Speaker 1: From Marhard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Vallet NBN.
Speaker 3: This is Bloomberg Technology with Caroline hide.
Speaker 1: And ed Love Love.
Speaker 4: I met Ludlow in San Francisco. Caroline hides off. This
Speaker 4: is Bloomberg Technology coming up in video slides. For a
Speaker 4: third consecutive day, almost four hundred billion dollars wiped off
Speaker 4: its market cap. Full coverage ahead, plus Apple facing billions
Speaker 4: of euros in fines over its app store rules under
Speaker 4: the EU's Digital Markets Act.
Speaker 1: Details succumb and car seller's.
Speaker 4: Worn of a possible material hit from the CDK cyber attack.
Speaker 4: We have all the latest from one of our big
Speaker 4: tech editors. This is what financial markets look like to
Speaker 4: start this week. Happy Monday to all of you watching
Speaker 4: around the world.
Speaker 1: World.
Speaker 4: The SMB five hundred actually modestly higher. We're going to
Speaker 4: get into this very shortly, but in video, which is
Speaker 4: the most expensive stock on the s and P five
Speaker 4: hundred is a real drag then as that one hundred
Speaker 4: down three ten percent yields pushing a little higher four
Speaker 4: point two six percent on the US tenure. And Bitcoin's
Speaker 4: been a real story. Going to dive deep into bitcoin.
Speaker 4: Halfway through the show with our own in house and
Speaker 4: list of Bloomberg Intelligence. But we're coming off one of
Speaker 4: the worst seven day stretches of the year so far
Speaker 4: for many digital assets, but mostly bitcoin. Let's take a
Speaker 4: look at Nvidia. Actually, in the last twenty minutes or so,
Speaker 4: the declines that we open with in Monday session have
Speaker 4: really accelerated. We're down more than five percent in the
Speaker 4: session over three days. The three straight days of declines,
Speaker 4: which hasn't happened since early May. We've wiped up more
Speaker 4: than three hundred and eighty billion dollars in market cap.
Speaker 4: As a consequence, Nvidia has gone from being the world's
Speaker 4: most valuable company briefly dropping below both Apple and Microsoft.
Speaker 4: But there's a lot of conversation around valuation. One of
Speaker 4: the tricks we're looking at is it's priced to sales ratio.
Speaker 4: It's trading at more than twenty times that the expected
Speaker 4: sales are the next twelve months. I want to get
Speaker 4: out to London and Bloomberg Opinions columnist Pame Olsen. In
Speaker 4: her column last week, Parmei argued that in Vidia is
Speaker 4: a classic case of the bigger they are, the harder
Speaker 4: they fall, and that other tech company leaders should be
Speaker 4: looking at what's happening with Nvidia and wincing over how
Speaker 4: rapidly it's taken the AI world. Pame good timing to
Speaker 4: have you on the program. Explain your thesis to me, Well.
Speaker 5: I think a lot of people look at videos as
Speaker 5: kind of bellweather for AI's success, but it's also a
Speaker 5: reflection a.
Speaker 3: Lot of the hype in AI.
Speaker 5: You know, it's kind of profiting from the short term
Speaker 5: success of businesses who are buying its chips for their servers,
Speaker 5: cloud companies like Microsoft and Amazon. But if you look
Speaker 5: further downstream at the the actual businesses who are buying
Speaker 5: the generative AI tools from the likes of open Ai
Speaker 5: or Microsoft Azure, we're seeing signs of discontent. There are
Speaker 5: businesses who are saying, and I've seen multiple surveys coming
Speaker 5: out just in the last few months, saying that they
Speaker 5: are not really getting the productivity they were hoping for.
Speaker 5: They're not quite sure how to use it. There's been
Speaker 5: a decline in plans to spend on AI.
Speaker 3: I think there's been.
Speaker 5: A decline from ninety three percent last year to sixty
Speaker 5: three percent this year. In spite of the fact that
Speaker 5: these tools are getting better.
Speaker 3: So I think a big reason.
Speaker 5: For this is that these generative AI tools from the
Speaker 5: likes of Microsoft, Open Ai, and Google have been marketed
Speaker 5: as general purpose tools, like a Swiss army knife.
Speaker 3: Of technology that's going to make.
Speaker 5: Your workforce more productive. But of course these tools aren't
Speaker 5: necessarily general purposes. They're certainly capable in some areas, but
Speaker 5: they make mistake, they make hallucinations, there are issues with
Speaker 5: data security. Strangely, our whole perception of computers in AI,
Speaker 5: in how it was kind of marketed to us by
Speaker 5: science fiction as being these kind of.
Speaker 3: Robotic, fact based machines, isn't really how it is. In reality.
Speaker 5: They're actually very good at artistic endeavors and generating images
Speaker 5: and poetry and stories. Actually really not so good at
Speaker 5: generating facts that you can rely on. And this is
Speaker 5: something that businesses are realizing, sometimes to their detriment. And
Speaker 5: so I think this has been with kind of raining
Speaker 5: and of spending, and I think we're starting to see
Speaker 5: that reflective potentially in the decline and shares and in video.
Speaker 4: A lot of investors, even if they can't do the
Speaker 4: math on valuation or correctly forecasting or predicting sales they'll say, oh,
Speaker 4: when videos supply constrained, right demand right now, for AI
Speaker 4: accelerators greatly exceeds their ability to supply. It's one other
Speaker 4: piece of your column that I found so interesting. We
Speaker 4: both covered technology for quite a long time, and you
Speaker 4: make the point that historically, in phases of technological progress,
Speaker 4: all companies have a very clear north star something to
Speaker 4: work towards. But you also make the point that with AI,
Speaker 4: it's kind of become such a grand vision led by
Speaker 4: specific individuals that it's lost or meaning what do you
Speaker 4: mean by that?
