Speaker 1: From Bahart where Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: And Caroline Heider Bloomberg's World headquarters in New.
Speaker 3: York and am Ed Ludlow in San Francisco. This is
Speaker 3: Bloomberg Technology coming up.
Speaker 4: We will have full coverage on TikTok throughout this program.
Speaker 4: The US House it passes are built of forced bike
Speaker 4: dance to celtictok of face a.
Speaker 3: Ban in the US, plus the European Union passes the
Speaker 3: world's most extensive AI guardrails. Will break down the impact
Speaker 3: of the AI Act and what it means for the
Speaker 3: future of artificial intelligence.
Speaker 4: Jamarth Palahabertia's Social Capital and fires two partners after a
Speaker 4: probe citing an undisclosed situation. We'll discuss what could be
Speaker 4: behind the decision and then involves a much hyped AI startup.
Speaker 3: The moment that the House did pass the divest or
Speaker 3: ban TikTok bill, there was a significant leg higher in
Speaker 3: both Rumble and Meta, but I put those up because
Speaker 3: the conversation will now change.
Speaker 5: Right.
Speaker 3: We're going to discuss whether the divest or ban TikTok
Speaker 3: bill will have success in the Senate. But we're already
Speaker 3: saying this is a foregone conclusion, and we're asking, well,
Speaker 3: who is going to benefit from a TikTok ban in
Speaker 3: the US or who is going to buy TikTok's US operations?
Speaker 3: And look at rumble it's gain over the last seven days,
Speaker 3: much of it in yesterday's session on reports that they're
Speaker 3: considering a bid or looking at options for TikTok's US operations.
Speaker 3: There's a lot to discuss, but the big step in
Speaker 3: the House has been taken. Now we move to the Senate.
Speaker 4: And still much potential pushback from the Senate, and notably
Speaker 4: a CEO who went there to lobby just those senators yesterday.
Speaker 2: Let's get into it with Alex Birinko.
Speaker 4: And Alex we understand, according to people familiar that show
Speaker 4: two was indeed looking to I'll get senators in particular.
Speaker 6: He was I think the TikTok team saw this bill
Speaker 6: potentially flying through the House like it did today, getting
Speaker 6: that majority vote in just the past few minutes. The
Speaker 6: next hurdle for them will be the Senate Majority Leader.
Speaker 6: Chuck Schumer in the Senate has so far not said
Speaker 6: that he would take up this bill. TikTok also put
Speaker 6: out a statement today appealing to senators saying, quote, this
Speaker 6: process was secret and the bill was jammed through for
Speaker 6: one reason.
Speaker 2: It's a ban.
Speaker 6: We are hopeful that the Senate will consider the facts,
Speaker 6: listen to their constituents, and realize the impact on the economy.
Speaker 6: So certainly TikTok CEO showed you who was down in
Speaker 6: DC is going to be spending his time in the
Speaker 6: Senate hoping that while this is the furthest a anti
Speaker 6: TikTok bill has gone in the US government, that it
Speaker 6: ends here.
Speaker 3: It's not just that Chuck Schumer has not endorsed the bill,
Speaker 3: it's that there is a bigger concern here as well.
Speaker 3: And Bloomberg's reporting this idea that even on the Republican
Speaker 3: side the aisle, they look at this bill more big picture.
Speaker 3: Why do we hand these powers to the administration and
Speaker 3: give them such sort of a blanket power for censorship
Speaker 3: to make a decision on TikTok. So that's there in
Speaker 3: the background. But I think I'm right in saying, Alex
Speaker 3: TikTok's always said that it's going to mount a legal
Speaker 3: challenge to the idea that it would have to divest
Speaker 3: or sell its US operations anyway.
Speaker 6: Yeah, you're right. I think it was summed up pretty
Speaker 6: succinctly to our DC colleagues by Republican Senator Tom Tillis
Speaker 6: out of North Carolina, who said yesterday that he's worried
Speaker 6: about the unintended consequences of a bill like this. Now,
Speaker 6: it's been fascinating to kind of watch the battle with
Speaker 6: TikTok in DC, because Republicans writ large have been some
Speaker 6: of the biggest agitators against TikTok. Some of that did
Speaker 6: change in the past week when we had Donald Trump himself,
Speaker 6: when he was the president who put the first executive
Speaker 6: order forward to ban TikTok, actually come out and say
Speaker 6: a few days ago, well, maybe we shouldn't do that
Speaker 6: because it would give meta too much power. So certainly
Speaker 6: we have some rangling here over not only over whether
Speaker 6: or not this bill actually addresses concerns or if national
Speaker 6: security concerns have actually been made clear to the lawmakers,
Speaker 6: but also how much power this would give the government.
Speaker 6: This would give the executive branch in kind of ruling
Speaker 6: over the private sector.
Speaker 3: And I'd point out that in that moment that the
Speaker 3: House passed the bill, there was a big spike in Meta.
Speaker 3: It is still lower seven tens of a ascent, but
Speaker 3: of course TikTok's user base and its platform is highly
Speaker 3: analogous with Meta's Instagram, short form video vertical. Bloomberg's Alex
Speaker 3: Brinka has done a masterful job of covering all of that.
Speaker 3: That is, that spike in Meta shares that I showed you,
Speaker 3: but then an immediate pullback. Right. So, sources say that
Speaker 3: TikTok intends to exhaust all legal challenges before it considers
Speaker 3: any kind of divestiture from its Chinese parent company Bike Dance.
Speaker 3: AT's bringing David Glancy, Institute of World Politics, Professor and
Speaker 3: Strategy and state Craft and Annenberg Chair of International Communication
Speaker 3: for his point of view, for many, David, this was
Speaker 3: a foregone conclusion. Divest or be banned. Is it is
Speaker 3: simple in your mind?
