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Speaker 1: From the heart where innovation, money and power Collie in

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Speaker 1: Silicon Vallet and beyond. This is Bloomberg Technology with Caroline

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Speaker 1: Hyde and Ed Ludlow.

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Speaker 2: I'm Scarlett who in for Caroline Hide at Bloomberg World

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Speaker 2: headquarters in New York, and.

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Speaker 3: I'm Alex Burnka in for Ed Ludlow in San Francisco.

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Speaker 3: This is Bloomberg Technology.

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Speaker 2: Coming up an escalation in the US China tensions as

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Speaker 2: China bans microns chips on cybersecurity risks.

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Speaker 4: Will bring you all the details, plus a.

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Speaker 3: Record find for Meta, the social media giant ordered to

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Speaker 3: pay one point three billion dollars to the EU after

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Speaker 3: regulators said it failed to protect personal information. We'll break

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Speaker 3: that decision down and forward.

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Speaker 2: Stepping up its electric vehicle output after reaching a series

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Speaker 2: of deals to buy lithium from projects in Canada to

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Speaker 2: We're going to be hearing from the CEO later this hour,

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Speaker 2: but first we want to give you a check on

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Speaker 2: markets and where things stand at midday here in New York.

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Speaker 4: It's very much weight and.

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Speaker 2: See game when it comes to the broader equity market,

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Speaker 2: both on the debt selling negotiations and what the Federal

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Speaker 2: Reserve decides to do with interest rates. Negotiating teams, by

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Speaker 2: the way, are back on at the table today in Washington,

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Speaker 2: d C. However, we do see the Nazak one hundred

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Speaker 2: leading the way. Tech stocks continue to be the outperformers here,

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Speaker 2: even as chip makers are under pressure. We'll get to

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Speaker 2: that a little bit later on the Nazak one hundred,

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Speaker 2: by the way, at a thirteen month high, and excel UF,

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Speaker 2: which is the ETF that tracks financial stocks, up by

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Speaker 2: a third of one percent, thanks very much. In focus

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Speaker 2: today with JP morgan Chase holding its investor day and

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Speaker 2: also helping to boost sentiment is pack West. The Beverly

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Speaker 2: Hills based lender is not a holding in this ETF,

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Speaker 2: but it is taking steps to boost its liquidity by

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Speaker 2: selling two point six billion dollars of real estate loans

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Speaker 2: at a discount and the two year yield ticking up

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Speaker 2: to four point three to three percent. There's no ECO

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Speaker 2: data today, so expect a lot of movement based on

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Speaker 2: incremental movement, hopefully progress in those debt sealing discussions. Let's

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Speaker 2: switch it up here and take a look at commodities.

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Speaker 2: Crude oil has now flipped to the upside, up by

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Speaker 2: four tenths of one percent, even as copper is down

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Speaker 2: by one point three percent. Still a lot of concerns

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Speaker 2: over what's going on in China. That post COVID rebound

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Speaker 2: has not been as strong as many people had hoped,

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Speaker 2: and the lack of fresh stimulus measures in China is

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Speaker 2: certainly holding back some of the medals.

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Speaker 4: And I wanted to point.

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Speaker 2: Out the Hanksaying Index closing up by more than one

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Speaker 2: percent after Joe Biden, the President said that he expects

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Speaker 2: US China relations to improve very shortly.

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Speaker 4: Details on that coming up.

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Speaker 2: And finally, Greek stocks getting a big, big day here.

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Speaker 2: They made a new ten year high after national elections.

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Speaker 2: It looks like the incumbent Prime Minister is in position

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Speaker 2: to get another four year term, which is certainly a

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Speaker 2: good thing for all his investment friendly policies. That investors

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Speaker 2: are keeping a very close eye on alex What about you?

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Speaker 4: What are you watching? I'm watching the top tech.

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Speaker 3: Mover today, Scarlett first with Meta Investors are really taking

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Speaker 3: that one point three billion dollar fine in Stride coming

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Speaker 3: over from the EU. Perhaps that's because the company has

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Speaker 3: actually in the past threatened to leave if there's not

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Speaker 3: a resolution on the EU's kind of push for them

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Speaker 3: not to send userdata over overseas to the US. I'm

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Speaker 3: also looking at Albermarle. Now, this is a company that

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Speaker 3: just inked a lithium partnership with Ford. Ford has a

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Speaker 3: fifty billion dollar electric vehicle plan and for Albemarle to

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Speaker 3: be in the mix. Investors are liking a little bit

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Speaker 3: of that now. In terms of what's going on in

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Speaker 3: the cybersecurity space, there is.

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Speaker 4: Kind of our top name of the day, Micron.

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Speaker 3: China's cybersecurity regulator said it found relatively serious cybersecurity risks

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Speaker 3: when it comes to the company's chips. Whether this is

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Speaker 3: political banter or there are actual risks. We're going to

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Speaker 3: break all that down in the show, but for now,

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Speaker 3: investors drove the stock down around five percent. It's pairents

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Speaker 3: some of those laws, but we'll get into the details here,

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Speaker 3: Suit Scarlett, all right, and let's stay on that right now,

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Speaker 3: because we're going to go now to San Francisco and

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Speaker 3: bring in Ian King, who's covered semiconductors in Asia and

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Speaker 3: now on the West Coast. So Ian, with his decades

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Speaker 3: of experience, is certainly the best person to speak on this.

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Speaker 2: Ian, as Alex was setting up for us. It's curious

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Speaker 2: this ban on Micron products. What kind of history does

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Speaker 2: Micron have with China specifically? Is there a notable significant

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Speaker 2: history between the two.

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Speaker 5: Yeah, I mean there are a number of incidents. The

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Speaker 5: big thing to point out is that Micron, unlike it's

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Speaker 5: South Korean competitors Sam Song and s Khaynix, doesn't have

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Speaker 5: a production plant in China. Those guys do, which obviously

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Speaker 5: makes them a little bit closer to Beijing's heart in

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Speaker 5: terms of what that country wants to do with domesticating

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Speaker 5: its own chip industry. And the other sort of negative

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Speaker 5: thing that's happened for Micron in the past is Micron

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Speaker 5: went caught with a Taiwanese company arguing that that company

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Speaker 5: with stealing its IP to give to China. So there's

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Speaker 5: there's some real kind of tension there in the past.

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Speaker 3: Now Ian Micron obviously caught in the middle of this

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Speaker 3: political banter.

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Speaker 4: If your Qualcom, if you're Broadcom.

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Speaker 3: If you're Intel, should you be worried that your next

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Speaker 3: And if not, why is Micron the target of Beijing's

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Speaker 3: ire at the moment?

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Speaker 5: I mean, the way to think about this is China

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Speaker 5: needs Qualcomm, China needs Intel. China needs Broadcom, it doesn't

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Speaker 5: need Micron. The chips that Micron makes, the DRAM and

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Speaker 5: the non flash memory chips are basically exactly the same

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Speaker 5: as the ones that Samsung makes, as the ones at

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Speaker 5: sk Henex makes, So literally you can drop them into

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Speaker 5: a piece of electronics, pull one out, put one in.

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Speaker 5: You can't do that with other products from those companies

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Speaker 5: you mentioned. So that's what's going on here.

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Speaker 2: That's incredible context here because Micron's memory chips are kind

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Speaker 2: of commoditized. They're pretty standard components as opposed to say,

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Speaker 2: in videos graphics chips. How much of this is trying

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Speaker 2: to buying time or giving its own domestic industry some

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Speaker 2: time to bloom.

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Speaker 5: I mean, if that's the plan, we're talking a decade

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Speaker 5: two decades before they'll have equivalent capabilities. What this is

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Speaker 5: being seen as more of Scarlett is really Beijing has

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Speaker 5: just really had to take it on the chin. We've

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Speaker 5: seen all of these actions by the US government against

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Speaker 5: Chinese technology companies, and really Beijing has had nothing to

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Speaker 5: fight back with apart from Micron. It can take a

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Speaker 5: swing at them.

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Speaker 3: Ian King, our in house semiconductor expert, Thank you. I

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Speaker 3: want to now bring in the Washington angle on this.

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Speaker 3: We have Bloomberg's Haley Lines. Kayley, as we see this

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Speaker 3: kind of back and forth between Beijing and DC, what

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Speaker 3: do you think is next here or does dec have

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Speaker 3: a response to this.

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Speaker 4: Micron move from China.

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Speaker 6: Yeah, well, we've already heard from the Commerce Department on this,

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Speaker 6: saying that Beijing's conclusion here that micro imposes a cybersecurity

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Speaker 6: national security threat has no basis in fact, and that

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Speaker 6: this action, along with some other recent action that Beijing

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Speaker 6: has taken, is inconsistent with China's assertions that it's opening

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Speaker 6: up its markets and is committed to a transparent regulatory framework.

