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Speaker 1: From Mahart.

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Speaker 2: We're Innovation of Money and Power Collie in Silicon Valley, NBN.

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Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.

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Speaker 3: I'm Caroline Hide at Bloomberg's World headquarters in New York

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Speaker 3: and ourm Ed Lovelow in San Francisco.

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Speaker 4: This is Bloomberg Technology coming up.

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Speaker 3: Full coverage of Salesforce's annual Dreamforce conference where guess what

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Speaker 3: AI will take center stage, will break down what to expect, and.

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Speaker 4: We'll go live to Washington as tech leaders descend on

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Speaker 4: Capitol Hill for a meeting with sentences to discuss none

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Speaker 4: other than artificial intelligence.

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Speaker 3: More details ahead, and we're going to stay in Washington

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Speaker 3: to get the latest from Google's antitrust trial and break

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Speaker 3: down the biggest takeaways from Apple's wonder last event and

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Speaker 3: the continued China concerns. All that and has always so

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Speaker 3: much more aheading, including.

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Speaker 4: Right now here in San Francisco. Dream Force underway. The

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Speaker 4: story for Salesforce has been about integrating AI into their

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Speaker 4: existing CRM and other offerings. For more on dream Force.

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Speaker 4: Who else Bloomberg's Brody Ford is in town in the flesh,

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Speaker 4: Brodi Ford, What's going on?

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Speaker 1: At dream Force.

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Speaker 5: Yeah, I mean it is back Dreamforce forty k people

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Speaker 5: here in downtown San Francisco. I am one of them,

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Speaker 5: and the big thing for them, like every other company,

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Speaker 5: is AI. And the subtext here is that Salesforce has

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Speaker 5: been grappling with They were growing above twenty percent every

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Speaker 5: year and now it's come to slow down, and there's

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Speaker 5: a bit of anxiety among the investor community. But of

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Speaker 5: course AI looks like this beautiful accelerant to bring them

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Speaker 5: back up. And their pitch is like a lot of

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Speaker 5: the incumbent players that yeah, sure you can get your

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Speaker 5: data and plug it into these llms, but you know,

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Speaker 5: can you trust that through our platform you can trust

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Speaker 5: the use of the AI.

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Speaker 1: That's the pitch.

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Speaker 3: I mean, we get the Einstein Einstein indeed upgrades and

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Speaker 3: it's sort of being injected across the entire offering a

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Speaker 3: Salesforce PRODI and you can see therefore the nuance come

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Speaker 3: with us.

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Speaker 6: It's safe.

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Speaker 3: But this comes in a context of well, anxiety across investors.

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Speaker 3: Post Oracles numbers the fact that maybe all this talk.

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Speaker 6: Of AI, or this desire to have AI.

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Speaker 3: Doesn't always immediately mean revenue picks up in quite the

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Speaker 3: way we were anticipating.

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Speaker 6: How do you think Salesforce navigates that one.

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Speaker 5: Salesforce has been pretty intentional about communicating it's going to

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Speaker 5: get what the pricing is going to look like. And

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Speaker 5: it's also it's really not that hypothetical. What a lot

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Speaker 5: of their AI use cases? All right, you're selling software

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Speaker 5: for salespeople. If you can automatically draft some outreach emails,

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Speaker 5: I mean, as a journalist, I would use that for sure, Right,

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Speaker 5: So I think a lot of their use cases are

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Speaker 5: going to be a lot more immediate than some of

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Speaker 5: the other AI we hear about, meaning as you say,

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Speaker 5: quicker revenue, uplift love.

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Speaker 3: That context for us as journalists and across any industry.

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Speaker 3: Of course, body Ford, we thank you so much for it.

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Speaker 3: Have fun out there as people get back together in

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Speaker 3: the flesh. But meanwhile, well let's say virtual for a

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Speaker 3: moment and get to Gil Lurio's Da Davidson, managing director

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Speaker 3: and head of institutional research, who I know is keeping

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Speaker 3: a keen eye on all of the announcements coming out

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Speaker 3: of Salesforce and mark many of really talking about why

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Speaker 3: you would want to be with their AI offering.

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Speaker 6: Is this a very crowded space.

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Speaker 3: Are there some significant winners clearly burning ahead.

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Speaker 7: In this Our perspective is that AI, artificial intelligence is

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Speaker 7: going to yes. Our perspective is that artificial intelligence is

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Speaker 7: going to transform a lot of software business, if not

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Speaker 7: all software business and technology businesses, but it's going to

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Speaker 7: take a while. There's going to be very few companies

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Speaker 7: that benefit in the short term. It's really Nvidia and

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Speaker 7: Microsoft have a very clear story of how their businesses

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Speaker 7: are going to get transformed and accelerate in the short term.

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Speaker 7: For everybody else, they have to build AI products. They

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Speaker 7: have to get better at AI. Their customers want that,

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Speaker 7: their customers expect that, but it's going to take a while,

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Speaker 7: and their customers, for as much as they're asking for it,

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Speaker 7: are also skeptical of products that have been rushed to market,

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Speaker 7: and they're going to be patient about making investments in AI.

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Speaker 7: They're going to want to see mature, ready for market

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Speaker 7: products before they implement them in their business.

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Speaker 4: Kil I know you have folks from your desk on

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Speaker 4: the ground at Dreamforce. You're keeping a close eye on

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Speaker 4: what's going on. Does anything of substance actually come out

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Speaker 4: of Dreamforce in terms of what you then pass on

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Speaker 4: to institutional investors about what you learned.

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Speaker 7: Well, they are very good about relaying the product roadmap

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Speaker 7: and how they're going to incorporate artificial intelligence into products

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Speaker 7: like Tableau, like MuleSoft, like the core sales and marketing offerings,

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Speaker 7: how they're going to do it holistically, how they're going

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Speaker 7: to protect the customers data. This is what their customers

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Speaker 7: want to hear. It doesn't mean their customers are ready

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Speaker 7: to push the button and buy new software, but they

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Speaker 7: want to hear that this is.

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Speaker 1: On the roadmap.

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Speaker 7: They want to hear that it's going to be part

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Speaker 7: of the products and going forward, and maybe they'll push

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Speaker 7: the button next year or the year after that. So

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Speaker 7: it's critical that Salesforce presents a good vision, and it

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Speaker 7: sounds like they are.

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Speaker 8: So.

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Speaker 1: Gail.

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Speaker 4: The story of Salesforce has been top line growth above

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Speaker 4: twenty five nineteen, twenty twenty. When I pose to an

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Speaker 4: investor the other day that AI could return Salesforce's growth

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Speaker 4: to that level, he just laughed and just gave an

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Speaker 4: audible hap. Where do you see AI taking this company?

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Speaker 1: Yeah?

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Speaker 7: I think the burden of proof is on Salesforce, and

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Speaker 7: again on every other software company that's talking AI right now,

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Speaker 7: Salesforce's revenue growth right now is barely double digits, and

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Speaker 7: they really have to come up with a new set

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Speaker 7: of very compelling products for that to accelerate. Either that

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Speaker 7: or enterprise software spend has to pick up, and we're

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Speaker 7: not seeing that yet either. So, just like a lot

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Speaker 7: of other software companies, and we'll talk about Oracle in

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Speaker 7: the second AI is a big part of what they

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Speaker 7: have to do. It doesn't mean that it's driving revenue

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Speaker 7: acceleration anytime soon.

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Speaker 4: Yeah, I think, Caroline, for that reason, that is why

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Speaker 4: we're thinking about Oracle right because the implications of that

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Speaker 4: name are the same for the Salesforce as well. Caroline.

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Speaker 3: Yeah, and give us that sense of well, whether you

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Speaker 3: were as shocked as the rest of the market, Gil,

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Speaker 3: I mean the fact that we saw Oracle shares tumbel

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Speaker 3: the most is two thousand and two, even while posting

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Speaker 3: thirty percent levels of growth for Cloud when it comes

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Speaker 3: to Cloud AI offerings, it builds as though that just

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Speaker 3: cannot live up to the insatiable expectations of investors.

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Speaker 7: Right now, Oracle is still a single digit grower. It

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Speaker 7: was masked over the last twelve months by the Certner acquisition,

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Speaker 7: and they are growing the OCI cloud hosting business very rapidly,

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Speaker 7: but it's still a relatively small business for them, and

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Speaker 7: most of their other businesses are flat declining. We're growing

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Speaker 7: very slowly. They said, expectations that AI.

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Speaker 4: Care, I'm going to jump I'm going to jump in here, Gil,

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Speaker 4: I think we have some technical issues, but we really

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Speaker 4: appreciate your analysis of both companies, Salesforce and Oracle. That

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Speaker 4: was Gil Luria of DA Davidson up in Portland, Oregon.

