WEBVTT - Visa to Buy Fraud-Prevention Firm BioCatch for $2.4 Billion 0:00:00.240 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.480 or watch us live on YouTube. 0:00:24.040 --> 0:00:25.880 We talked about how it's m and a Monday. There 0:00:25.960 --> 0:00:29.800 is some deal making fintech. Sure, why not Visa making 0:00:29.800 --> 0:00:33.280 a purchase, buying Biocatch for two point four billion dollars 0:00:33.320 --> 0:00:34.440 in cash. 0:00:34.440 --> 0:00:37.000 This is a fraud prevention firm. Let's bring in Dick 0:00:37.000 --> 0:00:37.400 sha Gera. 0:00:37.520 --> 0:00:40.519 She is our global fintech and payments analyst joining us 0:00:40.560 --> 0:00:43.280 from San Francisco. So is this a part of the 0:00:43.320 --> 0:00:47.680 business that Visa really needed to bolster that it didn't 0:00:47.720 --> 0:00:52.200 have already. Biocatch shut using artificial intelligence to detect fraud. 0:00:53.720 --> 0:00:57.080 Yes, Hi, Scarlett, always a pleasure to be here. So 0:00:57.600 --> 0:01:01.000 that's a good question, right. Visa actually did to cybersauce 0:01:01.320 --> 0:01:05.240 acquisition in the past, so it's important to understand why 0:01:05.280 --> 0:01:08.720 are they dropping this kind of money for Biocatch. But 0:01:08.880 --> 0:01:12.640 what biocatch actually does it is it evaluates user risk 0:01:12.760 --> 0:01:16.880 before the payment actually happens. It's during the account registration, 0:01:17.560 --> 0:01:20.560 during the log in, during the profile updates and navigation. 0:01:21.319 --> 0:01:25.400 That's what it's new. So the business itself is not new. 0:01:25.480 --> 0:01:30.399 Visa has a risk and security solutions business which actually generates. 0:01:29.959 --> 0:01:31.360 A two billion dollar revenue. 0:01:31.400 --> 0:01:35.319 That's what our estimate is already, and this basically adds 0:01:35.360 --> 0:01:35.679 to it. 0:01:36.440 --> 0:01:41.200 Dick should talk to us about AI in the FinTechs 0:01:41.200 --> 0:01:43.640 and payment space as it relates to fraud. I mean, 0:01:43.680 --> 0:01:45.680 you know that that's always one of the big risks 0:01:46.560 --> 0:01:49.640 in you know, the payment space here. I would think 0:01:49.720 --> 0:01:52.520 AI would be would hance if I'm a criminal, would 0:01:52.560 --> 0:01:56.080 really enhance my ability for fraud? How did the companies 0:01:56.120 --> 0:01:57.760 think about that? 0:01:57.760 --> 0:02:00.480 That's very true, Pauland if you notice, if you read 0:02:00.520 --> 0:02:03.120 the tele's, these card networks are obviously quite ahead of 0:02:03.160 --> 0:02:06.840 the curve in terms of identifying that issue. Right, So 0:02:06.880 --> 0:02:10.760 you're right, AI is actually accentuated fraud. It's a topic 0:02:10.880 --> 0:02:15.440 that is in every bank boardroom. If you think about 0:02:15.480 --> 0:02:18.560 what happened with Methos, the anthropic model, it exposed a 0:02:18.600 --> 0:02:22.639 lot of vulnerability. So financial fraud overall is growing and 0:02:22.680 --> 0:02:26.560 within payments. What was happening is the traditional gateway tools 0:02:26.600 --> 0:02:31.480 that authorize like they struggle with the app scams, which 0:02:31.520 --> 0:02:35.000 is basically when a legitimate user is tricked bioscammer into 0:02:35.000 --> 0:02:39.120 approving a transaction themselves, so they make the credentials device 0:02:39.160 --> 0:02:42.960 and OTP look valid. What companies like these, like biocatchs 0:02:43.080 --> 0:02:48.000 do is that they detect cognitive behavior and indicators of coversion. 0:02:48.040 --> 0:02:51.280 Basically if you're taking a long pause, if there's unusual 0:02:51.360 --> 0:02:55.320 navigation behavior or the phone call patterns during the session, 0:02:55.320 --> 0:02:58.760 and that helps them to prevent So this is preventative 0:02:59.520 --> 0:03:02.799 threatened eeligence as opposed to when you were acting or in. 0:03:02.800 --> 0:03:03.960 The moment of the payment. 