WEBVTT - Stability AI's Breakout Hurdles, Palantir Slides 0:00:00.120 --> 0:00:04.080 Technology coming up on the program Stability AIS. Breakout success 0:00:04.200 --> 0:00:09.000 faces threats as the startup confronts executive departures and concerns 0:00:09.039 --> 0:00:11.840 with its CEO. Will bring you our Bloomberg reporting on 0:00:11.880 --> 0:00:15.600 the artificial intelligence startup, plus full coverage of earnings ahead 0:00:15.600 --> 0:00:19.079 from Palenteer and Lucid's results to Rivian reporting after the bell. 0:00:19.120 --> 0:00:21.760 We got you covered, and we'll have an exclusive conversation 0:00:21.880 --> 0:00:25.840 with Spotify as the music streaming company further integrates AI 0:00:26.000 --> 0:00:28.520 technology in to its products. 0:00:28.960 --> 0:00:31.080 All right, let's get straight to our top story. 0:00:31.160 --> 0:00:35.800 Stability AI is confronting a series of executive departures, struggles 0:00:35.800 --> 0:00:39.280 to raise funds at a target valuation, and an accusation 0:00:39.600 --> 0:00:42.200 it's not paid its bills on time or in full. 0:00:42.240 --> 0:00:46.000 After breakout success with the stable diffusion model, the startup 0:00:46.040 --> 0:00:49.559 now faces mounting risks to its edge in the booming 0:00:49.640 --> 0:00:51.920 field of generative generative AI. 0:00:51.960 --> 0:00:53.720 The reporters who broke that story. 0:00:53.479 --> 0:00:56.760 Rachel mets here in San Francisco, Mark Bergen out in London, 0:00:57.040 --> 0:00:59.120 Join me now, Rachel, let's start with you. What were 0:00:59.160 --> 0:01:01.880 the main takeaway that we learned in the course of 0:01:01.880 --> 0:01:02.520 our reporting. 0:01:02.920 --> 0:01:06.160 We spent several months looking into this story and speaking 0:01:06.200 --> 0:01:09.200 to a lot of different people, including Emad Mustak himself, 0:01:09.200 --> 0:01:13.280 who is the person behind Stability AI, and we learned 0:01:13.280 --> 0:01:16.160 that we're looking at a company that seemed to come 0:01:16.200 --> 0:01:20.800 out of nowhere, has a CEO who tends to make 0:01:20.880 --> 0:01:24.000 some blue sky comments about things that may not have 0:01:24.120 --> 0:01:29.360 happened yet, and the company itself just seems kind of disorganized, 0:01:29.360 --> 0:01:30.240 I guess, I would say. 0:01:31.120 --> 0:01:33.200 And that was just a bit of what we've noticed. 0:01:33.240 --> 0:01:36.240 So let's remind us as what put Stability on the map. 0:01:36.280 --> 0:01:38.959 It was the stable diffusion model. What is that? 0:01:39.600 --> 0:01:45.240 In basic terms, stable diffusion is an image generation AI model. 0:01:45.480 --> 0:01:47.639 What it does is you type in a few words 0:01:47.680 --> 0:01:49.440 and it will give you back an image or a 0:01:49.520 --> 0:01:53.720 number of images. It was actually initially developed by a 0:01:53.760 --> 0:01:56.520 group of German researchers and a reserve scientist from a 0:01:56.520 --> 0:02:01.080 startup called Runway. Emad Mustak in mid twenty two approached 0:02:01.520 --> 0:02:05.720 this group of people to say, hey, I will support financially. 0:02:05.840 --> 0:02:09.080 I will pay for the computing power needed to improve 0:02:09.120 --> 0:02:10.440 this model to further train it. 0:02:11.120 --> 0:02:13.680 Okay, let's bring in Bloomba's Mark Bergen, who's out in London. 0:02:13.720 --> 0:02:15.480 One of the co bylines of this story. We were 0:02:15.520 --> 0:02:19.799 just showing pictures of m Ad the CEO of Stability. 0:02:20.440 --> 0:02:23.600 A lot of your reported reporting focused on him his 0:02:23.760 --> 0:02:24.760 leadership of the company. 0:02:24.760 --> 0:02:25.440 What did you learn. 0:02:26.960 --> 0:02:30.320 Yeah, I mean he's certainly a charismatic character. He has 0:02:30.360 --> 0:02:33.440 a history here in London. He's worked for hedge funds, 0:02:33.440 --> 0:02:36.720 He's worked as a consultant prior to Stability, He's worked 0:02:36.760 --> 0:02:39.680 with a lot of around emerging markets and finance. 