WEBVTT - Microsoft's Activision Deal and Meta's Threads 0:00:01.400 --> 0:00:05.080 From Mahart. We're Innovation of Money and Power Collie in 0:00:05.200 --> 0:00:06.680 Silicon Valley, NBN. 0:00:07.040 --> 0:00:11.080 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.880 --> 0:00:27.080 I'm Caroline Heinder, Bluemog's World TAD quarters in New York. 0:00:27.120 --> 0:00:29.000 Ed Ludlow, who's on assignment in some valley. 0:00:29.160 --> 0:00:31.160 This is Bloomberg Technology. Coming up. 0:00:31.200 --> 0:00:33.640 We'll bring you the latest on microsoft sixty nine billion 0:00:33.680 --> 0:00:35.479 dollar deal for Activision as. 0:00:35.360 --> 0:00:37.479 As companies they get a new shot at winning over 0:00:37.520 --> 0:00:39.080 the UK on the acquisition. 0:00:39.760 --> 0:00:42.680 Plus, we'll speak to one analyst who says metas threads 0:00:43.000 --> 0:00:45.639 look at add what eight billion dollars in revenue per 0:00:45.680 --> 0:00:48.520 year in the next couple of years. We'll discuss and 0:00:48.600 --> 0:00:51.720 the big four accounting firm KPMG and partners with Microsoft 0:00:51.800 --> 0:00:54.760 for a multi billion dollar partnership to incorporate you guessed 0:00:54.760 --> 0:00:57.200 it during to of AI into its business. We sit 0:00:57.280 --> 0:01:00.920 down with the KPMG CEO, Paul club Over. In the UK, 0:01:01.160 --> 0:01:05.119 the Antitrust Watchdog has said that a new merger investigation 0:01:05.280 --> 0:01:08.160 into Microsoft's sixty nine million Activision deal when it may 0:01:08.160 --> 0:01:10.840 be needed if the duo restructure their deal to try 0:01:10.880 --> 0:01:14.040 and reverse that previous UK veto for more. Let's bring 0:01:14.040 --> 0:01:16.480 in bloombergs Ley and Nylan, who's just been all across 0:01:16.520 --> 0:01:19.200 the competition analysis of this deal, And I mean, is 0:01:19.240 --> 0:01:21.160 this a good thing to go back to square one. 0:01:22.760 --> 0:01:25.840 In this case? It actually is. So the UK had 0:01:25.959 --> 0:01:30.560 vetoed Microsoft and Activision before effectively blocking the deal, but 0:01:30.680 --> 0:01:33.800 after yesterday when a US court said the deal can 0:01:33.840 --> 0:01:37.200 move forward, the UK sort of agreed to give it 0:01:37.240 --> 0:01:39.800 a second look, which is pretty unheard of. But in 0:01:39.880 --> 0:01:42.399 order to do that, they said Microsoft and Activision need 0:01:42.440 --> 0:01:44.360 to restructure it a little, so they're not looking at 0:01:44.400 --> 0:01:49.360 exactly the same thing. So Microsoft and Activision are going 0:01:49.400 --> 0:01:52.080 to make an offer to the UK and sort of 0:01:52.320 --> 0:01:56.160 restart negotiations over whether they might approve their deal. 0:01:56.640 --> 0:01:59.000 But in many ways people have sort of said that 0:01:59.040 --> 0:02:01.480 the FTC and I'VE regulators have got a bit of 0:02:01.480 --> 0:02:03.720 a win on their hands already because they have force 0:02:03.840 --> 0:02:06.480 changes to the way in which well competitors might be 0:02:06.520 --> 0:02:09.600 able to access the games eventually owned by Microsoft, called 0:02:09.600 --> 0:02:12.040 a duty being the key one. What are the ways 0:02:12.120 --> 0:02:15.760 could they alleviate any anxiety around a lack of competition? 0:02:17.200 --> 0:02:19.000 Yeah, so this is one of the things that the 0:02:19.080 --> 0:02:20.960 judge here in the US made a big point of 0:02:21.120 --> 0:02:23.079 is that the regulators had already won a little bit 0:02:23.120 --> 0:02:26.160 by getting Microsoft to offer these ten year deals to 0:02:26.200 --> 0:02:29.320 a lot of its rivals. So those deals they have 0:02:29.480 --> 0:02:33.919 with like Nintendo and Valve, the PC gaming company, and 0:02:33.960 --> 0:02:36.359 they've also offered them to some of the people who 0:02:36.400 --> 0:02:40.240 do streaming streaming games as well. But the thing about 0:02:40.240 --> 0:02:43.440 the UKCMA is they really hate what they call behavioral remedies. 