker 4: to pay for, but they just get to access them

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Speaker 4: for free at least for the next couple of years.

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Speaker 3: Bloemos Brodie Ford again two red headlines from the report.

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Speaker 3: Markets have behaved very strange, and we'll get more on

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Speaker 3: that later in the program. That's turned to matter. China

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Speaker 3: has blocked the social media giant's two billion dollar acquisition

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Speaker 3: of AI startup Mannus. The country's National Development and Reform

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Speaker 3: Commission ordered the cancelation of the deal, stating it was

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Speaker 3: prohibiting the foreign investment in accordance with laws and regulations.

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Speaker 3: Without further elaborating here with more, Bloombergs Executive editor for

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Speaker 3: Asia Tech Peter Elstrom, again another complicated story. Let's start

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Speaker 3: with the what we need to know. This is a

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Speaker 3: body in China unwinding at what we thought was a

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Speaker 3: done deal.

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Speaker 6: Yeah, this was a surprise, as you alluded to earlier.

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Speaker 6: The NDRC jumped in today. It was only a one

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Speaker 6: sentence announcement that they made. They didn't name Meta. They

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Speaker 6: just said that this foreign deal with Manus had to

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Speaker 6: be undone.

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Speaker 2: So what the.

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Speaker 6: DRC is doing here is they're trying to reverse a

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Speaker 6: deal that was announced in December. The reason is that

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Speaker 6: Manus's founders originally started the company when they were in

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Speaker 6: mainland China. They decided to move to Singapore in the

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Speaker 6: middle of last year. They declared themselves a Singapore company.

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Speaker 6: They did set up shop there legally, and so when

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Speaker 6: they cut the deal with Meta, Meta and Manus agreed

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Speaker 6: to the deal and they did not get explicit regulatory

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Speaker 6: approval from Beijing. But there were people inside of China

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Speaker 6: who were saying that this was essentially losing critical AI

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Speaker 6: technology to our biggest geopolitical rival in the United States,

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Speaker 6: in Meta in particular, So they wanted some sort of

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Speaker 6: pressure put to this, and we wrote a story last

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Speaker 6: week about how regulars now are pressing other AI companies

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Speaker 6: not to take money from US investors in particular. Now

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Speaker 6: it's not clear whether China is going to be able

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Speaker 6: to force Meta to undo this deal. These two companies

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Speaker 6: have been operating together quite closely already. Metayee Manus employees

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Speaker 6: have gone into the Meta offices. The executives are cooperating.

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Speaker 6: All the investors in Manus have already gotten paid, They

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Speaker 6: have their checks at this point, so it's not clear

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Speaker 6: how they can underwin this.

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Speaker 3: There's a technicality that Manis would say it was headquartered

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Speaker 3: in Singapore, but it shows that China has reach if

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Speaker 3: there's an origin within country. The political dimension is that

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Speaker 3: President Trump in just a few weeks time will visit

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Speaker 3: Jijing Pay and speak was Jijing Pay relationship as a

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Speaker 3: negotiation has had chips semikindizers at the heart of it.

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Speaker 3: What about software? What about AI and what we expect

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Speaker 3: to be a negotiation there.

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Speaker 6: Yeah, as you allude to, the technology transfer between the

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Speaker 6: two countries has been a very significant deal. China would

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Speaker 6: like more access to Nvidia chips in particular that are

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Speaker 6: used to train some of these more advanced models. At

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Speaker 6: the same time, Beijing has decided that they do need

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Speaker 6: to develop their own semiconductor industry. It's not clear how

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Speaker 6: big of a strategic priority this deal is going to

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Speaker 6: be for the Trump administration. We've reached out to them

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Speaker 6: for comment on this. They haven't weighed in so far.

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Speaker 6: It's not clear that that's that big of a deal.

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Speaker 6: Meta of course, is kind of playing catch up against

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Speaker 6: Alphabit and Microsoft, as you were alluding to earlier Open Ai,

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Speaker 6: so it's not one of the leading players in AI

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Speaker 6: right now. But this deal was designed to get them

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Speaker 6: back into the race. So we'll see whether Washington picks

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Speaker 6: up the ball here and decides to make this a

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Speaker 6: priority in those negotiations. Would be a bit of a surprise.

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Speaker 3: Metas said in its own statement that they did the

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Speaker 3: deal in compliance for applicable laws and that they expect

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Speaker 3: a resolution.

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Speaker 2: But didn't say any more than that.

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Speaker 3: Bloomberg's Peter Elstrom, who leads our coverage of Asia tech,

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Speaker 3: thank you very much saying with AI models and another

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Speaker 3: story out of China, China's deep Seek is aggressively rolling

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Speaker 3: out low cost plans for its newly released flagship model,

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Speaker 3: intensifying competition in the country's AI sector. The company's offering

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Speaker 3: developers a seventy five percent discount on its deep Seat

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Speaker 3: V four pro model and as cut fees for input

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Speaker 3: cachet hits to one tenth of previous pricing. The moves

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Speaker 3: expected to heighten competitive pressures across the industry and could

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Speaker 3: reignize a price driven race to the bottom. Here is

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Speaker 3: another story that broke this morning. Shares of Qualcomm are

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Speaker 3: now down one percent. They had jumped fourteen percent in

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Speaker 3: the pre market. The company initially surged eight percent of

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Speaker 3: the open after a closely watched industry analyst suggested the

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Speaker 3: chip maker was working with Open.

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Speaker 2: AI on a smartphone.

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Speaker 3: Here with the details, Bloomberg's equities reporter Rhyan VLASLCA this

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Speaker 3: was about an analyst who posted a report on x

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Speaker 3: and the market reacted, what are the details?

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Speaker 2: Hey, good morning, thanks for having me.

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Speaker 7: So this is a very closely followed and highly respected analyst,

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Speaker 7: and it really excited investors because Qualcomm right now is

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Speaker 7: going through pretty uncertain times. It has been pretty strongly

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Speaker 7: pressured this year the shares in large part because of

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Speaker 7: the rise in memory prices, prices from memory related chips,

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Speaker 7: which is having a negative impact on consumer electronics, especially

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Speaker 7: its handset chips. So it's facing that kind of weaker backdrop.

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Speaker 7: And at the same time, this has been a longer

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Speaker 7: term story, but Apple is developing more of its own

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Speaker 7: modem chips in house, developing more of its own internal hardware.

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Speaker 7: That has been a major problem for Qualcomm, which used

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Speaker 7: to count Apple as a major, major customer. So the

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Speaker 7: prospect that they would get a new big customer in

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Speaker 7: the form of open AI, a new market, a new

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Speaker 7: smartphone market, is obviously very exciting for investors. But I

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Speaker 7: guess it's maybe a little bit too far out there.

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Speaker 7: It's too hard to price what this would really mean

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Speaker 7: as far as revenue or anything else like that goes.

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Speaker 7: So we did see the stop the stock pulled back

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Speaker 7: after a pretty pronounced initial game.

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Speaker 3: We're sharing that right now, qual comes down eight tens

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Speaker 3: of a percent. The analyst we're talking about is Ming

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Speaker 3: chi Quo of TF International Securities, And you know, the

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Speaker 3: basics of it are. We know open Ai is planning

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Speaker 3: some kind of device. We don't know much more than that.

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Speaker 3: We know from January they were trying to establish us

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Speaker 3: supply chain. Qualcom is the biggest maker of smartphone processes.

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Speaker 3: What else is there to discuss, Ryan, I mean, that's

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Speaker 3: the extent of our knowledge at this point.

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Speaker 2: Right exactly.

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Speaker 7: And the report did say that mass production will begin

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Speaker 7: in twenty twenty eight, so again two years out. How

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Speaker 7: do you begin to price something like that or factor

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Speaker 7: it into a share price very hard to do, especially

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Speaker 7: with so few details out there. We did reach out

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Speaker 7: to all the companies involved, so far we haven't heard back,

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Speaker 7: so a lot of the stuff remains sort of speculative.

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Speaker 7: But like I said, right now, people are very focused

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Speaker 7: on the memory situation and how Qualcom is going to

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Speaker 7: navigate that. It does report as results I believe wednesday afternoon,

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Speaker 7: so that's going to be a very closely watched report

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Speaker 7: this week. You know, less in focus and some of

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Speaker 7: the other megacaps, but certainly a notable one to come out,

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Speaker 7: and I think maybe people are hoping that we'll get

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Speaker 7: a little bit more clarity on the situation.

