Speaker 1: Bloomberg Audio Studios, Podcasts, Radio Newshard.
Speaker 2: Where innovation, money and power. Collie in Silicon Valley, n Beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
Speaker 3: We are live from New York. This is Bloomberg Technology.
Speaker 4: Coming up, Apple CEO Tim Cook visit China and undines
Speaker 4: its importance to.
Speaker 3: The tech company.
Speaker 4: Will discuss the future US China relations and supply chains.
Speaker 4: Plus we'll look at what's behind Tesla's post election stock surge.
Speaker 3: Is it fundamentals, is it hype?
Speaker 4: And Bitcoin's rally stools out after nearly reaching one hundred
Speaker 4: thousand dollars.
Speaker 3: We'll discussed on Kristen Smith from Blockchain Association, but first.
Speaker 4: Let's get a little bit more on today's market moves
Speaker 4: when you fold in the geopolitical contentions here, we're still
Speaker 4: on what happens between US and China, and we still
Speaker 4: tried to digest what's happened in terms of earnings from
Speaker 4: the Chinese tech johnts Isabelle Lee joins us now and Isabelle,
Speaker 4: you've really been going global for us, and I want
Speaker 4: to take a moment to say how awful Chinese earnings
Speaker 4: have been for the big tech companies, and we get
Speaker 4: a little bit of a reprieven training today, but we
Speaker 4: were entering a bear market at the end.
Speaker 3: Of last week.
Speaker 5: Definitely, it was definitely underwhelming for all of the Chinese
Speaker 5: tech companies, and it's not a surprise to allude to
Speaker 5: the geopolitical and economic uncertainties and whether or not these
Speaker 5: companies can win investors back large hinges on Beijing's stimulus
Speaker 5: splits and that has really since fizzled out. Just over
Speaker 5: the past week, we have the five biggest tech companies
Speaker 5: erase forty one billion dollars in market cap. The MSCAI
Speaker 5: China indexed slits its lowest in September, and call after call,
Speaker 5: a lot of these executives are really just saying how
Speaker 5: uneven the economy is and how underwhelming their business is,
Speaker 5: and how most offered cautious optimism. But they also ask
Speaker 5: investors for patients. We have PDD for example, they walk
Speaker 5: around discussing their disappointing earnings. Ten Cent that it promised
Speaker 5: new blockbusters, even Baidu, which is the front runner in
Speaker 5: the AI development, failed to wow. And adding to this
Speaker 5: is of course Donald Trump win and what that would
Speaker 5: mean for China. And lastly we have Morgan Stanley cutting
Speaker 5: Chinese equities too slight underweight and Golden sax lowing. It's
Speaker 5: MSCA Chinese gauge ratings, so it's really underscores how cautious
Speaker 5: and how shaky Chinese equities are on for.
Speaker 4: Now, it's really with the roundup of concerns with China. Meanwhile,
Speaker 4: I commit that economic concern or a number of top
Speaker 4: executives of global firms traveling to China participating in discussions
Speaker 4: with the country's premiere. Apple CEO, Tim Cook was one
Speaker 4: of the most notable names. Just to take a listen
Speaker 4: to what he's had to say.
Speaker 1: And I'm thrilled to be here and I'm so proud
Speaker 1: that Apple has an exhibit here with our partners.
Speaker 3: So how do you value your partners in China?
Speaker 1: Oh, I value them very highly. We could not do
Speaker 1: what we do without them.
Speaker 4: Dan Willman's with us joining us for more on will
Speaker 4: remind us why China is so integral to Apple.
Speaker 6: China is a huge, hugely important to Apple supply chain,
Speaker 6: and according to our reporting, it is Apple's second largest
Speaker 6: market behind the US, where it is currently struggling. According
Speaker 6: to many of our reports over this past year against
Speaker 6: domestic Chinese domestics smartphone makers. So on those two counts
Speaker 6: extremely important to Apple.
Speaker 4: Meanwhile, they've got to try and front run what other
Speaker 4: tariffs look like, what the future and under a Trump
Speaker 4: administration can look like. And actually, you've done great reporting
Speaker 4: across the entire team that they have interesting relations across Asia.
Speaker 4: More broadly somewhere they have to invest more to earn
Speaker 4: the right to sell their products in China, where they
Speaker 4: have to earn the right to continue to build so much.
Speaker 6: The absolutely in a real study of contrast, today, Bloomberg
Speaker 6: also had a report out that Indonesia is really pushing
Speaker 6: back on lifting its iPhone sixteen sales ban, really demanding
Speaker 6: more investment from Apple, saying, hey, you have invested so
Speaker 6: much in manufacturing in Vietnam, which is a smaller market
Speaker 6: for you in terms of iPhone sales, why not invest
Speaker 6: more in Indonesia, which is the largest Southeast Southeast Asian economy.
Speaker 6: So the two stories today stood as a real contrast
Speaker 6: for me, this push from Indonesian leaders versus just this
Speaker 6: report out of China that really highlighted how vulnerable Apple's
Speaker 6: business is in the region.
Speaker 4: Dana we love the context Dane woman for all things Apple.
Speaker 4: Let's talk about the other juggernaut that is in video.
Speaker 4: A big exposure to China too, of course in terms
Speaker 4: of selling into that market. The CEO, Jensen Wang, was
Speaker 4: just in Hong Kong over the weekend, where he received
Speaker 4: an honorary doctorate in engineering from the Hong Kong University
Speaker 4: of Science and Technology. He emphasized in Vidia's ties to
Speaker 4: the region and weighed in on the potential impact of
Speaker 4: the incoming US administration.
Speaker 3: Just take a listen.
Speaker 7: I don't know what's going to happen with the new administration,
Speaker 7: but whatever happens, we'll balance multaneously compliance with laws and policies,
Speaker 7: continue to advance our technology and support and serve customers
Speaker 7: all over the world.
