WEBVTT - The House's TikTok Vote and the EU's AI Act 0:00:01.440 --> 0:00:06.760 From Bahart where Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.080 --> 0:00:30.560 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.640 --> 0:00:27.160 And Caroline Heider Bloomberg's World headquarters in New. 0:00:27.120 --> 0:00:29.680 York and am Ed Ludlow in San Francisco. This is 0:00:29.680 --> 0:00:31.280 Bloomberg Technology coming up. 0:00:31.280 --> 0:00:35.040 We will have full coverage on TikTok throughout this program. 0:00:35.159 --> 0:00:37.120 The US House it passes are built of forced bike 0:00:37.240 --> 0:00:39.199 dance to celtictok of face a. 0:00:39.240 --> 0:00:42.879 Ban in the US, plus the European Union passes the 0:00:42.920 --> 0:00:47.040 world's most extensive AI guardrails. Will break down the impact 0:00:47.120 --> 0:00:49.440 of the AI Act and what it means for the 0:00:49.479 --> 0:00:51.280 future of artificial intelligence. 0:00:51.400 --> 0:00:55.320 Jamarth Palahabertia's Social Capital and fires two partners after a 0:00:55.400 --> 0:00:59.280 probe citing an undisclosed situation. We'll discuss what could be 0:00:59.280 --> 0:01:02.639 behind the decision and then involves a much hyped AI startup. 0:01:02.960 --> 0:01:06.920 The moment that the House did pass the divest or 0:01:07.040 --> 0:01:09.920 ban TikTok bill, there was a significant leg higher in 0:01:09.959 --> 0:01:13.200 both Rumble and Meta, but I put those up because 0:01:13.280 --> 0:01:14.600 the conversation will now change. 0:01:14.640 --> 0:01:14.760 Right. 0:01:14.800 --> 0:01:18.960 We're going to discuss whether the divest or ban TikTok 0:01:19.000 --> 0:01:21.759 bill will have success in the Senate. But we're already 0:01:21.760 --> 0:01:24.680 saying this is a foregone conclusion, and we're asking, well, 0:01:24.680 --> 0:01:27.440 who is going to benefit from a TikTok ban in 0:01:27.480 --> 0:01:31.399 the US or who is going to buy TikTok's US operations? 0:01:31.440 --> 0:01:34.240 And look at rumble it's gain over the last seven days, 0:01:34.319 --> 0:01:37.319 much of it in yesterday's session on reports that they're 0:01:37.360 --> 0:01:41.160 considering a bid or looking at options for TikTok's US operations. 0:01:41.280 --> 0:01:43.480 There's a lot to discuss, but the big step in 0:01:43.520 --> 0:01:46.080 the House has been taken. Now we move to the Senate. 0:01:46.160 --> 0:01:50.720 And still much potential pushback from the Senate, and notably 0:01:50.720 --> 0:01:53.640 a CEO who went there to lobby just those senators yesterday. 0:01:53.720 --> 0:01:55.760 Let's get into it with Alex Birinko. 0:01:55.400 --> 0:01:58.480 And Alex we understand, according to people familiar that show 0:01:58.560 --> 0:02:01.880 two was indeed looking to I'll get senators in particular. 0:02:02.600 --> 0:02:06.600 He was I think the TikTok team saw this bill 0:02:06.680 --> 0:02:10.200 potentially flying through the House like it did today, getting 0:02:10.240 --> 0:02:13.080 that majority vote in just the past few minutes. The 0:02:13.120 --> 0:02:15.840 next hurdle for them will be the Senate Majority Leader. 0:02:16.280 --> 0:02:19.000 Chuck Schumer in the Senate has so far not said 0:02:19.040 --> 0:02:21.880 that he would take up this bill. TikTok also put 0:02:21.880 --> 0:02:25.120 out a statement today appealing to senators saying, quote, this 0:02:25.160 --> 0:02:27.120 process was secret and the bill was jammed through for 0:02:27.160 --> 0:02:27.640 one reason. 0:02:27.680 --> 0:02:28.120 It's a ban. 0:02:28.480 --> 0:02:31.000 We are hopeful that the Senate will consider the facts, 0:02:31.080 --> 0:02:34.280 listen to their constituents, and realize the impact on the economy. 