0:02:40.040 --> 0:02:41.760 He has a couple of companies. 0:02:41.440 --> 0:02:45.280 Are in crypto and blockchain space. And then, as Rachel said, 0:02:45.280 --> 0:02:47.359 I mean a mod moustache has even said his own 0:02:47.360 --> 0:02:49.160 words on stage. We kind of came out of nowhere, 0:02:49.960 --> 0:02:52.320 certainly not a well known entity in person here in 0:02:52.360 --> 0:02:55.080 London and in the valley, raised a lot of money, 0:02:55.360 --> 0:02:59.840 over one hundred million from some pretty high established investor 0:03:00.080 --> 0:03:01.520 is what we you know. 0:03:01.680 --> 0:03:03.280 I think that he has really. 0:03:03.040 --> 0:03:07.000 Positioned his company and its unique benefits around open source technology, 0:03:07.080 --> 0:03:09.320 and some investors we talked to that's what got them 0:03:09.360 --> 0:03:11.560 really excited. And one of the reasons they invested is 0:03:11.560 --> 0:03:14.440 they thought there would be an open source alternative to 0:03:14.639 --> 0:03:15.400 the open. 0:03:15.160 --> 0:03:17.040 A eyes and Googles of the world. 0:03:17.240 --> 0:03:20.000 As we talk in the story, that's clearly been threatened 0:03:20.000 --> 0:03:23.120 by companies like Meta, a lot of other newcomers that 0:03:23.160 --> 0:03:26.360 are also introducing competing sort of open source or open 0:03:26.400 --> 0:03:30.760 source like software products, Whereas what we're seeing in Stability 0:03:31.000 --> 0:03:34.160 is a lot of this internal turmoil while they're facing 0:03:34.360 --> 0:03:35.320 increased competition. 0:03:36.240 --> 0:03:38.839 So let's get to the specifics of that internal tour 0:03:38.920 --> 0:03:42.400 mail turmoil, Rachel. One of the things you report is 0:03:42.440 --> 0:03:45.640 that they tried to raise funds at a specific valuation. 0:03:45.760 --> 0:03:48.440 Four billion US dollars is what they were seeking. They 0:03:48.480 --> 0:03:51.520 weren't able to tell us about that, and also some 0:03:51.560 --> 0:03:54.720 of the departures that they've had at the higher levels 0:03:54.760 --> 0:03:55.360 of the company. 0:03:55.680 --> 0:03:58.760 So the company raised over one hundred million in funding 0:03:58.960 --> 0:04:02.360 late last year, right at the height of the success, 0:04:02.360 --> 0:04:05.160 the break out success of Stable Diffusion, and since then 0:04:05.200 --> 0:04:07.600 it hasn't announced a really large funding round. At that 0:04:07.640 --> 0:04:11.840 time it was valued at a billion dollars, and our 0:04:11.920 --> 0:04:15.920 reporting at Bloomberg has indicated that it was trying to 0:04:16.000 --> 0:04:19.559 raise at four billion dollars. As far as we are aware, 0:04:19.640 --> 0:04:20.760 that hasn't yet happened. 0:04:21.520 --> 0:04:24.840 We just showed some of the responses we got from 0:04:24.839 --> 0:04:28.480 Stability to our reporting, one stating that they've not had 0:04:28.839 --> 0:04:31.960 problems raising funds, Mark, and that actually that they said 0:04:31.960 --> 0:04:34.640 they weren't trying to raise funds. The other is that 0:04:34.880 --> 0:04:38.280 some of those departures in late July, according to stability 0:04:39.279 --> 0:04:42.640 were they were let go rather than people that resigned 0:04:42.640 --> 0:04:44.800 in their own volition. Mark, What else have you learned? 0:04:45.080 --> 0:04:46.680 What are kind of some of the key factors that 0:04:46.720 --> 0:04:48.000 you report out in this story. 0:04:49.160 --> 0:04:51.239 Yeah, I think what makes them a really interesting company, 0:04:51.320 --> 0:04:54.919 beyond the fact that they have such a successful stable diffusion, 0:04:55.000 --> 0:04:57.520 is they're trying to build these what they're called foundational models, 0:04:57.520 --> 0:05:00.200 Like they're trying to build this ground level infrastructure for 0:05:00.720 --> 0:05:03.080 generative AI, what a lot of investors and people in 0:05:03.120 --> 0:05:04.960 business believe is sort of the future of the Internet 0:05:04.960 --> 0:05:09.159 and the next transformational economy. That is a very expensive industry, right, 0:05:09.760 --> 0:05:11.320 very expensive enterprise. 