Speaker 1: From Marhart where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed Ludlow.
Speaker 2: I'm Caroline Heinder Blomberg's World headquarters in New York, and
Speaker 2: I'm Ed Ludlow here in San Francisco.
Speaker 3: This is Bloomberg Technology.
Speaker 2: Coming up metas push into generative AI. Mark Zuckerberg announces
Speaker 2: artificial intelligence tools that are coming to Instagram, Messenger, WhatsApp.
Speaker 2: We're going to run through the entirety and get the
Speaker 2: reaction to Meta connect.
Speaker 4: And Apple asked the US Supreme Court to reverse its
Speaker 4: app store ruling won by Epic two years ago. We're
Speaker 4: going to bring you the latest details.
Speaker 2: Plus TikTok airs and ads during the Republican debates moments
Speaker 2: after candidate's spa of the security concerns with the app
Speaker 2: have more on that than the companies e commerce ambitions too.
Speaker 2: But first let's checking on these markets, because actually we've
Speaker 2: got the NASA managing to push up more than a
Speaker 2: percentage point even in the face of growing yields on
Speaker 2: the thirty year Actually we're basically flat about one basis point.
Speaker 2: We had been at decade highs. In fact, the higher
Speaker 2: since twenty ten on the thirty year. Maybe a bit
Speaker 2: of a correction going on with yields pulling down on
Speaker 2: the front end.
Speaker 5: We've had some weaker macro data today.
Speaker 2: Ed we're still trying to work out the direction of
Speaker 2: travel from Federal Reserve and global central banks as they
Speaker 2: still have to tackle pretty strong economies, particularly here in
Speaker 2: the United States. The dollar manages are pulled down after
Speaker 2: days of rallying, so maybe that's a sigh of relief
Speaker 2: for some of the riskier assets out there. At the moment,
Speaker 2: we're seeing dollar indux off by five ten percent, move
Speaker 2: on to bitcoin therefore, and bitcoin manages to push higher
Speaker 2: versus the US dollar. That risk appetite building a little
Speaker 2: bit in the og world of crypto. So if we
Speaker 2: can just shine a light on what's happening in bitcoin.
Speaker 2: We are higher on the day, so currently up almost
Speaker 2: three point three percent.
Speaker 4: And to you on the micros, yeah, we got news
Speaker 4: and we've got earnings. On the news side, Peloton has
Speaker 4: a content deal with Lulu Lemmon. The stock up seven
Speaker 4: percent now had been much higher. Later in the show,
Speaker 4: we're going to bring you the analyst reaction because this
Speaker 4: is all around Lulu's mirror, but it has a finite life,
Speaker 4: and it's really interesting to see the stock bounce all
Speaker 4: over the place. On the earning side, Micron, the biggest
Speaker 4: US maker of memory chips, we're talking d ram, we're
Speaker 4: talking nand projecting a wide and expected loss for the
Speaker 4: current quarter, the fiscal first ending in November. But there
Speaker 4: are signs that the memory market, maybe in the trough,
Speaker 4: coming out of a trough, will go deeper.
Speaker 3: On that later in the program.
Speaker 4: There's an interesting day to to Meta Connect Meta's developers conference.
Speaker 4: Look at the stock on a two day basis. The
Speaker 4: training's kind of all over the place, like while Meta
Speaker 4: connect was going on, kind of disinterested. The stock falls
Speaker 4: closes basically flat on Wednesday, but we're significantly higher today.
Speaker 4: We had the hardware announcements around Quest three and the
Speaker 4: smart glasses.
Speaker 3: But as you talked.
Speaker 4: About, Carol, it's about the integration of what it's been
Speaker 4: working on the research side, large language models now generative
Speaker 4: AI tools in it's suite of apps and offerings.
Speaker 2: Yeah, and let's just listen and add as to what
Speaker 2: Mark Zeckerberg really articulated about AI at the event.
Speaker 6: Take listen what I argue is that people are going
Speaker 6: to want to interact with a bunch of different ais
Speaker 6: for the different things that you want to do.
Speaker 3: And I actually think that.
Speaker 6: Over time a lot of you are going to want
Speaker 6: to make your own AIS to advance individual goals that
Speaker 6: you have, whether you're a small business and you want
Speaker 6: to interact with customers, or if you're a creator and
Speaker 6: you want to engage your community, or.
Speaker 3: Whatever it is that you do.
Speaker 5: He needs to say.
Speaker 2: Mark German, who is our hands on product guy, can
Speaker 2: also will delve into how much these sort of chatbots,
Speaker 2: celebrity endorse some of them, or notably just the way
Speaker 2: in which you think Generator ai is going to ut
Speaker 2: the ante on some of their devices and indeed the
Speaker 2: offering they have for across the board social media.
Speaker 7: I certainly think the new devices are impressive, right, but
Speaker 7: this is really maybe the last stand for Meta right.
Speaker 7: Meta for the last few years has been pushing the
Speaker 7: idea of their quest headset to being the very core
Speaker 7: of the metaverse. Right, This idea of using headsets and
Speaker 7: virtual reality for the future of working online, for communicating
Speaker 7: with people, as the future of the social network. But
Speaker 7: if you watched Meta connect You'll notice that Mark Zuckerberg
Speaker 7: didn't really mention the metaverse, right, This latest Quest three,
Speaker 7: these new smart glasses with ray ban to pivot away
Speaker 7: from the metaverse and to move towards two things, productivity
Speaker 7: and AI. Right, they're pushing towards what Apple is doing
Speaker 7: with mixed reality, and I think the quest headset. The
Speaker 7: goal there is to focus on performance, gaming and productivity.
Speaker 7: Whereas the smart classes they have a lot of AI features.
Speaker 7: Now let's take a look at the AI. There's these
Speaker 7: generative AI chatbots, There's these celebrity chat heads. There are
Speaker 7: a few other things related to stickers. There's AI based collaboration,
Speaker 7: and these are things Meta really needed to do, right,
Speaker 7: But nothing they announced this week is novel. At this point,
Speaker 7: we've seen a lot of similar technology from Microsoft, from
Speaker 7: Google already, from Amazon a couple of weeks ago, certainly
Speaker 7: from open ai and others. So metas a bit of
Speaker 7: a laggard here, but they did what they needed to
Speaker 7: do to be there in twenty twenty four, which of
Speaker 7: course is going to be the year of AI for
Speaker 7: Apple as well.
