Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast, with Caroline Hyde in New York
Speaker 1: and Edva Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: The NASDAQ one hundred falls into correction territory is big
Speaker 3: tech stocks keep falling? The Iran war rattling investor confidence.
Speaker 3: Plus Meta is set to fund the construction of seven
Speaker 3: new natural gas fired energy plants to feel its Hyperian
Speaker 3: data center in Louisiana, and Anthropic is said to be
Speaker 3: looking to IPO as soon as October. This is the
Speaker 3: AI company wins a court order blocking a Trump ban
Speaker 3: on government use of its AI tool. Welcome to the program,
Speaker 3: Happy Friday, but less happy in financial markets where technology
Speaker 3: stocks have entered correction territory. Look at how the nas
Speaker 3: that one hundred is traded over the last six months
Speaker 3: or so, and you can see that as we kind
Speaker 3: of got into the beginning of twenty twenty six, we've
Speaker 3: gone from those highs down to.
Speaker 2: A bit of a trough that's.
Speaker 3: Been driven by partly the war in Iran and geopolitics,
Speaker 3: but also a very deep assessment of AI spending. Capsule
Speaker 3: expenditures and cash flows relating to AI. Case in point
Speaker 3: and a case study is Microsoft. Microsoft is on track
Speaker 3: to have its worst quarter since two thousand and eight,
Speaker 3: the worst quarter since the financial crisis, and a big
Speaker 3: part of that, including the activity we're seeing in this session,
Speaker 3: is the commitment to AI instructure, build out, the financing
Speaker 3: of it, and what's underpinning investor confidence right now.
Speaker 2: Then there's the newsflow in the moment.
Speaker 3: Shares of Meta are also down in this Friday session,
Speaker 3: and honestly, they're having a bit of a tough week,
Speaker 3: on track for the biggest drop since October. The social
Speaker 3: media giant is set to funder construction of seven new
Speaker 3: natural gas fired energy plants to fuel its Hyperion data.
Speaker 2: Center, which is in Louisiana.
Speaker 3: The project is expected to deliver five point two gigawatts
Speaker 3: of electricity, which is a lot. Bloomberg's Ridley Griffin joins
Speaker 3: us on set. This is a big project, So you know,
Speaker 3: you kind of talk about seven natural gas flowered sources
Speaker 3: of energy for a specific project, but give us the
Speaker 3: sum total of the reporting and a bit more about Hyperium.
Speaker 2: Yeah.
Speaker 4: So Hyperion is the crown jewel of Meta's data center.
Speaker 2: Fleet.
Speaker 4: They have in development more than thirty data centers.
Speaker 2: And this is the biggest.
Speaker 4: It's in rural Louisiana, And with today's announcement, we are
Speaker 4: actually going to see a total of ten natural gas
Speaker 4: plants serving this one single data center. It's a massive
Speaker 4: amount of energy from fossil fuels and it is just
Speaker 4: another push forward in this expansion of a major project.
Speaker 3: There isn't any sort of like dollar figure attached to this,
Speaker 3: you know, it's the gigawatt figure. And you know, over
Speaker 3: the course of the war in Iran in particular, we've
Speaker 3: been very focused on the movement in oil prices, but
Speaker 3: actually natural gas is much more relevant to how a
Speaker 3: data center is powered. Explain Meta's footprint here, I guess
Speaker 3: relative to the other big data center operators around the world.
Speaker 4: Yeah, I mean, this is a huge increase just from
Speaker 4: Meta's own fleet when it was five gigawats alone, that
Speaker 4: was about a thirty three x increase from the old
Speaker 4: data center size. This is much bigger than other competitors.
Speaker 4: But I want to say five gigawa is just to
Speaker 4: support the compute. This entire facility is right now expected
Speaker 4: to have seven point five gigawats powering it because it's
Speaker 4: not just the gps that need the power, but the
Speaker 4: broader facility.
Speaker 3: It's an interesting part of your reporting about Hyperia and
Speaker 3: Louisiana in particular, which is META saying, look, where are
Speaker 3: going to cover the cost of the electricity one way
Speaker 3: or the other, one reason being they don't want to
Speaker 3: pass it on to the general population of that zip code.
Speaker 3: That's been a tension in the Great AI buildout.
Speaker 4: Absolutely recently, President Donald Trump, you know, actually require that
Speaker 4: big tech companies pledge to pay those costs. This is
Speaker 4: something META has been saying for quite some time, but
Speaker 4: they don't want to ruffle feathers in a political moment
Speaker 4: that is already bringing a great amount of scrutiny to
Speaker 4: these data centers the.
Speaker 3: Most Riley Griffin, thank you very much. Wall Street's under
Speaker 3: pressure with the tech heavy Nazak one hundred slipping into
Speaker 3: correction territory. We talked about that at the top of
Speaker 3: the show. Rising oil prices, renewed inflation concerns tied to
Speaker 3: escalating tensions in Iran are weighing heavily on the sector.
Speaker 3: It's pressuring valuations and the outlook for big tech this
Speaker 3: is what markets look right now in the moment this Friday.
Speaker 3: Let's speak to Natalie Galla Ball, principal economist and director
Speaker 3: at Board. There is a lot going on in the
Speaker 3: world right now. You know, we focused on the correction
Speaker 3: in the Nasdaq one hundred as being a consequence of
Speaker 3: what's been happening around the world. Actually a lot of
Speaker 3: that still relates to what's happening in Ai.
Speaker 2: But in the here and now.
Speaker 3: This Friday, the war in Iran drives markets, and it
Speaker 3: drives the sentiment of technology investors. Where are we at
Speaker 3: in this global economy?
Speaker 5: You know, from a broad point of view, what we
Speaker 5: have to sort of acknowledge is that economic volatility is
Speaker 5: no longer episodic. It is an embedded part of the
Speaker 5: economic narrative. And we're seeing that in oil prices in
Speaker 5: real time. Monday alone, Brent crude fell ten fourteen percent
Speaker 5: in the matter of five hours. I mean it's back
Speaker 5: up as of today.
