Speaker 1: I'm Caroline Hyde, Oh, I'med Ludlow, both of us in
Speaker 1: San Francisco. This is Bloomberg Technology and after day's adventure
Speaker 1: capital dominating headlines, public market volatility hitting us smack in
Speaker 1: the face, and not to mention the crypto world as well,
Speaker 1: yet more signs of concern there. We have got so
Speaker 1: much to digest coming up, Tesla shedding tens of billions
Speaker 1: of dollars in its market value of its invest today.
Speaker 1: It just fails to energize shareholders. Then why the Commerce
Speaker 1: Secretary told Bloomberg the US concerns over Chinese apps go
Speaker 1: well beyond TikTok and a live conversation with SEC chair
Speaker 1: Gary Gensler about his concerns over artificial intelligence and crypto custody.
Speaker 1: This is crypto friendly bag. Silvergate continues to plunge after
Speaker 1: concerns about its viability. But first end, let's go to
Speaker 1: another key publicly traded stock, Teszler, of course, which look
Speaker 1: didn't get much love from shareholders. Following yesterday's Invest Today event,
Speaker 1: which included another third master plan on this time the
Speaker 1: transition to clean energy, Bloomberg's John O'Cain joins us now
Speaker 1: and look it really feels like we sold the news
Speaker 1: on this. Yeah, I mean, I think people were expecting
Speaker 1: maybe more specifics on the product side. You know, Musk
Speaker 1: and self had on the most recent turnings called called
Speaker 1: out that the next generation vehicle platform was going to
Speaker 1: be a big focus of it. And while we got
Speaker 1: some of the shape of what that might take and
Speaker 1: some of what's going into it, especially on the cost
Speaker 1: production side and the efficiency side, we didn't really get
Speaker 1: too much on the specifics. And you know, we got
Speaker 1: sort of a tease from lead designer friends from Holshouse
Speaker 1: and saying you're gonna have to wait for a later
Speaker 1: date to see anything more about it. Sean, you and
Speaker 1: the team out in Austin, editors in New York, myself
Speaker 1: in San Francisco. Four hours we followed along which headlines
Speaker 1: did we get, What did we learn actually from that presentation? Yeah,
Speaker 1: I mean, I think one of the big things for me,
Speaker 1: especially here in Texas, is that they finally confirmed that
Speaker 1: they broke around on a lithium refinery down near Corpus Christie.
Speaker 1: This is something that we first reported back in September
Speaker 1: must sort of confirmed on the Q three call in October,
Speaker 1: but it's been pretty mum ever since. I've had local
Speaker 1: sources down there for the last couple of weeks telling me, hey,
Speaker 1: you know, we're in the local government. We ever heard
Speaker 1: anything from Tesla, and it didn't really look like too
Speaker 1: much work was being done on the site, so they
Speaker 1: were actually a little bit maybe afraid that that wasn't
Speaker 1: going to happen. But this is their first big step
Speaker 1: into that sort of mine or that lithium supply chain
Speaker 1: that is maybe on the way to a potential mining acquisition.
Speaker 1: We've had some reports about some of that coming from
Speaker 1: Bloomberg and others, but this is really like a hands
Speaker 1: dirty sort of thing, and they're going to move really
Speaker 1: quickly because they want to have product coming out of
Speaker 1: that facility, refined lithium going to other factories by around
Speaker 1: the end of this coming year, early twenty twenty four.
Speaker 1: I think bok Shank and Terriff eight repolting and they
Speaker 1: lost twenty four hours. Thank you. I want to sit
Speaker 1: with this story and bring in future fun niting partners.
Speaker 1: CEO Gary Black, who was at last night's Tesla event
Speaker 1: out in Austin and Gary the market selling the news.
Speaker 1: Are you as disappointed by what you heard as the
Speaker 1: market was. I think there's a couple of things. One,
Speaker 1: it was going to go down anyway. As you know,
Speaker 1: going into today, Testa was up one hundred percent from
Speaker 1: its bottom, so you know there were traders and hedge
Speaker 1: funds playing the name because of this event, So it
Speaker 1: was going to go down regardless. But I do think
Speaker 1: that the investor day itself was it was very aspirational,
Speaker 1: but it was really short on detail, and I think
Speaker 1: that's what you're seeing with today's move. And then you know,
Speaker 1: I'd say the third thing, it was a problem there
Speaker 1: really was no product unveil, even though there was a
Speaker 1: lot of rumors in height that there might be a
Speaker 1: product of veil. And there was no updated financial targets.
Speaker 1: So you put those three things together and I think
Speaker 1: that's why the stock was off like six percent and
Speaker 1: an up one percent day. Yeah, sorry, Kara, I was
Speaker 1: just going to jump in that because I noticed on
Speaker 1: your Twitter and other people's Twitter you were hanging out
Speaker 1: with Ross Gerber while you were at the event. And
Speaker 1: as you know, Gary, he made an activist or a
Speaker 1: friendly activist bid so to speak to the ball, which
Speaker 1: he dropped. His grievance was lack of succession planning, lack
Speaker 1: of other executives. Were you convinced by all of those
Speaker 1: sixteen names that you heard from that there are others
Speaker 1: at that company leading the charge. Yeah, I mean there
Speaker 1: are a few things that I think, you know, give
Speaker 1: tess or some credit for what they accomplished. I think
Speaker 1: they made a convincing case to your point, they have
Speaker 1: a pretty deep team, and you know in the Q
Speaker 1: and A it was I actually took a picture of this.
