WEBVTT - Netflix Co-CEO Steps Down, Issues With 2016 Tesla Demo 0:00:13.400 --> 0:00:16.400 I'm Caroline Higher, Bloomberg's World headquarters in New York, and 0:00:16.400 --> 0:00:20.360 I'm Ed Ludlow in San Francisco. This is Bloomberg Technology. Netflix, 0:00:20.400 --> 0:00:23.200 a story of subscriber growth and succession. We dig into 0:00:23.239 --> 0:00:25.800 the earnings and the executive changes. As we learned Read 0:00:25.840 --> 0:00:30.280 Hastings will step down as CO as CEO. Plus emails 0:00:30.320 --> 0:00:33.360 from Elon Musk's shed light on his involvement in a 0:00:33.440 --> 0:00:39.280 twenty sixteen demo that exaggerated autopilot capabilities clus the hacks 0:00:39.320 --> 0:00:42.280 to stop hackers taking your money, and they're working. New 0:00:42.320 --> 0:00:45.360 research shows that the fewer companies are paying ransoms, that 0:00:45.440 --> 0:00:48.360 doesn't mean the number of attacks is actually down. We're 0:00:48.360 --> 0:00:50.440 going to discuss that, but first let's dig in on 0:00:50.479 --> 0:00:52.880 all of that, because it's interesting. We're getting succession planning 0:00:52.960 --> 0:00:56.480 and a chairman remaining over at Texas Instruments is similar 0:00:56.520 --> 0:00:59.720 for Netflix succession planning, unlike over at Disney. For many 0:00:59.720 --> 0:01:02.680 would argue, it's interesting, therefore, to bring on Lucas Shore, 0:01:02.800 --> 0:01:05.840 who so intimately understands this company and indeed the in 0:01:05.920 --> 0:01:08.600 the workings of Read Hastings. He himself, of course, a 0:01:08.600 --> 0:01:11.600 man who's focused on culture in so many ways. Lucas, 0:01:11.760 --> 0:01:14.960 what you make of who now steps up, Greg taking 0:01:14.959 --> 0:01:17.319 the co CEO roans and ultimately who's going to have 0:01:17.640 --> 0:01:19.959 the ultimate decision making power here because he remains as 0:01:20.040 --> 0:01:25.760 executive chairman. Yeah. Look, my assumption is that that Read 0:01:25.880 --> 0:01:30.440 will say that that Ted and Greg get ultimate authority 0:01:30.480 --> 0:01:33.720 there now the CEO obviously as chairman of the board, 0:01:33.920 --> 0:01:37.280 as co founder, as a major shareholder. If there were 0:01:37.360 --> 0:01:42.040 some huge transaction Netflix decided to sell itself by something significant, 0:01:42.040 --> 0:01:44.640 I imagine Read would get would get more involved. But 0:01:44.760 --> 0:01:47.080 he has been gradually stepping back from the day to 0:01:47.120 --> 0:01:49.760 day operations of the company already. You know, he delegated 0:01:49.800 --> 0:01:52.760 most of the Hollywood stuff to to Ted. He's put 0:01:52.800 --> 0:01:55.840 Gregg in charge of these two big initiative advertising and 0:01:55.880 --> 0:01:58.200 password sharing, And I think that's how the company is 0:01:58.240 --> 0:02:00.920 mostly going to keep operating with sort of Gregg looking 0:02:00.920 --> 0:02:03.320 at a lot of the kind of product and strategic fit, 0:02:03.680 --> 0:02:05.560 Ted looking at a lot of the you know, the 0:02:05.600 --> 0:02:10.919 more entertainment focused and programming operations. Hey, Lucas, let's think 0:02:10.919 --> 0:02:13.160 about the forward looking nature of this, you know, because 0:02:13.200 --> 0:02:16.120 Greg Peters kind of was already leading the charge on 0:02:16.160 --> 0:02:18.640 the ad supported tier, already leading the charge on the 0:02:18.639 --> 0:02:22.640 crackdown for password shared Ted Surrandos, the man about Hollywood 0:02:22.880 --> 0:02:26.440 doing the deals, thinking about content, given the numbers we 0:02:26.560 --> 0:02:29.360 just got, which was strong beats right, subscribers and on 0:02:29.600 --> 0:02:32.440 the top line is post bond line a bit weaker. 