Speaker 2: Now.
Speaker 5: If you are at all in an industry that has
Speaker 5: energy sensitivity, this environment feels almost impossible to plan in.
Speaker 2: One industry that is sensitive.
Speaker 3: That Riley Griffin was just talking about it Meta committing
Speaker 3: to invest in seven LNG powered plants for one specific
Speaker 3: data center site. You've been looking at the data of
Speaker 3: how the war in Iran is impacting energ What are
Speaker 3: you seeing?
Speaker 5: Yeah, I mean think just relative to pre conflict, LNG
Speaker 5: prices have swung sixty to eighty percent. Even if part
Speaker 5: of the impact is transitory. Say we get a best
Speaker 5: case scenario and the Strait of Hormuz reopens tomorrow, we
Speaker 5: still have a structural component we have to account for.
Speaker 5: What really comes to mind is the fact that seventeen
Speaker 5: percent of Qatar's LNG production is offline for three to
Speaker 5: five years. So this really has an implication on the
Speaker 5: cost side of the balance sheet for these companies.
Speaker 3: The other side of the conflict in Iran, and something
Speaker 3: specific to that region is the production of helium and
Speaker 3: sulfur based compounds critical components or materials.
Speaker 2: In chip fabrication.
Speaker 3: Both they provide stabilization in the etching process, in the
Speaker 3: deposition process. A lot of that happens in Katar. Again,
Speaker 3: are using data that suggests some kind of long term
Speaker 3: impact or indeed, in the short term a crisis of
Speaker 3: supply in those markets.
Speaker 5: Yes, absolutely, so. Let's take helium for example, thirty four
Speaker 5: percent of global supply comes from one facility in Qatar
Speaker 5: that has been affected by the strikes. It's anticipated to
Speaker 5: be offline in some regard for four to six months.
Speaker 5: Industry estimates are that we have about three months of inventory. Right,
Speaker 5: So you do some back of the Napkin math and
Speaker 5: you realize that the question really isn't will there be
Speaker 5: an impact? There will be an impact? When will it
Speaker 5: hit very likely Q two and to what extent? That
Speaker 5: really depends on the continued path that this conflict takes
Speaker 5: and if there is future escalation or hopefully de escalation.
Speaker 3: Away from I guess the short term in the war
Speaker 3: in Iran, there probably still is a debate around the
Speaker 3: health of the global economy, which in the technology context
Speaker 3: has just been underpinned by massive commitments to spend. The
Speaker 3: impact on raw materials, labor, How close are you tracking
Speaker 3: right now the consistency of capital expenditures that relate to
Speaker 3: data center in particular.
Speaker 5: I would say, right the question we have to ask
Speaker 5: ourselves is what is being impacted by this conflict. The
Speaker 5: cost side of the balance sheet is what's being impacted
Speaker 5: The cost to power these AI data centers, for example,
Speaker 5: the cost to produce these chips. Now, the second question
Speaker 5: is well these hyperscalers continue to meet demand. The answer,
Speaker 5: in my opinion, absolutely yes. So where do we see
Speaker 5: the impact? We see the impact on margin compression that
Speaker 5: seems like almost a given. And when do we see it?
Speaker 2: We see it in Q Two, Natalie.
Speaker 3: People at least on this program have been split on
Speaker 3: drawing parallels between this economic shock that is a war
Speaker 3: in Iran and some of what we saw in the
Speaker 3: early part of the COVID era in its impacts in
Speaker 3: supply chain shipping. For example, are you seeing any similarities
Speaker 3: or parallels? Well, can you tell me why this time?
Speaker 3: For the tech sector in particular, it is different.
Speaker 5: In one way, It's different because we aren't seeing a
Speaker 5: total shutdown of our supply chain network.
Speaker 6: Right.
Speaker 5: We are seeing a very large impact in the Strait
Speaker 5: of Hormuse. We have an ongoing impact in the Red Sea.
Speaker 5: But the good news is right, we can still get
Speaker 5: goods from.
Speaker 6: A to B.
Speaker 5: The bad news is that to do that we add
Speaker 5: thirty five hundred to four thousand nautical miles and about
Speaker 5: one to two point five million dollars in excess fuel costs,
Speaker 5: depending on vessel size and so we can continue to
Speaker 5: meet demand. It's just the fact that the supply chain
Speaker 5: environment is quite stressed and we're very likely to see
Speaker 5: an elevated cost implication, whereas in COVID right even the
Speaker 5: ability to meet demand was quite questionable due to the
Speaker 5: broad based shutdown.
Speaker 2: Not a Gallagher of Board.
Speaker 3: It's great to have you back on the show, and
Speaker 3: it's difficult to look at the impact of what's happening
Speaker 3: from the technology sector to the technology sector with everything
Speaker 3: happening with the war in Iran coming up on the
Speaker 3: show and Thropic as an October IPO, we have the
Speaker 3: Bloomberg reporting next.
Speaker 2: This is Bloomberg Tech.
Speaker 3: And Thropic, the maker of the popular Claude chatbot. It
Speaker 3: is said to be looking to IPO as soon as October.
Speaker 3: That's according to sources. Bloomberg's Bailey Lipshaltz, part of the
Speaker 3: team that broke the story. It's one of the three
Speaker 3: that we've been waiting for, SpaceX, Open AI and Anthropic.
Speaker 3: But I found this interesting, like give us some of
Speaker 3: the detail what we're hearing from sources. October is an
Speaker 3: interesting timeline.
Speaker 7: October is an interesting timeline.
Speaker 8: It also would be right before midterm elections, but it
Speaker 8: certainly is one of those IPO windows that we typically
Speaker 8: see getting hit. We're looking at, you know, normally April
Speaker 8: May and then post labor to our top of mind.
