Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed Ludlow.
Speaker 2: Now from New York and Caroline Hyde and I'm Jackie
Speaker 2: Devalas in San Francisco.
Speaker 3: This is Bloomberg Technology coming up.
Speaker 4: Apple fights back in the UK, removing its most advanced
Speaker 4: end to end encrypted security feature. Plus President Trump is
Speaker 4: expected to sign tariffs to counter digital services taxes despised
Speaker 4: by US tech giants, and Coinbase says the SEC has
Speaker 4: agreed to drop its lawsuit that accused it of running
Speaker 4: an illegal exchange. The first a check in on these
Speaker 4: markets and we're pulled lower once again. US economic data
Speaker 4: showing slower activity, and there's also hire inflation expectations the
Speaker 4: Nasdaq one hundred of by five tens of percent. The
Speaker 4: key drags down from a points perspective, Amazon Tesla, but
Speaker 4: we get to a key move on the day, Apple
Speaker 4: removing its most advanced end to end encrypted security feature.
Speaker 4: It's for cloud data, but it's to the UK user base.
Speaker 4: It's a completely stunning development that we're seeing. After of course,
Speaker 4: there were reports that the UK government ordered Apple to
Speaker 4: build a backdoor into customer data globally. The person who
Speaker 4: helps break it all down Bloomberg's Mark German, who sat
Speaker 4: with me in New York. This is quite the fight back.
Speaker 4: From a political perspective, this is a stunning development.
Speaker 5: So just to give some context here, like you said,
Speaker 5: the UK Parliament ordered Apple to build a backdoor to
Speaker 5: give it access to user data not only for users
Speaker 5: who live in the UK, but users globally, and so
Speaker 5: Apple essentially had an option either build that back door
Speaker 5: and continue to offer services like Advanced Data Protection, continue
Speaker 5: to offer iCloud in the region. But what they decided
Speaker 5: to instead simply remove their upgraded end to en encryption
Speaker 5: feature that's called Advanced Data Protection. Gives you extra security
Speaker 5: right for iCloud data, iCloud backups, text message backups, notes reminders.
Speaker 5: They have an app called free form Safari web book marks, right, so.
Speaker 4: They're removing that.
Speaker 5: So now in the UK you're only getting standard encryption
Speaker 5: for those features, but you still will get end to
Speaker 5: encryption for imassage, FaceTime and a few other things like
Speaker 5: passwords and health data. So that is a stunning development.
Speaker 5: They have not removed Advanced Data Protection any other region,
Speaker 5: and it remains available globally elsewhere.
Speaker 2: Mark the security of Apple's products is a huge part
Speaker 2: of its brand, as you know, where does this leave
Speaker 2: UK consumers with relation to other products they are on
Speaker 2: the market, Does it mean that they're going to be
Speaker 2: substantially less protected?
Speaker 5: Yeah, I mean end to end encryption is really the
Speaker 5: gold standard. It means that nobody can access that data
Speaker 5: unless you're on what Apple calls those trusted devices. So
Speaker 5: your own Apple ID logged in iPhone, iPad, mac watch,
Speaker 5: other products, You're not going to get that full end
Speaker 5: to end encryption on your text message backups, on your notes,
Speaker 5: on your reminders, things like that, and so that is
Speaker 5: a new privacy concern in the UK.
Speaker 4: But the other.
Speaker 5: Option was removing all protection entirely in building that backdoor
Speaker 5: in for the UK government. So from a compromise standpoint,
Speaker 5: it is a big compromise Apple is making, but it
Speaker 5: is also clear rebuke against the UK government because they
Speaker 5: are not building that back door.
Speaker 4: So they say, give us the historical context here, how
Speaker 4: often does Apple react to this regional manner?
Speaker 5: Well, in terms of regions right in China that is
Speaker 5: the poster child for these compromises. iCloud in China is
Speaker 5: operated by a local provider, right, not Apple servers, And
Speaker 5: there are talks that this local provider in China for iCloud,
Speaker 5: is actually a state backed entity, right, with connections to
Speaker 5: the Communist Party in China. Right, So that means they
Speaker 5: probably have full access, unfettered access to the user data
Speaker 5: there in China. To bring Apple intelligence there, they're essentially
Speaker 5: building what amounts to a censorship engine right in partnership
Speaker 5: with Ali Baba, so they'll be able to go in
Speaker 5: the Chinese government and basically monitor the output of the
Speaker 5: AI on iPhones in China and have via Ali Baba,
Speaker 5: Apple make tweaks to that engine.
Speaker 3: That's Bloomberg's, Markerman, thanks for joining us.
Speaker 2: Meanwhile, President Trump is expected to sign a memorandum today
Speaker 2: that could allow tariffs in response to digital services taxes
Speaker 2: that some countries impose on US giants like Alphabet and Meta.
Speaker 2: That's according to sources. Let's get more with Bloomberg's but
Speaker 2: Mike Shephard, Mike, who does this memorandum direct to do?
Speaker 2: And what could those actions look like?
Speaker 6: So what they're looking for, Jackie, is a way to
Speaker 6: address one of President Donald Trump's and his administration's biggest
Speaker 6: bugaboos over the years. They even took a look at
Speaker 6: this back in twenty fourteen. These digital service taxes that
Speaker 6: hit big American technology companies like Alphabet Inc. Like Meta
Speaker 6: platforms with fees in Europe and other countries that are
Speaker 6: charging for their services. And the administration has outlined this
Speaker 6: program of possible reciprocal tariffs. It's unclear whether it would
Speaker 6: fit directly into that or be parallel to it, but
Speaker 6: the idea is that Trump and his team see these
Speaker 6: taxes imposed by France and about thirty other countries worldwide
Speaker 6: as unfair to American companies. The timing of this is
Speaker 6: fascinating because we have the French President Emanuel Macron coming
Speaker 6: to Washington already with an intense slate of discussions over Ukraine.
