Speaker 1: From Mahart.
Speaker 2: We're Innovation of Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline Hide at Bloomberg's World headquarters in New York
Speaker 3: and ourm Ed Lovelow in San Francisco.
Speaker 4: This is Bloomberg Technology coming up.
Speaker 3: Full coverage of Salesforce's annual Dreamforce conference where guess what
Speaker 3: AI will take center stage, will break down what to expect, and.
Speaker 4: We'll go live to Washington as tech leaders descend on
Speaker 4: Capitol Hill for a meeting with sentences to discuss none
Speaker 4: other than artificial intelligence.
Speaker 3: More details ahead, and we're going to stay in Washington
Speaker 3: to get the latest from Google's antitrust trial and break
Speaker 3: down the biggest takeaways from Apple's wonder last event and
Speaker 3: the continued China concerns. All that and has always so
Speaker 3: much more aheading, including.
Speaker 4: Right now here in San Francisco. Dream Force underway. The
Speaker 4: story for Salesforce has been about integrating AI into their
Speaker 4: existing CRM and other offerings. For more on dream Force.
Speaker 4: Who else Bloomberg's Brody Ford is in town in the flesh,
Speaker 4: Brodi Ford, What's going on?
Speaker 1: At dream Force.
Speaker 5: Yeah, I mean it is back Dreamforce forty k people
Speaker 5: here in downtown San Francisco. I am one of them,
Speaker 5: and the big thing for them, like every other company,
Speaker 5: is AI. And the subtext here is that Salesforce has
Speaker 5: been grappling with They were growing above twenty percent every
Speaker 5: year and now it's come to slow down, and there's
Speaker 5: a bit of anxiety among the investor community. But of
Speaker 5: course AI looks like this beautiful accelerant to bring them
Speaker 5: back up. And their pitch is like a lot of
Speaker 5: the incumbent players that yeah, sure you can get your
Speaker 5: data and plug it into these llms, but you know,
Speaker 5: can you trust that through our platform you can trust
Speaker 5: the use of the AI.
Speaker 1: That's the pitch.
Speaker 3: I mean, we get the Einstein Einstein indeed upgrades and
Speaker 3: it's sort of being injected across the entire offering a
Speaker 3: Salesforce PRODI and you can see therefore the nuance come
Speaker 3: with us.
Speaker 6: It's safe.
Speaker 3: But this comes in a context of well, anxiety across investors.
Speaker 3: Post Oracles numbers the fact that maybe all this talk.
Speaker 6: Of AI, or this desire to have AI.
Speaker 3: Doesn't always immediately mean revenue picks up in quite the
Speaker 3: way we were anticipating.
Speaker 6: How do you think Salesforce navigates that one.
Speaker 5: Salesforce has been pretty intentional about communicating it's going to
Speaker 5: get what the pricing is going to look like. And
Speaker 5: it's also it's really not that hypothetical. What a lot
Speaker 5: of their AI use cases? All right, you're selling software
Speaker 5: for salespeople. If you can automatically draft some outreach emails,
Speaker 5: I mean, as a journalist, I would use that for sure, Right,
Speaker 5: So I think a lot of their use cases are
Speaker 5: going to be a lot more immediate than some of
Speaker 5: the other AI we hear about, meaning as you say,
Speaker 5: quicker revenue, uplift love.
Speaker 3: That context for us as journalists and across any industry.
Speaker 3: Of course, body Ford, we thank you so much for it.
Speaker 3: Have fun out there as people get back together in
Speaker 3: the flesh. But meanwhile, well let's say virtual for a
Speaker 3: moment and get to Gil Lurio's Da Davidson, managing director
Speaker 3: and head of institutional research, who I know is keeping
Speaker 3: a keen eye on all of the announcements coming out
Speaker 3: of Salesforce and mark many of really talking about why
Speaker 3: you would want to be with their AI offering.
Speaker 6: Is this a very crowded space.
Speaker 3: Are there some significant winners clearly burning ahead.
Speaker 7: In this Our perspective is that AI, artificial intelligence is
Speaker 7: going to yes. Our perspective is that artificial intelligence is
Speaker 7: going to transform a lot of software business, if not
Speaker 7: all software business and technology businesses, but it's going to
Speaker 7: take a while. There's going to be very few companies
Speaker 7: that benefit in the short term. It's really Nvidia and
Speaker 7: Microsoft have a very clear story of how their businesses
Speaker 7: are going to get transformed and accelerate in the short term.
Speaker 7: For everybody else, they have to build AI products. They
Speaker 7: have to get better at AI. Their customers want that,
Speaker 7: their customers expect that, but it's going to take a while,
Speaker 7: and their customers, for as much as they're asking for it,
Speaker 7: are also skeptical of products that have been rushed to market,
Speaker 7: and they're going to be patient about making investments in AI.
Speaker 7: They're going to want to see mature, ready for market
Speaker 7: products before they implement them in their business.
Speaker 4: Kil I know you have folks from your desk on
Speaker 4: the ground at Dreamforce. You're keeping a close eye on
Speaker 4: what's going on. Does anything of substance actually come out
Speaker 4: of Dreamforce in terms of what you then pass on
Speaker 4: to institutional investors about what you learned.
Speaker 7: Well, they are very good about relaying the product roadmap
Speaker 7: and how they're going to incorporate artificial intelligence into products
Speaker 7: like Tableau, like MuleSoft, like the core sales and marketing offerings,
Speaker 7: how they're going to do it holistically, how they're going
Speaker 7: to protect the customers data. This is what their customers
Speaker 7: want to hear. It doesn't mean their customers are ready
Speaker 7: to push the button and buy new software, but they
Speaker 7: want to hear that this is.
Speaker 1: On the roadmap.
Speaker 7: They want to hear that it's going to be part
Speaker 7: of the products and going forward, and maybe they'll push
Speaker 7: the button next year or the year after that. So
Speaker 7: it's critical that Salesforce presents a good vision, and it
Speaker 7: sounds like they are.
Speaker 8: So.
Speaker 1: Gail.
Speaker 4: The story of Salesforce has been top line growth above
Speaker 4: twenty five nineteen, twenty twenty. When I pose to an
Speaker 4: investor the other day that AI could return Salesforce's growth
Speaker 4: to that level, he just laughed and just gave an
Speaker 4: audible hap. Where do you see AI taking this company?