Speaker 7: The thing that's top of mind.
Speaker 8: For Anthropic and Opening Eye from our sourcing is that
Speaker 8: it's a bit of a race to try to go
Speaker 8: public first. Both are ambitiously trying to push ahead and
Speaker 8: forge ahead. We've seen and we've reported a number of updates,
Speaker 8: whether it's talking to bankers, talking to lawyers.
Speaker 7: We've heard that the.
Speaker 8: Big three in Goldman, Sachs, JP, Morgan, and Morgan Stanley
Speaker 8: are closely circling both companies with the expectation that one
Speaker 8: or two of them, hopefully according to Sourcing, will be
Speaker 8: potentially going public later this year.
Speaker 3: As a team, we've been super focused on the SpaceX
Speaker 3: IPO frankly, but Mthhropic. You know, the reported numbers are big,
Speaker 3: they're worth paying attention to.
Speaker 2: What do we know about their goals here?
Speaker 8: Yeah, so the information reported that they could raise sixty
Speaker 8: billion dollars. We haven't put out a number on what
Speaker 8: they would want to raising an IPO. The big focus
Speaker 8: has been what scale can they get to and what
Speaker 8: will investors be willing to underwrite. The big topic for
Speaker 8: both Anthropic and open AI is these are companies that
Speaker 8: spend a lot of money, and so when you talk
Speaker 8: to investors, the big question is how can you solve
Speaker 8: for that need to send and what does that ultimately
Speaker 8: look like?
Speaker 7: From evaluation perspective.
Speaker 8: Tens of billions of dollars is probably easy to raise,
Speaker 8: just given some of the rounds we've seen take place
Speaker 8: in private funding. But the big question will be how
Speaker 8: can the buyside come up with that capital? If we
Speaker 8: do see SpaceX potentially raising seventy five billion and then
Speaker 8: just a number of months later another fifty.
Speaker 3: We're waiting on a SpaceX confidential filing perspectus, but this
Speaker 3: reporting that we put out yesterday that suggests they're still
Speaker 3: working on this. What's happening in the month of April,
Speaker 3: for example, Yeah.
Speaker 8: So our reporting was that they've been working to and
Speaker 8: telling investors to get ready for meetings on the other
Speaker 8: side of that Easter holiday. So April sixth, that week
Speaker 8: and the week following is when investors are being told basically,
Speaker 8: clear your schedules and be ready to interact with SpaceX management.
Speaker 8: The big thing is that confidential filing from our sourcing
Speaker 8: and our undersea and it needs to be submitted to
Speaker 8: the SEC. Before those more fullsome conversations around valuations and
Speaker 8: around ultimate IPO sides can start to take place. So
Speaker 8: the big thing is if and when that confidential filing happens.
Speaker 7: We had reported it could take place as soon as March.
Speaker 8: We're just a few days from the end of the month,
Speaker 8: and then that can tee up some of those what
Speaker 8: we call testing the waters, just formal conversations and engagement
Speaker 8: with investors, just maybe providing a bit more detail on
Speaker 8: a bit more context about some of the numbers that
Speaker 8: could have been submitted to the SEC.
Speaker 3: Bloomberg's baby Lipschaltz, Thank you very much. Now coming up,
Speaker 3: President Trump pronounces a new Council of Advisors on Science
Speaker 3: and Technology. We speak with David Sachs, who has tapped
Speaker 3: us up as co chair.
Speaker 2: That's next. This is Bloomberg Tech.
Speaker 3: President Trump has tapped tech industry titans, including Mark Zuckerberg,
Speaker 3: Larry Ellison, and Jens to a new presidential council that
Speaker 3: will focus on AI policy and other science related issues.
Speaker 3: Co sharing that council with David Sachs, whose role as
Speaker 3: White House cryptos are has now ended. You spoke with
Speaker 3: me yesterday about the group's role in getting federal AI
Speaker 3: rules passed.
Speaker 2: Take a listen.
Speaker 9: Last week we released a National AI Framework, and the
Speaker 9: idea is to create one rule book for AI in
Speaker 9: the US. The problem that we're seeing right now is
Speaker 9: that you've got fifty different states regulating this in fifty
Speaker 9: different ways, and it's creating a patchwork of regulation that's
Speaker 9: difficult for our innovators to comply with. So what the
Speaker 9: President has called for is one rule book. What we
Speaker 9: did is and I worked with Michael Kratzios at OSTP
Speaker 9: and other folks of the White House. We looked at
Speaker 9: all the different things that the states we're doing, and
Speaker 9: we try to find some common denominators, and then we
Speaker 9: published that in a set of principles that we're calling
Speaker 9: the National AI Framework, and we're calling on Congress to
Speaker 9: act on that framework. The framework contains things like child safety.
Speaker 9: That's a very salient issue right now. How do you
Speaker 9: protect kids online? So we want to take care of that.
Speaker 9: There's things like the Raye Pair Protection Pledge, which the
Speaker 9: President's already announced. We want to make sure that these
Speaker 9: new AI data centers don't increase the cost of electricity
Speaker 9: for residential consumers. At the same time, we want to
Speaker 9: make it easier for those AI companies to bring their
Speaker 9: own power. So this is I think a much better
Speaker 9: approach than effectively the ban on new data centers that
Speaker 9: you're seeing from Bernie Sanders and others. There's principles and
Speaker 9: provisions related to content creators and how do you protect
Speaker 9: their new content while allowing for AI models to be trained.
Speaker 9: So there's a lot of different areas here that we've covered,
Speaker 9: and I think you're seeing a very good reception to
Speaker 9: this from Capitol Hill. Even the criticism I thought from
Speaker 9: Democrats was pretty muted. There's some Democrats we've already reached
Speaker 9: out to us. They want to work with us to
Speaker 9: see if we can do something in a biparisan way.
