Speaker 1: From Mahart.
Speaker 2: We're Innovation of Money and Power co Lie in Silicon
Speaker 2: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 2: Ed Loved.
Speaker 3: Love live from New York and San Francisco. This is
Speaker 3: Bloomberg Technology coming up Apple's iPhone sixteen. It hits the
Speaker 3: stores today without the crucial AI features what people buy.
Speaker 4: And Microsoft's AI power needs prompt the revival of a
Speaker 4: dormant reactor.
Speaker 3: Plus we hear from Salesforce CEO Marc Benioff and from
Speaker 3: the company's head of ventures. But first, let's just check
Speaker 3: in on these markets as we round out a risk.
Speaker 3: On week, we are up more than a percentage of point.
Speaker 3: Let's put it at that for the Nasdaq one hundred.
Speaker 3: Remember significant gains on this benchmark the previous week, where
Speaker 3: we eclipsed to five percent gain extraordinary moves. We dive
Speaker 3: back on the day Ed we have digested the federal
Speaker 3: reserve whopping cuts. What does that now mean for a
Speaker 3: little bit of profit taking happening in the MAGS seven
Speaker 3: for example? But what are you watching in terms of
Speaker 3: a key name.
Speaker 4: Going straight to Apple? Apple ups six tens of one
Speaker 4: percent the iPhone sixteen lineup goes on sale today sixty
Speaker 4: countries around the world. You will have seen the scenes
Speaker 4: in New York City, Caro here in San Francisco, the
Speaker 4: same thing. There's a lot of questions about how or
Speaker 4: whether or not this will drive an upgrade cycle. So
Speaker 4: we think about the iPhone in the context of Apple's
Speaker 4: overall portfolio of products. It is critically important. That's why
Speaker 4: this pie chart tells the story, right. I think there's
Speaker 4: a lot of skepticism about the innovation, the main innovation
Speaker 4: being a button on the side of the handset for
Speaker 4: camera control. Will that be enough? Is the delay of
Speaker 4: the release of Apple Intelligence, its generative AI platform to
Speaker 4: a later date going to impact this cycle? Those are
Speaker 4: all things that we need to consider.
Speaker 5: Got the perfect voice to do it with the Rilla profile,
Speaker 5: Senior research director at IDC.
Speaker 3: You run the numbers, you tell us a future of
Speaker 3: how integral the iOS system and Apple remains. Look, are
Speaker 3: you anticipating growth ultimately of market share Apple here?
Speaker 6: So you know, we all recognized, like right at the
Speaker 6: time of launch, right the features and everything that was announced.
Speaker 6: It was exciting, but a lot of people were disappointed.
Speaker 7: However, for those.
Speaker 6: Who you know, really follow the market market. I think
Speaker 6: we an't understand it's a long term play, right. It
Speaker 6: is definitely a first step for Apple in a long
Speaker 6: journey and in a big step, I think, so long term,
Speaker 6: we do expect this to you know, improve and impact
Speaker 6: Apple in a very positive way. But this year we're
Speaker 6: not expecting iPhone sixteen launch, you know, despite the hype
Speaker 6: and the marketing and the introduction of Apple Intelligence, even
Speaker 6: if it's a little bit rolled out a little later,
Speaker 6: we don't expect that to cause an upgrade cycle.
Speaker 7: This year.
Speaker 6: We think things will be slow to to pick up.
Speaker 6: But next year, however, we are expecting a four percent
Speaker 6: growth for our.
Speaker 5: Apple Why why the four percent acceleration?
Speaker 7: So you know, we've moved it up.
Speaker 6: I think it was about one or two percent, but
Speaker 6: after you know, all the announcements of WWDC and when
Speaker 6: we put out our forecasts, which was just a few
Speaker 6: weeks ago, given everything that we've seen already talked about
Speaker 6: Apple Intelligence of what's to come, right, I think it's
Speaker 6: not really about what's here today, but by next year
Speaker 6: what's going to happen. We're going to get language being
Speaker 6: rolled out and hopefully the issues with the you know,
Speaker 6: introduction of Apple Intelligence and EU and in China with
Speaker 6: partnerships being established, we think that will really help accelerate
Speaker 6: the momentum towards you know, the Apple Intelligence fold, whether
Speaker 6: it's sixteen, you know, towards later next year or the
Speaker 6: seventeen series, especially because I think right now it's still
Speaker 6: new in terms of the use cases. But as consumers
Speaker 6: start using it and they see their friends and family
Speaker 6: use it, and of course marketing picks up, consumer awareness
Speaker 6: and education increases, we do think, you know that those
Speaker 6: all those factors combined together will create sort of a
Speaker 6: bump of a certain percentage of people like that are
Speaker 6: because the average of fresh cycle.
Speaker 7: Nows are about four years and even five years.
Speaker 6: Right, we know plenty of people that have iPhone elevens
Speaker 6: and iPhone X, but next year, we're thinking it's going
Speaker 6: to lead to those with the thirteens or the fourteens
Speaker 6: even thinking, hey, you know what I want the seventeen.
Speaker 4: So Nabida, you and I were together at Apple Park
Speaker 4: just last week, it seems like a long time ago.
Speaker 4: I think it's worth reminding the audience of how Tim
Speaker 4: Cook summarized this generation of phone.
Speaker 8: This is this the innovation and invention these products deliver
Speaker 8: will continue to deepen the meaningful impact they have on
Speaker 8: all of our lives. I'm proud of our teams and
Speaker 8: what they've accomplished, and I can't wait for you to
Speaker 8: experience these amazing products.
Speaker 4: So then I look at your own research, your IDC
Speaker 4: forecasts for shit mints of smartphones in the years to come,
Speaker 4: and generate today I And that's my question for you.
Speaker 4: The innovation Tim Cook's talking about, It's not really on
Speaker 4: the hardware side, is it.
Speaker 7: No, And you know they.
