WEBVTT - World Economic Forum and Apple Vs. Supreme Court 0:00:00.200 --> 0:00:04.519 From Bahart where Innovation, Money and Power Collie in Silicon 0:00:04.600 --> 0:00:05.440 Vallet Nbon. 0:00:05.840 --> 0:00:09.360 This is Bloomberg Technology with Caroline Hyde and Ed. 0:00:09.400 --> 0:00:27.440 Ludlove Ourmed Ludlow in San Francisco. Caroline hides off this week. 0:00:27.520 --> 0:00:30.400 This is Bloomberg Technology coming up on the program. Full 0:00:30.440 --> 0:00:34.080 coverage from the World Economic Forum as tech heavyweights to 0:00:34.200 --> 0:00:37.919 send on Davos. We hear from Sam Altman, Satya Nadella, 0:00:38.280 --> 0:00:41.840 Marc Benioff, and many more. Plus the US Supreme Court 0:00:41.960 --> 0:00:46.199 rejects Apple's bid for an epic app store review. Details 0:00:46.240 --> 0:00:49.120 ahead on the decision that will likely affects billions of 0:00:49.159 --> 0:00:52.479 dollars in revenue for the iPhone maker, and Microsoft is 0:00:52.479 --> 0:00:55.440 announcing the next phase of its co pilot journey. We'll 0:00:55.440 --> 0:00:59.880 discuss the news with Microsoft's executive vice president Yusuf Mehdi. 0:01:00.480 --> 0:01:03.600 Welcome back after a holiday weekend here in the United States. 0:01:03.680 --> 0:01:06.280 The big story is Apple. This was the market mover 0:01:06.360 --> 0:01:09.280 and give them Apple's market cap, dragging indices to the 0:01:09.280 --> 0:01:12.160 downside softom by one point seven percent. Those declinents have 0:01:12.280 --> 0:01:17.479 been deeper. The US Supreme Court rejecting Apple's appeal of 0:01:17.520 --> 0:01:21.360 an appeals court decision earlier an anti trust suit which 0:01:21.480 --> 0:01:23.480 challenges the app store. I want to bring in Bloomberg's 0:01:23.480 --> 0:01:26.720 Mark German, our chief correspondent who leads our coverage of 0:01:26.760 --> 0:01:30.120 Apple and Mark. It's hard to understand the legal ease 0:01:30.200 --> 0:01:32.920 here because it's an appeal of an appeal. But explain 0:01:33.000 --> 0:01:34.880 this morning's news to our audience. 0:01:35.720 --> 0:01:37.720 ED, thanks for having me this morning as always. Yes, 0:01:37.800 --> 0:01:39.959 So let me explain Epic Games. 0:01:40.080 --> 0:01:40.480 Apple. 0:01:40.640 --> 0:01:43.120 They were in this major lawsuit a few years ago 0:01:43.680 --> 0:01:45.399 over the app store Apple one. 0:01:45.560 --> 0:01:47.080 Most of the lawsuit right. 0:01:47.319 --> 0:01:50.600 Apple One in the sense they were not designated of minoppoly. 0:01:50.680 --> 0:01:53.040 But there was one little car about that Apple lost 0:01:53.080 --> 0:01:55.640 on and that was known as a steering provision. The 0:01:55.800 --> 0:01:59.440 idea where the judge rule that Apple should allow developers 0:01:59.440 --> 0:02:02.280 to include a button inside of their applications to point 0:02:02.400 --> 0:02:06.160 users external to the app store to complete their transactions. Now, 0:02:06.160 --> 0:02:09.920 why is that such a big deal, Because primarily applications 0:02:10.000 --> 0:02:11.440 downloaded via the app Store. 0:02:11.200 --> 0:02:13.400 To the iPhone or the iPad have to use. 0:02:13.280 --> 0:02:17.120 Apple's INAPT billing system that takes between a fifteen percent 0:02:17.160 --> 0:02:18.400 and a thirty percent cut. 0:02:18.639 --> 0:02:21.480 In fact, the majority of Apple services. 0:02:20.960 --> 0:02:25.000 Revenue likely comes from transactions and in app purchases made 0:02:25.040 --> 0:02:28.240 through the app store, and Apple had been appealing that 0:02:28.400 --> 0:02:30.440 for the last several months, all the way up to 0:02:30.480 --> 0:02:34.440 the Supreme Court. Epic had also been appealing their losses 0:02:34.480 --> 0:02:37.160 in that initial trial in California up to the Supreme Court. 