0:02:32.720 --> 0:02:37.120 Where will they focus their energies going forward? Fore, you know, 0:02:37.240 --> 0:02:40.440 it's going to be continued execution on advertising because remember 0:02:40.520 --> 0:02:42.520 that that app here is only two months old, so 0:02:42.560 --> 0:02:44.640 that will be kind of improving some of the technology 0:02:44.680 --> 0:02:47.560 behind it, you know, targeting sales. You know, it got 0:02:47.560 --> 0:02:49.799 off to a relatively slow start, but I think they 0:02:49.840 --> 0:02:52.040 like what they're seeing. It will be rolling out this 0:02:52.080 --> 0:02:54.560 whole password crackdown, which I think is going to start 0:02:54.560 --> 0:02:56.640 this quarter and really ramp up in the middle of 0:02:56.639 --> 0:02:59.080 the year. Um, it's going to be kind of continuing 0:02:59.120 --> 0:03:01.519 to try to improve of programming in certain areas. You know, 0:03:01.560 --> 0:03:05.919 they've they've done really well recently on English language television programming, 0:03:06.120 --> 0:03:09.200 not quite as well on the foreign language television programming. 0:03:09.360 --> 0:03:11.200 I think they want to keep improving their hit rate 0:03:11.200 --> 0:03:13.120 on movies because they release a lot of movies people 0:03:13.120 --> 0:03:15.760 don't know, you know, don't watch. And then there's all 0:03:15.800 --> 0:03:17.639 gaming piece of it, which is still a small part 0:03:17.720 --> 0:03:20.519 of the business, but they're investing a lot of money 0:03:20.560 --> 0:03:22.120 into it. I don't think you're going to see a 0:03:22.120 --> 0:03:24.600 ton of news around that in twenty three, but it 0:03:24.720 --> 0:03:26.799 is something that they will continue to talk about as 0:03:26.840 --> 0:03:28.560 with the future. The one point I do want to 0:03:28.560 --> 0:03:31.240 make is while they had a really strong final quarter 0:03:31.320 --> 0:03:33.320 of the year, at least in terms of subscriber growth, 0:03:33.440 --> 0:03:35.320 the thing to keep in mind, just sort of big picture, 0:03:35.440 --> 0:03:37.360 is that for the full year, they did still post 0:03:37.360 --> 0:03:41.440 their worst subscriber growth since two thousand eleven. Alright, bloom 0:03:41.440 --> 0:03:44.160 bags Luke is sure great reporting on what's changing at 0:03:44.160 --> 0:03:46.920 Netflix and good analysis of the numbers, which I think 0:03:46.960 --> 0:03:49.240 we need more of. So let's bring a branding cats 0:03:49.280 --> 0:03:53.520 industry analysts at Para Analytics. It's interesting the third party 0:03:53.600 --> 0:03:56.520 data suggested that actually in the final three months of 0:03:56.600 --> 0:04:00.640 last year, Netflix is facing great competition from likes of Warned, 0:04:00.680 --> 0:04:04.080 Discovery and Disney, and actually demand over rule is starting 0:04:04.120 --> 0:04:07.280 to pull back. Well, when you saw those net subscribing 0:04:07.360 --> 0:04:10.480 ads for Netflix seven point seven million, what's your reaction, Brandon, 0:04:12.120 --> 0:04:14.600 I'm still not totally surprised. I mean, Netflix has always 0:04:14.600 --> 0:04:17.839 been savvy with its guidance. It likes to set the 0:04:17.960 --> 0:04:21.719 stage for positive narratives, which we are now very much 0:04:21.800 --> 0:04:24.760 engaging in. And we look at Netflix from our angle, 0:04:24.920 --> 0:04:27.440 is still the streaming industry leader. It's the most global 0:04:27.480 --> 0:04:31.280 surprise subscribers, and is the most in demand overall catalog 0:04:31.320 --> 0:04:34.320 with US audiences in all of two and that includes 0:04:34.360 --> 0:04:37.320 original and licensed movies and TV shows. And it also 0:04:37.400 --> 0:04:41.040 still leads the entire industry in global original demand and 0:04:41.279 --> 0:04:44.520 US original demands. So yes, that is shrinking as it 0:04:44.600 --> 0:04:47.720 seeds ground to you know, very hungry competitors that are 0:04:47.720 --> 0:04:51.280 gaining market share, but they still have a massive, massive lead. 0:04:51.320 --> 0:04:54.040 And I think all the doom and gloom around Netflix 0:04:54.120 --> 0:04:57.400 last April perhaps a bit premature, as we're seeing now 0:04:57.480 --> 0:05:00.680 even with what Lucas accurately pointed out there a subscriber 0:05:00.720 --> 0:05:04.200 total in a year since two thousand. Later, Lucas at 0:05:04.200 --> 0:05:07.520 the end of his Bloomberg News report, uh summed up 0:05:07.520 --> 0:05:09.920 the comments about the ads supported tier and they were 0:05:09.960 --> 0:05:12.919 a little bit muted from Netflix there. Please, with the 0:05:12.920 --> 0:05:15.760 progress on the ad supported tier, they're saying that it's 0:05:15.760 --> 0:05:19.800 bringing in cost conscious consumers. Do you think that that 0:05:19.920 --> 0:05:22.760 was part of the beat when it came to subscribe 0:05:22.760 --> 0:05:26.039 a growth in the last three months of last year. Yeah, 0:05:26.040 --> 0:05:28.560 and they even pointed out in their letter to shareholders 0:05:28.600 --> 0:05:30.839 that they aren't seeing a lot of conversions from premium 0:05:30.880 --> 0:05:33.440 subscriptions to add tiers, which is exactly what they wanted. 