Speaker 5: I think from the national security community, it's a pretty
Speaker 5: simple issue. It is a potential threat to national security
Speaker 5: because of its reach, the way the software is the
Speaker 5: potential to influence, but also the close relations It is
Speaker 5: a Chinese company, and there was a report that came
Speaker 5: out just on Monday an unclassified report on threats, a
Speaker 5: threat assessment, and China was prominently featured in that. And
Speaker 5: China's activities in the last few years have been much
Speaker 5: more aggressive. They've been working with adversaries like Russian and
Speaker 5: Iran more closely, and so I think there's real concerns
Speaker 5: and from the national security community, it should have been
Speaker 5: done probably years ago now.
Speaker 4: Of course, we know that this has been considered for
Speaker 4: a long time in terms of the worries of Chinese influence,
Speaker 4: and TikTok itself showed Chu himself has gone to lengths
Speaker 4: to say, look, we can alleviate that Project Texas for example,
Speaker 4: and shuing the Oracle is in some way facilitating the
Speaker 4: way in which data is read or indeed not transferred
Speaker 4: to China. How much have you read into well the
Speaker 4: ability for that to ease any of your concerns.
Speaker 5: The fact that it's a Chinese company and still has
Speaker 5: to abide by Chinese laws, which when push comes to shove,
Speaker 5: would require data transfers. The other major concern is their
Speaker 5: algorithm and the ability to potentially push influence messaging that
Speaker 5: we wouldn't be able to detect in real time. It
Speaker 5: would be really difficult to detect some of their longer
Speaker 5: term influence activities if they were to shift their algorithm
Speaker 5: for morm align purposes. And that's a real concern for
Speaker 5: the national security community.
Speaker 3: David, one hundred and seventy million Americans use TikTok and
Speaker 3: many of them like it. Are they being represented in
Speaker 3: this process?
Speaker 5: I think the Senate's going to have it say. I
Speaker 5: think the fact that it's been delayed for a number
Speaker 5: of years and there hasn't been action, that's a testament
Speaker 5: that they have been there's been a voice for those
Speaker 5: folks in the process.
Speaker 3: So I think, you know, we.
Speaker 5: Have a system of you know, laws and rules and
Speaker 5: ways to appeal, and there's a lot of different avenues
Speaker 5: for people to have their voices heard. And I think
Speaker 5: that's you know, a strength of the US you know,
Speaker 5: from the national security community at least, you know, this
Speaker 5: is serve a no brainer that the action should have
Speaker 5: happened a while ago.
Speaker 4: You've worked in the State Department, the Defense Department. If
Speaker 4: this doesn't go through, what does that mean for China
Speaker 4: in the US.
Speaker 5: I'm actually a little bit concerned if the Chinese government
Speaker 5: thinks that it can block policy policy action on important
Speaker 5: issues by appealing to domestic political factions or special interests.
Speaker 5: Then I think that makes a more dangerous world that
Speaker 5: may involved in the Chinese to be more aggressive, and
Speaker 5: it increases the potential for direct US China conflict in
Speaker 5: the years ahead.
Speaker 4: We want to thank you for your time, your expertise,
Speaker 4: Institute of World Politics, Professor of Strategy in Statecraft and
Speaker 4: Annenberg Chair of International Communication.
Speaker 2: That's David Glancy. We thank you.
Speaker 4: Coming up more regulation, this time from the EU. It
Speaker 4: passes a landmark set of AI rules. I have all
Speaker 4: the details for you. This has been by technology. The
Speaker 4: European Union today has passed the world's most extensive rules
Speaker 4: on artificial intelligence. Now the landmark set of rules could
Speaker 4: set the tone how AI is actually governed in more
Speaker 4: broadly the Western world for more.
Speaker 2: That's bringing Bloemberg's Jillian.
Speaker 4: Deutsch in Brussels, and many would say that some of
Speaker 4: the lawmakers have never been lobbied as hard as they
Speaker 4: have been over this particular AI act.
Speaker 2: What's the takeaway for companies trying to build.
Speaker 3: That's a great question.
Speaker 7: So right now it's a big celebratory day here in Brussels.
Speaker 7: I think last time I was speaking to you, it
Speaker 7: was after forty almost forty hours of negotiations in mid December.
Speaker 7: Fast forward three months and now we have the Parliament
Speaker 7: signing off on this act. And while it's our of celebration,
Speaker 7: we are getting lots of concerns of course from tech companies.
Speaker 7: They've been really studying the law and bells for quite
Speaker 7: some time about overregulation, concerns that you know, the European
Speaker 7: continent will be behind because they're regulating much more ahead
Speaker 7: than their.
Speaker 8: US cutter parts.
Speaker 7: We also have this concerned question from European tech companies too,
Speaker 7: and startups to say, hey, we really want to compete
Speaker 7: with US hyperscalers, and you can't over regulate us. Who
Speaker 7: overregulate us, we will never have a chance to actually compete.
Speaker 3: Okay, I'm Maestrel and I am building large language models
Speaker 3: and I'm based in Europe. Now that the act is passed,
Speaker 3: this is done, What is it that I actually actually
Speaker 3: have to do to comply?
Speaker 8: So there are a few things.
Speaker 7: I mean, I guess it's good to look at the
Speaker 7: use approach as a risk based approach. So for the
Speaker 7: most part, they're actually just regulating the use of the technology.
Speaker 7: Not the technology itself. So this means that in practice,
Speaker 7: the ev banning you know, the worst possibmous uses of AI,
Speaker 7: so AI systems cannot be used to you know, perform
Speaker 7: emotional recognition in workplaces or schools, cannot be used for
Speaker 7: social scoring, so giving citizens a score based on their
Speaker 7: behavior when it comes to high risk situations. Though these
Speaker 7: are some of the more tricky ones. This is you know,
Speaker 7: AI system is being used for migration applications or starting
Speaker 7: job applications. A lot of these companies, like open AI
Speaker 7: or Mistral will have to perform a lot more checks
Speaker 7: in order to prove to regulators that are they're safe.