Speaker 4: Precisely, the timing around geopolitics Russia Ukraine, the timing around
Speaker 4: Macron coming to the US. Mike also just push us
Speaker 4: forward in terms of how we see this is what
Speaker 4: Meta had been setting out to do. Reporting just yesterday
Speaker 4: that he was on Capitol Hill, Mark Zuckerberg discussing some
Speaker 4: of his policy wishes. Is this exactly one of them?
Speaker 6: Well, they have made clear for a long time that
Speaker 6: they object to these taxes. They see it as unfair. Now,
Speaker 6: on the other hand, in conversations with European officials, what
Speaker 6: we have heard and with members of other countries that
Speaker 6: charge these taxes. France, for instance, has a goods surplus
Speaker 6: with the US. It's a trade deficit from Donald Trump's perspective,
Speaker 6: but France sees a services deficit with the US, so
Speaker 6: there from their point of view, this digital service tax
Speaker 6: is a way of evening that out and also charging
Speaker 6: for economic activity that they see happening in this country.
Speaker 6: It will make for a complicated round of discussions, and
Speaker 6: the questions out there are many. One is how soon
Speaker 6: could something like this go into effect. We've seen how
Speaker 6: quickly Donald Trump has tried to move with some of
Speaker 6: these other tariff's decisions, and also what level they might
Speaker 6: set and how they would fit into other levees, whether
Speaker 6: they would be stacked on top of other measures, for instance,
Speaker 6: that's another open question, Mike.
Speaker 2: We know that Mark Zuckerberg and other tech executives have
Speaker 2: been getting closer to President Trump.
Speaker 3: Has this been kind of one.
Speaker 2: Of the initiatives that they've been pushing forward? Net Where
Speaker 2: does it leave companies?
Speaker 6: Well, that's a great question on the regulation front. Overall,
Speaker 6: they have been pushing the administration to not only dial
Speaker 6: back rulemaking here in the US it would hit them,
Speaker 6: but they also want the US to be a better
Speaker 6: ambassador for their interests abroad, especially in Europe. And we
Speaker 6: heard jd Vance, Vice President articulating this at the Munich
Speaker 6: Security Conference and at the AI summit in Paris that
Speaker 6: we followed so closely, articulating this vision that regulation is
Speaker 6: really impeding innovation and that levies like the Digital Services Tax,
Speaker 6: which they have long opposed, are just the sort of
Speaker 6: thing that is standing in the way of them making
Speaker 6: breakthroughs and investments in those countries as well.
Speaker 4: Bluemeg's Mike Shephard, we thank you. Look, Tariff's just one
Speaker 4: of the many changes in the political landscape for big
Speaker 4: tech and DEVA startups. Bradley Tusk joins US now to
Speaker 4: discuss how companies should manage this fluid environments. Of course,
Speaker 4: just pivoted his own VC to offer advice in exchange
Speaker 4: for equity instead of cash. Bradley, You've got a wealth
Speaker 4: of political experience. Communications Director Senator Chuck Schumer, a campaign
Speaker 4: and manager, of course, of Michael bloombergs two thousand and
Speaker 4: nine mayoral race. Reminder to our audience. Michael Bloomberg is
Speaker 4: the founder and majority owner of Bloomberg LP, the parent
Speaker 4: company of Bloomberg News. Bradley, I just wanted to put
Speaker 4: to you, like, how does a company you advise manage
Speaker 4: to move and navigate in this ever changing environment?
Speaker 7: Yeah, I mean right now, I think first and foremost,
Speaker 7: there's really a lot of disappointment amongst startups because the
Speaker 7: venture market has been dead for the last four years,
Speaker 7: so it as an absolute dearth of liquidity, both in
Speaker 7: terms of IPOs and MNA activity. And last fall there
Speaker 7: was a tremendous amount of optimism that both between reduced
Speaker 7: interest rates and a change regulators at the federal level,
Speaker 7: that market would really open up and we start to
Speaker 7: see a lot of growth, and all American innovation really
Speaker 7: relies upon that market being free and open, and that
Speaker 7: hasn't happened at all. We have both chairman power signaling
Speaker 7: we might be done with Ray cuts, but I think
Speaker 7: far more important the markets are so much in turmoil.
Speaker 7: There's so much chaos out of Washington that a smooth,
Speaker 7: stable climate that would have paved the way for new
Speaker 7: tech IPOs and there's literally over in one thousand s
Speaker 7: ones file then waiting to go, and new M and
Speaker 7: A just hasn't happened. And so right now I think
Speaker 7: you just have to basically sit tight. But I really
Speaker 7: do think that all the people in the venture community
Speaker 7: that supported President Trump right now are feeling some buyer's remorse.
Speaker 4: But if we do see President Trump being able to
Speaker 4: push back against the Digital Services tax, be able to
Speaker 4: push against European overreaches, they see it by fighting fire
Speaker 4: with fire, is that not It.
Speaker 7: Doesn't help, It doesn't help startups, it doesn't help It
Speaker 7: might help meta, it might help you know, Apple or
Speaker 7: someone like that. But the reality is when you have
Speaker 7: companies that are worth anywhere from a million to one
Speaker 7: hundred million or even a billion dollars and have revenue
Speaker 7: from a million to a couple hundred million, they're not
Speaker 7: paying the Digital service tax, right They're usually not even
Speaker 7: profitable at this point. And so and the problem is this,
Speaker 7: which is, you know, innovation ultimately happens because you have
Speaker 7: all of these founders sort of in a garage somewhere
Speaker 7: or the version of it, who come up with crazy
Speaker 7: ideas and most of them fail, but once in a while,
Speaker 7: one of them succeeds, which is what we saw with
Speaker 7: when we mentioned Meta, Mark Zuckerberger, Apple, Steve Jobs. If
Speaker 7: we don't have the new Zuckerbergs and Jobs and Bezoses
Speaker 7: of the world coming up, you know, then eventually we're
Speaker 7: going to have massive stagnation in our economy. And when
Speaker 7: there's no liquidity in the venture market, venture capital funds
Speaker 7: like mine can't really deploy as much. New capital LPs
Speaker 7: can't invest as much in venture funds, and as a result,
Speaker 7: startups either aren't being funded and they're not being created,
Speaker 7: or they're going out of business when they don't necessarily
Speaker 7: have do and so you know, the ripple effect is severe.