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Speaker 3: Then Lumo's rhym Vesavaca, thank you very much. Now coming out,

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Speaker 3: we're going to speak with Tim Alcuriy, UBS analysts and

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Speaker 3: global cohead of AI. You just had the trio top stories. Well,

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Speaker 3: this is a guy who can react to all three

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Speaker 3: of them.

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Speaker 2: That's next. This is Bloomberg Tech.

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Speaker 3: Okay, three big technology stories driving markets. The first, Microsoft

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Speaker 3: is down seven tens for percent. It has ended and

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Speaker 3: broken its exclusivity packs with open Ai, Meta has had

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Speaker 3: its deal with manas Ai and agentic ai platform blocked

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Speaker 3: by regulators in China. That stock is up six tents

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Speaker 3: one percent. And then the one that I don't think

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Speaker 3: any of us really saw coming. Qualcom is now down

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Speaker 3: about a percentage point eight tens of percent in the

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Speaker 3: pre market. It was up fourteen percent in the open

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Speaker 3: It was up eight percent all on an analyst report

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Speaker 3: that it is working with open ai as the silicon

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Speaker 3: provider on a future device, and that is all we know.

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Speaker 3: Tim Hercury Ubs semi and Semi. Caab Anlyst, also UBS's

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Speaker 3: global co head of AI is with us and I'm

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Speaker 3: extremely grateful to have you on a daylight today, Tim.

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Speaker 3: The basics of what we know is that there are

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Speaker 3: talks right between open Ai Qualcom Media Tech was also

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Speaker 3: named Qualcom is the biggest maker of smartphone processors. And

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Speaker 3: the stock went sick and then quickly fell away. Your

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Speaker 3: interpretation of the headlines, Yeah, look.

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Speaker 8: I mean we haven't commented on this deal in particular,

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Speaker 8: but you know what I would say is that, you know,

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Speaker 8: Quacom has had a server, you know, effort now for

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Speaker 8: a while, and it makes sense that they're going to

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Speaker 8: be a player in an agetic world and and and

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Speaker 8: you know certainly, you know, certainly they have a big effort,

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Speaker 8: and and you know, the thing I would say about

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Speaker 8: open Ai would be open ai tends to do a

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Speaker 8: lot of deals with a lot of different companies, and

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Speaker 8: so I typically put a little bit of a discount

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Speaker 8: factor on, you know, any deal they could signed with

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Speaker 8: open Ai, because they're doing deals with you know, virtually everybody.

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Speaker 2: Tim.

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Speaker 3: When I think about my use of an AI tool,

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Speaker 3: I spend a lot of time at my desk Obviously

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Speaker 3: I access that any given tool through a browser on desktop,

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Speaker 3: but most of the time it's on this thing, right,

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Speaker 3: the smartphone is the form factor by which I engage

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Speaker 3: with AI in my daily life. In your research, is

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Speaker 3: that the direction of travel that you see?

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Speaker 8: Yeah, I mean we do. We think that you know,

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Speaker 8: engagement with AI is going to be across of multitude

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Speaker 8: of different platforms and a multitude of different devices, including

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Speaker 8: you know, smartphones obviously, so you know, Qualcom.

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Speaker 9: Is going to have a play here.

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Speaker 8: Quacomm is has a you know, a very very strong

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Speaker 8: edge franchise, and they will.

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Speaker 9: Be a player.

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Speaker 8: I think the issue with Qualcom, of course, is that

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Speaker 8: seventy percent of the operating profit today comes from phones,

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Speaker 8: and and you had mentioned in the you Know show

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Speaker 8: previously the the you know situation with Apple, and we've

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Speaker 8: talked about that where once Apple doesn't need their motive anymore,

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Speaker 8: I don't think Apple is going to pay them a

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Speaker 8: license either, and so there's there's more angles to this

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Speaker 8: Apple story. So I think you're going to have to

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Speaker 8: get through this period before we can then look ahead

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Speaker 8: to Qualcomm being a player in a gentic world.

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Speaker 3: I just want to update our audience on Bloomberg Tech

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Speaker 3: that Intel went to the market for the investment investment

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Speaker 3: grade bond market this morning. They want some help financing

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Speaker 3: what they're building out in Ireland. But it was an

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Speaker 3: astonishing news week for Intel last week as well. Where

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Speaker 3: do you see Intel in its evolution in its turnaround?

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Speaker 3: Under Litboutan.

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Speaker 8: Yeah, you know, we've been talking for some time now

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Speaker 8: about being more optimistic about their foundry business and about

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Speaker 8: how they're turning around manufacturing. And I think that there's

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Speaker 8: a lot of different customers that are potentially very interested

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Speaker 8: in doing a deal with Intel on the foundry side,

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Speaker 8: and I think you're going to hear more about that

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Speaker 8: this fall. You know, we've talked about many, many different customers.

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Speaker 8: So I think they are turning things around from a

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Speaker 8: manufacturing point of view. They have a lot of you know,

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Speaker 8: very good packaging IP to offer to these customers. I

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Speaker 8: think the issue is their product roadmap. That that's kind

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Speaker 8: of where I've been really stuck for now. I think

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Speaker 8: because of the gentic the server CPU market's growing so

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Speaker 8: much that that's what people are getting excited about from

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Speaker 8: a stock point of view. So I would just you know,

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Speaker 8: my caution really is on the product side, I think

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Speaker 8: that they're turning things around. I think in foundry, the

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Speaker 8: you know, turnaround will come a little faster than it

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Speaker 8: comes on the product business.

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Speaker 3: Tim we ended Friday show with the Philadelphia Semiconductor Index

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Speaker 3: or socks up for an eighteenth straight day eighteen sessions,

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Speaker 3: its longest winning streak on record. We're giving some of

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Speaker 3: that back this morning. A nineteenth day would have been interesting,

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Speaker 3: I'm sure, but Intel was a big part of that story.

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Speaker 3: What else was driving investor sentiment around semiconductors that put

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Speaker 3: us on that historic streak. Yeah.

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Speaker 8: Look, I think there's been a resurgence in the realization

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Speaker 8: that the analog sector, for one, is not I was

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Speaker 8: pretty bullish on that sector into earnings, uh you know

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Speaker 8: t I came out and gave you know, pretty good guidance.

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Speaker 8: I think that customers are seeing the you know, capacity

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Speaker 8: constraints get closer and closer to them, you know, customers

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Speaker 8: in the industrial world, and so I think that customers

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Speaker 8: pretty much across the board are beginning to think that

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Speaker 8: they are going to have to start to build some

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Speaker 8: inventories to protect against all of this. And that was

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Speaker 8: one of the things that fueled this you know, rally

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Speaker 8: last week was when you know, t I came out

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Speaker 8: and basically guided you know, gave pretty good guidance and

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Speaker 8: pretty good commentary, and I think you're going to hear

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Speaker 8: more of that, So that was a big driver. I

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Speaker 8: think also, you know, I've been builtished on semiicap equipment.

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Speaker 8: I think you know you're going to hear more of

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Speaker 8: that this week from you KLA and from some others, uh,

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Speaker 8: you know, upping guidance there. There's just just so much

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Speaker 8: capacity that has to get built out over the next

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Speaker 8: three years. So you know, I think it's a myriad

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Speaker 8: of things driving the sector right now.

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Speaker 3: We we didn't even have time to talk about terrified

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Speaker 3: and whether you're and the team are modeling that in

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Speaker 3: as well, but we will now next time. Tim i

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Speaker 3: Caurier of UBS, really great to have you on the program.

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Speaker 2: Thank you. Now.

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Speaker 3: Coming up, it's a huge week for tech earnings and

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Speaker 3: two of the biggest names are slashing jobs. AI spending

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Speaker 3: is surging, headcount is shrinking. What's really going on we'll

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Speaker 3: discuss that next. This is Bloomberg Tech and Wednesday, two

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Speaker 3: of the biggest names in tech step up to report earnings.

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Speaker 3: Meta and Microsoft, and they do it under a cloud

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Speaker 3: of contradiction. Just days ago, both companies signal cuts that

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Speaker 3: could touch as many as twenty three thousand rolls, combined

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Speaker 3: meta planning to slash about ten percent of its workforce.