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Speaker 4: I Phone fifteen Pro six point one inch screen nine

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Speaker 4: hundred and ninety nine dollars, I Phone fifteen Pro Macs

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Speaker 4: six point seven inch screen one one hundred and ninety

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Speaker 4: nine dollars for the starting version, two hundred and fifty

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Speaker 4: six gigabytes of memory. When you hold both handsets in

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Speaker 4: your hand, what jumps out? We'll turn them on their

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Speaker 4: end and you'll see the USBC connector or poor ending

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Speaker 4: almost twelve years of Lightning connector, which Apple introduced in

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Speaker 4: twenty twelve. By the way, goodbye ringer mute switch button thing,

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Speaker 4: Hello action button. Then you look around the edges and

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Speaker 4: the sides, and it's those titanium sides that are new

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Speaker 4: to the iPhone fifteen Pro and Promax generation. The colors

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Speaker 4: are interesting, more kind of limited options on the color

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Speaker 4: side for Pro and Promax compare with fifteen and fifteen

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Speaker 4: plus where you get these kind of brighter pastel colors.

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Speaker 4: And then for Pro and Promac, it's really what is

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Speaker 4: on the inside. The A seventeen processor, Apple's fastest ever

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Speaker 4: smartphone chip, brings much speed, but also more memory and

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Speaker 4: higher performance, and for Promax in particular, new camera technology

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Speaker 4: up to five x zoom or magnification, which is kind

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Speaker 4: of pushing things forward on the photo side for iPhone.

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Speaker 4: So you see Tim Cook there Carrie taking selfies with

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Speaker 4: the crowd, and it.

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Speaker 6: Was so active.

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Speaker 8: Did you get one egg?

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Speaker 4: Honestly, the weight was hours and I had bigger things

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Speaker 4: to report on. I wanted to get hands on with

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Speaker 4: the phones. But just take my word for it. If

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Speaker 4: there were one thousand people in the room, ninety percent

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Speaker 4: of them were just going oh USBC on the bottom.

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Speaker 4: That's the reality of it.

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Speaker 3: We can be quite basic sometimes, can't we add it

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Speaker 3: all comes down to charging.

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Speaker 4: Yeah, and look, this was European Union mandated. It had

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Speaker 4: a deadline of twenty twenty four. Apple sort of jumped

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Speaker 4: before they were pushed on it. But it brings that

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Speaker 4: device in line with other Apple devices and every other

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Speaker 4: product that's out there from other brands. So I thought

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Speaker 4: that was really impoint by the way, which color would

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Speaker 4: you go for of what you just saw? What was

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Speaker 4: your favorite?

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Speaker 6: I mean anything goldie look can chain? I'm into.

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Speaker 3: The only issue being I then have to get some

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Speaker 3: enormous black plastic contraption to go over the top so

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Speaker 3: or don't hurt it. So kind of honor agnostic nowadays.

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Speaker 4: And as we know, no more leather in Apple accessories

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Speaker 4: and on gold I'm going to ask Mark German about

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Speaker 4: that in just a moment, so let's bring him in

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Speaker 4: Bloomber's Mark German to recap the day that was in

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Speaker 4: the Apple event, I mean Mark. The emphasis from the

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Speaker 4: street at Lease has been the pricing of iPhone fifteen

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Speaker 4: Pro Max. They raised the price by one hundred dollars.

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Speaker 4: What technology do you get in return?

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Speaker 9: So the price increase is really interesting because they went

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Speaker 9: as minor and stealth as they could on this price increase.

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Speaker 9: What they've done is they've eliminated the one hundred and

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Speaker 9: twenty eight gigabyte capacity option.

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Speaker 10: For the Promax starting at.

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Speaker 9: That two fifty six gigabyte, so they didn't raise the

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Speaker 9: price of that storage tier, but they raised the price

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Speaker 9: of the phone by removing that entry level tier. So

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Speaker 9: about a nine percent price increase in the US, but

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Speaker 9: you're having more sizeable price increases elsewhere. There's a minor

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Speaker 9: price jump in China. There's a fourteen percent price increase

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Speaker 9: on the Pro models in India. In Canada, you have

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Speaker 9: a fifty Canadian dollar increase on the regular Pro and

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Speaker 9: a two hundred dollars Canadian dollar increase on the Promax.

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Speaker 9: The differences this year between the Promo Pomacs are broader

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Speaker 9: than ever before it just was battery life and stream size.

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Speaker 9: Now you're getting that periscope camera that gives you that

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Speaker 9: five x zoom on the optical side, so hardware zoom

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Speaker 9: five x, which means no degradation, and then twenty five

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Speaker 9: x zoom on the digital side, so the quality will

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Speaker 9: dip a little bit, but you have that intense twenty

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Speaker 9: five x zoom. So it's an interesting strategy. But I

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Speaker 9: do think that camera will come to the lower end

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Speaker 9: model next.

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Speaker 3: Year, and strategy is so necessary because we know the

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Speaker 3: context with which Apple not only puts its new phones

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Speaker 3: into the market where we're worried about the Chinese consumer,

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Speaker 3: but also more broadly, revenue's been on the downside.

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Speaker 6: iPhone is still so integral.

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Speaker 3: Is it obvious to you that this is going to

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Speaker 3: be a hot seller as we head towards holidays?

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Speaker 9: You know, I'll tell you I've had some time to

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Speaker 9: digest the announcements. I would say that these are pretty

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Speaker 9: minor refreshes overall. But there is a new casing on

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Speaker 9: the iPhone fifteen Pro and promax right that titanium and

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Speaker 9: what I think consumers that are jumping for iPhones, those

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Speaker 9: early adopters, but those big Apple fans, they want to

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Speaker 9: buy what looks new, and these new phones look new.

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Speaker 10: So they're going to buy them, right.

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Speaker 9: But the technology itself, the feature set, it's not going

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Speaker 9: to feel much different. It's not going to operate much

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Speaker 9: different than the year prior. If you have a fourteen Pro,

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Speaker 9: you probably don't need to update to a fifteen Pro.

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Speaker 9: This is going to bring in people who are on thirteen's,

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Speaker 9: twelve to elevens and earlier. But I certainly think despite that,

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Speaker 9: that new design.

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Speaker 10: Is going to do enough and they are going to.

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Speaker 9: Get done what they need to get done, and that

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Speaker 9: is to probably meet their sales expectations for the holiday

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Speaker 9: order and titanium. You can see why their marketing is

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Speaker 9: all in in titanium because that's really what they got

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Speaker 9: this year.

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Speaker 1: Mark.

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Speaker 4: We got the investors perspective on Bloomberg Television earlier today

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Speaker 4: on Cole Crawford, who's a portfolio manager at Alja. Just

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Speaker 4: have a listen to what she had to say.

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Speaker 11: Forty percent of Apple's earnings comes from their services revenue,

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Speaker 11: and that services revenue is almost utility like in nature.

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Speaker 8: It's the storage that you pay.

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Speaker 11: On your iPhone, which you know, we're only increasing the

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Speaker 11: amount of storage and the number of photos that we

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Speaker 11: have in the cloud, and so there is almost a

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Speaker 11: stability aspect to the stock. Although granted, I do worry

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Speaker 11: that the handset numbers are going to come under pressure,

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Speaker 11: not only in China.

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Speaker 8: But also in the US.

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Speaker 4: Mark China is a concern. Timing is everything we heard

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Speaker 4: from the Chinese government overnight about the reports of clamping

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Speaker 4: down on foreign handsets. What do we know?

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Speaker 8: What is the latest?

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Speaker 9: Yeah, two things I'd argue on that first point, services

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Speaker 9: are not forty percent of Apple's overall revenue. If that

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Speaker 9: was the case, we would be having a much different discussion.

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Speaker 9: It's about twenty percent. But I will note that they

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Speaker 9: did announce new iicloud storage tiers, going from a ten

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Speaker 9: dollars maximum two terabytes to a sixty dollars a month

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Speaker 9: maximum at twelve terabytes. I'd be shocked if anyone could

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Speaker 9: fill up twelve terabytes in two and a half lifetimes,

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Speaker 9: but certainly those options are there. In terms of the

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Speaker 9: China situation, it seems like we're doing two things. They

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Speaker 9: seem to be walking back some of these claims and

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Speaker 9: reports by saying there has not been a ban. Just

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Speaker 9: because China is saying that doesn't mean it to be true.

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Speaker 9: I definitely still believe that government agencies are pushing their

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Speaker 9: employees and their workers to not bring iPhones into work.

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Speaker 9: But you know, publicly they are walking that notion back,

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Speaker 9: and privately they are probably still discussing, you know, the

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Speaker 9: future of Apple and that relationship there. In terms of

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Speaker 9: the other claims they said, they said they've seen security

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Speaker 9: issues on iPhones, I personally think they're referring to some

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Speaker 9: of the reports you've seen around iPhone security up in recent.

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Speaker 3: Weeks, always bringing us the full picture, Markham and going

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Speaker 3: into national when it comes to Apple, we thank you

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Speaker 3: so much. I mean, let's talk about what's coming up

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Speaker 3: as well, because we're not just talking about hardware and services.

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Speaker 3: We're thinking about what goes on inside the world of

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Speaker 3: technology right now and how it affects the way you work.

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Speaker 6: Work shifting is upon us to see you of GitHub.