Speaker 4: So what does AI look like at Meta in its
Speaker 4: suite of apps? You know, I don't know if you're
Speaker 4: still using Facebook, Theapple dot Com, but you're on Instagram,
Speaker 4: did they demonstrate what that actually looks like as a
Speaker 4: consumer user of social media?
Speaker 7: Yeah, I mean AI is now going to be completely
Speaker 7: integrated across the suite of Facebook apps, whether that's the
Speaker 7: main Facebook Blue app, whether that's Messenger, Instagram, WhatsApp, and
Speaker 7: what you're going to get there is a chat GPT
Speaker 7: like system integrated as a chatbot into those different messaging services, right,
Speaker 7: So have it write messages for you, have it do
Speaker 7: collaboration on your behalf with other people in your contact list.
Speaker 7: So it's a fully integrated expression of this generative AI,
Speaker 7: which is really what chat GBT has been missing. Chat
Speaker 7: GBT is this core technology. It's a novel, it can
Speaker 7: do some cool things, but it's not in integrated into
Speaker 7: a platform. And you're seeing Meta being one of the
Speaker 7: first companies to show integration of AI across their platform,
Speaker 7: not to do similar not too unsimilar from when Amazon
Speaker 7: showed a couple of weeks ago general of AI being
Speaker 7: built into Alexa. So really the next step of these
Speaker 7: generative AI tools is moving from this sort of raw data,
Speaker 7: these raw functions into something integrated into existing platforms, and
Speaker 7: I think you're going to see that from Apple happen
Speaker 7: as well next year. And I think Meta really showed
Speaker 7: some of the most cool stuff so far that we've
Speaker 7: seen in the I world because of how integrated is
Speaker 7: into the existing workflows that consumers use on a daily basis.
Speaker 4: Okay, you heard from Mark number one. That was Zuckerberg's
Speaker 4: thanks to Bloomberg's Mark German, he's Mark number two.
Speaker 3: Let's get to Mark number three.
Speaker 4: Joining us now is analyst Mark Mahaney over at Evercresi,
Speaker 4: Senior managing Director and outperform rating on Meta with a
Speaker 4: four hundred and thirty five dollars price target.
Speaker 1: Mark.
Speaker 4: I start by asking you, do you understand how Meta
Speaker 4: will make money from integrating its generative AI programs into
Speaker 4: the existing suite of apps.
Speaker 3: Yes, explain it to us.
Speaker 8: Okay, so sorry about that, but yes, Look, they've been
Speaker 8: they've been using AI. I mean, if you used it.
Speaker 9: There are three billion people who use Facebook and Instagram,
Speaker 9: and those people who have used it have noticed something
Speaker 9: in the last two years that's been driven by AI,
Speaker 9: which is the news feed has changed. It's gone from
Speaker 9: just content about from your friends and family to content
Speaker 9: from across the Internet. It's come from being a social site,
Speaker 9: social media site with the accent on social, to a
Speaker 9: social media site with an accent on media. That's artificial
Speaker 9: intelligence that's helped them that they've deployed it to make
Speaker 9: the user experience more, more broader, more all encompassing, and
Speaker 9: it's paid off. You've seen rising engagement. Then flip it
Speaker 9: over to the advertisers side. You've seen return on ad spend,
Speaker 9: remprove recover at meta over the last year. That's showing
Speaker 9: up in this dramatically accelerating ad revenin growth. It shows
Speaker 9: up in our in our in our advertiser channel checks.
Speaker 9: So look, we've already seen successful deployment of AI. I
Speaker 9: don't think the market realizes this. And now what they're
Speaker 9: doing is taking it a step further with generative AI
Speaker 9: and the use of chatbots. In the use of these
Speaker 9: of these I would you call them these little widgets,
Speaker 9: you know, emojis, et cetera. On the site, they're going
Speaker 9: to make the site even more engaging using generative AI.
Speaker 9: And on the chatbox side, here's it, they're going to
Speaker 9: better monetize youse. It's going to increase your engagement on
Speaker 9: the site. But then with the chatbots, there's a real
Speaker 9: pitch here for businesses. This can reduce materially customer service costs.
Speaker 9: This gives businesses a chance. Businesses that rely on WhatsApp
Speaker 9: and Facebook Messenger to interact with customers, This allows them
Speaker 9: to better more efficiently handle customer complaints, customer service requests,
Speaker 9: et cetera.
Speaker 8: So I think there's a lot of wins here.
Speaker 9: Everybody focuses us in then video and AWS and Microsoft
Speaker 9: is the big plays off of infrastructure and platforms. But
Speaker 9: here's the killer app, and it's a Facebook meta that's
Speaker 9: deploying generative AI right in front of our faces, and
Speaker 9: they're using it to improve user engage and advertisers spend.
Speaker 2: Okay, So that, with a bit of a mic drop mark,
Speaker 2: was a great analysis of how we're going to see
Speaker 2: money spinning out of generative AI. How does it fit
Speaker 2: into well, the rebranded meta, the metaverse, the actual hardware.
Speaker 2: How much do you think that is a decent future
Speaker 2: competitor to what Apple will eventually bring us in the
Speaker 2: first quarter of twenty twenty four.
Speaker 8: Yeah, So I don't know the answer to that, Caroline.
Speaker 8: That's tougher and what I find interesting about the.
Speaker 9: Way the stock traded, and I don't want to over
Speaker 9: ascribe intelligence to the markets. Market's usually right, But as
Speaker 9: we had conversations yesterday during Metaconnect about the metaverse, about
Speaker 9: the devices and the glasses, the stock kind of tricked down,
Speaker 9: and then we started getting into generative AI, the stock.
Speaker 8: Moved up, and that's the focus today.
Speaker 9: So I think that what it tells you is the
Speaker 9: market would like to hear a little less from Suckerberg
Speaker 9: in company about the metaverse and more about how they're
Speaker 9: going to deploy generative AI.
Speaker 8: And I think Suckerberg kind of got the memo.
Speaker 9: I think this was event that was kind of pitched
Speaker 9: as kind of part metaverse, part AI, but when it
Speaker 9: actually came to giving us details, we got a lot
Speaker 9: less metaverse, a lot less Oculus Quest, and we got a.
