Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Loudlove.
Speaker 3: I'm Caroline Heide a Bloomberg's WORLDEA quarters in New York,
Speaker 3: and I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology coming up.
Speaker 3: The fallout continues for Elon Musk after the billionaire endorse
Speaker 3: an anti semitic post on his social media platform. Will
Speaker 3: discuss what it means for his businesses, and.
Speaker 5: We'll return to APEX as Chinese President Jijingping finishes his
Speaker 5: first visits in the US in six years on a
Speaker 5: high note, what does it mean for US?
Speaker 4: Kurds on technology to China?
Speaker 6: And then there has.
Speaker 3: Been some Tesla investors criticizing the Elon Musk post, of course,
Speaker 3: one that seemingly is endorsing anti Semitic views. More advertisers, though,
Speaker 3: are also fleeing his social media platform X. The European
Speaker 3: Commission joined IBM in announcing it will stop advertising on
Speaker 3: X after Musk agreed with a post that said the
Speaker 3: Jewish people hold a dialectical hatred.
Speaker 6: Of white people.
Speaker 4: Now.
Speaker 3: Musk responded by saying, you have said the actual truth.
Speaker 4: That was Thursday.
Speaker 5: Meanwhile, this Friday morning, the White House is addressing Elon
Speaker 5: musk comments saying, quote, we condemn this abhorrent promotion of
Speaker 5: antisemitic and racist hate in the strongest terms, which runs
Speaker 5: against our core values as Americans. Joining us now from
Speaker 5: DC Bloomberg's a Kayla Gardener, Kayla give us the rest
Speaker 5: of the detail on that White House response to Elon
Speaker 5: Musk and Elon Musk's post.
Speaker 7: Yeah, the White House has been pretty adamant about condemning
Speaker 7: antisemitism pretty much ever since the President took office. They
Speaker 7: have a national strategy to counter antisemitism, and this has
Speaker 7: been a major focus of the Second Gentleman, who was
Speaker 7: of course the first Jewish spouse of a Vice president.
Speaker 7: And as you mentioned, this comes on top of yukes
Speaker 7: from the European Commission from IBM, which both announced they
Speaker 7: would be pulling advertising from the platform. But I think
Speaker 7: the best way to think about this is a broader
Speaker 7: and much more complicated relationship between the President and Elon Musk.
Speaker 7: Elon Musk has been very critical of Biden. He says
Speaker 7: he will not support him. In twenty twenty four, he
Speaker 7: was also unhappy when Tesla was not invited to an
Speaker 7: event for EB companies earlier this year, and so that's
Speaker 7: definitely something to think about here. And at the same time,
Speaker 7: the government also has contracts with SpaceX. It also applauded
Speaker 7: Elon Musk's decision to open up their charging infrastructure to
Speaker 7: other companies. But I do think it was the timing
Speaker 7: of these comments, of course, amid the Israel Hamas War
Speaker 7: that ultimately caused the White House to put out these
Speaker 7: statements because there has been such an increase in incidents,
Speaker 7: particularly against the Jewish community, they felt as though this
Speaker 7: was the time to make such a condemnation.
Speaker 3: Okayla God, we thank you so much for that really
Speaker 3: important context coming from Washington. That's bringing more context coming
Speaker 3: from an investivase now. Kristin Hall is founder and CEO
Speaker 3: of NIA Capital. It's a social impact fund and it
Speaker 3: is about two hundred and eight to two thousand dollars
Speaker 3: of Tesla stock as of mid year. It's waged pressure
Speaker 3: campaigns against the company for years, including via shareholder resolutions.
Speaker 3: You put out a response to Mask's comments saying that
Speaker 3: you're appalled by Elomusk's recent post on x Kristin, talk
Speaker 3: us through what you think. Ultimately, the investor viewpoint is
Speaker 3: at the.
Speaker 8: Moment, oh, this is so complicated. Thank you for having
Speaker 8: me today. This is the most complicated CEO for investors
Speaker 8: to deal with, and yet it really doesn't need to be.
Speaker 8: We all are completely appalled by his statement, and we're
Speaker 8: really calling on the board to take some action. If
Speaker 8: you think about what Tesla's assets are, it's that brand
Speaker 8: and it's also its people. So we really count on
Speaker 8: Tesla to be innovative, and we really need them to
Speaker 8: be able to attract, recruit, hire, and retain top talent.
Speaker 8: And of course a statement like this is going to
Speaker 8: inhibit all of those.
Speaker 5: Kristin Ela Musk has said in the past and consistently
Speaker 5: he is absolutely pro free speech, and he's also said
Speaker 5: on more than one occasion he's against anti semitism of
Speaker 5: any kind.
Speaker 4: That's right, you hold a small volume of shares.
Speaker 5: My understanding is that that is basically just a function
Speaker 5: of being a social impact investor. There will be parts
Speaker 5: of our audience that say, why is Kristin on She
Speaker 5: holds hardly any stock.
Speaker 6: Well, so we.
Speaker 8: Actually held Tesla for many years in our core portfolios.