Speaker 9: And so I think there's actually a very good chance
Speaker 9: that you'll see Congress now act on the streamwork and
Speaker 9: we'll get some meaningful AI legislation again, the one rule
Speaker 9: book that President Trump's talking about in the next few.
Speaker 2: Months for November.
Speaker 3: David a bipartisan AI framework before November.
Speaker 9: I think it could happen in the next few months.
Speaker 9: I mean, again, we've gotten a very good reception from
Speaker 9: Capitol Hill. This is an area where I think we're
Speaker 9: willing and happy to work with Democrats, and I think
Speaker 9: there's a lot of Democrats who would like to see
Speaker 9: a single national framework as well. I think they understand
Speaker 9: that it's not feasible or practical to have fifty states
Speaker 9: running in fifty different directions. And I think if we
Speaker 9: can work something out, I think we could get to
Speaker 9: the one rule book that the President's talking about.
Speaker 3: David, looking at the composition of the council, you and
Speaker 3: I have spoken in the past that the definition of
Speaker 3: a China Hawk, for example, and the context of exporting technology,
Speaker 3: it needs some discussion. But on the chip side, the
Speaker 3: infrastructure side, those are a group of CEOs that want
Speaker 3: to sell their technology around the world. Do you see
Speaker 3: that changing the President's current thinking on on exporting cutting
Speaker 3: edge or lead edge chips to China or more generally
Speaker 3: in different jurisdictions around the world.
Speaker 9: Well, I think this administration already has a pro export
Speaker 9: mindset because we understand that the way that American technology
Speaker 9: wins and dominates the globe is through market share. You
Speaker 9: want to have the most market share all over the world.
Speaker 9: You want the American textack to become the global standard.
Speaker 9: That's good for us economically, I think is also good
Speaker 9: in terms of national security and spreading our influence. Now,
Speaker 9: whenever you're talking about countries of concern, China, potential adversaries,
Speaker 9: you have to be more careful and needed more nuanced policy,
Speaker 9: and I think the administration has supported that. But I
Speaker 9: think that in general, we want the world to be
Speaker 9: a place where American technology wins, as it did with
Speaker 9: the Internet.
Speaker 3: That was David Sachs, co chair of the President's Counsel
Speaker 3: of Advisors on Science and Technology and partner at Craft
Speaker 3: Benches the Sex calls for clearer rules around artificial intelligence.
Speaker 3: There's also a growing push to modernize how those rules
Speaker 3: are written and implemented within governments. Joe Schidler, it's the
Speaker 3: CEO of Helios and AI platform designed to help track and
Speaker 3: navigate legislation in real time. Joe was a former advisor
Speaker 3: at the White House and US State Department under President
Speaker 3: Biden and joins US now. Just interest in your thoughts
Speaker 3: in the first instance, on what mister Sachs was saying.
Speaker 3: You know, the trajectory and timeline for a federal level
Speaker 3: set of rules on AI.
Speaker 10: Excuse to be with you, Ed, but yeah, I think
Speaker 10: what David had kind of stated yesterday makes a lot
Speaker 10: of sense. A patchwork of regulations across fifty states is
Speaker 10: not a sustainable structure in a global competitive technology race.
Speaker 10: I think as a builder and somebody who has sat
Speaker 10: inside of government, I can confidently say what we need
Speaker 10: right now as a single national framework that advances this
Speaker 10: critical technology and one of the most consequential times we're
Speaker 10: seeing in modern history.
Speaker 3: Joe, what every day Americans may be confused by is
Speaker 3: the distinction between either there not being enough regulation. In
Speaker 3: other words, we do not have a federal level framework,
Speaker 3: but there is a lot of state by state regulation.
Speaker 3: The point that mister Sachs was making, what is the
Speaker 3: real risk over regulation or under regulation in this context?
Speaker 10: Yeah, I think there is a fundamental mismatch between the
Speaker 10: pace of this technology and the rate at which we're
Speaker 10: trying to regulate this across different states, locality, cities. And
Speaker 10: the issue is this is still a very emerging technology
Speaker 10: in many respects. It's a horizontal technology that cross cuts
Speaker 10: across every sector of vertical industry. And you know, there's
Speaker 10: a question that I think is persisting throughout circles in
Speaker 10: DC in the valley of If not America.
Speaker 2: Then who.
Speaker 10: And we are at a moment right now where we're
Speaker 10: seeing massive productivity gains and key suckers of the economy
Speaker 10: to include government itself. And I think it's far too
Speaker 10: early to be taking an over regulatory approach to a
Speaker 10: technology we're still learning a great deal about.
Speaker 3: There's two specific areas I want to talk to you about.
Speaker 3: The first is the use of AI generally in national
Speaker 3: security and defense, and thropic is the biggest case study
Speaker 3: of late right And just having returned from DC, the
Speaker 3: position of many was it is not up to the
Speaker 3: companies how the government, particularly the defense or arms of
Speaker 3: government use the technology.
Speaker 2: Your viewpoint on that, please, yeah.
Speaker 10: I mean, I would say it's the prerogative of any
Speaker 10: American to express their First Amendment rights. And at the
Speaker 10: same time, we have systems to affect change. We live
Speaker 10: in a democratic, electoral society. If folks are unhappy with
Speaker 10: the position of any given administration or a government composition,
Speaker 10: there are plenty of tools at our disposal to affect change.
Speaker 10: What I would say is these technologies aren't anything new
Speaker 10: to the US military or defense circles. In general. We've
Speaker 10: been using machine learning and AI capabilities for decades, and
Speaker 10: for now it's starting to get a lot of attention
Speaker 10: in the media, particularly because of I think, adjacent stories that.
Speaker 2: Have a tendency to.
Speaker 10: Get a dialogue moving for for for instance, the patch
Speaker 10: shork of regulatory frameworks and the hyperscalers being caught in
Speaker 10: that as well.
Speaker 2: But I would say.
