Speaker 1: I'm Caroline hide A Bloomberg's World headquarters in New York,
Speaker 1: and I made Ludlow in San Francisco. This is Bloomberg
Speaker 1: Technology and tech continues to lead markets lower as the
Speaker 1: downturn hit Silicon Valley harder than most other sectors. We
Speaker 1: talk technicals, then Amazon Web Services CEO discusses Amazon's new
Speaker 1: in house chits and the latest on restructuring, and Twitter
Speaker 1: is no longer policing COVID misinformation that's as content concerns continue,
Speaker 1: while Elon Musque takes in at the app stores. But
Speaker 1: first aid, let's bring in Rob Cantwell. Here's portfolio manager
Speaker 1: Upholdings and Rob, it's great to have you with the show.
Speaker 1: And we actually source a little bit of data ourselves
Speaker 1: nowadays from Twitter. We go out with our daily poll
Speaker 1: and we wanted to ask our audience whether they are
Speaker 1: currently selling big tech, whether the reasons around, whether they're
Speaker 1: blaming the Federal Reserve and rate hikes, whether they're blaming
Speaker 1: the economic slowdown, whether they're blaming political headwinds. And actually, Robbed,
Speaker 1: we've got some British sentiment. They're not selling, they're buying
Speaker 1: in majority roll. Are you buying at this point, Well,
Speaker 1: it's tricky to go on a technology platform and ask
Speaker 1: them if they want to buy more technology. We certainly
Speaker 1: are finding plenty of good deals in the space, but
Speaker 1: it's a it's a it's a fascinating time to be
Speaker 1: an investor in big tech, small tech, medium tech, because
Speaker 1: big tech has gotten so big it's now more than
Speaker 1: the SMP five hundred that it has become intertwined with
Speaker 1: macro economic factors and statistics, and that hasn't been the
Speaker 1: case for the past twenty years. Google hasn't had to
Speaker 1: care about currency headwinds up until about six months ago.
Speaker 1: And so you've now got all these tech analysts that
Speaker 1: have been scrambling because the earnings calls this past quarter
Speaker 1: everybody missed due to currency. So now you've got all
Speaker 1: these tech analysts that have to become currency experts, and
Speaker 1: it's thrown things a little bit upside down. But really,
Speaker 1: what's that done is it has created plenty of opportunities
Speaker 1: for those that are willing to wait some of this
Speaker 1: stuff out, because there's there's obviously you want to be
Speaker 1: buying when when folks are selling. We've been saying this
Speaker 1: line on blue bag technology for weeks now about higher
Speaker 1: rates discount the present value of future profits. Why that's
Speaker 1: why we care about the FED. In the context all
Speaker 1: of the text exit, I'm gonna ask you a slightly
Speaker 1: different question, what is the bigger risk to the technology
Speaker 1: sector the FED or inflation? Well, interest rates actually affect
Speaker 1: a lot of things. Uh. They can push your multiple
Speaker 1: down from the discount factor that you just discussed, it
Speaker 1: also pushes down your growth rate, and a lower growth
Speaker 1: rate also drives the lower multiple. And if you look
Speaker 1: back over long enough periods of time, higher interest rates
Speaker 1: also means lower margins. So you're talking about a triple
Speaker 1: hit here of your discount factor, your margins for the company,
Speaker 1: and the growth rate expectations. And that's why you've seen
Speaker 1: stocks like Meta trade down almost seventy this year. They
Speaker 1: obviously have some other factors as well. So it'sest rates
Speaker 1: where we sit right now. Interest rates are more of
Speaker 1: a risk to the global economy than inflation. Inflation has
Speaker 1: started calming down over the past thirty days or so,
Speaker 1: but we're now in a low growth world and most
Speaker 1: central banks are saying they're not done raising interest rates,
Speaker 1: and so there isn't a single analyst out there that
Speaker 1: is forecasting a re acceleration and growth because until we
Speaker 1: see that interest rates have pause, that that effect that
Speaker 1: interest rates have on growth for the worldwide economy is
Speaker 1: going to continue to be an issue valuing a lot
Speaker 1: of these companies and the impact that raising rates has
Speaker 1: on the labor market in particular, that is the other
Speaker 1: side of the coin and of sacrifice that the federal
Speaker 1: Reserve is willing to swallow. At the moment, we're seeing
Speaker 1: those job layoffs coming thick and fast to the tech
Speaker 1: sector first and foremost. Rob is that the way you
Speaker 1: want to see companies controlling costs, and we likely to
Speaker 1: see them being the canary in the cold mine and
Speaker 1: this sweeping into other sectors. You know, it's job layoffs
Speaker 1: are are a tricky one because you saw the onset
Speaker 1: of COVID In early every company laid off too many
Speaker 1: employees and then six months later they were scrambling to
Speaker 1: rehire again. So you get these strange booming bus cycles
Speaker 1: where companies fire, profit margins start improving, and then they
Speaker 1: start chasing employees all over again. So whether or not
Speaker 1: we've gone recent history tells us that companies are likely
Speaker 1: going too far again in these recent playoffs. This this
Speaker 1: coincidental thtcent layoff number that became the socially accepted average
Speaker 1: for the amount of your workforce you can let go,
Speaker 1: we found to be a little bit peculiar and was
Speaker 1: a bit more reflective of companies just trying to hide
Speaker 1: in the average and not trying to stand up by
Speaker 1: not firing, but also not trying to stand out by
Speaker 1: over firing their their overall workforce. But inaggregate, it's just
Speaker 1: volatility in an economy is a risk because it doesn't
Speaker 1: allow the managers to plan and execute their strategies as
Speaker 1: smoothly as they could if there was less volatility. So
Speaker 1: we're certainly in a very volatile moment, uh, and interesting
Speaker 1: to see what comes out the other side. We we
Speaker 1: know it's been a toughier right You look at it
Speaker 1: as that one hundred with down thirty percent as of
Speaker 1: Tuesday's close, as we know, the worst year since two
Speaker 1: thousand and eight. If they're all green, green sheets or
Speaker 1: bright spots in the technology sector, where are they? Well?