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Speaker 3: Well, we're going to be thinking about all the artificial

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Speaker 3: intelligence viewpoints there as the bloombag technology time now for

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Speaker 3: work shifting, where we look at the changing landscape of

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Speaker 3: the labor market amid advances in technology.

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Speaker 6: If you're a developer, it's changing fast.

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Speaker 3: Gethubs Ai coding assistant Copilot for example, has tens of

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Speaker 3: thousands of enterprise customers. Are millions of users getting excited

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Speaker 3: about it. Hit to explain how it's actually boosting productivity

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Speaker 3: in the here and the now. Thomas Donkey, he's GitHub CEO.

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Speaker 3: It's great to have you in the studio Thomas. And

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Speaker 3: what I'd love a sense of is how much we're

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Speaker 3: seeing a speed up, how much productivity and how you

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Speaker 3: measure that at the moment.

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Speaker 12: Yeah, thank you so much for having me really exciting times.

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Speaker 12: You know, every company now is a software company. It's

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Speaker 12: not only the big tech you know on the West Coast,

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Speaker 12: it's really every bank, every supermarket, every automaker.

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Speaker 1: They all have to write software.

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Speaker 12: So their employee software developers. And what they do is,

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Speaker 12: you know, they're they're writing code on their machines and

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Speaker 12: get a copilot pretrix that next word, the next line,

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Speaker 12: even even multiple lines of code. And so in the

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Speaker 12: last two years since we launched get up copilate, we

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Speaker 12: saw that half the code is written by copilot in

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Speaker 12: those file to US enabled and it increases productivity of

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Speaker 12: up to fifty five percent.

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Speaker 6: And so we're seeing like the.

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Speaker 12: First real use case for AI way whole sector of

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Speaker 12: the workforce is adopting US to care productivity.

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Speaker 3: Also fascinating because you're within the Microsoft overall family. So

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Speaker 3: open AI has got this relationship. There's also open AI

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Speaker 3: code Interpreter. You've also think got some open source applications

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Speaker 3: sort of coming to the pipeline. We're looking at some exuberance.

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Speaker 3: It feels like in the developer world for open interpreter,

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Speaker 3: where do you go open source, non open source, open

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Speaker 3: AI GitHub, open interpreter, what are the offerings here.

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Speaker 12: I mean all of those will be probably covered and

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Speaker 12: cover different use cases. The opening I could and Torpreter

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Speaker 12: really helps you with analyzing data. It's really for the

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Speaker 12: Microsoft Excel user to process some data and broad charts

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Speaker 12: and those kinds of things with copartnered GitHub and then

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Speaker 12: quite frankly, at Microsoft we've always been a developer tools company.

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Speaker 12: Microsoft's first ever product was altair Base, you know, basic

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Speaker 12: Interpreter almost forty almost fifty years ago, forty eight years ago.

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Speaker 1: And so with giithub we're going.

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Speaker 12: Where the developer is there, then the editor. They're writing code,

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Speaker 12: they're debugging code. They have to you know, understand code

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Speaker 12: that comes as far back from the sixties programming language

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Speaker 12: called cobol all the way to you now of the

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Speaker 12: modern stacked, the cloud native companies that build you know,

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Speaker 12: the e commerce world of today, all of them use

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Speaker 12: code to build the innovation.

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Speaker 4: Thomas, how big a player or contributor is GitHub in

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Speaker 4: the open source AI movement? Do you consider GitHub a

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Speaker 4: leader there?

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Speaker 1: Getub is the home of open source.

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Speaker 12: You now, many, if not, if not the most, the

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Speaker 12: majority of open source projects is hosted on GitHub in

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Speaker 12: As such, you know, many of those new AI projects

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Speaker 12: are also hosted on GitHub and and getub is supporting

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Speaker 12: them by providing them free hosting for their source code,

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Speaker 12: you know, for their project, for their issue tracking, for discussions,

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Speaker 12: and of course we're enabling them to use get up

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Speaker 12: copilot to build their AI innovation.

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Speaker 4: Thomas, I speak to all kinds of founders, software engineers

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Speaker 4: about copilot. Are you able to tell me what specific

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Speaker 4: coding projects are happening with copilot and do you track them?

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Speaker 4: Do you have the data that can tell you the

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Speaker 4: specific areas of focus.

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Speaker 12: So we don't track, you know, on the large scale

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Speaker 12: of what project that would be a violation of our

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Speaker 12: private principles. But for individual organizations, we can show them

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Speaker 12: the data in which repositories, in which projects they're most successful.

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Speaker 6: With the use of copilot.

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Speaker 12: You know, there are certain programming languages like Python or

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Speaker 12: JavaScript that see really strong benefits from the use of

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Speaker 12: Copilot and a lot of lines of code written for

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Speaker 12: these projects.

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Speaker 3: Meanwhile, Blosso Microsoft sat in Adela's in Washington, along with

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Speaker 3: an awful lot of other key leaders thinking about the

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Speaker 3: future regulation when it comes to artificial intelligence. Are you

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Speaker 3: positive and feeling that's going to be written well for

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Speaker 3: GitHub to continue to see this evolution on your own platforms.

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Speaker 12: It's great that these conversations are happening, and we really

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Speaker 12: need to have these conversations happening in Washington because we

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Speaker 12: need the regulation happening.

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Speaker 10: Fast, right.

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Speaker 12: We need the legal security, the legal safety to apply

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Speaker 12: these tools and get the productivity gains. And think about

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Speaker 12: like many companies now have software developers spread a whole

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Speaker 12: around the whole world. You know, they're sitting here in

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Speaker 12: the United States, that's in Germany, in India, in Australia,

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Speaker 12: and so we also need to have regulation that is

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Speaker 12: somewhat equal across these countries because otherwise, as a software developer, myself,

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Speaker 12: as the manager of you now thousands of software developers,

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Speaker 12: I don't want my software developers in the United States

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Speaker 12: that have a different productivity gain than those that sit

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Speaker 12: in Germany and those that sit in India, right, we don't.

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Speaker 1: We want a.

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Speaker 12: Balance across all these countries, not not a competition between

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Speaker 12: these countries.

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Speaker 6: Fascinating. Thomas Doomkey of GitHub, we thank.

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Speaker 3: You, welcome back to Umore Technology.

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Speaker 6: I'm Caroline Heard in New York and.

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Speaker 4: I'm Ed Ludlow in San Francisco Cara quick check in

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Speaker 4: on the markets and as that one hundred, this tech

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Speaker 4: heavy index, It's been a choppy week of trading up Monday,

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Speaker 4: down Tuesday, and now we're up Wednesday modestly. CPI data

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Speaker 4: a little hotter than expected. We ask questions therefore about

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Speaker 4: what the Federal Reserve does in the rest of the year.

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Speaker 4: Do they raise rates one more time again? And when?

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Speaker 4: Why do we care? Because higher rates impact the present

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Speaker 4: cash values of future cash flows for tech companies, particularly

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Speaker 4: on Then as that one hundred, you have lots of

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Speaker 4: software names trading at higher multiples. That's what we care about.

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Speaker 4: In terms of specific movers.

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Speaker 6: We're watching a lot of the leaders in the.

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Speaker 4: Artificial intelligence space, some names behind me, all of them

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Speaker 4: moving to the upside. Microsoft up one point, sent a

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Speaker 4: big point boost on then as that one hundred, Palenteer

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Speaker 4: and Meta. What all three stocks have in common is

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Speaker 4: that their CEOs are all in one place right now

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Speaker 4: in a very important meeting. That is one of our

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Speaker 4: top stories. More than twenty tech and civil society leaders

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Speaker 4: are current taking part in a closed door Senate meetings

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Speaker 4: talk about how to shape AI regulation. Heavy hitters like

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Speaker 4: Elon Musk. Sam Altman andson Depitchai are present. We caught

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Speaker 4: up with Senator Elizabeth Warren and got her take and

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Speaker 4: talks about Musk.

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Speaker 6: They're sitting at a big round table all by themselves.

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Speaker 13: All of the senators are to sit there and ask

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Speaker 13: no questions.

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Speaker 8: That's the setup.

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Speaker 1: For more.

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Speaker 4: Let's bring in Bloomberg's Anda Eduton on the ground in DC.

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Speaker 4: What's going on inside that romana.

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Speaker 14: Well, I'm speaking with several people who are actually in

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Speaker 14: the room with the CEOs, and they're saying that right

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Speaker 14: now there's a discussion going on about open source and

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Speaker 14: the security of sharing open source resource research. You have

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Speaker 14: people like Clement DeLong of Hu Hugging Face and others

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Speaker 14: who are saying that open source is good and important

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Speaker 14: for innovation. You have others like Mark Zuckerberg who is

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Speaker 14: saying that it presents and security risk. So there have

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Speaker 14: already been some interesting exchanges and we'll see how the

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Speaker 14: rest of the session develops this afternoon they go into

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Speaker 14: more conversation.

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Speaker 6: How fascinating. Let's just go. We have of course Elo

442
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Speaker 6: masks coming live to us. We understand. Let's just dip

443
00:22:08,119 --> 00:22:09,880
Speaker 6: in for a seconds in.