Speaker 8: We really were behind that battery play and of course
Speaker 8: the infrastructure across many of the products and services that
Speaker 8: Tesla is bringing for a just and innovative transition to
Speaker 8: a sustainable economy. So that thesis was really important to us,
Speaker 8: and we did hold Tesla in our core portfolios. And
Speaker 8: yet when it became really apparent that there was racial
Speaker 8: discrimination within the plants and across the firm, we became
Speaker 8: really cautious and there was lots of risk for us
Speaker 8: as an investor, and we pulled out. We did retain
Speaker 8: some shares on a small amount of shares, as you
Speaker 8: point out, so that we could keep our responsibility as
Speaker 8: investors to engage with this firm and to call them
Speaker 8: on what in their own code of ethics says to
Speaker 8: do the right thing. So Elon Musk is actually in
Speaker 8: violation of his own code of ethics right now, and
Speaker 8: that's why we're calling on the board.
Speaker 4: Christ and thank you for that explanation.
Speaker 5: I just think the audience wanted to understand the mechanics
Speaker 5: of how your firm is operating. The emphasis is on
Speaker 5: the absolute truth statement or posts that he made. He
Speaker 5: made a follow up post which I are going to
Speaker 5: bring up on the screen for our audience, where he
Speaker 5: says the adl unjustly attacks the majority of the West,
Speaker 5: despite the majority of the West supporting the Jewish people
Speaker 5: and Israel. This is because they cannot buy their own
Speaker 5: tenets criticize the minority groups who are their primary threat.
Speaker 5: It is not right and needs to stop. What do
Speaker 5: you think Elon Musk was trying to say in that post?
Speaker 8: Now, Elon Musk has been erratic, He's been volatile with
Speaker 8: this speech. We never actually know what he's trying to do.
Speaker 8: And while he is saying he's promoting free speech, hateful
Speaker 8: speech and hates speech has no place on X and
Speaker 8: it certainly doesn't have any place coming from a major
Speaker 8: CEO in our nation.
Speaker 3: It's interesting that certain key founders leaders, one who actually
Speaker 3: co founded now Meta, has called on perhaps roles within
Speaker 3: other companies that Elon Musk holls. Of course, he's not
Speaker 3: just the leader of Tesla, but he also is the
Speaker 3: owner and CTO of X, the platform with which he's
Speaker 3: currently putting out these views. And indeed, one particular key
Speaker 3: founder saying, Linda Yacarino, your turn to actually potentially even
Speaker 3: firer own CTO. Linda herself has been trying to point
Speaker 3: out that X's view has always been very clear that
Speaker 3: discrimination by everyone should.
Speaker 6: Stop across the board.
Speaker 3: What would you want to see for Elon, whether he
Speaker 3: be CTO chair of X, whether it be CEO of Tesla,
Speaker 3: whether it be his roles and the many other companies
Speaker 3: that he has. Are you calling for him to step down?
Speaker 8: So that isn't my place to call for that. I
Speaker 8: do want to see the board stepping in and taking action.
Speaker 8: And whether that means, you know, taking his cell phone away,
Speaker 8: that's one possibility. But what we really need to see
Speaker 8: is leadership, and we want to see him not only
Speaker 8: protecting his brand but growing it in a sustainable and
Speaker 8: inclusive way.
Speaker 5: You know.
Speaker 8: Again, we want to see employees, both current and future
Speaker 8: feel not only really comfortable but excited to join this
Speaker 8: and bring their top talent and expert and skills. And
Speaker 8: then also on the consumer side, there are so many
Speaker 8: consumers right now saying they're getting rid of their Tesla
Speaker 8: and they're certainly not considering purchasing anything new, and so
Speaker 8: with a prime business model at Tesla at any rate,
Speaker 8: we need to see as an investor that that CEO
Speaker 8: is really looking out for the business model, and that
Speaker 8: brand has so much to do, so there's I personally
Speaker 8: would like to see him step down. Whether that's possible,
Speaker 8: that's really up to the board.
Speaker 6: Christin.
Speaker 3: It's been interesting because this hasn't happened in a vacuum.
Speaker 6: In fact, we have seen him put out.
Speaker 3: Very controversial posts before, some which he has indeed retracted,
Speaker 3: and he's gone to say he's full pro free speech
Speaker 3: but against anti antisemitism in.
Speaker 6: All its forms. But he's almost been a bit like Teflon.
Speaker 3: Nothing has stuck, and Tesla nevertheless is up ninety percent
Speaker 3: year to date in terms of a share price, and
Speaker 3: people thus far perhaps haven't been pulling back on their
Speaker 3: Tesla purchases. It's been deemed more of a consumer weakness
Speaker 3: story than it has actually a pushback against Lil Musk.
Speaker 3: Can you really sort of drive that narrative together?
Speaker 6: Do you think this is the moment that we see
Speaker 6: a tipping point?
Speaker 8: You know, it's going to be interesting to see what
Speaker 8: we see as a tipping point, because with a regular company,
Speaker 8: an ordinary company with one of the richest billionaire CEOs,
Speaker 8: we would have seen other consequences much earlier. Elon Musk
Speaker 8: is in icon in the US and across the world,
Speaker 8: and he seems to be treated differently both by his
Speaker 8: board and by his van base, and that's problematic, I believe,
Speaker 8: for the kind of companies and the kind of corporations
Speaker 8: that we want to see grow in the US.
Speaker 5: We reiterate that Tesla has rebounded to positive territory, having
Speaker 5: been down as much as three percent in the session
Speaker 5: over a two day basis.
Speaker 4: Of course it's lower, but on the week.
Speaker 5: I think on track for a pretty sizable gain. There
Speaker 5: are many that took to X in support of Elon
Speaker 5: Musk who are both Tesla shareholders and vehicle owners. But
Speaker 5: there's one name that seems aligned with you, and that
Speaker 5: is Ross Gerber, a Tesla investor who says his clients
Speaker 5: his an asset manager.