0:02:43.520 --> 0:02:45.800 So like when a company is just offering to do 0:02:45.919 --> 0:02:49.160 something like a ten year contract, they want something what 0:02:49.200 --> 0:02:52.280 they call structural, So they want Microsoft or Activision to 0:02:52.280 --> 0:02:55.720 actually offer to sell something off. So Microsoft and Activision 0:02:55.720 --> 0:02:58.840 are now sort of in the position of trying to 0:02:58.919 --> 0:03:01.000 decide what it is that they might be willing to 0:03:01.080 --> 0:03:04.840 sort of, you know, cleave off from their main deal 0:03:05.000 --> 0:03:08.640 in order to sort of play kate UK regulators overall. 0:03:09.720 --> 0:03:12.440 Does this feel once again that kind of big text 0:03:13.160 --> 0:03:16.760 almost winning here in terms of getting these deals through. 0:03:18.600 --> 0:03:20.919 That's a good question. I mean, the FTC is expected 0:03:20.919 --> 0:03:23.680 to appeal as soon as this afternoon, so it's not 0:03:23.800 --> 0:03:26.799 technically over here in the US, but yeah, I mean, 0:03:26.880 --> 0:03:30.920 the antitrust laws are definitely not really able to take 0:03:30.960 --> 0:03:33.360 on the tech stuff. You know, we already had the 0:03:33.440 --> 0:03:38.120 FTC losing earlier this year in the Meta within case. 0:03:38.520 --> 0:03:41.440 Although the difference with the UK is, you know, they 0:03:41.480 --> 0:03:44.000 have a little bit of a better law, it's a 0:03:44.000 --> 0:03:48.120 little bit harder to appeal, So you had them blocking 0:03:48.760 --> 0:03:50.920 Meta Giffee. So Meta is now actually going to have 0:03:50.920 --> 0:03:54.040 to spin off Giffee, even though the CMA was the 0:03:54.080 --> 0:03:56.400 only place in the world that had to pose that deal. 0:03:57.080 --> 0:04:00.680 Interesting this backward look at some of these big Dealslea 0:04:00.680 --> 0:04:02.840 and Ilan, thank you so much for bringing it to us. 0:04:02.840 --> 0:04:05.200 And interestingly we go to dig into Meta in particular. 0:04:05.280 --> 0:04:07.400 We just finished that conversation earlier on Meta. Let's dig 0:04:07.440 --> 0:04:09.760 into that company in particular, because we have been all 0:04:09.800 --> 0:04:10.520 over Threads. 0:04:10.560 --> 0:04:12.640 Of course, more than one hundred million people signing up. 0:04:12.680 --> 0:04:14.280 I'm sure plenty more than that now and. 0:04:14.880 --> 0:04:18.080 It is sort of for many becoming a Twitter alternative 0:04:18.200 --> 0:04:20.159 and add on and over the next couple of years, 0:04:20.200 --> 0:04:22.320 one analyst sees that Threads can reach close to two 0:04:22.400 --> 0:04:25.280 hundred million daily active users and generate well about eight 0:04:25.279 --> 0:04:27.520 billion dollars in an annual revenue. Joining us now is 0:04:27.560 --> 0:04:30.560 that analyst Mart Mahoney ever caught II Sceenior Managing Director. 0:04:30.720 --> 0:04:32.960 You've now form rating on Meta three hund and fifty 0:04:33.000 --> 0:04:33.719 dollars price target. 0:04:33.760 --> 0:04:35.480 Interestingly, it's no longer your number. 0:04:35.240 --> 0:04:39.360 One top pick because of the rampant, rapid rise in 0:04:39.400 --> 0:04:41.240 the share price that we have seen on the back 0:04:41.279 --> 0:04:42.520 of this year. 0:04:42.600 --> 0:04:44.320 Really, but mark the threads. 0:04:44.640 --> 0:04:46.640 Eight billion sounds like a lot, but it's not compared 0:04:46.640 --> 0:04:47.960 to the annual revenue in total. 0:04:49.960 --> 0:04:50.960 Yes, well all there. 