Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed loud Love.
Speaker 3: And Caroline Heide Bloomberg's world headquarters in New York and
Speaker 3: AURM Ed Lodlow in San Francisco. This is Bloomberg Technology
Speaker 3: coming up.
Speaker 4: Amazon CEO Annie Jase He says that general to AI
Speaker 4: boom is going to be.
Speaker 5: Built on Amazon Web Services.
Speaker 4: Or we need the takeaways from his annual letters.
Speaker 3: To shareholders class technology heavyweights to send on Washington for
Speaker 3: the White House steak dinner with big names like Jeff
Speaker 3: Bezos and Tim Kirk attending a lavish event and.
Speaker 4: Open AI CEO Sam Altman pictures a global AI coalition
Speaker 4: on his visit to the Middle East.
Speaker 5: Next stop.
Speaker 4: Maybe we see him over on Capitol Hill too. We'll
Speaker 4: discuss that and so much more throughout this hour. But Ed,
Speaker 4: we start on these markets up a quarter of a
Speaker 4: percentage point currently NASDAK managing.
Speaker 5: To put itself off of its lows.
Speaker 4: This is we once again really tackle inflationary pressures. Whether
Speaker 4: it's a PPI number coming after the CPI print yesterday,
Speaker 4: both showing inflationary pressures just start dialing up that little bit.
Speaker 4: And we're seeing though, managing the NASDAK to outperform as bomb.
Speaker 5: Markets actually pull back a little bit. I'm looking at
Speaker 5: the two year yield.
Speaker 4: We're outperforming on the front end of the curve, whereas
Speaker 4: the back end, the tenure yield, for example, you'll still
Speaker 4: pushing higher. But really the big move was yesterday, and
Speaker 4: looking at what's happening in the euro it's not just
Speaker 4: all about the Federal Reserve. It's about global world banks
Speaker 4: at the moment, central.
Speaker 5: Banks that is.
Speaker 4: And we're looking at what the ECB said, look staying
Speaker 4: pat as many had anticipated in terms of interest rates,
Speaker 4: but signaling that inflationary pressures are dialing down across the Atlantic,
Speaker 4: and therefore could we see cuts coming or off by
Speaker 4: three tens percent versus the US dollar.
Speaker 5: Moving on, look at what else is performing versus the
Speaker 5: US dollar. Crypto I'm down.
Speaker 4: By two tens percent on bitcoin at the moment, just
Speaker 4: sub that seventy thousand dollars level.
Speaker 5: But what are you watching on the micro.
Speaker 3: There are a lot of stories to fit in today.
Speaker 3: Apple's a name that we're going to look at later
Speaker 3: in the program with Bloomberg's Mark German rough eight tens
Speaker 3: one percent. Early unionization efforts are kind of the main headline.
Speaker 3: But there is a note from JP Morgan analysts that
Speaker 3: say that hedge funds are now looking at this stock
Speaker 3: and considering what happens next with artificial intelligence in the
Speaker 3: context of value add iOS and the handset. Hard to
Speaker 3: know what the driver is, if any at all, but
Speaker 3: we hire eight tens to one percent, and given its
Speaker 3: market capitalization, we always pay attention to Apple because if
Speaker 3: its waiting on major indices. There is an annual shareholder
Speaker 3: letter plus AI theme in today's show. I am very
Speaker 3: excited about it. JP Morgan is down nine tens to
Speaker 3: one percent Monday night. I know I wasn't here earlier
Speaker 3: in the week. Put the shareholder letter out and says AI,
Speaker 3: and we're going to talk about the numbers behind that.
Speaker 3: I think it's really interesting, so to Amazon up three
Speaker 3: tens to one percent Andy Jasse's annual letter. The focus
Speaker 3: about AI is interesting specific aws. Amazon is going to
Speaker 3: be a facilitator, a place where AI is built by others,
Speaker 3: maybe not building so much generator of AI themselves. That's
Speaker 3: the story you and I have told quite a lot
Speaker 3: in recent weeks and months.
Speaker 5: We are long shareholder letters.
Speaker 4: Let's dig in with punam Call and BLUEBG Intelligence and
Speaker 4: Ed just puts it so eloquently there. Ultimately, they want
Speaker 4: to be at the very heart the infrastructure of generative AI. Yes,
Speaker 4: they will build a substantial number of GENAI applications ourselves,
Speaker 4: but they're looking to others to build.
Speaker 6: Yes, you're absolutely right.
Speaker 7: You know, right now Amazon lags Microsoft when it comes
Speaker 7: to AI because Microsoft has access to the open AI. However,
Speaker 7: as they build these building blocks going forward, they can
Speaker 7: close that gap over time. So we think the investment
Speaker 7: is right. We think the time is right, and generator
Speaker 7: of AI will not only help fueld the AWS business,
Speaker 7: but also it's e commerce marketplace business where it will
Speaker 7: help drive sales higher.
Speaker 3: Pun and what we're talking about specifically is I think
Speaker 3: and you can go to Bedrock if you're a very
Speaker 3: large enterprise player or a smaller startup and build your
Speaker 3: own large language model, you can take advantage of a
Speaker 3: third party large language model. Caroline and I have spoken
Speaker 3: to Anthropic, for example Daniella m O'Day, and she talks
Speaker 3: about all the.
Speaker 6: Business they're winning through AWS.
Speaker 3: Bedrock What I don't know is Amazon's cloud business AWS
Speaker 3: actually gaining new customers, gaining growth or market share because
Speaker 3: of their strategy with Bedrock.
Speaker 7: Yeah, I think you know, over time they will gain
Speaker 7: new customers. It's just a matter of getting these large
Speaker 7: language models developed and them getting the customers interested. But
Speaker 7: we do think their scope for Amazon to continue to
Speaker 7: gain in that vertical.
Speaker 4: What's interesting is well Google's event earlier this week, Cloud Event,
Speaker 4: and they were really saying that it's startups that are
Speaker 4: coming to them for cloud. How much, ultimately do companies.
Speaker 5: Diversify, not go all in with one player.
