WEBVTT - SpaceX Eyes Borrowing for Nvidia Chips, Apple Plans Smart Home Push 0:00:02.560 --> 0:00:05.399 Bloomberg Audio Studios. Podcasts. 0:00:05.720 --> 0:00:15.870 Radio. News. Bloomberg Tech is live from the heart of 0:00:16.010 --> 0:00:19.799 Silicon Valley with Ed Ludlow in San Francisco. 0:00:22.250 --> 0:00:24.689 This is Bloomberg Tech. Coming up, the AI build-out keeps 0:00:24.730 --> 0:00:29.120 driving record borrowing, with SpaceX in talks to borrow $ 40 0:00:28.480 --> 0:00:32.100 billion to buy chips from NVIDIA. Plus, Apple plans its 0:00:32.159 --> 0:00:35.460 entry into the smart home space with a doorbell, thermostat, 0:00:35.540 --> 0:00:39.330 and other accessories developed with LG. And we'll discuss the 0:00:39.420 --> 0:00:43.030 mega AI IPO pipeline with J.D. Moriarty, vice chair and 0:00:43.050 --> 0:00:45.830 head of global tech equity capital markets at Bank of America. 0:00:45.950 --> 0:00:49.970 of America Securities. Hello from the world of tech. So 0:00:50.650 --> 0:00:54.680 stocks closed at records Tuesday, including the Nasdaq 100, very 0:00:55.060 --> 0:00:57.460 tech heavy index. We're now hitting pause on that, largely 0:00:57.480 --> 0:01:02.000 because of concerns about inflation. Oil is pushing higher. Inflation 0:01:02.040 --> 0:01:04.270 is still the concern of the day. But there's a 0:01:04.280 --> 0:01:06.030 lot in the news cycle. So let's get to our 0:01:06.050 --> 0:01:09.250 top story and take a look at today's big number. 0:01:09.250 --> 0:01:13.430 $ 40 billion. Bloomberg's reporting that SpaceX is in talks with 0:01:13.490 --> 0:01:17.690 banks and investors to borrow $ 40 billion to buy chips 0:01:17.720 --> 0:01:19.819 from NVIDIA, all according to sources. I want to get 0:01:19.840 --> 0:01:23.240 the details with Bloomberg's chief Wall Street correspondent, Sridhar Nadarajan. 0:01:23.500 --> 0:01:25.740 Let's start with the structure, right? There is a split 0:01:25.780 --> 0:01:30.380 between loan and some debt and the players involved based 0:01:30.420 --> 0:01:31.259 on Bloomberg's reporting. 0:01:31.760 --> 0:01:34.270 Look, every other morning we seem to be waking up 0:01:34.330 --> 0:01:38.429 to these big, unfathomable numbers almost. It's $ 60 billion one week, 0:01:38.430 --> 0:01:41.940 $ 40 billion next week. It's in tens of billions of dollars. 0:01:41.980 --> 0:01:45.539 This latest one involves SpaceX trying to finance these Nvidia 0:01:45.580 --> 0:01:48.870 chips with a $ 40 billion package, $ 10 billion of it 0:01:49.170 --> 0:01:52.390 to be syndicated through banks. $ 30 billion of it will 0:01:52.430 --> 0:01:55.850 likely go through private market players led by Apollo. PIMCO 0:01:55.870 --> 0:01:58.110 is possibly involved. They will syndicate it to the rest. 0:01:58.470 --> 0:02:01.220 But it is very clear that the tech story today 0:02:01.660 --> 0:02:03.900 is the debt story. And there is going to be 0:02:03.920 --> 0:02:07.480 this increasing confluence between some of the biggest private market players, 0:02:07.800 --> 0:02:10.350 some of the biggest firms with the deepest balance sheets, 0:02:10.770 --> 0:02:14.570 and the tech companies that so desperately need to invest 0:02:14.669 --> 0:02:18.169 and borrow so many hundreds of billions of dollars to 0:02:18.290 --> 0:02:20.960 fund and finance this AI infrastructure build-out. 0:02:22.300 --> 0:02:25.540 Sri, this morning, Bloomberg's Danny Berger had the opportunity to 0:02:25.580 --> 0:02:28.560 speak to John Cortese, who's the co-head of corporate credit 0:02:28.710 --> 0:02:31.190 at Apollo, one of the parties named in our reporting. 0:02:32.010 --> 0:02:33.269 And she asked about this scoop. 