Speaker 2: Will continue to do that, and we'll be able to
Speaker 2: do that.
Speaker 7: Just fine.
Speaker 4: Let's keep this conversation going from an investor perspective. Scott Ladin,
Speaker 4: a CEI of Horizon Investments. Does it give you pause
Speaker 4: as you try to understand what on earth US China
Speaker 4: relations look like next year and how it impacts your
Speaker 4: investments in tech?
Speaker 2: Yeah, look, it has to.
Speaker 8: I mean you have to take account of what this
Speaker 8: administration says they're going to do to China, especially on
Speaker 8: the tech front, and and frankly, what China's retaliation might
Speaker 8: look like. You know, we think actually the US is
Speaker 8: probably a little bit of a stronger position than they
Speaker 8: were in twenty eighteen, the last time these two powers
Speaker 8: really confronted, because China is frankly in the throes of
Speaker 8: a balance yout recession right now, so they probably don't
Speaker 8: have quite as much maneuverability on the on the stimulus side.
Speaker 8: But at the end of the day, you know, like
Speaker 8: taking account of how these two are going to interact
Speaker 8: amongst each other, kind have a lot to do with
Speaker 8: where we put our money in.
Speaker 4: Okay, So would you ever, even at these pretty beaten
Speaker 4: up levels, be thinking about the Chinese technology giant still
Speaker 4: being an area to be a creative in the future.
Speaker 8: Look for once for me twice on the Chinese stimulus stuff,
Speaker 8: it's not you know, you can't you can't predict what
Speaker 8: the what the Chinese administration or the Chinese Communist Party
Speaker 8: is going to do with respect to fiscal stimulus, which
Speaker 8: is really what the doctor ordered for that economy. And
Speaker 8: without that fiscal stimulus, it's really tough to get out
Speaker 8: of these balance sheet recessions where demand is just lacking.
Speaker 8: And so you know, if we do get signs, not signs,
Speaker 8: we get announcements that the China is going to engage
Speaker 8: in large scale fiscal stimulus, then yes, you have to
Speaker 8: get on board the Chinese tech stocks because you know
Speaker 8: they because then the consumer can come back alive again
Speaker 8: in China and we can really get get going. But
Speaker 8: without that, it's you just you can't predict policy in China.
Speaker 8: So you know, we just have to take a wait
Speaker 8: and see approach.
Speaker 4: What about US names that have significant exposure to China
Speaker 4: and perhaps haven't managed to show that they've got such
Speaker 4: strong demand globally that it doesn't matter.
Speaker 8: You know, it's gonna hurt them, you know, any but
Speaker 8: this is not you know, there's not new news. I mean,
Speaker 8: everybody knows with the Trump win that China's is going
Speaker 8: to be sort of enemy list number one. And so
Speaker 8: you know that these these companies have been planning for
Speaker 8: a while the potentiality of a Trump win.
Speaker 2: They're going to have answers to it.
Speaker 8: But you know, just just because you know, this is
Speaker 8: you know, like I said earlier, this is not new news, well, let's.
Speaker 4: Think about what's not new news when it comes to
Speaker 4: a player like in video. Currently, in Video is one
Speaker 4: the worst points contributor to the NASDAC. Today we're falling
Speaker 4: significantly another three percent, which is a lot of market
Speaker 4: cap erosion for Is this as big as this?
Speaker 3: Is that more.
Speaker 4: About just profit taking? Is that about exposure China? Is
Speaker 4: it about exposure to too few clients like Microsoft, like
Speaker 4: Amazon and like Alphabet.
Speaker 8: Yeah, look, it's probably a little bit of all those things, Caroline.
Speaker 8: It's it's you know, when you when you have one
Speaker 8: of your largest clients, you know, a company like Amazon
Speaker 8: coming out and saying, look, we might start competing with you,
Speaker 8: we might get in this game. Even though they've they've
Speaker 8: been in the game for a while, but now they're
Speaker 8: really ramping up efforts. You know, this is obviously a
Speaker 8: very lucrative space. You know, margins of seventy five eighty
Speaker 8: percent on businesses like this, So you know, it makes
Speaker 8: a lot of sense for it for other large tech
Speaker 8: companies to come in, to come in and try to
Speaker 8: challenge in Video's place in the market. These things will
Speaker 8: take some time, but but you know, those things will
Speaker 8: have to weigh on the on the stock price at
Speaker 8: some point.
Speaker 3: So what do you do, Scott? Do you keep the
Speaker 3: exposure you have to? It feels a fool Zerran to
Speaker 3: have a bet. Again, it's big tech in some way.
Speaker 8: Oh but let me be clear, I'm not I'm not
Speaker 8: advocating it anyway to bet against they bet against big tech.
Speaker 8: I mean, you know, we are we are in the
Speaker 8: in the mid to late nineties sort of cycle. AI
Speaker 8: is him as my kids would say, you know that,
Speaker 8: you know so this this is this is definitely a
Speaker 8: training guy to get on, but the train like that
Speaker 8: they have to get on in a broadening sense. You know,
Speaker 8: this is not just in VideA anymore. This is not
Speaker 8: the twenty twenty three AI trade. Just so you know,
Speaker 8: the broadening out of this team into other users, like
Speaker 8: how are companies going to use.
Speaker 2: AI in the future, you know what?
Speaker 8: Other what other you know, suppliers are going to come online,
Speaker 8: like like possibly Amazon in the chip space. So you know,
Speaker 8: playing that broadening out theme inside of AI is rankly
Speaker 8: We're spending quite a lot of time trying to figure
Speaker 8: that out here at Horizon, and it's something that I
Speaker 8: think a lot of investors are going to have to,
Speaker 8: but it is you know, you know, you do not
Speaker 8: want to be short tech. You do not want to
Speaker 8: be short at these this AI theme this time. To
Speaker 8: get on board, you have to understand how to play
Speaker 8: it for twenty twenty five, not for twenty twenty three.
