WEBVTT - Salesforce's Dreamforce, Tech Leaders on Capitol Hill 0:00:01.480 --> 0:00:02.360 From Mahart. 0:00:02.360 --> 0:00:06.800 We're Innovation of Money and Power Collie in Silicon Valley, NBN. 0:00:07.120 --> 0:00:11.160 This is Bloomberg Technology with Caroline Hyde and Ed Ludlove. 0:00:24.880 --> 0:00:27.440 I'm Caroline Hide at Bloomberg's World headquarters in New York 0:00:27.920 --> 0:00:29.560 and ourm Ed Lovelow in San Francisco. 0:00:29.640 --> 0:00:31.840 This is Bloomberg Technology coming up. 0:00:31.960 --> 0:00:36.080 Full coverage of Salesforce's annual Dreamforce conference where guess what 0:00:36.360 --> 0:00:40.400 AI will take center stage, will break down what to expect, and. 0:00:40.360 --> 0:00:42.800 We'll go live to Washington as tech leaders descend on 0:00:42.840 --> 0:00:46.040 Capitol Hill for a meeting with sentences to discuss none 0:00:46.080 --> 0:00:47.800 other than artificial intelligence. 0:00:47.880 --> 0:00:50.320 More details ahead, and we're going to stay in Washington 0:00:50.479 --> 0:00:53.080 to get the latest from Google's antitrust trial and break 0:00:53.120 --> 0:00:56.000 down the biggest takeaways from Apple's wonder last event and 0:00:56.080 --> 0:00:59.120 the continued China concerns. All that and has always so 0:00:59.240 --> 0:01:00.880 much more aheading, including. 0:01:00.720 --> 0:01:03.320 Right now here in San Francisco. Dream Force underway. The 0:01:03.360 --> 0:01:07.320 story for Salesforce has been about integrating AI into their 0:01:07.360 --> 0:01:10.680 existing CRM and other offerings. For more on dream Force. 0:01:10.959 --> 0:01:15.160 Who else Bloomberg's Brody Ford is in town in the flesh, 0:01:15.200 --> 0:01:16.800 Brodi Ford, What's going on? 0:01:16.800 --> 0:01:17.440 At dream Force. 0:01:18.800 --> 0:01:23.400 Yeah, I mean it is back Dreamforce forty k people 0:01:23.680 --> 0:01:26.560 here in downtown San Francisco. I am one of them, 0:01:27.280 --> 0:01:29.840 and the big thing for them, like every other company, 0:01:29.920 --> 0:01:33.400 is AI. And the subtext here is that Salesforce has 0:01:33.440 --> 0:01:37.120 been grappling with They were growing above twenty percent every 0:01:37.200 --> 0:01:39.080 year and now it's come to slow down, and there's 0:01:39.120 --> 0:01:42.280 a bit of anxiety among the investor community. But of 0:01:42.280 --> 0:01:45.119 course AI looks like this beautiful accelerant to bring them 0:01:45.160 --> 0:01:48.560 back up. And their pitch is like a lot of 0:01:48.600 --> 0:01:51.640 the incumbent players that yeah, sure you can get your 0:01:51.720 --> 0:01:55.360 data and plug it into these llms, but you know, 0:01:55.440 --> 0:01:58.720 can you trust that through our platform you can trust 0:01:58.760 --> 0:01:59.520 the use of the AI. 0:01:59.680 --> 0:02:00.440 That's the pitch. 0:02:00.720 --> 0:02:04.760 I mean, we get the Einstein Einstein indeed upgrades and 0:02:05.360 --> 0:02:08.000 it's sort of being injected across the entire offering a 0:02:08.080 --> 0:02:10.720 Salesforce PRODI and you can see therefore the nuance come 0:02:10.720 --> 0:02:11.079 with us. 0:02:11.120 --> 0:02:11.920 It's safe. 0:02:12.160 --> 0:02:15.959 But this comes in a context of well, anxiety across investors. 0:02:16.080 --> 0:02:19.280 Post Oracles numbers the fact that maybe all this talk. 0:02:19.080 --> 0:02:21.079 Of AI, or this desire to have AI. 0:02:20.960 --> 0:02:23.799 Doesn't always immediately mean revenue picks up in quite the 0:02:23.800 --> 0:02:25.240 way we were anticipating. 0:02:25.600 --> 0:02:27.480 How do you think Salesforce navigates that one. 0:02:28.919 --> 0:02:33.000 Salesforce has been pretty intentional about communicating it's going to 0:02:33.080 --> 0:02:35.880 get what the pricing is going to look like. And 0:02:35.919 --> 0:02:39.240 it's also it's really not that hypothetical. What a lot 0:02:39.280 --> 0:02:41.600 of their AI use cases? All right, you're selling software 0:02:41.639 --> 0:02:45.440 for salespeople. If you can automatically draft some outreach emails, 0:02:45.480 --> 0:02:47.720 I mean, as a journalist, I would use that for sure, Right, 0:02:47.800 --> 0:02:49.520 So I think a lot of their use cases are 0:02:49.520 --> 0:02:51.920 going to be a lot more immediate than some of 0:02:51.960 --> 0:02:54.679 the other AI we hear about, meaning as you say, 0:02:54.800 --> 0:02:57.280 quicker revenue, uplift love. 0:02:57.120 --> 0:02:59.960 That context for us as journalists and across any industry. 0:03:00.160 --> 0:03:01.960 Of course, body Ford, we thank you so much for it. 0:03:02.240 --> 0:03:05.000 Have fun out there as people get back together in 0:03:05.040 --> 0:03:07.320 the flesh. But meanwhile, well let's say virtual for a 0:03:07.320 --> 0:03:09.959 moment and get to Gil Lurio's Da Davidson, managing director 0:03:09.960 --> 0:03:12.600 and head of institutional research, who I know is keeping 0:03:12.600 --> 0:03:14.840 a keen eye on all of the announcements coming out 0:03:14.919 --> 0:03:18.120 of Salesforce and mark many of really talking about why 0:03:18.160 --> 0:03:19.919 you would want to be with their AI offering. 0:03:20.440 --> 0:03:21.800 Is this a very crowded space. 0:03:21.919 --> 0:03:24.640 Are there some significant winners clearly burning ahead. 0:03:24.360 --> 0:03:28.440 In this Our perspective is that AI, artificial intelligence is 0:03:28.440 --> 0:03:34.560 going to yes. Our perspective is that artificial intelligence is 0:03:34.600 --> 0:03:37.200 going to transform a lot of software business, if not 0:03:37.240 --> 0:03:40.840 all software business and technology businesses, but it's going to 0:03:40.920 --> 0:03:43.200 take a while. There's going to be very few companies 0:03:43.200 --> 0:03:46.920 that benefit in the short term. It's really Nvidia and 0:03:47.000 --> 0:03:50.440 Microsoft have a very clear story of how their businesses 0:03:50.440 --> 0:03:53.280 are going to get transformed and accelerate in the short term. 0:03:53.320 --> 0:03:57.120 For everybody else, they have to build AI products. They 0:03:57.160 --> 0:03:59.560 have to get better at AI. Their customers want that, 0:03:59.600 --> 0:04:03.360 their customers expect that, but it's going to take a while, 0:04:03.800 --> 0:04:06.400 and their customers, for as much as they're asking for it, 0:04:06.720 --> 0:04:10.200 are also skeptical of products that have been rushed to market, 0:04:10.240 --> 0:04:14.120 and they're going to be patient about making investments in AI. 0:04:14.480 --> 0:04:16.960 They're going to want to see mature, ready for market 0:04:17.000 --> 0:04:20.080 products before they implement them in their business. 0:04:21.440 --> 0:04:23.359 Kil I know you have folks from your desk on 0:04:23.400 --> 0:04:25.560 the ground at Dreamforce. You're keeping a close eye on 0:04:25.600 --> 0:04:29.000 what's going on. Does anything of substance actually come out 0:04:29.040 --> 0:04:31.599 of Dreamforce in terms of what you then pass on 0:04:31.640 --> 0:04:34.360 to institutional investors about what you learned. 0:04:35.600 --> 0:04:39.240 Well, they are very good about relaying the product roadmap 0:04:39.360 --> 0:04:44.359 and how they're going to incorporate artificial intelligence into products 0:04:44.440 --> 0:04:49.520 like Tableau, like MuleSoft, like the core sales and marketing offerings, 0:04:49.839 --> 0:04:52.080 how they're going to do it holistically, how they're going 0:04:52.120 --> 0:04:56.479 to protect the customers data. This is what their customers 0:04:56.560 --> 0:04:59.800 want to hear. It doesn't mean their customers are ready 0:04:59.800 --> 0:05:03.720 to push the button and buy new software, but they 0:05:03.760 --> 0:05:04.960 want to hear that this is. 0:05:04.920 --> 0:05:05.680 On the roadmap. 0:05:05.720 --> 0:05:07.440 They want to hear that it's going to be part 0:05:07.480 --> 0:05:10.320 of the products and going forward, and maybe they'll push 0:05:10.360 --> 0:05:12.560 the button next year or the year after that. So 0:05:12.600 --> 0:05:16.159 it's critical that Salesforce presents a good vision, and it 0:05:16.240 --> 0:05:17.320 sounds like they are. 0:05:18.760 --> 0:05:18.839 So. 0:05:18.960 --> 0:05:19.159 Gail. 0:05:19.240 --> 0:05:21.640 The story of Salesforce has been top line growth above 0:05:21.640 --> 0:05:25.760 twenty five nineteen, twenty twenty. When I pose to an 0:05:25.760 --> 0:05:30.039 investor the other day that AI could return Salesforce's growth 0:05:30.040 --> 0:05:32.640 to that level, he just laughed and just gave an 0:05:32.680 --> 0:05:36.520 audible hap. Where do you see AI taking this company? 