Speaker 1: From the Heart where Innovation, money and power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and ed Love Love.
Speaker 2: I'm Caroline Hyde and Bloomberg's world headquarters in New York.
Speaker 3: And I met Lovelad.
Speaker 4: This is Bloomberg Technology live in San Francisco from the
Speaker 4: RSA conference focus on cybersecurity. How are companies and governments
Speaker 4: around the world responding to the digital threat? That's the
Speaker 4: conversation Caroline will be having here.
Speaker 2: Meanwhile, there is so much conversation we had around competition,
Speaker 2: around earnings, and we start there with this market check ed,
Speaker 2: because let's just go to where we're.
Speaker 5: Seeing some of the movement.
Speaker 2: Interestingly, the buying of the NASDAC today big tech on top.
Speaker 2: Why because of earnings outperforming the Microsoft the Google's. Will
Speaker 2: get to it in a minute, but this isn't a
Speaker 2: global store. Technology actually underperforming over in Europe as some
Speaker 2: of the chip makers chip related companies are actually underwhelming
Speaker 2: in terms of their own performance, so we see a
Speaker 2: bit of a dive. They're pulled back on the six
Speaker 2: tens of percent over in European technology trading crypto.
Speaker 5: Getting a real buy.
Speaker 2: Is this risk on around technology and the correlation there,
Speaker 2: or is this because we're still worried about a banking crisis.
Speaker 2: Let's have a look quick look at what's happening in
Speaker 2: terms of First Republic Bank. We're seeing yet further record
Speaker 2: lows for this particular lender. We know that we have
Speaker 2: some concerns around maybe a.
Speaker 5: New share sale.
Speaker 2: We've got Alphabet shares on the upside as its earnings
Speaker 2: come thick and fast. Let's just go to some breaking
Speaker 2: news though, because we do indeed have the fact that
Speaker 2: Disney we understand, is suing Florida Governor Rhonda Santis. This
Speaker 2: is according to CNBC as it currently stands at the moment,
Speaker 2: So Disney we understand suing Florida's governor Rhonda Santis.
Speaker 5: Of course, there's been.
Speaker 2: A lot of political issues between the governor of that
Speaker 2: particular state and indeed the autonomy of Disney around its
Speaker 2: municipal area, in the way in which it finances, where
Speaker 2: it works.
Speaker 5: Let's get to.
Speaker 2: That story in a moment. But we're going to go
Speaker 2: back to some of the numbers at the moment because
Speaker 2: Disney not really reacting on the news. We're up just
Speaker 2: a tenth of a percent let's go back to where
Speaker 2: we are seeing movement alphabet on the higher side of
Speaker 2: see Google actually managed to shake off those nerves around
Speaker 2: competitive threat coming from Microsoft and AI and Indy. Let's
Speaker 2: talk about Microsoft. Let's talk about the fact that it
Speaker 2: beats on earnings. But a big news this morning coming
Speaker 2: from the UK, as we understand the shares of Activision
Speaker 2: really moving on the back of that because the sixteen
Speaker 2: nine billion dollar proposed takeover by Microsoft of Activision on
Speaker 2: hold the UK saying I'm sorry, we don't buy it,
Speaker 2: we don't like it, for by more than eleven percent,
Speaker 2: even though Activision came early with its earnings.
Speaker 5: Let's get to it.
Speaker 2: Jennifer Ream please to say a blue meg Intelligence joins
Speaker 2: us to really dive into why the UK thinks this
Speaker 2: is such a competitive threat.
Speaker 1: You know what they're concerned about.
Speaker 6: I think are the innovations to come, you know, the
Speaker 6: where the markets are moving. So we at first everybody
Speaker 6: was focusing on consoles and how this might affect gaming
Speaker 6: on consoles.
Speaker 7: But with the UK's.
Speaker 6: Concern is that things are moving to the cloud. People
Speaker 6: will pay a subscription to play a game and instead
Speaker 6: of downloading it, they'll have access to all sorts of
Speaker 6: games on the cloud, and that's easier and it's much better.
Speaker 6: It doesn't clog up their computers. And they're concerned that
Speaker 6: Microsoft will dominate that area in the future because it
Speaker 6: already has such a strong position in cloud now if
Speaker 6: it gets all this content, and especially this kind of
Speaker 6: must have content, a game like Call of Duty, that
Speaker 6: it can basically exclude other cloud providers. And that's the
Speaker 6: concern here.
Speaker 2: Arbitrage investor is saying, Look, we've never seen an appeal
Speaker 2: which Microsoft is doing work against the UK Competition Market Authority.
Speaker 5: What then, of what this means for getting it still done?
Speaker 2: Because they've also got European regulators looking at it, US
Speaker 2: regulators looking at it.
Speaker 6: Look right now, it's a real uphill climb. It's not
Speaker 6: only going to be difficult to overturn this decision, it's
Speaker 6: going to take a really long time. Deals can't stick
Speaker 6: together for four and five years, which might be needed.
Speaker 6: You know, they have a lawsuit coming up right here
Speaker 6: in the United States that's supposed to start August two
Speaker 6: within the Federal Trade Commission before an administrative law judge.
Speaker 6: That decision would get appeal to the Commission. Let's say
Speaker 6: it was for the companies, and the commissioners are the
Speaker 6: very commissioners that voted to sue, so they would likely
Speaker 6: reverse it, and now the appeal would go to the
Speaker 6: federal courts. That timing are looking at another year and
Speaker 6: a half. So you know, outside even of just the
Speaker 6: difficulty substantively of overturning a CMA decision in the Competition
Speaker 6: Appeal Tribunal, you also have just timing, and timing tends
Speaker 6: to kill deals.
Speaker 2: At the end of the day, the read across big
Speaker 2: tech can't do big deals?
Speaker 5: Is that really what we're left with.
Speaker 6: I think it's not so much that big tech can't
Speaker 6: do big deals. I think it's going to be very
Speaker 6: difficult for them to do big deals. They'll get intensive scrutiny,
Speaker 6: and if they do have a problem, the remedy they
Speaker 6: propose has to be a really good one thorough. It
Speaker 6: has to completely replace the competition that's lost by virtue
Speaker 6: of the deal. That's going to be difficult to do
Speaker 6: with these regulators today, to get them to accept the
Speaker 6: remedy that's been offered.