0:02:34.440 --> 0:02:37.400 So certainly TikTok CEO showed you who was down in 0:02:37.480 --> 0:02:41.160 DC is going to be spending his time in the 0:02:41.200 --> 0:02:44.680 Senate hoping that while this is the furthest a anti 0:02:44.720 --> 0:02:47.760 TikTok bill has gone in the US government, that it 0:02:47.960 --> 0:02:48.600 ends here. 0:02:50.040 --> 0:02:53.079 It's not just that Chuck Schumer has not endorsed the bill, 0:02:53.680 --> 0:02:56.000 it's that there is a bigger concern here as well. 0:02:56.040 --> 0:02:59.600 And Bloomberg's reporting this idea that even on the Republican 0:02:59.680 --> 0:03:03.760 side the aisle, they look at this bill more big picture. 0:03:04.400 --> 0:03:08.400 Why do we hand these powers to the administration and 0:03:08.480 --> 0:03:11.680 give them such sort of a blanket power for censorship 0:03:11.800 --> 0:03:14.280 to make a decision on TikTok. So that's there in 0:03:14.320 --> 0:03:16.560 the background. But I think I'm right in saying, Alex 0:03:16.800 --> 0:03:19.360 TikTok's always said that it's going to mount a legal 0:03:19.480 --> 0:03:22.040 challenge to the idea that it would have to divest 0:03:22.120 --> 0:03:24.000 or sell its US operations anyway. 0:03:25.720 --> 0:03:27.840 Yeah, you're right. I think it was summed up pretty 0:03:27.840 --> 0:03:31.400 succinctly to our DC colleagues by Republican Senator Tom Tillis 0:03:31.400 --> 0:03:34.480 out of North Carolina, who said yesterday that he's worried 0:03:34.480 --> 0:03:37.880 about the unintended consequences of a bill like this. Now, 0:03:37.920 --> 0:03:41.560 it's been fascinating to kind of watch the battle with 0:03:41.640 --> 0:03:45.800 TikTok in DC, because Republicans writ large have been some 0:03:45.920 --> 0:03:49.160 of the biggest agitators against TikTok. Some of that did 0:03:49.240 --> 0:03:52.080 change in the past week when we had Donald Trump himself, 0:03:52.480 --> 0:03:55.160 when he was the president who put the first executive 0:03:55.560 --> 0:03:58.520 order forward to ban TikTok, actually come out and say 0:03:58.560 --> 0:04:01.120 a few days ago, well, maybe we shouldn't do that 0:04:01.200 --> 0:04:04.680 because it would give meta too much power. So certainly 0:04:04.720 --> 0:04:08.720 we have some rangling here over not only over whether 0:04:08.840 --> 0:04:12.480 or not this bill actually addresses concerns or if national 0:04:12.520 --> 0:04:16.360 security concerns have actually been made clear to the lawmakers, 0:04:16.560 --> 0:04:19.480 but also how much power this would give the government. 0:04:19.560 --> 0:04:24.000 This would give the executive branch in kind of ruling 0:04:24.120 --> 0:04:25.440 over the private sector. 0:04:26.760 --> 0:04:28.960 And I'd point out that in that moment that the 0:04:29.120 --> 0:04:31.400 House passed the bill, there was a big spike in Meta. 0:04:31.480 --> 0:04:33.880 It is still lower seven tens of a ascent, but 0:04:33.960 --> 0:04:37.040 of course TikTok's user base and its platform is highly 0:04:37.040 --> 0:04:41.480 analogous with Meta's Instagram, short form video vertical. Bloomberg's Alex 0:04:41.520 --> 0:04:44.479 Brinka has done a masterful job of covering all of that. 0:04:44.480 --> 0:04:46.440 That is, that spike in Meta shares that I showed you, 0:04:46.480 --> 0:04:49.760 but then an immediate pullback. Right. So, sources say that 0:04:49.839 --> 0:04:54.440 TikTok intends to exhaust all legal challenges before it considers 0:04:54.480 --> 0:04:58.120 any kind of divestiture from its Chinese parent company Bike Dance. 0:04:58.160 --> 0:05:02.240 AT's bringing David Glancy, Institute of World Politics, Professor and 0:05:02.320 --> 0:05:07.120 Strategy and state Craft and Annenberg Chair of International Communication 0:05:07.320 --> 0:05:10.560 for his point of view, for many, David, this was 0:05:10.600 --> 0:05:14.600 a foregone conclusion. Divest or be banned. Is it is 0:05:14.640 --> 0:05:16.120 simple in your mind? 0:05:16.880 --> 0:05:19.640 I think from the national security community, it's a pretty 0:05:19.680 --> 0:05:24.680 simple issue. It is a potential threat to national security 0:05:25.000 --> 0:05:30.680 because of its reach, the way the software is the 0:05:30.720 --> 0:05:34.479 potential to influence, but also the close relations It is 0:05:34.520 --> 0:05:37.200 a Chinese