Speaker 8: Lot more AI. And that's why the stock's reacting the
Speaker 8: way it is.
Speaker 9: So you know, the market's telling Zuckerberg, you know, kind of,
Speaker 9: let's limit down the amount that you're investing in the metaverse,
Speaker 9: and we really appreciate what you're doing.
Speaker 8: In generative AI. That's one of the reasons we think
Speaker 8: the stock goes hired.
Speaker 4: But I still want to ask you, Monk, does spending
Speaker 4: fifteen minutes with a mixed reality headset on either watching
Speaker 4: something or playing something at the weekend?
Speaker 3: Does that appeal to you?
Speaker 8: I got I've tried both. I've got both versions of
Speaker 8: the Quest, you know, the Gen one and Gen two.
Speaker 9: The truth of the fact is I gave it to
Speaker 9: my children then they loved it for a day. So
Speaker 9: it's if I've seen something that's enduringly appealing to people,
Speaker 9: to adults and to all sorts of people. Know not yet,
Speaker 9: but is the potential there?
Speaker 8: I mean, why not. If there wasn't potential, you wouldn't
Speaker 8: have Apple entering this space.
Speaker 9: So there is a there there, Whether whether it you know,
Speaker 9: I don't know what if it's if it's Quest seven
Speaker 9: that really breaks through and then you really at a
Speaker 9: lower price point and you really get people kind of
Speaker 9: massive option of these devices. I think there's a potential
Speaker 9: for that, And then you have to figure out what
Speaker 9: are the other apps? Is there other educational apps? Absolutely,
Speaker 9: are there, enterprise apps probably, Whether whether Meta can really
Speaker 9: succeed with those or not, that's a different question.
Speaker 8: But yeah, I'm kind of believe that there is a
Speaker 8: there there Virtual reality, mixed reality, augmented reality.
Speaker 9: I think there's enough thoughtful people investing in this space
Speaker 9: and people looking for a different experience. I mean it
Speaker 9: is a wow experience. It just there's a lot of
Speaker 9: things that need to improve. But yeah, I think there's
Speaker 9: a there there.
Speaker 5: Timing is everything.
Speaker 2: I mean, in many ways, we saw chatbots and we
Speaker 2: saw AI with M and that was what twenty fifteen
Speaker 2: to twenty eighteen and they decided to put that on
Speaker 2: ICE because it wasn't as useful now a generator of AI,
Speaker 2: these chatbots are. Is there a winner takes all scenario?
Speaker 5: Hair mark? Because it's interesting that.
Speaker 2: Of course in this respect we've got meta teaming with
Speaker 2: Being and with Microsoft here, No, I.
Speaker 8: Don't think so.
Speaker 9: I think there's going to be a lot of plays
Speaker 9: and if we just step back, Yeah, it's a wonderful
Speaker 9: development that we're all going to benefit from as you know,
Speaker 9: as consumers, as businesses, as individuals, you know, well what
Speaker 9: have you?
Speaker 8: We're seeing just a dramatic step up in compute power
Speaker 8: and that's just a lot. I mean that all builds
Speaker 8: on you.
Speaker 9: You wouldn't have Jenai if you didn't have the Internet,
Speaker 9: if you didn't have mobile internet and if you didn't
Speaker 9: have cloud, but they all build on each other.
Speaker 8: It just means that these digital experiences are going to.
Speaker 9: Become more relevant amthing, more personalized, more useful, more entertaining.
Speaker 9: So I think it's just super exciting, and I think
Speaker 9: you're going to see a lot.
Speaker 8: You know, we've got these.
Speaker 9: Waves now if infrastructure and platform investments, and people are
Speaker 9: kind of waiting to see what apps come out of this,
Speaker 9: And I think I'm sure there are going to be
Speaker 9: some apps that you know, I can't think of, but
Speaker 9: that'll be out in the next three to five years
Speaker 9: that we'll look back on and say wow, or look
Speaker 9: at it and say wow.
Speaker 8: But there's also the ability to apply.
Speaker 9: Jenai today to improve existing processes, existing experiences.
Speaker 8: But I think there's one wonderful example on the right
Speaker 8: in front of us now.
Speaker 2: It's Meta Mamahiney who doesn't want Snoop Dogg as a
Speaker 2: dungeon master? Hey ever, Core I sign we thank you
Speaker 2: so much. Epic Games. It's the maker of, of course,
Speaker 2: the popular online game Fortnite. Becau's laying off about nine
Speaker 2: hundred employees. That's about sixteen percent of its workforce. That's
Speaker 2: all according to source, who says the job carts were
Speaker 2: announced in a memo to staff. Epic is one of
Speaker 2: the biggest privately held video game companies in the world.
Speaker 2: And of course, speaking of Epic, well, we know that
Speaker 2: it's had a long running battle with Apple. We've got
Speaker 2: an update on it for you and hard of it all.
Speaker 2: Epic claims that Apple's online marketplace policies violate federal law,
Speaker 2: claims that a federal judge rejected two years ago. But
Speaker 2: yesterday Epic asked the US Supreme Court to review that ruling,
Speaker 2: and just this morning, Apple found its own petition with
Speaker 2: a Supreme Court to review a different part of that
Speaker 2: ruling from two years ago. Let's spreak it all down.
Speaker 2: Blue Mos has been keeping up to speed with what
Speaker 2: is a very long saga, and just from your perspective,
Speaker 2: what Epic is trying to bring to the Supreme Court's
Speaker 2: attention is one particular nuance in the two years ago ruling,
Speaker 2: a California part of the law.
Speaker 10: Yes, that's right, so Apple one a majority of the
Speaker 10: ruling that basically said that it's app store policies don't
Speaker 10: violate federal antitrust laws. And that's the part that Epic
Speaker 10: is now appealing at this Supreme Court. And Epic one
Speaker 10: a ruling on a California state law claim related to
Speaker 10: competition law, where a judge found that the fact that
Speaker 10: Apple doesn't allow developers to point to alternative payment methods
Speaker 10: that perhaps through a link or a button or an
Speaker 10: email saying hey, you can go on the web and
Speaker 10: go directly to my website and make a payment. So
Speaker 10: the jets thought there was unlawful. And that's the part
Speaker 10: that Apple is appealing, and Apple wants to make sure
Speaker 10: that that part of the decision is reversed.