Speaker 1: What what? What's remarkable is that the usage of technology
Speaker 1: remains incredibly strong. You know elon reporting record, you know
Speaker 1: users sign ups and usage of Twitter that's not unique
Speaker 1: to Twitter. That's happening everywhere. That's happening in Instagram, that's
Speaker 1: happening in TikTok. And there's a couple of other technology
Speaker 1: transitions that are happening. The cloud computing one. We think
Speaker 1: Data Dog is an incredibly well positioned company that's already
Speaker 1: making money and is expanding margins and end payments, where
Speaker 1: Stripe as a private company adian as their public competitor.
Speaker 1: Those are two areas where, even though there's been a
Speaker 1: slowdown in growth as a whole, you're still seeing that
Speaker 1: the technology has such an advantage over the incumbents that
Speaker 1: the growth rates of those companies has remained penetrating. So
Speaker 1: those are the areas that were the most focused on
Speaker 1: over the next twelve months or so. Simultimism there. From
Speaker 1: one voice in the investment community, Rob Campbell, portfolio manager
Speaker 1: at Upholdings, thank you. Now. Let's turn to Twitter, which
Speaker 1: scrapped its policy preventing the sharing of false or miss
Speaker 1: leading information about COVID nineteen. That was done quietly announced
Speaker 1: on the company's website over the holiday week last week,
Speaker 1: and it's been effective since November. Bloomberg Sarah Fryer is
Speaker 1: here with more details and Sarah, why was this announced
Speaker 1: so quietly? Well, I think that what we're seeing here
Speaker 1: is this company is not as focused on being proactive
Speaker 1: with his communications except directly through Elon Musk. What we've
Speaker 1: seen is he's the one who's tweeting out what's happened
Speaker 1: with Twitter. He's explaining his spots almost stream of consciousness
Speaker 1: to the public, and then when it comes to these
Speaker 1: policy changes, we might not see abroad announcement or blog
Speaker 1: posts like we would in Twitter past. It just isn't
Speaker 1: They don't know, they're not staff to do it. They
Speaker 1: laid off the entire communications staff. So I think that
Speaker 1: we're just going to see either this is a private
Speaker 1: company right now, we as reporters have to ask questions
Speaker 1: of our sources and keep paying attention to what the
Speaker 1: leadership says dramatically reducing the size of the team devoted
Speaker 1: to tackling child sexual exploitation as well as one of
Speaker 1: the key stories out on the Blue Bow terminal today.
Speaker 1: So and your team driving that home talk to us
Speaker 1: about where he therefore is focused. If he's not focused
Speaker 1: on some of the prs around this, or indeed some
Speaker 1: of the content which many brands are worried about. He
Speaker 1: seems to be more worried about where people are sitting
Speaker 1: in the office and how they're all coming together right.
Speaker 1: I think he's absolutely concerned right now with making sure
Speaker 1: that there is a sense of momentum, a sense of
Speaker 1: of all the engineers together trying to build the next
Speaker 1: iteration of the product. He wants to launch a new
Speaker 1: form of verification on Twitter very soon, and he's crossing
Speaker 1: his fingers that it doesn't cause those kind of public
Speaker 1: disasters we saw the last time it happened. So I
Speaker 1: think I think he's getting a trial by fire in
Speaker 1: understanding how social media businesses work. We saw him talk
Speaker 1: in the last couple of days about the app stores
Speaker 1: for Apple and Google and how he thinks that they're unfair,
Speaker 1: and so I really think that this is um. This
Speaker 1: is a moment where, like the constant moderation stuff we
Speaker 1: will see far by the wayside a bit um as
Speaker 1: he tries to prove that he can grow Twitter. I
Speaker 1: just want to bring you some breaking headlines crossing the
Speaker 1: Bloomberg Caroline oathkeeper leader Rhodes was convicted of the January
Speaker 1: six sedition charge. You'll remember jury has been considering the
Speaker 1: charges against that militia group and its leader five individuals
Speaker 1: for a number of weeks. But that is the headline
Speaker 1: crossing the Bloomberg terminal overkeeper leader Roads convicted of January
Speaker 1: six sedition charge. We'll bring you more as we get that. Interestingly, Sarah,
Speaker 1: some more headlines crossing the Bloomberg. Twitter's former troughs and
Speaker 1: safety boss, yould Wrath speaking publicly saying that he fears
Speaker 1: not enough Twitter employees left to police content. That's coming
Speaker 1: from somebody who knew the trust and safety side of
Speaker 1: the business. Well, uh, well, the way police content on
Speaker 1: and police is a weird way to put it. It's
Speaker 1: really about having the expertise to know where to draw
Speaker 1: the line between something being um, you know, an opinion
Speaker 1: or a necessary thing that they want to they want
Speaker 1: to say to their audience, versus something that could be harmful,
Speaker 1: that could insticate violence, that could that could cause issues.
