Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From the heart where Innovation, money and power.
Speaker 3: Collie in Silicon Valley, Nbon.
Speaker 4: This is Bloomberg Technology with Caroline Hyde and.
Speaker 5: Ed Ludlow.
Speaker 6: And Caroline Heide at Blomberg's world headquarters in New York.
Speaker 7: Ed Ludlow, he's off today. This is Bloomberg Technology coming up.
Speaker 7: Full earnings coverage.
Speaker 6: Ahead. Is Adobe fools by the most of this two
Speaker 6: thousand and two. That's on phears of AI competition. We'll
Speaker 6: break down the results.
Speaker 7: Plus bitcoins slide from its record high continues.
Speaker 6: That's a bubble talk escalate.
Speaker 7: We'll discuss whether the bull run can continue, and we'll
Speaker 7: wrap the week that was for TikTok after the House
Speaker 7: voted to ban the social app or have it divested.
Speaker 6: What can we expect from the Senate.
Speaker 7: Adobe the biggest mover on the Nasdaq one hundred today,
Speaker 7: we're off by almost fourteen percent. As we said, I mean,
Speaker 7: having its worst way day in several decades. Let's talk
Speaker 7: about why it's straight to the earnings with Bertie Ford
Speaker 7: and could you actually dig into the individual numbers. Perhaps
Speaker 7: it wasn't that big a miss, but the amount.
Speaker 6: That the stock ran up last year. People are worried.
Speaker 8: You ask investors which software companies will make money from AI.
Speaker 8: In twenty twenty four, it was two names, Microsoft and Adobe.
Speaker 8: After last night, investors are saying, maybe it's just Microsoft,
Speaker 8: right because they expected to see this big surge in
Speaker 8: new business because of the AI products. Remember, Adobe has
Speaker 8: spent a lot of time and money putting its model
Speaker 8: into Photoshop illustrators so you can press that button generate
Speaker 8: and create a new image.
Speaker 2: Right But it appears that right now they are.
Speaker 8: Still more focused on new user acquisition and that kind
Speaker 8: of monetization of this new innovation is not coming.
Speaker 2: At least for a couple of quarters.
Speaker 7: In the biggest full for Adobe since twenty twenty two,
Speaker 7: September the fifteenth.
Speaker 6: I'm interested as to how.
Speaker 7: That is really focusing a light or some of the
Speaker 7: startups that aren't publicly traded.
Speaker 6: We can't see these sorts of moves in.
Speaker 7: I mean, Sora must have been the big one that
Speaker 7: everyone looked at and thought.
Speaker 6: Oh boy, he's got to race to catch up here.
Speaker 8: It was a funny moment about a year ago Dolly
Speaker 8: came out and mid Journey came out. That image generation
Speaker 8: people got real scared for Adobe. They responded with new
Speaker 8: innovations and photoshop. Investors said, Okay, we'll be fine. Sora
Speaker 8: came out and it's like Groundhog Day, right, everybody is
Speaker 8: afraid again.
Speaker 2: There's this same energy in the air that hey.
Speaker 8: This new piece of technology could make Adobe entirely obsolete, right.
Speaker 8: I mean, there was an interesting conversation on the earnings
Speaker 8: last night where an analyst had to Adobe, Hey, folks
Speaker 8: are getting worried that in the long run this software
Speaker 8: could be unused. Can you explain to us why that's
Speaker 8: not the case.
Speaker 2: That's not a.
Speaker 8: Level of candor and anxiety you tend to hear on these.
Speaker 7: Calls CA I mean, this is what investors ultimately want,
Speaker 7: is transparency, and actually we're kind of hearing that from
Speaker 7: the CEO.
Speaker 6: And a direction of trouble.
Speaker 7: What is there anyone that's bullish that's thinking, actually, look,
Speaker 7: they've just been conservative here. Here we will start to
Speaker 7: see generator of AI coming to the bottom line, to
Speaker 7: profitability to sales.
Speaker 8: Yeah, there's this argument that right now, the beauty of
Speaker 8: being a big company is that you can price for
Speaker 8: customer acquisition, and.
Speaker 2: That's what Adobe's doing.
Speaker 8: Now, that's done so well over the years that it's
Speaker 8: going to kind of get all the creatives in the
Speaker 8: ecosystem using its products and then monetize it.
Speaker 2: Right, that's the argument.
Speaker 8: Some other folks might see the numbers and say, we
Speaker 8: want a revenue uplift. Now, I don't know if we're
Speaker 8: willing to wait that long. When open AI is generating
Speaker 8: videos with prompts.
Speaker 7: Already to that point, I mean videos with prompts, it
Speaker 7: does feel as though that actually isn't just around the corner.
Speaker 6: I mean, what was it that.
Speaker 7: I think Nryan was saying that this notion that the
Speaker 7: next Oppenheim or will be done video prompt is not
Speaker 7: going to happen for decades.
Speaker 8: Yeah, And it's funny because he said this notion that
Speaker 8: the next op at Haybro we don't have prompts, it's
Speaker 8: not going to happen.
Speaker 2: Then he kind of pauses us at least for a
Speaker 2: couple decades, right, because there's.
Speaker 8: This understanding that AI will fundamentally change the way that
Speaker 8: applications for image and video happen.
Speaker 2: Right for now, you're.
Speaker 8: Just going to be able to tweak little things at
Speaker 8: the margins. A decade or two down the line are
Speaker 8: you going to have, you know, four hundred million creatives
Speaker 8: paying for photoshop.
Speaker 2: You might not need that many people.
Speaker 7: But if the training data is when they say it is,
Speaker 7: and you've got to put a protection there might be
Speaker 7: helpful to them in some way, shape or form.
Speaker 3: Yeah.
Speaker 8: No, absolutely right, And that's the big question around the
Speaker 8: training data, right is it that Adobe's big pitch as
Speaker 8: it relates to AI is that we have this safety,
Speaker 8: we have the copyright credentials. Whereas when it comes to
Speaker 8: open AI, there's this idea that, hey, where are you
Speaker 8: scraping it from? I think we all saw this very
Speaker 8: famous interview with our CTO a couple of days ago.
