Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Low in sentences go.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: President Trump advances plans for American investors to buy TikTok's
Speaker 3: US operations, with a potential value of fourteen billion dollars.
Speaker 4: As we discussed the later day I bubble warning, hedge
Speaker 4: fund manager David Einhorn cautions that huge spending on AI
Speaker 4: infrastructure may destroy vast amounts of capital.
Speaker 3: And our conversation with Qualcom CEO and the changing chip
Speaker 3: landscape in the wake of Nvidia's Intel deal, and.
Speaker 4: A lot more, a lot more, including the market look
Speaker 4: over the last five days, we have seen pressure on
Speaker 4: tech stocks more broadly. You're putting in the macro perspective
Speaker 4: of maybe we lean away from just the Federal Reserve
Speaker 4: being the key function tactic here, and indeed we start
Speaker 4: to question valuations more broadly. We're off more than a
Speaker 4: percentage point on the NASDAK not significant moves, the biggest
Speaker 4: drop in the five day basis that we've seen since
Speaker 4: the beginning of August, but still notable in terms of sentiment.
Speaker 4: Where sentiment has really changed is Crypto's strategy were formerly
Speaker 4: known as MicroStrategy, the worst performer on the week, and
Speaker 4: I'm looking at Bitcoin off by five point six percent
Speaker 4: key day for options expiring today, ED, what are you
Speaker 4: looking at?
Speaker 3: Okay, this is a story that's moving tech and moving markets.
Speaker 3: Intel and Global Foundaries are both up significantly. The Wall
Speaker 3: Street journals reporting that the Trump administration is looking at
Speaker 3: a policy where it will require US chip makers on
Speaker 3: a one for one basis to have the equivalent number
Speaker 3: of chips manufactured in the US as they do their
Speaker 3: customers import from overseas. We'll try and match that, but
Speaker 3: it's moving markets. Then there's Oracle, so Oracle on a
Speaker 3: five day basis on track for its biggest weekly drop
Speaker 3: since April. We know more about the structure of a
Speaker 3: deal for US TikTok, the breaking news in the last
Speaker 3: hour Bloomberg reporting citing sources that even in the event
Speaker 3: that this deal is done and completed, China and byte
Speaker 3: Dance will still take more than half the profits from
Speaker 3: US operations of TikTok. Let's get all the details with
Speaker 3: Bloombo's Alex Levine, who covers social media and has been
Speaker 3: all over this story. Let's start with what happened out
Speaker 3: in the White House last night. The President, the Treasury
Speaker 3: Secretary all explaining to us, along with the Vice President
Speaker 3: Alex the structure of this deal, what is new and
Speaker 3: what do we know?
Speaker 5: Well, I think what we know about the deal so
Speaker 5: far is that Oracle is set to play a huge
Speaker 5: role in helping the new US TikTok entity secure user data,
Speaker 5: and also the algorithm that is going to be leased
Speaker 5: from byte Dance for the United States to use and
Speaker 5: retrain using all US user data. What we saw from
Speaker 5: the White House yesterday at the Executive Order signing, there
Speaker 5: was actually not that much new in terms of what
Speaker 5: we know as far as China where China stands on this.
Speaker 5: There are a lot of questions from reporters about what
Speaker 5: sorts of nod or what sorts of approval the Chinese
Speaker 5: president has given to Trump, and it seems that Trump
Speaker 5: has been sending some mixed messaging on exactly where China stands.
Speaker 5: But I do think that one thing that is becoming
Speaker 5: clear is that as we begin to learn more about
Speaker 5: the structure of the deal and what by Dance will
Speaker 5: get from it. There are more and more questions, and
Speaker 5: I think some more scrutiny and even criticism from members
Speaker 5: of Trump's own party over what the eventual what the
Speaker 5: eventual outcome will be.
Speaker 4: I think exactly that the Chinese embassy has made the
Speaker 4: latest statements say the US side needs to provide an
Speaker 4: open fare and non discriminatory environment for Chinese investors.
Speaker 6: So no, yes, go for it.
Speaker 4: You can take this part of TikTok and start reworking
Speaker 4: in the underlying algorithm. For me, the question is is
Speaker 4: Oracle the right person to be overseeing the algorithm changes?
Speaker 4: And more broadly, how on earth are they going to
Speaker 4: separate the US version? And more broadly, what about the
Speaker 4: latest voyce is reporting that we're seeing that maybe byte docetells.
Speaker 6: End up still controlling operations with that in any way
Speaker 6: satisfied national security.
Speaker 5: Issues hit well, I think it depends how you ask
Speaker 5: on this first question that you had, which is is
Speaker 5: Oracle the right partner for this? If you asked the
Speaker 5: Trump administration, you asked the White House. Absolutely, they said
Speaker 5: yesterday that Oracle has been partnering with TikTok for several
Speaker 5: years already on trying to cordon off US user data
Speaker 5: from bye Edance's global operations in China. But I think
Speaker 5: one thing that's very top of mind for me is
Speaker 5: that TikTok and Oracle have been working together on this
Speaker 5: for years, and it has been an imperfect solution. This
Speaker 5: was proposed as a solution to the Biden administration back
Speaker 5: in twenty twenty two, and after years of negotiations with
Speaker 5: a framework that looked almost identical to what we're now
Speaker 5: talking about with TikTok and Oracle today, the Biden administration
Speaker 5: was not comfortable that this would adequately solve national security concerns.
Speaker 5: So you're starting to hear from lawmakers and others in
Speaker 5: across Washington that this might just be a new version
Speaker 5: of that, and if so, that that's just not going.
Speaker 4: To cut it, very similar to Project Texas from your
Speaker 4: own reporting, Alex Lavigne, thanks for breaking that down. Still
Speaker 4: so many questions to answer, but let's just talk about
Speaker 4: the advertising side of all of this. I'm beginning Rachel
Speaker 4: Tipograph found our CEO of analytics platform, Mickmac with all
Speaker 4: these questions remaining about how on Earth the algorithm continues
Speaker 4: and whether we all remain one hundred and seventy million
Speaker 4: US users.
Speaker 6: Using it as much.