Speaker 2: Always fantastic to have your analysis, Jennifer Ree. You're going
Speaker 2: to read her with Bloomberg intelligence. Let's get back to it, though,
Speaker 2: We've got to go over to San Francisco and you've
Speaker 2: got an important conversation.
Speaker 4: Yeah, we are live at the RSA conference here in SF.
Speaker 4: The focus cybersecurity, and we set the scene with Kevin Mandia,
Speaker 4: the CEO of Mandy and of course now part of
Speaker 4: the Google family.
Speaker 3: Kevin, it's good to see you, Thanks for having me.
Speaker 4: Let's start by saying, twenty twenty two a relatively quiet
Speaker 4: year from a cybersecurity perspective. We recognize that the digital
Speaker 4: threat you might have been quite well. I know you're
Speaker 4: always very busy, right, your peers, many of them are
Speaker 4: standing around us. Now, what is the topic of conversation today?
Speaker 4: What is the focus?
Speaker 1: Well, I think there's a lot of focuses.
Speaker 8: When you reviewed twenty twenty two and then looking into
Speaker 8: the future and twenty twenty two, I think the focus.
Speaker 1: Was, Hey, there was more zero days than before.
Speaker 8: We got to get better at the blocking and tackling
Speaker 8: the patch management. China really innovated on our offense when
Speaker 8: it came to cyber espionage we had.
Speaker 3: You've gone straight to China.
Speaker 4: WOHI is interesting because we recognize heightened geopolitical tensions between
Speaker 4: the United States and China. Do we see a ramp
Speaker 4: up in cyber activity coming from China correlate to.
Speaker 8: That, well, I do, you know, my view of all
Speaker 8: ideological and geopolitical conditions kind of seen in the cyber domain.
Speaker 1: What I can opine on is in.
Speaker 8: The cyber domain, I feel we saw more innovation, I
Speaker 8: meaning more vulnerability and vulnerability research and exploitation out of China.
Speaker 8: That to me was innovative, It was creative and advanced,
Speaker 8: and we saw them.
Speaker 1: Doing better operational security.
Speaker 8: So in that regard, offense with cyber espionage techniques out
Speaker 8: of China had perhaps its best greatest one year in
Speaker 8: advancement in my thirty year career.
Speaker 4: Mandian as it's been in the news cycle, has also
Speaker 4: been focused on activity in North Korea, particularly around RNSOM.
Speaker 4: We recognize that President Biden hosts his South Korean counterpart
Speaker 4: in the coming days. How much is that a threat
Speaker 4: At the moment, it seems somewhat random ransome activity that
Speaker 4: comes out of North.
Speaker 8: Well, you know, when you look at ransomware in particular,
Speaker 8: we saw actually a decrease in the over eleven hundred
Speaker 8: cases where we were hired to investigate what happened and
Speaker 8: what to do about it. We saw our ransomware investigations
Speaker 8: actually go down, but when we do threat research or
Speaker 8: respond to North Korean threat groups, we are seeing them
Speaker 8: hap to make money and those intrusions that are usually
Speaker 8: more indiscriminate, you know, it's kind of like attacker. We
Speaker 8: can and do some mining and things of that nature.
Speaker 4: It's basically been a year since Mandian joined Google Google Cloud.
Speaker 4: What's that transition been Like? You're a founder CEO essentially, right,
Speaker 4: do you remain entrepreneurial?
Speaker 3: How do you operate within a big BA slide?
Speaker 8: Well, so, you know, first, I don't feel that much
Speaker 8: of a change. We had tremendous alignment between what Mandian's
Speaker 8: vision of, you know, their cybersecurity future was and what
Speaker 8: Google Cloud's vision for what they want to do in cybersecurity.
Speaker 8: When you have that kind of alignment, it's kind of
Speaker 8: like two armies marching in the same direction towards the
Speaker 8: same goal. So it was easy to come in and integrate.
Speaker 8: I haven't felt change. We're still responding to breaches that matter.
Speaker 8: We're still advising customers on the consulting side how to
Speaker 8: transform your security programs.
Speaker 1: I think the big change.
Speaker 8: Back to your first question, which was kind of you know,
Speaker 8: what was twenty twenty two? What are we looking forward to?
Speaker 8: We are coming up on a shift change in security.
Speaker 8: You know, Cloud was a shift change in security where
Speaker 8: people had to recognize you could do security from the
Speaker 8: cloud or you had to do it for the cloud.
Speaker 8: Now we have AI coming out right and it's going
Speaker 8: to be a shift change.
Speaker 4: And you finally took us that absolutely so so generative AI.
Speaker 4: I mean, how does it change defense?
Speaker 1: Oh totally yeah.
Speaker 8: So you know, the best analogy I have, because the
Speaker 8: ways that it can do it is probably too quick
Speaker 8: for a sound bite, is I remember when Tesla one
Speaker 8: day just updated and my car could drive itself. I remember, yeah, absolutely,
Speaker 8: and I remember going, oh, there's no way it can
Speaker 8: drive itself.
Speaker 1: And first day I'm gripping the wheel.
Speaker 8: Second day, I'm on the two to eighty and I'm like,
Speaker 8: it worked.
Speaker 1: I think, AI, you're going to.
Speaker 8: See some of the most rapid answers where security challenges
Speaker 8: that were very hard, like great identity security, suddenly we go, wow,
Speaker 8: we're great at it now. So you're going to see
Speaker 8: advancements coming at speeds.
Speaker 4: Well, advancements. I mean, how are you integrating Bard very quickly?
Speaker 4: Because that is where Google has shown his hands.
Speaker 8: Well, we're creating, you know, for the security use case.
Speaker 8: You know, the way I look at is kind of
Speaker 8: coming from the other side. So is BARD coming at
Speaker 8: you for generative AI. But I'm looking at it from
Speaker 8: the vertex point and looking at it from We need
Speaker 8: our own models in security so that we can determine
Speaker 8: anomalies to log ons, anomalies for processes. The security use
Speaker 8: case is going to have different data, different machine learning models,
Speaker 8: So I kind of look at it from that standpoint.