Speaker 1: Yeah?
Speaker 7: I think the burden of proof is on Salesforce, and
Speaker 7: again on every other software company that's talking AI right now,
Speaker 7: Salesforce's revenue growth right now is barely double digits, and
Speaker 7: they really have to come up with a new set
Speaker 7: of very compelling products for that to accelerate. Either that
Speaker 7: or enterprise software spend has to pick up, and we're
Speaker 7: not seeing that yet either. So, just like a lot
Speaker 7: of other software companies, and we'll talk about Oracle in
Speaker 7: the second AI is a big part of what they
Speaker 7: have to do. It doesn't mean that it's driving revenue
Speaker 7: acceleration anytime soon.
Speaker 4: Yeah, I think, Caroline, for that reason, that is why
Speaker 4: we're thinking about Oracle right because the implications of that
Speaker 4: name are the same for the Salesforce as well. Caroline.
Speaker 3: Yeah, and give us that sense of well, whether you
Speaker 3: were as shocked as the rest of the market, Gil,
Speaker 3: I mean the fact that we saw Oracle shares tumbel
Speaker 3: the most is two thousand and two, even while posting
Speaker 3: thirty percent levels of growth for Cloud when it comes
Speaker 3: to Cloud AI offerings, it builds as though that just
Speaker 3: cannot live up to the insatiable expectations of investors.
Speaker 7: Right now, Oracle is still a single digit grower. It
Speaker 7: was masked over the last twelve months by the Certner acquisition,
Speaker 7: and they are growing the OCI cloud hosting business very rapidly,
Speaker 7: but it's still a relatively small business for them, and
Speaker 7: most of their other businesses are flat declining. We're growing
Speaker 7: very slowly. They said, expectations that AI.
Speaker 4: Care, I'm going to jump I'm going to jump in here, Gil,
Speaker 4: I think we have some technical issues, but we really
Speaker 4: appreciate your analysis of both companies, Salesforce and Oracle. That
Speaker 4: was Gil Luria of DA Davidson up in Portland, Oregon.
Speaker 4: I Phone fifteen Pro six point one inch screen nine
Speaker 4: hundred and ninety nine dollars, I Phone fifteen Pro Macs
Speaker 4: six point seven inch screen one one hundred and ninety
Speaker 4: nine dollars for the starting version, two hundred and fifty
Speaker 4: six gigabytes of memory. When you hold both handsets in
Speaker 4: your hand, what jumps out? We'll turn them on their
Speaker 4: end and you'll see the USBC connector or poor ending
Speaker 4: almost twelve years of Lightning connector, which Apple introduced in
Speaker 4: twenty twelve. By the way, goodbye ringer mute switch button thing,
Speaker 4: Hello action button. Then you look around the edges and
Speaker 4: the sides, and it's those titanium sides that are new
Speaker 4: to the iPhone fifteen Pro and Promax generation. The colors
Speaker 4: are interesting, more kind of limited options on the color
Speaker 4: side for Pro and Promax compare with fifteen and fifteen
Speaker 4: plus where you get these kind of brighter pastel colors.
Speaker 4: And then for Pro and Promac, it's really what is
Speaker 4: on the inside. The A seventeen processor, Apple's fastest ever
Speaker 4: smartphone chip, brings much speed, but also more memory and
Speaker 4: higher performance, and for Promax in particular, new camera technology
Speaker 4: up to five x zoom or magnification, which is kind
Speaker 4: of pushing things forward on the photo side for iPhone.
Speaker 4: So you see Tim Cook there Carrie taking selfies with
Speaker 4: the crowd, and it.
Speaker 6: Was so active.
Speaker 8: Did you get one egg?
Speaker 4: Honestly, the weight was hours and I had bigger things
Speaker 4: to report on. I wanted to get hands on with
Speaker 4: the phones. But just take my word for it. If
Speaker 4: there were one thousand people in the room, ninety percent
Speaker 4: of them were just going oh USBC on the bottom.
Speaker 4: That's the reality of it.
Speaker 3: We can be quite basic sometimes, can't we add it
Speaker 3: all comes down to charging.
Speaker 4: Yeah, and look, this was European Union mandated. It had
Speaker 4: a deadline of twenty twenty four. Apple sort of jumped
Speaker 4: before they were pushed on it. But it brings that
Speaker 4: device in line with other Apple devices and every other
Speaker 4: product that's out there from other brands. So I thought
Speaker 4: that was really impoint by the way, which color would
Speaker 4: you go for of what you just saw? What was
Speaker 4: your favorite?
Speaker 6: I mean anything goldie look can chain? I'm into.
Speaker 3: The only issue being I then have to get some
Speaker 3: enormous black plastic contraption to go over the top so
Speaker 3: or don't hurt it. So kind of honor agnostic nowadays.
Speaker 4: And as we know, no more leather in Apple accessories
Speaker 4: and on gold I'm going to ask Mark German about
Speaker 4: that in just a moment, so let's bring him in
Speaker 4: Bloomber's Mark German to recap the day that was in
Speaker 4: the Apple event, I mean Mark. The emphasis from the
Speaker 4: street at Lease has been the pricing of iPhone fifteen
Speaker 4: Pro Max. They raised the price by one hundred dollars.
Speaker 4: What technology do you get in return?
Speaker 9: So the price increase is really interesting because they went
Speaker 9: as minor and stealth as they could on this price increase.
Speaker 9: What they've done is they've eliminated the one hundred and
Speaker 9: twenty eight gigabyte capacity option.
Speaker 10: For the Promax starting at.
Speaker 9: That two fifty six gigabyte, so they didn't raise the
Speaker 9: price of that storage tier, but they raised the price
Speaker 9: of the phone by removing that entry level tier. So
Speaker 9: about a nine percent price increase in the US, but
Speaker 9: you're having more sizeable price increases elsewhere. There's a minor
Speaker 9: price jump in China. There's a fourteen percent price increase
Speaker 9: on the Pro models in India. In Canada, you have
Speaker 9: a fifty Canadian dollar increase on the regular Pro and
Speaker 9: a two hundred dollars Canadian dollar increase on the Promax.
