WEBVTT - Disney's Subscriber Miss and Google Cloud's AI Plans 0:00:01.639 --> 0:00:05.320 From the heart where Innovation, Money and power. Collie in 0:00:05.440 --> 0:00:10.720 Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde. 0:00:10.400 --> 0:00:11.320 And Ed Ludlove. 0:00:25.200 --> 0:00:27.640 I'm Caroline Heyde of Bloomberg's World headquarters in New York 0:00:28.160 --> 0:00:29.760 and Imed Ludlow in San Francisco. 0:00:29.880 --> 0:00:31.320 This is Bloomberg Technology. 0:00:31.400 --> 0:00:34.200 Coming up, we break down Disney's results. As the media 0:00:34.240 --> 0:00:38.760 giant takes a hit amid the battle for streaming dominance class. 0:00:38.760 --> 0:00:41.199 We'll bring you my conversations from Google io and here 0:00:41.240 --> 0:00:44.000 from the SAP CEO as the company's team up with 0:00:44.080 --> 0:00:47.360 Google Cloud to maximize AI usage, and. 0:00:47.440 --> 0:00:50.760 Microsoft announcing it's freezing salaries this year. As the tech 0:00:50.760 --> 0:00:53.960 giant looks to navigate economic uncertainty, we'll bring you the 0:00:54.000 --> 0:00:56.960 details so much more this hour. And the market too 0:00:57.320 --> 0:00:59.880 is trying to navigate economic concertainty at the moment. War 0:01:00.120 --> 0:01:02.560 is about the debt ceiling, worries about the ongoing concerns 0:01:02.600 --> 0:01:06.600 around US banks, and yet tech in outperforms. We're up 0:01:06.600 --> 0:01:08.440 only a tenth of a percent and managed to shake 0:01:08.480 --> 0:01:10.240 off some of the nerves and the rest of the 0:01:10.280 --> 0:01:13.039 market at the moment, we're up just some fifteen points. Now, 0:01:13.040 --> 0:01:15.440 there was economic data that the jobless claim showed some 0:01:15.520 --> 0:01:18.759 worry about the slowing in the jobs market, inflatory pressure 0:01:18.840 --> 0:01:21.000 dialing back a little bit when it comes to producer prices, 0:01:21.000 --> 0:01:23.600 the two year yield is coming down on that perhaps 0:01:23.600 --> 0:01:26.320 fall down in the inflationary pressure. But does this mean 0:01:26.360 --> 0:01:29.040 some sort of restrastionary environment? That is probably the watchword 0:01:29.080 --> 0:01:31.720 for today. We're look at KBW bank index under pressure 0:01:31.760 --> 0:01:33.520 with of course pack West the one that we look 0:01:33.520 --> 0:01:35.360 at front and center. Let's stal it on AND's of 0:01:35.360 --> 0:01:37.479 cour's happening in terms of the desire to get into 0:01:37.480 --> 0:01:39.280 a haven means the dollar is going higher, it means 0:01:39.319 --> 0:01:41.240 crypto is going lower off by two and a half percent. 0:01:41.480 --> 0:01:43.880 So Bitcoin currently training at twenty seven thousand on the 0:01:43.959 --> 0:01:45.600 day ed. But go into some of the micro the 0:01:45.640 --> 0:01:46.480 earnings and the like. 0:01:47.160 --> 0:01:49.480 Yeah, actually, outside of earnings, there's quite a lot of newsflow. 0:01:49.560 --> 0:01:50.600 There's driving these moves. 0:01:50.640 --> 0:01:53.000 Peloton a recall of two point two million bits. We're 0:01:53.000 --> 0:01:54.280 going to get into that late in the show with 0:01:54.280 --> 0:01:56.600 Bloomber's Mark Gunman. But at one point in the session 0:01:56.600 --> 0:01:59.200 that's stock at a record low. It's having an impact. 0:01:59.360 --> 0:02:03.600 Alphabet pair of Google up significantly five percent, biggest jump 0:02:03.640 --> 0:02:04.760 since the first week of February. 0:02:04.760 --> 0:02:06.200 It's trading at August high. 0:02:06.360 --> 0:02:09.040 The market like what it heard about what they're doing 0:02:09.080 --> 0:02:10.680 in the field of AI, and we will hear more 0:02:10.680 --> 0:02:12.960 about that as well. Interesting that some of its peers 0:02:13.080 --> 0:02:15.720 in the AI space, Microsoft and Video a little softer, 0:02:16.000 --> 0:02:18.840 both of them down around to both of them down 0:02:18.880 --> 0:02:22.200 around eight tenths of one percent. Disney is the big 0:02:22.240 --> 0:02:25.000 mover to the downside, and that one is on earnings 0:02:25.040 --> 0:02:28.600 and miss on subscribers and profit in the current period 0:02:28.600 --> 0:02:32.240 a loss will be wider or widening from the past quarter. 