Speaker 4: And so that's the part that Apple is appealing. In parallel,
Speaker 4: Epic is also asking the courts to review a separate
Speaker 4: part of the original decision.
Speaker 3: What does Epic want.
Speaker 10: So Epic one part which I talked about, But Apple
Speaker 10: won on the larger sort of aspect about federal antitrust laws,
Speaker 10: and the court held that it's APSTRO policies were absolutely
Speaker 10: fine and didn't violate any anti competition laws. So it
Speaker 10: upheld ABSTRO policies at large. And that's the part that
Speaker 10: Apple won, and Epic wants that reversed.
Speaker 4: All right, Bloomberg's Malti Nayak at the face of it
Speaker 4: and all the court battles, Thank you so much. Coming
Speaker 4: up here on BlueBag technology, Google has become a favorite
Speaker 4: for law enforcement seeking location and search data even for
Speaker 4: nonviolent cases. That's today's big take. We're going to bring
Speaker 4: you one of the reporters behind it. Coming up next,
Speaker 4: I will also take a quick look at AMD. There
Speaker 4: is no newsflow catalysts behind this stock, but on track
Speaker 4: for its biggest jump since May. AMD on a two
Speaker 4: day basis also on track for its biggest jump since May.
Speaker 4: A bit of momentum rising for two straight sessions in
Speaker 4: today's session up five point eight percent.
Speaker 3: This has been big.
Speaker 2: Technology time now for Talking Tech. First up, Elonmusk SpaceX Well.
Speaker 2: It's received its first contract from the US Space Force.
Speaker 2: It will provide customer satellite communications for the military under
Speaker 2: the company's new Starshill program. The decision extends Musk's role
Speaker 2: as a defense contract.
Speaker 5: Also teaming up with US agency.
Speaker 2: This is Palenteer signing a two hundred and fifty million
Speaker 2: dollar contract from the Defense Department. Under the new three
Speaker 2: year contract, Palenteer will research, develop and machine learning technology
Speaker 2: and affirm it's relationship with the US government, plus Apple's
Speaker 2: new iPhone fifteen, maybe too hot of a commodity, at
Speaker 2: least that's what some users are complaining about. How some
Speaker 2: mcgrites has spread online and on social media, saying that
Speaker 2: the back or the side of the phone comes too
Speaker 2: hot to touch while gaming, during phone calls, or indeed
Speaker 2: when charging it. So Apple so far has not responded
Speaker 2: to request for common.
Speaker 4: Ed that's a lot to do with titanium. As reported
Speaker 4: by Mark German now Bloomberg's shining a light on a
Speaker 4: growing trend regarding privacy concerns. Some police are using warrants
Speaker 4: to dig up location and search data from Google, even
Speaker 4: for nonviolent cases or on those that have nothing to
Speaker 4: do with the crime. It's the big, big take out
Speaker 4: in the Bloomberg magazine on October third for more scud
Speaker 4: of Julia Love, who covers all things Alphabet, the parent
Speaker 4: of Google, and author this story.
Speaker 3: Let's go through the mechanics.
Speaker 4: So the police try and get a warrant from a judge,
Speaker 4: and they go to Google and they ask for this data.
Speaker 1: Why Google has become one of the favorite destinations for
Speaker 1: law enforcement when they're trying to solve crimes. It has
Speaker 1: a big repository of location information. So if say, a
Speaker 1: burglary takes place at a jewelry store and the police,
Speaker 1: if they don't have other sources of evidence, they might
Speaker 1: go to Doodle to see if Goodle happens to have
Speaker 1: registered any devices that were present at the location near
Speaker 1: the time of the crime. And that can often be
Speaker 1: a first step in an investigation, but it raises big
Speaker 1: privacy concerns.
Speaker 4: Let's talk about the privacy concerns then. I think what's
Speaker 4: interesting is you write that this is often an avenue
Speaker 4: when a detective is at a loss. They can't go
Speaker 4: any further, so they turn to Google. But they are
Speaker 4: getting hold of people's data.
Speaker 3: Yes.
Speaker 1: The problem is that because Goodle has such big databases,
Speaker 1: that means that in order to find the potential.
Speaker 5: Suspects, they have to also.
Speaker 1: Go through data of people who had nothing to do
Speaker 1: with the crime, and police sometimes will have to go
Speaker 1: through those innocent users data in order to home in
Speaker 1: on the users who truly might be involved.
Speaker 5: Extraordinary the numbers.
Speaker 2: Google says it received a record sixty four hundred and
Speaker 2: seventy two search warrants in the US alone last year,
Speaker 2: and we know that's a lot. We know that in
Speaker 2: many ways, Apple has a different way of allowing or
Speaker 2: disallowing the sharing of such information. But you look, they
Speaker 2: also if you using Google Maps on your Apple iPhone,
Speaker 2: then your data will be exposed as well. Ultimately, what
Speaker 2: are people taking issue with and how are people starting
Speaker 2: to fight back on this?
Speaker 5: What's Google's response?
Speaker 1: So there's different schools of thought on this. Some people
Speaker 1: feel that we need to give law enforcement every tool
Speaker 1: that they can to solve crimes, but other people feel
Speaker 1: that the privacy implications are just too great. They are
Speaker 1: concerned about the possibility of using search data a search
Speaker 1: for the address where a crime took place could have
Speaker 1: been committed by the culprit, but it also just could
Speaker 1: have been conducted by someone who was on their way
Speaker 1: to the place, and so some people just feel like
Speaker 1: that's too big a risk to take, And legislation has
Speaker 1: been proposed in New York and California to ban the
Speaker 1: police from turning to doodle in this way.
Speaker 2: Your story really focuses on one particular well National Associated
Speaker 2: Criminal Defense Lawyer's Fourth Amendment Center, a guy called Michael Price,
Speaker 2: and just sort of highlighting that this is almost the
Speaker 2: opposite of how a warrant used to be where you'd
Speaker 2: ask for specific details on a specific person, and this is.
Speaker 5: Sort of far more catch all.
Speaker 2: I go again and ask has alphabet has Google responded
Speaker 2: to all of this?