Speaker 4: His clients are.
Speaker 5: Asking him to unwind their positions. They will no longer
Speaker 5: buy Tesla cars. My understanding is that you are doing
Speaker 5: a new initiative where you're right to the board of
Speaker 5: Tesla in the coming week. Have you spoken to Ross
Speaker 5: and who are you trying to bring in on the
Speaker 5: initiative that you're taking.
Speaker 8: Actually, that's really interesting, So we haven't spoken to Ross yet.
Speaker 4: I welcome that.
Speaker 8: I maybe he's available for a phone call this afternoon,
Speaker 8: that would be great. We are part of a coalition
Speaker 8: with Whistlestock Capital and many others who have written to
Speaker 8: the board, and we did that actually earlier this year.
Speaker 8: We put out a statement and a letter speaking about
Speaker 8: lots of different issues that we want to see the
Speaker 8: board take up, and sadly we have not had a response.
Speaker 8: And so we've been meeting as a group monthly to
Speaker 8: figure out how we can be engaged to really support
Speaker 8: this company to be its best. And we will resend
Speaker 8: that letter with a new cover letter with the additional
Speaker 8: grievances that have occurred since we sent the original letter,
Speaker 8: and that should go out in the next couple of weeks.
Speaker 3: Kristin, howe, let us know what the response, if any, is,
Speaker 3: and we thank you so much for articulating your point
Speaker 3: of view for Nia Impact Capital today.
Speaker 6: We thank you for your time. Meanwhile, coming up.
Speaker 3: That we're going to turn to the markets, because, as
Speaker 3: we've been saying, Tesla stock is up over the last
Speaker 3: five days, and indeed over the last month, tech stocks
Speaker 3: have really outperformed, and we're up two trillion dollars worth
Speaker 3: in terms of a risk rally in November, but could
Speaker 3: it be at a slowing point?
Speaker 6: And what are you looking at?
Speaker 5: I'm looking at shares of Applied Materials, the biggest US
Speaker 5: maker of chip making equipment. To see they're the stock
Speaker 5: down five point five percent, five point four percent. Reuter's
Speaker 5: reporting that a probe's been opened by the US into
Speaker 5: it breaching those US technology export curbs to China.
Speaker 4: We'll get the details next. This has Boombog.
Speaker 5: Technology technology stocks wavering today amid November's two trillion dollar rally.
Speaker 5: What can we expect going forward? There's a bit of
Speaker 5: a learning still to come and joining us now. Jonathan Curtis,
Speaker 5: Franklin Equity Group, Senior VP and Director of Portfolio Management.
Speaker 5: You're an investor who holds a number of the magnificent
Speaker 5: seven key semiconductor names and software names. It's in the
Speaker 5: chip space. I want to start Applied Materials. The report
Speaker 5: of that probe looking at whether they breached the US
Speaker 5: technology export curbs to China. You hold Applied Materials across
Speaker 5: different Franklin funds.
Speaker 4: Just to what did you make of that report? First? Jonathan?
Speaker 2: Yeah, Well, in fact, Applied Materials had actually disclosed back
Speaker 2: in October of twenty twenty two.
Speaker 4: I believe that they were under investigation.
Speaker 2: The incremental news that we got yesterday out of Reuter's
Speaker 2: was that the investigation had turned perhaps potentially criminal. I
Speaker 2: don't think comment the company is commentating on the specifics
Speaker 2: of that report. But importantly, Applied Materials is one of
Speaker 2: the world's leading semiconduction capital equipment companies. They're involved in
Speaker 2: really every part of the market with the exceptional lethography,
Speaker 2: They're a leading player in the space.
Speaker 4: They're very very.
Speaker 2: Essential for Western babs, FABS in Korea, FABS in Taiwan,
Speaker 2: and fabs in China. And while if they have made
Speaker 2: a mistake, or if somebody deeper down in the company
Speaker 2: made a mistake and allowed equipment to make its way
Speaker 2: over to a smith in China, then certainly that should
Speaker 2: be dealt with. But when I don't think that any
Speaker 2: sanctions that would be imposed would negatively impact the company's
Speaker 2: earnings power or they're certainly their mote, their critical supplier
Speaker 2: in the ecosystem and very very essential to keep operating.
Speaker 5: Johnath, thank you strapolate out the China risk to the
Speaker 5: industry more broadly. Right, if you think about how Nvidia
Speaker 5: is traded over the last seven days. Some of it's
Speaker 5: on reports of new gen China specific chips right trying
Speaker 5: to get product that complies with these curbs. Clearly there
Speaker 5: is a danger of being in breach of them. How
Speaker 5: as an investor do you navigate that?
Speaker 2: Yeah, well, so, certainly in China wants to be able
Speaker 2: to be a player on some of these leading edge chips.
Speaker 4: They want to be able to manufacture them. Certainly they
Speaker 4: want to have.
Speaker 2: Them for their own efforts in cloud computing, in military
Speaker 2: and artificial intelligence, and the US is trying to curb that.
Speaker 4: China is a very big market. Even if China is
Speaker 4: not able.