0:05:33.640 --> 0:05:36.839 They want the ad tire to expand the total addressable 0:05:36.880 --> 0:05:40.320 market from Netflix, and particularly at a time when consumers 0:05:40.320 --> 0:05:43.360 are weighing concession fears and maybe our recession fears, maybe 0:05:43.360 --> 0:05:47.160 a little bit more cost conscious. Now, yes, not the fastest, 0:05:47.200 --> 0:05:50.120 most explosive rollout, but this is going to be a 0:05:50.279 --> 0:05:53.120 must have for all advertisers looking to get into connect 0:05:53.160 --> 0:05:55.599 the TVs and digital TVs. So we are going to 0:05:55.640 --> 0:05:59.760 see that grow throughout. And we gotta remember they turned 0:05:59.760 --> 0:06:03.720 around and from years of an anti ad stance and 0:06:03.800 --> 0:06:06.280 created their ads here and only six months so there 0:06:06.360 --> 0:06:10.160 is a lot of upward potential and room to grow here. Yeah. 0:06:10.240 --> 0:06:13.359 Interesting in that earning statement they said, the early results 0:06:13.600 --> 0:06:16.480 they say they're pleased with, but there's much still to do. 0:06:17.240 --> 0:06:19.720 Can you run in any way talk about sort of 0:06:19.720 --> 0:06:22.520 the culture of innovation over a Netflix, because that is 0:06:22.560 --> 0:06:24.719 of course what we've come to know having read the 0:06:24.800 --> 0:06:28.040 No Rules Rules Book by read Hastings himself. I mean 0:06:28.040 --> 0:06:29.880 it's all about the way in which they set apart 0:06:29.920 --> 0:06:32.919 on different corporate culture. Now it's interesting to compare. Should 0:06:32.920 --> 0:06:35.960 we see succession planning with Disney Plus versus Netflix and 0:06:36.240 --> 0:06:38.760 the kind of operate opposite end of the spectrum. But 0:06:38.880 --> 0:06:42.840 we are seeing Disney Plus and Warner Brothers Discovery taking 0:06:43.040 --> 0:06:46.240 chunks perotentially out of market share from Netflix. How can 0:06:46.240 --> 0:06:49.480 Netflix ensure that it's stunding in goodstead to keep on growing, 0:06:49.560 --> 0:06:54.200 keep on innovating, keep on personalizing. It's funny because Netflix 0:06:54.200 --> 0:06:57.880 has always fanacied itself as the greatest disruptor in Hollywood history, 0:06:58.360 --> 0:07:00.360 and now it's really reached a point where it is 0:07:00.920 --> 0:07:04.679 recreating the playbook of its linear rivals instead of vice versa. 0:07:04.760 --> 0:07:08.359 So the market emphasis has shifted obviously towards profit and revenue, 0:07:08.400 --> 0:07:12.360 which they are clearly emphasizing, and their strategy and public 0:07:12.440 --> 0:07:16.720 narrative has followed suits. So clearly they are adjusting to 0:07:16.760 --> 0:07:19.800 the times. And frankly, they're in a better financial situation 0:07:19.800 --> 0:07:22.280 than every other major streamer. They're the only one really 0:07:22.400 --> 0:07:25.000 that's profitable at the moment. With Disney Plus, HBO, Max, 0:07:25.000 --> 0:07:28.760 Paramount Plus and Peacock all looking at or beyond to 0:07:28.880 --> 0:07:32.160 finally get into black. But in terms of continuing to grow, 0:07:32.400 --> 0:07:35.960 they're really really going to emphasize not only the ads 0:07:36.000 --> 0:07:40.080 here as a more cost effective alternative to cost conscious consumers, 0:07:40.160 --> 0:07:42.880 not only password sharing, where if they convert just ten 0:07:42.960 --> 0:07:46.320 percent of the hundred million or so password shairs, that's 0:07:46.320 --> 0:07:48.920 ten million new subs. But they also want to continue 0:07:48.960 --> 0:07:52.520 investing in non English content and create not just regional 0:07:52.560 --> 0:07:56.080 hits that resonate with the Latin