Speaker 9: The differences this year between the Promo Pomacs are broader
Speaker 9: than ever before it just was battery life and stream size.
Speaker 9: Now you're getting that periscope camera that gives you that
Speaker 9: five x zoom on the optical side, so hardware zoom
Speaker 9: five x, which means no degradation, and then twenty five
Speaker 9: x zoom on the digital side, so the quality will
Speaker 9: dip a little bit, but you have that intense twenty
Speaker 9: five x zoom. So it's an interesting strategy. But I
Speaker 9: do think that camera will come to the lower end
Speaker 9: model next.
Speaker 3: Year, and strategy is so necessary because we know the
Speaker 3: context with which Apple not only puts its new phones
Speaker 3: into the market where we're worried about the Chinese consumer,
Speaker 3: but also more broadly, revenue's been on the downside.
Speaker 6: iPhone is still so integral.
Speaker 3: Is it obvious to you that this is going to
Speaker 3: be a hot seller as we head towards holidays?
Speaker 9: You know, I'll tell you I've had some time to
Speaker 9: digest the announcements. I would say that these are pretty
Speaker 9: minor refreshes overall. But there is a new casing on
Speaker 9: the iPhone fifteen Pro and promax right that titanium and
Speaker 9: what I think consumers that are jumping for iPhones, those
Speaker 9: early adopters, but those big Apple fans, they want to
Speaker 9: buy what looks new, and these new phones look new.
Speaker 10: So they're going to buy them, right.
Speaker 9: But the technology itself, the feature set, it's not going
Speaker 9: to feel much different. It's not going to operate much
Speaker 9: different than the year prior. If you have a fourteen Pro,
Speaker 9: you probably don't need to update to a fifteen Pro.
Speaker 9: This is going to bring in people who are on thirteen's,
Speaker 9: twelve to elevens and earlier. But I certainly think despite that,
Speaker 9: that new design.
Speaker 10: Is going to do enough and they are going to.
Speaker 9: Get done what they need to get done, and that
Speaker 9: is to probably meet their sales expectations for the holiday
Speaker 9: order and titanium. You can see why their marketing is
Speaker 9: all in in titanium because that's really what they got
Speaker 9: this year.
Speaker 1: Mark.
Speaker 4: We got the investors perspective on Bloomberg Television earlier today
Speaker 4: on Cole Crawford, who's a portfolio manager at Alja. Just
Speaker 4: have a listen to what she had to say.
Speaker 11: Forty percent of Apple's earnings comes from their services revenue,
Speaker 11: and that services revenue is almost utility like in nature.
Speaker 8: It's the storage that you pay.
Speaker 11: On your iPhone, which you know, we're only increasing the
Speaker 11: amount of storage and the number of photos that we
Speaker 11: have in the cloud, and so there is almost a
Speaker 11: stability aspect to the stock. Although granted, I do worry
Speaker 11: that the handset numbers are going to come under pressure,
Speaker 11: not only in China.
Speaker 8: But also in the US.
Speaker 4: Mark China is a concern. Timing is everything we heard
Speaker 4: from the Chinese government overnight about the reports of clamping
Speaker 4: down on foreign handsets. What do we know?
Speaker 8: What is the latest?
Speaker 9: Yeah, two things I'd argue on that first point, services
Speaker 9: are not forty percent of Apple's overall revenue. If that
Speaker 9: was the case, we would be having a much different discussion.
Speaker 9: It's about twenty percent. But I will note that they
Speaker 9: did announce new iicloud storage tiers, going from a ten
Speaker 9: dollars maximum two terabytes to a sixty dollars a month
Speaker 9: maximum at twelve terabytes. I'd be shocked if anyone could
Speaker 9: fill up twelve terabytes in two and a half lifetimes,
Speaker 9: but certainly those options are there. In terms of the
Speaker 9: China situation, it seems like we're doing two things. They
Speaker 9: seem to be walking back some of these claims and
Speaker 9: reports by saying there has not been a ban. Just
Speaker 9: because China is saying that doesn't mean it to be true.
Speaker 9: I definitely still believe that government agencies are pushing their
Speaker 9: employees and their workers to not bring iPhones into work.
Speaker 9: But you know, publicly they are walking that notion back,
Speaker 9: and privately they are probably still discussing, you know, the
Speaker 9: future of Apple and that relationship there. In terms of
Speaker 9: the other claims they said, they said they've seen security
Speaker 9: issues on iPhones, I personally think they're referring to some
Speaker 9: of the reports you've seen around iPhone security up in recent.
Speaker 3: Weeks, always bringing us the full picture, Markham and going
Speaker 3: into national when it comes to Apple, we thank you
Speaker 3: so much. I mean, let's talk about what's coming up
Speaker 3: as well, because we're not just talking about hardware and services.
Speaker 3: We're thinking about what goes on inside the world of
Speaker 3: technology right now and how it affects the way you work.
Speaker 6: Work shifting is upon us to see you of GitHub.
Speaker 3: Well, we're going to be thinking about all the artificial
Speaker 3: intelligence viewpoints there as the bloombag technology time now for
Speaker 3: work shifting, where we look at the changing landscape of
Speaker 3: the labor market amid advances in technology.
Speaker 6: If you're a developer, it's changing fast.
Speaker 3: Gethubs Ai coding assistant Copilot for example, has tens of
Speaker 3: thousands of enterprise customers. Are millions of users getting excited
Speaker 3: about it. Hit to explain how it's actually boosting productivity
Speaker 3: in the here and the now. Thomas Donkey, he's GitHub CEO.
Speaker 3: It's great to have you in the studio Thomas. And
Speaker 3: what I'd love a sense of is how much we're
Speaker 3: seeing a speed up, how much productivity and how you
Speaker 3: measure that at the moment.
Speaker 12: Yeah, thank you so much for having me really exciting times.
Speaker 12: You know, every company now is a software company. It's
Speaker 12: not only the big tech you know on the West Coast,
Speaker 12: it's really every bank, every supermarket, every automaker.
Speaker 1: They all have to write software.
Speaker 12: So their employee software developers. And what they do is,
Speaker 12: you know, they're they're writing code on their machines and
Speaker 12: get a copilot pretrix that next word, the next line,
Speaker 12: even even multiple lines of code. And so in the
Speaker 12: last two years since we launched get up copilate, we
Speaker 12: saw that half the code is written by copilot in
Speaker 12: those file to US enabled and it increases productivity of
Speaker 12: up to fifty five percent.
