Speaker 1: From Mahart where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: ed Luod.
Speaker 2: Love live from New York. This is Blue Meg Technology
Speaker 2: coming up. Chinese tech stocks enter a bear market by
Speaker 2: do PDD under pressure following earnings results.
Speaker 3: Meanwhile, Amazon boosts its stake in Anthropic investing another four
Speaker 3: billion dollars in the open AI arrival, and the CEO
Speaker 3: of Binance discusses bitcoin near one hundred thousand dollars and
Speaker 3: the impact of a Trump White House.
Speaker 4: At first we check.
Speaker 2: On these markets that a little bit of just caution
Speaker 2: and sensitive training. On the last day of the week,
Speaker 2: we're up a tenth of a percent in fact, and
Speaker 2: that's that one hundred is at one point eight percent
Speaker 2: for the last five training days, making up some of
Speaker 2: last week's sell off. And more broadly, we are up
Speaker 2: for the month of November. We're looking at the Golden
Speaker 2: Dragon over in China. We've seen the trade be on
Speaker 2: the downward trajectory, in particular the Hangsting for example, being
Speaker 2: sold off. And I'm looking at the tech focused US
Speaker 2: ETFs and other areas that you can really track how
Speaker 2: Chinese ets, Chinese tech names are doing. And when you
Speaker 2: look at the NaSTA Golden Dragon here, we're off by
Speaker 2: one point eight percent. We want to dig into what's
Speaker 2: the anxiety that's growing in this particular index. Now, technically
Speaker 2: in the bear market, we've got Baidu, you've got PDD
Speaker 2: for example, really on the lower side due to their
Speaker 2: earnings weakness. They sold off in trading in China. We're
Speaker 2: off by two point six percent. As you see on
Speaker 2: the US ADRs. These are both US ADRs PDD as well,
Speaker 2: off by five percent.
Speaker 4: All of this as we see the PDD.
Speaker 2: For example, pledging to keep investing amid rising competition in
Speaker 2: home and abroad. But it's competition and indeed a Chinese
Speaker 2: economy that continues to weaken. We go out to Henry Wren,
Speaker 2: who's based in London, just talk us through what seems
Speaker 2: to be ever mounting pressure on Chinese tech names.
Speaker 5: Yeah, so we can start from Baydo and the nation's
Speaker 5: biggest search engine operator. And clearly a tough quarter for
Speaker 5: by Do because we saw the revenue declined by three
Speaker 5: percent in a quarter, which was the weakest growth place
Speaker 5: that by the I seen in more than two years.
Speaker 5: And that weakness was clearly driven by its core business
Speaker 5: of online advertising and marketing. That part declined revenue by
Speaker 5: five percent in a quarter, and CEO Robin Lee on
Speaker 5: the earning statement said that the macro has been weak,
Speaker 5: while CFO on earnings call acknowledged that despite paging stimulus
Speaker 5: measures in late September, consumers are still cautious and advertisers
Speaker 5: spending are still subdued. There are still silver lining though
Speaker 5: AI business. AI and cloud business is still growing revenue
Speaker 5: by double digit but there are some concerns on monetization
Speaker 5: as well, because those AI driven search query are monetized
Speaker 5: at a lower rate and that compare with general queries.
Speaker 5: And competition is of course stepping up with other platforms
Speaker 5: such as short form video platforms like Going and Quite
Speaker 5: show gaining more user attention as well.
Speaker 2: Let's just talk about the competition also for PDD as well,
Speaker 2: and look both of these companies. PDD in particular has
Speaker 2: been trying to make inroads into a US consumer. What
Speaker 2: seems to also be depressing some of these Chinese names
Speaker 2: is the fact that perhaps US investors are going to
Speaker 2: be less likely to be able to access these sorts
Speaker 2: of investments you just look at what's happening with the
Speaker 2: governor of Texas trying to limit that at the moment,
Speaker 2: that seems to a center shiver Daana spine.
Speaker 5: Yeah, that indeed hit investor sentiment again for today's trading.
Speaker 5: As to PDD, the competition is stepping up. We're talking
Speaker 5: about domestic business in terms of JD and Ali Ababa
Speaker 5: keeps on investing as well, but also overseas for a
Speaker 5: team move because Amazon is stepping up its game as well.
Speaker 5: So on pdd's earnings call, the company set again for
Speaker 5: the second quarter in a role that in the to
Speaker 5: step up investments to keep up its game versus competitors.
Speaker 4: And we have been seeing this in the.
Speaker 5: Results as well, because its margins has been trending downwards
Speaker 5: again for this quarter and the company needs to reimburse
Speaker 5: more in terms of its merchants, giving merchants more perbs,
Speaker 5: reimburse merchants fulfillment costs as well as lowering the technology
Speaker 5: service costs for those merchants as well. So clearly it's
Speaker 5: reimbursing more, the margins is going down and it needs
Speaker 5: to keep up its growth to invest more, and that
Speaker 5: has hit investor sentiments Henry.
Speaker 2: Ran with the inside track on what's happening with Chinese
Speaker 2: tech names. Let's broaden out the conversation now. Later it
Speaker 2: is with US chief Investment Officer for the Matic Innovation
Speaker 2: Equities at the Alliance Burnsteed, and we want to read
Speaker 2: across just generally sentiment around international technology names. But when
Speaker 2: you look at China, I know that within the ETF
Speaker 2: that you particularly manage, there are some companies with exposure
Speaker 2: to China.
Speaker 4: How do you feel about the economy? How do you
Speaker 4: feel abut consumer that?
Speaker 6: I think it's you know, we do our stock selection
Speaker 6: pretty carefully. We look at whether exposed to rather than
Speaker 6: making a macro call, we look at what they're exposed
Speaker 6: to and then whether they have competitive pressure there. And
Speaker 6: we are our ETF and a lot of stocks were
Speaker 6: investing in broadly speaking, are driven by secular tailwinds. So
Speaker 6: regardless of economic outlook cyclically, we believe the selection that
Speaker 6: we have, we select them carefully, will enjoy sustained growth tailwinds.
Speaker 4: And that's how we do it. One by one really, and.
Speaker 2: When you're looking at the one by one tailwinds, how
Speaker 2: much you have to bake in the anxiety around a
Speaker 2: headwind of geopolitical tension of a new administration that comes
Speaker 2: in that makes relationships with China ever harder, particularly for
Speaker 2: US exporters.