American market or Asia Pacific, 0:07:56.160 --> 0:07:59.200 but that travel globally and we're seeing that steadily increase 0:07:59.240 --> 0:08:02.560 in frequency over the past several quarters. Yeah, really interesting 0:08:02.640 --> 0:08:04.960 to bring up the global perspective of this business. And 0:08:05.000 --> 0:08:06.720 I think what's really interesting is the way in which 0:08:06.760 --> 0:08:08.640 investors have started to buy in. And it was you 0:08:08.720 --> 0:08:11.080 that was on Twitter just saying what we're off more 0:08:12.200 --> 0:08:14.640 up from the lows that Netflix's share price that hit 0:08:14.920 --> 0:08:17.360 analysts looking more far more on the buy side than 0:08:17.400 --> 0:08:19.520 they are on the cull side in terms of ratings. Brandon, 0:08:20.000 --> 0:08:23.240 from your geographical perspective, which leaders can they pull where 0:08:23.240 --> 0:08:25.120 it's going to be growing the most at the moment. 0:08:25.240 --> 0:08:29.960 Is it Latin, is it Asia Visa v U S Europe. Yeah, 0:08:29.960 --> 0:08:34.559 I mean Netflix has years long unrivaled investments in overseas 0:08:34.600 --> 0:08:36.880 content regions, so they really do have a lead on 0:08:36.920 --> 0:08:39.880 the competition in that regard. Asia Pacific has been their 0:08:39.920 --> 0:08:43.400 biggest growth arena over the last five or six corners quarters, 0:08:43.440 --> 0:08:46.600 so they're going to continue to hyper focus on that. Obviously, 0:08:46.640 --> 0:08:50.160 we've seen South Korea become a major international hub for content, 0:08:50.240 --> 0:08:53.200 both his regional hits and hits that can hopefully translate 0:08:53.360 --> 0:08:56.000 to the domestic audience as well. And then there's the 0:08:56.280 --> 0:08:58.640 big White whale and streaming. Everyone is trying to crack 0:08:58.720 --> 0:09:01.440 the code in India. Now. Netflix has gotten off to 0:09:01.440 --> 0:09:04.160 a slow start there. They're behind Amazon and Disney Plus 0:09:04.240 --> 0:09:07.199 in terms of market share, but they continue to experiment 0:09:07.240 --> 0:09:10.280 with morbil only plans with six months and annual plans 0:09:10.280 --> 0:09:13.160 that offer discounts, and they continue to invest in original 0:09:13.200 --> 0:09:17.000 content that covers a variety of regional dialects. So they're 0:09:17.000 --> 0:09:19.600 going to hyper focus on on that area while still 0:09:19.640 --> 0:09:22.960 serving the areas that have proved to be fruitful to them, 0:09:23.080 --> 0:09:29.120 such as Latin America. Alright, Para analytics industry analyst Brandon Cats, 0:09:29.120 --> 0:09:30.760 I think we're gonna have being this conversation about the 0:09:30.800 --> 0:09:33.360 future of Netflix for many weeks to come. Thank you 0:09:33.440 --> 0:09:35.760 so much for joining the program. I want to bring 0:09:35.800 --> 0:09:38.880 a quick correction to our audience, Caroline, because earlier we 0:09:39.000 --> 0:09:40.959 showed a board of the share price of a T 0:09:41.080 --> 0:09:43.439 and T, and after ours when we meant to show 0:09:43.520 --> 0:09:46.880 T mobile, which is disclosed, it will take a significant 0:09:46.960 --> 0:09:51.000 charge from a cybersecurity vulnerability that it disclosed in a 0:09:51.040 --> 0:09:53.360 regulatory filing. After the market close. You can see in 0:09:53.400 --> 0:09:56.079 your screen te Mobile down one point five percent. I 0:09:56.080 --> 0:09:58.120 got my Bloomberg terminal in front of me and I 0:09:58.160 --> 0:10:02.120 can confirm it's down one point five in after hours. 0:10:02.320 --> 0:10:05.080 Will continue to track that story. Now coming up some 0:10:05.200 --> 0:10:09.319 emails shedding light on Elon Musk's involvement in a twenty 0:10:09.480 --> 0:10:12.240 sixteen demo. What does that mean for the ev maker? 0:10:12.640 --> 0:10:15.959 Could it face probes? How does it market its technology? 0:10:15.960 --> 0:10:28.040 Will discuss all of that next. This is Bloomberg. Quite 0:10:28.080 --> 0:10:31.400 the scoop coming from Bloomberg use today. Elon Musk oversaw 0:10:31.480 --> 0:10:35.240 the creation of a video that exaggerated the abilities of 0:10:35.280 --> 0:10:39.360 Tesla's driver assistant system called Autopilot. He even dictated the 0:10:39.360 --> 0:10:42.680 opening text that was claiming the company's car drove itself. 