WEBVTT - The FTC's War on Big Tech 0:00:13.680 --> 0:00:16.280 I'm Caroline Hana Blue Mugs World headquarters in New York 0:00:16.840 --> 0:00:19.360 and Mad Love though in San Francisco. This is bloom 0:00:19.360 --> 0:00:22.720 Bug Technology. Coming up this hour, the FTC is front 0:00:22.720 --> 0:00:27.080 and center. Federal regulators looking to block Microsoft's sixty billion 0:00:27.080 --> 0:00:29.920 dollar acquisition of Activision Blizzard, saying the tie up between 0:00:29.920 --> 0:00:34.280 the Xbox maker and the game publisher would harm competition. Plus, 0:00:34.320 --> 0:00:37.839 the FTC has opened its campaign to block Metters acquisition 0:00:38.080 --> 0:00:40.880 of a virtual reality company. We had the story straight 0:00:41.120 --> 0:00:44.400 from the San Jose Federal courtroom, and Russia builds on 0:00:44.440 --> 0:00:47.280 Elon Musk and his bankers. That's as they consider providing 0:00:47.360 --> 0:00:50.320 him with new margin loans backed by Tesla Stock to 0:00:50.360 --> 0:00:54.000 replace the riskiest Twitter debt. We've got details of that later. 0:00:54.400 --> 0:00:57.120 But first the FTC did what we thought the FTC 0:00:57.280 --> 0:01:01.160 might do. They've stuck to the promise they're going tougher 0:01:01.440 --> 0:01:03.240 on Big M and A, particularly in the text space. 0:01:03.320 --> 0:01:05.640 Lena Carna Coles promised that and she follows through. And 0:01:05.760 --> 0:01:08.000 let's dig into all of this in d C. I 0:01:08.040 --> 0:01:09.360 want to follow the news. You want to get to 0:01:09.400 --> 0:01:11.080 where the regulators are looking to block that. So it's 0:01:11.080 --> 0:01:13.640 seen nine billion dollar deal and of course, it's all 0:01:13.680 --> 0:01:16.000 about a question of competition, whether or not it would 0:01:16.040 --> 0:01:18.680 be harmed by this deal. Lea. Nilan has been breaking this. 0:01:18.800 --> 0:01:21.480 You had the scoop Leah and back before we got 0:01:21.520 --> 0:01:24.600 the announcement from the FTC. Just talk to us about 0:01:24.640 --> 0:01:28.479 the reasoning behind this decision. Yeah, it's really interesting. I mean, 0:01:28.600 --> 0:01:31.039 a lot of the focus in the Microsoft Activision deal 0:01:31.120 --> 0:01:34.160 has been on the console market, but the FTC said 0:01:34.200 --> 0:01:37.039 that it's actually not as worried about the console market 0:01:37.120 --> 0:01:40.080 as it is about where gaming might be going in 0:01:40.120 --> 0:01:43.760 the future, which is into subscriptions and the cloud. UM. 0:01:43.800 --> 0:01:45.720 And they said that's a major reason why they have 0:01:45.800 --> 0:01:49.600 concerns about this deal is acquiring Activision is going to 0:01:49.640 --> 0:01:53.360 give Microsoft a great library of games that will give 0:01:53.360 --> 0:01:55.760 it sort of an insurmountable lead in these two sort 0:01:55.800 --> 0:01:59.080 of emerging markets. UM. Given that Microsoft also already has 0:01:59.120 --> 0:02:03.279 some advantages with its you know, cloud based um cloud 0:02:03.280 --> 0:02:05.800 based service, making it a little bit cheaper for it 0:02:05.880 --> 0:02:08.640 than other gaming companies to offer this kind of a service. 0:02:09.520 --> 0:02:12.280 And yet, and yet Microsoft had been trying to get 0:02:12.320 --> 0:02:14.440 ahead of this, been trying to do deals a decade 0:02:14.480 --> 0:02:17.160 deal done of course just yesterday with Nintendo for access 0:02:17.200 --> 0:02:20.160 to cool of duty. UM. We understand that they sat 0:02:20.160 --> 0:02:22.760 down with Lena Khan yesterday to trying to explain the reasoning. 