Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet Nbon. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed lud Love.
Speaker 2: I'm Caroline Heindel Bloomberg's World headquarters in New York, and
Speaker 2: I'm Ed Lovelo in San Francisco.
Speaker 3: This is Bloomberg Technology.
Speaker 2: Coming up, we'll preview what to expect from Meta's connect
Speaker 2: as analysts watch for the company's generator AI and v
Speaker 2: ARE plans.
Speaker 4: Plus, we'll have more reaction to the FTC's landmark antitrust
Speaker 4: suit against Amazon, and hear from Chair Lena Kahan.
Speaker 2: Herself and as Sir Altman's open AI seeks up to
Speaker 2: a ninety billion dollar valuation. Will discuss the state of AI,
Speaker 2: the regulation of it with the co chair of the
Speaker 2: UK government's AI review. All that and so much more
Speaker 2: coming up. First, we check in on these markets, which
Speaker 2: are map dictated. We're flip flopping between gains and losses
Speaker 2: on the NASAC at the moment, currently underwater by two
Speaker 2: tens percent. It seems to be being moved by this
Speaker 2: particular market.
Speaker 5: The bond market.
Speaker 2: We're seeing yields back up four basis points. Look for
Speaker 2: it sort of decade long highs at the moment four
Speaker 2: point five to seven on the tenure. At the moment
Speaker 2: we're seeing above five percent on a two year We're.
Speaker 5: Worried about the direction of travel for the Federal.
Speaker 2: Reserve and indeed a potential government start shut down here
Speaker 2: in the United States. Interesting though, then we see the dollar,
Speaker 2: of course still pushing higher. Is that as we expect
Speaker 2: the Fed to have to push back on currently where
Speaker 2: some of the inflatory pressures have been, we're seeing the
Speaker 2: Bloomberg Dollar Index are for a six straight day, longest
Speaker 2: winning street that we've seen since the beginning of the year.
Speaker 2: Let's move on and see that actually in the face
Speaker 2: of a stronger dollar, Bitcoin higher up five ten percent,
Speaker 2: we saw a sudden bount of buying in European trading.
Speaker 2: So actually managing to tread some water here, ed, But
Speaker 2: get back to the micro that's involved today.
Speaker 4: Yeah, there's kind of some themes in the show from
Speaker 4: sort of consumer electronics to augmented reality playing out in
Speaker 4: the new cycle markets as well. So Snap up two
Speaker 4: point three percent. They're shuttering the unit of their business
Speaker 4: that does augmented reality for enterprise one hundred and seventy
Speaker 4: jobs going with that job's being cut as well, it's
Speaker 4: kind of a question about the long term commitment of
Speaker 4: Snap two org maintor reality. Later in the show, we
Speaker 4: will talk to our Bloomberg Intelligence and list about that
Speaker 4: consumer electronics hardware. Peloton now down nine ten to one percent.
Speaker 4: Tom Cortes, the last remaining founder of Peloton, is leaving
Speaker 4: the company. So of the five that started the company,
Speaker 4: he was the last DOMINODA four. He has left but
Speaker 4: will remain on as an advisor. The stock kind of
Speaker 4: traded sideways for most of the session. It is now down.
Speaker 4: The big one, as you said, is Meta Connect. Meta
Speaker 4: Connect is the company's annual developers conference. When we think
Speaker 4: about developers conferences, we do think software, but there's going
Speaker 4: to be a big hardware component. We know that quest
Speaker 4: the next generation of will be a topic of conversation.
Speaker 4: Of course, alongside AI, we are treading water on Meta
Speaker 4: the parent of Facebook. Upper tenth of one percent. How
Speaker 4: much focus is going to be on the software side,
Speaker 4: how much focus is going to be on the latest
Speaker 4: generation of hardware metaverse versus artificial intelligence? What is the priority?
Speaker 4: These are the great questions we have to ask.
Speaker 2: And indeed the ones that we've been asking day in,
Speaker 2: day out, in fact with executives of Meta. Of course,
Speaker 2: last week I got to sit down with the head
Speaker 2: of Global affairs to discuss how the company is utilizing
Speaker 2: generative AI.
Speaker 5: Just take a listen.
Speaker 6: We're announcing next Wednesday on the twenty seven new applications
Speaker 6: of generative AI in our products. Things like you'll be
Speaker 6: able to communicate with businesses on WhatsApp and Messenger, the
Speaker 6: sort of really really extraordinary aipowered bots that will transform
Speaker 6: the way that all of us as consumers interact with businesses,
Speaker 6: and many other things that will announce next Wednesday.
Speaker 5: Let's weigh up what investors want to hear.
Speaker 2: Jeffrey's seen it Internet Analyst is with us Brinville ahead
Speaker 2: of the all important Meta connect and Brent to that end,
Speaker 2: how much do you want to be hearing about generative AI?
Speaker 2: How much do you want to be hearing about chatbots?
Speaker 2: About therefore, the desire of people younger generation in particular
Speaker 2: to remain committed to instagramed Messenger, to the other offerings.
Speaker 7: I think AI is front center for every tech company, Google, Amazon,
Speaker 7: the whole industry. This is this is the majority of
Speaker 7: the topics that we're having with our investors, So I
Speaker 7: think that's what investors want to hear. Obviously at software,
Speaker 7: they don't love the hardware side of this, so they'd
Speaker 7: like to hear more about this than the quest and
Speaker 7: the hardware side, which again I think most investors are
Speaker 7: skeptical about obviously a more expensive endeavor, higher margin building
Speaker 7: software and AI than hardware, So I think we want
Speaker 7: to hear more around that. Mark Zuckerberg, you know, did
Speaker 7: a story yesterday as Instagram about Jarvis.
Speaker 8: Back in twenty sixteen.
Speaker 7: He showed Jarvis was his AI bought at his house
Speaker 7: that could turn on the lights and do things like
Speaker 7: make his toast at home. Right, So that was back
Speaker 7: in twenty sixteen, and he kind of re posted that.
Speaker 7: So we believe, you know, this concept of Jarvis for
Speaker 7: the home comes to the mass market in AI.