0:03:04.320 --> 0:03:09.280 So Visa and MasterCard are both strengthening their aperture like 0:03:09.280 --> 0:03:12.840 to basically address these issues and also help their plans 0:03:12.919 --> 0:03:13.160 with it. 0:03:13.800 --> 0:03:16.920 So they're trying to come up with solutions. As a consumer, 0:03:17.160 --> 0:03:23.480 how would I experience the use of biocatch in preventing fraud? 0:03:23.639 --> 0:03:25.520 Would I not be able to make a purchase or 0:03:26.160 --> 0:03:28.200 am I going to get an alert? How would it 0:03:28.200 --> 0:03:28.680 affect me? 0:03:30.040 --> 0:03:32.080 Yeah, Scarlett, I'm yet to take a look at what 0:03:32.280 --> 0:03:34.560 exactly is the modality of it. But if you were 0:03:34.600 --> 0:03:37.200 to take a cue from what Visa did with cybersauce 0:03:37.800 --> 0:03:41.000 a lot of this happens in the back end. The 0:03:41.440 --> 0:03:44.680 Holy Grail is actually walking a very tight rope wherein 0:03:45.080 --> 0:03:49.160 you approve most or all of the good transactions and 0:03:49.200 --> 0:03:52.840 you block as many of the bad transactions without actually 0:03:52.880 --> 0:03:56.800 blocking the good transactions. So that's what all these companies 0:03:56.840 --> 0:04:00.440 are trying to approve. And authorization rates are one metric 0:04:00.560 --> 0:04:03.840 with which all of the payment companies actually sell their services. 0:04:03.880 --> 0:04:07.760 So they go and boast about their perfect authorization rates 0:04:07.760 --> 0:04:08.880 and minimal fraud rates. 0:04:08.920 --> 0:04:11.280 That's the metric that they're judged on by the merchants. 0:04:11.720 --> 0:04:13.960 I've got at least one Visa car in my pocket, 0:04:14.040 --> 0:04:18.080 so I applaud this deal that can help cybersecurity, so 0:04:18.160 --> 0:04:21.159 diction real quick. Just for Visa, just for example, over 0:04:21.160 --> 0:04:24.880 the last I know ten years, how is their fraud rate? 0:04:24.920 --> 0:04:26.960 Whatever you look at, has it gotten better or worse? 0:04:27.000 --> 0:04:28.560 What's going on out there in the marketplace. 0:04:29.360 --> 0:04:31.960 So actually the metric I would watch for this Paull 0:04:32.240 --> 0:04:34.720 is how are they doing on their revenue side, because 0:04:34.800 --> 0:04:38.039 like I mentioned, this is not just strengthening their own 0:04:38.040 --> 0:04:42.679 internal fraud protection, it actually is generating direct revenue for Visa. 0:04:42.800 --> 0:04:46.320 So to give you an example, Visa is actually creating 0:04:46.400 --> 0:04:50.640 a lot more of this services revenue line, and we 0:04:50.720 --> 0:04:53.599 project that their services business by itself could be about 0:04:53.600 --> 0:04:57.440 fifteen plus billion dollars by twenty twenty seven. That's about 0:04:57.480 --> 0:05:00.640 thirty one percent of their revenue from ten billion in 0:05:00.720 --> 0:05:04.880 twenty twenty five. So the fraud and the risk and 0:05:04.920 --> 0:05:09.240 security solutions itself is doing two billion dollars annual revenue 0:05:09.279 --> 0:05:11.479 run rate right now, and I think they're trying to 0:05:11.520 --> 0:05:14.159 build and catch on this opportunity that has come along 0:05:14.520 --> 0:05:16.719 with increased requirements. 0:05:16.880 --> 0:05:18.880 And by the way, the timing is amazing. 0:05:18.520 --> 0:05:21.560 Because a lot of global regulators are increasingly holding the 0:05:21.680 --> 0:05:25.280 banks libel for social engineering and scam losses. So this 0:05:25.320 --> 0:05:28.880 allows Visa to kind of bring a very monetizable solution 0:05:29.400 --> 0:05:32.159 to sell to financial institutions facing these complies. 0:05:32.440 --> 0:05:35.360 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:39.520 --> 0:05:43.200 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:43.279 --> 0:05:46.400 weekdays at ten am Eastern on Apple Coarclay, and Android 0:05:46.400 --> 0:05:49.680 Auto with the Bloomberg Business app. Listen on demand wherever 0:05:49.760 --> 0:05:53.320 you get your podcasts, or watch us live on YouTube. 