WEBVTT - Mark Gurman Talks Apple's Lawsuit with OpenAI

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<v Speaker 1>So what we're going to do is fly in the

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<v Speaker 1>men from LA and we're going to have a light.

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<v Speaker 1>We're commercial free with you this hour. Thank you to

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<v Speaker 1>our all of our wonderful advertisers for that. And this

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<v Speaker 1>is on Apple. Mark German flat out drives a conversation worldwide.

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<v Speaker 1>He joins us, our chief correspondent on technology and Apple

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<v Speaker 1>at Bloomberg News. How's Tim Cook doing? I mean the

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<v Speaker 1>litigation and all where they're like tantrums and arguments over

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<v Speaker 1>the last two weeks as Apple went after Sam and

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<v Speaker 1>open AI.

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<v Speaker 2>I have to tell you they're dealing with so much

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<v Speaker 2>right now. They have this big management transition, right Tim

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<v Speaker 2>Cook stepping down at the beginning of September, John Turnus

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<v Speaker 2>dating over. They're dealing with the memory shortage, dealing with

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<v Speaker 2>global politics, Trump, tariffs, you name it, right, But it

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<v Speaker 2>feels like the biggest thing they've been dealing with over

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<v Speaker 2>the last year is actually open Ai. Tim Cook, the

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<v Speaker 2>executive team over there, they've been beside themselves four hundred people,

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<v Speaker 2>four hundred people, and in their mind they needed to

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<v Speaker 2>do something to stop the bleeding.

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<v Speaker 3>How can they stop people from leaving?

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<v Speaker 2>In the lawsuit, the lawsuits Okay, but the lawsuit.

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<v Speaker 1>Every day everybody leaves, we lose people of Bloomberg, we

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<v Speaker 1>gain people.

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<v Speaker 3>Yes, But what's just so what here.

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<v Speaker 2>We don't lose you know, another company, right, a competitor.

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<v Speaker 2>Ten percent of that company isn't made up of Bloomberg employees, Right,

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<v Speaker 2>It's four hundred people leaving one company for another company.

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<v Speaker 2>And it's in Apple's history, completely unprecedented. Open Ai probably

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<v Speaker 2>made up between five and ten percent of that company's

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<v Speaker 2>made up of people who came from Apple. It's in

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<v Speaker 2>Apple's view, it's it's absurd. Apple believes there was some

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<v Speaker 2>shady behavior going on. They couldn't prove it, of course,

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<v Speaker 2>until they caught this kid, this iPhone engineer named Chang Lu,

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<v Speaker 2>who hacked into Apple servers after he left the company

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<v Speaker 2>and was able to pull engineering presentations and all sorts

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<v Speaker 2>of other material. And so they were able to build

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<v Speaker 2>a case around that. But one thing I'll tell you

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<v Speaker 2>is even so the lawsuit is kind of flimsy. Like

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<v Speaker 2>you said, people transfer between companies all the time. That

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<v Speaker 2>is commonplace. But what Apple's doing here is they created

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<v Speaker 2>a narrative to scare their current employees. I think, uh,

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<v Speaker 2>and if you're an Apple employee right now, and you're

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<v Speaker 2>teetering between staying an Apple and going to open a eye.

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<v Speaker 1>Happens here mister Bloomberg cut walks by me, says if

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<v Speaker 1>you don't shape up, I'm cutting off coffee.

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<v Speaker 2>Oh that's funny, Paul Sweety, what's.

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<v Speaker 4>The what's what's the intent here of Apple here? Is

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<v Speaker 4>it maybe, as you suggest, maybe to scare existing employees.

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<v Speaker 4>But if you're you don't like to be in a

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<v Speaker 4>position where you have to do that. You want to

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<v Speaker 4>create an environment where you want to say Apple because

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<v Speaker 4>it's Apple.

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<v Speaker 2>Well they're okay, Well, how much time do we have?

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<v Speaker 2>But let's unpack this. So Apple has been dealing with

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<v Speaker 2>a lot lately. Obviously, the innovation engine has slowed down.

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<v Speaker 2>There are a lot of people who wanted to go

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<v Speaker 2>to open AI and work on this new technology with

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<v Speaker 2>the promise of building something revolutionary, thinking we're going to

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<v Speaker 2>build the next iPhone.

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<v Speaker 1>Right.

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<v Speaker 2>The other thing you have to know is that open

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<v Speaker 2>ana's paying three four, five x what Apple is paying

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<v Speaker 2>them more money. They're paying them more money.

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<v Speaker 3>It's like when they go from the Giants to the Dodgers.