Speaker 1: And when you don't have subject matter experts in various
Speaker 1: areas of content, you may not be able to make
Speaker 1: that determination. So I think that you know, Twitter by
Speaker 1: cutting a lot of its staff would be recently reported
Speaker 1: today that the the team that works on on child exploitation,
Speaker 1: exploitation content. The highly specific expertise to to be able
Speaker 1: to weed that stuff out effectively has been cut in half. Um,
Speaker 1: you end up, you will end up with a lot
Speaker 1: of trouble on one thing we reported, and in fact
Speaker 1: you helped us report the story out. The team that
Speaker 1: was working with governments, UM, trying to understand what to
Speaker 1: do about about content takedown requests from certain governments or
Speaker 1: asking for data and users. I mean that team has
Speaker 1: been decimated. So I think they are going to be
Speaker 1: in a really tough, smart and a lot of these
Speaker 1: very difficult decisions going forward. Sarah fr we want to
Speaker 1: thank you so much for all of that. Let's get
Speaker 1: to those all important crypto markets said, because worries about
Speaker 1: contagion from the implosion of FDx still hangs over the
Speaker 1: digital asset class. Nevertheless, they're pushing hard on Tuesday. Yeah,
Speaker 1: it's interesting. We found a little bit of momentum across
Speaker 1: a number of cryptocurrencies digital tokens throughout Tuesday's main session.
Speaker 1: We hit five pm East and we spill over into
Speaker 1: the following day. We're finding our feet even so, I
Speaker 1: want to get straight to the Bloomberg Galaxy Crypto Index.
Speaker 1: It's an interesting index because it trades very similar to
Speaker 1: the equity markets and inequity index that it has an
Speaker 1: opening and closing point, and it's waited based on the
Speaker 1: biggest digital tokens by market value, so largely bitcoin, ether tether.
Speaker 1: But you can see since that tweet, that original tweet
Speaker 1: from cz where we first had those concerns or revelations
Speaker 1: as he called them, raised about f t X, we're
Speaker 1: down now more than across the basket of cryptocurrencies that
Speaker 1: the Boomberg Galaxy Crypto Index is tracking. The question posed
Speaker 1: in the story today is that is more and more
Speaker 1: of the fallout kind of becomes unveiled, in which direction
Speaker 1: does this index go. It's still has some downward momentum,
Speaker 1: and it looks like we're gonna have to have something
Speaker 1: very serious to snap out of this fundamental downward trend
Speaker 1: we're seeing in this broad basket of cryptocarac Yeah, and
Speaker 1: let's get a little bit more into the ft X
Speaker 1: collapse right here, right now too. As you give us
Speaker 1: the macro, let's go in a little bit more on
Speaker 1: the micro because there's been much handwringing about or whether
Speaker 1: it's got a wider impact on the growth of crypto
Speaker 1: at large. Many have tried to highlight that actually ft
Speaker 1: X is demise actually underpins the reason that decentralized finance
Speaker 1: is needed because ft X was too centralized. Just take
Speaker 1: a listen to Tim Draper of Draper Associates. What do
Speaker 1: you have to say about it. F t X was
Speaker 1: very centralized. It was all centered around this one guy.
Speaker 1: And when you centralize anything, bad things can happen. Let's
Speaker 1: now talk about all of this with our next guest,
Speaker 1: Va Saidath. She is the co founder of the Collective
Speaker 1: Intelligence Project. Unlike Tim Draper, don't think centralization is inherently bad.
Speaker 1: But I first and foremost want to make clear to
Speaker 1: our audience that in your own funding for your project,
Speaker 1: you did take some re granted funds from f t
Speaker 1: X Future Fund. It's widely known that they've given money
Speaker 1: to an awful lot of organizations. You're an experimental research organization.
Speaker 1: Just tell us a little bit why the Future Fund
Speaker 1: would have had interest in getting to grips with democratic
Speaker 1: effective governance that you study. Yeah, I think there's actually
Speaker 1: a lot of it relaxed between that question and the
Speaker 1: one about centralization and decentralization, because a lot of the
Speaker 1: posit promise of crypto on the decentralized side was to
Speaker 1: say there is something about democratic, effective governance and self
Speaker 1: determination that is enabled by these technologies, right, Um, that
Speaker 1: we are able to do more decentralized, less intervention oriented
Speaker 1: institutional structures. Uh. And we were experimenting with democracy and
Speaker 1: technology and so got some regranted funds from ft X
Speaker 1: in that process. But I think it speaks to also
Speaker 1: this question around whether centralization is good or bad, because
Speaker 1: in my point of view, accountability is really a big
Speaker 1: part of the goal of both decentralization and centralization, and
Speaker 1: the ecosystem is often much more focused on the kind
Speaker 1: or the degree of decentralization as opposed to the type
Speaker 1: of decentralization. So you ran this quote of Tim Draper,
Speaker 1: for example, who was saying t X is too centralized,
Speaker 1: but comparing that to banks, which haven't failed in quite
Speaker 1: a while, are very centralized entities in some sense and
Speaker 1: are regulated as such. Right And so I think it's
Speaker 1: quite complicated to call something as a whole purely centralized
Speaker 1: and say all of its faults are down to that. Dave,
Speaker 1: We've had this debate over centralized decentralized. You've introduced us
Speaker 1: to a third term, poly centralism or polycentrism. What is that? Yeah,
Speaker 1: it's a bit of an academic term. Um, but I
Speaker 1: find myself often saying we don't want either decentralization or centralization.