Speaker 1: They're eighteen people all lined up in shares in a row,
Speaker 1: elon of course in the middle, and it did look
Speaker 1: like they had a pretty deep ense. So they get
Speaker 1: coups for that. I think the second thing, they made
Speaker 1: a convincing case that they can actually drive costs down
Speaker 1: fifty per They didn't but this knew what they called
Speaker 1: Generation three platform, but they didn't give a timeframe and
Speaker 1: actually two years, it could be ten years, and I
Speaker 1: think that's one of the again data points that would
Speaker 1: have been helpful to have. And I think the third
Speaker 1: thing that you know was very helpful, as they said,
Speaker 1: cybertruck is definitely coming this year. That's a big catalyst.
Speaker 1: There's a million what they call pre orders one hundred
Speaker 1: dollars deposit, you know, that could add fifty cents to
Speaker 1: a dollar share next year, and earnings if they even
Speaker 1: got up to about one hundred thousand delivers. So those
Speaker 1: three things I think were positive, but again there really
Speaker 1: wasn't a lot of data to connect the dots, if
Speaker 1: you will. They made the case that their volumes will
Speaker 1: go from one point eight million this year to twenty
Speaker 1: million by twenty thirty, and that was a big, bold assertion,
Speaker 1: but there really wasn't a lot of demand elements, you know,
Speaker 1: by model or by segment to support that. And I think,
Speaker 1: you know, those are the things that is institutional investor
Speaker 1: or We just didn't see a lot of garry. What
Speaker 1: about supply side? What's interesting, they're showing a deep bench
Speaker 1: in terms of executives. They're showing a deep design to
Speaker 1: have a lot more in house technology, particularly on their
Speaker 1: chips actually saw a big move and some of their
Speaker 1: suppliers today. Do you like that sound? I like that
Speaker 1: they're trying to do a lot of it internally. Is
Speaker 1: you know, obviously they cut out the middleman. They're doing
Speaker 1: it themselves. We own Wolf and Wolf, you know, because
Speaker 1: Silicon card by they made the point that they're going
Speaker 1: to cut that by seventy five percent. Look, Tesla makes
Speaker 1: a lot of claims, and you know, one of the
Speaker 1: things that I don't know who said it, but you
Speaker 1: know somebody said it last night is you can't always
Speaker 1: take their claims literally because it takes them a long time.
Speaker 1: I mean, think about Cybertruck. They announced this back twenty
Speaker 1: nineteen and here we are twenty twenty three and it's
Speaker 1: not out, So it could or could not happen. So
Speaker 1: if I'm a supplier and you know some of the
Speaker 1: suppliers got hurt today, I wouldn't get too worked up
Speaker 1: about it because a lot of times these claims don't
Speaker 1: materialize with Tesla. So to me, like Wolf, we own it.
Speaker 1: You know, we think it's still cheap stock, and you know,
Speaker 1: I think it's going to be fine over time. Do
Speaker 1: you get ultimately them frustrated with master plans, with the
Speaker 1: fact that perhaps master Plan one point zero two point
Speaker 1: zero on executed and we're already talking about three point nine. Look,
Speaker 1: that's Elon is brilliant, and he's yet, you know, unpredictable,
Speaker 1: and as an investor, you don't like the unpredictability of it,
Speaker 1: and yeah, we get we get frustrated with it. When
Speaker 1: he bought Twitter, we were very frustrated by that because
Speaker 1: you know, in my experience, it's hard to you know,
Speaker 1: run two companies, and Elon runs three or four now.
Speaker 1: But Twitter is a whole different animal, SpaceX and more
Speaker 1: in which he built from scratch, right. So it's bad
Speaker 1: enough that he's got those two, but now he's got Twitter,
Speaker 1: which is a total rebuild, and so that's frustrating. It's
Speaker 1: you know, it is frustrating that you know, he often,
Speaker 1: you know, does it one a. I guess that's what
Speaker 1: makes him so skilled, and that's what makes him so
Speaker 1: successful that, you know, one of the things people tell
Speaker 1: me about when he realizes he's wrong, he will make
Speaker 1: an immediate turn and go in the right direction. And
Speaker 1: you've seen that over and over again. What tells an
Speaker 1: example is they took radar out of the FSD, and
Speaker 1: I guess he realized that, you know, high death radar
Speaker 1: actually had advance and now they're putting the high death
Speaker 1: radar back in. And I don't know if it frustrates
Speaker 1: me as investor, he used to do them because he
Speaker 1: adds a lot of you he's brilliant and he's he ads,
Speaker 1: you know, tremendous you know value from a a you know,
Speaker 1: stock picking standpoint, But at times you've got to be
Speaker 1: ready to you know, tilt when he tilts, investors left
Speaker 1: wanting more. A future fund managing partner Gary Black were
Speaker 1: really great to have some time at the thank you with.
Speaker 1: What we're worried about is Chinese backed companies being on
Speaker 1: you know, tens of millions of American phones, including members
Speaker 1: of the military, and privacy concerns, data concerns, misinformation concerns.