Speaker 7: I think diversification will happen across the board. It depends
Speaker 7: on what you're using and where you want to be.
Speaker 7: Amazon has done a great job in attracting not just
Speaker 7: the startups but also established businesses, So.
Speaker 5: We think the scope is wide.
Speaker 7: We do think they're in the early innings of this,
Speaker 7: and we do think right now they lag, but that
Speaker 7: doesn't mean that they'll lag for a long time.
Speaker 6: Let's talk about Andy Jesse.
Speaker 3: He comes from AWS, that was his world, but the
Speaker 3: story since he's taken the helm of Amazon has been
Speaker 3: about cost discipline. In fact, don't even call it discipline pooa,
Speaker 3: let's call it what it is, cutting cost lowering CAPEX.
Speaker 3: And when I read the letter, he seems committed to that.
Speaker 6: Still, yes, he does.
Speaker 7: In fact, you know, they've been highlighting since last quarter
Speaker 7: about the forty five cent reduction that they've had per
Speaker 7: unit in their cost basis, and they think they can
Speaker 7: press the pedal harder on that this year, largely as
Speaker 7: they base GLEE streamline their inbound fulfillment, and they parse
Speaker 7: out packages more efficiently to those regional distribution centers that
Speaker 7: allow for SIND delivery.
Speaker 3: Clunamgyle of Bloomberg Intelligence one of our analysts that leaves
Speaker 3: coverage of this stock, and we're really grateful to have
Speaker 3: you in reaction. Meanwhile, Amazon founder Jeff Bezos joined tech
Speaker 3: heavyweights last night at the White House state dinner hosted
Speaker 3: by President Biden for Japan's Prime Minister Fumiyo Kashida. Attendees
Speaker 3: included Bezos's fiance Lawrence Sanchez, Apple CEO Tim Cook and
Speaker 3: executive Lisa Jackson. Microsoft president Brad Smith was Intendants as
Speaker 3: a well, and actor Robert de Niro. Even vent capitalists
Speaker 3: including Robert Stavius of Bessemer Venture Partners. You also had
Speaker 3: Jamie Diamond, Massa Sun and John Gray of Blackstone and Caro.
Speaker 3: For me, the story is pretty clear here. Japan important
Speaker 3: for technology and the economy and more.
Speaker 4: Broadly for big get togethers of some important players, no
Speaker 4: matter where they tend to be based. I mean, this
Speaker 4: is where certain conversations had, deals are done. How many
Speaker 4: are having intimate conversations with the Prime Minister of Japan.
Speaker 4: But more broadly, I liked his Star Trek reference as well.
Speaker 4: If you heard some of the commentary coming out of
Speaker 4: the Leader of Japan, he was sort of going to
Speaker 4: go boldly where no one has been before in terms
Speaker 4: of deepening the US Japanese relationship.
Speaker 5: But this is more broad, isn't as well?
Speaker 4: I mean, there's a delightful menu that they managed to
Speaker 4: be having triage Raby state not bad. But this is
Speaker 4: also about deepening ties. But not just from an economic perspective.
Speaker 4: We've got to think of this from a geopolitical perspective,
Speaker 4: and notably what's happening with the Philippines coming in at
Speaker 4: the moment, and indeed what this means for China US relations.
Speaker 3: Yeah, I go straight to China when the CEOs turn up.
Speaker 3: You know that that market is important, right, whether it's
Speaker 3: for supply chain or the economy direct.
Speaker 6: So let's bring up menu back up.
Speaker 3: That is contemporary modern American Japanese fusion.
Speaker 6: That looks great.
Speaker 3: But there's also a political element to this as well,
Speaker 3: that Biden had a lot of big names in the
Speaker 3: White House in an election year.
Speaker 4: Character Yeah, I think that is really notable and ultimately
Speaker 4: trying to ensure that the economy is what Biden can
Speaker 4: hang his hat on as well. Many worrying about the
Speaker 4: inflationary pressures that were garnered yesterday and they did what
Speaker 4: this really means for Biden Bidenomics and the lack thereof
Speaker 4: but tech heavyweight really clear and present when it comes
Speaker 4: to relationships with US and Japan.
Speaker 5: JP Morgan.
Speaker 4: It kicks off earning season Banks they are at the
Speaker 4: start of them hammers tomorrow and earlier this week. Just
Speaker 4: remember we heard from the CEO Jamie Diamond in his
Speaker 4: annual letter to shareholders where he focused mainly on artificial
Speaker 4: intelligence joining us now to discuss how banksy utilizing the
Speaker 4: technology investing in it.
Speaker 5: Evidence CEO Alexandra was a Visita is with us.
Speaker 4: Evidence is an intelligent platform that really benchmarks attracts AI
Speaker 4: adoption across financial services sector.
Speaker 5: And JP Morgan is the standout performer.
Speaker 4: Alexandra, you think that's in some way akin to the
Speaker 4: performance of the bank.
Speaker 8: Can it stop more broadly, Yeah, well, thank you so
Speaker 8: much for having me on Caroline and ED. But its
Speaker 8: performance is incredibly strong in terms of its AI maturity,
Speaker 8: its head and shoulders above other banks. It was early
Speaker 8: to the game. Jamie Diamond made AI a focus for
Speaker 8: the banks six years ago, where he made clear that
Speaker 8: it was going to be an AI first organization and
Speaker 8: from that followed a lot of initiatives like establishing a
Speaker 8: research lab, you know, doubling down on hiring AI talent,
Speaker 8: reorganizing the EXAC team, and that really has paid off
Speaker 8: and you see, well, according to our measurements, you can
Speaker 8: see that they sort of really stand out against other
Speaker 8: banks and are incredibly strong on AI capabilities.
Speaker 3: We've been looking at the data behind JP Morgan's AI hiring.
Speaker 3: You just made a really interesting point, which is six
Speaker 3: years ago this all started.
Speaker 6: Let's show the chart.
Speaker 3: There's the AI hype of twenty two, twenty twenty three,
Speaker 3: but if you track the.
Speaker 6: Hiring and what's so interesting.
Speaker 3: The title of that chart is JP Morgan slows AI hiring.