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Speaker 3: Microsoft offering buyouts on a scale it's never attempted before.

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Speaker 2: At the same time, both are.

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Speaker 3: Spending at record levels, pouring billions into AI data centers

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Speaker 3: and chasing the next wave of growth. Here discussed attention

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Speaker 3: Sarah Franklin ladders see the platform just sees massive flow

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Speaker 3: of data right It's an HR platform and analytics platform

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Speaker 3: that sees the world through numbers. And that's why I

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Speaker 3: love having you on the program. I just outlined the

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Speaker 3: story two of the biggest companies in this country, in

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Speaker 3: the world cutting levels that we've not seen, but spending

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Speaker 3: a lot. Is that the trade off that companies are

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Speaker 3: managing right now.

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Speaker 10: We're seeing this across the board. It's a trend in

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Speaker 10: tech ed and it is really important right now that

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Speaker 10: we look at people and their performance and not just

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Speaker 10: what they're doing with tokens or what they're doing with AI.

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Speaker 10: It's very interesting right now how you see leaders that

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Speaker 10: are investing in severance and not necessarily the skills. It's

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Speaker 10: a transformation in tech and we need to have leaders

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Speaker 10: with the courage to take people from here to there.

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Speaker 3: You know, job cuts and roles being eliminated is not pleasant, right,

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Speaker 3: you know, And if anyone from Meta or Microsoft is watching,

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Speaker 3: you know, reach out tell us what your experience has been.

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Speaker 3: You said on performance is so interesting. So what the

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Speaker 3: managers are measuring this in revenue per employee or output

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Speaker 3: per employee to make that decision.

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Speaker 10: You see a lot you see revenue per employee. You

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Speaker 10: also see token maxing as a trend.

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Speaker 2: Right they stay in age?

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Speaker 10: Yeah, yes, right, but ask yourselves like, would you look

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Speaker 10: at the person at your company that sends the most

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Speaker 10: email as the most productive. It's a new thing that

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Speaker 10: we can use to measure. It's not necessarily the correlation

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Speaker 10: to performance. And what we need to do is help

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Speaker 10: people get from where we are today to where we're

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Speaker 10: going to with AI.

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Speaker 3: You know a lot of people would look at the

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Speaker 3: overall size of a Microsoft or a Meta and say,

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Speaker 3: you know, well, ten thousand roles or eight thousand roles

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Speaker 3: is or isn't a lot to anyone's point of view,

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Speaker 3: from the payroll perspective. Does cutting that level really free

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Speaker 3: up capital? Does it take the pressure off the finance teams?

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Speaker 10: It doesn't really relieve the pressure. And it also deeply

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Speaker 10: impacts culture. Whether it's one person or a thousand people

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Speaker 10: or ten thousand, it is a human and people care

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Speaker 10: about what happens to other humans.

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Speaker 2: So there's a real.

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Speaker 10: Cost on the spreadsheet. There's also a real cultural cost

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Speaker 10: to what it means to lay off people.

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Speaker 3: I always try and look deeper, what's the underlying story.

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Speaker 3: I remember when you and I were talking kind of

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Speaker 3: more immediately after the pandemic, the idea was to undo

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Speaker 3: pandemic era exuberance and hiring. Now it's you know, it's

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Speaker 3: about the AI era, right and freeing up for capex.

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Speaker 3: But what those two things have in common is when

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Speaker 3: you see waves of layoffs to that level that really

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Speaker 3: experienced people in there, sometimes they go and found companies

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Speaker 3: of their own.

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Speaker 11: Yeah.

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Speaker 10: No, it's what we're seeing right now is a big

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Speaker 10: transformation in tech, and it's not just for the companies.

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Speaker 10: It's also for the people with the careers. They've spent years,

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Speaker 10: decades even working on refining their craft and what it

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Speaker 10: means to be told to change overnight. It's like me

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Speaker 10: telling you be in Europe in an hour unless you

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Speaker 10: know how to teleport, not possible, but you can get

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Speaker 10: there in a day. And so everybody's looking right now,

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Speaker 10: how do I transform? How do I evolve with AI?

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Speaker 10: And it's something that's the responsibility of leaders and also

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Speaker 10: people to take it into theirselves to learn as well.

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Speaker 3: I also want to make the distinction Meta is doing cuts,

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Speaker 3: Microsoft is doing what I used to call in the

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Speaker 3: UK voluntary redundancies, but buyouts here in America.

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Speaker 2: Is there is there.

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Speaker 3: Something to learn from that distinction or it's just a

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Speaker 3: different means to the same end.

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Speaker 10: It's still an investment in severance and not in the

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Speaker 10: skills in your people. And that's the big difference. And

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Speaker 10: so the more that we can invest in how we

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Speaker 10: train people, how we get them from point A to

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Speaker 10: point B, the better that we will all be, because

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Speaker 10: it's a short term gain on the spreadsheet, but a

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Speaker 10: long term loss in the knowledge that you have in

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Speaker 10: the workforce.

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Speaker 3: Sarah Franklin, the lattis, it's great to have you back

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Speaker 3: on Bloomberg Tech and we are just at the start

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Speaker 3: of what is a big week in earnings. Now coming

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Speaker 3: up Elon Musk and Sam Oltman, and we'll face off

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Speaker 3: in an Oakland court this week in a battle that

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Speaker 3: could determine the future of open ai.

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Speaker 2: This is going to be a big one and we're

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Speaker 2: going to look at it right now.

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Speaker 3: This is a market that's being driven by newsflow. It's

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Speaker 3: kind of a situation where there have been so many

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Speaker 3: headlines through the morning, everyone needed a moment to make

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Speaker 3: sense of it. I would linger for a second on

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Speaker 3: the Philadelphia Semiconductor Index or socks. We just talked about

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Speaker 3: it with Tim akuriy from UBS on Friday. We ended

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Speaker 3: the show by saying that that index was up for

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Speaker 3: an eighteenth straight day, a record. We're giving some of

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Speaker 3: that back. We're off by two percent. Also, what we

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Speaker 3: used to say was our risk asset of choice Bitcoin,

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Speaker 3: It's seventy six six hundred US dollars for token. Also,

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Speaker 3: I guess we're saying this is a risk off environment.

440
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Speaker 3: That's what the world looks like. We're only halfway through

441
00:22:48,880 --> 00:22:51,440
Speaker 3: the program. It is halftime and this is Bloomberg Tech.

442
00:23:02,520 --> 00:23:05,879
Speaker 3: Welcome back to Bloomberg Tech. Our top story open ai

443
00:23:06,160 --> 00:23:10,919
Speaker 3: has broken free from its exclusivity packs with Microsoft. Microsoft's

444
00:23:10,920 --> 00:23:13,480
Speaker 3: down four tenths of a percent when this story broke,

445
00:23:13,720 --> 00:23:17,199
Speaker 3: two red headlines on the terminal. Microsoft fell four percent

446
00:23:17,240 --> 00:23:20,520
Speaker 3: and then it came back. Everyone's assessing what this means.

447
00:23:20,520 --> 00:23:24,200
Speaker 3: But basically open ai is free to distribute and sell

448
00:23:24,240 --> 00:23:28,280
Speaker 3: its models with other cloud providers, and that is the

449
00:23:28,280 --> 00:23:31,400
Speaker 3: reaction from Bloomberg Intelligence. A lot of focus on Amazon

450
00:23:31,440 --> 00:23:34,920
Speaker 3: and AWS. Our colleague Anna Ragrana Bi he kind of

451
00:23:34,960 --> 00:23:37,920
Speaker 3: leads the coverage for Hyperscalers, is saying that this amended

452
00:23:37,920 --> 00:23:41,040
Speaker 3: partnership is going to be a net positive enter prize

453
00:23:41,040 --> 00:23:44,760
Speaker 3: AI adoption, but more broadly for AWS, something he's been

454
00:23:44,800 --> 00:23:47,040
Speaker 3: writing about all year. And of course open ai did

455
00:23:47,040 --> 00:23:50,360
Speaker 3: that deal. Amazon jumps in the pre market. It's now

456
00:23:50,440 --> 00:23:52,800
Speaker 3: kind of given up some of the menum Let's sad

457
00:23:52,840 --> 00:23:55,560
Speaker 3: to another open ai story. One of the biggest feuds

458
00:23:55,560 --> 00:23:58,600
Speaker 3: in tech heads to court today. Elon Musk claims open

459
00:23:58,640 --> 00:24:02,480
Speaker 3: ai abandon its founding mission as a nonprofit. He's suing

460
00:24:02,560 --> 00:24:05,040
Speaker 3: the company, two of its co founders, Sam Altman and

461
00:24:05,080 --> 00:24:08,520
Speaker 3: Greg Brockman, and Microsoft. Musk is seeking up to one

462
00:24:08,560 --> 00:24:10,720
Speaker 3: hundred and thirty four billion dollars in damages that he

463
00:24:10,800 --> 00:24:14,480
Speaker 3: says should go to open AI's charitable arm. If he wins,

464
00:24:14,600 --> 00:24:18,000
Speaker 3: let's bring in Bloomberg's AI editor Seth Figereman. We should

465
00:24:18,040 --> 00:24:20,040
Speaker 3: note that there was a developing story at the end

466
00:24:20,040 --> 00:24:23,040
Speaker 3: of last week when Musk actually dropped a number of

467
00:24:23,040 --> 00:24:25,200
Speaker 3: the claims that he was making. So let's start there.