company, and there was a report that came 0:05:37.200 --> 0:05:42.440 out just on Monday an unclassified report on threats, a 0:05:42.480 --> 0:05:47.040 threat assessment, and China was prominently featured in that. And 0:05:47.360 --> 0:05:50.040 China's activities in the last few years have been much 0:05:50.040 --> 0:05:54.720 more aggressive. They've been working with adversaries like Russian and 0:05:54.800 --> 0:05:58.359 Iran more closely, and so I think there's real concerns 0:05:58.400 --> 0:06:01.040 and from the national security community, it should have been 0:06:01.080 --> 0:06:03.360 done probably years ago now. 0:06:03.400 --> 0:06:06.520 Of course, we know that this has been considered for 0:06:06.520 --> 0:06:10.120 a long time in terms of the worries of Chinese influence, 0:06:10.240 --> 0:06:13.119 and TikTok itself showed Chu himself has gone to lengths 0:06:13.120 --> 0:06:16.560 to say, look, we can alleviate that Project Texas for example, 0:06:16.560 --> 0:06:20.000 and shuing the Oracle is in some way facilitating the 0:06:20.040 --> 0:06:22.800 way in which data is read or indeed not transferred 0:06:22.839 --> 0:06:25.680 to China. How much have you read into well the 0:06:25.720 --> 0:06:29.360 ability for that to ease any of your concerns. 0:06:29.640 --> 0:06:32.000 The fact that it's a Chinese company and still has 0:06:32.040 --> 0:06:35.719 to abide by Chinese laws, which when push comes to shove, 0:06:35.800 --> 0:06:40.520 would require data transfers. The other major concern is their 0:06:40.560 --> 0:06:46.800 algorithm and the ability to potentially push influence messaging that 0:06:46.920 --> 0:06:50.600 we wouldn't be able to detect in real time. It 0:06:50.640 --> 0:06:53.520 would be really difficult to detect some of their longer 0:06:53.600 --> 0:06:58.720 term influence activities if they were to shift their algorithm 0:06:59.560 --> 0:07:03.320 for morm align purposes. And that's a real concern for 0:07:03.400 --> 0:07:04.680 the national security community. 0:07:05.640 --> 0:07:09.840 David, one hundred and seventy million Americans use TikTok and 0:07:09.880 --> 0:07:13.240 many of them like it. Are they being represented in 0:07:13.280 --> 0:07:14.040 this process? 0:07:16.720 --> 0:07:19.360 I think the Senate's going to have it say. I 0:07:19.360 --> 0:07:23.000 think the fact that it's been delayed for a number 0:07:23.000 --> 0:07:26.120 of years and there hasn't been action, that's a testament 0:07:26.120 --> 0:07:28.560 that they have been there's been a voice for those 0:07:28.560 --> 0:07:29.760 folks in the process. 0:07:31.600 --> 0:07:32.520 So I think, you know, we. 0:07:32.520 --> 0:07:35.720 Have a system of you know, laws and rules and 0:07:35.920 --> 0:07:38.800 ways to appeal, and there's a lot of different avenues 0:07:38.800 --> 0:07:41.560 for people to have their voices heard. And I think 0:07:41.600 --> 0:07:44.680 that's you know, a strength of the US you know, 0:07:44.720 --> 0:07:47.280 from the national security community at least, you know, this 0:07:47.440 --> 0:07:50.160 is serve a no brainer that the action should have 0:07:50.200 --> 0:07:50.960 happened a while ago. 0:07:51.400 --> 0:07:54.720 You've worked in the State Department, the Defense Department. If 0:07:54.720 --> 0:07:58.080 this doesn't go through, what does that mean for China 0:07:58.120 --> 0:07:58.640 in the US. 0:08:00.120 --> 0:08:03.560 I'm actually a little bit concerned if the Chinese government 0:08:03.680 --> 0:08:08.440 thinks that it can block policy policy action on important 0:08:08.440 --> 0:08:13.720 issues by appealing to domestic political factions or special interests. 0:08:14.320 --> 0:08:18.360 Then I think that makes a more dangerous world that 0:08:18.840 --> 0:08:22.160 may involved in the Chinese to be more aggressive, and 0:08:22.360 --> 0:08:26.680 it increases the potential for direct US China conflict in 0:08:26.720 --> 0:08:28.200 the years ahead. 