0:02:22.760 --> 0:02:27.520 It seemingly hasn't landed. No. I mean, the FTC, particularly 0:02:27.600 --> 0:02:30.120 under Lena Khan, has been very, very worried about the 0:02:30.160 --> 0:02:32.480 sort of deals that the tech giants are doing. As 0:02:32.480 --> 0:02:35.600 you mentioned, you know, today the FTC started its lawsuit 0:02:35.680 --> 0:02:40.799 against Meta over the acquisition of a virtual reality startup. UM. 0:02:40.840 --> 0:02:43.799 You know, the Microsoft folks came to d C. They 0:02:43.800 --> 0:02:46.000 had offered a lot of concessions, I mean, not just 0:02:46.480 --> 0:02:48.880 these ten year deals with the other console makers. They 0:02:48.919 --> 0:02:52.840 had reached an agreement with the Communication Workers of America 0:02:53.000 --> 0:02:56.760 to offer labor neutrality if any of the gaming studios 0:02:56.840 --> 0:03:00.640 wanted to unionize, which they thought, you know, FTC would 0:03:00.639 --> 0:03:04.320 look kindly upon. Um. They had also offered some uh 0:03:04.760 --> 0:03:07.919 conditions related to employment noncompetes that they thought that FTC 0:03:08.040 --> 0:03:10.200 would like, and that was not quite enough to do 0:03:10.240 --> 0:03:13.880 it for in the end. I guess Leah, those conditions 0:03:14.080 --> 0:03:17.880 or offers that Microsoft made are academic, right, they weren't enough. 0:03:17.960 --> 0:03:20.680 What's the timeline from this point? Just because the FTC 0:03:21.080 --> 0:03:23.240 has voted in this direction, it doesn't mean the deal 0:03:23.320 --> 0:03:27.080 is dead. No, No, this is UM. They voted for 0:03:27.200 --> 0:03:30.840 an administrative complaint. That means that from here it goes 0:03:30.960 --> 0:03:34.000 to a trial within the FTC before the FTC's in 0:03:34.080 --> 0:03:38.280 house UM administrative law judge. That sort of a process 0:03:38.560 --> 0:03:40.560 is going to take several months. You know, probably we 0:03:40.600 --> 0:03:45.120 would not have a decision, an initial decision, until next summer, 0:03:45.240 --> 0:03:48.080 next fall, UM. And from there, you know, Microsoft can 0:03:48.120 --> 0:03:50.880 still appeal several times. So this is by no means 0:03:50.960 --> 0:03:53.960 the end. And Microsoft says it intends to litigate UM 0:03:54.000 --> 0:03:56.800 there is this is not the only regulatory approval they need. 0:03:56.840 --> 0:03:59.800 They still need approval in the UK and also in 0:03:59.840 --> 0:04:02.880 the EU are the two main other ones, and UM, 0:04:02.960 --> 0:04:05.400 neither of those jurisdictions we're going to make a ruling 0:04:05.480 --> 0:04:08.000 on on this deal until at least the spring March 0:04:08.080 --> 0:04:11.520 or April. So Microsoft is still going to keep forward 0:04:11.720 --> 0:04:14.840 with moving towards regulatory approval there as it tries to 0:04:14.880 --> 0:04:17.640 litigate here in the US. I kind of love this 0:04:17.680 --> 0:04:21.839 story because there's a process that happens, but there's also 0:04:21.920 --> 0:04:25.480 fighting talk. I saw headlines crossing the Bloomberg from Activision CEO, 0:04:25.640 --> 0:04:29.719 for example, what is their public position the companies about 0:04:29.720 --> 0:04:33.000 what they want out this. Yeah, I mean both companies 0:04:33.040 --> 0:04:35.279 have said, we want this deal to close. We want 0:04:35.279 --> 0:04:37.680 this deal. We think it's good for consumers because it 0:04:37.720 --> 0:04:41.120 expands access to gaming UM in ways that they wouldn't 0:04:41.160 --> 0:04:46.040 have now through these cloud and subscription based products UM. 0:04:46.160 --> 0:04:48.599 Right now, Activision does not have any its games on 0:04:48.640 --> 0:04:52.880 any of these subscription uh subscription based products, and you know, 0:04:53.120 --> 0:04:57.960 so obviously this would expand access UM and both of 0:04:58.000 --> 0:05:00.560 them say that they are committed to fighting. Now. You know, 0:05:00.680 --> 0:05:04.120 the deadline for the deal isn't until next summer, so 0:05:04.160 --> 0:05:06.359 they'll probably have to look at it extending it because 0:05:06.360 --> 0:05:09.440 of the length of the FTC's process, but you know 0:05:10.120 --> 0:05:14.200 they might be willing to do that. Bloomberg's lead Nylon 0:05:14.320 --> 0:05:17.720 Carrol said it fantastic reporting. Thank you. All right, let's 0:05:17.720 --> 0:05:20.839 move on to San Jose, where federal regulators are opening 0:05:20.839 --> 0:05:24.839 their campaign to block Metas acquisition of the virtual reality 0:05:24.920 --> 0:05:28.640 company within Bloomberg's Alex Brinka is down at the courthouse. 