0:05:54.080 --> 0:05:59.320 Marriott report a second quarter earnings that beat estimates, spooking 0:05:59.320 --> 0:06:01.200 demand threw of high room prices in the US, but 0:06:01.240 --> 0:06:04.520 the stocks down, So I'm guessing their forward guidance wasn't 0:06:04.560 --> 0:06:06.440 that great. Let's check in with an expert on all 0:06:06.440 --> 0:06:08.720 this stuff. Brian Egger, Senior Gaming and Lodging analyst for 0:06:08.760 --> 0:06:10.359 Bloomberg and Tellent just joins us life here in our 0:06:10.360 --> 0:06:13.840 Bloomberg Get Active Brokers studio, no Nantucket office for him. 0:06:14.880 --> 0:06:17.360 Talk to us about Mary. What did they release today? 0:06:17.800 --> 0:06:21.359 So Mary had had an above expected level of revenue 0:06:21.400 --> 0:06:23.159 p available room growth we like to call it ref 0:06:23.200 --> 0:06:27.120 park and they also raised their full year metric as well, 0:06:27.160 --> 0:06:29.640 so there was some second half upside. So I don't 0:06:29.640 --> 0:06:32.560 think they really lower guidance. There may been some expectation 0:06:32.640 --> 0:06:35.360 that the third quarter could have been even higher. They 0:06:35.440 --> 0:06:37.360 got to bump in the second quarter and they'll get 0:06:37.440 --> 0:06:39.479 some of that in the third quarter from the World Cup. 0:06:40.040 --> 0:06:42.560 I mean the we reek spots globally are obviously the 0:06:42.600 --> 0:06:46.000 Middle East, and there were some pockets of weakness, but 0:06:46.080 --> 0:06:49.680 overall quite strong. I think I think the outlook may 0:06:49.680 --> 0:06:52.240 have been people are looking for a bit more, but 0:06:53.480 --> 0:06:56.839 taking a step back, it was overall a pretty positive prints. 0:06:57.040 --> 0:06:59.960 So for these full service hotel groups, like Mariatt High. 0:07:00.080 --> 0:07:03.520 At Hilton, they have like a million brands, right, they 0:07:03.640 --> 0:07:05.800 really segment the market. 0:07:05.720 --> 0:07:09.000 Thirty thirty one if you count Bonvoy from Aria. 0:07:09.200 --> 0:07:14.080 Well, yeah, I'm a bond boy person. I guess that works, right, 0:07:14.120 --> 0:07:16.520 I mean, that's proven to be the way to cut 0:07:16.520 --> 0:07:17.120 this market up. 0:07:17.160 --> 0:07:20.560 Yeah, you know. They and they report separately trends for 0:07:21.120 --> 0:07:23.960 luxury versus mid scale versus limited service, and they've been 0:07:24.000 --> 0:07:27.240 differing a trends since we emerge from the pandemic. But 0:07:27.320 --> 0:07:29.720 it does benefit them to have different segments. 0:07:29.760 --> 0:07:30.160 Overall. 0:07:30.200 --> 0:07:33.360 They skewed a bit more upscale and luxury then let's 0:07:33.360 --> 0:07:36.000 say win them or even Hilton a little bit more like. 0:07:36.040 --> 0:07:41.760 Kyat, so they see I presume the K shaped economy 0:07:41.800 --> 0:07:44.520 out there is that in fact reflected. 0:07:44.120 --> 0:07:47.680 In their results to a large degree, although I think 0:07:47.720 --> 0:07:50.160 increasingly the CEO of Hilton the last quarter used the 0:07:50.200 --> 0:07:52.880 term C shaped, which is interesting because I think what 0:07:52.880 --> 0:07:55.800 you're seeing is upscale luxury is still quite strong, but 0:07:55.840 --> 0:08:00.560 the limited service, which have been lagging in your last 0:08:00.600 --> 0:08:03.000 year or two, is actually coming back really and I 0:08:03.040 --> 0:08:05.880 think we're seeing a bit more strength in that part 0:08:05.880 --> 0:08:08.600 of the business, whether it's you know, whether it's a 0:08:08.600 --> 0:08:10.120 business travel or leisure travel. 0:08:10.360 --> 0:08:13.600 So are these companies like again Marriotta High, Are these 0:08:13.760 --> 0:08:14.640 global companies? 