0:05:11.440 --> 0:05:13.640 Open AI is raised over ten billion. 0:05:13.880 --> 0:05:16.920 We've seen startups like Rachel mentioned Runway, raising a lot 0:05:16.960 --> 0:05:19.520 of money because this is requires a lot of research, 0:05:19.520 --> 0:05:22.800 that requires a lot of compute, It requires hiring top 0:05:22.880 --> 0:05:27.800 shelf very expensive engineers. We talked Mustak in our reporting 0:05:27.839 --> 0:05:31.400 shows that their revenue he had previously sent out a 0:05:31.400 --> 0:05:34.240 tweet saying it was around ten million run rate of 0:05:34.279 --> 0:05:37.000 revenue for the year. It's below that now, in part 0:05:37.040 --> 0:05:39.880 because of their investment in research and development. 0:05:40.000 --> 0:05:42.480 So it's a very expensive business. It's something that a lot. 0:05:42.320 --> 0:05:44.800 Of their competitors have felt the need to be on 0:05:44.839 --> 0:05:49.200 this constant ramp of fundraising, and the fact that they 0:05:49.440 --> 0:05:52.560 have not, I think is certainly almost an outlier amongst 0:05:52.560 --> 0:05:53.040 their peers. 0:05:54.440 --> 0:05:58.520 Invokes Rachel Max mark Bergen. Just really important reporting on 0:05:58.560 --> 0:06:00.839 a company that we talk about often and here on 0:06:00.839 --> 0:06:04.080 Bloomberg Technology, and now we find out the reality behind 0:06:04.080 --> 0:06:06.040 that name that has a lot of momentum. Thank you 0:06:06.120 --> 0:06:08.360 very much, all right here on Bloomberg Technology. I want 0:06:08.360 --> 0:06:11.320 to get quick check in of the markets broadly. This 0:06:11.360 --> 0:06:13.039 is what we're looking at, and aw's that one hundred 0:06:13.120 --> 0:06:16.480 down one point five percent. We've seen the index level 0:06:16.560 --> 0:06:19.600 kind of treading water, but now some outside declines, particularly 0:06:19.600 --> 0:06:21.760 in chip names. You've got the socks, we're down two 0:06:21.760 --> 0:06:24.840 point six percent. Yields have come down though that's been 0:06:24.880 --> 0:06:28.080 the story the selloff in treasuries, but the US tenure 0:06:28.160 --> 0:06:30.440 yield back down towards four percent. It had been at 0:06:30.520 --> 0:06:33.159 four point two percent last week. We can see it 0:06:33.600 --> 0:06:36.560 continue to pull back. Bitcoin, which has traded in quite 0:06:36.640 --> 0:06:40.120 a narrow range for the last two weeks or so 0:06:40.320 --> 0:06:43.599 around twenty nine five hundred US dollars per token, but 0:06:43.760 --> 0:06:46.120 pushing a little higher in the early part of this 0:06:46.240 --> 0:06:49.920 Tuesday session. The single name that we are watching is Palenteer. 0:06:50.000 --> 0:06:52.880 We are off session lows when it comes to Palenteer 0:06:52.960 --> 0:06:55.640 right now, down seven percent on an inch day basis. 0:06:55.640 --> 0:06:58.240 We've been heading for our biggest decline since November. 0:06:58.520 --> 0:06:59.880 The story really clear. 0:07:00.320 --> 0:07:02.840 The market is not happy with the guidance that they 0:07:02.920 --> 0:07:06.840 gave two point two to one billion dollars for revenue 0:07:06.880 --> 0:07:09.320 in full year twenty three, and this has been seeing 0:07:09.360 --> 0:07:11.080 a range of two point one nine to two point 0:07:11.080 --> 0:07:15.200 twenty four. But it's about not walking the walk while 0:07:15.240 --> 0:07:17.600 the company is certainly talking to the talk for more 0:07:17.600 --> 0:07:20.040 impaltied results. I want to bring a man deep sing 0:07:20.040 --> 0:07:24.800 Boomberg Intelligence senior technology analysts that there's a real fighting 0:07:24.880 --> 0:07:27.680 talk from this this company in Alex carp in particular, 0:07:27.720 --> 