Speaker 6: We we certainly are not here to make any predictions
Speaker 6: about political outcome or policy. It's a very difficult thing
Speaker 6: for us to do. But rather what we do is
Speaker 6: we do take into consideration in terms of the risk factors,
Speaker 6: you know, if they are exposed, and we certainly will
Speaker 6: increase a discount way when we think about the valuation.
Speaker 6: But then again it goes to one by one and
Speaker 6: see how they are positioned.
Speaker 2: Okay, well, when we're talking therefore more thematically are the
Speaker 2: tailwinds for you still all about artificial intelligence. Whether or
Speaker 2: not a particular chip maker has a large exposure to
Speaker 2: selling their very high end chips into China. The tailwinds
Speaker 2: are so strong that at the moment you can still
Speaker 2: stick by these names. I know you can't go into
Speaker 2: individual selections, but I mean we've all been talking about
Speaker 2: in video this week, for example, when.
Speaker 6: We look at these companies, so what we look is
Speaker 6: the overall exposure. So China is part of it, but
Speaker 6: China is not the sole driver for the growth. So
Speaker 6: when we look at it and we can see, you know,
Speaker 6: the immedia, for example, China is part of their business,
Speaker 6: but that's not the majority of their business, and the
Speaker 6: other parts of the business is so strong that you know,
Speaker 6: we can do scenario analysis whether or not China goes
Speaker 6: up or down, what does it do to the overall
Speaker 6: And then given the applied demand constrain, the constrained environment
Speaker 6: that we're in, they can't easily be allocate to other areas.
Speaker 6: So that's kind of really how we think about its
Speaker 6: overall geographic exclosure.
Speaker 2: Let's talk therefore about the hype cycle that we've been in,
Speaker 2: the huge valuations baked into certain AI exposed names. You're
Speaker 2: comfortable with that at the moment you feel that the
Speaker 2: demand is so strongly indeed supply issues are limited, that
Speaker 2: you can continue to plow money into companies that have
Speaker 2: risen so far so fast.
Speaker 4: Already, what we.
Speaker 6: Think about it is on evaluation front. What we care
Speaker 6: is over a long term, can they sustain the profit pool?
Speaker 6: Who has the pricing power? I think that's what ultimately matters.
Speaker 6: In a fast growing phase, some of these companies will
Speaker 6: look very expensive, but we really need to look out
Speaker 6: over the ten year Horizon. Are they going to be
Speaker 6: the market leader? Do they have competitive differentiation therefore they
Speaker 6: can garner a bigger part of the profit pool. Not
Speaker 6: every single one of those are going to be a winner,
Speaker 6: So it's actually a great time for alpha investors. Frankly,
Speaker 6: you get to choose the one that you truly believe in,
Speaker 6: and then there are ones, says Frathi, that we do
Speaker 6: not believe in and we choose now to invest in them.
Speaker 2: Well, you've got a whole array of winners for the
Speaker 2: last year in the ab Global Disruptors and international technology
Speaker 2: portfolios that you manage. Nature Chief Investment officer for Alien Spernstein,
Speaker 2: So it's great to have her expertise and themes here. Meanwhile,
Speaker 2: coming out Amazon boosting its staking a propic. We're sticking
Speaker 2: on AI folks. This is Blume Meg Technology. Let's talk
Speaker 2: about anti trust and Google, because the latest is that
Speaker 2: perhaps the tech giant will be forced to unwind it's
Speaker 2: partnership with AI startup Anthropic if a federal judge accepts
Speaker 2: the US Justice Department's proposal to resolve this landmark anti
Speaker 2: trust case over online search. Let's stick into all of it.
Speaker 2: Adam Kovokovich is with US CEO and founder of the
Speaker 2: Chamber of Progress for more on your expertise that we
Speaker 2: must make clear that used to work for Google, you
Speaker 2: really help really think about strategy and lobbying there. And
Speaker 2: now you are CEO one of the key tech lobbies
Speaker 2: out there, Adam, so we know which side of the
Speaker 2: equation perhaps you're coming from. But did that take you
Speaker 2: by surprise when the UK has already said, look, we're okay,
Speaker 2: we're at ease with this anthropic investment, but then the
Speaker 2: US takes a second look.
Speaker 7: Absolutely, and you're absolutely right that I think a loser
Speaker 7: from these remedies would be anthropic. The AAR startup, the
Speaker 7: DOJ wants to unwind Google's investment in anthropic, they want
Speaker 7: to go beyond that. I think it's a testament and
Speaker 7: a symbol of how sweeping these remedies are. And I
Speaker 7: think one of the things that's kind of interesting about
Speaker 7: this case is that it was brought by the Trump
Speaker 7: the first Trump administration. I don't think they cared that
Speaker 7: much about the search default deals, but they wanted to
Speaker 7: kind of punish Google. And now I think what you
Speaker 7: see happening now that Biden's Justice Department has won the case.
Speaker 1: They don't seem that interested in the core.
Speaker 7: Of the case, which is really search default agreements, and
Speaker 7: instead are treating the as a kind of vehicle or
Speaker 7: pretty broad sweeping changes to Google's business, like unwinding things
Speaker 7: like their anthropic investment.
Speaker 2: The main one that Bloomberg had been reporting on and
Speaker 2: then was need substantiated by the DOJ was the setting
Speaker 2: off of Chrome, and many like you said. This doesn't
Speaker 2: seem to be going into the payments that were being
Speaker 2: made to Apple or to Samsung and other Android device
Speaker 2: makers to make.
Speaker 4: Google Search the default.
Speaker 2: But the fact that Chrome has about sixty percent market
Speaker 2: share when it comes to the browser market, and then
Speaker 2: a lot of people access searched through it, would it
Speaker 2: not be a good idea to start peeling off some
Speaker 2: of the ways in which it dominates and search.
Speaker 1: Well.
Speaker 7: The key point is that if the Justice Department thought
Speaker 7: that Chrome was a problem, it should have included Chrome.
Speaker 1: In its original argument.
Speaker 7: That's the strange part about including it as a remedy.
Speaker 7: The DJ never brought any charges against Google over Chrome.
Speaker 7: They never made any allegation that Google had, you know,
Speaker 7: improperly referenced its search engine in Chrome. Now they're invoking
Speaker 7: in the remedy sphase. So I think it's coming out
Speaker 7: of left field and the way that judge will reject.