Speaker 6: And so we're seeing like the.
Speaker 12: First real use case for AI way whole sector of
Speaker 12: the workforce is adopting US to care productivity.
Speaker 3: Also fascinating because you're within the Microsoft overall family. So
Speaker 3: open AI has got this relationship. There's also open AI
Speaker 3: code Interpreter. You've also think got some open source applications
Speaker 3: sort of coming to the pipeline. We're looking at some exuberance.
Speaker 3: It feels like in the developer world for open interpreter,
Speaker 3: where do you go open source, non open source, open
Speaker 3: AI GitHub, open interpreter, what are the offerings here.
Speaker 12: I mean all of those will be probably covered and
Speaker 12: cover different use cases. The opening I could and Torpreter
Speaker 12: really helps you with analyzing data. It's really for the
Speaker 12: Microsoft Excel user to process some data and broad charts
Speaker 12: and those kinds of things with copartnered GitHub and then
Speaker 12: quite frankly, at Microsoft we've always been a developer tools company.
Speaker 12: Microsoft's first ever product was altair Base, you know, basic
Speaker 12: Interpreter almost forty almost fifty years ago, forty eight years ago.
Speaker 1: And so with giithub we're going.
Speaker 12: Where the developer is there, then the editor. They're writing code,
Speaker 12: they're debugging code. They have to you know, understand code
Speaker 12: that comes as far back from the sixties programming language
Speaker 12: called cobol all the way to you now of the
Speaker 12: modern stacked, the cloud native companies that build you know,
Speaker 12: the e commerce world of today, all of them use
Speaker 12: code to build the innovation.
Speaker 4: Thomas, how big a player or contributor is GitHub in
Speaker 4: the open source AI movement? Do you consider GitHub a
Speaker 4: leader there?
Speaker 1: Getub is the home of open source.
Speaker 12: You now, many, if not, if not the most, the
Speaker 12: majority of open source projects is hosted on GitHub in
Speaker 12: As such, you know, many of those new AI projects
Speaker 12: are also hosted on GitHub and and getub is supporting
Speaker 12: them by providing them free hosting for their source code,
Speaker 12: you know, for their project, for their issue tracking, for discussions,
Speaker 12: and of course we're enabling them to use get up
Speaker 12: copilot to build their AI innovation.
Speaker 4: Thomas, I speak to all kinds of founders, software engineers
Speaker 4: about copilot. Are you able to tell me what specific
Speaker 4: coding projects are happening with copilot and do you track them?
Speaker 4: Do you have the data that can tell you the
Speaker 4: specific areas of focus.
Speaker 12: So we don't track, you know, on the large scale
Speaker 12: of what project that would be a violation of our
Speaker 12: private principles. But for individual organizations, we can show them
Speaker 12: the data in which repositories, in which projects they're most successful.
Speaker 6: With the use of copilot.
Speaker 12: You know, there are certain programming languages like Python or
Speaker 12: JavaScript that see really strong benefits from the use of
Speaker 12: Copilot and a lot of lines of code written for
Speaker 12: these projects.
Speaker 3: Meanwhile, Blosso Microsoft sat in Adela's in Washington, along with
Speaker 3: an awful lot of other key leaders thinking about the
Speaker 3: future regulation when it comes to artificial intelligence. Are you
Speaker 3: positive and feeling that's going to be written well for
Speaker 3: GitHub to continue to see this evolution on your own platforms.
Speaker 12: It's great that these conversations are happening, and we really
Speaker 12: need to have these conversations happening in Washington because we
Speaker 12: need the regulation happening.
Speaker 10: Fast, right.
Speaker 12: We need the legal security, the legal safety to apply
Speaker 12: these tools and get the productivity gains. And think about
Speaker 12: like many companies now have software developers spread a whole
Speaker 12: around the whole world. You know, they're sitting here in
Speaker 12: the United States, that's in Germany, in India, in Australia,
Speaker 12: and so we also need to have regulation that is
Speaker 12: somewhat equal across these countries because otherwise, as a software developer, myself,
Speaker 12: as the manager of you now thousands of software developers,
Speaker 12: I don't want my software developers in the United States
Speaker 12: that have a different productivity gain than those that sit
Speaker 12: in Germany and those that sit in India, right, we don't.
Speaker 1: We want a.
Speaker 12: Balance across all these countries, not not a competition between
Speaker 12: these countries.
Speaker 6: Fascinating. Thomas Doomkey of GitHub, we thank.
Speaker 3: You, welcome back to Umore Technology.
Speaker 6: I'm Caroline Heard in New York and.
Speaker 4: I'm Ed Ludlow in San Francisco Cara quick check in
Speaker 4: on the markets and as that one hundred, this tech
Speaker 4: heavy index, It's been a choppy week of trading up Monday,
Speaker 4: down Tuesday, and now we're up Wednesday modestly. CPI data
Speaker 4: a little hotter than expected. We ask questions therefore about
Speaker 4: what the Federal Reserve does in the rest of the year.
Speaker 4: Do they raise rates one more time again? And when?
Speaker 4: Why do we care? Because higher rates impact the present
Speaker 4: cash values of future cash flows for tech companies, particularly
Speaker 4: on Then as that one hundred, you have lots of
Speaker 4: software names trading at higher multiples. That's what we care about.
Speaker 4: In terms of specific movers.
Speaker 6: We're watching a lot of the leaders in the.
Speaker 4: Artificial intelligence space, some names behind me, all of them
Speaker 4: moving to the upside. Microsoft up one point, sent a
Speaker 4: big point boost on then as that one hundred, Palenteer
Speaker 4: and Meta. What all three stocks have in common is
Speaker 4: that their CEOs are all in one place right now
Speaker 4: in a very important meeting. That is one of our
Speaker 4: top stories. More than twenty tech and civil society leaders
Speaker 4: are current taking part in a closed door Senate meetings
Speaker 4: talk about how to shape AI regulation. Heavy hitters like
Speaker 4: Elon Musk. Sam Altman andson Depitchai are present. We caught
Speaker 4: up with Senator Elizabeth Warren and got her take and
Speaker 4: talks about Musk.