0:08:28.400 --> 0:08:30.320 We want to thank you for your time, your expertise, 0:08:30.360 --> 0:08:34.199 Institute of World Politics, Professor of Strategy in Statecraft and 0:08:34.240 --> 0:08:35.960 Annenberg Chair of International Communication. 0:08:36.040 --> 0:08:38.400 That's David Glancy. We thank you. 0:08:38.440 --> 0:08:41.240 Coming up more regulation, this time from the EU. It 0:08:41.280 --> 0:08:44.480 passes a landmark set of AI rules. I have all 0:08:44.520 --> 0:09:03.200 the details for you. This has been by technology. The 0:09:03.240 --> 0:09:06.800 European Union today has passed the world's most extensive rules 0:09:06.840 --> 0:09:09.959 on artificial intelligence. Now the landmark set of rules could 0:09:10.040 --> 0:09:12.760 set the tone how AI is actually governed in more 0:09:12.800 --> 0:09:14.280 broadly the Western world for more. 0:09:14.400 --> 0:09:16.000 That's bringing Bloemberg's Jillian. 0:09:15.760 --> 0:09:19.080 Deutsch in Brussels, and many would say that some of 0:09:19.080 --> 0:09:21.800 the lawmakers have never been lobbied as hard as they 0:09:21.840 --> 0:09:24.360 have been over this particular AI act. 0:09:24.720 --> 0:09:29.000 What's the takeaway for companies trying to build. 0:09:28.400 --> 0:09:29.240 That's a great question. 0:09:29.320 --> 0:09:32.359 So right now it's a big celebratory day here in Brussels. 0:09:32.559 --> 0:09:34.240 I think last time I was speaking to you, it 0:09:34.320 --> 0:09:37.840 was after forty almost forty hours of negotiations in mid December. 0:09:38.200 --> 0:09:41.199 Fast forward three months and now we have the Parliament 0:09:41.240 --> 0:09:44.000 signing off on this act. And while it's our of celebration, 0:09:44.080 --> 0:09:46.400 we are getting lots of concerns of course from tech companies. 0:09:47.000 --> 0:09:49.120 They've been really studying the law and bells for quite 0:09:49.120 --> 0:09:52.760 some time about overregulation, concerns that you know, the European 0:09:52.800 --> 0:09:57.000 continent will be behind because they're regulating much more ahead 0:09:57.080 --> 0:09:57.800 than their. 0:09:59.120 --> 0:09:59.920 US cutter parts. 0:10:00.440 --> 0:10:03.160 We also have this concerned question from European tech companies too, 0:10:03.160 --> 0:10:05.120 and startups to say, hey, we really want to compete 0:10:05.120 --> 0:10:08.800 with US hyperscalers, and you can't over regulate us. Who 0:10:08.840 --> 0:10:11.760 overregulate us, we will never have a chance to actually compete. 0:10:13.080 --> 0:10:16.920 Okay, I'm Maestrel and I am building large language models 0:10:17.000 --> 0:10:20.560 and I'm based in Europe. Now that the act is passed, 0:10:20.640 --> 0:10:22.760 this is done, What is it that I actually actually 0:10:22.840 --> 0:10:24.280 have to do to comply? 0:10:25.920 --> 0:10:26.880 So there are a few things. 0:10:26.920 --> 0:10:28.240 I mean, I guess it's good to look at the 0:10:28.600 --> 0:10:30.839 use approach as a risk based approach. So for the 0:10:30.920 --> 0:10:33.559 most part, they're actually just regulating the use of the technology. 0:10:33.720 --> 0:10:37.040 Not the technology itself. So this means that in practice, 0:10:37.440 --> 0:10:40.320 the ev banning you know, the worst possibmous uses of AI, 0:10:41.000 --> 0:10:44.160 so AI systems cannot be used to you know, perform 0:10:44.200 --> 0:10:47.760 emotional recognition in workplaces or schools, cannot be used for 0:10:47.840 --> 0:10:51.480 social scoring, so giving citizens a score based on their 0:10:51.480 --> 0:10:54.640 behavior when it comes to high risk situations. Though these 0:10:54.640 --> 0:10:56.839 are some of the more tricky ones. This is you know, 0:10:57.120 --> 0:10:59.600 AI system is being used for migration applications or starting 0:10:59.679 --> 0:11:02.679 job applications. A lot of these companies, like open AI 0:11:03.080 --> 0:11:05.439 or Mistral will have to perform a lot more checks 0:11:05.600 --> 0:11:08.079 in order to prove to regulators that are they're safe. 0:11:08.760 --> 0:11:11.000 The one exception that a lot of companies like Mistrel 0:11:11.000 --> 0:11:14.480 were really lobbying hard against were these additional controls to 0:11:14.559 --> 0:11:17.200 general purpose or generative AI. And these are not based 0:11:17.240 --> 0:11:20.400 on the use of AB it's explicitly regulating technology itself. 