Speaker 8: Obviously Microsoft and Google are.
Speaker 7: Doing this meta also as an incredible opportunity given given
Speaker 7: what they have with What's App, Messenger and the global
Speaker 7: platforms that they have that can help us, you know,
Speaker 7: find the right goods. We want help help surface ideas,
Speaker 7: maybe pass along photos or other ideas or our friends.
Speaker 7: So I think this is going to be for us,
Speaker 7: the most exciting part of it. I think the sideshow
Speaker 7: will be, you know, Meta Quest three and the price point.
Speaker 8: Everyone's all below out of the vision prow at thirty
Speaker 8: five hundred dollars.
Speaker 7: So the differentiation there and what's going to happen in
Speaker 7: the next generation of the Metaversese brand.
Speaker 4: Meta is building large language models, a heavy emphasis on
Speaker 4: open source when developing that technology, and it's kind of
Speaker 4: hinted at how that translates to generative AI tools and
Speaker 4: their existing properties. Right I think we're focusing on AI agents.
Speaker 4: Do you see a clear path to Meta ever making
Speaker 4: any money from all of the things that they are
Speaker 4: working on the R and D side?
Speaker 8: We do.
Speaker 7: They've been very clear they're not making money now or
Speaker 7: don't believe that this will be a big revenue initiative
Speaker 7: in the short term. Long term, we do believe that
Speaker 7: they can make money on Lama, and they're obviously a
Speaker 7: consumer focused company, not as much enterprise, and so this
Speaker 7: is you know, going to take them time to figure
Speaker 7: this out.
Speaker 8: But we think given the quality of the feedback.
Speaker 7: From the channel about Lama and how they're using it,
Speaker 7: how they're the the open source community loving what they're doing.
Speaker 7: There's no doubt there's an opportunity to monetize that this.
Speaker 8: This isn't in the numbers. Uh, this isn't in the
Speaker 8: valuation today.
Speaker 7: So two three, four years from now, could this could
Speaker 7: we have a discussion around you know, is this going
Speaker 7: to be a material revenue engine where they could they
Speaker 7: could potentially license this model to companies to use and
Speaker 7: they would get a royalty for the answer is yes,
Speaker 7: one hundred percent. What the details look like, they're still
Speaker 7: trying to iron those out. Those aren't in our model,
Speaker 7: but certainly we do believe that they can monetize it
Speaker 7: going forward.
Speaker 4: Brent, quickly, it sounds to me like you're not that
Speaker 4: excited about augmented in virtual reality.
Speaker 3: Is that fair?
Speaker 8: Yes, that's fair.
Speaker 3: Okay, Okay.
Speaker 4: Here's the thing that it's either a metaverse story or
Speaker 4: it's an AI story. Do you see a world in
Speaker 4: which meta can convince investors that we can have both.
Speaker 7: I think we can have both, but I think that
Speaker 7: is the lass they've talked about the metaverse. The higher
Speaker 7: the stock is gone, so form an investor perspective, they
Speaker 7: if they keep talking about the software world and what's
Speaker 7: going on the social networking side. That's great. This is
Speaker 7: an advertising driven story, right. The majority of the revenue
Speaker 7: is driven off for advertising. So at this point, I
Speaker 7: think everyone the jury is out whether the metaverse is
Speaker 7: going to be exciting or not. I think most people
Speaker 7: are saying it's not going to be as exciting and
Speaker 7: taking the height because there's real world productivity measures that
Speaker 7: we can see and how it's impacting our lives, Like
Speaker 7: putting a headset on and being claustrophobic and playing a
Speaker 7: game with my kids for ten minutes is not going
Speaker 7: to change my life, right, So I'm I think right
Speaker 7: now we're not We're probably the biggest bear on the metaverse.
Speaker 7: We're very foolish about the position and what they can
Speaker 7: do with the other side of their franchise, and so
Speaker 7: we're very clear about what we like we don't like.
Speaker 2: Interestingly, many an executive is trying to lean into what
Speaker 2: investors and analysts such as yourself like, and look we
Speaker 2: had and flipski on earlier in the week just talking
Speaker 2: about how generative AI is becoming such a focus for AWS.
Speaker 2: On the flip side of all of this is the
Speaker 2: regulatory environment and look Amazon Meta all of them being
Speaker 2: eyed from regulators in particularly the FTC.
Speaker 5: We just heard.
Speaker 2: Yesterday of course Amazon under fire there. What are you
Speaker 2: making of this landscape? How do you expect the FTC
Speaker 2: some of these legal wranglings to unfold for is In,
Speaker 2: for example, brand.
Speaker 7: The government has been trying to tackle big tech for
Speaker 7: a long time, and we've said this that the government,
Speaker 7: the government or oversight is the right thing to help
Speaker 7: protect all of us as consumers. But the big tech
Speaker 7: is being big is not bad, right, Being bad is bad.
Speaker 7: So as long as they find the middle ground. We've
Speaker 7: said this repeatedly, investors, anytime a regulatory scare comes in,
Speaker 7: you buy these stocks.
Speaker 8: Just look at the charts of.
Speaker 7: Meta, Google, Amazon or over the course of the last
Speaker 7: five years, any any regulatory scare, these need these names
Speaker 7: need to be bought.
Speaker 8: Clearly.
Speaker 7: Uh, there's been multiple attempts for the government to take
Speaker 7: down tech.
Speaker 8: It hasn't happened.
Speaker 7: They find a way out, stocks recover, Investors make money.
Speaker 7: So I'm all for regulation and doing the right thing
Speaker 7: to protect all of us. But I think what's happened
Speaker 7: is they've overstepped their boundaries and they've gone after things
Speaker 7: that they don't necessarily have good footing or educate it
Speaker 7: on and then that's caused the proms.
Speaker 8: So I think ultimately these are comedies that have.
Speaker 7: Both one and then end goal, and I think they
Speaker 7: can meet in the middle. And we've said this repeatedly,
Speaker 7: like any regulatory scaring, Internet has not really done anything
Speaker 7: that he stocks. Just pull up the chart at Google
Speaker 7: for the last five years and you can just see
Speaker 7: it's an amazing up into the right chart.