0:02:34.850 --> 0:02:38.480 Can't talk about SpaceX, but I think if you look at. 0:02:39.560 --> 0:02:41.600 All of these companies that are the best companies in 0:02:41.620 --> 0:02:43.500 the world, the largest companies in the world, the largest 0:02:43.540 --> 0:02:46.320 parts of equity portfolios. It's not surprising that the largest 0:02:46.370 --> 0:02:48.990 companies are looking at this marketplace and saying, we'd like 0:02:49.030 --> 0:02:52.670 to find structured solutions for complicated build-outs or project build-outs, 0:02:53.010 --> 0:02:55.350 AI being one of them, chip financing being one of them. 0:02:55.389 --> 0:02:57.830 So it's a huge amount of that happening. I would 0:02:57.850 --> 0:03:02.060 expect more of it. It's been very clearly stated to 0:03:02.070 --> 0:03:05.049 the marketplace what the CapEx needs are to build that AI. 0:03:05.060 --> 0:03:06.820 So I think you're going to see more and more. 0:03:08.350 --> 0:03:11.550 We also got a warning signal through the CDS, right? 0:03:11.590 --> 0:03:14.130 Five-year credit default swaps jumping to their highest level since 0:03:14.169 --> 0:03:17.210 they started trading in June. But listening to that Apollo 0:03:17.830 --> 0:03:21.280 non-response and the parties on the Wall Street side we're 0:03:21.300 --> 0:03:25.600 talking about, there's an appetite to back these kinds of deals, right? 0:03:25.639 --> 0:03:28.560 There's no real concern that the capital can't be found. 0:03:29.050 --> 0:03:31.030 And the numbers show that. If you look at the 0:03:31.070 --> 0:03:35.010 amount raised for data centers, for stacking these data centers 0:03:35.050 --> 0:03:37.800 with chips, for the power required to power these data centers, 0:03:38.040 --> 0:03:42.840 we've raised about $ 360 billion so far this year. That's 0:03:42.880 --> 0:03:45.520 about three times the pace last year And if you 0:03:45.540 --> 0:03:48.040 talk to analysts across the street, that number is only 0:03:48.100 --> 0:03:50.240 going to keep going up in the next year or two. 0:03:50.640 --> 0:03:53.870 We are talking about trillions of dollars in requirements, and 0:03:53.930 --> 0:03:56.390 these companies will keep coming back to the market. Yes, 0:03:56.530 --> 0:03:58.850 like you point out, with what is happening in the 0:03:58.910 --> 0:04:01.990 broader rate environment, with some of the concerns starting to 0:04:02.010 --> 0:04:04.070 seep in, if there is too much ebullience and too 0:04:04.110 --> 0:04:06.990 much enthusiasm out there, you will see some of these 0:04:07.090 --> 0:04:10.559 risk gauges starting to go up. SpaceX, you can see 0:04:10.580 --> 0:04:12.440 that in the CDS a couple of weeks ago. We 0:04:12.460 --> 0:04:15.160 talked about Oracle and we saw the moves in Oracle CDS. 0:04:15.580 --> 0:04:18.320 But for the large part, these are not crazy blowouts. 0:04:18.380 --> 0:04:22.060 These are contained moves. And for the biggest, most credit 0:04:22.160 --> 0:04:25.240 worthy players, there will be demand. Because when you listen 0:04:25.279 --> 0:04:28.340 to what else people like the senior executives at Apollo 0:04:28.380 --> 0:04:30.560 have to say, they're not really trying to make a 0:04:30.600 --> 0:04:33.280 bet on whether these chips will depreciate in value or 0:04:33.380 --> 0:04:36.760 hold their value. They are basically betting on the underlying 0:04:36.820 --> 0:04:39.400 credit worthiness of the borrower. And as long as that 0:04:39.460 --> 0:04:41.860 is solid, they are willing to extend their balance sheet 0:04:41.880 --> 0:04:42.100 to them. 0:04:43.350 --> 0:04:46.789 Bloomberg Shridhar Natarajan, thank you very much. Now, staying with SpaceX, 0:04:46.870 --> 0:04:50.630 its Crew 12 is heading home. The four-person crew undocked 0:04:50.650 --> 0:04:54.510 from the International Space Station this morning after spending nearly 0:04:54.690 --> 0:04:58.250 eight months in orbit. Their Dragon capsule is now on 0:04:58.290 --> 0:05:02.719 a 27-hour journey back to Earth. Splashdown is set for 0:05:02.860 --> 0:05:06.099 Thursday evening. in the Pacific, and we will track the 0:05:06.140 --> 0:05:09.760 progress of that mission. Another Musk story. Elon Musk setting 0:05:09.779 --> 0:05:13.880 the record straight on his chip-making ambition, saying there should be, quote, 0:05:14.279 --> 0:05:18.099 zero doubt about who's in charge of that initiative. Earlier 0:05:18.140 --> 0:05:21.919 this week, Musk confirmed discussions with TSMC over his planned 0:05:21.960 --> 0:05:25.400 terror fab in Texas, which raised questions about Intel's role 0:05:25.660 --> 0:05:29.100 and if they'd be displaced. Now, Intel CEO Lit Bhutan, 0:05:29.140 --> 0:05:32.320 speaking overnight in Tokyo, said, says his company is still 0:05:32.400 --> 0:05:36.510 there as a technology partner, while Musk is saying TSMC 0:05:36.570 --> 0:05:40.210 won't be running that fab. Bloomberg's global tech editor, Peter Elstrom, 0:05:40.230 --> 0:05:44.210 is with us. The twists and turns. Try and summarize 0:05:44.230 --> 0:05:44.950 where we've landed. 