444
00:22:09,880 --> 00:22:12,480
Speaker 1: Order I think the general.

445
00:22:12,560 --> 00:22:15,480
Speaker 15: I think it's clear that there's a strong consensus of

446
00:22:15,560 --> 00:22:18,080
Speaker 15: woman's with sensus that there should be some AI regulation

447
00:22:18,440 --> 00:22:19,440
Speaker 15: that would be in the best.

448
00:22:19,240 --> 00:22:21,959
Speaker 1: Interests of the people to do so. And I think

449
00:22:22,000 --> 00:22:23,080
Speaker 1: we'll probably see something happen.

450
00:22:23,119 --> 00:22:26,040
Speaker 15: I don't know what, on what time frame or exactly

451
00:22:26,080 --> 00:22:27,119
Speaker 15: how it will manifest itself.

452
00:22:27,520 --> 00:22:29,760
Speaker 1: Questions what are they going to do? I don't know.

453
00:22:29,880 --> 00:22:34,119
Speaker 15: I mean, there's this, there's clearly we've created regulatory agencies before,

454
00:22:34,880 --> 00:22:38,359
Speaker 15: and actually just recently just before leaving, made the point that,

455
00:22:39,440 --> 00:22:42,639
Speaker 15: you know, while our regulatory agencies are not perfect, and

456
00:22:42,720 --> 00:22:46,080
Speaker 15: I deal with regulators on a very frequent basis with

457
00:22:46,240 --> 00:22:52,960
Speaker 15: automotive you know, communications starling and then a with with rockets,

458
00:22:53,000 --> 00:22:57,960
Speaker 15: so I've had transfiy interaction with regulators for you know,

459
00:22:58,440 --> 00:23:03,040
Speaker 15: decades a please, and well, regulators are not perfect.

460
00:23:03,440 --> 00:23:05,520
Speaker 1: There's no regulatory agency, but I'm aware of that.

461
00:23:05,560 --> 00:23:08,320
Speaker 15: I think we should at the federal level at least

462
00:23:08,320 --> 00:23:09,560
Speaker 15: that that we should delete.

463
00:23:09,800 --> 00:23:12,960
Speaker 1: Yeah, I should be I think I or something like

464
00:23:13,000 --> 00:23:13,880
Speaker 1: that someone.

465
00:23:14,880 --> 00:23:18,080
Speaker 15: Yeah, I don't know what exactly, perhaps perhaps an apartment

466
00:23:18,119 --> 00:23:18,680
Speaker 15: of AI.

467
00:23:20,400 --> 00:23:22,480
Speaker 1: And probably listen, I think the probably any.

468
00:23:22,359 --> 00:23:24,840
Speaker 15: Of there being some sort of a regulatory agency that

469
00:23:24,960 --> 00:23:27,600
Speaker 15: sends on its own, similar to the f A or FC.

470
00:23:27,520 --> 00:23:32,160
Speaker 1: Is likely at some point, you think so, I think so. Now.

471
00:23:32,480 --> 00:23:35,880
Speaker 15: The reason that I've been such an affable AI safety

472
00:23:35,960 --> 00:23:39,040
Speaker 15: in advance of sort of anything terrible happening is that

473
00:23:39,119 --> 00:23:44,480
Speaker 15: I think the consequences of AI going wrong are are severe.

474
00:23:44,920 --> 00:23:47,000
Speaker 1: So we have to be proactive rather than reactive.

475
00:23:47,680 --> 00:23:49,840
Speaker 15: Uh, you know in the past, if he takes a

476
00:23:50,480 --> 00:23:53,040
Speaker 15: but I'm being somewhat late, full of speaking of regulators.

477
00:23:53,119 --> 00:23:54,720
Speaker 15: I'm a little late for the f A. I'm meeting with

478
00:23:54,760 --> 00:23:56,800
Speaker 15: the FA and holds you up, sure, but.

479
00:23:59,040 --> 00:24:01,160
Speaker 1: Yeah, if you if you take the exact of safety belts.

480
00:24:01,119 --> 00:24:03,879
Speaker 1: Seatbelts were opposed by.

481
00:24:03,760 --> 00:24:05,680
Speaker 15: The auto industry for a very long time, even though

482
00:24:05,720 --> 00:24:08,440
Speaker 15: the data was very clear that they're safe, that they

483
00:24:08,800 --> 00:24:09,920
Speaker 15: radically improve.

484
00:24:11,600 --> 00:24:12,280
Speaker 1: Deaths and injuries.

485
00:24:13,680 --> 00:24:16,119
Speaker 15: So, you know, we don't want to be in that

486
00:24:16,160 --> 00:24:19,720
Speaker 15: situation where we're fighting regulations even though you know there's

487
00:24:19,760 --> 00:24:20,400
Speaker 15: a safety thing.

488
00:24:20,640 --> 00:24:22,879
Speaker 1: We can't wait for millions of people to die in

489
00:24:23,000 --> 00:24:26,879
Speaker 1: auto accidents, as you know, constutely like. And it's important

490
00:24:26,880 --> 00:24:28,240
Speaker 1: to just elevate the question here.

491
00:24:28,880 --> 00:24:32,800
Speaker 15: Question is is really one of civilizational risks, So just

492
00:24:32,920 --> 00:24:35,080
Speaker 15: it's it's not like one group.

493
00:24:34,920 --> 00:24:36,760
Speaker 1: Versus another, one group of humans us another.

494
00:24:36,840 --> 00:24:38,920
Speaker 15: It's like, hey, this is something that's potentially risk people,

495
00:24:39,000 --> 00:24:40,840
Speaker 15: whole humans everywhere.

496
00:24:41,800 --> 00:24:48,520
Speaker 1: Very important to understand that is there an equally.

497
00:24:46,640 --> 00:24:49,280
Speaker 8: Hunger sufficiently premar.

498
00:24:49,359 --> 00:24:52,639
Speaker 15: No, no, no, no, the sequence of events will not

499
00:24:52,680 --> 00:24:56,359
Speaker 15: be jumping at the deep end and making the rules.

500
00:24:56,560 --> 00:25:00,280
Speaker 1: But it saw us with insight tract.

501
00:25:00,320 --> 00:25:02,639
Speaker 15: This is actually how all of the regulatory bodies performed

502
00:25:02,680 --> 00:25:05,600
Speaker 15: their believe as you start with a group formed to

503
00:25:05,640 --> 00:25:09,680
Speaker 15: create insight to understand the situation, then you have proposed

504
00:25:09,720 --> 00:25:12,840
Speaker 15: rule making. You'll get some rejections from industry or whatever,

505
00:25:13,560 --> 00:25:15,800
Speaker 15: and then ultimately you get sort of a consensus sort

506
00:25:15,800 --> 00:25:16,359
Speaker 15: of role making.

507
00:25:16,560 --> 00:25:19,160
Speaker 1: Their rulemaking then becomes a law regulation.

508
00:25:26,320 --> 00:25:28,919
Speaker 6: There you have it. You must speaking to reporters.

509
00:25:28,960 --> 00:25:31,080
Speaker 3: Of course, it seems to be as they draw to

510
00:25:31,119 --> 00:25:33,280
Speaker 3: a close for the lunch time break, and and we

511
00:25:33,359 --> 00:25:35,440
Speaker 3: understand that some people are going to be subbing in

512
00:25:35,720 --> 00:25:38,320
Speaker 3: for the CEOs of their companies for the second half

513
00:25:38,359 --> 00:25:40,960
Speaker 3: of the discussions with senators, and we'll broadly we heard

514
00:25:41,000 --> 00:25:43,000
Speaker 3: from me La Must they're really talking about whether or

515
00:25:43,000 --> 00:25:46,159
Speaker 3: not we will see some sort of regulator start to

516
00:25:46,359 --> 00:25:48,080
Speaker 3: oversee artificial intelligence.

517
00:25:48,160 --> 00:25:49,120
Speaker 6: Just tell us if you.

518
00:25:49,040 --> 00:25:51,600
Speaker 3: Can summarize the arguments we've heard thus far of how

519
00:25:51,840 --> 00:25:54,840
Speaker 3: you really get to grips with regulating AI more broadly.

520
00:25:55,840 --> 00:25:56,879
Speaker 6: I mean, that's the question.

521
00:25:56,960 --> 00:25:58,439
Speaker 14: I think you have most of the people in that

522
00:25:58,560 --> 00:26:00,880
Speaker 14: room agreeing that there should be so kind of regulation,

523
00:26:01,000 --> 00:26:03,520
Speaker 14: but there's no agreement about how and when it comes to,

524
00:26:03,560 --> 00:26:07,480
Speaker 14: like a licensing regime or a regulatory agency like Musk

525
00:26:07,600 --> 00:26:10,000
Speaker 14: was just talking about. We know that other companies like

526
00:26:10,040 --> 00:26:13,359
Speaker 14: IBM actually oppose that proposal, whereas you know others like

527
00:26:13,400 --> 00:26:16,199
Speaker 14: Microsoft and open Ai think that would be a good idea.