0:11:21.160 --> 0:11:22.959 And in the end, what these companies will have to 0:11:23.000 --> 0:11:25.880 do is perform we're can to prove to regulators, you know, 0:11:25.960 --> 0:11:28.559 the energy consumption, prove that they are actually complying with 0:11:28.600 --> 0:11:31.480 copyright laws. And there's a new AI office that was 0:11:31.559 --> 0:11:33.880 based in Brussels and that the EU is currently setting up. 0:11:34.160 --> 0:11:35.960 This will actually kind of operate almost like a police 0:11:36.000 --> 0:11:37.680 force where they can go to the likes of mister 0:11:37.880 --> 0:11:41.120 Open Ai, Microsoft whomever and say, hey, we want more 0:11:41.360 --> 0:11:43.640 data on how you've trained your large language model, and 0:11:43.720 --> 0:11:47.120 ultimately they can even ban an application if it's performing poorly. 0:11:47.960 --> 0:11:51.920 Jenny and Mistral has indeed partnered with Microsoft and one 0:11:52.040 --> 0:11:56.319 expert saying that EU lawmakers they've got played in this 0:11:56.400 --> 0:12:00.200 particular situation. How why will this not be a read 0:12:00.240 --> 0:12:03.679 across to just how the rest of the world adopts 0:12:03.760 --> 0:12:04.840 AI legislation. 0:12:06.080 --> 0:12:08.280 I think it's really interesting because last year we saw 0:12:08.679 --> 0:12:11.800 lots of these tech companies even pushing for regulation. We 0:12:11.880 --> 0:12:14.839 had Sam Moltman obviously in Congress as someone knows, pushing 0:12:14.880 --> 0:12:18.120 for regulation, and so we've had that obviously in Brussels. 0:12:18.200 --> 0:12:21.800 But while even arguing for regulation, they've also been simultaneously 0:12:21.880 --> 0:12:24.360 lobbing quite hard against them of the worst or the 0:12:24.400 --> 0:12:27.400 strictest controls that they've seen in Brussels. Mistral was a 0:12:27.480 --> 0:12:28.679 really clear cut case of that. 0:12:29.520 --> 0:12:29.960 Last year. 0:12:30.000 --> 0:12:32.160 They were really effective and getting the French government also. 0:12:32.440 --> 0:12:35.400 I'll if ALPHAA Germans started up really pushing these governments 0:12:35.400 --> 0:12:37.839 saying hey, if you will reregulate us, then we will 0:12:37.880 --> 0:12:40.280 not be able to compete with US companies. Now, fast 0:12:40.320 --> 0:12:42.440 forward four or five months, they were obviously a partnered 0:12:42.480 --> 0:12:44.520 with Microsoft, and so that's left a kind of a 0:12:44.800 --> 0:12:47.240 bad taste in a lot of lawmaker's mouths. But we 0:12:47.320 --> 0:12:49.280 also have lots of other companies that are really you know, 0:12:49.400 --> 0:12:52.360 signing on for voluntary commitments, trying to prove to governments. 0:12:52.600 --> 0:12:55.360 They're taking this seriously that they're taking as many commitments 0:12:55.360 --> 0:12:57.280 as possible. But I think I think more and more 0:12:57.559 --> 0:12:59.960 leaders are starting to wake up to the tech companies 0:13:00.040 --> 0:13:00.839 may be self serving. 0:13:01.640 --> 0:13:04.600 Huh never, Gillian Deutsch b thank you so much. 0:13:05.320 --> 0:13:05.360 Ed. 0:13:05.520 --> 0:13:06.440 What of your book? Coming up? 0:13:07.440 --> 0:13:10.199 The other top tech stories that were watching in Talking Tech? 0:13:10.320 --> 0:13:13.480 First up, the Pentagon is pulling out of plans to 0:13:13.600 --> 0:13:16.120 spend as much as two point five billion dollars on 0:13:16.160 --> 0:13:19.719 a chip grant to Intel. That's according to sources. The 0:13:19.800 --> 0:13:22.960 move threatens the total amount of federal funding that Intel 0:13:23.080 --> 0:13:25.880 was expecting to receive and now puts the onus on 0:13:25.920 --> 0:13:28.679 the Commerce Department to make up a shortfall. The funding 0:13:28.800 --> 0:13:31.920 was part of a package that allocated three point five 0:13:31.960 --> 0:13:37.480 billion dollars to Intel to produce defense and intelligence related semiconductors, 0:13:37.720 --> 0:13:40.880 plus shares of Singtel climbing the most in almost two years. 