Speaker 5: Well, this whole race, this arms race for AI, was
Speaker 5: sparked by two men, Sam Altman of Open Ai and
Speaker 5: Demis Hasabus, the founder of DeepMind Google DeepMind now, and
Speaker 5: both guys we're trying to create artificial general intelligence, which
Speaker 5: is this hugely ambitious goal to create a machine that
Speaker 5: can essentially do everything.
Speaker 3: It is more knowledgeable than humans.
Speaker 5: It can surpass our own cognitive abilities, and it has
Speaker 5: general knowledge, meaning it can do creative things, but it
Speaker 5: can also do mathematical calculations very well and better than humans.
Speaker 5: And their objectives were nothing less than curing cancer and
Speaker 5: solving climate change. There was a sense that if you
Speaker 5: had this machine, this almost godlike machine that could solve
Speaker 5: everything in a general capacity, that it could fix all problems.
Speaker 3: And I think when you have a vision like that,
Speaker 3: that's just so grand, and then it trickles.
Speaker 5: Down into the marketing and sales channels of your tech company,
Speaker 5: and then they're going out and trying to sell this
Speaker 5: to businesses. Then your end customers have this kind of
Speaker 5: sense that they're getting this tool that has this general
Speaker 5: purpose ability. They're almost left with a sense of paralysis.
Speaker 5: I mean, what do you do with technology that can
Speaker 5: do everything? Where do you even start? So I think
Speaker 5: the mistake that some tech companies have made in marketing
Speaker 5: AI has been not necessarily in saying that the capabilities
Speaker 5: are too high, because the they're very capable, but it's
Speaker 5: been in marketing them as being general purpose because they
Speaker 5: can't do everything everywhere all at once. They can only
Speaker 5: do a few things very well. And that's why I
Speaker 5: think businesses need time when they buy these tools to
Speaker 5: experiment with them.
Speaker 3: You know, it's a little bit like with the mobile revolution.
Speaker 5: People individuals who worked for companies brought in their smartphones
Speaker 5: and they told the IT people, can you just set
Speaker 5: up my corporate.
Speaker 3: Email to my BlackBerry, to my iPhone, and they were
Speaker 3: sort of forced.
Speaker 5: Companies were forced to do that because people were doing
Speaker 5: their own personal experiments with them and using them as
Speaker 5: productivity tools for themselves. And I think right now, this
Speaker 5: kind of top down approach to let's force the entire
Speaker 5: staff to use these tools, it's just a recipe for failure,
Speaker 5: because when technology is so new and cutting edge, it
Speaker 5: really needs time to percolate and for individuals to just
Speaker 5: sort of find the way and how these tools were
Speaker 5: work for everybody else.
Speaker 4: Patmy Elsen, one of our Bloomberg Opinion columnists, just really
Speaker 4: fantastic to have you on the show, and I really
Speaker 4: strongly advised the audience read Palme's column from last week.
Speaker 4: Let's keep the conversation going with the Aka Yoshioka, portfolio
Speaker 4: manager at Wealth Enhancement Group.
Speaker 1: This is wonderful.
Speaker 4: There is the fundamental analysis that you can make whether
Speaker 4: you're on the cell side or by side. There is
Speaker 4: the technologist or techno optimist view, and then there's the
Speaker 4: sort of romantic view of what AI can do for mankind.
Speaker 4: Very difficult for you, aoco, everything that we've just discussed,
Speaker 4: Where do you start with the fundamentals or what your
Speaker 4: heart tells you.
Speaker 2: Absolutely, we always go back to the fundamentals. I think
Speaker 2: when we're looking at a security and I think we
Speaker 2: look back at history too. I think there's a part
Speaker 2: of us. There are some of us that have witnessed
Speaker 2: some of this back in the nineties, in early two
Speaker 2: thousand when the tech bubble bursts, and so we're well
Speaker 2: aware of some of the risks that surround names that
Speaker 2: get hyped up from both the sentiment standpoint, even though
Speaker 2: the fundamentals may be there in order to support some
Speaker 2: of the overall enthusiasm around the start.
Speaker 4: The point that the Bloomberg story at the weekend made
Speaker 4: was that it's really hard to forecast or predict top
Speaker 4: line growth from video right now. If you go back
Speaker 4: to the August quarter of twenty twenty three, which is
Speaker 4: when this kind of parabolic growth took off, revenue each
Speaker 4: quarter has come in on average thirteen percent above what
Speaker 4: management guided. Now, as you know better than anyone, management
Speaker 4: teams can be a little conservative even at the midpoint
Speaker 4: of the ranges when they guide, but it's still the
Speaker 4: math that you have to do. They point in this
Speaker 4: piece to the price to sales ratio being above twenty
Speaker 4: three something like that. In any normal circumstance, I think
Speaker 4: people would be much more cautious.
Speaker 1: Than they are within video.
Speaker 4: Why are they not being so cautious at least until
Speaker 4: this morning session.
Speaker 2: Absolutely, I think it's really difficult to really ask for
Speaker 2: what the you know, total addressable market really is for
Speaker 2: artificial intelligence. You could say that it continues to be,
Speaker 2: you know, to be growing, and so really trying to
Speaker 2: ascertain what that number is going to be in the
Speaker 2: long term is what is so difficult about, you know,
Speaker 2: valuing in video right now. It used to be sort
Speaker 2: of a rule of thumb when I was growing up
Speaker 2: in this business that you know, anything over ten times
Speaker 2: price to sales was just too expensive. And at twenty
Speaker 2: three times, it's well above that, and so it does
Speaker 2: become very difficult and so and it becomes more of
Speaker 2: a short term guessing game in terms of supply and demand.