Speaker 8: He said, are you scraping from YouTube?
Speaker 6: You answer it?
Speaker 2: Answer it.
Speaker 7: I'm sure she has more answers to that question now,
Speaker 7: but some plenty of means being made with that particular
Speaker 7: interview by the Wall Street Journal. Thirty two buys still
Speaker 7: though on Adobe two sounds brilliant.
Speaker 6: To have you on.
Speaker 7: Thank you, Jody Forward running us through the latest and
Speaker 7: the big dive in the Adobe share price as we say,
Speaker 7: having its worst day since twenty twenty two.
Speaker 6: Coming up. Bitcoin it's retreating from.
Speaker 7: Its latest record high too, and that's going to take
Speaker 7: on why we've got citizens JMPS Devin Ryan joining us.
Speaker 9: This is Blueberg Technology.
Speaker 7: Let's just talk about crypto because there's been a week
Speaker 7: and Bitcoin there is actually pulling back from its recent
Speaker 7: record highs that it's recently set, and there's an intensifying
Speaker 7: debate about whether the ball run that we've seen across
Speaker 7: the cryptosphere is kind of evidence of just speculative froth
Speaker 7: that we're seeing across global markets.
Speaker 6: Let's break that down with Shannali beassec.
Speaker 7: And there's been some wild headlines, wild expectations today, the
Speaker 7: pullback yesterday, we're hearing of a monster cycle in crypto
Speaker 7: that was only just starting.
Speaker 10: Yeah, it's interesting because you have seen just super inflows
Speaker 10: into those ETFs, You have the having in front of you,
Speaker 10: and you have a lot of people saying you have
Speaker 10: this never before seen dynamic in bitcoin where you're going
Speaker 10: to have more demand while supply is decreasing, but at
Speaker 10: the same time there's leverage in these markets, Caroline, so.
Speaker 5: Not surprising to see a pullback.
Speaker 10: A lot of people have been calling from it, everyone
Speaker 10: from Glenn Goodman to Mike Novograts have expected there to
Speaker 10: be a pullback given the leverage that's been seen. At
Speaker 10: some point, when you're buying things on margin or buying
Speaker 10: things with money you don't have, there is always that
Speaker 10: potential for a little bit of a reversal. However, you
Speaker 10: do only see really us come full circle.
Speaker 6: For the week.
Speaker 10: We have still been well above sixty seven thousand, but
Speaker 10: we have seen bitcoin hit those new highs even just
Speaker 10: this week above seventy two thousand.
Speaker 7: Talk about the leverage and where it's coming in from
Speaker 7: the beause many would associate that with Asian investors, but
Speaker 7: we'll keep talking about the institutional bar that's just come
Speaker 7: into the market with these US bitcoins, bail etm.
Speaker 10: Just think about how much leverage there is in the
Speaker 10: system now. It's not the same type of leverage you
Speaker 10: saw in twenty twenty one with the same types of players.
Speaker 10: Of course, we saw those leverage intermediaries blow up, but
Speaker 10: now the type of leverage you're seeing are from things
Speaker 10: like finance perpetual futures, which are largely outside of the
Speaker 10: United States. You have them in bitcoin futures as well,
Speaker 10: which you buy futures on margin, and then you have
Speaker 10: other forms of leverage. You think micro strategy issuing bonds
Speaker 10: to buy bitcoin, and other big crypto players also tapping
Speaker 10: debt markets in order to really capture the part of
Speaker 10: this boom. So you can make an argument here that
Speaker 10: the leverage you're seeing is happening through safer entities, more
Speaker 10: regulated markets. Even in the United States. You think about
Speaker 10: some of the leverage you also see in leveraged ETFs
Speaker 10: for people trying to really amplify their exposure to bitcoin
Speaker 10: at these prices. Now, the big question is is everything
Speaker 10: we've expected out of the positivity in bitcoin priced in
Speaker 10: right now or is there another thing that will add
Speaker 10: some fuel to this cycle after that.
Speaker 7: Having we can keep an eye on correlations, correlations within crypto,
Speaker 7: Bitcoin down, Solana still up, but we also think about
Speaker 7: the correlations between tech stocks, more badley, the markets, and
Speaker 7: Cryptotionalibasik always does it all for.
Speaker 6: Us, and we thank her so much.
Speaker 7: Let's dig in really about some of the outsized returns
Speaker 7: we've seen of late, whether we can continue what this
Speaker 7: is in terms of a healthy or not pullback with
Speaker 7: citizens Damp Director of Financial Technology Research, Devin Ryan, it's
Speaker 7: great to speak to you again, Devon, and some of
Speaker 7: your notes have been pretty extraordinary in terms of the
Speaker 7: sheer scale of money that is entering this space and
Speaker 7: where you see some of the price points going. Can
Speaker 7: you just talk us through your main thesis of what
Speaker 7: the ets could do for bitcoin and the ecosystem more generally.
Speaker 3: Yeah, happy too, Caroline, Thanks so much for having me on.
Speaker 11: So we put on a note earlier this week, and
Speaker 11: we are talking about two hundred and twenty billion dollars
Speaker 11: of net inflows into these ETFs.
Speaker 3: Over the next three years.
Speaker 11: So for context, there's been about ten billion of net
Speaker 11: inflows over the first two months of launch, but we
Speaker 11: see that accelerating quite a bit, and the reason being
Speaker 11: is that we've essentially opened up a lot of additional
Speaker 11: capital that historically, up until January this year, was shut
Speaker 11: out of investing in crypto and bitcoin specifically. The biggest
Speaker 11: pool that is retail.
Speaker 3: Investors advisor led money.
Speaker 11: There's about twenty five trillion dollars of assets where advisors
Speaker 11: really want to custody the money within their own custodian,
Speaker 11: not move it out to somewhere like coinbase. And so
Speaker 11: ultimately now these advisors with the ETF approval.
Speaker 3: Can start to look at that. But I think we're
Speaker 3: in the first inning.