Speaker 3: I know you don't want to share the secret source.
Speaker 3: But as you're.
Speaker 4: Doing that work, where have been the rich pickings so far?
Speaker 3: We've heard often.
Speaker 4: It's about the energy play, or it's about the applications
Speaker 4: within healthcare, But where have you found some of the
Speaker 4: outsized potential here?
Speaker 2: You're you're picking on a couple of them. Look at mean,
Speaker 2: you know, at some point you've got to get down
Speaker 2: to the users. So you know, if you know, if you.
Speaker 8: Think about how how the tech trade played out in
Speaker 8: the middle late nineties, you know, first there's the people
Speaker 8: that made the tech and made things possible. But really,
Speaker 8: you know, the main gains where to we had by
Speaker 8: people that use the technology, that use the internet, that
Speaker 8: use PCs in order to enhance productivity in their businesses.
Speaker 8: So you know that, you know, getting onto that, getting
Speaker 8: onto that type of play is we're spending quite a
Speaker 8: lot of time trying to figure out, like you know what.
Speaker 2: You know you mentioned healthcare, which.
Speaker 8: Biotech companies are going to figure this out in order
Speaker 8: to do advanced drug development? You know which which major
Speaker 8: farmers are going to figure this out for the same
Speaker 8: type type of reason. You know what kind of industrial
Speaker 8: companies are going to figure out logistics improvements based on
Speaker 8: some AI logical that they're building in their processes. And
Speaker 8: so those types of questions are the things we're trying
Speaker 8: to answer right now. You know, I do think we're
Speaker 8: second or thirty any of this stuff. It's probably a
Speaker 8: little early to get really on board with the users,
Speaker 8: but it is.
Speaker 2: You know, you have to start doing the work right now.
Speaker 4: Keep going on when you've done the work, and as
Speaker 4: you continue down at Scott Lander, his CIO of Horizon Investments,
Speaker 4: we really appreciate your time today. Meanwhile, coming up, we've
Speaker 4: got so much more on some of the stocks that
Speaker 4: have outperformed. Tesla for example, absolutely mean like stock Search,
Speaker 4: is it needing Wall Street feeling a bit wary at
Speaker 4: these levels.
Speaker 3: We'll bring you the details from the latest UBS.
Speaker 4: Note, as we're up another four percent over the last
Speaker 4: five days, let's just focus in in one of well
Speaker 4: key driver in the market, today is Tesla.
Speaker 3: We want to look at it over the last month.
Speaker 4: Shares as you see thirty one percent in the last
Speaker 4: month because well, of course, all surrounding the new administration
Speaker 4: that's likely to come in twenty twenty five. BBS analysts
Speaker 4: are cautioning that this post election surge is more to
Speaker 4: do with marketing xuberants and actual improvements in the fundamentals
Speaker 4: of the business.
Speaker 3: Who knows Cretridel.
Speaker 4: Has more And we've been trying to understand crucially whether
Speaker 4: this relationship personal one really between Elon Musk and Trump
Speaker 4: and the future administration will bear dividends for the business
Speaker 4: of Tesla, And you've been trying to measure it up,
Speaker 4: so has UBS.
Speaker 1: Yeah.
Speaker 9: I think UBS's report is very interesting today because they
Speaker 9: will sort of grant this idea that narrative wise, it
Speaker 9: makes a lot of sense that you would see a
Speaker 9: run up in the stock given how close Elon Musk
Speaker 9: has placed himself to Donald Trump. But they really sort
Speaker 9: of pick apart some of the reasons you know, commonly
Speaker 9: cited for this run up in the last few weeks.
Speaker 9: You know, you take a look at taking away ev
Speaker 9: tax credits in the US, for example, maybe Tesla is
Speaker 9: able to handle that better than some of its competitors
Speaker 9: that aren't making money on EV's but it's still not
Speaker 9: a positive for EV demand as a whole, and so
Speaker 9: UBS is a bit bearish on that front. And when
Speaker 9: you look at autonomous vehicle policy as well, you don't
Speaker 9: have an actual robotaxi at Tesla, whereas you know, Weimo
Speaker 9: is out with a robotaxi now, and you know that
Speaker 9: was that company was just valued at about forty five billions.
Speaker 9: So does it really make sense to put, you know,
Speaker 9: potentially one hundreds of billions of dollars on a Tesla
Speaker 9: autonomous vehicle valuation given its it's sort of closest comp
Speaker 9: Weimo is valued it much less than that.
Speaker 3: The problem is.
Speaker 4: The price target for the next twelve months on average
Speaker 4: from the analyst that rate it is well below where
Speaker 4: we're currently trading two and forty four, whereas the last
Speaker 4: price is currently three hundred and fifty four. We've seen
Speaker 4: relative strength indexes of Tesla just show that we are
Speaker 4: over bought territory, and yet we don't seem to be
Speaker 4: able to actually against the stock.
Speaker 2: Yeah.
Speaker 9: I think that's another point that UBS makes interestingly today.
Speaker 9: Is just that we've seen this before. We've seen that
Speaker 9: this is sort of an ultimate momentum stock that when
Speaker 9: it rises, it really rises.
Speaker 2: When it falls, it really falls.
Speaker 9: And I guess that's sort of befitting of Musk, right,
Speaker 9: he doesn't do anything halfway. But you really see in
Speaker 9: terms of you know, equities that are are commonly you know,
Speaker 9: traded with with options that you know really sort of
Speaker 9: lead to these outsized moves. I think Tesla is you know,
Speaker 9: sort of exhibit A in terms of stocks that you know,
Speaker 9: because of the options activity, you tend to see you know,
Speaker 9: sustained and really dramatic moves in the stock one where
Speaker 9: or the other when you have a a sort of
Speaker 9: reason for the stock to you know, narrative wise, you know,
Speaker 9: go in one direction or the next.
Speaker 4: We'll see whether the meme trading can continue. We're currently
Speaker 4: up on the day at least. Created Al always great
Speaker 4: to check in with you.