Speaker 8: So respected believe in it.
Speaker 7: Don't believe they're going to have a mass of consequence
Speaker 7: or businesses.
Speaker 1: Brent.
Speaker 4: When you outlined that ten minutes with an ar v
Speaker 4: I headset playing with your kids at the weekend wouldn't
Speaker 4: change your life, there were parents in the San Francisco
Speaker 4: studio team here that tickled them a lot. I think
Speaker 4: they probably share that view of you. Jeffrey, Senior Internet Analysts,
Speaker 4: Brent Hill, thank you very much. Sticking with devices, Amazon
Speaker 4: has lured away longtime Microsoft executive Panos Pana to head
Speaker 4: the company's devices and services business after device's chief Dave
Speaker 4: limp announced his plans to retire. He most recently was
Speaker 4: Microsoft's chief product officer, overseeing Windows as well as the
Speaker 4: company's hardware teams, and of course Dave Limpoff to head
Speaker 4: up Blue Origin carr Lots.
Speaker 5: Of Revolving Doors.
Speaker 4: FTC chair Lena Kahan is seeking to end what she
Speaker 4: calls Amazon's illegal conduct, but didn't go as far as
Speaker 4: to call for a breakup of Amazon. We sat down
Speaker 4: with her at our Bloomberg office in Washington, DC.
Speaker 3: This is the conversation. Have listen.
Speaker 9: This is a.
Speaker 10: Case about a set of unlawful tactics that Amazon has
Speaker 10: used to maintain its monopolies. We note in the complaint
Speaker 10: both a set of anti discounting tactics that Amazon uses
Speaker 10: to punish any seller or retailer that dares to discount,
Speaker 10: and ultimately these sets of tactics deter sellers and retailers
Speaker 10: from lowering prices and closes off an entire dimension of
Speaker 10: price competition.
Speaker 9: The other set of tactics.
Speaker 10: We note, is a coercive scheme that Amazon uses to
Speaker 10: effectively require sellers use its fulfillment service, and this in
Speaker 10: turn ends up stunting the development of independent fulfillment providers
Speaker 10: and ultimately also deprives actual and potential rivals of scale.
Speaker 9: And that's really the core theme here.
Speaker 10: These are a set of tactics, but ultimately Amazon has
Speaker 10: pursued them to deprive actual and potential competitors of the
Speaker 10: ability to gain the scale and momentum needed to effectively
Speaker 10: compete online. And having achieved and protected its monopoly power,
Speaker 10: our complaint details how Amazon is now exploiting that monopoly
Speaker 10: power in ways that harm customers, both the sellers, the
Speaker 10: tens of millions of American families that use Amazon to
Speaker 10: do their shopping, but also the.
Speaker 9: Sorry, both the shoppers, but also the sellers.
Speaker 10: The hundreds of thousands and tens of thousands of sellers
Speaker 10: use Amazon to access those shoppers, and it's done that
Speaker 10: through actively raising prices. Amazon takes close to one out
Speaker 10: of every two dollars from sellers that they use its platform.
Speaker 9: It's also degraded its.
Speaker 10: Service by adding a whole set of pay to play
Speaker 10: ads that make it more difficult for consumers to find
Speaker 10: what they're looking for and steers them to higher price products.
Speaker 10: So really encourage everybody to read the complaint. It details
Speaker 10: all of this conduct in great detail, and we're really
Speaker 10: looking forward to moving forward with it.
Speaker 9: So one of the things in the complaint is.
Speaker 10: This phrase structural relief that you're seeking structural relief in
Speaker 10: this case, which implies a breakup.
Speaker 5: What would that look like.
Speaker 10: So at this stage the complaint is really focused on
Speaker 10: the issue of liability. We lay out a scheme that
Speaker 10: we believe violates the US antitrust laws.
Speaker 9: What we note in.
Speaker 10: The complaint is that these different aspects of Amazon's scheme have.
Speaker 9: An aggregated effect.
Speaker 10: So the harm is accumulating their feedback loops between the harms,
Speaker 10: and so the net exclusionary effect of Amazon's conduct is
Speaker 10: quite significant. Ultimately, we'll want to make sure that any
Speaker 10: remedy is halting the illegal conduct, preventing a recurrence, and
Speaker 10: ensuring that Amazon is not able to profit and benefit
Speaker 10: from its illegal behavior. So right now we're squarely focused
Speaker 10: on the question of liability, But when we get to
Speaker 10: the issue of remedy, those are going to be the
Speaker 10: principles we'll be focused on.
Speaker 2: FTC Chair Lena Calm there and look, Amazon has responded
Speaker 2: to this lawsuit, with the company's Global Council writing that
Speaker 2: if the FTC were to be successful, the result would
Speaker 2: be actually anti competitive, anti consumer. Let's stick in to
Speaker 2: all of this with Charlotte's lame and competition Policy Director
Speaker 2: of Policy.
Speaker 5: At public Knowledge.
Speaker 2: And also you previously worked in the Anti competitive Practices
Speaker 2: division of the FTZ investigating, litigating, and Charlotte, if you
Speaker 2: were there now, how much confidence would you have that
Speaker 2: this would be a winnable action.
Speaker 11: I think there's a reason that the antitrust attorneys at
Speaker 11: the FTC tried not to answer those kinds of questions.
Speaker 11: It's really hard to say at this early stage, but
Speaker 11: I think they feel confident, right. I watched that interview
Speaker 11: with Lena Khan yesterday, and it's so important to highlight
Speaker 11: this problem for people. It seems clear, even though Amazon
Speaker 11: has built their reputation on having the best prices, that
Speaker 11: that didn't come from being a really efficient competitor. It
Speaker 11: came from pushing those third party sellers to raise prices
Speaker 11: everywhere else. That's not fair competition and if that's what's
Speaker 11: going on, it needs to step Charlotte.
