Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From Mahart where Innovation, money and power Collie in Silicon Valley, Nbon.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and ed Love Love.
Speaker 4: Live from London and San Francisco. This is Bloomberg Technology.
Speaker 4: Coming up, we'll have full market coverage after a wild
Speaker 4: week for techtocs.
Speaker 1: Plus Apple losing ground in China. Will break down why.
Speaker 4: And as the Paris Olympics kick off, they raise for
Speaker 4: an onslaught of cyber attacks. But first it's check in
Speaker 4: on these markets. An extraordinary week. In fact, we have
Speaker 4: been down for three straight weeks on the Nasdaq one hundred.
Speaker 4: This week we lose about three It is the worst week,
Speaker 4: well only since the previous week, since last week, ed,
Speaker 4: but we are training basically at the low since May,
Speaker 4: and we've wiped off a ton of market capitalization.
Speaker 1: Yeah, and I think a big part of the story
Speaker 1: is the Magnificent seven. I think you've already shown this
Speaker 1: Bloomberg terminal chart this week, Harrow, but it's kind of
Speaker 1: the go to. You know, in the past two sessions
Speaker 1: Wednesday Thursday, almost a trillion dollars of market kap are raised,
Speaker 1: and that has a broader impact on markets at an
Speaker 1: index level, but I think largely Google, which we'll talk
Speaker 1: about later in the program specifically, and volatility in Nvidia.
Speaker 1: It's still top of mind for so many investors, so
Speaker 1: let's talk about it. Joining us for more is Anthony
Speaker 1: Segni and Bini and Mirror Prize. Sorry for Friday, not
Speaker 1: enough Coffee Financial Chief market Strategist. The market volatility it
Speaker 1: gets you gets me anti Welcome back to the program.
Speaker 1: I mean I've framed it in a very specific way.
Speaker 1: We're still micro focused on the MAG seven. Whether it's
Speaker 1: a waiting consider whether it's just a newsflow consideration to
Speaker 1: someone like you looking at the markets. Is that still
Speaker 1: truly the case?
Speaker 2: Yeah, I mean I think the next few weeks are
Speaker 2: all about earnings. We're going to have a big week.
Speaker 2: If you thought this week was volatile, wait for next week.
Speaker 2: We have Microsoft, Apple, Amazon, Meta, all of these companies
Speaker 2: are reporting. They're about a third of the Nasdaq by
Speaker 2: market cap weight, and so there's going to be a
Speaker 2: lot of attention on the earnings from these MAG seven names.
Speaker 2: And when we get later in August, we're going to
Speaker 2: see Nvidia, and that's been the big story in the
Speaker 2: first half of what's been driving the market higher. So
Speaker 2: I think there's a little bit of trepidation around earnings season.
Speaker 2: I think earnings are going to be fine for the
Speaker 2: MAG seven, but there's certainly some trepidation if they're going
Speaker 2: to meet kind of the whisper numbers and the expectations
Speaker 2: that have been set, which are very high. Valuations are
Speaker 2: very high in these Mag seven names, and I think
Speaker 2: the market's starting to pay a little bit more attention
Speaker 2: to all the style that didn't keep pace with the
Speaker 2: Mag seven. Financial small cap cyclicals outside at tech, these
Speaker 2: are the areas that are driving the market right now.
Speaker 4: Anthony, have you been one of those who've thought that
Speaker 4: the valuations have become silly, absurd or have you actually
Speaker 4: thought there was reason for and Video getting to its
Speaker 4: three trillion dollar market cap?
Speaker 2: Yeah, I think it's fair to question some of the
Speaker 2: valuations of big tech right now, certainly based on AI
Speaker 2: and some of the payoffs that may take a few
Speaker 2: more quarters or years to develop, and so I think
Speaker 2: it's right for investors to question some of the valuations.
Speaker 2: But I also think the secular drivers of artificial intelligence
Speaker 2: are real, and I think they will generate profit for
Speaker 2: these companies. They're already generating profits for companies like in Nvidia,
Speaker 2: in Microsoft, and Alphabet. It's just the question are they
Speaker 2: meeting elevated expectations right now? And it's normal to see
Speaker 2: over the course of a cycle investors kind of get
Speaker 2: ahead of where the profits really are. They take those
Speaker 2: expectations back. Provides an opportunity for investors to look at
Speaker 2: some of these stocks that have really moved higher, maybe
Speaker 2: at a little bit cheaper price. And so if you
Speaker 2: have a balanced view of both growth and some of
Speaker 2: the cyclical opportunities that have developed, I think you can
Speaker 2: use a pullback in big tech as a means to
Speaker 2: put more dollars to work.
Speaker 1: And the one reason that we watch Alphabet, the parent
Speaker 1: of Google, so closely is largely because it goes first right,
Speaker 1: and it gives us an indication of how cloud will do,
Speaker 1: but also advertising will do, and then that sets us
Speaker 1: up for this week next week that you use perfectly
Speaker 1: framed for us. But there is more to the market
Speaker 1: than just earnings. Are you able to apportion some waiting
Speaker 1: to how much the market is looking at the rate
Speaker 1: cycle against what the mag seven do in terms of EPs?
Speaker 5: Growth.
Speaker 6: Yeah. I think it's a great question.