Speaker 2: Let's talk about artificial intelligence because that sector has gotten
Speaker 2: a lot of cash from venture capitalists. So I don't
Speaker 2: think those startup founders are actually hanging out in a garage.
Speaker 3: But let's talk about the regulation in the space.
Speaker 2: It's virtually non existent at the federal level, but there
Speaker 2: is movement at.
Speaker 3: The state level.
Speaker 2: How do you see this shaking out and how are
Speaker 2: you advising startups in this space to navigate it?
Speaker 3: Right now?
Speaker 7: Yeah, my advice is really exactly what you just said,
Speaker 7: which is we've really got to pay attention to the states.
Speaker 7: There's all we've seen on the federal level was one
Speaker 7: very kind of tepet executive order from President Biden that's
Speaker 7: already been rescinded by President Trump. But last year over
Speaker 7: eight hundred bills around AI were introduced in state government.
Speaker 7: There will probably be double by the time we're done
Speaker 7: with sessions this year. And some of them are very
Speaker 7: specific around things like deep fakes, but some of them
Speaker 7: are very comprehensive around how you regulate allows, how you
Speaker 7: regulate apps, and so right now, the problem with the
Speaker 7: lack of any sort of federal leadership is we're going
Speaker 7: to end up patchwork of fifty different states with different
Speaker 7: sets of regulation that companies have to try to comply
Speaker 7: with all of them. But at the moment, if you're
Speaker 7: one of my portfolio companies, it's let's focus on the
Speaker 7: states where legislation is the most likely to move. Let's
Speaker 7: focus on where those bills are going and make sure
Speaker 7: we have a seat at the table so that a
Speaker 7: it doesn't destroy us, and be if possible, it can
Speaker 7: help us build a regulatory mode.
Speaker 2: What other sectors are you looking at that, you think
Speaker 2: you can add value when it comes to this regulatory advice.
Speaker 2: I'm thinking autonomous vehicles, cannabis, you know, startups and delivery.
Speaker 3: What are you saying?
Speaker 8: Yep?
Speaker 7: All those for sure. A lot in digital health, especially
Speaker 7: because healthcare is so big, so fragmented, so regulated, and
Speaker 7: quite frankly so screwed up, that there's so much room
Speaker 7: for improvement. That's a really big sector for us. Ed
Speaker 7: tech is another one. I'm excited about nuclear and what's
Speaker 7: happening around that. The gov tech sector has been growing
Speaker 7: a lot lately, so that's become interesting. Transportation gaming, you know.
Speaker 7: The good news for a business like mine, where you're
Speaker 7: investing in and working with startups and regulated industries is
Speaker 7: government's reach for better or worse is very broad, and
Speaker 7: the vast majority of industries are impacted by government one
Speaker 7: way or another, and so that gives us an opportunity
Speaker 7: to add value.
Speaker 4: To add value. Bradley, you have just gone on and
Speaker 4: to say that the moment your industry, the VC industry,
Speaker 4: the startup industry is feeling buyers remorse around Trump, but
Speaker 4: we push back a little bit and say it's only February. Yep,
Speaker 4: and ultimately are we likely to see your advice going
Speaker 4: forward that things will change from a federal perspective and
Speaker 4: things might open up from an IPO perspective, and companies
Speaker 4: can build the next Zuckerber. We can see the next
Speaker 4: billion dollar, trillion dollar.
Speaker 7: I hope so because I have a lot of money
Speaker 7: at stake here as to my live other vcs.
Speaker 9: Look, my hope is.
Speaker 7: And what at least I'm telling myself what I'm up
Speaker 7: at three in the morning is Trump came in with
Speaker 7: a burst of energy. That's who he is. They wanted
Speaker 7: to make a splash. They have, and soon enough things
Speaker 7: will calm down and the markets will sort of feel
Speaker 7: better and we'll start to.
Speaker 4: See as a new record highs.
Speaker 7: Yeah, but it is not. It's so far not resulting
Speaker 7: in tech company sort of listing IPOs. So that's what
Speaker 7: we need to get to. And on one hand, it
Speaker 7: is possible because Trump, by the way, to his credit,
Speaker 7: just in terms of the work put in, had so
Speaker 7: much activity on opening day and in the first week
Speaker 7: that that there was a lot. But as a result
Speaker 7: they've also done a lot too, so there might not
Speaker 7: be as much to keep doing going forward. On the
Speaker 7: other hand, he operates in chaos, right, that is how
Speaker 7: he functions, and that's not necessarily what you want if
Speaker 7: you are trying to take you know, young tech startups
Speaker 7: and either sell them to bigger companies or take them public.
Speaker 2: That's Tusk Venture CEO Bradley Task. Thanks so much for
Speaker 2: joining us.
Speaker 10: Thank you.
Speaker 3: Coming up next, Ali.
Speaker 2: Baba regains its spot is the number two company in China.
Speaker 3: More in that. Next, this is Bloomberg.
Speaker 4: Let's talk about Alibaba stock rally. It has catapulted the
Speaker 4: Chinese tech darling back to the number two spot in
Speaker 4: the country. For more bloombergs Henry Ren joins us on
Speaker 4: this rally sustainability and indeed the breadth of the buying
Speaker 4: of China tech. Henry just, why are we seeing this
Speaker 4: sort of rally in Alibaba and can it sustain this number?
Speaker 3: Yeah?