Speaker 4: What are advertising decisions being made right now?
Speaker 7: Advertisers in a weight and C mode. Right now, it
Speaker 7: is still commonplace for TikTok, and we're actually seeing all
Speaker 7: time high traffic in September from first twenty percent of
Speaker 7: total traffic from advertisers was allocated to TikTok. If we
Speaker 7: date back to Q one, it was ten percent. So
Speaker 7: people still see TikTok as a place to build brand
Speaker 7: and drive performance all at once. That being said, major
Speaker 7: advertisers have contingency plants. The moment that TikTok America is created,
Speaker 7: I don't think we're going to see traffic at twenty percent.
Speaker 7: These major advertisers are going to wait to see if
Speaker 7: the user base is still there, if the engagement is
Speaker 7: still there, and if the ad performance results are still there.
Speaker 7: If those things are to be true, then absolutely you'll
Speaker 7: see dollars move into TikTok America. But in the meantime,
Speaker 7: you're going to probably see a short term boom to
Speaker 7: environments like meta and alphabet where there are other places
Speaker 7: to invest your short form video ad dollars.
Speaker 4: How is this going to impact efficiencies for brands? Because
Speaker 4: at the moment you can go to one platform and
Speaker 4: have global reach.
Speaker 6: That's going to be really important.
Speaker 4: For some of these global companies if they have to
Speaker 4: silo off a US targeted ad versus global.
Speaker 7: Absolutely, there's a domino effect here. A lot of these
Speaker 7: major advertisers, they have these global joint business plans in
Speaker 7: place where they're guaranteeing ad dollars across multiple geographies. Advertisers
Speaker 7: have major question marks. Are those agreements going to be
Speaker 7: thrown out the window? And then from the actual operating standpoint,
Speaker 7: there has been a single platform to do buying, measurement
Speaker 7: and optimizations. It is unclear now if advertisers are going
Speaker 7: to have to log into multiple platforms and then Carolyn
Speaker 7: Prer point, what are the results going to be? Which
Speaker 7: is why major advertisers they have choices they can go
Speaker 7: invest dollars in other places. It's the sm B businesses
Speaker 7: that have been heavily reliant on an environment like TikTok
Speaker 7: or Amazon where they might go all in, but if
Speaker 7: they don't see those results, I promise you you're going
Speaker 7: to see dollars move out of that environment back into
Speaker 7: places like Meta and Google.
Speaker 2: Rachel.
Speaker 3: What we do know from the reporting is that there
Speaker 3: will be a retraining or even from the ground up
Speaker 3: rebuild of the algorithm. How worried are people in your
Speaker 3: community and your network that that basically removes what makes
Speaker 3: TikTok good for them, that the algorithm is not as
Speaker 3: effective as it currently is when Oracle has been able
Speaker 3: to review it and change it.
Speaker 7: Yeah, it's less about the algorithm, and it's more about
Speaker 7: will user engagement still hold? And will the effectiveness of
Speaker 7: the ads, meaning the cost per impression or the cost
Speaker 7: per click or the cost per sale.
Speaker 8: Will those hold.
Speaker 7: If those things don't hold, you will see dollars move out.
Speaker 7: So the algorithm is a mechanism to make those things true.
Speaker 7: But what advertisers are really concerned about is results.
Speaker 3: What Bloomberg has reported is that byte Dance is still
Speaker 3: going to get fifty percent of the profits from a
Speaker 3: US TikTok, and that MGX, a state backed investment vehicle
Speaker 3: of UAE, is one of the anchor investors. If you're
Speaker 3: a content creator on TikTok, or you're an advertiser on TikTok,
Speaker 3: do you care about either of those considerations.
Speaker 7: If you're an advertiser in TikTok and you're a global brand.
Speaker 7: I'm talking Fortune one thousand brands. You care about two things.
Speaker 7: You care about performance, but then you also care about
Speaker 7: brand safety. And so if they don't feel that their
Speaker 7: concerns are being addressed by this new ownership structure around
Speaker 7: brand safety, then yes they will care. If they believe
Speaker 7: it's being addressed, then it's irrelevant to that creators. Creators
Speaker 7: care more about the culture and the community. Will the
Speaker 7: community still stay in TikTok? Will the vibe still be
Speaker 7: the same? They don't really care about the ownership structure
Speaker 7: as long as the community engagement is there.
Speaker 4: Let's talk about a name that you said that maybe
Speaker 4: you will be benefiting amid all of this, and is
Speaker 4: meta and the move to Instagram in this moment by
Speaker 4: advertising dollars. But what's happening in Europe at the moment
Speaker 4: is interesting with meta as well and the UK and
Speaker 4: being forced to basically add a subscription offer rather than
Speaker 4: offering just advertising. How advertisers looking at that, how much
Speaker 4: do they anticipate people will go for an ad free
Speaker 4: version of Instagram.
Speaker 7: I love what's happening right now because we can look
Speaker 7: at mcmac's data globally, we do operate globally, and it's
Speaker 7: really interesting. The laws that are taking place in the
Speaker 7: EU and UK when it comes to advertising is way
Speaker 7: more stricter than the US, and as a result, platforms
Speaker 7: like Meta have struggled in recent years in those environments.
Speaker 7: In twenty twenty three, Meta had to introduce the same
Speaker 7: ad free tier in the EU, and there's been no
Speaker 7: public data whether users have adopted that or not. The
Speaker 7: only thing that we've seen happen is that the price
Speaker 7: per tier come down, which is a signal that maybe
Speaker 7: adoption was initially there. Fast forward, the UK government is
Speaker 7: adopting very similar rules as the EU, where they're putting
Speaker 7: very strict guardrails in place and how platforms can target
Speaker 7: users and essentially you have to opt in one hundred
Speaker 7: percent and if you don't opt in one hundred percent,
Speaker 7: then you have to pay for an ad free tier.
Speaker 7: What's interesting is that right now in the UK, seventy
Speaker 7: five percent of ad investment is happening in Meta. Meanwhile
Speaker 7: in the EU it's closer to thirty six percent, which
Speaker 7: is another signal that if this happens in the UK,
Speaker 7: you're going to start to see ad diversification outside of
Speaker 7: Meta into other platforms. So it's actually the reverse of
Speaker 7: what's happening in the US.