Speaker 8: But I can feel the shift change coming. It will
Speaker 8: be real and complex challenges are suddenly going to get
Speaker 8: easier for us?
Speaker 3: Yes or no? Are you making money for Google?
Speaker 1: Am I making money? Yes?
Speaker 3: Yes or no?
Speaker 4: Will you be there in a year's time, still part
Speaker 4: of that bigger company?
Speaker 1: Yeah?
Speaker 4: Kevin Mandia, CEO of Mandy and thank you heart Caroline
Speaker 4: of Google Cloud from RSA you in New York.
Speaker 5: It's what a great punch the interview ed.
Speaker 3: Thank you so much.
Speaker 2: Let's look at the parent company of Google, Alphabet of
Speaker 2: course actually managing to post better than expected earnings for
Speaker 2: the fiscal first quarter showing really resilience in the face
Speaker 2: of new AI fueled search competition, also finally breaking even
Speaker 2: when it comes to cloud places. Say we can dig
Speaker 2: into Alphabet with Daniel Newman, his principal analyst at Full
Speaker 2: Term Research for joining us now and what are you
Speaker 2: seeing Dan at the moment in terms of Alphabet's shares rising.
Speaker 2: The fact that this doesn't seem to be a worry
Speaker 2: that Chat GPT, Open Ai, Microsoft Being are really eroding
Speaker 2: some of their competitive power.
Speaker 9: I think it's going to be a little bit longer
Speaker 9: before we start to see the real impact on search.
Speaker 9: Of course, we saw open ai and chat Gpt integrated
Speaker 9: into Being and that brought up some concern. But the
Speaker 9: core business model and where people land to do search
Speaker 9: today is still on Google.
Speaker 10: And that is also why we saw this big in
Speaker 10: topic rise about.
Speaker 9: Say Samsung and whether or not Microsoft should be investing
Speaker 9: big to put search on the mobile devices because right
Speaker 9: now the first place people do go to search is
Speaker 9: still Google.
Speaker 10: But Microsoft is making this interesting again.
Speaker 2: Certainly is and Microsoft really talking up it's AI investments.
Speaker 2: The focus on how they beef up compute power in
Speaker 2: their earnings as well is Alphabet managing to convince investors
Speaker 2: that it too is still an AI leader because it's
Speaker 2: managed to underwhelm us far.
Speaker 10: Yeah.
Speaker 9: I think they were forced to come out with their
Speaker 9: hand a little bit earlier than they had anticipated and
Speaker 9: wanted to, and that caused a little bit of consternation
Speaker 9: when that first launch is barred, didn't go exactly as planned.
Speaker 9: I use all these tools, and I'm also someone that's
Speaker 9: been following the innovation, the investment, and I think it
Speaker 9: would be really early to rule Google or Alphabet out.
Speaker 9: You see what they're doing with Brain and deep mind,
Speaker 9: the investments that they're making. No question, Microsoft got a
Speaker 9: first move or advantage put a lot a lot of
Speaker 9: companies on their heels.
Speaker 10: We saw Google had to.
Speaker 9: Follow, Aws has had to follow a number of other
Speaker 9: companies have. But I think multiple companies succeeding and investing
Speaker 9: is going to bring innovation to the consumer, to the enterprise,
Speaker 9: and that's actually good if there is no declarative winner
Speaker 9: this early.
Speaker 2: Of course, the real power behind profits, behind revenue for
Speaker 2: Alphabet is the search.
Speaker 5: But what about cloud?
Speaker 2: How much is this folding into the AI provision that
Speaker 2: we so clearly see with Microsoft and Azure and also
Speaker 2: here at other competitors.
Speaker 10: I think this inflection is actually going to be good.
Speaker 9: That the company turned a profit for the first time
Speaker 9: in this quarter. It was a small profit, but they've
Speaker 9: been mounting up some significant losses but had been continued
Speaker 9: to invest in the infrastructure required to move into different regions.
Speaker 10: In different zones.
Speaker 9: I think companies that have maybe been on the fence
Speaker 9: about utilizing Google Cloud may feel little more comfortable seeing
Speaker 9: that this company has turned a corner in terms of profitability.
Speaker 10: And also Google because it's reputation.
Speaker 9: In data in AI and there is a lot of
Speaker 9: strength there that should help them as companies turn to
Speaker 9: multi cloud. So while Google may not win all the
Speaker 9: cloud business, that's where AWS has been incredibly successful in.
Speaker 10: Azure as well.
Speaker 9: Google will start to become part of the equation in
Speaker 9: these enterprise cloud deployments and I think that's going to
Speaker 9: be a big part of them staying on pace for.
Speaker 10: Growth, and that's what they did this quarter.
Speaker 9: You saw twenty eight percent here versus twenty seven percent
Speaker 9: over at Azure.
Speaker 2: Really smart to read across the whole space for AI
Speaker 2: with you, Daniel Newman.
Speaker 5: Of course, Future and Research. We appreciate the expertise.
Speaker 2: Meanwhile, let's turn to another key tech john that are
Speaker 2: going to report soon. It's Meta reporting results off the Bell.
Speaker 2: To be specific, when we make Sarah frag joins us Phillip,
Speaker 2: what are we going to expect from Meta because we
Speaker 2: know it's a tough macro environment in terms of sales.
Speaker 5: Is it all about the costs the efficiency?
Speaker 11: That was the narrative last quarter that Mark Zuckerberg's CEO
Speaker 11: really pushed is that this is.
Speaker 3: A new era for the company.
Speaker 11: They're going to be cutting costs, They're going to be
Speaker 11: trying to be faster on their product more efficient. But
Speaker 11: I think that beyond that efficiency talk, you know, we'll
Speaker 11: see if it's been enough. They have announced a lot
Speaker 11: of cuts of their workforce, They've announced a lot of
Speaker 11: ways that they're slimming down their their product line. Is
Speaker 11: are investors going to be satisfied with that? Considering the
Speaker 11: fact that their main products are still slowing in growth
Speaker 11: and the advertising market is still very tough. If we
Speaker 11: see a resurgence in demand from advertisers, I think investors
Speaker 11: will be really happy about that. If we see continued
Speaker 11: growth of Facebook and Instagram, I think investors will be
Speaker 11: happy about that. But I think overall this company, it's
Speaker 11: going to be closely watched what they what they're really
Speaker 11: thinking strategically, efficiency is not a strategic product plan, it's
Speaker 11: it's a commitment, right, And so are they about the metaverse?