Speaker 3: Meanwhile, let's take.
Speaker 4: A look at Rocket Lab shares absolutely surging as well
Speaker 4: after the satellite company said it successfully launched IS fifty
Speaker 4: sixth electron missile LUMEGS. Bruce Einhorn joins US. Now we're
Speaker 4: up three percent there's other narratives around the business today
Speaker 4: in terms of the chip sacked, but focus on this launch.
Speaker 4: We had one out of New Zealand very swiftly after
Speaker 4: one out of the United States.
Speaker 10: Yes, so there are two launches. The launch in the
Speaker 10: United States is for a customer that the rocket Lab
Speaker 10: has not yet disclosed. In the past, rocket Lab has
Speaker 10: done launches from Virginia for US government customers. The launch
Speaker 10: in New Zealand was for French startup. This was part
Speaker 10: of a multiple launch contract that rocket Lab.
Speaker 2: Has with them.
Speaker 10: So altogether this makes fourteen launches that rocket Lab has
Speaker 10: had this year, which beats their record which was ten
Speaker 10: last year.
Speaker 2: Let's put this in context.
Speaker 10: Impressive for rocket Lab, but remember that SpaceX has had
Speaker 10: more than one hundred launches this year.
Speaker 4: They are very much still and also run at the moment,
Speaker 4: but they're clearly garnering some momentum here. What's interesting is
Speaker 4: they're also getting money from the US government when it
Speaker 4: comes to chips. Where else in the manufacturing area are
Speaker 4: they and why are they getting such money from the
Speaker 4: Commerce Department.
Speaker 10: So this is the final signing of a contract from
Speaker 10: the Department of Commerce related to the Chips Act. Twenty
Speaker 10: three point nine million dollars. The company had announced a
Speaker 10: preliminary deal for this before, so this is not a surprise.
Speaker 2: People knew this was coming.
Speaker 10: Rocket Lab has a subsidiary in New Mexico that makes
Speaker 10: solar cells. It's one of the only companies I believe
Speaker 10: they are only two in the United States that make
Speaker 10: these components. And so rocket Lab has now gotten funding
Speaker 10: from Commerce Department to promote that to build more of those.
Speaker 10: So just giving another lift to this stock. Interesting what
Speaker 10: you were talking about with craigirl about optimism about post election.
Speaker 10: Rocket Lab is one company among several space companies also
Speaker 10: benefiting from this bullishness after Trump's reelection that the new
Speaker 10: administration will have policies that will be favorable to the sector.
Speaker 4: Almost twelve billion dollars market capitalization not quite up to
Speaker 4: the two hundred and fifty billion dollar market evaluation we
Speaker 4: understand for the privately held SpaceX At the moment, Bruce
Speaker 4: Einhorn will need to get the context.
Speaker 3: The French government.
Speaker 4: Suffering to buy the advanced computing assets.
Speaker 3: From ATOS for as much as six hundred and fifty.
Speaker 4: Three million dollars after an earlier offer from the state expired.
Speaker 4: Now the offer includes the company's AI business as well
Speaker 4: as its supercomputers and Merg's Benoir Badillo is here with
Speaker 4: more And what is better about this dale or is
Speaker 4: it just different because this is all about trying to
Speaker 4: bail out what is a company that's under a lot
Speaker 4: of duress from a debt perspective.
Speaker 2: Exactly.
Speaker 11: Yeah, it's important for Athos at this stage to divest
Speaker 11: it has these activities. The creditors who are taking over
Speaker 11: the company will win liquidity out of it. And most importantly,
Speaker 11: the French state has wanted to ensure that these strategic
Speaker 11: assets remain within French control and are sort of safe.
Speaker 11: These are important assets because the supercomputers we're talking about
Speaker 11: are used to do the dissimulations of nuclear activities for example,
Speaker 11: that are very key to friends and the French government.
Speaker 2: So this deal is sort of narrower.
Speaker 11: It's just on the supercomputers part of Athos, which called
Speaker 11: build Essay, and this leaves on the sides other assets
Speaker 11: that are in cyber security or what's called mission critical systems.
Speaker 11: So these are said are going to be sort of
Speaker 11: up for auctions and other French companies again are going
Speaker 11: to make bids for these activities.
Speaker 3: So that's the kicker here.
Speaker 4: These all want to remain in local hands in some way.
Speaker 3: Some deals have worked world.
Speaker 4: Grade unit we sold to a French engineering company, but
Speaker 4: others have unraveled, like the one with Talas. Is it
Speaker 4: just trying to find the right price point here.
Speaker 11: Yes, there's a bit of that. The creditors want a
Speaker 11: good price point for it. That the French defense companies
Speaker 11: bidding for these assets will certainly want to have a
Speaker 11: good price as well. We know that Talis, an important
Speaker 11: French defense company, is interested by what's called mission critical
Speaker 11: assets here. They said in the past they could be interested,
Speaker 11: they have not made a bid yet. It was probably
Speaker 11: complicated for these companies to do a deal with the
Speaker 11: French states. So now the state has done the deal
Speaker 11: in the supercomputers, and other deals could be done. But
Speaker 11: you're right, what's at stake here is really used as
Speaker 11: strategic assets and the sovereignty of French technology that's critical
Speaker 11: for the civilian industry and also for a lot of
Speaker 11: military use. So while this company has been unraveling, it's
Speaker 11: really the stake of these really sovereign assets that's at
Speaker 11: steak now.
Speaker 4: Meanwhile, it's bonds trading at sense on the Euro. Significant
Speaker 4: pressure there still Benman Bartolo on that key French asset.
Speaker 3: We thank you very much. Meanwhile, time for talking tech now.