Speaker 2: And obviously in the first half there was a lot
Speaker 2: of questions about the economy, inflation, interest rates, and so
Speaker 2: a lot of investors piled into big tech because the
Speaker 2: profits of these companies were very visible. I think what
Speaker 2: we're seeing in the second half, or at least at
Speaker 2: the start, is that there's a little bit more clarity
Speaker 2: or certainty about a soft landing. Interest rates look like
Speaker 2: they might come down starting in September from a FED
Speaker 2: rate cut. Inflation is moderating lower. We saw that in
Speaker 2: the PCE data this morning, and so I think there's
Speaker 2: a little bit more confidence in the other four hundred
Speaker 2: and ninety three s and p five hundred companies that
Speaker 2: their profits and their outlooks might actually improve in the
Speaker 2: second half. And so that macro backdrop that was a
Speaker 2: little bit more uncertain in the first half is starting
Speaker 2: to get clarity in the second half, and I think
Speaker 2: that's why you're seeing some money rotate out of big
Speaker 2: tech in those magnificent seven names and into some of
Speaker 2: the areas like small caps and financials and industrials and
Speaker 2: which are performing better today. I think investors are starting
Speaker 2: to give those areas a second.
Speaker 4: Look, Anthony. The reason we love your experience over the
Speaker 4: last couple of decades is because you don't just look
Speaker 4: at certain equities or asset classes, but you look globally
Speaker 4: as well. This rotation has kind of been happening in
Speaker 4: the Japanese names have sold off European chip makers too,
Speaker 4: and I'm interested as to whether or not you're seeing
Speaker 4: some global narratives build as well.
Speaker 2: Yeah, I think it's a great question. I mean, you're
Speaker 2: certainly seeing normalization in terms of economic growth patterns, inflation,
Speaker 2: and interest rates, not only here in the US but
Speaker 2: in Europe.
Speaker 6: In Japan.
Speaker 2: Japan will have their FED, their BOJ meeting next week.
Speaker 2: They're talking about actually normalizing policy by hiking rates. In Europe,
Speaker 2: You've seen the ECB cut rates in June. They're on
Speaker 2: pace to cut rates again in September. That's because there's
Speaker 2: this balance between growth and inflation. And think about the
Speaker 2: narrative over the last two years, not only in the
Speaker 2: US but across the globe of really high inflation, really
Speaker 2: high growth, and really high interest rates. And what we've
Speaker 2: seen over the last six to twelve months is more
Speaker 2: normalization in inflation, the opportunity to normalize interest rates and
Speaker 2: a pretty solid economic environment in Europe and in Japan.
Speaker 2: These areas are performing well and could continue to perform
Speaker 2: well if investors look for that cyclical trade outside of
Speaker 2: big tech, which is really dominating US indices.
Speaker 4: Anthony, It's always great to catch up with you. Happy weekend,
Speaker 4: Anthony segment. Many of America's financial.
Speaker 1: Apple's losing ground in the China market, with the iPhone
Speaker 1: officially falling out of the top five in the nation
Speaker 1: according to new data from IDC. Let's break it all
Speaker 1: down with Bloomberg Intelligence analysts An Ragrana. That's a very
Speaker 1: interesting table was showing and there's actually a chart within
Speaker 1: the Bloomberg news story that shows this sort of slide
Speaker 1: in position that Apple has had relatively short term mannerag
Speaker 1: right and thinking towards the end of twenty twenty three
Speaker 1: over a six month period. What is the data tell you?
Speaker 5: Yeah, I mean a couple of things.
Speaker 6: I would say this.
Speaker 7: You know, when it comes to Apple and China, we
Speaker 7: know over the last few years the growth has.
Speaker 5: Not been there.
Speaker 7: But the comment I will take you back to what
Speaker 7: they said in their last earnings call is they grew
Speaker 7: in China while all third party data providers were saying that,
Speaker 7: you know, China shipments are down. Now there is always
Speaker 7: a timing issue in terms of, you know, when the
Speaker 7: product is shipped out of the warehouse versus when it's activated,
Speaker 7: when it's recognized as revenue. So I think next week's
Speaker 7: earnings is going to be extremely important to see what's
Speaker 7: really going on in China for Apple, and I think,
Speaker 7: because you know, to be fairly blunt, that is the
Speaker 7: most important thing for over the next twelve months for Apple,
Speaker 7: far more than you know, anything else.
Speaker 8: At this point.
Speaker 4: The way in which the IDC tracks the data, whether
Speaker 4: it's government, whether it's actually seeing what third parties are
Speaker 4: really up to. We can sort of try and dig
Speaker 4: into the nuance there, Ana Rag, But the overall narrative
Speaker 4: seems to be that Apple loses position and Huawei gains.
Speaker 4: Is that the right one to make?
Speaker 7: Oh yeah, but that's because over the last twelve months
Speaker 7: we have seen a massive upgrade in Huaweve phones. But
Speaker 7: there's a reason for it because Wawe hadn't you know,
Speaker 7: launched a phone for several years, so the people who
Speaker 7: had the older phones were going out to go out
Speaker 7: and refresh that or buy the newer ones, Whereas as
Speaker 7: we know for Apple Life phones, we are seeing an
Speaker 7: elongation in the refresh cycle because the product's been you know,
Speaker 7: a far more reliable product as well as it's expensive,
Speaker 7: so people are keeping it longer. So that's really has
Speaker 7: been the biggest issue for Apple for over the last
Speaker 7: I would say two and a half years or so.
Speaker 1: The domestic Chinese handset makers are a factor here, right,
Speaker 1: Ana rag and Blimberg's reported about government policy directing government
Speaker 1: employees or state backed enterprises to leave the iPhone at home.
Speaker 1: How do you model that at Bloomberg Intelligence, that kind
Speaker 1: of policy perspective.