0:02:37.440 --> 0:02:40.200 Today Tuesday, the Supreme Court decided they're not going to 0:02:40.280 --> 0:02:42.080 high here either side. 0:02:42.160 --> 0:02:44.520 So that means Epic's not going to get what they want. 0:02:44.560 --> 0:02:46.960 They want Apple to open up the app store completely 0:02:46.960 --> 0:02:47.560 in the US. 0:02:47.760 --> 0:02:51.160 They want them to be designated as an antitrust violator 0:02:51.240 --> 0:02:52.080 as a monopoly. 0:02:52.520 --> 0:02:54.040 Apple is not getting what they want. 0:02:54.320 --> 0:02:57.280 Their appeal here has failed for that carve out for 0:02:57.360 --> 0:03:00.280 the external button for in app purchases. Were going to 0:03:00.320 --> 0:03:02.400 have to wait and see Apple's response here to see 0:03:02.440 --> 0:03:05.960 when they're going to implement this and exactly how. The 0:03:06.040 --> 0:03:09.360 interesting other tidbit year is March seventh is when the 0:03:09.360 --> 0:03:12.520 Digital Markets Act comes into place. The Digital Markets Act 0:03:12.560 --> 0:03:15.040 is in the European Union. This is going to require 0:03:15.120 --> 0:03:18.440 Apple to open up the app store. There allowed outside billing, 0:03:18.720 --> 0:03:21.840 so it's possible Apple's going to try to use that 0:03:21.919 --> 0:03:24.560 same technology to open up the billing in the US 0:03:24.600 --> 0:03:26.480 as well, or they may take another method. 0:03:26.480 --> 0:03:27.400 We'll have to wait and see. 0:03:27.400 --> 0:03:30.440 But either way, not great news for Apple this morning 0:03:30.480 --> 0:03:31.000 nor Epic. 0:03:31.880 --> 0:03:32.079 Yeah. 0:03:32.120 --> 0:03:35.400 We had the European Commission Executive Vice President Margareta Vestla 0:03:35.960 --> 0:03:39.200 on with me live last Friday, and her message was, well, 0:03:39.240 --> 0:03:42.600 I'm meeting with Tim Cook. That meeting happened. You know, 0:03:42.680 --> 0:03:44.800 you have to comply by March seventh. And what she 0:03:44.880 --> 0:03:46.960 told me was she was going to explain to Tim 0:03:47.000 --> 0:03:50.440 Cook and other CEOs how they could comply. Let's get 0:03:50.440 --> 0:03:53.880 back to the app store dispute. There's an iOS iPhone 0:03:54.000 --> 0:03:58.760 user consideration here, a technology consideration that if the High 0:03:58.800 --> 0:04:03.880 Court put into effect the Appeals Court's original decision, you, 0:04:03.920 --> 0:04:08.360 as a developer of an iOS app, can direct the 0:04:08.440 --> 0:04:12.040 consumer elsewhere outside of the iOS ecosystem. 0:04:12.120 --> 0:04:12.280 Right. 0:04:12.360 --> 0:04:15.320 Just explain if I'm an iPhone user what I might 0:04:15.360 --> 0:04:16.320 see going forward. 0:04:18.040 --> 0:04:19.719 Yeah, So, if you're an iPhone user right now, and 0:04:19.800 --> 0:04:22.240 let's say I'll use Fortnite as an example. Let's say 0:04:22.240 --> 0:04:24.479 Fortnite was stole the app store. You want to buy 0:04:25.120 --> 0:04:27.240 a new character, you want to buy a bundle. 0:04:26.880 --> 0:04:27.600 So you click that. 0:04:27.800 --> 0:04:30.880 Maybe it's priced at ten dollars, and traditionally what you 0:04:30.920 --> 0:04:33.520 would have to do is use your app store credentials 0:04:33.560 --> 0:04:35.080 you get to pop up through the app Store. You 0:04:35.080 --> 0:04:38.440 would approve it with touch ID, your pastor base ID. 0:04:38.640 --> 0:04:41.120 It's ten dollars. Seven dollars of that would go to 0:04:41.120 --> 0:04:41.599 the developer. 0:04:41.640 --> 0:04:42.800 Three dollars a go to Apple. 0:04:43.320 --> 0:04:47.600 Now, when this comes into effect that button, maybe you'll 0:04:47.640 --> 0:04:48.280 be able. 0:04:48.080 --> 0:04:50.080 To go to a website to finish the transaction. 0:04:50.160 --> 0:04:54.560 Maybe you'll use Stripe for example, and the vast majority 0:04:54.720 --> 0:04:56.680 in that case of the revenue will then go to 0:04:56.680 --> 0:04:59.599 the developer. Stripe charges maybe three and four percent, Maybe 0:04:59.640 --> 0:05:02.400 it goes PayPal. They take a few percentage points. So 0:05:02.480 --> 0:05:05.279 it's going to mean less revenue for Apple, more revenue 0:05:05.279 --> 0:05:08.679 for the developer. Now there is a scenario here where 0:05:08.760 --> 0:05:12.520 even if apps can point developers to collect payments outside 0:05:12.560 --> 0:05:14.960 of the app Store, Apple could still have a method 0:05:15.000 --> 0:05:16.640 to collect that caament from the developer. 