0:02:32.600 --> 0:02:35.320 It's interesting because they're still on track to meet that 0:02:35.360 --> 0:02:38.200 cost reduction goal, but there are some worrying signs about 0:02:38.200 --> 0:02:41.120 the cost of streaming. It's streaming or nothing, so let's 0:02:41.160 --> 0:02:44.440 stick with Disney. Bringing bloombergs Chris Palmery from LA That 0:02:44.560 --> 0:02:47.280 subscriber miss Chris was quite interesting because it seems to 0:02:47.320 --> 0:02:50.560 be showing the impact of bringing in an AD supported 0:02:50.639 --> 0:02:53.639 tier in the quarter gone right. 0:02:53.800 --> 0:02:56.600 I mean, some people would argue a cheaper air supported 0:02:57.600 --> 0:03:00.520 a tier would bring in new subscribers, but need out 0:03:00.520 --> 0:03:04.040 for the second quarter has lost Disney plus subscribers overall. 0:03:04.560 --> 0:03:05.560 That's partly with. 0:03:05.800 --> 0:03:08.280 When they introduced the new tier, they really raised the 0:03:08.400 --> 0:03:11.400 cost of the ad free version thirty eight percent, and 0:03:11.440 --> 0:03:13.960 so I think you're definitely seeing some people canceled for 0:03:14.000 --> 0:03:18.320 that reason, and there's concern now have we peaked in 0:03:18.480 --> 0:03:19.600 streaming penetration. 0:03:19.800 --> 0:03:21.840 That's that obviously is worrisome. 0:03:22.520 --> 0:03:25.639 Christy McCarthy, the CFO, though, trying to cast this as 0:03:25.639 --> 0:03:28.000 a blit when it comes to increased spending from a 0:03:28.000 --> 0:03:31.760 marketing perspective, Chris, why don't investor sort of seeing it 0:03:31.800 --> 0:03:32.080 as that. 0:03:33.720 --> 0:03:35.640 Well, you know, that's the thing is that there's been 0:03:35.640 --> 0:03:37.880 so much focus in the last few months and less 0:03:37.880 --> 0:03:40.600 on subscriber growth in these companies and more on let's 0:03:40.640 --> 0:03:42.920 ring profits from this, but now this seems to be 0:03:43.080 --> 0:03:46.920 now a focus on both as well. It's going to 0:03:46.920 --> 0:03:48.400 be difficult. There was a lot of things on the 0:03:48.400 --> 0:03:52.520 call to ponder suggestions. For example, that Dieiger now lights 0:03:52.560 --> 0:03:55.720 the WHO streaming service, wants to keep to that and 0:03:55.960 --> 0:03:58.640 that which means they'll have to buy out the one 0:03:58.760 --> 0:04:01.400 third of WHO that they done. There's also a big 0:04:01.440 --> 0:04:04.440 write off on content that they're now no longer putting 0:04:04.440 --> 0:04:05.160 on the services. 0:04:05.160 --> 0:04:06.560 So at the same time they're talking. 0:04:06.400 --> 0:04:09.440 About raising the cost of the Disney Plus service, they're 0:04:09.440 --> 0:04:12.480 reducing the programming on it, so there's a lot of 0:04:12.600 --> 0:04:14.040 uncertainty and streaming right now. 0:04:14.360 --> 0:04:15.880 And also, I. 0:04:15.840 --> 0:04:18.960 Mean the people who've left from the streaming unit as well, 0:04:19.000 --> 0:04:21.120 the fact that all at the same time they are 0:04:21.279 --> 0:04:24.360 thinking about costs, they are cutting into their labor, into 0:04:24.400 --> 0:04:26.920 their talent pool, and a large lot of that comes 0:04:26.920 --> 0:04:31.040 from the people who actually launched Disney Plus right right, And. 0:04:31.120 --> 0:04:33.120 You know, overall we're in the midst of Disney's in 0:04:33.120 --> 0:04:36.400 the midst of a seven thousand person reduction, hoping to 0:04:36.440 --> 0:04:37.080 say five and a. 0:04:37.080 --> 0:04:39.280 Half million billion dollars in costs. 0:04:39.920 --> 0:04:42.480 You know, this was not the maximum quarter for that. 0:04:42.560 --> 0:04:44.680 It'll be the current one where a lot of the 0:04:44.680 --> 0:04:47.560 people were let go. But there wasn't a lot of discussion. 0:04:47.560 --> 0:04:49.839 They said they're on progress to meet those targets, but 0:04:50.080 --> 0:04:53.159 not a lot of discussion about how much they're really saving. 0:04:54.000 --> 0:04:57.800 And we'll see this year. So that's another concern. The 0:04:57.880 --> 0:04:58.800 discussion across. 0:04:58.560 --> 0:05:02.560 Spinningbek Television Radio Morning is whether Disney is a technology 0:05:02.600 --> 0:05:05.520 company or if it's a media and entertainment company. 