Speaker 6: Drove that message very very clearly, right, It's really about
Speaker 6: the change of the user experience. Right, How is these
Speaker 6: new features going to improve your life? And how are
Speaker 6: they going to make your lives easier? And of course
Speaker 6: they showcase some of those use cases, but I think
Speaker 6: it's just really in the long run, going to change
Speaker 6: the complete way we interact with our smartphones, right. And
Speaker 6: I think that's when jen Ai or the super cycle,
Speaker 6: the refresh will really really kick, when those digital assistants
Speaker 6: start coming into play where we can just talk to
Speaker 6: our phones rather than having to go into multiple apps
Speaker 6: to do the task we need to do.
Speaker 7: And I'm really excited for when that happens.
Speaker 3: So software innovation the hardware innovation. Well, that Limelight got
Speaker 3: stolen by Huawei a few hours after Apple. It feels like, look,
Speaker 3: not everyone wants a trifle phone, but how are we
Speaker 3: seeing innovation? Mean that we all pulling away from market
Speaker 3: share in China.
Speaker 6: So definitely, Huawei's launch, you know, did get a lot
Speaker 6: of attention and they were trying to showcase in a
Speaker 6: different way.
Speaker 7: Right, this is our on the hardware side, right with
Speaker 7: the foldable device.
Speaker 6: But the truth of the matter is, you know, while
Speaker 6: Huawei does remain a very valid competitor for Apple in China, right,
Speaker 6: we've all seen the number as recently, the foldable segment
Speaker 6: is still very niche, and we do believe that, you know,
Speaker 6: in terms of foldables or this specific product impacting Apple negatively,
Speaker 6: I don't think so. Again, it's a very niche segment,
Speaker 6: and specifically, you know, with the trifold device, it's still
Speaker 6: going to be even further niche within the foldables because
Speaker 6: of supply challenges that Huawei's seeing. But overall, you know,
Speaker 6: it is a rocky road this year for Apple. But
Speaker 6: we do hope that with as they you know, resolve
Speaker 6: the partnership issues in China, especially because AI is a
Speaker 6: very more important you know, China market consumers are very
Speaker 6: spec driven. When you compare globally in terms of importance
Speaker 6: of AI features to consumers, Chinese consumers are more likely
Speaker 6: to place it incomining.
Speaker 4: Appurchase Nabila, We were just showing pictures from around the world,
Speaker 4: including China, sixty countries, right, that's important. I think it's
Speaker 4: what reminding ourselves. Like some people will buy some iPhone sixteens,
Speaker 4: it's all relative to prior generations, right that. Could you
Speaker 4: give any sort of geographical context on where you think
Speaker 4: this handset will do well and where it will do poorly.
Speaker 6: In terms of you know, this coming for the rest
Speaker 6: of this year. We think definitely there's a large installed
Speaker 6: base of users. Right, Like I mentioned, I'm sure we're
Speaker 6: all you know, iPhone elevens and X and regions where
Speaker 6: the refreshed cycles are longer. I think develop markets where
Speaker 6: Apple has larger share, right, where there's lots of those
Speaker 6: installed based of older models. I think those are the
Speaker 6: regions that will this year. So essentially it's not really
Speaker 6: Apple intelligence that's going to motivate them to buy. It's
Speaker 6: time for them to upgrade anyway, and I think those
Speaker 6: new buyers or shorter reverse cycles that's going to happen
Speaker 6: next year, especially with the trade and promotions. Right right now,
Speaker 6: it's more of a future proof device with the Apple
Speaker 6: iPhone sixteenth.
Speaker 4: Lebe lipa Pow whose research at IDC on smartphone markets
Speaker 4: so closely followed. Thank you. Good to have you back
Speaker 4: here on Bloomberg Technology. Okay, coming up on the show,
Speaker 4: Elon Musk is now on the Secret Services Radar after
Speaker 4: deleting a post about assassination attempts on presidential candidates. We're
Speaker 4: going to cover that story next. This is Bloomberg Technology.
Speaker 4: Israel continues to carry out strikes against Lebanon. Across Lebanon,
Speaker 4: stepping up hostilities against Hezballah. Thousands of pages and other
Speaker 4: device is exploding in Lebanon this week mark a new
Speaker 4: and deadly escalation in the use of supply chains against enemies,
Speaker 4: an urgency to reduce dependence on technology from rivals. Bloomberg's
Speaker 4: Dwan Flatley covers national security and joined us from Washington.
Speaker 4: And you've done some deep reporting with colleagues on this
Speaker 4: idea that, particularly for cheap goods, that when you go
Speaker 4: across the supply chain and the assembly of these products.
Speaker 4: They persent a risk because they can be weaponized. What
Speaker 4: did you learn?
Speaker 9: Yeah, it's a fascinating topic, and obviously what happened in
Speaker 9: Lebanon with these pagers and walkie talkies really I think
Speaker 9: crystallize the issue in a lot of people's minds. Where
Speaker 9: before we had we knew coming out of the pandemic
Speaker 9: that these supply chains were a big deal because we
Speaker 9: were worried about the cutoff of critical you know, PPE
Speaker 9: and other things like that, but this is taking it
Speaker 9: to a whole other level. I mean, I think you
Speaker 9: have to kind of think about this two categories.
Speaker 4: Right.
Speaker 9: You have what happened in Lebanon, which was according to
Speaker 9: what we've been able to ascertain. You know, Israel has
Speaker 9: not claimed responsibility for this, but you know the senses
Speaker 9: that they were involved obviously, and it was a specific
Speaker 9: hack and a specific sort of intelligence operation that has
Speaker 9: been used in various contexts, you know, for a long time.
Speaker 9: This is probably the most dramatic, you know, out outcome
Speaker 9: of that, but that is something that's been around for
Speaker 9: a while. And then you have this sort of separate
Speaker 9: but related issue of supply chains hacking critical infrastructure, and
Speaker 9: both of those two things kind of come together in
Speaker 9: our story, which sort of explains and looks at how
Speaker 9: as supply chains have both been concentrated in some countries
Speaker 9: like China, for instance, there's a vulnerability there. But at
Speaker 9: the same time, diversifying your supply chains also creates some
Speaker 9: vulnerabilities because you have excuse me, more entry points for
Speaker 9: people to to kind of exploit. So it's you know,
Speaker 9: it's kind of you there's not a lot of great options.