Speaker 8: In the US.
Speaker 7: Opportunity for Meta to grab market share. In the UK,
Speaker 7: they might actually lose market share right.
Speaker 3: Now, Nick mag Ceo, Rachel Tippograph back on Bloomberg Tech,
Speaker 3: Back and forth.
Speaker 2: Great to have you on the show. A story we're tracking.
Speaker 3: Jaomi unveiled a smartphone designed to take on the just
Speaker 3: released iPhone seventeen, underscoring the Chinese company's broader ambitions to
Speaker 3: take on US rivals from Apple to Tesla. The Jaomi seventeen,
Speaker 3: which will be offered in Pro and Promax models just
Speaker 3: like Apple's Marque series, starts at six hundred and thirty
Speaker 3: dollars for the most basic model and rising to about
Speaker 3: eight hundred and forty dollars at the top end, more
Speaker 3: than one hundred dollars cheaper than the base iPhone seventeen.
Speaker 4: Carol, Let's go back to AI now, because coming up
Speaker 4: computing powerhousers that are feeding the AI boom, they're seeing
Speaker 4: explosive growth of their own.
Speaker 6: How will this compute market evolve? One of that next
Speaker 6: This is a Boomberg Tech.
Speaker 3: The AI revolution is fueling explosive growth for companies selling
Speaker 3: computer power. Call Weave, despite forecasting losses this year, is
Speaker 3: valued at over fifty billion dollars, while Oracle's added two
Speaker 3: hundred and fifty billion so its market cap. That surge
Speaker 3: is subject of this weekend's essay by Bloomberg Ideas and
Speaker 3: Culture senior writer Felix Salmon, who joins US now. I
Speaker 3: spoke to the core Weave CEO last night and I
Speaker 3: basically put to him that all of the people in
Speaker 3: this ecosystem are writing checks they can't cash. The demand
Speaker 3: is there, but their ability to pay for it. The
Speaker 3: infrastructure needs to be built, maybe it's not. And you
Speaker 3: make a really smart case on just how wide some
Speaker 3: of the losses are with all the spending as as
Speaker 3: much as they have momentum in what they're doing.
Speaker 9: And what that in financial terms is called is counterparty risk.
Speaker 9: That if you are selling, if you're building data centers,
Speaker 9: and you're expecting trillions of dollars of demand, then what
Speaker 9: you're worried about is that the people who are contracting
Speaker 9: to pay, like you know, Open the Eye has said
Speaker 9: that it's going to pay Ora called three hundred billion dollar,
Speaker 9: that they just won't have that money because they're losing money,
Speaker 9: and where are they going to be able to find it?
Speaker 9: You know, in video can't just throw billions of dollars
Speaker 9: at them forever. And so the big question then comes,
Speaker 9: how are they going to be able to hedge that
Speaker 9: counterparty risk? And the answer to that question is what
Speaker 9: if compute is actually traded as a commodity on markets
Speaker 9: on exchanges. That solves a huge number of problems.
Speaker 4: And people are already walking that line and already building
Speaker 4: that offering. It seems like Felix push us forward as
Speaker 4: to how we could get what you call really these
Speaker 4: combinatorial auctions.
Speaker 9: Combinator yeah, is something called the Milgram assignment auction. And
Speaker 9: all markets are auctions, right. If you think about the
Speaker 9: stock market, people are bidding every microsecond for how much
Speaker 9: they're willing to bid and offer on various stocks. And
Speaker 9: that's a very simple auction. It's just like there's one
Speaker 9: object and you can have a single price of that object.
Speaker 9: It's the share of stock. Other auctions, other commodities have
Speaker 9: more complicated things, like in the oil market, you have
Speaker 9: to invent these standards like ren crude or West Texas
Speaker 9: Intermedia that people can sort of agree on. When you're
Speaker 9: talking about something as complicated as compute, where there are
Speaker 9: hundreds of different variables that people care about, what chips
Speaker 9: you have, how much uptime there is, what time of
Speaker 9: day you're using, all of this kind of stuff. Then
Speaker 9: you need a very sophisticated auction that is powered itself
Speaker 9: by AI. But we have these companies one Kronos and
Speaker 9: Autonomics that are actually building that right now, and really
Speaker 9: it's super necessary. Without it, we aren't going to be
Speaker 9: able to see the level of investment that people are
Speaker 9: sure is coming.
Speaker 4: Food for thought, and that's exactly what job description is.
Speaker 4: Felix Salmon is a great really go dive into it
Speaker 4: this weekend. But for more on AI and the questioning
Speaker 4: of valuations around AI as well, let's talk to Stephanie Aliaga.
Speaker 6: She's global market strategist at JP Morgan. No, we just
Speaker 6: have the latest David Einhorn coming out saying I'm.
Speaker 4: Worried about the shaft scale of AI infrastructure investment to
Speaker 4: the moment that billions is going to be lost in
Speaker 4: terms of capital.
Speaker 6: What are you thinking of these warnings around a bubble.
Speaker 10: Yeah, it's clear we're seeing explosive demand demand growth that
Speaker 10: we've really never seen before. That doesn't mean it's not real,
Speaker 10: but it does mean that we should continue to really
Speaker 10: look at these valuations and perform these sanity checks.
Speaker 6: And what gives me.
Speaker 10: Some confidence when I'm performing my sanity check is that
Speaker 10: this infrastructure wave, as significant as it is, is powered
Speaker 10: by real demand growth that is already showing up in
Speaker 10: the numbers. It's funded by real cash flows, and even
Speaker 10: after all of this enormous spending the four major hyperscalers,
Speaker 10: they're still free cash flow positive, and so there's a
Speaker 10: lot of demand, and still the supply constraint on infrastructure
Speaker 10: is there. So there's no house of cards underneath this
Speaker 10: AI infrastructure wave, I'd say. But still I think the
Speaker 10: AI theme is it's a lot term. One deep seek
Speaker 10: was one upset that we had earlier this year. There
Speaker 10: will surely be others, and right now we're in this
Speaker 10: kind of period of digestion. But I think we're just
Speaker 10: waiting for that next piece of like bullish commentary and data,
Speaker 10: and then we're going to appreciate the fundamentals once more.