Speaker 2: Right now, demand outstrips supply. But you know, as Parmi mentioned,
Speaker 2: if demand starts to weigane a little bit and that
Speaker 2: equilibriate equilibrium comes to fruition, I think, you know, it
Speaker 2: could be problematic for Nvidia.
Speaker 4: To investors get distracted for other potential opportunities because of
Speaker 4: all this sort of myopic focus on one name.
Speaker 2: I think, you know, part of the reason why some
Speaker 2: of the utility companies have done so well recently is
Speaker 2: just all of the electricity demand that's being forecast for
Speaker 2: the data centers to really utilize the power that AI
Speaker 2: brings to all these servers and data centers. And you know,
Speaker 2: you've seen sort of that secondary and tertiary derivative plays
Speaker 2: of artificial intelligence and Nvidia kind of come to the market.
Speaker 2: So we'll have to see where the true sort of
Speaker 2: opportunities are going forward now that so many sort of
Speaker 2: secondary and tertiary effects have really.
Speaker 1: Been played out a little bit.
Speaker 2: And you know, we look back at history again with
Speaker 2: Nvidia and there have been plenty of times in which
Speaker 2: the stock has come down over fifty percent. It's part
Speaker 2: of the volatility for the stock over the long term.
Speaker 4: Ka Yoshioka, portfolio manager a Welk Enhancement Group.
Speaker 1: Great to catch up.
Speaker 4: Great to have you here on Bloomberg Technology.
Speaker 1: Thank you.
Speaker 4: We have some breaking news crossing the Bloomberg terminal, and
Speaker 4: we have a red headline crossing the Bloomberg terminal. Black
Speaker 4: suit cybercrime gang is blamed in major CDK ransomware attack.
Speaker 4: This is a hacking group called black Suit, and according
Speaker 4: to Alan Lisker, who is a threat analyst at the
Speaker 4: cybersecurity firm Recorded Future, they are behind the cyber attack
Speaker 4: on CDK Global. That is the hack that has basically
Speaker 4: crippled a number of auto and car retailers because those
Speaker 4: names on your screen, some of which are really moving
Speaker 4: through upside but recovering from many days of declines, rely
Speaker 4: on cdk's platform for a POS front office, back office
Speaker 4: inventory management. So that's the breaking news that we're getting.
Speaker 4: We have a name that it is a group called
Speaker 4: Black Suit, and that the cybercrime group has demanded an
Speaker 4: extor aortion fee which is believed to be in the
Speaker 4: tens of millions of dollars from CDK, and Bloomberg News
Speaker 4: reported if you remember Friday, that CDK would be prepared
Speaker 4: to make a random payment.
Speaker 1: Later in the.
Speaker 4: Program, we're going to go out to Dana Wolman, who's
Speaker 4: one of our tech editors who's been leading coverage of this,
Speaker 4: and we will get a much bigger picture and detailed
Speaker 4: picture of what's going on.
Speaker 1: After we've got that break news.
Speaker 4: Okay, coming up on the show, Apple is risking new
Speaker 4: fines over its.
Speaker 1: App store rules in the European Union.
Speaker 4: We're going to go out to Bloomberg's Mark Guman. There
Speaker 4: is a lot of Apple news to discuss.
Speaker 1: Stay with us, This is Bloomberg Technology.
Speaker 4: There's a lot of Apple news to break down today. First,
Speaker 4: the company risks billions of euros of new fines in
Speaker 4: the EU after antitrust regulators escalated a conflict over the
Speaker 4: company's app store rules. And Apple has added China's two
Speaker 4: biggest online retailers, Ali Barber and JD to a growing
Speaker 4: list of apps that will support its mixed reality Vision
Speaker 4: pro headset when it goes on sale in that jurisdiction. Friday,
Speaker 4: Who else do we go to? Bloomberg's chief correspondent, Mark German.
Speaker 4: Let's start with the EU. You know, it's an ongoing
Speaker 4: and developing issue for Apple operating in the EU market
Speaker 4: in the context of the Digital Markets Act. What is
Speaker 4: the latest and how does it change things?
Speaker 6: Yeah, the U situation had a lot of news over
Speaker 6: the past few days. Let me take you back to Friday.
Speaker 6: So a couple of weeks ago WWDC Apple introduced Apple
Speaker 6: Intelligence that's its new AI system for the iPhone, iPad
Speaker 6: Mac that also introduced a couple sort of heart new
Speaker 6: features for the iPhone and iPad. One is called iPhone
Speaker 6: Mirring that allows you to use your iPhone via your
Speaker 6: Mac via the new Sequoya update coming in the fall.
Speaker 6: The other one is called SharePlay screen sharing, where you
Speaker 6: can essentially screenshare from one iPad to another and control
Speaker 6: the other iPad. Let's say you want to help your
Speaker 6: parents with technical support. Those three features, according to Apple,
Speaker 6: won't be coming to customers in the twenty seven countries
Speaker 6: that make up the EU later this year because of
Speaker 6: the Digital Markets Act and the interoperability requirements, which means
Speaker 6: that Apple may have to lower the privacy of those
Speaker 6: features in order to make them interoperable for third party
Speaker 6: developers and meet some of the EU guidelines. This morning,
Speaker 6: the European Union announced charges against Apple related to its
Speaker 6: compliance or according to them, lack of compliance with the
Speaker 6: Digital Markets Act relating to steering users to be able
Speaker 6: to complete app payments outside of the Apple payment system.