Speaker 4: A first up online verification company, id dot me as
Speaker 4: close to tender offer that value the business at one
Speaker 4: point eight billion dollars, according to a source, REMIT Capital,
Speaker 4: a new investor in the company, led the transaction with
Speaker 4: existing investors Viking Global Investors and Capital G anticipating plus
Speaker 4: insta three sixty. It's a Chinese rival to GoPro, with
Speaker 4: backers including IDG. Capital is considering an IPO in Hong
Speaker 4: Kong after plans for a listing in mainland China stalled,
Speaker 4: according to sources who say the company could seek evaluation
Speaker 4: of at least two point one million dollars in a
Speaker 4: share sale. And Sony is in the early stages of
Speaker 4: developing a portable console there all play its PlayStation five
Speaker 4: games on the move. According to sources who paid say
Speaker 4: that the product is meant to expand Sony's reach and
Speaker 4: go head to head a Nintendo in the portable gaming market.
Speaker 4: Welcome back to Bloemberg Technology. I'm Caroline Hyde in New York.
Speaker 4: Yet more news around companies buying adding to the balance
Speaker 4: sheet MicroStrategy one of them. Let's get to it with
Speaker 4: Kristin Smith, SEO of the Blockchain Association, who can really
Speaker 4: discuss the future more broadly of how we're going to
Speaker 4: be thinking about where we go in terms of overseeing
Speaker 4: of bitcoin and crypto more generally, how we're going to
Speaker 4: see more laws made.
Speaker 3: Of course, we've had.
Speaker 4: The news that the SEC share Gary Gensler, is announced
Speaker 4: that he's going to be stepping down from his seat
Speaker 4: come January. So, Kristian, were you surprised by the news
Speaker 4: that he's front running in.
Speaker 12: No, I wasn't surprised by the news. It's very common
Speaker 12: when there is a change of power for the chair
Speaker 12: of the SEC to step down at the end of
Speaker 12: the Congress and the end of the presidential term before
Speaker 12: the inauguration, and so, you know, we're certainly very excited
Speaker 12: to see him leave. It has been a really difficult
Speaker 12: couple of years for the industry. We felt like we've
Speaker 12: been boxed in the corner with his regulation by enforcement approach.
Speaker 12: But right now we're really focused on trying to figure out,
Speaker 12: you know, how can we move forward as an industry
Speaker 12: how can we reset our relationship with government. And we're
Speaker 12: very excited to get new people into these key positions
Speaker 12: and work with the newly elected Congress when they come
Speaker 12: to power next year, because I think we have a
Speaker 12: real opportunity to get a regulatory frameworkting place that will
Speaker 12: that will be lasting and appropriate for the industry for
Speaker 12: decades to come.
Speaker 4: Okay, can you talk to us about the names, for example,
Speaker 4: the sec acclony, pondering, folly, chump for example.
Speaker 3: These will the names that you think won't be regulation
Speaker 3: bond form.
Speaker 12: Yeah, and I think that there are a couple of
Speaker 12: great names that have been floating around for the chair
Speaker 12: of the SEC. I think from the standpoint of the
Speaker 12: Blockchain Association and the industry, what we want to see
Speaker 12: is somebody in there who has experience and deep understanding
Speaker 12: of crypto. I think there are going to be many
Speaker 12: challenges of the SEC chair faces, but figuring out the
Speaker 12: right regulatory environment for digital assets is going to be
Speaker 12: one of those things. And so we don't care who
Speaker 12: it is as long as it is somebody who has
Speaker 12: a deep understanding and who's willing to have an open
Speaker 12: dialogue with the industry.
Speaker 4: There's been a discussion about having the first of a
Speaker 4: crypto post in the White House. Is that necessary at
Speaker 4: this moment when you have a relatively pro Congress, more procrypto.
Speaker 3: Than we've ever seen before.
Speaker 4: Add indeed, a new SEC check, I think it.
Speaker 12: Would certainly be a welcome position. I mean, make no mistake.
Speaker 12: What we needed was a strong Treasury Secretary pick, and
Speaker 12: I think we got that with Scott Bessett. We also
Speaker 12: need strong choices for the SEC and the CFTC because
Speaker 12: without those three positions, a CRYPTOSR isn't going to be
Speaker 12: able to get much done. But if you look at
Speaker 12: the many different issues, and this is something that we
Speaker 12: touched on our letter to President Trump on last week,
Speaker 12: they cross many different agencies.
Speaker 8: Right.
Speaker 12: We need to deal with the debanking issues with the
Speaker 12: prudential bank regulators. We need to deal with the market
Speaker 12: regulatory issues with the SEC and the CFTC. We need
Speaker 12: Congress to step in and pass a new law. And
Speaker 12: I think having a CRYPTOSAR position at the White House
Speaker 12: would help facilitate those conversations and make sure that we're getting.
Speaker 3: All the pieces done.
Speaker 12: Because there are a lot of different different parts that
Speaker 12: need to be addressed. They occur across many different agencies,
Speaker 12: and so yes, we would welcome someone in that role,
Speaker 12: but not at the expense of getting somebody strong in
Speaker 12: at the SEC and the CFTC.
Speaker 4: Okay, So, if it's not a mutually exclusive thing, who
Speaker 4: would you want to see as a ZAW level? How
Speaker 4: deep within active duty do you want them to be
Speaker 4: or do you want them to be perhaps a step
Speaker 4: remove in terms of advisory.
Speaker 12: Well, I think there are really two qualifications you want
Speaker 12: from that role. One is you want somebody who understands
Speaker 12: the crypto industry.
Speaker 3: It is very nuanced.
Speaker 12: There are a lot of different pieces, and you need
Speaker 12: somebody who can understand and navigate the people and the
Speaker 12: personalities of the industry. I also think, though, you need
Speaker 12: somebody that knows how to navigate government, because if you
Speaker 12: have someone who shows up from industry but doesn't understand
Speaker 12: the nuances in the history of their relationships, you know,
Speaker 12: it would be difficult. And so I think that's going
Speaker 12: to be a very tough position to find. But I
Speaker 12: think there are a lot of people in the industry
Speaker 12: that are willing to step up and step in and
Speaker 12: do that kind of role.