Speaker 3: But look how elevated it was in twenty twenty two
Speaker 3: and it started back in twenty twenty. What do you
Speaker 3: make of that about how ahead of the curve or not?
Speaker 3: So to speak, JP Morgan.
Speaker 8: Is Yeah, I mean, I mean, first of all, it's
Speaker 8: a really important point that you make it in terms
Speaker 8: of the hype in twenty two and twenty three of
Speaker 8: AI and sort of what we're heading into is more
Speaker 8: of a let's sort of see what gets through production.
Speaker 2: It's much harder.
Speaker 8: Than we think, and sort of the use cases going
Speaker 8: from ideation to production just takes a little longer, and
Speaker 8: some of that slow down and hiring is also a
Speaker 8: little bit of a let's what talent do we actually need?
Speaker 8: But when you look at that chart, you can see
Speaker 8: that really being on a hiring tear from for the
Speaker 8: last sort of six seven years. And you know, the
Speaker 8: proportion of AI talent and the caliber of AI talent
Speaker 8: in the bank is second to none. So right now
Speaker 8: a lot of the banks are looking at like where
Speaker 8: you know, the onset of using you know, genitive AI,
Speaker 8: Where are we using it in the bank? Which which
Speaker 8: platforms are we going to use, whether it's open AI
Speaker 8: or Mistral or hugging face, which one of those, How
Speaker 8: does it fit into our particular needs and how do
Speaker 8: we refine it so so it gives us the best
Speaker 8: output possible. So there is a bit of a let's
Speaker 8: see what we can use internally of our AI talent
Speaker 8: that can you know, can help us, you know, refine
Speaker 8: that and before we sort of accelerate again, uh, and
Speaker 8: think about what we hire externally. But it should should
Speaker 8: also be noted that when you sort of look across
Speaker 8: the banking sector, even the banks that have cut employees
Speaker 8: have sort of tried to keep the AI talent sort
Speaker 8: of relatively steady, if not increasing.
Speaker 4: Talking of talent, of course, within that shareholder letter was
Speaker 4: the demonstration and their commitment to elevating almost exs level
Speaker 4: the discussion around AI, and they mention the importance in
Speaker 4: creating that new position Chief Data and Analytics Officer that
Speaker 4: sits in the operating committee. That person over at JP
Speaker 4: Morgan is indeed Teresa heightens Ritter, who I was lucky
Speaker 4: enough to speak to at an evident event, and it's
Speaker 4: notable that she has been galvanizing the focus on sort
Speaker 4: of from top down ensuring that all talent are online
Speaker 4: with where AI can really bring about a change in productivity,
Speaker 4: Where are they seeing it and drive down in costs?
Speaker 5: Where are they passing this on to the user of
Speaker 5: JP Morgan.
Speaker 8: Yeah, when it comes to well, first of all, when
Speaker 8: it comes to driving the use of AI and where
Speaker 8: you sort of look at the letter as really talking
Speaker 8: about gaining efficiencies and really making the banks sort of
Speaker 8: strong and lean and robust forwithstanding sort of any macro
Speaker 8: challenges on you know, in the future, So looking at
Speaker 8: driving down the costs and bringing up efficiency and bringing
Speaker 8: up productivity, and AI being used to also see where
Speaker 8: you can elevate revenues.
Speaker 5: Is it's whereas that it's sort of.
Speaker 8: In every newk and cranny of the bank looking at
Speaker 8: sort of the ways that it can create that return
Speaker 8: on investment. And then you know, with the AI tools
Speaker 8: that then gets passed on to the customer and you
Speaker 8: know in better customer management, you know experiences if time and.
Speaker 3: To Alexandra, do you think Jamie Diamond has a good
Speaker 3: understanding of artificial intelligence?
Speaker 6: He himself, he is.
Speaker 8: Nick He saw it very early. He knew it was
Speaker 8: going to be very impactful. He was one of the
Speaker 8: first CEOs bank CEOs to go out and and say
Speaker 8: we are changing. We are going to be an AI
Speaker 8: company or an AI first company, where many banks would
Speaker 8: be we're going to be great banks and using AI
Speaker 8: to become a little bit better bank. He was a
Speaker 8: visionary with that. I think he has a good understanding.
Speaker 3: Yes, he's more upbeat about it than he is about Bitcoin.
Speaker 3: Alex and Mussa Visita. It's great to have you, of evident.
Speaker 3: Of course, now EU's top tech regulator, Margareta ves Thea
Speaker 3: says AI could be as disruptive as the atomic bomb.
Speaker 3: The Executive Vice President of the European Commission joined Bloomberg
Speaker 3: earlier today to talk about the current state of AI.
Speaker 9: It's top of mind for us to make sure that
Speaker 9: the market stays competitive. When everything gets fueled by artificial intelligence,
Speaker 9: it's going to change the marketplace.
Speaker 10: Do you have a timeline at all, Commissioner, when we
Speaker 10: could potentially see.
Speaker 11: Some movement on this.
Speaker 6: No, we don't have a fixed timeline.
Speaker 9: Of course, we want to produce results as fast as possible,
Speaker 9: also for the involved companies for their benefit. We'll be
Speaker 9: getting there soon, I think.
Speaker 12: So we're talking about Microsoft and open Ai, but of
Speaker 12: course they're not the only players. To hear, you have
Speaker 12: Amazon actually with a big almost three billion dollar investment
Speaker 12: into Anthropic, which of course competes with OpenAI.
Speaker 11: What do you make of that?
Speaker 12: Is that something that you're looking at as well?
Speaker 9: Well? We will be having, you know, a vigilant, keen
Speaker 9: attention to what is happening in this field. We see
Speaker 9: a lot of entrenched market power when it comes to technology,
Speaker 9: and it's really important that now when we have technology
Speaker 9: which is not just a new technology, it's it's basically
Speaker 9: a new world that we're looking into, that we make
Speaker 9: sure that it's a competitive new world.