Speaker 6: Long story short, the EU wants Apple to lower the
Speaker 6: commission significantly, which it did. It broke up the commissions
Speaker 6: between a technology fee and a revenue share fee, and
Speaker 6: then at the same time, Apple is still trying to
Speaker 6: collect that revenue from apps that are sideloaded and not
Speaker 6: bought through the app store, and so the your Opean
Speaker 6: union doesn't love that.
Speaker 4: Let's quickly get to the Vision pro use in China,
Speaker 4: so Ali, Barber and JD you know, big name compatible apps.
Speaker 4: But it's an important launch market as well. What's the latest.
Speaker 6: It's an important launch. The Vision Pro goes on sale
Speaker 6: in China, Hong Kong, Singapore at the end of this week.
Speaker 6: I don't really think it matters if Ali Baba or
Speaker 6: other applications locally are on there and not certainly it helps,
Speaker 6: but the real story with the Vision Pro is that
Speaker 6: sales are not going to take off until the company
Speaker 6: is able to make a version that's about half the price.
Speaker 6: I reported over the weekend that Apple is still planning
Speaker 6: to release a cheaper model as early as the end
Speaker 6: of next year, but they're struggling on how to cost
Speaker 6: reduce it given how expensive the components are in the
Speaker 6: Vision Pro, and if they really start reducing functionality, you're
Speaker 6: down to something that's on par with a competitor that's
Speaker 6: still a third of the price in Meta. So Apple
Speaker 6: is a long way to go on the vision pro
Speaker 6: to make it a success.
Speaker 4: Check out Mark's latest power on from over the weekend, Bluebos,
Speaker 4: Mark Gumman, thank you. There is more with Apple which
Speaker 4: will be withholding a raft in new technologies from hundreds
Speaker 4: of millions of consumers in the EU, citing concerns posed
Speaker 4: by the blocks.
Speaker 1: Regulatory tepts to rain in big tech.
Speaker 4: At the same time, reports over the weekend that Apple
Speaker 4: is open minded about its partners here.
Speaker 1: In the US on AI.
Speaker 4: Bloomberg Intelligence senior analyst and Irana joins me on set
Speaker 4: in San Francisco.
Speaker 1: It's great to have you in town.
Speaker 4: I want to get to this AI reports from the
Speaker 4: Wall Street Journal. And in short, it's that Apple would
Speaker 4: look at metas underlying technology and Google's underlying technology.
Speaker 1: We already know about open AI. What do you make
Speaker 1: of that?
Speaker 7: Now?
Speaker 8: I really like it because one of the things is
Speaker 8: they have been criticized for choosing a particular vendor and
Speaker 8: not you know, you could say, give users a choice,
Speaker 8: and that's getting them in some regulatory trouble.
Speaker 9: Now, you know, if you were to give me a
Speaker 9: choice for Becauzar in search there's.
Speaker 8: A high likelihood I'm going to go with Google, and
Speaker 8: you know you're going to have the same If you
Speaker 8: give users the choice whether it's Open Ai, Meta or Google,
Speaker 8: the users will define, you know, where they want to go.
Speaker 8: And I think that that kind of protects Apple in
Speaker 8: my view, from a regulatory point of view, and not
Speaker 8: only that, in the case of Google, for example, it's
Speaker 8: been criticized for a lot of money that's coming from
Speaker 8: Google do to Apple. I think, you know, there's ways
Speaker 8: you can redo that deal.
Speaker 4: The regulatory compliance observation is really interesting. You know, they
Speaker 4: probably don't want to make any more trouble for themselves,
Speaker 4: but we've just outlined some of the difficulty they're having,
Speaker 4: particularly in Europe. You know, whether it's app store related
Speaker 4: or it's policy related. And I ask you this probably
Speaker 4: every three months, and I have done for a few
Speaker 4: years now. I still don't know whether that anxiety regulatory
Speaker 4: risk is reflected in the stock or whether investors really
Speaker 4: have concerns about that.
Speaker 8: See, we have a concern about it because frankly, from
Speaker 8: a free cast flow point of view, that's a big
Speaker 8: payment that goes from Google to Apple and has a
Speaker 8: very high margin to but you know, Apple's always been
Speaker 8: a closed ecosystem ever since we have known the operating system,
Speaker 8: which is why they argue that it's a better operating system,
Speaker 8: it has less attacks, et cetera. Now, if they're going
Speaker 8: to open it up, the question is whether you're going
Speaker 8: to get the same level of safety or not. And
Speaker 8: that's the argument they're making. But the regulators are saying
Speaker 8: you're making too much money on the app store fee.
Speaker 8: I think there is truth of both sides. The question
Speaker 8: is how how low the feest can get. In one
Speaker 8: of the conference calls, the CFO said that EU accounts
Speaker 8: for only seven percent of the app store sales. That
Speaker 8: was the first time we got that information. So frankly speaking, financially,
Speaker 8: it's not going to ding them, but only if that
Speaker 8: kind of ruling comes to the US and China, it's
Speaker 8: going to be a.
Speaker 4: Bigger Rasuo BLOEMBG intelligence and listener. Right, Rona, thank you
Speaker 4: so much time for talking tech. And first off, a
Speaker 4: blockbuster hit for ten cents, It's Dungeon and Fight, a
Speaker 4: mobile game brought in two hundred and seventy million in
Speaker 4: just thirty days, taking the top spot in downloads and revenue.
Speaker 1: In China.