Speaker 11: I don't think advisors have really been allocated yet, so
Speaker 11: we see flows actually accelerating from here.
Speaker 3: So there will be volatility.
Speaker 11: But you know, in my career covering financials and fintech
Speaker 11: for twenty years, you know, follow the flows and when
Speaker 11: there's money coming into a new market and it's substantial,
Speaker 11: which we think it will be with these ETFs, it's
Speaker 11: really transformational.
Speaker 7: It is amazing that we've been talking some of these cycles.
Speaker 6: For years, but only now do we hear the like.
Speaker 7: So you Devin talking about two hundred and twenty billion
Speaker 7: dollars coming in, and we hear Bernstein yesterday out with
Speaker 7: a note saying.
Speaker 6: We are entering this monster cycle for crypto. What changed
Speaker 6: your tune? Was it the ETF?
Speaker 11: Yeah, We've been consistently constructive on the space, and you know,
Speaker 11: I cover Coinbase, which is in our view, kind of
Speaker 11: the biggest on ramp in the public markets into the industry.
Speaker 11: I think you guys touched on it. There's a lot
Speaker 11: of speculation going on. You have Bitcoin and then you
Speaker 11: have you know, twenty thousand other cryptocurrencies, and I think
Speaker 11: that many of those cryptocurrencies are going to be worthless
Speaker 11: when you.
Speaker 3: Look out over the next couple of decades.
Speaker 11: That being said, we are in the early innings, and
Speaker 11: so people are putting their chips on various blockchains that
Speaker 11: they think will have development on top of them. And
Speaker 11: just like you would in a technology stock or even
Speaker 11: a biotech stock that is, you know, in its formation days,
Speaker 11: you know, it's going to take ten years to get
Speaker 11: to commercial application, and a lot of these blockchains are
Speaker 11: in their first inning and people are speculating on which
Speaker 11: ones will be utilized. And so I'm very bullish on
Speaker 11: the applications the block technology that's kind of the broader
Speaker 11: crypto ecosystem that coinbase is benefiting from. And then the
Speaker 11: ETF for bitcoin is in my opinion, kind of its
Speaker 11: own animal. But we do see again, you know, we
Speaker 11: think people are going to increasingly move some money, you know,
Speaker 11: small amounts, but small amounts now that you've opened the
Speaker 11: door to, in our opinion, over one hundred trillion dollars
Speaker 11: of capital in the US that potentially could look at
Speaker 11: allocating something here, and we're shut out, you know, much
Speaker 11: of that until January eleventh.
Speaker 7: You mentioned coinbase, and just a disclosure that my husband
Speaker 7: is a director over at coinbase, but I am interested
Speaker 7: in outside of the space of just Bitcoin.
Speaker 6: Bitcoin is sort of hoovered.
Speaker 7: Up all the oxygen in terms of being able to
Speaker 7: shine all out on the price, being able to talk
Speaker 7: about the ets but there is talk of an e ETF.
Speaker 7: There is still Solana doing very well, for example, other
Speaker 7: old coins.
Speaker 6: How does that spillover effect continue.
Speaker 3: Yeah, it's a great question, Caroline.
Speaker 11: So I think there was a lot of discussion in
Speaker 11: the market leading to the Bitcoin ETF that would be
Speaker 11: cannibalistic and that everybody would just trade the ETF and
Speaker 11: then that would hurt Coinbase. We were taking the other
Speaker 11: side of that argument. But I think the evidence is
Speaker 11: now clear that in reality what's happened is there's been
Speaker 11: a significant amount of more money that's moved into the
Speaker 11: broader space, both Bitcoin, where Coinbase is participating a lot
Speaker 11: of the trading of the underlying assets in the ETF
Speaker 11: and then elsewhere. But their volumes are up over one
Speaker 11: hundred percent trading volumes over the first quarter last year,
Speaker 11: and a lot of that's happening in all of these
Speaker 11: other assets, because again, people are more interested in learning
Speaker 11: about the space and taking views on other blockchain technologies
Speaker 11: and which ones you could be successful, and so that's
Speaker 11: really what's happening. I think we're still kind of in
Speaker 11: the early days of that as well. That's coinbase. But
Speaker 11: then Coinbase is also, you know, in our opinion, going
Speaker 11: to have their hand in virtually every aspect of how
Speaker 11: this industry grows, whether it's tokenization of real world assets,
Speaker 11: whether it's you know, payments and remittance and development of
Speaker 11: Web three applications.
Speaker 3: You know, they have their own blockchain called Base.
Speaker 11: You know, they're very active and staking and there's going
Speaker 11: to be a lot of innovation in this industry that
Speaker 11: I don't think has even happened yet.
Speaker 3: So coinbas to.
Speaker 11: Us is really a play on that growth, even more
Speaker 11: so than just trading volumes and you know, the exchange activity.
Speaker 7: It's interesting that Bernstein called out robin Hood is the
Speaker 7: key play.
Speaker 6: You've got a twenty.
Speaker 7: Five dollars price target, I believe in that particular company.
Speaker 7: Where else could be benefiting in terms of brokerages. Is
Speaker 7: it all about the institutional play and the retail play
Speaker 7: Still yeah.
Speaker 11: I think you know, Galaxy is a name they're Canadian
Speaker 11: listed right now, but that's Michael Lenovogratz. As you guys mentioned,
Speaker 11: They're clearly a public market play here. We know a
Speaker 11: lot of the private players in this space, and there's
Speaker 11: a lot of really interesting companies in the private markets.
Speaker 11: Robin Hood, you know, clearly has an investor base that
Speaker 11: is I think in the demographic that is active in crypto.
Speaker 11: It's not as big of a driver for their business model.
Speaker 11: Coinbase is really a pure play on the crypto ecosystem,
Speaker 11: both trading but then also development and how was blockchain
Speaker 11: used over the next five to ten years, and they're
Speaker 11: going to participate in all that. I think Robinhood has
Speaker 11: you know, their tenacles into some of that.
Speaker 3: But you know, robin Hoood's a broader brokerage, which is good.