Speaker 9: But I think the one thing that folks that we
Speaker 9: talked to said was we just need more visibility into
Speaker 9: the supply chain. And so that's one of the takeaways.
Speaker 3: Let's talk about that visibility because many would say, look,
Speaker 3: it is now that the US says this, but previously
Speaker 3: the US and spies have a history of taking an advantage
Speaker 3: of the United States dominance in the supply chain. Now
Speaker 3: the shoes on the other foot, what can be done
Speaker 3: for investment by US companies to just track the supply chain.
Speaker 9: Absolutely, I mean, it's a great question because it kind
Speaker 9: of goes both ways.
Speaker 2: Right.
Speaker 9: We've seen this in the context of the Russia Ukraine War,
Speaker 9: where the US government has really been leaning on companies
Speaker 9: to get more visibility into the supply chains going out,
Speaker 9: who are you exporting to, who's not only who is
Speaker 9: your customer, but who's your customer's customer. And there's a
Speaker 9: big push on that from the government side, and actually
Speaker 9: on Capitol Hill a couple of weeks ago there is
Speaker 9: a big hearing and Intel and Texas Instruments and some
Speaker 9: other companies were really pressed on this, and basically what
Speaker 9: they were saying was it's very difficult to get that
Speaker 9: kind of clarity on not just who you're selling to,
Speaker 9: but who the people that you're selling to are selling to.
Speaker 9: So that goes out and then coming in same problem
Speaker 9: because you're not necessarily sourcing. You know, when you're buying
Speaker 9: a vast quantity of these types of material semiconductors or whatever,
Speaker 9: you're not buying it from. You know, you may be
Speaker 9: buying it from one point, but that vendor is getting
Speaker 9: it from multiple points. And so it's kind of the
Speaker 9: double edged source of globalization that we're really seeing here.
Speaker 9: So it's a very difficult problem to solve.
Speaker 3: This is where the Internet of Things comes in. Blue
Speaker 3: mugstand flatten me. We really appreciate your time. Thank you.
Speaker 5: Meanwhile, one of email Musk's posts.
Speaker 3: On X is facing an investigation by the Secret Service
Speaker 3: following the latest assassination attempt of form a. President Donald
Speaker 3: Trump mask took to X writing quote and no one
Speaker 3: is even trying to assassinate Biden Comma in a now
Speaker 3: deleted post for more, Bomberg Stanahal joins us for more,
Speaker 3: and you learned about this investigation through freedom of information at.
Speaker 5: Requests to the Secret Service? What did you ask for?
Speaker 10: Well, so the backup for a minute. When emailon posts things,
Speaker 10: they see an incredibly wide audience. He has millions of followers.
Speaker 10: His tweets are often amplified by others. And what was
Speaker 10: curious to me is that he posted this on Sunday
Speaker 10: and then he deleted it, and I was wondering why
Speaker 10: did he delete it? And I deleted and I think
Speaker 10: I actually tweeted at him like, hey, did you get
Speaker 10: a phone call from the FBI or the Secret Service?
Speaker 10: So then I just filed a request to the Secret
Speaker 10: Service asking you know, do you have records? Are you
Speaker 10: investigating the side like any email correspondence? And what's funny
Speaker 10: about Foyer? And there's a little bit of an art
Speaker 10: to this is that usually it takes quite a while
Speaker 10: to pry records loose sort of get a response. But
Speaker 10: I immediately got a response, like within twenty four hours.
Speaker 10: They sent a record, they said to me a response,
Speaker 10: and simultaneously, our colleague Jason Leopold, who is like the
Speaker 10: master of Foyer requests, had also done the same thing.
Speaker 10: So I was talking to Jason, like, hey, I just
Speaker 10: want to let you know that I filled this request,
Speaker 10: and he's like, oh, I did the same thing, and
Speaker 10: we've gotten very similar responses.
Speaker 4: So dona just real quick. I mean, it is an our.
Speaker 4: You know, I've looked to you so often to try
Speaker 4: and get hold of documentation because you cannot hide from documentation.
Speaker 4: The response of the Secret Service is really interesting because
Speaker 4: in the actual response itself, I'm just going to look
Speaker 4: down on my screen because I don't want to get
Speaker 4: it wrong that they withheld certain thing because disclosure could
Speaker 4: reasonably be expected to interfere with enforcement proceedings. And it's
Speaker 4: that sentence alone that lets us know what's going on
Speaker 4: in the background between Musk and the Secret Service.
Speaker 10: Correct, And to be clear, we shouldn't like jump to
Speaker 10: a conclusion that this means that there will be an
Speaker 10: enforcement proceeding or that there will be a big outcome.
Speaker 10: But I think the Secret Service, you know, by a law,
Speaker 10: I mean they have to investigate anything that could be
Speaker 10: seen as a credible bet thread or could be seen
Speaker 10: as something that's a potential incitement of violence, and so
Speaker 10: it's fairly standard operating procedure that they would look into this.
Speaker 7: For me, what I just want to know is what
Speaker 7: happened behind the scenes, Like was.
Speaker 10: He urged to take this down by investors or members
Speaker 10: of his family or people in his inner circle. Was
Speaker 10: there a whole back and forth, you know, with campaigns,
Speaker 10: or did the Secret Service like call him on the
Speaker 10: phone and be like, hey, buddy, like this is maybe
Speaker 10: not so great.
Speaker 7: Like I just would love to know exactly what happened in.
Speaker 10: Terms of what inspired him to take him down take
Speaker 10: it down, because he got quite a lot of backlash
Speaker 10: and it was up for several hours.
Speaker 3: ANAHA, the ALTA reporting Thank you Now. Palentiner has won
Speaker 3: a one hundred million dollar contract that will extend access
Speaker 3: to AI targeting tools to more US military personnel via
Speaker 3: the company's Digital Warfare platform. Now this will help create
Speaker 3: a picture of the same battlefield on thousands of digital
Speaker 3: screens simultaneously, and it's been used by the US military
Speaker 3: to help identify targets for airstrikes in the Middle East.