0:07:31.520 Man deep about the momentum they have driven by their 0:07:31.600 --> 0:07:35.440 artificial intelligence offering. But do you see any of that 0:07:35.480 --> 0:07:38.040 momentum show up in the financial guidance they gave. 0:07:39.920 --> 0:07:42.760 No, And I think it's too early for any company 0:07:42.760 --> 0:07:47.160 on the software side to really guide in terms of 0:07:47.200 --> 0:07:49.720 the revenue impact, but it comes to a generative AI. 0:07:50.440 --> 0:07:54.120 They have called out a few use cases around healthcare 0:07:54.160 --> 0:07:58.000 and antology, which seem interesting, but it's too early, I 0:07:58.040 --> 0:07:59.920 think to say that you know it's going to drive 0:08:00.360 --> 0:08:02.640 revenue growth, as you see in the case of the 0:08:02.680 --> 0:08:05.840 lives of Nvidia, and that's where you know, with the 0:08:06.320 --> 0:08:09.680 model that Palenteer has, which is not a recurring subscription 0:08:09.840 --> 0:08:13.120 model unlike a lot of the cloud players, and when 0:08:13.160 --> 0:08:16.640 you're training at eighteen to twenty times sales, the kind 0:08:16.720 --> 0:08:19.600 of growth they are putting, it's just not enough to 0:08:19.680 --> 0:08:22.640 you know, sustain that stock momentum. And I think that's 0:08:22.640 --> 0:08:24.680 why you're seeing that reaction to them. 0:08:26.160 --> 0:08:29.440 This is what Alex carb the CEO of palenter Technology 0:08:29.520 --> 0:08:31.400 is told Bloomberg in an interview. 0:08:31.800 --> 0:08:33.200 We've got a good chance. 0:08:32.840 --> 0:08:38.240 Of becoming the most important software company in the world. 0:08:39.400 --> 0:08:41.240 What's your response to that, Mandy. 0:08:42.840 --> 0:08:46.480 Too early, because when you look at the partnerships that 0:08:46.559 --> 0:08:50.480 have been announce so far, Snowflake has partnered with Nvidia, 0:08:50.520 --> 0:08:53.280 what are they trying to do. They're trying to leverage, 0:08:53.559 --> 0:08:57.200 you know, Nvidia's expertise when it comes to GPUs and 0:08:57.240 --> 0:09:01.320 accelerators and overlay that with the product that they have 0:09:01.440 --> 0:09:05.520 at commercial enterprises. And that's the I think part where 0:09:05.640 --> 0:09:09.160 Talenteer will find it challenging to grow because they have, 0:09:09.240 --> 0:09:11.000 you know, the customer base when it comes to the 0:09:11.040 --> 0:09:14.240 government side. On the commercial side, they don't have enough 0:09:14.240 --> 0:09:18.920 partnerships to drive that momentum, and most of the software sales, 0:09:18.960 --> 0:09:22.280 if you think about it, happen you know at that 0:09:22.400 --> 0:09:25.400 top level where you need salesforce, where you need to 0:09:25.480 --> 0:09:29.680 constantly add customers up sell. In fact, Talenteers net retention 0:09:29.880 --> 0:09:32.240 rate declined to one hundred and ten percent. They were 0:09:32.280 --> 0:09:34.880 around one hundred and thirty percent. That just goes to 0:09:34.960 --> 0:09:38.920 show they have some churn issues and commercial side sequentially 0:09:38.960 --> 0:09:42.880 decelerated in the quarter. So clearly commercial side is where 0:09:43.040 --> 0:09:45.760 there'll be challenged and they need partnerships. They need the 0:09:45.800 --> 0:09:47.760 service providers to drive the nomentum. 0:09:48.480 --> 0:09:51.760 You wrote about Talentie small customer base in your Bloomberg 0:09:51.800 --> 0:09:56.199 Intelligence Reacts. The way they described it is that they 0:09:56.240 --> 0:10:03.400 have for artificial intelligence platform aipay organizations as customers, but 0:10:03.440 --> 0:10:07.360 they're talking to three hundred What do you make of 0:10:07.400 --> 0:10:10.400 their ability to convert? But also I guess on the 0:10:10.440 --> 0:10:13.520 other side of the table the willingness of big commercial 0:10:13.640 --> 0:10:17.120 orgs to invest in AI driven data analysis. 