Speaker 1: What we want is polycentrism. Uh. And the term is
Speaker 1: a bit what it sounds like. So having many centers,
Speaker 1: and I think the problem is, you know, decentralized systems
Speaker 1: often carry a grain of centralization within them. A great
Speaker 1: example of this is the Internet. And so the t
Speaker 1: c P I P protocol that underpins a lot of
Speaker 1: the communication capabilities and packet switching of the Internet is decentralized,
Speaker 1: and it has successfully been decentralized, right, But the way
Speaker 1: that that happened is actually through this complex polycentric having
Speaker 1: many systems, sorry, many centers, a standard setting, organizations and
Speaker 1: regulatory agencies and private companies that kind of sprung up
Speaker 1: around it that allowed for that decentralization to stay in place. However,
Speaker 1: you know, the Internet as we know it now is
Speaker 1: not decentralized. Most of us spend our time on the
Speaker 1: and then on five websites. And why did that happen
Speaker 1: because many of the layers of the stack under over
Speaker 1: that decentralized protocol centralized because there was no kind of
Speaker 1: clear polycentric structure keeping them decentralized. And you know, decentralization
Speaker 1: tends to centralize without some checks and balances. So I
Speaker 1: think that's where this idea of polycentrism comes from. Instead
Speaker 1: of just allowing chaotic centralization from chaotic decentralization, can you
Speaker 1: intentionally allow checks and balances? And by the way, this
Speaker 1: is basically the principle that underpins federalism and the U.
Speaker 1: S Government and all of these kinds of things that
Speaker 1: say there should be something between the local and the
Speaker 1: federal to that end of you Therefore, is it regulation
Speaker 1: that helps with transparency, the checks and the balances within
Speaker 1: inevitably centralized parts. How do you get to the utopia
Speaker 1: of polycentrism. Does it become organic or do you need
Speaker 1: actually real fundamental rules in place to drive back. I
Speaker 1: think it's a great question. I mean, I think regulation
Speaker 1: is one thing, and regulating harms is always important, but
Speaker 1: many of six feessibule polycentric systems. Whether we think about
Speaker 1: it as federal agencies, wikipedia as a polycentric system, and
Speaker 1: many open source code repositories on this way. Uh. And
Speaker 1: the word actually comes from Eleanor Ostrom, who's a Nobel
Speaker 1: Prize winner, and she looks at self governing systems, not
Speaker 1: regulation at all, not state run systems at all. And
Speaker 1: so I think a lot of this is not just rules,
Speaker 1: but can you have different kinds of institutions. Can you
Speaker 1: have public input and private input in civil society input?
Speaker 1: And that's how the standard setting process of the Internet
Speaker 1: currently runs. And so polycentrism won't work if it's just
Speaker 1: rules top down. It's this ecosystem of different centers that's necessary.
Speaker 1: And I do think you know, the crypto industry where
Speaker 1: where it goes next is unclear, but to succeed it
Speaker 1: will need to develop this kind of polycentric ability to
Speaker 1: not just invite in certain forms of regulation, but actually
Speaker 1: have different groups at the table because otherwise a lot
Speaker 1: of these you know, uh, tend towards either centralization or plutocracy. Okay,
Speaker 1: Debious ad Off, co founder of the Collective Intelligence Projects,
Speaker 1: thank you. Coming up, we'll bring you the latest venture
Speaker 1: can a round up from around the world. This is
Speaker 1: Bloomberg time for talking tech in today. A venture capital
Speaker 1: round up starting with farm robots. That's what Cleveland Avenue,
Speaker 1: the VC firm founded by a former McDonald CEO, is
Speaker 1: investing in, leading a forty six point five million dollars
Speaker 1: Series A funding round for the agriculture tech startup Verdant Robotics.
Speaker 1: This as farmers increasingly rely on technology to produce enough
Speaker 1: food for a growing population, while also facing a shortage
Speaker 1: of workers and pressure to reduce their environmental impact. And
Speaker 1: while the venture market is in the middle of a downturn,
Speaker 1: there are still plenty of emerging players. Seed Stars has
Speaker 1: launched a platform called seed Stars Capital along with the
Speaker 1: Swiss based investment holding company x Multiplied, the goal to
Speaker 1: fund as much as five million dollars of new funding
Speaker 1: into emerging and diverse VC managers in Africa, Asia, the
Speaker 1: Middle East, Latin America, and Central and Eastern Europe. And
Speaker 1: staying in the world of global vcs, Evolution Equity Partners
Speaker 1: is betting on cyber security and scouting for more investors
Speaker 1: from Asia and the Middle East for its latest fund.
Speaker 1: The firm has raised five million dollars for this fund
Speaker 1: so far, with a target of seven and fifty million
Speaker 1: dollars expected to close in the first quarter of three Carol,
Speaker 1: and loving how you follow the money. Meanwhile, coming up
Speaker 1: a WS CEO Adam Slipsky discussing layoffs, discussing the chip
Speaker 1: sector and growing competition. This is Bloomberg. Welcome back to
Speaker 1: Bloomberg Technology. I'm Caroline hard in New York. Now Amazon's
Speaker 1: Reinvent Carl Computing conferences underway in Las Vegas, and the
Speaker 1: company announcing it will build its own chips for a
Speaker 1: WS customers looking for high performance computers pleased to say
Speaker 1: Bloomberg examily changs in fact San Francisco joining well, Thank
Speaker 1: you Caroline and joining us now from Reinvent in Las Vegas.
Speaker 1: Is AWS CEO Adam Selipsky. Conference off to a good start. Adam,
Speaker 1: thank you for joining us. You've got a pronounced economic
Speaker 1: downturn happening. You've got layoffs happening across the board, including
Speaker 1: at Amazon, but still record Cyber Monday sales against that backdrop.
Speaker 1: What has been made message you want customers to take
Speaker 1: away from Reinvent this year. It's great to see you, Emily,
Speaker 1: Thanks so much. We are so excited to be here
Speaker 1: in Las Vegas at our eleventh Reinvent with over fifty
Speaker 1: thou customers and partners live here, as well as over
Speaker 1: three hundred thousand registered around the world for the for
Speaker 1: the virtual part of the event, I think they're the
Speaker 1: big Probably the biggest message here to reinvent is that
Speaker 1: companies and all sorts of organizations continue to transform themselves
Speaker 1: using the cloud, that particularly in times of economic concertainty,
Speaker 1: that that's the best time to lean in big as
Speaker 1: the cloud is the most efficient place to be running
Speaker 1: cost savings, at least for most enterprises who move work
Speaker 1: close to the cloud. Clouds also the place to be flexible.