0:05:37.800 --> 0:05:39.080 Yeah? 0:05:38.440 --> 0:05:41.520 I think the burden of proof is on Salesforce, and 0:05:41.520 --> 0:05:44.640 again on every other software company that's talking AI right now, 0:05:44.680 --> 0:05:49.479 Salesforce's revenue growth right now is barely double digits, and 0:05:49.600 --> 0:05:52.000 they really have to come up with a new set 0:05:52.040 --> 0:05:55.800 of very compelling products for that to accelerate. Either that 0:05:56.120 --> 0:05:58.880 or enterprise software spend has to pick up, and we're 0:05:58.880 --> 0:06:02.320 not seeing that yet either. So, just like a lot 0:06:02.360 --> 0:06:04.719 of other software companies, and we'll talk about Oracle in 0:06:04.760 --> 0:06:07.400 the second AI is a big part of what they 0:06:07.400 --> 0:06:10.440 have to do. It doesn't mean that it's driving revenue 0:06:10.480 --> 0:06:12.160 acceleration anytime soon. 0:06:13.200 --> 0:06:15.440 Yeah, I think, Caroline, for that reason, that is why 0:06:15.480 --> 0:06:18.159 we're thinking about Oracle right because the implications of that 0:06:18.279 --> 0:06:20.640 name are the same for the Salesforce as well. Caroline. 0:06:20.720 --> 0:06:23.960 Yeah, and give us that sense of well, whether you 0:06:24.040 --> 0:06:25.839 were as shocked as the rest of the market, Gil, 0:06:25.960 --> 0:06:28.599 I mean the fact that we saw Oracle shares tumbel 0:06:28.600 --> 0:06:31.480 the most is two thousand and two, even while posting 0:06:31.560 --> 0:06:34.400 thirty percent levels of growth for Cloud when it comes 0:06:34.440 --> 0:06:37.279 to Cloud AI offerings, it builds as though that just 0:06:37.360 --> 0:06:40.280 cannot live up to the insatiable expectations of investors. 0:06:40.320 --> 0:06:45.120 Right now, Oracle is still a single digit grower. It 0:06:45.200 --> 0:06:49.240 was masked over the last twelve months by the Certner acquisition, 0:06:50.040 --> 0:06:55.160 and they are growing the OCI cloud hosting business very rapidly, 0:06:55.839 --> 0:06:58.320 but it's still a relatively small business for them, and 0:06:58.480 --> 0:07:01.919 most of their other businesses are flat declining. We're growing 0:07:02.000 --> 0:07:06.200 very slowly. They said, expectations that AI. 0:07:10.280 --> 0:07:12.440 Care, I'm going to jump I'm going to jump in here, Gil, 0:07:12.480 --> 0:07:14.560 I think we have some technical issues, but we really 0:07:14.600 --> 0:07:17.680 appreciate your analysis of both companies, Salesforce and Oracle. That 0:07:17.840 --> 0:07:21.240 was Gil Luria of DA Davidson up in Portland, Oregon. 0:07:29.200 --> 0:07:31.760 I Phone fifteen Pro six point one inch screen nine 0:07:31.880 --> 0:07:34.480 hundred and ninety nine dollars, I Phone fifteen Pro Macs 0:07:34.800 --> 0:07:37.640 six point seven inch screen one one hundred and ninety 0:07:37.680 --> 0:07:40.280 nine dollars for the starting version, two hundred and fifty 0:07:40.280 --> 0:07:43.680 six gigabytes of memory. When you hold both handsets in 0:07:43.720 --> 0:07:45.400 your hand, what jumps out? We'll turn them on their 0:07:45.520 --> 0:07:49.360 end and you'll see the USBC connector or poor ending 0:07:49.560 --> 0:07:52.880 almost twelve years of Lightning connector, which Apple introduced in 0:07:52.920 --> 0:07:57.600 twenty twelve. By the way, goodbye ringer mute switch button thing, 0:07:57.840 --> 0:08:00.600 Hello action button. Then you look around the edges and 0:08:00.640 --> 0:08:03.240 the sides, and it's those titanium sides that are new 0:08:03.600 --> 0:08:07.480 to the iPhone fifteen Pro and Promax generation. The colors 0:08:07.480 --> 0:08:09.880 are interesting, more kind of limited options on the color 0:08:09.880 --> 0:08:12.520 side for Pro and Promax compare with fifteen and fifteen 0:08:12.560 --> 0:08:15.360 plus where you get these kind of brighter pastel colors. 0:08:15.600 --> 0:08:17.840 And then for Pro and Promac, it's really what is 0:08:17.880 --> 0:08:21.520 on the inside. The A seventeen processor, Apple's fastest ever 0:08:21.600 --> 0:08:25.720 smartphone chip, brings much speed, but also more memory and 0:08:25.800 --> 0:08:29.280 higher performance, and for Promax in particular, new camera technology 0:08:29.360 --> 0:08:32.520 up to five x zoom or magnification, which is kind 0:08:32.520 --> 0:08:35.400 of pushing things forward on the photo side for iPhone. 0:08:38.880 --> 0:08:41.440 So you see Tim Cook there Carrie taking selfies with 0:08:41.480 --> 0:08:42.160 the crowd, and it. 0:08:42.160 --> 0:08:43.040 Was so active. 0:08:43.080 --> 0:08:43.880 Did you get one egg? 0:08:44.679 --> 0:08:47.480 Honestly, the weight was hours and I had bigger things 0:08:47.480 --> 0:08:49.200 to report on. I wanted to get hands on with 0:08:49.240 --> 0:08:51.800 the phones. But just take my word for it. If 0:08:51.800 --> 0:08:54.600 there were one thousand people in the room, ninety percent 0:08:54.640 --> 0:08:57.560 of them were just going oh USBC on the bottom. 0:08:57.640 --> 0:08:58.839 That's the reality of it. 0:09:00.080 --> 0:09:02.079 We can be quite basic sometimes, can't we add it 0:09:02.120 --> 0:09:03.319 all comes down to charging. 0:09:04.520 --> 0:09:07.280 Yeah, and look, this was European Union mandated. It had 0:09:07.280 --> 0:09:10.320 a deadline of twenty twenty four. Apple sort of jumped 0:09:10.360 --> 0:09:12.520 before they were pushed on it. But it brings that 0:09:12.600 --> 0:09:15.520 device in line with other Apple devices and every other 0:09:15.559 --> 0:09:18.200 product that's out there from other brands. So I thought 0:09:18.200 --> 0:09:19.920 that was really impoint by the way, which color would 0:09:19.920 --> 0:09:21.920 you go for of what you just saw? What was 0:09:21.960 --> 0:09:22.440 your favorite? 0:09:22.600 --> 0:09:24.840 I mean anything goldie look can chain? I'm into. 0:09:25.080 --> 0:09:26.720 The only issue being I then have to get some 0:09:26.920 --> 0:09:29.400 enormous black plastic contraption to go over the top so 0:09:29.480 --> 0:09:33.319 or don't hurt it. So kind of honor agnostic nowadays. 0:09:33.280 --> 0:09:35.640 And as we know, no more leather in Apple accessories 0:09:35.640 --> 0:09:37.680 and on gold I'm going to ask Mark German about 0:09:37.720 --> 0:09:39.320 that in just a moment, so let's bring him in 0:09:39.320 --> 0:09:42.560 Bloomber's Mark German to recap the day that was in 0:09:42.600 --> 0:09:46.320 the Apple event, I mean Mark. The emphasis from the 0:09:46.360 --> 0:09:49.200 street at Lease has been the pricing of iPhone fifteen 0:09:49.280 --> 0:09:51.920 Pro Max. They raised the price by one hundred dollars. 0:09:52.400 --> 0:09:54.200 What technology do you get in return? 0:09:55.600 --> 0:09:58.559 So the price increase is really interesting because they went 0:09:58.640 --> 0:10:01.840 as minor and stealth as they could on this price increase. 0:10:01.880 --> 0:10:03.839 What they've done is they've eliminated the one hundred and 0:10:03.920 --> 0:10:06.120 twenty eight gigabyte capacity option. 0:10:06.400 --> 0:10:08.400 For the Promax starting at. 0:10:08.280 --> 0:10:10.800 That two fifty six gigabyte, so they didn't raise the 0:10:10.840 --> 0:10:13.880 price of that storage tier, but they raised the price 0:10:13.960 --> 0:10:16.520 of the phone by removing that entry level tier. So 0:10:16.840 --> 0:10:20.560 about a nine percent price increase in the US, but 0:10:20.600 --> 0:10:24.319 you're having more sizeable price increases elsewhere. There's a minor 0:10:24.400 --> 0:10:28.520 price jump in China. There's a fourteen percent price increase 0:10:28.520 --> 0:10:31.679 on the Pro models in India. In Canada, you have 0:10:31.720 --> 0:10:34.959 a fifty Canadian dollar increase on the regular Pro and 0:10:35.040 --> 0:10:39.000 a two hundred dollars Canadian dollar increase on the Promax. 