Speaker 1: That doesn't just apply to TikTok. That was US Commerce
Speaker 1: Secretary Gina Ramundo. They're talking about her concerns around TikTok
Speaker 1: and other Chinese social media apps that are said to
Speaker 1: me threatening national security. Now former NSA David Kennedy, who's
Speaker 1: now founded two cybersecurity companies, Trusted Set Combinary Defense, is
Speaker 1: with us, and David, my question to you is, where
Speaker 1: is the vulnerability. Why is Gina Raymondo concern not just
Speaker 1: about TikTok but other Chinese apps as well. We've seen
Speaker 1: for years that China has created one of the largest
Speaker 1: surveillance states, not only in its own people, but just
Speaker 1: globally tracking US personnel for espionage purposes, cyber warfare. They're
Speaker 1: one of our peer competitors on the cyberspace. They're the
Speaker 1: largest country for intellectual property theft yielding trillions of dollars
Speaker 1: have been electric property efet per year from China. And
Speaker 1: you know, they don't play by any type of rules whatsoever.
Speaker 1: And the big issue that you run into, and I
Speaker 1: think what the big contrast is from you know, social
Speaker 1: media companies here in the United States versus something like
Speaker 1: China is that you know, they control the content that
Speaker 1: is delivered to the endpoints or the dephone or the
Speaker 1: device that is looking at TikTok as well as the
Speaker 1: information that is collected that could then be used by
Speaker 1: the government itself. That's you know, government employees, locations, um,
Speaker 1: you know, information about you know, specific individuals that are
Speaker 1: trying to pull or pulling a type of data information on.
Speaker 1: They use this as another source of many other sources
Speaker 1: that they centrally use and they're one of the best
Speaker 1: when it comes to large big data analytics and what
Speaker 1: they're dealing with if with tracking people all across the world,
Speaker 1: that it's a major problem and it's a major concern,
Speaker 1: especially from China. David, you are a hacker, but the friendly,
Speaker 1: the friendly kind of hacker, as I understand it. What
Speaker 1: I don't understand is is this a sort of systems
Speaker 1: vulnerability or is this an issue of who has access
Speaker 1: to data? It's it's a combination of bulf actually. So
Speaker 1: if you know, if you look at byte Dance, which
Speaker 1: is the you know, subsidiary company that is um you know,
Speaker 1: out of Beijing, specifically they control the code that goes
Speaker 1: into the devices. Now you know, Apple for example, has
Speaker 1: a pretty stringent UH policy around you know, inspecting source
Speaker 1: code and things like that. It's Google a little bit
Speaker 1: more on the open side. But the collection of the
Speaker 1: data aspect and where that data it goes to is
Speaker 1: the most concerning part about it. Could they introduce code
Speaker 1: that you know, could eavesdrop on US citizens, absolutely, um
Speaker 1: you know. But the main concern is the amount of
Speaker 1: information that they're pulling back, collecting and then using that
Speaker 1: information to go against you know, key personnel that they
Speaker 1: would look to target um you know, or individuals or
Speaker 1: people that are of interest to the Chinese government, you know, scientists,
Speaker 1: medical research, you know, duty contractors that specifically focus on
Speaker 1: you know, next generation research or weapons systems, missile defense systems,
Speaker 1: those types of things, as well as their ability to
Speaker 1: control content that goes to individuals. So obviously, you know,
Speaker 1: you hear the term misinformation quite a bit. I think
Speaker 1: what's most important to understand is that you know, they
Speaker 1: can start to home in and and focus content on
Speaker 1: individuals and really change their perception of what's actually occurring
Speaker 1: in reality. And you know, we live through our devices nowadays,
Speaker 1: and you know, live through TikTok, lift through you know,
Speaker 1: Facebook and Twitter, and through various online news sources. So
Speaker 1: what is presented to us as content is typically our
Speaker 1: worldview on what's actually happening out there. So can you
Speaker 1: curb you know, public opinion based on the contents coming
Speaker 1: out of TikTok And that's absolutely possible, do you Roman though?
Speaker 1: Of course, coming from the administration, there has been much
Speaker 1: talk the administration doing something about TikTok, maybe we chat
Speaker 1: Ali pay some of the others as well, but dragging
Speaker 1: their heels and so states have started to step in
Speaker 1: or individual institutions, particularly in the well the education side
Speaker 1: of things, is that the right way to deal with this,
Speaker 1: you know, the outright of banning of TikTok is is
Speaker 1: an interesting and other Chinese owned companies is an interesting dilemma.
Speaker 1: I think, you know what just recently happened with banning
Speaker 1: it within government employees as a solid one. You know,
Speaker 1: we removed Huawei from being able to be purchased here
Speaker 1: in the United States specifically on military basis installation can
Speaker 1: have hardware in those facilities, which is a Chinese based company.
Speaker 1: And there's been direct intelligence that have shown Huawei has
Speaker 1: you know, worked on behalf of the Chinese government for
Speaker 1: intellectual property theft in other areas. Um. You know, the
Speaker 1: interesting part is, you know, does the federal government play
Speaker 1: a role in what the US you know, citizens can
Speaker 1: and can't cannot do. And I think that's a pretty
Speaker 1: large discussion, heavy discussion have They've largely stayed away from that,
Speaker 1: And I think you're looking at states kind of looking
Speaker 1: at well, personal information is really important. It's not just
Speaker 1: TikTok for example, I mean social Security number is your
Speaker 1: personal data that's stored within corporations. You know, Uh, the
Speaker 1: EU does this very well with protecting personal information. So
Speaker 1: I think states are looking at this and saying, well,
Speaker 1: can we look at this as a personal information issue,
Speaker 1: a privacy issue, and can we put controls in place
Speaker 1: that hold you know that that holds bitte dance specifically
Speaker 1: accountable for where that data is stored and how it's protected,
Speaker 1: not necessarily banning it. I think that's probably a better
Speaker 1: measured approach to say, you know, this data has to
Speaker 1: stay here. Of course, the continued crackdown, you are still
Speaker 1: reviewing existing licenses from export to Huawei as well. We
Speaker 1: continue to keep our communications with that company open as well.