Speaker 7: The one exception that a lot of companies like Mistrel
Speaker 7: were really lobbying hard against were these additional controls to
Speaker 7: general purpose or generative AI. And these are not based
Speaker 7: on the use of AB it's explicitly regulating technology itself.
Speaker 7: And in the end, what these companies will have to
Speaker 7: do is perform we're can to prove to regulators, you know,
Speaker 7: the energy consumption, prove that they are actually complying with
Speaker 7: copyright laws. And there's a new AI office that was
Speaker 7: based in Brussels and that the EU is currently setting up.
Speaker 7: This will actually kind of operate almost like a police
Speaker 7: force where they can go to the likes of mister
Speaker 7: Open Ai, Microsoft whomever and say, hey, we want more
Speaker 7: data on how you've trained your large language model, and
Speaker 7: ultimately they can even ban an application if it's performing poorly.
Speaker 4: Jenny and Mistral has indeed partnered with Microsoft and one
Speaker 4: expert saying that EU lawmakers they've got played in this
Speaker 4: particular situation. How why will this not be a read
Speaker 4: across to just how the rest of the world adopts
Speaker 4: AI legislation.
Speaker 7: I think it's really interesting because last year we saw
Speaker 7: lots of these tech companies even pushing for regulation. We
Speaker 7: had Sam Moltman obviously in Congress as someone knows, pushing
Speaker 7: for regulation, and so we've had that obviously in Brussels.
Speaker 7: But while even arguing for regulation, they've also been simultaneously
Speaker 7: lobbing quite hard against them of the worst or the
Speaker 7: strictest controls that they've seen in Brussels. Mistral was a
Speaker 7: really clear cut case of that.
Speaker 3: Last year.
Speaker 7: They were really effective and getting the French government also.
Speaker 7: I'll if ALPHAA Germans started up really pushing these governments
Speaker 7: saying hey, if you will reregulate us, then we will
Speaker 7: not be able to compete with US companies. Now, fast
Speaker 7: forward four or five months, they were obviously a partnered
Speaker 7: with Microsoft, and so that's left a kind of a
Speaker 7: bad taste in a lot of lawmaker's mouths. But we
Speaker 7: also have lots of other companies that are really you know,
Speaker 7: signing on for voluntary commitments, trying to prove to governments.
Speaker 7: They're taking this seriously that they're taking as many commitments
Speaker 7: as possible. But I think I think more and more
Speaker 7: leaders are starting to wake up to the tech companies
Speaker 7: may be self serving.
Speaker 2: Huh never, Gillian Deutsch b thank you so much.
Speaker 9: Ed.
Speaker 2: What of your book? Coming up?
Speaker 3: The other top tech stories that were watching in Talking Tech?
Speaker 3: First up, the Pentagon is pulling out of plans to
Speaker 3: spend as much as two point five billion dollars on
Speaker 3: a chip grant to Intel. That's according to sources. The
Speaker 3: move threatens the total amount of federal funding that Intel
Speaker 3: was expecting to receive and now puts the onus on
Speaker 3: the Commerce Department to make up a shortfall. The funding
Speaker 3: was part of a package that allocated three point five
Speaker 3: billion dollars to Intel to produce defense and intelligence related semiconductors,
Speaker 3: plus shares of Singtel climbing the most in almost two years.
Speaker 3: This after the Australian Finance Review reported that Singtel was
Speaker 3: in discussions to sell off carrier Optus to pe firm
Speaker 3: Brookfield for ten point six billion dollars, Singapore's largest carrier,
Speaker 3: responding to the report saying there was quote no impending
Speaker 3: deal to offload Optis for the said sum as reported.
Speaker 3: And Google is curbing its gen Ai chatbot Gemini, from
Speaker 3: responding to questions directly to the Indian general elections that's
Speaker 3: beginning next month. This follows similar controls it's set up
Speaker 3: in the US and other countries that are holding elections
Speaker 3: this year, all in this effort to combat concerns over
Speaker 3: misinformation and conspiracies. Google meanwhile collaborating with the Election Commission
Speaker 3: of India to enable easier discovery of vital voting information
Speaker 3: with Google Search. Social Capital, the venture capital firm that's
Speaker 3: led by podcasters and former Facebook executive Chamath Palihapatia, fired
Speaker 3: two of its partners citing an undisclosed quote situation. That's
Speaker 3: according to a letter it's sent to its investors that
Speaker 3: was reviewed by Bloomberg. I want to bring in Bloomberg's
Speaker 3: Mark German, who broke this story, and actually in the
Speaker 3: last hour, Mark you've updated the story with more information,
Speaker 3: particularly about Ravi Tanuku, one of the partners terminated, because
Speaker 3: you've heard from his lawyer tell us the latest.
Speaker 8: Yes, So, yesterday morning, Shamath, as you mentioned, former Facebook
Speaker 8: executive he's on the All In podcast, sent a letter
Speaker 8: to investors in Social Capital, you know, to say that
Speaker 8: two of their top partners, uh Jay Zaveri and Ravi Tanuku,
Speaker 8: they were fired. They hired walk to Lifton, a big
Speaker 8: time law firm, to review and probe the situation, and
Speaker 8: after a probe, Shamath terminated both of them on Sunday.
Speaker 8: This situation in question happened last Tuesday, and in the
Speaker 8: letter all he did was call it a situation. So
Speaker 8: there's been a lot of intrigue within Social Capital, in
Speaker 8: the investment in venture capital communities about what exactly happened here.