0:04:50.960 --> 0:04:54.040 I agree with Carolina, like where you are set it up? 0:04:54.400 --> 0:04:56.400 Could they get the eight billion in revenue? One of 0:04:56.400 --> 0:04:59.599 the biggest, the easiest part of their math, if you will, 0:04:59.839 --> 0:05:03.240 is the revenue that they could get per user. On Twitter, 0:05:03.279 --> 0:05:06.039 as a documented history, they were generating about twenty dollars 0:05:06.120 --> 0:05:09.599 in ad revenue per user Meta. Facebook also has a 0:05:09.600 --> 0:05:13.040 documented history here they've been able to generate monetization levels 0:05:13.040 --> 0:05:15.560 two to three x that of Twitter. And I don't 0:05:15.560 --> 0:05:18.560 think it's because they spam ads all over the user. 0:05:18.360 --> 0:05:20.200 Interface a little. Maybe they do a little of that. 0:05:20.480 --> 0:05:23.080 It's because they are much better at targeting and matching 0:05:23.480 --> 0:05:28.120 advertisers with users. They are able to find relevant audiences 0:05:28.200 --> 0:05:31.800 for advertisers and marketers can put relevant ads against and 0:05:31.839 --> 0:05:32.760 they're able to track. 0:05:32.640 --> 0:05:33.560 The performance of those. 0:05:33.600 --> 0:05:36.600 That's why you've got almost ten million advertisers that are 0:05:36.640 --> 0:05:39.520 on There's a lot of these are small businesses obviously. 0:05:39.600 --> 0:05:40.880 That are on Meta. 0:05:41.000 --> 0:05:42.680 So yeah, they'll be able to better monetize if they 0:05:42.720 --> 0:05:44.520 get the users. The question is whether they will or 0:05:44.520 --> 0:05:47.239 not be at one hundred million ramp is outstanding. 0:05:47.000 --> 0:05:48.760 When do you think we might see that switched on? 0:05:48.839 --> 0:05:52.400 We know Mark Zuckerberg himself and we've heard from Amasara 0:05:52.400 --> 0:05:54.360 as well saying, look, we're not going to think about 0:05:54.360 --> 0:05:56.400 putting the advertising out there until we have a line 0:05:56.400 --> 0:05:59.120 of sight on a billion users. Do you think that's 0:05:59.160 --> 0:05:59.920 really what they're going to. 0:05:59.839 --> 0:06:04.000 Be I take him at their word on that. 0:06:04.680 --> 0:06:06.960 Since these numbers that we're talking about, even that eight billion, 0:06:07.000 --> 0:06:08.480 I know that sounds like a big number. 0:06:08.680 --> 0:06:11.120 That's only kind of a mid single digit percent. 0:06:11.200 --> 0:06:15.000 Impact FREMDA, So it's not like they need the ad 0:06:15.040 --> 0:06:18.360 revenue near term. In fact, I think the absolute genius 0:06:18.360 --> 0:06:20.839 strategy here would be show no ads, you know, like, 0:06:21.320 --> 0:06:24.680 bring more and more users onto Threads and what the 0:06:25.080 --> 0:06:28.039 Threads experience has got to improve dramatically. I assume it will. 0:06:28.080 --> 0:06:30.640 I assume they'll be easier for us to use it. 0:06:31.520 --> 0:06:33.320 For the great things that we've used Twitter for in 0:06:33.360 --> 0:06:35.839 the past. When Uber cfo the news came out that 0:06:36.400 --> 0:06:38.680 he may be resigning. If you go to Twitter, if 0:06:38.680 --> 0:06:40.320 you'd gone to Twitter, you would have found plenty of 0:06:40.400 --> 0:06:41.680 relevant news articles about it. 0:06:41.720 --> 0:06:42.919 If you've gone the threads, you wouldn't have. 0:06:42.920 --> 0:06:45.719 Seen anything like there's that real time news element that's 0:06:45.760 --> 0:06:48.440 really great magical about Twitter. So there's some of that 0:06:48.440 --> 0:06:51.080 that needs to be built at threads. When I just 0:06:51.120 --> 0:06:53.120 find interesting to set up here for meta is I 0:06:53.120 --> 0:06:56.240 think Twitter as an asset has been fundamentally underinvested in 0:06:56.640 --> 0:06:58.840 for a couple of years, not just since Musk took 0:06:58.880 --> 0:07:00.640 over the company, but for a couple of years, both 0:07:00.680 --> 0:07:03.200 on the advertiser side and on the user side. That 0:07:03.240 --> 0:07:06.080 created the opportunity for Threads that can just bring in 0:07:06.240 --> 0:07:08.720 so many new users from its existing database. 0:07:08.880 --> 0:07:12.280 It's existing user base, it one and a half billion users. 