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Speaker 6: So that's the US response. Of course, China, for its

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Speaker 6: part in releasing this conclusion from this review, says it

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Speaker 6: wasn't political, that it is about national security, but it

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Speaker 6: does kind of have this sense of escalating a fight

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Speaker 6: between the world's two largest economies when it comes to

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Speaker 6: this technology. Because we have to keep in mind the

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Speaker 6: US has already taken plenty of action on its own.

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Speaker 6: It's blacklisted certain Chinese technology firms, and of course late

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Speaker 6: last year also introduced a pretty sweeping restriction on selling

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Speaker 6: advanced semiconductor manufacturing equipement to China.

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Speaker 2: You know, it's ironic that this is happening right as

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Speaker 2: President Joe Biden is in Asia attending the G seven

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Speaker 2: summit and making comments about how he sees he has

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Speaker 2: China relations actually improving very shortly. Give us some context

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Speaker 2: for when he made those comments and what he might

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Speaker 2: be referring to.

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Speaker 6: Well, that was him speaking before he left the G

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Speaker 6: seven seven in Japan, your right, Scarlett or Ambrey Horden,

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Speaker 6: was asking him about China. Also the question around sanctions

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Speaker 6: to facilitate a meeting between Defense Secretary Lloyd Austin and

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Speaker 6: his counterpart, which that we understand is under review by

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Speaker 6: the administration, still something potentially in the works. But he

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Speaker 6: did say referring to the Chinese spy balloon incident that

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Speaker 6: captured all of our attention earlier this year, calling it silly,

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Speaker 6: saying that he does expect relations between the US and

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Speaker 6: China too thaw in the near term. It poses a

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Speaker 6: very interesting contrast between the tone of the President's remarks

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Speaker 6: over the weekend versus then just hours later later China

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Speaker 6: making this move against a US company.

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Speaker 3: Now, Kaylee, this isn't the only big conversation happening in DC.

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Speaker 3: It is start of the week. Where are we next

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Speaker 3: on the debt ceiling debate? What do we expect today

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Speaker 3: on this Monday.

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Speaker 6: Well, at five point thirty pm, there is going to

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Speaker 6: be a meeting between President Biden and House Speaker Kevin McCarthy.

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Speaker 6: So that's really what we're all looking forward to.

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Speaker 4: Now.

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Speaker 6: Those two did speak on the phone yesterday when the

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Speaker 6: President Biden was on Air one on his.

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Speaker 4: Way back to the US.

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Speaker 6: It seemed that their tone coming out of that phone

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Speaker 6: call was one of more optimism. But really this is

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Speaker 6: going to be about real progress being made.

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Speaker 7: We understand that.

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Speaker 6: The two sides are still really far far apart in

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Speaker 6: the negotiations, as their different parties have been working over

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Speaker 6: the weekend, working again at the Capitol this morning on

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Speaker 6: this But the issue of spending cuts, spending caps, stricter

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Speaker 6: work requirements for entitlements, permitting reform, all still on the table,

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Speaker 6: all still needing to be ironed out into an ultimate compromise.

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Speaker 6: Because even once we get a deal between Speaker McCarthy

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Speaker 6: and President Biden, it still needs to work. It's the

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Speaker 6: way through both chambers of Congress to make it back

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Speaker 6: to the President's desk for him to sign off on it.

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Speaker 6: And we're just ten days out now from June first,

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Speaker 6: which Treasury Secretary Jenneyellen reiterated over the weekend could be

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Speaker 6: the earliest possible X State.

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Speaker 2: Yeah, Cluck is sticking. Kelly, Thank you so much. Kelly

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Speaker 2: Lines joining us from Washington.

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Speaker 4: It's time now for talking tech.

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Speaker 3: First up, Uber, the ride sharing company, is placing its

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Speaker 3: head of diversity on leave after complaints of insensitivity.

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Speaker 7: CEO Dara Kashrashahi asked.

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Speaker 3: Bo Young Lee to take a leave of absence after

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Speaker 3: workers complained that an employee event she moderated called Don't

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Speaker 3: Call Me Karen was insensitive to people of color. And

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Speaker 3: turmoil in the cyber insurance market. Global insurers are racing

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Speaker 3: to figure out how to avoid covering government sponsored cyber

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Speaker 3: attacks and catastrophic hacks. Ransomware attacks increased by eighty seven

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Speaker 3: percent in twenty twenty two from the year prior, with

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Speaker 3: global cyber premiums expected to exceed twenty three billion dollars

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Speaker 3: by twenty twenty five.

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Speaker 4: Plus.

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Speaker 3: Instagram ran into some technical difficulties on Sunday night. Tens

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Speaker 3: of thousands of users reported that they could not access

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Speaker 3: the app and what was the second widespread disruption in

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Speaker 3: just over two months. Down detectors now reporting that the

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Speaker 3: problem lasted for about an hour and the app is

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Speaker 3: back up and running.

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Speaker 4: Now, Scarlett, all right, well we're going.

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Speaker 2: To stick with Instagram because his parent company Meta now

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Speaker 2: faces a record one point three billion dollar fine in

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Speaker 2: the EU. So we want to bring in Alex Webb

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Speaker 2: of Bloomberg Quick Take, who covers all things tech, to

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Speaker 2: give us some more context here.

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Speaker 4: Alex, this is.

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Speaker 2: Something that was not a total surprise, but the amount

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Speaker 2: is certainly a surprise.

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Speaker 8: Yes, it is a record fine for Facebook. The question

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Speaker 8: is whether ultimately they will end up paying it. There

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Speaker 8: sort pertains to the so called US EU privacy Shield.

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Speaker 8: This was the agreement that previously let companies transfer data

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Speaker 8: from Europe to the US without any major questions asked.

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Speaker 8: Then all of a sudden there were concerns that actually

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Speaker 8: US intelligence agencies might have access to this data, so

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Speaker 8: they scrapped the privacy shield. Facebook has, according to this decision,

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Speaker 8: at any rate, failed to prevent data from being shipped

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Speaker 8: over to the US. There is, however, a new privacy shield.

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Speaker 8: Talks about it are in the offering that could be

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Speaker 8: agreed upon by the end of the Northern Hemisphere summer.

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Speaker 3: Now alex The investors, though, are not necessarily seeing this

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Speaker 3: as about thing. Perhaps that's because the company in the

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Speaker 3: past has threatened to actually pull out of the EU.

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Speaker 3: How are you taking this stock reaction that the shares

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Speaker 3: are up about two percent on the news even though

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Speaker 3: this is a record fine for Meta.

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Speaker 8: Well, Often in these sort of cases, when a fine

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Speaker 8: is sold out, stocks do tend to pop because investors

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Speaker 8: have clarity. They know how much this is likely to

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Speaker 8: cost the company if it does end up costing them

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Speaker 8: anything at all. That clarity therefore results in a stock

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Speaker 8: price gain. Often then, don't forget you know, Facebook has

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Speaker 8: met as oodles of money, has very healthy free cash flow,

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Speaker 8: even before the savings program that they've been putting into place.

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Speaker 8: They've reported twenty eight billion of revenue in the first quarter.

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Speaker 8: So one point three billion, you know, while clearly painful,

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Speaker 8: is not going to bankrupt the company.

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Speaker 4: Yeah.

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Speaker 2: Absolutely, And we've seen how those tech companies with their

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Speaker 2: free cash flow have been regarded as safe havens for

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Speaker 2: investors in this turbulent time in the markets. One thing

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Speaker 2: that I did notice in the reporting is that metal

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Speaker 2: was given time to suspend any future transfer of data.

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Speaker 2: Does that mean that there is a way out for

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Speaker 2: the company where perhaps a fine could be whittled down.

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Speaker 8: No, it means that if they don't do it by

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Speaker 8: that date, then there could be there's the risk of

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Speaker 8: further punishment. The real act. One of the really interesting

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Speaker 8: piece of reporting on this About a year ago, Motherboard

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Speaker 8: managed to get hold of an internal document from Facebook

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Speaker 8: which likened data to a pot of ink that is

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Speaker 8: thrown into a swimming pool. That the ink is in

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Speaker 8: the pool, Now, how do you gather that ink back up?

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Speaker 8: The internal Facebook document heavily implied that that was essentially impossible.

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Speaker 8: That's the real challenge they face right now. Perhaps over

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Speaker 8: the course of the past year since this reporting was published,

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Speaker 8: they have found a way of putting the ink back

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Speaker 8: in the pot, but it is a real challenge and

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Speaker 8: will be interested to see how or if they do it.

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Speaker 3: Alex, this is meta cotton and crosshairs. This beats out

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Speaker 3: the record fine that was previously applied to Amazon. Are

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Speaker 3: there other companies in the EU that should be looking

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Speaker 3: at this as kind of a warning sign? Who should

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Speaker 3: be actually looking at where their ink is spread throughout

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Speaker 3: their organizations.