Speaker 7: But Chrome is clearly very valuable for Google as a
Speaker 7: way to encourage people to spend time on the Internet.
Speaker 1: Good for Google's business, that's clearly true.
Speaker 7: But the idea that you know it's valuable to other people,
Speaker 7: I just don't think it doesn't have any revenue of
Speaker 7: its own. It's not valuable if it's decoupled from Google's
Speaker 7: search results.
Speaker 1: Frankly, I just think it's very unlikely.
Speaker 7: I think it's about as likely that Google will be
Speaker 7: forced to sell Chrome as you know Elon musk Doze
Speaker 7: Commission is actually going to make the government more efficient.
Speaker 2: Ah, that's taking us into a completely different avenue, Adam
Speaker 2: so another time. But I'm interested more broadly in some
Speaker 2: of the other areas. I mean ones that took perhaps
Speaker 2: people are back was the idea that they'll be forced
Speaker 2: to license, sell off, at least hand over their data,
Speaker 2: unique data to other rivals, even as large a rival
Speaker 2: as Microsoft when it comes to the world of search.
Speaker 2: How technically feasible is that and ultimately how pro competition
Speaker 2: is that sort of an outcome.
Speaker 7: Yeah, well, I think technically technical feasibility that with the
Speaker 7: Justice Department said as there should be a technical committee
Speaker 7: that really has full access to Google's a source code.
Speaker 1: And that's obviously very invasive.
Speaker 7: You're absolutely right that things like spinning off Chrome got
Speaker 7: a lot of attention. But if you bear a look
Speaker 7: in the details that this filing, you're absolutely right. They're
Speaker 7: proposing that Google have to make its secret sauce algorithms
Speaker 7: available to rivals, share its users data with rival search engines,
Speaker 7: including by the way, foreign search engines like Baydoo and
Speaker 7: the Index. There actually is a provision in there that
Speaker 7: would make Google pay for consumers to switch to consume
Speaker 7: competing search engines, which is like PEPSI paying you know,
Speaker 7: their customers to try coke. It would make them fun
Speaker 7: paid advertising campaigns for rivals, like being induct dot Go.
Speaker 7: And I think that, you know, all these extreme remedies,
Speaker 7: I don't think. I think they would not only deter
Speaker 7: Google from continuing to invest in search innovations if they
Speaker 7: have to share everything. But they're so extreme and they're
Speaker 7: so beyond the judges findings. They're a bit like prescribing
Speaker 7: and amputation just because the patient has a hangnail.
Speaker 2: The arguments you make are very clear, and we therefore
Speaker 2: try and play devil's advocate here me as the consumer,
Speaker 2: would any of this be good for me as a consumer?
Speaker 2: If indeed Google is forced to open up any parts
Speaker 2: of the ideas coming from the DOJ remedy.
Speaker 7: Well, I think the vast majority of people just want
Speaker 7: their search engines to work right, and they want their
Speaker 7: search engines to answer questions for them.
Speaker 1: And you know, one of the things I think is
Speaker 1: interesting is that.
Speaker 7: Obviously the AI layer that people that Google's building into
Speaker 7: its search engine is a direct response to the success
Speaker 7: of things like chat GPT. We saw a news report
Speaker 7: yesterday that OpenAI was going to probably build its own browser.
Speaker 1: But these remedies would take direct aim at there.
Speaker 7: They wouldn't allow Googled, for example, to put in AI
Speaker 7: generated results into its search results, and so I do
Speaker 7: think that would be a pre direct violation of the
Speaker 7: consumer Welfare Standard, which has really been kind of the
Speaker 7: load star for anti trust enforcement.
Speaker 1: I conceive that all of these remedies would be great.
Speaker 7: For Microsoft and great for Duck Duck Go, But you know,
Speaker 7: that's just not the way we historically do anti trust
Speaker 7: enforcement in the US.
Speaker 2: Many had felt that actually there had been a slight
Speaker 2: changing and viewpoint of how you do anti trust in
Speaker 2: the US, particularly under Lena Kahan and under now the
Speaker 2: current DOJ. What's notable, though, is this is going to change.
Speaker 2: We've got a new administration coming in in twenty twenty five,
Speaker 2: and it's likelihood is that Jonathan Canter, who's been leading
Speaker 2: the charge on this particular case, hands over the rains.
Speaker 4: Do you think anything changes on the back of that.
Speaker 2: As you mentioned, it was the Trump administration that first
Speaker 2: brought this case.
Speaker 7: That's right, and I think, frankly, the fact that Jonathan
Speaker 7: Canter is on its way out is probably the main
Speaker 7: reason why these remedies are so sweeping. He's not going
Speaker 7: to be around for the trial about the remedies next year.
Speaker 7: A lot of the attorneys who've been prosecuting the case are,
Speaker 7: you know, shopping their resumes around Washington. Trump's gonna have
Speaker 7: a goal turnover in agencies like the DOJ, so cantor
Speaker 7: doesn't have to own what happens next, and I think
Speaker 7: that's why he swung for the fences. I do think
Speaker 7: it's an open question about what the Trump administration will do.
Speaker 7: Trump named Pam Bondi, a former Attorney General of Florida,
Speaker 7: as his next attorney general. She will then decide who
Speaker 7: the head of the Anti Trust.
Speaker 1: Division will be. And there might be slight changes.
Speaker 7: I think that Trump likes having cases a big against
Speaker 7: big tech because frankly, they provide him some kind of
Speaker 7: punishment or leverage over big tech services. But there might
Speaker 7: be changes in how they manage the case, might be
Speaker 7: different approaches to how they approach things like remedies.
Speaker 2: Adam Kovakovich, we thank you for the expertise chamber of
Speaker 2: a progress CEO on all things Google. Meanwhile, we're just
Speaker 2: talking about how Google might have to unwind its anthropic
Speaker 2: and investment. Well, another company is piling in there, Amazon
Speaker 2: pumping an additional four billion dollars in its stake and
Speaker 2: anthropic and we know that it's the builder of Claude
Speaker 2: generative artificial intelligence software, where a key competitor to open
Speaker 2: ai and Bloembg's Matt Day is here with more and Matt.
Speaker 2: When you saw this extra enormous set of money going
Speaker 2: towards anthropic.