0:10:39.440 --> 0:10:42.440 The differences this year between the Promo Pomacs are broader 0:10:42.440 --> 0:10:45.520 than ever before it just was battery life and stream size. 0:10:45.840 --> 0:10:48.720 Now you're getting that periscope camera that gives you that 0:10:48.800 --> 0:10:52.360 five x zoom on the optical side, so hardware zoom 0:10:52.440 --> 0:10:55.560 five x, which means no degradation, and then twenty five 0:10:55.760 --> 0:10:58.120 x zoom on the digital side, so the quality will 0:10:58.120 --> 0:11:00.959 dip a little bit, but you have that intense twenty 0:11:00.960 --> 0:11:03.960 five x zoom. So it's an interesting strategy. But I 0:11:04.000 --> 0:11:06.240 do think that camera will come to the lower end 0:11:06.240 --> 0:11:06.840 model next. 0:11:06.760 --> 0:11:10.040 Year, and strategy is so necessary because we know the 0:11:10.080 --> 0:11:13.840 context with which Apple not only puts its new phones 0:11:13.880 --> 0:11:16.240 into the market where we're worried about the Chinese consumer, 0:11:16.320 --> 0:11:18.920 but also more broadly, revenue's been on the downside. 0:11:19.040 --> 0:11:20.840 iPhone is still so integral. 0:11:21.360 --> 0:11:23.760 Is it obvious to you that this is going to 0:11:23.760 --> 0:11:25.560 be a hot seller as we head towards holidays? 0:11:26.360 --> 0:11:27.680 You know, I'll tell you I've had some time to 0:11:27.720 --> 0:11:30.559 digest the announcements. I would say that these are pretty 0:11:30.600 --> 0:11:35.120 minor refreshes overall. But there is a new casing on 0:11:35.200 --> 0:11:38.360 the iPhone fifteen Pro and promax right that titanium and 0:11:38.440 --> 0:11:42.160 what I think consumers that are jumping for iPhones, those 0:11:42.200 --> 0:11:44.400 early adopters, but those big Apple fans, they want to 0:11:44.400 --> 0:11:47.040 buy what looks new, and these new phones look new. 0:11:46.960 --> 0:11:48.520 So they're going to buy them, right. 0:11:48.679 --> 0:11:52.080 But the technology itself, the feature set, it's not going 0:11:52.120 --> 0:11:54.320 to feel much different. It's not going to operate much 0:11:54.400 --> 0:11:56.840 different than the year prior. If you have a fourteen Pro, 0:11:57.200 --> 0:11:59.360 you probably don't need to update to a fifteen Pro. 0:12:00.080 --> 0:12:02.280 This is going to bring in people who are on thirteen's, 0:12:02.320 --> 0:12:06.880 twelve to elevens and earlier. But I certainly think despite that, 0:12:06.880 --> 0:12:07.839 that new design. 0:12:07.679 --> 0:12:09.839 Is going to do enough and they are going to. 0:12:09.760 --> 0:12:11.400 Get done what they need to get done, and that 0:12:11.520 --> 0:12:15.120 is to probably meet their sales expectations for the holiday 0:12:15.280 --> 0:12:17.880 order and titanium. You can see why their marketing is 0:12:17.920 --> 0:12:19.880 all in in titanium because that's really what they got 0:12:19.880 --> 0:12:20.280 this year. 0:12:21.240 --> 0:12:21.440 Mark. 0:12:21.480 --> 0:12:25.319 We got the investors perspective on Bloomberg Television earlier today 0:12:25.320 --> 0:12:28.960 on Cole Crawford, who's a portfolio manager at Alja. Just 0:12:29.000 --> 0:12:30.240 have a listen to what she had to say. 0:12:31.160 --> 0:12:34.760 Forty percent of Apple's earnings comes from their services revenue, 0:12:34.920 --> 0:12:38.680 and that services revenue is almost utility like in nature. 0:12:38.760 --> 0:12:40.880 It's the storage that you pay. 0:12:40.679 --> 0:12:45.080 On your iPhone, which you know, we're only increasing the 0:12:45.120 --> 0:12:47.000 amount of storage and the number of photos that we 0:12:47.040 --> 0:12:50.120 have in the cloud, and so there is almost a 0:12:50.200 --> 0:12:55.520 stability aspect to the stock. Although granted, I do worry 0:12:55.800 --> 0:12:58.559 that the handset numbers are going to come under pressure, 0:12:58.920 --> 0:13:00.239 not only in China. 0:13:00.320 --> 0:13:01.600 But also in the US. 0:13:03.880 --> 0:13:07.360 Mark China is a concern. Timing is everything we heard 0:13:07.400 --> 0:13:12.360 from the Chinese government overnight about the reports of clamping 0:13:12.400 --> 0:13:14.280 down on foreign handsets. What do we know? 0:13:14.360 --> 0:13:15.719 What is the latest? 0:13:16.280 --> 0:13:19.920 Yeah, two things I'd argue on that first point, services 0:13:19.960 --> 0:13:22.320 are not forty percent of Apple's overall revenue. If that 0:13:22.440 --> 0:13:25.000 was the case, we would be having a much different discussion. 0:13:25.040 --> 0:13:27.679 It's about twenty percent. But I will note that they 0:13:27.840 --> 0:13:30.880 did announce new iicloud storage tiers, going from a ten 0:13:30.920 --> 0:13:33.760 dollars maximum two terabytes to a sixty dollars a month 0:13:33.800 --> 0:13:37.040 maximum at twelve terabytes. I'd be shocked if anyone could 0:13:37.040 --> 0:13:39.679 fill up twelve terabytes in two and a half lifetimes, 0:13:39.679 --> 0:13:42.160 but certainly those options are there. In terms of the 0:13:42.240 --> 0:13:44.719 China situation, it seems like we're doing two things. They 0:13:44.760 --> 0:13:49.000 seem to be walking back some of these claims and 0:13:49.040 --> 0:13:52.160 reports by saying there has not been a ban. Just 0:13:52.160 --> 0:13:55.199 because China is saying that doesn't mean it to be true. 0:13:55.640 --> 0:14:00.000 I definitely still believe that government agencies are pushing their 0:14:00.080 --> 0:14:03.120 employees and their workers to not bring iPhones into work. 0:14:03.640 --> 0:14:06.080 But you know, publicly they are walking that notion back, 0:14:06.760 --> 0:14:11.200 and privately they are probably still discussing, you know, the 0:14:11.240 --> 0:14:15.840 future of Apple and that relationship there. In terms of 0:14:16.000 --> 0:14:18.439 the other claims they said, they said they've seen security 0:14:18.520 --> 0:14:22.000 issues on iPhones, I personally think they're referring to some 0:14:22.040 --> 0:14:25.680 of the reports you've seen around iPhone security up in recent. 0:14:25.400 --> 0:14:29.800 Weeks, always bringing us the full picture, Markham and going 0:14:29.840 --> 0:14:32.000 into national when it comes to Apple, we thank you 0:14:32.040 --> 0:14:34.240 so much. I mean, let's talk about what's coming up 0:14:34.280 --> 0:14:37.440 as well, because we're not just talking about hardware and services. 0:14:37.480 --> 0:14:39.920 We're thinking about what goes on inside the world of 0:14:39.960 --> 0:14:41.840 technology right now and how it affects the way you work. 0:14:41.880 --> 0:14:43.880 Work shifting is upon us to see you of GitHub. 0:14:44.360 --> 0:14:47.119 Well, we're going to be thinking about all the artificial 0:14:47.160 --> 0:15:03.760 intelligence viewpoints there as the bloombag technology time now for 0:15:03.800 --> 0:15:05.800 work shifting, where we look at the changing landscape of 0:15:05.840 --> 0:15:07.800 the labor market amid advances in technology. 0:15:08.000 --> 0:15:09.640 If you're a developer, it's changing fast. 0:15:09.680 --> 0:15:13.000 Gethubs Ai coding assistant Copilot for example, has tens of 0:15:13.000 --> 0:15:15.840 thousands of enterprise customers. Are millions of users getting excited 0:15:15.880 --> 0:15:18.520 about it. Hit to explain how it's actually boosting productivity 0:15:18.560 --> 0:15:21.640 in the here and the now. Thomas Donkey, he's GitHub CEO. 0:15:21.680 --> 0:15:23.360 It's great to have you in the studio Thomas. And 0:15:24.400 --> 0:15:27.320 what I'd love a sense of is how much we're 0:15:27.360 --> 0:15:30.000 seeing a speed up, how much productivity and how you 0:15:30.040 --> 0:15:31.160 measure that at the moment. 0:15:31.520 --> 0:15:33.760 Yeah, thank you so much for having me really exciting times. 0:15:33.960 --> 0:15:36.320 You know, every company now is a software company. It's 0:15:36.360 --> 0:15:38.120 not only the big tech you know on the West Coast, 0:15:38.160 --> 0:15:41.200 it's really every bank, every supermarket, every automaker. 0:15:41.400 --> 0:15:42.600 They all have to write software. 0:15:42.640 --> 0:15:44.520 So their employee software developers. And what they do is, 0:15:44.520 --> 0:15:46.640 you know, they're they're writing code on their machines and 0:15:46.680 --> 0:15:49.920 get a copilot pretrix that next word, the next line, 0:15:50.160 --> 0:15:52.760 even even multiple lines of code. And so in the 0:15:52.840 --> 0:15:54.840 last two years since we launched get up copilate, we 0:15:54.880 --> 0:15:57.840 saw that half the code is written by copilot in 0:15:57.840 --> 0:16:00.760 those file to US enabled and it increases productivity of 0:16:00.880 --> 0:16:02.480 up to fifty five percent. 0:16:02.720 --> 0:16:04.320 And so we're seeing like the. 0:16:04.200 --> 0:16:07.280 First real use case for AI way whole sector of 0:16:07.280 --> 0:16:09.680 the workforce is adopting US to care productivity. 