0:10:43.040 --> 0:10:45.960 This is all according to internal emails viewed by Bloomberg 0:10:46.280 --> 0:10:48.679 and our own Dana Hall is here to join us 0:10:48.720 --> 0:10:52.600 and discuss your scoop DNA. And it's extraordinary, really the 0:10:52.640 --> 0:10:55.840 relevancy that this still has, because what's six years on, 0:10:56.200 --> 0:10:59.160 we're still debating whether autopilot is really what it says 0:10:59.160 --> 0:11:02.880 it is. Yeah, and this is pretty extraordinary. I mean, 0:11:02.880 --> 0:11:06.200 this video that I'm referring to is still on Tesla's website. 0:11:06.280 --> 0:11:08.800 It's a pretty seminal video in the history of the company. 0:11:08.920 --> 0:11:11.280 It is this, you know, a great video sent to 0:11:11.320 --> 0:11:14.319 the tune of the Rolling Stone song um Painted Black. 0:11:14.400 --> 0:11:16.880 It's still on Tessel's website, and it purports that this 0:11:16.960 --> 0:11:19.280 car is driving itself and that the only reason why 0:11:19.280 --> 0:11:22.400 a drivers in the cars for legal reasons. But what 0:11:22.480 --> 0:11:25.440 we learned via these emails and via deposition that we 0:11:25.440 --> 0:11:28.000 got a hold of this week is that, you know, 0:11:28.120 --> 0:11:31.480 Musk really oversaw the production of this video, and dozens 0:11:31.480 --> 0:11:34.760 of Tesla staffers were involved, and Musk himself wrote that 0:11:34.880 --> 0:11:37.360 language that you see when the video first starts playing. 0:11:38.440 --> 0:11:40.760 I want to go back to the basics of this 0:11:40.880 --> 0:11:44.920 story because it's important so we're talking about some emails 0:11:44.960 --> 0:11:48.120 that Elon Musque sent to quite a large group of 0:11:48.400 --> 0:11:51.040 the Autopilot team. We have some of it that we 0:11:51.080 --> 0:11:53.320 can bring up that I'll read you. Since this is 0:11:53.360 --> 0:11:56.920 a demo, it is fine to hardcore code some of 0:11:56.960 --> 0:12:00.880 it since we will backfill with production code later in 0:12:00.920 --> 0:12:03.520 an O tier update O T over the air update. 0:12:03.800 --> 0:12:06.480 What is Elon must talking about here? So this was 0:12:06.600 --> 0:12:08.600 so the first email that we got is an email 0:12:08.640 --> 0:12:11.920 that went out to the entire Autopilot team in mid October, 0:12:12.920 --> 0:12:15.439 and he's basically like, all hands on deck for this demo, 0:12:15.480 --> 0:12:18.199 and he's basically saying, don't worry, like we're going to 0:12:18.280 --> 0:12:20.319 continue to work on this code. We're going to continue 0:12:20.320 --> 0:12:22.120 to refine it we find it through over the air 0:12:22.200 --> 0:12:25.600 updates and over their updates. Is something that Tesla regularly does. 0:12:26.280 --> 0:12:30.199 But what's important is that nine days later he in 0:12:30.559 --> 0:12:33.040 a second email, He's basically like, this is the language 0:12:33.080 --> 0:12:36.280 that I want in the video, and the language is 0:12:37.280 --> 0:12:41.720 basically ultimately saying this is going to drive itself. I'm 0:12:41.760 --> 0:12:44.400 telling you where we are going to be rather than 0:12:44.440 --> 0:12:47.160 where we are in this here and now. The here 0:12:47.200 --> 0:12:50.080 and now. Dana is also that there's loads of probes 0:12:50.120 --> 0:12:54.760 into autopilot right from various authorities in the US. Yeah, 0:12:54.800 --> 0:12:56.160 so this is the this is the thing that I 0:12:56.160 --> 0:12:58.320 think will be interesting to watch going forward. You have 0:12:58.440 --> 0:13:02.160 sort of two simultaneous things happening. The first is families 0:13:02.200 --> 0:13:06.319 of drivers that died in crashes where autopilot was engaged 0:13:06.440 --> 0:13:09.200 or may have been engaged, are suing the company. I mean, 0:13:09.200 --> 0:13:12.680 there are several civil cases ongoing, including the case of 0:13:12.679 --> 0:13:15.400 Walter Huang, which is here in the Bay Area, and 0:13:15.400 --> 0:13:18.680 that trial begins in March. And then secondly, you have 0:13:18.920 --> 0:13:22.120 you know, NITZA