528
00:26:16,320 --> 00:26:18,919
Speaker 14: So we'll see more policy discussion about that as we

529
00:26:18,960 --> 00:26:21,879
Speaker 14: go into the afternoon. And an interesting thing about Musk.

530
00:26:22,119 --> 00:26:24,720
Speaker 14: In his opening statement, he tried to make the point

531
00:26:24,760 --> 00:26:27,240
Speaker 14: that the AI that powers self driving cars is not

532
00:26:27,280 --> 00:26:29,919
Speaker 14: as dangerous as the kind of deep mind AI that

533
00:26:30,320 --> 00:26:34,000
Speaker 14: emulates human intelligence. However, he did get some pushback on

534
00:26:34,040 --> 00:26:37,160
Speaker 14: that from deb Raji, one of the researchers from Berkeley,

535
00:26:37,160 --> 00:26:41,199
Speaker 14: who made the point that self driving car powered AI

536
00:26:41,400 --> 00:26:43,639
Speaker 14: could also make mistakes that could prove to be fatal.

537
00:26:44,640 --> 00:26:47,359
Speaker 3: Well, said Anna edgeton getting all the inside track and

538
00:26:47,400 --> 00:26:49,399
Speaker 3: the closed door meeting and us wringing you what was

539
00:26:49,400 --> 00:26:51,480
Speaker 3: happening just on the outside of that, we need a

540
00:26:51,560 --> 00:26:52,120
Speaker 3: musk as well.

541
00:26:52,200 --> 00:26:53,360
Speaker 6: Let's continue this conversation.

542
00:26:53,440 --> 00:26:55,440
Speaker 3: I'm pleased to say Dominique Shelton Leipzig is with a

543
00:26:55,600 --> 00:26:58,439
Speaker 3: privacy and cybersecurity partner at Maya Brown Needs of the

544
00:26:58,480 --> 00:27:01,000
Speaker 3: firm's global day to renovation team, offering CEO and more

545
00:27:01,119 --> 00:27:04,359
Speaker 3: level advice basically on exactly this on the impact of

546
00:27:04,400 --> 00:27:07,879
Speaker 3: multiplagy intelligence and how it should be adopted without some

547
00:27:07,960 --> 00:27:11,040
Speaker 3: sort of a regulatory framework. Are you positive that we

548
00:27:11,080 --> 00:27:13,520
Speaker 3: will get a regulator or will it be down to

549
00:27:13,560 --> 00:27:14,760
Speaker 3: self regulation once more?

550
00:27:15,400 --> 00:27:18,320
Speaker 2: You know, thank you so much Caroline for having me,

551
00:27:18,440 --> 00:27:22,520
Speaker 2: and thank you also. This is such an important issue

552
00:27:22,720 --> 00:27:27,480
Speaker 2: and just hearing what the CEO Musk was talking about

553
00:27:27,640 --> 00:27:34,040
Speaker 2: how AI is really going to impact all of our lives, medical, financial, educational.

554
00:27:34,400 --> 00:27:38,119
Speaker 2: So this conversation that's happening with the senators is so important.

555
00:27:38,720 --> 00:27:42,240
Speaker 2: We are going to see regulation. The only question will

556
00:27:42,280 --> 00:27:44,879
Speaker 2: be whether the United States moves first.

557
00:27:45,720 --> 00:27:48,359
Speaker 8: What we've got we're very close.

558
00:27:48,119 --> 00:27:52,760
Speaker 2: To right now is legislation being adopted in Europe to

559
00:27:52,840 --> 00:27:57,080
Speaker 2: govern AI, and we're expecting that by December twenty twenty three.

560
00:27:57,200 --> 00:27:59,880
Speaker 8: So the issue is there are thirty.

561
00:27:59,680 --> 00:28:03,840
Speaker 2: Seven countries and six continents that have draft legislation already

562
00:28:04,040 --> 00:28:07,280
Speaker 2: before their legislatures, and Europe looks like it will go

563
00:28:07,400 --> 00:28:10,080
Speaker 2: first with the US behind, and EU.

564
00:28:10,040 --> 00:28:11,159
Speaker 6: Sort of shifted tone.

565
00:28:11,320 --> 00:28:13,000
Speaker 3: Originally it felt as though they were going to be

566
00:28:13,040 --> 00:28:16,160
Speaker 3: regulating application of AI, but then suddenly it turned its

567
00:28:16,160 --> 00:28:18,920
Speaker 3: attention more to the actual building of the foundational models.

568
00:28:19,560 --> 00:28:21,760
Speaker 3: That seems to be an argument being pushed back against

569
00:28:21,800 --> 00:28:24,719
Speaker 3: these some US CEOs. They don't want to see the

570
00:28:24,720 --> 00:28:28,199
Speaker 3: building of foundational models being under some sort of scope

571
00:28:28,240 --> 00:28:31,280
Speaker 3: here is that already thrown out with the bath water.

572
00:28:31,920 --> 00:28:34,000
Speaker 2: I think this is going to be an ongoing debate,

573
00:28:34,880 --> 00:28:39,240
Speaker 2: and there's a discussion at the US level and also

574
00:28:39,280 --> 00:28:45,400
Speaker 2: the international level about having the actual deployers, the users

575
00:28:45,640 --> 00:28:50,880
Speaker 2: of the AI having guardrails as well as the providers

576
00:28:51,120 --> 00:28:54,880
Speaker 2: and the foundation models as well of a generative AI

577
00:28:55,240 --> 00:28:58,200
Speaker 2: large language models. So I think we're starting to see

578
00:28:58,280 --> 00:29:02,200
Speaker 2: proposals like the one that came out yesterday with Senator

579
00:29:02,680 --> 00:29:06,440
Speaker 2: Blumenthal and Holly. They have a framework that would encompass

580
00:29:06,800 --> 00:29:10,880
Speaker 2: the large language models as well as the other types

581
00:29:10,920 --> 00:29:11,320
Speaker 2: of AI.

582
00:29:12,680 --> 00:29:15,560
Speaker 4: Dominique Guenela Musk was speaking just a few moments ago.

583
00:29:15,640 --> 00:29:18,680
Speaker 4: He gave the analogy of acting on AI safety as

584
00:29:18,680 --> 00:29:21,880
Speaker 4: being akin to the seat belt that with the seat

585
00:29:21,880 --> 00:29:25,920
Speaker 4: belt action came after many tragedies and crashes, and he

586
00:29:26,000 --> 00:29:29,600
Speaker 4: just wants to be proactive rather than reactive. Is that

587
00:29:29,640 --> 00:29:32,000
Speaker 4: an approach that you think will work based on what

588
00:29:32,120 --> 00:29:33,400
Speaker 4: DC's saying right now.

589
00:29:34,040 --> 00:29:36,800
Speaker 2: Yes, I think it's very exciting to see this number

590
00:29:37,000 --> 00:29:41,880
Speaker 2: of CEOs. We have literally the most important and largest

591
00:29:41,960 --> 00:29:45,080
Speaker 2: tech companies that are present in DC right now to

592
00:29:45,120 --> 00:29:47,920
Speaker 2: discuss this issue because they do see it as being

593
00:29:48,000 --> 00:29:51,600
Speaker 2: important and they are being proactive. I think it's wonderful

594
00:29:51,640 --> 00:29:53,880
Speaker 2: that the academics are there as well and the community

595
00:29:53,920 --> 00:29:58,760
Speaker 2: groups are present at Senator Schumer's forum because the point

596
00:29:58,840 --> 00:29:59,680
Speaker 2: is that we all need.

597
00:29:59,520 --> 00:30:01,280
Speaker 8: To grapple these issues together.

598
00:30:02,120 --> 00:30:05,360
Speaker 2: There is going to need to be a communication from

599
00:30:05,840 --> 00:30:10,880
Speaker 2: proactive steps taken by the leadership of our tech companies,

600
00:30:10,920 --> 00:30:13,360
Speaker 2: and they're doing that just by their presence of being

601
00:30:13,440 --> 00:30:15,680
Speaker 2: present to have these very important discussions.

602
00:30:15,880 --> 00:30:17,240
Speaker 8: So I'm excited for the future.

603
00:30:18,120 --> 00:30:18,560
Speaker 6: Dominie.

604
00:30:18,600 --> 00:30:22,560
Speaker 4: Do you get the sense that policy makers legislators are

605
00:30:22,880 --> 00:30:26,200
Speaker 4: as collaborative on this issue as the private sector is.

606
00:30:26,240 --> 00:30:29,440
Speaker 4: They're actually engaging on it with those that are leading

607
00:30:29,480 --> 00:30:30,960
Speaker 4: the development of the technology.

608
00:30:31,720 --> 00:30:35,120
Speaker 2: Yes, what I'm seeing is cross party in the US,

609
00:30:35,240 --> 00:30:41,080
Speaker 2: cross party and bipartisan support around answering the call of

610
00:30:41,160 --> 00:30:45,920
Speaker 2: many of these CEOs to put in place the opportunities

611
00:30:45,960 --> 00:30:49,760
Speaker 2: and governance and guardrails that will allow AI to be

612
00:30:49,920 --> 00:30:54,120
Speaker 2: just amazing. So what we want is the ability to

613
00:30:54,280 --> 00:30:59,520
Speaker 2: innovate and create understanding where there are limits or areas

614
00:30:59,560 --> 00:31:03,480
Speaker 2: where safety needs to come first, and this is something

615
00:31:03,480 --> 00:31:07,720
Speaker 2: that the regulators and the business community are aligning on.