0:05:46.130 --> 0:05:49.790 Yeah, let's pause for a second. Musk talked about TerraFab 0:05:49.830 --> 0:05:52.650 back in March. And at the time, it was unclear 0:05:52.690 --> 0:05:54.770 exactly where he was going to go with this venture. 0:05:54.830 --> 0:05:58.210 He talked about it as an epic adventure in chip building. 0:05:58.570 --> 0:06:00.220 He said that there was such a shortage in the 0:06:00.260 --> 0:06:02.180 chip industry that he was going to get into the 0:06:02.220 --> 0:06:04.490 business of making the chips himself. He said it was 0:06:04.529 --> 0:06:06.820 important enough that they wanted to get into the kind 0:06:06.860 --> 0:06:09.380 of logic chips that TSMC makes, and they're going to 0:06:09.400 --> 0:06:11.599 make memory chips at the same time. And the vision 0:06:11.640 --> 0:06:14.740 he laid out was really quite exceptional at that point. 0:06:15.110 --> 0:06:17.849 It was called a fever dream by some people. And 0:06:18.170 --> 0:06:20.670 one analyst estimated that it would cost $ 5 trillion to 0:06:20.670 --> 0:06:23.610 $ 13 trillion to be able to build out this whole project. 0:06:23.930 --> 0:06:26.570 So early on, they brought Intel on as the partner 0:06:26.970 --> 0:06:29.590 to help them. If you don't have this chip expertise, 0:06:29.630 --> 0:06:32.850 you need to be able to use the IP from someplace. Intel, 0:06:32.890 --> 0:06:36.310 of course, has that kind of expertise. They began working together. 0:06:36.350 --> 0:06:38.710 But then, as you mentioned, there was this report that 0:06:38.750 --> 0:06:41.860 TSMC was somehow involved. In fact, Musk confirmed that there 0:06:41.900 --> 0:06:44.240 were talks at that point without going into any kind 0:06:44.260 --> 0:06:46.820 of detail. So, as you mentioned, we talked with Luke Buten, 0:06:46.839 --> 0:06:49.900 the CEO of Intel Overnight in Tokyo. He confirmed they're 0:06:49.940 --> 0:06:52.750 still working with Musk and Terafab at this point. They 0:06:52.770 --> 0:06:56.330 plan on continuing that work. That's a positive for Intel. 0:06:56.790 --> 0:07:01.330 And then also Musk responded to something that suggested TerraFab 0:07:01.370 --> 0:07:03.250 would never actually own the fabs. In fact, it would 0:07:03.270 --> 0:07:05.790 be TSMC that would build the fabs and own the fabs. 0:07:05.810 --> 0:07:08.150 And he said, that's not at all the case. TerraFab, 0:07:08.670 --> 0:07:11.530 Musk and his team are going to build these fabs themselves. 0:07:11.890 --> 0:07:14.440 TSMC may be involved somehow, but they're not going to 0:07:14.560 --> 0:07:15.220 own the property. 0:07:15.240 --> 0:07:18.720 I think it's really useful to go back to the 0:07:18.760 --> 0:07:21.460 basics of what TerraFab is, right? It's a joint venture 0:07:21.520 --> 0:07:26.860 between SpaceX and and Tesla to currently separate companies. But 0:07:26.980 --> 0:07:28.840 I think Musk has always talked about the idea that 0:07:29.220 --> 0:07:31.850 there isn't enough chip supply for the things that both 0:07:31.880 --> 0:07:36.410 those companies want to do. So, Musk's solution, build it themselves. 0:07:36.770 --> 0:07:38.090 Is that kind of a fair sum? 0:07:38.410 --> 0:07:40.050 Yeah, that's exactly it. 0:07:40.070 --> 0:07:40.150 Yeah. 0:07:40.170 --> 0:07:42.000 And he said at the time back in March, he 0:07:42.040 --> 0:07:44.780 said in order to accomplish what he wants to accomplish 0:07:44.820 --> 0:07:50.120 with rockets and robots and autonomous cars, They need chips. 