Speaker 11: So, Ali Baba is part of the China tech rally
Speaker 11: that we have been seeing for the past few weeks
Speaker 11: since Deep seeks Ai breakthrough, and the whole theasis is
Speaker 11: basically based on the optimism over the country's tech advancement
Speaker 11: as evidenced by Deep Seek of course, and then in
Speaker 11: the past few weeks we have been seeing signs of
Speaker 11: more supportive stands toward the private sector by Beijing as
Speaker 11: well evidence by Chijin being present embracing all those important
Speaker 11: tech leaders in a rear meeting in Beijing. And basically
Speaker 11: the supported stands toward the private sector as well as
Speaker 11: the tech breakthrough are all supporting the stocks. And most
Speaker 11: importantly recent we have been having some companies reporting earnings,
Speaker 11: including Ali Baba yesterday reporting some recovery in its core
Speaker 11: business of domestic e commerce as well as a growing
Speaker 11: croc cloud business. So all those factors putting together are
Speaker 11: supporting China techs raally in the past few weeks.
Speaker 2: Henry, what does this tell us about beijing stands on
Speaker 2: regulation in a sector that really saw it it.
Speaker 3: Suffer from a crackdown.
Speaker 2: Does it mean that this pressure to scrutiny is over?
Speaker 12: Yeah?
Speaker 4: Interesting question. I felt.
Speaker 11: The fact that President Hijingpin himself inviting all those tech
Speaker 11: leaders to Beijing for a PAP talk this sign is
Speaker 11: pretty telling, isn't it, Because in the past two or
Speaker 11: three years, all the headlines, the top headlines we've been
Speaker 11: seeing about more scrutiny into all those companies, not just
Speaker 11: about those tech giants, but also the right heading companies
Speaker 11: of d D but also the food delivery company of Maiitwan.
Speaker 11: But this is important. This is a clear sign of pivot. However,
Speaker 11: we still need to caution a little bit here because
Speaker 11: the expectations is this scrutiny on those tech firms will continue,
Speaker 11: and the priority of Beijing is pretty clear as well,
Speaker 11: because if you see the seat map of that meeting,
Speaker 11: Jack Ma the co founder of Ali Baba and Ponima
Speaker 11: the CEO of Tencent, they're not sitting at the front
Speaker 11: row of facing President cheating Pin. The tech darlings from
Speaker 11: Beijing size are still about the heart tech, including Huawei
Speaker 11: as well as the EV maker Buid, So we have
Speaker 11: to keep that in mind.
Speaker 4: Henry in just thirty seconds, it's interesting who's been buying
Speaker 4: some of these Chinese ADRs, Ryan Cohen, as reported by
Speaker 4: the Wall Street Journal, who else has been winning?
Speaker 11: Yeah, So lots of heats from training activities these days,
Speaker 11: and apart from Ryan Cohen, also billionaire investor David Tapper
Speaker 11: as well, famous for his by Everything China coll we're
Speaker 11: seeing more training activities among on shore mainland traders as
Speaker 11: swallowed these days. So all those factors boosting Johnny Stocks.
Speaker 2: That's Bloomberg's Henry Wren. Thanks for joining US. Investors are
Speaker 2: showing their renewed enthusiasm for quantum computing off the back
Speaker 2: of breakthroughs that indicate commercial applications for the technology could
Speaker 2: just be a.
Speaker 3: Few years away.
Speaker 2: Startup Querra has raised two hundred and thirty million dollars
Speaker 2: from backers including Google and SoftBank's Vision Fund. The company's
Speaker 2: interim CEO, Andy Or, joins us now for more.
Speaker 3: Andy, we just had Microsoft on the show this.
Speaker 2: Week unveiling their quantum computing chip, and it just feels
Speaker 2: like the field went from like an episode of Star
Speaker 2: Trek to all of a sudden, real world applications. You
Speaker 2: pulled together this funding fairly quickly. Talk to us about
Speaker 2: what happened over the last couple months that allowed this
Speaker 2: breakthrough to happen.
Speaker 8: Well, it's an overnight success that takes about seven or
Speaker 8: eight years. It's just that everything's coming to ruition at once,
Speaker 8: and so from the investor point of view, you're seeing
Speaker 8: all these exciting activities and you're thinking it's all happening now,
Speaker 8: but it's been going on for a long time. We're
Speaker 8: all just now reaching the surface. Where people can see us.
Speaker 8: You know, we've been for about seven years, probably use
Speaker 8: fifty sixty seventy million dollars to get to where we
Speaker 8: are and now having sold quantum machines and pushing the
Speaker 8: boundaries of the technology. We're three to five years away
Speaker 8: from useful quantum computing as an industry as a society
Speaker 8: in my opinion, and I think that we're going to
Speaker 8: be one of a small handful of companies that are
Speaker 8: going to demonstrate and deliver useful quantum computers and that
Speaker 8: is going to be transformational.
Speaker 13: How much does the retail investor, the institutional investor need
Speaker 13: to understand the differences in methodology here because people are
Speaker 13: doing it a willow is different from what we've just
Speaker 13: seen for Microsoft.
Speaker 8: Yes, so we call them modalities, but they're really approaches.
Speaker 8: They're underlying technological differences. Microsoft just announced a new one.
Speaker 8: Say there's five different modalities or technological approaches that people
Speaker 8: are using to create a quantum computer. There's neutral atoms,
Speaker 8: there's superconducting, there's ions, there's photons, and there's the Microsoft,
Speaker 8: the Microsoft Topological cubit. I think that you're probably going
Speaker 8: to see several different modalities focus on specific use cases initially,
Speaker 8: and so I don't think you're going to see one
Speaker 8: that's going to reign supreme. If I had to guess,
Speaker 8: I happen to think the neutral atom quantum supercomputing that
Speaker 8: we're building is likely the ticket that is going to win.
Speaker 8: But I think you want to see Yeah, well, it's
Speaker 8: funny how you like we are. But you know, it's
Speaker 8: not just building the underlying quantum computer. It's the algorithms
Speaker 8: that are required so that you can do something useful
Speaker 8: with them.
Speaker 4: Yeah, so tell us about the usefulness here, Andy, because
Speaker 4: we had a great discussion with Microsoft really talking about
Speaker 4: how we could end forever chemicals for example. Where are
Speaker 4: your applications about to work and that three to five
Speaker 4: year time frame you talk of, Yeah.