0:10:18.440 --> 0:10:20.880 I think clearly there is an appetite and there is 0:10:21.000 --> 0:10:25.200 excitement around generative AI. The way enterprises typically go about 0:10:25.200 --> 0:10:27.520 this kind of stuff is they will do it in 0:10:27.679 --> 0:10:31.600 you know, pilot and phases, and you know you're going 0:10:31.679 --> 0:10:35.320 to wait for ROI to really allocate a huge budget 0:10:35.480 --> 0:10:38.960 for twenty twenty four for example. And as I said, 0:10:39.040 --> 0:10:43.360 it's a very competitive space. You are competing with hyperscalers, 0:10:43.400 --> 0:10:46.720 You're competing with the likes of Snowflake data breaks that 0:10:46.880 --> 0:10:50.920 have an army of salespeople, which I think Palenteer will 0:10:50.960 --> 0:10:53.600 find it hard to compete with. And what it does 0:10:53.640 --> 0:10:56.000 to their bottom line is they have no way but 0:10:56.160 --> 0:10:59.840 to keep hiring salespeople. So I know they focus on 0:11:00.000 --> 0:11:03.360 operatability and they're doing a buyback, but to my mind, 0:11:03.400 --> 0:11:06.000 their expenses will have to grow, especially when it comes 0:11:06.040 --> 0:11:08.559 to sales and marketing, and that will limit any operating 0:11:08.640 --> 0:11:09.880 leverage you'll see in the NEUTRA. 0:11:11.000 --> 0:11:13.559 All Right, a big thanks to Bloemberg Intelligence senior tech 0:11:13.600 --> 0:11:24.760 analyst Mandy Singh. We've got some fresh news just out 0:11:24.760 --> 0:11:28.240 this past hour and video has announced an updated AI 0:11:28.440 --> 0:11:32.000 processor that gives a jolt frankly to the chip's capacity 0:11:32.559 --> 0:11:35.319 and speed. This is the company seeks to cement its 0:11:35.360 --> 0:11:38.360 dominance in what is a burgeoning market, and video says 0:11:38.440 --> 0:11:41.120 the super chip, which is called the GH two hundred, 0:11:41.360 --> 0:11:43.480 is going to go into production in the second quarter 0:11:43.880 --> 0:11:46.080 of twenty twenty four. It's part of a new lineup 0:11:46.280 --> 0:11:49.680 of both hardware and software that, in videos introduce focus 0:11:50.120 --> 0:11:51.359 on artificial intelligence. 0:11:51.600 --> 0:11:51.880 All right. 0:11:51.920 --> 0:11:54.800 Another top story, Amazon will meet with FTC chair Li 0:11:54.880 --> 0:11:58.080 Nakhan next week in a final push to avoid an 0:11:58.120 --> 0:12:02.559 antitrust lawsuit over the e commerce giants marketplace for third 0:12:02.640 --> 0:12:06.280 party sellers that, according to Bloomberg sources, joining us now 0:12:06.520 --> 0:12:10.400 Adam Kavakovit's Chamber of Progress founder and CEO. 0:12:11.559 --> 0:12:12.440 What do you make of this? 0:12:13.000 --> 0:12:16.360 Either we are closer towards a show off, a showdown 0:12:16.920 --> 0:12:20.480 between Amazon and the FDC, or we're close to avoiding one. 0:12:20.640 --> 0:12:21.600 What's your assessment? 0:12:22.720 --> 0:12:24.720 Well, I don't think we're close to avoiding one. 0:12:24.760 --> 0:12:27.760 And I think that's partly because Lena Kahn has made 0:12:27.800 --> 0:12:30.880 her name as an Amazon critic right her Really her 0:12:30.920 --> 0:12:35.120 claim to fame originally was her twenty seventeen law review 0:12:35.120 --> 0:12:39.480 paper which articulated her view that while Amazon probably has 0:12:39.640 --> 0:12:43.720 pro consumer justifications for its behavior, she believed that it was 0:12:43.760 --> 0:12:47.959 doing harm to rival retailers and to online sellers. And she, 0:12:48.360 --> 0:12:50.640 you know again, six years ago, called for an expansion 0:12:50.679 --> 0:12:53.320 of antitrust law to deal with what she viewed as 0:12:53.320 --> 0:12:55.680 problematic behavior. And so I think in some ways for her, 0:12:55.880 --> 0:12:59.439 this is a long time coming, though. And I think 0:12:59.440 --> 0:13:01.160 the way to think of this meeting next week that 0:13:01.200 --> 0:13:03.280 Amazon will have with the FTC sometimes it's called the 0:13:03.360 --> 0:13:06.760 last Rights