Speaker 8: There's been all sorts of speculation, but now we've learned
Speaker 8: this comes down to Groc. It's an AI startup that
Speaker 8: Social Capital invested in, you know, five six years ago.
Speaker 9: In this how to do with the.
Speaker 8: Partners being involved in offering a special purpose vehicle related
Speaker 8: to Grock to some outside investors. This happened after Grock
Speaker 8: was worth maybe sixty million a few years ago. Now
Speaker 8: it's valuation topped a billion, so special purpose vehicle related
Speaker 8: to that and all the money to be earned there.
Speaker 8: The company only said Social Capital that the two men
Speaker 8: violated company policy, but didn't go beyond that. And we've
Speaker 8: heard from lawyers for both of the men who were
Speaker 8: terminated saying there is no wrongdoing and once they show
Speaker 8: their case, the public will know that they've done nothing wrong.
Speaker 8: And Shamath and Social Capital haven't responded to those responses.
Speaker 4: Missus veris firing was unfair and undeserved, so says the spokesman,
Speaker 4: and the firm's leadership approved and participated in the investment
Speaker 4: that is now being used as a pretext they say
Speaker 4: to fire him ultimately, Mark, how unusual is it to
Speaker 4: get such little information such a step is taken.
Speaker 2: How unusual is it to lose such partners from a firm?
Speaker 8: Oh, I mean, people are fired from firms all the time,
Speaker 8: but it is pretty unusual, especially you're showing the tweet
Speaker 8: from Social Capital what they've done. There by saying employee
Speaker 8: specific circumstances and saying they have no further comments at
Speaker 8: this time, not even naming the people in initial tweet.
Speaker 8: They all they did was create a bunch of intrigue
Speaker 8: about what exactly happened. If they had come out and
Speaker 8: said initially when happened, maybe it wouldn't have been such
Speaker 8: a significant news cycle. But they handled this poorly from
Speaker 8: the get go. And it was really a three sentence
Speaker 8: email from Tremouth to a bunch of outside investment partners
Speaker 8: that really got this going. And in that email, all
Speaker 8: he did was call it a situation. He said, if
Speaker 8: you want more information, give me a call. So lots
Speaker 8: of intrigue here, So, yes, an unusual situation.
Speaker 3: Indeed, so Mark Social excuse me. Social Capital is basically
Speaker 3: not saying anything, giving any details, But we know this
Speaker 3: has something to do with AI starts up. Grock, just
Speaker 3: explain the basics of that.
Speaker 8: Yeah, I mean there's a lot of speculation on what
Speaker 8: exactly that means. Right, this AI startup, their evaluation completely
Speaker 8: just went through the roof. And I guess there were
Speaker 8: some concerns from Schamath potentially about that investment and how
Speaker 8: that investment was handled, and if and how outside investors
Speaker 8: had been dragged into that. We're still trying to gather
Speaker 8: more information on what exactly is happening here. Our hope
Speaker 8: is that the lawyers for both sides start presenting their
Speaker 8: cases to the public and perhaps send us more information
Speaker 8: about what's going on here so we can really understand.
Speaker 8: But this seems really abrupt, right having this the quot
Speaker 8: quote situation appear on Tuesday, hiring a law firm on Thursday,
Speaker 8: having both partners terminated on Sunday, and then this announcement
Speaker 8: coming via email on Tuesday within one week. You know,
Speaker 8: this seems like something that was done very quickly, something
Speaker 8: that may have been done in a rash manner. But
Speaker 8: really we're going to need to know more information before
Speaker 8: we can really determine, you know, who's in the right
Speaker 8: and who's in the wrong here.
Speaker 4: And indeed, we have invited Chamath Padhabat here onto the
Speaker 4: show and Social Capital to get a little bit more
Speaker 4: of that information. And I know, Mark, you have got
Speaker 4: plenty of queries out there with and we thank you
Speaker 4: so much breaking it all down, Mark German.
Speaker 2: Thus far, Social Capital has not responded.
Speaker 3: Welcome back to Bloomberg Technology, Ed love Low here in
Speaker 3: San Francisco.
Speaker 2: Karen Hide in New York.
Speaker 4: Let's get you a quick check on these markets, because well,
Speaker 4: maybe a little bit of a soul the news after
Speaker 4: we take some profit on yesterday's games. Once again, we're
Speaker 4: off about eight ten percent when you're looking at the
Speaker 4: key benchmark that is the Nasdaq one hundred, So draw
Speaker 4: down in particular when it comes to some of the
Speaker 4: key chip names and video under pressure Micron as well,
Speaker 4: So keep an eye on those chip stocks.
Speaker 2: I'm looking at the US.
Speaker 4: Also, perhaps dictating the path of trade for equities is
Speaker 4: what's happening in the bond market when you see yield
Speaker 4: just pushing up a little bit on the end of
Speaker 4: the curve. In particular, we've got a thirty year auction
Speaker 4: that's coming, and well, there was a bit of lackluster
Speaker 4: demand yesterday. We could see a bit of pressure bonds
Speaker 4: yields of course go higher. Quite often we see tech
Speaker 4: stoks go lower. We're seeing bitcoin still managing to park
Speaker 4: halve its own path.
Speaker 2: We're up more than two percent.
Speaker 4: When you're looking at bitcoin, we're up seventy two thousand,
Speaker 4: seven and sixty one. Move on some of the individual
Speaker 4: movers when it come to the tech names, and I'm looking,
Speaker 4: as I say, at the chip stocks. These have been
Speaker 4: pushing generally on the pressure of the NASDEK. We're off
Speaker 4: by two.
Speaker 2: Point six percent.