Speaker 10: You just recently under the DMA went after three big
Speaker 10: US tech companies, and to be honest, Commissioner, three is
Speaker 10: a crowd. I'm really curious to know which of these
Speaker 10: you are honing in on. And because a lot of
Speaker 10: people really seem to think it's Apple, where the EU
Speaker 10: has a lot of problems with.
Speaker 9: Well, what's the point of the Digital Markets Act is
Speaker 9: to open the market to make sure that that more
Speaker 9: businesses can can get to their customers so customers have
Speaker 9: more choice. So obviously we are looking at getting out
Speaker 9: of self preferencing so that you do not if your
Speaker 9: for instance, have a Google search and you do not
Speaker 9: just get a Google products. And we're looking at how
Speaker 9: businesses can get a real relationship with their customers. So
Speaker 9: to get rid of the ends is staring that we
Speaker 9: see quite a lot and people have choice is they
Speaker 9: want to stay in the Apple payment environment or they
Speaker 9: want to have a direct and sometimes cheaper relationship with
Speaker 9: their service provider.
Speaker 12: Well among those three Apple, Google and Meta, do you
Speaker 12: have a priority target?
Speaker 9: Well, we have opened these five cases because we think
Speaker 9: these are very important.
Speaker 11: We may have more cases in the.
Speaker 9: Pipeline, so we have given retaining orders for what may
Speaker 9: be evidence once we're moving forward. These five cases, they
Speaker 9: are all priority. We think that they are absolutely key
Speaker 9: if our suspicions are confirmed that we get compliance because
Speaker 9: this is this is what opens the market, and that's
Speaker 9: the basic idea. Are the Digital Markets Act for many
Speaker 9: more businesses to have a fair chance to get to
Speaker 9: their customers.
Speaker 6: Okay, time for talking tech and first up.
Speaker 3: KKR is said to be reviewing options of a sale
Speaker 3: or an IPO for BMC software, which could be worth
Speaker 3: as much as fifteen billion dollars including debt. That's according
Speaker 3: to sources. While no final decisions have been made, KKR
Speaker 3: is favoring an IPO of BMC, which filed confidentially last
Speaker 3: year with the SEC for a listing. Plus French chip
Speaker 3: materials company Seutech is said to be considering building a
Speaker 3: factory in the United States, following in the footsteps of
Speaker 3: one of its biggest customers, TSMC, as it expands from
Speaker 3: Arizona to Texas. With government incentives, The consideration would mean
Speaker 3: that Stech would add to its global factory facilities alongside Singapore, Belgium,
Speaker 3: and France, and positions the company for growth outside of
Speaker 3: China and Saudi Arabia and the UAE are racing for
Speaker 3: AI dominance, rushing to build out expensive data center infrastructure
Speaker 3: to help support the technology. Both countries lag behind Western
Speaker 3: Europe in terms of data center capacity, with hopes of
Speaker 3: closing that gap in.
Speaker 11: A few years.
Speaker 3: In a recent report by PwC, it estimated that AI
Speaker 3: will contribute nearly ninety six billion dollars to the UAE
Speaker 3: and one hundred and thirty five billion to Saudi Arabia's
Speaker 3: economy by twenty thirty.
Speaker 5: Caroline That was a great business sweep piece.
Speaker 4: Meanwhile, let's just talk about employees over in an Apple
Speaker 4: store in Shorthills, New Jersey, just petitioned to unionize. It's
Speaker 4: marking the first lutch effort that we've seen it in
Speaker 4: about a year long lull of news around this. Bloomberg's
Speaker 4: Mark German just going to remind us of the context
Speaker 4: when it comes to Apple, because they're not the first
Speaker 4: store that's looking to unionize.
Speaker 13: Yeah, no, that's a great point.
Speaker 14: The Apple unionization efforts really kicked into high gear right
Speaker 14: in the.
Speaker 13: Middle of the COVID pandemic. In twenty twenty two.
Speaker 14: You saw their retail store in the Towson area of
Speaker 14: Maryland petition to unionize.
Speaker 13: They successfully unionized.
Speaker 14: Are now recognize is a unionized Apple retail store. The
Speaker 14: Penn Station store and a mall in Oklahoma City, Oklahoma
Speaker 14: is a unionized store. So those two are the only
Speaker 14: two unionized stores. But there have been a few other
Speaker 14: stores that attempted, one in Saint Louis, Missouri, one in Atlanta, Georgia.
Speaker 13: Those fell apart.
Speaker 14: One of those unions even chastised the union company and
Speaker 14: ended up siding with Apple. Now you have another store
Speaker 14: joining in and that is the Short Hills mall store
Speaker 14: and upscale area in New Jersey. And at this point
Speaker 14: it's still early. They've petitioned, they have one hundred and
Speaker 14: four employees that would be part of the union. There
Speaker 14: still needs to be a vote. They still need to
Speaker 14: get to the bargaining table with Apple.
Speaker 13: But this is the process.
Speaker 14: And so this was a major development petitioning publicly stating hey,
Speaker 14: we are trying to unionize.
Speaker 13: So this is a big deal. The fifth store that
Speaker 13: we know of to attempt.
Speaker 3: They are trying to unionize. This is a path trodden
Speaker 3: by Amazon. You know, Caroline and I've kind of been
Speaker 3: through a similar story arc with that company.
Speaker 6: But I guess the next question.
Speaker 3: At all smart, what is Apple's attitude towards unionization the
Speaker 3: company's approach.
Speaker 14: Well, the company is completely against unionization. They've been holding
Speaker 14: roundtables at the Short Hills, New Jersey store for months
Speaker 14: now pushing back on the idea of that team unionizing.
Speaker 14: They don't want to have to change their perks, their benefits,
Speaker 14: their pay strategy. You know, Apple is a company that
Speaker 14: wants things to be consistent and completely under their control.
Speaker 13: Unionization upsets that.
Speaker 14: Finely tuned balance the company has enjoyed for as long
Speaker 14: as it has under Tim Cook and Steve Jobs before him,
Speaker 14: So certainly this is not something that Apple wants. I
Speaker 14: think they're fairly happy that out of the two hundred
Speaker 14: and seventy and change retail stores in the US, only
Speaker 14: two have successfully unionized, and of those two, they haven't
Speaker 14: given them anything.