Speaker 7: Yeah, and again, as I said, you know, going into
Speaker 7: the last quarter earnings, all of these things were you
Speaker 7: know at Player at that time too. Meanwhile, Apple came
Speaker 7: out and said that they grew in the Greater China region,
Speaker 7: and that's why I am more inclined to wait for
Speaker 7: Apple's comments rather than any of the data sources. But
Speaker 7: having said that, I think Apple is going to have
Speaker 7: a bit of a tough time if you see the
Speaker 7: Republican you know, president coming in, because if the China
Speaker 7: rhetoric is going to go up over the next two
Speaker 7: to three years. You know, Apple's going to be right
Speaker 7: in the middle of the US China issue, so I
Speaker 7: think really Apple's not as clear cut at this point
Speaker 7: compared to you know, let's say somebody like an Amazon
Speaker 7: or Microsoft in terms of the visibility over the next
Speaker 7: two to three years.
Speaker 4: Of course, we had that reporting earlier in the week
Speaker 4: that Micron and Apple executives were visiting China of late
Speaker 4: and talking to government officials and Agrana. Great to have
Speaker 4: some time with you, Bloomberg Elligence. We thank you. Meanwhile,
Speaker 4: let's just talk about how politics is affecting China US
Speaker 4: relationships a bit more. China based Byte Dance is going
Speaker 4: all out in Washington to keep TikTok from being banned,
Speaker 4: with lawyers, lobbyists, and of course the money joining us.
Speaker 4: Now with the details, Mike Shephard, you understand more than
Speaker 4: many the intricacies of US and China relationships, and TikTok
Speaker 4: is just fighting this hard because they have to do
Speaker 4: all They're going to be out.
Speaker 9: This is really existential for TikTok and for byte Dance
Speaker 9: to be able to maintain this kind of access through TikTok.
Speaker 9: And it's one hundred and seventy million users to what
Speaker 9: may be the most lucrative advertising market in the world,
Speaker 9: and TikTok is not going gently into that good night
Speaker 9: in the face of this law that was passed and
Speaker 9: signed in April. It requires the company the app to
Speaker 9: be sold by byte Dance by January nineteenth, or will
Speaker 9: face a ban on its US operations, and that would
Speaker 9: be devastating to the company and also to US users
Speaker 9: who have really grown to depend on it not only
Speaker 9: as a source of entertainment, but also as a source
Speaker 9: of income and business. There are many small businesses who
Speaker 9: are active on the app as well, and TikTok is
Speaker 9: deploying them too as part of this campaign.
Speaker 1: Mike, there's an issue of language here that I find
Speaker 1: just crucial that when this law was passed in April,
Speaker 1: it was a divest or ban law, and it just
Speaker 1: seems like the divest part is just not a talking
Speaker 1: point for TikTok or the US government at this stage.
Speaker 9: I'm glad you brought that up, because when you see,
Speaker 9: for example, Vice President Harris joining TikTok as of yesterday
Speaker 9: to help boost her campaign against President Donald former President
Speaker 9: Donald Trump, what we are seeing is that there is
Speaker 9: great utility in this app. The app itself is not
Speaker 9: the issue. It really is the ownership. However, we are
Speaker 9: seeing zero movement when it comes to a sale. Bite
Speaker 9: Dan says TikTok is not up for sale. The Chinese
Speaker 9: government has expressed objections to any idea that this crown
Speaker 9: jewel of Bite Dance would be forced to be sold
Speaker 9: by the US government.
Speaker 1: Boombergs Mike Shepherd, who leads our coverage of tech and politics,
Speaker 1: thank you very much. A story that Mike just mentioned
Speaker 1: in the context of TikTok, Vice President Kamala Harris officially
Speaker 1: joined the app with her first personal account since she
Speaker 1: began her presidential campaign four days ago. TikTok and other
Speaker 1: social media platforms has seen a groundswell of viral memes, images,
Speaker 1: and videos, all featuring the Vice president. Worth noting, President
Speaker 1: Joe Biden did sign that law into a bill in April,
Speaker 1: forcing Byte Dance to sell the app by January. As
Speaker 1: Michael outlined or faced the prospects being barred from operating
Speaker 1: in the United States. This is an astonishing sitch, Cuasian Caroline.
Speaker 4: What's also astonishing is how expensive some of those power
Speaker 4: brookers and lawyers are that they're using fifteen hundred in
Speaker 4: that story an hour. Meanwhile, look, let's just talk China
Speaker 4: a little bit more. But in the context of esports.
Speaker 4: The company an Ip kicks off trading on the NASLAC
Speaker 4: co founder and chairman Mario Hoo is going to be
Speaker 4: joining us as Bluemare Technology.
Speaker 1: It's time for talking tech and first start. The SEC
Speaker 1: is suing short seller Andrew Left and his Citron Capital.
Speaker 1: The regulators alleging that Left n Stron generated about twenty
Speaker 1: million dollars in illegal profits and is accusing him of
Speaker 1: committing fraud through stock trade, social media posts and research reports.
Speaker 1: The SEC says Left would allegedally make a recommendation and
Speaker 1: then capitalize on the resulting movements on prices far different
Speaker 1: than what he'd recommended. Left had no immediate comment. Plus
Speaker 1: Apple agrees to AI safeguards. The tech giant is the
Speaker 1: latest company set to adopt a set of voluntary protections
Speaker 1: for AI crafted by the Biden administration. Apple will join
Speaker 1: the likes of Open Ai and Alphabet, as well as Microsoft,
Speaker 1: committing to testing its AI systems for discriminatory tendency, security flaws,
Speaker 1: and national security risks. And shares of TSMC for the
Speaker 1: most in three months in Taiwan. This is the country's
Speaker 1: stock market reopened after two days of closures due to
Speaker 1: a typhoon. The stock decline joining a global route in
Speaker 1: tech stocks as investors rethink their AI positions. TSMC's Taiwan
Speaker 1: listing has now fallen more than fourteen percent from its peak.