0:16:09.920 --> 0:16:15.800 Also fascinating because you're within the Microsoft overall family. So 0:16:16.040 --> 0:16:18.560 open AI has got this relationship. There's also open AI 0:16:18.680 --> 0:16:21.600 code Interpreter. You've also think got some open source applications 0:16:21.640 --> 0:16:25.240 sort of coming to the pipeline. We're looking at some exuberance. 0:16:25.280 --> 0:16:28.200 It feels like in the developer world for open interpreter, 0:16:29.440 --> 0:16:32.160 where do you go open source, non open source, open 0:16:32.200 --> 0:16:35.920 AI GitHub, open interpreter, what are the offerings here. 0:16:36.120 --> 0:16:38.640 I mean all of those will be probably covered and 0:16:38.640 --> 0:16:41.600 cover different use cases. The opening I could and Torpreter 0:16:41.760 --> 0:16:45.000 really helps you with analyzing data. It's really for the 0:16:45.200 --> 0:16:50.080 Microsoft Excel user to process some data and broad charts 0:16:50.120 --> 0:16:53.320 and those kinds of things with copartnered GitHub and then 0:16:53.400 --> 0:16:56.680 quite frankly, at Microsoft we've always been a developer tools company. 0:16:56.880 --> 0:17:00.720 Microsoft's first ever product was altair Base, you know, basic 0:17:00.760 --> 0:17:04.480 Interpreter almost forty almost fifty years ago, forty eight years ago. 0:17:04.680 --> 0:17:06.120 And so with giithub we're going. 0:17:05.880 --> 0:17:09.080 Where the developer is there, then the editor. They're writing code, 0:17:09.160 --> 0:17:12.760 they're debugging code. They have to you know, understand code 0:17:12.760 --> 0:17:15.879 that comes as far back from the sixties programming language 0:17:15.920 --> 0:17:17.800 called cobol all the way to you now of the 0:17:17.840 --> 0:17:21.399 modern stacked, the cloud native companies that build you know, 0:17:21.560 --> 0:17:24.520 the e commerce world of today, all of them use 0:17:24.720 --> 0:17:26.240 code to build the innovation. 0:17:28.200 --> 0:17:32.400 Thomas, how big a player or contributor is GitHub in 0:17:32.440 --> 0:17:35.600 the open source AI movement? Do you consider GitHub a 0:17:35.640 --> 0:17:36.240 leader there? 0:17:37.040 --> 0:17:39.320 Getub is the home of open source. 0:17:39.359 --> 0:17:42.560 You now, many, if not, if not the most, the 0:17:42.640 --> 0:17:46.040 majority of open source projects is hosted on GitHub in 0:17:46.040 --> 0:17:49.080 As such, you know, many of those new AI projects 0:17:49.080 --> 0:17:51.720 are also hosted on GitHub and and getub is supporting 0:17:51.760 --> 0:17:54.560 them by providing them free hosting for their source code, 0:17:54.560 --> 0:17:57.760 you know, for their project, for their issue tracking, for discussions, 0:17:57.960 --> 0:17:59.960 and of course we're enabling them to use get up 0:18:00.040 --> 0:18:02.800 copilot to build their AI innovation. 0:18:04.400 --> 0:18:06.960 Thomas, I speak to all kinds of founders, software engineers 0:18:06.960 --> 0:18:10.960 about copilot. Are you able to tell me what specific 0:18:11.160 --> 0:18:15.280 coding projects are happening with copilot and do you track them? 0:18:15.320 --> 0:18:18.119 Do you have the data that can tell you the 0:18:18.200 --> 0:18:19.720 specific areas of focus. 0:18:20.480 --> 0:18:23.080 So we don't track, you know, on the large scale 0:18:23.119 --> 0:18:26.159 of what project that would be a violation of our 0:18:26.200 --> 0:18:30.719 private principles. But for individual organizations, we can show them 0:18:30.760 --> 0:18:35.560 the data in which repositories, in which projects they're most successful. 0:18:35.000 --> 0:18:36.080 With the use of copilot. 0:18:36.080 --> 0:18:39.159 You know, there are certain programming languages like Python or 0:18:39.280 --> 0:18:43.639 JavaScript that see really strong benefits from the use of 0:18:43.720 --> 0:18:46.879 Copilot and a lot of lines of code written for 0:18:47.040 --> 0:18:47.840 these projects. 0:18:48.400 --> 0:18:52.439 Meanwhile, Blosso Microsoft sat in Adela's in Washington, along with 0:18:52.520 --> 0:18:55.240 an awful lot of other key leaders thinking about the 0:18:55.320 --> 0:18:58.240 future regulation when it comes to artificial intelligence. Are you 0:18:58.280 --> 0:19:01.800 positive and feeling that's going to be written well for 0:19:01.920 --> 0:19:04.680 GitHub to continue to see this evolution on your own platforms. 0:19:04.880 --> 0:19:07.120 It's great that these conversations are happening, and we really 0:19:07.160 --> 0:19:09.920 need to have these conversations happening in Washington because we 0:19:09.960 --> 0:19:11.879 need the regulation happening. 0:19:11.560 --> 0:19:12.400 Fast, right. 0:19:12.440 --> 0:19:16.280 We need the legal security, the legal safety to apply 0:19:16.400 --> 0:19:19.000 these tools and get the productivity gains. And think about 0:19:19.040 --> 0:19:21.680 like many companies now have software developers spread a whole 0:19:21.680 --> 0:19:23.520 around the whole world. You know, they're sitting here in 0:19:23.520 --> 0:19:26.879 the United States, that's in Germany, in India, in Australia, 0:19:26.920 --> 0:19:29.639 and so we also need to have regulation that is 0:19:29.640 --> 0:19:33.760 somewhat equal across these countries because otherwise, as a software developer, myself, 0:19:33.800 --> 0:19:37.080 as the manager of you now thousands of software developers, 0:19:37.200 --> 0:19:39.399 I don't want my software developers in the United States 0:19:39.400 --> 0:19:41.920 that have a different productivity gain than those that sit 0:19:41.960 --> 0:19:44.639 in Germany and those that sit in India, right, we don't. 0:19:44.840 --> 0:19:45.360 We want a. 0:19:45.320 --> 0:19:48.040 Balance across all these countries, not not a competition between 0:19:48.080 --> 0:19:48.680 these countries. 0:19:48.880 --> 0:19:51.640 Fascinating. Thomas Doomkey of GitHub, we thank. 0:19:51.520 --> 0:20:01.840 You, welcome back to Umore Technology. 0:20:01.840 --> 0:20:03.560 I'm Caroline Heard in New York and. 0:20:03.600 --> 0:20:06.199 I'm Ed Ludlow in San Francisco Cara quick check in 0:20:06.240 --> 0:20:08.160 on the markets and as that one hundred, this tech 0:20:08.200 --> 0:20:11.040 heavy index, It's been a choppy week of trading up Monday, 0:20:11.119 --> 0:20:15.679 down Tuesday, and now we're up Wednesday modestly. CPI data 0:20:16.160 --> 0:20:19.440 a little hotter than expected. We ask questions therefore about 0:20:19.480 --> 0:20:21.680 what the Federal Reserve does in the rest of the year. 0:20:21.960 --> 0:20:24.480 Do they raise rates one more time again? And when? 0:20:25.040 --> 0:20:27.520 Why do we care? Because higher rates impact the present 0:20:27.560 --> 0:20:31.040 cash values of future cash flows for tech companies, particularly 0:20:31.040 --> 0:20:32.399 on Then as that one hundred, you have lots of 0:20:32.480 --> 0:20:35.800 software names trading at higher multiples. That's what we care about. 0:20:35.880 --> 0:20:37.320 In terms of specific movers. 0:20:37.080 --> 0:20:38.760 We're watching a lot of the leaders in the. 0:20:38.800 --> 0:20:41.840 Artificial intelligence space, some names behind me, all of them 0:20:41.840 --> 0:20:44.480 moving to the upside. Microsoft up one point, sent a 0:20:44.520 --> 0:20:47.720 big point boost on then as that one hundred, Palenteer 0:20:47.920 --> 0:20:50.800 and Meta. What all three stocks have in common is 0:20:50.800 --> 0:20:53.600 that their CEOs are all in one place right now 0:20:53.800 --> 0:20:56.520 in a very important meeting. That is one of our 0:20:56.560 --> 0:20:59.560 top stories. More than twenty tech and civil society leaders 0:20:59.600 --> 0:21:02.600 are current taking part in a closed door Senate meetings 0:21:02.640 --> 0:21:06.399 talk about how to shape AI regulation. Heavy hitters like 0:21:06.440 --> 0:21:09.880 Elon Musk. Sam Altman andson Depitchai are present. We caught 0:21:09.960 --> 0:21:12.879 up with Senator Elizabeth Warren and got her take and 0:21:12.920 --> 0:21:13.720 talks about Musk. 0:21:14.880 --> 0:21:17.800 They're sitting at a big round table all by themselves. 0:21:18.320 --> 0:21:20.880 All of the senators are to sit there and ask 0:21:21.160 --> 0:21:22.000 no questions. 0:21:22.080 --> 0:21:23.400 That's the setup. 