Speaker 4: Tesra as well, seeing yet another day of losses, off
Speaker 4: by two point seven percent. This is we see analysts
Speaker 4: once again going negative on the stock, and I'm showing
Speaker 4: some particular companies that are outperforming though PDD Chinese names
Speaker 4: interestingly on the higher side.
Speaker 2: No real catalyst for this.
Speaker 4: We had some mixed reviews coming from analysts and Monday's
Speaker 4: trade with well, certain analysts saying like by the stock,
Speaker 4: Goldman saying no. But we're up another almost five percent
Speaker 4: on the day, even as we continue to digest US
Speaker 4: China tensions. And we're going go back to that TikTok
Speaker 4: story in a moment. But now let's focus in a
Speaker 4: bit on what's happening with a crypto rally. Please to
Speaker 4: be welcome, taking client CEO of Edge and Node. It's
Speaker 4: a software development company behind the graph actually an indexing
Speaker 4: and query protocol organizing the world's open blockchain data. And
Speaker 4: last time I checked, well the crypto related to the
Speaker 4: graph is seeing about a four billion dollar market capitalization.
Speaker 2: Take an tell us about some of the exuberants.
Speaker 4: Is it or just natural interest that's coming into the
Speaker 4: space at the moment, given the ETFs that we saw launched,
Speaker 4: will it stay?
Speaker 2: Is it sticky?
Speaker 8: Absolutely?
Speaker 3: I do think it is sticky.
Speaker 10: Obviously, these markets are sicular, so it won't be a
Speaker 10: straight shot up. But you know, the total wealth in
Speaker 10: the world is four hundred and fifty trillion dollars and
Speaker 10: I think bitcoin will take at least ten percent of that,
Speaker 10: if not more, over the next decade or two, so
Speaker 10: a lot of room to grow. I'm looking forward to it.
Speaker 10: You know, the ETF A lot of this was unexpected.
Speaker 10: The volumes that we've seen over one billion dollars yesterday
Speaker 10: came in inflows in just a day, So I think
Speaker 10: people are expecting tens of millions and we're averaging hundreds
Speaker 10: of millions a day.
Speaker 3: Just a bitcoin alone, is you run your business and
Speaker 3: you build out the technology. Does it matter to you
Speaker 3: if bitcoin is it's seventy two thousand US dollars part
Speaker 3: tooken or eighty thousand US dollars pertoken.
Speaker 8: It doesn't.
Speaker 10: I don't really pay attention to your price.
Speaker 8: We're here building.
Speaker 10: We've been through many bear markets, many ball markets, but
Speaker 10: it is exciting to see more people getting involved in
Speaker 10: this ecosystem, and crypto is definitely here. To say, the
Speaker 10: number of Americans holding crypto is only growing, and so
Speaker 10: I'm excited to see that continue.
Speaker 3: One question we've not asked as much recently is whether
Speaker 3: the kind of negative overhang around your industry has gone away.
Speaker 3: You know, we talked about how twenty twenty two to
Speaker 3: twenty twenty three there was a bit of a black eye,
Speaker 3: a lot of it stemming from the collapse of FTX
Speaker 3: and what happened with Sam bankman Free. Now we're focused
Speaker 3: on the trading activity of bitcoin, the authorization of spot
Speaker 3: bitcoin ETF. Is this one feel good in your world
Speaker 3: at the moment?
Speaker 10: I would say, you know, I think that it's important
Speaker 10: that we learn from the lessons the past. When you
Speaker 10: look at things like ATTX and the recent implosions or
Speaker 10: the more recent implosions, a lot of that was when
Speaker 10: it comes to centralized tech on top of these decentralized ecosystems,
Speaker 10: and so it's really important that when you're thinking about crypto,
Speaker 10: especially in a world of an ETF that you're self
Speaker 10: custodying that crypto, because then you have true ownership over
Speaker 10: your assets, and it's really difficult to get that without
Speaker 10: self custudying your assets.
Speaker 4: The irony being, of course, with the introduction of ETFs,
Speaker 4: we're seeing a broader surge of people able to benefit
Speaker 4: from the gains or indeed just brought a volatility of
Speaker 4: bitcoin without having to go through the rigmarole of self custodying.
Speaker 4: Tell us a little bit therefore, about the underlying technology,
Speaker 4: what you're building, and ultimately whether any of this will
Speaker 4: be more than speculation. What is it that the infrastructure
Speaker 4: that's necessary now to actually be real rails, be real
Speaker 4: alternative to normal finance.
Speaker 8: Absolutely.
Speaker 1: Yeah.
Speaker 10: So it's easy to kind of look at the screen
Speaker 10: and see these tokens and the trading volume and all
Speaker 10: of that, but when you look underneath the hood, a
Speaker 10: lot of these ecosystems, there's an ecosystem underneath, there's a
Speaker 10: thriving community of builders and individuals that are participating in
Speaker 10: these protocols. So when it comes to the graph, we're
Speaker 10: organizing data. We're ensuring that data on the Internet isn't corruptible.
Speaker 10: And last quarter alone we saw a nine hundred and
Speaker 10: fifty million queries, so almost a billion queries, and that's
Speaker 10: you can think of that like a search. So Web
Speaker 10: three use Web three usage is at an all time high,
Speaker 10: and I think that's only going to continue. And when
Speaker 10: you look at crypto, you want to think about Web three,
Speaker 10: and you want to think about monetary policy. Bitcoin has
Speaker 10: very much proven monetary policy and Web three is something
Speaker 10: that we are currently building to decentralize the Internet.
Speaker 2: How global does that end up being?
Speaker 4: Where are the investors, the builders, the querias to your
Speaker 4: sort of Google of Web three coming from?
Speaker 8: Great question?