Speaker 1: You can grow and shrink your capacity at will, and
Speaker 1: it's a place to to innovate where you can do
Speaker 1: more with fewer resources. So precisely because of the economic
Speaker 1: uncertainty and not despite it, we see a lot of
Speaker 1: companies leaning in. Now, Amazon in a way has already
Speaker 1: reinvented cloud technology. What is the next era of reinvention
Speaker 1: actually look like. Well, I think we're still very early
Speaker 1: in cloud adoption Emily, despite the fact that AWS is
Speaker 1: the significant leader UH in the cloud space, and as
Speaker 1: you said, did did a pioneer starting in two thousand
Speaker 1: and six. Probably depending what study you look at maybe
Speaker 1: ten of i T workloads have moved to the cloud,
Speaker 1: and that's a lot of That's a lot of dollars
Speaker 1: because there's a lot of I T in the world,
Speaker 1: but it's still only a small percentage, and we firmly
Speaker 1: believe that in the fullness of time, most i T
Speaker 1: will move to the clouds. So I think that we're
Speaker 1: seeing companies leaning in. A lot of acceleration happening, tremendous
Speaker 1: interest in our continuing to improve price performance for customers,
Speaker 1: interest in data and machine learning and analytics, and interest
Speaker 1: in specialized purpose boat solutions for different vertical industries and
Speaker 1: horizontal business functions. Now, if indeed this is a recession,
Speaker 1: it's a first for AWS as a sort of company
Speaker 1: within a company. Amazon has seen this before, but AWS hasn't.
Speaker 1: You know. Now you've got big company sales but also
Speaker 1: big company problems. What are you cutting in? Where? Where
Speaker 1: are you pausing? And why? Well, Emily, actually AWS was
Speaker 1: founded in well, launched in two thousand and six, and
Speaker 1: so we're already in business for the Great Recession and
Speaker 1: two thousand and two thousand and nine, and it was
Speaker 1: really interesting. We didn't know then if that would would
Speaker 1: help US or hurt US quite frankly, and it turned
Speaker 1: out I I think it was actually a significant tail
Speaker 1: wind because a lot of companies who didn't have the
Speaker 1: money for capital expenditure were easily able to move to
Speaker 1: the cloud and get moving quickly on AWS really with
Speaker 1: with just operating expense and being able to turn capacity
Speaker 1: on and off. Now, I don't know if we're going
Speaker 1: to have a recession now, and I don't know exactly
Speaker 1: how that will impact our customers and US if we do,
Speaker 1: but I think there's at least a reasonable hypothesis that
Speaker 1: again a lot of companies could actually turn to the
Speaker 1: cloud in the case of a recession. And we're very
Speaker 1: focused always on helping companies be extremely cost effective in
Speaker 1: good times, in lean times, and any times. We want
Speaker 1: customers to spend as little as they possibly can for
Speaker 1: any particular unit of work, and we know they'll bring
Speaker 1: more workloads to the cloud if if the economics makes sense.
Speaker 1: But how are you applying that to AWS itself? I mean,
Speaker 1: Andy Jassey has said that cuts are going to continue
Speaker 1: into next year and the plan is to lay off
Speaker 1: thousands of corporate employees. How many of those employees are
Speaker 1: coming from within AWS. Is there a hiring freeze? How
Speaker 1: are you changing your spending strategy. Well, we have taken
Speaker 1: a pause in AWS on hiring new employees. We've actually
Speaker 1: expanded tremendously over the past several years, I mean very
Speaker 1: high employee growth for a number of years in a row.
Speaker 1: It really all to support our business growth and of
Speaker 1: course to support all the things that our customers want
Speaker 1: to do. So we have actually a significant amount of
Speaker 1: resources all across the company and development, sales and marketing,
Speaker 1: and I think we were well positioned right now to
Speaker 1: make sure we're being really efficient with all those people
Speaker 1: we've hired, and I think we're gonna have uh, certainly
Speaker 1: all the capacity of people that we need for right now.
Speaker 1: We've got a lot of things done for our customers,
Speaker 1: so we are going to take that pause, but I
Speaker 1: think we'll still be able to deliver. Okay, Now, on
Speaker 1: the last call, you said, uh, the growth rate of
Speaker 1: a W has trailed off in Q three. Has that
Speaker 1: continued into QU four? You seeing customers pull back? You
Speaker 1: mentioned financial services, crypto mortgages. Are those still the weaker
Speaker 1: business lines? And it's anything bucking the trend? Well, as
Speaker 1: we said on the on the last call. I think
Speaker 1: there's some uh, you know, there's a mix of headwinds
Speaker 1: and tail winds, and we d see customers, some customers
Speaker 1: tightening their belts which I mentioned earlier, and just getting
Speaker 1: efficient with their cloud spent and frankly, they should be
Speaker 1: doing that all the time, and we help them do
Speaker 1: that all the time, but I think more of them
Speaker 1: are doing that right now. At the same time, you
Speaker 1: see other customers leaning in because of the cost efficiencies,
Speaker 1: because of the flexibility in their in their overall usage,
Speaker 1: and and and and spend. So I think you see
Speaker 1: a mix of these things. Um. I think regardless of
Speaker 1: whatever happens in the short term that you know, in
Speaker 1: any medium term scenario, really the secular trend of very
Speaker 1: strong long term adoption of the cloud is going to continue. Now,
Speaker 1: data centers consume a lot of water, and Amazon Web
Speaker 1: Services has promised to replenish the water that it consumes.