0:05:16.800 --> 0:05:18.800 Maybe the developer at the end of each month needs 0:05:18.800 --> 0:05:19.760 to write Apple a check. 0:05:20.279 --> 0:05:22.120 This is something they've done with dating apps in the 0:05:22.120 --> 0:05:24.680 Netherlands that has required a similar rule. 0:05:24.720 --> 0:05:27.000 But Apple is still trying to collect that money. 0:05:27.040 --> 0:05:29.599 Instead of charging a thirty percent fee, they charge something 0:05:29.640 --> 0:05:32.279 like twenty six or twenty seven percent to taking out 0:05:32.279 --> 0:05:35.200 that processing feed from there too, So it is going 0:05:35.240 --> 0:05:37.400 to be very interesting to see how Apple implements this. 0:05:37.720 --> 0:05:40.800 I would imagine, as they should, they will implement it 0:05:40.839 --> 0:05:43.279 in the way that's the most advantageous to their bottom lie. 0:05:44.440 --> 0:05:46.920 All right, Bloomberg's Mark Gum and our chief correspondent who 0:05:47.040 --> 0:05:49.800 leads our coverage of Apple, thank you very much. A 0:05:49.800 --> 0:05:53.240 pretty complex story. All right, Let's go back to markets 0:05:53.279 --> 0:05:56.320 and our top stories, because on this Tuesday, they're inextricably linked. 0:05:56.360 --> 0:06:00.200 Joining us. Erika Klouer, portfolio manager for the Pgmen and 0:06:00.240 --> 0:06:03.320 Technology Fund Jennison Associates, a one hundred and eighty six 0:06:03.360 --> 0:06:06.719 billion dollar active asset manager that takes a bottom up, fundamental, 0:06:06.960 --> 0:06:08.800 long term investment approach. And I think, when I look 0:06:08.800 --> 0:06:12.440 at your portfolio specifically, Erica, if the story of twenty 0:06:12.480 --> 0:06:16.160 twenty three was the Magnificent seven, you're pretty closely aligned 0:06:16.160 --> 0:06:19.680 with those, one of them being Apple. You will have 0:06:19.720 --> 0:06:22.440 seen the news this morning of the Supreme Court's decision 0:06:22.520 --> 0:06:27.960 to reject Apple's appeal of the Appeals court original decision. 0:06:28.800 --> 0:06:31.640 When you hold a stock like Apple and you consider 0:06:31.720 --> 0:06:35.839 its services revenue, how do you think about the news 0:06:35.880 --> 0:06:38.919 story of this morning in terms of the attractiveness of 0:06:38.920 --> 0:06:39.400 that name. 0:06:40.520 --> 0:06:43.280 Sure well, thank you so much for having me. You know, 0:06:43.320 --> 0:06:46.960 Apple has been a long time holding of Jennison Associates, 0:06:47.000 --> 0:06:49.400 and we look at the business as one that is 0:06:49.520 --> 0:06:54.680 extraordinarily sticky. Companies who use Apple products and consumers who 0:06:54.760 --> 0:06:57.839 use Apple products tend to have a difficult time switching 0:06:57.880 --> 0:07:01.839 over to other platforms. As a result, the sustainability of 0:07:01.839 --> 0:07:05.560 the services business is incredibly attractive. Certainly, if you look 0:07:05.600 --> 0:07:07.560 on the hardware side of the part of the business, 0:07:07.960 --> 0:07:11.520 there is more competition. There also is saturation and maturity 0:07:11.520 --> 0:07:15.000 in that business. So really what drives our investment decision 0:07:15.200 --> 0:07:17.280 is the sustainability of that services business. 0:07:18.760 --> 0:07:20.800 Erica. The other big story of the morning which we 0:07:20.840 --> 0:07:23.160 have to discuss is FED speak. In fact, it will 0:07:23.200 --> 0:07:27.920 probably be the speak of the week, and FED Governor 0:07:27.960 --> 0:07:32.320 Waller is kind of front and center, basically saying the 0:07:32.360 --> 0:07:35.280 FED may need to cut rates this year, emphasis on 0:07:35.320 --> 0:07:38.400 this year, depending on inflation, but there is no need 0:07:38.440 --> 0:07:42.200 to go as deep or as fast as historically a 0:07:42.240 --> 0:07:45.080 FED might have done. How does that inform your view 0:07:45.240 --> 0:07:46.480 of the technology sector. 