Speaker 4: The performance of the game exceeded analyst expectations and mark
Speaker 4: the biggest debut of the year for ten Cent to date. Plus,
Speaker 4: Amazon and f One will debut a new AI feature
Speaker 4: to keep viewers watching, set to be rolled out during
Speaker 4: the Spanish Grand Prix. The new feature, dubbed the stat Bot,
Speaker 4: aims to provide context and trivia during broadcasts by passing
Speaker 4: through race archives and real time racing data. The new
Speaker 4: tech will be rolled out live during this Sunday's race
Speaker 4: in Barcelona, and Mitsubishi Heavy Industry says they're nearly done
Speaker 4: designing a next gen nuclear reactor as Japan ready to
Speaker 4: shift to develop more atomic power. Bloomberg spoke with Mitsubishi's
Speaker 4: president Friday. Here's what he had to say about a
Speaker 4: nuclear future.
Speaker 7: I believe that gas turbines will grow going forward, and
Speaker 7: it will be combined with carbon capture, hydrogen combustion and
Speaker 7: so on. Nuclear power is also valuable power source in
Speaker 7: the context of carbon neutrality, so I think it'll be
Speaker 7: necessary to a certain extent as well.
Speaker 4: Welcome back to Bloomberg Technology, Ed Lovelow in San Francisco.
Speaker 4: I want to check in on the markets, but I'm
Speaker 4: kind of micro focused on what's happening with bitcoin. Actually,
Speaker 4: remember that this is an asset that trades twenty four
Speaker 4: to seven and over the last seven days or so,
Speaker 4: we've basically had one of the worst weeks of the
Speaker 4: year so far. It's interesting Bitcoin just above sixty one
Speaker 4: thousand US dollars per token.
Speaker 1: It's hovering at a more than one month low.
Speaker 4: But the other data set that we look at is
Speaker 4: the outflows six consecutive days of outflows on dedicated bitcoin
Speaker 4: spot ets here in the United States. By association, we
Speaker 4: also go to the equity market. If we change up
Speaker 4: the boards, you see some of the sort of hypo
Speaker 4: related stocks also under pressure. Coinbase chief among them, down
Speaker 4: four percent. Actually, Riot Marathon Digital holdings have kind of
Speaker 4: paired some of the losses that we saw.
Speaker 1: There's a number of things happening in the market, some
Speaker 1: of its psychological.
Speaker 4: I was listening to Bloomberg television earlier, and we're back
Speaker 4: to that debate of which you think about the bigger picture, Well,
Speaker 4: if bitcoin is digital gold, why is it not behaving
Speaker 4: like gold.
Speaker 1: There's a lot to discuss.
Speaker 4: Unfortunately for us, we can break it all down with
Speaker 4: Bloomberg intelligence and this James Seffert, James, good morning to you.
Speaker 4: I don't know where do you want to start. For me,
Speaker 4: the outflows data is kind of key because for at
Speaker 4: least for me, that's the very little that I've got
Speaker 4: to go on.
Speaker 9: Yeah, I mean, it's the one area where we can
Speaker 9: know exactly where money is moving, right, that's one of
Speaker 9: the benefits of utfs. We know exactly how much money
Speaker 9: is going in or going out. And like you said,
Speaker 9: over the last ten or so trading days, it's been
Speaker 9: a significant outflows and net outflows, but it's been about
Speaker 9: a billion dollars in olflows. And that's what ETFs are
Speaker 9: built to do. They're built to take in money and
Speaker 9: see money go in and out, and they're basically overall
Speaker 9: they're going to track the underlying asset. That said, these things,
Speaker 9: since they launched in January have still taken in about
Speaker 9: fifteen billion dollars. So, yes, a billion dollars out over
Speaker 9: the last ten or so trading days is a big deal,
Speaker 9: but it's not enough to cause the kind of correction
Speaker 9: that we're seeing in the market right now, with bitcoin
Speaker 9: trading under sixty two thousand.
Speaker 4: As you know, James, I just got back from a vacation,
Speaker 4: and while I was away, I was kind of braced
Speaker 4: to the idea that there might be some more traction
Speaker 4: or news around eth spot, ETF, ether, Ethereum, spot ETF
Speaker 4: and I came back and nothing had really happened, and
Speaker 4: we continue the status quo that we're expecting some movement
Speaker 4: in the coming weeks.
Speaker 1: What kind of a consideration is that right now?
Speaker 9: Yeah, I mean, obviously, based on what we're seeing in
Speaker 9: the markets with pricing, I don't think anyone's really paying
Speaker 9: attention to the fact that we're going to get Ethereum, spot,
Speaker 9: ETFs are over under date. If you to try and
Speaker 9: figure out when these things are going to launch right
Speaker 9: now with July second, we think the SEC is going
Speaker 9: to get those filings off their plate before the July
Speaker 9: fourth weekend. That's just our guest. There's no guarantee, no
Speaker 9: matter what, they will launch some point this summer. So
Speaker 9: that is again only a matter of time that people
Speaker 9: are not really kind of focused on the fact that
Speaker 9: that's happening. Because Ethereum is also down, as you kind
Speaker 9: of hinted at, it's any stocks related to bitcoin or crypto.
Speaker 9: Ethereum is down but they are going to launch at
Speaker 9: some point in the in the next couple of weeks,
Speaker 9: and we think it'll happen before jewel or July fourth,
Speaker 9: but there's no guarantee on that front. That said, if
Speaker 9: I would add that, all these issuers they just had
Speaker 9: to file a whole bunch of amendments to these ETFs,
Speaker 9: so they had to submit a bunch of new documentation
Speaker 9: in the SEC, and all of those came in on Friday,
Speaker 9: right around market closed. So the SEC has some new
Speaker 9: stuff to get through and it will could take a week,
Speaker 9: maybe two weeks, and then we'll know for sure when
Speaker 9: these things are going to launch.