0:21:25.600 --> 0:21:25.960 For more. 0:21:26.040 --> 0:21:29.440 Let's bring in Bloomberg's Anda Eduton on the ground in DC. 0:21:29.720 --> 0:21:31.400 What's going on inside that romana. 0:21:32.560 --> 0:21:34.760 Well, I'm speaking with several people who are actually in 0:21:34.800 --> 0:21:37.240 the room with the CEOs, and they're saying that right 0:21:37.280 --> 0:21:40.000 now there's a discussion going on about open source and 0:21:40.040 --> 0:21:43.199 the security of sharing open source resource research. You have 0:21:43.240 --> 0:21:48.400 people like Clement DeLong of Hu Hugging Face and others 0:21:48.440 --> 0:21:50.320 who are saying that open source is good and important 0:21:50.320 --> 0:21:52.720 for innovation. You have others like Mark Zuckerberg who is 0:21:52.720 --> 0:21:55.119 saying that it presents and security risk. So there have 0:21:55.240 --> 0:21:57.920 already been some interesting exchanges and we'll see how the 0:21:58.000 --> 0:22:00.480 rest of the session develops this afternoon they go into 0:22:00.520 --> 0:22:01.160 more conversation. 0:22:02.880 --> 0:22:05.680 How fascinating. Let's just go. We have of course Elo 0:22:05.760 --> 0:22:08.080 masks coming live to us. We understand. Let's just dip 0:22:08.119 --> 0:22:09.880 in for a seconds in. 0:22:09.880 --> 0:22:12.480 Order I think the general. 0:22:12.560 --> 0:22:15.480 I think it's clear that there's a strong consensus of 0:22:15.560 --> 0:22:18.080 woman's with sensus that there should be some AI regulation 0:22:18.440 --> 0:22:19.440 that would be in the best. 0:22:19.240 --> 0:22:21.959 Interests of the people to do so. And I think 0:22:22.000 --> 0:22:23.080 we'll probably see something happen. 0:22:23.119 --> 0:22:26.040 I don't know what, on what time frame or exactly 0:22:26.080 --> 0:22:27.119 how it will manifest itself. 0:22:27.520 --> 0:22:29.760 Questions what are they going to do? I don't know. 0:22:29.880 --> 0:22:34.119 I mean, there's this, there's clearly we've created regulatory agencies before, 0:22:34.880 --> 0:22:38.359 and actually just recently just before leaving, made the point that, 0:22:39.440 --> 0:22:42.639 you know, while our regulatory agencies are not perfect, and 0:22:42.720 --> 0:22:46.080 I deal with regulators on a very frequent basis with 0:22:46.240 --> 0:22:52.960 automotive you know, communications starling and then a with with rockets, 0:22:53.000 --> 0:22:57.960 so I've had transfiy interaction with regulators for you know, 0:22:58.440 --> 0:23:03.040 decades a please, and well, regulators are not perfect. 0:23:03.440 --> 0:23:05.520 There's no regulatory agency, but I'm aware of that. 0:23:05.560 --> 0:23:08.320 I think we should at the federal level at least 0:23:08.320 --> 0:23:09.560 that that we should delete. 0:23:09.800 --> 0:23:12.960 Yeah, I should be I think I or something like 0:23:13.000 --> 0:23:13.880 that someone. 0:23:14.880 --> 0:23:18.080 Yeah, I don't know what exactly, perhaps perhaps an apartment 0:23:18.119 --> 0:23:18.680 of AI. 0:23:20.400 --> 0:23:22.480 And probably listen, I think the probably any. 0:23:22.359 --> 0:23:24.840 Of there being some sort of a regulatory agency that 0:23:24.960 --> 0:23:27.600 sends on its own, similar to the f A or FC. 0:23:27.520 --> 0:23:32.160 Is likely at some point, you think so, I think so. Now. 0:23:32.480 --> 0:23:35.880 The reason that I've been such an affable AI safety 0:23:35.960 --> 0:23:39.040 in advance of sort of anything terrible happening is that 0:23:39.119 --> 0:23:44.480 I think the consequences of AI going wrong are are severe. 0:23:44.920 --> 0:23:47.000 So we have to be proactive rather than reactive. 0:23:47.680 --> 0:23:49.840 Uh, you know in the past, if he takes a 0:23:50.480 --> 0:23:53.040 but I'm being somewhat late, full of speaking of regulators. 0:23:53.119 --> 0:23:54.720 I'm a little late for the f A. I'm meeting with 0:23:54.760 --> 0:23:56.800 the FA and holds you up, sure, but. 0:23:59.040 --> 0:24:01.160 Yeah, if you if you take the exact of safety belts. 0:24:01.119 --> 0:24:03.879 Seatbelts were opposed by. 0:24:03.760 --> 0:24:05.680 The auto industry for a very long time, even though 0:24:05.720 --> 0:24:08.440 the data was very clear that they're safe, that they 0:24:08.800 --> 0:24:09.920 radically improve. 0:24:11.600 --> 0:24:12.280 Deaths and injuries. 0:24:13.680 --> 0:24:16.119 So, you know, we don't want to be in that 0:24:16.160 --> 0:24:19.720 situation where we're fighting regulations even though you know there's 0:24:19.760 --> 0:24:20.400 a safety thing. 0:24:20.640 --> 0:24:22.879 We can't wait for millions of people to die in 0:24:23.000 --> 0:24:26.879 auto accidents, as you know, constutely like. And it's important 0:24:26.880 --> 0:24:28.240 to just elevate the question here. 0:24:28.880 --> 0:24:32.800 Question is is really one of civilizational risks, So just 0:24:32.920 --> 0:24:35.080 it's it's not like one group. 0:24:34.920 --> 0:24:36.760 Versus another, one group of humans us another. 0:24:36.840 --> 0:24:38.920 It's like, hey, this is something that's potentially risk people, 0:24:39.000 --> 0:24:40.840 whole humans everywhere. 0:24:41.800 --> 0:24:48.520 Very important to understand that is there an equally. 0:24:46.640 --> 0:24:49.280 Hunger sufficiently premar. 0:24:49.359 --> 0:24:52.639 No, no, no, no, the sequence of events will not 0:24:52.680 --> 0:24:56.359 be jumping at the deep end and making the rules. 0:24:56.560 --> 0:25:00.280 But it saw us with insight tract. 0:25:00.320 --> 0:25:02.639 This is actually how all of the regulatory bodies performed 0:25:02.680 --> 0:25:05.600 their believe as you start with a group formed to 0:25:05.640 --> 0:25:09.680 create insight to understand the situation, then you have proposed 0:25:09.720 --> 0:25:12.840 rule making. You'll get some rejections from industry or whatever, 0:25:13.560 --> 0:25:15.800 and then ultimately you get sort of a consensus sort 0:25:15.800 --> 0:25:16.359 of role making. 0:25:16.560 --> 0:25:19.160 Their rulemaking then becomes a law regulation. 0:25:26.320 --> 0:25:28.919 There you have it. You must speaking to reporters. 0:25:28.960 --> 0:25:31.080 Of course, it seems to be as they draw to 0:25:31.119 --> 0:25:33.280 a close for the lunch time break, and and we 0:25:33.359 --> 0:25:35.440 understand that some people are going to be subbing in 0:25:35.720 --> 0:25:38.320 for the CEOs of their companies for the second half 0:25:38.359 --> 0:25:40.960 of the discussions with senators, and we'll broadly we heard 0:25:41.000 --> 0:25:43.000 from me La Must they're really talking about whether or 0:25:43.000 --> 0:25:46.159 not we will see some sort of regulator start to 0:25:46.359 --> 0:25:48.080 oversee artificial intelligence. 0:25:48.160 --> 0:25:49.120 Just tell us if you. 0:25:49.040 --> 0:25:51.600 Can summarize the arguments we've heard thus far of how 0:25:51.840 --> 0:25:54.840 you really get to grips with regulating AI more broadly. 0:25:55.840 --> 0:25:56.879 I mean, that's the question. 0:25:56.960 --> 0:25:58.439 I think you have most of the people in that 0:25:58.560 --> 0:26:00.880 room agreeing that there should be so kind of regulation, 0:26:01.000 --> 0:26:03.520 but there's no agreement about how and when it comes to, 0:26:03.560 --> 0:26:07.480 like a licensing regime or a regulatory agency like Musk 0:26:07.600 --> 0:26:10.000 was just talking about. We know that other companies like 0:26:10.040 --> 0:26:13.359 IBM actually oppose that proposal, whereas you know others like 0:26:13.400 --> 0:26:16.199 Microsoft and open Ai think that would be a good idea. 0:26:16.320 --> 0:26:18.919 So we'll see more policy discussion about that as we 0:26:18.960 --> 0:26:21.879 go into the afternoon. And an interesting thing about Musk. 0:26:22.119 --> 0:26:24.720 In his opening statement, he tried to make the point 0:26:24.760 --> 0:26:27.240 that the AI that powers self driving cars is not 0:26:27.280 --> 0:26:29.919 as dangerous as the kind of deep mind AI that 0:26:30.320 --> 0:26:34.000 emulates human intelligence. However, he did get some pushback on 0:26:34.040 --> 0:26:37.160 that from deb Raji, one of the researchers from Berkeley, 0:26:37.160 --> 0:26:41.199 who made the point that self driving car powered AI 0:26:41.400 --> 0:26:43.639 could also make mistakes that could prove to be fatal. 0:26:44.640 --> 0:26:47.359 Well, said Anna edgeton getting all the inside track and 0:26:47.400 --> 0:26:49.399 the closed door meeting and us wringing you what was 0:26:49.400 --> 0:26:51.480 happening just on the outside of that, we need a 0:26:51.560 --> 0:26:52.120 musk as well. 0:26:52.200 --> 0:26:53.360 Let's continue this conversation. 