0:07:47.440 --> 0:07:51.840 Sure well, Jennison is a bottoms up research house and 0:07:51.920 --> 0:07:54.840 so we tend to look at companies over a longer 0:07:54.840 --> 0:07:57.680 period of time. Looking at the duration is the sustainability 0:07:57.960 --> 0:08:01.280 of the company's competitive advantages. But one of the critical 0:08:01.320 --> 0:08:04.560 factors that goes into our decision making at Jennison is 0:08:04.600 --> 0:08:07.680 really looking at the ability of technology companies to be 0:08:07.840 --> 0:08:10.880 deflationary over time, and we think that is going to 0:08:10.920 --> 0:08:13.880 be more important than ever over the next three to 0:08:13.920 --> 0:08:18.240 five years, as companies are able to use AI to 0:08:18.400 --> 0:08:22.160 bring down their costs to increase their productivity to an 0:08:22.200 --> 0:08:24.360 extent that we do not think is properly discounted in 0:08:24.440 --> 0:08:26.840 many of the share prices today. 0:08:27.120 --> 0:08:30.960 Two of your biggest holdings are in Nvidia and I 0:08:31.040 --> 0:08:34.480 believe also Broadcom. You know, we go back to that 0:08:34.520 --> 0:08:38.840 Magnificent seven discussion of last year. Are those solely AI 0:08:39.040 --> 0:08:40.520 stories to your mind? 0:08:41.400 --> 0:08:46.200 Great question. We at Jennison Associates have owned in Vidia 0:08:46.280 --> 0:08:50.199 since twenty sixteen and broadcome about the same time period, 0:08:50.720 --> 0:08:54.440 and the reason for the duration of those holdings is 0:08:54.480 --> 0:08:57.960 that we look to those companies as key enablers within 0:08:58.440 --> 0:09:01.800 artificial intelligence deployment. Certainly in Nvidia is more of a 0:09:01.840 --> 0:09:05.080 pure play in that arena. Broadcom is a little bit 0:09:05.120 --> 0:09:09.560 different in the sense that it not only has aiasic 0:09:09.640 --> 0:09:12.600 parts custom parts that it makes for hyperscalers such as Google, 0:09:12.920 --> 0:09:16.880 but it also has a very strong portfolio of networking 0:09:16.920 --> 0:09:19.280 products that we think are going to be essential within 0:09:19.320 --> 0:09:23.920 the AI ecosystem, and beyond that, they have very strong 0:09:23.960 --> 0:09:27.640 market share in many other semiconductor businesses that may be 0:09:27.640 --> 0:09:32.160 more mature, but the company has extraordinary pricing power that 0:09:32.200 --> 0:09:35.880 has sustained over the last decade and we think will 0:09:36.480 --> 0:09:38.559 extend for the next decade as well. 0:09:39.240 --> 0:09:42.000 Another name that you hold is AMD. The stock currently 0:09:42.040 --> 0:09:44.440 up almost eight percent, putting it on track for its 0:09:44.480 --> 0:09:47.959 biggest jump since early December. A lot of analysts have 0:09:47.960 --> 0:09:50.280 been updating their price targets on this name. I sat 0:09:50.320 --> 0:09:53.280 down with Lisa Sue when they kind of fully launched 0:09:53.280 --> 0:09:56.600 the MII three hundred X and started to really build 0:09:56.679 --> 0:09:59.520 up their AI story and boost their forecasts. It's the 0:09:59.559 --> 0:10:02.439 same quest question, do you see AMD as an AI 0:10:02.600 --> 0:10:04.040 play or something broader? 