Speaker 1: David Kennedy, we want to thank you so much, trusted
Speaker 1: sec founder and indeed an ethical hacker. Meanwhile, we've talked
Speaker 1: about how the cybersecurity industry, perhaps some would say, is
Speaker 1: seeing high labor shortages right now in the face of
Speaker 1: all of that work to be done. But look broadly,
Speaker 1: it's an issue across the board in America, the labor
Speaker 1: side that is. Here's what US Commerce Secretary Gena Romano
Speaker 1: also had to say earlier about some of the top
Speaker 1: concerns she hears from CEOs. She's in touch with workforce.
Speaker 1: It's unbelievable, like workforce, workforce, workforce. We can't hire enough,
Speaker 1: we can't hire first enough, we can't hire people with
Speaker 1: the skills that we need. Look, so we went to
Speaker 1: you our audience, and we actually asked them, look does
Speaker 1: this apply to technology, because I'm afraid the labor tightness
Speaker 1: she talks of. We meanwhile got all these layouts who
Speaker 1: are closure in congres ideas all we hear is laos
Speaker 1: or service. I do hear from tech executives. There are
Speaker 1: specific roles. They can't feel like expertise, but pretty divisive
Speaker 1: subjects in the tech sector as well. Fifty say yes
Speaker 1: look to tastop concern is talent still in the tech sector.
Speaker 1: Even so, we'll keep tracking that one now coming up.
Speaker 1: Salesforce CEO Mark Benioff on the company's pivot away from
Speaker 1: M and A to provatization. The change in strategy seems
Speaker 1: to be paying off for investors. To take a look
Speaker 1: at that shark, Caroline. We'll bring you more of that next.
Speaker 1: This is Bloomberg. As we really focus on our performance,
Speaker 1: on our profitability, on the reprioritization back to being a
Speaker 1: core CRM company. It was really time to put the
Speaker 1: M and A committee on ice and just mitigate what
Speaker 1: we've been doing with M and A and as focused
Speaker 1: more on our chord as part of the transformation that
Speaker 1: I've put it into the company in the last ninety days,
Speaker 1: sales will CEO Mark Penny of following the company's reprioritization,
Speaker 1: it's back on profits. Some are let's bring in Bloomberg
Speaker 1: Intelligent senior technology analysts Anna Granner and look as he
Speaker 1: reprioritizes to basically where the activist investors want him to.
Speaker 1: What should he be thinking of if it's not M
Speaker 1: and A No. I think the organic growth rate is
Speaker 1: very important for this company. I think that a decail
Speaker 1: rating for a while that needs to go up. But
Speaker 1: the big thing for us as well as has been
Speaker 1: that they spend way too much on sales and marketing.
Speaker 1: I think we are not the only one that talked
Speaker 1: about in the last few years. Everybody is looking at
Speaker 1: a company like this. Everybody knows Salesforce. It's been around
Speaker 1: for twenty four years. Why is it it's spending forty
Speaker 1: percent of its sales on sales and marketing compared to
Speaker 1: let's say Microsoft with eleven percent. I think that's where
Speaker 1: everybody got excited, and that's where where you see now.
Speaker 1: If Anna Ring you say everybody knows Salesforce, you've written
Speaker 1: on a research date. This is the new salesforce. What
Speaker 1: is so attractive about the new salesforce? If philosophically an
Speaker 1: every good company should take care of, you know, sales
Speaker 1: and marketing and profit in the same manner as let
Speaker 1: you look at growth from a salesforce point of view.
Speaker 1: It was the only focus for growth for the past
Speaker 1: decade and two US and free cash flow was not
Speaker 1: the biggest priority. And I think that's you should have
Speaker 1: a balance of them. I'm not saying, you know, you
Speaker 1: need to be on one side or the other. The
Speaker 1: new salesforce is going to be very, very profitable. I
Speaker 1: think from from the old point of view, the question
Speaker 1: is can we see a decent amount of growth when
Speaker 1: the economy turns? Hey, Anna, rag is Smartpenny is still
Speaker 1: under pressure? I don't. I think he has I would
Speaker 1: say a couple of years without any problem now, because
Speaker 1: he's delivered in one go. I mean, can you imagine
Speaker 1: his margin targets are well ahead of time, so I
Speaker 1: think he has enough time now. I don't think it's
Speaker 1: going to be an issue. Slim Bag Intelligence Senior tech analyst,
Speaker 1: Anna rag Brna, thank you very much. Security and Exchange
Speaker 1: Commission that's been busy as looking into potential conflicts of
Speaker 1: interest with asset managers using artificial intelligence, specifically predictive data analytics. This,
Speaker 1: of course, this is the SEC is also weighing some
Speaker 1: of the biggest changes to American equity market structure nearly
Speaker 1: two decades, and of course it continues to crack down
Speaker 1: on the crypto industry more broadly following the fall out
Speaker 1: of FTX, joining us to discuss from the BI Market
Speaker 1: Structure Conference. We're very pleased to welcome to the show,
Speaker 1: SEC chair Gary Gensler. Long day of Blomberg conversations for you,
Speaker 1: and we are pleased to have you live on this show.