0:08:15.480 --> 0:08:18.160 Yeah, I mean they are, and so when you when 0:08:18.200 --> 0:08:20.920 they disclose the results, you get a picture into what's 0:08:20.920 --> 0:08:25.000 happening in Asia or Middle East, Africa, Latin America as 0:08:25.000 --> 0:08:27.240 well as the US. So they are quite global. It's interesting. 0:08:27.240 --> 0:08:29.880 I think a lot of businesses today that over the 0:08:29.920 --> 0:08:33.920 last decade or maybe even more, we're really investing in 0:08:33.920 --> 0:08:37.080 the Middle East UAE by I mean that Ara. 0:08:37.000 --> 0:08:39.600 And the casinos too. When yes, you know exactly. 0:08:39.400 --> 0:08:41.480 Are they rethinking that? 0:08:41.600 --> 0:08:41.840 Now? 0:08:42.120 --> 0:08:44.800 How are they What are they getting that's over there 0:08:44.840 --> 0:08:46.079 that's not us, don't worry about. 0:08:45.960 --> 0:08:49.120 Yeah, I don't think they're rethinking it. But obviously a 0:08:49.200 --> 0:08:52.559 major tragic world event happens and then it affects their 0:08:52.640 --> 0:08:55.480 overall growth. Like for example, in the second quarter for 0:08:55.600 --> 0:08:58.600 Marriott rev, par in the Middle East is down forty 0:08:58.600 --> 0:09:01.560 three percent, you know, not prizing given the level of disruption. 0:09:02.360 --> 0:09:04.760 I think the expectation is if you get a normalization 0:09:04.920 --> 0:09:09.000 in the geopolitical climate, that that growth will come back. 0:09:09.400 --> 0:09:12.080 But obviously Near Terman has had an effect, and there's 0:09:12.120 --> 0:09:14.120 also been a little bit of a slow down not much, 0:09:14.160 --> 0:09:16.680 but a little bit in new openings in the pace 0:09:16.720 --> 0:09:19.320 of net unit growth or room growth because of some 0:09:19.679 --> 0:09:22.240 opening or construction delays in the Middle East as well. 0:09:22.440 --> 0:09:25.319 Interesting, how about here in the US, what's the industry 0:09:25.320 --> 0:09:27.960 doing capacity wise or are we still are we building 0:09:27.960 --> 0:09:30.120 new hotels? Are referring existing ones? 0:09:30.520 --> 0:09:31.040 What's going on? 0:09:31.120 --> 0:09:33.920 There's kind of a mid single digit rate of overall growth. Now, 0:09:33.960 --> 0:09:36.720 some of that is new construction. Some of that, and 0:09:36.760 --> 0:09:39.439 it's true in the case of Mariotte and Hilton comes 0:09:39.440 --> 0:09:43.600 from conversions, you know, so you basically get non branded 0:09:43.760 --> 0:09:47.720 Hilton branded hotels are not marribranded, and so some of 0:09:47.720 --> 0:09:50.360 that moroom growth of some conversions and not necessarily new 0:09:50.400 --> 0:09:51.280 ground up construction. 0:09:51.640 --> 0:09:54.079 All Right, it's been i don't know ten twenty years 0:09:54.080 --> 0:09:57.520 of the airbnbs of the world. How is it all 0:09:57.559 --> 0:10:00.880 shaken out with that segment. I'm not sure what the 0:10:00.960 --> 0:10:03.720 term is for the airbnb part of the world versus hotels. 0:10:03.880 --> 0:10:06.160 Yeah, I mean, first of all, remember some of these 0:10:06.280 --> 0:10:10.400 entities have the equivalent of a you know, vacation ownership 0:10:10.400 --> 0:10:14.480 type interest type of experience, and you know, I think 0:10:14.559 --> 0:10:18.880 for a price sensitive short term bookings window wizure customer 0:10:19.240 --> 0:10:21.880 had some effect on the margin, but I think the 0:10:22.040 --> 0:10:26.400 overall perception is that the leisure consumer and traveler, particularly 0:10:26.440 --> 0:10:29.600 for you know, high end stays, has been really resilient. 0:10:29.640 --> 0:10:32.360 And that's kind of the sweet spot of a Mariotte because. 