616
00:31:08,120 --> 00:31:10,120
Speaker 2: I also will say what's good this time is that

617
00:31:10,160 --> 00:31:16,360
Speaker 2: there is also the use of research scientists, large language

618
00:31:16,520 --> 00:31:21,440
Speaker 2: model experts to engage them on how this technology actually

619
00:31:21,480 --> 00:31:25,040
Speaker 2: works and therefore how we can craft common sense legislation.

620
00:31:26,360 --> 00:31:27,680
Speaker 6: What is it being talked about?

621
00:31:28,880 --> 00:31:29,560
Speaker 8: What's not being.

622
00:31:29,520 --> 00:31:33,200
Speaker 2: Talked about are the nitty gritty of the sort of

623
00:31:33,440 --> 00:31:37,520
Speaker 2: unanimity of thinking around the world in terms of what

624
00:31:37,600 --> 00:31:40,800
Speaker 2: the legislation should look like. What we're seeing all around

625
00:31:40,800 --> 00:31:44,720
Speaker 2: the world is a focus on ranking risk ranking of AI,

626
00:31:45,920 --> 00:31:49,200
Speaker 2: focus on high risk, treating that differently than we're treating

627
00:31:49,400 --> 00:31:50,480
Speaker 2: low risk AI.

628
00:31:50,960 --> 00:31:52,720
Speaker 8: There's also a focus.

629
00:31:52,320 --> 00:31:56,440
Speaker 2: On testing and monitoring and auditing of the systems themselves

630
00:31:56,680 --> 00:31:58,960
Speaker 2: to make sure that they are amazing and they're doing

631
00:31:59,040 --> 00:32:01,480
Speaker 2: exactly what the companies want them to do and with

632
00:32:01,560 --> 00:32:05,200
Speaker 2: the public wants, and so I'm very excited for the

633
00:32:05,240 --> 00:32:09,160
Speaker 2: way the legislation, the draft legislation has been put together

634
00:32:09,280 --> 00:32:13,560
Speaker 2: and the framework that has been floated in Washing, Frameworks

635
00:32:13,600 --> 00:32:16,560
Speaker 2: being floated in Washington as well as around the world,

636
00:32:16,600 --> 00:32:20,240
Speaker 2: because we're getting at tackling the actual governance that will

637
00:32:20,240 --> 00:32:21,160
Speaker 2: make AI amazing.

638
00:32:22,280 --> 00:32:25,600
Speaker 4: Dominique Caroline and I speak to companies and executives of

639
00:32:25,640 --> 00:32:29,040
Speaker 4: all shapes and sizes and sectors, and they're talking to

640
00:32:29,120 --> 00:32:31,800
Speaker 4: talk and it's really hard for us to discern if

641
00:32:31,840 --> 00:32:34,880
Speaker 4: they're walking the walk. Do you see clients actually spending

642
00:32:34,960 --> 00:32:39,880
Speaker 4: money and hiring the right people to operationalize any of

643
00:32:39,880 --> 00:32:41,000
Speaker 4: what we've just discussed.

644
00:32:41,520 --> 00:32:44,600
Speaker 2: Absolutely, you know what has been so exciting and what

645
00:32:44,640 --> 00:32:47,320
Speaker 2: we've seen. We have an AI task force that we

646
00:32:47,560 --> 00:32:51,080
Speaker 2: put together at our firm because it's a cross disciplinary issue,

647
00:32:51,240 --> 00:32:54,320
Speaker 2: and we every day I'm speaking to clients that are

648
00:32:54,440 --> 00:32:57,800
Speaker 2: from Fortune five hundred companies that are very serious about

649
00:32:58,120 --> 00:33:01,760
Speaker 2: getting AI governance right are already looking at.

650
00:33:01,720 --> 00:33:04,640
Speaker 8: Draft legislation and mapping to that now, so.

651
00:33:04,720 --> 00:33:08,640
Speaker 2: They are prepared and ready to pivot when final regulations

652
00:33:08,640 --> 00:33:08,880
Speaker 2: come in.

653
00:33:08,920 --> 00:33:10,960
Speaker 8: They're going to be already ahead of the game.

654
00:33:11,200 --> 00:33:14,640
Speaker 2: That's the way to approach this because, as mister Musk

655
00:33:14,680 --> 00:33:17,880
Speaker 2: said earlier, regulation is going to come, and so the

656
00:33:18,000 --> 00:33:20,760
Speaker 2: key here is really being prepared. And we're seeing clients

657
00:33:20,760 --> 00:33:23,080
Speaker 2: and companies every day. I talk to clients and companies

658
00:33:23,080 --> 00:33:26,080
Speaker 2: that are focused laser focused on getting this right and

659
00:33:26,120 --> 00:33:27,720
Speaker 2: being amazing with their AI.

660
00:33:27,880 --> 00:33:30,320
Speaker 3: And global regulation at that. Good to have a global

661
00:33:30,360 --> 00:33:32,080
Speaker 3: law firm with us. We thank you so much. Of course,

662
00:33:32,120 --> 00:33:35,680
Speaker 3: Dominique coming into the studio. Dominique Shelton Leipzig partner ever

663
00:33:35,720 --> 00:33:36,720
Speaker 3: at Mett bram ed.

664
00:33:37,680 --> 00:33:40,240
Speaker 4: All right, let's get some talking tech and first stop.

665
00:33:40,400 --> 00:33:43,440
Speaker 4: ARM is expecting to price its initial public offering at

666
00:33:43,440 --> 00:33:46,920
Speaker 4: the top end of its range or even higher. Bloomberg

667
00:33:46,960 --> 00:33:49,680
Speaker 4: sources say that the soft bank done chip designer could

668
00:33:49,720 --> 00:33:52,480
Speaker 4: be a dollar or more above its fifty one dollar target.

669
00:33:52,560 --> 00:33:56,280
Speaker 4: ARM sets begin trading on the Nasdaq tomorrow, and game

670
00:33:56,320 --> 00:33:59,440
Speaker 4: maker Square NX is hoping to rebound from the underwhelming

671
00:33:59,480 --> 00:34:03,479
Speaker 4: sales of Final Fantasy sixteen, the latest installment of its

672
00:34:03,520 --> 00:34:07,160
Speaker 4: global hit series. Nearly tw two billion dollars. Sorry of

673
00:34:07,200 --> 00:34:10,560
Speaker 4: its value has fallen since the game's release. Now, investors

674
00:34:10,560 --> 00:34:14,160
Speaker 4: are wondering if the legacy franchise has run its course. Plus,

675
00:34:14,200 --> 00:34:17,680
Speaker 4: the CEO of Binance US has left the company. Brian Schroeder,

676
00:34:17,760 --> 00:34:20,400
Speaker 4: stepped down from his role, just as the struggling crypto

677
00:34:20,480 --> 00:34:24,040
Speaker 4: platform conducted its second round of layoffs. More than one

678
00:34:24,120 --> 00:34:26,520
Speaker 4: hundred jobs have been cut from its workforce amid a

679
00:34:26,560 --> 00:34:30,160
Speaker 4: regulatory crackdown from the US Securities and Exchange Commission.

680
00:34:30,160 --> 00:34:33,040
Speaker 3: Caroline Mean, Well, look, let's talk about what else is

681
00:34:33,040 --> 00:34:36,200
Speaker 3: happening over in Washington and ten week and trust trial

682
00:34:36,239 --> 00:34:38,920
Speaker 3: between Google and the Department of Justice is underway, and

683
00:34:38,960 --> 00:34:40,840
Speaker 3: the government is accusing the search shound, of course, of

684
00:34:40,880 --> 00:34:43,759
Speaker 3: spending ten billion dollars a year to maintain what it

685
00:34:43,840 --> 00:34:45,920
Speaker 3: calls as a monopoly with us.

686
00:34:46,120 --> 00:34:48,200
Speaker 6: Is going to be really a moment to.

687
00:34:48,200 --> 00:34:51,560
Speaker 3: Dissect how we're hearing the arguments laid out ed. We

688
00:34:51,640 --> 00:34:54,239
Speaker 3: ultimately know that it feels as though we're trying to

689
00:34:54,239 --> 00:34:57,319
Speaker 3: reminisce to a nineteen nineties feeld of Microsoft. How much

690
00:34:57,480 --> 00:35:00,400
Speaker 3: is this a time that we're going to see timately

691
00:35:00,680 --> 00:35:03,279
Speaker 3: Alphabet be able to fight back on the grounds that, yes,

692
00:35:03,560 --> 00:35:06,839
Speaker 3: it is actually easy to be able to change your

693
00:35:06,880 --> 00:35:08,799
Speaker 3: ways in which you search. The point is that they're

694
00:35:08,840 --> 00:35:10,160
Speaker 3: so good no one wants to do that.