and the California Department of Motor Vehicles 0:13:22.360 --> 0:13:24.959 looking you know, autopilot kind of on two fronts, both 0:13:25.600 --> 0:13:28.520 the technology itself as well as how it was marketed 0:13:28.520 --> 0:13:32.800 to customers. And you know, bureaucracy moves very slowly. I 0:13:32.800 --> 0:13:35.000 don't know what the latest is on those investigations, but 0:13:35.040 --> 0:13:38.560 this is technology that has been you know, under scrutiny 0:13:38.600 --> 0:13:40.600 for quite some time now, and I think what's what's 0:13:40.640 --> 0:13:43.439 relevant is that, Okay, yes, we got emails that are 0:13:43.440 --> 0:13:46.439 frankly six years old, but they are they show just 0:13:46.559 --> 0:13:50.120 how heavily involved Musk himself was in the creation of 0:13:50.120 --> 0:13:52.000 the video, the production of the video, and what the 0:13:52.080 --> 0:13:54.559 language of the video was going to say. Alright, bloom 0:13:54.600 --> 0:13:57.280 bags down the hole. Just terrific reporting alongside Seawan O. 0:13:57.400 --> 0:14:07.840 Kaine is at in Austin. Thank you so much. Just 0:14:07.880 --> 0:14:10.760 a few years ago people were writing stories about how 0:14:10.800 --> 0:14:13.080 this is stigmatized and how people should not talk to 0:14:13.280 --> 0:14:16.440 AI and this is creepy and strange. Now this is 0:14:16.440 --> 0:14:19.240 not a question anymore. But again, now the question is 0:14:19.240 --> 0:14:21.600 it okay to have any golfer? Is it okay to 0:14:21.640 --> 0:14:27.160 have that outwork? Jenni Acuta, CEO of the AI chatbot Replica, 0:14:27.360 --> 0:14:29.640 which we spoke to last week, And now let's bring 0:14:29.640 --> 0:14:32.240 in Andrew Straight for more context on all of this, 0:14:32.400 --> 0:14:35.080 because he's an Associate director of Emergent Technology and Industry 0:14:35.080 --> 0:14:38.080 Practice over at the Aida Lovelace Institute in London, focusing 0:14:38.120 --> 0:14:41.440 on research on policy on practice. Basically, sure and the 0:14:41.520 --> 0:14:44.360 data and AI work for people, work for society. But 0:14:44.400 --> 0:14:47.640 what's so fascinating about your background is you've long worked 0:14:47.640 --> 0:14:50.440 in AI ethics, you've long worked in content moderation. You 0:14:50.520 --> 0:14:53.440 worked DeepMind, such a standout AI performer over in the 0:14:53.520 --> 0:14:57.240 UK and which is ultimately bought by alphabets. Google talk 0:14:57.280 --> 0:14:59.640 to us about when we're thinking of chat gypt, when 0:14:59.640 --> 0:15:02.280 we're thinking of replica and all the innovations around chatbots 0:15:02.280 --> 0:15:05.160 and AI, are we up to speed with the ethical 0:15:05.280 --> 0:15:10.120 ramifications here. It's a very good question. I would say 0:15:10.160 --> 0:15:12.640 that in general, we have continued to not do the 0:15:12.680 --> 0:15:16.000 best of jobs of communicating limitations and risks. These kinds 0:15:16.040 --> 0:15:20.800 of technologies can raise people society. Um, these are very 0:15:20.800 --> 0:15:23.040 exciting technologies. I think there's no doubt to say that 0:15:23.240 --> 0:15:26.480 general models are raising all kinds of exciting applications from 0:15:26.480 --> 0:15:29.960 home writing to co generation. But they are not magic. 0:15:30.040 --> 0:15:35.840 They're built on hidden a process of labor that are 0:15:35.840 --> 0:15:39.720 oftentimes relying on exploited and underpaid workers, and they can 0:15:39.760 --> 0:15:42.000 have very serious impacts and people's society that needs to 0:15:42.000 --> 0:15:45.880 be better communicated. So it's critical as developers these technologies, 0:15:45.880 --> 0:15:49.600 as policymakers that we create the conditions for these technologies 0:15:49.640 --> 0:15:53.120 to be beneficial to people in society. That's something we 0:15:53.160 --> 0:15:55.080 certainly can see these technic these tech companies doing a 0:15:55.120 --> 0:15:58.120 bit more of. Yeah, it feels like open AI, for example, 0:15:58.440 --> 0:16:02.480 which is behind chatching Piece, is very much trying to 0:16:02.560 --> 0:16:05.520 have the narrative of how do we ethically introduces, how 0:16:05.520 --> 0:16:08.560 do we