Speaker 6: Blamebak's chief correspondent Motgum and thank you.
Speaker 3: Welcome back to blame Bags ten Lovelow here in San
Speaker 3: Francisco and Caroline Heid and New York.
Speaker 4: I've got to check on the markets for you, Ed,
Speaker 4: because right now, no, we're actually seeing NAZAC and tech
Speaker 4: stocks outperform on a day where bon yields are still
Speaker 4: selling off on the end of the curve, so ten
Speaker 4: yure yields are seeing four basis points to the higher.
Speaker 5: We are still trying to.
Speaker 4: Debate the inflatory pressures we have PPI today, CPI yesterday,
Speaker 4: still showing inflation is kind of going the wrong direction
Speaker 4: for the Federal Reserve. If banking on a cup come June,
Speaker 4: people starting to take those bets off the table. We're
Speaker 4: seeing Bitcoin under pressure just by two tens percent, where
Speaker 4: of sixty nine thousand s.
Speaker 5: It's around sixty five.
Speaker 4: We're basically kind of treading water ahead of earning season
Speaker 4: as well, the banks kicking off tomorrow. Moving on to
Speaker 4: some individual movers, I mean interesting on the upside, A
Speaker 4: lot of the key names are used to Nvidia, Apple, indeed,
Speaker 4: even Amazon and a new record high today after its
Speaker 4: shareholder letter.
Speaker 5: I want to shine on an Atlassian.
Speaker 4: It's getting an upgrade from analysts thinking that now is
Speaker 4: the time to be buying into this enterprise focus software company.
Speaker 5: So up more than three percent. Tesla though once again languishing,
Speaker 5: pulling back.
Speaker 4: In fact, you noted that Rivian shares performing as much
Speaker 4: as seven percent to a record lows. Some reports that
Speaker 4: Ford is cutting its evil prices. Elon Musk apparently looking
Speaker 4: at India. Maybe we'll get some updates on supply and
Speaker 4: in team demand coming from that country. Adobe, though, want
Speaker 4: to watch interesting reporting coming out on basically how expensive
Speaker 4: it is sometimes to be training your large language models
Speaker 4: and text to video in particular, and where you're getting
Speaker 4: some of those videos from.
Speaker 5: We want to dig in on Nado.
Speaker 4: We've just done a pressure by about percentage point today,
Speaker 4: but looking like it is really trying to take on
Speaker 4: the likes of Saura. Of course open aiyes product when
Speaker 4: it comes to AI video generation, apparently offering it's network
Speaker 4: of photographers and artists get this one hundred and twenty
Speaker 4: dollars to submit videos of people engaged in everyday actions, walking,
Speaker 4: expressing emotions, joy, anger, according to documents all seen by Bloomberg.
Speaker 4: Let's just get more of our own reporter Brady Ford,
Speaker 4: who helped break this story. And it is notable that
Speaker 4: they're playing a bit of catch up here with text
Speaker 4: to video. But where they don't have to play so
Speaker 4: much catch up is where they train their data.
Speaker 5: You'd have thought, but maybe they have to pay a
Speaker 5: bit extra.
Speaker 11: Yeah, it's a funny dynamic.
Speaker 15: So they have this giant repository of they've been using
Speaker 15: to train their photos. They got like three hundred million photos,
Speaker 15: not as big of a deal when it comes to
Speaker 15: the video. They don't have quite as much of that
Speaker 15: in the stock libraries. So we see now that they're
Speaker 15: starting to procure data to be able to train on.
Speaker 15: And it's really funny kind of videos, right. It's like
Speaker 15: some of the sample videos is people smiling, people frowning,
Speaker 15: picking up weights, right, training these AI models on how
Speaker 15: people really interact with the world.
Speaker 5: I like them thing we're all really fit.
Speaker 15: Yes, they think we're all very fit, or they don't
Speaker 15: even have any videos of us doing it so they
Speaker 15: know we're not right. But yeah, so they really need
Speaker 15: these videos to help their model understand how the world
Speaker 15: works and so that they can, you know, not get
Speaker 15: smoked by open AI.
Speaker 3: Mate two dollars sixty two cents per minute or as
Speaker 3: high as seven dollars five cents per minute, based on
Speaker 3: your reporting good reporting. If you're the CFO or COO
Speaker 3: of Adobe, and that's before you facturing compute costs, you're
Speaker 3: not going to be thrilled about the cost of training
Speaker 3: a model like the Economic Sphere are actually newsworthy.
Speaker 6: This is a surprise.
Speaker 15: So it's not quite as high as it may sound like, right,
Speaker 15: because it's one hundred and twenty dollars for one hundred
Speaker 15: short videos.
Speaker 9: Right.
Speaker 11: I was trying to do the math of if I wanted.
Speaker 15: To create this, it's going to take you a good
Speaker 15: five six hours to make all these videos doing push ups,
Speaker 15: then cooking and smiling and frowning. I mean, the actual
Speaker 15: amount they're paying ends up being pretty low. And you
Speaker 15: could say that all. I mean, they could scrape the
Speaker 15: open Internet for free, but we know that there are
Speaker 15: issues there with tagging the videos correctly getting the exact
Speaker 15: quality you need. So I mean these are things they
Speaker 15: might need to procure once, but they can continue to
Speaker 15: train on. So, Yes, it is a material amount of
Speaker 15: money in the grand scheme. It's not like they're selling
Speaker 15: out a ton to every creator though.
Speaker 4: I mean all of this comes within the context of
Speaker 4: Sora and where it got data, right, yeah.
Speaker 13: Right.
Speaker 15: We also have that viral clip of the open Aic saying, oh,
Speaker 15: we don't know where it was trained, but right, we
Speaker 15: all kind of know where it was trained, right, And
Speaker 15: I mean that's been Adoby's whole marketing pitch that we're
Speaker 15: going to try to do things the right way.
Speaker 11: We're going to only use sources that we have true
Speaker 11: access to.