Speaker 10: Yeah, so it is global. So there's a community of
Speaker 10: indexers they're called, which are like nodes, they're almost Google
Speaker 10: like companies, but they're all individual and they're located all
Speaker 10: around the world over on many different continents, and so
Speaker 10: this is very much a global movement and I think
Speaker 10: it's important that we remember that here in America. And
Speaker 10: I know London is thinking of an eight etn that
Speaker 10: is physically bad, and with that, we don't in America.
Speaker 10: We don't want London to beat us to it. So
Speaker 10: I'm looking forward to the ethetfter coming soon.
Speaker 3: You fine, Ceo, Oh, I'm sorry, Caroline, entirely my fault
Speaker 3: ed taking clients co of g and what I was
Speaker 3: going to say someone that came from the world of
Speaker 3: sort of traditional finance London, Wall Street and now in
Speaker 3: the world of web three. Let's get another story. Hive
Speaker 3: Mind Capital Partners is trying to bank on the latest
Speaker 3: crypto renaissance by betting on an NFT comeback. The firm
Speaker 3: is seeking to raise at least fifty million dollars for
Speaker 3: a fund dedicated to digital art and blockchain. This after
Speaker 3: the firm already acquired prized NFTs from the portfolio Starry
Speaker 3: Night Capital, an NFT fund launched by the graced founders
Speaker 3: of bankrupt crypto hedge fund Three Arrows Capital. A lot
Speaker 3: going on in that world, more stories to come.
Speaker 4: Meanwhile, we've got to get back to the top story
Speaker 4: when it comes to us to policy, to regulation, all
Speaker 4: things TikTok. We're going to be bringing on a Republican representative.
Speaker 4: They're from Georgia. Bunny Carter joins us. Next, this is
Speaker 4: Bloomberg Technology.
Speaker 9: This plainly is a conduct law, meaning we're acting because
Speaker 9: of the demonstrated malign national security threat of TikTok, not
Speaker 9: because of the content of anybody's speech. And the bill
Speaker 9: is narrowly tailored, which is key for First Amendment analysis
Speaker 9: because it simply requires investment. Meaning the millions of Americans
Speaker 9: that love TikTok. I'm not one of them, but they
Speaker 9: can continue to use the application, but just in a
Speaker 9: more secure way.
Speaker 3: That was FCC commission a Brendan Cobb before the House
Speaker 3: passed the bill that could lead to a sale or
Speaker 3: ban of TikTok in the United States. That's bringing bloombergs
Speaker 3: Dan Flatley out in DC. The House is expected past
Speaker 3: the bill. It now goes to the Senate. The summit's
Speaker 3: a foregone conclusion, but there is still some politicking to
Speaker 3: do on this in the Senate. Dan, yeah, absolutely.
Speaker 11: You know, I'm standing here on the Senate side of
Speaker 11: the Capitol just having come over from the House where
Speaker 11: there was a big vote three point fifty two to
Speaker 11: sixty five in favor of doing this, this devestment or
Speaker 11: ban measure on TikTok. The question now, of course, is
Speaker 11: what happens over here in the Senate. You know, we've
Speaker 11: gotten a little bit of an inkling over the last
Speaker 11: hour or so statement from the Intel Committee chairman and
Speaker 11: vice Chairman Mark Warner, a Democrat, and Marco Rubio, Republican,
Speaker 11: saying they were encouraged by the House vote, they want
Speaker 11: to see this passed in the Senate, and then a
Speaker 11: statement from Senate Leader Schumer basically saying we're just we're
Speaker 11: going to look at it. So he hasn't committed to
Speaker 11: anything yet. The question is what's the path forward. There's
Speaker 11: interest here, but we don't have a clear path yet.
Speaker 4: Okay, thus far, at the moment, is there a feeling
Speaker 4: that this could become a reality.
Speaker 2: We already know that. We'll show you.
Speaker 4: The CEO of TikTok has been not there already having
Speaker 4: closed door meetings with senators. But also they're galvanizing. They
Speaker 4: use a base right now you go on the TikTok
Speaker 4: app and they're wanting you to get in touch with
Speaker 4: your lawmakers.
Speaker 11: Yeah, certainly a lot of lobbying and advocacy left to
Speaker 11: be done. I actually met with a couple of TikTok
Speaker 11: influencers here yesterday at the Capital who were talking to members.
Speaker 11: You know, what I've heard in the background from advisors
Speaker 11: and staffers here in the Senate is that let's see
Speaker 11: what the House does let's see what the House vote
Speaker 11: looks like. Obviously, we got a big positive signal for
Speaker 11: the sale or ban from the House today, so that
Speaker 11: could influence things. You know, there's a receptive audience in
Speaker 11: the White House. President Joe Biden has said that he
Speaker 11: would sign this if Congress passes it. So you sort
Speaker 11: of have two of the three elements that you would
Speaker 11: need in order to get this into law. But the
Speaker 11: Senate does tend to work its own will on these
Speaker 11: kinds of things and to take its time, so that's
Speaker 11: still an open question. Obviously, TikTok is focusing its efforts
Speaker 11: on lobbying on the Senate, where they think that they
Speaker 11: can slow things down potentially.
Speaker 3: We just showed some of what TikTok responded to the
Speaker 3: outcome of the House vote, and we have a sure
Speaker 3: we will say it again, but they basically said the
Speaker 3: process was done in secret and the bill was jammed
Speaker 3: through for one reason. It's a ban, but on paper
Speaker 3: it's not a ban. It's a divest or ban bill.
Speaker 3: Is there any chatter about the process for a third
Speaker 3: party to come in and buy TikTok's US operations?
Speaker 11: Yeah, you know, it's interesting you talk to a lot
Speaker 11: of members who opposed the House bill, and they say,
Speaker 11: this just came together too fast.
Speaker 3: You know, we have concerns. But six months.
Speaker 11: First of all, the bill came together to the House
Speaker 11: floor too fast, and then six months is not enough
Speaker 11: time to effectuate a sale.