0:07:50.430 --> 0:07:52.950 And he said if the chip industry is not gonna 0:07:52.990 --> 0:07:54.910 be able to supply those chips, and he thinks it 0:07:54.950 --> 0:07:57.710 doesn't have that capacity right now, then they have to 0:07:57.750 --> 0:08:00.800 build it themselves. So it sounded like they were pushing 0:08:00.840 --> 0:08:03.980 into this business partly to motivate the chip industry, to 0:08:04.020 --> 0:08:06.520 move more quickly, to expand more quickly. Now, the other 0:08:06.560 --> 0:08:08.800 side of this, of course, is the chip industry is 0:08:08.860 --> 0:08:12.300 terribly cyclical. These companies invest billions and billions of dollars, 0:08:12.320 --> 0:08:14.460 and then they find themselves with too much capacity. They've 0:08:14.490 --> 0:08:16.590 done this again and again over the years. So they've 0:08:16.610 --> 0:08:19.190 been a little bit cautious about how quickly they've expanded, 0:08:19.490 --> 0:08:21.970 especially on the memory chip front. But now Musk is 0:08:21.990 --> 0:08:24.170 trying to push that a little bit faster. Talk about 0:08:24.210 --> 0:08:26.230 capital needs. I mean, they may need to raise billions 0:08:26.270 --> 0:08:28.250 of dollars, tens of billions of dollars, if not trillions 0:08:28.270 --> 0:08:30.290 of dollars, to be able to accomplish some of the 0:08:30.330 --> 0:08:31.670 goals he has for TerraFab. 0:08:32.900 --> 0:08:37.120 Bloomberg's Peter Ahlstrom. Thank you. SpaceX is pushing the Trump 0:08:37.140 --> 0:08:40.160 administration to make it easier for rocket companies to get 0:08:40.280 --> 0:08:43.500 access to bands of spectrum, a move that could help 0:08:43.540 --> 0:08:47.910 increase launches. But those efforts are facing pushback from rivals 0:08:47.950 --> 0:08:50.930 in the aerospace industry. So Boeing, Lockheed Martin and GE 0:08:50.970 --> 0:08:54.630 Healthcare are among those warning the changes could disrupt everything 0:08:54.750 --> 0:08:59.270 from flight tests of commercial jets and missiles to hospital 0:08:59.330 --> 0:09:03.000 equipment and and even TV broadcasts. The Federal Communications Commission, 0:09:03.320 --> 0:09:06.700 which is being asked to scrap a third-party entity that 0:09:06.740 --> 0:09:10.900 controls how spectrum is shared, did not respond to requests 0:09:10.940 --> 0:09:14.440 for comment. Coming up here on Bloomberg Tech, Apple's push 0:09:14.480 --> 0:09:19.080 into smart home devices includes an unusual partnership. We've got 0:09:19.100 --> 0:09:31.420 the details next. This is Bloomberg Tech. Apple's upcoming push 0:09:31.450 --> 0:09:35.190 into smart home devices will include a doorbell, thermostat, and 0:09:35.230 --> 0:09:39.830 other accessories developed through an unusual partnership with LG Electronics. 0:09:39.870 --> 0:09:42.210 The products will be part of an ecosystem that works 0:09:42.230 --> 0:09:45.810 with Apple's new smart home hub, according to Bloomberg sources. 0:09:46.110 --> 0:09:48.670 Let's get the details with Bloomberg's Mark Gurman, who leads 0:09:48.710 --> 0:09:52.050 our coverage of consumer technology. So interesting to read this one. 0:09:52.309 --> 0:09:54.290 And we'll bring the diagrams back up that were in 0:09:54.309 --> 0:09:58.650 your story. But Apple is partnering on this range of devices. 0:10:01.080 --> 0:10:04.439 So I've been reporting for years now that Apple has several... 0:10:04.670 --> 0:10:08.370 first party in-house smart home devices coming. This is part 0:10:08.410 --> 0:10:12.340 of a gigantic reboot to its home strategy. HomeKit launched 0:10:12.700 --> 0:10:16.120 in 2014 has been an unmitigated disaster compared to what 0:10:16.140 --> 0:10:18.900 you're seeing from Ring, from what you're seeing from Google, 0:10:19.179 --> 0:10:21.520 from what you're seeing from others. So Apple is starting over. 0:10:21.820 --> 0:10:24.240 And so they'll announce a new HomePod mini, a smart 0:10:24.280 --> 0:10:26.559 home hub with a display that's like an Amazon Echo Show, 0:10:26.920 --> 0:10:29.980 and a new Apple TV. But yesterday, I revealed there's more. 0:10:30.360 --> 0:10:33.830 In addition to the flagship devices, Apple's basically coming out 0:10:33.850 --> 0:10:36.530 with what I'm calling a smart home starter kit. If 0:10:36.570 --> 0:10:38.369 you're building a smart home, what would you want? You 0:10:38.410 --> 0:10:41.150 would want a smart lock. You'd want a smart thermostat. 