Speaker 11: Are they about AI? What's what's the real vision for
Speaker 11: the future of meta And I think people will really
Speaker 11: be hanging on with zuckerber that's about that.
Speaker 2: Yeah, you take us there, because it's going to be
Speaker 2: the fourth straight revenue decline, fourth straight quarter of revenue declines.
Speaker 2: We're expecting analysts expecting could see daily active users of
Speaker 2: more than two billion, monthly active users of more than
Speaker 2: three billion.
Speaker 5: So it's still such a juggernauts sir.
Speaker 2: But how much do you think we are going to
Speaker 2: hear this pivot to artificial intelligence?
Speaker 5: Is that going to be the lexicon?
Speaker 2: Or do we have to realize that they're still willing
Speaker 2: to take losses on the investment in the metaverse?
Speaker 11: Well, Zuckerberg has to be careful because he can't just
Speaker 11: cut out and say AI is our new north star
Speaker 11: because they just went through a complete rebrand of Facebook
Speaker 11: into meta and said that the metaverse was the future.
Speaker 11: So I think what they're going to have to do
Speaker 11: is is And we've seen it a little bit from
Speaker 11: Nick Klay yesterday on Bloomberg Television saying that you can't
Speaker 11: have the metaverse without AI and sort of making AI
Speaker 11: part of the metaverse vision. So it gets a little squishier.
Speaker 11: But I think that what we're hearing from employees is
Speaker 11: certainly more focused on AI. But Meta risks looking like
Speaker 11: they're following again the pressures we were talking about, the
Speaker 11: competitive pressure from CHATTYBT and Microsoft. Even though Meta has
Speaker 11: been very investing in this market for a long time.
Speaker 2: We hear how many times they use the turn of
Speaker 2: phrase lama its own large language model. We thank you
Speaker 2: so much, Sarah Fryar ahead of all things Meta. Meanwhile,
Speaker 2: ed all things cyber for you, right.
Speaker 4: We focus on the talent needed to combat cybersecurity threats
Speaker 4: with Morgan Danski NC Cybersecurity Collaboration Center Chief.
Speaker 3: That's coming up next. This is Bloomberg.
Speaker 4: We'relive at the RSA Friends here in San Francisco. The
Speaker 4: focus cyber security, and we turn to USA battle for
Speaker 4: talent to combat threats and cybersecurity. Morgan Adamski NSA, Cybersecurity
Speaker 4: Collaboration Center Chief you have a target three thousand new
Speaker 4: staff by next year, Why do you need three thousand
Speaker 4: more people operating within your agency?
Speaker 12: Absolutely, so we continue to have to grow the talent.
Speaker 12: We need people with different backgrounds. As we have attrition
Speaker 12: and people leave, we need to continue to fill that pipeline.
Speaker 12: And so we need people that just are ready to
Speaker 12: fulfill the mission and have purpose. And so we're excited.
Speaker 12: It's our biggest hiring year to date.
Speaker 4: When our global audience thinks about NSA, that they think
Speaker 4: about all the sorts of security threats. But where is
Speaker 4: your focus when it comes to cybersecurity?
Speaker 3: What are you working on day to day?
Speaker 12: Yes, the People's Republic of China is the pacing threat
Speaker 12: right right?
Speaker 3: You went right there, straight to China.
Speaker 4: How does that? How does that look? What sorts of threats?
Speaker 4: Is this ransomware?
Speaker 3: What do you we did?
Speaker 12: It's more so that persistent broad threat cyber espionage preposition,
Speaker 12: looking for opportunities to gain information, to steal intellectual property.
Speaker 12: It is the broadest, most pervasive threat that we face
Speaker 12: every single day.
Speaker 4: The bind administration has set broad cybersecurity goals, everything matching
Speaker 4: your efforts in hiring, to competency in cybersecurity. What kind
Speaker 4: of energy is that given you in your agency?
Speaker 12: A lot of energy. We're very excited because we have
Speaker 12: a lot of people coming out of college, but people
Speaker 12: that want to have, you know, mid career changes to
Speaker 12: come into cybersecurity, and so it's really invigorated us to
Speaker 12: go out recruit, talk about our mission publicly and bring
Speaker 12: in as many people as possible.
Speaker 4: Morgan, how many times a day do you say the
Speaker 4: words generative and.
Speaker 3: AI A lot?
Speaker 4: Recently we talked about it massive. What does it matter
Speaker 4: to you AI right now?
Speaker 7: Right now?
Speaker 12: You know, Generative AI has been something that we've really
Speaker 12: focused on for a long time, but it's right now
Speaker 12: Obviously at the forefront of everyone's minds.
Speaker 7: They want to talk.
Speaker 12: About both the benefits and the risks. What's really important
Speaker 12: is that we're having that conversation up front as we
Speaker 12: start to really understand the technologies and how we can
Speaker 12: take advantage of it.
Speaker 4: Earlier in the year, when we were at CS we
Speaker 4: spoke to Jenny Slie of CISA, and she had a
Speaker 4: message which was Corporate America needs to do more. We
Speaker 4: need companies of all sizes detecting threats earlier, designing safeguards
Speaker 4: into whatever product they're working on. Absolutely, who leads this charge?
Speaker 4: You the private sector, do you work together?
Speaker 12: We work together. It's going to take all of us
Speaker 12: to do secure by design type products and build it
Speaker 12: into the foundation. Cybersecurity is a mindset, it's not a
Speaker 12: skill set, and so we really have to just think
Speaker 12: about how are we taking all the necessary measures to
Speaker 12: make sure when we build technology it's there for the
Speaker 12: future and it's secure.
Speaker 4: Going back to that hiring target then and skill set.
Speaker 4: Are those three thousand people you're looking for actually out there?
Speaker 4: Are you worried about sort of a deficit in skill
Speaker 4: in this country?
Speaker 12: No, those people are out there. They don't necessarily have
Speaker 12: to have degrees in cybersecurity or backgrounds and engineering. Sometimes
Speaker 12: it's just people who like to solve problems and think
Speaker 12: about the problem in a different way. So we're really
Speaker 12: looking for all walks of life when we talk about
Speaker 12: those three thousand employees.