Speaker 4: If we try and marry those two points of discussion together,
Speaker 4: the outflow data we have from bitcoin the well, I
Speaker 4: think you said not paying attention, but let's say lack
Speaker 4: of activity.
Speaker 1: In gearing up for ef ETF.
Speaker 4: Is it case of like, well, if I'm an investor
Speaker 4: and I'm open minded to putting money to work in
Speaker 4: different places, I'm holding out to wait for eh. Is
Speaker 4: there a close relationship between bitcoins ETF flows and I
Speaker 4: guess the anticipation of a new product to come.
Speaker 9: It'll be very interesting to see what people do Obviously,
Speaker 9: there's a lot of people that have put money to
Speaker 9: work in those bitcoin ETFs that the most successful launches
Speaker 9: in ETF history across the world. So are there are
Speaker 9: people going to say, I'd rather have a sort of
Speaker 9: index ex sourcis of cryptocurrency. Do I believe in bitcoin
Speaker 9: more than ethereum or ethereum more than bitcoin? And we'll
Speaker 9: see those numbers come out once these things launched, We'll
Speaker 9: see what the flows do. We were pretty we had
Speaker 9: strong convictions that these were going these bitcoin ets were
Speaker 9: going to be successful, and even still, the numbers that
Speaker 9: we saw come out in the month since they launched
Speaker 9: kind of blew our expectations out of the water. Like
Speaker 9: I said, we're about fifteen billion now. We thought fifteen
Speaker 9: billion was going to be the first year of flows
Speaker 9: with these bitcoin ETFs, and that was pretty strong indications
Speaker 9: of what we thought was going to happen. And it
Speaker 9: looks like we're I mean, we don't know what's going
Speaker 9: to happen between now and the rest of the year,
Speaker 9: but it'll be interesting to see what people do with
Speaker 9: these ethereum ETFs when they ultimately do launch. I'm more
Speaker 9: inclined to think that I don't know. We view these
Speaker 9: things as kind of satellite positions in portfolios. People in
Speaker 9: our minds, we are assuming are not putting significant capital
Speaker 9: to work fifty percent of their portfolios. So if they're
Speaker 9: doing something like three to five percent, like we're hearing
Speaker 9: from these issuers are getting from their clients, maybe they
Speaker 9: just add a couple of percentage points onto ethereum. Maybe
Speaker 9: they sell a little bitcoin and buy ethereum. But we
Speaker 9: won't know until these things launch, and even then we
Speaker 9: won't exactly know what people are doing. We can just
Speaker 9: kind of read the tea leaves and get kind of
Speaker 9: an inkling of what's going on.
Speaker 4: You're pretty good at reading the tds. Okay, So on
Speaker 4: the beach, I wasn't talking about ethereum ets. We were
Speaker 4: talking about interest rates whenever wherever. When I look at
Speaker 4: digital assets or cryptos as a market broadly, you know,
Speaker 4: there seems to be in the pullback of recent weeks,
Speaker 4: a concern about rates, but just generally, this sense that
Speaker 4: we look at the crypto market is a reflection of
Speaker 4: risk appetite going forward and whatever the FED will, it
Speaker 4: won't do.
Speaker 1: What's your math on that?
Speaker 9: Yeah, I mean the way I look at it is
Speaker 9: one this thing, these assets. There's a lot of underlying
Speaker 9: belief that people have in these assets, right, but also
Speaker 9: they are pure momentum. There's a lot of momentum at
Speaker 9: play behind this. So when we see moves like this,
Speaker 9: it's pretty standard to see big moves. I was looking
Speaker 9: at some of the numbers for the twenty seventeen bull
Speaker 9: market for bitcoin and crypto and the twenty twenty bull
Speaker 9: market for crypto. It's very, very very common to see many,
Speaker 9: many pullbacks of ten percent or more some in most cases.
Speaker 9: In both cases we saw pullbacks of twenty five to
Speaker 9: thirty percent or more before we hit those ultimate old
Speaker 9: time highs. So this is a very volatile market. I
Speaker 9: think the one thing hitting right now is mount Gox,
Speaker 9: which was a crypto exchange that went bankrupt in twenty fourteen.
Speaker 9: We just got announcements that they're going to start releasing
Speaker 9: those coins, and I think people are worried about the
Speaker 9: potential of nine billion worth of bitcoin hitting the markets
Speaker 9: and getting sold. I don't think there's a lot of
Speaker 9: caveats here and there about how much money is actually
Speaker 9: going to get dumped on the on the market, but
Speaker 9: I think that's really kind of like we've already in
Speaker 9: this kind of sideways to downtrend for bitcoin, and now
Speaker 9: we're getting this news of Mount Cox releasing coins next
Speaker 9: month potentially, and I think that's just kind of spooking
Speaker 9: markets here a little bit.
Speaker 4: Bloomerg Intelligence analyst James Siefer, it's great to have you
Speaker 4: on the program, and you've been very busy of late.
Speaker 1: We appreciate it.
Speaker 4: Okay, coming up on Bloomberg Technology, we're going to be
Speaker 4: joined by Alexander Yazdi, co founder and CEO of Voodoo,
Speaker 4: to discuss the company's recent acquisition of the social media
Speaker 4: platform be Real for five hundred million euros.
Speaker 1: A lot of you on be Real, I'm not. We'll
Speaker 1: just talk about it. This has been big technology.
Speaker 4: Leading mobile apps and games publisher Voodoo recently acquired the
Speaker 4: social media platform be Real in a five hundred million
Speaker 4: euro deal. With this acquisition, Voodoo hopes to further its
Speaker 4: diversification into consumer apps, but it also offers be Real
Speaker 4: a platform for growth. Delighted to say that, Voodoo CEO
Speaker 4: Alexandriasdi joins me now to discuss and you know, I
Speaker 4: look at this, I'm so familiar with some of the
Speaker 4: mobile gaming side of Voodoo. I'm not a B real user.