Speaker 1: But you're still not disclosing the amount of water that
Speaker 1: AWS actually uses, which is something that Google does do.
Speaker 1: Why not release that number when the industry and some
Speaker 1: of the stakeholders really want more transparency. Well, Emily, we're
Speaker 1: a leader and sustainability Overall, we've released a lot of statistics.
Speaker 1: We've pledged to be NETS are a carbon, NETS are
Speaker 1: a carbon as a company across Amazon BY we said
Speaker 1: we're going to be a renewable energy as a company
Speaker 1: BY We're already of the way there towards that goal.
Speaker 1: So there's lots of stats we've released. And then this
Speaker 1: week we did make a pledge to be water positive BY,
Speaker 1: meaning that we're going to return more water to the
Speaker 1: communities than we use in our direct operations BY and
Speaker 1: we released our actual energy efficiency usage stat this week.
Speaker 1: We consume zero point to five leaders of water per
Speaker 1: kilo what hour in our data center. That is not
Speaker 1: a stat which every other cloud provider releases, and those
Speaker 1: who do UH do not have as good performance as
Speaker 1: we have. We're the leader in the cloud space with that,
Speaker 1: and we'll continue to UH to release more data as
Speaker 1: the months and the years go on. So I think
Speaker 1: it will be good transparency from AWS and most importantly,
Speaker 1: I think will continue to be a leader and to
Speaker 1: actually build towards the sustainable future, including with water. Now,
Speaker 1: you're continuing to develop your own chip technology, which is
Speaker 1: we've talked about in the past. You're promoting it at Reinvent,
Speaker 1: and it does make a lot of sense, But I
Speaker 1: wonder how it impacts your relationships with suppliers. Why wouldn't
Speaker 1: in Video, Intel, a m D give better prices or
Speaker 1: better supply uh to other competitors, to Google, to Microsoft
Speaker 1: when you've got your own silicon in the making. Well, Emily,
Speaker 1: we have great relationships with all of those chip manufacturers
Speaker 1: and including the ones you mentioned UH, Intel and A
Speaker 1: m D and Video etcetera. And we're going to continue
Speaker 1: to have those great relationships. We continue to sign long
Speaker 1: term deals with with with with many of those suppliers.
Speaker 1: I mean, AWS is is large now. Last quarter we
Speaker 1: were an eighty two billion dollar a year run rate,
Speaker 1: and we have tremendous capacity needs around the world. Our
Speaker 1: customers have a just a vast heterogeneity of different needs,
Speaker 1: and so I think there are lots of use cases
Speaker 1: for all of those chip vendors to be working with
Speaker 1: us to service our customers. And there's going to be
Speaker 1: increasing use cases and big, big time utility for our
Speaker 1: our own custom design chips as well. All Right, Adam Selipsky,
Speaker 1: CEO of AWS joining us from Reinvent in Las Vegas.
Speaker 1: Good luck with the rest of the conference. Guys, I'll
Speaker 1: send it back to you, all right. Thanks Emmy. Block fine,
Speaker 1: which is going through its own bankruptcy proceedings now, is
Speaker 1: looking to collect money from the other bankropt empire, some
Speaker 1: my and Freed's bankrupt empire, including from Alameda Research to
Speaker 1: the tune of six or eighty million dollars. It's not
Speaker 1: only about what I can said to explain the dispute
Speaker 1: and the huge amount of documents you've been waiting. Three uh.
Speaker 1: There has certainly been a lot of legal documents because
Speaker 1: of course there are multiple bankruptcies as well as a lawsuit.
Speaker 1: So let's bring you through this for a second here.
Speaker 1: Because you have money that Block five was owed from Alameda,
Speaker 1: as you said, six million dollars, and then f t
Speaker 1: X had also had a credit line over to Block five.
Speaker 1: They are owed two d seventy five million dollars. They
Speaker 1: had a credit line in which they were not able.
Speaker 1: Block five was not able to get the entire extent
Speaker 1: of their money. And remember when it comes to the
Speaker 1: money that they lent to Alameda. Interestingly, Block five is
Speaker 1: seeking the collateral and they're doing it in the means
Speaker 1: of a separate regulatory filing here. Now I'm holding here
Speaker 1: Block Five's lawsuit against Emergent Fidelity Technologies. Remember that is
Speaker 1: in the company that had bought the Robin Hood shares.
Speaker 1: This entity is not included in the bankruptcy filings, which
Speaker 1: is what makes this interesting. Interestingly, also defended in this
Speaker 1: law suit is E D and f Man Capital Markets,
Speaker 1: which had held the collateral that is being disputed here.
Speaker 1: And according to the Financial Times, which saw the loan
Speaker 1: documents between Block five and UM and Emergent Technologies, here
Speaker 1: Emergent Fidelity and Technologies the collateral and dispute as the
Speaker 1: Rock and Hood shares. So they want them back. They
Speaker 1: want them back because this is what was liquid inside
Speaker 1: the sam Bankment freed Empire at large. Remember this is
Speaker 1: not an entity that is in the bankruptcy procedees when
Speaker 1: it comes to f t X. However, that draws a
Speaker 1: lot of questions in terms of how Block five gets
Speaker 1: paid and frankly, how other people get paid. Because Block
Speaker 1: Fi wants to get paid to pay everybody else. This
Speaker 1: is deeply confusing. For money ultimately get you hearing from
Speaker 1: lawyers how likely they are to get a significant amount
Speaker 1: of the six D eighty million they're off the back.
Speaker 1: You know, it's an interesting question because six D and
Speaker 1: eighty million in the scope of billions of dollars here,
Speaker 1: it's a signific gain amount of money, especially when you
Speaker 1: look at the rest of what block fives creditors are
Speaker 1: owed here remembered a large group of creditors or owned
Speaker 1: seven hundred million or so, so that means that six
Speaker 1: D fifty would really help on that regard. But something
Speaker 1: interesting to just kind of bring you into the background here.