Speaker 6: They're sitting at a big round table all by themselves.
Speaker 13: All of the senators are to sit there and ask
Speaker 13: no questions.
Speaker 8: That's the setup.
Speaker 1: For more.
Speaker 4: Let's bring in Bloomberg's Anda Eduton on the ground in DC.
Speaker 4: What's going on inside that romana.
Speaker 14: Well, I'm speaking with several people who are actually in
Speaker 14: the room with the CEOs, and they're saying that right
Speaker 14: now there's a discussion going on about open source and
Speaker 14: the security of sharing open source resource research. You have
Speaker 14: people like Clement DeLong of Hu Hugging Face and others
Speaker 14: who are saying that open source is good and important
Speaker 14: for innovation. You have others like Mark Zuckerberg who is
Speaker 14: saying that it presents and security risk. So there have
Speaker 14: already been some interesting exchanges and we'll see how the
Speaker 14: rest of the session develops this afternoon they go into
Speaker 14: more conversation.
Speaker 6: How fascinating. Let's just go. We have of course Elo
Speaker 6: masks coming live to us. We understand. Let's just dip
Speaker 6: in for a seconds in.
Speaker 1: Order I think the general.
Speaker 15: I think it's clear that there's a strong consensus of
Speaker 15: woman's with sensus that there should be some AI regulation
Speaker 15: that would be in the best.
Speaker 1: Interests of the people to do so. And I think
Speaker 1: we'll probably see something happen.
Speaker 15: I don't know what, on what time frame or exactly
Speaker 15: how it will manifest itself.
Speaker 1: Questions what are they going to do? I don't know.
Speaker 15: I mean, there's this, there's clearly we've created regulatory agencies before,
Speaker 15: and actually just recently just before leaving, made the point that,
Speaker 15: you know, while our regulatory agencies are not perfect, and
Speaker 15: I deal with regulators on a very frequent basis with
Speaker 15: automotive you know, communications starling and then a with with rockets,
Speaker 15: so I've had transfiy interaction with regulators for you know,
Speaker 15: decades a please, and well, regulators are not perfect.
Speaker 1: There's no regulatory agency, but I'm aware of that.
Speaker 15: I think we should at the federal level at least
Speaker 15: that that we should delete.
Speaker 1: Yeah, I should be I think I or something like
Speaker 1: that someone.
Speaker 15: Yeah, I don't know what exactly, perhaps perhaps an apartment
Speaker 15: of AI.
Speaker 1: And probably listen, I think the probably any.
Speaker 15: Of there being some sort of a regulatory agency that
Speaker 15: sends on its own, similar to the f A or FC.
Speaker 1: Is likely at some point, you think so, I think so. Now.
Speaker 15: The reason that I've been such an affable AI safety
Speaker 15: in advance of sort of anything terrible happening is that
Speaker 15: I think the consequences of AI going wrong are are severe.
Speaker 1: So we have to be proactive rather than reactive.
Speaker 15: Uh, you know in the past, if he takes a
Speaker 15: but I'm being somewhat late, full of speaking of regulators.
Speaker 15: I'm a little late for the f A. I'm meeting with
Speaker 15: the FA and holds you up, sure, but.
Speaker 1: Yeah, if you if you take the exact of safety belts.
Speaker 1: Seatbelts were opposed by.
Speaker 15: The auto industry for a very long time, even though
Speaker 15: the data was very clear that they're safe, that they
Speaker 15: radically improve.
Speaker 1: Deaths and injuries.
Speaker 15: So, you know, we don't want to be in that
Speaker 15: situation where we're fighting regulations even though you know there's
Speaker 15: a safety thing.
Speaker 1: We can't wait for millions of people to die in
Speaker 1: auto accidents, as you know, constutely like. And it's important
Speaker 1: to just elevate the question here.
Speaker 15: Question is is really one of civilizational risks, So just
Speaker 15: it's it's not like one group.
Speaker 1: Versus another, one group of humans us another.
Speaker 15: It's like, hey, this is something that's potentially risk people,
Speaker 15: whole humans everywhere.
Speaker 1: Very important to understand that is there an equally.
Speaker 8: Hunger sufficiently premar.
Speaker 15: No, no, no, no, the sequence of events will not
Speaker 15: be jumping at the deep end and making the rules.
Speaker 1: But it saw us with insight tract.
Speaker 15: This is actually how all of the regulatory bodies performed
Speaker 15: their believe as you start with a group formed to
Speaker 15: create insight to understand the situation, then you have proposed
Speaker 15: rule making. You'll get some rejections from industry or whatever,
Speaker 15: and then ultimately you get sort of a consensus sort
Speaker 15: of role making.
Speaker 1: Their rulemaking then becomes a law regulation.
Speaker 6: There you have it. You must speaking to reporters.
Speaker 3: Of course, it seems to be as they draw to
Speaker 3: a close for the lunch time break, and and we
Speaker 3: understand that some people are going to be subbing in
Speaker 3: for the CEOs of their companies for the second half
Speaker 3: of the discussions with senators, and we'll broadly we heard
Speaker 3: from me La Must they're really talking about whether or
Speaker 3: not we will see some sort of regulator start to
Speaker 3: oversee artificial intelligence.
Speaker 6: Just tell us if you.
Speaker 3: Can summarize the arguments we've heard thus far of how
Speaker 3: you really get to grips with regulating AI more broadly.
Speaker 6: I mean, that's the question.
Speaker 14: I think you have most of the people in that
Speaker 14: room agreeing that there should be so kind of regulation,
Speaker 14: but there's no agreement about how and when it comes to,
Speaker 14: like a licensing regime or a regulatory agency like Musk
Speaker 14: was just talking about. We know that other companies like
Speaker 14: IBM actually oppose that proposal, whereas you know others like
Speaker 14: Microsoft and open Ai think that would be a good idea.
Speaker 14: So we'll see more policy discussion about that as we
Speaker 14: go into the afternoon. And an interesting thing about Musk.
Speaker 14: In his opening statement, he tried to make the point
Speaker 14: that the AI that powers self driving cars is not
Speaker 14: as dangerous as the kind of deep mind AI that
Speaker 14: emulates human intelligence. However, he did get some pushback on
Speaker 14: that from deb Raji, one of the researchers from Berkeley,
Speaker 14: who made the point that self driving car powered AI
Speaker 14: could also make mistakes that could prove to be fatal.