Speaker 2: To acquire the chips they want, they will certainly find
Speaker 2: other ways around being able to get get the most
Speaker 2: leading edge chips by manufacturing their own less powerful chips,
Speaker 2: but spending then more money on the equipment to build
Speaker 2: those less powerful chips and more money on the infrastructure
Speaker 2: to run those chips so they can match the compute
Speaker 2: capacity in the West. So, in an odd way, we
Speaker 2: actually think it is positive for the industry because it
Speaker 2: ultimately means that there's an overspend if you will happening
Speaker 2: in China to support matching the compute capacity requirements of China,
Speaker 2: but certainly we are paying close attention to it, you know,
Speaker 2: guard up applied Materials. At the beginning of our conversation,
Speaker 2: I think forty four percent of their revenue in the
Speaker 2: most recent quarter was from in fact China, So certainly
Speaker 2: China is a big consumer. The US is really trying
Speaker 2: to limit China's access to equipment and processes and chips
Speaker 2: at the leading edge. But China can make good progress
Speaker 2: and build a very successful industry on lagging edge nodes
Speaker 2: if they want it, and they'll just end up having
Speaker 2: to overspend to match the compute capacity available in the
Speaker 2: West for more advanced chips.
Speaker 3: Jonathan is interesting and mentions in video of course, and
Speaker 3: the way in which they're trying to build different types
Speaker 3: of chips to meet the current standards, and video course
Speaker 3: got its earnings coming up fast, and I'm interested in
Speaker 3: your perspective on ultimately how far these Magnificent seven have
Speaker 3: room yet to run. Is an idea I think is
Speaker 3: put out by Goldman Sachs that twenty twenty four you stay,
Speaker 3: you hold, you remain invested, and actually these might have
Speaker 3: sent seven is still going to be some of the
Speaker 3: companies that deliver into the next year as well.
Speaker 6: Do you abide by that with evaluations?
Speaker 2: Yeah, yeah, we're certainly quite positive on really the entire
Speaker 2: technology sector and artificial intelligence particular. The Magnificent Seven have
Speaker 2: done well because they are truly magnificent businesses, strong balance sheets,
Speaker 2: high levels of profitability, structural growers. But almost all of them,
Speaker 2: with the exception of one or two, have very strong
Speaker 2: AI talk tracks and opportunities. They have massive amounts of data,
Speaker 2: They can get more data, they can wrangle the compute
Speaker 2: to build these models, They have the talent to build
Speaker 2: these models, and then they have the pathways into which
Speaker 2: to deliver value from these models into their customers and
Speaker 2: charge for them. Some of these companies have the potential
Speaker 2: to double their overall businesses on the delivery of AI
Speaker 2: features into just a small number of their businesses. Is
Speaker 2: great potential that lies ahead for many of the Magnificent Seven.
Speaker 2: Now we own many of them, we happen to be
Speaker 2: underweight them. We see greater value down the market cap
Speaker 2: range companies that have some of those same characteristics as
Speaker 2: the Magnificent Seven, but that are trading it more compelling
Speaker 2: valuation levels.
Speaker 3: Can you just very quickly tell us some of the
Speaker 3: names therefore that are less obvious.
Speaker 2: Sure a company like a service now for instance, they
Speaker 2: have they can tick all those boxes that the Magnificent
Speaker 2: seven can in terms of being able to be a
Speaker 2: player in AI.
Speaker 4: But I think they're just a less well understood business.
Speaker 2: They have significant opportunities to raise prices and to deliver
Speaker 2: new value to their customers, to make their customers more efficient,
Speaker 2: all with generative AI.
Speaker 3: Jonathan Curtis, we thank you a Franklin Equity Group.
Speaker 6: Great to have you time now for talking tech.
Speaker 3: First up, Apple maybe falling behind in fact on his
Speaker 3: efforts to make a modem chip for the iPhone.
Speaker 6: Apple will likely misrolling.
Speaker 3: Out its own emonem for twenty twenty five due to
Speaker 3: the complex designs of Qualcom's chip.
Speaker 6: Mean While open AI, s Altmann.
Speaker 3: Believes we have yet to see the biggest risks in
Speaker 3: AI posers to US politics and policy. While he is
Speaker 3: hopeful that oftificial intelligence can help humanity in the longer term,
Speaker 3: Amann has called for government oversight of the technology in
Speaker 3: the near term. Plus, Amazon cunning hundreds of jobs in
Speaker 3: its voice activated Alexa division. Now, the company says it's
Speaker 3: shifting efforts to better focus on building capabilities powered by
Speaker 3: you guess it generator.
Speaker 6: AI ed.
Speaker 5: Back here in SF and the pitch, I says he
Speaker 5: expects China to be at the forefront of AI. The
Speaker 5: Alphabet CEO called China's work on the technology astounding to
Speaker 5: see during a conversation over at APEX.
Speaker 4: Have a listen. It's not going to be easy.
Speaker 9: But I would start from this premise that AI will proliferate.
Speaker 9: So this is not the inherent nature of software. AI
Speaker 9: advances will get out to in all countries, and so
Speaker 9: it is naturally the kind of technology. I don't think
Speaker 9: there's any unilateral safety to be had. We all have
Speaker 9: a shared incentive to solve for safety. You know, you
Speaker 9: could have AI go wrong in one country that will
Speaker 9: impact every other country. So in some ways, it's like
Speaker 9: climate change in the planet. We all share a planet.
Speaker 9: I think that's true for AI. So now that you
Speaker 9: know that will be true, I think you have to
Speaker 9: start building the frameworks globally to make progress. I've seen
Speaker 9: encouraging progress when the G seven happened in Hiroshima. I
Speaker 9: think it was a good start. You've seen more progress
Speaker 9: the Uki summit last week, the administration here. The White
Speaker 9: House has been leading the way as well, and I
Speaker 9: saw good encouraging announcements even yesterday for us in China
Speaker 9: to start having a dialogue on AI alf Let's CEO.