0:05:28.680 --> 0:05:31.599 She's been there all day long. What was the story 0:05:31.640 --> 0:05:36.039 of the day and how did things play out? Yeah, 0:05:36.040 --> 0:05:39.080 so they started opening statements. Witnesses are starting right now, 0:05:39.120 --> 0:05:40.920 and the big story of the day is the FDC 0:05:41.080 --> 0:05:44.880 is trying to kind of push this novel argument uphill 0:05:44.960 --> 0:05:48.599 to prove that this deal could hurt future competition in 0:05:48.640 --> 0:05:52.400 the virtuality fitness space. You're just talking about the Microsoft 0:05:52.400 --> 0:05:56.200 activision also looking at future competition. This is kind of 0:05:56.200 --> 0:06:00.520 a torch that FDC chair Um has been taking saying, Look, 0:06:00.760 --> 0:06:04.920 we need to get the regulations um right now before 0:06:04.960 --> 0:06:07.480 a company has a monopoly. So they tried to make 0:06:07.520 --> 0:06:10.600 that argument. The FDC also laid out some really interesting 0:06:10.600 --> 0:06:15.560 evidence showing their case Um that Meta has been was 0:06:15.680 --> 0:06:20.200 building a VR fitness app internally and they scrapped that. Actually, 0:06:20.200 --> 0:06:22.920 when Apple had some interest in the company they ended 0:06:22.960 --> 0:06:26.440 up acquiring, they scrapped that instead to acquire the company 0:06:26.480 --> 0:06:29.720 called Within, and in doing so, they basically took a 0:06:29.720 --> 0:06:34.320 potential future rival, that internal potential UM app that Meta 0:06:34.320 --> 0:06:37.200 would build off the table, and that's what hurt competition. 0:06:37.279 --> 0:06:40.240 So some back and forth there on both sides in 0:06:40.360 --> 0:06:43.440 terms of what the two litigants are pushing for. Talk 0:06:43.520 --> 0:06:46.240 to us about the back and forth from metas perspective, 0:06:46.480 --> 0:06:48.359 how are they trying to argue that, look, they weren't 0:06:48.360 --> 0:06:54.760 actually building something internally. Uh, there was charts and there 0:06:54.760 --> 0:06:57.119 were words. They basically threw up an organ chart saying, 0:06:57.120 --> 0:06:59.880 look from Mark Zuckerberg all the way down the chain, 0:07:00.240 --> 0:07:02.760 it was a no at every step In terms of 0:07:02.800 --> 0:07:05.520 the effort to build this internally. It was only a 0:07:05.560 --> 0:07:08.479 brainstorming exercise. And then they realized that actually building this 0:07:08.520 --> 0:07:11.080 app internally there were too many obstacles. It was too 0:07:11.080 --> 0:07:13.000 hard to do, so the best course of action was 0:07:13.040 --> 0:07:16.120 to go out and acquire. We also heard metas Council 0:07:16.200 --> 0:07:19.679 more Hanson come out and say, look, this this nascent 0:07:19.720 --> 0:07:22.680 competition argument the FTC is making. They think that they 0:07:22.720 --> 0:07:24.520 have no evidence here and that it could have a 0:07:24.600 --> 0:07:28.200 chilling effect on any vertical deals in the future because 0:07:28.200 --> 0:07:30.960 companies might be afraid to go out and buy companies 0:07:31.000 --> 0:07:34.280 they don't compete with just because they're big, because the 0:07:34.320 --> 0:07:38.000 FDC might then get involved. So some real pushback. They're saying, look, 0:07:38.200 --> 0:07:40.760 the core of of the FTCs argument is not true 0:07:40.960 --> 0:07:42.880 in terms of what they layout over the next eight days. 0:07:42.920 --> 0:07:44.840 I think that's so important that you really bring the 0:07:44.920 --> 0:07:48.760 context more broadly here, Alex, because this isn't just also 0:07:48.960 --> 0:07:52.760 about the nacency of this particular type of technology, but 0:07:52.840 --> 0:07:56.160 also the nacency of Meta zone pivot into the Meta BHUs. 0:07:56.280 --> 0:07:57.600 What does it mean for them the fact that they 0:07:57.600 --> 0:07:59.800 pegged everything on this space and then being stopped from 0:07:59.800 --> 0:08:04.120 doing in organic growth in it, and Met as a 0:08:04.160 --> 0:08:06.920 company who has pushed into new spaces through acquisition. We 0:08:06.920 --> 0:08:09.280 saw that with Instagram, we saw that with with WhatsApp, 0:08:09.440 --> 0:08:12.160 So you can imagine that them going out inquiring an 0:08:12.160 --> 0:08:14.640 app like this is meant