Speaker 4: I know my producer, John Hyland was was a B
Speaker 4: real user at times. I think Jackie Lopez, who leads
Speaker 4: our team, also as a user. What was the impetus here?
Speaker 4: What made you wake up Alexander and think this is
Speaker 4: the one for us?
Speaker 1: Sure? Thanks Ed? Thanks Ed?
Speaker 9: Sorry? So yeah?
Speaker 10: So be really is amazing. It's the most successful social
Speaker 10: up created in the best AHOs and they really created
Speaker 10: the unique behavior that just to share antique content with
Speaker 10: true friends and also where every single user is posting
Speaker 10: content and not just a passive consumer, and so unlike
Speaker 10: other social networks, the users really share their real lives
Speaker 10: without the fear of being charged and without all the
Speaker 10: time consuming effort to craft the perfect facade. And their
Speaker 10: success really shows the users create for this type of
Speaker 10: content because they grew until like to forty million users
Speaker 10: and the majority of them are extremely engaged. So why
Speaker 10: we acquire with we do is because we think we
Speaker 10: can push their vision and mission to create authentic connections
Speaker 10: to more people everywhere in the world. And Voodoo's mission
Speaker 10: also and why we exist is to help products and
Speaker 10: great ideas to have the best possible life and scale
Speaker 10: by leveraging all the growth technologies and the optimization skills
Speaker 10: we develop in the past ten years, first as you said,
Speaker 10: with games, but also then with non gaming ups especifically
Speaker 10: social ups in the past four years.
Speaker 4: It's an interesting expansion to portfolio really quickly. Five hundred
Speaker 4: million euros in cash. How is the deal structured?
Speaker 10: Yeah, so the deally is like structuring cash and shell
Speaker 10: So there is a portion in cush and a portion
Speaker 10: in Voodoo shells. And there is a part of the
Speaker 10: five hundred million which is an upfront consideration, and another
Speaker 10: part which is based on performance. So it's not like
Speaker 10: the full five hundred is not just a five hundred
Speaker 10: up fronts.
Speaker 4: The reason I ask is I kind of do the
Speaker 4: math on Voodoo plus be Real. So you guys have
Speaker 4: one hundred and fifty million active users monthly across basically
Speaker 4: the entire portfolio, but with be Real you're like instantly
Speaker 4: added forty million more. You know, it's an interesting use
Speaker 4: of capital. But you know you've been talking about how
Speaker 4: you think you can help be Real scale find growth.
Speaker 4: They also help you find growth pretty quickly as well.
Speaker 10: Yeah, so we don't we don't aim at using be
Speaker 10: Real or games to do massive cross promotion. You know,
Speaker 10: we we like to have our apps stand alone, driven
Speaker 10: by leaders that have full ownership on their products, so
Speaker 10: we will more leverage or know how our technology and
Speaker 10: our skills to grow be Real into what it should be,
Speaker 10: which is like an iconic global social network because the
Speaker 10: need they answer is really global and it's a daily
Speaker 10: universal need to share content with friends. So we will
Speaker 10: just take this gem and invest all our infrastructure to
Speaker 10: grow be Really. But it's not like using our games
Speaker 10: to take their users into be Real or vice versa.
Speaker 4: I think we should talk about the social media landscape
Speaker 4: and the opportunity before you, you know, you'll be aware
Speaker 4: of what's happening with TikTok in this country, in the
Speaker 4: United States, particularly when it comes to image or video
Speaker 4: based content. Right the competition between TikTok, Instagram reels. In Europe,
Speaker 4: Snapchat still has a strong presence. But my question for
Speaker 4: you is whether you feel that there is there is
Speaker 4: a demand right now for something different, new, and that
Speaker 4: be Real is kind of reflective of that.
Speaker 1: Definitely.
Speaker 10: I really think like social media is great, and there
Speaker 10: is a lot of social media that promotes a part
Speaker 10: of your life which is the one you want to share,
Speaker 10: the one which.
Speaker 1: Is like crafted, modified, improved.
Speaker 10: But also at the same time the users need also
Speaker 10: to have a social network that makes them able to
Speaker 10: share like their authentic lives. Right, So it's two different
Speaker 10: purposes and BE really unseld the second one, which is
Speaker 10: to share their autentic life without any filter, to there
Speaker 10: a small circle of true friends. So until now, no
Speaker 10: social media actually answered that need and be really really
Speaker 10: grew so much without any marketing strategies to this forty
Speaker 10: million months active users because there is a need and
Speaker 10: there is also a hole in this specific need.
Speaker 4: Ala when you think about your strategy to grow be
Speaker 4: real it's user base and its engagement, where do you
Speaker 4: think that comes from? I mean, do you specifically say, okay,
Speaker 4: this is analogous with Snapchat or snap we go after
Speaker 4: those users, or we think this is analogous with current
Speaker 4: Facebook users.
Speaker 1: What are your target audiences?
Speaker 10: So you know, our target adjance is like everyone having
Speaker 10: a smartphone because as I said before, really like everyone
Speaker 10: in the on the planet really needs to to have
Speaker 10: authentic connection with their friends. So that's our target audience today,
Speaker 10: it's more for the generation Z which are using the product,
Speaker 10: and that's great because usually the social networks can grow
Speaker 10: with with this generation. And I think if we do
Speaker 10: a good job then I mean, if we do a
Speaker 10: good job on the product side, meaning adding the right
Speaker 10: features to conquy again the users who churn and also
Speaker 10: conkey on new users on Burial, then we can grow
Speaker 10: to more users in more countries and also targeting maybe
Speaker 10: people at later ages like forty plus, et cetera, because
Speaker 10: Burial didn't move that past in adding new features to
Speaker 10: create newness and life in the product.