Speaker 8: Well it's going to be baby steps. I mean, you know,
Speaker 8: one way to think about it are things like life science,
Speaker 8: material science, drug discovery, new materials, super conducting materials at
Speaker 8: room temperature, new forms of encryption. These are applications. The
Speaker 8: methodologies are simulation, optimization and machine learning. These are the
Speaker 8: things that techniques that quantum computers can with unique power,
Speaker 8: bring to bear to solve those kinds of problems. I
Speaker 8: think initially three to five years from now, you're going
Speaker 8: to see the very beginning of quantum supremacy where very small,
Speaker 8: niche based problems are going to be solved, the classical
Speaker 8: computers are never ever ever going to be able to solve.
Speaker 8: And then very quickly a handful of years after that,
Speaker 8: you're going to see whole industries start to be transformed.
Speaker 2: That's Andy or, interim CEO of Qierra. Thanks so much
Speaker 2: for joining us.
Speaker 4: Welcome back to BLU MyD Technology and HID in New.
Speaker 3: York, and I'm Jackie Devalas in San Francisco.
Speaker 4: It's going to quit check on these markets, JACKI, because
Speaker 4: we are down on the week. We're off by four
Speaker 4: ten percent over the last five training days. If you
Speaker 4: look at the NAZA one hundred on the day, what
Speaker 4: tugs are slower the likes of Tesla. Interestingly, one of
Speaker 4: the points drags I want to go to one of
Speaker 4: the most talked about stories today when it comes to
Speaker 4: tech and evs. Nissan has been spiraling higher. If you're
Speaker 4: looking at its ADLs, we're up six percent. Tesla on
Speaker 4: the downside by two point four percent. Now this is
Speaker 4: we get a pushback to an FT report that Japan
Speaker 4: is courting Tesla on a Nissan investment in exchange for
Speaker 4: US factories. Now, someone who is involved in the well
Speaker 4: who denies any involvement in the reporting is someone who
Speaker 4: used to be on the Tesla board. Who Eremochi Mazzuno,
Speaker 4: a former board member of Tesla, denying that report by
Speaker 4: the ft that he's leading a Japanese group that aims
Speaker 4: to persuade the EV maker to invest in Nisan. This
Speaker 4: one is going to roll on as we see Tesla
Speaker 4: off by two percent. Interestingly in the EV sector work
Speaker 4: by more than three percent for Rivian. Why they're warning
Speaker 4: about first annual sales decline policy risks. Of course, EV
Speaker 4: tax credits may be coming to an end regulatory policies
Speaker 4: that could weigh on sales more broadly, So keep an
Speaker 4: eye on the EV and auto space is a busy one.
Speaker 4: Let's switch gears now because US prosecutors and regulators are
Speaker 4: investigating a thirty two million dollar deal between CrowdStrike and
Speaker 4: tech distributor Carasoft to provide cybersecurity tools to the IRS. Now,
Speaker 4: it's all according to sources and a document seen by
Speaker 4: Bloomberg News. Jake Bliberg joins US who has been reporting
Speaker 4: out this story since October. Basically your reporting has spurred
Speaker 4: this investigation. So what do we know?
Speaker 14: So what we know is that last fall of following
Speaker 14: our report, SEC investigators and DOJ investigators began interviewing people
Speaker 14: who used to work for CrowdStrike and who worked for
Speaker 14: the IRS, asking them what happened with this deal because
Speaker 14: something sort of curious took place after a CrowdStrike closed it.
Speaker 14: The IRS didn't ultimately buy the software subscriptions that the
Speaker 14: deal was for.
Speaker 3: What's at stake here?
Speaker 2: What does this mean for CrowdStrike? Could it impact their revenue?
Speaker 2: Villas in on what the company has said about the
Speaker 2: investigation this far.
Speaker 14: So what the company has said is that they stand
Speaker 14: by the accounting or their accounting of this deal, and
Speaker 14: what to say for them is scrutiny on a transaction
Speaker 14: that came at a pretty important time for them, right
Speaker 14: at the close of a quarter back in twenty twenty three,
Speaker 14: and was big enough that it could have made the
Speaker 14: difference between them meeting or falling short of market expectations
Speaker 14: on a key metric for that quarter. Although we should
Speaker 14: say that the company hasn't detailed just how it accounted
Speaker 14: for this deal, but again they're saying they stand by
Speaker 14: what they did there.
Speaker 2: That's Bloomberg Exchange. Blinberg, thanks so much for joining us.
Speaker 2: Now US crypto trading platform, Coinbase says the SEC has
Speaker 2: agreed to drop its lawsuit that alleged it ran an
Speaker 2: illegal exchange. All this pending Commissioner approval. Bloomberg Shanale Basic
Speaker 2: is standing by with Coinbasis chief legal officer Paul Grebel.
Speaker 15: Shanali, thank you, Jackie, Paul, thank you for joining us
Speaker 15: today on the heels of this news. It's been a
Speaker 15: fight that you have been fighting for a while. Now,
Speaker 15: now that you have this agreement, what does it free
Speaker 15: Coinbase up to do?
Speaker 10: Good morning, Chanale. Today is a big date, not just
Speaker 10: for Coinbase, but for crypto and for the United States.
Speaker 10: With this case in our rearview mirror a, Coinbase is
Speaker 10: going to be in a much stronger position to not
Speaker 10: only push for a permanent legislation that we think will
Speaker 10: provide clarity to the markets, but also to double down,
Speaker 10: maybe even triple down on innovation in our own products
Speaker 10: and services that we think are going to serve our
Speaker 10: customers very very well.
Speaker 15: It's interesting to see you have this initial excitement around
Speaker 15: the agreement. When it comes to your stock performance, you're
Speaker 15: actually now seeing your stock at the moment down on
Speaker 15: the day.
Speaker 4: Was a lot of this baked in.
Speaker 15: One question I have for you is what this means
Speaker 15: for investors in coinbase. Presumably you've been spending a lot
Speaker 15: of money.
Speaker 4: On legal fees.
Speaker 15: How much have you been spending through the course of
Speaker 15: this fight, and what is it for you up to
Speaker 15: now spend on instead.