Speaker 4: Carrot and a company not fearful of that volatility is
Speaker 4: Chinese Esports Company and ip it began training today. It
Speaker 4: opened at thirty dollars eleven after pricing the IPO at No.
Speaker 4: Nine dollars per share, we're is putting back to about
Speaker 4: that nine dollars level. A please to welcome NMP co
Speaker 4: founder and chairman Mario Ho. Mario, why go public in
Speaker 4: the US?
Speaker 8: Well, this is the biggest capital markets platform in the
Speaker 8: world for us.
Speaker 5: We've always thought that.
Speaker 8: In order for us to truly go global and to
Speaker 8: see partnerships all over the world, we need to be
Speaker 8: at the biggest exchange, and that for US is Nasdaq.
Speaker 4: And so give us the thesis. You're going out to
Speaker 4: the investor base, obviously you're trying to woo them on
Speaker 4: the business model. The business model one is perhaps hard
Speaker 4: for a US consumer to understand, because for US we
Speaker 4: think China regulatory crackdown gaming, but actually esports is something
Speaker 4: very different, well loved national pride.
Speaker 8: Absolutely, esports is well loved national pride everywhere in the world,
Speaker 8: every single government, exemplified by the recent news the fact
Speaker 8: that there is going to be an Esports Olympics at
Speaker 8: Saudi Arabia in twenty twenty five. I mean, for US,
Speaker 8: whether it is an investor from China, whether it's an
Speaker 8: investor from the US, so US the business model of
Speaker 8: running esports teams, the excitement that comes out of it,
Speaker 8: can be understood by everyone.
Speaker 1: Our game is and esports fans in the audience will
Speaker 1: know that you're the parent company or holding company behind
Speaker 1: Ninja's in Pajamas in Sweden, ESV five in China. And
Speaker 1: you guys talk a lot about the big market opportunity,
Speaker 1: right You cite this report that esports globally is going
Speaker 1: to be a one hundred billion dollar a year market
Speaker 1: by twenty twenty seven. Your teams do well, but you've
Speaker 1: booked about nineteen million dollars in prize money. So for
Speaker 1: all the investors watching, how do you make that number
Speaker 1: a lot bigger.
Speaker 8: Well, prize money is only one part of our business revenue,
Speaker 8: which belongs to the part where we run esport teams.
Speaker 5: We also do a lot other than that.
Speaker 8: We also do talent management. We have sort of an
Speaker 8: IMG where we sign and manage a lot of esports talent.
Speaker 8: We also do offline events production, very much like the
Speaker 8: Esports Live Nation, and in the future we're going into
Speaker 8: so many different new avenues like esports, hotels, games publishing.
Speaker 8: We're definitely going to be raising the overall revenue pie
Speaker 8: of the company, not just prize money, but that is
Speaker 8: something we care about because our brands are a very,
Speaker 8: very winning brands.
Speaker 1: You mentioned the impact of having esports at the Saudi
Speaker 1: Arabia Olympics. That's a really interesting global view of this market.
Speaker 1: Could you sort of compare and contrast for us the
Speaker 1: health of esports in the USA against the health of
Speaker 1: esports in a market like China, for example.
Speaker 8: Well, I think in terms of monetization and sponsorships, because
Speaker 8: the US has a very well functioned traditional platform for
Speaker 8: traditional sports, I think the esport teams tend.
Speaker 4: To do very very well here.
Speaker 8: On the other side, in China, for example, you'll see
Speaker 8: a bigger size of following, more people, bigger population, more
Speaker 8: population that follows games and esports. So for esport teams
Speaker 8: in China to rack up a huge following and then
Speaker 8: to monetize that would also be easier. So it's a
Speaker 8: different demographic, but in terms of competitiveness, I think it
Speaker 8: is the same everywhere in the world, And like you said,
Speaker 8: Saudi Arabia, I would be very excited to see how
Speaker 8: the US teams pitch against the Chinese teams and of
Speaker 8: course teams from Europe and all the.
Speaker 5: World as well.
Speaker 4: Maria. What sort of companies are wanting to really get
Speaker 4: in on the esport crescendo, I mean many sort of
Speaker 4: think back to ultimately the collapse of phase over here
Speaker 4: in the US and a larger life celebrities involved, but
Speaker 4: also worrying around the commitment of sponsors. What sort of
Speaker 4: companies are wanting to cral around you and wanting to
Speaker 4: support some of the players that you represent and the
Speaker 4: talent that you're going to be managing.
Speaker 8: Well, first off, I think it is good to have
Speaker 8: a correction in the esports market globally where we're now
Speaker 8: as esports companies are are credited when you're able to
Speaker 8: prove a path to profitability, and that's great. That's for
Speaker 8: the overall health of the esports industry worldwide. For US,
Speaker 8: we have insane sponsorship from all over the world. You
Speaker 8: see companies like Red Bull BYD, China Mobile, Fila Puma,
Speaker 8: brands that are targeted to are targeting towards young people
Speaker 8: around the world. Will still find that very attractive to
Speaker 8: be represented by esports teams and have their logos on
Speaker 8: our shirts. Another reason for that is some companies want
Speaker 8: to really youngify or turn their brand younger in terms
Speaker 8: of audience, and for those characterist companies, we're sort of
Speaker 8: a very good partner for them.
Speaker 1: Mario Jackson Wang is a huge star mainland China in particular,
Speaker 1: huge following, and you've kind of tied League of Legends
Speaker 1: into his following. Will you replicate that strategy with any
Speaker 1: other celebrity in Europe or in the USA.
Speaker 8: Absolutely, we're not saying no to that. The success of
Speaker 8: Jackson on his own, but also combining with the gaming
Speaker 8: audience has been something that's taken the market by storm.