meeting. It's really a formality. I think it's 0:13:07.120 --> 0:13:09.480 it's not going to it's not likely to deter the 0:13:09.520 --> 0:13:12.400 FTC from bringing a lawsuit. I fully expect that they 0:13:12.440 --> 0:13:15.680 will bring a lawsuit, and candidly, based on the pace 0:13:15.720 --> 0:13:18.440 of these things, that lawsuit probably won't see the inside 0:13:18.480 --> 0:13:21.080 of a courtroom for about two years, which maybe long 0:13:21.120 --> 0:13:23.520 after Lena Kahn has left the FTC. 0:13:24.480 --> 0:13:26.440 I just want to remind our audience, Adam, that the 0:13:26.480 --> 0:13:30.280 Chamber of Progress essentially a tech industry trade group, that 0:13:30.400 --> 0:13:34.240 antitrust is an area that you research and share policy 0:13:34.280 --> 0:13:38.680 perspective on regularly. When I was at some Valley a 0:13:38.720 --> 0:13:41.800 couple of weeks ago, the Microsoft Activision deal was firm 0:13:41.840 --> 0:13:45.240 in focus and a lot of people asking the question, 0:13:45.920 --> 0:13:49.520 why does the FTC keep picking fights that to many 0:13:49.559 --> 0:13:52.720 in the market that they feel that they can't win. 0:13:53.360 --> 0:13:55.640 It's a great question, and I think that there are 0:13:56.280 --> 0:13:59.000 things that the FTC can do that are more practical wins. 0:13:59.040 --> 0:14:01.120 But I think it's very clear that Lena Khan has 0:14:01.160 --> 0:14:05.120 come into the agency as a critic of past FTC chairs. 0:14:05.120 --> 0:14:08.599 She feels that they've been too conciliatory. 0:14:08.600 --> 0:14:10.880 And she wants to bring lawsuits and I sort of 0:14:10.920 --> 0:14:12.719 call it a little bit of a yolo strategy. I 0:14:12.720 --> 0:14:16.080 don't think she particularly cares if she loses those suits. 0:14:16.559 --> 0:14:19.720 I think this particular suit, based on the reporting and 0:14:19.760 --> 0:14:20.760 some of the leaks that have come out of the 0:14:20.840 --> 0:14:23.320 FTC about the things they're looking at, all of the 0:14:23.400 --> 0:14:28.040 behavior in question Amazon, I think has pretty compelling pro 0:14:28.280 --> 0:14:33.880 consumer justifications for But she's really seen a broader goal, 0:14:33.920 --> 0:14:36.960 which is to expand the range of antitrust law to 0:14:37.280 --> 0:14:41.160 encounter harms to suppliers and harms to sellers and harms 0:14:41.200 --> 0:14:43.360 to workers, and so I think. 0:14:43.240 --> 0:14:46.320 She is intent on bringing cases that she believes serve 0:14:46.440 --> 0:14:47.000 that mission. 0:14:48.120 --> 0:14:50.320 And so I don't think the losing record terres Her, 0:14:50.360 --> 0:14:52.320 I think she thinks, well, you know, we should try 0:14:52.320 --> 0:14:54.600 and if we lose, then that might prompt Congress to 0:14:54.720 --> 0:14:57.840 change the laws. And I think that's pretty explicitly stated 0:14:57.840 --> 0:14:59.120 as a strategy of. 0:14:59.040 --> 0:15:02.200 Hers, best of your knowledge, Adam, When they all go 0:15:02.280 --> 0:15:05.000 into a room, when the FTC and Amazon sit down, 0:15:05.200 --> 0:15:08.320 what happens? I mean, what is it that one side 0:15:08.360 --> 0:15:09.640 has to convince the other of. 0:15:11.160 --> 0:15:14.200 Well, it's interesting because I think if you look at 0:15:14.200 --> 0:15:16.800 the issues that the FTC has been investigating, these are 0:15:16.800 --> 0:15:20.120 the kinds of issues that in prior administrations and even 0:15:20.160 --> 0:15:24.000 in other countries might yield a settlement with Amazon rather 0:15:24.040 --> 0:15:25.400 than being taken to court. 0:15:25.680 --> 0:15:28.680 In fact, both the EU the EU settled. 0:15:28.320 --> 0:15:31.280 With Amazon on some of these issues related to prime 0:15:31.400 --> 0:15:34.960 and what they call their Fulfillment by Amazon program last year, 0:15:35.560 --> 0:15:39.280 and the UK is actually exploring a similar settlement. If 0:15:39.360 --> 0:15:42.320 the FTC wanted to take a constructive approach here with 0:15:42.360 --> 0:15:44.520 it with Amazon, I think they could, and frankly, I 0:15:44.560 --> 0:15:45.240 think there's. 0:15:45.040 --> 0:15:47.160 Probably room for compromise. 