Speaker 11: A lot of the other brokerages really, you know, they're
Speaker 11: barely there yet. And that's also, in our opinion, part
Speaker 11: of the opportunity the self directed market. I would put
Speaker 11: in that bucket of retail investors and we estimate that
Speaker 11: two hundred and twenty billion dollars of net inflows. You
Speaker 11: one hundred and sixty one hundred and seventy billion of
Speaker 11: that is still going to come from retail, whether self
Speaker 11: directed or advisor led. And I've covered the wealth management
Speaker 11: market for twenty years. These are folks that again they're
Speaker 11: relatively conservative, but they want to invest where the customers
Speaker 11: want to invest, and I think the people are going
Speaker 11: to want some small access to this new asset class.
Speaker 7: Sticking with it, citizens, JMP Director of Financial Technology Research
Speaker 7: Devin Ryan. Great to talk through your note through some
Speaker 7: of the players within it.
Speaker 6: Thank you time now for talking tech. First up, TikTok.
Speaker 7: Owner bike Dance is human resources chief taking the helm.
Speaker 7: The companies sharply reduced gaming division and we'll refocus the
Speaker 7: business on more personal content in look, an effort to
Speaker 7: avoid the head on clash with Tencent is a pivot
Speaker 7: for a unit that once hoped to take on the
Speaker 7: leading Chinese game distribution leaders like Tencent and of course Nettes. Meanwhile,
Speaker 7: the Chinese government is quietly encouraging eed makers from BYD
Speaker 7: to Giely to sharply increase their purchases from local auto
Speaker 7: chip makers. Is in an effort to reduce reliance on
Speaker 7: Western imports.
Speaker 6: Of course boosts China's own domestics semi conductor industry.
Speaker 7: Plus, the US plans to award more than six billion
Speaker 7: dollars to Samsung to help the chip maker expand beyond
Speaker 7: its project in Texas, the federal funding for South Korea's
Speaker 7: leading chip maker we're becoming, alongside significant additional US investment
Speaker 7: by the firm.
Speaker 6: All of that, according to sources.
Speaker 7: Now, let's turn our attention to cybersecurity, always top of
Speaker 7: mind for executives, the board of businesses, and you and
Speaker 7: me as individuals. Microsoft Corporate Vice President Security, Compliance, Identity
Speaker 7: and Management, Basu Jaka is here to tell us all
Speaker 7: about microsf co Pilot for Security. It's a generative AI
Speaker 7: offering that will be being made widely available at prefers.
Speaker 6: What's the aim here for you.
Speaker 7: To support security it professionals?
Speaker 6: How much easier is their life going to get?
Speaker 3: Well?
Speaker 5: Caroline, it's so great to be here with you.
Speaker 4: Thank you for having me to understand why we did
Speaker 4: go by it for security. Step back and look at
Speaker 4: what we're facing against and today the threat landscape is unprecedented.
Speaker 4: The speed, the scale, the sophistication of attacks is increasing.
Speaker 4: Just as an example, we're seeing a tanex increase in
Speaker 4: identity related attacks from three billion to thirty billion over
Speaker 4: the same time frame year over year.
Speaker 5: And this is why we designed GO Pilot for Security.
Speaker 4: It's the industry's first generative AI product and the industry's
Speaker 4: leading generative AI product that's based on open AICHATGBT four
Speaker 4: models plus a Microsoft Security model. And I do believe
Speaker 4: that the next eighteen months of AI innovation are going
Speaker 4: to determine the next eighteen years of cybersecurity. So that's
Speaker 4: why we did this, because we believe that Go Buy
Speaker 4: It for Beauty is going to help all defenders defend
Speaker 4: at machine speed and scale.
Speaker 7: I mean, this has been in beta, this has been
Speaker 7: quietly rolled out and tested.
Speaker 6: What does uptake Binlin, what is interest inbound men like?
Speaker 4: Yeah, we actually announced co part for security last March,
Speaker 4: and we went into private preview with tons of customers
Speaker 4: because we wanted to do co creation. We wanted our
Speaker 4: customers in the journey with us, and last fall we
Speaker 4: then expanded that to hundreds of customers as well as
Speaker 4: one hundred plus partners. What we've seen through that is
Speaker 4: it's making defenders faster no matter who you are. So
Speaker 4: if you're early in career, twenty six percent faster, if
Speaker 4: your seasoned professional twenty two percent faster. We've seen ninety
Speaker 4: seven percent of people want to use the tool again,
Speaker 4: so there's a lot of sentiment, of positive sentiment, a
Speaker 4: sentiment of joy using it, and a lot of organizations
Speaker 4: are ready to embrace this or really positive feedback.
Speaker 7: I'm going to ask a sensitive question here because you are,
Speaker 7: of course in charge of the security business. More broadly
Speaker 7: over at Microsoft, we've had some recent disclosures. I think
Speaker 7: of last summer, the Chinese hackers. I think of just
Speaker 7: a couple of months ago, the Russian affiliated hack that
Speaker 7: we understand.
Speaker 6: That you know, Senator Ron Wyden was saying, this is
Speaker 6: as a compromise, is inexcusable? How much questioning if you
Speaker 6: got on that?
Speaker 7: And is it impacting demand for security products coming from Microsoft.
Speaker 4: We recently publish an update on what are the Microsoft
Speaker 4: actions that we are taking to address the cyber attack
Speaker 4: that you just reference scale line.
Speaker 5: It was published and Friday. We continue to do to
Speaker 5: do all we can.
Speaker 4: To protect Microsoft, to protect our customers, and we are
Speaker 4: using our cybersecurity tools to really integrate the latest knowledge
Speaker 4: from the threat landscape and then continue to protect comprehensively.
Speaker 7: Has it hit sales though, because many would say the
Speaker 7: compromise from the Russian hackers it was like cybersecurity one
Speaker 7: I won.
Speaker 5: We are continuing to our investigation.
Speaker 4: I can't talk more than what we said on Friday,
Speaker 4: and we continue to see our gusts using more.