Speaker 10: Well, the last four years of the Gary Gensler regime
Speaker 10: and his war on crypto have been nothing short of
Speaker 10: a disaster for American crypto. Writ large, in coinbases case,
Speaker 10: we've had to spend over fifty million dollars just on
Speaker 10: outside law firms and other advisors alone. That doesn't even
Speaker 10: include the cost internally. That doesn't even include the tax
Speaker 10: on innovation that Gary Gensler's misguided campaign imposed. So with
Speaker 10: all of that now lifted, we're able to focus on
Speaker 10: the future. As I said, I think legislation in the
Speaker 10: Congress on market structure and stable coins is going to
Speaker 10: be critically important. And then of course there's the whole
Speaker 10: point of legislation as well as rulemaking at the SEC,
Speaker 10: which is to bring new listings to our platform, to
Speaker 10: de new products and services that provide a real alternative
Speaker 10: in terms of financial services, and ultimately to provide a
Speaker 10: foundation for innovations that go well beyond speculation investing in
Speaker 10: financial services that we think are going to be tremendously
Speaker 10: important to the US economy.
Speaker 15: One question is what this means in terms of unlocking
Speaker 15: new products. In terms of unlocking token listings, there has
Speaker 15: been a lot of dispute around what is allowed in
Speaker 15: terms of bringing to market on the coin base exchange.
Speaker 15: Do you think that this could unlock a further wave
Speaker 15: of listings.
Speaker 10: Well, I think that we are going to see an
Speaker 10: acceleration in listings on the platform going forward. Our approach
Speaker 10: to listings that actually remained remarkably consistent over many years,
Speaker 10: which is to look at the state of the law,
Speaker 10: to understand where the courts are and frankly, to understand
Speaker 10: where the course you're likely to go if and when
Speaker 10: issues are brought before them. But I think that with
Speaker 10: this resolution we can consign to the ash heap of
Speaker 10: history the SEC's misguided view that somehow every digital asset
Speaker 10: other than perhaps bitcoin, was a security. That was the
Speaker 10: view of the SEC during the Gary Gensler regime, and
Speaker 10: that view has now been firmly rejected by the new
Speaker 10: leadership in charge.
Speaker 15: What does this mean in terms of the types of
Speaker 15: investments you're going to make in the future. You mentioned
Speaker 15: fifty million dollars over a span of years when it
Speaker 15: came to legal costs hiring outside lawyers. Does that fifty
Speaker 15: million translate to fifty million in the future to new
Speaker 15: engineers and other talents at coinbase.
Speaker 10: Well, I think actually it translates to an even bigger
Speaker 10: investment going forward in software development and technology in basic
Speaker 10: science to support the advancement of cryptocurrency and crypto and
Speaker 10: digital assets more generally all over the world. The Gensler
Speaker 10: regime may have been great for lawyers like me, but
Speaker 10: it's been an absolute disaster for innovation in the United States. Fortunately,
Speaker 10: with the new leadership at the SEC turning the page,
Speaker 10: we think we're going to be able to look forward
Speaker 10: and focus much more on building and much less on litigating.
Speaker 15: Paul, you mentioned rule making being a critical part of
Speaker 15: the push moving forward. How soon do you expect more
Speaker 15: rules that would clarify a lot of uncertainties in the
Speaker 15: crypto industry, particularly when it comes to registrations with the SEC,
Speaker 15: when it comes to listings and.
Speaker 10: Otherwise, well, Coinbase has been focused on regulatory clarity and
Speaker 10: especially rule making for years. It's one of the reasons why,
Speaker 10: even as we were defending ourselves against this bogus meritless
Speaker 10: case by the SEC, we actually sue the SEC ourselves
Speaker 10: to get rules for crypto in place. I'm very confident
Speaker 10: that with Acting Cherieta and Commissioner Purson's leadership and the
Speaker 10: announcement recently of a crypto task Force at the SEC,
Speaker 10: we're going to see rules that will allow companies like Coinbase,
Speaker 10: but also many others to come in and register to
Speaker 10: be allowed to list crypto asset securities transactions appropriately on
Speaker 10: our platform, and then move past this phase an era
Speaker 10: where these decisions were made in courtrooms rather than as
Speaker 10: part of a deliberative process between industry regulators and other stakeholders.
Speaker 15: Paul, we thank you for your time. This is Paul
Speaker 15: Graywell Comebasis Chief legal Officer, Jackie back to you.
Speaker 3: Thanks.
Speaker 2: Shanali coming up x Say's fortune facelift. How the one
Speaker 2: struggling social media platform sing improved financials.
Speaker 3: This is Bloomberg.
Speaker 4: Let's take a look at the social media platform X.
Speaker 4: Of course we know it's in talks with investors for
Speaker 4: a fresh equity fundraising value at forty four billion dollars,
Speaker 4: but it's still mide and debt. It's improved fortunes are
Speaker 4: really due to heavily adjustive financials and investors potential fear
Speaker 4: of missing out and megs. Max Chraffkin joins us on
Speaker 4: some of the opacity that Moodies calls it the undermines
Speaker 4: the reliability this financial information that we've ultimately been drip
Speaker 4: fed fly reports here.
Speaker 7: Yeah.
Speaker 16: Absolutely, so, Elon Musk and X really for almost since
Speaker 16: Elon Musk has bought X has been trying to tell
Speaker 16: this story that the finances are improving, that things are
Speaker 16: getting better. We've seen lots of reasons to doubt that,
Speaker 16: although there have been over the last few months some
Speaker 16: sort of positive signs, maybe some advertisers perhaps coming back
Speaker 16: partly because you know, they want to keep somebody who's
Speaker 16: a close advisor to President Trump happy, and in this
Speaker 16: fundraising you see some of the ways that they're trying
Speaker 16: to sort of cover up the advertising losses or what
Speaker 16: most of us believe are huge advertising losses. So these
Speaker 16: include deals with Xai, which is Elon Musk's Ai company
Speaker 16: ownership stake at Xai, a deal with chips that were
Speaker 16: provided from.