to layer on top of 0:08:14.720 --> 0:08:18.520 their oculus, which was also an active position headset to 0:08:18.600 --> 0:08:20.880 move into this space. They are a year in to 0:08:21.000 --> 0:08:24.160 being renamed Meta after the Metaverse, which is the virtual 0:08:24.200 --> 0:08:26.880 reality world that they're working on building. It is a 0:08:26.880 --> 0:08:30.560 strategy that Mark Zuckerberg has caught a lot of detractors 0:08:30.640 --> 0:08:33.360 UM coming his way. The stock is way down because 0:08:33.360 --> 0:08:35.640 of the money they're pouring into this, so this kind 0:08:35.679 --> 0:08:38.199 of test for them in this court. They say, if 0:08:38.200 --> 0:08:40.880 the judge blocks this, if they award the injunction, they're 0:08:40.880 --> 0:08:43.880 gonna walk away from this transaction. So pretty high stakes 0:08:43.920 --> 0:08:46.040 here for Meta in terms of what they're trying to 0:08:46.080 --> 0:08:48.280 build in virtual reality, which they say is not only 0:08:48.280 --> 0:08:51.880 the future of Meta, but the future of computing in general. 0:08:52.240 --> 0:08:55.160 UM in the next generation of the computing era and 0:08:55.280 --> 0:08:57.120 exploring care. It has been so good to have you 0:08:57.160 --> 0:08:58.760 on the ground there in San Jose. We thank you 0:08:58.840 --> 0:09:01.120 so much. And and we've got to break it down. 0:09:01.240 --> 0:09:04.559 We've got to go throughout the FTCs focus on M 0:09:04.640 --> 0:09:06.360 and A. And we can do that with the perfect guest, 0:09:06.360 --> 0:09:09.800 American Antrtrust Institute President Diana Moss down in d C, 0:09:10.360 --> 0:09:14.960 Diana today just is emblematic of what currently it feels 0:09:14.960 --> 0:09:18.160 like the administration's focus on M and A, particularly within technology. 0:09:18.200 --> 0:09:21.400 We shouldn't be surprised, Nakanist did us this direction. What 0:09:21.440 --> 0:09:23.199 do you make of the doubling down from the FTC 0:09:23.320 --> 0:09:27.000 at the moment, I think this is very much in 0:09:27.480 --> 0:09:32.720 keeping with the chairs promises, UH and the Assistant Attorney 0:09:32.760 --> 0:09:35.400 General's promises to really take a hard look at the 0:09:35.400 --> 0:09:38.640 digital sector. And for good reason. You know, the digital 0:09:38.679 --> 0:09:43.600 sector is um has grown dramatically in the last twenty years. UH. 0:09:43.720 --> 0:09:46.959 They are coming off an acquisition spree that peaked in 0:09:47.040 --> 0:09:51.640 about It is absolutely a growth by acquisition model as 0:09:51.679 --> 0:09:55.720 opposed to a in our get a do it yourself model. 0:09:55.800 --> 0:09:58.880 It's sort of the buyer build question. So with the 0:09:58.920 --> 0:10:02.200 digital business ecosystems that is the name of the game. 0:10:02.280 --> 0:10:06.360 It is to acquire and grow largely through ocquisition, and 0:10:06.440 --> 0:10:10.560 both the Microsoft Activision and the Metal within are really 0:10:10.600 --> 0:10:14.920 really good leading examples of this growth by acquisition strategy 0:10:15.120 --> 0:10:19.000 and the competition problems that they raised because they are 0:10:19.720 --> 0:10:26.840 very large companies with dominant positions. Diana, that word competition, 0:10:27.800 --> 0:10:31.400 That's the bit that I think consumers, investors struggle to 0:10:31.440 --> 0:10:35.719 understand or at least struggle to sympathize with the FTC with, Right, 0:10:35.800 --> 0:10:39.679 Is the FTC doing this because it wants to foster competition? 0:10:39.720 --> 0:10:42.640 In other words, have many players in the metaverse, which, 0:10:42.720 --> 0:10:45.480 let's be honest, isn't a real thing yet, or they 0:10:45.520 --> 0:10:48.600 want to prevent monopolies or is it the same idea? 0:10:49.840 --> 0:10:53.079 I think it's they're the same idea, right. The antitrust 0:10:53.120 --> 0:10:55.800 laws in the United States are designed to promote and 0:10:55.840 --> 0:10:59.719 preserve and protect competition for the benefit of consumers and 0:11:00.000 --> 0:11:03.160 workers and smaller businesses that might be trying to get 0:11:03.160 --> 0:11:07.040 a foothold in markets or expand in markets. Um of course, 0:11:07.400 --> 0:11:10.920 that rationale, which is very consumer facing and worker facing 0:11:10.960 --> 0:11:14.680 and smaller business facing, can run up against rationales for 0:11:14.760 --> 0:11:19.160 why companies might need think they need to be bigger, 0:11:19.200 --> 0:11:22.480 to innovate more or innovate more quickly, and be more 0:11:22.559 --> 0:11:26.400 dynamic to ultimately bring new products to market and serve 0:11:26.480 --> 0:11:29.960 consumer demands. So there is a very strong tension there. 