0:10:32.120 --> 0:10:34.840 I see, like you know, some of these court by 0:10:34.840 --> 0:10:37.000 marriage or some of the over ends. I mean they 0:10:37.000 --> 0:10:40.160 are dominated by travel teams. You pull into there and 0:10:40.200 --> 0:10:43.120 then you know, like twenty seven lacrosse teams or ice 0:10:43.160 --> 0:10:45.840 hockey teams. That's a part of the business that didn't 0:10:45.880 --> 0:10:46.880 exist a while ago. 0:10:47.559 --> 0:10:50.280 I mean, it's a different type of experience and travel 0:10:50.320 --> 0:10:53.679 purchase obviously if you're looking at a vacation ownership or 0:10:53.679 --> 0:10:56.160 a home renting for short term, but it does not 0:10:56.280 --> 0:10:58.439 seem to have detracted in any way for the overall, 0:10:58.800 --> 0:11:00.480 weizure travel strength. 0:11:00.600 --> 0:11:03.319 That's amazing because you think about all the Airbnb inventory 0:11:03.360 --> 0:11:04.280 that's come on to the market. 0:11:04.760 --> 0:11:07.000 I mean, at one point we thought are individual consumers, 0:11:07.520 --> 0:11:10.120 certainly we'll choose one over the other, But overall, I 0:11:10.120 --> 0:11:12.480 think it represents a very neat segment of the market. 0:11:12.600 --> 0:11:16.040 So stay with us. More from Bloomberg Intelligence coming up 0:11:16.040 --> 0:11:16.559 after this. 0:11:20.880 --> 0:11:24.560 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:24.640 --> 0:11:27.720 weekdays at ten am Eastern on Apple, Cocklay and Android 0:11:27.760 --> 0:11:31.040 Auto with the Bloomberg Business app. Listen on demand wherever 0:11:31.120 --> 0:11:34.840 you get your podcasts, or watch us live on YouTube. 0:11:35.160 --> 0:11:36.800 I thought we were going to come in potentially for 0:11:36.840 --> 0:11:39.360 another farmer merger Monday. 0:11:40.000 --> 0:11:41.480 Sure, I'm not sure that's gooding. 0:11:41.520 --> 0:11:44.760 We've got some noise, but a lot of noise because 0:11:44.760 --> 0:11:48.400 you have the UK drug maker Astrazenica in talks reportedly 0:11:48.600 --> 0:11:51.520 to combine with US rival Bristol Myers. 0:11:52.120 --> 0:11:53.520 If they combine, this. 0:11:53.400 --> 0:11:56.600 Would be a deal valued at almost four hundred billion dollars. 0:11:56.800 --> 0:11:58.200 But I don't know if it's a deal or not 0:11:58.240 --> 0:11:59.800 a deal. So let's check out somebody who follows this 0:11:59.800 --> 0:12:03.319 stuf for a living. Sam Fazelli. Uh he is. I 0:12:03.360 --> 0:12:05.000 don't know what his titles, but he's just the top 0:12:06.800 --> 0:12:09.920 drug bosses shaking his head, pharma analyst in the city 0:12:09.920 --> 0:12:14.120 of London. Sam talkers, You've known Asseneca and brister Miles 0:12:14.200 --> 0:12:17.960 squib of Prince in New Jersey for decades. Here, what 0:12:18.000 --> 0:12:20.040 do you think about a potential type of these two companies? 0:12:20.920 --> 0:12:24.240 So Paul and Scola go into your terminal and ask 0:12:24.360 --> 0:12:28.800 me and type what has Pascal Soio, CEO of Astenka, 0:12:28.840 --> 0:12:33.360 said about nego mergers negative negative negative negative negative? How 0:12:33.440 --> 0:12:36.920 is this credulous? What happened since the results that came 0:12:36.960 --> 0:12:40.000 out recently and the last time the CEO said this? 0:12:40.360 --> 0:12:44.840 So I'm going to speculate here right, all speculation. This 0:12:44.960 --> 0:12:48.120 is FT saying, which of course is a very credible source, 0:12:49.520 --> 0:12:52.520 that perhaps there have been some discussions and maybe on 0:12:52.720 --> 0:12:59.800 some segment to be put together cardiovascular oncology or call 0:12:59.840 --> 0:13:03.000 it operation, on an area where they could collaborate the 0:13:03.120 --> 0:13:05.959 merger together. Why would you do that if you'd be 0:13:06.040 --> 0:13:08.520 telling us the story just a few days ago at 0:13:08.520 --> 0:13:11.880 the Q two that we have double digit growth Ernie's 0:13:11.880 --> 0:13:14.920 growth to twenty thirty, and then go and buy yourself 0:13:14.960 --> 0:13:19.880 a company that's got flat or negative earnings growth potentially 0:13:19.920 --> 0:13:23.920 depending on how quickly these patent experience hit Bristol Myers. 