0:07:12.640 --> 0:07:13.600 Well, the race is now on. 0:07:13.720 --> 0:07:16.040 Therefore, and it feels as though Twitter has been making 0:07:16.160 --> 0:07:18.960 changes in terms of brand safety to a large extent, 0:07:19.000 --> 0:07:21.040 and at the same time they've got this sort of 0:07:21.080 --> 0:07:24.840 window before meta does turn on the advertising switch. To 0:07:24.880 --> 0:07:27.320 an extent, how much do you think you know Twitter 0:07:27.360 --> 0:07:30.000 is so embedded as our lifestyle and our use case. 0:07:30.440 --> 0:07:33.480 Can Threads really keep the site gest going. 0:07:34.760 --> 0:07:34.920 Well? 0:07:34.960 --> 0:07:35.880 I guess we should if we. 0:07:36.960 --> 0:07:40.480 I think the sober assessment is we should assume that 0:07:40.520 --> 0:07:46.240 Twitter will be the leading real time news public town 0:07:46.320 --> 0:07:50.960 square communications platform for the next five to ten years. 0:07:51.200 --> 0:07:54.520 They probably will maintain that leading position. But it's so 0:07:54.600 --> 0:07:57.720 interesting that there's this opening created, so it is possible 0:07:57.800 --> 0:07:59.840 that Threads they can come up with a better product. 0:08:00.200 --> 0:08:02.920 It's not better than the Twitter now, but could. 0:08:02.680 --> 0:08:05.120 They make one that's better. They certainly have the potential 0:08:05.160 --> 0:08:05.480 to do that. 0:08:05.480 --> 0:08:07.640 They've got the engineering talent to do that, and they 0:08:07.640 --> 0:08:09.640 can certainly bring in a lot more users. 0:08:09.720 --> 0:08:10.200 And there's a. 0:08:10.200 --> 0:08:12.400 Couple of really simple things that they've done. I mean, 0:08:12.520 --> 0:08:14.600 you think about the challenges that Twitter has had. It's 0:08:14.720 --> 0:08:17.320 onboarding challenge for a lot of people is real, like 0:08:17.640 --> 0:08:19.400 what do I get out of Twitter? It just seems 0:08:19.440 --> 0:08:22.160 like a delusion of information? How do I find something useful? 0:08:22.720 --> 0:08:25.520 I think Threads has made it easy for people to 0:08:25.520 --> 0:08:28.400 come in to find followers and to find people to follow, 0:08:28.720 --> 0:08:32.520 either friends, people that they know, and then and they've 0:08:32.520 --> 0:08:35.000 done it in a way that maybe seems more I 0:08:35.000 --> 0:08:38.200 don't know, user friendly, that's less caustic as an environment. 0:08:38.280 --> 0:08:41.280 That's something that still needs to be addressed on Twitter. 0:08:41.320 --> 0:08:43.880 It's been a long standing battle on Twitter how to 0:08:43.880 --> 0:08:46.480 get some of that uncivil commentary off the site. 0:08:46.600 --> 0:08:48.840 So there's a real opportunity here for threads. That's what 0:08:48.840 --> 0:08:49.800 I'm more intrigued by. 0:08:49.840 --> 0:08:52.400 It's all potential, But these one hundred million users in 0:08:52.520 --> 0:08:54.360 less than a week, we've never seen that before. 0:08:54.960 --> 0:08:58.840 Mark here we have a conversation about competition being added 0:08:59.480 --> 0:09:02.240 for many, it's a worry about competition being taken away. 0:09:02.280 --> 0:09:04.280 I'm thinking of Meta is I think in a closed 0:09:04.360 --> 0:09:07.199 room tomorrow and the EU having to try and vindicate 0:09:07.280 --> 0:09:11.440 marketplace in particular, and how they haven't reduced unfairly competition there. 0:09:11.640 --> 0:09:13.960 How much is regulation aheadwind to all of the big 0:09:14.000 --> 0:09:14.840 tech names right now? 0:09:15.840 --> 0:09:19.120 It's going to be a constant presence, constant headwind going forwards. 0:09:19.360 --> 0:09:21.880 If I simplify all this, Caroline, I think about three 0:09:21.880 --> 0:09:25.640 types of regulation. There's kind of monopoly power regulation, privacy, 0:09:26.480 --> 0:09:26.920 and then. 0:09:26.840 --> 0:09:30.079 Third is kind of social health kind of sort of regulation. 