Speaker 1: Share Gensler, I'm just going to start with the day
Speaker 1: of news and start with Silvergat in particular its shares
Speaker 1: very much under dr rest at the moment because it
Speaker 1: couldn't hand in a ten K filing to you in time,
Speaker 1: noting that it was worried of course about well, it's
Speaker 1: ability to remain a going concern. How have you worried
Speaker 1: about the spillover BACTERA. You're talking to colleagues over the
Speaker 1: FDIC and some of the other institutions. So let me
Speaker 1: let me step back caroline from any one company, and
Speaker 1: for your viewers, we play a role in overseeing the markets,
Speaker 1: overseeing registaurants, and of course we have a robust sort
Speaker 1: of copple on the beat or enforcement and examination functions.
Speaker 1: So I'm not going to comment on any one company here,
Speaker 1: But in terms of the overall question about crypto tokens
Speaker 1: and the crypto markets, while they are give or take
Speaker 1: a trillion dollars of worldwide market value, our overall capital
Speaker 1: markets here in the US are well for one hundred
Speaker 1: trillion dollars, So that puts it in contexts of scale.
Speaker 1: But it is important that so much of this field,
Speaker 1: this crypto field, is highly speculative. It is not necessarily
Speaker 1: the investing public should understand this. It's not necessarily compliant
Speaker 1: currently with the appropriate laws of our nation to protect you,
Speaker 1: the investing public, to get full, fair and truthful disclosures
Speaker 1: to understand what's happening at these platforms. So that being
Speaker 1: the case, traditional finance, much of traditional finance being compliant
Speaker 1: has some question and is adverse in dealing with what
Speaker 1: may well be depending upon the company and so forth,
Speaker 1: dealing in highly speculative assets that are not necessarily compliant
Speaker 1: with their laws. Let's talk therefore more broadly about your
Speaker 1: focus and enforcement. I just want to ring what one
Speaker 1: particular builder in the ecosystem, the Ripple founder, had to
Speaker 1: say a little bit earlier. If you could just take
Speaker 1: a listen, the sec is kind of playing offense and
Speaker 1: attacking the whole industry. This is not a healthy way
Speaker 1: to regulate an industry. Your regulation through enforcement, as opposed
Speaker 1: to where we're seeing in other countries where they're doing
Speaker 1: the work right, they're codifying, they're creating a framework that
Speaker 1: allows an industry to grow while protecting consumers. And I
Speaker 1: think that's really what the US is lagging now. Check INSLA.
Speaker 1: I'm pretty sure you might say, well, look, a founder
Speaker 1: in that sort of business might be saying this, but
Speaker 1: what about some of these players. We've spoken to many
Speaker 1: who have perhaps been part of previous administrations who are
Speaker 1: now you know, advises to some of these companies and
Speaker 1: worried a little bit about the holistic nature of really
Speaker 1: trying to regulate, and worried that it is more about
Speaker 1: enforcement rather than the rules of the road. At the moment, Paralyne,
Speaker 1: there's nothing incompatible crypto in our securities law, our securities
Speaker 1: laws were brought about to protect the investing public against
Speaker 1: fraud and schemes and manipulation. And it was through this
Speaker 1: idea of full, fair and truthful disclosure registering with the SEC.
Speaker 1: When you're raising money from the public and the public's
Speaker 1: anticipating a profit, it's pretty straightforward, actually common sense approach
Speaker 1: to helping the public and investing. So this broad field,
Speaker 1: we have one goal at the SEC is for them
Speaker 1: to come into compliance. Whether it's the tokens, that's basically
Speaker 1: people raising money or offering these tokens, and it's also
Speaker 1: what i'll call the storefronts, but they can call themselves
Speaker 1: crypto exchanges or lending or staking as a service or
Speaker 1: other intermediaries to come into compliance and ensure that they
Speaker 1: aren't mislead the public. But also they don't commingle the funds.
Speaker 1: They don't take the public's funds and do things we
Speaker 1: just don't allow in our financial markets. We don't allow
Speaker 1: the New York Stock Exchange to also play with the
Speaker 1: customers funds and make markets run a hedge fund, run
Speaker 1: a dealer, be in the clearing business. We separate out
Speaker 1: those conflicts missed against. Thank you for your time. You've
Speaker 1: set out the goal there, and what I want to
Speaker 1: ask you about is the results of your actions. You
Speaker 1: have asked a number of names in the crypto industry
Speaker 1: to register their products with the SEC. Very few have,
Speaker 1: in particular those that are most known to us, the
Speaker 1: bigger names in the industry. Why are they not acting
Speaker 1: on your requests? Well, the law is the law, and
Speaker 1: they need to come in and properly follow the laws,
Speaker 1: and we will work with them to do that. But
Speaker 1: in the meantime we will also look out for the
Speaker 1: investing public and we've been very clear, for instance, about
Speaker 1: what's called crypto lending and what the requirements are there
Speaker 1: about staking as a service. We've also been rather clear
Speaker 1: about pustodying customer funds and we will continue to do this,
Speaker 1: and of course we would yes most suggests that they
Speaker 1: come into compliance missed against. There are all types of
Speaker 1: subject matter crossing your desk at the moment. One of
Speaker 1: them is artificial intelligence. Caroline and I have been discussing
Speaker 1: all week what the finance industry is doing in often
Speaker 1: a not uniform way with regards to AI. What are
Speaker 1: your concerns about artificial intelligence, potentially conflicts of interest in
Speaker 1: the asset management industry for example. I think this is
Speaker 1: the most one of the most transformative technologies of our times.