Speaker 5: So welcome back to Bloomberg Technology, Ed Ludlow here in
Speaker 5: San Francisco.
Speaker 6: In Caroline Hide in New York.
Speaker 3: There has of course been some weakness in Tesla's trading
Speaker 3: yesterday after of course, one has been seemingly an endorsement
Speaker 3: for some anti semitic posts post on x by the
Speaker 3: owner of x Any, the CEO of Tesla, which is
Speaker 3: Elon Musk.
Speaker 6: But a lot to still be dissecting across the board.
Speaker 5: D Yeah, that was the big story of the last
Speaker 5: twenty four hours. The other is Apex, which is wrapping
Speaker 5: up in San Francisco. It's a who's who of global
Speaker 5: power players in politics and technology. One of them, I'm
Speaker 5: delighted to say, joins me right now on set Bloomberg's
Speaker 5: Amory Horden. You make it to that party last night
Speaker 5: down the road.
Speaker 6: I did that.
Speaker 5: Now I'm in all seriousness. Everyone that matters in the
Speaker 5: world has been here. When you last joined us on
Speaker 5: the show, it was all about Biden. G what happened
Speaker 5: after that, particularly in the world of technology as well.
Speaker 10: Yeah, I think Biden and she really was the starting
Speaker 10: gun to this entire APEC summit. But then for Shijingping,
Speaker 10: as much as the Biden meeting was very important. Actually,
Speaker 10: the New York Times had a story about one of
Speaker 10: the organizers was talking about how the Chinese had prepared
Speaker 10: three speeches for him to give those executives, and he
Speaker 10: ended up going with the friendliest one after the Biden meeting,
Speaker 10: that room where he.
Speaker 6: Got all those applauses.
Speaker 10: It costs a lot of money.
Speaker 4: To say about Tim Cook being in the room as well, people.
Speaker 10: Like that, Larry Fang, Steve Schwartzman. But then we also
Speaker 10: had a letter from Shijingping going out to executives saying
Speaker 10: he wants a heartwarming welcome really of the business community.
Speaker 10: He's clearly trying to woo investors. And it comes as
Speaker 10: there's been a tumble really a feign direct investment into China.
Speaker 10: So this was Shijingping's opening in his moment. The problem
Speaker 10: is these are just words at this moment. They sound
Speaker 10: very fuzzy and warm from the Chinese president, But will
Speaker 10: there be actions? I will note about a few hours
Speaker 10: before Shijing Ping's letter became public and his remarks to
Speaker 10: these executives, the Chinese Commerce Ministry did say that they
Speaker 10: are going to try to go after a campaign for
Speaker 10: potential discriminative measures that are happening to foreign investors.
Speaker 4: So aka technology export curbs.
Speaker 6: Technology expert curbs.
Speaker 10: I'm talking more about foreign direct investment into China, but yes,
Speaker 10: technology companies have been having a number of issues in China.
Speaker 10: But if we're talking about technology export curbs from the
Speaker 10: United States into China, that is something that I'm sure
Speaker 10: Shijinping brought up with President Biden. But the US is
Speaker 10: not going to budge on any of these sanctions, any
Speaker 10: of these penalties that potentially can hinder their national security.
Speaker 3: Amory Horden, it's been great to have you on the
Speaker 3: show throughout the week. We really appreciate it, and we
Speaker 3: want to well pick up where Amrie leaves off. Ultimately,
Speaker 3: has these discussions in any way changed the ultimate relationship,
Speaker 3: the trade relationship between US and China thus far, I've
Speaker 3: got the perfect guest e Liza Tobin, Senior director of
Speaker 3: Research analysis for the Economy Special Competitive Studies Project, And
Speaker 3: indeed you previously served on the National Security Council Staff
Speaker 3: as China Director, where you help lead development of multiple
Speaker 3: US strategies and policies related to China. And to that
Speaker 3: end point, will policy change? Will doing business get any
Speaker 3: easier between these two nations?
Speaker 4: Thank you so much.
Speaker 8: No.
Speaker 1: I think the previous speaker is right. I think the
Speaker 1: talk out of Xi Jinping is trying to signal that
Speaker 1: China is open to business. But I think words are cheap,
Speaker 1: and I think what we're seeing is a tactical shift,
Speaker 1: but no strategic shift on either side. I think the
Speaker 1: US is going to keep up the pressure on the
Speaker 1: technology and economic controls, and for China's side, I don't
Speaker 1: think Sheijinping's strategy has change at all over the long term.
Speaker 1: I think this is trying to kind of reduce some
Speaker 1: of the pressure given how weak China's economy is looking lately.
Speaker 3: Okay, so paint us forward five ten years time. What
Speaker 3: does this relationship look like. What does this self ability
Speaker 3: to provide for chips, for manufacturing, for technological innovation within
Speaker 3: China look like? Can they be self determination in that respect?