Speaker 5: This year, Greenberg is reporting that.
Speaker 3: Constellation Energy, it's the owner of the shuttered three Mile
Speaker 3: Island nuclear plant over in Pennsylvania, it's hitting record highs
Speaker 3: in terms of its share price because it's going to
Speaker 3: restart the reactor and set its output to Microsoft to
Speaker 3: power you guess, their oftificial intelligence. Bloomberg's Deinabas reported on
Speaker 3: this and actually there is this florry need for energy.
Speaker 5: And we're turning to nuclear.
Speaker 11: Now absolutely, because it's not just energy that Microsoft, Amazon,
Speaker 11: Google and all the cloud hyper scalers are looking for.
Speaker 11: They want clean energy. And you know, I think often
Speaker 11: we talk about solar and wind. Nuclear is also clean.
Speaker 11: It has some different components. It's always on, whereas wind
Speaker 11: and solar are a bit more variable. That's both a
Speaker 11: strength and weakness. One of the reasons Constellation had shut
Speaker 11: down this site five years ago is that they didn't
Speaker 11: have you know, the customer.
Speaker 7: Demand for that always on.
Speaker 11: Because for green energy, people were trying to pair things
Speaker 11: with solar and wind which are again more variable. Incomes Microsoft,
Speaker 11: which needs you know, tremendous amount of clean energy to
Speaker 11: run its ever expanding fleet of data centers and meet
Speaker 11: its climate pledges. And those data centers always need to
Speaker 11: be on so you know, Microsoft, Microsoft Energy chief Bobby
Speaker 11: Hollis told me it's a good match.
Speaker 4: It's an interesting deal for Constellation. Obviously, Constellations shares are
Speaker 4: up significantly. They have to invest one point six billion dollars.
Speaker 4: But they get a customer who's pledging or contractually applied
Speaker 4: obliged to buy energy for twenty years. That's the mechanics
Speaker 4: of the deal. But I guess we have short memories, right, Diana.
Speaker 4: I remember, let's say two years ago, when not just
Speaker 4: Microsoft but Amazon as well had very ambitious energy and
Speaker 4: climate targets.
Speaker 1: Right.
Speaker 4: How much is that a priority for Microsoft?
Speaker 11: So this has been a real issue for Microsoft. They
Speaker 11: still have these climate targets. One is, you know, all
Speaker 11: data centers running on green energy by twenty twenty five.
Speaker 11: And the other, which is the one that they're really
Speaker 11: not sure they can make at this point because of AI,
Speaker 11: which is there are pledge to be carbon negative by
Speaker 11: twenty thirty. They told us last spring that that pledge
Speaker 11: has been imperiled by the dramatic expansion in AI.
Speaker 4: So the deal.
Speaker 11: Today helps them, but it doesn't help them on the
Speaker 11: hardest problem. The deal today gives them green energy, and
Speaker 11: so it helps them with the green energy goal. But
Speaker 11: the biggest reason they are worried about their carbon negative
Speaker 11: by twenty thirty goal is other the embodied emissions from concrete,
Speaker 11: steel and chips which sure used in these data centers.
Speaker 11: So you know this part of the deal today that
Speaker 11: does not help them with that.
Speaker 7: That is, as Bobby Hollis told me, a harder problem.
Speaker 4: Bloombergstina Bess on an important deal but also important development
Speaker 4: in the world of AI. Thank you. Let's focus on
Speaker 4: the Xbox side of Microsoft's business, and in particular how
Speaker 4: it's president Sarah Bond is laying the groundwork for the
Speaker 4: company's next console in a bid to catch up to
Speaker 4: Sony and Nintendo. Bloomberg Cecilia the Anastasio joins us. Now
Speaker 4: this is a deep dive into Sarah Bond, a relative outsider,
Speaker 4: but now in what's a massive gaming company or arm
Speaker 4: she's really important. What is she trying to do?
Speaker 12: Sarah Bond is trying to move the Xbox business beyond
Speaker 12: the Xbox console. A head of Microsoft Gaming, Phil Spencer,
Speaker 12: says that they've been selling consoles to the same two
Speaker 12: hundred million global households, and they really want Xbox to
Speaker 12: mean more than the plastic box in your living room.
Speaker 12: Sarah Bond's mandate is to expand xbo games into phones,
Speaker 12: into next generation hardware shore but also, you know, potentially handheld,
Speaker 12: which is something that she and her boss have have
Speaker 12: sort of teased at.
Speaker 3: Your story is so fascinating because you go into the
Speaker 3: relationship between her and her boss, how they turn to
Speaker 3: HR to really ensure that they could communicate more efficiently.
Speaker 3: But also her history T Mobile, what is she going
Speaker 3: to bring to the TABLESSMIA.
Speaker 12: Yeah, Sarah Bond's history from T Mobile really gives Microsoft
Speaker 12: expertise that was lacking in the mobile world and in
Speaker 12: the mobile gaming world in particular. So at T Mobile,
Speaker 12: she's someone who knows a lot about subscriptions, a lot
Speaker 12: about how to keep people coming back to a product
Speaker 12: and also how to trim subscriptions in a way where
Speaker 12: users don't feel bloated by extra services they don't need.
Speaker 12: And Microsoft has a sort of Netflix for game service
Speaker 12: called the game Pass that has thirty four million subscribers,
Speaker 12: probably more at this point because that data is old,
Speaker 12: and Sarah Bond is being to reach gamers who want
Speaker 12: sort of a subscription product using game Pass, which will
Speaker 12: be available on phones, on PCs, on tablets, on Xbox,
Speaker 12: on smart TVs, whatever you you know have, Xbox hopes
Speaker 12: to be there.
Speaker 4: So see really quick, A big impetus for the Activision
Speaker 4: deal was mobile gaming and yet to see the story there,
Speaker 4: what is it.