Speaker 1: Honored when I was at MIT to do research and
Speaker 1: teach both go on AI and crypto, and I think
Speaker 1: it's artificial intelligence. It's changing how we're going to drive,
Speaker 1: how radiology happens, and yes, how finance happens. Our particular
Speaker 1: focus is that robo advising, and there's fifty one million
Speaker 1: accounts in America that has separately managed accounts from investment advisors,
Speaker 1: brokerage applications. Again, millions of Americans that the applications are
Speaker 1: using artificial intelligence predictive data analytics where they may be
Speaker 1: putting their revenues, the platforms revenues. This is ahead of
Speaker 1: their clients interest and how to deal with those conflicts
Speaker 1: where there's scooping up data on our lives, scooping up
Speaker 1: data from our potentially from how we drive our cars
Speaker 1: to our fitbits, to the programs we want, and then
Speaker 1: marketing to us differentially, marketing to us rather than thinking
Speaker 1: putting us first, putting us the clients first, which is
Speaker 1: I think really why finance is meant to be about finances. Also,
Speaker 1: we hope about transparency and about lifting all boats as well.
Speaker 1: And you at the moment are trying to transform regulation
Speaker 1: in many ways, trying to ensure that we have this
Speaker 1: overhaul of regulatory profile so that transparency does come to
Speaker 1: bear within the equity markets more broadly as well. Check INSLA.
Speaker 1: I'm interested in particular about some of the responses you're
Speaker 1: getting to that big proposal you'll put out in December,
Speaker 1: in particularly the National Association and security professionals. They're representing
Speaker 1: women and minorities. As we enter, of course the month
Speaker 1: of where we think about equality in particular for women,
Speaker 1: we come out of that for people of color for February,
Speaker 1: I'm wondering about some of the warriors that they have
Speaker 1: about ability for minorities to participate in equity markets. Out
Speaker 1: four proposals in December addressing four different aspects or problems
Speaker 1: in the market, and it was really to make the
Speaker 1: markets work better for all Americans, working Americans of our
Speaker 1: great diverse nation, men and women alike, of people of
Speaker 1: all racial and ethnic backgrounds. And it's really about them.
Speaker 1: Those are our clients, and that and that the markets
Speaker 1: actually when they submit an order to give them and
Speaker 1: work towards best execution and that we try to level
Speaker 1: this playing field because so much of the market. Now,
Speaker 1: if you're a working family and you're just trying to
Speaker 1: invest in the market and you put an order in,
Speaker 1: it's going not to the transparent market, but it's being
Speaker 1: routed off to wholesalers and what's called the dark market,
Speaker 1: and trying to level up that competition for now then
Speaker 1: ASP of course have gone to you and hoping that
Speaker 1: that doesn't ensure that we see continued inclusion. Sec Chair
Speaker 1: Gary Ginzler, wonderful to have some time with you, Thank
Speaker 1: you very much. Indeed, ed yeah, just you know, fascinating conversation.
Speaker 1: But I think you know, Chair Against makes a clear point.
Speaker 1: He doesn't think that these nascent more nascent industries are
Speaker 1: necessarily odds with the laws of this nation. What we
Speaker 1: put to him was, well, why why are many of
Speaker 1: these players not following them currently? And I'm not sure
Speaker 1: we've got a full answer to that. We will try
Speaker 1: again in the next opportunity coming up. How the rise
Speaker 1: of generative AI is impacting every industry and that includes gaming.
Speaker 1: More on that next with Sony AI's COO Mika Spranger.
Speaker 1: This is Bloomberg so as we solve real world AI,
Speaker 1: because any I don't think there's anyone even close to
Speaker 1: Tesla unsolving real world AI. That was Elon must They're
Speaker 1: talking about AI during Tesla's investor day yesterday. Now, Generals
Speaker 1: of AI fever has taken the world by storm since
Speaker 1: chat GPT showed just how far this technology has come
Speaker 1: and the possibilities it opens up to many industries, and
Speaker 1: that includes gaming, which, as you guys know, gaming Sony
Speaker 1: actually just released its own Grand Turismo Sophie game, which
Speaker 1: now features an improved AI racing agent. Sony's chief operation
Speaker 1: officer Mika Spranger joins us now, and I love the
Speaker 1: idea of that. I've been playing video games my whole life,
Speaker 1: where the bot that you're playing against is either incredibly
Speaker 1: hard or incredibly easy, depending on how good a gamer
Speaker 1: you are. But this seems to be an extension of that.