0:09:30.200 --> 0:09:34.720 When it comes to Meta, there's no monopoly regulatory risk. 0:09:35.080 --> 0:09:37.080 I mean, if there was a real if there really 0:09:37.120 --> 0:09:39.880 was a monopolistic power at Facebook, you never would have 0:09:39.920 --> 0:09:43.880 had TikTok. We obviously had TikTok, so that if there's 0:09:43.920 --> 0:09:46.640 a new social media there's nothing to stop people from 0:09:46.640 --> 0:09:49.040 creating a new social media outlet and. 0:09:48.920 --> 0:09:51.560 For driving traffic there if they have a really good service. 0:09:51.600 --> 0:09:55.560 TikTok prove that the other issues are more serious, the 0:09:55.600 --> 0:09:59.080 privacy issues. But I think Facebook has kind of come around, 0:09:59.120 --> 0:10:01.440 it's relatively reasonably address that. 0:10:01.800 --> 0:10:04.640 And the social health impact of Facebook that's waxed. And 0:10:04.679 --> 0:10:07.000 when I think we had a point where we over. 0:10:08.280 --> 0:10:12.960 Dramatized, dramatize the impact of social media on social health, 0:10:12.960 --> 0:10:14.640 there are plenty of other parts of media that have 0:10:14.880 --> 0:10:17.920 positive and negative impacts on social health. So I just 0:10:18.120 --> 0:10:20.120 sort of think we've moved away from that. Maybe we've 0:10:20.160 --> 0:10:23.720 also matured a little bit how we think about those risks, 0:10:23.760 --> 0:10:25.680 So they're going to be long standing. It comes with 0:10:25.720 --> 0:10:29.200 the territory because you've just invited everybody to make a comment, and. 0:10:29.120 --> 0:10:30.640 Not all those comments are going to be good. 0:10:31.000 --> 0:10:33.120 Mam Ma Hainey have a core II analyst. 0:10:33.240 --> 0:10:36.200 We didn't even get onto your uber perspective. Your top 0:10:36.200 --> 0:10:39.320 pick interesting on the Domino's News today. We thank you 0:10:39.400 --> 0:10:42.080 so much, of course, Mart mahoney for evercre is. I meanwhile, 0:10:42.120 --> 0:10:44.600 coming up, I've got to discuss that big deal KPMG 0:10:44.679 --> 0:10:48.160 and Microsoft entering a multi year, multi billion dollar AI 0:10:48.280 --> 0:10:49.760 and cloud services agreement. 0:10:49.880 --> 0:10:50.600 We discuss the. 0:10:50.600 --> 0:10:56.080 Announcement next KPMGCO booknot And meanwhile, let's just look at 0:10:56.120 --> 0:10:57.959 what's happening with Shopify out more than a percent. But 0:10:58.280 --> 0:11:00.559 let's go to the nitty gritty. They fascinate story that 0:11:00.640 --> 0:11:03.439 this company is basically putting a price tag on time. 0:11:03.880 --> 0:11:06.680 Rolling out calculator embedded in your calendar if you're an 0:11:06.679 --> 0:11:08.880 employee there then estimates the cost of. 0:11:09.040 --> 0:11:10.680 Any meeting of three or more people. 0:11:10.720 --> 0:11:13.360 Basically, the company's new internal tool is trying to push 0:11:13.440 --> 0:11:16.880 you to be more productive take away what they project 0:11:16.920 --> 0:11:20.000 to be three hundred and twenty two thousand hours of 0:11:20.160 --> 0:11:22.280 meetings this year by basically putting a price tag on it. 0:11:22.600 --> 0:11:25.000 It's expensive, folks. This Bloomberg. 0:11:34.600 --> 0:11:38.080 Both for accounting firm KPMG has just announced a multimillion 0:11:38.120 --> 0:11:41.079 dollar commitment in Microsoft cloud and AI services over the 0:11:41.160 --> 0:11:43.920 next five years, and it's expected though to bring in 0:11:44.559 --> 0:11:47.360 more than twelve billion dollars in ALID revenue. Joining us 0:11:47.440 --> 0:11:50.400 now to discuss the partnership as Paul Knups KBMG CEO 0:11:50.520 --> 0:11:53.800 and so talk to us this commitment, but to bring 0:11:53.920 --> 0:11:56.840 more in I'm assuming this is all a productivity boost. 