Speaker 2: What's interesting is sort of investor an analyst reaction to
Speaker 2: all of this, and one particular analyst saying that this
Speaker 2: is a benign scenario for Amazon over at BED, and
Speaker 2: in fact they said that they were surprised the narrowness
Speaker 2: of the overall case, saying that there isn't sort of
Speaker 2: a reference to disallowing vertical integration. Do you think the
Speaker 2: outcome should be some sort of breakup or has it
Speaker 2: got to be something else?
Speaker 11: So certainly I think stopping the conduct is not going
Speaker 11: to be sufficient.
Speaker 5: This has been.
Speaker 11: Going on for a long time and replacing the competition
Speaker 11: that has been lost is really difficult. So step one
Speaker 11: is going to be to stop the conduct, but more
Speaker 11: will be needed. And I heard Chair con yesterday sort
Speaker 11: of demurring that this is going to be a decision
Speaker 11: that happens far in the future, and that's absolutely right.
Speaker 11: The remedy stage of litigation is later and separate. But
Speaker 11: it may be that, you know, separating off the fulfilled
Speaker 11: by Amazon part of the business is the only way
Speaker 11: to address that lost competition, in which case the court
Speaker 11: would have to take that seriously, Charlotte.
Speaker 4: Some news in the last hour. The FTC has issued
Speaker 4: an order saying that it will continue its internal case
Speaker 4: against Activision and Microsoft steal that when that deal closes,
Speaker 4: they could then after the fact, try to unwind it.
Speaker 4: This is what Activision had to say in response via
Speaker 4: a spokesperson. We're focused on working with Microsoft toward closing
Speaker 4: how the FTC uses limited taxpayer dollars.
Speaker 3: Is its decision.
Speaker 4: Given your CV that Caroline outline, What is your response
Speaker 4: to this situation.
Speaker 11: Well, they're drying on an important point, which is that
Speaker 11: the FTC has limited resources and there are so many
Speaker 11: important cases that we want them to bring with those
Speaker 11: limited resources. But this case against Microsoft and Activision is
Speaker 11: a really important case. So if they think that that
Speaker 11: has the opportunity to help so many consumers, as I
Speaker 11: believe it would, that might be an important priority to
Speaker 11: spend those limited resources. But they're absolutely right. We do
Speaker 11: need to increase funding for these agencies so that they
Speaker 11: can take on all of these important cases.
Speaker 4: Charlotte quickly, it is Lena Khan picking too many fights.
Speaker 11: No, we need to pick these fights. And she spoke
Speaker 11: yesterday about the deterrence strategy which can make this more
Speaker 11: efficient use of resources. Right, if businesses out there can
Speaker 11: see this is not going to be an opportunity for
Speaker 11: you to try something risky because there is a really
Speaker 11: fierce enforcer here that can actually be a way of
Speaker 11: saving resources. So I think that's part of the strategy
Speaker 11: and that can work over time.
Speaker 4: Charlott's Lane and competition policy director at public knowledge. Thank
Speaker 4: you so much for your time. This is Bloomberg Technology.
Speaker 2: Time now for work shifting when we look at the
Speaker 2: changing landscape of the labor market amid advances in technology.
Speaker 5: Big breakthrough for Hollywood.
Speaker 2: The Writers Guild of America approved a new contract with
Speaker 2: the studios, ending it strike after months of intense negotiations.
Speaker 5: Now one of the biggest wins in the deal is.
Speaker 2: Some assurance that artificial intelligence well won't replace their jobs.
Speaker 2: Glomberg's Felix Jillet is here with us with more details
Speaker 2: and before we move to what's next to occur in
Speaker 2: all of this, Yeah, AI, how have they won any
Speaker 2: sort of protection here?
Speaker 12: Well, they got what they wanted basically, which is that
Speaker 12: the Hollywood studios agreed that they're not going to you know,
Speaker 12: feed a bunch of scripts into the AI machine and
Speaker 12: come back and credit a movie to an AI that
Speaker 12: you know, the humans are still going to get the credit,
Speaker 12: and that was what was really important. Now, the studios
Speaker 12: did retain the right to experiment a little bit with AI,
Speaker 12: so you know, it remains to be seen a little
Speaker 12: bit how this is going to play out, But for
Speaker 12: the time being, the writers are declaring victory.
Speaker 2: And read across therefore to actors because they too, particularly
Speaker 2: perhaps you know, the extras that are used, worried about
Speaker 2: AI replacing them in some way.
Speaker 5: Is this an issue?
Speaker 12: Yeah, I think they had similar concerns. And now there's
Speaker 12: a template for these protections. So I think, you know,
Speaker 12: there's optimism to believe that the writers, having made this pack,
Speaker 12: well now the actors will make some real progress quickly.
Speaker 4: Some of the numbers bind this felix are incredible, the
Speaker 4: loss of the economy based on the strike. But the
Speaker 4: whole point here is that the cost of contents getting higher.
Speaker 4: Did the studios feel good about this outcome?
Speaker 12: Their reaction has been notably more muted than the writers.
Speaker 12: I mean, the writers have been very exuberant, very you know,
Speaker 12: declaring victory.
Speaker 3: The studios gave up a lot.
Speaker 12: I think they gave up more than they thought they
Speaker 12: would have to five months ago in terms of compensation,
Speaker 12: in terms of minimum staff in on shows, and also
Speaker 12: in terms of the AI protections.
Speaker 4: Okay, so the other thing you're writing about is Lachlan Murdock.
Speaker 4: Daddy's gone metaphorically speaking, what's next?
Speaker 12: Well, it's interesting, you know, at this announcement, last week's
Speaker 12: stepping back as chairman of the two companies, you know,
Speaker 12: talking to all the Murdoch kremlinologists about what this all means.
Speaker 12: Very unclear to everybody, Like does this change anything? What
Speaker 12: does this mean a lot of unanswered questions. I mean,
Speaker 12: I think clearly it was framed as another vote of
Speaker 12: confidence by Rupert In his chosen successor, Lachlan, his eldest son.
Speaker 12: But at the same time, you know, the issues of
Speaker 12: what's going to happen to the company down the road
Speaker 12: remained fairly unresolved. And you know, they tried to recombine
Speaker 12: Fox and News Corporation earlier this year. Investors balked at
Speaker 12: that idea. So what comes next?