Speaker 12: It's a little challenging. So when Microsoft announced the deal
Speaker 12: with Activision, mobile was the fastest growing segment of the
Speaker 12: games industry. Now, global consumer spending on mobile games dropped
Speaker 12: two percent in twenty twenty three. It's still, you know,
Speaker 12: an over one hundred billion dollar industry. But you know,
Speaker 12: PC gaming is actually the fastest growing sector of the
Speaker 12: games industry this year according to one recent study. So
Speaker 12: it's going to be a little challenging for Sarah to
Speaker 12: kind of make good on the Activision acquisition. And at
Speaker 12: the same time, you know, she has high hopes because
Speaker 12: so many people have mobile phones.
Speaker 3: Cecilia, it's a great report. We thank you, Cecilia Anastasio,
Speaker 3: We thank you. Welcome back to Bloomberg Technology. I'm Caroline Height.
Speaker 4: In New York and I'm me d Ludlow in San Francisco.
Speaker 3: I need to be discussing when it comes to AIS
Speaker 3: always an open. AI's latest fundraising is near completion, with
Speaker 3: perspective investors set to find out today whether.
Speaker 5: They'll be part of the deal.
Speaker 3: Sort according to sources, Bloomba's Katie Ruth has more everyone
Speaker 3: wanting in on this.
Speaker 13: Well, certainly a lot of venture firms are in strategics.
Speaker 13: You know, we've reported that Microsoft, which is an existing investor,
Speaker 13: would be putting in more, but also in Nvidia and Apple,
Speaker 13: and then you know a flew of other investors are
Speaker 13: trying to put money in.
Speaker 5: They'll find out.
Speaker 13: Today after it was over subscribed by billions of dollars.
Speaker 4: What I find interesting, Katie, a source told me a
Speaker 4: couple of weeks ago. You may remember that in Video
Speaker 4: is only going to put in one hundred million dollars,
Speaker 4: and there's other reports out there that there's a threshold.
Speaker 4: But it's not a surprise, is it that the world's
Speaker 4: most important AI company has investors of all kinds fighting
Speaker 4: to get over what is a relatively rare round sure.
Speaker 13: Well, I mean they raised last year at an eighty
Speaker 13: six billion dollar valuation, so it's a significant premium to that.
Speaker 5: I think.
Speaker 13: You know, there's no question there's a lot of demand
Speaker 13: to be in you know, this this transformative AI company.
Speaker 13: By at what price?
Speaker 5: That was the real question.
Speaker 13: But they've certainly had plenty of demand at this one
Speaker 13: hundred and fifty billion pre money valuation.
Speaker 3: Yeah, that was a liquidity event for the employees. That
Speaker 3: eighty six billion phenomenal at the rate that they've managed
Speaker 3: to raise.
Speaker 5: Do how important is the strategic side of this?
Speaker 3: How much does Open AI want them at the cap table?
Speaker 13: Well, certainly it's good to have trillion dollar companies in
Speaker 13: your court. It remains to be seen, you know what
Speaker 13: exactly they have in mind, what kinds of otnerships they
Speaker 13: want to expand upon. But yeah, you know, I think
Speaker 13: that it's a very competitive race to be the leader
Speaker 13: in AI. And if you have companies like Microsoft, Apple
Speaker 13: and Nvidio betting on you, then it really makes you
Speaker 13: even more competitive.
Speaker 5: Katie Ruth, Wait, thank you.
Speaker 4: Now.
Speaker 3: Another side of AI is its regulation. The United Nations
Speaker 3: Expert Group says AI governance discussions been too fragmented The
Speaker 3: group includes government officials, academics, other executives actually from Google,
Speaker 3: Microsoft and and deed open AI and it just came
Speaker 3: out with a report suggesting measures like establishing a fund
Speaker 3: to support poorer countries looking to work on artificial intelligence
Speaker 3: and calling on countries to limit military use of AI
Speaker 3: to prevent human rights violations. Meanwhile, we sat down with
Speaker 3: the presidents of Latvia yesterday and asked him whether.
Speaker 5: AI should be more regulated take to.
Speaker 14: Listen the use of social media, artificial intelli joints for disinformation,
Speaker 14: the fakes, interference and elections. I think we need some framework.
Speaker 14: But at the same time, and this is sometimes a
Speaker 14: challenge for the European Union and about the European Union.
Speaker 14: Let's face it, to be sometimes back in Europe get
Speaker 14: overly regulatory.
Speaker 4: Let's keep the conversation going with NYU Professor Emeritus an
Speaker 4: AI expert Gary Marcus, who's known for his critique of
Speaker 4: the booming AI industry. He's also the author of a
Speaker 4: new book called Taming Silicon Valley, How we can ensure
Speaker 4: that AI works for us and he joins us now. Gary,
Speaker 4: based on the idea of fragmentation of regulation, I always
Speaker 4: think about how AI technology is required to respect the
Speaker 4: laws and rules of various jurisdictions. At the same time,
Speaker 4: technology isn't bound by jurisdictions or borders. What do you
Speaker 4: make of the sort of preamble that we're fragmented.
Speaker 15: I mean, we certainly are fragmented. I think when we
Speaker 15: think about global AI governance, there's actually an advantage to
Speaker 15: the companies and having global AI governance, and that is
Speaker 15: that fragmentation. You think about how expensive it is to
Speaker 15: train these models you saw earlier today Microsoft buying the
Speaker 15: rights to the energy of three Mile Island one hundred percent.
Speaker 15: It's very expensive to train these models. And if you
Speaker 15: have to do that differently for every jurisdiction, because they
Speaker 15: each have their own rules, that would be an insane
Speaker 15: amount of power, especially when we're talking about maybe making
Speaker 15: bigger models one hundred times, a thousand times, ten thousand
Speaker 15: times bigger than existing models. So fragmentation is actually a
Speaker 15: problem for the companies.
Speaker 1: It's also a problem for the world.
Speaker 15: I mean, we really do want to have some uniform
Speaker 15: approach to all of the downsides, things like nonconsensual deep thake,
Speaker 15: foreign misinformation and so forth. There are many downsides, and
Speaker 15: we want a coordinated response to it. So I think
Speaker 15: it's actually in everybody's interest to have some coordination.
Speaker 1: But fragmentation is the DePaul.
Speaker 5: Let's talk about coordination.