Speaker 1: The administration going into this was really signaling that they
Speaker 1: see the United States as in a long term strategic
Speaker 1: rivalry and competition with the peoples from public of China,
Speaker 1: and so this meeting was intended to kind of set
Speaker 1: a floor and stabilize relations, and they kind of signaled
Speaker 1: very low expectations that they hope to at the very
Speaker 1: least restore some kind of military to military communications. So
Speaker 1: going forward, based on the updates last month that you
Speaker 1: saw to the export controls on the high end AI chips,
Speaker 1: these were really a doubling down by the US administration
Speaker 1: on those controls and the signaling that they realized that
Speaker 1: they're in a cat and mouse game and that China
Speaker 1: will adjust to the US controls and continue to seek loopholes,
Speaker 1: but the administration in response, will continue to update them
Speaker 1: in order to try to meet the object of preventing
Speaker 1: China from using US high end chips to accelerate their
Speaker 1: military development.
Speaker 5: Eliza, you said a moment ago, words are cheap. I
Speaker 5: think that's what you said. That we're talking largely in
Speaker 5: the context of the diplomatic relationship between the US and China.
Speaker 5: You look at who is in the room Wednesday night.
Speaker 5: Tim kok hoc Tan of Broadcom, it seems as if
Speaker 5: the private sector the biggest technology companies in the world
Speaker 5: have a very different attitude to China.
Speaker 4: They just want to do business there. Beijing is smart.
Speaker 1: It has a strategy of trying to exploit the gaps
Speaker 1: and the splits in American society, you know, federal government
Speaker 1: versus local and state level government, public and private. They
Speaker 1: realize that we're democracy and they try to exploit these gaps. However,
Speaker 1: I think given how increasingly opaque and hostile to foreign
Speaker 1: businesses the Chinese market is, I don't think you're going
Speaker 1: to see any kind of strategic reprochement between the companies.
Speaker 1: China has moved on beyond the era of reform and opening.
Speaker 4: That era is over.
Speaker 1: They still say these words, but I think the reality
Speaker 1: on the ground is becoming increasingly hostile.
Speaker 4: Liza, it's Friday. It's been a long week.
Speaker 5: What is the most positive outcome from APEG. What is
Speaker 5: a good thing that's come out of it?
Speaker 1: Looks I had mentioned that the administration kind of set
Speaker 1: a low bar for itself, and I think they stepped
Speaker 1: over those low expectations easily, and there are a few
Speaker 1: kind of concrete deliverables. One that they're quite I think
Speaker 1: gratified by is an agreement to work with the Chinese
Speaker 1: on counter narcotics, and of course there's a lot of
Speaker 1: precursor chemicals for fentanyl flowing into the United States, much
Speaker 1: of it coming through Mexico, and they're signaling that the
Speaker 1: Chinese are starting to take some actions to crack down
Speaker 1: on firms that are doing this. So I think the
Speaker 1: hope is very modest that at least in the short term,
Speaker 1: we can save some American lives by limiting the flow
Speaker 1: of this. So we should expect the cooperation on the
Speaker 1: Chinese side to turn on and off depending on how
Speaker 1: happy they are with other aspects of the relationship. But
Speaker 1: in the short term, if we can save American lives,
Speaker 1: I think that's a good thing. It's also good for
Speaker 1: our militaries to be talking to each other. That's a
Speaker 1: pretty low bar, but we need to be communicating to
Speaker 1: avoid some kind of misunderstanding. And then they've also announced
Speaker 1: that we will start some type of initial discussions with
Speaker 1: the Chinese about AI risk and safety, and of course
Speaker 1: this is something the US is talking to a lot
Speaker 1: of different partners and allies around the world of art about,
Speaker 1: and they'll start doing the same with China.
Speaker 5: All right, Eliza Tobin at the special Competitive Studies product.
Speaker 4: Thank you for joining us here on Bloomberg Technology.
Speaker 5: Now coming up on the show, we'll be joined by
Speaker 5: Michelle Gonzalez, head of Microsoft Spenter, to discuss her outlook
Speaker 5: for bench capital and interesting strategy there private markets and
Speaker 5: a big tech name. Thus nets this is Bloomberg Technology.
Speaker 5: Time for the VC roundup and in the news. Canadian
Speaker 5: startup Deep Sky raised fifty five million dollars from VC
Speaker 5: firms and governments to begin a carbon capture plant in Quebec.
Speaker 5: Uses early stage technology aiming to suck millions of tons
Speaker 5: of emissions out of the atmosphere and also out of
Speaker 5: the oceans and over in Japan, Japan's state backed foundry
Speaker 5: startup Rapidness says it will work to develop semiconductor technology
Speaker 5: with Canada's ten storrants. The companies will exchange no how
Speaker 5: on two nanometer logic chips to help devices access AI.
Speaker 5: According to Rapidest, plus billionaires Zeba, Neil Rolledolf Sad and
Speaker 5: Eric Schmidt announced a new nonprofit AI research lab in Paris.
Speaker 5: The lab will have three hundred million euros in total
Speaker 5: funding and produce open source research.
Speaker 3: Caroline we've got to stick with the world of AI
Speaker 3: labs and investment.
Speaker 6: Is today's VC spotlight. Let's bringing Michelle Gonzalez.
Speaker 3: She is corporate vice president, Global head of Microsoft's bench
Speaker 3: Fund twelve. And what's so fascinating is you are aligning
Speaker 3: with your own thesis driven view on investing, but also
Speaker 3: basically what works alongside Microsoft's own business focus and in
Speaker 3: many ways helps turbocharge some of the companies that you
Speaker 3: have in your portfolio. Where is anything being done outside
Speaker 3: of AI? I mean, is everything about artificial intelligence fee
Speaker 3: right now?