Speaker 3: You know, they have.
Speaker 12: Been pretty quiet on the M and A front for
Speaker 12: the past couple of years, really since acquiring it. To
Speaker 12: be yeah, that looks like a successful deal for them,
Speaker 12: but there's still basically a minno in this world of giants.
Speaker 2: An extraett. It's a great wad go do it? This
Speaker 2: has been the technology Welcome back to Blue Meg Technology.
Speaker 2: I'm Caroline Hyde, New York.
Speaker 4: Now I med Lovelow in San Francisco. A quick check
Speaker 4: in on the markets. There's not a lot of kind
Speaker 4: of big action at the macro level, at the index level,
Speaker 4: and now's that one hundred down three tenths of one percent.
Speaker 4: There's still a lot of focus right on economic data,
Speaker 4: what the Federal Reserve will do, and before you know it,
Speaker 4: Caroline Earning season will be back and we will get
Speaker 4: for I know, I just cannot believe it. There are
Speaker 4: two names that we're looking at specifically right now, and
Speaker 4: this has been a theme of the show, right Artificial
Speaker 4: intelligence and hardware. It is Metaconnect today the developers conference.
Speaker 4: We're up three tens of one percent. We will go
Speaker 4: even further later in the show on what we expect,
Speaker 4: why we do or don't care about the hardware side,
Speaker 4: and we will focus on the AI side. Microsoft softer
Speaker 4: four tens of one percent. You're about to bring us
Speaker 4: a story that makes this move surprising to me because
Speaker 4: you think about the news flow. Would Microsoft be higher
Speaker 4: on what you were about to bring our audience.
Speaker 2: You would have thought so, because on paper they have
Speaker 2: made a pretty penny on a thirteen billion dollar investment
Speaker 2: in one company, ed Open AI. We are talking about,
Speaker 2: of course, the fact that company, the AI company, is
Speaker 2: in talking to its investors about a potential share sale
Speaker 2: that would value it up to eighty to ninety billion dollars. Now,
Speaker 2: this at the moment ed is all according to the
Speaker 2: Wall Street Journal reporting sources, But the deal would allow employees,
Speaker 2: most crucially, to look sell some of their existing shares
Speaker 2: to be able to access some of the monetary value
Speaker 2: of the work that they've been doing without.
Speaker 5: The company actually having to issue or raise fresh capital.
Speaker 2: This exact valuation extraordinary when you think that actually open
Speaker 2: Ai was only just starting in our lexicon at the
Speaker 2: beginning of this year.
Speaker 4: Yeah, and when they did issue shares in April that
Speaker 4: was at a twenty nine billion dollar valuation. It's a
Speaker 4: hell of a jump. A big part of the story
Speaker 4: is employee liquidity, right, it's a big frustration when you're
Speaker 4: in a private startup for decade and you can't sell
Speaker 4: that your RSUs or your stock. And then did you
Speaker 4: see the revenue numbers that the journal reported and weird
Speaker 4: that might be it?
Speaker 2: Yeah, I mean the fact that Bloomberg knows that they're
Speaker 2: going to be bringing in about a billion in a year.
Speaker 2: I mean everyone's been questioning, how do you monetize the
Speaker 2: generative AI opportunity?
Speaker 5: Well, clearly open ai is already doing that solely with enterprise.
Speaker 2: They're still evolving in terms of multimodal ways in which
Speaker 2: we can interact with generative AI. It's also notable though,
Speaker 2: what I thought was interesting is the fact that what
Speaker 2: they're number three now behind TikTok, but also behind SpaceX
Speaker 2: and who was a co founder of open ai.
Speaker 4: Yeah, very interesting the wrap around with mister Elon Musk,
Speaker 4: who's doing his own thing now and a lot of AI.
Speaker 2: Let's dive into all of this look in authority in
Speaker 2: the space, particularly when it comes to the impact of
Speaker 2: generative AI, maybe regulation of it. Dame Wendy Halls with US,
Speaker 2: Professor of Computer Science at the University of Southampton, also
Speaker 2: as a co chair of the UK Government's AI Review
Speaker 2: published back in twenty seventeen. And boy has the narrative
Speaker 2: kind of changed accelerated, Wendy since twenty seventeen. And we've
Speaker 2: had you on the show for just talk about the
Speaker 2: exuberance that you still see around the space and ultimately
Speaker 2: whether we're wringing our hands about the opportunity but also
Speaker 2: the risks.
Speaker 13: Enough, well we should have ring our hands about the opportunities.
Speaker 13: The opportunities are there. There's a hype wave at the moment,
Speaker 13: and I remember the web dot com crash. I'm just
Speaker 13: saying that putting it out there when everyone piled into
Speaker 13: web companies and the technology wasn't mature enough and we
Speaker 13: had a crash. The generative AI people may be buying
Speaker 13: into it, but it's not proven yet as a thing
Speaker 13: that business can use. Is it really I'm not saying
Speaker 13: it won't be, but at the moment, is it reliable enough?
Speaker 13: And there's a lot of competition. We don't really know
Speaker 13: what the business models are. There's still to be explored,
Speaker 13: and so there's a terrible I personally wouldn't be buying
Speaker 13: shares in AI companies at the member. Then I'm not
Speaker 13: a stocks and shares person, so I'm not in the.
Speaker 3: Contrad style, Wendy.
Speaker 4: We appreciate the perspective that will go commercialization. A second
Speaker 4: today is Meta connect and we will hear from the
Speaker 4: parent company of Facebook what they are doing in the
Speaker 4: world of artificial intelligence. But broadly they have stuck to
Speaker 4: the doctrine of open source development. What is your position
Speaker 4: on open source development?
Speaker 14: Well, I'm a circular academic.
Speaker 13: I love it for the innovation it provides, but I
Speaker 13: worry about the risks and who's responsible is the world
Speaker 13: of responsible AI if you get you know who's responsible
Speaker 13: for the use of that open source and who's responsible
Speaker 13: for whether it goes to the bad actors or the good.
Speaker 14: Actors down the line.