Speaker 8: So if we're able to if I'm able to form
Speaker 8: a friendship as strong as the one I have with
Speaker 8: Jackson here with somebody with the US celebrity. Absolutely, but
Speaker 8: from business perspective, yes, those are our possibilities that we're
Speaker 8: looking to seek into the US markets.
Speaker 1: Mario Ho, co founder, chairman and co CEO of NIP Group,
Speaker 1: thank you, Welcome back to Blinbow Technology. Ed Ludlow in San.
Speaker 4: Francisco, Caroline Hyde in London. Let's all quit check on
Speaker 4: these markets because it has been a tumultuous time this week,
Speaker 4: to say the very least. But we are up this
Speaker 4: Friday on the NASAK six tens percent, even though we
Speaker 4: have been down for three straight weeks. More broadly on
Speaker 4: the benchmarks and lost. Remember about a trillion dollars worth
Speaker 4: of market cap over in the NASDAT one hundred rotheran
Speaker 4: two thousand gains OUTPERFORMSS again, small caps outshining big tech
Speaker 4: because we see that rotation in place. Bitcoin though a
Speaker 4: little bit of love. Remember we have well previous President
Speaker 4: Trump speaking at the Bitcoin event in Nashville this weekend.
Speaker 4: We'll see what he says for the cryptos SEMA up
Speaker 4: three point five percent as risk assets do better across
Speaker 4: the board. Move on to the individual movie because we
Speaker 4: have got some in play and when you're looking at
Speaker 4: the leaderboard, Charter Communications beats on its earnings. We're up
Speaker 4: some fifteen percent. Extraordinary movements for this particular company. Dordash
Speaker 4: doing well. Of course, we finally get Prop twenty two
Speaker 4: being signed off by the Supreme Court over in California,
Speaker 4: that does well, and some analyst upgrading on the stock.
Speaker 4: We're at more than three percent. Dex Com what a
Speaker 4: wipeout forty one percent unexpected cut to twenty twenty four
Speaker 4: sales forecasts. This is a blood sugar monitoring device maker
Speaker 4: for diabetics. Look, we are starting potentially to see the
Speaker 4: impact of a zepic and some of those similar weight
Speaker 4: loss drugs. The CEO wouldn't say whether really they've been
Speaker 4: impacted by perhaps fewer common type two diabetes necessities coming
Speaker 4: from people as they use that weight loss drug ed
Speaker 4: What are you looking at?
Speaker 1: Glasses in the news and making moves essolaw Loxodica, the
Speaker 1: world's biggest eyewear maker, said Meta is planning to buy
Speaker 1: a stake in the company, confirmation. The two companies have
Speaker 1: already been working together for years and presented their first
Speaker 1: RayBan Meta smart glasses in twenty twenty one. This deal
Speaker 1: would see the US tech giant further stepping up its
Speaker 1: pushes in too smart glasses right. Another Meta story metas
Speaker 1: facing its first EU fine over allegations it abused its
Speaker 1: dominance in the classified ad market by tying Facebook Marketplace
Speaker 1: to its social network, bringing in Bloomberg, Sam Stalton out
Speaker 1: of Brussels, Sam, A good afternoon to you. Just what'll
Speaker 1: be through the EU's perspective on this, the sort of
Speaker 1: the angst that the Commission has against what Meta did.
Speaker 10: Yes, hello from Brussels, Ed and Caroline, and yes, we
Speaker 10: expect this line to be issued against Meta in the
Speaker 10: coming months. And the European Commission has a number of
Speaker 10: concerns with how the company has tied Facebook Marketplace to
Speaker 10: the Facebook social media network, and what it is set
Speaker 10: to say, as I say, in the coming months, is
Speaker 10: that Facebook shouldn't make access to marketplace obligatory on users
Speaker 10: having a social media account, and it also shouldn't use
Speaker 10: the data from its rivals, And I'm talking about non
Speaker 10: public data belonging to classified ads rivals like eBay or Craigslist, etc.
Speaker 10: To compete against them, because what the Commission has found
Speaker 10: is that over the years, Facebook has actually been a
Speaker 10: space for those types of companies to advertise and promote
Speaker 10: their services, but what Facebook has actually done with that
Speaker 10: data could be problematic in terms of an abuse of dominance.
Speaker 10: So the finest set to come in the coming months.
Speaker 10: We don't exactly know how much it will be, but
Speaker 10: just a reminder, Brussels does have relatively high binding powers
Speaker 10: up to ten percent of global annual revenue, so it
Speaker 10: could be a fairly hefty bill for the Menlo Park
Speaker 10: firm to pay off.
Speaker 4: Person saying the claims why the commission are without foundation
Speaker 4: At the moment, Sam and the organization continues to work
Speaker 4: constructively with regulators over the issue. What's the chances that
Speaker 4: they can work constructively here because you know, as a
Speaker 4: user of Facebook marketplace, you can understand why you want
Speaker 4: it tied to the social media platform because you want
Speaker 4: to understand about the buyer that's putting in the interest
Speaker 4: and ultimately here sometimes really hard to sell things through
Speaker 4: these sorts of platforms.