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<v Speaker 2>It's the combiny. It's the combination of yeah, there's no

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<v Speaker 2>salary cap in Silicon Valley, right, You're getting the combination

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<v Speaker 2>of more money with the promise of working on something

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<v Speaker 2>far cooler, not doing the same phone or iPad or

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<v Speaker 2>Apple Watch.

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<v Speaker 1>Guys, Sonara wearing brunicuc and l T shirts, I get it,

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<v Speaker 1>Like the way you style mark is there business? I mean,

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<v Speaker 1>are we going to get a bombshell for them this

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<v Speaker 1>quarter like we did from IBM this morning?

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<v Speaker 3>I don't see it.

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<v Speaker 2>No, that's not going to happen. In fact, if you wanted.

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<v Speaker 3>A record high yesterday.

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<v Speaker 2>Well let's turn the conversation into Apple's future. What Apple

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<v Speaker 2>is going to do over the next two and a

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<v Speaker 2>half years in terms of new products has never happened

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<v Speaker 2>before in its history. There is so much stuff coming

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<v Speaker 2>that I am having a hard time wrapping my heat

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<v Speaker 2>around it. There's a lot coming. You've never seen anything

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<v Speaker 2>like this. My credit card is already. I can feel

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<v Speaker 2>it in my pockets.

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<v Speaker 3>It's shaking. It is.

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<v Speaker 1>I mean, I mean, I have and folks, I don't

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<v Speaker 1>get tweaked a nerdy on this, but I'm gonna do

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<v Speaker 1>it with young German.

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<v Speaker 3>I got an M three Ultra at home Okay, I.

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<v Speaker 1>Have a twenty nineteen Mac Pro, which I'm using as

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<v Speaker 1>a coffee table to put a martini.

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<v Speaker 2>I didn't know you were that cool. I mean, I

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<v Speaker 2>know you were cool, but I didn't know. But I

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<v Speaker 2>like an every ultra QUI I.

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<v Speaker 3>Have an M three altar. Blah blah blah.

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<v Speaker 1>I don't want to get into it because you're your

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<v Speaker 1>conversation is more important than mine. I don't see any

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<v Speaker 1>innovation slow down here. I got a needle, Alexis go.

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<v Speaker 1>Would somebody go up, go.

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<v Speaker 3>Out to my man bag at my desk and pull

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<v Speaker 3>out the Neo?

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<v Speaker 2>Okay, the incredible just so market see incredible. My wife

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<v Speaker 2>just got one last week. Okay, that machine is awesome,

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<v Speaker 2>even though they did one hundred dollars price, Like at

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<v Speaker 2>seven hundred dollars, you're not getting anything in that category.

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<v Speaker 2>So yeah, that is an innovative product and she loves it.

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<v Speaker 2>Everyone I know who has the Neo absolutely loves it.

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<v Speaker 2>By the way, there's a new Neo coming next year.

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<v Speaker 3>They hit a.

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<v Speaker 1>Record high yesterday. Woe is me, Apple, Paul, you gotta

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<v Speaker 1>be kidning. IBM's done twenty perc.

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<v Speaker 2>It's ridiculous.

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<v Speaker 1>These guys are rocking the free world because they're not

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<v Speaker 1>doing all this AI stuff right right.

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<v Speaker 2>I mean it's funny people say, oh, Apples the new IBM,

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<v Speaker 2>Apple is the new Microsoft, and they mean in a

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<v Speaker 2>negative sense. No, no, no, no, no no. Apple's future

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<v Speaker 2>the next three years extraordinarily strong AI wearables. They're working

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<v Speaker 2>on three AI wearables, and they're working on three AI

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<v Speaker 2>home products. They've got stuff coming that's going to blow

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<v Speaker 2>your mind, from smart glasses to this new smart home device.

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<v Speaker 2>I'm pumped. And don't get me started on the iPhone

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<v Speaker 2>Ultra of the foldable phone. I'm really excited for that.

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<v Speaker 4>So you think Apple, from an investor's perspective, can shake

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<v Speaker 4>the concern that they're kind of missing AI, they're lagging

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<v Speaker 4>behind AI?

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<v Speaker 2>Can they change that narrative? Do you think? Have you

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<v Speaker 2>tried the new Seri AI on the phone?

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<v Speaker 1>No?

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<v Speaker 2>So, the public beta came out yesterday. I've been using

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<v Speaker 2>it since the beginning of June, the developer beta. But

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<v Speaker 2>the new Serie AI, what they've gone from on CIRI

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<v Speaker 2>is completely incompetent to competent. I'm not saying it's anywhere

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<v Speaker 2>near as good as Chat GPT, but for ninety five

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<v Speaker 2>percent of people. The SERI in your pocket now will

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<v Speaker 2>do absolutely what you expect, and it's it's terrific.

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<v Speaker 3>Paul twenty finally, finally, Yeah, I.