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Speaker 8: I think that the EU has been very slow on GDPR,

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Speaker 8: on the general Data Protection regulation, and they are that

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Speaker 8: clearly picking the big most egregious victims first. It's still

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Speaker 8: five years, so first, it's a very long timeline. It

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Speaker 8: is a warning shot to other people to say, you know,

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Speaker 8: sort your stuff out. I'm sure there are plenty of

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Speaker 8: other companies who have done this. Facebook also sits on

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Speaker 8: one of the biggest pools of consumer data in the world,

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Speaker 8: so it's unsurprising therefore that they are gone for first.

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Speaker 8: I wouldn't like to name names on who else might

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Speaker 8: be in the firing line, but I'm sure there is

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Speaker 8: a very long list of people who could be vulnerable

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Speaker 8: to this well.

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Speaker 3: Bloomberg's Alex Webb thanks for joining and some clarity on

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Speaker 3: that situation. Rory Harvey, executive vice president of General Motors,

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Speaker 3: spoke exclusively to Bloomberg's Matt Miller about its new line

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Speaker 3: of evs, including an electric Chevrolet Varado.

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Speaker 4: Take a listen.

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Speaker 9: We have our Altium platform, and the Altium platform actually

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Speaker 9: gives us the ability to be able to configure battery

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Speaker 9: packs in many different formats in terms of the amount

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Speaker 9: of modules that are in there, so dependent upon the

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Speaker 9: capabilities of the vehicle, dependent upon the prices of the vehicle,

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Speaker 9: dependent upon what functionality we want from the vehicle, then

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Speaker 9: we can figure those atium battery packs in a way

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Speaker 9: that fits the customer needs. So there's a huge decree

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Speaker 9: of commonality within autium. But it also provides us with

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Speaker 9: ultimate flexibility.

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Speaker 10: Is altm able to scale from you know, a thirty

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Speaker 10: thousand dollars vehicle all the way up to one hundred

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Speaker 10: and fifty thousand dollars vehicle.

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Speaker 9: It certainly is. That's one of the great things about

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Speaker 9: otium as a product.

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Speaker 10: That's that's very impressive. Now, having said that, more people

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Speaker 10: who are ordering your vehicles are paying closer to the

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Speaker 10: upper end. I saw that of the Silverado HD orders,

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Speaker 10: which is a work truck. Let's be fair, right, eighty

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Speaker 10: four percent or for AT four and Denali trims. In

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Speaker 10: fact more than fifty percent or for Denali and Denali

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Speaker 10: Ultimate trims.

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Speaker 4: So they're paying top dollar for these trucks.

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Speaker 9: Yeah, no, I mean, and I think that's again it's

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Speaker 9: just credibility in terms of the desirability of the product portfolio.

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Speaker 9: If you looked at the general Motors product portfolio today,

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Speaker 9: I think it's outstanding. And if you looked at it

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Speaker 9: in terms of what customers are looking at to buy

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Speaker 9: to meet their needs. As an example, they're paying a premium.

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Speaker 9: So again it just shows the desirability of our vehicles

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Speaker 9: and the fact that we've got vehicles that are attractive

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Speaker 9: to our customers.

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Speaker 10: You have a small electric vehicle in the bolt that

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Speaker 10: addresses that issue. How are your EV sales as a

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Speaker 10: percentage of the total what do you expect for example,

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Speaker 10: Rory in twenty twenty three and twenty twenty four.

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Speaker 9: Yeah, that one's really interesting because, as you know, Matt,

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Speaker 9: the adoption rates continue to change. If you looked at

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Speaker 9: the data for April, I think it was the highest

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Speaker 9: penetration of evs in the industry as an example. So

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Speaker 9: we adjust our production capabilities in line with could demand.

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Speaker 9: So I guess I'm not going to give a definitive number,

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Speaker 9: but suffice to say that you know it's increasing all

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Speaker 9: of the time. And if you looked at the second

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Speaker 9: half of the year, certainly if you take the Cadillac

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Speaker 9: Lyric as an example, we know that we started off

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Speaker 9: deliberately so with relatively low volumes and we're building significantly

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Speaker 9: in half two, so it's going to take an ever

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Speaker 9: greater proportion of general motor sales.

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Speaker 10: Rory, let me finally ask you about the chip situation.

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Speaker 10: Are you all cut up in terms of the supply chain?

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Speaker 10: Can you get all the chips that you need to

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Speaker 10: produce in the size that you want to.

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Speaker 9: I would say work in progress. I would say it's

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Speaker 9: significantly better than where it was historically. I would say

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Speaker 9: that we are not in a position that we could

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Speaker 9: declare that it's all totally behind us, but I would

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Speaker 9: say that it's much more stable, and I would say

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Speaker 9: that it's going to continue to improve going forward. So

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Speaker 9: a much better position overall.

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Speaker 2: And you can watch Ry Harvey's full interview with Bloomberg

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Speaker 2: on the Terminal. Now, Matt Miller has been pretty busy

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Speaker 2: because he also sat down with Ford CEO Jim Farley

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Speaker 2: about that company ramping up its EV production, which includes

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Speaker 2: striking a number of deals to buy lithium for batteries.

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Speaker 2: Matt joins us now from Ford's production plant in Michigan. Matt,

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Speaker 2: I thought you were going to wear a hard hat.

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Speaker 2: I didn't realize you're outside in front of cars. But

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Speaker 2: of course you are tell us a little bit about

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Speaker 2: the Ford Lithium partnership that it made public today. How

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Speaker 2: critical is this partnership to meeting Ford's edy goals.

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Speaker 10: Yeah, it's very important because you know, last year Ford

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Speaker 10: sold at least in the US, I think about sixty

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Speaker 10: one sixty two thousand electric vehicles in total. In twenty

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Speaker 10: twenty six, they want to sell two millions, so they've

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Speaker 10: got to ramp up substantially, and the most difficult part

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Speaker 10: of that, according to Jim Farley, is scaling up battery production.

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Speaker 10: In order to build those batteries, they need a lot

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Speaker 10: of chemicals and minerals like lithium, they need nickel, they

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Speaker 10: need cobalt, and getting those things isn't particularly easy, especially

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Speaker 10: since eighty percent of that refining process currently sits in China.

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Speaker 10: So Ford has made a number of deals three on

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Speaker 10: lithium with the biggest lithium producers in the world to

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Speaker 10: get that refining done in North America and in South America,

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Speaker 10: so in Canada and Mexico and in Chile. That's really

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Speaker 10: key to keeping costs down, and that's really the biggest

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Speaker 10: part of the vehicle. So they're going to be building

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Speaker 10: their next generation electric vehicles in Tennessee as well as

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Speaker 10: around the rest of North American plants that they already

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Speaker 10: have production in. But getting these chemicals, getting these minerals

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Speaker 10: is really important.

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Speaker 4: And Matt, that sounds expensive.

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Speaker 7: Are those costs being passed along to consumers?

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Speaker 3: What's the pricing strategy look like for Ford's evs as

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Speaker 3: they roll them out?

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Speaker 10: Yeah, so it is very expensive. And right now they

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Speaker 10: have a negative one hundred percent margin and change right

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Speaker 10: they're losing three billion dollars this year on about three

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Speaker 10: billion dollars in revenue. They hope to change that dramatically.

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Speaker 10: So by twenty twenty six, remember is less than three

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Speaker 10: years away, they want to have an eight percent margin

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Speaker 10: on their entire electric vehicle fleet, so that would be

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Speaker 10: a massive change, a ten percent margin on the internal

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Speaker 10: combustion engine fleet.

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Speaker 4: And they need.

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Speaker 10: Those big margins which they already make on you know,

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Speaker 10: the big trucks and the very expensive gas cars they sell,

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Speaker 10: like the Mustang or the Bronco that you see behind me.

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Speaker 10: They need those profits to invest into this battery electric

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Speaker 10: vehicle business before it starts making its own money.

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Speaker 4: Yeah, it's own virtuous circle. Matt, thank you. So much.

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Speaker 2: Matt Miller, of course, joining us right now from outside

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Speaker 2: Ford's production plant. Welcome back to Bloomberg Technology. I'm Scarlettfoo in.

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Speaker 7: New York, and I'm Alex Brinkan San Francisco.

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Speaker 4: All right, let's get you.