0:13:40.920 --> 0:13:44.559 This after the Australian Finance Review reported that Singtel was 0:13:44.600 --> 0:13:48.120 in discussions to sell off carrier Optus to pe firm 0:13:48.160 --> 0:13:51.840 Brookfield for ten point six billion dollars, Singapore's largest carrier, 0:13:51.880 --> 0:13:55.200 responding to the report saying there was quote no impending 0:13:55.280 --> 0:13:59.160 deal to offload Optis for the said sum as reported. 0:13:59.400 --> 0:14:03.400 And Google is curbing its gen Ai chatbot Gemini, from 0:14:03.480 --> 0:14:07.800 responding to questions directly to the Indian general elections that's 0:14:07.840 --> 0:14:11.120 beginning next month. This follows similar controls it's set up 0:14:11.160 --> 0:14:13.840 in the US and other countries that are holding elections 0:14:13.880 --> 0:14:16.679 this year, all in this effort to combat concerns over 0:14:16.800 --> 0:14:21.640 misinformation and conspiracies. Google meanwhile collaborating with the Election Commission 0:14:21.680 --> 0:14:25.960 of India to enable easier discovery of vital voting information 0:14:26.560 --> 0:14:38.600 with Google Search. Social Capital, the venture capital firm that's 0:14:38.680 --> 0:14:43.400 led by podcasters and former Facebook executive Chamath Palihapatia, fired 0:14:43.600 --> 0:14:48.000 two of its partners citing an undisclosed quote situation. That's 0:14:48.040 --> 0:14:50.880 according to a letter it's sent to its investors that 0:14:51.040 --> 0:14:53.080 was reviewed by Bloomberg. I want to bring in Bloomberg's 0:14:53.080 --> 0:14:55.680 Mark German, who broke this story, and actually in the 0:14:55.760 --> 0:14:58.680 last hour, Mark you've updated the story with more information, 0:14:59.200 --> 0:15:03.200 particularly about Ravi Tanuku, one of the partners terminated, because 0:15:03.200 --> 0:15:05.200 you've heard from his lawyer tell us the latest. 0:15:06.400 --> 0:15:10.080 Yes, So, yesterday morning, Shamath, as you mentioned, former Facebook 0:15:10.080 --> 0:15:14.120 executive he's on the All In podcast, sent a letter 0:15:14.440 --> 0:15:18.080 to investors in Social Capital, you know, to say that 0:15:18.280 --> 0:15:23.480 two of their top partners, uh Jay Zaveri and Ravi Tanuku, 0:15:24.080 --> 0:15:28.000 they were fired. They hired walk to Lifton, a big 0:15:28.120 --> 0:15:31.760 time law firm, to review and probe the situation, and 0:15:31.840 --> 0:15:35.040 after a probe, Shamath terminated both of them on Sunday. 0:15:35.680 --> 0:15:40.080 This situation in question happened last Tuesday, and in the 0:15:40.200 --> 0:15:42.800 letter all he did was call it a situation. So 0:15:42.880 --> 0:15:45.880 there's been a lot of intrigue within Social Capital, in 0:15:46.000 --> 0:15:49.600 the investment in venture capital communities about what exactly happened here. 0:15:49.920 --> 0:15:53.000 There's been all sorts of speculation, but now we've learned 0:15:53.080 --> 0:15:55.560 this comes down to Groc. It's an AI startup that 0:15:55.680 --> 0:15:59.120 Social Capital invested in, you know, five six years ago. 0:15:59.480 --> 0:16:01.080 In this how to do with the. 0:16:01.240 --> 0:16:06.560 Partners being involved in offering a special purpose vehicle related 0:16:06.600 --> 0:16:10.960 to Grock to some outside investors. This happened after Grock 0:16:11.080 --> 0:16:13.400 was worth maybe sixty million a few years ago. Now 0:16:13.520 --> 0:16:17.840 it's valuation topped a billion, so special purpose vehicle related 0:16:17.920 --> 0:16:20.720 to that and all the money to be earned there. 