ensure that it's iterating at a safe pace? 0:16:09.240 --> 0:16:11.320 But what more can be done where in the world, 0:16:11.360 --> 0:16:16.160 for example, is working well with private, with public, with academics, 0:16:16.160 --> 0:16:20.520 with governments, for example. It's a very good question. Um. 0:16:20.760 --> 0:16:23.160 One thing I think that we can see more of 0:16:23.440 --> 0:16:27.160 is initial consideration of the potential uses or misuses of 0:16:27.200 --> 0:16:30.040 these technologies and building in safeguards that are meaningful to 0:16:30.360 --> 0:16:33.000 prevent those misuses. So, to give up a credit, they 0:16:33.080 --> 0:16:35.960 when they release chat GPT, they were very careful to 0:16:35.960 --> 0:16:38.800 put in place safeguards to prevent certain types of toxic 0:16:38.920 --> 0:16:43.320 or harmful content or dangerous content from being shared. But 0:16:43.640 --> 0:16:46.200 as you can see, these these kinds of safeguards could 0:16:46.240 --> 0:16:49.520 very quickly be overcome. If you typed in the appropriate response. 0:16:49.560 --> 0:16:51.920 You could get chat GPT to give you instructions now 0:16:51.960 --> 0:16:55.320 to make a Molotov cocktail or how to hotwire a car. Um. 0:16:55.400 --> 0:16:57.440 And even more concerning is that it's not just the 0:16:57.480 --> 0:17:00.920 story of chat GPT. Even if Chat GPT and Opening 0:17:00.920 --> 0:17:03.600 Eye put in these kinds of of safeguards, other types 0:17:04.000 --> 0:17:07.639 of companies doing creating generative models may not do the same. 0:17:08.280 --> 0:17:10.439 So I think a few things are needed. One is 0:17:10.480 --> 0:17:13.520 there needs to be more cross industry collaboration, communication and 0:17:13.520 --> 0:17:17.000 discussion about the kinds of risk these technologies pose. There 0:17:17.040 --> 0:17:19.640 needs to be more discussion and clarity of the kinds 0:17:19.680 --> 0:17:21.560 of standards need to be met in order for these 0:17:21.560 --> 0:17:24.440 technologies to be released safely. And there also needs to 0:17:24.440 --> 0:17:26.760 be a bit more clarification and communication with members the 0:17:26.760 --> 0:17:29.439 public about those impacts. Um I'm thinking particularly there of 0:17:29.560 --> 0:17:32.760 educators and creators who are most impacted by these technologies 0:17:32.760 --> 0:17:35.560 at the moment. And lastly, we need really strong and 0:17:35.560 --> 0:17:38.159 stringent regulation. We do a lot of public attitude surveying 0:17:38.200 --> 0:17:40.399 and research in our in our institute, and one of 0:17:40.440 --> 0:17:43.800 the most clear messages that comes across is people want 0:17:43.880 --> 0:17:46.880 regulation for AI. They want to feel safe, They want 0:17:46.880 --> 0:17:49.240 to have some sense that government has a grip on 0:17:49.280 --> 0:17:52.000 these technologies and is putting in place the right safeguards, 0:17:52.040 --> 0:17:55.080 keep them, keep them stick, Andrew. The big news headline 0:17:55.160 --> 0:17:57.760 that that I saw on Thursday today in the world 0:17:57.760 --> 0:18:00.800 of AI was the FBI Director Chris A. Ray saying 0:18:00.840 --> 0:18:05.080 he's deeply concerned about China's research in the field of 0:18:05.080 --> 0:18:07.840 AI and it in it's AI program and what it 0:18:07.920 --> 0:18:12.479 might use AI for an independent research group like yours. 0:18:12.880 --> 0:18:15.359 Do you see what China is doing in the field 0:18:15.400 --> 0:18:18.119 of AI is a worry. I think what the FBI 0:18:18.280 --> 0:18:21.000 talking about here and broadly what others have talked about, 0:18:21.040 --> 0:18:23.879 is the military applications of AI that could pose a 0:18:23.880 --> 0:18:29.760 threat to society. It's a it's a concerning development, certainly 0:18:29.840 --> 0:18:32.399 whenever you are kind of rushing into the use of 0:18:32.440 --> 0:18:35.159 AI from military and times weapons. But it's important to 0:18:35.160 --> 0:18:39.040 acknowledge that's not simply a China problem. Many militaries around 0:18:39.040 --> 0:18:41.840 the world are are developing these kinds of technologies, again 0:18:42.000 --> 0:18:46.080 oftentimes without much consideration for the kinds of race dynamics 0:18:46.119 --> 0:18:49.480 that doing so can create between other countries. So in 0:18:49.520 --> 0:18:52.320 the UK and the US, in other parts of the 0:18:52.320 --> 0:18:55.120 world these kinds of Tina's weapons systems are being developed. 