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Speaker 2: A check on the market gets at midday here in

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Speaker 2: New York, another day of muted price action when it

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Speaker 2: comes to equities and the major indexes, the SMP moving

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Speaker 2: up marshaling by one tenth of one percent. Clearly, investors

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Speaker 2: are waiting for any kind of progress on debt selling negotiations,

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Speaker 2: as well as responding to commentary from FED officials. Two

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Speaker 2: FED Regional Bank presidents Neil Kashkari and James Buller giving

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Speaker 2: some hawkish commentary talking about how a pause is not

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Speaker 2: necessarily the thing that's going to come up next, perhaps

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Speaker 2: a rat hike might be in order in the coming future,

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Speaker 2: and also how inflation is still something the FED is

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Speaker 2: keeping its eye on. Nevertheless, you continue to see those

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Speaker 2: big cap tech stocks piling on gains. We have the

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Speaker 2: NAZAQ one hundred already at a thirteen month high, gaining

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Speaker 2: another two tenths of one percent.

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Speaker 4: Apple among the big gainers.

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Speaker 2: Here and XLF the ETF that tracks financial stocks in

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Speaker 2: focus today as JP Morgan Chase holds its Investor Day

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Speaker 2: and PacWest makes some moves to shortest liquidity, the two

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Speaker 2: year yield inching up by six basis points these days,

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Speaker 2: that kind of is an inching up at four point

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Speaker 2: three to two percent. We know that Treasury Secretary Janet

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Speaker 2: Yellen has said that the chances the US can pay

442
00:22:06,119 --> 00:22:08,800
Speaker 2: all its bills by mid June, when the next round

443
00:22:08,800 --> 00:22:11,560
Speaker 2: of tax receipts come in, are quite low. And we

444
00:22:11,640 --> 00:22:14,399
Speaker 2: do know that President Joe Biden and Kevin McCarthy, the

445
00:22:14,440 --> 00:22:17,080
Speaker 2: Speaker of the House, are scheduled to resume meeting at

446
00:22:17,119 --> 00:22:20,200
Speaker 2: five thirty pm Eastern time today after the market's closed.

447
00:22:20,200 --> 00:22:22,040
Speaker 2: So there's a lot of wait and see until we

448
00:22:22,080 --> 00:22:24,600
Speaker 2: get to that point. Now, taking a look at one

449
00:22:24,640 --> 00:22:27,720
Speaker 2: individual name, it's Micron, and the stock is in retreat today,

450
00:22:27,760 --> 00:22:30,439
Speaker 2: falling as much as five percent from Friday's close to

451
00:22:30,440 --> 00:22:33,520
Speaker 2: an eleven month high. But today it is coming down

452
00:22:33,520 --> 00:22:35,720
Speaker 2: a little bit because, like so many other tech socks,

453
00:22:36,040 --> 00:22:39,000
Speaker 2: Micron has had a banner twenty twenty three. So far,

454
00:22:39,280 --> 00:22:42,000
Speaker 2: the memory chip maker had gained as much as thirty

455
00:22:42,000 --> 00:22:45,760
Speaker 2: seven percent after giving indication that the industry has worked

456
00:22:45,760 --> 00:22:48,000
Speaker 2: its way through most of the over supply of chips.

457
00:22:48,000 --> 00:22:51,560
Speaker 2: But what happened today is that China said Micron's products

458
00:22:51,600 --> 00:22:54,560
Speaker 2: fail to pass a cybersecurity review, and that's led to

459
00:22:54,560 --> 00:22:57,040
Speaker 2: a decision to ban Micron products.

460
00:22:57,280 --> 00:22:58,600
Speaker 4: Other US chip makers.

461
00:22:58,320 --> 00:23:00,920
Speaker 2: Are falling in sympathy, while we've seen some Korean chip

462
00:23:00,960 --> 00:23:05,000
Speaker 2: makers like Kinix and sk gain as a result alex.

463
00:23:06,200 --> 00:23:09,879
Speaker 3: Now, increasingly leaders of AI companies are asking Congress to

464
00:23:09,960 --> 00:23:14,960
Speaker 3: establish safeguards to mitigate threats their technology poses, like open Ai,

465
00:23:15,080 --> 00:23:18,480
Speaker 3: CEO and many others. But what kinds of threats does

466
00:23:18,520 --> 00:23:22,800
Speaker 3: AI pose to society exactly? We'll bring in Sarakraft's, director

467
00:23:22,840 --> 00:23:26,040
Speaker 3: of the Technology Institute over at Cornell, a non resident

468
00:23:26,080 --> 00:23:28,679
Speaker 3: senior fellow at the Brookings Institute who recently wrote that

469
00:23:28,840 --> 00:23:32,520
Speaker 3: large language models quote may disrupt far more than just

470
00:23:32,560 --> 00:23:36,600
Speaker 3: the economy. They also appear poised to challenge democracy too.

471
00:23:37,240 --> 00:23:41,040
Speaker 3: Let's bring Sarah in for a deeper dive. Sarah, tell

472
00:23:41,080 --> 00:23:43,320
Speaker 3: me challenges to democracy?

473
00:23:43,600 --> 00:23:44,399
Speaker 4: What do you mean by that?

474
00:23:45,640 --> 00:23:48,160
Speaker 11: Yeah? Thanks, It's great to be here. So one other things.

475
00:23:48,200 --> 00:23:51,240
Speaker 12: So, I've been working with language models now for several years,

476
00:23:51,400 --> 00:23:55,159
Speaker 12: and the concern I had was that if looking at

477
00:23:55,200 --> 00:23:58,920
Speaker 12: twenty sixteen, there were bad actors that were trying to

478
00:23:58,960 --> 00:24:02,680
Speaker 12: insinuate themselves in the democratic process. What happens now when

479
00:24:02,840 --> 00:24:06,000
Speaker 12: these language models enter in and make it really easy

480
00:24:06,080 --> 00:24:09,960
Speaker 12: to generate a lot of content, credible content, really quickly.

481
00:24:10,560 --> 00:24:13,960
Speaker 12: So we wanted to map that terrain, and so we

482
00:24:14,119 --> 00:24:18,159
Speaker 12: did an experiment and randomly sent AI generated texts and

483
00:24:18,320 --> 00:24:23,520
Speaker 12: human generated texts to members of Congress the state legislatures

484
00:24:23,560 --> 00:24:26,200
Speaker 12: around the country. And we saw that members of Congress

485
00:24:26,200 --> 00:24:29,119
Speaker 12: cannot tell the difference. And anyone who's worked with CHAGBT

486
00:24:29,320 --> 00:24:31,159
Speaker 12: can see just how plausible.

487
00:24:30,720 --> 00:24:32,120
Speaker 11: Sounding this content is.

488
00:24:32,880 --> 00:24:35,399
Speaker 12: And so I think it's important for us to understand

489
00:24:35,480 --> 00:24:39,480
Speaker 12: the threat and by way of mitigating that threat.

490
00:24:39,480 --> 00:24:41,119
Speaker 11: And I think that's what we were trying to uncover

491
00:24:41,200 --> 00:24:42,000
Speaker 11: with this research.

492
00:24:42,880 --> 00:24:43,160
Speaker 7: Sarah.

493
00:24:43,160 --> 00:24:45,679
Speaker 3: When I think of where misinformation tiply lives, that's on

494
00:24:45,720 --> 00:24:50,080
Speaker 3: social media. So I have to ask AI companies. Folks

495
00:24:50,160 --> 00:24:52,520
Speaker 3: like Sam Altman are going to Congress saying hey, regulate

496
00:24:52,600 --> 00:24:55,600
Speaker 3: us social media companies. You've kind of heard the same tune.

497
00:24:55,920 --> 00:24:57,919
Speaker 3: Who do you think is actually where does the owners

498
00:24:57,920 --> 00:25:01,320
Speaker 3: fall in terms of who needs to intervene here and

499
00:25:01,400 --> 00:25:05,000
Speaker 3: make sure that AI misinformation and the impact on democracy

500
00:25:05,080 --> 00:25:07,520
Speaker 3: doesn't get out of control, right.

501
00:25:07,600 --> 00:25:10,679
Speaker 12: I think what we've seen with technology and regulation is

502
00:25:10,720 --> 00:25:12,720
Speaker 12: that off it it's very reactive at.

503
00:25:12,640 --> 00:25:14,560
Speaker 11: The federal level, and I think there are good reasons

504
00:25:14,560 --> 00:25:16,520
Speaker 11: for that. This technology is moving so quickly.

505
00:25:17,080 --> 00:25:20,600
Speaker 12: And by contrast, for example, the European Union is trying

506
00:25:20,600 --> 00:25:22,840
Speaker 12: to really lean into regulation, but I think there's a

507
00:25:22,880 --> 00:25:27,840
Speaker 12: real risk that they are going to pass this AI Act.

508
00:25:27,640 --> 00:25:30,120
Speaker 11: And it will come into force and already be obsolete.

509
00:25:30,320 --> 00:25:33,320
Speaker 12: So I think some of the onus actually is on

510
00:25:33,359 --> 00:25:36,080
Speaker 12: the firms, and open AI has done some of this by.

511
00:25:36,080 --> 00:25:39,360
Speaker 11: Making certain outputs not possible.