Speaker 5: You're not going to get done in the courts. Basically,
Speaker 5: you're going to get sued.
Speaker 13: You're not.
Speaker 15: They literally say, yeah, if you get sued, we're going
Speaker 15: to be there with you.
Speaker 11: We'll see you in court, we'll back you up.
Speaker 15: Will that end up holding them back? Will that end
Speaker 15: up casting more than it needs to? It is yet
Speaker 15: to be seen. But that's at least their public message
Speaker 15: at this time.
Speaker 3: Bloomberg's Brady Ford, I think you're always on top of
Speaker 3: it when it comes to Adobe, Thank you now. Open
Speaker 3: AI CEO Sam Outman has been working to build a
Speaker 3: global coalition among government and industry leaders to support boosting
Speaker 3: the supply of chips, energy and data center capacity that's
Speaker 3: needed to develop artificial intelligence technology. That's according to our
Speaker 3: sources and Bloomberg Shreen Gafari broke that story with me
Speaker 3: and joined me on set. This is kind of an
Speaker 3: evolution of our existing reporting, right. It started with this
Speaker 3: idea that Sam Outman was worried about the supply long
Speaker 3: term of AI accelerators or the GPUs, the train models,
Speaker 3: and later inference it's bigger.
Speaker 6: Now, just recap for audience what.
Speaker 16: You and I have learned, right, So we know now
Speaker 16: that Sam Maltman has been in the UAE this week
Speaker 16: meeting with government officials, with investors, and the pitch is
Speaker 16: to build some kind of global coalition that goes beyond
Speaker 16: just manufacturing chips, but actually into also things like energy production,
Speaker 16: which is a huge and growing resource for them that
Speaker 16: they're quite worried about securing.
Speaker 3: What's interesting here is the players. You know, we have
Speaker 3: some understanding that Sam met with UAE officials. G forty
Speaker 3: two is a name that gets bandied round, But do
Speaker 3: we know who's in this coalition so far?
Speaker 5: So we know the pitch is that it's worldwide.
Speaker 16: Sam is traveling to Washington, DC today right to meet
Speaker 16: with people on Capitol Hill, national security leaders, so we
Speaker 16: know that, you know, he's talking to US leaders as well,
Speaker 16: but we also know that he's talking to He has
Speaker 16: in the past talking to leaders of several Western countries
Speaker 16: and democracies, and so the pitch goes beyond just the
Speaker 16: Middle East.
Speaker 4: For sure, it's going to resonate with law makers. It's
Speaker 4: got to resonate with the supply chain more sure. And
Speaker 4: we're seeing a lot of money being spent by the
Speaker 4: US government trying a law offshore chip makers manufacturers fabs
Speaker 4: ultimately coming from TSMC.
Speaker 5: There's much reporting on whether Samsung is going to.
Speaker 6: Be here as well.
Speaker 4: Digging in deeper, how much is he talking to Corporate
Speaker 4: America and corporations more broadly as well?
Speaker 16: Just because this doesn't happen even night right, I mean,
Speaker 16: I think this conversation is going to go beyond open
Speaker 16: an eye to other industries. I don't think you know,
Speaker 16: you don't want the pitch to sort of just focus
Speaker 16: on one company, but rather on building out the capabilities
Speaker 16: for industry as a whole. So that's what I'm under
Speaker 16: seeing the discussion to be at these times.
Speaker 4: It's a brilliant reporting from both you and ED and
Speaker 4: we'll see what that conversation ends up looking like on
Speaker 4: Capitol Hill as well.
Speaker 5: I'm sure you're reporting on that too, Sharon Guffrey. We
Speaker 5: thank you so much.
Speaker 4: I meanwhile, coming up, pitch Book out with its latest
Speaker 4: report into the health of the VC industry.
Speaker 5: May readging into the pitch Book analyst Kyle Stamford that's next.
Speaker 4: This is Blue made Technology. Let's just talk about private
Speaker 4: markets a little bit. Fundraising they're in beginning of twenty
Speaker 4: twenty four met with some actual residual optimism, but that
Speaker 4: did not translate into meaningful growth in VC activity. That's
Speaker 4: all according to Pitchbook's latest Venture Monitor report, and it
Speaker 4: highlights the competition for capital remains a fierce two years
Speaker 4: into a slowdown, and while stronger companies might still be
Speaker 4: able to compel investment, the same is.
Speaker 5: Not true for those that are kind of struggling.
Speaker 4: Carl Stamford with please to say, leads US Venture capital
Speaker 4: research over at Pitchbook and joins us. And so it
Speaker 4: really feels like a tailor that haves and the have not.
Speaker 4: If you're an AI dialing, you're able to reap it in.
Speaker 4: If you're not, and you're not managing to grow revenue
Speaker 4: and indeed profitability and count yourself out.
Speaker 1: Yeah, but I mean at some point that's where this
Speaker 1: market should be, right, I mean, we're looking at high
Speaker 1: risk investments, companies that should be growing fast, being able
Speaker 1: to get their their product and market and eventually exit
Speaker 1: down the line.
Speaker 2: Fifty five thousand companies.
Speaker 1: Are currently VC backed in the US market, you know,
Speaker 1: one hundred and twenty thousand or so globally. That's a
Speaker 1: huge number of companies that still are fighting through similar trajectory,
Speaker 1: similar sectors, and fighting for that capital that's just not
Speaker 1: there anymore.
Speaker 6: Okay.
Speaker 3: I am hearing and seeing things that the data doesn't show.
Speaker 3: For example, twenty four hours ago, we had Toyota Ventures
Speaker 3: on the show. They are a single LP fund granted Toyota,
Speaker 3: but they raised even more money from that LP to
Speaker 3: invest in physical stuff I'm hearing lots about funds that
Speaker 3: are being raised to invest in manufacturing industrialization. Why is
Speaker 3: that not showing up in the data?