0:10:41.410 --> 0:10:43.650 You'd want a smart doorbell. And you would want smart 0:10:43.710 --> 0:10:46.839 security cameras inside, outside. It may be a floodlight camera. 0:10:47.200 --> 0:10:49.079 So they're coming out with all of that. And they're 0:10:49.100 --> 0:10:53.100 partnering with LG on it. according to my sources. And 0:10:53.120 --> 0:10:56.880 I searched to the FCC database and found that these 0:10:57.320 --> 0:11:00.760 LG branded devices are in midst of getting regulatory approval 0:11:00.780 --> 0:11:01.439 in the United States. 0:11:03.320 --> 0:11:06.280 Okay. So how unusual is the step for Apple to say, 0:11:06.340 --> 0:11:07.780 go to another company and be like, you guys are 0:11:07.800 --> 0:11:10.020 good at this and we're good at this and we 0:11:10.070 --> 0:11:13.330 can work together. And then the big picture of why 0:11:13.670 --> 0:11:18.550 a lock and a doorbell and a thermostat works with 0:11:18.570 --> 0:11:19.829 what Apple's trying to do in the home. 0:11:21.020 --> 0:11:25.380 It's extremely unusual, but it's not unprecedented. They've done this 0:11:25.420 --> 0:11:28.610 a couple times. They've built devices with Belkin and put 0:11:28.650 --> 0:11:32.110 them under the Belkin brand before. They've built some iPad 0:11:32.150 --> 0:11:34.930 accessories with Logitech and put it under the Logitech brand before. 0:11:35.370 --> 0:11:37.929 But this LG one is kind of crazy because LG 0:11:37.970 --> 0:11:40.510 doesn't make smart home devices, right? Like this is new 0:11:40.550 --> 0:11:44.679 territory completely for LG. Belkin has made iPhone accessories for years. 0:11:44.740 --> 0:11:47.600 Logitech has made iPad accessories for years. I mean, LG 0:11:47.620 --> 0:11:50.240 is basically completely out of left field and completely random. 0:11:50.260 --> 0:11:52.439 This is why this news was so shocking. They don't 0:11:52.460 --> 0:11:55.060 make a smart home devices. They don't make a smart 0:11:55.100 --> 0:11:57.600 cameras for the home. They don't make door bells. They 0:11:57.620 --> 0:12:00.250 don't make locks. They don't make any of this stuff. Uh, 0:12:00.490 --> 0:12:04.050 so it's fascinating. And Apple and LG have a big relationship, right? LG, 0:12:04.530 --> 0:12:07.610 the sister companies, LG electronics, LG display, make screens for 0:12:07.650 --> 0:12:10.410 Apple devices. Uh, one of the pieces of the LG 0:12:10.429 --> 0:12:14.440 conglomerate make camera modules. So there is some relationship there. And, uh, 0:12:15.350 --> 0:12:17.750 To me, these look pretty nice. And like I said earlier, 0:12:17.950 --> 0:12:21.210 if you're wanting to build a smart home as a consumer, 0:12:21.390 --> 0:12:23.120 you're going to start with a doorbell. You're going to 0:12:23.130 --> 0:12:24.820 start with a lock. You're going to start with a thermostat. 0:12:25.200 --> 0:12:26.980 And so that's why Apple's going after these products. 0:12:28.080 --> 0:12:30.580 Bloomberg's Mark Gurman. And don't forget to read Power On, 0:12:30.820 --> 0:12:33.959 his newsletter, and listen to the new podcast, Power On. 0:12:34.890 --> 0:12:37.189 Thank you very much. Meanwhile, the leader in the smart 0:12:37.230 --> 0:12:40.570 doorbell market, Ring, is out with its own new products. 0:12:40.610 --> 0:12:44.580 The Amazon-owned home security company releasing its first smart lock 0:12:44.929 --> 0:12:48.360 and new default security encryption for users' data. Delighted to 0:12:48.400 --> 0:12:51.459 say that Ring founder, Jamie Siminoff, joins us now. Let's 0:12:51.480 --> 0:12:54.100 start with what's new here. Lots of the audience familiar 0:12:54.140 --> 0:12:57.370 with Ring, the doorbell. Goes beyond that now with a 0:12:57.429 --> 0:12:58.030 range of things. 0:12:58.890 --> 0:13:01.750 Yeah, so we have a large range of products from 0:13:01.890 --> 0:13:05.230 outdoor cameras, indoor cameras, alarm system. We started with the doorbell, 0:13:05.730 --> 0:13:07.490 and now I call it the peanut butter and jelly. 