512
00:25:39,400 --> 00:25:41,800
Speaker 12: So anyone who's done certain types of trying to push

513
00:25:41,840 --> 00:25:45,520
Speaker 12: the boundaries on outputs might see that open AI.

514
00:25:45,480 --> 00:25:47,240
Speaker 11: Doesn't actually permit those.

515
00:25:47,320 --> 00:25:49,200
Speaker 12: So I think again this is a spirit of trying

516
00:25:49,200 --> 00:25:52,159
Speaker 12: to understand through the public and private partnerships, you know,

517
00:25:52,240 --> 00:25:56,159
Speaker 12: government and firms, kind of what that risk is, that

518
00:25:56,240 --> 00:26:00,960
Speaker 12: threat is, but also to try to think through anticipate is.

519
00:26:00,920 --> 00:26:04,200
Speaker 11: This a too early you know, to regulate or too late?

520
00:26:04,280 --> 00:26:06,560
Speaker 12: And I think we're still really trying to understand what

521
00:26:06,600 --> 00:26:10,840
Speaker 12: this technology is about, and so lurching into something at

522
00:26:10,880 --> 00:26:12,760
Speaker 12: the federal level might be a little premature.

523
00:26:13,320 --> 00:26:15,439
Speaker 2: So following on what you said, Sarah about the onus

524
00:26:15,480 --> 00:26:18,120
Speaker 2: falling on the firms, firms are made up of people,

525
00:26:18,320 --> 00:26:22,600
Speaker 2: so I wonder anytime there's a new leader in charge,

526
00:26:22,720 --> 00:26:26,160
Speaker 2: or they have someone else looking over regulation or their

527
00:26:26,160 --> 00:26:29,440
Speaker 2: policy side, whatever they propose could change as well.

528
00:26:29,800 --> 00:26:32,680
Speaker 4: How concerned are you about I guess.

529
00:26:32,600 --> 00:26:35,480
Speaker 2: The quality of people who are making these kinds of

530
00:26:35,480 --> 00:26:37,360
Speaker 2: decisions at these big firms.

531
00:26:38,080 --> 00:26:39,960
Speaker 12: Right, And this is the question is a great question

532
00:26:40,000 --> 00:26:42,280
Speaker 12: because we've been thinking about this for several years in

533
00:26:42,320 --> 00:26:47,199
Speaker 12: different contexts content moderation, when Facebook was under fire for

534
00:26:47,680 --> 00:26:50,239
Speaker 12: what they were permitting and not permitting. And it's a

535
00:26:50,280 --> 00:26:55,240
Speaker 12: real debate about kind of outsourcing the public market space,

536
00:26:55,440 --> 00:26:59,720
Speaker 12: marketplace of ideas, for example, to private firms. And again

537
00:26:59,800 --> 00:27:02,760
Speaker 12: that's something that I think in Europe they're less tolerant of,

538
00:27:02,840 --> 00:27:05,359
Speaker 12: and in the US I think for a good reason,

539
00:27:05,440 --> 00:27:08,119
Speaker 12: we're saying, let's let these firms innovate. But what we

540
00:27:08,200 --> 00:27:10,800
Speaker 12: need to be thinking through is just what guardrails do

541
00:27:10,840 --> 00:27:15,000
Speaker 12: we need in place to kind of guard against the

542
00:27:15,400 --> 00:27:18,920
Speaker 12: more extreme consequences of those technologies.

543
00:27:19,320 --> 00:27:21,360
Speaker 2: It's interesting that you said that Europe is already moving

544
00:27:21,400 --> 00:27:25,080
Speaker 2: ahead and perhaps whatever policy they institute might become obsolete quickly,

545
00:27:25,160 --> 00:27:28,080
Speaker 2: but because they are moving ahead, do they become do

546
00:27:28,119 --> 00:27:30,360
Speaker 2: they set the precedent that the USN needs to kind

547
00:27:30,359 --> 00:27:31,080
Speaker 2: of follow up with.

548
00:27:32,720 --> 00:27:34,960
Speaker 12: You know, if we look at previous technologies, I don't

549
00:27:35,040 --> 00:27:39,480
Speaker 12: think that we have. The US has fallen in lockstep

550
00:27:39,600 --> 00:27:42,400
Speaker 12: at all with Europe when it comes to big tech

551
00:27:42,440 --> 00:27:45,639
Speaker 12: and technology, and I think one reason is if you

552
00:27:45,680 --> 00:27:50,080
Speaker 12: look at where big tech resides, it's almost exclusively in

553
00:27:50,119 --> 00:27:53,120
Speaker 12: the United States, and so these things do become kind

554
00:27:53,160 --> 00:27:56,240
Speaker 12: of circular, which is Europe is more inclined to lean

555
00:27:56,320 --> 00:28:00,240
Speaker 12: into regulation in part because it's not harming their of

556
00:28:00,280 --> 00:28:03,439
Speaker 12: their firms, and the US maybe because it has not

557
00:28:03,560 --> 00:28:06,720
Speaker 12: leaned into regulation, has really I think fostered an environment

558
00:28:06,840 --> 00:28:11,600
Speaker 12: of innovation, and again kind of consequently, there are fewer

559
00:28:11,640 --> 00:28:13,679
Speaker 12: incentives for the US to be out in front. And

560
00:28:13,720 --> 00:28:16,480
Speaker 12: I think again, you know, when we look at where

561
00:28:16,600 --> 00:28:19,920
Speaker 12: there's an interesting story about Google's barred and they haven't

562
00:28:20,040 --> 00:28:22,080
Speaker 12: they released it in one hundred and eighty countries, but

563
00:28:22,240 --> 00:28:25,240
Speaker 12: not in Europe. And you know, when we look at

564
00:28:25,280 --> 00:28:30,480
Speaker 12: the history of big tech and legal you know, litigation,

565
00:28:31,080 --> 00:28:35,640
Speaker 12: big tech American companies have not always fared well in Europe,

566
00:28:35,680 --> 00:28:38,600
Speaker 12: and so I think there is some wariness of these

567
00:28:38,720 --> 00:28:41,920
Speaker 12: these you know, chat GPT, which was banned by the

568
00:28:41,960 --> 00:28:46,480
Speaker 12: banned by the Italian government. Other firms actually not only

569
00:28:46,560 --> 00:28:50,680
Speaker 12: not following an offset, but really trying quite apprehensive of

570
00:28:50,880 --> 00:28:54,200
Speaker 12: engaging in that sort of European regulatory space.

571
00:28:54,200 --> 00:28:55,480
Speaker 11: So I don't think the US will.

572
00:28:55,280 --> 00:28:57,960
Speaker 12: Go in that direction, not just because of what we're

573
00:28:57,960 --> 00:29:00,640
Speaker 12: seeing already, but what we've seen with other forms of

574
00:29:00,680 --> 00:29:02,160
Speaker 12: technology in the past.

575
00:29:02,600 --> 00:29:05,880
Speaker 3: Now, Sarah, you talk about the US being reactive when

576
00:29:05,880 --> 00:29:09,160
Speaker 3: it comes to regulation, we haven't seen any meaningful regulation

577
00:29:09,240 --> 00:29:11,520
Speaker 3: against raining and the power of big tach against reigning

578
00:29:11,520 --> 00:29:13,719
Speaker 3: and social media. What actually do you think needs to

579
00:29:13,800 --> 00:29:18,000
Speaker 3: happen for AI regulations to cross the line here in

580
00:29:18,040 --> 00:29:18,920
Speaker 3: the United States.

581
00:29:19,520 --> 00:29:22,680
Speaker 12: Yeah, it's a great question, because you know, again everything

582
00:29:22,760 --> 00:29:24,960
Speaker 12: is so reactive when we look back to the history

583
00:29:24,960 --> 00:29:28,400
Speaker 12: of arms control. No, there was some indication that we

584
00:29:28,440 --> 00:29:32,080
Speaker 12: should do arms control on nuclear weapons early, but really

585
00:29:32,120 --> 00:29:34,440
Speaker 12: it didn't happen until after the Cuban missile crazes and

586
00:29:34,960 --> 00:29:38,280
Speaker 12: you know, where the world almost blew up. And unfortunately,

587
00:29:38,320 --> 00:29:41,800
Speaker 12: I think that it takes kind of a real crisis,

588
00:29:41,880 --> 00:29:46,840
Speaker 12: existential crisis like that to happen before meaningful regulation can

589
00:29:46,880 --> 00:29:49,320
Speaker 12: take place, and I do think it raises this question

590
00:29:49,360 --> 00:29:52,720
Speaker 12: of is are we at that point where meaningful regulation

591
00:29:52,840 --> 00:29:55,000
Speaker 12: is needed? And I would submit that, you know, we

592
00:29:55,120 --> 00:29:59,320
Speaker 12: have some threats on the horizon, but because this technology

593
00:29:59,440 --> 00:30:01,800
Speaker 12: is evolving so quickly, and because frankly, I don't think

594
00:30:01,840 --> 00:30:05,880
Speaker 12: these existential risks have presented and are really even a

595
00:30:06,040 --> 00:30:07,360
Speaker 12: hypothetical risk.