Speaker 13: As we talk about regulation, we have to talk about
Speaker 13: regulation of open source as well as the regulation of
Speaker 13: the core generators of the technology.
Speaker 2: I've seem to recall when Meta first announced Lama Too
Speaker 2: and Nick Kleagg was out there discussing about the why
Speaker 2: they're focused on open sourcing.
Speaker 5: You said, and I think it was you saying, look, this.
Speaker 2: Is potentially like giving people the instructions for a nuclear
Speaker 2: bomb here. Do you still stand by that that it
Speaker 2: could be as impactful? And you think Meta and the
Speaker 2: rest of the regulatory community are reacting to that.
Speaker 13: Well, I yes, I stand by what I said in
Speaker 13: these sense, and it makes people think about what we're
Speaker 13: doing right if the say are the AI companies are
Speaker 13: saying we can't explain how this stuff works, but we're
Speaker 13: putting it out there anyway, you know, we've I'm not
Speaker 13: a doom sir about this.
Speaker 14: I think generative AI is going to.
Speaker 13: Be a profoundly positive technology if used well and responsibly.
Speaker 13: But lots of people are pulling Jeffrey Hinton and people
Speaker 13: have pulled out of it. They're also it's dangerous, it's dangerous,
Speaker 13: We've got to be careful. But then they're giving away
Speaker 13: the open source versions. It just seems so contradictory in
Speaker 13: my mind. If you think something is so dangerous, shouldn't
Speaker 13: you be making sure very sure about who the people
Speaker 13: you're giving it to and what they're.
Speaker 14: Going to do with it.
Speaker 2: Also what's interesting is an inn Video executive has since
Speaker 2: left the business and as it's two thousand and one,
Speaker 2: claiming that their biggest concern is the fact that it
Speaker 2: is being dominated by big tech players and then there
Speaker 2: isn't enough of the startups being able to come in
Speaker 2: and other players being able to be at the table.
Speaker 5: Do you agree with that narrative?
Speaker 2: I mean, we're about to have yet another summit occurring
Speaker 2: where you are in the UK.
Speaker 13: Well, I won't be at the summit right the people
Speaker 13: at the It's at Bletchley Park, which is tiny. There's
Speaker 13: about one hundred and twenty seats you can get into
Speaker 13: the conference room and a number of country if I
Speaker 13: had that by the number of countries attending, there won't
Speaker 13: be many reps from every country. We mainly diplomats people
Speaker 13: from the intelligence agencies because it's all about.
Speaker 14: Cybersecurity and national security.
Speaker 13: And it'll be the tech grows, the people running the
Speaker 13: tech companies that will be there.
Speaker 14: There won't be a diversity of thought of any.
Speaker 13: Type there, and so I really worry that this whole
Speaker 13: conversation is being run by the tech companies and they're
Speaker 13: being effectively asked to regulate themselves and they're giving away
Speaker 13: stuff to you know, here's the open source guys. You
Speaker 13: do do this is who's responsible in this food chain?
Speaker 14: Where is the responsibility? That's what wiries me.
Speaker 3: Well, Wendy, let's talk about the nation.
Speaker 4: That's why I want to ask you, though, Wendy, about
Speaker 4: the nation state level action.
Speaker 3: Right.
Speaker 4: We had Joe White on the show last week, the
Speaker 4: UK Technology Ambassador, and he was telling Caroline and I
Speaker 4: about all the meetings he's having with the tech companies
Speaker 4: to secure the compute, the chip makers, the hyperscale cloud providers.
Speaker 4: So I understand your concerns, but do you at least
Speaker 4: see the UK trying to get itself at a national
Speaker 4: level in a position of leadership in what is a
Speaker 4: nascent technology.
Speaker 13: Yes, of course I do, and a lot of the
Speaker 13: things they're doing is totally applaud We have to put
Speaker 13: more money into this the UK does.
Speaker 14: I mean we don't.
Speaker 13: We are never going to be able to put the
Speaker 13: amount of money the US and China puts in. The
Speaker 13: EU's bigger than us, it could put more in. We
Speaker 13: don't have the companies in Europe, of course, they're all
Speaker 13: in Washington, in Washington or in shen Zen in China,
Speaker 13: and so we can only lead by regulating, governing. And
Speaker 13: I've always said that that's the right thing for us
Speaker 13: to do, because we're good at that sort of stuff.
Speaker 13: But just at the moment, since chat GPT came out,
Speaker 13: everything has flipped in the UK. It's really turned so
Speaker 13: that it is all about the technology at the moment
Speaker 13: and the safety risks, and it's not about very little
Speaker 13: about how you you know.
Speaker 14: The good things that this can be used for and.
Speaker 13: How it's going to be used by society evolving the
Speaker 13: wider community in those debates.
Speaker 3: Day Mighty Hall.
Speaker 4: On that note, then, let me ask you then in
Speaker 4: your research, what are you most excited about about artificial
Speaker 4: intelligence bringing to society.
Speaker 13: Well, I'm excited about the things that the day I
Speaker 13: can do that will give us answers to questions we
Speaker 13: couldn't possibly.
Speaker 14: Work out without it. So example, in health.
Speaker 13: Everyone talks about health, but the breakthroughs are already. It
Speaker 13: will relieve people in the judgeries of some of the
Speaker 13: boring jobs, create new jobs. It will help us with
Speaker 13: solving the big ground challenges of the world like the
Speaker 13: climate change and energy and food security. And you know,
Speaker 13: we'll be able to do things with AI and data
Speaker 13: we couldn't possibly have done without without it, and that's
Speaker 13: you know, it's just and it's going to change. Generative
Speaker 13: AI is going to change how we do everything. It
Speaker 13: will change how you work, how I work, how students work.
Speaker 14: You know it will.
Speaker 13: It will be as profound as the introduction of the
Speaker 13: calculator and the computer back in the seventies. We will
Speaker 13: all approach the creation of things differently. But it doesn't
Speaker 13: mean that generative AI is going to wipe us out
Speaker 13: of existence as it is now. So that there's such
Speaker 13: a hype around the existential threat and that we've got
Speaker 13: to of course talk about that and global but it's
Speaker 13: not the immediate threats are you know, more about misinformation
Speaker 13: and threats to the democratic process.