695
00:35:10,200 --> 00:35:12,919
Speaker 4: Ed, Yeah, And what I would say is the reason

696
00:35:13,000 --> 00:35:15,439
Speaker 4: we love hearings in court documents is sometimes you get

697
00:35:15,520 --> 00:35:18,600
Speaker 4: crazy stories like what Google was doing twenty years ago

698
00:35:19,080 --> 00:35:21,440
Speaker 4: to fight off its competition. Let's bring in Bloombergs near

699
00:35:21,520 --> 00:35:24,680
Speaker 4: Lylan out in DC on the antitrust beat. And that

700
00:35:24,800 --> 00:35:27,280
Speaker 4: was kind of a mainstay of your latest reporting, Leah,

701
00:35:27,480 --> 00:35:29,919
Speaker 4: what was going on inside Google two thousand and three

702
00:35:30,320 --> 00:35:33,799
Speaker 4: and what the Justice Department kind of unearthed in those disclosures?

703
00:35:33,840 --> 00:35:34,520
Speaker 4: What have we learned?

704
00:35:35,400 --> 00:35:39,040
Speaker 16: Yeah, So the very first witness who started last yesterday

705
00:35:39,080 --> 00:35:42,160
Speaker 16: afternoon is Hal Vari and he is Google's one time

706
00:35:42,560 --> 00:35:44,799
Speaker 16: chief economist, and he was sort of the one who

707
00:35:44,840 --> 00:35:49,120
Speaker 16: came up with this strategy that they ended up pursuing

708
00:35:49,160 --> 00:35:54,759
Speaker 16: to make Google's search engine that fuck across browsers and

709
00:35:55,120 --> 00:35:58,120
Speaker 16: mobile devices. It sort of came out of these memos

710
00:35:58,120 --> 00:36:01,320
Speaker 16: that he wrote in two thousand and three two thousand

711
00:36:01,360 --> 00:36:04,640
Speaker 16: and five timeframe, when they sort of discovered that if

712
00:36:04,680 --> 00:36:08,160
Speaker 16: people had set Google as their homepage, they ended up

713
00:36:08,200 --> 00:36:11,839
Speaker 16: doing a lot more searching than if they had their

714
00:36:11,880 --> 00:36:16,720
Speaker 16: homepage as something else like yeahoo aol MSN some of

715
00:36:16,760 --> 00:36:18,920
Speaker 16: the other big web pages of the day. So that

716
00:36:19,040 --> 00:36:20,840
Speaker 16: sort of made them realize that when you make it

717
00:36:20,880 --> 00:36:24,120
Speaker 16: really easy for people to do it, make it automatic,

718
00:36:24,640 --> 00:36:27,279
Speaker 16: it ends up leading to much more traffic and making it,

719
00:36:27,600 --> 00:36:29,600
Speaker 16: you know, Google, a much better product.

720
00:36:30,200 --> 00:36:33,319
Speaker 3: So hal Varian, he's been cooled, I understand, and course

721
00:36:33,360 --> 00:36:36,320
Speaker 3: to testify that was one of the first moves made.

722
00:36:37,120 --> 00:36:40,879
Speaker 3: Are we likely to see this momentum build in terms

723
00:36:40,920 --> 00:36:43,400
Speaker 3: of the argument of how long Google's been aware of

724
00:36:43,440 --> 00:36:45,439
Speaker 3: how important it is to dominate the world of search,

725
00:36:45,480 --> 00:36:47,759
Speaker 3: and ultimately whether it will ever bring about some sort

726
00:36:47,760 --> 00:36:48,240
Speaker 3: of breakup.

727
00:36:49,200 --> 00:36:49,520
Speaker 5: Yeah.

728
00:36:49,560 --> 00:36:51,960
Speaker 16: So, as you know, we were saying, this is a

729
00:36:51,960 --> 00:36:54,279
Speaker 16: ten week trial, so there's going to be a lot

730
00:36:54,320 --> 00:36:58,600
Speaker 16: of different witnesses, both within Google and from outside Google

731
00:36:59,000 --> 00:37:01,480
Speaker 16: talking about how It's power in search has sort of

732
00:37:01,480 --> 00:37:03,800
Speaker 16: grown over time. You know, hal Varin is the person

733
00:37:03,840 --> 00:37:06,239
Speaker 16: that they sort of decided to start with as sort

734
00:37:06,239 --> 00:37:11,160
Speaker 16: of like the origin story of this this conduct, as

735
00:37:11,160 --> 00:37:14,480
Speaker 16: the Justice Department alleges. But we're also going to hear

736
00:37:14,480 --> 00:37:17,360
Speaker 16: from a lot of other interesting people, including some of

737
00:37:17,360 --> 00:37:22,320
Speaker 16: the people who helped develop search, some of Google's search rivals,

738
00:37:22,800 --> 00:37:27,400
Speaker 16: like folks at Goo and Microsoft and the now defunct Geneva.

739
00:37:27,800 --> 00:37:32,360
Speaker 16: And we'll also hear from Sunder Pshai himself, who is

740
00:37:32,400 --> 00:37:35,000
Speaker 16: now the CEO, but you know has actually already come

741
00:37:35,080 --> 00:37:37,600
Speaker 16: up in some of these emails as such, because back

742
00:37:38,080 --> 00:37:40,400
Speaker 16: in the early days he was very involved in helping

743
00:37:40,440 --> 00:37:41,719
Speaker 16: develop the search engine.

744
00:37:43,080 --> 00:37:45,440
Speaker 4: Do mostly and iland that on the ground anti trust

745
00:37:45,480 --> 00:37:48,160
Speaker 4: reporting from DC. Thank you. Let's keep the conversation going,

746
00:37:48,239 --> 00:37:53,200
Speaker 4: joining us now William Kovacic GW Professor of Law, and William,

747
00:37:53,719 --> 00:37:56,879
Speaker 4: you know, the trials are exciting. They give newsflow, they

748
00:37:56,880 --> 00:38:01,239
Speaker 4: give new disclosures. But the only question is is this

749
00:38:01,280 --> 00:38:03,800
Speaker 4: a serious threat to Google as a whole entity.

750
00:38:06,000 --> 00:38:08,959
Speaker 17: It is a serious threat, and the threat goes back

751
00:38:09,000 --> 00:38:12,480
Speaker 17: to the experience with the Microsoft case which the Department

752
00:38:12,480 --> 00:38:15,719
Speaker 17: of Justice brought over twenty years ago, and the most

753
00:38:15,800 --> 00:38:18,759
Speaker 17: important concept to come out of that case is that

754
00:38:18,800 --> 00:38:21,719
Speaker 17: there are important limits on what a dominant enterprise can

755
00:38:21,800 --> 00:38:26,200
Speaker 17: do by way of buying up inputs channels of distribution

756
00:38:27,000 --> 00:38:29,600
Speaker 17: that it and its rivals need in order to compete.

757
00:38:30,320 --> 00:38:32,920
Speaker 17: And the theory that was endorsed by the Court of

758
00:38:32,920 --> 00:38:35,839
Speaker 17: Appeals in that case is that a dominant firm can

759
00:38:35,880 --> 00:38:41,200
Speaker 17: overreach when it basically seeks to preclude its competitors from

760
00:38:41,200 --> 00:38:45,120
Speaker 17: getting effective access to users. And that core theory is

761
00:38:45,160 --> 00:38:48,040
Speaker 17: the heart of this case, and I'm sure that's the

762
00:38:48,040 --> 00:38:51,200
Speaker 17: theory that Google takes most seriously here in its defense.

763
00:38:52,360 --> 00:38:55,040
Speaker 4: William, you spent almost a decade as a non executive

764
00:38:55,080 --> 00:38:59,319
Speaker 4: director at the uk CMA Competition and Markets Authority. Put

765
00:38:59,320 --> 00:39:02,800
Speaker 4: your regulation to hat on and tell us what chances

766
00:39:02,880 --> 00:39:07,000
Speaker 4: you think US regulators have of doing of a successful

767
00:39:07,040 --> 00:39:11,120
Speaker 4: action against Google or Alphabet They.

768
00:39:11,040 --> 00:39:13,360
Speaker 17: Have a fighting chance to demonstrate that there was an

769
00:39:13,400 --> 00:39:17,160
Speaker 17: infringement of law because of this core concept that is

770
00:39:17,320 --> 00:39:22,560
Speaker 17: favorable to them. Obtaining relief that goes beyond prohibiting the

771
00:39:22,600 --> 00:39:24,960
Speaker 17: specific conduct might be difficult.

772
00:39:25,239 --> 00:39:27,440
Speaker 10: That's proven to be a very tough.

773
00:39:27,280 --> 00:39:30,399
Speaker 17: Challenge in the United States. The other thing that will

774
00:39:30,440 --> 00:39:32,759
Speaker 17: be difficult to cope with in the case itself is

775
00:39:33,400 --> 00:39:38,800
Speaker 17: Google's response in talking about the placement the search engine

776
00:39:39,239 --> 00:39:42,680
Speaker 17: on these devices. I suspect Google is going to ask

777
00:39:42,719 --> 00:39:45,400
Speaker 17: the court, what would you have expected us to do otherwise?