596
00:30:07,200 --> 00:30:10,560
Speaker 11: I think it is a little too early. But frankly,

597
00:30:10,600 --> 00:30:13,040
Speaker 11: also we have to think about the political environment.

598
00:30:12,600 --> 00:30:16,840
Speaker 12: In Washington, which is not really conducive to doing anything

599
00:30:17,080 --> 00:30:21,200
Speaker 12: meaningful on really anything, because there might be an agreement

600
00:30:21,440 --> 00:30:24,160
Speaker 12: that something needs to be done, but disagreement.

601
00:30:23,600 --> 00:30:24,320
Speaker 11: On how to do it.

602
00:30:24,560 --> 00:30:26,560
Speaker 2: That seems to be the way of Washington. Sarah, I

603
00:30:26,600 --> 00:30:29,400
Speaker 2: really appreciate your joining us and sharing your insight. Sarah

604
00:30:29,440 --> 00:30:31,600
Speaker 2: Krepps is Professor of law and director of the Tech

605
00:30:31,640 --> 00:30:35,760
Speaker 2: Policy Institute at Cornell. Now coming up, there is more

606
00:30:35,800 --> 00:30:38,080
Speaker 2: on AI, this time from an investing perspective. We're going

607
00:30:38,120 --> 00:30:41,000
Speaker 2: to be joined by compounds of Michael Dempsey up next.

608
00:30:41,400 --> 00:30:43,840
Speaker 2: And in the meantime, keeping an eye on shares of PayPal,

609
00:30:43,920 --> 00:30:47,440
Speaker 2: which are popping today as Venmo introduces an account for

610
00:30:47,520 --> 00:30:50,240
Speaker 2: teenagers who are between thirteen to seventeen years old for

611
00:30:50,360 --> 00:30:53,320
Speaker 2: sending and receiving money. This feature will come with a

612
00:30:53,360 --> 00:30:56,280
Speaker 2: debit card and plans to roll over to select customers

613
00:30:56,440 --> 00:30:59,320
Speaker 2: starting next month. PayPal up by better than three percent,

614
00:31:00,320 --> 00:31:00,840
Speaker 2: is Bloomberg.

615
00:31:21,440 --> 00:31:24,479
Speaker 13: There are many companies that are going to struggle in

616
00:31:24,520 --> 00:31:28,200
Speaker 13: their transition to really deliver AI solutions at scale.

617
00:31:28,320 --> 00:31:31,000
Speaker 14: Consumers are really engaging with the AI in a way

618
00:31:31,040 --> 00:31:32,880
Speaker 14: that just seems so much more real and authentic than

619
00:31:32,880 --> 00:31:33,360
Speaker 14: they ever have.

620
00:31:33,720 --> 00:31:36,320
Speaker 13: I think the bigger opportunity actually lies in the enterprise.

621
00:31:36,720 --> 00:31:38,520
Speaker 4: I think AI is going to be deployed into every

622
00:31:38,560 --> 00:31:39,320
Speaker 4: facet of work.

623
00:31:39,400 --> 00:31:41,560
Speaker 13: I think we're at a moment here where there is

624
00:31:41,680 --> 00:31:44,640
Speaker 13: a tremendous advantage for US based companies.

625
00:31:44,720 --> 00:31:48,040
Speaker 8: I think on the application side, I think the Chinese

626
00:31:48,920 --> 00:31:51,680
Speaker 8: companies potentially can do really, really well.

627
00:31:51,800 --> 00:31:54,040
Speaker 2: I think we actually need to be going faster on

628
00:31:54,080 --> 00:31:55,320
Speaker 2: the regulatory front.

629
00:31:55,560 --> 00:31:58,440
Speaker 6: We are really thinking about generative AI as a tool

630
00:31:58,720 --> 00:31:59,280
Speaker 6: for good.

631
00:31:59,440 --> 00:32:04,080
Speaker 2: I do think that an opportunity for perhaps pro technology

632
00:32:04,120 --> 00:32:08,239
Speaker 2: policy making. And that was a compilation of what our

633
00:32:08,280 --> 00:32:11,640
Speaker 2: recent VC Spotlight guests are saying about AI investments here

634
00:32:11,760 --> 00:32:14,560
Speaker 2: and around the world. We're going to continue the conversation

635
00:32:14,640 --> 00:32:17,160
Speaker 2: now with Michael Dempsey. He is managing partner at Compound,

636
00:32:17,200 --> 00:32:20,640
Speaker 2: which is a thesis driven, research centric seed stage investment

637
00:32:20,680 --> 00:32:23,959
Speaker 2: firm that's focused on emerging technologies with more than two

638
00:32:24,040 --> 00:32:26,720
Speaker 2: hundred and twenty five million dollars in assets under management.

639
00:32:26,880 --> 00:32:28,920
Speaker 4: Michael, it's so good to speak with you. Thanks a

640
00:32:28,920 --> 00:32:29,760
Speaker 4: lot for joining us.

641
00:32:30,120 --> 00:32:32,360
Speaker 2: I guess I want to start with just the overall

642
00:32:32,360 --> 00:32:38,600
Speaker 2: state of AI, because from traditional market watcher's perspective, AI seems.

643
00:32:38,320 --> 00:32:38,960
Speaker 4: To be in a bubble.

644
00:32:39,080 --> 00:32:41,960
Speaker 2: Bank of America strategist Michael Hartnett says tech is forming

645
00:32:42,000 --> 00:32:44,600
Speaker 2: a bubble, and AI in particular, isn't a baby bubble

646
00:32:44,720 --> 00:32:47,240
Speaker 2: bubbill start with easy money, they end with rate hikes.

647
00:32:47,960 --> 00:32:49,080
Speaker 4: How much do you agree with that?

648
00:32:50,880 --> 00:32:52,760
Speaker 15: You know, I think in some ways I do agree

649
00:32:52,760 --> 00:32:55,320
Speaker 15: with it. I think that there's a kind of vacuum

650
00:32:55,320 --> 00:32:57,520
Speaker 15: of conviction and areas to spend time in on the

651
00:32:57,560 --> 00:33:00,160
Speaker 15: investor side today after kind of a very crazy the

652
00:33:00,200 --> 00:33:03,000
Speaker 15: past few years, and you know, things cycling in and

653
00:33:03,000 --> 00:33:05,920
Speaker 15: out of the zeitgeist, like crypto for an example. I

654
00:33:05,960 --> 00:33:08,160
Speaker 15: do think that, unlike a lot of prior areas, there

655
00:33:08,160 --> 00:33:10,600
Speaker 15: will be massive disruption and there is so much hard

656
00:33:10,760 --> 00:33:14,000
Speaker 15: y that can hop in with a ton of different industries,

657
00:33:14,240 --> 00:33:16,560
Speaker 15: and I think for the first time people can see

658
00:33:16,600 --> 00:33:18,280
Speaker 15: it and feel it in a way that is very

659
00:33:18,320 --> 00:33:20,600
Speaker 15: tangible to their day to day lives. And so that

660
00:33:20,640 --> 00:33:24,000
Speaker 15: creates some sort of compounding effect of the kind of

661
00:33:24,080 --> 00:33:26,560
Speaker 15: zeitgeist in the moment and how big it feels, because

662
00:33:26,560 --> 00:33:29,960
Speaker 15: at every dinner, at every interaction, someone is talking about AI,

663
00:33:30,160 --> 00:33:32,440
Speaker 15: someone's talking about the ethics of it, et cetera.

664
00:33:33,640 --> 00:33:35,840
Speaker 3: Michael I used to cover tech deals and some of

665
00:33:35,840 --> 00:33:38,680
Speaker 3: this vibe kind of throws me back to when Airbnb

666
00:33:38,960 --> 00:33:42,120
Speaker 3: Uber we're doing their massive funding grounds around some consumer

667
00:33:42,160 --> 00:33:44,120
Speaker 3: tech when they were still private. A lot of that

668
00:33:44,160 --> 00:33:46,840
Speaker 3: was driven by folks like yourself, but also bigger investors'

669
00:33:46,880 --> 00:33:50,120
Speaker 3: growth money, private equity firms piling in. Is that kind

670
00:33:50,160 --> 00:33:52,640
Speaker 3: of money already moving into this market? Do you think

671
00:33:52,680 --> 00:33:55,200
Speaker 3: that will fuel some of this potential for bubble that

672
00:33:55,240 --> 00:33:56,080
Speaker 3: you're talking about.

673
00:33:57,880 --> 00:33:58,480
Speaker 11: It's starting to.