Speaker 14: How AI might be used in the.
Speaker 13: Campaign's next year and that and that's those are the
Speaker 13: things that worry me.
Speaker 4: Dame Wendy Hall, Professor of computer science at the University
Speaker 4: of Southampton. Robust conversation as always, Thank you.
Speaker 14: Okay.
Speaker 4: Now coming up here from Bloomberg Technology the future of
Speaker 4: marine transportation? Can the marine transportation industry go electric? We'll
Speaker 4: talk all about that more with ARC co founder Ryan
Speaker 4: Cook and Eclipse Sventure's founder Lee or Susan.
Speaker 3: That's coming up next.
Speaker 4: This is Bloomberg Technology. Okay, time for talking tech. First
Speaker 4: stop can How's planned IPO will be Keith for gauging
Speaker 4: demand in Hong Kong's sluggish deals market, companies have raised
Speaker 4: just under three billion dollars so far in twenty twenty three.
Speaker 4: That's on track for the least since the nineteen nineties.
Speaker 3: What a stat can now.
Speaker 4: The logistics unit of Aali Barber is expected to raise
Speaker 4: at least one billion dollars, and Binance says it's doing
Speaker 4: business in Russia as it recognizes that quote operating in
Speaker 4: Russia is not compatible with its compliance strategy. The crypto
Speaker 4: exchange platform is selling its units to comes a service
Speaker 4: launch just one day before the deal was announced. Binance
Speaker 4: and its founder Chang Peng Jao have been the subjects
Speaker 4: of regulatory reviews this year in the US, plus TikTok
Speaker 4: Shop is dealing with a major setback to its growth
Speaker 4: in ambitions. In Indonesia, officials implemented a ban that prohibits
Speaker 4: social commerce companies from facilitating direct e commerce payments on
Speaker 4: their platforms. The new policies aimed at ensuring local e
Speaker 4: commerce services such as Tokopedia won't be squeezed out.
Speaker 3: Caroline.
Speaker 2: Yeah, well, now you've got a real focus today in
Speaker 2: the VC spotlight right where we're going to be talking
Speaker 2: electric boat snow less take it away.
Speaker 4: Yes, So two interesting people coming up on the program. First,
Speaker 4: ARC's co founder and CTO joins us Ryan Cook alongside
Speaker 4: Lee or Susan, one of the partners over it at clips.
Speaker 4: Electric Boat Companies raised seventy million dollars to expand its
Speaker 4: operations electrify more of the marine industry. This is like
Speaker 4: the Tesla playbook to go mass market in boats. So
Speaker 4: let's bring this conversation in and Ryan I want to
Speaker 4: start with you. You had a limited number, fewer than
Speaker 4: twenty of these three hundred thousand dollars battery electric boats.
Speaker 4: The next gen model is going to come next year,
Speaker 4: twenty twenty four, but we don't know anything about it.
Speaker 4: So tell us where do these funds go to develop
Speaker 4: this next gen model?
Speaker 9: Yeah?
Speaker 15: Thanks, Ed, Yeah, I mean these funds really go to
Speaker 15: us expanding production into a more mass market vehicle. The
Speaker 15: ARC one was limited edition, we completely sold out, but
Speaker 15: we really want to focus our attention now on electrifying
Speaker 15: everything else on the water, everything up in the marine industry.
Speaker 15: A lot of gas boats out there, and ourxsmission is
Speaker 15: to convert all of them to electric. These funds really
Speaker 15: help us accelerate that mission. We're going to be using
Speaker 15: it to expand our footprint here in Los Angeles, and
Speaker 15: we're going to be using it too, as you mentioned,
Speaker 15: work on our next more mass market product, which we
Speaker 15: will unveil more details in the next couple of months.
Speaker 2: Oh, you leave us hanging, but or on that respect,
Speaker 2: what is the ultimate total addressable market here?
Speaker 5: From your mind's eye?
Speaker 2: Why are you so excited to commit more capital here?
Speaker 1: Yeah, it's great to be here again.
Speaker 16: Caroline, and I think you know, like many other physical industries,
Speaker 16: the marinetime industries is being here for I don't know,
Speaker 16: five thousand years.
Speaker 1: It's a gay game.
Speaker 16: Think industry of multi hundreds of billions of dollars that's
Speaker 16: still being run by generally gas, a combustant engine. That's
Speaker 16: all going to change by electlification, with batteries, with electronics.
Speaker 1: You guys mentioned in the previous section AI.
Speaker 16: We love seeing AI in a physical industries and the
Speaker 16: impact in society and climate, and of course building what
Speaker 16: we believe will be the next Testla.
Speaker 1: Here with dog.
Speaker 4: Ryan, we talked about your CV. You had seven years
Speaker 4: of engineering at SpaceX, some of your investors at Tesla alum,
Speaker 4: some of your staff a Tesla alum. And you seem
Speaker 4: to be replicating this idea like Tesla started with the Roadster,
Speaker 4: then the Model Less than the Model three. Is it
Speaker 4: fair to say that you're kind of replicating that path forward.
Speaker 1: Yeah, I think that's fair to say.
Speaker 15: I mean, we really think that's the smartest way to
Speaker 15: go about doing this. The hardest part about working on
Speaker 15: a hardware startup is really scaling that production. Starting with
Speaker 15: something that's a smaller batch field kind of like the
Speaker 15: ARC one. It allows you to learn a lot where
Speaker 15: the risks are minimized because you have fewer products out there.
Speaker 15: We can take all of those learnings and honestly move
Speaker 15: faster as we move into the next product, rather than
Speaker 15: trying to jump straight to something else mass market. And
Speaker 15: the other point here that we're only two and a
Speaker 15: half years old, we've already sold and delivered orc ones
Speaker 15: to customers. That's incredible speed for a hardware company, and
Speaker 15: it really speaks to the engineering team that we have
Speaker 15: and this kind of first principles approach that you know
Speaker 15: we bring from space accent as well to be able
Speaker 15: to execute that quickly.