Speaker 3: The United Nations has put up this thought process report
Speaker 3: and now they want an independent scientific panel on artificial
Speaker 3: intelligence in the same way they almost have with climate change.
Speaker 5: Is that going to help?
Speaker 3: Is that going to make sure that more people are
Speaker 3: at the table other than basically the G seven and
Speaker 3: some of the biggest companies in the world.
Speaker 15: I mean, God is in the details. But I think
Speaker 15: it's a good start. I think absolutely we need more
Speaker 15: independent scientists weighing in. We also need authority if something
Speaker 15: doesn't work, to do something. So one of the most
Speaker 15: interesting things that happened the last couple of weeks is
Speaker 15: open AI put out a new model and they said
Speaker 15: there's a bioweapons risk here.
Speaker 1: Now they might be right about that.
Speaker 15: They might be wrong about it, but let's suppose they're
Speaker 15: right about it. They decided, despite that risk, they would
Speaker 15: go ahead and release it. And that was really just
Speaker 15: ultimately Sam Altman's decision and nobody else's. Who was Senate
Speaker 15: testimony earlier in the week where former employee and a
Speaker 15: former board member said basically they didn't feel listened to, right,
Speaker 15: and so open Ai sam Almon doesn't have to listen.
Speaker 15: If his employee say the bioweapons risk here is serious,
Speaker 15: maybe not for this model, but the next model, he
Speaker 15: can go ahead anyway and say, but I need to
Speaker 15: make back the money for one hundred and fifty billion
Speaker 15: dollar valuation, which by the way, is not a trivial thing.
Speaker 1: And there's also no outside input.
Speaker 15: So even if this IPC panel that says, you know,
Speaker 15: this is dangerous, there's nothing in the UN that can
Speaker 15: immediately do anything about it. There's nothing in the US
Speaker 15: government that immediately do anything about it. So it's a
Speaker 15: very good, I think thought experiment, like when this stuff
Speaker 15: gets worse, who's making these decisions?
Speaker 3: I mean, but this has happened time and time again,
Speaker 3: and we always go they should self regulate.
Speaker 5: And in a way, Samon one did just that. You
Speaker 5: just told me that you're coughing.
Speaker 3: A bit because you're basically exhausted having written this book
Speaker 3: in two months out of share anger.
Speaker 5: In a way, what's what's the response to the anger?
Speaker 5: What's the answer here?
Speaker 15: Well, I mean the anger is partly I went to
Speaker 15: the Senate. I testified next to Sam Altman, and he
Speaker 15: talked about not just self regulation but real regulation. The
Speaker 15: Senate bipartisan all talked about. This was May of last year.
Speaker 15: Nothing has actually happened. There's been no you know, major
Speaker 15: piece of legislation in the United States to deal with
Speaker 15: any of this. And self regulation is not going to happen.
Speaker 15: I mean, even when they make promises, they often back
Speaker 15: down and they're not they're going to agree to things
Speaker 15: like information sharing. They're not going to agree to, you know,
Speaker 15: deferring the decision about whether to release this new product
Speaker 15: that maybe finally makes them some money to the general public.
Speaker 1: And they're not making money right now.
Speaker 15: I mean open Ai I had a five billion dollar
Speaker 15: operating last year.
Speaker 4: Last year, Let's go back to what you just said
Speaker 4: on open ai. It's not a trivial amount of money,
Speaker 4: but the stakes are also very high. How much does
Speaker 4: that keep you up at night that we have a
Speaker 4: single company with quite confusing governance structure that has the
Speaker 4: world's biggest technology companies and investors fighting over around and
Speaker 4: it's releasing technology at a cadence that you outlined.
Speaker 15: I mean, everybody should have been worried at the drama
Speaker 15: last year. It sort of made for an amazing Netflix
Speaker 15: special or something like that when Sam.
Speaker 1: All we remember buyed and we hired and all of
Speaker 1: this drama.
Speaker 15: But it also says like who is running this company
Speaker 15: and what are the checks and balances? Right, And the
Speaker 15: ultimate answer is Sam is running it. There are no
Speaker 15: checks and balances, And you know, we should be worried
Speaker 15: if a company can't even govern itself internally. A lot
Speaker 15: of people left after that incident. We should be worried.
Speaker 15: It's a lot of power, and we should be worried,
Speaker 15: not just about open air, but the whole industry, like
Speaker 15: responsible AI excuse me as a watchword for the entire
Speaker 15: field for a few years, and now it's almost like
Speaker 15: nobody really cares because there's so much money on the table.
Speaker 4: We had the President of Latvia here yesterday from the
Speaker 4: European Union. You have Hunger next week. Do you have
Speaker 4: any hope that actually these sort of round table, state
Speaker 4: level discussions will yield some kind of framework in which
Speaker 4: the world's kept safe from AI.
Speaker 15: I have a mild bit of hope, but I think
Speaker 15: that we really need the public to be involved and
Speaker 15: say this matters, So you know, politicians always have to
Speaker 15: weigh in competing interests. They get a lot of money
Speaker 15: from the tech companies. They are involved with the tech
Speaker 15: companies in various ways. If the public doesn't speak up,
Speaker 15: I think we will see very light regulation, if any
Speaker 15: at all. The reason I wrote this book is I
Speaker 15: think making these decisions the most important thing that we
Speaker 15: can do for one of the most important things we
Speaker 15: can do in the world in the next few years.
Speaker 15: Think about what happened with social media. We waited too
Speaker 15: long and we entrenched the set of practices that now
Speaker 15: lead to all kinds of polarization, bad for teenage girls
Speaker 15: and so forth, and it's hard to fix these things.
Speaker 15: We have to get AI policy right now.
Speaker 3: I expert Gary Marcus, so good to have you appreciate.
Speaker 5: It, And what are you looking at?
Speaker 4: I think we should reflect on the week in markets, Carol.