Speaker 5: How are they dealing with it? Internally?
Speaker 3: These warrants put.
Speaker 5: Doodle in a difficult spot.
Speaker 1: They're court orders, so they're not optional that the company
Speaker 1: is obligated to comply. However, they really go over them
Speaker 1: with a fine tooth comb. They try to identify warrants
Speaker 1: that are overbroad and that potentially violate the Fourth Amendment,
Speaker 1: and they do push back on those. They've got a
Speaker 1: big team staff by lawyers, but also often young people
Speaker 1: just starting their careers who are tasked worth fighting back.
Speaker 1: But they do find that if a judge has signed
Speaker 1: off on it, there's only so much the company can do.
Speaker 2: It's an amazing piece to go and read yourself, and
Speaker 2: Davy Albo, we really appreciate you running us through it.
Speaker 2: Go get the Business Week article and delve into it.
Speaker 2: Thank you, Julia. Welcome back to bluemag Technology.
Speaker 4: I'm Caroline Hyde in New York and Imed Lovelow in
Speaker 4: San Francisco. Let's get that private market news. It's time
Speaker 4: for the VC roundup and an alumnus of Google's AI
Speaker 4: research unit, DeepMind has a new venture fund, Mythos Ventures,
Speaker 4: that will bankroll young AI startups.
Speaker 3: The firm is founded.
Speaker 4: Earlier this year and has raised fourteen million dollars from
Speaker 4: more than four dozen different investors that all according to
Speaker 4: a filing, and also open Ai is in talks to
Speaker 4: raise more than one billion dollars from SoftBank to develop
Speaker 4: a consumer AI device. That's the Financial Times reporting, citing
Speaker 4: sources and open Ai chief Sam Altman has tapped former
Speaker 4: Apple design chief Johnny Ive to design quote the iPhone
Speaker 4: of artificial intelligence plus Alpha Sense says it raised one
Speaker 4: hundred and fifty million dollars in a Series E financing
Speaker 4: round led by Bond, bringing its valuation to two point
Speaker 4: five billion dollars. It will use the funds to expand
Speaker 4: the Enterprise solution, grow its collection of searchable business content,
Speaker 4: and make strategic acquisitions that expand its platform capabilities.
Speaker 2: Cara I mean, well, let's stick with the private markets
Speaker 2: for a moment, because black Lane it's an ouproviding.
Speaker 5: Premium global chauffeur services.
Speaker 2: Let's closed a Series F funding with the company seeing
Speaker 2: evaluation that's roughly fifty percent higher than its previous one
Speaker 2: from twenty twenty. Backers of the series f including Mercedes,
Speaker 2: Ben's Mobility, AGESH Enterprises, and six, who is partnered with
Speaker 2: the company as it continues to expand, so gains Wiltov.
Speaker 2: I'm pleased to say Blacklin CEO is joining us and
Speaker 2: remind us YenS back in what was it twenty eleven
Speaker 2: when you first found in this company, many felt okay,
Speaker 2: the European version of Uber, but you've managed to carve
Speaker 2: a different path, offering longer kind of rides.
Speaker 5: How are you distinct.
Speaker 11: Yeah, exactly as you said, it's about the use case
Speaker 11: that we serve. It's a different one than if you
Speaker 11: would just hop into a car that transports you around
Speaker 11: the block.
Speaker 8: It's a bit like food.
Speaker 11: If you want right, there's this fast food chain, there
Speaker 11: is a mid tier restaurant, and there are top restaurants
Speaker 11: out there where quality counts, where you really want to
Speaker 11: enjoy the experience, and it's comparable to us. We are
Speaker 11: one of those top restaurants. If you want the top
Speaker 11: transportation service and you can enjoy it, especially when you
Speaker 11: spend long times in the car. So naturally the long
Speaker 11: distance is our sweet spot.
Speaker 2: And we're looking at a lot of Mercedes Benz there.
Speaker 2: It feels as I you've got a few strategic investors
Speaker 2: on board, Mercedes Men's Mobility being one of them. In
Speaker 2: sixth Just how are you teaming with ultimately a company
Speaker 2: that will will rent me a car for a short
Speaker 2: term basis?
Speaker 11: Yeah, same explanation. Actually it's about use cases, right, and
Speaker 11: sometimes you have the use case for a rental car,
Speaker 11: but also a Sixth customers. Sometimes one's a different option.
Speaker 11: And therefore, when you are already playing in a premium
Speaker 11: mobility space, than the premium show for service backly and
Speaker 11: fits very well into the portfolio. And so we are
Speaker 11: actually partnering up. We will be introduced into the Sixth
Speaker 11: booking channels. That's helping us for distribution. It's helping Sixth
Speaker 11: to capture a new service that they can offer to
Speaker 11: their customers. So it's a win win. We are starting
Speaker 11: in North America and then continue to expand globally.
Speaker 3: Yeah.
Speaker 4: And the two big stories of the last year in
Speaker 4: this space were the rental car companies not having inventory
Speaker 4: because of their knee reaction to the pandemic, and then
Speaker 4: on the the ride sharing side, the driver deficit and
Speaker 4: driver supply. How did chauffeur manage and navigate those two scenarios.
Speaker 11: Yeah, that's a great question. It was in detail challenge
Speaker 11: for the whole industry, not only the kind industry, the
Speaker 11: rental kin industry, but also the whole hospitality industry. And
Speaker 11: we are operating in both segments, right, So it was
Speaker 11: about car shortage, chip crisis.
Speaker 8: It was about.
Speaker 11: Chauffeurs and supply of premium show feurs, which is difficult, right,
Speaker 11: It's not a commodity. A professional chauffeur is something very
Speaker 11: special that needs training and week last year we quad
Speaker 11: drippled our revenue, right, so imagine such a demand surge
Speaker 11: into our systems. Luckily, we have a very solid and
Speaker 11: loyal base of shawfee services. We helped them also to
Speaker 11: pull through the difficult times of the pandemic, so we
Speaker 11: were able to keep up to our high standards of
Speaker 11: actually almost one hundred percent fulfillment rate for every booking
Speaker 11: that has been placed in our system also during those times.
Speaker 4: So I also find the cap table interesting. Caroline's absolutely right.