0:10:04.880 --> 0:10:07.040 Well, As you point out, AMD is one of the 0:10:07.080 --> 0:10:10.000 top holdings that Jennison Associates, and the reason for that 0:10:10.480 --> 0:10:13.280 is not only do we think that the company has 0:10:13.320 --> 0:10:17.839 a very viable and important product portfolio to address the 0:10:17.880 --> 0:10:21.720 AI opportunities, but we also look to the PC segment, 0:10:21.880 --> 0:10:24.600 which may not be getting so much attention as AI 0:10:24.800 --> 0:10:27.079 does today because it's not as exciting. It's a more 0:10:27.120 --> 0:10:30.200 mature industry. But I think that there is going to 0:10:30.280 --> 0:10:35.480 be an important multi year upgrade cycle two aipcs and 0:10:35.559 --> 0:10:38.560 their AMD is very well positioned to continue to gain 0:10:38.600 --> 0:10:42.400 market share and increase its average selling prices. So we 0:10:42.440 --> 0:10:45.800 think the combination of those two markets, along with its 0:10:45.920 --> 0:10:49.840 very strong portfolio programmable logic devices, which goes into different 0:10:49.920 --> 0:10:54.040 end markets, is going to push advanced micro devices earnings 0:10:54.120 --> 0:10:56.680 higher than expectations for the next several years. 0:10:58.000 --> 0:11:00.480 Eric I think one thing that many of this names 0:11:00.480 --> 0:11:03.160 having common other than the sort of battleground for high 0:11:03.200 --> 0:11:08.440 performance GPU, is exposure to China. And there is the 0:11:08.480 --> 0:11:11.920 policy side of this, where the US has clear export 0:11:12.440 --> 0:11:16.280 controls and restrictions of technology to China, and then there's 0:11:16.320 --> 0:11:18.480 the politics side of it. And I believe that one 0:11:18.480 --> 0:11:21.600 of China's vice premieres this morning was trying to say, like, look, 0:11:21.640 --> 0:11:24.839 we need open access to technology. Is an investor, where 0:11:24.880 --> 0:11:26.320 do you position yourself within that? 0:11:27.760 --> 0:11:30.000 This is a great question. I would say that the 0:11:30.120 --> 0:11:33.600 biggest concern that we have at Jennison at this point 0:11:34.080 --> 0:11:38.360 is the strain on relations with China visa the ability 0:11:38.600 --> 0:11:42.480 for there to be technology innovation. Undoubtedly, the world is 0:11:42.600 --> 0:11:47.319 much more globally interconnected with regards to technology deployment, innovation 0:11:47.800 --> 0:11:53.240 and supply chain. With there being so much more, frankly 0:11:53.320 --> 0:11:56.240 tension between the US and China, this is an area 0:11:56.280 --> 0:12:00.640 that gives us a lot of concern. We still believe 0:12:00.679 --> 0:12:04.679 that the pace of innovation will continue, but we are 0:12:04.720 --> 0:12:08.840 monitoring the situation very tightly. As one example, the biggest 0:12:08.880 --> 0:12:11.480 foundry in the world, the biggest maker of semiconductors in 0:12:11.520 --> 0:12:16.520 the world for other companies, is Taiwan Semiconductor. If TSMC's 0:12:16.480 --> 0:12:20.160 supply chain is disrupted, that would harm the entire technology 0:12:20.200 --> 0:12:23.760 industry and frankly, the global economy. So this is a 0:12:23.960 --> 0:12:26.360 very important issue that we are monitoring at Jennison. 0:12:27.520 --> 0:12:31.520 Erica Klaud, portfolio manager for the PGM Jennison Technology Fund. 0:12:31.880 --> 0:12:34.839 A lot of covered ground there, very wide knowledge based, 0:12:34.880 --> 0:12:37.480 great discussion. Good to have you on the program. Now 0:12:37.559 --> 0:12:40.000 coming up, we're going to get more from Davos. That's 0:12:40.040 --> 0:12:52.400 coming up next here this is Bloomberg Technology. Okay, it's 0:12:52.440 --> 0:12:55.160 time for talking tech and first stop Saudi Arabia's Sovereign 0:12:55.200 --> 0:12:59.199 Wealth Fund, the public Investment Funds plans make big investments 0:12:59.200 --> 0:13:02.800 in both the semiductor and space industries this year. That's 0:13:02.800 --> 0:13:06.240 according to its Minister of Communications. The Kingdom has been 0:13:06.360 --> 0:13:10.319 ramping up efforts to diversify its economy away from oil 0:13:10.600 --> 0:13:14.360 and speaking of semiconductors, chip design company Synopsis has agreed 0:13:14.360 --> 0:13:17.880 to buy software developer and Sis for about thirty four 0:13:18.000 --> 0:13:21.440 billion dollars in cash and stock, according to an announcement 0:13:21.480 --> 0:13:24.800 by the companies, The dealers set to expand Synopsis' customer 0:13:24.840 --> 0:13:28.640 base and its suite of products. Plus, Netflix is testing 0:13:28.679 --> 0:13:31.840 a joint plan with French retailer car four in a 0:13:31.880 --> 0:13:35.800 pilot project to win more customers to its cheapest subscription, 0:13:35.920 --> 0:13:39.520 mimicking a model used by Amazon to boost its streaming customers. 