Speaker 3: Stephanie, every phone call I get at the moment about
Speaker 3: specific infrastructure deal there's an element of debt involved. How
Speaker 3: closely are you tracking that and are you worried about it?
Speaker 10: So the infrastructure spending boom is beyond just those four
Speaker 10: major hyperscalers right that fifth in line, as you know,
Speaker 10: came out with a bond deal this week.
Speaker 2: So we are.
Speaker 10: Seeing that AI is going to cost a lot of money,
Speaker 10: and you know, the debt markets are coming in to
Speaker 10: help fund some of those gaps and spending. I'm not
Speaker 10: incredibly worried about that just yet. I mean, the bargain
Speaker 10: that bond investors are making is that there will ultimately
Speaker 10: be enough revenue generated from this to pay back the bonds.
Speaker 10: That's maybe a more conservative bet than what equity markets
Speaker 10: are making by putting more money into these lead megacaps
Speaker 10: that already have sky high valuations. But more broadly, I
Speaker 10: think it just shows that, you know, this infrastructure wave
Speaker 10: has a lot of urgency behind it, and it's beginning
Speaker 10: to touch many other corners of the market. The corporate
Speaker 10: bond market is one of them, but we're also seeing
Speaker 10: it in utilities and infrastructure and public and private and
Speaker 10: so forth.
Speaker 4: I mean, a forty year bond with what was it
Speaker 4: ended up a yield of just about one point sixty
Speaker 4: five percentage points.
Speaker 6: So for treasuries feels.
Speaker 4: Like, I mean, relatively little to have to pay for
Speaker 4: the price of that longer term debt, but there is belief.
Speaker 6: I want to go back to the comment you made,
Speaker 6: this isn't a house of cards. How do you feel
Speaker 6: though about some of.
Speaker 4: The circularity arguments that are going on that basically it's
Speaker 4: the same people are buying, basically giving money in equity
Speaker 4: for promise of buying their GPUs later.
Speaker 10: Absolutely, markets have been rewarding large capital spending commitments, and
Speaker 10: we should not be rewarding redundant capital spending commitments. And
Speaker 10: I think that is one of the I guess the
Speaker 10: sanity checks that we've all performed this week is okay.
Speaker 10: It seems like capital slashing from one balance sheet to
Speaker 10: another balance sheet. But a lot of the comparisons that
Speaker 10: are being made to the dot com bubble of companies
Speaker 10: selling bannerats to one another trying to juice up their valuations.
Speaker 10: What's different this time around is the spending is grounded
Speaker 10: in real infrastructure, real chip spending, real data centers, and
Speaker 10: so that gives me a bit more confidence on that.
Speaker 10: But we know absolutely should not be rewarding companies for
Speaker 10: redundant capital spending commitments.
Speaker 3: Stephanie, really quick, can the global energy sector.
Speaker 2: Meet the demand?
Speaker 10: That's the million dollar question, right, billion trillion dollar question.
Speaker 10: I guess The reality is it's going to take all
Speaker 10: hands on deck. And while a lot of data center
Speaker 10: power commitments have been made in fact this year enough
Speaker 10: to power New York, Chicago and LA for a year.
Speaker 10: That's the degree of power commitments that have been made.
Speaker 10: A lot of that's in the pipeline. The reality is
Speaker 10: we are confronting in very aged infrastructure grid. It's going
Speaker 10: to take time until the twenty thirties at minimum, until
Speaker 10: nuclear power, even new natural gas power is going to
Speaker 10: be there. In the meantime, there's hope that we can
Speaker 10: get a lot more efficient and that the demand is
Speaker 10: it's tracking up, but it's also tracking up gradually, right,
Speaker 10: so we're not too worried about that real I think
Speaker 10: bottleneck moment happening, it seems a few years into the future.
Speaker 10: Until then maybe we see more efficiency gains or the
Speaker 10: costs of compute have come down ninety eight percent already.
Speaker 3: Stephaniely Aliaga, global market strategist at JP Morgan Asset Management,
Speaker 3: thank you very much. Now coming up, Bloomberg Tech Asias
Speaker 3: sat down with Holton Nu from bay Too Apollo, China's
Speaker 3: biggest robotaxi operator at conversations.
Speaker 2: The next this is Blenberg.
Speaker 4: Tech the race that bring driverist taxis to the world.
Speaker 4: It is on and while the likes of Weimo have
Speaker 4: focused on establishing domestic strongholds, Chinese companies are aggressively expanding internationally.
Speaker 4: Here is by do Apollos, Global manager of overseas Business.
Speaker 4: You speaking with Blumberg Tech Asia, Aldreders.
Speaker 11: I think both Waymo and Bido Apollo, we are the
Speaker 11: only two companies who provide over one thousand cars in
Speaker 11: all the cities.
Speaker 12: What does your expansion plan and your and your scale
Speaker 12: up look like.
Speaker 11: We have already signed several legally binding contract with different
Speaker 11: partners globally. Any single one of them is regarding one
Speaker 11: thousands level of robotaxis deployment. I believe once we remove
Speaker 11: the safety driver from the car, you know, the numbers
Speaker 11: of deployment can can raise gigantically right, since what we
Speaker 11: are aiming for is uh is the real AUTI of
Speaker 11: striving is without safety driver.
Speaker 12: With working with us companies Uber and Lyft. Do you
Speaker 12: see any risk of geopolitics coming into the equation as well?
Speaker 11: From bidose perspective, we think both China and the US
Speaker 11: have enough ability and wisdom to overcome such kind of
Speaker 11: geopolitical problems or difficulties. So we believe since we are
Speaker 11: also commniests working for for new technology, also for profit
Speaker 11: for profile, generating profits for for both companies, so I
Speaker 11: think we're yeah, everything will be good in the end.