Speaker 4: I'm going to the mag seven index. It's a Bloomberg
Speaker 4: index of those magnificent seven names, because we spent a
Speaker 4: lot of the week talking about them in the context
Speaker 4: of the FED that, okay, we now know where we
Speaker 4: stand with rates finally being cut by fifty basis points
Speaker 4: going lower. There's a valuation question around some of those
Speaker 4: that had incredible performance in the first half of this
Speaker 4: year and actually over a longer duration. And then there's
Speaker 4: the idea of, well, what happens if we do or
Speaker 4: don't get a recession? It very closely mirrors. Then there's
Speaker 4: that one hundred that you showed earlier in the show.
Speaker 4: But yeah, no dirt. You know a lot of the
Speaker 4: biggest points drivers on that index are than mag seven anyway,
Speaker 4: and it's just interesting to keep our eye on the
Speaker 4: trajectory of them. Will they continue to be the story
Speaker 4: in this market? Okay? Coming up in the program, we're
Speaker 4: going to hear from Salesforce CEO Mark Benioff as they
Speaker 4: launched some new AI tools over at Dreamforce. Their conversations.
Speaker 4: Coming up next Sploomberg Technology.
Speaker 3: Salesforce is launching a slow of new gen AI tools
Speaker 3: known as Agents. CEO Mark Benioff spoke with bloom Megseminey
Speaker 3: Chang at their annual Dreamforce event in San Francis.
Speaker 5: Go to take a listen.
Speaker 16: These customers have been convinced something that's not true, that
Speaker 16: they have to buy an LLM, they have to go
Speaker 16: to a hyperscaler, they have to get a database, they
Speaker 16: have to buy a security technology, they have to choose
Speaker 16: a chip, they have to hook it all together themselves.
Speaker 16: They have to deiy their AI. It's not true. You
Speaker 16: do not have to diy your AI. And when we
Speaker 16: started the show, they didn't really believe it. So that's
Speaker 16: why we created a whole factory across the street as
Speaker 16: you saw in Moscowe West, where we have put more
Speaker 16: than ten thousand customers through already, to show them that
Speaker 16: on the Salesforce platform, which they've already been committed to
Speaker 16: for more than twenty years, we've had great success in
Speaker 16: sales and service and marketing and communications and commerce and
Speaker 16: analytics and Slack and all of these technologies that now
Speaker 16: they're also building AI. And this is a shock to
Speaker 16: them and sing for us because they're showing them how
Speaker 16: once again we're future proofing their company with the Salesforce platform.
Speaker 9: So you've basically di wied it for them, software company.
Speaker 5: What models you've built it on? Is it?
Speaker 4: Is?
Speaker 11: It?
Speaker 5: Is it?
Speaker 16: We have our own, We have many and they don't
Speaker 16: need to know. Okay, and they don't why what chip
Speaker 16: am I using? You know what hyperscaler? They don't care.
Speaker 16: They don't care what I'm using you know, it's like
Speaker 16: what type of flowers in the cake? What kind of
Speaker 16: sugar did I buy at the store? Why does it matter?
Speaker 16: Do you like the cake? Is this the final product
Speaker 16: that you like?
Speaker 7: All right?
Speaker 16: And I think that for our customers, they don't want
Speaker 16: to know all the pieces. They want to know does
Speaker 16: this work and can they make a greater success for
Speaker 16: their own companies.
Speaker 4: That was Salesforce CEO Mark Benioff. Staying with Salesforce, it's
Speaker 4: investment on Salesforce Ventures just announce a five hundred million
Speaker 4: dollar investment fund for AI that is expanding. It is
Speaker 4: discussed as John SUMMERGI, Salesforce Ventures President, and I just
Speaker 4: want to do the mechanics of this really quickly. You
Speaker 4: basically invest now with almost like a billion dollars capital
Speaker 4: play with off balance sheet from Salesforce, Right, and you're
Speaker 4: looking for things that add to what Mark Benioff was
Speaker 4: just talking about. Right, You're looking for the next frontier
Speaker 4: of an actual GENAI tool exactly.
Speaker 17: So we feel that AI is one of the most
Speaker 17: significant innovations in our lifetime, and we're looking for entrepreneurs
Speaker 17: who are helping to solve business challenges in unprecedented ways.
Speaker 17: That AI allows them to do so. And last year
Speaker 17: we announced a five hundred million dollar fund. We invested
Speaker 17: in twenty four companies with that money, and we decided
Speaker 17: to expand it to up to a billion dollars now
Speaker 17: to invest in this very exciting AI innovation.
Speaker 4: We just listened to Mark Benioff talk about why salesforces
Speaker 4: generative air offering is better than any company of any
Speaker 4: size engaging with the GPU provider right through to application layer,
Speaker 4: and it sounds like they're pretty happy with what they've
Speaker 4: got to offer. So how can you go and find
Speaker 4: something new that Salesforce doesn't already have.
Speaker 17: Well, we're seeing interesting companies develop new business applications that
Speaker 17: are in new areas. Like for example, we invest in
Speaker 17: a company called Runway, and if you're familiar with the
Speaker 17: Oscar Awards winning film Everything Everywhere, All at once, they
Speaker 17: used Runway technology to take their editing staff from you know,
Speaker 17: normally hundreds of people editing this very complex movie down
Speaker 17: to a handful of people using their technology. And this
Speaker 17: is real productivity value that's being delivered. We're seeing interesting
Speaker 17: developments in new models, in new vertical applications, in AI security,
Speaker 17: in areas that are we do not cover today, but
Speaker 17: we want to partner with these companies and deliver more
Speaker 17: solutions to our customers.
Speaker 5: You're an Anthropic.
Speaker 3: Listed as one of the wannabes in open Ai.
Speaker 5: Why not?
Speaker 17: So we partner with both open ai and Anthropic and
Speaker 17: the number of other LLM providers. We also have our
Speaker 17: own lms as well, our large language models, and we
Speaker 17: are very excited about what we've invested in with Anthropic.
Speaker 17: We are in hugging Face, which is an open source
Speaker 17: provider of models, and we're also in Mistral, which is
Speaker 17: another another provider, and so we feel pretty good about
Speaker 17: the investments that we've made in the foundational model level.
Speaker 17: And now we're looking to invest in different types of
Speaker 17: companies with this new five hundred million dollar fund.