778
00:39:45,960 --> 00:39:49,520
Speaker 17: Should we have stood by and not even bid in

779
00:39:49,600 --> 00:39:51,719
Speaker 17: the auctions that determined who was going to be on

780
00:39:51,800 --> 00:39:55,200
Speaker 17: those devices? Should we have simply allowed our rivals to

781
00:39:55,200 --> 00:39:59,120
Speaker 17: go ahead and obtain that precious real estate? What would

782
00:39:59,160 --> 00:40:02,600
Speaker 17: you have had us do otherwise? And by implication what

783
00:40:02,640 --> 00:40:05,640
Speaker 17: should large firms do Otherwise, I think that's going to

784
00:40:05,640 --> 00:40:07,880
Speaker 17: be a hard issue for the court to wrestle with.

785
00:40:08,280 --> 00:40:10,880
Speaker 17: But I'd say, if I had to look at where

786
00:40:11,360 --> 00:40:15,560
Speaker 17: the possibilities for success are, the government has a serious

787
00:40:15,760 --> 00:40:21,320
Speaker 17: prospect of succeeding on the essential question of whether exclusivity

788
00:40:22,000 --> 00:40:24,440
Speaker 17: was improperly obtained as a means of exclusion.

789
00:40:25,360 --> 00:40:29,839
Speaker 13: We had Rebecca Allensworth on yesterday and thinking about sort

790
00:40:29,840 --> 00:40:32,120
Speaker 13: of the concept of ultimately, even if they win or

791
00:40:32,160 --> 00:40:36,640
Speaker 13: lose this individual case, ultimately the pendulum is swinging in

792
00:40:36,719 --> 00:40:39,359
Speaker 13: the way in which regulators look at big tech.

793
00:40:39,440 --> 00:40:42,880
Speaker 3: You yourself at the FTC sharing it of course the

794
00:40:42,920 --> 00:40:45,279
Speaker 3: agency from March two thousand and eight, two thousand and nine.

795
00:40:45,400 --> 00:40:48,600
Speaker 3: Do think conversations are permanently changed in the way in

796
00:40:48,640 --> 00:40:50,799
Speaker 3: which regulators i big tech.

797
00:40:51,960 --> 00:40:55,600
Speaker 17: I think there's been a durable change in the risk

798
00:40:55,640 --> 00:40:59,680
Speaker 17: appetite that regulators in the United States, in the United

799
00:40:59,760 --> 00:41:02,960
Speaker 17: king as we were just mentioning before taken looking at

800
00:41:02,960 --> 00:41:06,320
Speaker 17: the sector. I think there was a fairly strong belief

801
00:41:06,400 --> 00:41:10,040
Speaker 17: twenty years ago, going back to the documents that Leah

802
00:41:10,080 --> 00:41:12,759
Speaker 17: was describing earlier, there was a sense that this is

803
00:41:12,800 --> 00:41:17,920
Speaker 17: a very dynamic sector and that unpredictable changes, changes you

804
00:41:17,960 --> 00:41:22,400
Speaker 17: can't even identify at the moment, will deny any individual

805
00:41:22,480 --> 00:41:27,799
Speaker 17: firm sustain preeminence in the field. Those assumptions have been revisited,

806
00:41:27,880 --> 00:41:31,840
Speaker 17: and I think globally you see a change from thinking

807
00:41:32,160 --> 00:41:36,439
Speaker 17: be cautious about intervening to be willing to intervene even

808
00:41:36,480 --> 00:41:39,840
Speaker 17: though the specific outcome might be uncertain. And part of

809
00:41:39,840 --> 00:41:43,400
Speaker 17: that strong belief is that simply having an active presence

810
00:41:43,440 --> 00:41:47,920
Speaker 17: of the regulators chasens and limits the behavior of dominant firms.

811
00:41:48,040 --> 00:41:51,640
Speaker 3: And isn't it ironic that ultimately that moment, that unpredictable

812
00:41:51,640 --> 00:41:53,840
Speaker 3: moment is upon us the fact that Generative a I

813
00:41:53,880 --> 00:41:55,880
Speaker 3: have swung into the mix and suddenly seems to be

814
00:41:55,920 --> 00:41:59,280
Speaker 3: the most competitive threat to Google Search that we've had.

815
00:41:59,160 --> 00:41:59,960
Speaker 6: In a long time.

816
00:42:00,120 --> 00:42:04,200
Speaker 3: So I'm interested as to the perspective that already in practice,

817
00:42:04,320 --> 00:42:07,200
Speaker 3: do you think companies have been withholding from making purchases,

818
00:42:07,280 --> 00:42:11,600
Speaker 3: withholding perhaps making changes to the way in which they

819
00:42:11,640 --> 00:42:15,080
Speaker 3: react to competitors because of the way regulators are now acting.

820
00:42:16,560 --> 00:42:18,680
Speaker 17: I think we're going to get some good insights in

821
00:42:18,719 --> 00:42:22,200
Speaker 17: the trial on exactly that question. But I suspect that

822
00:42:22,640 --> 00:42:26,640
Speaker 17: what companies have continued to look for our opportunities to

823
00:42:26,680 --> 00:42:29,440
Speaker 17: achieve real breakthrough, So the kind that you were discussing

824
00:42:29,680 --> 00:42:32,960
Speaker 17: in the previous segment with the Musk interview. I think

825
00:42:33,000 --> 00:42:37,640
Speaker 17: there's no question that companies are looking for opportunities. It

826
00:42:37,680 --> 00:42:41,640
Speaker 17: will astonish by allowing them to achieve true pre eminence.

827
00:42:41,239 --> 00:42:42,359
Speaker 1: On in their own right.

828
00:42:42,800 --> 00:42:48,440
Speaker 17: But a very difficult and almost unmeasurable issue in the

829
00:42:48,520 --> 00:42:53,120
Speaker 17: trial is whether you advance innovation more by being aggressive

830
00:42:53,160 --> 00:42:56,600
Speaker 17: in intervening, or whether you advance it more by being

831
00:42:56,640 --> 00:42:57,400
Speaker 17: more permissive.

832
00:42:58,680 --> 00:43:01,920
Speaker 3: Absolutely fascinating, So we thank you, GW Professor of law,

833
00:43:01,960 --> 00:43:03,680
Speaker 3: William Kovechic thank you.

834
00:43:03,680 --> 00:43:04,520
Speaker 6: Meanwhile, coming up, a.

835
00:43:04,520 --> 00:43:07,839
Speaker 3: Cyber attack takes out part of the biggest strip as

836
00:43:07,920 --> 00:43:10,480
Speaker 3: hackers target MGM will have the details next.

837
00:43:10,760 --> 00:43:25,360
Speaker 6: There is a roombag Technology MGM Resorts in Las Vegas.

838
00:43:25,440 --> 00:43:27,479
Speaker 3: It was hit by a cyber attack this week, taking

839
00:43:27,520 --> 00:43:30,239
Speaker 3: down payment system slot machines guess ability to.

840
00:43:30,200 --> 00:43:32,279
Speaker 6: Actually access their hotel rooms and check in.

841
00:43:32,640 --> 00:43:34,839
Speaker 3: Details of the attack, including who is behind it, though

842
00:43:34,960 --> 00:43:36,840
Speaker 3: the motive the type of information that they may have

843
00:43:36,840 --> 00:43:40,399
Speaker 3: obtained all remains pretty limited. A spokesperson for the FBI

844
00:43:40,520 --> 00:43:42,520
Speaker 3: office in Las Vegas said they are aware of the

845
00:43:42,560 --> 00:43:45,080
Speaker 3: attack they are assisting, and MGM says that hotels and

846
00:43:45,120 --> 00:43:48,680
Speaker 3: casinos are currently operational, but plenty of frustration there.

847
00:43:48,719 --> 00:43:51,640
Speaker 4: It feels, yeah, some of the reporting is amazing. People

848
00:43:51,760 --> 00:43:54,799
Speaker 4: being forced to use cash. Can you imagine having to

849
00:43:54,920 --> 00:43:58,000
Speaker 4: use paper money in this day and age? Outrageous? But

850
00:43:58,160 --> 00:44:01,600
Speaker 4: check out that story on Bloomberg because sadly, Caroline, that

851
00:44:01,680 --> 00:44:05,239
Speaker 4: does it for this edition of Bloomberg Technologies, Big Show.

852
00:44:05,320 --> 00:44:07,840
Speaker 4: Recap it on our podcast wherever you find your podcast

853
00:44:07,960 --> 00:44:10,800
Speaker 4: on the Bloomberg terminal, but we're also on Apple, Spotify

854
00:44:11,120 --> 00:44:13,839
Speaker 4: and on iHeart, as well as the Bloomberg platforms from

855
00:44:13,880 --> 00:44:16,440
Speaker 4: San Francisco and out in New York City. This is

856
00:44:16,480 --> 00:44:21,400
Speaker 4: Bloomberg Technology.