Speaker 1: Have I got that right, Mika? Yeah, absolutely so. There
Speaker 1: is a racing agent. And I was trained to really
Speaker 1: be competitive with the best Espards drivers in grunch Whismo,
Speaker 1: which is an extremely highly realistic racing game, and we
Speaker 1: did that last year, published on a cover of Nature,
Speaker 1: and this year, actually this month, we released it into
Speaker 1: the game in varying levels of difficulty. So if you're
Speaker 1: a beginner, if you're intermediate, or if you're an expert,
Speaker 1: you can drive against the agent, but we balance the
Speaker 1: performance of the car, so you do have a chance
Speaker 1: against the agent in the beginner mold, but you can
Speaker 1: also race against its one. We want fullhead, you know,
Speaker 1: same cars against a fully blown superhuman racing agent that
Speaker 1: we release last year, and so we hope this really
Speaker 1: can inspire people to learn from the agent, and it's
Speaker 1: an important step for the game because you know, if
Speaker 1: you are an expert in the game, it will take
Speaker 1: some time for you and you need friends actually at
Speaker 1: the same level to compete against, and that's what the
Speaker 1: agent actually addresses Mika. A few weeks ago, we had
Speaker 1: son Ya Huang, who's a partner at VC fans a
Speaker 1: choir on the show, and she has this thesis that
Speaker 1: by twenty thirty, generated AI tools will be so good
Speaker 1: that they will be used to just dream up video games.
Speaker 1: And I wondered, what big picture work is Sony doing
Speaker 1: to that effect in the video game space. So obviously,
Speaker 1: I mean gaming has always been technology driven, right, and
Speaker 1: so we are looking at new technologies. Obviously there's been
Speaker 1: a lot of bus around chat, GPT, mid journey and
Speaker 1: these kinds of models. For us, it's really important that
Speaker 1: this technology is therefore the creator, so we are interested
Speaker 1: in what this does to gaming creators, how it helps
Speaker 1: them creator fulfill their creative visions. And so, you know,
Speaker 1: people are starting to take up the technology. I think
Speaker 1: there's a lot of things that still need to happen
Speaker 1: in the technology as well for this to be really
Speaker 1: useful for gaming, but we do see also, you know,
Speaker 1: people already starting using it, the artists are using it,
Speaker 1: and that's really important for us because for us, really
Speaker 1: the creator, so we are Creator Center Company is really
Speaker 1: about what the creators are doing with this technology. Delvin
Speaker 1: that maker. What more needs to be done to the
Speaker 1: technology to make really purposeful, really useful for Sony. Yeah,
Speaker 1: so so obviously what we see today is a lot
Speaker 1: around to the image in a generation. But you know,
Speaker 1: games are three D. I mean, that's just a very
Speaker 1: big one and obviously that's something that would need to
Speaker 1: be addressed for this to be really impactful on the
Speaker 1: gaming production pipeline. But again, you know, I think the
Speaker 1: technology develops extremely fast. GT Sophie was a Nature paper
Speaker 1: last year. It's in the game now. So you know,
Speaker 1: the cycles from like high high level technology breakthroughs to
Speaker 1: actually bringing this to users or creators around the world
Speaker 1: is very very fast. One thing I would say though,
Speaker 1: is what is really important for us is really the
Speaker 1: ethical aspects of this right. So we need to make
Speaker 1: sure also that the technology is developed in a responsible
Speaker 1: way from the data that goes into it. It needs
Speaker 1: to be fair and transparent. You know, people have rights,
Speaker 1: creators have rights. These need to be respected. It's also
Speaker 1: important what happens on the output side. And so for us,
Speaker 1: actually aithics is at the core for Sony. I we
Speaker 1: have this, we have a we have a dedicated team
Speaker 1: at all the projects we're doing from an a ethics
Speaker 1: perspective and really shaping how we developed a technology. Do
Speaker 1: you need to be hand in hand with governments around this?
Speaker 1: We just have the SEC chair on talking about AI's
Speaker 1: use within finance and he's wanting to perhaps see some
Speaker 1: rules of the road in place. Do you need governments
Speaker 1: to work alongside to build this ethical roadmap? I think
Speaker 1: it's important for governments to play a role, but I
Speaker 1: think this is also beyond governments. From a Sony perspective,
Speaker 1: we have a responsibility for our creators. We have you know,
Speaker 1: we work with them on a day to day basis,
Speaker 1: you know, in many part ways are part of the
Speaker 1: company actually, and for us, it's it's not just about
Speaker 1: government regulation. For us, it's really about making the technology
Speaker 1: for the creators so that they can unbleach their creativity
Speaker 1: and their imagination. And so the human for us is
Speaker 1: really center. Yeah, of course governments, you know, play a
Speaker 1: role in this, but it's also companies that have to
Speaker 1: step up. Hey, mecare, Caroline and I are having a
Speaker 1: lot of executives from the world of AI on at
Speaker 1: the moment, a lot of investors, a lot of academic
Speaker 1: What we're strying to understand is how can we know
Speaker 1: how competent Sony AI is at its craft? What makes
Speaker 1: you different? What makes you stand out from all those
Speaker 1: other AI players out there. I would say two things.
Speaker 1: One is we have extremely high impact projects and we
Speaker 1: aim also for you know, technology contributions that really are recognized.
Speaker 1: For instance, Gt. Sophie Agent was featured on the cover
Speaker 1: of Nature and that's really important part of us to
Speaker 1: raise awareness about the technology, but also a show that
Speaker 1: we are actually able to do that. The other thing
Speaker 1: is really as part of Sony. As I mentioned, for us,
Speaker 1: it's important that we focused on the people and how
Speaker 1: people use this technology going forward to you know, fulfill
Speaker 1: their creative visions. And I think that kind of sets
Speaker 1: us apart and you know, our voice I think should
Speaker 1: be heard in this space. Thank you for such a
Speaker 1: global conversation coming live for us from Tokyo Nikos Branger
Speaker 1: Sony AI COO. Really fascinating the applications within gaming. Now.