674
00:33:58,880 --> 00:34:00,600
Speaker 15: I think more and more people are trying to figure

675
00:34:00,600 --> 00:34:03,640
Speaker 15: out what are the areas in which they can properly

676
00:34:03,680 --> 00:34:05,680
Speaker 15: deploy hundreds of millions of dollars. And you've see that

677
00:34:05,720 --> 00:34:08,320
Speaker 15: on the foundation model side of things. In the larger

678
00:34:08,360 --> 00:34:10,239
Speaker 15: AI labs, and I think you're going to start to

679
00:34:10,239 --> 00:34:12,759
Speaker 15: see it on the more application layer and middleware side

680
00:34:12,760 --> 00:34:15,640
Speaker 15: of things, and so it's it's definitely starting. We're seeing

681
00:34:15,680 --> 00:34:17,680
Speaker 15: it now with the full stack kind of larger scale

682
00:34:17,800 --> 00:34:20,720
Speaker 15: VC firms, some of the growth firms, and then obviously

683
00:34:20,760 --> 00:34:22,600
Speaker 15: on the hedge fund side, we're seeing on public markets

684
00:34:22,600 --> 00:34:24,759
Speaker 15: people are trying to figure out outside of Nvidia, what

685
00:34:24,800 --> 00:34:26,919
Speaker 15: are the plays that they should be having to get

686
00:34:26,920 --> 00:34:30,160
Speaker 15: exposure to things that feel quite asymmetric from an upside

687
00:34:30,200 --> 00:34:33,080
Speaker 15: perspective and just incredibly large scale if it does work,

688
00:34:33,120 --> 00:34:34,439
Speaker 15: which is kind of our job.

689
00:34:34,960 --> 00:34:35,240
Speaker 4: Michael.

690
00:34:35,239 --> 00:34:37,920
Speaker 2: I'm curious about your investment portfolio. How much of it

691
00:34:38,040 --> 00:34:40,799
Speaker 2: centers on AI? Is it less than half more than

692
00:34:40,840 --> 00:34:43,520
Speaker 2: two thirds? And when we talk about centered on AI,

693
00:34:43,840 --> 00:34:47,799
Speaker 2: are these companies that started with the goal of entering

694
00:34:47,880 --> 00:34:50,680
Speaker 2: and building out AI or have they pivoted to AI

695
00:34:51,200 --> 00:34:53,200
Speaker 2: and expanded to AI from where they started.

696
00:34:54,760 --> 00:34:54,960
Speaker 4: Yeah.

697
00:34:54,960 --> 00:34:56,880
Speaker 15: So we've been investing in AI or mL as we

698
00:34:56,960 --> 00:34:58,799
Speaker 15: used to call it, since twenty fourteen, and I think

699
00:34:59,360 --> 00:35:02,000
Speaker 15: probably about sixty percent of our portfolio falls within that

700
00:35:02,080 --> 00:35:04,960
Speaker 15: area now, and that's because AI moved from a very

701
00:35:05,000 --> 00:35:09,840
Speaker 15: kind of vertical specific misnomer too now being a horizontal platform,

702
00:35:09,880 --> 00:35:13,840
Speaker 15: and so everything from biology company is using AI to

703
00:35:13,960 --> 00:35:16,360
Speaker 15: kind of do more of a search and discover instead

704
00:35:16,360 --> 00:35:20,719
Speaker 15: of a random walk in discovery too. Core companies like Runway, Mlwave,

705
00:35:20,800 --> 00:35:23,360
Speaker 15: dot Ai that are doing kind of full stack building

706
00:35:23,400 --> 00:35:26,160
Speaker 15: their own models, using it in very unique ways. And

707
00:35:26,239 --> 00:35:29,080
Speaker 15: so I think for us, we ourselves as very AI

708
00:35:29,160 --> 00:35:31,600
Speaker 15: native investors and think that most of how we like

709
00:35:31,640 --> 00:35:34,719
Speaker 15: to invest is companies that either have a unique take

710
00:35:34,760 --> 00:35:36,920
Speaker 15: on product as it's enabled by the bleeding edge of

711
00:35:37,080 --> 00:35:39,520
Speaker 15: AI or our building and kind of pushing that bleeding

712
00:35:39,600 --> 00:35:40,800
Speaker 15: edge into their core category.

713
00:35:41,920 --> 00:35:45,840
Speaker 3: Let's talk regulatory risk or appetite for regulation from some

714
00:35:45,920 --> 00:35:47,040
Speaker 3: of your portfolio companies.

715
00:35:47,239 --> 00:35:49,120
Speaker 4: Which side of that debate are you falling on?

716
00:35:49,200 --> 00:35:51,359
Speaker 3: Where do you think in the US, in particular, our

717
00:35:51,400 --> 00:35:54,640
Speaker 3: government should be getting in and kind of laying out

718
00:35:54,760 --> 00:35:57,680
Speaker 3: the guard rails for what this industry's impact could be

719
00:35:57,800 --> 00:36:01,160
Speaker 3: on consumers, on businesses and tech writ large.

720
00:36:02,600 --> 00:36:04,680
Speaker 15: Yeah, so I watched the entire hearing last week, and

721
00:36:04,800 --> 00:36:08,000
Speaker 15: I think generally everyone did a really incredible job. Sam

722
00:36:08,000 --> 00:36:10,680
Speaker 15: obviously is what who got the most praise for his

723
00:36:10,719 --> 00:36:13,560
Speaker 15: embrace of regulation. I think he made a very strong

724
00:36:13,560 --> 00:36:15,319
Speaker 15: point which I agree with which is that on the

725
00:36:15,320 --> 00:36:17,879
Speaker 15: startup side and really even the mid sized company side,

726
00:36:17,920 --> 00:36:20,360
Speaker 15: I don't think regulation should come into.

727
00:36:20,160 --> 00:36:21,319
Speaker 11: Play just yet.

728
00:36:21,480 --> 00:36:23,800
Speaker 15: I think there's all sorts of ethical dilemmas to discuss

729
00:36:23,840 --> 00:36:26,000
Speaker 15: around how to use different types of training data, what

730
00:36:26,080 --> 00:36:28,200
Speaker 15: data you can train on, how do you get opt in, etc.

731
00:36:28,840 --> 00:36:30,799
Speaker 15: But I think a lot of our companies are taking

732
00:36:30,800 --> 00:36:33,560
Speaker 15: an approach of making sure they're doing things responsibly and

733
00:36:33,560 --> 00:36:36,759
Speaker 15: making sure that they're doing things transparently, and I think

734
00:36:36,880 --> 00:36:40,319
Speaker 15: it's a little too early to be trying to put

735
00:36:40,360 --> 00:36:43,719
Speaker 15: into effect things that could hamstering development, especially in the

736
00:36:43,800 --> 00:36:45,879
Speaker 15: United States, because I do think this is some form

737
00:36:45,920 --> 00:36:48,200
Speaker 15: of an existential technology and we want to make sure

738
00:36:48,200 --> 00:36:50,719
Speaker 15: we're continually pushing the frontier of that. And while there

739
00:36:50,719 --> 00:36:53,520
Speaker 15: are certain areas like these large models and kind of

740
00:36:53,520 --> 00:36:56,799
Speaker 15: frontier models that could have regulation at the compute layer,

741
00:36:57,080 --> 00:36:58,799
Speaker 15: I think more and more as people start to get

742
00:36:58,800 --> 00:37:01,759
Speaker 15: better at miniaturizing model doing things locally, it's going to

743
00:37:01,760 --> 00:37:04,520
Speaker 15: become really difficult. And I'm not sure on the government

744
00:37:04,560 --> 00:37:07,080
Speaker 15: side we yet have an understanding or a group of

745
00:37:07,080 --> 00:37:10,680
Speaker 15: people with enough understanding to properly regulate something that is

746
00:37:10,719 --> 00:37:14,560
Speaker 15: so important and honestly is moving so quickly.

747
00:37:15,160 --> 00:37:18,080
Speaker 2: Our previous guest, Sarahcrafts of the Cornell Tech Policy Institute,

748
00:37:18,200 --> 00:37:20,719
Speaker 2: was just saying that the owners really falls on the

749
00:37:20,719 --> 00:37:24,439
Speaker 2: firms themselves to propose regulation or to try to set

750
00:37:24,480 --> 00:37:26,560
Speaker 2: up their own guardrails to that end.

751
00:37:27,120 --> 00:37:28,919
Speaker 4: Is there anyone that you've.

752
00:37:28,719 --> 00:37:31,520
Speaker 2: Encountered, that you've engaged with who you believe is a

753
00:37:31,600 --> 00:37:34,480
Speaker 2: leader in thinking through some of these issues that you

754
00:37:34,520 --> 00:37:38,479
Speaker 2: think people need to be paying attention to.