Speaker 10: In general, there's a dangerous notion of allowing boardrooms and
Speaker 10: private executives asserting too much influence in systems of government
Speaker 10: that have clear processes for change.
Speaker 3: Joe, we just have thirty seconds, but the pace of
Speaker 3: innovation in AI agents, genuinely autonomous AI agents, how do
Speaker 3: you regulate for that?
Speaker 10: I mean, I think right now we need to be
Speaker 10: thinking through a verticalized mindset. There are a lot of
Speaker 10: platforms are as included that are trying to close the
Speaker 10: delta between generic models, a trained mixed quality data and
Speaker 10: very sensitive enterprise workflows across private industry and government itself.
Speaker 10: And so I would say applying an over regulatory approach
Speaker 10: to agentic workflows could be short sighted. In the grand
Speaker 10: Skey Global Competitive Race.
Speaker 3: Joe Schidler, Helios. Great to have you on the show.
Speaker 3: Thank you very much. Like coming up, Apple opens its
Speaker 3: doors to outside AI assistance like Google's Gemini and throp
Speaker 3: its Claude. We've got the Bloomberg reporting. Next, it is
Speaker 3: halftime and this is Bloomberg Tech. Welcome back to Bloomberg Tech.
Speaker 3: It's Friday, but it's the end of a difficult week
Speaker 3: for technology stocks. And as that one hundred has fallen
Speaker 3: into correction territory on a technical basis, it has fallen
Speaker 3: ten percent from a recent high. Then there's some movement
Speaker 3: as well in cybersecurity stocks.
Speaker 2: This one is a little less straightforward.
Speaker 3: Cybersecurity stocks fell after a report that Anthropic is testing
Speaker 3: an AI model that has very advanced cyber capabilities, and
Speaker 3: it sparks and fears that actually this model could go
Speaker 3: on the offense. It could present a cyber threat to
Speaker 3: some of those names that are down you see on
Speaker 3: your screen that would provide the defense.
Speaker 2: Go out and read about it.
Speaker 3: It's complicated, but I'm sure we'll be speaking about it again.
Speaker 3: Then there's the big news from Bloomberg. Apple plans to
Speaker 3: open Siri to outside AI assistance. Allowing users to choose
Speaker 3: their own chatpot. The Siri overhaul is set to be
Speaker 3: incorporated in the company upcoming iOS twenty seven update. Bloomberg's
Speaker 3: Apple and Consumer tech editor Mark German once again broke
Speaker 3: the story. This is strategy all over the place, right
Speaker 3: as you know. I just upgraded to iPhone seventeen pro,
Speaker 3: got the latest iOS. I've gone back to using Siri.
Speaker 3: I'm reading your reporting and it seems like Apple's latest
Speaker 3: strategy is to say, whichever chat bought the consumer wants,
Speaker 3: we'll find a way to integrate it.
Speaker 2: Give us the details.
Speaker 11: Yeah, they're going a bit agnostic here. The idea is
Speaker 11: they want all the different AI platforms to be easily
Speaker 11: accessible from their devices, and what that would allow them
Speaker 11: to do is tap into a new app store section
Speaker 11: they're building, and then that would allow them to take
Speaker 11: thirty percent or whatever the slices that they agreed to
Speaker 11: with the AI provider to up their subscriptions to the
Speaker 11: higher end tiers on those devices. So they're going to
Speaker 11: make money there. And so this is them doubling down
Speaker 11: on their hardware as a platform, doubling down on their
Speaker 11: services strategy, really slightly bowing out of the a here
Speaker 11: as they continue to see how this is going to
Speaker 11: end up developing, and as a report earlier this week,
Speaker 11: they're also working on some new first party features like
Speaker 11: that Serie app, the ability to access Siri from the
Speaker 11: keyboard more easily, and so they are continuing to push
Speaker 11: forward there, and as we've talked about numerous times, they
Speaker 11: are rebuilding their underlying models using technology from Gemini.
Speaker 3: You broke another story about Apple, but what's happening internally
Speaker 3: with comp super interesting. There seems to be a return
Speaker 3: to a sort of bonus or incentive structure for the
Speaker 3: teams that work on design. What do we need to
Speaker 3: know here and what are the kind of numbers involved?
Speaker 2: Yeah, one of the.
Speaker 11: Biggest issues Apple is grappling with our company sort of
Speaker 11: circling it like sharks, given the AI situation there and
Speaker 11: the AI crisis they've really been facing and different companies
Speaker 11: open AI in particular wanting to poach their best hardware
Speaker 11: engineering talent, and so what Apple dooing is trying to
Speaker 11: respond to that by giving one time bonuses RSUs these
Speaker 11: vests over four years to some of the key talent.
Speaker 11: Particularly this week it was the iPhone product design team
Speaker 11: within the hardware engineering group, incentivizing them to stay and
Speaker 11: not jump ship to open Ai.
Speaker 3: It's difficult to tie those two stories together because, as
Speaker 3: you've just outlined, the bonuses are going to the iPhone
Speaker 3: design team. But the bigger environmental picture is AI talent.
Speaker 11: What about THOSEIAI talent per se. So what open ai
Speaker 11: is doing they are building hardware, they are building devices,
Speaker 11: and as you know, Apple has some of the best
Speaker 11: hardware engineering talent in the world for building devices, and
Speaker 11: so what open ai wants to do is they want
Speaker 11: to marry that fit and finish of Apple. They want
Speaker 11: to marry that harbor engineering capability of Apple with their
Speaker 11: own AI models that they consider industry leading, and so
Speaker 11: bringing them the two together would be extremely powerful. And
Speaker 11: so they are going after Apple talent. They've been poaching
Speaker 11: several dozen people, i would say even a month over
Speaker 11: the last half a year. And don't forget the hardware
Speaker 11: engineering group at OpenAI is run two of the people
Speaker 11: running it used to run hardware at Apple. So it
Speaker 11: is a pretty interesting situation right now.