468
00:24:25,720 --> 00:24:29,160
Speaker 3: We go to court today this jury selection. What are

469
00:24:29,160 --> 00:24:30,679
Speaker 3: the claims that Musk is sticking with.

470
00:24:31,800 --> 00:24:34,520
Speaker 12: Yeah, I mean, this is a years long saga that's

471
00:24:34,520 --> 00:24:37,439
Speaker 12: really culminating in the court case this week. And at

472
00:24:37,480 --> 00:24:41,040
Speaker 12: the heart of it, Elon is alleging that Altman and

473
00:24:41,080 --> 00:24:44,480
Speaker 12: other leaders that Operanie effectively tried to enrich themselves by

474
00:24:44,520 --> 00:24:49,360
Speaker 12: pursuing a for profit push at Obanie, which was originally

475
00:24:49,400 --> 00:24:52,119
Speaker 12: founded by Musk, Alman and a group of others as

476
00:24:52,160 --> 00:24:56,000
Speaker 12: a nonprofit research organization. And he's claiming that he has

477
00:24:56,040 --> 00:24:59,480
Speaker 12: effectually been defrauded as part of that, and he is

478
00:24:59,560 --> 00:25:01,360
Speaker 12: asking for or up to one hundred and thirty four

479
00:25:01,359 --> 00:25:04,280
Speaker 12: billion dollars in damages. But in some ways, even more

480
00:25:04,320 --> 00:25:06,679
Speaker 12: crucially than the amount of money he's asking for are

481
00:25:06,760 --> 00:25:10,600
Speaker 12: some of the remedies for that, which range from seeking

482
00:25:10,640 --> 00:25:13,959
Speaker 12: to have Altman pushed out as CEO and his other

483
00:25:14,000 --> 00:25:17,000
Speaker 12: official positions at the company and also trying to unwind

484
00:25:17,080 --> 00:25:20,320
Speaker 12: the for profit conversion that was completed early last year.

485
00:25:21,160 --> 00:25:24,360
Speaker 3: We were just showing some of those that the dudes testify.

486
00:25:24,680 --> 00:25:28,240
Speaker 3: It's a pretty blockbuster list. And who's who, right, Sam

487
00:25:28,280 --> 00:25:32,440
Speaker 3: Altman is going to testify Elon Musk himself, Miramradi formerly

488
00:25:32,520 --> 00:25:37,199
Speaker 3: open aicto now of Thinking Machines, Microsoft CEO Sati and Nadella.

489
00:25:38,160 --> 00:25:41,560
Speaker 3: There is some historical beef here which you should explain

490
00:25:41,720 --> 00:25:46,320
Speaker 3: the relationship between Musk and Altman plays out on social media. Musk,

491
00:25:46,400 --> 00:25:49,720
Speaker 3: of course, is also the founder and leader of a

492
00:25:49,840 --> 00:25:51,640
Speaker 3: rival frontier lab XAI.

493
00:25:52,359 --> 00:25:55,400
Speaker 12: That's right, yeah, I mean these were two close colleagues

494
00:25:55,400 --> 00:25:57,359
Speaker 12: for a time who were instrumental on the founding of

495
00:25:57,359 --> 00:26:00,159
Speaker 12: Opening I more than a decade ago. Elion in some

496
00:26:00,160 --> 00:26:04,040
Speaker 12: ways as very much the benefactor of the organization in

497
00:26:04,080 --> 00:26:06,959
Speaker 12: its early days. Sam has previously said that he considered

498
00:26:06,960 --> 00:26:10,159
Speaker 12: as Elon must to be a hero of his. But

499
00:26:10,200 --> 00:26:13,040
Speaker 12: there was a falling out within the first few years

500
00:26:13,080 --> 00:26:17,359
Speaker 12: of the company's launch, seemingly in OPENINGE Eye is telling

501
00:26:17,400 --> 00:26:20,760
Speaker 12: of it, because Elon Musk wanted more control, He wanted

502
00:26:20,880 --> 00:26:23,800
Speaker 12: it to operate as part of Tesla. He seemed to

503
00:26:23,800 --> 00:26:27,879
Speaker 12: want to be CEO of the organization himself. Altman and

504
00:26:27,960 --> 00:26:31,760
Speaker 12: others refrained from that and must ended up believing Opennie

505
00:26:32,520 --> 00:26:35,000
Speaker 12: around twenty eighteen. Since then, there's been a lot of

506
00:26:35,480 --> 00:26:39,600
Speaker 12: name calling on both sides, with Musk in particular loving

507
00:26:39,640 --> 00:26:43,200
Speaker 12: to call Sam Alman scam Altman, among other things. Elon

508
00:26:43,240 --> 00:26:46,159
Speaker 12: has also taken steps to undercut the organization, not just

509
00:26:46,280 --> 00:26:50,680
Speaker 12: through launching a rival company, but making a hostile big

510
00:26:50,680 --> 00:26:53,680
Speaker 12: as some might recall, to try to basically take over

511
00:26:53,840 --> 00:26:56,440
Speaker 12: the nonprofit that controls Openiey. This core case should be

512
00:26:56,520 --> 00:26:58,800
Speaker 12: understood in that larger fight.

513
00:27:00,040 --> 00:27:02,280
Speaker 2: Bloomberg, Seth Magun, thank you very much.

514
00:27:02,359 --> 00:27:04,640
Speaker 3: Let's talk through the legal claims that the jury will

515
00:27:04,640 --> 00:27:07,639
Speaker 3: be asked to weigh in more detail with Dorothy Lund,

516
00:27:07,880 --> 00:27:10,920
Speaker 3: professor of law at Columbia Law School, where she specializes

517
00:27:10,960 --> 00:27:15,600
Speaker 3: in corporate ownership, governance, securities regulation. Let's start with the

518
00:27:15,640 --> 00:27:19,679
Speaker 3: legal claims in the case. I mean, technically speaking, what

519
00:27:19,880 --> 00:27:24,240
Speaker 3: is it that Elon Musk is suing for and based

520
00:27:24,280 --> 00:27:26,480
Speaker 3: on what and hoping to achieve what?

521
00:27:28,080 --> 00:27:30,440
Speaker 5: Yeah, So, at this point there are only two claims

522
00:27:30,440 --> 00:27:32,600
Speaker 5: that remain a lot of others have been dropped or

523
00:27:32,720 --> 00:27:36,560
Speaker 5: dismissed and So the first is that Altman in open

524
00:27:36,640 --> 00:27:40,639
Speaker 5: ai violated a promise to Musk that open ai would

525
00:27:40,640 --> 00:27:45,040
Speaker 5: have a permanent charitable mission to develop safe open source

526
00:27:45,119 --> 00:27:48,560
Speaker 5: AI technology for the public good and not private gain,

527
00:27:49,280 --> 00:27:53,000
Speaker 5: and this was violated when in twenty nineteen open ai

528
00:27:53,240 --> 00:27:54,080
Speaker 5: created a.

529
00:27:53,960 --> 00:27:57,200
Speaker 9: For profit affiliate. So that's the first allegation.