Speaker 3: That was by do Apollos Holton New along with our
Speaker 3: own Annabel Drulers. Check out the full episode of Bloomberg
Speaker 3: Tech Asia online or on the Bloomberg terminal. A lot
Speaker 3: of stories coming out of the region now coming up.
Speaker 3: More on TikTok as President Trump advances plans for US
Speaker 3: investors to buy the social media platform in the US.
Speaker 3: About that story. Next, This is Bloomberg Tech. Welcome back
Speaker 3: to Bloomberg Tech Cara. I'm sounding the tech ipo watch
Speaker 3: Clackson the alarm, and the name I'm looking at is Klana.
Speaker 3: Down almost six percent in the session. But the reason
Speaker 3: that's notable is the shares trading at thirty nine dollars
Speaker 3: nine cents a share, meaning they are down below the
Speaker 3: forty dollars IPO price pretty quickly as well. Like think
Speaker 3: of all the other IBOs you and I've covered in
Speaker 3: recent weeks and months, and some of them had a
Speaker 3: lot of long term momentum. This feels like a pretty
Speaker 3: quick drop back, and there is a broader sell off
Speaker 3: in fintech right now. But it's one to watch this Friday.
Speaker 3: Sorry to bring the mood down, but it's a it's
Speaker 3: a notable moment.
Speaker 2: Oracle. Sorry, I've just got carried away. I'm having a
Speaker 2: good time.
Speaker 3: Oracle over the course of five days is down almost
Speaker 3: eight percent, also bearing in mind broader momentum that it's
Speaker 3: had in recent weeks, right, But to kind of sell
Speaker 3: the news week where we got a lot more detail
Speaker 3: on its participation in US TikTok and how it's going
Speaker 3: to operationally and to anchor, investor and board seat member
Speaker 3: run things. But that's five day drop, biggest in April.
Speaker 3: Please take it away.
Speaker 4: I will, because yes, Oracles run far higher in recent months,
Speaker 4: and no ononder there's been a profit taking. But we
Speaker 4: aren't going to drill into Oracle into potential TikTok investment
Speaker 4: and the role that it plays with Bluemost brody Ford
Speaker 4: who covers the company. And there is a great opinion
Speaker 4: piece out of our colleague Davely who really puts out
Speaker 4: really the question of what expertise does Oracle, a cloud
Speaker 4: company have when it comes to social media algorithms, brody.
Speaker 13: Not a whole lot. I think the UL maybe they
Speaker 13: a would tell you as much as well. I think
Speaker 13: it's very interesting how much rhetorical value the administration has
Speaker 13: placed on Oracle's involvement. They are the kind of technological
Speaker 13: underpinning of a lot of the operations, but they're the
Speaker 13: cloud vendor, right, I mean, they are not an algorithm
Speaker 13: designing company. They're not a business operations social media. They're
Speaker 13: not a consumer company period, right. And so as Oracle
Speaker 13: takes a very large role on the stage of how
Speaker 13: this TikTok deal is rolled out, my anticipation is that
Speaker 13: their role doesn't change a whole lot from what it
Speaker 13: is today, which is a cloud infrastructure vendor.
Speaker 3: Brady, you and I have spent a lot of the
Speaker 3: last thirty six hours on the phone trying to work
Speaker 3: this out, so let's swap notes. My understanding is that
Speaker 3: the Trump administration went to MGX which is a basically
Speaker 3: state backed investment firm in the UAE, and invited them
Speaker 3: to participate. You also have some details on these kind
Speaker 3: of anchor investors and what role they'll take.
Speaker 2: Just give us your notes please, right.
Speaker 13: So, these three anchor investors will likely get about a
Speaker 13: fifteen percent share each and a board seat. The exact
Speaker 13: numbers may shift around with the idea is that these
Speaker 13: are the kind of three anchor non Chinese investors, kind
Speaker 13: of each coming from somewhat different backgrounds Oracle. We've discussed
Speaker 13: MGX being an Amorati investment company than Silver Like being
Speaker 13: a US tech focused investment company, and so I think
Speaker 13: the idea is showing that, hey, there's a breadth of
Speaker 13: folks behind this initiative. Though of course the reporting is
Speaker 13: very live in terms of exactly what these three companies
Speaker 13: are going to be buying.
Speaker 3: The most brady Ford busy week. Forew a lot more
Speaker 3: reportings come, Thank you very much. Let's bring in Teresa Payton.
Speaker 3: She's the CEO of Foota List Solutions and the former
Speaker 3: White House Chief Information Officer under George W. Bush administration.
Speaker 3: If we may, I want to go to the UAE
Speaker 3: piece of this first, because you know, the emphasis from
Speaker 3: the administration was making US TikTok American. The UAE is
Speaker 3: an ally of the United States in defense, for example.
Speaker 3: You know there is weapons and other agreements there. But
Speaker 3: in the context of something that is digital, what do
Speaker 3: you make of MGX participating as an anger for investor
Speaker 3: and potential board seat holder of a US TikTok.
Speaker 8: Well, I think it's very interesting.
Speaker 14: Obviously they have deep enough pockets to be a part
Speaker 14: of this, which is kind of part of the deal negotiation.
Speaker 14: But I to have some open questions because there's some
Speaker 14: open questions about how they feel about social media for
Speaker 14: their own citizens. And so now we're talking about we're
Speaker 14: going to have some type of a twin algorithm, because
Speaker 14: by Dance is still going to have the algorithm, but
Speaker 14: we're going to have it here in the United States
Speaker 14: and we're going to be retraining.
Speaker 8: It on US data.
Speaker 14: And so I've got a lot of questions around that
Speaker 14: board seat and what kind of voting rights, what kind
Speaker 14: of direction, what kind of influence they may have over
Speaker 14: this sort of digital twin of an algorithm we're going
Speaker 14: to have the US and how that retraining's going to happen.
Speaker 3: Okay, from a pure technology standpoint, how do you think
Speaker 3: this is going to work read the algorithm or.
Speaker 2: Is it going to work at all?
Speaker 14: Well, hopefully they've got some really great engineers working on this,
Speaker 14: so whenever you kind of go into this mode of
Speaker 14: there's going to be a master copy and then we're
Speaker 14: going to have our own local, regional copy, but it's
Speaker 14: going to be essentially the same, except for it's not
Speaker 14: we're going to be training it on us data. I
Speaker 14: end up having a lot of questions like what's the
Speaker 14: quality assurance for this?