Speaker 3: There's actually a third story out of Night from Mark
Speaker 3: about Apple discontinuing the MacPro desktop. But you have to
Speaker 3: go and read that one. Bloomberg's Mark German terrific stuff,
Speaker 3: Thank you very much. It's been a rollercoaster week for
Speaker 3: memory and storage stocks. After Google unveiled an AI breakthrough
Speaker 3: that can cut the memory requirement to run an LLM
Speaker 3: by a factor of six. The market reaction came in waves. First,
Speaker 3: everything in memory sold off around the world. Then investors
Speaker 3: started to realize this might not be doomsday for all
Speaker 3: of them. Let's refresh your memories for a moment. If
Speaker 3: storage for AIDATA is like a warehouse, nand and flash
Speaker 3: are the long term holding area, but HI bandwidth memory,
Speaker 3: on the other hand, is.
Speaker 2: The workbench, the loading dock.
Speaker 3: This is how it was summed up by Bloomberg's man
Speaker 3: Deep Sing of Bloomberg Intelligence of how the market is
Speaker 3: digesting this breakthrough in memory.
Speaker 12: Typically, when something like this happens, everyone would implement those
Speaker 12: sort of efficiencies. Remember deep seek everyone pivoted to a
Speaker 12: reasoning model within the next six months. And guess what
Speaker 12: the demand actually took off because you know, everyone implemented
Speaker 12: that and it helped, you know, drive more usage. So
Speaker 12: if anything, I think it should drive more usage and
Speaker 12: the effect of that would be more memory demand.
Speaker 3: So this isn't the AI trade breaking its investors getting
Speaker 3: much more informed, but more selective about where the demand
Speaker 3: actually is.
Speaker 2: Worth going back and reading that on the Bloomberg terminal.
Speaker 3: Coming up, we're going to hear from Coastler Bench's co
Speaker 3: founder Vinodekostler on his take on the AI race between
Speaker 3: US and China.
Speaker 2: That conversation. Next, this is Bloomberg Tech.
Speaker 3: President Trump is set to travel to China in May
Speaker 3: to meet with the country's leader, Shi Jingping. The AI race,
Speaker 3: conflict in the Middle East, and trade tension are likely
Speaker 3: to be top of the agenda, especially as China launched
Speaker 3: a pair of investigation into US trade practices retaliating against
Speaker 3: Trump's tariffs. Let's get the broader picture with Michelle Guider,
Speaker 3: CEO of the Crack Institute for Tech Diplomacy Perdue. She
Speaker 3: also served as Assistant Secretary of State for Global Public
Speaker 3: Affairs under the first Trump administration. Off camera, we were talking,
Speaker 3: you know, I've tried to make sense this week of
Speaker 3: where the United States currently stands as it relates to
Speaker 3: China in the context of technology. Earlier in the program,
Speaker 3: we spoke with David Sachs about just that your sense
Speaker 3: of the balance right now in closer economic cooperation with
Speaker 3: China while considering them in the technology context to continue
Speaker 3: to be an economic adversary.
Speaker 13: Yeah, there's a lot going on when it comes to
Speaker 13: conversations in DC and in Silicon Valley about the United
Speaker 13: States leading and technology and your right. All of that
Speaker 13: is within the context of making sure that we're winning
Speaker 13: this so called textechnology race with regard.
Speaker 2: To China, and I think that's really important.
Speaker 13: And I think it's important also that we have a
Speaker 13: common picture and an understanding of what winning means. You
Speaker 13: referenced your interview with David Sachs yesterday, and I think
Speaker 13: you put it really well. It's market share for American
Speaker 13: technology or Allied technology, ultimately trusted technology. And I think
Speaker 13: that's really important. However, the big challenge there that I
Speaker 13: think isn't talked about enough is that if you look
Speaker 13: at market share of artificial intelligence, there's a concerning trend
Speaker 13: growing with Chinese models, and specifically their open weight and
Speaker 13: their open source models, which are cheap. They're good enough,
Speaker 13: and if you look at the trend just about a
Speaker 13: year ago, fifteen months ago, Chinese open source models were
Speaker 13: essentially a negligible part of world AI usage. Fast forward
Speaker 13: to fifteen months later, end of twenty twenty five, All
Speaker 13: of a sudden, they're going from one percent to almost
Speaker 13: thirty percent of global token.
Speaker 7: Usage world A usage, all of a sudden.
Speaker 13: And so they're cheaper, they're good enough, and the Chinese
Speaker 13: are very focused, not necessarily on having the best models,
Speaker 13: but on having the most used. And so I think
Speaker 13: the United States, when we're talking about Silicon Valley in Washington,
Speaker 13: d C. Connecting, need to make sure that not only
Speaker 13: do we have an innovation strategy, we've also got a
Speaker 13: really big distribution strategy.
Speaker 3: We're going to hear later in the program from someone
Speaker 3: who is a China Hawk, but maybe a different definition
Speaker 3: of a China Hawk. That's Vinod Kosler. The reason I
Speaker 3: wanted to talk to David Sachs about the Presidential Council
Speaker 3: Advisors for Science and Tech is look at who's on it.
Speaker 3: Those are companies that either at one time had a
Speaker 3: big market share in China or would love to export
Speaker 3: their technology to China with something like pea cast. Is
Speaker 3: it realistic that a sitting president's thinking or the policy
Speaker 3: of the administration of the day actually gets influenced by
Speaker 3: those that they're a part of it.
Speaker 13: Yeah, I think the bridge and the conversation between those
Speaker 13: tech leaders and Silicon Valley leaders in general and Washington,
Speaker 13: d C has increasingly been fortified, and those conversations were
Speaker 13: happening anyway. I think p CAST in that group of
Speaker 13: advisors is now going to accelerate that. But it's not new,
Speaker 13: and that conversation and the back and forth on policy
Speaker 13: has already been taking place, and I think that's really important,
Speaker 13: and that bridge is really important. At the same time,
Speaker 13: let's not forget that we also have to keep in
Speaker 13: mind every American in between Silicon Valley and Washington, DC,
Speaker 13: when it comes to technology, they're focused on jobs. They're
Speaker 13: focused on the energy requirements and data centers being built
Speaker 13: in their backyard. So that's also really important, as are
Speaker 13: our allies because AI ultimately is borderless and the only
Speaker 13: way that the United States is going to lead is
Speaker 13: by working hand in hand with our allies as well.