530
00:27:57,320 --> 00:28:00,919
Speaker 5: In the second is that it's really related, is that

531
00:28:01,000 --> 00:28:06,679
Speaker 5: Altman and open eye received undeserved benefits such as Musk's investment,

532
00:28:07,119 --> 00:28:08,960
Speaker 5: because of these broken promises.

533
00:28:10,480 --> 00:28:13,800
Speaker 3: Professor Lund, does it matter that this is a jury trial?

534
00:28:15,680 --> 00:28:18,800
Speaker 5: You know, this is a jury trial, Yes, but the

535
00:28:18,920 --> 00:28:21,239
Speaker 5: jury in this case is only being used as an

536
00:28:21,280 --> 00:28:25,199
Speaker 5: advisory to Judge Gondalas Rogers, so she actually doesn't have

537
00:28:25,280 --> 00:28:28,320
Speaker 5: to follow their opinion, although it will certainly give her

538
00:28:28,359 --> 00:28:31,359
Speaker 5: some cover if she does. And so today, you know,

539
00:28:31,359 --> 00:28:36,560
Speaker 5: we're starting jury selection and it's a really interesting process.

540
00:28:36,600 --> 00:28:38,800
Speaker 5: And the law here, you know, it doesn't require that

541
00:28:39,360 --> 00:28:40,720
Speaker 5: jurors have never heard.

542
00:28:40,480 --> 00:28:42,920
Speaker 9: Of Elon Musk or they've never used open ai.

543
00:28:43,960 --> 00:28:46,479
Speaker 5: But instead, you know, the goal will be defined people

544
00:28:46,560 --> 00:28:49,320
Speaker 5: that can put aside what they've heard they know about

545
00:28:49,360 --> 00:28:51,960
Speaker 5: these people, and to decide.

546
00:28:51,520 --> 00:28:54,640
Speaker 9: The case only on the evidence presented. In court.

547
00:28:54,840 --> 00:28:58,800
Speaker 5: But you know, these are two very infamous figures, right,

548
00:28:58,880 --> 00:29:03,200
Speaker 5: Musk and Altman. Musk has been aggressively moving companies to

549
00:29:03,280 --> 00:29:04,680
Speaker 5: Texas and out of California.

550
00:29:04,720 --> 00:29:06,720
Speaker 9: It's been leaning hard into MAGA politics.

551
00:29:07,280 --> 00:29:10,560
Speaker 5: Altman isn't as well known, but he's had some recent

552
00:29:10,600 --> 00:29:14,840
Speaker 5: episodes suggesting he faces some real personality challenges as well,

553
00:29:14,880 --> 00:29:17,760
Speaker 5: you know, the recent multiv cocktail attack on his house.

554
00:29:18,600 --> 00:29:20,880
Speaker 5: You know, I think in general there's just growing uneasy

555
00:29:20,880 --> 00:29:24,000
Speaker 5: and skepticism about whether AI is going to visit its

556
00:29:24,080 --> 00:29:29,760
Speaker 5: dystopia in future on all of US and Employment Data Center,

557
00:29:30,080 --> 00:29:34,120
Speaker 5: environmental effects, power consumption. So you know, I think here

558
00:29:34,160 --> 00:29:36,760
Speaker 5: it's going to be these The jury's views may be

559
00:29:36,800 --> 00:29:40,440
Speaker 5: colored on these specific views on each of these individuals

560
00:29:40,640 --> 00:29:42,320
Speaker 5: and also AI generally.

561
00:29:43,320 --> 00:29:43,560
Speaker 2: Well.

562
00:29:43,680 --> 00:29:47,520
Speaker 3: Mister Altman is well known to regular viewers of this program,

563
00:29:47,600 --> 00:29:50,560
Speaker 3: but just in case, he's the CEO of Open AI,

564
00:29:50,720 --> 00:29:53,920
Speaker 3: which is regarded probably as the most consequential AI lab

565
00:29:54,680 --> 00:29:58,160
Speaker 3: at this moment in time. But therein lies an interesting

566
00:29:58,240 --> 00:30:02,280
Speaker 3: point elon Musk also at the helm of XAI, which

567
00:30:02,320 --> 00:30:04,640
Speaker 3: is now owned by SpaceX, a company in which he

568
00:30:04,760 --> 00:30:09,600
Speaker 3: is CEO. Does that matter going into the case that

569
00:30:09,680 --> 00:30:13,000
Speaker 3: he leads a rival company to the one that Sam

570
00:30:13,040 --> 00:30:14,040
Speaker 3: Altman now leads.

571
00:30:15,440 --> 00:30:18,320
Speaker 5: Absolutely, I mean, you know, it's very easy to view

572
00:30:18,360 --> 00:30:22,880
Speaker 5: this suit cynically because Musk is operating his own rival

573
00:30:22,960 --> 00:30:26,960
Speaker 5: AI company, and he's he's tried to partner with or

574
00:30:27,160 --> 00:30:31,120
Speaker 5: take over open Ai multiple times he's been spurned. So

575
00:30:31,840 --> 00:30:35,520
Speaker 5: I think absolutely there's a reason to be suspect about

576
00:30:35,520 --> 00:30:37,800
Speaker 5: his motives here, and even the judge in this case

577
00:30:38,120 --> 00:30:41,800
Speaker 5: has called this out, you know, in some pre trial motions.

578
00:30:42,440 --> 00:30:43,320
Speaker 9: You can in fact.

579
00:30:43,120 --> 00:30:47,440
Speaker 5: See in his IPO letter for SpaceX that you know,

580
00:30:47,560 --> 00:30:50,800
Speaker 5: they disclose that Grock is going to benefit if this

581
00:30:50,920 --> 00:30:53,360
Speaker 5: suit is successful. So I think at the end of

582
00:30:53,400 --> 00:30:54,880
Speaker 5: the day, the judge and jury are going to have

583
00:30:54,920 --> 00:30:59,560
Speaker 5: to determine whether Musk is disingenuously using this lawsuit to

584
00:30:59,600 --> 00:31:03,120
Speaker 5: niqu app open ai and create more room for his

585
00:31:03,240 --> 00:31:07,200
Speaker 5: own for profit initiatives to thrive with less competition. And

586
00:31:07,240 --> 00:31:10,880
Speaker 5: this is essentially what open ai is, you know, put

587
00:31:10,880 --> 00:31:12,360
Speaker 5: pointing to in this litigation.

588
00:31:13,680 --> 00:31:16,080
Speaker 3: So if we just have two minutes left here, but

589
00:31:17,080 --> 00:31:21,880
Speaker 3: the central issue is the nonprofits origin of open ai,

590
00:31:22,560 --> 00:31:24,440
Speaker 3: and within the world of AI, of course we have

591
00:31:24,560 --> 00:31:28,760
Speaker 3: public benefit corporation structures as well. Is there a chance

592
00:31:28,840 --> 00:31:33,720
Speaker 3: that this case sets precedent for the legal structure of

593
00:31:33,720 --> 00:31:35,160
Speaker 3: companies that operate that way.

594
00:31:36,640 --> 00:31:38,600
Speaker 5: Yeah, So, I mean, you know, there's a lot to

595
00:31:38,680 --> 00:31:40,040
Speaker 5: say about this structure.

596
00:31:40,880 --> 00:31:41,040
Speaker 1: You know.

597
00:31:41,080 --> 00:31:43,920
Speaker 5: One of the arguments that Musk has made is that,

598
00:31:44,600 --> 00:31:47,479
Speaker 5: you know, if we're not careful here, this is going

599
00:31:47,560 --> 00:31:51,440
Speaker 5: to cause other nonprofits to.

600
00:31:51,720 --> 00:31:53,360
Speaker 9: Follow the same path as open Ai.

601
00:31:53,440 --> 00:31:57,000
Speaker 5: They're going to make promises and then fall behind on them,

602
00:31:57,280 --> 00:31:59,880
Speaker 5: and whereas the other nonprofits kind of go and go

603
00:32:00,160 --> 00:32:00,560
Speaker 5: this way.

604
00:32:01,000 --> 00:32:03,240
Speaker 9: You know, I think this is ultimately a weak argument

605
00:32:03,800 --> 00:32:04,240
Speaker 9: for one.

606
00:32:05,120 --> 00:32:07,280
Speaker 5: Open ai is not your typical startup, right, This is

607
00:32:07,320 --> 00:32:09,800
Speaker 5: a very unique company in business.