Speaker 1: Kyle Right, Well, I think first if you start with
Speaker 1: Toyota Adventures or these corporate LPs, they have a much
Speaker 1: different return profile or ability to get these different returns
Speaker 1: than a attraditional VC autritional LP might be looking for. Right,
Speaker 1: there's a return on products or ability to integrate new
Speaker 1: products into their cars down the road. As the attritional LP, though,
Speaker 1: they're looking for that cash on cash return, and we
Speaker 1: have not seen that by any means. I mean, all
Speaker 1: the last quarter, the entire story was about Reddit and Esterilabs,
Speaker 1: which were solid IPOs, but in total in the US
Speaker 1: it was just eighteen point six billion dollars in exit
Speaker 1: value that was generated. And so if you're an LP
Speaker 1: without those returns and those distributions is coming back to you,
Speaker 1: there's less incentive to put money back into the market now,
Speaker 1: or there's not an ability.
Speaker 16: Right.
Speaker 1: They're looking for that capital would come back to recycle
Speaker 1: into new funds and new commitments and make sure that
Speaker 1: they're in all these vintage years. But if that's not
Speaker 1: coming back, there's just no way for these traditional LPs
Speaker 1: to get or to put money back into the venture
Speaker 1: market right.
Speaker 4: Now, and you say traditional LPs, and it has been
Speaker 4: fascinating to see almost the domination of corporate VC in
Speaker 4: the area of AI, certainly compared to the venture capital
Speaker 4: arena right now. Who are a new guard of LPs
Speaker 4: that aren't corporate. Are we seeing bench capital companies managing
Speaker 4: to lure in different types of investors to secure their
Speaker 4: next funds?
Speaker 2: Do you think the investor of the LP bas is
Speaker 2: going to always be wide ranging?
Speaker 9: Right?
Speaker 1: Pensions obviously are in that you sell CalPERS, read up
Speaker 1: their commitment and increase their commitment to VC or the
Speaker 1: last quarter.
Speaker 2: I mean, corporates obviously are huge.
Speaker 1: You look at the Japanese corporations and there's trillions of
Speaker 1: dollars on their balance sheet they're able to put into
Speaker 1: put to work in venture into new businicists. The large
Speaker 1: megacaps in the US as well, huge amounts of cash
Speaker 1: to be able to put it put to work, and
Speaker 1: we've seen that in some of their AI invest some
Speaker 1: of the past few years. I think where it really
Speaker 1: gets down to struggling for LPs when you look at
Speaker 1: the smaller ones, right the high net worth individuals that
Speaker 1: maybe are feeling still very wealthy, but not nearly what
Speaker 1: they were in twenty twenty one. You look at foundations
Speaker 1: or endowments that are finding ways to put capital to work,
Speaker 1: but maybe are not as able to take that ten
Speaker 1: years of illiquidity that DC is going to bring to
Speaker 1: to their cash. So there is still a broad range
Speaker 1: in investors. Gps are being very strategic with who they're
Speaker 1: going after and how they're positioning their strategy, and BC
Speaker 1: fund to those LPs make sure it works for them
Speaker 1: as well.
Speaker 3: Kyle, it's been relatively exciting recently, relatively in the IPO market.
Speaker 3: You know Reddit as an example. Is there a relationship
Speaker 3: between upstream downstream? So when LPs and the firms that
Speaker 3: they give money to see activity in the IPO market,
Speaker 3: so they regain faith that actually putting something into a
Speaker 3: five or ten year horizon is a good idea.
Speaker 1: I mean, I think relative excitement is a really good
Speaker 1: way to position Q one, right. I mean, those two
Speaker 1: IPOs were great, but there's seven hundred and twenty unicorns
Speaker 1: in the market right now or private in the US,
Speaker 1: or fourteen hundred globally. Globally, there's a four point eight
Speaker 1: trillion dollar market cap on these unicorns, and so a
Speaker 1: couple IPOs is great, but until those distributions actually get
Speaker 1: going back to LPs again, it's going to be a
Speaker 1: slow fundraising market. It's going to be a slow deal
Speaker 1: making market. We have our fun distribution data is showing
Speaker 1: that distributions over the past four quarters have been as
Speaker 1: low as they were in the global financial crisis. And
Speaker 1: so again, there is definitely some positives that come out
Speaker 1: of a few companies going to public, but there needs to.
Speaker 2: Be many more.
Speaker 1: And the M and A market again too, where a
Speaker 1: lot of these returns are also going to get generated,
Speaker 1: is non existing. Many of the deals we have from
Speaker 1: an M and A perspective this quarter were had no
Speaker 1: deal of value attached, right, so their immaterial to the
Speaker 1: corporate growth. And so that's a very difficult spot when
Speaker 1: you look at returns down the road.
Speaker 3: Hey, Carl, let's tap into your relative excitement. What are
Speaker 3: you relatively excited about thematically? Subsector wise?
Speaker 1: Sure, subsector wise, I mean, obviously AI is going to
Speaker 1: be the major area going forward. I think we've seen
Speaker 1: a lot of unique companies and you need this models
Speaker 1: getting started. I think It's interesting dynamic too, with the
Speaker 1: incumbents and Microsoft and AI and Microsoft and Google and
Speaker 1: Amazon being so heavy into it. I think it's going
Speaker 1: to be very quick to what we're talking about, the
Speaker 1: bifurcation and have and have nots. Then there's gonna be
Speaker 1: a lot of money made in AI and there's a
Speaker 1: lot of money loss, and I think it's be relatively
Speaker 1: quick over the next few years because of the incumbents
Speaker 1: and how they're playing in the market.
Speaker 2: You know, Tech in.
Speaker 1: General, I think is still really strong. Even though it's
Speaker 1: a slow market. Like Karen said, strong companies are getting funded.
Speaker 1: There's money out there for these companies, and so tech
Speaker 1: is going to continue pushing forward in We like what
Speaker 1: we've seen, but it's in me a difficult market, I
Speaker 1: think for every sector down the road.
Speaker 3: Carl Stamford, lead US Bench Capital Research Analysts at Pitchburg,
Speaker 3: Thank you very much.
Speaker 4: More protection for teens on Instagram is coming now. The
Speaker 4: social platform, run of course by Meta, is turning to
Speaker 4: AI to blur out nude images sent via direct message now.