Speaker 4: You know, you look at sex and Mercedes, but what
Speaker 4: is it that you guys have black lain. Technologically speaking,
Speaker 4: what is it that is unique that justifies this round
Speaker 4: justifies what is a fifty percent jump invaluation?
Speaker 11: Yeah, it's the whole package, right, It's the digital product
Speaker 11: that is driving a lot of value.
Speaker 8: Right.
Speaker 11: We are a technology company, right. We have a huge
Speaker 11: engineering a team that is building the dispatching technologies behind
Speaker 11: that are building the apps for both sides of the
Speaker 11: marketplace that are building also the products for the city
Speaker 11: to city for instance, or prediction algorithms to to understand
Speaker 11: how the next day might evolve. Because we have like
Speaker 11: a lot of inflow into our system. We have pre
Speaker 11: book rights, we have on demand rights, we have a
Speaker 11: very special fleet. We want to utilize those exclusive fleets
Speaker 11: in many markets in the most optimal manner. So it's
Speaker 11: a very different spin to technology than if you compare
Speaker 11: to pure on demand play for.
Speaker 2: Instance, and when using the new funds yen. Is it
Speaker 2: about talent? Is it about those engineers? Is it about
Speaker 2: expansion and marketing? Where do you deploy the cash?
Speaker 11: Yeah, it is about all of that. It's like we grow,
Speaker 11: especially on the technological side. We will invest heavily into
Speaker 11: continue to push the limits technologically. We will launch more
Speaker 11: products the city to city is one of those. Philadelphia
Speaker 11: to New York, Miami, Fort Lauderdale a center, Barbara, those
Speaker 11: kind of routes are really growing as significantly. Well, we
Speaker 11: will push them and we will launch more markets. We
Speaker 11: have an electric only fleet now in cities like Dubai
Speaker 11: for instance, on the road. We want to continue being
Speaker 11: also the sustainability leader in the transportation industry. Right in
Speaker 11: twenty seventeen, we were the first to offset every single
Speaker 11: right and we have led the industry to follow. Now
Speaker 11: we want to also lead the electrification site and this
Speaker 11: is it's also something that requires investment.
Speaker 8: Of course.
Speaker 4: Jen's I said earlier that this was a fifty percent
Speaker 4: jump in valuation. It's just Caroline and I and the
Speaker 4: global Bloomberg technology audience just between us, what's the valuation?
Speaker 3: Are you a unicorn? Based on this? Give us some scale.
Speaker 8: We are on a great way to reach it.
Speaker 11: Not there yet, but if we continue to grow in
Speaker 11: with those numbers quadrupling last year, this year also looks
Speaker 11: very very promising. I think we will meet again the
Speaker 11: three of us and discussed us in more detail.
Speaker 3: All right, Yeah, and taught of black Laine. See great
Speaker 3: to have you here. On the program. Thank you, Caroline Group.
Speaker 5: Next time, I'll tease it out of him.
Speaker 2: Meanwhile, get a quick market check for me as we
Speaker 2: assess the private markets. There, let's look at the public
Speaker 2: We're up by one point three percent, and as that
Speaker 2: one hundred, we're actually managing to see a relatively risk
Speaker 2: on kind of a day, even though.
Speaker 5: We see some macro weakness.
Speaker 2: Maybe it is as we anticipate in the Federal Reserve
Speaker 2: not having to go so far so far ast we're
Speaker 2: looking at the two year yield actually coming down some
Speaker 2: basis poice, it's still above five percent. Nevertheless, we are
Speaker 2: pulling back a little bit. That's spurring bitcoin to the height.
Speaker 5: So I go into the.
Speaker 2: Individual names though for a moment, ed because we have
Speaker 2: had some lackluster numbers coming out work day down eight
Speaker 2: percent worse performer.
Speaker 5: On than as that one hundred.
Speaker 2: Is it perhaps re engauges new team, new CFO and
Speaker 2: just recalibrating growth seventeen to nineteen percent, revenue increases where
Speaker 2: they're expecting it. We're seeing Micron up some three percent,
Speaker 2: down some three percent as well, that too, as they
Speaker 2: curtail some of their outlooks on the back of what
Speaker 2: is still a very difficult market for some chip makers
Speaker 2: if they're not being really spurred by artificial intelligence. And
Speaker 2: I'm looking at Serious ExM, this one continues to be volatile.
Speaker 2: Liberty Media of course trying to be combining its own
Speaker 2: eighty five percent stake in these traded stock.
Speaker 5: Of Serious XM.
Speaker 2: And at the moment we're up some seventeen percent, but
Speaker 2: yesterday it was down hard from New York for San Francisco.
Speaker 5: This is Bloomberg Technology.
Speaker 2: Let's take a quick look at Peloton shares because they're
Speaker 2: doing pretty well well. The biggest moves is July thirty
Speaker 2: first of this year, at one point moving the highest
Speaker 2: since February. That's after agreeing a deal with Lululemon to
Speaker 2: tap its online workouts and team up on apparel intelseampiece
Speaker 2: of say founder Telsea Advisory Group is with us now
Speaker 2: writing a note on what ultimately seems to be Peloton
Speaker 2: once again finding new partnerships way to bring their product
Speaker 2: to more people, while Lululemon seems to be stepping back
Speaker 2: from its mirror product.
Speaker 12: Yes, Lululemon is stepping back from its mirror product, but
Speaker 12: keep in mind it's less than one percent of sales.
Speaker 12: I think the partnership with Peloton adds something to each.
Speaker 12: For Lulu Lemon, they get digital content that they don't
Speaker 12: have to provide themselves that now becomes a lower cost.
Speaker 12: It's a revenue share for Peloton given the app memberships,
Speaker 12: and they'll get a percentage of that fee. So with
Speaker 12: both communities having in age fitness members, it's a win
Speaker 12: win for each and the co branded apparel only is
Speaker 12: a benefit to Lulu given they wholesale the product to
Speaker 12: Peloton and they sell it in their stores and online.
Speaker 5: Dolge was about that for what the apparel part.
Speaker 2: Of it means for Peloton, because they were trying to
Speaker 2: make their own kid and basically was out just wasn't
Speaker 2: working out for them.