0:15:47.640 --> 0:15:50.160 But I don't think that's what's going to happen, because 0:15:50.280 --> 0:15:54.320 she has, you know, pretty publicly dismissed settlements again as 0:15:54.360 --> 0:15:57.680 being overly conciliatory sort of trimming your trimming the FTC 0:15:57.800 --> 0:15:59.880 sales too much, and so I don't think I wouldn't 0:16:00.000 --> 0:16:02.120 inspect that next week's meeting will be kind of an 0:16:02.120 --> 0:16:06.160 exchange or real opportunity to have off a lawsuit. It's 0:16:06.200 --> 0:16:08.360 really much more of a formality, and I would expect 0:16:08.360 --> 0:16:11.720 that they'll the FDC will file their lawsuit pretty soon 0:16:11.760 --> 0:16:12.640 after those meetings. 0:16:13.640 --> 0:16:15.800 Since last we spoke at him, I guess the big 0:16:15.840 --> 0:16:18.880 development in the world of technology and antitrust has been 0:16:19.480 --> 0:16:24.200 the Warren Graham Bill, basically the Brawl proposal for a 0:16:24.240 --> 0:16:29.240 new agency to regulate the technology industry. What was the 0:16:29.360 --> 0:16:31.480 Chamber of Progress's response to that? 0:16:32.360 --> 0:16:33.160 We took a look at that. 0:16:33.280 --> 0:16:35.120 I think one of the things that I see a 0:16:35.200 --> 0:16:39.360 lot in tech policy debates is you see policymakers doing 0:16:39.400 --> 0:16:40.520 things like that where they say, well. 0:16:40.480 --> 0:16:43.040 We need a new agency, right, we need a new regulator. 0:16:43.040 --> 0:16:44.320 There are people who called for that. 0:16:45.040 --> 0:16:47.320 What I think that does it's a frankly a little 0:16:47.320 --> 0:16:47.600 bit of. 0:16:47.560 --> 0:16:52.040 A cheat because it puts aside the harder question of 0:16:52.080 --> 0:16:55.160 what behaviors policymakers. 0:16:54.400 --> 0:16:55.000 Want to ban. 0:16:55.160 --> 0:16:55.320 Right. 0:16:55.520 --> 0:16:57.720 I think this Amazon case is a really good example. 0:16:57.760 --> 0:17:00.520 I think many people look at big tech companies and 0:17:00.560 --> 0:17:01.880 they think they've got a lot of power. 0:17:02.360 --> 0:17:04.480 We are to regulate big big companies. 0:17:04.800 --> 0:17:06.720 I think that's something that is broadly popular. 0:17:07.080 --> 0:17:09.119 But then when you look at the details, right this, 0:17:09.119 --> 0:17:11.200 this case, I think largely is going to be about 0:17:11.200 --> 0:17:15.800 Amazon Prime in a route, whether that bundle is pro competitive, 0:17:16.080 --> 0:17:18.640 and so I think that you know, so I think 0:17:18.720 --> 0:17:21.000 I think there's a gap between do we want more regulation, 0:17:21.119 --> 0:17:22.600 Sure most people are for that, but then what do 0:17:22.640 --> 0:17:24.800 we what is the problem we want solved? And again, 0:17:24.800 --> 0:17:26.760 if you look at this Amazon situation, I don't think 0:17:26.760 --> 0:17:28.560 that's that's something they're clamoring for change around. 0:17:29.920 --> 0:17:31.240 So you're a reminder our audience. 0:17:31.280 --> 0:17:33.679 What we've reported is that Chair Lee Na Khan and 0:17:33.720 --> 0:17:37.560 the agency's three other commissioners will meet with Amazon next week. 0:17:37.600 --> 0:17:41.480 According to sources, both Amazon and the FTC declined to comment. 