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<v Speaker 1>Don't get Serriu twenty eight point seven percent per year

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<v Speaker 1>for the last ten years.

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<v Speaker 3>This company's a failure, exactly. It's terrible exactly.

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<v Speaker 4>So what's next stage for this suit here? Because this

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<v Speaker 4>kind of goes to the heart and soul of any

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<v Speaker 4>tech company.

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<v Speaker 3>It's the people.

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<v Speaker 4>They walk out the door, your assets walk out the

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<v Speaker 4>door every day at five o'clock.

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<v Speaker 2>Well, let me just say, well, in some places five o'clock.

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<v Speaker 2>But let me tell you this, if you're an Apple

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<v Speaker 2>employee and you read that lawsuit, you'd have to be

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<v Speaker 2>a lunatic to not second guests going to open AI

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<v Speaker 2>the way that Apple frames this, the way Apple talks

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<v Speaker 2>about how your their security is going to go after

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<v Speaker 2>you if you go to open AI. I think Apple

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<v Speaker 2>employees are going to be very scared to move between

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<v Speaker 2>companies at this point.

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<v Speaker 1>Do you have winners and losers in your head? You

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<v Speaker 1>don't have to tell us, because I understand it's rude,

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<v Speaker 1>But if there's like seven players in AI, does Mark

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<v Speaker 1>know these two or three aren't gonna make it, that.

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<v Speaker 2>Are not going to make it. Well, I'll tell you this.

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<v Speaker 2>I guess people are listening in on this one to

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<v Speaker 2>hear about Apple. Apple's gonna make it because Apple is

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<v Speaker 2>a hardware company at its very core, and they have

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<v Speaker 2>the models now from Google to do cool hardware stuff.

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<v Speaker 2>And I think that these six AI products that they're

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<v Speaker 2>coming out with are going to do an effective job.

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<v Speaker 2>I think they're going to sell well, and I think

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<v Speaker 2>the integration of hardware and AI is the next step

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<v Speaker 2>for the company of those Again, Okay, so we're going

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<v Speaker 2>to see a few next year and a few the

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<v Speaker 2>year after. You've got smart glasses, you've got AirPods with AI,

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<v Speaker 2>you've got a pendant, you've got the smart Home Hub. Basically,

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<v Speaker 2>Tom Paul, you put this smart Home command center on

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<v Speaker 2>your desk, you put it in your kitchen, you put

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<v Speaker 2>it wherever you walk up to it, and it's like,

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<v Speaker 2>oh hi, Paul, right, be able to pull up your news,

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<v Speaker 2>your notes, your music, You'll do FaceTime on it. It's

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<v Speaker 2>going to be a really cool device. It's a game changer.

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<v Speaker 1>If you met Rebecca Ferguson, I mean, a guy as

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<v Speaker 1>cool as you like side those Season three on it

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<v Speaker 1>Apple Rocket It right now?

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<v Speaker 3>Are you going to be one.

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<v Speaker 1>Of these people at the beginning that's an executive producer, marker?

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<v Speaker 3>You know, how's that whole thing going for them? For Apple?

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<v Speaker 2>You're talking about the home devices.

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<v Speaker 1>No, I'm talking about Apple TV and silos. Oh there's

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<v Speaker 1>season and there's executive. There's all these fancy people. I

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<v Speaker 1>don't think of producers.

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<v Speaker 2>It's not a money maker for them, but it is

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<v Speaker 2>is a marketing engine, right. How many people are falling

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<v Speaker 2>in love with these shows and they're like, I want

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<v Speaker 2>to be part of the CECO system. So I think

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<v Speaker 2>that people ignore that this is part of the marketing

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<v Speaker 2>budget even though it's a money loser. But like the

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<v Speaker 2>tide is sort of turning right Like a few years ago,

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<v Speaker 2>it felt like I don't know how much long are

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<v Speaker 2>they going to do this? For now it's feeling like

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<v Speaker 2>they can do this forever and they are going to

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<v Speaker 2>turn a profit on Apple TV at some point.

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<v Speaker 1>And what's so great is we have Gerard Cassidy coming

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<v Speaker 1>up Portland, Maine.

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<v Speaker 3>Who's using an iPhone eight. It's like Nixon.

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<v Speaker 2>iPhone eight twenty seventeen.

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<v Speaker 3>It still works, It still works.

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<v Speaker 2>It still works much even.

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<v Speaker 1>What's more amazing is drug Cassidy still works. Mark German,

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<v Speaker 1>thank you, thank you so much for joining us in

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<v Speaker 1>our studios. Usually I see him at the bar at

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<v Speaker 1>the Sunset Tower in l A. But he's here today

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<v Speaker 1>and that's a good thing. On Apple is well.