Speaker 11: Well, thank you Carolyn for having me here. Yes, we
Speaker 11: view AI as a revolution on the order of mobile,
Speaker 11: the smartphone technology, cloud computing, and the internet itself. We've
Speaker 11: even had a few of our experts in house think
Speaker 11: of it as the impact on society similar to electricity.
Speaker 11: And so we are all in on AI as M
Speaker 11: twelve's investment investment ARM. We are Microsoft's Venture Fund, a
Speaker 11: CBC thesis driven So the other areas that we do
Speaker 11: cover our cybersecurity. We have the GitHub Fund, which is
Speaker 11: focused on developer tools and oh look there's our portfolio
Speaker 11: companies we have. We invest in infrastructure, deep tech as
Speaker 11: well as enterprise applications.
Speaker 3: Now, it's quite an expensive place to be investing right
Speaker 3: now for AI, amazingly considering the macroeconomy. And it's also
Speaker 3: pretty competitive. What is your edge? I mean in lots
Speaker 3: of ways. We started to see big corporates come in
Speaker 3: because they can offer basically the compute power. Is that
Speaker 3: something that really has set you apart?
Speaker 11: Yeah, this is actually a golden age for corporate venture capital,
Speaker 11: particularly with JENNYI. Founders are looking for access to customers.
Speaker 11: So in the enterprise right now, there's a lot of excitement.
Speaker 11: So we're seeing about sixty percent of enterprises say they
Speaker 11: want to adopt AI technology and then needing to have
Speaker 11: sort of the right partners. So that's one aspect for US.
Speaker 11: We also, as you mentioned, have access to technology. So
Speaker 11: we just announced AAI supercomputer dedicated GPUs for M twelve
Speaker 11: portfolio companies, and you see this as well with Nvidia
Speaker 11: and salesforces investments as well. So for US, we look
Speaker 11: to connections customer access, helping these companies get go to
Speaker 11: market ready selling to the enterprise, as well as the compute.
Speaker 4: I want to dig in on that supercomputer. It's interesting.
Speaker 5: Access to compute is something we talk about in the
Speaker 5: show all the time. It's great having the supercomputer be
Speaker 5: built in the first place. Who pays for it on
Speaker 5: an ongoing basis so that your portfolio companies and founders
Speaker 5: can have access to that compute.
Speaker 11: Well, what I can tell you now, right now, we're
Speaker 11: offering this as a way for our companies to start
Speaker 11: experimenting with their training, and it is free for a
Speaker 11: certain time, but we are a business, so eventually they'll
Speaker 11: be a paying for that as well.
Speaker 5: Michelle, real quick, give us an example of something that
Speaker 5: you've invested in that down the road has ended up
Speaker 5: becoming a part of Microsoft or the technology that Microsoft uses.
Speaker 11: Yeah, So one actually recent example here is in World.
Speaker 11: We invested two years ago. I knew the founders from
Speaker 11: Google and this is a company that's focused on non
Speaker 11: player characters, so AI characters in the gaming space. And
Speaker 11: we just announced a multi year co development partnership with Microsoft.
Speaker 11: This is about a year in the making and our
Speaker 11: team worked very hard to ensure that this partnership came together.
Speaker 11: This will now allow game developers on Xbox to have
Speaker 11: access to almost an aigan co pilot, which will help
Speaker 11: them with prompting for different scripts. And help building their
Speaker 11: game development. So that's one example, but we have several
Speaker 11: others well.
Speaker 5: Corporate vice president and global head of end to Michelle Gonzalez.
Speaker 5: When one of those examples goes big, come back on
Speaker 5: the show tell us about it.
Speaker 4: Definitely for your time, thank you for joining us.
Speaker 3: The fallout from an Elon Musk post seemingly endorsing anti
Speaker 3: semitic views, it continues to spread, whether it's Tesler investors
Speaker 3: criticizing the billionaire or more advertisers continuing to flee his
Speaker 3: social media platform X, including for example IBM as bringing
Speaker 3: in Blumber Businesswee columnist Max Chafkin, who has been following
Speaker 3: the rise the volatility around in a Musk for years now. Ultimately,
Speaker 3: this has sort of been hiding in plain sight for
Speaker 3: a long time.
Speaker 6: Does this time it stick?
Speaker 4: Yeah?
Speaker 12: You know, Elon Musque, as you said, has kind of
Speaker 12: had an edgy social media presence for years.
Speaker 6: Has anyone who followed the.
Speaker 12: You know, funding secured ruhaha five years ago knows? You know,
Speaker 12: He's always sort of done things that are a little
Speaker 12: bit outside of the norm.
Speaker 4: This is something further.
Speaker 12: This was an explicit endorsement of a anti Semitic conspiracy
Speaker 12: theory and in fact, an anti Semitic conspiracy theory that
Speaker 12: has been cited in you know, a prominent mass shooting.
Speaker 12: It's the same philosophy that was used by the mass
Speaker 12: shooter in the Tree of Life Synagogue who killed eleven people.
Speaker 4: So certainly very serious.
Speaker 12: We've seen responses from investors, We've seen a handful of advertisers,
Speaker 12: you know, a lot of sort of backlash to this,
Speaker 12: and Elon Musk, I think crucially, has not really responded.
Speaker 12: I mean he's sort of attempted to do a little
Speaker 12: damage control the night of, but mostly he's been tweeting
Speaker 12: through it and more or less standing by what he said.