0:26:53.440 --> 0:26:55.440 I'm pleased to say Dominique Shelton Leipzig is with a 0:26:55.600 --> 0:26:58.439 privacy and cybersecurity partner at Maya Brown Needs of the 0:26:58.480 --> 0:27:01.000 firm's global day to renovation team, offering CEO and more 0:27:01.119 --> 0:27:04.359 level advice basically on exactly this on the impact of 0:27:04.400 --> 0:27:07.879 multiplagy intelligence and how it should be adopted without some 0:27:07.960 --> 0:27:11.040 sort of a regulatory framework. Are you positive that we 0:27:11.080 --> 0:27:13.520 will get a regulator or will it be down to 0:27:13.560 --> 0:27:14.760 self regulation once more? 0:27:15.400 --> 0:27:18.320 You know, thank you so much Caroline for having me, 0:27:18.440 --> 0:27:22.520 and thank you also. This is such an important issue 0:27:22.720 --> 0:27:27.480 and just hearing what the CEO Musk was talking about 0:27:27.640 --> 0:27:34.040 how AI is really going to impact all of our lives, medical, financial, educational. 0:27:34.400 --> 0:27:38.119 So this conversation that's happening with the senators is so important. 0:27:38.720 --> 0:27:42.240 We are going to see regulation. The only question will 0:27:42.280 --> 0:27:44.879 be whether the United States moves first. 0:27:45.720 --> 0:27:48.359 What we've got we're very close. 0:27:48.119 --> 0:27:52.760 To right now is legislation being adopted in Europe to 0:27:52.840 --> 0:27:57.080 govern AI, and we're expecting that by December twenty twenty three. 0:27:57.200 --> 0:27:59.880 So the issue is there are thirty. 0:27:59.680 --> 0:28:03.840 Seven countries and six continents that have draft legislation already 0:28:04.040 --> 0:28:07.280 before their legislatures, and Europe looks like it will go 0:28:07.400 --> 0:28:10.080 first with the US behind, and EU. 0:28:10.040 --> 0:28:11.159 Sort of shifted tone. 0:28:11.320 --> 0:28:13.000 Originally it felt as though they were going to be 0:28:13.040 --> 0:28:16.160 regulating application of AI, but then suddenly it turned its 0:28:16.160 --> 0:28:18.920 attention more to the actual building of the foundational models. 0:28:19.560 --> 0:28:21.760 That seems to be an argument being pushed back against 0:28:21.800 --> 0:28:24.719 these some US CEOs. They don't want to see the 0:28:24.720 --> 0:28:28.199 building of foundational models being under some sort of scope 0:28:28.240 --> 0:28:31.280 here is that already thrown out with the bath water. 0:28:31.920 --> 0:28:34.000 I think this is going to be an ongoing debate, 0:28:34.880 --> 0:28:39.240 and there's a discussion at the US level and also 0:28:39.280 --> 0:28:45.400 the international level about having the actual deployers, the users 0:28:45.640 --> 0:28:50.880 of the AI having guardrails as well as the providers 0:28:51.120 --> 0:28:54.880 and the foundation models as well of a generative AI 0:28:55.240 --> 0:28:58.200 large language models. So I think we're starting to see 0:28:58.280 --> 0:29:02.200 proposals like the one that came out yesterday with Senator 0:29:02.680 --> 0:29:06.440 Blumenthal and Holly. They have a framework that would encompass 0:29:06.800 --> 0:29:10.880 the large language models as well as the other types 0:29:10.920 --> 0:29:11.320 of AI. 0:29:12.680 --> 0:29:15.560 Dominique Guenela Musk was speaking just a few moments ago. 0:29:15.640 --> 0:29:18.680 He gave the analogy of acting on AI safety as 0:29:18.680 --> 0:29:21.880 being akin to the seat belt that with the seat 0:29:21.880 --> 0:29:25.920 belt action came after many tragedies and crashes, and he 0:29:26.000 --> 0:29:29.600 just wants to be proactive rather than reactive. Is that 0:29:29.640 --> 0:29:32.000 an approach that you think will work based on what 0:29:32.120 --> 0:29:33.400 DC's saying right now. 0:29:34.040 --> 0:29:36.800 Yes, I think it's very exciting to see this number 0:29:37.000 --> 0:29:41.880 of CEOs. We have literally the most important and largest 0:29:41.960 --> 0:29:45.080 tech companies that are present in DC right now to 0:29:45.120 --> 0:29:47.920 discuss this issue because they do see it as being 0:29:48.000 --> 0:29:51.600 important and they are being proactive. I think it's wonderful 0:29:51.640 --> 0:29:53.880 that the academics are there as well and the community 0:29:53.920 --> 0:29:58.760 groups are present at Senator Schumer's forum because the point 0:29:58.840 --> 0:29:59.680 is that we all need. 0:29:59.520 --> 0:30:01.280 To grapple these issues together. 0:30:02.120 --> 0:30:05.360 There is going to need to be a communication from 0:30:05.840 --> 0:30:10.880 proactive steps taken by the leadership of our tech companies, 0:30:10.920 --> 0:30:13.360 and they're doing that just by their presence of being 0:30:13.440 --> 0:30:15.680 present to have these very important discussions. 0:30:15.880 --> 0:30:17.240 So I'm excited for the future. 0:30:18.120 --> 0:30:18.560 Dominie. 0:30:18.600 --> 0:30:22.560 Do you get the sense that policy makers legislators are 0:30:22.880 --> 0:30:26.200 as collaborative on this issue as the private sector is. 0:30:26.240 --> 0:30:29.440 They're actually engaging on it with those that are leading 0:30:29.480 --> 0:30:30.960 the development of the technology. 0:30:31.720 --> 0:30:35.120 Yes, what I'm seeing is cross party in the US, 0:30:35.240 --> 0:30:41.080 cross party and bipartisan support around answering the call of 0:30:41.160 --> 0:30:45.920 many of these CEOs to put in place the opportunities 0:30:45.960 --> 0:30:49.760 and governance and guardrails that will allow AI to be 0:30:49.920 --> 0:30:54.120 just amazing. So what we want is the ability to 0:30:54.280 --> 0:30:59.520 innovate and create understanding where there are limits or areas 0:30:59.560 --> 0:31:03.480 where safety needs to come first, and this is something 0:31:03.480 --> 0:31:07.720 that the regulators and the business community are aligning on. 0:31:08.120 --> 0:31:10.120 I also will say what's good this time is that 0:31:10.160 --> 0:31:16.360 there is also the use of research scientists, large language 0:31:16.520 --> 0:31:21.440 model experts to engage them on how this technology actually 0:31:21.480 --> 0:31:25.040 works and therefore how we can craft common sense legislation. 0:31:26.360 --> 0:31:27.680 What is it being talked about? 0:31:28.880 --> 0:31:29.560 What's not being. 0:31:29.520 --> 0:31:33.200 Talked about are the nitty gritty of the sort of 0:31:33.440 --> 0:31:37.520 unanimity of thinking around the world in terms of what 0:31:37.600 --> 0:31:40.800 the legislation should look like. What we're seeing all around 0:31:40.800 --> 0:31:44.720 the world is a focus on ranking risk ranking of AI, 0:31:45.920 --> 0:31:49.200 focus on high risk, treating that differently than we're treating 0:31:49.400 --> 0:31:50.480 low risk AI. 0:31:50.960 --> 0:31:52.720 There's also a focus. 0:31:52.320 --> 0:31:56.440 On testing and monitoring and auditing of the systems themselves 0:31:56.680 --> 0:31:58.960 to make sure that they are amazing and they're doing 0:31:59.040 --> 0:32:01.480 exactly what the companies want them to do and with 0:32:01.560 --> 0:32:05.200 the public wants, and so I'm very excited for the 0:32:05.240 --> 0:32:09.160 way the legislation, the draft legislation has been put together 0:32:09.280 --> 0:32:13.560 and the framework that has been floated in Washing, Frameworks 0:32:13.600 --> 0:32:16.560 being floated in Washington as well as around the world, 0:32:16.600 --> 0:32:20.240 because we're getting at tackling the actual governance that will 0:32:20.240 --> 0:32:21.160 make AI amazing. 0:32:22.280 --> 0:32:25.600 Dominique Caroline and I speak to companies and executives of 0:32:25.640 --> 0:32:29.040 all shapes and sizes and sectors, and they're talking to 0:32:29.120 --> 0:32:31.800 talk and it's really hard for us to discern if 0:32:31.840 --> 0:32:34.880 they're walking the walk. Do you see clients actually spending 0:32:34.960 --> 0:32:39.880 money and hiring the right people to operationalize any of 0:32:39.880 --> 0:32:41.000 what we've just discussed. 