0:18:55.119 --> 0:18:58.040 There are as I understand, it's some some excellent work 0:18:58.040 --> 0:19:00.560 being done to develop ethical codes of practice groups like 0:19:00.600 --> 0:19:04.240 them defense, but it is important to acknowledge that those 0:19:04.280 --> 0:19:06.520 are are nut risks unique to China, that those are 0:19:06.600 --> 0:19:09.320 very serious ethical and legal considerations that need to be 0:19:10.119 --> 0:19:13.199 seriously considering the dress on the international level. All Right. 0:19:13.280 --> 0:19:17.200 Andrew Straight, Associate Director of Emerging Technology and industry practice 0:19:17.400 --> 0:19:19.439 at the aid of loves Lace Institry. Thank you for 0:19:19.440 --> 0:19:29.840 staying up so late for us. Welcome back to the technology. 0:19:29.840 --> 0:19:32.280 I'm Caroline Hyde in New York and I made lovelow 0:19:32.320 --> 0:19:34.879 back in San Francisco. And let's get straight back to 0:19:34.960 --> 0:19:37.760 the Netflix news and the future of the company and 0:19:37.840 --> 0:19:40.879 Read Hastings and bring in John Klein, the CEO of 0:19:40.960 --> 0:19:44.560 hang and a former president of CNN. Let's be honest 0:19:44.600 --> 0:19:46.680 while we've got you on the show. You know this industry, 0:19:46.840 --> 0:19:49.080 you know the names in the industry. There was a 0:19:49.119 --> 0:19:52.440 big stock reaction to the news that Read Hastings would 0:19:52.440 --> 0:19:56.520 step back as co CEO go to the executive chair position. 0:19:56.920 --> 0:20:00.119 Greg Peters, a name well known, steps up to cocy 0:20:00.240 --> 0:20:02.680 uh Um, what do you make of all of that? 0:20:02.880 --> 0:20:08.000 Is just an example of good succession planning well. At first, Blush, 0:20:08.040 --> 0:20:10.919 it feels like the opposite of the Bob Eiger situation, 0:20:10.960 --> 0:20:15.080 where he decided to dive back into a horribly messy 0:20:15.320 --> 0:20:19.960 macro environment in the hope of fixing it. Whereas Reid 0:20:20.000 --> 0:20:24.240 looks like he is stepping back a little bit. But 0:20:24.280 --> 0:20:26.439 then as you think about it a little further, you know, 0:20:26.520 --> 0:20:30.159 an executive chairman is very different than a non executive chairman. 0:20:30.240 --> 0:20:33.240 Executive chairman sort of says, I still have to clear 0:20:33.280 --> 0:20:35.399 everything if I want to. I've still got an office 0:20:35.480 --> 0:20:37.919 right there, and you're gonna see me all the time. 0:20:38.480 --> 0:20:42.480 Plus the fact that they brought in a co CEO. Still, 0:20:42.840 --> 0:20:46.399 I thought when they elevated Ted Serrando's to co CEO 0:20:46.480 --> 0:20:49.760 that that was the sign that he was the success 0:20:50.359 --> 0:20:55.040 So imagine now the idea that he was not the successor, 0:20:55.119 --> 0:20:57.800 and in fact he's sort of pemmed in on both sides. 0:20:58.119 --> 0:21:00.240 I don't know how that's gonna play out. I don't 0:21:00.240 --> 0:21:04.280 know any of the psychology involved among these people, but 0:21:05.160 --> 0:21:08.280 I just wonder how that's going to play out. John, 0:21:08.320 --> 0:21:11.440 You've led sort of legacy traditional media companies, You've led 0:21:11.480 --> 0:21:15.840 digital media companies. Um, where does Netflix sit right now? 0:21:15.880 --> 0:21:18.720 For you? And I guess the leadership of this growing 0:21:18.800 --> 0:21:23.040 and increasingly competitive field, you know, Disney, Warner Brother, Discovery. 0:21:23.080 --> 0:21:26.239 The data shows they're growing. They're also considering whether they 0:21:26.240 --> 0:21:29.760 aggressively spend, whether they pull back. You know, is Netflix 0:21:29.800 --> 0:21:32.400 a healthy company despite kind of the shake up they've 0:21:32.440 --> 0:21:36.800 had it management? Well, Netflix transform the entire media industry, 0:21:36.960 --> 0:21:39.240 not so much by the content choice as they made, 0:21:39.520 --> 0:21:44.760