Speaker 8: What did you think, Well, we knew Anthropic was raising money,
Speaker 8: but This really underlines for us that Amazon has gone
Speaker 8: full bear hug on Nthropic. You know, much like Microsoft
Speaker 8: pumped a ton of money to Open Ai to get
Speaker 8: some exclusive rights and sort of preferred cloud provider for
Speaker 8: chat GPT, Amazon has decided that, you know, hey, cloud
Speaker 8: is a good enough product that if they can, you know,
Speaker 8: seek to tie it to their platform, they're gonna They're
Speaker 8: going to do that.
Speaker 4: How exclusive, therefore will Anthropic be?
Speaker 2: We know that actually Google currently has like an investment
Speaker 2: that it's hoping to keep in it, so Whennthropic can.
Speaker 8: Still run on other clouds, it's not like the Microsoft
Speaker 8: open A ideal in that regard. But one exclusive bit
Speaker 8: that Amazon has been pushing for is Anthropic using more
Speaker 8: of Amazon's hardware to train its models. Right, This is
Speaker 8: a key differentiator Amazon thinks for its cloud in the
Speaker 8: long term. They think, if Anthropic can help them make
Speaker 8: a really good AI chip, then you know, that's just
Speaker 8: another advantage for a cloud platform that already brings and
Speaker 8: a ton of money for Amazon.
Speaker 2: And they're spending a ton of money. Matt Day, great
Speaker 2: to have you, thank you time now for talking tech.
Speaker 2: First up, Paramount is promising a one million dollar retention
Speaker 2: bonus to its head of government relations and of human resources.
Speaker 2: That's all depending on the merger with Skydance. Just last month,
Speaker 2: Paramount announced that it's three co CEOs will receive three
Speaker 2: million dollars in cash bonuses even if they no longer
Speaker 2: are with the company. Plus DirecTV has notified EchoStar that
Speaker 2: it intends to terminate this acquisition of Dish Network.
Speaker 4: This is after the bondholders failed.
Speaker 2: To consent to a key dead exchange, effectively killing the
Speaker 2: deal that would have created the largest PATV provider in
Speaker 2: the United States. And Apple is readying to revamp Siri now.
Speaker 2: According to sources, the tech giant is developing a more
Speaker 2: conversational version of its digital assistant BACLY, aiming to catch
Speaker 2: up with rivals like Opening Eyes Chat GPT. The new
Speaker 2: sery is said to use more advanced lllms and will
Speaker 2: have the ability to handle more sophisticated requests. Now talking
Speaker 2: of AI, AI leaders and safety institutes and gathered in
Speaker 2: San Francisco this week to discuss the impact of artificial
Speaker 2: intelligence on society, but one looming topic dominated conversations, what
Speaker 2: will policy look like under a second Trump administration. For
Speaker 2: more bloom Sharene Gafari joins US now and you were
Speaker 2: there alongside was it? Sexutreen, Romando and all awful lot
Speaker 2: of heads of various AI safety networks and cummings together,
Speaker 2: What are we currently thinking about that maybe the US
Speaker 2: version of AI safety is dismantled in some.
Speaker 1: Way, That's right.
Speaker 4: So we had a who's who there?
Speaker 9: You know, tech leaders like Athropic CEO Dario Armadae, officials
Speaker 9: from international countries around the world who have all just
Speaker 9: agreed to be part of this international consooratum of different
Speaker 9: AI safety institutes. But the looming question of uncertainty is
Speaker 9: what will happen on the US side to its own
Speaker 9: AI safety institute that was leading the talks if there
Speaker 9: is a new administration that will take a different approach
Speaker 9: to AI policy.
Speaker 2: Elizabeth Kelly currently heading up that institute, What did she
Speaker 2: think of the future of AI innovation and guard rails
Speaker 2: under our next administration?
Speaker 9: Right, So, she really made the case that despite the
Speaker 9: fact that incoming President Trump has said that he will
Speaker 9: repeal the or his party rather platform has said it
Speaker 9: will repeal the Biden Executive Order on AI, Elizabeth Kelly
Speaker 9: really made the case to me in an interview on
Speaker 9: the sidelines of the conference, that this Safety Institute should
Speaker 9: not be seen as a politicized group, that it is
Speaker 9: part of a nonpartisan, larger government institute called NIST, which
Speaker 9: is all about evaluating and making safety standards. And they've
Speaker 9: long been doing this for things like facial recognition technology,
Speaker 9: for example, measuring how good it is and what the
Speaker 9: risks are. And so she's saying that, look, no matter
Speaker 9: who's president, we're happy to be continuing our work as
Speaker 9: we have. And you know, that's sort of the best
Speaker 9: case scenarios that this work continues. But the big question
Speaker 9: is that of incoming President Trump does try to take
Speaker 9: a different approach, repeals the EO. Will we see change
Speaker 9: with this institute as well?
Speaker 2: How disconcerting is it for AI companies trying to build
Speaker 2: in what feels like a bit of a vacuum of direction,
Speaker 2: because I know that very positive words were said about
Speaker 2: the AI Safety Institute the US version by for example,
Speaker 2: the leaders of Anthropic.
Speaker 9: Yeah, it does provide some level of uncertainty because what
Speaker 9: these companies don't want is a patchwork of legislation in
Speaker 9: all these different countries. And of course the asif stitudensty
Speaker 9: isn't doing actual legislation, but it is providing some kind
Speaker 9: of standardized testing to say, this is how you make
Speaker 9: sure that you're this is how we can say your
Speaker 9: models are actually risky in terms of biological threats or
Speaker 9: cybersecurity threats. So if they're having to run, you know,
Speaker 9: one hundred different tests for one hundred different countries and
Speaker 9: the US's version of those tests is constantly changing, that's
Speaker 9: not good for them.
Speaker 10: Right.
Speaker 9: So it's in these companies like Anthropic and opening Ice
Speaker 9: interest to have standardization, and they're calling for the Trump
Speaker 9: administration to keep the USAI Safety Institute.
Speaker 4: What about more local government officials.
Speaker 2: You've been interesting in reporting that Sam Altman, for example,
Speaker 2: going to be helping the new San Francisco math.
Speaker 9: That's right. So at a local level, Daniel Lurie, our
Speaker 9: new mayor here in San Francisco, has appointed Sam Altman
Speaker 9: to be part of his transition advisory team.
Speaker 4: You know, he's said in.