0:13:39.679 --> 0:13:42.440 If enough users sign up to the trialcar four said 0:13:42.440 --> 0:13:47.320 it will expand the offer to its customers all across France. Okay, So, 0:13:47.360 --> 0:13:50.440 the World Economic Forum is underway in Davos, and Open 0:13:50.480 --> 0:13:54.560 AI CEO Sam Outman joined Bloomberg's Brad Stone to discuss 0:13:54.600 --> 0:13:58.840 the upcoming election and the influence AI could have on jobs. 0:13:58.840 --> 0:13:59.319 Have a listen. 0:14:01.920 --> 0:14:03.480 I think there's a lot at stake at this election. 0:14:03.559 --> 0:14:07.720 I think elections are you know, huge deals. I believe 0:14:08.120 --> 0:14:10.439 that America is going to be fine no matter what 0:14:10.480 --> 0:14:12.880 happens in this election. I believe that AI is going 0:14:12.960 --> 0:14:15.000 to be fine no matter what happens in this election, 0:14:15.160 --> 0:14:16.880 and we will have to work very hard to make 0:14:16.920 --> 0:14:21.640 it so. But this is not you know, no one 0:14:21.640 --> 0:14:23.880 wants to set up here and like hear me rant 0:14:23.880 --> 0:14:28.680 about politics, I'm going to stop after this. But I 0:14:28.800 --> 0:14:31.800 think there has been a real failure to sort of 0:14:32.840 --> 0:14:36.600 learn lessons about what's kind of like working for the 0:14:36.640 --> 0:14:37.880 citizens of America and let's. 0:14:37.720 --> 0:14:40.040 Not there are political figures in the US and around 0:14:40.080 --> 0:14:43.520 the world like Donald Trump who have successfully tapped into 0:14:43.840 --> 0:14:48.920 a feeling of dislocation, anger of the working class. 0:14:48.560 --> 0:14:52.960 If the feeling of it, you know, exacerbbaiting inequality or 0:14:53.560 --> 0:14:57.480 technology leaving people behind. Is there the danger that you know, 0:14:57.560 --> 0:14:59.080 AI furthers those trends. 0:14:59.160 --> 0:14:59.920 Yes, for sure. 0:15:00.120 --> 0:15:03.120 I think that's something to think about. But one of 0:15:03.120 --> 0:15:06.600 the things that surprised us very pleasantly on the upside, 0:15:06.880 --> 0:15:08.640 because you know, when you start building a technology, you 0:15:08.680 --> 0:15:10.840 start doing research, you kind of say, well, we'll follow 0:15:10.840 --> 0:15:12.760 where the science leads us. And when you put a product. 0:15:12.800 --> 0:15:14.640 You'll say, this is going to co above with society 0:15:14.880 --> 0:15:16.360 and will follow where users lead. 0:15:16.280 --> 0:15:19.880 Us, but it's not. You get to steer it, but 0:15:20.000 --> 0:15:20.800 only somewhat. 0:15:20.840 --> 0:15:23.640 There's some which is just like, this is what the 0:15:23.680 --> 0:15:26.200 technology can do, this is how people want to use it, 0:15:26.720 --> 0:15:28.720 and this is what it's capable of. And this has 0:15:28.760 --> 0:15:31.760 been much more of a tool than I think we expected. 0:15:31.840 --> 0:15:34.560 It is not yet and again in the future it'll 0:15:35.000 --> 0:15:38.320 it'll get better, but it's not yet like replacing jobs 0:15:38.320 --> 0:15:40.320 in the way or to the degree that people thought 0:15:40.320 --> 0:15:42.960 it was going to. It is this incredible tool for 0:15:43.040 --> 0:15:46.280 productivity and you can see people magnifying what they can 0:15:46.320 --> 0:15:49.560 do by a factor of two or five or in 0:15:49.600 --> 0:15:51.400 some way that doesn't even talk to it makes sense 0:15:51.400 --> 0:15:52.880 to talk about a number, because they just couldn't do 0:15:52.880 --> 