Speaker 2: Let's go back to Iran.
Speaker 3: You know, we said that when the President travels to China,
Speaker 3: depending on where we are in that process, they will
Speaker 3: likely discuss the.
Speaker 2: War in Iran. Why does it matter? Quickly? The US
Speaker 2: get China's view on this.
Speaker 13: Well, I think, look, they're one of the leading economies.
Speaker 13: They have a lot to do with our own economy,
Speaker 13: oil prices and things like that, and so you know,
Speaker 13: making sure that we're on the same page is good
Speaker 13: for American strategy. And i'd say, you know, we're seeing
Speaker 13: a big role that technology is playing in Iran as well,
Speaker 13: and so all of that is part of American technological
Speaker 13: leadership and dominance and ultimately bringing this war to a
Speaker 13: victorious end as soon as possible.
Speaker 3: Michelle Guide to CEO the Crack Institute for Tech Diplomacy
Speaker 3: It Pard, It's great to have you back on the show,
Speaker 3: Thank you very much. Sticking with China, we discussed the
Speaker 3: AI race between the two world powers with KOs laventus
Speaker 3: Co founda Viino Kosa this week. That was on the
Speaker 3: sidelines of the Hill and Valley Forum, and here's what
Speaker 3: he had to say about Nvidia CEO Jensmong celebrating the
Speaker 3: company's approval to sell AI accelerators to China.
Speaker 14: He is celebrating that it's in his short term economic interest.
Speaker 14: I don't leave it's in the interests of the country
Speaker 14: as a whole to do that. Of course, he's cut
Speaker 14: whatever DLS he can. He's a great guy. He's a
Speaker 14: very visionary guy. But he's good for his business and
Speaker 14: that's his responsibility as CEL. That doesn't mean everything he
Speaker 14: does is good for America.
Speaker 6: It's good for his global business.
Speaker 3: Do you think there's a chance that we changed policy,
Speaker 3: changed tap decide to cut off.
Speaker 6: I think we absolutely should.
Speaker 14: And I'm in the cape of being as hawkish as possible,
Speaker 14: and and it.
Speaker 6: Historic policy for America.
Speaker 14: And I thought this admission administration was on that bandwagon,
Speaker 14: but they seem to have changed course. Uh, don't know
Speaker 14: what the influences were there. They're probably some that I
Speaker 14: don't understand.
Speaker 3: The middle grounds that middle grounds on the right term.
Speaker 3: The other consideration are countries in the middle, principally the
Speaker 3: golf that you export the technology to the golf. If
Speaker 3: you don't, same vacuum China comes in. But equally there
Speaker 3: are still so called diffusion considerations around what would China
Speaker 3: have access to that technology through golf stations? But where
Speaker 3: do you stand on that the node that little ground.
Speaker 14: Now, Look, there's no clear answers to all of these questions.
Speaker 14: That's a place, really if you don't fill the vacuum Bibilla,
Speaker 14: China will and I think it's important to have.
Speaker 6: Global use of hard technologies. So it's a balancing act.
Speaker 3: I would like to talk a little bit about open Ai,
Speaker 3: but in a slightly different context. You wrote the first
Speaker 3: real institutional check into open Ai. If you will, you're
Speaker 3: not an investor in anthropic.
Speaker 6: That's right. If you're not, can investor think put.
Speaker 3: The conversation here at Hill and Valley in part has
Speaker 3: been of course anthropics relationship with the pentag and what
Speaker 3: I had heard from a number of anthropic investors is
Speaker 3: that they actually cheered Dario m Oday, taking not a
Speaker 3: moral high ground per se, but basically saying having that
Speaker 3: niche of having red lines is good commercially. Now, the
Speaker 3: consequence of that action is that open Ai came in
Speaker 3: and had an opportunity to do business with the Pentagon,
Speaker 3: and I'd be grateful, you know, drawing on your experience
Speaker 3: in the Valley and as an investor on how you
Speaker 3: feel Anthropic handled that and then what open Ai did
Speaker 3: coming into it.
Speaker 14: So I had a tweet on Dario's comments and was
Speaker 14: very simple. I said, I admire him for sticking to principles,
Speaker 14: his principles, and I admire anybody who sticks to principles,
Speaker 14: but I think he had the wrong principles. He should
Speaker 14: not be the one deciding what technology the Department.
Speaker 6: Of War should use in the battlefield or anywhere else.
Speaker 14: I think he can mandate things like no illegal uses
Speaker 14: like mass surveillance and others.
Speaker 6: That's a reasonable position to take.
Speaker 14: But to understand what the Department of War can or
Speaker 14: cannot do with the technology should require all the knowledge
Speaker 14: that the Department of War has and their knowledge of
Speaker 14: what President she would do in Taiwan or what President
Speaker 14: Puttin would do. I don't think Dario is in a
Speaker 14: position to do that or judge that, and I think
Speaker 14: so the principle of sticking to principles is great. He
Speaker 14: just happened to have.
Speaker 6: The wrong principles.
Speaker 14: And it's reasonable for him to explain what the technology
Speaker 14: is capable of and not capable of the capabilities which
Speaker 14: is qualified to do qualified to.
Speaker 6: Then judge how that technology is used. That just being arrogant.
Speaker 3: He was coastera Benures co founder Vinode Coostler, and Thropic
Speaker 3: has won a key court order pausing a ban on
Speaker 3: government use of the company's AI tools. It follows the
Speaker 3: dispute between Anthropic and the Pentagon over the use of
Speaker 3: its AI Bloombergs Katrina Mansen covers defense technology and has
Speaker 3: the details. This was a moment in time this week.