Speaker 4: For people who aren't day to day working in crypto.
Speaker 4: Can you explain to them why they would want to
Speaker 4: see an SEC chair so deeply in the weeds of
Speaker 4: understanding crypto when the SEC also has to oversee the
Speaker 4: trillions in passive investment, the understanding of implications of AI
Speaker 4: on ETF investment, and ultimately when Crypto remains all about
Speaker 4: the same size as Nvidia's market cap.
Speaker 13: Yeah, well, I.
Speaker 3: Think that this is something.
Speaker 12: You're going to be someone who can walk and choo
Speaker 12: gum at the same time, right. I think if you
Speaker 12: look at Crypto, yes, it's just approaching a three trillion
Speaker 12: dollar market cap, but this is still the early days.
Speaker 12: This is going to be the foundation of financial services,
Speaker 12: of our Internet, of so many things going forward that
Speaker 12: we really want to get the regulatory framework right now
Speaker 12: for when this is a ten to twenty thirty trillion
Speaker 12: dollar asset class. And so I think that it's really
Speaker 12: important that we get the rules right so that consumers
Speaker 12: feel protected, so that institutions feel comfort to come in,
Speaker 12: but also so that the developers, the builders of the
Speaker 12: underlying blockchains and the applications on top of the blockchains,
Speaker 12: they understand the rules of the roads. They can do
Speaker 12: it right here in the US I think this is
Speaker 12: going to be a big part of our economy in
Speaker 12: the future, and if we don't get the rules right now,
Speaker 12: we're going to miss out on that here in the
Speaker 12: United States.
Speaker 3: Have you been asked, Kristin for bisar Ro pardon? Have
Speaker 3: you been off to told about Bizarro?
Speaker 12: I've spoken to some people about it, not for me,
Speaker 12: but I've offered some ideas as to what kind of
Speaker 12: qualifications would be goad.
Speaker 4: Kristin Smith, thank you for the transparency. It's great to
Speaker 4: have you on again. See the blockchain and Association. Meanwhile, let's
Speaker 4: talk about other government versus tech. Google and the US
Speaker 4: government really facing it off in federal court today as
Speaker 4: each side and delivering its closing arguments in the case,
Speaker 4: and the tech joan's a legend monopoly of online advertising.
Speaker 3: Adam Epstein's here with us. He's COSEO of the Search.
Speaker 4: Advertising Company and Marketplace been advising the DOJ and Trust
Speaker 4: team on the remedies in this case.
Speaker 3: And this is sprawling. At the moment.
Speaker 4: Everyone's front of mind for Alphabet and Google is the
Speaker 4: fact that they might have to sell off Chrome. Now
Speaker 4: many would say, okay, it's about dominance and search. Many
Speaker 4: people worry us about dominance and advertising, and that's something
Speaker 4: that Europe's been looking at too. Just tell us what
Speaker 4: role you've played for the US government.
Speaker 14: Sure, so you know, I've been in search for twenty years.
Speaker 14: I went to the closing arguments back in May, the
Speaker 14: decision came out and August and I wrote a memo
Speaker 14: talking about how there could be behavioral remedies that could
Speaker 14: fix the search and the advertising search advertising markets. The
Speaker 14: DOJ saw the memos, asked me to speak with them
Speaker 14: a few times about what we're doing, and then you've
Speaker 14: seen in their proposed final judgment in order. Some of
Speaker 14: the ideas are in there, as well as some of
Speaker 14: the ideas around Chrome divestiture, Android divestiture. Some of that's
Speaker 14: around making sure that Google would comply with the behavioral remedies.
Speaker 14: And so this is a two hundred billion dollar market
Speaker 14: and this minimum opolate's been running for a while, so
Speaker 14: getting the remedy rate is difficult, and then making sure
Speaker 14: that there's compliance will be the next step.
Speaker 4: Your business is in the world of placing advertising, but
Speaker 4: not having to depend just purely on a few key
Speaker 4: dominant forces in search. Right, would some of the things
Speaker 4: being discussed at the moment. Some of the remedies dramatic
Speaker 4: as they are, help your benefit and benefit your business.
Speaker 14: Sure, you know, there's I think a lot of folks
Speaker 14: that would be able to invest in this. In this industry,
Speaker 14: it's been I think such an adelict. Microsoft called it
Speaker 14: a no fly zone for investment for about twenty years.
Speaker 14: So we've been working where we can around the edges
Speaker 14: to help browsers and large shopping apps create native search experiences,
Speaker 14: and we think that is the future. And obviously we
Speaker 14: have a little bit of a head start, but there
Speaker 14: will be a lot of entrance in this space, both
Speaker 14: from the advertising side and on the search results side,
Speaker 14: especially around AI next gen search agents.
Speaker 4: That's really the future, and that's that's kind of the
Speaker 4: irony of the whole situation. Many feel Actually Google's never
Speaker 4: been under such competitive threat than they are now, particularly
Speaker 4: when it comes to us perhaps dotting Google searched one
Speaker 4: and instead using chat gipt.
Speaker 3: You might also they be using AI overviews and a
Speaker 3: Gemini offering.
Speaker 4: Just from your perspective setting off a chrome, can you
Speaker 4: see anyone in the market actually.
Speaker 3: Buying that, apart from an open AI for example.
Speaker 14: Sure, I think there's other folks that would be itento
Speaker 14: in buying Chrome. It's the largest browser in the world.
Speaker 14: I think with the DOJ's initial proposed to be really
Speaker 14: set off was the first shot of browser war three
Speaker 14: point zero. Okay, So I think you'll see other browsers,
Speaker 14: you know, the duc Duck goes the Firefox of the world,
Speaker 14: the Braves, those folks will be more to the front forefront.