Speaker 3: It just takes too long to do something like that.
Speaker 11: I've heard chatter about various groups coming forward and maybe
Speaker 11: potentially being interested, but there's no obvious purchaser for this.
Speaker 3: Companies have tried it in the past.
Speaker 11: What there was a consortium between Walmart and Oracle and
Speaker 11: some others a few years ago that tried to buy it.
Speaker 11: It didn't happen. The company is much more valuable now.
Speaker 11: The company has said TikTok has said that it's going
Speaker 11: to fight this in the courts. So even if this
Speaker 11: were to get through Congress and be signed into law
Speaker 11: by the President, there's still going to be legal challenges,
Speaker 11: and whether they could get a sale done in six
Speaker 11: months is a very much an.
Speaker 4: Open question, absolutely impending questions still to be asked. We
Speaker 4: thank you so much, and let's ask a few more.
Speaker 4: Please to have someone fresh from voting on the Hill.
Speaker 4: Republican Representative Buddy Carter of Georgia, and in fact, you're
Speaker 4: a co sponsor of the bill, and I'm interested therefore
Speaker 4: with your perspective here with it passing through the House.
Speaker 4: But former President Trump said saying he actually is sort
Speaker 4: of backtracking. Having originally been the first one with an
Speaker 4: executive order against TikTok, he now thinks if you pull
Speaker 4: away at TikTok, it makes other rivals more strong. Certainly
Speaker 4: matter for example, are you still standing by the view
Speaker 4: that TikTok should be bandle soold?
Speaker 12: Well, let's make sure we understand now, we're not talking
Speaker 12: about banning TikTok.
Speaker 8: This is up to TikTok.
Speaker 3: This is up to by dance.
Speaker 12: They make the decision on whether they wanted to go
Speaker 12: away or whether they want to divest themselves of the
Speaker 12: ownership of this. This is two questions here. First of all,
Speaker 12: this is a question about you know, is it going
Speaker 12: to be banned? No, they have to divest themselves. That's
Speaker 12: a question that only they can answer. The second question
Speaker 12: is us in Congress, that's in the House and in
Speaker 12: the Senate, and that is this is about national security. Now,
Speaker 12: are we going to take national security seriously? The number
Speaker 12: one responsibility of the federal government is to protect our
Speaker 12: homeland and protect our citizens. We have to take it seriously,
Speaker 12: and it is about national security.
Speaker 3: Congressman, thank you for your time this morning. Project Texas
Speaker 3: was the plan whereby the US user data of the
Speaker 3: TikTok app would be housed in data centers on shore
Speaker 3: here in the United States owned and operated by Oracle.
Speaker 3: Were you not convinced of that plan such that you
Speaker 3: co sponsored this bill? Why did that not work?
Speaker 12: No, it doesn't matter where they are based. If it's
Speaker 12: owned by the Chinese Communist Party, that's the problem, and
Speaker 12: that's the responsibility of Congress. That's our responsibility to guard
Speaker 12: against these kind of national security issues. That's why we
Speaker 12: acted on this. And you know, I would beg to
Speaker 12: differ with some of my colleagues who are saying, oh,
Speaker 12: this was too Russia distitute. Right, We've been talking about
Speaker 12: this for a long time now, and remember TikTok has
Speaker 12: been banned on government fund for some time now, so
Speaker 12: this is not anything new. And again it's this is
Speaker 12: not a band. We're just saying that Bike Dance, the
Speaker 12: parent company of TikTok that is owned by the Chinese
Speaker 12: Communist Party, they must divest themselves with this, and the
Speaker 12: bill specifically says adversarial countries.
Speaker 3: I mean, we're not talking, we're not Congressman. Congressman, I'm
Speaker 3: sorry to interrupt you. But there is a choice on
Speaker 3: bike dance and TikTok side as well. It's a divest
Speaker 3: or ban, and Bloomberg's reported that TikTok will exhaust its
Speaker 3: legal options to avoid a sale or a divestiture. There
Speaker 3: is one hundred and seventy million Americans who love using TikTok.
Speaker 3: What do you think is fair in the case where
Speaker 3: tichtok just says we're going to dig in here, we
Speaker 3: will not sell to a third party.
Speaker 12: Well, if they're not going to sell to a third
Speaker 12: party and they're going to continue to be used by
Speaker 12: the Chinese Communist Party, then I think that we have
Speaker 12: to step in and we have to say no, you're
Speaker 12: not going to be allowed here. You know that American
Speaker 12: apps are not allowed in China. I hope everybody realizes that.
Speaker 12: And you know that the content of TikTok in China
Speaker 12: is different than the content of TikTok here in America.
Speaker 12: You know, we're not just talking about dancing dancing people
Speaker 12: or cats or being on TikTok. We're talking about the
Speaker 12: ability of the Chinese Communist Party to get your data,
Speaker 12: to actually use biometrics against you, and that's something that
Speaker 12: we have the responsibility in Congress of guarding against. If
Speaker 12: we don't do this, then we're being there responsible in Congress.
Speaker 4: What's interesting is if indeed Bye Dance is sold, that
Speaker 4: impacts those that have invested in Byte Dance. The parent
Speaker 4: of TikTok one is actually well a billionaire JP Megadona,
Speaker 4: Jeffy Ass being one of them, fifteen billion dollars riding
Speaker 4: on his investment. Of course, he made his fortune with
Speaker 4: Suskahanna International Group. How are you talking to some of
Speaker 4: the people who have a lot of money on the
Speaker 4: line when it comes to their investment.