Speaker 5: Of our cybersecurity tools.
Speaker 4: Today, we have more than a million customers who use
Speaker 4: Microsoft security products, and as we talked about for our
Speaker 4: co Pilate for Security, we are seeing great interest.
Speaker 7: How is that interest coming globally at the moment? Where
Speaker 7: are you seeing the demand come from? What kind of clients?
Speaker 7: Are they predominantly US Western Mas?
Speaker 6: Do you seeing it elsewhere?
Speaker 4: We're seeing actually global demand for this, and we're making
Speaker 4: it available globally as well. Our general availability starting April
Speaker 4: first is global. We started in English, but we're rolling
Speaker 4: out eight new languages Japanese and Portuguese, Spanish, et cetera,
Speaker 4: and we expect to continue to roll this out globally
Speaker 4: across the year. The interest in customers is also worldwide.
Speaker 4: There is no specific region. And then again, the way
Speaker 4: we've designed Copilate for Security is for all, so we
Speaker 4: wanted all kinds of defenders to use it, all organizations,
Speaker 4: public sector, private sectors, small and medium businesses, large enterprise,
Speaker 4: So we are seeing that as well.
Speaker 7: What's interesting is because I think being is present in China,
Speaker 7: for example, how much do you have inbound interest for
Speaker 7: your products from a security basis coming from China.
Speaker 4: We have interest across the world for our security products,
Speaker 4: and we have it available.
Speaker 5: We have different products today.
Speaker 4: We integrate fifty plus categories and bring you to life
Speaker 4: in six product families which form our Microsoft Security Cloud.
Speaker 4: And depending on where customers are in the journey, they
Speaker 4: are using different parts of our products. Some use the
Speaker 4: full stacks, some use just one or two products, and
Speaker 4: we have seven hundred thousand plus customers who are using
Speaker 4: four or more of our products.
Speaker 6: Now, have you had any a pressure to be pulling back?
Speaker 6: You're offering that.
Speaker 4: We haven't seen any pressure to pull back our product.
Speaker 7: We want to thank you for your transparency today to
Speaker 7: talk through the product to the uptake already and the.
Speaker 6: Demand that you're continuing to see.
Speaker 7: We thank you so much of the time today, Microsoft
Speaker 7: Corporate Vice President's Security, Compliance, Identity and Management Aspassion, we
Speaker 7: thank her. Welcome back to Bloue Meg Technology. I'm Caroin
Speaker 7: Hid in New York. Let's just talk more, borady about
Speaker 7: what we've had across this week.
Speaker 6: When it comes to TikTok and.
Speaker 7: China, We've heard from the chairman of the Senate Intelligence
Speaker 7: Committee potentially about.
Speaker 6: That ban or divestment. Take listen.
Speaker 12: They're collecting enormous amount of personal data about Americans. The
Speaker 12: genius of TikTok it kind of knows what you like
Speaker 12: even before you may know. And that kind of personal
Speaker 12: data of the one hundred and seventy million Americans who
Speaker 12: are on ninety minutes a day. If you don't think
Speaker 12: that as a security risker, potentially you could be blackmailed
Speaker 12: at some future time by Asians of the Chinese government,
Speaker 12: then I think you don't understand the unfortunate real world
Speaker 12: that we live in.
Speaker 7: So there's a senator who potentially wants to see an
Speaker 7: expedited bill pass through his part of the US government.
Speaker 7: But let's get to Alex Barinka for the latest on tikto,
Speaker 7: because it was such a rapid week in terms of
Speaker 7: it getting through the House with real momentum, the idea
Speaker 7: of a ban or be bought by someone else.
Speaker 6: But the Senate seems to be slowing down.
Speaker 1: I think for those of us who've watched this process
Speaker 1: are taking a deep breath on this Friday, because it
Speaker 1: does seem like it's slowing down. In the Senate, and
Speaker 1: that's for a few reasons. We've heard from senators on
Speaker 1: both sides of the aisle who are basically in support
Speaker 1: of some kind of regulation either of TikTok or of
Speaker 1: data privacy on social media more broadly, but are saying
Speaker 1: that maybe not so fast, we need to take a
Speaker 1: look at this bill.
Speaker 6: One example on the.
Speaker 1: Democrat side is Senator Richard Blumenthal, who said that he's
Speaker 1: in support of separating TikTok from byte Dance, it's parent company,
Speaker 1: it's Chinese parent company, but warned that the deadline in
Speaker 1: the bill about one hundred and sixty five days was
Speaker 1: too short. So that's one kind of knock against this
Speaker 1: moving forward. Another very interesting name, Caroline was Republican Senator
Speaker 1: Ted Cruz, who has consistently been a voice again TikTok
Speaker 1: and sits on the Commerce Committee, which has jurisdiction.
Speaker 6: Over this bill.
Speaker 1: He also said that this bill should be referred to
Speaker 1: the Senate panel for more work, that this bill would
Speaker 1: go through the full amendment process and that would slow
Speaker 1: it down. I will point out we are now also
Speaker 1: just months out from the November US election.
Speaker 6: Does anyone want to be.
Speaker 1: Kind of going back and forth on this bill right now,
Speaker 1: or do they want to be out on the road campaigning.
Speaker 1: I think that's a very valid question to ask as
Speaker 1: the Senate Chamber considers the timing on whether or not
Speaker 1: they move this one forward.
Speaker 7: And ultimately whether the US population thinks this is a
Speaker 7: priority or indeed to the opposite side.
Speaker 6: Hates it.
Speaker 7: And just tell us about how we've seen immobilized gen z.
Speaker 7: Have they been doing what TikTok costs and calling their
Speaker 7: representatives because suddenly maybe Trump, who originally floated the idea
Speaker 7: of a TikTok ban, seems to be going against it,
Speaker 7: in large part because he was of a backlash.
Speaker 6: They have been.
Speaker 1: Lawmakers phones have been flooded at different times this week
Speaker 1: with calls from their constituents who are saying, don't vote
Speaker 1: this bill through.
Speaker 3: There are one hundred and.