Speaker 14: There'll be new browsers coming out, perhaps really built around
Speaker 14: gen Ai and the idea there is that you know,
Speaker 14: if we have a lot of entry points and we're
Speaker 14: still able to have some Google modernization, some Google results
Speaker 14: side by side, that's gonna be the best and most
Speaker 14: innovative experience for users and searchers.
Speaker 2: It's not that it's an all or nothing.
Speaker 14: Either you get Google and you've got to take Gemini,
Speaker 14: or you can use something else. It's a little bit
Speaker 14: more innovative or trying something different. The idea that we
Speaker 14: all go to the search engine result page of Google
Speaker 14: and basically get a one size fits all solution. That's
Speaker 14: I think what the real you know, detriment is to
Speaker 14: consumers and to users of the search monopoly.
Speaker 2: We have Chrome in place, but the problem is.
Speaker 4: It's very expensive for the infrastructure build around an offering
Speaker 4: such as search and Google Chrome as an access point
Speaker 4: to search. Would anyone ever be able to offer such
Speaker 4: a great product consumers without the huge deep pockets that
Speaker 4: a Google has.
Speaker 14: Exactly so half the clicks that Google sells out to
Speaker 14: advertisers start on third party sites like Apple, like Samsung.
Speaker 14: The question is can they get access to Google's results
Speaker 14: into their ads and then curate their own experiences with
Speaker 14: perhaps instead of Gemini, a chat GPT search agent, or
Speaker 14: with other ads, or with other results, or ranking and
Speaker 14: changing how the rankings work. That's really what we're talking
Speaker 14: about is allowing for that innovation to take to take hold,
Speaker 14: not forcing force funneling every user to search result page
Speaker 14: of Google in order to take advantage of Google's assets.
Speaker 14: So the idea is, I think it's both. It's not
Speaker 14: an either or situation, and that would be the remedy
Speaker 14: that I think gets us into a more innovative space
Speaker 14: and also brings competition to the market, which is at
Speaker 14: the end of the day, what the goal is.
Speaker 4: Well, we're going to be waiting for the final round
Speaker 4: of what exactly is going to be offered, and indeed,
Speaker 4: then an appeal process. But in the meantime, Adam, it's
Speaker 4: been great having here from a perspective of the ad marketplace.
Speaker 4: Is coca there, Adam Epstein. Meanwhile, coming up some major
Speaker 4: fundrais news for cybersecurity firm Halcion.
Speaker 3: Company CEO John Miller joins us.
Speaker 13: Next, this is a bloom technology.
Speaker 3: In today's VC Spotlight.
Speaker 4: We're talking about the explosive growth in ransomware, and we're
Speaker 4: looking at.
Speaker 3: What a cybersecurity firm, Halcion is.
Speaker 4: Doing to stop those attacks and how it plans to
Speaker 4: invest his newest round of funding. Here with more is
Speaker 4: Halsey and CEO John Miller, who's just announced announcing one
Speaker 4: hundred million dollar raise.
Speaker 3: It's your Series C.
Speaker 4: Congratulations John, and I want to understand when you yourself now
Speaker 4: have a one billion dollar valuation, put that into context
Speaker 4: of how much each year cut bad actors are making
Speaker 4: from ransomware.
Speaker 15: Oh, it's a small, small fraction.
Speaker 11: Right.
Speaker 15: We've seen the growth of ransomware year over year explode
Speaker 15: in the last five years. You know, the losses that
Speaker 15: corporations are seen are on the scale of tens to
Speaker 15: hundreds of billions of dollars a year, Right, Now, the
Speaker 15: scary thing is we're the only actual, or at least
Speaker 15: the first any ransomware company to ever exist where we
Speaker 15: took ransomware as the mission of our company to try
Speaker 15: to figure out how to mitigate as much risk for
Speaker 15: our customers as possible.
Speaker 4: Okay, so that's fascinating for our viewers to try and understand.
Speaker 4: How you block suddenly your corporate being overtaken and everything
Speaker 4: demanding that you give them some crypto payment immediately. What
Speaker 4: is it that your technology is different?
Speaker 15: So what we're all about is breaking that leverage that
Speaker 15: they get to actually incent someone to pay them, right.
Speaker 15: So it normally goes down into kind of two forms
Speaker 15: of extortion. One is they'll come in and encrypt everyone's data,
Speaker 15: effectively breaking the computers, right, and then they'll demand extortion
Speaker 15: to get the encryption keys back to bring all the
Speaker 15: data back. And then the double ex as it's called,
Speaker 15: is when they steal data from outside of the enterprise
Speaker 15: and then charge you to not release it. And so
Speaker 15: what helsy on what we do is we've figured out
Speaker 15: how they xfiltrate or steal that data, and we stop
Speaker 15: it when it starts to get stolen, and we when
Speaker 15: they go to encrypt the systems, we stop them, and
Speaker 15: if they successfully encrypt something, we capture the encryption keys
Speaker 15: and we have the ability to just decrypt everything.
Speaker 4: Anyway you can explain the underlying of what it is
Speaker 4: you're doing.
Speaker 15: Yeah, I mean it's all super technical, right. The best
Speaker 15: way to think of it as like a new type
Speaker 15: of focused anti virus. Instead of anti virus being wide
Speaker 15: against all types of kind of malware and spyware and adwear,
Speaker 15: we're just focused on ransomware. And so because of that,
Speaker 15: we every day we follow the different groups, We take
Speaker 15: apart their tools, we take apart their samples. We're just
Speaker 15: completely focused on this threat, and it's giving us increased
Speaker 15: efficacy over everybody else that's trying to do like general
Speaker 15: security for everything. It was our theory that ransomware had
Speaker 15: becomes such a big problem that by actually focusing on
Speaker 15: it alone would give you higher affocacy in the ability
Speaker 15: to mitigate more risk than the more generalized solutions that exists.