0:11:30.120 --> 0:11:33.520 But in the digital sector, I think the balances have tipped, 0:11:34.160 --> 0:11:37.000 as we've seen in these two cases, but also UH 0:11:37.040 --> 0:11:40.480 the d o j's case in Google, the FTCs case 0:11:40.520 --> 0:11:44.720 in in Facebook, and and several state cases that uh, 0:11:44.760 --> 0:11:47.920 there is a significant dominance problem in in some of 0:11:47.960 --> 0:11:51.960 the leading digital tech players and that competition really needs 0:11:52.000 --> 0:11:54.560 to be scrutinized very carefully. And M and A of 0:11:54.600 --> 0:11:59.839 course is one of the leading ways that these companies grow. DIN. 0:12:00.080 --> 0:12:02.840 Do you have any sympathy for within in this in 0:12:02.880 --> 0:12:06.720 this instance would matter in the startup within? You know, 0:12:06.800 --> 0:12:09.800 one thing we've learned is, of course that the metaverse 0:12:09.920 --> 0:12:14.800 is a nascent idea. It needs capital, access to talent 0:12:14.920 --> 0:12:19.000 to grow and to continue. You worried that there would 0:12:19.040 --> 0:12:22.520 be an over stifling of innovation if bigger tech companies 0:12:22.559 --> 0:12:28.720 aren't allowed to go out and acquire smaller companies. So 0:12:28.800 --> 0:12:31.560 that's a that's a really good question, and it comes 0:12:31.640 --> 0:12:35.360 up a lot in like discourse. UM, but what is 0:12:35.400 --> 0:12:40.240 the better pathway to innovation. Is it to encourage competition 0:12:40.360 --> 0:12:44.360 by smaller rivals, independent market players, and have them grow 0:12:44.920 --> 0:12:49.000 into significant market players that could then challenge these incumbent 0:12:49.120 --> 0:12:52.719 companies right the large digital text um? Or is it 0:12:52.760 --> 0:12:55.800 and we do that through promoting antitrust enforcement? Or is 0:12:55.840 --> 0:13:01.000 it to provide a pipeline or a feed of these 0:13:01.000 --> 0:13:05.199 startups and smaller companies into the big digital ecosystems knowing 0:13:05.240 --> 0:13:08.640 that they will be acquired and uh and claiming that 0:13:08.640 --> 0:13:12.880 that somehow will increase the ability of companies to increase innovation. 0:13:13.240 --> 0:13:16.760 There's a real tension there. Um. But again I think 0:13:16.800 --> 0:13:19.640 the balances have tipped. And and for example, in the 0:13:19.720 --> 0:13:24.720 meadow Within case, the purchase of Within, which has this 0:13:25.240 --> 0:13:29.880 leading VR fitness app supernatural um takes out a really 0:13:29.880 --> 0:13:33.160 important source of competition in a market that is all 0:13:33.280 --> 0:13:36.240 that that already does not have very much competition. So 0:13:36.280 --> 0:13:39.199 we worry about that when you eliminate competition in an 0:13:39.240 --> 0:13:44.720 already concentrated market. In the Microsoft Activision case, that also 0:13:45.040 --> 0:13:49.040 that acquisition also eliminates important competition on the outside of 0:13:49.080 --> 0:13:53.640 a digital business ecosystem, and we worry about those acquisitions 0:13:53.640 --> 0:13:56.719 when there isn't already a lot of competitions. So if 0:13:56.720 --> 0:14:00.520 you're in the camp where competition serves the interests of innovation, 0:14:00.720 --> 0:14:02.720 or in the other camp, which is we need big 0:14:02.760 --> 0:14:06.679 companies to acquire smaller companies to continue to innovate, that 0:14:06.720 --> 0:14:09.960 really frames out the debate. It's also an interesting debate 0:14:10.080 --> 0:14:12.520 to be having as we head towards basically a real 0:14:12.559 --> 0:14:15.559 pullback already