0:16:21.040 --> 0:16:24.640 The company only said Social Capital that the two men 0:16:24.880 --> 0:16:28.640 violated company policy, but didn't go beyond that. And we've 0:16:28.720 --> 0:16:31.040 heard from lawyers for both of the men who were 0:16:31.120 --> 0:16:35.040 terminated saying there is no wrongdoing and once they show 0:16:35.120 --> 0:16:37.880 their case, the public will know that they've done nothing wrong. 0:16:38.600 --> 0:16:42.280 And Shamath and Social Capital haven't responded to those responses. 0:16:42.840 --> 0:16:47.160 Missus veris firing was unfair and undeserved, so says the spokesman, 0:16:47.400 --> 0:16:49.840 and the firm's leadership approved and participated in the investment 0:16:49.880 --> 0:16:53.160 that is now being used as a pretext they say 0:16:53.280 --> 0:16:58.200 to fire him ultimately, Mark, how unusual is it to 0:16:58.240 --> 0:17:01.600 get such little information such a step is taken. 0:17:01.640 --> 0:17:04.440 How unusual is it to lose such partners from a firm? 0:17:05.960 --> 0:17:08.920 Oh, I mean, people are fired from firms all the time, 0:17:09.040 --> 0:17:11.879 but it is pretty unusual, especially you're showing the tweet 0:17:12.240 --> 0:17:16.760 from Social Capital what they've done. There by saying employee 0:17:16.800 --> 0:17:19.879 specific circumstances and saying they have no further comments at 0:17:19.880 --> 0:17:22.560 this time, not even naming the people in initial tweet. 0:17:22.760 --> 0:17:25.080 They all they did was create a bunch of intrigue 0:17:25.080 --> 0:17:27.159 about what exactly happened. If they had come out and 0:17:27.200 --> 0:17:30.200 said initially when happened, maybe it wouldn't have been such 0:17:30.440 --> 0:17:33.239 a significant news cycle. But they handled this poorly from 0:17:33.280 --> 0:17:35.880 the get go. And it was really a three sentence 0:17:35.960 --> 0:17:39.480 email from Tremouth to a bunch of outside investment partners 0:17:39.720 --> 0:17:42.160 that really got this going. And in that email, all 0:17:42.200 --> 0:17:44.000 he did was call it a situation. He said, if 0:17:44.040 --> 0:17:47.240 you want more information, give me a call. So lots 0:17:47.280 --> 0:17:51.560 of intrigue here, So, yes, an unusual situation. 0:17:51.880 --> 0:17:56.600 Indeed, so Mark Social excuse me. Social Capital is basically 0:17:56.680 --> 0:17:59.560 not saying anything, giving any details, But we know this 0:17:59.720 --> 0:18:02.480 has something to do with AI starts up. Grock, just 0:18:02.800 --> 0:18:04.280 explain the basics of that. 0:18:06.440 --> 0:18:08.240 Yeah, I mean there's a lot of speculation on what 0:18:08.359 --> 0:18:13.640 exactly that means. Right, this AI startup, their evaluation completely 0:18:14.119 --> 0:18:16.720 just went through the roof. And I guess there were 0:18:16.800 --> 0:18:21.199 some concerns from Schamath potentially about that investment and how 0:18:21.240 --> 0:18:24.920 that investment was handled, and if and how outside investors 0:18:24.960 --> 0:18:27.720 had been dragged into that. We're still trying to gather 0:18:27.880 --> 0:18:31.119 more information on what exactly is happening here. Our hope 0:18:31.200 --> 0:18:34.840 is that the lawyers for both sides start presenting their 0:18:34.960 --> 0:18:37.600 cases to the public and perhaps send us more information 0:18:37.640 --> 0:18:39.760 about what's going on here so we can really understand. 0:18:40.280 --> 0:18:43.200 But this seems really abrupt, right having this the quot 0:18:43.280 --> 0:18:47.240 quote situation appear on Tuesday, hiring a law firm on Thursday, 0:18:47.440 --> 0:18:50.880 having both partners terminated on Sunday, and then this announcement 0:18:50.960 --> 0:18:53.920 coming via email on Tuesday within one week. You know, 0:18:54.040 --> 0:18:57.080 this seems like something that was done very quickly, something 0:18:57.119 --> 0:18:59.600 that may have been done in a rash manner. But 0:18:59.720 --> 0:19:01.800 really we're going to need to know more information before 0:19:01.800 --> 0:19:03.720 we can really determine, you know, who's in the right 0:19:03.760 --> 0:19:04.600 and who's in the wrong here. 0:19:05.240 --> 0:19:07.879 And indeed, we have invited Chamath Padhabat here onto the 0:19:07.880 --> 0:19:10.360 show and Social Capital to get a little bit more 0:19:10.440 --> 0:19:12.679 of that information. And I know, Mark, you have got 0:19:12.720 --> 0:19:14.960 plenty of queries out there with and we thank you 0:19:15.119 --> 0:19:17.240 so much breaking it all down, Mark German. 