Speaker 3: Well, said Anna edgeton getting all the inside track and
Speaker 3: the closed door meeting and us wringing you what was
Speaker 3: happening just on the outside of that, we need a
Speaker 3: musk as well.
Speaker 6: Let's continue this conversation.
Speaker 3: I'm pleased to say Dominique Shelton Leipzig is with a
Speaker 3: privacy and cybersecurity partner at Maya Brown Needs of the
Speaker 3: firm's global day to renovation team, offering CEO and more
Speaker 3: level advice basically on exactly this on the impact of
Speaker 3: multiplagy intelligence and how it should be adopted without some
Speaker 3: sort of a regulatory framework. Are you positive that we
Speaker 3: will get a regulator or will it be down to
Speaker 3: self regulation once more?
Speaker 2: You know, thank you so much Caroline for having me,
Speaker 2: and thank you also. This is such an important issue
Speaker 2: and just hearing what the CEO Musk was talking about
Speaker 2: how AI is really going to impact all of our lives, medical, financial, educational.
Speaker 2: So this conversation that's happening with the senators is so important.
Speaker 2: We are going to see regulation. The only question will
Speaker 2: be whether the United States moves first.
Speaker 8: What we've got we're very close.
Speaker 2: To right now is legislation being adopted in Europe to
Speaker 2: govern AI, and we're expecting that by December twenty twenty three.
Speaker 8: So the issue is there are thirty.
Speaker 2: Seven countries and six continents that have draft legislation already
Speaker 2: before their legislatures, and Europe looks like it will go
Speaker 2: first with the US behind, and EU.
Speaker 6: Sort of shifted tone.
Speaker 3: Originally it felt as though they were going to be
Speaker 3: regulating application of AI, but then suddenly it turned its
Speaker 3: attention more to the actual building of the foundational models.
Speaker 3: That seems to be an argument being pushed back against
Speaker 3: these some US CEOs. They don't want to see the
Speaker 3: building of foundational models being under some sort of scope
Speaker 3: here is that already thrown out with the bath water.
Speaker 2: I think this is going to be an ongoing debate,
Speaker 2: and there's a discussion at the US level and also
Speaker 2: the international level about having the actual deployers, the users
Speaker 2: of the AI having guardrails as well as the providers
Speaker 2: and the foundation models as well of a generative AI
Speaker 2: large language models. So I think we're starting to see
Speaker 2: proposals like the one that came out yesterday with Senator
Speaker 2: Blumenthal and Holly. They have a framework that would encompass
Speaker 2: the large language models as well as the other types
Speaker 2: of AI.
Speaker 4: Dominique Guenela Musk was speaking just a few moments ago.
Speaker 4: He gave the analogy of acting on AI safety as
Speaker 4: being akin to the seat belt that with the seat
Speaker 4: belt action came after many tragedies and crashes, and he
Speaker 4: just wants to be proactive rather than reactive. Is that
Speaker 4: an approach that you think will work based on what
Speaker 4: DC's saying right now.
Speaker 2: Yes, I think it's very exciting to see this number
Speaker 2: of CEOs. We have literally the most important and largest
Speaker 2: tech companies that are present in DC right now to
Speaker 2: discuss this issue because they do see it as being
Speaker 2: important and they are being proactive. I think it's wonderful
Speaker 2: that the academics are there as well and the community
Speaker 2: groups are present at Senator Schumer's forum because the point
Speaker 2: is that we all need.
Speaker 8: To grapple these issues together.
Speaker 2: There is going to need to be a communication from
Speaker 2: proactive steps taken by the leadership of our tech companies,
Speaker 2: and they're doing that just by their presence of being
Speaker 2: present to have these very important discussions.
Speaker 8: So I'm excited for the future.
Speaker 6: Dominie.
Speaker 4: Do you get the sense that policy makers legislators are
Speaker 4: as collaborative on this issue as the private sector is.
Speaker 4: They're actually engaging on it with those that are leading
Speaker 4: the development of the technology.
Speaker 2: Yes, what I'm seeing is cross party in the US,
Speaker 2: cross party and bipartisan support around answering the call of
Speaker 2: many of these CEOs to put in place the opportunities
Speaker 2: and governance and guardrails that will allow AI to be
Speaker 2: just amazing. So what we want is the ability to
Speaker 2: innovate and create understanding where there are limits or areas
Speaker 2: where safety needs to come first, and this is something
Speaker 2: that the regulators and the business community are aligning on.
Speaker 2: I also will say what's good this time is that
Speaker 2: there is also the use of research scientists, large language
Speaker 2: model experts to engage them on how this technology actually
Speaker 2: works and therefore how we can craft common sense legislation.
Speaker 6: What is it being talked about?
Speaker 8: What's not being.
Speaker 2: Talked about are the nitty gritty of the sort of
Speaker 2: unanimity of thinking around the world in terms of what
Speaker 2: the legislation should look like. What we're seeing all around
Speaker 2: the world is a focus on ranking risk ranking of AI,
Speaker 2: focus on high risk, treating that differently than we're treating
Speaker 2: low risk AI.
Speaker 8: There's also a focus.
Speaker 2: On testing and monitoring and auditing of the systems themselves
Speaker 2: to make sure that they are amazing and they're doing
Speaker 2: exactly what the companies want them to do and with
Speaker 2: the public wants, and so I'm very excited for the
Speaker 2: way the legislation, the draft legislation has been put together
Speaker 2: and the framework that has been floated in Washing, Frameworks
Speaker 2: being floated in Washington as well as around the world,
Speaker 2: because we're getting at tackling the actual governance that will
Speaker 2: make AI amazing.
Speaker 4: Dominique Caroline and I speak to companies and executives of
Speaker 4: all shapes and sizes and sectors, and they're talking to
Speaker 4: talk and it's really hard for us to discern if
Speaker 4: they're walking the walk. Do you see clients actually spending
Speaker 4: money and hiring the right people to operationalize any of
Speaker 4: what we've just discussed.