Speaker 9: A past interviews that Sam Altman is one of the
Speaker 9: most important people in the world, and he's living here
Speaker 9: in our city. So you know, there's an obvious incentive,
Speaker 9: I think, on both sides for the mayor both to
Speaker 9: you know, take advice from someone who's so powerful, and
Speaker 9: also for open AI to be a potentially bigger part
Speaker 9: of civic engagement here in the city.
Speaker 2: Sharane Gafari, We thank you all things AI. Welcome back
Speaker 2: to Blue Meg Technology. I'm Karen Hide in New York.
Speaker 2: Let's get a quick check on these markets. Halfway through
Speaker 2: the show, almost halfway through the training day, we're up
Speaker 2: one point five percent of the course of the trading
Speaker 2: week on the Nasdaq one hundred, best weeks since the
Speaker 2: start of the month, when, of course we learn the
Speaker 2: outcome of the election, when the Nasdaq one hundred rallied
Speaker 2: more than five percent. We're making up some of last
Speaker 2: week's erosions. Let's move on to some of the individual
Speaker 2: assets and indeed names under the hood, and Nazak one
Speaker 2: hundred is actually down on the day, just slightly, largely
Speaker 2: because of Nvideo. It's the biggest points drag. We're off
Speaker 2: by more than three percent after earnings came after the
Speaker 2: bell on Wednesday night and we seem to shake off
Speaker 2: some of the anxiety and yesterday's trade, But so we
Speaker 2: head towards the weekend, maybe a little bit more of
Speaker 2: profit taking happening on this name.
Speaker 4: Bitcoin up seven tenths of a percent. We're at ninety
Speaker 4: and forty one.
Speaker 2: The ramp up has been extraordinary in crypto since the
Speaker 2: outcome of the election, and it continues to be a
Speaker 2: risk on ASCID of choice. Meanwhile, on a play getting
Speaker 2: some sort of proxy effect of Bitcoin. Many have turned
Speaker 2: their attention to MicroStrategy. We're up another eight percent. Remember
Speaker 2: it sold off yesterday after Citron Research came out and said, look,
Speaker 2: even Michael Sailor himself would say that this stock has
Speaker 2: run too far, too fast. It's time to perhaps perhaps
Speaker 2: better against it, even though four years ago they'd said
Speaker 2: use it as a Bitcoin proxy. But for now we've
Speaker 2: got to dig in a little bit more about what's
Speaker 2: happening with MicroStrategy, and indeed what's happening in terms of
Speaker 2: leveraged ETFs around the name.
Speaker 4: Look, over the last two days, we're off by nine percent.
Speaker 2: That's going to hurt if you perhaps in these two
Speaker 2: x ETFs ones that are dining out on leveraging any
Speaker 2: move that happens with micro Strategy. But it's actually proving
Speaker 2: a pain point for some of the banks that trying
Speaker 2: to make the markets around these ETFs Bloomberg's Deniza Tinkover
Speaker 2: is here with us, so just talk us through who
Speaker 2: are the players that allow you to go two times
Speaker 2: and move on MicroStrategy and the difficulties that they're having
Speaker 2: well with some of the swap market around it.
Speaker 10: Yeah, so it's very interesting that these are very recent players.
Speaker 10: They weren't around just a few months ago. They actually
Speaker 10: increase their levelage. So currently there are two main big
Speaker 10: ETFs that have two times the exposure of micro strategy,
Speaker 10: which means they obviously go up when micro strategy rallies,
Speaker 10: but also.
Speaker 4: The losses can be quite seep. And what we have
Speaker 4: seen is actually.
Speaker 10: From a lot of trading desks, including no Mura and
Speaker 10: other people on the street actually flagging the effect of
Speaker 10: those two ETFs, which are now around four billion, which
Speaker 10: doesn't seem that big, but the amount of risk and
Speaker 10: leverage exposures they take is quite is quite important. The
Speaker 10: way they do it is they do it via swaps,
Speaker 10: and that has become a problem. Not many people are
Speaker 10: ready to take that risk and to follow that volatility.
Speaker 10: In fact, there are three prime brokeages of one of
Speaker 10: the ETFs is working at the moment, and it's really
Speaker 10: hard to get more levelage going forward to chase that
Speaker 10: rally and potentially obviously if we go down.
Speaker 2: So just get technical for us for a moment, because
Speaker 2: there are a lot of retail investors who are in
Speaker 2: these leverage gtfs. I'm hearing from neighbors about how they're
Speaker 2: taking options out on some of these leverage ETFs and
Speaker 2: it makes the eyes water. But basically, when trying to
Speaker 2: fulfill the promise of these instruments, the risk limits of
Speaker 2: a prime broker are being tested. So what is the
Speaker 2: ETF manager.
Speaker 1: To do well?
Speaker 10: The ETF managers can also We've seen a lot of
Speaker 10: people use co options sometimes to chase that upsite or
Speaker 10: just being limited with very few prime brokers. But the
Speaker 10: way those product works is that they offer rebalance within
Speaker 10: the last thirty minutes of the trading day. So if
Speaker 10: you look a little bit deeper in some of those charts,
Speaker 10: you often see really big gurations in the last thirty minutes,
Speaker 10: which is what actually trading dests are looking at.
Speaker 4: And for example, if you've seen a.
Speaker 10: Big update, a lot of those products need to buy
Speaker 10: a lot more of the underlying stock or some kind
Speaker 10: of exposure to it to chase back to the needed
Speaker 10: exposure to have two times leverage. Seemed that really big
Speaker 10: effect in the last thirty minutes, which can be up
Speaker 10: or down depending on the.
Speaker 2: MOLF t rex two x long MSTR daily target ETF.
Speaker 2: The ticket is MSTU. There's also Sylvia Deablonski who we
Speaker 2: have on the team often. She runs the defiance daily
Speaker 2: target to X longing MSTR ETF ticket MSTX. Fascinating Taniza
Speaker 2: takover on all things MicroStrategy and the leverage play there. Meanwhile,
Speaker 2: digital assets being flagged as unregistered securities by the SEC
Speaker 2: are rallying after the agency's chair, Gary Gensler, and that's
Speaker 2: that he prans to step down. Cryptos supporter Donald Trump,
Speaker 2: of course, has vowed to fire Gensler, who now intends
Speaker 2: to exit in January on his own accord, on the
Speaker 2: day the President elect is due to be inaugurated. Meanwhile,
Speaker 2: Bitcoin's wild ride has been continuing. We know it's near
Speaker 2: that one hundred thousand dollars level, very psychologically important, and
Speaker 2: the cryptocurrency surging since Donald Trump's re election. Finance CEO
Speaker 2: Richard Teng sat down with Blue Megs Trancy Laqua to
Speaker 2: discuss the impact of the second Trump administration on crypto markets.