Speaker 4: X to Xai.
Speaker 16: And what we're seeing is this kind of inner party transaction,
Speaker 16: which you know, for most investors would probably be a
Speaker 16: bit of a red flow or at least a yellow flag,
Speaker 16: but for Elon Musk is just sort of part of
Speaker 16: how he does business. He's always done this with his companies,
Speaker 16: kind of combined them and done it in ways that
Speaker 16: are not necessarily conventional.
Speaker 2: Max Just looking at a simple figure how much revenue
Speaker 2: the company generated, it's still substantially less than what it
Speaker 2: was generating prior to Musk coming in. Why are investors
Speaker 2: still so confident?
Speaker 16: Yeah, the story points it out, but I think a
Speaker 16: lot of it.
Speaker 4: Is just fomo.
Speaker 16: It's this sense that fear of missing out, the sense
Speaker 16: that Elon Musk is in a hot place, he is
Speaker 16: at the arm of the most powerful person in the world,
Speaker 16: and that is driving at least some of this excitement.
Speaker 16: We've seen similar run ups in value at Tesla and
Speaker 16: at Musk's other companies where people just sort of are thinking, hey,
Speaker 16: this is going to work out one way or another,
Speaker 16: and then you also have the kind of AI angle.
Speaker 16: Of course, there's a lot of hype around AI X
Speaker 16: has or is related to this chatbot thing called Groc,
Speaker 16: which is inside of X. So I think it's a
Speaker 16: bet on that it's a bet on Musk, and I
Speaker 16: think a lot of anytime you're seeing investors wanting to
Speaker 16: do business with a Musk company, you got to think
Speaker 16: about the larger Elon Musk empire, SpaceX one Day or Starlink,
Speaker 16: one of Musk companies is going to have an IPO.
Speaker 16: Lots of these guys are going to want in on that.
Speaker 16: There are lots of there are reasons to stay close
Speaker 16: to Elon Musk, even if you're not necessarily a true
Speaker 16: believer in any particular deal.
Speaker 2: That's Bloomberg's Max Chafkin, thanks so much for joining us.
Speaker 2: The DOES staffer who resigned after a report LinkedIn to
Speaker 2: racism and eugenics has been reinstated at the Social Security Administration.
Speaker 2: According to a source, Marco Elez, who reportedly advocated for
Speaker 2: a quote eugenic immigration policy and argued against mixed raced
Speaker 2: relationships and posts on X, had received support from Musk
Speaker 2: President Trump and Vice President JD. Vance after his departure
Speaker 2: earlier this month.
Speaker 4: Caroline, let's just talk more about what's happening around the
Speaker 4: world with nonprofits that target online extremism and authoritarian propaganda.
Speaker 4: They're slashing operations, They're laying off employees. This is after
Speaker 4: the government cost cutting push led by Elon Musk and
Speaker 4: President Trump, but a stop to some vital US support
Speaker 4: for many. This is according to nearly a dozen sources
Speaker 4: who spoke with Bloomberg. Jeff Stone is one of the
Speaker 4: reporters on this lengthy piece, and we perhaps are unsurprised
Speaker 4: that this is what the repercussions are when you start
Speaker 4: to pull away at fact checking.
Speaker 9: We should be unsurprised. A significant a small but significant
Speaker 9: portion of US foreign aid has for years been dedicated
Speaker 9: to projects that are often independent media projects. But what
Speaker 9: they do is fight extremism online. They flag and refute
Speaker 9: Russian propaganda, particularly in countries US allied countries that are
Speaker 9: thinking about closer relationships with the Kremlin. So these are
Speaker 9: small organizations that have a really vital part of the
Speaker 9: way that people around the world consuming media. A lot
Speaker 9: of them are thinking about cutting back on staff and
Speaker 9: pausing a lot of their projects.
Speaker 2: Jeff, what recourse do these organizations have. Is there any
Speaker 2: other place that they can kind of fill in the
Speaker 2: gap and funding that they were previously receiving that's now
Speaker 2: being cut.
Speaker 9: It really depends on It really depends on the organization, Jackie.
Speaker 9: Some of them are closing entirely, some of them are
Speaker 9: laying off staff, others. Most of them are scrambling to
Speaker 9: find different sources of funding, whether that be asking their
Speaker 9: other investors for more cash. But a lot of them
Speaker 9: are really trying to figure that out now. The short
Speaker 9: answer is there's not an immediate path to sustainability, but.
Speaker 4: It's not all about money. They might be putting back
Speaker 4: from anti disinformation for other reasons, right.
Speaker 9: That's right, Caroline. Disinformation has become an incredibly loaded word. Obviously,
Speaker 9: a lot of the right wing side of things has
Speaker 9: often conflated it with censorship. These organizations are a little
Speaker 9: bit different. What they do is flag extremism, and they
Speaker 9: will flag threats, often potentially violent threats to law enforcement
Speaker 9: around the world. So under that political aspect of disinformation,
Speaker 9: these other projects are also folding.
Speaker 3: That's Bloomberg, Steffstone, thanks for joining.
Speaker 2: Us at a time when DEI has fallen out of
Speaker 2: favor in Washington and with some big tech firms. Stacy
Speaker 2: Brown Philpott's new fund is targeting diverse founders. The former
Speaker 2: Task Gravit CEO has raised one hundred and seventy two
Speaker 2: million dollars for underinvested startups. She's here to tell us
Speaker 2: more about Cherry Rock Capital. Stacey, thanks so much for
Speaker 2: coming in. Tell us more about the company's investment philosophy
Speaker 2: and how you managed to bring investors institutional investors, especially
Speaker 2: that now was the time to bet big on underrepresented founders.
Speaker 3: Well, thank you for having me.
Speaker 12: Cherry Rock Capital is focused on investing at the series
Speaker 12: A series B stage in underinvested founders, where we see
Speaker 12: a gap in the market, which is an opportunity to
Speaker 12: generate outsize returns. As you just said, we have institutional
Speaker 12: investors like Mass Mutual, JP Morgan, Goldman, Sachs, top tier
Speaker 12: capital partners, Pivotal Ventures, and they all wanna see great returns.