0:13:07.550 --> 0:13:09.830 I mean, the lock and the doorbell have always, we thought, 0:13:09.910 --> 0:13:12.510 come together, but we didn't have an angle on the 0:13:12.550 --> 0:13:14.800 lock or an innovation on the lock that we thought 0:13:14.860 --> 0:13:17.300 warranted us putting our brand on it until now. 0:13:18.740 --> 0:13:22.709 Jamie, let's talk about that innovation. There are, as Mark's 0:13:22.750 --> 0:13:27.570 kind of outlined, an increasing number of options of smart 0:13:27.590 --> 0:13:29.810 home devices. What is it that you're good at? What 0:13:29.850 --> 0:13:31.460 is it that you think you're better at on the 0:13:31.500 --> 0:13:34.900 hardware side, the software side relative to the competition? 0:13:35.780 --> 0:13:38.239 First of all, we start everything around a mission to 0:13:38.260 --> 0:13:41.240 make neighborhoods safer. I think with that North Star that 0:13:41.260 --> 0:13:44.620 really drives our business into a direction that so far 0:13:44.980 --> 0:13:47.400 no one has been able to follow. Secondly, I'm an inventor. 0:13:47.660 --> 0:13:51.420 I've invented the smart doorbell, the floodlight camera, and many 0:13:51.540 --> 0:13:54.890 other innovations around the home. including today with the smart 0:13:54.929 --> 0:13:59.429 lock that now has a rechargeable power. 0:13:59.210 --> 0:13:59.680 Dial on it. 0:13:59.730 --> 0:14:01.470 So that if the smart, I mean, you know, when 0:14:01.490 --> 0:14:03.449 a smart lock loses its batteries, it becomes a not 0:14:03.470 --> 0:14:04.670 smart lock or a dumb lock. 0:14:04.850 --> 0:14:05.050 Right. 0:14:05.130 --> 0:14:07.540 And so, you know, now instead of having to have 0:14:07.559 --> 0:14:09.540 a backup key that's hidden in the area where the 0:14:09.580 --> 0:14:12.360 spiders are around your house, you literally just twist this 0:14:12.420 --> 0:14:15.080 power dial. It comes back on and now you get in. 0:14:15.100 --> 0:14:17.160 And so that's, you know, Ring really mission to make 0:14:17.179 --> 0:14:20.970 neighborhoods safer. We're very innovative. I consider myself an inventor. 0:14:21.680 --> 0:14:23.310 And that's what we've been able to do so far, 0:14:23.350 --> 0:14:25.330 which is, I think, how we've become what I believe 0:14:25.370 --> 0:14:26.930 is the largest home security company in the world. 0:14:27.530 --> 0:14:27.790 Right. 0:14:28.250 --> 0:14:31.790 Jamie, I have a smart doorbell from from another brand. 0:14:31.890 --> 0:14:34.850 But the main point I'm getting at is that it's 0:14:34.910 --> 0:14:38.470 part of an integrated system of multiple devices of different types. 0:14:38.550 --> 0:14:38.770 Right. 0:14:39.510 --> 0:14:41.750 What kind of data do you see about a consumer 0:14:41.770 --> 0:14:46.440 that buys one Ring product in aggregate with lots of others, right? 0:14:46.480 --> 0:14:48.820 They're kind of bulk buyers of systems rather than just 0:14:48.900 --> 0:14:49.530 one piece of it. 0:14:49.800 --> 0:14:52.220 Yeah, certainly it's the rings of security and everything you 0:14:52.260 --> 0:14:54.740 can buy from Ring works on its own or works 0:14:54.780 --> 0:14:57.000 together sort of on the app and in the ecosystem. 0:14:57.040 --> 0:14:58.240 It also works with Alexa Plus. 0:14:59.220 --> 0:15:00.980 So we do see that people, you know, they certainly 0:15:01.440 --> 0:15:03.920 starting at the doorbell as your first ring of security, 0:15:04.390 --> 0:15:08.710 working your way around alarm system, outdoor cameras, some indoor cameras. 0:15:09.170 --> 0:15:11.890 smart lock now, you know, we really help people to 0:15:11.950 --> 0:15:14.200 build the security they need and also, you know, choose 0:15:14.220 --> 0:15:15.760 your power. I mean, one of the big things is, 0:15:16.040 --> 0:15:19.830 you know, we offer batteries, solar, and powered options in 0:15:19.890 --> 0:15:21.470 basically every camera that we have. 0:15:23.140 --> 0:15:26.920 Jamie, you heard Mark Gurman's reporting there on Apple's entry 0:15:26.980 --> 0:15:30.960 into this category, which includes a smart lock and thermostat, 0:15:31.000 --> 0:15:34.600 et cetera, based on his reporting. How do you react 0:15:34.640 --> 0:15:37.640 to that? What's your feeling about Apple coming into the space? 