608
00:32:09,840 --> 00:32:13,040
Speaker 9: It's had a very unique sort of governance history.

609
00:32:13,200 --> 00:32:16,560
Speaker 5: Each of its iterations has looked really different in interesting

610
00:32:16,600 --> 00:32:18,479
Speaker 5: ways that we could spend far more than two minutes on.

611
00:32:19,600 --> 00:32:22,000
Speaker 5: And you know, the other thing I think is important

612
00:32:22,000 --> 00:32:24,960
Speaker 5: to note in this conversation is that something that's true

613
00:32:24,960 --> 00:32:28,040
Speaker 5: of corporate law is that it's enabling. It allows businesses

614
00:32:28,080 --> 00:32:32,880
Speaker 5: to change their forms based on their unique business needs.

615
00:32:32,960 --> 00:32:36,040
Speaker 9: Right, and so you know, over time.

616
00:32:36,720 --> 00:32:38,800
Speaker 5: You know, the argument that open ai has made is

617
00:32:38,840 --> 00:32:41,160
Speaker 5: that we started off as a nonprofit, but this is

618
00:32:41,160 --> 00:32:43,960
Speaker 5: a really capital and tons of business and we just

619
00:32:44,040 --> 00:32:48,040
Speaker 5: needed more money in order to continue to pursue our

620
00:32:48,120 --> 00:32:50,160
Speaker 5: mission and develop this technology.

621
00:32:50,760 --> 00:32:52,560
Speaker 9: And this is why we made these changes.

622
00:32:52,600 --> 00:32:55,560
Speaker 5: And this is all sort of consistent with our initial

623
00:32:55,600 --> 00:32:58,040
Speaker 5: goals and the promises that were made upfront.

624
00:32:59,080 --> 00:33:00,480
Speaker 9: And so again I think.

625
00:33:00,320 --> 00:33:03,640
Speaker 5: That this is this is something you would expect from organizations,

626
00:33:03,640 --> 00:33:05,840
Speaker 5: that they change their business form over time, and you

627
00:33:05,840 --> 00:33:09,320
Speaker 5: wouldn't necessarily want to deter that either.

628
00:33:11,280 --> 00:33:15,080
Speaker 3: Dorothy Lund, professor at Columbia Law School. Again, the Open

629
00:33:15,120 --> 00:33:18,480
Speaker 3: AI must trial jury selection starts today in Oakland, Thank

630
00:33:18,520 --> 00:33:20,840
Speaker 3: you very much. Coming up, we're going to speak with

631
00:33:20,880 --> 00:33:24,920
Speaker 3: Under Secretary of State for Economic Affairs Jacob Helberg about

632
00:33:24,960 --> 00:33:28,680
Speaker 3: strengthening the US tech supply chain. Big focus on chips

633
00:33:29,000 --> 00:33:31,440
Speaker 3: and silicon. This is Bloomberg Tech.

634
00:33:32,360 --> 00:33:34,640
Speaker 6: We were the jip capital of the world, and now

635
00:33:34,840 --> 00:33:35,960
Speaker 6: you know Intel.

636
00:33:36,360 --> 00:33:40,120
Speaker 9: And now they're coming back. All the jip companies are

637
00:33:40,120 --> 00:33:40,680
Speaker 9: coming back.

638
00:33:45,680 --> 00:33:47,760
Speaker 2: Let's get back to one of our top stories today.

639
00:33:47,880 --> 00:33:51,880
Speaker 3: China has blocked Meta's two billion dollar acquisition of AI

640
00:33:51,960 --> 00:33:56,000
Speaker 3: startup Manus, effectively unwinding a deal that we thought was done.

641
00:33:56,200 --> 00:33:59,440
Speaker 3: It's a clear move by Beijing to keep advanced AI

642
00:33:59,520 --> 00:34:03,200
Speaker 3: technology from flowing to the US. Just weeks before the

643
00:34:03,280 --> 00:34:06,560
Speaker 3: expected Trump Gee meeting. Joining us on the show today

644
00:34:06,720 --> 00:34:09,960
Speaker 3: under Secretary of State for Economic Affairs Jacob Helberg, who's

645
00:34:10,000 --> 00:34:13,359
Speaker 3: been shaping the US strategy on exactly this kind of thing,

646
00:34:13,640 --> 00:34:15,880
Speaker 3: economic and technology competition.

647
00:34:16,320 --> 00:34:17,520
Speaker 2: This is about state craft.

648
00:34:18,280 --> 00:34:20,160
Speaker 3: You know, we are going to talk a lot about

649
00:34:20,520 --> 00:34:23,239
Speaker 3: silicon you know that's been a big focus for you.

650
00:34:23,320 --> 00:34:26,600
Speaker 3: But this moved by China and one of its regulatory

651
00:34:26,600 --> 00:34:30,040
Speaker 3: bodies to block this deal. How do you interpret that

652
00:34:30,080 --> 00:34:33,360
Speaker 3: as a strategy and state craft on China's side.

653
00:34:33,640 --> 00:34:36,000
Speaker 11: Well, it's great to be here and great to be

654
00:34:36,080 --> 00:34:38,680
Speaker 11: with the Bloomberg team. So I think this is just

655
00:34:38,719 --> 00:34:43,400
Speaker 11: the latest example of how China's economic diplomacy branded itself

656
00:34:43,440 --> 00:34:46,800
Speaker 11: to the rest of the world as being all about connectivity,

657
00:34:46,840 --> 00:34:50,120
Speaker 11: and in fact it's really been about coercion and practice.

658
00:34:50,360 --> 00:34:52,920
Speaker 11: What we have done at the State Department is built

659
00:34:52,960 --> 00:34:58,920
Speaker 11: an economic security coalition with fourteen countries called Paksliga. In January,

660
00:34:59,000 --> 00:35:00,919
Speaker 11: I gave a speech at HUDD and that really laid

661
00:35:00,920 --> 00:35:04,400
Speaker 11: out the blueprint. And last week we announced a forward

662
00:35:04,440 --> 00:35:08,200
Speaker 11: deployed industrial base with our partner, or our oldest ally

663
00:35:08,320 --> 00:35:11,680
Speaker 11: in Asia, the Philippines, which really is the beginning of

664
00:35:11,719 --> 00:35:14,440
Speaker 11: the build and we're incredibly excited to get to hit

665
00:35:14,480 --> 00:35:15,200
Speaker 11: the ground running.

666
00:35:15,600 --> 00:35:18,200
Speaker 3: When we talk about China and from a policy standpoint,

667
00:35:18,200 --> 00:35:21,239
Speaker 3: in this program, we talk about Belton Road the initiative.

668
00:35:21,520 --> 00:35:23,080
Speaker 2: How is pack Silica different.

669
00:35:23,600 --> 00:35:26,720
Speaker 3: Why is the strategy through pack Silica a better form

670
00:35:27,120 --> 00:35:27,840
Speaker 3: of state craft.

671
00:35:28,000 --> 00:35:31,920
Speaker 11: Yeah, so we are obviously building this effort with the

672
00:35:31,920 --> 00:35:34,560
Speaker 11: benefit of having been able to study what China has

673
00:35:34,600 --> 00:35:36,680
Speaker 11: done through the Belton Road Initiative for the past twenty

674
00:35:36,680 --> 00:35:39,720
Speaker 11: five years. And the easiest way to understand the Belton

675
00:35:39,800 --> 00:35:44,160
Speaker 11: Road Initiative is it was China's attempt to build government

676
00:35:44,239 --> 00:35:47,879
Speaker 11: owned roads and government operated bridges and railways with state

677
00:35:47,880 --> 00:35:51,600
Speaker 11: owned enterprises. The Chinese government has done this entirely in house.