0:13:24.000 --> 0:13:26.680 Why would you do that? In which corporate finance book 0:13:26.720 --> 0:13:27.560 does that make sense? 0:13:28.320 --> 0:13:31.680 I guess part of this is that Astra Zeneca, which 0:13:31.760 --> 0:13:34.559 is listed of course in the UK, a member of 0:13:34.600 --> 0:13:37.600 the Footy one hundred, completed a direct listing in New 0:13:37.640 --> 0:13:40.120 York this year and maybe that got people thinking that 0:13:40.440 --> 0:13:42.320 it has greater ambitions in the US. 0:13:42.360 --> 0:13:43.840 And I hear what you're saying about how. 0:13:43.760 --> 0:13:47.640 There might be specific partnerships with BMY, But how did 0:13:47.640 --> 0:13:50.360 that direct listing in New York get people talking and 0:13:50.400 --> 0:13:52.200 thinking about what its ambitions could be. 0:13:53.679 --> 0:13:56.600 I think there's a little bit of effort going on 0:13:56.679 --> 0:13:59.760 by all pharma companies to show how US friendly they 0:13:59.800 --> 0:14:03.120 are because of all the obvious conversations that have been 0:14:03.120 --> 0:14:05.800 going Some of it is sincere, some of it is not. Also, 0:14:06.760 --> 0:14:09.040 I think it's a signal to the Europeans and the 0:14:09.120 --> 0:14:12.200 UK specifically saying your environment is not great for research 0:14:12.520 --> 0:14:15.080 the US is some of that's going on. But as 0:14:15.240 --> 0:14:18.240 Zenica is already an international company, they've had no problem 0:14:18.320 --> 0:14:21.480 growing their business in the US, in China, in Asia, 0:14:21.960 --> 0:14:24.720 in any other country that they want to. So really, 0:14:24.760 --> 0:14:28.000 I don't buy that story that this is geographic to 0:14:28.000 --> 0:14:30.280 get a better foothold in the US. And if you 0:14:30.360 --> 0:14:32.560 really want that, at least get go after something that's 0:14:32.600 --> 0:14:35.880 complimentary as opposed to exactly the same build business area, 0:14:35.920 --> 0:14:38.160 which would cause quite a lot of questions at least 0:14:38.280 --> 0:14:42.840 whether it's real or not on the anti trust side 0:14:42.840 --> 0:14:43.080 of things. 0:14:43.160 --> 0:14:46.320 Yeah, I just I don't buy it. I don't buy it. 0:14:46.400 --> 0:14:48.440 I think there's something else maybe going on, but I 0:14:48.480 --> 0:14:49.800 don't buy the full merger. 0:14:50.040 --> 0:14:52.280 I mean, is there a sense that if you're ever 0:14:52.360 --> 0:14:55.120 to want to get a deal of this size done, 0:14:56.320 --> 0:14:59.560 you do it with this well this administration is in office? 0:14:59.600 --> 0:15:01.520 Is that maybe just feeling us a little bit? 0:15:02.160 --> 0:15:02.560 Maybe? 0:15:02.680 --> 0:15:06.320 Maybe, but again, going to do something that's secretive not dilutive. 0:15:06.640 --> 0:15:08.360 I mean, you know, it would take them, It would 0:15:08.400 --> 0:15:11.080 take the everything that Pascal has already been saying, we 0:15:11.160 --> 0:15:13.600 take their eyes off of the pipeline. It would cause 0:15:13.640 --> 0:15:17.280 a huge amount of consternation within the companies, people wondering 0:15:17.320 --> 0:15:18.680 whether they have a job or not in a year. 0:15:18.680 --> 0:15:20.720 What do you think happened. We've been around long enough 0:15:20.720 --> 0:15:23.360 to know these mega emergency from it don't tend to 0:15:23.400 --> 0:15:25.920 work unless you have a massive patent clip coming up. 0:15:26.440 --> 0:15:28.680 You merge two pattern clips here, they get even worse. 0:15:29.280 --> 0:15:33.320 I just doesn't make sense, you know. Ockham's raiser simple 0:15:33.360 --> 0:15:34.600 answer is it doesn't make sense. 0:15:34.800 --> 0:15:35.640 It doesn't make sense. 0:15:35.640 --> 0:15:38.320 But if you mentioned something about how Bristol Meyer's scribe 0:15:38.400 --> 0:15:41.280 has seen flat growth, why why is it such a laggard? 