Speaker 1: I spent again another day with the bankruptcy experts and lawyers,
Speaker 1: and something interesting they told me is one thing that
Speaker 1: hasn't happened here yet is credit or committees getting together,
Speaker 1: which could become very interesting because in this instance, if
Speaker 1: you watch normal bankruptcy play out on Wall Street, you're
Speaker 1: seeing big creditors, you know, big hedge funds or private
Speaker 1: equity firms banned together to get their money back or
Speaker 1: fight against each other. But in this case, because the
Speaker 1: depositors are key here, you might see more aligning of
Speaker 1: interest between these big institutional investors and the customers themselves
Speaker 1: that are working with trusts to get their money back.
Speaker 1: I have a feeling this will go on and on
Speaker 1: Shnati Bassak is going to go back to those bankruptcy expects.
Speaker 1: I'm sure, but there's a lot of money being passed
Speaker 1: around some very interconnected woven parts him. Meanwhile, that's switch
Speaker 1: gears a little bit. Let's talk about, unfortunately once again
Speaker 1: layoffs because AMC Networks, the network responsible shows like Breaking Bad,
Speaker 1: like The Walking Dead, like top Gear, says it is
Speaker 1: planning to lay off about of its US workforce. Now.
Speaker 1: This follows an announcement earlier on Tuesday that it's chief
Speaker 1: executive has stepped down less than three months after taking
Speaker 1: the reins has become the latest media company rocked by
Speaker 1: lots of viewers to streaming services such as Netflix and
Speaker 1: Disney Plus. Meanwhile, coming up, we're going to get digging
Speaker 1: deep into the chip sector, into Chinese exposure of US
Speaker 1: giants such as Land Research. The CFO Doug Betting is
Speaker 1: going to be joining us the changing semiconducted chip landscape.
Speaker 1: Amiddle all these geo political tensions, Lisa Blomberg. Now to
Speaker 1: the fast changing power struggles in the semiconductor chip industry.
Speaker 1: Major companies like Apple and Amazon are jump starting plans
Speaker 1: to make in house chips for their products. As geo
Speaker 1: political tensions get in the way of manufacturing. For instance,
Speaker 1: COVID lockdowns and worker protests. Apple's key assembly plant in
Speaker 1: China have pushed back delivery times for the iPhone four
Speaker 1: teen Pro models in the US as long as thirty
Speaker 1: seven days, according to Counterpoint Research. Now White House trade
Speaker 1: restrictions with China are creating more headaches for chip makers
Speaker 1: and chip equipment makers. Land Research, for example, says it
Speaker 1: could lose nearly half of its China revenue in because
Speaker 1: of those new policies. For more we bring in LAMB
Speaker 1: CFO Doug Bessenger. He's at the Credit Swiss Annual Technology
Speaker 1: Conference in Arizona. Doug, let's get right to it. How
Speaker 1: do you navigate a world where the US, your home country,
Speaker 1: has policy seas in place that prevent you selling to China,
Speaker 1: your biggest potential market. Yeah, And what I observed going
Speaker 1: on is there were some technology lines that were drawn
Speaker 1: some of the most advanced manufacturing process capability not requires
Speaker 1: a license to be able to ship to China, which
Speaker 1: presumptively is is going to be not granted. And so um,
Speaker 1: what that has done is we we as we look
Speaker 1: in the next year it's impacted to to two and
Speaker 1: a half billion dollars of our revenue has has gone
Speaker 1: away from the customers that were impacted by that. Um.
Speaker 1: You know, the regulations are what they are. You have
Speaker 1: to comply with them at the end of the day.
Speaker 1: And that's exactly what we're doing. Uh. You know, having
Speaker 1: said all that, we we just finished the best quarter
Speaker 1: financially in the history of our company, our forty two
Speaker 1: year old company, uh, just north of five billion dollars
Speaker 1: in revenue, and looking into the December quarters seeing strength
Speaker 1: continuing there in spite of the fact that we have
Speaker 1: to deal with these restrictions in terms of certain customers
Speaker 1: and certain technology used in China. There is some evidence
Speaker 1: that some names have been able to be a bit
Speaker 1: nimble were the restrictions and the license is actually as
Speaker 1: hard to come by as you feed. Um. You know,
Speaker 1: we had seen that, we knew this was coming. I mean,
Speaker 1: we we had been interacting with the Department of Commerce,
Speaker 1: US government relative to kind of how the industry works,
Speaker 1: how we were positioned in the industry, how how the
Speaker 1: equipment sector supports the customer base, and so it was
Speaker 1: an educated process, I guess is what I would describe,
Speaker 1: and we understood it was coming and we were prepared for.
Speaker 1: Do you understand more could be coming, tougher rules coming
Speaker 1: from the United States, the TIP attack continuing. You know,
Speaker 1: as as we sit here today, I don't see anything
Speaker 1: incremental to what has already been communicated and out there.