Speaker 11: Take a listen, president from being elected suddenly give a
Speaker 11: boost and give greater clarity to this. But I would
Speaker 11: say that twenty twenty four has been a landmark year
Speaker 11: and that momentum started earlier this year. So if you
Speaker 11: look at what happened in January this year with Big
Speaker 11: Coin ETF being approved firstly in the United States and
Speaker 11: is subsequently all around the world from Brazil to Canada
Speaker 11: to Australia, Hong Kong and at least goes on, it
Speaker 11: gives a lot of recognition and finally the respect that
Speaker 11: this sector deserves all along and with the likes of
Speaker 11: all the largest money manager and all the top financial
Speaker 11: institutions around the world starting to recognize the value of
Speaker 11: this space. Have Larry fin CEO of the largest money
Speaker 11: manager Black Role in the world that went from a
Speaker 11: crypto skeptic to a crypto believer. I think that it
Speaker 11: selfpiacks value. So if you look at the Bigcoin ETF
Speaker 11: is the best performing ETF so far in the I think,
Speaker 11: in the history of ITTF. Right again, it shows that
Speaker 11: institutionalization has started and mainstreaming has started.
Speaker 6: Could the Trump administration change everything from for cryptocurrencies.
Speaker 11: Well, it's a big positive. I think the last four years,
Speaker 11: especially if you're in the United States, I think the
Speaker 11: last four years has been pretty tough, right in terms
Speaker 11: of you know, regulation by enforcement, which is not necessarily
Speaker 11: the best form of regulation. But President we have a
Speaker 11: very pro crypto president. And if you look at it's
Speaker 11: not only President Trump himself, by the House of Representative
Speaker 11: two thirds of the legislature being elected a pro crypto
Speaker 11: seen stories happening at the Senate level, many pro crypto
Speaker 11: legislators and policy makers have been elected.
Speaker 2: Finance CEO WHOCHI Tank there speaking with our own frontcy Lacar.
Speaker 2: Now just a note and a reminder that Finance itself
Speaker 2: remains under a consent order with the formal monitoring requirements
Speaker 2: in place. Plus there is an ongoing sec but none
Speaker 2: of its currency suite executives have been charged in the
Speaker 2: most recent.
Speaker 4: Round of indictments.
Speaker 2: Now coming up, we'll talk about where enterprises are allocating
Speaker 2: their dollars when it comes to AI men adventures.
Speaker 4: Tim Tully's with us.
Speaker 2: This is bloom Meg Technology, still private. Fintech giant Stripe
Speaker 2: is again buying back some of its shares and a
Speaker 2: roughly seventy billion dollar valuation. The deal is likely to
Speaker 2: see hundreds of millions of dollars in shares change hands
Speaker 2: according to sources numbers. Katie roof choices once again with
Speaker 2: yet another secondary market activity. Katie and just who are
Speaker 2: they purchasing from? Who needs the liquidity?
Speaker 12: So this is actually for ex employees rather than current employees.
Speaker 12: And then also venture capitalists and other large investors. So
Speaker 12: Stripe has done several tender offers I believe at least
Speaker 12: the third.
Speaker 4: One this year.
Speaker 12: This is different than the Sequoia one a couple months
Speaker 12: ago where they purchased a lot of shares. Our understanding
Speaker 12: is it actually could be Striped itself buying back a
Speaker 12: lot of its shares, and this could be a potential
Speaker 12: move to clean up their cap table in case they
Speaker 12: want to ips someday.
Speaker 4: Okay, clean cap table always helps.
Speaker 2: Talking of potential IPOs, you were reporting on one for
Speaker 2: One Password.
Speaker 12: Yeah, exactly. So One Password is having early conversations with banks.
Speaker 12: Our understanding is they're hoping to go public next year.
Speaker 12: This is a Toronto based company, the password management business.
Speaker 12: They've been around for a while. They originally bootstrapped and
Speaker 12: then they started taking outside capital. Maybe five years ago
Speaker 12: Excel was knocking down their door to get into that one,
Speaker 12: and now it looks like they're getting closer to providing
Speaker 12: a liquidity event for their shareholders.
Speaker 4: Oooh, some activity ahead, Katie Ruth.
Speaker 2: We appreciate it as always an all things VC backed investments,
Speaker 2: So that stick with VC now because investment in AI
Speaker 2: native applications get this reach four point six billion dollars
Speaker 2: in twenty twenty four, almost eight times what it was
Speaker 2: in twenty twenty three. It's all coming from the latest
Speaker 2: insight report from Meno Ventures, who are looking at where
Speaker 2: enterprises are spending now on general to AI and where
Speaker 2: it is all going for.
Speaker 4: Twenty twenty five.
Speaker 2: Tim Talley, Menlo Ventures partner, can deep dive with us
Speaker 2: a bit now and it's an interesting amount of conversations
Speaker 2: I'm having that are pivoting away from the infrastructure, the
Speaker 2: large language models, over to where in the application layer
Speaker 2: this is going to be most valuable. Where are you
Speaker 2: seeing that activity to write checks to applications in general
Speaker 2: to AI.
Speaker 13: Yeah, just to be technical for a moment, A lot
Speaker 13: of that is driven by the fact that these foundation
Speaker 13: models are translating texts into other text well, so what
Speaker 13: you're seeing is the money's flowing into places where applications
Speaker 13: can do well with text as you can imagine. So
Speaker 13: that's really legal tech, it's healthcare, it's fintech, And largely
Speaker 13: that's because the architectures are settling in terms of how
Speaker 13: developers build applications. In twenty three, books are still trying
Speaker 13: to figure out how to build applications using generative AI.
Speaker 13: That has changed greatly in twenty twenty four as applications
Speaker 13: move into more agentic architectures.
Speaker 2: What's been so interesting is, for example, you're an investor
Speaker 2: in Nthropic, we announced today that Amazon is taking another
Speaker 2: four billion dollar cash and fusion into the business. It
Speaker 2: really wants to make it a bedrock or bedrock. It
Speaker 2: wants to really ensure that it's offering its own well
Speaker 2: cloud technology but off to other clients with the help
Speaker 2: of Anthropic, but also having Anthropic train its own data
Speaker 2: on its own chips.