0:11:57.240 --> 0:11:59.880 Well, you know, you think about the velocity of change 0:12:00.040 --> 0:12:03.800 right now, Caroline, and the speed of innovation and generative AI. 0:12:04.160 --> 0:12:06.520 Many of us weren't even talking about it nine months ago, 0:12:06.520 --> 0:12:08.920 and now it's all anybody wants to talk about. It's 0:12:08.960 --> 0:12:11.920 amazing that veloci of change and speed of innovation. So 0:12:12.280 --> 0:12:16.920 to co develop solutions with Microsoft for all of our businesses, AUTIT, 0:12:16.960 --> 0:12:20.360 taxs and advisory that we can bring to market. Some 0:12:20.480 --> 0:12:23.319 of the solutions already under development and some are in 0:12:23.440 --> 0:12:26.480 nascent stages, but we're really excited about the power of 0:12:26.600 --> 0:12:28.400 that partnership or we can bring to market in the 0:12:28.440 --> 0:12:32.800 future working together with Microsoft. So we'll spend two billion, 0:12:32.920 --> 0:12:36.000 Our invest two billion over the next five years on 0:12:36.160 --> 0:12:39.319 AI and cloud, and we expect to generate about twelve 0:12:39.360 --> 0:12:42.480 billion dollars of additional revenue over the next several years 0:12:42.559 --> 0:12:46.960 through cybersecurity solutions, through cloud migration, and also through new 0:12:47.040 --> 0:12:49.839 innovative applications that use GENERAI. 0:12:50.520 --> 0:12:55.120 So with your own workforce, having the early access to 0:12:55.200 --> 0:12:59.600 Microso three sixty five copilot the Azuo Open AI service. Ultimately, 0:13:00.360 --> 0:13:03.400 will you have a competitive edge? Will others follow your lead? 0:13:03.440 --> 0:13:05.120 Will they also do deals with Microsoft? 0:13:05.640 --> 0:13:07.400 So there's no doubt they will. This is not an 0:13:07.440 --> 0:13:10.360 exclusive arrangement, and we are going to be investing in 0:13:10.440 --> 0:13:14.040 generative AI across the board, so we're looking for additional opportunities. 0:13:14.559 --> 0:13:17.720 But we think our long standing relationship with Microsoft, which 0:13:17.800 --> 0:13:20.840 dates back to two thousand and our history of working 0:13:20.920 --> 0:13:24.240 with them as a partner, even going to market with 0:13:24.360 --> 0:13:27.839 them with twenty five hundred clients as joint clients, that 0:13:28.040 --> 0:13:29.800 we have an edge in the sense that we have 0:13:29.920 --> 0:13:33.319 that long, strong history of development and we're going to 0:13:33.600 --> 0:13:36.760 idate with them the power of their technology with the 0:13:36.840 --> 0:13:42.199 power of our knowledge experience in advisory, tax auditing is 0:13:42.240 --> 0:13:45.560 a really great combination for ensuring that we can solve 0:13:45.559 --> 0:13:48.640 our clients' most complex problems that actually also help our 0:13:48.679 --> 0:13:50.640 communities in society be better. 0:13:51.320 --> 0:13:54.120 How are you selling this to your workforce because a 0:13:54.200 --> 0:13:57.120 lot of anxiety is out there that AI is going 0:13:57.200 --> 0:13:57.839 to take our jobs. 0:13:58.240 --> 0:13:58.360 Right. 0:13:58.760 --> 0:14:01.120 Well, if I look at the forty years I've been 0:14:01.120 --> 0:14:04.120 at KPMG and I think about the history of technology, 0:14:04.720 --> 0:14:06.959 I haven't seen a technology disruption. I think this is 0:14:07.000 --> 0:14:10.440 the greatest technology disruption in many decades. I haven't seen 0:14:10.480 --> 0:14:13.240 one yet that's caused a loss of workforce on a 0:14:13.280 --> 0:14:15.839 growth space. It's on a net basis. So I actually 0:14:15.920 --> 0:14:19.600 believe that workforces over time will grow with generative AI. 0:14:20.120 --> 0:14:22.400 We're going to need more people to interpret results, to 0:14:22.480 --> 0:14:26.880 co develop solutions, to develop solutions. We need more data scientists. 0:14:26.960 --> 0:14:29.320 We're going to need a lot of quality and cyber 0:14:30.040 --> 0:14:34.600 assessments of the information that the generative AI applications produce. 0:14:35.040 --> 0:14:37.840 So as I think about that history of technology disruption 0:14:38.000 --> 0:14:41.680 and what it's done to workforce, it's actually generated economic 0:14:41.760 --> 0:14:44.760 activity that should allow for us to grow our workforces 0:14:44.800 --> 0:14:47.400 in the future and actually also put some of those 0:14:47.480 --> 0:14:51.320 mundane routine tasks that people don't enjoy doing and upscale 0:14:51.400 --> 0:14:53.680 people to do more interesting, creative things. 