Speaker 8: Will it still feel and look the same?
Speaker 14: I mean, TikTok may lose it's hip and cool factor
Speaker 14: once we take sort of the global piece out of
Speaker 14: it and start.
Speaker 8: To run at locally.
Speaker 14: So it'll be very interesting to see what the knowledge
Speaker 14: transfer will be. I know, as part of Project Dallas,
Speaker 14: TikTok Usa has been doing a lot of work to
Speaker 14: be in compliance with the Foreign Control of you know,
Speaker 14: kind of regulations around Siphius, and so it could be
Speaker 14: they already have people very well trained up to take
Speaker 14: the reins of TikTok USA's algorithm. But if they don't,
Speaker 14: I'm a little worried about how it's going to be
Speaker 14: too owned and maybe a little bumpy once we kind
Speaker 14: of do this split and have this algorithm twin of
Speaker 14: sort of the master copy, but it has to be retrained.
Speaker 4: And let's face it, if they're Byte Dance TikTok employees
Speaker 4: who've been working on Project Texas, who says that byte
Speaker 4: Dancers going to want them to move to us TikTok?
Speaker 6: So we have to question what.
Speaker 4: Engineering talent follows through theresa. I'm also interested in. There's
Speaker 4: been some Reuters reporting and Bloomberg's yet to been confirming
Speaker 4: on it.
Speaker 6: But the idea that actually byte.
Speaker 4: Dance as a whole has a lot more control than
Speaker 4: perhaps have been previously thought. Yes, they perhaps give over
Speaker 4: the algorithm in a sunch way and it becomes updated
Speaker 4: and monitored by the likes of Oracle, but they then
Speaker 4: hold a separate division that will continue to be wholly owned,
Speaker 4: and they'll control the revenue generating business operations such as
Speaker 4: e commerce and advertising.
Speaker 6: How does that technically work.
Speaker 4: And how does that make us understand it from a
Speaker 4: national security perspective?
Speaker 14: Yeah, this is very interesting to me. So I think
Speaker 14: a couple of things. One, we know the data has
Speaker 14: been physically separated, but the algorithm itself. The reason why
Speaker 14: an algorithm like TikTok's was so popular and beat out
Speaker 14: most US based social media companies, at least as it
Speaker 14: relates to gen Z, gen A and even you know,
Speaker 14: candidly other generations. A lot of people have adopted TikTok,
Speaker 14: and the reason why it's so good is that algorithm
Speaker 14: is constantly learning. How does it learn? It has to
Speaker 14: train itself on data and where you come from, where.
Speaker 8: You go to and all of those things.
Speaker 14: I don't know how the algorithm stays hip and cool
Speaker 14: and edgy if it's completely separated from ByteDance, So how
Speaker 14: does it learn if it becomes a black box of learning?
Speaker 14: So lots of questions still around how that engineering is
Speaker 14: going to work and how are they going to set
Speaker 14: this up. So, for example, there is a term called
Speaker 14: digital twin where you can actually have a.
Speaker 8: Full production copy of production and.
Speaker 14: Essentially have it be the same and you know, potentially
Speaker 14: have the data be separated. We're going to have to
Speaker 14: have some really smart engineers on the US side of
Speaker 14: TikTok to really say whether or not there's backdoors, whether
Speaker 14: or not some of the data itself is truly anonymized,
Speaker 14: or if we still have a real issue with kind
Speaker 14: of foreign interest being able to see USB citizen.
Speaker 4: Data and theresa I follow up with a relatively sensitive
Speaker 4: political question here, because a lot of anxiety has been
Speaker 4: put into the potential biases that creep into this algorithm.
Speaker 4: If it's Chinese overseeing controlled whatever, you might make a
Speaker 4: byte dance. If it's now overseen and controlled by Oracle,
Speaker 4: what can they put in place to ensure that the
Speaker 4: users that may or may not migrate over feel comfortable
Speaker 4: with the control of algorithm by them and what biases
Speaker 4: they need to oversee in the same way that we
Speaker 4: question other parent companies such as Metro and Snap.
Speaker 14: I love the question asking here because of our lack
Speaker 14: of governance and guardrails over social media platforms, over big tech,
Speaker 14: as far as understanding the transparency around these algorithms, how
Speaker 14: they train things. Do I, as a user get to
Speaker 14: reset my algorithm? Do I get to see transparency into
Speaker 14: what's being served up to me or to my children
Speaker 14: or to my customers if I have a business account.
Speaker 8: So, because we don't.
Speaker 14: Have that today, this is a great question and it
Speaker 14: has to be asked of all the social media and
Speaker 14: big tech platforms, and you're right, we don't know potentially
Speaker 14: who's sitting on that board, not just Oracle, but the
Speaker 14: other investors. You know, are they going to have sort
Speaker 14: of a heavy thumb, if you will, on the algorithms
Speaker 14: and how they work more to com Obviously.
Speaker 4: Evolving story trees are paid in there with us, so
Speaker 4: appreciate it.
Speaker 6: CEO for Talis Solutions form of.
Speaker 4: Bush white House CIO coming up of an AI stargate
Speaker 4: ambitions could super charge them on for aipower, big implications
Speaker 4: from video and Oracle.
Speaker 6: That's next. This is bloombag Tech.
Speaker 4: Quil Com CEO Cristiano Arman said that the Nvidia Intel
Speaker 4: deal from earlier this week is in a way, and
Speaker 4: I quote the moment they had been waiting for. He
Speaker 4: spas why talks about the impact on Qualcom and the
Speaker 4: rest of the industry when the news broke this.
Speaker 15: Week, when you actually dig deeper on it, and it
Speaker 15: was interesting, Actually when did announcement happen, it was interesting.
Speaker 2: We were slightly up.