0:15:37.980 --> 0:15:40.160 I've had competitors since day one. I've stuck to my 0:15:40.180 --> 0:15:42.460 mission of making neighborhoods safer, and so far that's paid 0:15:42.500 --> 0:15:44.400 dividends for us. So we're just going to keep focusing 0:15:44.440 --> 0:15:45.000 on our neighbors. 0:15:45.320 --> 0:15:46.500 Which is what we call our customers. 0:15:46.520 --> 0:15:50.150 I'm going to keep innovating, bringing new-to-world products, and I 0:15:50.190 --> 0:15:52.470 feel like if I do that, I'll remain successful and 0:15:52.490 --> 0:15:54.230 keep being the leader in the market. 0:15:55.890 --> 0:16:00.830 Here. I'm genuinely interested in the economics of consumer electronics, right? 0:16:01.250 --> 0:16:04.530 Especially when you push into getting electronics getting smaller and 0:16:04.550 --> 0:16:09.020 smaller and smaller. And Ring within Amazon, we showed... In fact, Tim, 0:16:09.040 --> 0:16:10.980 put the table back up with the price points for 0:16:11.000 --> 0:16:13.440 this generation of Ring gear. 0:16:13.840 --> 0:16:14.020 Like. 0:16:15.020 --> 0:16:17.440 How do you get that right, the pricing? Is it 0:16:17.480 --> 0:16:20.140 a benefit to have Amazon scale that you can price 0:16:20.180 --> 0:16:23.210 such as you do? Is this a profitable enterprise? 0:16:24.130 --> 0:16:27.650 Certainly Ring is very profitable at this point. And we also, 0:16:27.770 --> 0:16:29.930 we are big enough now in terms of scale that yes, 0:16:30.250 --> 0:16:33.710 certainly being at Amazon is not a detriment, but we're 0:16:33.730 --> 0:16:35.850 big enough now that we can get scale in the 0:16:35.890 --> 0:16:38.280 pieces and the things that we buy. And we're very 0:16:38.320 --> 0:16:41.800 innovative in how we are able to choose the chips, 0:16:41.880 --> 0:16:43.780 build the products, build them from scratch, try to use 0:16:43.800 --> 0:16:46.380 first principles effectively. and really build the best products at 0:16:46.400 --> 0:16:49.040 the best cost to democratize home security for everyone. 0:16:50.060 --> 0:16:53.320 Jamie, what happens next in this field? How does the 0:16:53.360 --> 0:16:55.540 smart home change in the future, to your mind? 0:16:56.180 --> 0:16:59.950 I mean, with AI and superintelligence, certainly the smart home 0:16:59.970 --> 0:17:03.210 is going to continue to change. I believe we're the 0:17:03.230 --> 0:17:07.109 appendages for AI and superintelligence. It's going to need to 0:17:07.150 --> 0:17:09.210 have the physical, it's going to need to have a lock, 0:17:09.230 --> 0:17:10.290 it's going to need to have a doorbell, it's going 0:17:10.310 --> 0:17:11.389 to need to have cameras, it's going to need to 0:17:11.430 --> 0:17:13.149 be able to see and sense things And when you 0:17:13.170 --> 0:17:15.570 put all of that into a superintelligence, I do believe 0:17:15.590 --> 0:17:20.060 that that is going to superpower our ability in the home, 0:17:20.119 --> 0:17:22.840 our peace of mind in the home, and doing things 0:17:22.960 --> 0:17:24.160 for us. I mean, in the end of the day, 0:17:24.180 --> 0:17:27.180 it doesn't matter the technology. It's how is it better 0:17:27.220 --> 0:17:28.900 for us to live in our homes when we have 0:17:28.940 --> 0:17:31.159 all this stuff? And I do believe the age of 0:17:31.200 --> 0:17:32.720 abundance is ahead of us, and we're going to have, 0:17:32.740 --> 0:17:35.200 you know, around our area, we're going to be living 0:17:35.240 --> 0:17:37.500 in our homes safer, more secure, and it's going to 0:17:37.540 --> 0:17:38.610 be more peace of mind. 0:17:39.940 --> 0:17:42.950 Ring founder, Jamie Siminoff. Thank you very much for your time. 0:17:42.810 --> 0:17:43.190 On the show. 0:17:44.270 --> 0:17:47.949 Okay, coming up, the hidden risks of open source AI. 0:17:48.550 --> 0:17:53.260 Why powerful models running offline are becoming harder to police. 