678
00:35:52,080 --> 00:35:55,319
Speaker 11: We have a totally different model. We believe America's superpower

679
00:35:55,520 --> 00:35:58,880
Speaker 11: is the power of its private companies and its ability

680
00:35:58,920 --> 00:36:03,520
Speaker 11: to build products that delight and enchant billions of users

681
00:36:03,640 --> 00:36:06,640
Speaker 11: around the world, and so we decided to partner with

682
00:36:06,680 --> 00:36:10,960
Speaker 11: the private sector to really roll out platforms. The Forward

683
00:36:11,239 --> 00:36:14,680
Speaker 11: Deployed Industrial Base is our first major rollout that will

684
00:36:14,719 --> 00:36:18,120
Speaker 11: be a platform for American companies in partnership with a

685
00:36:18,160 --> 00:36:22,800
Speaker 11: strong sovereign partner in the Philippines. And ultimately the framework

686
00:36:22,840 --> 00:36:26,640
Speaker 11: that we adopted is a framework where both the US

687
00:36:26,640 --> 00:36:29,000
Speaker 11: and the Philippines have skin in the game and share

688
00:36:29,040 --> 00:36:32,160
Speaker 11: in the upside of success. And it's that kind of

689
00:36:32,360 --> 00:36:34,799
Speaker 11: positive sum approach that we hope to bring to all

690
00:36:34,840 --> 00:36:35,600
Speaker 11: of our partnerships.

691
00:36:35,680 --> 00:36:37,279
Speaker 2: Just discuss the Philippines a little bit more.

692
00:36:37,360 --> 00:36:43,560
Speaker 3: Is a case study beyond its geographic position on the map.

693
00:36:43,840 --> 00:36:47,160
Speaker 3: Why is that an important partner? I guess if you

694
00:36:47,200 --> 00:36:49,080
Speaker 3: looked at it through an economic lens, or through a.

695
00:36:49,040 --> 00:36:51,680
Speaker 11: Trade lens or a supply chain lens, well, we're very

696
00:36:51,680 --> 00:36:54,520
Speaker 11: excited to partner with the Philippines because it's our oldest

697
00:36:54,560 --> 00:36:59,560
Speaker 11: ally in Asia, is a defense treaty. Ally, it's also

698
00:36:59,640 --> 00:37:03,640
Speaker 11: a kind that has very rich manufacturing capabilities, and so

699
00:37:03,760 --> 00:37:06,120
Speaker 11: ultimately that kindness.

700
00:37:05,680 --> 00:37:08,719
Speaker 2: Is the potential, the forward looking bit, the forward looking bit.

701
00:37:08,760 --> 00:37:12,000
Speaker 11: But they already today have a very deep manufacturing sector.

702
00:37:12,560 --> 00:37:17,920
Speaker 11: And so the values alignment, combined with the complementary industrial capabilities,

703
00:37:18,000 --> 00:37:22,160
Speaker 11: we thought, provide the Philippines with a very compelling value

704
00:37:22,160 --> 00:37:26,640
Speaker 11: proposition as a first test bed for the forward deployed

705
00:37:26,680 --> 00:37:29,680
Speaker 11: industrial base as well as for American companies and for

706
00:37:29,719 --> 00:37:33,319
Speaker 11: Filipino workers. So we're thrilled to be partnering with them,

707
00:37:33,360 --> 00:37:35,759
Speaker 11: and we think American companies will be very excited to

708
00:37:35,920 --> 00:37:36,359
Speaker 11: go there.

709
00:37:36,800 --> 00:37:39,520
Speaker 3: Under Secretary, this is the first opportunity we've had to

710
00:37:39,600 --> 00:37:43,160
Speaker 3: speak I think since CES in January actually, but of

711
00:37:43,200 --> 00:37:47,200
Speaker 3: course in between, we've had the conflict in Iran, the

712
00:37:47,239 --> 00:37:49,879
Speaker 3: war in Iran, and we spend a lot of time

713
00:37:49,920 --> 00:37:52,680
Speaker 3: on this program talking about the impact to chip supply

714
00:37:52,760 --> 00:37:56,320
Speaker 3: chains because of helium, for example, key stabilizer in the

715
00:37:56,400 --> 00:37:57,759
Speaker 3: chip manufacturing process.

716
00:37:58,200 --> 00:38:00,160
Speaker 2: Has that had an impact in the world.

717
00:38:00,239 --> 00:38:02,320
Speaker 3: That you were doing, you know, some of those golf

718
00:38:02,360 --> 00:38:04,759
Speaker 3: partners a key to what you're trying to do.

719
00:38:05,239 --> 00:38:08,120
Speaker 11: Well, let me just say that we, obviously, you know,

720
00:38:08,239 --> 00:38:11,239
Speaker 11: have made a very conscious decision to really double down

721
00:38:11,320 --> 00:38:14,879
Speaker 11: on our partnerships with the Golf we have. We work

722
00:38:14,920 --> 00:38:16,200
Speaker 11: with them incredibly closely.

723
00:38:16,360 --> 00:38:17,880
Speaker 2: I hosted the us.

724
00:38:17,800 --> 00:38:21,880
Speaker 11: U AAI working group in Washington with my colleagues from

725
00:38:22,320 --> 00:38:24,600
Speaker 11: the Office of Science and Technology at the White House

726
00:38:24,600 --> 00:38:28,520
Speaker 11: as well as the Commerce Department. Ultimately, one of the

727
00:38:28,520 --> 00:38:33,920
Speaker 11: big takeaways from an economic diplomacy standpoint of the Iran

728
00:38:34,040 --> 00:38:37,560
Speaker 11: crisis is really just the importance of de risking single

729
00:38:37,600 --> 00:38:41,479
Speaker 11: points of failure. Right now, we have a concentration risk

730
00:38:41,640 --> 00:38:46,480
Speaker 11: across our supply chains, whether it's logistics, whether it's actuators,

731
00:38:46,520 --> 00:38:50,759
Speaker 11: whether it's rare earth magnets that remains unacceptably high. And ultimately,

732
00:38:51,160 --> 00:38:53,640
Speaker 11: that really is the genesis of what pack silica is

733
00:38:53,680 --> 00:38:54,400
Speaker 11: meant to address.

734
00:38:55,040 --> 00:39:00,040
Speaker 3: When the President meets Swushijingping, what's on the table a

735
00:39:00,239 --> 00:39:04,200
Speaker 3: point of negotiation or interest both sides may well change.

736
00:39:04,200 --> 00:39:07,319
Speaker 3: We spend a lot of time with you and other

737
00:39:07,360 --> 00:39:10,560
Speaker 3: colleagues and government talking about the idea of whether China

738
00:39:10,640 --> 00:39:13,680
Speaker 3: should or should not have access to leading edge chips.

739
00:39:14,080 --> 00:39:16,719
Speaker 3: But there's a software component to this as well. If

740
00:39:16,719 --> 00:39:20,160
Speaker 3: we take the Mannus case study, do you expect the

741
00:39:20,200 --> 00:39:23,520
Speaker 3: President to bring that up and use the competence of

742
00:39:23,600 --> 00:39:27,000
Speaker 3: Chinese AI companies on the software side as a point

743
00:39:27,040 --> 00:39:29,360
Speaker 3: of discussion or we just focused on chips.

744
00:39:30,000 --> 00:39:31,520
Speaker 2: I expect the President to.

745
00:39:33,120 --> 00:39:38,800
Speaker 11: Really walk into that room with maximum leverage and decision space.

746
00:39:39,840 --> 00:39:45,080
Speaker 11: His national security strategy made abundantly clear that America will

747
00:39:45,160 --> 00:39:48,960
Speaker 11: secure the inputs it vitally needs for its supply chains,

748
00:39:49,320 --> 00:39:54,319
Speaker 11: and ultimately President Trump has reshaped American economic diplomacy the

749
00:39:54,400 --> 00:39:55,600
Speaker 11: way only.

750
00:39:55,280 --> 00:39:56,480
Speaker 2: An executive could.

751
00:39:56,680 --> 00:39:59,719
Speaker 11: And it is really thanks to his leadership that this

752
00:40:00,120 --> 00:40:04,239
Speaker 11: historic arrangement and partnership with the Philippines was made passable.

753
00:40:05,160 --> 00:40:08,759
Speaker 3: Jacob Helberg, us Undersecretary of State for Economic Affairs, back

754
00:40:08,800 --> 00:40:12,280
Speaker 3: on Bloomberg Tech and what has been an astonishing start

755
00:40:12,600 --> 00:40:16,040
Speaker 3: to twenty twenty six now coming up. It's a sixteen

756
00:40:16,239 --> 00:40:19,879
Speaker 3: trillion dollar test for the tech market this week. Those

757
00:40:19,880 --> 00:40:22,120
Speaker 3: are the names at the heart of it. This is

758
00:40:22,120 --> 00:40:33,200
Speaker 3: Bloomberg Tech. Time for talking tech. First start Meta is

759
00:40:33,280 --> 00:40:36,640
Speaker 3: reaching for the stars to fuel its AI ambitions. The

760
00:40:36,760 --> 00:40:39,680
Speaker 3: tech giant reserved up to one gigawa of power from

761
00:40:39,719 --> 00:40:43,879
Speaker 3: startup Overview Energy, which plans to beam solar rays from

762
00:40:44,040 --> 00:40:45,600
Speaker 3: orbit back to Earth.