0:15:56.720 the things at all before. And that is I think 0:15:56.840 --> 0:16:00.480 quite exciting, this new vision of the future that we 0:16:00.520 --> 0:16:02.720 didn't really see when we started. We kind of didn't 0:16:02.720 --> 0:16:04.400 know how it was going to go, and very thankful 0:16:04.440 --> 0:16:06.920 the technology did go in this direction. But where this 0:16:07.040 --> 0:16:09.960 is a tool that magnifies what humans do, lets people 0:16:09.960 --> 0:16:13.160 do their jobs better, lets the AI do parts of jobs, 0:16:13.360 --> 0:16:15.120 and of course jobs will change and of course some 0:16:15.240 --> 0:16:18.440 jobs will totally go away, But the human drives are 0:16:18.480 --> 0:16:20.640 so strong in the sort of way that society works, 0:16:20.640 --> 0:16:23.560 is so strong that I think, and I can't believe 0:16:23.560 --> 0:16:26.240 I'm saying this, because it would have sounded like an 0:16:26.360 --> 0:16:28.680 ungrammatical sentence to me at some point, but I think 0:16:28.720 --> 0:16:32.200 AGI will get developed in the reasonably close ish future, 0:16:32.640 --> 0:16:34.760 and it'll change the world much less than we all think. 0:16:34.760 --> 0:16:37.160 It'll change jobs much less than we all think. And 0:16:37.200 --> 0:16:40.360 again that sounds I may be wrong again now, but 0:16:40.520 --> 0:16:42.840 that wouldn't even compiled for me as a sentence at 0:16:42.840 --> 0:16:45.120 some point, given my conception then of how EGI was 0:16:45.120 --> 0:16:45.480 going to go. 0:16:45.560 --> 0:16:48.720 As you've watched the technology develop, have you both changed 0:16:48.760 --> 0:16:52.960 your views on how significant the job dislocation and disruption 0:16:53.080 --> 0:16:55.080 will be as AGI comes into focus. 0:16:55.320 --> 0:16:57.160 You know, you hear a coder say, okay, I'm like, 0:16:57.200 --> 0:16:59.400 two times won't productive, three times won't productive whatever then 0:16:59.400 --> 0:17:01.240 they used to be, and I can never code again 0:17:01.280 --> 0:17:03.200 without this tool. You mostly hear that from the younger ones. 0:17:03.200 --> 0:17:07.440 But it turns out, and I think this will be 0:17:07.480 --> 0:17:09.560 true for a lot of industries. The world just needs 0:17:09.560 --> 0:17:11.400 a lot more code than we have people to write 0:17:11.440 --> 0:17:14.080 right now. And so it's not like we run out 0:17:14.080 --> 0:17:15.400 of demand. It's that people can. 0:17:15.359 --> 0:17:18.080 Just do more. Expectations go up, but ability goes up. 0:17:18.119 --> 0:17:23.680 To That was open Ais Sam Outman. Let's stick with Davos. 0:17:23.680 --> 0:17:27.359 Bradstone also caught up with Salesforce CEO Mark Benioff to 0:17:27.359 --> 0:17:31.320 discuss the kinds of disruptive changes we can expect with AI. 0:17:31.560 --> 0:17:32.159 Have listened. 0:17:34.320 --> 0:17:38.440 I think this idea that companies like open ai or 0:17:39.320 --> 0:17:42.800 Microsoft and others want to create digital people that can 0:17:42.880 --> 0:17:47.159 do all kinds of tasks that we do. You know, 0:17:47.200 --> 0:17:49.800 will they be taxed to, how they'll be regulated, what 0:17:49.880 --> 0:17:53.560 are the dangers involved? All of these kind of important questions. 0:17:53.600 --> 0:17:55.680 At the same time, we want to have these incredible 0:17:55.720 --> 0:17:59.840 benefits of AI that we're all experiencing better healthcare, better education, 0:18:00.040 --> 0:18:03.199 and you know, augmentation of our yep. Let me tell 0:18:03.200 --> 0:18:05.440 you an incredible story where I was just in Milan 0:18:05.560 --> 0:18:08.800 with Gucci and they brought us into work on their 0:18:08.920 --> 0:18:12.480 call center and very excited. How do we use AI? 0:18:12.680 --> 0:18:16.920 How do we create better customer service? But we don't 0:18:16.960 --> 0:18:19.600 really know what is their end goal? Is it more productivity? 