upon us in terms of VC funding, real 0:14:15.600 --> 0:14:17.800 pullback in terms of the free money that we're also 0:14:17.920 --> 0:14:21.720 used to. And I'm wondering what ways do we tend 0:14:21.760 --> 0:14:24.920 to see big companies that are sitting on a ton 0:14:24.960 --> 0:14:27.760 of cash be able to foster innovation in the space 0:14:27.800 --> 0:14:30.000 they want to see grow if it isn't just by 0:14:30.160 --> 0:14:33.960 trying to do deals and actually acquire them out right right, 0:14:34.080 --> 0:14:38.000 the very good question, and again the growth by acquisition 0:14:38.040 --> 0:14:42.000 model really serves as a as a funnel for a 0:14:42.040 --> 0:14:44.720 lot of a lot of the free cash that companies have. 0:14:45.000 --> 0:14:46.960 But I think you have to look a little bit 0:14:47.000 --> 0:14:50.120 deeper at the culture of the companies, at the way 0:14:50.160 --> 0:14:53.920 the digital ecosystems are structured with with a platform with 0:14:54.040 --> 0:14:57.120 lots of cloud technology, where we've seen lots of acquisitions 0:14:57.120 --> 0:15:00.440 in the last many years, but also these constellation of 0:15:00.640 --> 0:15:04.600 apps that exists in the ecosystem. That's a complex business 0:15:04.640 --> 0:15:08.080 model and it's the value proposition, and it's really supercharged. 0:15:08.160 --> 0:15:11.520 So if you have market power in a platform or 0:15:11.520 --> 0:15:15.239 in cloud technology, all of those pieces of the ecosystem 0:15:15.280 --> 0:15:20.240 work together where where um um uh market power can 0:15:20.280 --> 0:15:24.880 be leveraged throughout the ecosystem. And so that complicates the 0:15:24.920 --> 0:15:28.320 innovation story as well. And in fact, my charge supercharge 0:15:28.360 --> 0:15:33.080 incentives to buy smaller rivals because by buying a new 0:15:33.120 --> 0:15:37.840 application like a like gaming content or VR app content, 0:15:38.240 --> 0:15:42.400 fitness app content, you're able then to connect that content 0:15:42.560 --> 0:15:47.600 to um to the platform a platform, and to supercharge 0:15:47.640 --> 0:15:50.960 it with value with cloud technology. So it's a very 0:15:51.040 --> 0:15:56.080 complex business proposition. It's a value proposition, but also poses 0:15:56.160 --> 0:16:01.600 really complicated problem strand I trust enforcers in crafting complaints. 0:16:01.600 --> 0:16:04.040 But the ultimate concern, I'm sure as you know, is 0:16:04.080 --> 0:16:07.000 that all of all of this gets locked up in 0:16:07.040 --> 0:16:10.160 a single ecosystem, which makes it very difficult for for 0:16:10.240 --> 0:16:13.400 small arrivals to get into those markets. I think, Diana, 0:16:13.440 --> 0:16:16.600 we're just starting this conversation and will certainly continue it 0:16:16.640 --> 0:16:18.600 in the weeks and months to come. American Anti Trust 0:16:18.680 --> 0:16:23.000 Institute President Diana Moss, thank you coming up. Elon Musk 0:16:23.160 --> 0:16:25.800 under pressure as bankers struggle to find buyers for the 0:16:25.800 --> 0:16:28.560 Twitter debt used for the purchase of the company after 0:16:28.600 --> 0:16:32.600 the billionaire promised to turn around its finances. This is Bloomberg, 0:16:41.960 --> 0:16:44.880 So Elon Musk's bankers and considering replacing some of the 0:16:44.960 --> 0:16:47.800 riskiest and level the costliest debt that he led on 0:16:47.800 --> 0:16:51.320 Twitter with new margin loans back by Tesla stock that 0:16:51.360 --> 0:16:55.240 he'd personally be responsible for repaying. Is actually but one 0:16:55.280 --> 0:16:59.160 of three pretty big bloomberg scoop surrounding Tesla today and Ed, 0:16:59.240 --> 0:17:01.280 as always, you were behind a couple of them. Just 0:17:01.360 --> 0:17:04.000 run us through some of the other stories that play 0:17:04.040 --> 0:17:05.960 when it comes to you. Yeah, I mean the debt 0:17:05.960 --> 0:17:08.679 burdens important, right, one point two billion dollars of payments 0:17:08.680 --> 0:17:10.480 and least they something had to give there. The other 0:17:10.520 --> 0:17:13.879 two are the testers cutting production as in Shanghai, so 0:17:13.960 --> 0:17:16.920 the market's a bit worried about demand in China, which 0:17:16.960 --> 0:17:19.199 is the biggest TV market currently and the second. As 0:17:19.240 --> 0:17:22.639 we reported, the China chief at Tessa has moved to 0:17:22.680 --> 0:17:24.840 Austin to kind of get things going there, which is 0:17:25.119 --> 0:17:27.640 a really interesting time when everyone's questioning what is Elon 0:17:27.720 --> 0:17:30.840 Musk doing any given day with which company? Yeah, and 0:17:31.080 --> 0:17:34.160 rumors swirl as to his leadership at all these various companies. 