0:14:53.880 --> 0:14:56.440 And you've been out to the executives that you work 0:14:56.520 --> 0:14:59.560 for the clients, and they seem to agree. They're also saying, look, 0:14:59.560 --> 0:15:01.880 this is actually going to add to employees, this is 0:15:01.920 --> 0:15:03.760 going to add to our productivity. That's right. 0:15:03.920 --> 0:15:06.920 So you know, we just completed surveyed recently where eighty 0:15:06.920 --> 0:15:10.640 percent of executives said that this would be a major 0:15:10.720 --> 0:15:14.920 disruption seventy five percent. It's be their top emerging technology 0:15:14.960 --> 0:15:17.680 for the next eighteen months. And there's general agreement too 0:15:17.720 --> 0:15:20.800 that was going to add headcount over time. So we 0:15:20.800 --> 0:15:23.560 feel pretty confident that it will also reduce stress because 0:15:23.800 --> 0:15:25.960 some of these mundane task again will no longer have 0:15:26.040 --> 0:15:29.280 to be done by people, and they can then provide 0:15:29.320 --> 0:15:32.240 more value added advice, do more creative things in the 0:15:32.680 --> 0:15:33.400 work environment. 0:15:34.000 --> 0:15:37.120 He as to having more exciting work. I'm excited. I'm interested. 0:15:37.160 --> 0:15:39.920 Though you've readferenced cyber and the way in which you're 0:15:39.920 --> 0:15:41.720 going to be using general to AI. There a lot 0:15:41.760 --> 0:15:44.240 of the worries, and there's been this quick adoption by 0:15:44.280 --> 0:15:48.320 companies to use open AI team with Microsoft, but they 0:15:48.360 --> 0:15:50.960 don't want their own workforce using it because they're worried 0:15:51.000 --> 0:15:54.240 about their own data and it's somehow ending up in 0:15:54.320 --> 0:15:56.320 the data tropes that are going to be in my 0:15:56.400 --> 0:15:57.200 own chat GIPT. 0:15:58.000 --> 0:15:59.880 How have you dealt with that? The privacy angle. 0:16:00.280 --> 0:16:03.680 So when we use a chat GPT version, we use 0:16:03.720 --> 0:16:06.800 it in our own secure environment, not the open source 0:16:07.000 --> 0:16:09.960 application that's out there, which provides a lot of protection. 0:16:10.040 --> 0:16:14.080 And we also really value the enterprise protection security that 0:16:14.200 --> 0:16:18.120 Microsoft brings to us. So we want to use AI responsibly, 0:16:18.240 --> 0:16:21.320 ethically and in a very secure environment. As we develop 0:16:21.360 --> 0:16:23.920 these solutions, we're going to ensure that companies have that 0:16:24.040 --> 0:16:28.360 same kind of security, governance and architecture built around their solutions. 0:16:28.440 --> 0:16:30.600 That's going to be very important for the future because 0:16:30.600 --> 0:16:35.160 there are those concerns along with concerns around data accuracy too. 0:16:36.200 --> 0:16:38.320 Well, we continue to see how that is monitored and 0:16:38.400 --> 0:16:41.000 improved on and iterated and as you say, a big 0:16:41.040 --> 0:16:43.160 disruption that we're in. Thank you so much coming on 0:16:43.240 --> 0:16:47.360 and talking about the deal. Surely is the KPMGCO. 0:16:48.480 --> 0:16:48.640 Time. 0:16:48.720 --> 0:16:51.600 Now I'm talking tech first. Up China based hackers. They've 0:16:51.600 --> 0:16:54.440 reached a series of email accounts link to government agencies 0:16:54.560 --> 0:16:56.760 in the US and Europe. Now the hackers accessed and 0:16:57.120 --> 0:17:02.600 exported unclassified Microsoft data number of accounts plaus Chip designer 0:17:02.760 --> 0:17:04.800 ARM is in talks within Vidia to join a group 0:17:04.840 --> 0:17:07.719 of potential investors to anchor its initial public offering. According 0:17:07.720 --> 0:17:09.840 to the Financial Times, now in Video, which is a 0:17:09.960 --> 0:17:12.200 long time partner of ARM, is seeming to invest in 0:17:12.200 --> 0:17:13.720 a valuation of thirty five to. 0:17:13.800 --> 0:17:15.640 Forty billion dollars as being reported. 