Speaker 1: Seventy million Americans who use this app on a monthly basis.
Speaker 1: The average age of those users is over thirty, So
Speaker 1: absolutely the voting contingent. And for the Democrats in particular,
Speaker 1: they've really relied on young people on the last presidential
Speaker 1: election and the midterms to help them win on the ground.
Speaker 1: So though President Biden has said he would sign this
Speaker 1: bill if it passed through both chambers and hit his desk.
Speaker 1: That is certainly something that strategists we are talking to
Speaker 1: say that politicians need to pay attention to youth voter
Speaker 1: turnout poles say might be a lot lower in the past.
Speaker 1: That could be a real problem for Democrats in particular.
Speaker 1: So is upsetting that cohort of people a smart idea? Well,
Speaker 1: I do think that some people are potentially thinking twice
Speaker 1: even though they think that this might be really important legislation,
Speaker 1: either on data privacy or specifically on TikTok and.
Speaker 6: Just remind us Alex. This whole debate throws up so
Speaker 6: many questions.
Speaker 7: One key one is who would buy it if they
Speaker 7: were divested and.
Speaker 6: What sort of price point? Who the names in the ring?
Speaker 1: The names are, it's an interesting shortlist. Bloomberg Intelligence puts
Speaker 1: the US business at about thirty five to forty billion
Speaker 1: dollars in valuation.
Speaker 6: Not too many.
Speaker 1: People could write a check that big, and some of
Speaker 1: the names like Meta, Amazon or Alphabet who would be
Speaker 1: the obvious ones, might have a hard time getting that
Speaker 1: through antitrust review. We've already had people like former Treasury
Speaker 1: Secretary Steve Manuchin come out and say, hey, I want
Speaker 1: to get a group of buyers together to buy this
Speaker 1: asset if this bill goes through. But it is an
Speaker 1: incredibly valuable one. So while that list of names might
Speaker 1: be short right now, if this bill does get signed
Speaker 1: into law, I can probably guarantee we'll have folks across
Speaker 1: the board who are saying, hey, this is an incredibly
Speaker 1: powerful asset. What can we do to kind of put
Speaker 1: together either a consortium, sell a piece of it public,
Speaker 1: or keep it private so that we can keep this
Speaker 1: really kind of money making, lucrative potential asset in the
Speaker 1: hands of Americans, but keep it making money for those owners.
Speaker 7: Your old M and A be coming straight back at you,
Speaker 7: Alex Spirenka, perfect person be talking about all of this.
Speaker 6: We thank you so much. Meanwhile, let's turn to the legal.
Speaker 7: Implications of any sort of potential ban or indeed divestment
Speaker 7: of TikTok. David Greens with US Senior staff attorney and
Speaker 7: Civil Liberties Director over the Electronic Frontier Foundation. Now that's
Speaker 7: a nonprofit organization that defensible liberties in the digital works.
Speaker 7: And David, what's been interesting is some of the reticence
Speaker 7: from certain senators has been we can't just deploy a
Speaker 7: leaf out of China's book here.
Speaker 6: We can't do what they do, which has banned.
Speaker 7: Ultimately social media forms of expression that we don't like.
Speaker 6: Is that something you're thinking about.
Speaker 13: Oh, yes, I'm thinking about it quite a bit, and
Speaker 13: I'm actually glad to hear that senators are thinking about
Speaker 13: it as well. The US, you know, historically, really really
Speaker 13: without exception, over the over the past or at least
Speaker 13: sixty years, has been a champion for the free flow
Speaker 13: of in around the world, and we've chastised other governments
Speaker 13: when they have shut down apps and calling those actions undemocratic.
Speaker 13: I think most recently, or maybe most famously, when the
Speaker 13: government of Nigeria shut down Twitter because it accused Twitter
Speaker 13: of disseminating misinformation about the Nigerian government, and they shut
Speaker 13: down Twitter for six months, and the US State Department
Speaker 13: issued a very strong statement telling them that even if
Speaker 13: they didn't like the content and thought it might be harmful,
Speaker 13: that it was undemocratic to cut off a mode of
Speaker 13: communication that was used by its people. And we are
Speaker 13: now doing the same thing, And it is quite ironic
Speaker 13: that's happening in the context of China, which is, you know,
Speaker 13: a nation that doesn't have a good human rights and
Speaker 13: civil liberties history, and yet here we are really, you know,
Speaker 13: taking a page out of an undemocratic playbook to try
Speaker 13: to address concerns.
Speaker 7: Those concerns, let's dwell on them, because maybe people would say, Okay,
Speaker 7: we need to adopt a leaf adrada out of their
Speaker 7: book because we cannot risk manipulation on the platform itself.
Speaker 7: We cannot risk us data getting into the hands of
Speaker 7: the Chinese. But couldn't they just access the data any
Speaker 7: how without TikTok?
Speaker 13: Yes, absolutely, And I think there's really good reasons to
Speaker 13: be concerned about the amount of data that TikTok and
Speaker 13: really almost every other social media service collect about US users.
Speaker 13: They collect a tremendous amount of data, they retain it,
Speaker 13: and then they share it widely. And there's a whole
Speaker 13: industry of data brokers that buy information from social media
Speaker 13: companies and other online services and then sell it all
Speaker 13: across the world, including to governments like China and other
Speaker 13: foreign adversaries, even those who don't operate their own social
Speaker 13: media companies. So I really think it's safe to assume
Speaker 13: that China has regardless of ownership by ByteDance. China has
Speaker 13: a lot of information about US users. The way to
Speaker 13: address that, of course, is to pass comprehensive data privacy law.
Speaker 13: And this, the bill that the House past, is not
Speaker 13: a privacy law. It says very very little, It has
Speaker 13: very few provisions in it that actually guarantee privacy for
Speaker 13: US users, and really just shutting down TikTok will do
Speaker 13: will be just a very tiny step and largely ineffectual
Speaker 13: one in protecting US data.