Speaker 12: In TikTok Again, they know if they don't want to
Speaker 12: lose their money, and I certainly don't blame I wouldn't
Speaker 12: want to lose my money either, But a divestre means
Speaker 12: that they're not going to lose their money. It just
Speaker 12: means that it's not going to be OneD by the
Speaker 12: Chinese Communist Party. And when you take the chance of
Speaker 12: investing in something that is OneD by the Chinese Communist Party.
Speaker 12: Then those are the chances you're taking.
Speaker 2: Have you spoken to Jeffias out of interest?
Speaker 9: No, I have not.
Speaker 3: All Right, Republican Representative of Georgia, Buddy Carter, we appreciate
Speaker 3: you joining us. Almost immediately after the outcome of that
Speaker 3: House vote. Venture capitalist Mark Farrell, a leading contender for
Speaker 3: San Francisco, Mayer and veiled a pack of proposals that
Speaker 3: include providing more money to the police and restricting access
Speaker 3: to public parks as he hosts to boost public safety,
Speaker 3: revite it out liesing downtown SF, and revamping the city's image.
Speaker 3: But we also talked about technology and what he'll do
Speaker 3: to incentivize the industry. Have a listen.
Speaker 13: I'm fortunate to already have support from diverse communities across
Speaker 13: San Francisco, in every single neighborhood, every single economic makeup
Speaker 13: of a family, every single business that you could imagine,
Speaker 13: and career that you can imagine. So I believe my
Speaker 13: private sector background matters. And you asked that question before,
Speaker 13: in particular over the next four years when we have
Speaker 13: a projected billion and a half dollar budget deficit in
Speaker 13: the City of San Francisco, having a mayor who has
Speaker 13: actually read a p and l knows what a balance
Speaker 13: sheet it looks like, and has been in that sector
Speaker 13: for over twenty years. Matters to the City of San Francisco.
Speaker 13: We cannot afford to have somebody come in and learn
Speaker 13: on the job, or we can't afford for more years
Speaker 13: of the same administration where you're simply listening to other
Speaker 13: people tell you where to put your dollars. We need
Speaker 13: a mayor who's going to lead on the budget and
Speaker 13: be strong with hither or her priorities. And that's what
Speaker 13: I offer San Francisco.
Speaker 3: Okay, so let's talk about technology. Technology is a business.
Speaker 3: As a taxpayer in this city, how are you going
Speaker 3: to approach the biggest employers, the employees also of a
Speaker 3: lot of people that live in this city but might
Speaker 3: commute outwards to Silicon Valley. You will what San.
Speaker 13: Francisco will have in me next year as mayor. It's
Speaker 13: finally a mayor that once again addresses and actively engages
Speaker 13: with our business community. Technologies have been a big part
Speaker 13: of it here in San Francisco. Quite frankly, for the
Speaker 13: past ten plus years, we've been over indexed to the
Speaker 13: technology sector here in San Francisco and we need to
Speaker 13: make sure we actively court that industry to come back
Speaker 13: to the city of San Francisco, because technology companies have
Speaker 13: left in droves. But I also believe it's the impetus
Speaker 13: of the next mayor to diversify a downtown economy once again,
Speaker 13: focus on hospitality, once again, focus on residential.
Speaker 3: My conversation with Mark Farrell Karr, and he was somebody
Speaker 3: who was interim mayor in twenty eighteen after the death
Speaker 3: of Ed Lee. He was late to the race, but
Speaker 3: you look at how quickly he's raising funds to catch
Speaker 3: up and where the funds are coming from. And that's
Speaker 3: the technology story for me.
Speaker 4: I mean, you've deep doven so to diven You've deep
Speaker 4: dived so much into areas and pockets of growth in
Speaker 4: particular rejuvenation that AI in particular is brought at the
Speaker 4: area Cerebral Valley, for example, your documentary of late. I mean,
Speaker 4: this is someone who's got to be seeing the opportunities
Speaker 4: as well as some of the things he still wants
Speaker 4: to be fixing.
Speaker 3: He wants to offer tax incentives to tech companies that
Speaker 3: make in office mandatory and also the scrap in office
Speaker 3: cafeteria so they go spend in the local economy, so
Speaker 3: he recognizes the AI boom that's happening. But I don't
Speaker 3: know how popular mandatory in office is going to be
Speaker 3: in this city. It's hard to call.
Speaker 4: It's getting a little bit more popular coming from some
Speaker 4: of the C suite levels though of late. Meanwhile, talking
Speaker 4: a C suite, we know that one person has been busy,
Speaker 4: and of course show to the CEO of TikTok has
Speaker 4: been busy on the hill talking to senators. We understand
Speaker 4: as we look to potentially a ban or divestment of
Speaker 4: TikTok from byte Dance being pushed through by the House.
Speaker 4: It really did sail through that vote earlier today. The
Speaker 4: question mark is what happens with the Senate. And we
Speaker 4: just heard from one key lawmaker there.
Speaker 3: Yeah, and his point that really stuck out to me
Speaker 3: was well, if TikTok chooses not to divest, we'll make them. Yeah,
Speaker 3: but this was supposed to be a divest all band bill.
Speaker 2: And look, this is very deja vus.
Speaker 4: This was happening in prior administration, with a prior decision
Speaker 4: and push to have them divest and or people being
Speaker 4: lined up then and Oracle was one of them, and
Speaker 4: the oracle became, well, the data answer. That doesn't seem
Speaker 4: to be living up to many hopes right now for
Speaker 4: some of those lawmakers. That does it for this addition
Speaker 4: of Blueback technology, What a big one we had.
Speaker 3: Yeah and in some ways a historic show. Recap everything
Speaker 3: that was to say on the podcast, ron Apples, Spotify, iHeart,
Speaker 3: and so many of you are listening to the podcast
Speaker 3: on a daily basis on the Bloomberg platforms. Thank you
Speaker 3: so much from San Francisco and New York City. This
Speaker 3: is Bloomberg Technology.