Speaker 12: It didn't work, the apparel didn't work. It definitely requires
Speaker 12: inventory management, it requires design and talent, It requires an
Speaker 12: infrastructure and sourcing and manufacturing. Take that away with the
Speaker 12: awareness that Lulu has with their apparel brand it with
Speaker 12: Peloton and Lulu Lemon, you have a win win for
Speaker 12: each and at the same time for Peloton it helps
Speaker 12: to increase their presence. Keep in mind, Lulu has around
Speaker 12: thirteen million members compared to Peloton which doesn't have that
Speaker 12: sort of ilk, and as a result, you can basically
Speaker 12: grow the reach. I do not think that Lulu Lemon
Speaker 12: is buying Peloton. I think this is an opportunity for
Speaker 12: Lulu Lemon to continue to track new members and they
Speaker 12: don't have to bother with the digital content, of which
Speaker 12: Peloton has a ton that consumers seem to value.
Speaker 4: And like Dana, I still find the shares reaction weird
Speaker 4: because at the end of this year, Lula Lemon discontinues
Speaker 4: the Mirror. So basically what Peloton gets is access to
Speaker 4: an audience that exists now but won't grow in the future.
Speaker 3: Why is the stock up so much?
Speaker 12: I think the reason why Peloton is up is because
Speaker 12: to be able to partner with Lulu Lemon, a powerhouse
Speaker 12: in terms of fitness, a real differentiator in terms of
Speaker 12: their apparel assortment and the technicality and functionality.
Speaker 5: And keep in mind, with a peril what Lulu is doing.
Speaker 12: You look at accessories, which grew forty four percent on
Speaker 12: top of fifty one percent in the prior quarter. You're
Speaker 12: entering a wider universe with a quality partner that is
Speaker 12: a real solid balance sheet.
Speaker 4: Does this signal anything to you about the value of
Speaker 4: Peloton's content, but how good it is.
Speaker 5: I think it does signal what the value is.
Speaker 12: They have greater instructors, and some of those instructors are
Speaker 12: going to become Lulu brand ambassadors, and they have a
Speaker 12: constantly changing product suite and basically content suite that is
Speaker 12: going to continue the appeal to.
Speaker 5: Lulu members of their app.
Speaker 12: So I think it's a win win for each and
Speaker 12: I think the transition to the Peloton app for Lulu
Speaker 12: members will only expand the platform for each of them.
Speaker 5: How far can Barry McCarthy take this?
Speaker 2: How many more deals, how many inter linking and interwoven
Speaker 2: partnerships can he bring to the table to really inspire
Speaker 2: this pop in the shares a lot?
Speaker 5: And I think he needs a lot.
Speaker 12: I mean, yes, obviously the stock is up today, but
Speaker 12: it's still a long way off from where it had
Speaker 12: been and you're really transitioning into a new normal in
Speaker 12: this post pandemic world. So the way for their content
Speaker 12: to prove value added to a wider audience, I think
Speaker 12: is what he's looking to do and looking for these
Speaker 12: partnerships to increase the value of what Peloton is today
Speaker 12: and what it could be in the future.
Speaker 2: I mean, five hundred million is what I think Lunar
Speaker 2: Lemon spent on Mirror and.
Speaker 5: They basically like wiped it out, They wrote it off.
Speaker 12: It's better to try and fail fast rather than keep
Speaker 12: it going and not continue investing.
Speaker 5: We know where their growth is coming.
Speaker 12: It's coming from international, it's coming from enhanced product and
Speaker 12: now an increased member base too.
Speaker 3: That is organic growth. What about inorganic growth?
Speaker 4: You know you said that you don't think Lulu Lemon's
Speaker 4: going to buy Peloton, but it's always part of the
Speaker 4: conversation someone buying Peloton. Do you see that happening anywhere?
Speaker 12: It'll depend on these partnerships. Who do they partner with.
Speaker 12: What does it add to the value of the company that.
Speaker 5: They're partnering with. That'll be the key.
Speaker 12: And what can Barry McCarthy do in order to create
Speaker 12: a data company and a content company rather than a
Speaker 12: product company. The data has more value than the product,
Speaker 12: and they still have product that they need to move.
Speaker 3: I'm glad you went there.
Speaker 4: I think it's time we asked you, Dana, give us
Speaker 4: your Barry McCarthy scorecard. What do you think of the
Speaker 4: job that he's done.
Speaker 12: I mean he's improving the business by being able to
Speaker 12: partner with a Lulu Lemon. I don't think any of
Speaker 12: us would have seen a Lulu Lemon partnership a year ago.
Speaker 12: So showcasing the value of what the content is and what.
Speaker 5: The member base is.
Speaker 12: Given the similarity and demographic to a Lulu, it's a
Speaker 12: win win. It wouldn't have been here a year ago,
Speaker 12: and that's a proof point.
Speaker 5: That's positive. You still need.
Speaker 12: More on the board because free cash flow break even
Speaker 12: free cash flow is definitely the quantitative scorecard that you
Speaker 12: have to measure in the future.
Speaker 2: It's interesting we all sort of reassessed Peloton and decided, look,
Speaker 2: this isn't a mass market product.
Speaker 5: This is a high end product. It's got more of
Speaker 5: a niche.
Speaker 2: There's a Tonal, there's a Pelaton, there's you know, these
Speaker 2: more unique ways in which we sell. But now it
Speaker 2: feels us as a content company, you're thinking it could
Speaker 2: be more of a mass product.
Speaker 12: Again, it can be because you look at some of
Speaker 12: these floor exercises that you have that you don't need
Speaker 12: product for. We know we're barrier McCarthy comes from. We
Speaker 12: know what he's been doing. Look he's on the board.
Speaker 12: Of instacart also, so he knows what's needed to create value.
Speaker 12: Can he get from here to there in a fast
Speaker 12: enough timeframe is what needs to be seen.
Speaker 4: Is there a future for at home workouts? And the
Speaker 4: reason I asked that is I'm an Equinox member.
Speaker 3: Right.
Speaker 4: They have an agreement with soul Cycle on the content side,
Speaker 4: so you can either go to a human led class
Speaker 4: or you go to the gym and you use a
Speaker 4: library of classes. Peloton's not quite gone there yet. Do
Speaker 4: you think they will?