Speaker 1: We just talked to artificial intelligence, says talk, well, a
Speaker 1: little bit more share. We chatted with the macy CEO
Speaker 1: and he's in shout. Indeed, the chairman two Jeff Gannette,
Speaker 1: earlier today about well how he sees AI impacting his
Speaker 1: own business. But first I actually talked about the companies
Speaker 1: expanding digital footprint within the new Macy's marketplace and actually
Speaker 1: it's the good gaming take listen. So in the fourth
Speaker 1: quarter we launch the Macy's Marketplace. We did this in September.
Speaker 1: We've added twenty new categories and five hundred new brands
Speaker 1: as a result of marketplace, and that gives customers a
Speaker 1: lot more choices. Example, So during the fourth quarter, two
Speaker 1: of the hottest categories for us in marketplace, and we
Speaker 1: really didn't have in our own inventory from before, was
Speaker 1: video games and electronics. Those are where customers they trust
Speaker 1: Macy's as a brand and so they're ready to transact
Speaker 1: with us if we have the right content for them.
Speaker 1: So so much of our business starts on digital or
Speaker 1: is transacted on digital. So to have marketplace that a
Speaker 1: customer they don't know whether it's marketplace or offender direct
Speaker 1: or owned inventory, they just know that when they come
Speaker 1: to Macy's they can get they can get a broad
Speaker 1: range of categories at great values. So that's what we're
Speaker 1: so encouraged by. So what you heard us talk about
Speaker 1: today is we're going to be adding two thousand new
Speaker 1: brands in twenty three on the Macy's side, and we're
Speaker 1: going to be adding a Bloomingdale's marketplace in the back
Speaker 1: half of twenty three. So it just gives us a
Speaker 1: lot of flexibility because we're a trusted brand. We're a
Speaker 1: department store that has many categories and about to have
Speaker 1: a lot more as a result of Marketplace. And you
Speaker 1: really understood that omni channel balance. I'm going to ask
Speaker 1: you that for maybe a bit of a curveful, but
Speaker 1: maybe one being asked a lot more of you. AI
Speaker 1: Artificial intelligence it seems to be something that some of
Speaker 1: your competitors are talking up at least. Is this something
Speaker 1: that you embrace with Macy's. So I'll put that in
Speaker 1: the camp of kind as data and analytics. You know,
Speaker 1: AI absolutely so. When you look at the technology that
Speaker 1: we have and that we've invested in, and when you
Speaker 1: look at the science that we have that we're putting
Speaker 1: against the art of the business, it's a combination of
Speaker 1: that that makes a great retailer. So art and science
Speaker 1: is so important. Where are the trends going? You can't
Speaker 1: always see that an algorithm the boy you can look
Speaker 1: at all the signals you can aggregate them for in
Speaker 1: real time and what's going on in the balance of
Speaker 1: the industry. We're a customer that where they are on
Speaker 1: Instagram and how they're responding to new trends, and how
Speaker 1: do you express that you each of your individual brands.
Speaker 1: What we see is that our customers at Bloomingdale's, they're
Speaker 1: upfront with trends and when they move off of a trend,
Speaker 1: you know, you can see where that might cool based
Speaker 1: on trend perds on the macy side. So we're using
Speaker 1: all of the data that we have. You know, we've
Speaker 1: built up our gating analytics capability. We built us on
Speaker 1: our fixed once over the past couple of years. That's
Speaker 1: paying dividends. You know when you look at dynamic pricing,
Speaker 1: to be able to scrape the entire internet on where
Speaker 1: the prices are on commodities and now in real time
Speaker 1: you can make adjustments online and in some respects in store.
Speaker 1: So we were clearly using you know, where science is
Speaker 1: taking us to better. We're starting to respond to this
Speaker 1: customer who's got so many choices and they're looking for
Speaker 1: the best combination of value and experience, and we have
Speaker 1: a huge opportunity to get that rate and to do
Speaker 1: that in real time is an important component of who's
Speaker 1: going to win. I'm in region. It's been going viral.
Speaker 1: Elon Musk, while heading climate friendly Companies, made a ton
Speaker 1: of trips on his private jets, some even as short
Speaker 1: as thirteen minutes, but in the Business Week spent weeks
Speaker 1: navigating Musk twenty twenty two travels. In total, he took
Speaker 1: more than one hundred and seventy flights one hundred and seventy,
Speaker 1: amounting to a dozen trips around the Earth. Carolina December
Speaker 1: was his busiest travel month, not surprised, notching fifty five
Speaker 1: thousand mars. Look at how he ranks against the pantheon
Speaker 1: of tech grades in his global travel. But what's also
Speaker 1: amazing is the short distances at times he's doing. At
Speaker 1: one point, he went what from the SpaceX headquarters Hawthorne
Speaker 1: to six miles to the area before he went to phrase,
Speaker 1: that's it for this edition of Bloomberg Technology. We're about
Speaker 1: to have a very big goodbye to someone special here.
Speaker 1: I'll be tweeting about it. An amazing week so far,
Speaker 1: Balan Swiller, we love you. This is Bloomberg