0:32:41.520 --> 0:32:44.600 Absolutely, you know what has been so exciting and what 0:32:44.640 --> 0:32:47.320 we've seen. We have an AI task force that we 0:32:47.560 --> 0:32:51.080 put together at our firm because it's a cross disciplinary issue, 0:32:51.240 --> 0:32:54.320 and we every day I'm speaking to clients that are 0:32:54.440 --> 0:32:57.800 from Fortune five hundred companies that are very serious about 0:32:58.120 --> 0:33:01.760 getting AI governance right are already looking at. 0:33:01.720 --> 0:33:04.640 Draft legislation and mapping to that now, so. 0:33:04.720 --> 0:33:08.640 They are prepared and ready to pivot when final regulations 0:33:08.640 --> 0:33:08.880 come in. 0:33:08.920 --> 0:33:10.960 They're going to be already ahead of the game. 0:33:11.200 --> 0:33:14.640 That's the way to approach this because, as mister Musk 0:33:14.680 --> 0:33:17.880 said earlier, regulation is going to come, and so the 0:33:18.000 --> 0:33:20.760 key here is really being prepared. And we're seeing clients 0:33:20.760 --> 0:33:23.080 and companies every day. I talk to clients and companies 0:33:23.080 --> 0:33:26.080 that are focused laser focused on getting this right and 0:33:26.120 --> 0:33:27.720 being amazing with their AI. 0:33:27.880 --> 0:33:30.320 And global regulation at that. Good to have a global 0:33:30.360 --> 0:33:32.080 law firm with us. We thank you so much. Of course, 0:33:32.120 --> 0:33:35.680 Dominique coming into the studio. Dominique Shelton Leipzig partner ever 0:33:35.720 --> 0:33:36.720 at Mett bram ed. 0:33:37.680 --> 0:33:40.240 All right, let's get some talking tech and first stop. 0:33:40.400 --> 0:33:43.440 ARM is expecting to price its initial public offering at 0:33:43.440 --> 0:33:46.920 the top end of its range or even higher. Bloomberg 0:33:46.960 --> 0:33:49.680 sources say that the soft bank done chip designer could 0:33:49.720 --> 0:33:52.480 be a dollar or more above its fifty one dollar target. 0:33:52.560 --> 0:33:56.280 ARM sets begin trading on the Nasdaq tomorrow, and game 0:33:56.320 --> 0:33:59.440 maker Square NX is hoping to rebound from the underwhelming 0:33:59.480 --> 0:34:03.479 sales of Final Fantasy sixteen, the latest installment of its 0:34:03.520 --> 0:34:07.160 global hit series. Nearly tw two billion dollars. Sorry of 0:34:07.200 --> 0:34:10.560 its value has fallen since the game's release. Now, investors 0:34:10.560 --> 0:34:14.160 are wondering if the legacy franchise has run its course. Plus, 0:34:14.200 --> 0:34:17.680 the CEO of Binance US has left the company. Brian Schroeder, 0:34:17.760 --> 0:34:20.400 stepped down from his role, just as the struggling crypto 0:34:20.480 --> 0:34:24.040 platform conducted its second round of layoffs. More than one 0:34:24.120 --> 0:34:26.520 hundred jobs have been cut from its workforce amid a 0:34:26.560 --> 0:34:30.160 regulatory crackdown from the US Securities and Exchange Commission. 0:34:30.160 --> 0:34:33.040 Caroline Mean, Well, look, let's talk about what else is 0:34:33.040 --> 0:34:36.200 happening over in Washington and ten week and trust trial 0:34:36.239 --> 0:34:38.920 between Google and the Department of Justice is underway, and 0:34:38.960 --> 0:34:40.840 the government is accusing the search shound, of course, of 0:34:40.880 --> 0:34:43.759 spending ten billion dollars a year to maintain what it 0:34:43.840 --> 0:34:45.920 calls as a monopoly with us. 0:34:46.120 --> 0:34:48.200 Is going to be really a moment to. 0:34:48.200 --> 0:34:51.560 Dissect how we're hearing the arguments laid out ed. We 0:34:51.640 --> 0:34:54.239 ultimately know that it feels as though we're trying to 0:34:54.239 --> 0:34:57.319 reminisce to a nineteen nineties feeld of Microsoft. How much 0:34:57.480 --> 0:35:00.400 is this a time that we're going to see timately 0:35:00.680 --> 0:35:03.279 Alphabet be able to fight back on the grounds that, yes, 0:35:03.560 --> 0:35:06.839 it is actually easy to be able to change your 0:35:06.880 --> 0:35:08.799 ways in which you search. The point is that they're 0:35:08.840 --> 0:35:10.160 so good no one wants to do that. 0:35:10.200 --> 0:35:12.919 Ed, Yeah, And what I would say is the reason 0:35:13.000 --> 0:35:15.439 we love hearings in court documents is sometimes you get 0:35:15.520 --> 0:35:18.600 crazy stories like what Google was doing twenty years ago 0:35:19.080 --> 0:35:21.440 to fight off its competition. Let's bring in Bloombergs near 0:35:21.520 --> 0:35:24.680 Lylan out in DC on the antitrust beat. And that 0:35:24.800 --> 0:35:27.280 was kind of a mainstay of your latest reporting, Leah, 0:35:27.480 --> 0:35:29.919 what was going on inside Google two thousand and three 0:35:30.320 --> 0:35:33.799 and what the Justice Department kind of unearthed in those disclosures? 0:35:33.840 --> 0:35:34.520 What have we learned? 0:35:35.400 --> 0:35:39.040 Yeah, So the very first witness who started last yesterday 0:35:39.080 --> 0:35:42.160 afternoon is Hal Vari and he is Google's one time 0:35:42.560 --> 0:35:44.799 chief economist, and he was sort of the one who 0:35:44.840 --> 0:35:49.120 came up with this strategy that they ended up pursuing 0:35:49.160 --> 0:35:54.759 to make Google's search engine that fuck across browsers and 0:35:55.120 --> 0:35:58.120 mobile devices. It sort of came out of these memos 0:35:58.120 --> 0:36:01.320 that he wrote in two thousand and three two thousand 0:36:01.360 --> 0:36:04.640 and five timeframe, when they sort of discovered that if 0:36:04.680 --> 0:36:08.160 people had set Google as their homepage, they ended up 0:36:08.200 --> 0:36:11.839 doing a lot more searching than if they had their 0:36:11.880 --> 0:36:16.720 homepage as something else like yeahoo aol MSN some of 0:36:16.760 --> 0:36:18.920 the other big web pages of the day. So that 0:36:19.040 --> 0:36:20.840 sort of made them realize that when you make it 0:36:20.880 --> 0:36:24.120 really easy for people to do it, make it automatic, 0:36:24.640 --> 0:36:27.279 it ends up leading to much more traffic and making it, 0:36:27.600 --> 0:36:29.600 you know, Google, a much better product. 0:36:30.200 --> 0:36:33.319 So hal Varian, he's been cooled, I understand, and course 0:36:33.360 --> 0:36:36.320 to testify that was one of the first moves made. 0:36:37.120 --> 0:36:40.879 Are we likely to see this momentum build in terms 0:36:40.920 --> 0:36:43.400 of the argument of how long Google's been aware of 0:36:43.440 --> 0:36:45.439 how important it is to dominate the world of search, 0:36:45.480 --> 0:36:47.759 and ultimately whether it will ever bring about some sort 0:36:47.760 --> 0:36:48.240 of breakup. 0:36:49.200 --> 0:36:49.520 Yeah. 0:36:49.560 --> 0:36:51.960 So, as you know, we were saying, this is a 0:36:51.960 --> 0:36:54.279 ten week trial, so there's going to be a lot 0:36:54.320 --> 0:36:58.600 of different witnesses, both within Google and from outside Google 0:36:59.000 --> 0:37:01.480 talking about how It's power in search has sort of 0:37:01.480 --> 0:37:03.800 grown over time. You know, hal Varin is the person 0:37:03.840 --> 0:37:06.239 that they sort of decided to start with as sort 0:37:06.239 --> 0:37:11.160 of like the origin story of this this conduct, as 0:37:11.160 --> 0:37:14.480 the Justice Department alleges. But we're also going to hear 0:37:14.480 --> 0:37:17.360 from a lot of other interesting people, including some of 0:37:17.360 --> 0:37:22.320 the people who helped develop search, some of Google's search rivals, 0:37:22.800 --> 0:37:27.400 like folks at Goo and Microsoft and the now defunct Geneva. 0:37:27.800 --> 0:37:32.360 And we'll also hear from Sunder Pshai himself, who is 0:37:32.400 --> 0:37:35.000 now the CEO, but you know has actually already come 0:37:35.080 --> 0:37:37.600 up in some of these emails as such, because back 0:37:38.080 --> 0:37:40.400 in the early days he was very involved in helping 0:37:40.440 --> 0:37:41.719 develop the search engine. 0:37:43.080 --> 0:37:45.440 Do mostly and iland that on the ground anti trust 0:37:45.480 --> 0:37:48.160 reporting from DC. Thank you. Let's keep the conversation going, 0:37:48.239 --> 0:37:53.200 joining us now William Kovacic GW Professor of Law, and William, 0:37:53.719 --> 0:37:56.879 you know, the trials are exciting. They give newsflow, they 0:37:56.880 --> 0:38:01.239 give new disclosures. But the only question is is this 0:38:01.280 --> 0:38:03.800 a serious threat to Google as a whole entity. 