755
00:37:38,480 --> 00:37:39,959
Speaker 15: To be honest, I think it's most of the people

756
00:37:39,960 --> 00:37:43,560
Speaker 15: who are running thee these large labs, whether it's kind

757
00:37:43,600 --> 00:37:46,160
Speaker 15: of people like Sam, I think Gary marcusly it's some

758
00:37:46,239 --> 00:37:48,320
Speaker 15: really good points. As a professor in the hearing, I

759
00:37:48,360 --> 00:37:51,720
Speaker 15: think there are people that are trying to take ethical approaches.

760
00:37:51,719 --> 00:37:53,600
Speaker 15: The teament Runway cares a lot about making sure they

761
00:37:53,640 --> 00:37:57,520
Speaker 15: work with creators. But I think to Sam's point, these

762
00:37:57,520 --> 00:38:00,640
Speaker 15: people have day jobs that are probably the most exciting

763
00:38:00,680 --> 00:38:03,160
Speaker 15: they've ever been and something they view as kind of

764
00:38:03,160 --> 00:38:05,120
Speaker 15: their life's work. So I do think it's hard. I

765
00:38:05,160 --> 00:38:08,400
Speaker 15: think more and more as more people who have been

766
00:38:08,440 --> 00:38:11,120
Speaker 15: at large organizations and scene regulation and other lines of

767
00:38:11,200 --> 00:38:14,480
Speaker 15: technology start to really dig in to AI, we will

768
00:38:14,560 --> 00:38:17,200
Speaker 15: start to have people rise naturally. But to be honest,

769
00:38:17,280 --> 00:38:18,840
Speaker 15: right now, most of the people are those who have

770
00:38:18,960 --> 00:38:21,959
Speaker 15: the depth of understanding of knowing how quickly this moves

771
00:38:21,960 --> 00:38:23,839
Speaker 15: in the scale at which it's moving, and those people

772
00:38:23,880 --> 00:38:25,040
Speaker 15: are building right now.

773
00:38:25,320 --> 00:38:28,000
Speaker 2: All right, Michael Dempsey, managing partner at Compound, thank you

774
00:38:28,040 --> 00:38:29,840
Speaker 2: so much for giving us your perspective.

775
00:38:38,000 --> 00:38:41,239
Speaker 3: SpaceX launched four private astronauts and route to the International

776
00:38:41,239 --> 00:38:44,360
Speaker 3: Space Station, including the first woman from Saudi Arabia to

777
00:38:44,400 --> 00:38:46,920
Speaker 3: travel to space. That crew lifted off a top of

778
00:38:47,000 --> 00:38:49,960
Speaker 3: Falcon nine rocket Sunday evening from the Kennedy Space Center

779
00:38:50,000 --> 00:38:53,200
Speaker 3: in Florida. That mission, operated by Axiom Space, is the

780
00:38:53,280 --> 00:38:56,680
Speaker 3: second of four human space flight launches that SpaceX is

781
00:38:56,680 --> 00:38:57,920
Speaker 3: set to handle for the company.

782
00:38:58,280 --> 00:38:59,680
Speaker 4: Axium has plans to build its.

783
00:38:59,520 --> 00:39:02,240
Speaker 7: Own space station in the future.

784
00:39:03,320 --> 00:39:06,640
Speaker 3: Now, Apple is just a few weeks away from debuting

785
00:39:06,719 --> 00:39:10,440
Speaker 3: its mixed reality headset. Bloomberg's Mark German has been following

786
00:39:10,440 --> 00:39:14,320
Speaker 3: the project incredibly closely, and he joins us now for more, Mark,

787
00:39:14,640 --> 00:39:16,520
Speaker 3: what do we need to know about what's coming.

788
00:39:16,520 --> 00:39:17,760
Speaker 4: We've heard about this for a minute.

789
00:39:18,040 --> 00:39:20,240
Speaker 7: Give us the top deal on this headset.

790
00:39:21,040 --> 00:39:22,600
Speaker 14: Yeah, thank you so much for having me. Yeah, it's

791
00:39:22,640 --> 00:39:25,640
Speaker 14: definitely been a minute. So we're actually right now two

792
00:39:25,640 --> 00:39:30,680
Speaker 14: weeks away, two weeks and five minutes away, I should say,

793
00:39:31,400 --> 00:39:34,360
Speaker 14: from that headsets launch event, this is going to be

794
00:39:34,400 --> 00:39:38,200
Speaker 14: Apple's first feature new product in eight years, right, since

795
00:39:38,239 --> 00:39:41,520
Speaker 14: the original Apple Watch was introduced and went on sale

796
00:39:41,560 --> 00:39:44,760
Speaker 14: in twenty fifteen. This is going to be a really

797
00:39:44,760 --> 00:39:48,440
Speaker 14: interesting test case for Apple, right. You know, Apple didn't

798
00:39:48,480 --> 00:39:52,720
Speaker 14: necessarily create the MP three player markets, the smartphone markets,

799
00:39:52,760 --> 00:39:55,439
Speaker 14: the tablet markets, but there was a sense that those

800
00:39:55,480 --> 00:39:58,200
Speaker 14: areas were soon about to take off and explode.

801
00:39:58,280 --> 00:39:58,440
Speaker 3: Right.

802
00:39:59,000 --> 00:40:00,600
Speaker 4: Mixed reality is a little bit different.

803
00:40:00,920 --> 00:40:02,680
Speaker 14: Apple is really going to have to come in here

804
00:40:02,719 --> 00:40:04,680
Speaker 14: and maybe define this market.

805
00:40:04,760 --> 00:40:08,840
Speaker 4: Right, Meta is there. HTC is a big player Sony,

806
00:40:09,280 --> 00:40:10,560
Speaker 4: but it's super nascent.

807
00:40:10,640 --> 00:40:13,799
Speaker 14: We're talking, you know, fewer than ten million units of

808
00:40:13,800 --> 00:40:16,520
Speaker 14: these devices going on sale are being sold on an

809
00:40:16,440 --> 00:40:18,920
Speaker 14: annual basis right now, Right, So Apple's going to have

810
00:40:18,960 --> 00:40:20,600
Speaker 14: to come in here and shake it up from the

811
00:40:20,719 --> 00:40:23,319
Speaker 14: very bottom. And they're coming in with a device that's

812
00:40:23,320 --> 00:40:26,080
Speaker 14: a little bit experimental. It's going to be very expensive

813
00:40:26,680 --> 00:40:29,560
Speaker 14: anywhere between I'm told twenty eight hundred dollars and thirty

814
00:40:29,560 --> 00:40:32,480
Speaker 14: two hundred dollars, right, It's going to have some pretty

815
00:40:32,480 --> 00:40:36,399
Speaker 14: intense technology, over a dozen censors on the outside. You'll

816
00:40:36,400 --> 00:40:39,440
Speaker 14: control it with your eyes and hands. You'll use it

817
00:40:39,480 --> 00:40:44,040
Speaker 14: for virtual reality, FaceTime and productivity. Very interesting to see

818
00:40:44,040 --> 00:40:47,120
Speaker 14: how Apple positions it. I'm told they're going to push

819
00:40:47,160 --> 00:40:49,239
Speaker 14: it towards creatives if people want to use it for

820
00:40:49,280 --> 00:40:54,000
Speaker 14: productivity as the future of the computer. I definitely think

821
00:40:54,040 --> 00:40:57,279
Speaker 14: this is going to be exciting for consumers, but there's

822
00:40:57,320 --> 00:40:59,719
Speaker 14: a very big risk here for the company, right I

823
00:40:59,760 --> 00:41:02,320
Speaker 14: think it's either going to be a huge flop or

824
00:41:02,400 --> 00:41:06,279
Speaker 14: a huge success, and for Apple, there's really nothing in between.

825
00:41:07,080 --> 00:41:10,000
Speaker 3: Quite the binary call there from our very own Mark German,

826
00:41:10,080 --> 00:41:12,680
Speaker 3: thank you for joining us on Apple and their headsets.

827
00:41:13,120 --> 00:41:16,759
Speaker 3: And that does it for this edition of Bloomberg Technology.

828
00:41:17,040 --> 00:41:18,919
Speaker 3: Make sure to tune in tomorrow as our very own

829
00:41:19,000 --> 00:41:21,760
Speaker 3: Caroline Heights is down for an exclusive interview with TikTok

830
00:41:21,840 --> 00:41:25,560
Speaker 3: CEO show Chow that comes from the Qatar Economic Forum.

831
00:41:25,800 --> 00:41:26,440
Speaker 4: You won't want to.

832
00:41:26,360 --> 00:41:28,600
Speaker 7: Miss it, and don't forget to check out our podcast.

833
00:41:28,640 --> 00:41:30,960
Speaker 7: You can find it on the terminal as well as online.

834
00:41:31,280 --> 00:41:32,560
Speaker 4: This is Bloomberg