Speaker 4: But at the moment we are We had Palo Alto
Speaker 4: Network see on last week, for example, and there's a
Speaker 4: shift between towards what he says is platformization. People wanting
Speaker 4: not just loads and loads of different vendors, but wanting
Speaker 4: a one stop shop to protect them.
Speaker 3: Would you end up folding in.
Speaker 4: Your offerings to other cyber players out there? What is
Speaker 4: your end goal here when you've now raised a good
Speaker 4: chunk of change from some key partners.
Speaker 15: So we integrate with all of those players, the Palo Alto's,
Speaker 15: the Cisco's, the Dells. Really we are kind of our
Speaker 15: own platform, right, so we're building ourselves to not just
Speaker 15: have a feature that gets integrated into something bigger, but
Speaker 15: a platform specifically around mitigating the risk of these ransomware threats. Right,
Speaker 15: as these attackers continue to get more money and be
Speaker 15: more successful, it just gives them better access, they get
Speaker 15: better tools, there's more of them. So we're starting to,
Speaker 15: I mean, and I think it's obvious we're starting to
Speaker 15: lose the war against these attackers. And by coming in,
Speaker 15: we're going to use this money to just try to
Speaker 15: bring as much value as we can to our customers
Speaker 15: about stopping these ransomware attacks.
Speaker 4: John Miller und a million dollar Seriously, we thank you
Speaker 4: from Houseion. Amazon getting ready to go toe to toe
Speaker 4: with Nvidia in the AI hardware space, so that won't
Speaker 4: happen anytime soon. The car coomputing giant is hoping to
Speaker 4: reduce its reliance on the chip maker Remags.
Speaker 3: Matt Day is here for more.
Speaker 4: The toe to toe quote comes from a very key
Speaker 4: executives within Amazon who's trying to take on in video
Speaker 4: in the training and inference space.
Speaker 3: Tell us about it, that's right.
Speaker 16: That was from James Hamilton, the godfather of Amazon Web
Speaker 16: Services hardware strategy.
Speaker 2: About a decade ago.
Speaker 16: He suggested to Jeff Bezos that they get started making chips,
Speaker 16: and we're seeing some of the fruits of that now.
Speaker 16: You know, they weren't necessarily planning on the AI boom
Speaker 16: to unfold as it is, but you know, it just
Speaker 16: so happens. They're on their third generation of AI chip
Speaker 16: and they think they've got a part as they'd call it,
Speaker 16: that can compete within video.
Speaker 4: Why is the generation so important and why therefore they're
Speaker 4: going all out and handing four billion dollars to Anthropic
Speaker 4: again to be able to get them to use these chips.
Speaker 16: Ever Moore, Yeah, so the third generation is kind of
Speaker 16: the prove it point in chips. You know, your first
Speaker 16: is an experiment, your second starts to catch on in
Speaker 16: the third. If you did it right, It's probably going
Speaker 16: to be the one that gets you the volume and
Speaker 16: the success that or else you go a different direction.
Speaker 16: This is definitely helps explain why Amazon is doing things
Speaker 16: like spending all that money on anthropic as you said,
Speaker 16: investing in them and investing in other partners who will
Speaker 16: help them use their chips, help them improve Amazon's home
Speaker 16: built chips and build a better mass trap to compete
Speaker 16: more effectively within video.
Speaker 4: In videos down a lot today, three percent. It's a
Speaker 4: big move in terms of market cap because it's of
Speaker 4: course got a massive market cap. But at what point
Speaker 4: would we see less dependence on an Invidia from an Amazon.
Speaker 4: What is they end goal here that they no longer
Speaker 4: have to buy them at all, or is it more
Speaker 4: that they just supplement and aren't quite so dependent.
Speaker 16: I think it's definitely to supplement it. You know, Amazon's
Speaker 16: a pretty sober about this. They're not trying to remove
Speaker 16: all of the Invidia from their data centers, far from it,
Speaker 16: and that would be a miracle if they could pull
Speaker 16: that off. And I think the goal, if they were
Speaker 16: even optimistic, would be that they can create a credible
Speaker 16: rival to in video. They can put a lot of
Speaker 16: those in their own data centers, and then you know,
Speaker 16: for the customers of theirs who want to use in
Speaker 16: video that's still around, but that they've got a competitive
Speaker 16: offering as well.
Speaker 4: And just remind us, I mean, Alphabet's been at this
Speaker 4: a long time. Microsoft and just getting in the space.
Speaker 16: Yeah, Amazon's got company, or as you said, Google's been
Speaker 16: doing this for about a decade. Microsoft just now is
Speaker 16: rolling out its first chips. But it seems that everyone
Speaker 16: in the cloud has come to sort of the same
Speaker 16: realization that they need to build the hardware too, and
Speaker 16: they need to build the more sophisticated hardware, which are
Speaker 16: the chips.
Speaker 3: Matt Day.
Speaker 4: It is a great piece Today's Bloomberg Big Take, go
Speaker 4: read it, an excellent deep dive.
Speaker 3: Meanwhile, we've got.
Speaker 4: Plenty more news on Amazon because that came out on
Speaker 4: Friday that they're really trying to help their clients.
Speaker 3: Understand quantum computing.
Speaker 4: It's the next iteration of artificial intelligence and machine learning,
Speaker 4: and boy is it helping some quantum computing stocks.
Speaker 3: Look at this. On the day, we're currently.
Speaker 4: Seeing Rerighetti up seventy one percent. We're up twenty eight
Speaker 4: percent on quantum computing as They're saying, Amazon's offering advisory
Speaker 4: help as well as, of course the future of where
Speaker 4: hardware goes when it comes to using quantum computing for
Speaker 4: its clients. Now that does it for this edition of
Speaker 4: Bloomberg Technology. You do not want to forget.
Speaker 3: To check out our podcast.
Speaker 4: I find more on the terminal as well as online
Speaker 4: on Apple, on Spotify, and iHeart this is Bloomberg Technology.
Speaker 2: This healthy shay N Health over