Speaker 4: After China, what is the next big thing that keeps
Speaker 4: you up at night?
Speaker 12: What keeps me up at night is the workforce? Is
Speaker 12: the development To be completely honest with you, when you
Speaker 12: talk about threats, though it's probably Russia, they're a multi
Speaker 12: prong threat and it's something that we focus on every
Speaker 12: day as well.
Speaker 4: There is heightened geopolitical tension between the US and China
Speaker 4: and Russia, going back to the war in Ukraine. Does
Speaker 4: the ramp up in cyber threat mirror that ramp up
Speaker 4: in geopolitical tension.
Speaker 5: Absolutely.
Speaker 12: We see a lot of our cyber actors both in
Speaker 12: China and Russia, but also activists in cyber criminals learning
Speaker 12: from what's happening every single day, and so they're just
Speaker 12: learning techniques that they're now employing broad skill.
Speaker 4: All right, Morgan Adamski and a say, Cybersecurity Collaboration Center chief,
Speaker 4: Thank you, Caroline Talent.
Speaker 3: Just one conversation.
Speaker 4: This is an industry in public sector that is hiring
Speaker 4: right now.
Speaker 7: Wow.
Speaker 2: One of the bright spots therefore in the world of
Speaker 2: technology seems to be resilient. Welcome back to Blue Meg Technology.
Speaker 2: I'm Caroline Hyde in New York.
Speaker 4: And I'm Ed Ludlow live here at the RSA conference
Speaker 4: in San Francisco. Cybersecurity is what we're talking about. Industry
Speaker 4: arriving here with generative AI kind of top of mind.
Speaker 4: They're also thinking about what threats look like right now.
Speaker 4: So I'm going to bring in CrowdStrike CEO George Kurtz
Speaker 4: here with me on site.
Speaker 3: This is what you've been talking about.
Speaker 4: The sophistication of what your industry faces, what the public
Speaker 4: sector face is what are the biggest threats out there
Speaker 4: to you and what have you found in the first
Speaker 4: four months of this year.
Speaker 7: Well, we talk a lot about nation state threats, which
Speaker 7: are certainly prevalent and will always be prevalent. One of
Speaker 7: the things that we actually did a keynote on myself
Speaker 7: and Mike Sintonis was on e crime and we took
Speaker 7: a representative case study of some e crime groups and
Speaker 7: really talked about the sophistication level. While it's sophisticated, it's
Speaker 7: actually relatively easy to get into many organizations. You could
Speaker 7: just buy access. And then a big focus for the
Speaker 7: e crime groups now is actually not even encrypting the
Speaker 7: end users data, but to actually steal it first and
Speaker 7: then extort the company to make sure that they get
Speaker 7: paid before they lead the data on the web.
Speaker 3: What is the rationale of the threat actor?
Speaker 4: I think that there's this idea, if you take ransomware
Speaker 4: as an example, that that activity is just indiscriminate. They
Speaker 4: just want money, So they go after whoever they want.
Speaker 7: Well, they want money, and they go after where the
Speaker 7: money's at, right. They go after the bigger companies, they
Speaker 7: go after source code, they go after companies that they
Speaker 7: know could pay. From a public embarrassment perspective, but you're right,
Speaker 7: there's a bit of indiscriminate access that if they have it,
Speaker 7: they're going to try it. Whether it's a hospital, whether
Speaker 7: it's a large company, whether it's a government organization. They
Speaker 7: want to get paid from everyone.
Speaker 4: We just talked to the NSA about trying to hire
Speaker 4: talent in the public sector in this country. You post
Speaker 4: strong earnings, strong top line growth, How seriously does corporate
Speaker 4: America take the threats digital threats, cyber threats. Well, you're
Speaker 4: just waking up to this now, or do you see
Speaker 4: sort of consistency.
Speaker 7: I think it's consistent, and it's been consistent over the
Speaker 7: last probably five years. From a boardroom perspective, I think
Speaker 7: it's moved from an annoyance of having a PC that's
Speaker 7: infected to potentially systemic risk to a business when the
Speaker 7: entire business is ransomed and their systems are rendered useless.
Speaker 7: So it is the number one in my opinion, threat
Speaker 7: that has talked about in the boardroom today.
Speaker 4: Do you remember in January when we were at CS
Speaker 4: there were thousands of people there, not that many of
Speaker 4: them were saying generative AI. Right now everyone here is
Speaker 4: saying generative AI. What does that mean to you? Are
Speaker 4: you using generative AI tools to improve crowdstrikes offering? Do
Speaker 4: you use it personally? I mean, how does it impact
Speaker 4: your industry?
Speaker 7: Well, I'm this is one of those fascinating technologies and
Speaker 7: I think it's a bit of an iPhone moment for
Speaker 7: many folks when they actually use it and get the
Speaker 7: results out. When you think about generative AI and how
Speaker 7: can be used in security, it can really help in automation.
Speaker 7: There's a lot of repetitive task for a security operation center, administrator,
Speaker 7: things of that nature, and I think that will help
Speaker 7: revolutionize that. And we've been pioneering AI since I started
Speaker 7: the company in twenty eleven, so it isn't a new
Speaker 7: buzzword to us as opposed to a lot of companies.
Speaker 7: But I think what's important when we think about generative
Speaker 7: AI is I think it's going to compress the timeframe
Speaker 7: that companies have to actually patch because the ability to
Speaker 7: create exploits and take advantage of these vulnerabilities that exist
Speaker 7: and patch Tuesday, Microsoft has, etc. It's going to compress
Speaker 7: that time down to a very small level.
Speaker 4: There's a debate in the fields of whether generative AI
Speaker 4: makes tackling phishing more difficult or if it helps to
Speaker 4: rescale the workforce You've already got to literally improve defense.
Speaker 4: Where's your headline with that? Is this an upskiller or
Speaker 4: is it a sort of displacement of human activity?
Speaker 7: For me, there's always going to be humans in the loop.
Speaker 7: And you kind of look at level one, two, and three.