Speaker 7: So, David, why if we hear from Elizabeth Warren? She
Speaker 7: seems to want to broader privacy law, But what would
Speaker 7: stop that actually being executed? Is it lobbying from social
Speaker 7: media companies here in the US? Is it ultimately the
Speaker 7: negatives to some of that privacy overreach?
Speaker 5: Well, it's I don't know.
Speaker 13: I don't know what the reluctance of Congress has been,
Speaker 13: but I and it's not. It's not completely easy to
Speaker 13: write a good comprehensive data privacy law. There have been
Speaker 13: some proposed, and we eff haven't actually been completely pleased
Speaker 13: with a lot of the with a lot of the
Speaker 13: proposal because we don't think they go we don't they
Speaker 13: go far enough.
Speaker 5: I don't know what the political obstacle is.
Speaker 13: It seems, and it really makes me question because it
Speaker 13: has been so difficult to pass a data privacy law
Speaker 13: and it was so easy to get this TikTok bill through.
Speaker 13: It really makes me question whether the motivations behind this
Speaker 13: most recent TikTok bill are data privacy because this sailed
Speaker 13: through the House in three days, and we've and privacy
Speaker 13: legislations had a much tougher slock.
Speaker 7: It was fast bipartisanship, which we don't say much TikTok
Speaker 7: issuing a statement of course saying that it's jammed through
Speaker 7: for one reason.
Speaker 6: It's a ban.
Speaker 7: David Green, we thank you so much, Senior staff attorney
Speaker 7: and Civil Liberties director over at the Electronic Frontier Foundation.
Speaker 6: Some great resources there.
Speaker 7: I Meanwhile, coming up that we're going to be speaking
Speaker 7: with Alis Spentink, CEO and co founder of Entrepreneur First
Speaker 7: is about opening up a new office in San Francisco,
Speaker 7: bringing entrepreneurs over from London, from Bangalore, from.
Speaker 6: New York to the Bay Area.
Speaker 7: Meanwhile, let's just focus in on what's happening in Africa
Speaker 7: at the moment, because well, there's been a real lack
Speaker 7: of access to the internet ultimately at the moment, and
Speaker 7: undersea cable damage has caused internet outages across Africa, we
Speaker 7: understand and we're seeing an impact not so much on
Speaker 7: an MTN group today it's up two point three percent.
Speaker 7: This in Votercom, Africa's biggest wireless carry is basically trying
Speaker 7: to tackle these issues of connectivity and they say multiple
Speaker 7: undersea cables failures between South Africa and Europe are currently
Speaker 7: impacting the network providers. Microsoft also impacted as well.
Speaker 6: They're saying they're reported disruptions to its cloud services.
Speaker 7: And Microsoft three sixty five is the Blombo technology Entrepreneur
Speaker 7: First and invests in early career technical founder talent that
Speaker 7: is now opening up in San Francisco, an office there
Speaker 7: to connect the founders in the world's best following ecosystem. Well,
Speaker 7: so they say, let's bring on Alice Bentink, co founder
Speaker 7: CEO of Entrepreneur First, which I know well from having
Speaker 7: covered the London scene for a couple of decades and
Speaker 7: seen the rise of EF You've then, of course built
Speaker 7: offices in New York.
Speaker 6: They're over in Bangalore even as well as in Paris.
Speaker 7: I'm interested as to why now San Francisco, What does
Speaker 7: that ecosystem have that the others don't.
Speaker 2: Well.
Speaker 14: For a number of years now, we've been working directly
Speaker 14: with the San Francisco ecosystem. So back in twenty seventeen,
Speaker 14: we raised the Series A from led by Graylock alongside
Speaker 14: reied Hoffmann and Founder's Fund. As we've been plugged into
Speaker 14: this ecosystem for a while, and what we've seen is
Speaker 14: there's a huge amount of demand from Bay Area investors
Speaker 14: to invest in exceptional talent that comes from Europe and Asia.
Speaker 14: We've had vcs like Andresen and Kosler and Sequoia invest
Speaker 14: in our companies at.
Speaker 6: A very early stage.
Speaker 14: And what we're doing now is we're building a bridge
Speaker 14: between the exceptional talent and the exceptional founders that were
Speaker 14: seeing in Europe and Asia and bringing them to the
Speaker 14: Bay Area to access not just the investors, but the
Speaker 14: wider ecosystem and the magic, if you like, of the
Speaker 14: Bay Area.
Speaker 7: If you've already had this talent and success. For example,
Speaker 7: I mean what we're seeing portfolio now worth more than
Speaker 7: ten billion dollars. As you say, some of these companies
Speaker 7: that are well known, particularly in Europe and more broadly
Speaker 7: worldwide of received funding from read Hoffmann, who I know
Speaker 7: is going.
Speaker 6: To be opening your office today.
Speaker 7: Why there need to be even more plugged in if
Speaker 7: it's already worked thus far.
Speaker 14: I mean, it's a great point, but I think if
Speaker 14: you look, the bridge is actually building in both directions.
Speaker 14: We see many of the firms that I just mentioned
Speaker 14: opening offices in London.
Speaker 6: To access Europe.
Speaker 14: But we really see this as a strengthening of the
Speaker 14: ties between the two ecosystems.
Speaker 6: I think it's also.
Speaker 14: Word saying that by bringing our companies here and helping
Speaker 14: them access the level of ambition, the depth of network,
Speaker 14: and it's not just about the investors here, it's also
Speaker 14: about who you can hire, who you're surrounded by, and
Speaker 14: we're excited to give our companies deep access to that.
Speaker 7: It's expensive to hire that talent on the West Coast.
Speaker 7: What have been some of the nerves coming into those
Speaker 7: foulers coming over because you've got a whole raft of
Speaker 7: companies coming, but where do they see some of the worries?
Speaker 14: So we've got thirty three companies that have joined us
Speaker 14: out here.
Speaker 6: I think some of the worries.
Speaker 14: Are around the cost of running a company here, but
Speaker 14: I would say that is offset by the benefits of
Speaker 14: the ecosystem. I think the real opportunity here is to
Speaker 14: expand their ambitions, give them access to the US market,
Speaker 14: and to give them access to a opportunity that they can.