Speaker 3: What's so interesting is full of Salesforce. Last five acquisitions
Speaker 3: have been funded at some point by Salesforce ventures. How
Speaker 3: much do you end up realizing you should buy these companies,
Speaker 3: not just strategically invest in them.
Speaker 17: Well, one of the benefits of investing in a company
Speaker 17: first is that you do get a chance to work
Speaker 17: with them and see how the technology can help deliver
Speaker 17: success to your customers. And we do partner very well
Speaker 17: with a lot of the companies that we invest in.
Speaker 17: But keep in mind we've made investments in over six
Speaker 17: hundred and thirty companies over the past fifteen years. We've
Speaker 17: only acquired twenty of the companies that we've invested in,
Speaker 17: so it's a very small minority of the businesses that
Speaker 17: we've invested in. But we're very excited about some of
Speaker 17: the recent acquisitions we've made out of the fund. Companies
Speaker 17: like SPIF, which do an incentive compensation management airkit, which
Speaker 17: is a big foundational element of our Agent Force technology.
Speaker 1: We acquired them last year.
Speaker 17: Adam Evans, the founder of Erkitt, is a two time
Speaker 17: boomerang back to Salesforce. We're really excited to have him.
Speaker 4: John tens At thousands of people have descended on our
Speaker 4: city for Dreamforce.
Speaker 17: So exciting.
Speaker 4: I've always thought about it as a customer event. I
Speaker 4: know loads of people that either work at Salesforce, MuleSoft,
Speaker 4: or they use CRM right historically, for you, what's the
Speaker 4: week been like in terms of unearthing interesting founders, interesting
Speaker 4: startups that you might write a check for.
Speaker 17: I think this week is one of the most exciting
Speaker 17: weeks I've ever been in San Francisco. The energy in
Speaker 17: the city is really palpable, and you're seeing CIOs and
Speaker 17: C suite executives meeting with entrepreneurs at Dreamforce together all
Speaker 17: at Moscowy Center. We had over forty five thousand people
Speaker 17: in person, and from my perspective, I got to.
Speaker 4: Say the traffic was dreadful last night, Thank you very much.
Speaker 17: From my perspective, I got to meet with some fascinating
Speaker 17: founders who are really redefining the way AI is going
Speaker 17: to work in the future and solving critical business challenges.
Speaker 17: So I'm very excited about what I saw this week.
Speaker 5: It's great to have some time with you.
Speaker 3: Thank you, John SUMMERJAI as sales scance ventures.
Speaker 2: Demand has been really strong in the US. We've had
Speaker 2: incredible large infrastructure projects going on, the overhaul of the
Speaker 2: grid that's going on, AI demands on electrification, telecom and
Speaker 2: everything is being delivered, both services and goods, and this
Speaker 2: has created a whole new sets of business for US.
Speaker 2: So we see incredible demand across all our vehicle lines,
Speaker 2: both here and any of Europe.
Speaker 5: Ford pro CEO Tim Canis.
Speaker 3: They're talking about the accelerating commercial adoption of evs and
Speaker 3: he's there at the outset of a new and revamped
Speaker 3: Wall Street Week with David Weston now joins us because
Speaker 3: the host of that show that we're about to be
Speaker 3: able to watch in full later today, David and.
Speaker 18: Ted Cannis is a friend of yours of this show. Actually,
Speaker 18: I've seen him.
Speaker 1: He's the character.
Speaker 18: Yeah, but the demand seems well, and he's always been
Speaker 18: somewhat raw raw. I think you'd agree. But the thing
Speaker 18: that I didn't really understand until i'd gone out there
Speaker 18: and talked to him and Jim Farley, the CEO of Ford,
Speaker 18: is there are two stories about EV's i'd heard meaning
Speaker 18: one story, and one of is the consumer side, which
Speaker 18: is slowing down all around the world, frankly, and then
Speaker 18: is the commercial side, these delivery vans and emergency vehicles,
Speaker 18: And that one is just as robust as ever. And
Speaker 18: as you know, Ford has a significant advantage in that
Speaker 18: it's something like forty percent market share in that market.
Speaker 4: I think the thing you learn about the EV industry
Speaker 4: is it's complicated. David. You make that point so well,
Speaker 4: So how do we take that to Wall Street Week?
Speaker 4: There's always a money story behind everything, and within an industry,
Speaker 4: and even on Wall Street. There's a culture story behind it.
Speaker 4: How are you going to tell us that?
Speaker 18: The question is really and that is the larger story.
Speaker 18: You're exactly right ed. The question is what does this
Speaker 18: mean for an auto industry Detroit, O industry that is
Speaker 18: trying to rebound from some very dark days as you know,
Speaker 18: back in the eighties and the nineties and actually going
Speaker 18: to the brink of extinction during the Great Financial Crisis.
Speaker 18: What is that need they think that the ev impetus
Speaker 18: will really drive them. They're having a little trouble on
Speaker 18: the consumer side, but Ford particularly is relying heavily on
Speaker 18: the commercial side. So it really raises the question for
Speaker 18: investors is this a good investment or not? Is this
Speaker 18: someplace you want to put your money or not into
Speaker 18: this resurgent auto industry. And one of the things we
Speaker 18: talk about with Jim Farley particularly is China and China
Speaker 18: coming on the scene and the very high quality, very
Speaker 18: low cost something he says a little bit like Toyota
Speaker 18: because he used to work, as you know, Jim Farley
Speaker 18: at Toyota. Even though he comes from Detroit, he were
Speaker 18: for Toatorya and he saw those battle days.
Speaker 3: It's going to be fascinating China, important for higher education.
Speaker 3: You delve into that sea as well as the business
Speaker 3: of restaurants. You don't want to miss it all Street
Speaker 3: week later at David Weston six pm New York Time.
Speaker 3: That does it, though, for this edition of Bloomberg Technology
Speaker 3: Ed What.
Speaker 4: A week Cambionship Technology Recap on the podcast you know
Speaker 4: exactly where to find it from New York and ess
Speaker 4: this is Bloomberg