Speaker 7: If you can automate a lot of the level one
Speaker 7: repetitive task and you can basically make level two analysts
Speaker 7: or level three analysts more productive, you're going to hire
Speaker 7: less of them, be their hard to actually find and
Speaker 7: keeping their expensive. So why not automate the repartitive tasks.
Speaker 4: At the state actor level? Where are you seeing more activity?
Speaker 4: China or Russia?
Speaker 7: China's pretty active, pretty active now, particularly when you look
Speaker 7: at what's happening with Taiwan. They have a long plan.
Speaker 3: There is that ramptop as geopolitical we've.
Speaker 7: Seen it ramped up. Yeah, with geopolitical.
Speaker 3: Tension and how does it manifest itself, particularly.
Speaker 7: In the technology industry. You know, obviously there's a lot
Speaker 7: of chips in Taiwan, so there's a lot of understanding
Speaker 7: what's happening. There's a lot of reconnaissance. There is a
Speaker 7: lot of just understanding even shipping lanes, you know, who's
Speaker 7: shipping what. All of these facets of information are of
Speaker 7: interest to the Chinese government, and they suck it all in.
Speaker 7: It's like big data exercise for them. They suck it
Speaker 7: all in and they build a puzzle and they're very patient.
Speaker 4: George Kurtz Crowdshrake, CEO. We're live here at RSA, Caroline
Speaker 4: back to you in New York.
Speaker 2: So much more to come. Let's just get a quick
Speaker 2: check on the markets though, as we look at what
Speaker 2: is really tech galvanizing some risk on sentiment in the
Speaker 2: United States. Now's that one hundred having its best day
Speaker 2: in a couple of weeks since mid April. The reason
Speaker 2: earning's coming in better than expected, particularly when you look
Speaker 2: at some of the key names. I'm looking at the
Speaker 2: S and P five hundred, which is being helped hire
Speaker 2: by some of those tech names. But this isn't risk
Speaker 2: gone across the rest of the market, particularly over in Europe.
Speaker 2: You think about how Desolt Systems, it's a software company
Speaker 2: ASM and another key chip maker there. They actually fell
Speaker 2: in trading after their earnings. So we see a weaker
Speaker 2: all country world index. Tech really uperforming today. Let's move
Speaker 2: it on and look at what's happening in terms of
Speaker 2: individual movers. An absolute wealth of news coming today. Of
Speaker 2: course Microsoft doing well after its earnings, but also that
Speaker 2: news that it will no longer according to the US
Speaker 2: perhaps be able to be buying Activision.
Speaker 5: Remember sixty nine billion dollars.
Speaker 2: This is one of the top thirty M and A
Speaker 2: deals ever and the UK thinks it's anti competitive according
Speaker 2: to its Competition Market authority.
Speaker 5: Activision Blizzard off by more than.
Speaker 2: Ten percent as we worry about that deal going through.
Speaker 2: Tesla off by more than three percent. Interesting fiscal on
Speaker 2: the upside today as actually we see that this does
Speaker 2: have a route to getting some of its cars into
Speaker 2: the European market into the US market. By May Fiz
Speaker 2: Tesla having a pretty bad day, actually one of the
Speaker 2: worst performers on the NASDAK, dragging it down. But also
Speaker 2: we've got to keep on thinking what's happening in Disney
Speaker 2: actually trying to sue Ronda Santas, the governor of California,
Speaker 2: not of California, the governor of what's happening in Florida
Speaker 2: at the moment, ED, But so much more coming up
Speaker 2: from you in terms of cyber.
Speaker 4: Yeah, so much of that Microsoft story is about AI.
Speaker 4: So that's where we take the conversation. Next Vasu Jacao,
Speaker 4: who's the security chief over at Microsoft. They've already told
Speaker 4: us how they integrated those AI tools into the security offering.
Speaker 4: How's that driving the business? And what's she talking about here?
Speaker 4: Or next from RSA. This is Bloomberg. Welcome back to
Speaker 4: Bloomberg Technology. We are live at the RSA conference here
Speaker 4: in San Francisco.
Speaker 3: The focus cybersecurity.
Speaker 4: But I gotta be honest, everyone's talking about generative AI,
Speaker 4: which is fortunate because we are joined by Microsoft's VP
Speaker 4: of Security, Vasu Jacau, and you've already gone there. You've
Speaker 4: already told us how Microsoft integrates GPT into security co pilot.
Speaker 4: But why what is the benefit of using AI to
Speaker 4: boost security offering?
Speaker 13: It's great to be here with you live, ED, thank
Speaker 13: you for having us. We have to remember who we
Speaker 13: are up against as we think about why we need
Speaker 13: AI today. The threat landscape is really challenging. We've gone
Speaker 13: from five hundred and sixty seven attacks per second to
Speaker 13: twelve eighty seven attacks per second. That translates to tons
Speaker 13: of billions of attacks. Cybersecurity is very complex. The average
Speaker 13: defender is dealing with more than seventy tools at any
Speaker 13: given time, and it.
Speaker 5: Takes a long time for us to.
Speaker 13: Investigate all of this work and to do strategic work.
Speaker 5: So that's where AI is going to be a game changer.
Speaker 13: And let's not forget the talent shortage that we're facing
Speaker 13: as an industry. That's where AI is going to really
Speaker 13: augment that human essence.
Speaker 4: US Microsoft shares up more than eight percent. Investors really
Speaker 4: bought the AI story during earnings. Security, you know, flex
Speaker 4: a little bit. How important is your unit now within
Speaker 4: Microsoft's offering to enterprise clients of all sizes.
Speaker 13: YAH security is a twenty billion dollar business within Microsoft.
Speaker 13: We offer six product lines which come together to form
Speaker 13: one security cloud, and AI is very much at the
Speaker 13: heart of it. We talked about Security Copilot, which is
Speaker 13: what we announced on March twenty eight, the first and
Speaker 13: only generative AI pro which uses open ailm technologies as
Speaker 13: well as our Microsoft Security specific model, and we are
Speaker 13: really seeing our customers trust us on this journey. We
Speaker 13: have eight hundred and sixty thousand customers and six hundred
Speaker 13: thousand customers now who are using more than four Microsoft
Speaker 13: security products. Are really emphasizing that end to end journey
Speaker 13: we've been on.