Speaker 6: Access in Europe.
Speaker 14: But our companies are trying to build globally from day one,
Speaker 14: and the US market is so large and recently consistent
Speaker 14: that we believe this gives them a better opportunity to
Speaker 14: build a globally important company from the very beginning.
Speaker 7: What kind of companies have come, I mean we're just
Speaker 7: thinking of why Combinator, for example, and guess what a
Speaker 7: whole load of their recent batch have been AI and
Speaker 7: generative AI focused. Is Is that the kind of slant
Speaker 7: that you're seeing with the companies you're enticing over I mean,
Speaker 7: AI is the defining technology of our generation, and so yes,
Speaker 7: a lot of our companies.
Speaker 6: Are the majority are using AI in some way.
Speaker 14: We've actually been investing in AI companies since twenty fourteen,
Speaker 14: and we built Europe's first computer vision Unicorn, and in
Speaker 14: some ways that's a great example of why we're doing this.
Speaker 14: So it was a founder from Romania, a founder from
Speaker 14: France that built together in our office in London and
Speaker 14: then actually got their seed investment from a US based
Speaker 14: firm called Zetta that's based in San Francisco, actually next
Speaker 14: to our office in South Park, and I think that
Speaker 14: demonstrates the importance of the bridge between the two ecosystems.
Speaker 7: You're clearly bringing geographical diversity as you talk about those
Speaker 7: two technical founders you brought together, and it is quite
Speaker 7: such an interesting concept you built basically find those founders early,
Speaker 7: back them, pre idea pre team, pre product market fit,
Speaker 7: and actually build it within What is the.
Speaker 6: Cohort looking like as well?
Speaker 7: I mean it's a boring question for one woman to
Speaker 7: ask another, but there is a question of diversity.
Speaker 14: If you work in technology, diversity is always a challenge.
Speaker 14: So about twenty percent of our founders are women, and
Speaker 14: we know the technology industry does struggle with gender diversity
Speaker 14: in particular, and it's something that we've been very intentional
Speaker 14: about ever since the beginning of founding Entrepreneur First. We
Speaker 14: actually built an organization alongside EF called Code First Girls,
Speaker 14: which teaches women to code for free across Europe, and
Speaker 14: that has been an important driver to help shift the
Speaker 14: narrative around diversity within technology, but also to actually change
Speaker 14: the numbers of women that we see founding companies. So
Speaker 14: it is something we see that we take very seriously.
Speaker 14: We have some amazing female founders in this cohort that
Speaker 14: we're very excited by spending.
Speaker 6: Good luck with the launch. We thank you so much.
Speaker 6: Co founder and CEO of Entrepreneur.
Speaker 7: First, let's stig into general to AI a little bit more.
Speaker 7: Now we're going to be talking with Cerebras Systems. It's
Speaker 7: announcing it's third generation wafer scale chip. Basically the way
Speaker 7: in which we're seeing the infrastructure being supplied to the
Speaker 7: training of data for generative AI, but also a new
Speaker 7: AI supercomputer digging into all of it. Andrew Feldman, co
Speaker 7: founder CEO of Cerebras, and just tell us with this
Speaker 7: new third generation, what would people see feel trained differently?
Speaker 15: Thank you so much for having me again, very much
Speaker 15: appreciate it. In a new generation, one hopes to be
Speaker 15: able to do the same work in half the time,
Speaker 15: right and to pay the same price.
Speaker 2: And that's what we were able to achieve.
Speaker 6: And so.
Speaker 15: This is a four trillion transistor chip. This is the
Speaker 15: largest chip ever made in the history of the compute industry,
Speaker 15: and it's optimized for the training of AI work, a
Speaker 15: big generative AI and it slashes the amount of time
Speaker 15: it takes to complete one of these projects in half.
Speaker 2: And so this is a huge st forward.
Speaker 15: It cuts the cost per unit compute in half and
Speaker 15: is the foundation of a new supercomputer we're building. And
Speaker 15: so it's a big, big lead both for us and
Speaker 15: for the industry.
Speaker 7: We can see from the art behind you almost the
Speaker 7: architecture is within and throughout you.
Speaker 6: I'm interested in the ultimately what does this mean? Like
Speaker 6: what when you talk.
Speaker 7: To us For the audience who don't exactly know how
Speaker 7: the biggest chip in the world is made, what technology
Speaker 7: goes into that?
Speaker 15: Well, the art behind us actually is the chip and
Speaker 15: that was really cool. One of our engineers got fired
Speaker 15: up on a on a project. A chip of the
Speaker 15: size takes years of development. It involves a thinking of
Speaker 15: how you're going to do the math underneath artificial intelligence.
Speaker 2: And what it means for your every day user is.
Speaker 15: That their their mapping software UH that uses AI is
Speaker 15: more efficient, that their recommendation engines that select or recommend
Speaker 15: things for them in UH, in their shopping or on
Speaker 15: Netflix is even better. It means that they're the generative
Speaker 15: AI models. They play with, whether it's uh chat, GPT
Speaker 15: or others. These are less expensive, These are more powerful.
Speaker 15: These have bigger impact at work, not just at play.
Speaker 15: And so I think as you build faster compute, the
Speaker 15: the AI infrastructure enables the what everybody cares about, which
Speaker 15: is the AI to permeate through UH the economy, through
Speaker 15: the way we live, work and play.
Speaker 7: Well. It's a big announcement, a notable one ahead of
Speaker 7: in videos, big event next week, and we thank you
Speaker 7: so much Andrew Feldman, who's a key player in the
Speaker 7: infrastructure of AI co found or CEO Cerebras.
Speaker 6: Meanwhile, that does.
Speaker 7: It for this edition of Bloomberg Technology. You do not
Speaker 7: want to forget to check out our podcast. You can
Speaker 7: find it on the terminal as well as online on Apple,
Speaker 7: Spotify and iHeart Boy, who've had a big one in
Speaker 7: terms of TikTok, go back, consume it all.
Speaker 9: This is Blomberg Technology.