Speaker 10: Yes, Caroline, well, indeed, I mean it has been working
Speaker 10: with regulators since this case was first launched in the
Speaker 10: EU in mid twenty twenty one. Facebook did actually try
Speaker 10: to stop this investigation by offering some concessions. It made
Speaker 10: an agreement actually with the UK's Competition authority to stop
Speaker 10: using this non public data to compete against classified ad rivals,
Speaker 10: and that was enough for the UK regulator, but it
Speaker 10: wasn't enough for dgcomp Here at the European Commission in Brussels,
Speaker 10: it wanted more. Metal wasn't prepared to offer more. And
Speaker 10: we're in a situation now where it's basically a standoff,
Speaker 10: but it looks like it's heading towards that fine and
Speaker 10: a couple of quite significant behavioral orders as well, which
Speaker 10: we expect to include an order from the European Commission
Speaker 10: for Facebook to create a separate portal that users who
Speaker 10: don't have a Facebook social media account can use to
Speaker 10: access the Facebook marketplace.
Speaker 4: Really appreciate you breaking it all down because it's complex,
Speaker 4: Sam Stolton, go have one awful evening over in Brussels.
Speaker 4: We thank you. Meanwhile, let's talk about another key platform
Speaker 4: on Meta. It's WhatsApp, and it's hit one hundred million
Speaker 4: monthly active users in the United States, growing it's daily
Speaker 4: audience by double digits. Now, Meta CEO Mark Zuckerberg announce
Speaker 4: the new milestone on his WhatsApp channel yesterday. The app
Speaker 4: has a mass billions of users of course worldwide, but
Speaker 4: more US users would improve Meta's effort to build out
Speaker 4: WhatsApp's business for the US market, typically being the most
Speaker 4: lucrative eventually for advertising. Now back to good old anti
Speaker 4: trust DC chat. You know Colm was in San Francisco.
Speaker 4: Well she's been meeting with members of the business and
Speaker 4: VC community. She discussed Well's on hamond and an exclusive interview.
Speaker 4: We bring by so many chang starting with hedults around
Speaker 4: official intelligence, just take a listen.
Speaker 11: As a general matter, historically, we've seen that openness and
Speaker 11: open source can be a critical vector of innovation, right.
Speaker 11: I mean, what happens traditionally when you render some of
Speaker 11: these ecosystems more open is that it can lower barriers
Speaker 11: to entry, It can lower costs for entrepreneurs and startups
Speaker 11: and really enable them to innovate much more freely. And
Speaker 11: so we want to make sure that that tradition continues.
Speaker 11: We are watching very closely. I think there's still an
Speaker 11: open question around what openness really means in the AI context.
Speaker 11: Our team has been focusing on this idea of open
Speaker 11: weight models, which we think could similarly engender a lot
Speaker 11: of competition and innovation and make it easier for startups
Speaker 11: and entrepreneurs to compete on a level playing field. Of course,
Speaker 11: we need to really closely understand what are any restrictions
Speaker 11: licensing restrictions that are being included here and could those
Speaker 11: be foreclosing competition. More generally, we also need to be
Speaker 11: aware of how there are significant incumbents that may have
Speaker 11: an outsized role to be playing because they have key
Speaker 11: control over the raw material and key inputs. And so
Speaker 11: we need to be aware of the broader potential competition
Speaker 11: issues or bottlenecks or choke points that could emerge in
Speaker 11: ways that could inhibit innovation and inhibit competition. And so
Speaker 11: that's what we're going to be talking with founders and
Speaker 11: vcs and others about today.
Speaker 12: I do have to take a moment to talk about
Speaker 12: the presidential election. A number of prominent tech folks have
Speaker 12: endorsed President Trump for a variety of reasons, but I
Speaker 12: have heard specifically multiple tech executives and investors complain about
Speaker 12: how they can't do deals on your watch. Do you
Speaker 12: have any concerns that your agenda has that all alienated
Speaker 12: the tech community or could impact the impact of your
Speaker 12: agenda going forward.
Speaker 11: You know, it's been such an honor to serve and
Speaker 11: then Biden Harris administration, and you know, we're just focused
Speaker 11: on doing our work. What I oftentimes hear from the
Speaker 11: business community, including small businesses, including entrepreneurs, is that they
Speaker 11: want markets to be more open and more fair and
Speaker 11: more competitive, rather than incumbents being able to squash out
Speaker 11: nason competitive threats. I mean, our free enterprise system is
Speaker 11: one where the best ideas are supposed to win, and
Speaker 11: we've historically seen that it's the disruptors and entrepreneurs that
Speaker 11: have been a key vector of innovation. And so our
Speaker 11: job at the FTC when we enforce the antitrust laws
Speaker 11: is to make sure that our markets stay open and
Speaker 11: fair and competitive. And that's something that you know, most
Speaker 11: businesses and most entrepreneurs should really be able to get behind.
Speaker 1: FTC Chair Lina Kahan and Bloomberg's Emily Chang. Coming up,
Speaker 1: we'll be joined by hillal' zidel, Managing director at Kennett Partners,
Speaker 1: on the firm's brand new fund focused on all things
Speaker 1: SaaS and all things Europe.
Speaker 5: This is Bloomberg Technology.
Speaker 4: Transatlantic growth equity investor Kennett Partners let's just raise two
Speaker 4: hundred ninety million dollars for its largest fund to date,
Speaker 4: called Kennet six, which brings the firm's assets under management
Speaker 4: to over one point four billion dollars. Ringing in Heillales Adel,
Speaker 4: managing director at Kennett Partners for more. Is great to
Speaker 4: have some time with you, Heillo, And look, we want
Speaker 4: to understand about the reputation the returns you've already given
Speaker 4: some of your LPs and investors. What kind of companies
Speaker 4: have you backed, what sort of returns have you got?
Speaker 3: Hey, thanks so much for having me in the show.
Speaker 3: Great to be here. Yeah, So we're investing ken It
Speaker 3: six right now. We have a long track record, not
Speaker 3: the twenty twenty plus years investing in the sector. Now
Speaker 3: focus is on business to business software companies and in
Speaker 3: particular those that have been bootstrapped and you know, getting.