Speaker 4: Leo, You've put a lot of dollars into real world startups,
Speaker 4: companies that actually make stuff. But it was interesting to
Speaker 4: note the expansion of US manufacturing here and not going overseas.
Speaker 3: What do you make of that, Leo?
Speaker 16: I think there is a new industrial renaissance in this country.
Speaker 1: I just came back from Washington, d C. Two weeks ago.
Speaker 16: The government is very serious to help this country build again.
Speaker 16: I think we understanding what that means from a geopolitics
Speaker 16: point of view and the needs to secure and resilience,
Speaker 16: our supply chain and manufacturing, and that's mean building companies
Speaker 16: like RC locally when you're putting on top of it,
Speaker 16: automation and software the other two biggest move that we
Speaker 16: are seeing in physical industries. You now can build the
Speaker 16: most sophisticated boat in Los Angeles.
Speaker 1: Uh, that would be just not something you could do before.
Speaker 16: And it's very exciting because I think we are seeing
Speaker 16: companies like Tesla and s Basics and ARC and others
Speaker 16: building a new industrial regime here in this country.
Speaker 2: Ron Therefore, what is the headache for you as you
Speaker 2: want to take on this money to accelerate in a
Speaker 2: big way. Is it supply chain that remains a concern?
Speaker 2: Is it talent pool? What is it that hinders you
Speaker 2: if at all?
Speaker 15: Yeah, it's it's probably a combination of both of those.
Speaker 15: You know, talent is really the most important. Talent is
Speaker 15: what lets you, you know, accelerate move quickly. We invest
Speaker 15: a lot in our people. We have a great engineering
Speaker 15: team with a great background from you know Tueslee be
Speaker 15: in SpaceX, all those companies. The supply chain is definitely
Speaker 15: the top of mind as well. That's actually where CLIPS
Speaker 15: is incredibly helpful. They have a great portfolio of companies.
Speaker 15: They have a lot of experience operating in the hardware space.
Speaker 15: Our main focus though, is really just execution.
Speaker 1: On production ramp.
Speaker 15: Anyone who's started a hardware company knows trying to scale
Speaker 15: production is the hardest possible thing. Building one of something
Speaker 15: is easy, Building hundreds thousands of something is incredibly difficult.
Speaker 1: So that's really you know, the next.
Speaker 15: Year, two years being our entire focus is building the
Speaker 15: production line itself.
Speaker 2: Well here, so hope you don't have to sleep there
Speaker 2: too much as well, Elan did arc CTO co founder
Speaker 2: Ryan Cook, great has some time you an Eclipse founder
Speaker 2: and managing partner ner Sisan, Thank you very much. Now, look,
Speaker 2: all eyes are going to be trained on the Meta
Speaker 2: Connect event, which is slee to start relatively shortly about
Speaker 2: half a last time, but we've got to touch on
Speaker 2: the news out of Snap, the company closing a division
Speaker 2: focused on making augmented reality services for businesses, putting the
Speaker 2: plug on its latest attempt just try and diversify this
Speaker 2: business mandate. Seeing a place to say cover both of
Speaker 2: these key companies, Bloombag Intelligence and you already wrote to
Speaker 2: react to what was a great piece coming out of
Speaker 2: our own Alex Bernka, what do you make of really
Speaker 2: the decision quite hard nose decision here to just pull
Speaker 2: the plug.
Speaker 17: I think in case of all these companies that are
Speaker 17: relying on hyperscalers to give them the cloud capacity. I mean, look,
Speaker 17: investing in generative AI isn't cheap, and that's what every
Speaker 17: small company is realizing. It's hitting their growth margin. In
Speaker 17: the case of Snap, clearly they have a problem with
Speaker 17: top line growth. And I think AR, even though it
Speaker 17: was touted as the next big thing a couple of
Speaker 17: years back, clearly isn't the thing that investors are focused on.
Speaker 17: They're more focused on generative AI, and that's why they're
Speaker 17: trying to cut their costs here. And look, Snap, compared
Speaker 17: to their peers has a very high R and D intensity,
Speaker 17: it's about forty percent, So compare that to all their peers,
Speaker 17: it's more twenty to twenty five percent is more than
Speaker 17: norm So I'm not surprised they're cutting that line.
Speaker 4: Mandy, Meta connect and the keynote from Zark coming up shortly.
Speaker 4: What's the AI story that you want to hear from Meta?
Speaker 17: Yeah, Look, I think we've seen a clear strategy from
Speaker 17: Microsoft using copilots to monetize GENI as well as the
Speaker 17: cloud capacity. Same thing with Google, you know, monetizing cloud
Speaker 17: and then they're launching copilots do it, and also they're
Speaker 17: integrating it in search. In the case of Meta, yes,
Speaker 17: they have a large anguage model, they have open source it. Well,
Speaker 17: we still don't know how they are going to monetize it,
Speaker 17: and a lot of the GPU capacity that they're buying
Speaker 17: it's more for internal use. Yes, it will help with
Speaker 17: at targeting, but I think investors are more focused on
Speaker 17: external forms of monetization, and that's fair. They can integrate
Speaker 17: their large ANGLID model and build an ecosystem that's tied
Speaker 17: to the API. I think that would be huge in
Speaker 17: terms of monetization.
Speaker 2: We'll see how that all unfolds, and also those agent bots,
Speaker 2: chatbots and how all the different variations are discussed. Man
Speaker 2: keep saying Bloomberg technology will let him get back to
Speaker 2: get ready for the meta connective and meanwhile, now that
Speaker 2: does it for this addition of Bloomberg technology today.
Speaker 3: Yeah, so much to recap.
Speaker 4: There will be people out there that are excited about
Speaker 4: ARVR headsets.
Speaker 3: Recap our discussion.
Speaker 4: On that on the podcast Apples, Spotify, n iHeart. Of course,
Speaker 4: it's on all the Bloomberg platforms as well. Big show
Speaker 4: coming up in twenty four hours time from SFA New York.
Speaker 4: This is Bloomberg Technology.