Speaker 2: Absolutely, you know what has been so exciting and what
Speaker 2: we've seen. We have an AI task force that we
Speaker 2: put together at our firm because it's a cross disciplinary issue,
Speaker 2: and we every day I'm speaking to clients that are
Speaker 2: from Fortune five hundred companies that are very serious about
Speaker 2: getting AI governance right are already looking at.
Speaker 8: Draft legislation and mapping to that now, so.
Speaker 2: They are prepared and ready to pivot when final regulations
Speaker 2: come in.
Speaker 8: They're going to be already ahead of the game.
Speaker 2: That's the way to approach this because, as mister Musk
Speaker 2: said earlier, regulation is going to come, and so the
Speaker 2: key here is really being prepared. And we're seeing clients
Speaker 2: and companies every day. I talk to clients and companies
Speaker 2: that are focused laser focused on getting this right and
Speaker 2: being amazing with their AI.
Speaker 3: And global regulation at that. Good to have a global
Speaker 3: law firm with us. We thank you so much. Of course,
Speaker 3: Dominique coming into the studio. Dominique Shelton Leipzig partner ever
Speaker 3: at Mett bram ed.
Speaker 4: All right, let's get some talking tech and first stop.
Speaker 4: ARM is expecting to price its initial public offering at
Speaker 4: the top end of its range or even higher. Bloomberg
Speaker 4: sources say that the soft bank done chip designer could
Speaker 4: be a dollar or more above its fifty one dollar target.
Speaker 4: ARM sets begin trading on the Nasdaq tomorrow, and game
Speaker 4: maker Square NX is hoping to rebound from the underwhelming
Speaker 4: sales of Final Fantasy sixteen, the latest installment of its
Speaker 4: global hit series. Nearly tw two billion dollars. Sorry of
Speaker 4: its value has fallen since the game's release. Now, investors
Speaker 4: are wondering if the legacy franchise has run its course. Plus,
Speaker 4: the CEO of Binance US has left the company. Brian Schroeder,
Speaker 4: stepped down from his role, just as the struggling crypto
Speaker 4: platform conducted its second round of layoffs. More than one
Speaker 4: hundred jobs have been cut from its workforce amid a
Speaker 4: regulatory crackdown from the US Securities and Exchange Commission.
Speaker 3: Caroline Mean, Well, look, let's talk about what else is
Speaker 3: happening over in Washington and ten week and trust trial
Speaker 3: between Google and the Department of Justice is underway, and
Speaker 3: the government is accusing the search shound, of course, of
Speaker 3: spending ten billion dollars a year to maintain what it
Speaker 3: calls as a monopoly with us.
Speaker 6: Is going to be really a moment to.
Speaker 3: Dissect how we're hearing the arguments laid out ed. We
Speaker 3: ultimately know that it feels as though we're trying to
Speaker 3: reminisce to a nineteen nineties feeld of Microsoft. How much
Speaker 3: is this a time that we're going to see timately
Speaker 3: Alphabet be able to fight back on the grounds that, yes,
Speaker 3: it is actually easy to be able to change your
Speaker 3: ways in which you search. The point is that they're
Speaker 3: so good no one wants to do that.
Speaker 4: Ed, Yeah, And what I would say is the reason
Speaker 4: we love hearings in court documents is sometimes you get
Speaker 4: crazy stories like what Google was doing twenty years ago
Speaker 4: to fight off its competition. Let's bring in Bloombergs near
Speaker 4: Lylan out in DC on the antitrust beat. And that
Speaker 4: was kind of a mainstay of your latest reporting, Leah,
Speaker 4: what was going on inside Google two thousand and three
Speaker 4: and what the Justice Department kind of unearthed in those disclosures?
Speaker 4: What have we learned?
Speaker 16: Yeah, So the very first witness who started last yesterday
Speaker 16: afternoon is Hal Vari and he is Google's one time
Speaker 16: chief economist, and he was sort of the one who
Speaker 16: came up with this strategy that they ended up pursuing
Speaker 16: to make Google's search engine that fuck across browsers and
Speaker 16: mobile devices. It sort of came out of these memos
Speaker 16: that he wrote in two thousand and three two thousand
Speaker 16: and five timeframe, when they sort of discovered that if
Speaker 16: people had set Google as their homepage, they ended up
Speaker 16: doing a lot more searching than if they had their
Speaker 16: homepage as something else like yeahoo aol MSN some of
Speaker 16: the other big web pages of the day. So that
Speaker 16: sort of made them realize that when you make it
Speaker 16: really easy for people to do it, make it automatic,
Speaker 16: it ends up leading to much more traffic and making it,
Speaker 16: you know, Google, a much better product.
Speaker 3: So hal Varian, he's been cooled, I understand, and course
Speaker 3: to testify that was one of the first moves made.
Speaker 3: Are we likely to see this momentum build in terms
Speaker 3: of the argument of how long Google's been aware of
Speaker 3: how important it is to dominate the world of search,
Speaker 3: and ultimately whether it will ever bring about some sort
Speaker 3: of breakup.
Speaker 5: Yeah.
Speaker 16: So, as you know, we were saying, this is a
Speaker 16: ten week trial, so there's going to be a lot
Speaker 16: of different witnesses, both within Google and from outside Google
Speaker 16: talking about how It's power in search has sort of
Speaker 16: grown over time. You know, hal Varin is the person
Speaker 16: that they sort of decided to start with as sort
Speaker 16: of like the origin story of this this conduct, as
Speaker 16: the Justice Department alleges. But we're also going to hear
Speaker 16: from a lot of other interesting people, including some of
Speaker 16: the people who helped develop search, some of Google's search rivals,
Speaker 16: like folks at Goo and Microsoft and the now defunct Geneva.
Speaker 16: And we'll also hear from Sunder Pshai himself, who is
Speaker 16: now the CEO, but you know has actually already come
Speaker 16: up in some of these emails as such, because back
Speaker 16: in the early days he was very involved in helping
Speaker 16: develop the search engine.
Speaker 4: Do mostly and iland that on the ground anti trust
Speaker 4: reporting from DC. Thank you. Let's keep the conversation going,
Speaker 4: joining us now William Kovacic GW Professor of Law, and William,
Speaker 4: you know, the trials are exciting. They give newsflow, they
Speaker 4: give new disclosures. But the only question is is this
Speaker 4: a serious threat to Google as a whole entity.