0:17:16.280 --> 0:17:19.000 Meanwhile, in a Musk will hold an event broadcast on 0:17:19.119 --> 0:17:23.120 Twitter spaces focused on artificial intelligence, and he's invited two 0:17:23.200 --> 0:17:26.320 prominent US House warmakers, Democrat and Republican state leaders. 0:17:26.680 --> 0:17:27.439 We'll speak with. 0:17:27.600 --> 0:17:30.840 Musk for about forty five minutes tonight some pm Eastern time, 0:17:31.680 --> 0:17:32.159 mean while. 0:17:32.040 --> 0:17:33.240 Let's talk about AI a little bit. 0:17:33.160 --> 0:17:36.440 More, because today's big take how AI can make politics 0:17:36.480 --> 0:17:40.960 more dangerous, with AI holding the potential to supercharged dissemination 0:17:41.040 --> 0:17:44.200 of misinformation in political campaigns, among other things, we really 0:17:44.240 --> 0:17:45.720 want to dig into that, the highs, the lows of 0:17:45.720 --> 0:17:50.800 aiding bags emily bound for more great peace and at 0:17:50.880 --> 0:17:54.280 this moment, how we already seeing AI sort of becoming 0:17:55.000 --> 0:17:56.880 involved in campaigns already. 0:17:57.480 --> 0:18:01.119 We absolutely are. We're seeing it from the local level, 0:18:01.640 --> 0:18:03.920 the state level, and we're definitely seeing it at the 0:18:04.000 --> 0:18:08.040 federal and international level. So there have been instances of 0:18:08.240 --> 0:18:13.760 pretty convincing deep bakes, so that is pictures and videos 0:18:13.880 --> 0:18:19.880 that aren't real but look very real circulating in campaigns, 0:18:20.880 --> 0:18:21.920 you know, up and down the board. 0:18:23.000 --> 0:18:25.600 We're also, though, of course, going to sort of supercharge 0:18:25.680 --> 0:18:29.680 not only potential disinformation, but go supercharge the workers who 0:18:29.760 --> 0:18:30.600 are trying. 0:18:30.400 --> 0:18:31.800 To activate campaigns as well. 0:18:32.000 --> 0:18:35.040 How are we already see sort of productivity being top 0:18:35.080 --> 0:18:35.480 at the moment. 0:18:36.520 --> 0:18:36.720 Yeah. 0:18:36.800 --> 0:18:40.480 So for the big take piece I've published today, Laura 0:18:40.600 --> 0:18:45.439 Davison and I talked with congressional staffers, campaigns staffers, lobbyists, 0:18:45.640 --> 0:18:49.120 and politicians, So the people who make up to Washington 0:18:49.840 --> 0:18:51.840 and ask them, how are you using AI? And we 0:18:51.960 --> 0:18:55.520 found it's already being used in a really widespread way. 0:18:55.720 --> 0:18:58.959 So lobbyists are using it to create the first drafts 0:18:59.000 --> 0:19:03.560 of campaigns. Congressional staffers are using it just to get 0:19:03.600 --> 0:19:08.080 the first draft on a page of speeches. The generative 0:19:08.119 --> 0:19:12.320 AI still isn't sophisticated enough to write bills, but we're 0:19:12.400 --> 0:19:13.280 not that far off. 0:19:13.680 --> 0:19:15.760 Okay, So look, there are some positives to all of this, 0:19:16.080 --> 0:19:19.160 but Washington in and of itself is also iying AI 0:19:19.359 --> 0:19:22.480 and the regulation of AI pretty seriously. Can they tackle 0:19:22.560 --> 0:19:25.880 its own influence within their own sphere of political campaigns. 0:19:26.920 --> 0:19:27.080 Yeah. 0:19:27.200 --> 0:19:31.639 Senate Majority Leader Chuck Schumer just today said that this 0:19:31.800 --> 0:19:34.639 is going to be one of the most difficult challenges 0:19:34.800 --> 0:19:37.720 that Congress has ever faced, is trying to regulate this 0:19:38.000 --> 0:19:42.440 very complicated and nascent technology. They're right now just sort 0:19:42.480 --> 0:19:46.160 of in the talking phase. They're having briefings to get 0:19:46.320 --> 0:19:49.160 lawmakers up to speed with what AI is, how it's 0:19:49.200 --> 0:19:53.280