Speaker 6: To a great clothes on Kennet six.
Speaker 3: In order to do that, you need to have a
Speaker 3: strong track record, and we're delighted to have that.
Speaker 6: Kennet six is a continuation.
Speaker 3: Of what we've been doing without fire funds, and we're
Speaker 3: really excited about what we're seeing in the market right now.
Speaker 1: Hello, what's the backstory for wanting to focus on SaaS.
Speaker 6: The few things. Firstly, you know scalability.
Speaker 3: These companies can scale very rapidly, they have high gross margins, they.
Speaker 6: Are predictable businesses and with incess.
Speaker 3: We focus particularly on business to business companies and really
Speaker 3: those that are mission critical or essential to the underlying customers.
Speaker 3: What we really care about is is this company a
Speaker 3: real problem of their customer. One of the unique aspects
Speaker 3: of our particular strategy is on bootstrapped SALAS companies. That's
Speaker 3: businesses that have been built by the founders without relying
Speaker 3: on external capital. These are companies that are very different
Speaker 3: to the traditional venture capital business of raising large sums
Speaker 3: of money going out spending raising more. The companies we're
Speaker 3: investing in have been built to scale by their founders
Speaker 3: with very limited resources, and that's a strategy that we
Speaker 3: think provides our investors with really compelling risk adjusted returns.
Speaker 4: And also clean cap tables too. I'm interested in sort
Speaker 4: of trying to avoid hype cycles here. HELLU, I'm looking
Speaker 4: at some of the previous investors Cross border solutions. Six
Speaker 4: X at the moment is an AI driven tax and
Speaker 4: transfer pricing solutions. You've got financial automation software platform. I
Speaker 4: can imagine a lot of the founders you're now going
Speaker 4: to be looking to have had to in some way
Speaker 4: describe their business as artificial intelligence at its heart. How
Speaker 4: do you get out of some of the heady high
Speaker 4: valuations when you start targeting that.
Speaker 6: Yeah, I mean that's a super relevant question. I think.
Speaker 3: You know, we came out of a momentum cycle of
Speaker 3: twenty twenty to twenty twenty two when prices were really high.
Speaker 3: You know, lots of investors were coming in and investing
Speaker 3: in technology. That's corrected. We're now in a more moderate environment,
Speaker 3: and then AI comes along, and you know, it is
Speaker 3: creating another level of level of hype. Our view is that,
Speaker 3: you know, we need to be investing in good businesses,
Speaker 3: good management teams, good strategies at the right pricing. We
Speaker 3: don't have a fomo style investing. We're not trying to
Speaker 3: find the next unicorn. We're not trying to find you know,
Speaker 3: the next the next big thing. We believe that just
Speaker 3: sticking to you know, rational investing is the right way
Speaker 3: to the right way to know to be.
Speaker 6: Successful in this category.
Speaker 3: You know that being said AI is real, AI is
Speaker 3: in our view, you know, the next platform shift, you know,
Speaker 3: post mobile, post the Internet. But I think we're at
Speaker 3: the particular point in the market where the reality you know,
Speaker 3: needs to catch up a little bit with the hype
Speaker 3: that's out. Then I think you're seeing that in the
Speaker 3: market in general, with you know, huge investment going into infrastructure,
Speaker 3: into LMS and limited commercial value CONMUCUALEREV at that point,
Speaker 3: and I think it's going to happen, but it's going
Speaker 3: to take time.
Speaker 1: Hello, it's a euro denominated fund and you're in London.
Speaker 1: We've we've got a new government in London.
Speaker 5: Just to explain all of that, please absolutely.
Speaker 3: So we invest in Europe, in the UK and in
Speaker 3: the US, and we're really looking for the best businesses
Speaker 3: that we can support in their scalely, so you know,
Speaker 3: investing in businesses in the UK. We recently invested, as
Speaker 3: you said earlier, the company called screen Dragon, which is
Speaker 3: a business between the UK and Islands.
Speaker 6: Our objective, you know, with this.
Speaker 3: And many other companies is rarely around expansion, so you know,
Speaker 3: where we're investing in the UK company, we want to
Speaker 3: help build a world class management team around the founders.
Speaker 3: We want to support these companies expanding international and ultimately
Speaker 3: developed strategies that maximize the value going forward.
Speaker 6: I think for us, the key point.
Speaker 3: Is is the business we're investing in serving an international market.
Speaker 6: Here.
Speaker 3: We're not really focused on companies that only serve domestic markets.
Speaker 3: It's much more about can this business scale and serve
Speaker 3: customers multiple multiple geographies.
Speaker 1: Hell els Adelle, managing director at Kennett Partners.
Speaker 5: Thank you.
Speaker 13: They're spending over a billion dollars when they're here in Paris,
Speaker 13: so we're seeing really good demand this summer. I think
Speaker 13: Q three is going to be quite strong, and I
Speaker 13: think this event, the Olympics, it's just the ultimate demonstration
Speaker 13: of the power of their ABNB.
Speaker 4: Or we're talking Olympics and just hours ahead of the
Speaker 4: Olympics opening ceremony, trains going to and from Paris were
Speaker 4: hit by an arson attack. Fires set three critical rail
Speaker 4: line nodes, causing delays for eight hundred thousand pus. The
Speaker 4: identity of the attackers is not yet known. Meanwhile, train
Speaker 4: delays are not the only concern. Like the Olympics, cyber
Speaker 4: team is bracing for attacks at this year's games, after
Speaker 4: France was already the target of hacks that shut down
Speaker 4: a film festival last month. In further Olympic news, get this,
Speaker 4: Canadian women's soccer head coach Bev Priestman was removed from
Speaker 4: the team after flying a drone over an opponent's training session.