Speaker 1: So I kind of think we are where we are, UM,
Speaker 1: and it's it's part of just doing business. UM. China
Speaker 1: is going to be a little bit different, but the
Speaker 1: broad business is still pretty strong. UM. And you know,
Speaker 1: we're we're doing our best to support our customers in
Speaker 1: no matter where they are geographically, So you remain committed
Speaker 1: to China, you remain as invested in that country going forward. Uh. Yeah,
Speaker 1: we still have a lot of customers that we're shipping
Speaker 1: too in China. UM. Some we no longer can at
Speaker 1: certain process technology nodes, and some of those customers they
Speaker 1: have process technology that doesn't need the license, so we
Speaker 1: still be business with them. And yeah, we're still absolutely
Speaker 1: committed to the China region and everywhere our customers are
Speaker 1: buying equipment and equipping their fabs. Doug, if you saw
Speaker 1: this coming, is that to to two point five billion
Speaker 1: sales hit for China? Conservative could could the picture actually
Speaker 1: be brighter than that? You know it might be. I
Speaker 1: think things are going to evolve. What ended up happening
Speaker 1: is technology lines were drawn. Excuse me, we're drawn, and
Speaker 1: the most advanced technology requires a license, which again presumptively
Speaker 1: won't be granted. Um, it's possible that some of these
Speaker 1: customers would invest at process technology notes that don't require
Speaker 1: the license. I think those discussions and evaluations are underway. Uh,
Speaker 1: And if there's some level of success there, then it
Speaker 1: won't be as big as the two to two and
Speaker 1: a half billion dollars that we describe. But right now,
Speaker 1: that's the best I have for you, is two to
Speaker 1: two and a half billion dollars of impact to us, Doug,
Speaker 1: He's some pretty buoyant around the rest of the business.
Speaker 1: And I'm interested about consumer demand right here right now,
Speaker 1: particularly for consumer electronics. How is that ultimately affecting your
Speaker 1: business right now? What are the headwinds there your Carolinas
Speaker 1: as we look into next year. I mean the semiconnector
Speaker 1: industry I describe as a growth cyclical industry. We grow
Speaker 1: over time. In fact, I was I was looking at
Speaker 1: some data the other day between pre Code and kind
Speaker 1: of where we're at today from two semic connector industry
Speaker 1: has grown back from a revenue standpoint, and the spending
Speaker 1: on WAYFRO fab equipment, which is what we do, has
Speaker 1: grown by nearly Those are the trends I see continuing
Speaker 1: into the future. Um. But it's a growth cyclical industry,
Speaker 1: So you know, as we evaluate what next year looks like,
Speaker 1: we do believe and in fact, as we talk to
Speaker 1: our customers and understand what their plans are for next year,
Speaker 1: that there will be a reduction in spending next year
Speaker 1: of the tune of twenty plus percent is what we
Speaker 1: see in terms of investment in way for FIB equipment spending.
Speaker 1: It's a growth cyclical industry. We have to be able
Speaker 1: to manage the company when that happens. We've been doing
Speaker 1: it for a long time and and we'll manage it
Speaker 1: accordingly go into the next year. But that's not what
Speaker 1: gets me excited right UM. There was a study McKinsey
Speaker 1: published earlier this year that talked about a trillion dollar
Speaker 1: semi connector industry by the end of the decade. That's exciting.
Speaker 1: That's what I see happening in this industry. The semi
Speaker 1: connector industry is enabling all aspects of society. Data is exploding. UM.
Speaker 1: We are the plumbing underneath making that data useful. And
Speaker 1: when an industry grows to a trillion dollars, there's a
Speaker 1: lot more equipment that's going to need to be put
Speaker 1: in play to to be able to support that level
Speaker 1: of business. Doug real quick, because we're going to run
Speaker 1: out of time in a second. R and D you
Speaker 1: make the machines that make the chips in simple terms,
Speaker 1: but you seem really bullish about investment. Talk to us
Speaker 1: very quickly about R and D. What is going to
Speaker 1: drive you forward technologically? You know, every year, every single year,
Speaker 1: we have to bring out new capability. What our customers
Speaker 1: want in the future is beyond what we're able to
Speaker 1: do today, and so you you always have to be
Speaker 1: getting better in this business, and that's absolutely what we're doing.
Speaker 1: You know. One of the things when I when I
Speaker 1: look at the product Polkfolio Land Research, we're bringing up
Speaker 1: a brand new edge platform that we're extremely excited about.
Speaker 1: It's the first bottoms up redesign of our EDG configuration
Speaker 1: in over twenty years. Were the leader in h technology UM,
Speaker 1: and we've got a brand new tool capability coming out
Speaker 1: that the customers are excited about, as are we. We
Speaker 1: love a bit of excitement. Thank you, Doug Bettinger, Land
Speaker 1: Research CFO over at the Credit Space event. Meanwhile, let's
Speaker 1: talk a little bit about what's going viral today because
Speaker 1: a new activist ad taking aim at big tech is
Speaker 1: using deep fakes to mock a lack of oversight. The ad,
Speaker 1: by Demand Progress shows a monopoly man, as you can see,
Speaker 1: morph into a deep fake of none other than Mark Zuckerberg,
Speaker 1: who thanks Congress for failing to take action against big
Speaker 1: tech companies. It will air during the lame duck period
Speaker 1: in Congress as the lawmakers draft major antitrust legislation. Look
Speaker 1: tech companies lobbyists have spent a hundred and twenty million
Speaker 1: dollars on advertising against the bill. Ed, I've already been
Speaker 1: seeing you've been making some great social content based on
Speaker 1: this very ad. Right, Well, it's all about timing, right.
Speaker 1: The Congress reset January three, the GOP comes in. They
Speaker 1: want this bill moved quickly by Pelosi and Shuma, so
Speaker 1: that's why they put the deep fake out there. Go
Speaker 1: check them out. What is it on Instagram? Is on
Speaker 1: TikTok that one and it's on Twitter at Technology, my
Speaker 1: cross platform. On this show, that does it. For this
Speaker 1: addition of by Technology Wednesday, we have d y d
Speaker 1: X CEO Antonio Giuliano to discuss operations in the leading
Speaker 1: crypto derivatives at change There and don't forget to check
Speaker 1: out our podcasts at your usual platforms, Carow, this is
Speaker 1: Bloomberg