0:15:41.320 --> 0:15:45.120 What is it having trouble doing right now? And does 0:15:45.160 --> 0:15:47.080 it need someone to buy it out. 0:15:48.400 --> 0:15:50.480 It doesn't need someone to buy that. They do have 0:15:50.600 --> 0:15:54.080 what they need to get to the Greek growth or 0:15:54.160 --> 0:15:57.560 the or the re startup growth. The thing is they're 0:15:57.600 --> 0:16:01.359 suffering from what all former companies at some point patent expirers, 0:16:01.440 --> 0:16:04.400 which is great for consumers. We forget all that. They 0:16:04.400 --> 0:16:07.280 go and invent drugs, spend billions developing them and creating 0:16:07.280 --> 0:16:09.800 a market, improving that drugs are good and safe, et cetera, 0:16:10.320 --> 0:16:12.880 and then twelve years or ten years in they become generic. 0:16:12.880 --> 0:16:15.520 People you can buy them for by a tenth of 0:16:15.600 --> 0:16:19.000 the price or if not less. So that's what's happening 0:16:19.040 --> 0:16:20.760 in Bristol Myers. A couple of drugs are going off 0:16:20.800 --> 0:16:23.680 patent that they're dealing with that they have a pipeline 0:16:23.720 --> 0:16:26.200 that's developing. I want to point to a podcast I 0:16:26.200 --> 0:16:29.360 did on our Angles of Healthcare Podcasts with the head 0:16:29.360 --> 0:16:34.320 of Oncology, Christian Message c from bms A Bmy. You 0:16:34.360 --> 0:16:36.400 going and listen to that. You hear a lot of 0:16:36.400 --> 0:16:37.880 great stuff going on in the company. 0:16:39.160 --> 0:16:42.080 Stay with us. More from Bloomberg Intelligence coming up after this. 0:16:46.200 --> 0:16:49.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:49.960 --> 0:16:53.360 weekdays at ten am Eastern on Applecarplay and Android Auto 0:16:53.440 --> 0:16:56.520 with the Bloomberg Business App. Listen on demand wherever you 0:16:56.560 --> 0:17:00.200 get your podcasts, or watch us live on YouTube. 0:17:00.600 --> 0:17:04.840 On Friday, New York State sued Calshie for running allegedly 0:17:04.920 --> 0:17:09.000 an illegal, unlicensed gambling operation in the state. Right They're 0:17:09.000 --> 0:17:12.280 basically saying that Calshi's prediction market exposes New York State 0:17:12.359 --> 0:17:15.159 residents to serious personal and financial risk, and that the 0:17:15.200 --> 0:17:17.280 company did not seek a license from the New York 0:17:17.280 --> 0:17:20.359 State Gaming Commission. That gets to the heart of the 0:17:20.400 --> 0:17:23.280 matter here with prediction markets and whether they're gambling or 0:17:23.320 --> 0:17:28.560 something else, And so the discussion continues. The debate continues. 0:17:28.840 --> 0:17:31.960 Jonathan Kay is founder and CEO of Aptopia. He joins 0:17:32.000 --> 0:17:35.560 us right now from Boston. Jonathan, different states have different 0:17:35.560 --> 0:17:38.280 points of view on this. We know the federal government 0:17:38.600 --> 0:17:41.760 looks at prediction markets and says it's okay, just give 0:17:41.840 --> 0:17:43.879 us the lay of the land right now in terms 0:17:43.880 --> 0:17:47.880 of how much market share prediction markets have taken when 0:17:47.880 --> 0:17:50.960 it comes to sports betting, or in this case, the 0:17:51.040 --> 0:17:54.240 terminology they use as events contracts. 0:17:54.960 --> 0:17:57.560 Yeah, well, Paul and Scarlett, thank you so much for 0:17:57.600 --> 0:18:00.960 having me nice to be here today. Generally, what we're 0:18:01.000 --> 0:18:03.600 seeing is, I think we're here today because we've seen 0:18:03.680 --> 0:18:07.440 prediction markets daily active users, right, the amount of people 0:18:07.440 --> 0:18:10.320 that go back to the app each day actually start 0:18:10.359 --> 0:18:15.120 to meaningfully surpass those of online sports books often known 0:18:15.160 --> 0:18:19.320 as DraftKings and FanDuel. And what you've seen is actually 