Speaker 4: Instagram announced in a blog post today that the update
Speaker 4: aims to protect users from unwanted photos as well as
Speaker 4: from potential sextortion scammers. This comes, of course, as US
Speaker 4: politicians have been continuing to accuse a platform of damage
Speaker 4: to youth mental health.
Speaker 6: Let's stay with Instagram.
Speaker 3: It's recently changed its policies for political content and it
Speaker 3: has caused a stir from some users. The move, which
Speaker 3: is coming during an election year, has prompted some pushback,
Speaker 3: with some like Republican Senator Marsha Blackburn even accusing the
Speaker 3: company of censorship. You're looking at the posts that she
Speaker 3: made on x Let's break it all down with el Rochford,
Speaker 3: senior data senior data and policy specialists with the Crime
Speaker 3: and Justice Institute, as well as Jess Natali, creator of
Speaker 3: the So Informed Instagram page. Jess, Let's start with you.
Speaker 3: You are a user, a well followed user of Instagram.
Speaker 3: The policy and its rationale are clear.
Speaker 6: What is your response to it?
Speaker 17: I mean, I think it's quite alarming and quite transparent,
Speaker 17: the timing in which this is being rolled out, and
Speaker 17: as small things like preparing people for the election, giving
Speaker 17: them the educational tools all the way to a genocide
Speaker 17: being documented on their platform. I think it's taking away
Speaker 17: the authority through people to consume what they want to
Speaker 17: be consuming, which is important information, it's news.
Speaker 4: I'm interested in the academic perspective here, l because your
Speaker 4: PhD in sociology of the per dou you're focused on
Speaker 4: reproductive justice, on racial justice movements in particular. And I'm
Speaker 4: wondering if when ultimately Instagram is saying we are not
Speaker 4: trying to clamp down on what you have actively decided
Speaker 4: you want to watch those that you follow, but it's
Speaker 4: more people that you don't follow sort of suddenly getting
Speaker 4: into your.
Speaker 5: Reels, into your streams more poorly.
Speaker 4: How much do you think that this does limit, you know, ultimately,
Speaker 4: people not wanting to be bombarded with things that they
Speaker 4: do want to be seeing, or indeed, does it cut
Speaker 4: off an ability to see outside your own bubble right now?
Speaker 18: Sure, I think that's a great question. Opting into seeing
Speaker 18: political content is a little bit tricky because a lot
Speaker 18: of users weren't aware of this future was being rolled
Speaker 18: out at all, so they weren't aware that this rollout
Speaker 18: would impact what they were seeing or not seeing.
Speaker 5: But it seems a bit odd the selection criteria.
Speaker 18: So social topics are being filtered out, but how is
Speaker 18: that being defined? Social media offers essential infrastructure informational infrastructure
Speaker 18: to users and so a lot of young people are
Speaker 18: getting their news from social media and this will impact
Speaker 18: what they're seeing and what they're not seeing, and they
Speaker 18: may not even be aware that there are things being
Speaker 18: filtered from their viewing.
Speaker 4: So before we dig in with you all a little
Speaker 4: bit more about where the lines are drawn and where
Speaker 4: a blurry is to what is seen as political content.
Speaker 4: I just want to go to you, Jess, because your
Speaker 4: numbers just give us a breakdown. People who opt in
Speaker 4: to see your content because they want to be politically
Speaker 4: informed by you, are they seeing less of.
Speaker 5: Your content on the back of this.
Speaker 4: You still getting the amount of video engagement, still getting
Speaker 4: the amount of people who want to come and build
Speaker 4: up your profile.
Speaker 17: Ultimately, there is absolutely a dramatic decrease and the people
Speaker 17: I'm reaching and the people who are engaging, which you know,
Speaker 17: those go hand in hand. Prior to this being rolled out,
Speaker 17: it was also there were censorship in place before this,
Speaker 17: and I want to make that clear. Instagram with the
Speaker 17: sensoring content well before this new rollout, but this has
Speaker 17: caused the dramatic decrease. I have three point one million followers,
Speaker 17: so three point one million people who have opted in
Speaker 17: to see what I'm posting, and I have been reaching
Speaker 17: somewhere between six and eight percent of my own followers
Speaker 17: since this went.
Speaker 3: Okay, well, I'm an Instagram user, Caroline's Instagram user. That
Speaker 3: there is the policy side, and then there's just the
Speaker 3: technology the platform, And I think many people would say
Speaker 3: Instagram is not a place you go for news or politics.
Speaker 3: Many would just say it's for entertainment value. It is
Speaker 3: to share what you're interested in from a passion point
Speaker 3: of view. That is an experience I think many people have.
Speaker 3: What is your research tell you about the majority of
Speaker 3: use case for why people go to Instagram and the
Speaker 3: type of content they're trying to get.
Speaker 11: Absolutely so.
Speaker 18: I think there's also many people who would say they
Speaker 18: don't go to Instagram to see food content, that they're
Speaker 18: sick of seeing food blogs and recipes. Right, So, for
Speaker 18: every user who doesn't want to see political content, there
Speaker 18: are users who are seeking out political content and news
Speaker 18: content on Instagram. The perception that Instagram is not a
Speaker 18: political platform is just that it's a perception. There are
Speaker 18: plenty of users who use Instagram to follow journalists, to
Speaker 18: follow news outlets, to follow political organizations and political organizations
Speaker 18: are very active on the platform, so this is going
Speaker 18: to harm those organizations in all directions across the political spectrum.
Speaker 18: And I think it's a bit shortsighted to say that
Speaker 18: Instagram isn't a political platform and that that's not what
Speaker 18: users want to see. We have plenty of evidence that
Speaker 18: activists are online and that Instagram is being used for
Speaker 18: political organization and for entertainment purposes. A lot of political
Speaker 18: content is entertaining for people, although that might not be
Speaker 18: their primary source of entertainment and often.
Speaker 5: Their passion throughout. You're bringing both of your passions today.
Speaker 4: L Rochford, of course, and Jess Nattel we wish we
Speaker 4: had along with both of you.
Speaker 5: This is broom big technology