Speaker 1: So that's our job.
Speaker 10: We want to grow be Real by giving the users
Speaker 10: more opportunities to share authentic content. And if we think
Speaker 10: that if we do the right job, then people would
Speaker 10: come back and we would get more users.
Speaker 1: Voodoo is Alexander Yazdi. It's great to have you in
Speaker 1: the program. I know a lot of be Real users
Speaker 1: watch this show. So if you're a b Real user
Speaker 1: and you.
Speaker 4: Have a thought on Voodoo buying the platform, please reach
Speaker 4: out to us and Alexander come back on the show soon.
Speaker 4: A hacking group called Black Suit is believed to be
Speaker 4: behind the cyber attack on CDK Global. That's paralyzed car
Speaker 4: sales across the US. That's according to a threat analyst
Speaker 4: at the security firm recorded Future from All. Let's bring
Speaker 4: in our technology editor, Bloomberg's Dana Wolman, tell me about
Speaker 4: black Suit and what we know.
Speaker 11: Black Suit is a known group comprised of hackers based
Speaker 11: in both Russia and other parts of Eastern Europe. And interestingly,
Speaker 11: they have not named CDK a victim on their website,
Speaker 11: and that could mean a couple things. It could mean
Speaker 11: that CDK paid a ransom, which we don't know if
Speaker 11: they did or not. Or it could mean that there
Speaker 11: are still an active negotiations with CDK. So worth noting,
Speaker 11: and you said Bloomberg's source on this was not a
Speaker 11: black Suit itself, but a security researcher.
Speaker 4: I think that Bloomberg reported on Friday that in terms
Speaker 4: of an extortion fee, CDK was planning to make a payment.
Speaker 4: That's kind of like the tech side of it, right,
Speaker 4: it was cdk's platform that was compromised and them that
Speaker 4: was compromised. One of the things you've been writing about
Speaker 4: even this morning, right it's been five days or so now,
Speaker 4: is that this is actually materially really impacting some of
Speaker 4: the auto and car retailers.
Speaker 1: What have you learned?
Speaker 11: Yeah, so far, by my account, at least five publicly
Speaker 11: traded auto dealerships have filed with the SEC warning investors
Speaker 11: of a possible financial impact, and the wording has varied
Speaker 11: from one company need to another. Some of them have said,
Speaker 11: well it's a little essentially said well, it's a little
Speaker 11: too early to gauge the exact impact. One of them
Speaker 11: said it's reasonably likely that the impact was material. The
Speaker 11: company that so far seems the least affected of the
Speaker 11: ones that posted filings was Penske, only because it's auto
Speaker 11: dealership division does not use CDK software.
Speaker 1: It does use CDK, but.
Speaker 11: In a more specialized business facing division, and of those companies,
Speaker 11: Penske is the only one whose stock seems to be
Speaker 11: up since this hack broke on Wednesday.
Speaker 4: So never before have many of our audience stopped to
Speaker 4: think about the software management platform that any given car
Speaker 4: retailer uses. But we learn quite a lot about CDK.
Speaker 4: Just explain its place in that industry. Because if you
Speaker 4: went to try and buy a car this past weekend,
Speaker 4: which is end of the quarter, you might have struggled.
Speaker 11: You and me both ed I had not heard of
Speaker 11: before this story broke, and I certainly didn't know that
Speaker 11: one company had a really strong grip on the entire
Speaker 11: market for dealership software. I don't think anyone has really
Speaker 11: thought much about the kind of software that dealerships use,
Speaker 11: but in fact, many tens of thousands. By our account,
Speaker 11: around fifteen thousand dealerships in the US and Canada use
Speaker 11: CDK software and they use it for almost everything that
Speaker 11: they do. That includes scheduling appointments, tracking repairs on cars,
Speaker 11: and closing transactions.
Speaker 3: Without this software, with the software.
Speaker 11: Being down as it has been since this series of attacks,
Speaker 11: dealerships either aren't serving customers or they're resorting to good
Speaker 11: old fashioned pen and paper when possible, and it's not
Speaker 11: even always possible to do things using pen and paper.
Speaker 1: Dana, really quick, we have thirty seconds.
Speaker 4: But what's the next thing that the tech and auto's
Speaker 4: teams are watching for in this story?
Speaker 11: So aside from looking to see if black Suit takes
Speaker 11: exact responsibility, we are looking for a couple of things.
Speaker 11: We would really love to know the exact amount of
Speaker 11: the ransom. We've reported so far that it's in the
Speaker 11: tens of millions. Obviously, we're looking for a more specific
Speaker 11: number than that, and we're waiting for CDK software to
Speaker 11: go back online, which of course the fifteen thousand dealers
Speaker 11: are as well. Every day that the software is down,
Speaker 11: these companies are of course losing money.
Speaker 4: Bloomberg's day in a warm and it's been so busy
Speaker 4: for you and the Auto's team trying to get to
Speaker 4: the bottom of this story, which will continue to cover.
Speaker 1: Thank you so much.
Speaker 4: That does it for this edition of Bloomberg Technology Fast
Speaker 4: starts the week, and there's a lot to recap on
Speaker 4: the podcast.
Speaker 1: You know where to find the pod.
Speaker 4: It's on Apple, so on Spotify, it's on iHeart, and
Speaker 4: it's on all of the Bloomberg platforms. From San Francisco,
Speaker 4: Happy Monday. This is Bloomberg Technology.