Speaker 4: What's interesting.
Speaker 2: I'm talking to some application generative AI application makers and
Speaker 2: they're saying the support coming from cloud providers for their
Speaker 2: businesses too is extraordinary. How are you seeing these application
Speaker 2: makers also dining out from Amazon, Microsoft, and the rivalry there, Like.
Speaker 13: It's really really expensive to train and provide inference for
Speaker 13: these things, and you know, seeing a four billion dollar
Speaker 13: cash infusion from the likes of Amazon is not shocking
Speaker 13: at all. I think it's great for developers who sit
Speaker 13: in the Amazon ecosystem. They've already been us to use
Speaker 13: services within that ecosystem and to move over to Anthropic
Speaker 13: I think makes things really really easy for them in
Speaker 13: Anthropic is obviously benefiting from that.
Speaker 2: Just from the research that you've done. Are we seeing
Speaker 2: money stop going towards these foundational layers and instead finding
Speaker 2: a new home in the application makers or are people
Speaker 2: still writing checks in both directions. It's just very different valuations.
Speaker 1: It's going in both directions.
Speaker 13: Store you saw it in the report. The amount of
Speaker 13: spend in foundation models went up six point five x
Speaker 13: from a billion in twenty twenty three to six point
Speaker 13: five billion in twenty twenty four. That's a huge increase.
Speaker 13: And as you mentioned earlier, we saw the amount of
Speaker 13: spending the application layer go up about eight x to
Speaker 13: about four point six billion dollars in twenty twenty four.
Speaker 13: So the dollars are flowing in both directions.
Speaker 2: Frankly and you mentioned some of the sectors where this
Speaker 2: makes most obvious sense, and we've had a lot of
Speaker 2: these these startup founders on the show that are particularly
Speaker 2: helping serve the legal industry, the healthcare industry.
Speaker 4: How much money.
Speaker 2: Are you starting to see these ultimate end clients purchasing?
Speaker 2: How much are we seeing product market fit? How much
Speaker 2: we actually seeing clients spend money on these products.
Speaker 13: I think that we call it PMF in the venture industry,
Speaker 13: a product market fit that you know, it's definitely there
Speaker 13: right You know, I have a legal type startup called
Speaker 13: Eve that's seeing huge, huge benefit from plaintiff side case management,
Speaker 13: and the throughput is definitely there, So you know, plaintiff
Speaker 13: sid lawyers are getting the benefit and they're spending the
Speaker 13: dollars and you know, like you asked earlier, the product
Speaker 13: market fit is certainly there right now, and people are
Speaker 13: buying up and slaping up the software left and right.
Speaker 13: So we're really excited.
Speaker 2: But everyone keeps on question return on AI investment. Are
Speaker 2: these companies in healthcare, in the legal services finding that
Speaker 2: it's productivity that gets boosted?
Speaker 4: What else is giving them the return?
Speaker 14: Oh?
Speaker 13: Absolutely, I mean they're not going to be buying the
Speaker 13: software for not getting the value. So you know, we
Speaker 13: hear it anecdotally from folks that they're getting tons and
Speaker 13: tons of value out of software and the spend is
Speaker 13: just increasingly rapidly. So you can imagine that the value
Speaker 13: is certainly there.
Speaker 2: Push us forward, because where is the next vang god
Speaker 2: of money to be made within the AI hype cycle
Speaker 2: or AI reality?
Speaker 4: Tim, Where else are you looking to put money to work?
Speaker 13: Yeah, I mean it's really focused around the application layer
Speaker 13: right now. I think architectures like I mentioned earlier are settled,
Speaker 13: and because the architectures are settled, makes it easier to
Speaker 13: build the applications, and so you're going to see the
Speaker 13: velocity of applications come out much much more quickly. So,
Speaker 13: you know, I think legal definitely, workflow, automation, chat, customer
Speaker 13: support is certainly a space marketing human resources.
Speaker 1: So I think I think really any vertical.
Speaker 13: Right now is right for a disruption for AI AI.
Speaker 2: Right now, Tim Tally come back when you're starting to
Speaker 2: write even more of those checks to some of these
Speaker 2: new companies men Ventures partner, it's great to have you on.
Speaker 15: Creators from all around the world come to TikTok that
Speaker 15: the discovered to find an audience to live their dreams
Speaker 15: of fame and for.
Speaker 13: Now.
Speaker 15: In addition to launching countless Global Stars, the discovery and
Speaker 15: authenticity that defined the TikTok experience, I've also made the
Speaker 15: platform home the serious issues that are vital to the
Speaker 15: global good.
Speaker 4: Talking about the positive angles of TikTok.
Speaker 2: They're the CEO show cho recently speaking in at Apex
Speaker 2: in Peru. Back in the United States, questions about the
Speaker 2: future of the app continue to loom. That says lawmakers
Speaker 2: potentially going to be looking at changing all of it
Speaker 2: within the administration. Right now, in Washington, Project Liberty is
Speaker 2: hosting its inaugural summit on the Future of the Internet
Speaker 2: to explore how policymakers and citizens can come together to
Speaker 2: create a better online experience for all Americans.
Speaker 4: Here with the future of TikTok and the Internet.
Speaker 2: Rit large Frankmincourt, junior founder of Project Liberty, and before
Speaker 2: we get onto your bid and interest in TikTok, just
Speaker 2: tell us a little bit more about the summit that
Speaker 2: you're having, because it's all about trying to have whether
Speaker 2: it's lawmakers or whether it's TikTok creators in and of
Speaker 2: themselves talking about their experience on the Internet and how
Speaker 2: it can be improved.
Speaker 14: Right, yeah, exactly, Caroly, Nice to see you again. And
Speaker 14: it's really a great gathering of many, many different people,
Speaker 14: nearly five hundred people here, almost one hundred speakers, really
Speaker 14: brilliant people who are really concerned about our broken internet
Speaker 14: and want to fix it. It's not just complain about it.
Speaker 14: And so as you pointed out, it's an array of folks,
Speaker 14: not just technologists or just investors, or just influences or
Speaker 14: just parents. It's all of the above plus others. So
Speaker 14: the conversations are really really extremely interesting and the level
Speaker 14: of energy is very high because people are talking to
Speaker 14: people they otherwise might not be talking to if they
Speaker 14: were just in their own bubble. So yeah, and it's
Speaker 14: very solutions oriented. We're making a number of announcements yesterday
Speaker 14: and today, and I'm thrilled with how things are going.