Speaker 15: It was kind of neutral to positive to Qualcom, and
Speaker 15: we saw I think the market stock reaction on arm
Speaker 15: On MD and and an Intel was up and the
Speaker 15: way we actually look at this, we're incredibly excited because
Speaker 15: what he basically means is, I think it's Intel was
Speaker 15: sending a message that they're integrated GPU in their AI
Speaker 15: products are They're not going to likely not to continue
Speaker 15: with that because that's what the market is seeing. It's
Speaker 15: going to be in Vidia. So then as in Nvidia
Speaker 15: comes in to the integrated GPU market, combining their GPU
Speaker 15: with Intel x eighty six, he started to bring AI
Speaker 15: into the PC market. And that is the moment we've
Speaker 15: been waiting for. And I think that's what we do.
Speaker 15: And I think the Qualcom DNA is anything that is
Speaker 15: battery power, is high performance, low battery life and a
Speaker 15: lot of AI. That's that's where we want the market
Speaker 15: to be welcome.
Speaker 2: The CEO Christiano, I'm on there.
Speaker 3: Meanwhile, Open ai is pushed to scale up as Stargate
Speaker 3: project is set to accelerate demand for AI computes, potentially
Speaker 3: lifting other AI sectors from in Video's hardware sales to
Speaker 3: Oracle's cloud services for more. We've got mandate seeing senior
Speaker 3: tech industry analysts of Bloomberg Intelligence, the thing about everything
Speaker 3: that's happening is a misunderstanding of where the demand is
Speaker 3: being sent, You've done a really good job. Like Microsoft
Speaker 3: is outsourcing to Oracle basically because they don't have their
Speaker 3: own capacity to deal with this. Just present the thesis
Speaker 3: that you're trying to get the market to understand.
Speaker 16: Yeah, look, I mean open Ai has told us that
Speaker 16: they expect to get to two hundred billion dollar in
Speaker 16: revenue by twenty thirty. Currently they will likely close the
Speaker 16: year at twenty billion in ARR. So you know, when
Speaker 16: you look at that seventy percent keeger for the next
Speaker 16: four years, I think deals like what they have signed
Speaker 16: with Oracle, the three hundred billion dollar deal and then
Speaker 16: in video signing up that one hundred billion dollar investment
Speaker 16: for ten gigawatt capacity kind of makes sense. How they
Speaker 16: get to that capacity which will enable that two hundred
Speaker 16: billion dollar in revenue. And we have sliced the different
Speaker 16: kind of segments they will have. It won't be just
Speaker 16: CHATQPT subscriptions. They will have API sales and AI agent sales.
Speaker 16: But the enabling kind of infrastructure for that will come
Speaker 16: from additional power and data center capacity that they will
Speaker 16: have from all the deals that they are doing. And
Speaker 16: that's the vision, And it comes down to how they
Speaker 16: execute on that vision.
Speaker 4: There was more news with open Ai looking towards call
Speaker 4: weave a little bit more for some of its compute needs.
Speaker 4: Now the care we've CEO joined at Ludlow remain a
Speaker 4: little bit earlier yesterday.
Speaker 6: Just to listen to what you have to say.
Speaker 17: The challenge that we have is competition among our clients for.
Speaker 2: The infrastructure that we have.
Speaker 17: Right it is not a question of giving up one
Speaker 17: client for another client because their demand doesn't completely absorb
Speaker 17: all of our infrastructure. It's just a question of we
Speaker 17: have one hundred units of compute to deliver in the
Speaker 17: next twelve months. We could deliver all one hundred to
Speaker 17: client number one, all one hundred to client number two,
Speaker 17: or all one hundred to client number three. And the
Speaker 17: question is is how are we going to divvy that
Speaker 17: up among those coins.
Speaker 6: Issue is supply side Mandle.
Speaker 4: We say time and time again, and how big therefore
Speaker 4: is the need? I've seen numbers. We start with Baine
Speaker 4: saying two trillion. Then we saw, of course Ali Baba
Speaker 4: say it's could be four trillion.
Speaker 6: I've just read.
Speaker 4: McKinsey's bullish case is up to send point nine trillion
Speaker 4: by twenty thirty.
Speaker 6: What do you have it as?
Speaker 16: Yeah, look, I think Jensen sort of laid out quite
Speaker 16: well with the one hundred billion dollar investment. He said,
Speaker 16: for ten gigabart power, you need a four hundred billion
Speaker 16: dollar investment. They are putting hundred billion dollars open. Aye
Speaker 16: will have to find three hundred billion dollars from somewhere else.
Speaker 16: But you can actually see if we end up adding
Speaker 16: fifty gigaward of capacity, that would make up you know,
Speaker 16: two trillion number. And so from that perspective, then you
Speaker 16: start looking at how how much will be the tokens
Speaker 16: generated from that additional fifty gigaward power capacity. And the
Speaker 16: reason why that's the right framework is because every querry
Speaker 16: right now is the function of tokens consumed. I mean,
Speaker 16: Google says they have nine hundred eighty trillion tokens per month,
Speaker 16: and that seems to be growing quite rapidly. Every company
Speaker 16: right now is quantifying that. And so if you make
Speaker 16: it a function of power, it's easy to see where
Speaker 16: we will land up given you know, the tokens consumed
Speaker 16: per ai agent or per query or any other use
Speaker 16: case that Jenny I has.
Speaker 4: And then we just need to source that power and
Speaker 4: deep seeing Bloomberg Intelligence, great analysis, go read it.
Speaker 6: Thank you.
Speaker 4: Meanwhile, coming up, we'll take a look at how Apple
Speaker 4: lagged so far behind on AI, how.
Speaker 6: It can catch up. This is Blomberg Tech.
Speaker 2: Apple.
Speaker 4: There's long leed Silicon Valley in tech, but in the
Speaker 4: world of AI, it's fallen way behind. Continuing missteps could
Speaker 4: arguably threaten the ipho's dominance. Bloomberg Originals took a deep
Speaker 4: dive into what went wrong and if Apple can catch up.
Speaker 7: Sirih Well the name of the guy I had a
Speaker 7: meeting with a couple of months ago at Cafe Cranell.
Speaker 8: I met Zach Wingate at Cafe Grenelle.