Speaker 12: It's something certainly they'll examine over time. I don't think
Speaker 12: there's anything that they're not looking at in order to
Speaker 12: extract value. So it's a matter of time, just like
Speaker 12: what we've been seeing with some of these partnerships that
Speaker 12: Barry McCarthy is putting in place.
Speaker 4: All right, Dana Telsey of Telsey Advisory Group, Great to
Speaker 4: have you on the program.
Speaker 3: And what's been a big story.
Speaker 6: We need to win elections, and part of how we
Speaker 6: win elections is reaching the next generation of young Americans
Speaker 6: where they are.
Speaker 10: This is infuriating because TikTok is one of the most
Speaker 10: dangerous social media actions that we could have.
Speaker 4: That was Republican candidate Nikki Haley there criticizing her rival
Speaker 4: Vivit Ramaswami for joining the app TikTok and echoing other politicians'
Speaker 4: concerns around the app's growing role in the US, and
Speaker 4: moments after candidates debated on how best to limit China's
Speaker 4: influence in the US, a commercial break featured an ad
Speaker 4: from TikTok. Ads from the social media platform appeared several
Speaker 4: times throughout the broadcast, with one of them featuring a
Speaker 4: US Navy veteran who goes by the nickname Patriotic Kenny.
Speaker 4: Let's bring in Bloomberg Sarah Friar, our technology editor who
Speaker 4: pretty much leads coverage of social media. Okay, so what
Speaker 4: would the arguments for and against in this debate?
Speaker 13: Well, I think that there's a real problem that politicians
Speaker 13: have here, which is what they want to show that
Speaker 13: they are strong on China, that they have this this
Speaker 13: ability to maintain our national security as a foremost priority.
Speaker 13: But at the same time, they want to make sure
Speaker 13: that they get elected. And if you want to reach
Speaker 13: young voters, you have to be on.
Speaker 4: TikTok, much like halftime at the Super Bowl. You know,
Speaker 4: ads that run in these political debates get seen by
Speaker 4: lots of people. Has anyone actually had anything to say
Speaker 4: about the irony of that since it happened, Well, I
Speaker 4: think that it's.
Speaker 13: It's just it goes to show how critical TikTok is
Speaker 13: right now as part of our cultural infrastructure. I mean,
Speaker 13: this is an app that is that really gains seen
Speaker 13: during the pandemic, but isn't going anywhere. They're only expanding
Speaker 13: their ambitions. They're moving to shopping, going head to head
Speaker 13: with Amazon. We've written about that a bit, and they
Speaker 13: have You've had this pressure from the US government on
Speaker 13: you know, should we blan this app? Should we figure
Speaker 13: out how to put restrictions on them? They had that
Speaker 13: partnership with Oracle, but that criticism has slowed down. The
Speaker 13: government has bigger problems. They have a potential shutdown coming
Speaker 13: this weekend. So I think that that TikTok is now like, hey,
Speaker 13: we need to use this opportunity to advertise to US consumers.
Speaker 13: We are gonna be part of the twenty twenty four election.
Speaker 13: And that's what that's what we're going to try to
Speaker 13: take advantage of.
Speaker 4: Caroline when we cover the news with TikTok, it's regulation,
Speaker 4: it's the relationship with China, but out in the real
Speaker 4: world across America, tens of millions of people use TikTok
Speaker 4: and they love it.
Speaker 2: Yeah, one point seven billion people use it across the world.
Speaker 2: And so to that point, has the growth at any
Speaker 2: point showed any deterioration, Has it at any point seen
Speaker 2: that us have pushed away against the app?
Speaker 13: Well, I think that we continue to see growth here.
Speaker 13: One struggle that TikTok recently faced is actually in Indonesia,
Speaker 13: which is a place where it is extremely popular, but
Speaker 13: the government is starting to take a concern. They said
Speaker 13: that now TikTok cannot as they expand their shop tool there,
Speaker 13: they actually can't directly connect collect payments through the app,
Speaker 13: so that really hampers their ability to expand there. So
Speaker 13: I think when resistance to TikTok's growth does come, it
Speaker 13: comes in the form of government resistance, and I think
Speaker 13: there's going to be more of that for this particular app,
Speaker 13: just because of its Chinese based ownership. It's a little
Speaker 13: it gets a little bit more of a microscope, a
Speaker 13: little bit more scrutiny than the other apps. And those
Speaker 13: Republican candidates would tell you that's for good reason.
Speaker 2: And talk to us a little bit more about the
Speaker 2: e commerce play here, And we had Matt Mahiney on
Speaker 2: a little bit earlier in the show, and he's been
Speaker 2: putting out a note on Amazon, the opportunity to buy
Speaker 2: into that stuck after its dip, but also some of
Speaker 2: the competition wheel of false coming from the Timus and
Speaker 2: the Tiktoks of this world. How much of a pressure
Speaker 2: do you think it will be from an e commerce perspective, Well, we.
Speaker 13: Had the scoop here at Bloomberg on the Black Friday
Speaker 13: campaign that TikTok is planning.
Speaker 3: They're going to give really steep.
Speaker 13: Discounts on TikTok for for their for their goods, and
Speaker 13: they're going to make it really easy for merchants. They're
Speaker 13: essentially paying for merchants to to have visibility on the
Speaker 13: app and not have the same kind of fees that
Speaker 13: they have when they list on Amazon. Whether that's going
Speaker 13: to work to migrate consumers to do their Black Friday
Speaker 13: shopping or holiday shopping on TikTok, I don't know, but
Speaker 13: it certainly is the most significant run up against Amazon
Speaker 13: that we've seen in the US in a while, and
Speaker 13: they do have the budget to make it happen.
Speaker 5: Because now I won.
Speaker 2: Like, just as the FTC is really pounding the anti
Speaker 2: competitive table.
Speaker 5: These competitive edges seem to keep coming in.
Speaker 2: Sarah fra, We thank you so much just really drilling
Speaker 2: down on the world of TikTok me.
Speaker 5: While that doesn't to this edition of New Technology.
Speaker 4: Yet, yeahcap on the podcast. Listen to everything we discussed
Speaker 4: across the news and the world of technology on.
Speaker 3: Apple, Spotify, iHeart, and of.
Speaker 4: Course across all of our Bloomberg platforms. More to come
Speaker 4: from San Francisco and New York City. This is Bloomberg