Speaker 4: They trust you since that March announcement. Are they getting
Speaker 4: their checkbooks out and buying into security products because of
Speaker 4: the integration of the open AI technology.
Speaker 13: They do trust us, And every single customer I have
Speaker 13: met since we announced Security Copilot has asked us about
Speaker 13: when Security Copilot will be available at scale. We've released
Speaker 13: right now in private preview because it's very important for
Speaker 13: us to work with some customers and partners. It's a
Speaker 13: learning system. We need to train this AI. We need
Speaker 13: to learn from our customers. But every single customer, every
Speaker 13: single partner has asked us and we're.
Speaker 5: Helping them lay the foundations for AI.
Speaker 4: Right now, security has kind of seen in this emerging
Speaker 4: growth driver for Microsoft. There's also a talent question that's
Speaker 4: happening here on the ground at RSA. Do you need
Speaker 4: to have people with a new skill set who have
Speaker 4: a background in AI rather than traditional security software.
Speaker 13: That's the beauty of this new generative AI. You know
Speaker 13: what the most powerful coding language right now is in
Speaker 13: the world. It's English, and that's going to help get
Speaker 13: a whole new generation of defenders in because it's going
Speaker 13: to reduce the barriers to entry for cybersecurity.
Speaker 5: We have a talent.
Speaker 13: Shortage right now, three point four million jobs. We have
Speaker 13: a diversity challenge right now, we have a training challenge.
Speaker 13: So imagine someone who just gets into the workforce and
Speaker 13: can use AI as their ally to help them understand,
Speaker 13: to help them get trained. And imagine a Tier two
Speaker 13: analyst who is in your security operations center who can
Speaker 13: now have AI help them with automation and augmentation so
Speaker 13: they can then put their time on strategic decision making.
Speaker 4: When Microsoft reported earnings, you know clearly Cloud was a
Speaker 4: strength as one example. The macro picture is still a
Speaker 4: bit concerning when it comes to cybersecurity. Do you see
Speaker 4: stability in the kind of commitment to invest into cyber
Speaker 4: security capabilities capacity even when economic times are hard. I'm
Speaker 4: just wonder what the health of demand is.
Speaker 13: Absolutely, we made a big commitment to cybersecurity. We're investing
Speaker 13: twenty billion dollars in security over five years. That has started,
Speaker 13: and we continue to see security as the top priority
Speaker 13: for all organizations and the top spend as well as
Speaker 13: the most defensible spent. So we'll continue investing, we'll continue innovating,
Speaker 13: and we'll continue taking our customers on that.
Speaker 4: Journey of USU. There are other things to talk about
Speaker 4: beyond AI. What are the corridor conversations here? You know,
Speaker 4: part of what we've been talking about is where the
Speaker 4: threats are coming from?
Speaker 3: But for you, where's your focus?
Speaker 5: Our focus right now is end to end with AI.
Speaker 13: And I'll leave you with this, perhaps in our hands
Speaker 13: today is the most consequential technology that we're going to
Speaker 13: see in our lifetimes. We all need to be included in.
Speaker 13: That is the conversation being having in the hallways. It's
Speaker 13: not about what technology can do, but it is what
Speaker 13: is can humans do when empowered by this incredible AI
Speaker 13: and incredible technology?
Speaker 3: Yes or no?
Speaker 4: Are you using chat GPT every single day? I am
Speaker 4: Okay Vasu Jakau, Microsoft VP of Security.
Speaker 3: It's so good.
Speaker 4: Catch up here on the ground at RSA in San Francisco.
Speaker 4: Bloomberg Technology Live at the RSA conference here in San
Speaker 4: Francisco cybersecurity. The broader theme, generative AI the focus, let's
Speaker 4: bring it in rapid seven, Chief Security Officer ja blue
Speaker 4: Jen AI.
Speaker 3: The topic.
Speaker 4: You're looking at it from the other side of the table,
Speaker 4: which is advances in quantum computing. How do the threat
Speaker 4: actors harness that? Why is that a concern for you?
Speaker 14: Well, I think it's a concern because we don't tend
Speaker 14: to prioritize those things that are import until they become urgent.
Speaker 14: AI is a perfect example of that. Actually, frankly, we've
Speaker 14: been looking at AI from a very long time lens.
Speaker 14: You know, we saw the AI winter and then all
Speaker 14: of a sudden chat GPT and we've got all this
Speaker 14: new renewed interest and I feel like it's similar to
Speaker 14: what we're experiencing with quantum. So we had the beginning of.
Speaker 5: The hype cycle.
Speaker 14: You know, we're worried about a quantum winter, but I
Speaker 14: feel like we should be prepared for that, you know,
Speaker 14: quick accelerated speed up, so that we do have our
Speaker 14: house in order when there is a quantum computer capable
Speaker 14: of decrypting ursay and making available our secret.
Speaker 5: So we need to prepare. And this is why I'm concerting.
Speaker 4: Your industry colleagues are sort of pretty upbeat, right they
Speaker 4: see AI as being value additive for their businesses, or
Speaker 4: they're talking about how they've always been combatant in AI.
Speaker 3: Very few of them are saying the.
Speaker 4: Problems we're dealing with could be made worse by AI.
Speaker 4: That's essentially your concern.
Speaker 14: Well, I think there are a lot of people that
Speaker 14: are actually concerned about the growth of AI and what
Speaker 14: the downsides could be from all different standpoints, from ethical
Speaker 14: to also you know, the potential for what does AI.
Speaker 5: Mean for cybersecurity?
Speaker 14: Also from the flip side, like every technology can be
Speaker 14: good or bad, use fair enough, but I would like
Speaker 14: us to have a sort of roadmap for quantum readiness
Speaker 14: so that when there's a quantum computer capable of breaking
Speaker 14: our current cryptography, that we actually have a plan and
Speaker 14: that we actually know where our crown jewels are and
Speaker 14: we're able to protect them.
Speaker 4: We're here in San Francisco earlier we were talking with
Speaker 4: the NSA. There's a lot of emphasis on what the
Speaker 4: Biden administration's doing. Absolutely, but you're actually the vice chair
Speaker 4: of the European Technical Standards Institute, and I just wondered
Speaker 4: which jurisdiction you think is actually leading the way and
Speaker 4: combating cyber threats.