0:17:41.520 --> 0:17:44.280 Adam Baca, it's Chamber of Progress founder and CEO, thank 0:17:44.320 --> 0:17:47.119 you very much. Now coming up here on Bloomberg Technology, 0:17:47.160 --> 0:17:50.159 local NBA games could be coming to your streaming ads 0:17:50.480 --> 0:17:52.560 sooner than you think. We'll talk about the tech giants 0:17:52.560 --> 0:17:54.920 that want those rights and why they're for sale. 0:17:55.040 --> 0:18:11.520 Next. This is Bloomberg Time for Talking Tech. 0:18:11.600 --> 0:18:15.720 First up, super conductor stocks in South Korea plunge Tuesday 0:18:15.760 --> 0:18:19.520 after a US based research center rebutted claims of a 0:18:19.560 --> 0:18:23.239 breakthrough in the technology. A Condensed matter theory center at 0:18:23.280 --> 0:18:27.000 the University of Maryland challenge claims made by Quantum Energy 0:18:27.040 --> 0:18:31.720 Research Center that had synthesized material known as LK ninety nine, 0:18:31.720 --> 0:18:33.520 which we reported on the show. 0:18:33.520 --> 0:18:35.080 Last week and elsewhere. 0:18:35.119 --> 0:18:39.320 Walt Disney, Apple, Amazon, and YouTube have all expressed interest 0:18:39.440 --> 0:18:42.800 in streaming local NBA games. The media and tech giants 0:18:43.040 --> 0:18:46.520 are open to acquiring local rights held currently by Diamond 0:18:46.560 --> 0:18:50.320 Sports Group, but only if they can obtain a critical 0:18:50.640 --> 0:18:53.760 mass of teams that according to Bloomberg's sources, here with 0:18:53.840 --> 0:18:57.560 the latest Bloomberg's Jerry Smith, seems like a lot of 0:18:57.640 --> 0:19:00.359 names throwing their hat in the ring, Jerry, and a 0:19:00.400 --> 0:19:04.440 lot of it contingent on achieving a big package. 0:19:04.480 --> 0:19:06.439 What do we know. Yeah, that's right. 0:19:06.480 --> 0:19:10.119 I mean, that's something we've seen in the sports media industry. 0:19:10.400 --> 0:19:14.280 The biggest change being these big tech companies Amazon, Apple, 0:19:14.320 --> 0:19:18.040 and YouTube really aggressively getting into this space. We've saw 0:19:18.119 --> 0:19:22.359 Amazon with the getting the NFL rights. YouTube is Sunday 0:19:22.400 --> 0:19:26.520 Ticket rights, and Apple has MLS and baseball as well, 0:19:26.920 --> 0:19:30.479 So this is an opportunity now where the local sports 0:19:30.560 --> 0:19:33.879 rights in many cases, many of these teams are broadcast 0:19:33.880 --> 0:19:36.560 by a company called Diamond Sports, groups that file for 0:19:36.600 --> 0:19:41.040 bankruptcy in March, and one thing that bankruptcy allows is 0:19:41.040 --> 0:19:45.000 for Diamond Sports to reject contracts and not pay these teams. 0:19:45.080 --> 0:19:48.000 And when that happens, the rights go back to the 0:19:48.080 --> 0:19:50.960 leagues and then they become up for grabs, and these 0:19:50.960 --> 0:19:54.000 big tech companies as well as Disney which owns ESPN, 0:19:54.119 --> 0:19:57.960 see an opportunity to swoop in and potentially buy these rights. 0:19:58.960 --> 0:20:02.359 Explains to US straighted distinction between so the local level 0:20:02.800 --> 0:20:05.160 and the nationwide level. There's a big audience in bluebog 0:20:05.200 --> 0:20:08.040 technology that aren't even in the US, but the NBA 0:20:08.160 --> 0:20:13.600 is available on many cable streaming platforms. What is it 0:20:13.680 --> 0:20:15.680 specifically that the local rights give you. 0:20:16.200 --> 0:20:16.640 That's right. 0:20:16.680 --> 0:20:19.960 So there's two different really sets of rights in the US. 0:20:20.080 --> 0:20:25.440 There's the national rights, which are owned by ESPN and 0:20:25.600 --> 0:20:28.879 Warner Brothers Discovery, and then in each team's local market, 0:20:29.040 --> 0:20:33.000 there's a broadcaster that broadcast the games just for people 0:20:33.000 --> 0:20:35.960 who live in that city. So if you're a Boston 0:20:36.000 --> 0:20:39.240 Celtics fan, for example, you would be if you're in 0:20:39.240 --> 0:20:41.760 the Boston area, you would get that broadcaster there. So 0:20:42.080 --> 0:20:45.879 these are different teams in different cities, and in a 0:20:45.880 --> 0:20:48.359 lot of cases they have been broadcast by a cable 0:20:48.440 --> 0:20:52.960 channel owner. Diamond a Diamond with a bankruptcy in large 0:20:52.960 --> 0:20:55.200 part because its owner took on a lot of debt 0:20:55.640 --> 0:20:57.920 while there was quirt cutting happening. And now these rights 0:20:57.920 --> 0:20:59.880