Speaker 3: But what do we need to know about it?
Speaker 2: Well, the judge is.
Speaker 15: Saying this looks like illegal retaliation and putting a seven
Speaker 15: day at an injunction, saying that the Pentagon cannot declare
Speaker 15: Anthrotropic in fact a supply chain risk. Now the judge
Speaker 15: put a stay on that injunction, so for seven days.
Speaker 15: The Pentagon now has a chance to appeal. So we're
Speaker 15: really still in this incremental stage of trying to work
Speaker 15: out these very fraught lines between whether the Pentagon can
Speaker 15: claim that Anthropic is essentially usurping chain of command, the
Speaker 15: president's ability to command his own troops, and whether Anthropic
Speaker 15: is is instigating unfair redlines or whether it's absolutely extraordinary,
Speaker 15: which we know it is. It's unprecedented to declare Anthropic
Speaker 15: a supply train risk, treating it as an adversary, a
Speaker 15: US adversary, and a judge at the moment saying no, that.
Speaker 7: Is not okay.
Speaker 3: A lot of people weighed in on this Palenteer has
Speaker 3: been one of the winners of the government's attitude towards
Speaker 3: working with the private sector and opined on it. It's
Speaker 3: been a big week for you as well. A new book,
Speaker 3: Project Maven out in the world. You know, thread that
Speaker 3: together where Palenteer and the story that you're telling fits
Speaker 3: in today.
Speaker 15: Well, it was fascinating the book came out on the
Speaker 15: same day that you, me everybody else was at Hill
Speaker 15: and Valley, and for the founders of Hill and Valley,
Speaker 15: so much of what has been animating them to end
Speaker 15: what they called, to me, this cold war between East
Speaker 15: and West Coast, between Silicon Valley and Washington goes back
Speaker 15: to Project Maven, the moment that Google workers protested discovering
Speaker 15: they were involved in what they called the business of war,
Speaker 15: their cutting edge AI tech being used to identify with
Speaker 15: drone footage identify potential targets in US battle zones. Now
Speaker 15: today we see it playing out slightly differently, but nonetheless
Speaker 15: we are in this key moment where Anthropica the Pentagon
Speaker 15: are now at war again and AI is at the
Speaker 15: heart of another fracture between Silicon Valley and what the
Speaker 15: Pentagon wants to do with AI.
Speaker 3: Bloomberg's Katrina Manson, author of that new book Project Mavin,
Speaker 3: hits the shelves this week, Thank you very much. Now
Speaker 3: coming up, Amazon is coming in after Walmart in rural America.
Speaker 3: We'll discuss why conversations. Next, this is Bloomberg Tech. Amazons
Speaker 3: spent decades perfecting urban and suburban delivery. Now Amazon's expanding
Speaker 3: rapidly in rural America, dooking it out with Walmart over
Speaker 3: the one trillion dollar rural US market. Bloomberg crunched exclusive
Speaker 3: data for this big take. Bloomberg Spenser Sofa covers Amazon
Speaker 3: is behind it all. Interesting battleground. I mean, what's the
Speaker 3: Amazon strategy here?
Speaker 16: Well, Amazon's always tried to sell to rural America, and
Speaker 16: the proposition has always been, look, we'll connect you with
Speaker 16: the broad assortment of goods that it's going to be
Speaker 16: tough for you to find nearby, but you're gonna have
Speaker 16: to wait for them.
Speaker 7: You know.
Speaker 16: Amazon is known for like one two day delivery in
Speaker 16: most of the country, but in rural areas it could
Speaker 16: be four days, six days. It's always been a bit longer,
Speaker 16: and so the challenge there is how do we speed
Speaker 16: that up given a high cost right, it's so expensive
Speaker 16: to deliver to disperse population, so they're trying to crack that,
Speaker 16: and they're bringing in small bus and owners to deliver
Speaker 16: around their businesses for like two dollars and fifty cents
Speaker 16: a pop. So that's really how they're trying to crack
Speaker 16: this code is by bringing in a new kind of
Speaker 16: partner other than the postal service or ups that's willing
Speaker 16: to do these deliveries kind of at like a side
Speaker 16: hustle spender.
Speaker 3: Real quick is the state of play that Walmart still
Speaker 3: dominates in rural areas, and I guess Amazon.
Speaker 7: It's bigger than Amazon.
Speaker 16: It's bigger than Amazon and rural areas, but rural America's
Speaker 16: spending is also very fragmented. About eighty percent of it
Speaker 16: is going to like a huge mix of You've got
Speaker 16: like Dollar General, tractor supply, and any number of regional
Speaker 16: chains and things, so it's wide open. Walmart's definitely bigger
Speaker 16: than Amazon and rural America, and Amazon is its new
Speaker 16: delivery centers are like right on top of it in
Speaker 16: a lot of cases, so there's a fight between those two.
Speaker 16: But there's also a lot of peripheral players that stand
Speaker 16: to lose some share bling bag.
Speaker 3: Spenser Ciper with a big take, Thank you very much.
Speaker 3: One last piece of news, especially if you're planning to
Speaker 3: spend your weekend playing video games. Sony plans to raise
Speaker 3: the price for the PlayStation five console by one hundred dollars,
Speaker 3: citing pressure on the global economy. The hikes take effect
Speaker 3: on April second, with the cost of consumers going up
Speaker 3: around the world. Remember PlayStation hugely popular console in countries
Speaker 3: all over the planet. That does it for this edition
Speaker 3: of Bloomberg Tech, Happy Friday, wishing you a good weekend.
Speaker 2: But there was a lot in the show to recap.
Speaker 3: You can do that on the podcast and you know
Speaker 3: where to find it. From San Francisco, this is Bloomberg Tech.