Speaker 12: So what we see is a real opportunity to do
Speaker 12: just that by focusing on underinvested founders who generally lack
Speaker 12: access to capital.
Speaker 2: Did this anti DEI climate, especially over the last couple
Speaker 2: of weeks, which has it it really intensified. Did that
Speaker 2: affect your ability to to fund raise because it just
Speaker 2: closed in January?
Speaker 4: Right, we did.
Speaker 12: We just closed in January. But you can see the
Speaker 12: names of LPs that we have. Our limited partners are
Speaker 12: focused on generating returns. This is something we're doing for
Speaker 12: the long term. I'm building an enduring institution that will
Speaker 12: last for more than twenty years, and they see the
Speaker 12: opportunity over that duration to generate outsize returns, not just
Speaker 12: for them, but all so for our founders. So the
Speaker 12: current backdrop didn't really affect us at all.
Speaker 4: So, Stacey, where do you think in particular sector points
Speaker 4: all the areas that are like you to bring these
Speaker 4: outsized returns.
Speaker 12: Well, we're focused on five sectors right now. Our first
Speaker 12: investment was in a company called Coactive, which is an
Speaker 12: enterprise multimodal AI company that helps businesses organize and analyze audio, video,
Speaker 12: and image data. We think that sector is very exciting.
Speaker 12: We also invested Invitable Health, which is a digital health
Speaker 12: company that provides health insurance to small businesses who employ
Speaker 12: hourly workers. We think that sector is very exciting and
Speaker 12: we're close to some investments in the future of work
Speaker 12: and fintech.
Speaker 4: Sectors as well. Help You were a founding Sorry you go, Jockie,
Speaker 4: You were a founding.
Speaker 2: Member of soft Bank's Opportunity Fund, which had a similar mission.
Speaker 2: What did you learn from their investing in similar startups
Speaker 2: that you would do differently here with Terry Rock.
Speaker 12: Well, we learned that focus brings clarity. We didn't have
Speaker 12: a pipeline problem of finding underinvested entrepreneurs with the soft
Speaker 12: Bank Opportunity Fund, which is now called the Open Opportunity Fund,
Speaker 12: but we decided to focus just on Series A and
Speaker 12: Series B where we see a big opportunity to generate alpha,
Speaker 12: and all our LPs want to see us greet generate
Speaker 12: great returns, and the way to do that is through alpha.
Speaker 4: Stacey told us about the conversation you've been having with
Speaker 4: the founders of Coactive AI of Vitable Health. When you're
Speaker 4: seeking them out, what is their environment like to raise
Speaker 4: funds at the moment? Are they actually quietly seeing more
Speaker 4: support in this environment or less.
Speaker 12: We love the founders at Coactive, Cody and and Will
Speaker 12: and Joseph over at Vitable, They're focused on scaling and
Speaker 12: growing their businesses. Their go to market strategy, hiring the
Speaker 12: best people, and they chose to work with Terry Rock
Speaker 12: Capital because we help them do just that. We co
Speaker 12: invested and coactive alongside Emerson Collective. We joined and recent
Speaker 12: Horowitz and bestmer Venture partners on the cap table with Vitable,
Speaker 12: we joined First Round Capital and City's Impact Fund on
Speaker 12: the cap table. So they were looking for a great
Speaker 12: set of investors and bringing car Cherry Rock Capital in
Speaker 12: was really about helping them scale, which is what I
Speaker 12: did when I was the CEO of task Rabbit. So
Speaker 12: the founders that we're looking for have found early product
Speaker 12: market fit, They've got a few.
Speaker 4: Million dollars in revenue.
Speaker 12: And now they're looking for help like we bring over
Speaker 12: sixty years of operating experience to scale their businesses.
Speaker 2: Let's talk about what LPs want to see as well,
Speaker 2: because there haven't been that many IPOs over the last
Speaker 2: couple of years. What catalysts do you think the market
Speaker 2: needs in VC to really kind of catalyze the truth
Speaker 2: that we've been in.
Speaker 4: What timing is everything?
Speaker 12: I think this is a great time to invest when
Speaker 12: you look at the economic cycle for venture. The twenty foot,
Speaker 12: twenty four and twenty twenty five vintage is a great vintage.
Speaker 12: So I think we have raised our hundred and seventy
Speaker 12: two million dollars at a great time. Our LPs also
Speaker 12: want us to create differentiation. When we go out and
Speaker 12: we win deals, we come in at the best valuation
Speaker 12: we can come in because that really determines our exit
Speaker 12: in our returns. So we're very disciplined in our diligence process,
Speaker 12: and they want to make sure that we are disciplined
Speaker 12: so that we can generate the best possible return for them.
Speaker 4: Stacy Brown, Philpark has been great speaking with you, founder
Speaker 4: of Cherry Rock Capital, on the fundraise. Now let's bring
Speaker 4: you some breaking news because we understand that post Tim
Speaker 4: Cook meeting with President Trump, Trump is currently saying that
Speaker 4: Apple will build plants in the United States and not
Speaker 4: in Mexico. He's saying that Apple is shifting his plants
Speaker 4: because of the tariffs that he's been imposing, and Trump
Speaker 4: is saying that we're going to have a lot of
Speaker 4: chip makers as well coming to the United States. President
Speaker 4: Trump speaking after, of course, he met with Tim Cook yesterday.
Speaker 4: Apple currently still remaining up four tenths of a percent,
Speaker 4: but there is a lot to navigate when it comes
Speaker 4: to the White house and doing business here in the
Speaker 4: United States for technology chants such as Apple and the like.
Speaker 4: Now from New York and San Francisco. That does it
Speaker 4: for this edition of Bloemberg Technology. You do not want
Speaker 4: to forget to check out upcast. You can find it
Speaker 4: on the terminal as well as online on Apple, Spotify,
Speaker 4: and iHeart. From New York, San Francisco. This is Boomberg