0:18:19.359 --> 0:18:21.640 since the Super Bowl, the last like kind of four 0:18:21.760 --> 0:18:25.520 or five months, you've seen parody. So you've seen DraftKings 0:18:25.560 --> 0:18:28.880 and FanDuel and Calshi kind of be in a dog fight, 0:18:29.000 --> 0:18:32.120 frankly in terms of daily active users, which I think 0:18:32.160 --> 0:18:35.520 for people that are avid gamblers or avid investors in 0:18:35.560 --> 0:18:38.320 this space. Super Bowl to now is kind of a 0:18:38.359 --> 0:18:40.520 slow period. So we were looking to see what would 0:18:40.520 --> 0:18:43.000 come out of the World Cup, and what you saw 0:18:43.240 --> 0:18:45.920 was like the dog fight break up, right. You saw 0:18:45.960 --> 0:18:50.520 Calshi essentially grow to be materially larger in terms of 0:18:50.600 --> 0:18:54.680 daily active users than the sports books and polymarket kind 0:18:54.680 --> 0:18:57.160 of come out of this tier two positioning and now 0:18:57.320 --> 0:19:00.720 enter into the dogfight with DraftKings and sports and fandom. 0:19:01.040 --> 0:19:05.240 So is it easier less expensive? Why are people going 0:19:05.320 --> 0:19:08.360 from the online sports books to these prediction markets? Are 0:19:08.359 --> 0:19:11.440 these prediction markets easier to use cheaper to use. What's 0:19:11.760 --> 0:19:12.159 driving it? 0:19:12.200 --> 0:19:12.560 Do you think? 0:19:14.200 --> 0:19:17.439 Yeah, it's a really really good question, And so we 0:19:17.560 --> 0:19:20.200 beat up three angles guys. So we looked at is 0:19:20.240 --> 0:19:23.120 it the location of the user, because there's states where 0:19:23.119 --> 0:19:26.560 it's legal and non legal. Is it the demographic of 0:19:26.600 --> 0:19:29.199 the user, the age or the gender, or is it 0:19:29.280 --> 0:19:33.240 something specific to an event where like an elections or 0:19:33.440 --> 0:19:40.080 Love Island which is ridiculously popular. Is that driving the activity? Right? 0:19:40.160 --> 0:19:44.240 And what we saw is that location, whether you're in 0:19:44.280 --> 0:19:46.879 a state that you can legally use DraftKings and fend 0:19:47.040 --> 0:19:50.840 or not, was really not a contributor to activity at 0:19:50.920 --> 0:19:55.520 all during this low period. Then we saw non legal 0:19:55.560 --> 0:20:00.159 states be a significant driver of activity to cal She 0:20:00.240 --> 0:20:02.920 and polymarket during the World Cup. So I would say 0:20:02.920 --> 0:20:04.840 the first thing is that you have somebody who's in 0:20:04.880 --> 0:20:07.679 a state where they don't think sports betting is legal. 0:20:08.080 --> 0:20:11.199 And even though DraftKings and FanDuel have like snuck prediction 0:20:11.359 --> 0:20:14.200 markets into their app, I think the perception is, hey, 0:20:14.200 --> 0:20:15.960 I'm going to state that it's not legal. I'm not 0:20:16.000 --> 0:20:18.600 doing that cal She is this thing I heard is okay, 0:20:18.640 --> 0:20:21.720 so I'm gonna do it right. And so location was 0:20:21.720 --> 0:20:26.960 a big driver and and frankly, gender was a huge driver, right. 0:20:27.000 --> 0:20:31.159 I think it's it's probably widely understood that male like 0:20:31.320 --> 0:20:34.680 young males pretty much dominate like a sports betting industry. 0:20:35.160 --> 0:20:37.480 What that means in number sense is that twenty two 0:20:37.560 --> 0:20:41.879 percent of FanDuel and DraftKings users are female all shee 0:20:42.000 --> 0:20:45.119 that number is up to thirty two percent. That is 0:20:45.160 --> 0:20:48.760 a material shift. That's a whole new tam that it 0:20:48.800 --> 0:20:49.280 opened up. 0:20:50.359 --> 0:20:51.119 How did it do that? 0:20:51.200 --> 0:20:55.639 How did Calshi and prediction markets like a polymarket manage 0:20:55.680 --> 0:20:59.800 to find their way to female users so quickly? 0:21:02.000 --> 0:21:04.919 Yeah, I think like we talk a lot about politics 0:21:04.960 --> 0:21:07.000