0:19:17.280 --> 0:19:19.680 Thus far, Social Capital has not responded. 0:19:28.119 --> 0:19:30.520 Welcome back to Bloomberg Technology, Ed love Low here in 0:19:30.600 --> 0:19:31.800 San Francisco. 0:19:31.480 --> 0:19:32.280 Karen Hide in New York. 0:19:32.320 --> 0:19:34.640 Let's get you a quick check on these markets, because well, 0:19:34.760 --> 0:19:37.840 maybe a little bit of a soul the news after 0:19:37.920 --> 0:19:40.080 we take some profit on yesterday's games. Once again, we're 0:19:40.080 --> 0:19:41.960 off about eight ten percent when you're looking at the 0:19:42.040 --> 0:19:44.600 key benchmark that is the Nasdaq one hundred, So draw 0:19:44.720 --> 0:19:46.359 down in particular when it comes to some of the 0:19:46.520 --> 0:19:48.920 key chip names and video under pressure Micron as well, 0:19:49.160 --> 0:19:50.440 So keep an eye on those chip stocks. 0:19:50.480 --> 0:19:51.320 I'm looking at the US. 0:19:51.560 --> 0:19:54.200 Also, perhaps dictating the path of trade for equities is 0:19:54.240 --> 0:19:56.200 what's happening in the bond market when you see yield 0:19:56.320 --> 0:19:58.240 just pushing up a little bit on the end of 0:19:58.280 --> 0:20:00.240 the curve. In particular, we've got a thirty year auction 0:20:00.400 --> 0:20:02.400 that's coming, and well, there was a bit of lackluster 0:20:02.480 --> 0:20:05.200 demand yesterday. We could see a bit of pressure bonds 0:20:05.280 --> 0:20:07.720 yields of course go higher. Quite often we see tech 0:20:07.760 --> 0:20:11.119 stoks go lower. We're seeing bitcoin still managing to park 0:20:11.200 --> 0:20:11.960 halve its own path. 0:20:12.000 --> 0:20:12.960 We're up more than two percent. 0:20:13.000 --> 0:20:14.920 When you're looking at bitcoin, we're up seventy two thousand, 0:20:14.960 --> 0:20:17.200 seven and sixty one. Move on some of the individual 0:20:17.240 --> 0:20:19.800 movers when it come to the tech names, and I'm looking, 0:20:19.840 --> 0:20:21.560 as I say, at the chip stocks. These have been 0:20:21.640 --> 0:20:24.399 pushing generally on the pressure of the NASDEK. We're off 0:20:24.440 --> 0:20:24.840 by two. 0:20:24.680 --> 0:20:25.359 Point six percent. 0:20:25.560 --> 0:20:28.119 Tesra as well, seeing yet another day of losses, off 0:20:28.119 --> 0:20:30.240 by two point seven percent. This is we see analysts 0:20:30.280 --> 0:20:32.879 once again going negative on the stock, and I'm showing 0:20:32.960 --> 0:20:36.520 some particular companies that are outperforming though PDD Chinese names 0:20:36.560 --> 0:20:37.720 interestingly on the higher side. 0:20:37.760 --> 0:20:38.639 No real catalyst for this. 0:20:38.760 --> 0:20:41.560 We had some mixed reviews coming from analysts and Monday's 0:20:41.640 --> 0:20:44.399 trade with well, certain analysts saying like by the stock, 0:20:44.480 --> 0:20:47.280 Goldman saying no. But we're up another almost five percent 0:20:47.400 --> 0:20:50.000 on the day, even as we continue to digest US 0:20:50.119 --> 0:20:52.199 China tensions. And we're going go back to that TikTok 0:20:52.240 --> 0:20:54.359 story in a moment. But now let's focus in a 0:20:54.400 --> 0:20:56.639 bit on what's happening with a crypto rally. Please to 0:20:56.720 --> 0:20:59.280 be welcome, taking client CEO of Edge and Node. It's 0:20:59.280 --> 0:21:02.480 a software development company behind the graph actually an indexing 0:21:02.520 --> 0:21:06.280 and query protocol organizing the world's open blockchain data. And 0:21:06.640 --> 0:21:08.960 last time I checked, well the crypto related to the 0:21:09.040 --> 0:21:11.960 graph is seeing about a four billion dollar market capitalization. 0:21:12.400 --> 0:21:16.159