0:17:53.340 --> 0:17:55.879 We have an important piece of Bloomberg reporting next. This 0:17:55.940 --> 0:18:08.810 is Bloomberg Tech. The rise of open source AI is 0:18:08.890 --> 0:18:12.330 creating a new challenge for law enforcement. Once powerful models 0:18:12.450 --> 0:18:16.230 are downloaded and run privately, their safeguards can be stripped away. 0:18:16.430 --> 0:18:20.550 And investigators say they're increasingly being used to create illegal 0:18:20.609 --> 0:18:24.520 child sexual abuse material that can be nearly impossible to track. 0:18:25.080 --> 0:18:27.280 It's the topic of today's Big Take. And Bloomberg's Big 0:18:27.320 --> 0:18:31.139 Tech editor, Sarah Fryer, joins us now. Sarah, you edited 0:18:31.200 --> 0:18:34.620 this story with the team. We talk a lot about 0:18:34.640 --> 0:18:36.960 the risk of open source AI. And the benefits of 0:18:37.000 --> 0:18:40.060 open source also on this program, but very simply, this 0:18:40.160 --> 0:18:45.909 story explains how open source tech makes illegal activity easier 0:18:46.310 --> 0:18:48.990 for human users. Can you explain why? 0:18:49.700 --> 0:18:53.340 Well, once it's on somebody's personal device, there's no commercial 0:18:53.660 --> 0:18:56.690 entity that it's interacting with. You can train it for 0:18:56.730 --> 0:19:00.610 whatever purpose you have, and then it can just run locally. 0:19:01.050 --> 0:19:04.879 And so that makes it very difficult for investigators to 0:19:04.980 --> 0:19:08.619 find this illegal activity and stop it. And it also 0:19:09.320 --> 0:19:13.649 means that these communities of people who engage in child 0:19:13.710 --> 0:19:18.010 exploitative imagery, they're passing notes with each other on forums 0:19:18.270 --> 0:19:21.290 talking about how to use open source tech to make 0:19:21.330 --> 0:19:25.660 this content and sharing their models for people to download 0:19:25.780 --> 0:19:30.980 on their own devices and create unlimited amounts, which is 0:19:31.140 --> 0:19:32.260 quite concerning. 0:19:33.580 --> 0:19:37.560 The story details case studies of child exploitation crimes, right? 0:19:37.740 --> 0:19:42.280 And in the reporting, in talking to investigators, what have 0:19:42.359 --> 0:19:46.730 those investigators, and I guess the industry, noticed about how 0:19:46.810 --> 0:19:51.990 AI is changing and accelerating, frankly, what is harm to miners? 0:19:52.950 --> 0:19:57.780 The limit to what can be created And the amount 0:19:57.800 --> 0:20:04.030 of content is just the perpetrator's imagination. And they can 0:20:04.210 --> 0:20:07.470 ask AI to take an image of a child that 0:20:07.650 --> 0:20:12.730 is just a normal photo and decide to create whatever 0:20:12.790 --> 0:20:17.129 kind of results they want, possibly an illegal result in 0:20:17.410 --> 0:20:21.870 sexual positions. So what we're seeing here is that for investigators, 0:20:22.190 --> 0:20:26.620 this flood of images, the dramatic increase in the amount 0:20:26.700 --> 0:20:28.899 of illegal content that is being created is making it 0:20:28.960 --> 0:20:32.100 very difficult for them to figure out of these children 0:20:32.140 --> 0:20:34.360 we see. First of all, who are the real children? 0:20:34.840 --> 0:20:39.400 Who are the generated images of real children? And then 0:20:39.880 --> 0:20:42.460 who might be in danger today? Who might be in 0:20:42.660 --> 0:20:46.379 physical danger in their communities that we need to help save? 0:20:46.820 --> 0:20:48.700 And it's just becoming more difficult than ever. 0:20:50.000 --> 0:20:52.470 Sarah, can anything be done to remedy it? 0:20:53.220 --> 0:20:57.260 Well, it's very difficult to fix the problem in this space, 0:20:57.300 --> 0:21:00.860 in part because as models are doing their red teaming 0:21:01.220 --> 0:21:04.730 and trying to figure out how these tools could be 0:21:04.869 --> 0:21:09.170 used for illegal activity, they cannot themselves create this kind 0:21:09.210 --> 0:21:13.230 of content. It's just too illegal to do. 0:21:13.090 --> 0:21:14.710 If you're a company. However. 0:21:15.430 --> 0:21:17.760