Speaker 14: That's a brilliant question, and I think, frankly, I think, frankly,
Speaker 14: the thing that's needed is that we work closer together,
Speaker 14: that we find our friends in this area, and you know, the.
Speaker 4: Macignized cooperation between the United States.
Speaker 14: And Europe, I think it could be better, to be
Speaker 14: very frankly, you, I think it actually needs to improve
Speaker 14: if we actually want to have any chance of doing well.
Speaker 14: The Biden administration with the Quantum Preparedness Act, you know,
Speaker 14: basically telling federal government that they need to have an
Speaker 14: inventorization of their cryptographic resources in order to make that transition.
Speaker 14: That was a great move, but now we need to
Speaker 14: kind of see it through and you know, it will
Speaker 14: hit the vendor landscape for everyone who serves the federal government,
Speaker 14: and I'm hoping that that trickle down effect will actually
Speaker 14: be meaningful across the cybersecurity industry.
Speaker 4: The other topic of conversation is talent. You know, this
Speaker 4: seems to be an industry where everyone is saying, we
Speaker 4: need more people. We're hiding in the thousands. I know
Speaker 4: that actually, for you, education is a big part of
Speaker 4: that is there a skills gap in this country or
Speaker 4: a talent gap in the United States.
Speaker 14: I wish there weren't, but there absolutely is.
Speaker 3: And why why is that?
Speaker 14: And I think there's two things. First of all, even
Speaker 14: though there is an availability of certain types of cybersecurity education,
Speaker 14: we don't see the uptake that we'd like to see.
Speaker 14: We don't see the demographic diversity that we want to
Speaker 14: see when we actually have applicants for different positions. And
Speaker 14: I and I feel like the depth of technical skills
Speaker 14: is still where we fall.
Speaker 5: The most short.
Speaker 14: So I think making it more accessible, you know, having
Speaker 14: coding practices in high schools, really starting very early with
Speaker 14: a kind of digital form of education, that's what we need.
Speaker 4: When you say things like security, network architecture or end
Speaker 4: to end encryption in the context of a corporate entity,
Speaker 4: sometimes people's eyes glaze over.
Speaker 5: I truly, yeah, yeah.
Speaker 4: But you know, the threats seem to be very serious.
Speaker 4: Do you recognize corporate America taking that threat seriously? Is
Speaker 4: their interest and willingness to invest to protect themselves?
Speaker 14: So it goes back to your previous question as well
Speaker 14: about literacy in terms of cybersecurity. Do we have enough
Speaker 14: cybersecurity knowledge and skill set to be able to do
Speaker 14: this well. And I think Corporate America is a perfect example,
Speaker 14: especially at the board level, where that also needs to improve.
Speaker 14: We need to actually improve because there is a fiduciary
Speaker 14: duty to make sure that we know enough about cybersecurity
Speaker 14: that we ask the right questions of enterprises, and I
Speaker 14: think here as well to be doing a better job.
Speaker 14: A great example that I always like to point to
Speaker 14: is the UK National Cybersecurity Center created a lot of
Speaker 14: advice for boards on specifically which questions do you need
Speaker 14: to ask in order to know that you're capable of
Speaker 14: performing that fiduciary duty for cybersecurity skills.
Speaker 4: Going back to generative AI very quickly, what's your data
Speaker 4: day engagement like with generative AI tools, are you using
Speaker 4: them in your line of business?
Speaker 14: Actually, right now, within the company, we are asking people
Speaker 14: not to use chatchupute for any other corporate resources unless
Speaker 14: it's been perfectly vetted by us. And that's a very
Speaker 14: simple reason because I don't think that we're at a
Speaker 14: place we're using it internally for our own products, but
Speaker 14: using a large language model that's external to our company
Speaker 14: is not something that we're going to do right now
Speaker 14: unless it's for you know, people who are using it
Speaker 14: in their free time. So I think that there's definitely
Speaker 14: a market for it to improve product, but I'm not
Speaker 14: sure that it's actually at the right place that needs
Speaker 14: to be from a security perspective in order to try
Speaker 14: in the data set with our data.
Speaker 4: Jablue, Rapid seven, Chief Security Officer, So good to catch
Speaker 4: up here at the RSA conference in San Francisco, Caroline.
Speaker 4: It's a day where the subject matter is clear. It's
Speaker 4: generative AI, and everyone is talking about that.
Speaker 2: Yeah, whether or not it's in the world of cyber
Speaker 2: whether it's in the earnings that we start to see
Speaker 2: the hype become reality. The talk of the net editions
Speaker 2: Microsoft is making in terms of new customers interested in
Speaker 2: how it's evolving AI within its business model. But also
Speaker 2: we've got to talk deals. Ed you're a gamer, what
Speaker 2: did you make in the Microsoft Activision news.
Speaker 4: Yeah, Look, I think a lot of the merger arbitrary
Speaker 4: specialists and a lot of though like generally this is
Speaker 4: a serious blow. There's a July deadline, but the questions
Speaker 4: around innovation and consumer pricing, Microsoft and Activision pushing back
Speaker 4: heavily against that that's the bit that.
Speaker 3: You have to track. Well, what else can they do
Speaker 3: to convince regulators?
Speaker 2: And it all comes round back to well cloud gaming.
Speaker 2: And we were talking so much today around the earnings
Speaker 2: of how much cloud is a driver and asu're for Microsoft,
Speaker 2: whether actually it's finally breaking even over at Alphabet and Google.
Speaker 2: What more are you looking forward to in terms of
Speaker 2: the cyber net conversations you're going to be having over
Speaker 2: their RSA.
Speaker 4: Yeah, I think it's where's the value adding? We heard
Speaker 4: Microsoft saying, look, this is a driver for a lot
Speaker 4: of our businesses right now. We're demonstrating how the AI
Speaker 4: works but also how it improves our existing businesses Cloud
Speaker 4: that I think we've got to do more there.
Speaker 5: Character we do always more to do.
Speaker 2: We thank you so much for being out there.
Speaker 6: Ed.
Speaker 2: That does it for this edition of Bloomberg Technology. You
Speaker 2: do not want to forget to check out our podcast.
Speaker 2: Can find it on the terminal, Go listen back to
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