0:18:19.760 --> 0:18:22.639 You know, is it just better customer relationships? Is a 0:18:22.760 --> 0:18:25.240 higher margins. Do they want to reduce staff, do they 0:18:25.280 --> 0:18:29.240 want to increase staff? But when we apply the technology 0:18:29.240 --> 0:18:33.240 that we're seeing now, what we saw was the current 0:18:33.280 --> 0:18:36.400 state of AI, which is really the ability to augment 0:18:36.520 --> 0:18:40.040 human being and human performance, revenues went up thirty percent 0:18:40.760 --> 0:18:45.000 because these individuals who were call center service agents also 0:18:45.080 --> 0:18:49.400 then simultaneously became sales agents marketing agents. They were able 0:18:49.440 --> 0:18:51.040 to do all these things that they just could not 0:18:51.160 --> 0:18:54.880 do before. And that's a tremendous theme I think that's 0:18:54.920 --> 0:18:56.960 going on. I feel that way myself, you know, when 0:18:56.960 --> 0:19:00.920 I'm with chat GPT or co Pilot or anthropict Cloud 0:19:01.080 --> 0:19:04.120 or whatever it is, mister Awl, I get that same feeling, 0:19:04.200 --> 0:19:07.720 Oh wow, I've got a little bit more capability than 0:19:07.760 --> 0:19:12.000 i had before because I'm being augmented through AI. And 0:19:12.040 --> 0:19:16.480 I'm sure it's true in a lot of disciplines. Certainly 0:19:16.480 --> 0:19:18.320 it's true in healthcare, and it's going to be true 0:19:18.359 --> 0:19:20.800 in a lot more things. But we're on an ARC 0:19:20.840 --> 0:19:23.440 and we all know that that you know there, it's 0:19:23.480 --> 0:19:25.200 going to start to be able to do things that 0:19:25.480 --> 0:19:28.520 will be fundamentally a surrogate for what we all do. 0:19:28.520 --> 0:19:31.800 Today and what will determine whether a company can be 0:19:31.840 --> 0:19:33.080 successful with AI or not. 0:19:34.080 --> 0:19:36.840 How long will it be until I come to Davos 0:19:36.880 --> 0:19:39.760 to be interviewed by the Bloomberg AI. That's what I 0:19:39.800 --> 0:19:40.600 really want to know. 0:19:40.760 --> 0:19:43.040 I replace Well, maybe you know. 0:19:43.640 --> 0:19:46.800 I mean, we've been doing this together for a long time, right, 0:19:46.840 --> 0:19:47.879 what a couple decades? 0:19:47.920 --> 0:19:48.680 A few decades? 0:19:48.840 --> 0:19:52.520 I'm not that old, but okay, but you know what 0:19:52.560 --> 0:19:52.840 I mean. 0:19:52.920 --> 0:19:56.080 Where it's like, you know, I don't know when we 0:19:56.119 --> 0:19:59.439 get to this point where there's not just all of 0:19:59.520 --> 0:20:02.440 us in the but there's an AI as well participating 0:20:02.880 --> 0:20:06.440 in this conversation and then work about to create digital people, 0:20:06.520 --> 0:20:09.480 digital salespeople, digital service people, digital marketing people. 0:20:13.040 --> 0:20:16.439 That was Salesforce CEO and chair Mark Benioff explaining that 0:20:16.520 --> 0:20:19.080 my boss, Bradstone and maybe me one day will be 0:20:19.200 --> 0:20:22.160 replaced by AI. Let's see quick check in on the markets. 0:20:22.200 --> 0:20:23.680 We're soft the three tens and one percent on the 0:20:23.720 --> 0:20:26.520 Nazak one hundred, but megacaps are doing some of the 0:20:26.640 --> 0:20:29.840 work to lift up the index, one of those names 0:20:29.840 --> 0:20:32.240 being Microsoft. It's pared some of its earlier gains in 0:20:32.280 --> 0:20:35.080 the session, but we are up three tents of one percent. 0:20:35.320 --> 0:20:38.640 Why well, City and Thedella speaking on Stage and Davos, 0:20:38.680 --> 0:20:41.879 but also some news on what Microsoft's doing with AI. 0:20:41.960 --> 0:20:45.640 Microsoft is now opening up it's AI Assistant co Pilot 0:20:45.880 --> 0:20:50.760 two consumers with access to open AI's latest chat, GPT technology, 0:20:51.000 --> 0:20:54.320 and image creation features. The company also announced it's making 0:20:54.359 --> 0:20:58.360 the corporate version available to smaller companies and SME's delighted 0:20:58.359 --> 0:21:01.080