Speaker 5: Well more than that, we've written to everyone and chased
Speaker 5: every avenue we have to try and get an answer
Speaker 5: or response from me or Musk. For what it's worth,
Speaker 5: there's two things happening in parallel. So Media Matters post
Speaker 5: this report on Thursday right and it shows that names
Speaker 5: like Apple, Oracle, IBM, their ads are showing up in
Speaker 5: timelines alongside sensitive content, for example posts that are pro
Speaker 5: Nazi as an example, and X wrote to me this morning, Max,
Speaker 5: we're showing their response right now, but they're basically saying
Speaker 5: this is a function of the media matters, researchers, their
Speaker 5: user base. In other words, this is how ad targeting works,
Speaker 5: and therein lies a bigger technology problem about the health
Speaker 5: of that platform.
Speaker 4: Right.
Speaker 12: Yeah, we should also say that, you know, Linda Yakarino
Speaker 12: posted essentially sort of like halfway towards a sub tweet
Speaker 12: of Elon Musk saying that the company doesn't tolerate anti
Speaker 12: semitism of any kind.
Speaker 4: I do think.
Speaker 12: It's a lot harder to make the argument that you're
Speaker 12: taking hateespe seriously when the de facto leader of the company,
Speaker 12: you know, Linda Yacarino's CEO, but Musk is the owner
Speaker 12: and seems to be making all the big decisions is
Speaker 12: going out there and actually actively tweeting hate speech himself. Right,
Speaker 12: it's harder to say you're taking this seriously, and that's
Speaker 12: going to create a huge challenge with advertisers.
Speaker 3: Dustin Muskowitz, for example, he was one of the co
Speaker 3: founders of Facebook. He sort of put it out there
Speaker 3: in a social media post saying, look, Linda Acchni needs
Speaker 3: to fire Elo Musk as CTO as chair. Whether or
Speaker 3: not that's in any way feasibly possible. But at what
Speaker 3: point do you think, if ever, this might have ramifications
Speaker 3: on his holding of senior executive titles across his incredibly
Speaker 3: successful businesses.
Speaker 12: Well, I think each of his companies are going to
Speaker 12: be a little bit different.
Speaker 4: You know.
Speaker 12: Tesla, of course, is a publicly traded company with a
Speaker 12: huge customer base. Now that customer base has traditionally been
Speaker 12: left of center, right, these are environmentalists, and you got
Speaker 12: to think that this is going to have an impact
Speaker 12: on Tesla's already significant challenges generating Jaman and for its cars.
Speaker 12: SpaceX is a government contractor, so you ask, like, is
Speaker 12: the Biden administration are they Are they gonna They've already
Speaker 12: they've put out a statement. You know, I suppose it
Speaker 12: possible to go further. I do think at some point
Speaker 12: we will see a response from us, because the volume
Speaker 12: is getting up there, but it's telling. I'd say that
Speaker 12: it hasn't happened yet.
Speaker 4: All right, Bloombers match Traffckin.
Speaker 5: That has been the top story of the last twenty
Speaker 5: four hours. It is not the only story in the
Speaker 5: world of Elon. SpaceX has a significant launch planned for Saturday.
Speaker 4: Starship will do a full attempt.
Speaker 5: Number two joining us Bloomberg's Lauren Grush and Lauren, what
Speaker 5: is significant about this attempt and what are we expecting
Speaker 5: to happen?
Speaker 13: Sure, So, as you mentioned, it's the second time ever
Speaker 13: that SpaceX will be launching a fully stacked starship system.
Speaker 13: So that's the starship space Trap on top of its
Speaker 13: massive super heavy booster. And you know, I can't tell
Speaker 13: you what we effect last time when it launched. Elon
Speaker 13: mentioned you know, excitement would be guaranteed. Preferably, we're looking
Speaker 13: to see them do quite a bit better than last time.
Speaker 6: If you watch the last the first.
Speaker 13: Launch attempt, they did, you know, have a few engine
Speaker 13: failures and then the rocket started spinning out of control
Speaker 13: and SpaceX was forced to intentionally destroy it. So the goal,
Speaker 13: hopefully is to get a little farther than last time.
Speaker 5: Lauren just outlined the rocket science from from countdown ten nine, eight,
Speaker 5: five forty to one zero lift off, what happens thereafter?
Speaker 13: Sure, So, at liftoff, presumably all thirty three Raptor engines
Speaker 13: at the base of super Heavy will ignite, lifting off
Speaker 13: the entire rocket. Roughly two and a half minutes into flight.
Speaker 13: We're going to be looking at this thing called stage separation,
Speaker 13: so that's super heavy and Starship separating, and something that
Speaker 13: SpaceX will be testing on this flight is known as
Speaker 13: hot staging, So the engines on the Starship spacecraft will
Speaker 13: ignite briefly while that super heavy booster is still attached,
Speaker 13: giving it a bit of a kick and pushing it away.
Speaker 13: That's something that SpaceX changed from the first launch and
Speaker 13: it's the only thing. They can only test it during flight,
Speaker 13: so that's going to be something exciting to watch. And
Speaker 13: then if all goes well, hopefully Starship we'll continue on
Speaker 13: reaching near orbit and doing almost a full lap around
Speaker 13: the Earth before it comes down off the coast of Hawaii.
Speaker 6: Right, all right, gosh, we thank you so much.
Speaker 3: That does it for the decision this edition of BlueBag
Speaker 3: Technology yet
Speaker 4: Yeah, recap the podcast, right, we get yours