Speaker 4: There had been prior instances of this by the head coach,
Speaker 4: according to the statement from Canada's soccer CEO confirming Prieseman's suspension.
Speaker 1: Ad A lot of news, A lot of news, and
Speaker 1: back to CrowdStrike. Ninety seven percent of crowdstrikes sensors are
Speaker 1: now back online after last week's outage, Bloomberg's reported, But
Speaker 1: there are growing concerns that incident like this are.
Speaker 5: Part of a new normal.
Speaker 1: It's something I wrote about last week in Tech Daily.
Speaker 1: Pager Duty is a cloud computing company that plays an
Speaker 1: important role as an early warning system for incidents like this.
Speaker 1: Pager Duty CEO Jen Jennifer de Harder joins us now
Speaker 1: for more. What was that like for you that twenty
Speaker 1: four hour, four day period when the outage happened.
Speaker 5: We just explained what page of Judy does.
Speaker 1: So you must have been at your desk thinking, okay,
Speaker 1: we've got something to do here.
Speaker 14: Look, I mean, these are the moments that were designed
Speaker 14: and built and prepared for. I'm especially proud of our
Speaker 14: technology and software and operations team because despite our platform
Speaker 14: coming under significant surges in traffic incidents, we saw at
Speaker 14: the peak, we saw nearly two hundred percent spike in
Speaker 14: the number of incidents that are normally processing on the platform,
Speaker 14: over two point six million events, which is, you know,
Speaker 14: significantly higher than what we see in any typical hour,
Speaker 14: and of four hundred and twenty five percent increase in
Speaker 14: the number of incident workflows that our customers were running
Speaker 14: on the platform. So just seeing our technology stand up,
Speaker 14: you know, in a very realile and resilient way under
Speaker 14: that kind of pressure makes me very proud of our team,
Speaker 14: but also is just a good reminder that the effort
Speaker 14: that we undertake to build operational resilience to prepare for
Speaker 14: these unexpected but really challenging moments, you have to anticipate them.
Speaker 14: You have to invest in the infrastructure, the redundancy, and
Speaker 14: the resilience to deliver when the time.
Speaker 4: Comes, Jennifer, is that's going to happen more?
Speaker 14: It is happening more absolutely. I mean, our customers saw
Speaker 14: nearly a forty five percent increase in customer facing incidents
Speaker 14: just a year on year, we are seeing the number
Speaker 14: of major incidents on the platform increase. These are incidents
Speaker 14: that have material or reasonable business impact, and that's because
Speaker 14: most of consumer engagement with brands financial transactions today are
Speaker 14: taking place on digital apps that are supported by complex
Speaker 14: infrastructure technology infrastructure, some of which is a and some
Speaker 14: of which is increasing in its complexity because we're able
Speaker 14: to ship new products and services all the time, every
Speaker 14: day into this ecosystem, and that complexity is going to
Speaker 14: continue to grow with the advent of generative ai.
Speaker 1: Jen I just want to point out to our audience
Speaker 1: We've made every effort to get George Kurtz, the CrowdStrike CEO,
Speaker 1: on this program on a daily basis, and he's yet
Speaker 1: to do certain. The reason I flagged that is so
Speaker 1: many IT managers, CSOs, CIO cybersecurity managers watch the program.
Speaker 5: They have very specific questions.
Speaker 1: The chief among them question is you know, is this
Speaker 1: a preventable event or is this the sort of state
Speaker 1: of doing business now in the world that we live in.
Speaker 14: Well, I think this is a good reminder that anybody
Speaker 14: who is responsible for technology and a business, and every
Speaker 14: business now is a technology business, is responsible for making
Speaker 14: sure they have good practices in place and good controls
Speaker 14: in place around technology change and around the ability to
Speaker 14: respond or roll back when a change does work ineffectively.
Speaker 14: But the reality is human error, technology fread, fragility and
Speaker 14: tech debt, in our aging technology infrastructure, cybersecurity threat etc.
Speaker 14: All of these things create a more dynamic and volatile
Speaker 14: environment for the technology ecosystems we've grown to rely on,
Speaker 14: and that means that we have to make the investments
Speaker 14: in our infrastructure, in modernizing not only our technology but
Speaker 14: the way we operate so when these things do happen,
Speaker 14: and they will, that we can handle them more effectively.
Speaker 14: And one of the reasons that pagere duty is architected
Speaker 14: the way it is is because these events in particular
Speaker 14: are unstructured, they're unpredictable, and yet they're high impact and
Speaker 14: high value. So getting back to recovery of these systems
Speaker 14: is really important. But also this is a tremendous opportunity
Speaker 14: for everybody in industry, not just folks who were.
Speaker 6: Affected by the outage last week, of folks that.
Speaker 14: Weren't to double down on investing in infrastructure, on preparing,
Speaker 14: on improving their resilience, on practicing things like chaos engineering,
Speaker 14: tabletop exercises, and also communicating to customers the importance of redundancy,
Speaker 14: having multiple systems, failover practices, documentation, even how we onboard people,
Speaker 14: and you know that is one thing I wanted to underscore.
Speaker 14: One of the things we haven't been talking about a
Speaker 14: lot is the people who have been working twenty four
Speaker 14: by seven set systems back online. We talk a lot
Speaker 14: about automation generative AI right now, but the human needs
Speaker 14: to be in the loop.
Speaker 4: Well said the people behind this technology, Jeneva Tahata. We
Speaker 4: thank you so much, CEO page a GT. How wonderful
Speaker 4: weekend that does it for this edition of Bluebog Technology ED.
Speaker 5: Incredible week incredible show. Check out the pod