0:17:34.160 --> 0:17:36.320 And we want to get back to the reason that 0:17:36.359 --> 0:17:38.760 people think is distracted, which of course is Twitter. And 0:17:38.840 --> 0:17:41.280 Shini Vassa was one of the by lines on this 0:17:41.560 --> 0:17:44.040 scoop that came out last night and just has continued 0:17:44.080 --> 0:17:47.720 to fascinate us today of the debt. Talk to us 0:17:47.760 --> 0:17:50.679 a little bit about how much pressure this shows that 0:17:50.760 --> 0:17:52.560 all of them are under at the moment. Listen, the 0:17:52.720 --> 0:17:55.480 unsecured part of this debt is the part that the 0:17:55.480 --> 0:17:57.879 banks are most worried about. They had promising interest rate 0:17:57.920 --> 0:18:01.160 of eleven point seven per cent, and we know that 0:18:01.320 --> 0:18:04.280 junkie debt, risky debt, junk debt here has really gotten 0:18:04.359 --> 0:18:07.199 much more expensive for the banks to be carrying, so 0:18:07.240 --> 0:18:10.600 they could take real losses here because of that promised 0:18:10.760 --> 0:18:14.480 rate there. Remember, there's a benefit here potentially, and this 0:18:14.560 --> 0:18:16.720 is just a discussion that the bankers are really having 0:18:16.760 --> 0:18:19.280 here four musques to be doing this, and that one 0:18:19.320 --> 0:18:22.680 benefit would be to really start to lower that burden 0:18:22.880 --> 0:18:25.679 of that one point two billion dollars worth of interest payments. 0:18:25.680 --> 0:18:28.800 He would have to make Twitter revenue right even that 0:18:29.000 --> 0:18:31.600 last year. Absolutely, So you know, if you're paying more 0:18:31.640 --> 0:18:34.200 than you're essentially making, it is a very difficult burden 0:18:34.200 --> 0:18:35.679 to be taking on as you're trying to turn the 0:18:35.680 --> 0:18:38.480 ship around. Now, I want to like shadow this a 0:18:38.480 --> 0:18:41.119 little bit with the scuttle butt that's going on in 0:18:41.280 --> 0:18:44.280 Wall Street right now. Why this matters so much because 0:18:44.359 --> 0:18:46.320 as the banks trying to offload this debt, you have 0:18:46.359 --> 0:18:49.320 the by side really negotiating just so hard to bring 0:18:49.359 --> 0:18:51.679 the cost of that debt down because a lot of 0:18:51.800 --> 0:18:54.760 big firms would love to be buying this debt cheaply 0:18:55.119 --> 0:18:57.959 sixty cents on the dollar maybe last the banks are like, 0:18:58.160 --> 0:19:02.439 no way, is that happening in our lifetimes hopefully, but 0:19:02.640 --> 0:19:04.040 because if they did that, they would have to take 0:19:04.000 --> 0:19:06.640 bigger and bigger losses. But the negotiation, if they were 0:19:06.720 --> 0:19:10.600 to sell this debt below par, which might happen, is 0:19:10.640 --> 0:19:13.240 one option. But the other option here could be these 0:19:13.280 --> 0:19:16.280 martinal laws. Yeah, well the markets changed since April. Don't 0:19:16.280 --> 0:19:18.200 ask me what it's going to look like throughout my lifetime. 