Speaker 4: Well, let's go to solutions.
Speaker 2: Because day one was held at the mccatt School of
Speaker 2: Public Policy. They're very lies the idea that this might
Speaker 2: have some sort of policy solution, and you had law
Speaker 2: makers such as Nancy Mace, Republican and Democrat Rokana sat
Speaker 2: down together to discuss it. Is it about government intervention
Speaker 2: here or is it some other solution.
Speaker 14: Yeah, Well, the point I made yesterday and I had
Speaker 14: the privilege of helping start that school a decade ago,
Speaker 14: is that, you know, I started this adventure thinking that
Speaker 14: maybe policy intervention was the answer.
Speaker 1: That you could see a decade ago that.
Speaker 14: The Internet was headed in a not a great direction
Speaker 14: and it could do a lot of harm, which it
Speaker 14: has subsequently done. Well, maybe we can help get the
Speaker 14: policy making apparatus to get out in front of this.
Speaker 14: Turned out that big tech is policy making is no
Speaker 14: match for big tech. Big tech is too powerful, it's
Speaker 14: too fast, it's too big, it's too rich, it has
Speaker 14: too much influence, quite frankly. So that's when we launched
Speaker 14: Project Liberty five years ago to actually reimagine how the
Speaker 14: Internet works, build the technology, bring in partners from all
Speaker 14: over the world who share the same concerns that we have,
Speaker 14: which is, you know, the data that is now driving
Speaker 14: the Internet is being scraped from us all. It's being
Speaker 14: aggregated by big platforms, algorithms and AI being applied to it,
Speaker 14: and we're all being stripped of our humanity and never
Speaker 14: mind the value we create, So you know, think of
Speaker 14: data as personhood, and we need to reclaim ownership of ourselves.
Speaker 14: We should own and control our identity and our data.
Speaker 14: That's fundamentally the point. And now, thankfully lots of people
Speaker 14: around the world are recognizing this and wanting to build
Speaker 14: this new version of the Internet, and that's what this
Speaker 14: is about.
Speaker 2: I want to recognize, though, on the flip side, that
Speaker 2: a lot of this social media has good in It
Speaker 2: has connections, helps people who feel alone in certain parts
Speaker 2: of the world, who don't see identity that they resemble
Speaker 2: near them, find community online. There's social there's businesses that
Speaker 2: are built on these social media platforms. So there is
Speaker 2: positive as well.
Speaker 4: As some of the harms. And I'm interested as.
Speaker 2: To when you look at making a bid for TikTok,
Speaker 2: for example, how you support the positive at the same
Speaker 2: time as having some sort of decentralized social network protocol
Speaker 2: that allows people to perhaps keep their identity a little
Speaker 2: bit more.
Speaker 14: Yeah, there's massive good that can come out of technology,
Speaker 14: massive good that can come out of social media. But
Speaker 14: we don't have to have all the bad as well.
Speaker 14: I mean, it's just it's not like way, this is
Speaker 14: some good, So let's accept the bad. We want to
Speaker 14: have a Internet technology that really is amplifying good. It's
Speaker 14: really optimizing for people, it's really protecting children, it's strengthening democracy,
Speaker 14: it's helping us get smarter, not dumber. And so what
Speaker 14: we want to do with TikTok is actually move the
Speaker 14: user base over by the way, we don't want to
Speaker 14: see it shut down either. We want to move the
Speaker 14: user base over to this open source protocol where people
Speaker 14: can own and control their identity and their data, and
Speaker 14: the value proposition is shared with the users. I want
Speaker 14: to see this, at least a portion of it green
Speaker 14: Bay Packerd. And what I mean by that, just as
Speaker 14: the fans own the green Bay Packer football team, let
Speaker 14: those that are on tikto talk that create the value
Speaker 14: on a piece of the platform.
Speaker 4: How likely is that within the next administration.
Speaker 14: It's it's a great question.
Speaker 1: I'm not sure. I've heard.
Speaker 14: President elect Trump say he doesn't want to ban TikTok either. Uh,
Speaker 14: we're waiting on the legal decision. The Congress passed a
Speaker 14: piece of legislation, UH, really demanding that it either be
Speaker 14: shut down or bandits that much of a national security threat.
Speaker 14: So I assume that it will be sold and then
Speaker 14: we're in a position to buy it. Uh you know
Speaker 14: when and if it is sold. So we're watching very carefully.
Speaker 14: We expect the legal decision will be the first week
Speaker 14: of December, and then we'll see what the new Trump
Speaker 14: administration does. But uh, we're here ready to buy it.
Speaker 14: And again it's not me buying it. I don't want
Speaker 14: to be the CEO of TikTok. Uh I want to
Speaker 14: I want the people to buy it. This is a
Speaker 14: great opportunity to catalyze an alternative internet. And you know,
Speaker 14: the technology is here, it's working. We have nearly a
Speaker 14: million people using this new technology. Now we need scale.
Speaker 1: TikTok would provide scale.
Speaker 2: A McCourt junior come back after those December dates, founder
Speaker 2: of Project Liberty.
Speaker 4: Thank you.
Speaker 2: I'll let you continue with the summit. Now, let's just
Speaker 2: take a look at what's happened to this market this week.
Speaker 4: A big round trip for Nvidio.
Speaker 2: We're up a tenth of a percent after its earnings
Speaker 2: came out on Wednesday.
Speaker 4: We are currently off by more than three percent on
Speaker 4: the day.
Speaker 2: But stability in Nvidia, the world's most valuable publicly traded company,
Speaker 2: after those results and Ana's TEK one hundred. We're at
Speaker 2: one point seven percent on the week, just making back
Speaker 2: some of the losses of the previous week, and we're still.
Speaker 4: Higher in the month of November.
Speaker 2: Remember bitcoin never ending ninety nine thousand, one hundred, we
Speaker 2: are ever close to the psychological level of one hundred
Speaker 2: thousand dollars per bitcoin.
Speaker 4: Eight percent on the day. That does it for this
Speaker 4: edition of Bloomberg Technology.
Speaker 2: Check it all out on the podcast, Apple, Spotify, and
Speaker 2: iHeart This is Bloomberg