0:38:06.000 --> 0:38:08.959 It is a serious threat, and the threat goes back 0:38:09.000 --> 0:38:12.480 to the experience with the Microsoft case which the Department 0:38:12.480 --> 0:38:15.719 of Justice brought over twenty years ago, and the most 0:38:15.800 --> 0:38:18.759 important concept to come out of that case is that 0:38:18.800 --> 0:38:21.719 there are important limits on what a dominant enterprise can 0:38:21.800 --> 0:38:26.200 do by way of buying up inputs channels of distribution 0:38:27.000 --> 0:38:29.600 that it and its rivals need in order to compete. 0:38:30.320 --> 0:38:32.920 And the theory that was endorsed by the Court of 0:38:32.920 --> 0:38:35.839 Appeals in that case is that a dominant firm can 0:38:35.880 --> 0:38:41.200 overreach when it basically seeks to preclude its competitors from 0:38:41.200 --> 0:38:45.120 getting effective access to users. And that core theory is 0:38:45.160 --> 0:38:48.040 the heart of this case, and I'm sure that's the 0:38:48.040 --> 0:38:51.200 theory that Google takes most seriously here in its defense. 0:38:52.360 --> 0:38:55.040 William, you spent almost a decade as a non executive 0:38:55.080 --> 0:38:59.319 director at the uk CMA Competition and Markets Authority. Put 0:38:59.320 --> 0:39:02.800 your regulation to hat on and tell us what chances 0:39:02.880 --> 0:39:07.000 you think US regulators have of doing of a successful 0:39:07.040 --> 0:39:11.120 action against Google or Alphabet They. 0:39:11.040 --> 0:39:13.360 Have a fighting chance to demonstrate that there was an 0:39:13.400 --> 0:39:17.160 infringement of law because of this core concept that is 0:39:17.320 --> 0:39:22.560 favorable to them. Obtaining relief that goes beyond prohibiting the 0:39:22.600 --> 0:39:24.960 specific conduct might be difficult. 0:39:25.239 --> 0:39:27.440 That's proven to be a very tough. 0:39:27.280 --> 0:39:30.399 Challenge in the United States. The other thing that will 0:39:30.440 --> 0:39:32.759 be difficult to cope with in the case itself is 0:39:33.400 --> 0:39:38.800 Google's response in talking about the placement the search engine 0:39:39.239 --> 0:39:42.680 on these devices. I suspect Google is going to ask 0:39:42.719 --> 0:39:45.400 the court, what would you have expected us to do otherwise? 0:39:45.960 --> 0:39:49.520 Should we have stood by and not even bid in 0:39:49.600 --> 0:39:51.719 the auctions that determined who was going to be on 0:39:51.800 --> 0:39:55.200 those devices? Should we have simply allowed our rivals to 0:39:55.200 --> 0:39:59.120 go ahead and obtain that precious real estate? What would 0:39:59.160 --> 0:40:02.600 you have had us do otherwise? And by implication what 0:40:02.640 --> 0:40:05.640 should large firms do Otherwise, I think that's going to 0:40:05.640 --> 0:40:07.880 be a hard issue for the court to wrestle with. 0:40:08.280 --> 0:40:10.880 But I'd say, if I had to look at where 0:40:11.360 --> 0:40:15.560 the possibilities for success are, the government has a serious 0:40:15.760 --> 0:40:21.320 prospect of succeeding on the essential question of whether exclusivity 0:40:22.000 --> 0:40:24.440 was improperly obtained as a means of exclusion. 0:40:25.360 --> 0:40:29.839 We had Rebecca Allensworth on yesterday and thinking about sort 0:40:29.840 --> 0:40:32.120 of the concept of ultimately, even if they win or 0:40:32.160 --> 0:40:36.640 lose this individual case, ultimately the pendulum is swinging in 0:40:36.719 --> 0:40:39.359 the way in which regulators look at big tech. 0:40:39.440 --> 0:40:42.880 You yourself at the FTC sharing it of course the 0:40:42.920 --> 0:40:45.279 agency from March two thousand and eight, two thousand and nine. 0:40:45.400 --> 0:40:48.600 Do think conversations are permanently changed in the way in 0:40:48.640 --> 0:40:50.799 which regulators i big tech. 0:40:51.960 --> 0:40:55.600 I think there's been a durable change in the risk 0:40:55.640 --> 0:40:59.680 appetite that regulators in the United States, in the United 0:40:59.760 --> 0:41:02.960 king as we were just mentioning before taken looking at 0:41:02.960 --> 0:41:06.320 the sector. I think there was a fairly strong belief 0:41:06.400 --> 0:41:10.040 twenty years ago, going back to the documents that Leah 0:41:10.080 --> 0:41:12.759 was describing earlier, there was a sense that this is 0:41:12.800 --> 0:41:17.920 a very dynamic sector and that unpredictable changes, changes you 0:41:17.960 --> 0:41:22.400 can't even identify at the moment, will deny any individual 0:41:22.480 --> 0:41:27.799 firm sustain preeminence in the field. Those assumptions have been revisited, 0:41:27.880 --> 0:41:31.840 and I think globally you see a change from thinking 0:41:32.160 --> 0:41:36.439 be cautious about intervening to be willing to intervene even 0:41:36.480 --> 0:41:39.840 though the specific outcome might be uncertain. And part of 0:41:39.840 --> 0:41:43.400 that strong belief is that simply having an active presence 0:41:43.440 --> 0:41:47.920 of the regulators chasens and limits the behavior of dominant firms. 0:41:48.040 --> 0:41:51.640 And isn't it ironic that ultimately that moment, that unpredictable 0:41:51.640 --> 0:41:53.840 moment is upon us the fact that Generative a I 0:41:53.880 --> 0:41:55.880 have swung into the mix and suddenly seems to be 0:41:55.920 --> 0:41:59.280 the most competitive threat to Google Search that we've had. 0:41:59.160 --> 0:41:59.960 In a long time. 0:42:00.120 --> 0:42:04.200 So I'm interested as to the perspective that already in practice, 0:42:04.320 --> 0:42:07.200 do you think companies have been withholding from making purchases, 0:42:07.280 --> 0:42:11.600 withholding perhaps making changes to the way in which they 0:42:11.640 --> 0:42:15.080 react to competitors because of the way regulators are now acting. 0:42:16.560 --> 0:42:18.680 I think we're going to get some good insights in 0:42:18.719 --> 0:42:22.200 the trial on exactly that question. But I suspect that 0:42:22.640 --> 0:42:26.640 what companies have continued to look for our opportunities to 0:42:26.680 --> 0:42:29.440 achieve real breakthrough, So the kind that you were discussing 0:42:29.680 --> 0:42:32.960 in the previous segment with the Musk interview. I think 0:42:33.000 --> 0:42:37.640 there's no question that companies are looking for opportunities. It 0:42:37.680 --> 0:42:41.640 will astonish by allowing them to achieve true pre eminence. 0:42:41.239 --> 0:42:42.359 On in their own right. 0:42:42.800 --> 0:42:48.440 But a very difficult and almost unmeasurable issue in the 0:42:48.520 --> 0:42:53.120 trial is whether you advance innovation more by being aggressive 0:42:53.160 --> 0:42:56.600 in intervening, or whether you advance it more by being 0:42:56.640 --> 0:42:57.400 more permissive. 0:42:58.680 --> 0:43:01.920 Absolutely fascinating, So we thank you, GW Professor of law, 0:43:01.960 --> 0:43:03.680 William Kovechic thank you. 0:43:03.680 --> 0:43:04.520 Meanwhile, coming up, a. 0:43:04.520 --> 0:43:07.839 Cyber attack takes out part of the biggest strip as 0:43:07.920 --> 0:43:10.480 hackers target MGM will have the details next. 0:43:10.760 --> 0:43:25.360 There is a roombag Technology MGM Resorts in Las Vegas. 0:43:25.440 --> 0:43:27.479 It was hit by a cyber attack this week, taking 0:43:27.520 --> 0:43:30.239 down payment system slot machines guess ability to. 0:43:30.200 --> 0:43:32.279 Actually access their hotel rooms and check in. 0:43:32.640 --> 0:43:34.839 Details of the attack, including who is behind it, though 0:43:34.960 --> 0:43:36.840 the motive the type of information that they may have 0:43:36.840 --> 0:43:40.399 obtained all remains pretty limited. A spokesperson for the FBI 0:43:40.520 --> 0:43:42.520 office in Las Vegas said they are aware of the 0:43:42.560 --> 0:43:45.080 attack they are assisting, and MGM says that hotels and 0:43:45.120 --> 0:43:48.680 casinos are currently operational, but plenty of frustration there. 0:43:48.719 --> 0:43:51.640 It feels, yeah, some of the reporting is amazing. People 0:43:51.760 --> 0:43:54.799 being forced to use cash. Can you imagine having to 0:43:54.920 --> 0:43:58.000 use paper money in this day and age? Outrageous? But 0:43:58.160 --> 0:44:01.600 check out that story on Bloomberg because sadly, Caroline, that 0:44:01.680 --> 0:44:05.239 does it for this edition of Bloomberg Technologies, Big Show. 0:44:05.320 --> 0:44:07.840 Recap it on our podcast wherever you find your podcast 0:44:07.960 --> 0:44:10.800 on the Bloomberg terminal, but we're also on Apple, Spotify 0:44:11.120 --> 0:44:13.839 and on iHeart, as well as the Bloomberg platforms from 0:44:13.880 --> 0:44:16.440 San Francisco and out in New York City. This is 0:44:16.480 --> 0:44:21.400 Bloomberg Technology.