Speaker 17: It is a serious threat, and the threat goes back
Speaker 17: to the experience with the Microsoft case which the Department
Speaker 17: of Justice brought over twenty years ago, and the most
Speaker 17: important concept to come out of that case is that
Speaker 17: there are important limits on what a dominant enterprise can
Speaker 17: do by way of buying up inputs channels of distribution
Speaker 17: that it and its rivals need in order to compete.
Speaker 17: And the theory that was endorsed by the Court of
Speaker 17: Appeals in that case is that a dominant firm can
Speaker 17: overreach when it basically seeks to preclude its competitors from
Speaker 17: getting effective access to users. And that core theory is
Speaker 17: the heart of this case, and I'm sure that's the
Speaker 17: theory that Google takes most seriously here in its defense.
Speaker 4: William, you spent almost a decade as a non executive
Speaker 4: director at the uk CMA Competition and Markets Authority. Put
Speaker 4: your regulation to hat on and tell us what chances
Speaker 4: you think US regulators have of doing of a successful
Speaker 4: action against Google or Alphabet They.
Speaker 17: Have a fighting chance to demonstrate that there was an
Speaker 17: infringement of law because of this core concept that is
Speaker 17: favorable to them. Obtaining relief that goes beyond prohibiting the
Speaker 17: specific conduct might be difficult.
Speaker 10: That's proven to be a very tough.
Speaker 17: Challenge in the United States. The other thing that will
Speaker 17: be difficult to cope with in the case itself is
Speaker 17: Google's response in talking about the placement the search engine
Speaker 17: on these devices. I suspect Google is going to ask
Speaker 17: the court, what would you have expected us to do otherwise?
Speaker 17: Should we have stood by and not even bid in
Speaker 17: the auctions that determined who was going to be on
Speaker 17: those devices? Should we have simply allowed our rivals to
Speaker 17: go ahead and obtain that precious real estate? What would
Speaker 17: you have had us do otherwise? And by implication what
Speaker 17: should large firms do Otherwise, I think that's going to
Speaker 17: be a hard issue for the court to wrestle with.
Speaker 17: But I'd say, if I had to look at where
Speaker 17: the possibilities for success are, the government has a serious
Speaker 17: prospect of succeeding on the essential question of whether exclusivity
Speaker 17: was improperly obtained as a means of exclusion.
Speaker 13: We had Rebecca Allensworth on yesterday and thinking about sort
Speaker 13: of the concept of ultimately, even if they win or
Speaker 13: lose this individual case, ultimately the pendulum is swinging in
Speaker 13: the way in which regulators look at big tech.
Speaker 3: You yourself at the FTC sharing it of course the
Speaker 3: agency from March two thousand and eight, two thousand and nine.
Speaker 3: Do think conversations are permanently changed in the way in
Speaker 3: which regulators i big tech.
Speaker 17: I think there's been a durable change in the risk
Speaker 17: appetite that regulators in the United States, in the United
Speaker 17: king as we were just mentioning before taken looking at
Speaker 17: the sector. I think there was a fairly strong belief
Speaker 17: twenty years ago, going back to the documents that Leah
Speaker 17: was describing earlier, there was a sense that this is
Speaker 17: a very dynamic sector and that unpredictable changes, changes you
Speaker 17: can't even identify at the moment, will deny any individual
Speaker 17: firm sustain preeminence in the field. Those assumptions have been revisited,
Speaker 17: and I think globally you see a change from thinking
Speaker 17: be cautious about intervening to be willing to intervene even
Speaker 17: though the specific outcome might be uncertain. And part of
Speaker 17: that strong belief is that simply having an active presence
Speaker 17: of the regulators chasens and limits the behavior of dominant firms.
Speaker 3: And isn't it ironic that ultimately that moment, that unpredictable
Speaker 3: moment is upon us the fact that Generative a I
Speaker 3: have swung into the mix and suddenly seems to be
Speaker 3: the most competitive threat to Google Search that we've had.
Speaker 6: In a long time.
Speaker 3: So I'm interested as to the perspective that already in practice,
Speaker 3: do you think companies have been withholding from making purchases,
Speaker 3: withholding perhaps making changes to the way in which they
Speaker 3: react to competitors because of the way regulators are now acting.
Speaker 17: I think we're going to get some good insights in
Speaker 17: the trial on exactly that question. But I suspect that
Speaker 17: what companies have continued to look for our opportunities to
Speaker 17: achieve real breakthrough, So the kind that you were discussing
Speaker 17: in the previous segment with the Musk interview. I think
Speaker 17: there's no question that companies are looking for opportunities. It
Speaker 17: will astonish by allowing them to achieve true pre eminence.
Speaker 1: On in their own right.
Speaker 17: But a very difficult and almost unmeasurable issue in the
Speaker 17: trial is whether you advance innovation more by being aggressive
Speaker 17: in intervening, or whether you advance it more by being
Speaker 17: more permissive.
Speaker 3: Absolutely fascinating, So we thank you, GW Professor of law,
Speaker 3: William Kovechic thank you.
Speaker 6: Meanwhile, coming up, a.
Speaker 3: Cyber attack takes out part of the biggest strip as
Speaker 3: hackers target MGM will have the details next.
Speaker 6: There is a roombag Technology MGM Resorts in Las Vegas.
Speaker 3: It was hit by a cyber attack this week, taking
Speaker 3: down payment system slot machines guess ability to.
Speaker 6: Actually access their hotel rooms and check in.
Speaker 3: Details of the attack, including who is behind it, though
Speaker 3: the motive the type of information that they may have
Speaker 3: obtained all remains pretty limited. A spokesperson for the FBI
Speaker 3: office in Las Vegas said they are aware of the
Speaker 3: attack they are assisting, and MGM says that hotels and
Speaker 3: casinos are currently operational, but plenty of frustration there.
Speaker 4: It feels, yeah, some of the reporting is amazing. People
Speaker 4: being forced to use cash. Can you imagine having to
Speaker 4: use paper money in this day and age? Outrageous? But
Speaker 4: check out that story on Bloomberg because sadly, Caroline, that
Speaker 4: does it for this edition of Bloomberg Technologies, Big Show.
Speaker 4: Recap it on our podcast wherever you find your podcast
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Speaker 4: Bloomberg Technology.