Speaker 18: Sach actor Bella Ramsey was bailed out by a new
Speaker 18: version of Apple's Siri that was meant to be available for.
Speaker 19: All That feature still has not been released. Originally supposed
Speaker 19: to come out in April May of twenty twenty five,
Speaker 19: but now it's on track for Spring twenty twenty six.
Speaker 18: Apple took down the ad and is facing a lawsuit
Speaker 18: over the delay, but the disconnect exposed a deeper issue.
Speaker 18: The company was losing ground in the AI race.
Speaker 19: They totally missed the boat. There was indecision. There was
Speaker 19: lack of concern that this could become a real thing.
Speaker 6: This is a story about how hard it can be
Speaker 6: to stay on top.
Speaker 16: AI is something that wasn't in their DNA.
Speaker 18: Continued failure doesn't just hurt Siri, it could threaten the
Speaker 18: iPhone's dominance. The product line accounts for more than half
Speaker 18: of Apple's revenue, so missteps with what's become its most
Speaker 18: non noticeable missing features could be devastating.
Speaker 19: We saw this for many decades. Nokia was at the
Speaker 19: very top of the phone industry. Apple came out with
Speaker 19: a much better mouse truck. BlackBerry was at the top
Speaker 19: of the industry.
Speaker 9: Apple came out.
Speaker 19: With the better mouse truck. They are going to be
Speaker 19: in danger of the next Apple being created if they
Speaker 19: don't get their act together soon with some serious acquisitions
Speaker 19: changes in partnerships.
Speaker 3: You can catch the full episode at Bloomberg dot com,
Speaker 3: on YouTube or on the terminal. Two Wall Street bulls,
Speaker 3: Tom Lee and Dan Ives are going against the grain
Speaker 3: of Wall Street, leveraging social media to bring in fresh
Speaker 3: inflows and outperformance in their ETFs. For more, Bloomberg Cross
Speaker 3: asset reporter Isabelle Lee joins us this is one of
Speaker 3: the most read stories on the Bloomberg terminal and the website.
Speaker 3: It's not surprising two characters megatech bulls, but they've launched
Speaker 3: ETFs explain the basics what we need to know about
Speaker 3: what they're up to.
Speaker 20: So these two hf stand out in a CE or
Speaker 20: four four two hundred ETFs in the US because they
Speaker 20: engineer a rare double performance, which is outperformance and flows.
Speaker 20: Usually you're outperformed, but you don't see flows. Usually have flows,
Speaker 20: but the performance isn't that. So both of them have
Speaker 20: those two and the both of them also are really
Speaker 20: this big figures. Tomlely has five hundred thousand followers on Twitter,
Speaker 20: dan Ives has around two hundred thousand. So they go
Speaker 20: straight to their retail investors, and they go straight to
Speaker 20: them with their ideas and guess what these are. Retail
Speaker 20: investors buy them up by the billions as well.
Speaker 4: Their ideas go straight to a potential retail and institutional investor.
Speaker 4: And at the same time, say dan Ives comes on
Speaker 4: this show as a buyside and sell side analyst. He's
Speaker 4: coming on and trying to say I'm independent and my
Speaker 4: view is that these companies are going to go higher
Speaker 4: and he does think they're all going to go high.
Speaker 6: He's a permeable. But what if we start to question evaluations.
Speaker 6: What if at some point.
Speaker 4: He goes negative on the idea of certain stocks. Does
Speaker 4: that damage the ETF inflows?
Speaker 6: How does he remain independent in this way.
Speaker 20: That's a good point, Caroline, And this is a new trend.
Speaker 20: We're seeing that these prominent figures are launching their own ETF.
Speaker 20: So both Tom Lee and Danives have their own really
Speaker 20: strong base because of their research. They both just send
Speaker 20: out researchers every day. You get their notes multiple times
Speaker 20: a day if you pay as a client. And then
Speaker 20: they thought, you know what, why not let me wrap
Speaker 20: my ideas into this one big ETF so that my
Speaker 20: followers or my now investors can just buy those ETFs.
Speaker 6: In one click.
Speaker 20: And that's a beautiful ets and one click you can
Speaker 20: really just purchase them. But to your point, that is
Speaker 20: true because followers are loyal to them, they listen to
Speaker 20: their every call.
Speaker 6: But what if they now it's the question of.
Speaker 20: Whether there's going to be some self interest that remains
Speaker 20: to be c and I'm sure they practice fiduciary and
Speaker 20: they're doing what's best for their clients, so.
Speaker 6: The rest of their interests.
Speaker 20: But then it's really interesting because these big name launches
Speaker 20: from Rubini also he launches own ETFs, even Gmo. Even
Speaker 20: Rick Reader who's now in contention to Fetchir, he has
Speaker 20: his own ETF. So it's really a new wave. And
Speaker 20: I think not all famous people when they launch their
Speaker 20: own ETFs, not all of them gain traction. For them
Speaker 20: at least it's doing well.
Speaker 3: They are their own personal brands. Hopefully that's thrups some
Speaker 3: picks real quick. But dan Ives is charismatic. Just explain
Speaker 3: to those that don't know what he's like.
Speaker 20: Where do we begin with Danas every quart he has
Speaker 20: this quotable. He wears these colorful clothes. He's always in
Speaker 20: a cap. Everyone is in black and white, and he's
Speaker 20: just really this big, red, colorful figure. Tomley is the same.
Speaker 20: They make this big, audacious bets and it really is
Speaker 20: a SoundBite that you've'll forever listened to.
Speaker 4: Interesting mean, they both recently become chairs of digital asset
Speaker 4: treasury companies as well, so they seem to be in
Speaker 4: sync on certain areas of the market. Bloomberg's is Abelli
Speaker 4: great reporting and great story. Go read it that does
Speaker 4: it from this edition at Blomberg tech Head.
Speaker 2: Yeah, don't forget to check out the podcast. You know
Speaker 2: where to find it.
Speaker 3: It's on the Bloomberg terminal, it's online, it's on Apple,
Speaker 3: it's on Spotify, and it's on iHeart. What a week
Speaker 3: it's been from San Francisco and New York City.
Speaker 2: It's Bloomberg