763
00:40:45,680 --> 00:40:46,239
Speaker 2: Meta said it.

764
00:40:46,239 --> 00:40:50,200
Speaker 3: Hopes to secure uninterrupted energy for its massive data centers

765
00:40:50,360 --> 00:40:53,879
Speaker 3: by twenty thirty plus. A former Tokyo Electron engineer has

766
00:40:53,880 --> 00:40:57,560
Speaker 3: been sentenced to ten years in jail for stealing TSMC's

767
00:40:57,600 --> 00:41:01,480
Speaker 3: proprietary data. Taiwan is on high alert for technology leaks.

768
00:41:01,640 --> 00:41:04,480
Speaker 3: The hefty prison term for the former engineer reflects the

769
00:41:04,480 --> 00:41:08,880
Speaker 3: government's efforts to guard its world class semiconductor industry. Former

770
00:41:08,920 --> 00:41:13,200
Speaker 3: Deepmine researcher and AlphaGo mastermind David Silver has raised one

771
00:41:13,239 --> 00:41:17,919
Speaker 3: point one billion dollars for his new startup ineffable intelligence

772
00:41:18,000 --> 00:41:21,280
Speaker 3: at a five point one billion dollar valuation. With backing

773
00:41:21,320 --> 00:41:25,399
Speaker 3: from Sequoia, Nvidia, and Google, the Silver's moving beyond large

774
00:41:25,480 --> 00:41:30,000
Speaker 3: language models to focus on reinforcement learning and robotics. Okay,

775
00:41:30,280 --> 00:41:33,400
Speaker 3: it's a sixteen trillion dollar tests for the market rally.

776
00:41:33,440 --> 00:41:37,600
Speaker 3: With the Magnificent Seven projected to grow profits by nineteen percent,

777
00:41:38,120 --> 00:41:41,560
Speaker 3: the stakes could not be higher. Bluembe'skarmen Rhinikey joins us

778
00:41:41,560 --> 00:41:43,760
Speaker 3: to break down it is a make or break week

779
00:41:44,000 --> 00:41:46,080
Speaker 3: for the S and P five hundred, the mag seven.

780
00:41:46,360 --> 00:41:48,560
Speaker 3: We can frame it in any aggregate you like, but

781
00:41:48,600 --> 00:41:50,080
Speaker 3: we have big earnings Wednesday.

782
00:41:50,320 --> 00:41:53,160
Speaker 2: We have big earnings Thursday. What are you watching for?

783
00:41:53,719 --> 00:41:55,680
Speaker 13: Yeah, it's really going to be a flurry of excitement.

784
00:41:55,800 --> 00:41:58,360
Speaker 13: Especially Wednesday after the bell we get four of the

785
00:41:58,360 --> 00:42:03,839
Speaker 13: biggest hyper scalers reporting, that's Alphabet, Microsoft, Amazon and Meta Platforms.

786
00:42:04,120 --> 00:42:06,040
Speaker 13: These companies are the biggest in the S and P

787
00:42:06,160 --> 00:42:09,000
Speaker 13: five hundred. They've helped drive a lot of this rallied

788
00:42:09,360 --> 00:42:12,360
Speaker 13: that's gone back to record highs that we've seen in April,

789
00:42:12,400 --> 00:42:16,160
Speaker 13: and so these earnings are so important for the entire

790
00:42:16,200 --> 00:42:18,280
Speaker 13: market and really what investors are going to be looking

791
00:42:18,320 --> 00:42:23,280
Speaker 13: for is this balance between high capital expenditures on artificial

792
00:42:23,280 --> 00:42:26,640
Speaker 13: intelligence infrastructure going forward and the return on that investment.

793
00:42:26,719 --> 00:42:30,080
Speaker 13: So the group that we're getting this week, they're expected

794
00:42:30,040 --> 00:42:34,319
Speaker 13: to spend more than six hundred and forty billion in

795
00:42:34,400 --> 00:42:37,399
Speaker 13: twenty twenty six on capital expenditures. That's up from more

796
00:42:37,440 --> 00:42:40,279
Speaker 13: than four hundred billion this year. So this is a

797
00:42:40,480 --> 00:42:43,320
Speaker 13: huge jump in the amount of money these companies are spending,

798
00:42:43,360 --> 00:42:45,319
Speaker 13: and investors are going to be watching for what the

799
00:42:45,360 --> 00:42:46,600
Speaker 13: return on that investment is.

800
00:42:46,960 --> 00:42:50,440
Speaker 3: We've become accustomed to watching the capital expenditures numbers, it's

801
00:42:50,480 --> 00:42:52,560
Speaker 3: been several quarters now. But if we put that to

802
00:42:52,680 --> 00:42:56,080
Speaker 3: one side, what else is it that investors are looking for?

803
00:42:56,280 --> 00:42:58,280
Speaker 3: A guess across the forum Wednesday.

804
00:42:58,560 --> 00:43:00,880
Speaker 13: Yeah, So there are a few line items that are

805
00:43:00,880 --> 00:43:03,440
Speaker 13: going to be really important. One is cash flow, free

806
00:43:03,440 --> 00:43:06,000
Speaker 13: cash flow, and there are some interesting facts to kind

807
00:43:06,000 --> 00:43:09,279
Speaker 13: of dive into here. So for Amazon, for example, free

808
00:43:09,280 --> 00:43:12,319
Speaker 13: clash flow is expected to be negative this quarter and

809
00:43:12,480 --> 00:43:15,640
Speaker 13: potentially the widest sense twenty twenty two when what was

810
00:43:15,640 --> 00:43:18,400
Speaker 13: happening then is that the company was investing a lot

811
00:43:18,640 --> 00:43:21,839
Speaker 13: in warehouses to meet sort of demand that had been

812
00:43:21,840 --> 00:43:24,279
Speaker 13: fueled by the pandemic. So that's something investors are going

813
00:43:24,320 --> 00:43:28,439
Speaker 13: to be watching really closely. Meta's first quarter free cash

814
00:43:28,480 --> 00:43:30,760
Speaker 13: flow is also expected to be the smallest in nearly

815
00:43:30,800 --> 00:43:32,799
Speaker 13: four years. And then on the flip side with some

816
00:43:32,840 --> 00:43:37,400
Speaker 13: of the other companies, including Amazon and Alphabet cloud sales,

817
00:43:37,480 --> 00:43:40,440
Speaker 13: so how those cloud businesses are doing is going to

818
00:43:40,480 --> 00:43:44,080
Speaker 13: be extremely important. Investors really want to see growth here.

819
00:43:44,120 --> 00:43:48,080
Speaker 13: It's you know, proof for you know, the AI trend

820
00:43:48,160 --> 00:43:48,760
Speaker 13: going forward.

821
00:43:49,520 --> 00:43:51,560
Speaker 3: We didn't get to Apple, but that's on Thursday, so

822
00:43:51,560 --> 00:43:53,880
Speaker 3: I'm giving us a breather. We can do it later

823
00:43:53,960 --> 00:43:55,640
Speaker 3: in the week. But that was a great summary of

824
00:43:55,640 --> 00:43:58,399
Speaker 3: what's to come. Calmen, Rhinicky, thank you, and that does

825
00:43:58,440 --> 00:44:01,359
Speaker 3: it for this edition of Blueberg Tech. So many news

826
00:44:01,440 --> 00:44:04,480
Speaker 3: headlines that were driving tech markets this morning. Recap on

827
00:44:04,480 --> 00:44:06,239
Speaker 3: the podcast. You know where to find it on the

828
00:44:06,280 --> 00:44:10,319
Speaker 3: Bloomberg terminal as well as online on Apple, Spotify and

829
00:44:10,440 --> 00:44:11,920
Speaker 3: iHeart this is Bloomberg.