0:19:18.200 --> 0:19:22.960 Bloomberg Shonali Bassek. Let's get to Disney streaming service Disney Plus, 0:19:23.000 --> 0:19:26.359 which is debuted. It's ad supported service, coming with strict rules, 0:19:26.359 --> 0:19:30.399 no alcohol commercials, no political spots, no ads from competitors 0:19:30.400 --> 0:19:33.120 Carrot Interesting, isn't it because it's about a month on 0:19:33.359 --> 0:19:36.480 from Netflix's ads sponsored one, and they do have a 0:19:36.520 --> 0:19:40.200 beer ad ed right, But they've learned from the experience 0:19:40.200 --> 0:19:42.399 with Hulu where they already have ads just half as 0:19:42.480 --> 0:19:44.720 much now on Disney Plus. We'll be right back. This 0:19:44.800 --> 0:19:59.280 is Bloomberg against almost any measure. It was a record year, 0:19:59.720 --> 0:20:01.920 not in terms of the amount of funding going to 0:20:01.960 --> 0:20:05.080 private companies, but the number of deals that were actually done. 0:20:05.160 --> 0:20:07.639 So we were moving at a pace of almost a 0:20:07.720 --> 0:20:11.040 hundred companies being funded every day. In a lot of ways, 0:20:11.080 --> 0:20:14.760 it felt like there were there was too much money 0:20:14.840 --> 0:20:18.040 chasing despite the fact that it was so many deals, 0:20:18.080 --> 0:20:23.200 too few deals. Oh where we were in CB insights 0:20:23.200 --> 0:20:26.000 Brian Lee there and interestingly, actually, as we keep talking 0:20:26.040 --> 0:20:28.680 about the slowdown in BC funding at the moment, amid 0:20:28.680 --> 0:20:31.520 all the concerns, we actually that learned that phone paid 0:20:31.560 --> 0:20:34.240 today and some Walmart owned digital payments Bran is actually 0:20:34.240 --> 0:20:36.160 seeing as much as one billion dollars from the likes 0:20:36.160 --> 0:20:40.359 of General Atlantic and Tiger Global, Catter Investment Authority and Microsoft. 0:20:40.400 --> 0:20:43.560 So it seems that some deals potentially still getting done 0:20:43.560 --> 0:20:46.480 if you're the right size, right space. Yeah, the headline 0:20:46.520 --> 0:20:50.800 is that the value overall globally VC value deals down right, 0:20:50.880 --> 0:20:53.399 But actually what we learned from the Prequeen data we 0:20:53.480 --> 0:20:55.800 learned from CB Insights in the last twenty four hours 0:20:55.840 --> 0:20:57.639 is that it does depend on geography. So in that 0:20:57.720 --> 0:21:01.080 case that deals in India in China the dollar value 0:21:01.160 --> 0:21:03.760 is down fift twenty two year on year in USA 0:21:03.800 --> 0:21:07.560 it's according to greet Queen. But those are just two markets. 0:21:07.600 --> 0:21:10.240 So the question I guess is where is money still flowing? 0:21:10.480 --> 0:21:13.800 Where is the opportunity which subsectors? And luckily, you know, 0:21:13.800 --> 0:21:15.640 we can talk about this a week long if you're like, yeah, 0:21:15.680 --> 0:21:18.000 we're going to keep on talking about until the year 0:21:18.119 --> 0:21:20.159 is done, until the next year is through. But what 0:21:20.320 --> 0:21:21.719 the perfect guests to talk about it in the here 0:21:21.760 --> 0:21:23.919 and the now. It's needed to Horney. Here's with us, 0:21:23.920 --> 0:21:27.400 director of research at pitchbook for more and just talk 0:21:27.480 --> 0:21:29.679 to us about what you're learning at pitch but what 0:21:29.720 --> 0:21:32.439 you're seeing in terms of the great highs that we 0:21:32.520 --> 0:21:35.160 came from what two and now looking into twenty three 0:21:35.240 --> 0:21:37.600 is going to look like for VC checks. Yeah, I mean, 0:21:37.640 --> 0:21:41.320 it's been truly astonishing a couple of years, and I 0:21:41.359 --> 0:21:44.200 think as you look forward over the next eighteen months, 0:21:44.200 --> 0:21:45.760 I think the most important thing to do is actually 0:21:45.800 --> 0:21:48.600 look backwards and get a sense of what's happening over 0:21:48.600 --> 0:21:50.360 the past couple of years in the venture markets, which 0:21:50.400 --> 0:21:52.000 is in a lot of ways led us to worry 0:21:52.040 --> 0:21:54.440 out today. And so if you think about the dry 0:21:54.480 --> 0:21:56.359 powder number, so money that hasn't been invested in the 0:21:56.440 --> 0:21:59.400 end vehicles, there's five and sixty plus billion dollars globally, 0:21:59.720 --> 0:22:01.760 and I think the narrative over the past couple of 0:22:01.840 --> 0:22:04.560 years was that even in the case of a downturn, 0:22:04.880 --> 0:22:06.840 you're gonna end up in a world where there was 0:22:07.000 --> 0:22:09.920 enough money to help supplement the industry and prop it up. 0:22:10.359 --> 0:22:12.560 If you you pull that layer back a little bit 0:22:12.560 --> 0:22:14.040 and you take a look at what's happening under the 0:22:14.040 --> 0:22:16.080