0:05:05.560 --> 0:05:06.880 And it's interesting the. 0:05:06.800 --> 0:05:11.920 Bright Spot Chris the Park's business technology company that operates 0:05:11.920 --> 0:05:12.719 a park's business. 0:05:14.400 --> 0:05:17.440 Well, they would certainly like to think that they're technologically savvy. 0:05:17.480 --> 0:05:19.320 You know, they have all these you know, you can 0:05:19.440 --> 0:05:22.800 order online, everything's you know, through your app nowadays you're 0:05:22.960 --> 0:05:25.080 you know, you pay a little extra ZiT the app 0:05:25.120 --> 0:05:26.520 and you can cut the line on the rides. 0:05:26.760 --> 0:05:28.039 So there's a whole lot going on there. 0:05:28.080 --> 0:05:31.000 But yeah, but basically this is an experiential business. 0:05:31.520 --> 0:05:31.880 Uh. 0:05:31.920 --> 0:05:34.360 And you know it's certainly in the future we'll all 0:05:34.400 --> 0:05:37.680 be watching things online. But you know, it depends on 0:05:38.000 --> 0:05:41.320 you know, really human interaction to to make those great 0:05:41.360 --> 0:05:44.920 movies and TV shows work. So you know, I would 0:05:44.960 --> 0:05:48.320 put Disney in the media and entertainment category more than tech. 0:05:48.440 --> 0:05:52.120 And Chris, did they mention AI, Yes, it was a 0:05:52.160 --> 0:05:56.120 discussion of that, And you know, I don't think that 0:05:56.120 --> 0:05:59.400 there's there's there seems to be agreement in Hollywood that 0:05:59.800 --> 0:06:03.200 this is not going to completely replace the screenwriter and 0:06:04.600 --> 0:06:08.000 and so we'll see how that plays out in negotiations 0:06:08.000 --> 0:06:10.760 with the writers strike because the writers want that sort 0:06:10.760 --> 0:06:11.320 of in writing. 0:06:11.880 --> 0:06:14.400 Well, thanks for bringing it back to all things Hollywood 0:06:14.440 --> 0:06:17.159 that you cover as well, Chris, how mary brilliant breakdown 0:06:17.160 --> 0:06:19.560 on what's happening with Disney, and let's talk a little 0:06:19.560 --> 0:06:22.240 bit more about how AI is uphending the way in 0:06:22.240 --> 0:06:24.880 which people are thinking about investing in tech and otherwise 0:06:24.880 --> 0:06:27.320 in the moment, please to just dive into the markets 0:06:27.320 --> 0:06:29.280 a little bit more with Sylvia Jablonski. She's to find 0:06:29.320 --> 0:06:32.080 CTF CEO CIO overseeing what nine hundred million dollars in 0:06:32.120 --> 0:06:34.880 assets under management and some of your ETFs really catering 0:06:34.880 --> 0:06:38.279 to the focus on AI at the moment, Sylvia, And 0:06:38.400 --> 0:06:41.680 do you worry that there's hype priced in or are 0:06:41.680 --> 0:06:44.160 we underestimating the amount of change and the amount of 0:06:44.600 --> 0:06:46.240 well value that can be found. 0:06:47.360 --> 0:06:49.880 Oh, good wording and great to be here with you today. Well, 0:06:49.960 --> 0:06:53.160 I think that we're you know, I think the rise 0:06:53.200 --> 0:06:56.800 in the stack price this year is you know, perhaps 0:06:56.960 --> 0:06:59.120 on some of the zuber ands over AI. But don't 0:06:59.120 --> 0:07:01.120 forget that twenty twenty too. It's very much a tech 0:07:01.160 --> 0:07:02.800 recession here. So I think a lot of that is 0:07:02.880 --> 0:07:06.279 catch up and then the inertia behind the AI build 0:07:06.279 --> 0:07:08.520 out is something that you know, helped propel gains. But 0:07:08.920 --> 0:07:11.440 I do think it's underestimated. I do think that tech 0:07:11.480 --> 0:07:13.800 has a long way to go, and you know, with 0:07:13.960 --> 0:07:17.640 that comes some other components of tech like semiconductor companies. 0:07:17.680 --> 0:07:21.679 For example, AI is just beginning and it's been around 0:07:21.680 --> 0:07:23.240 for a couple of decades, but it is now just 0:07:23.240 --> 0:07:26.200 sort of coming to fruition and becoming monetizable. So if 0:07:26.240 --> 0:07:28.480 you think about what AI can change, it's pretty much 0:07:28.520 --> 0:07:32.240 every sector out there, everything from healthcare you know, robotic surgery, 0:07:32.320 --> 0:07:37.120 research to defense, you know, precise information targeting things like that, banks, 0:07:37.360 --> 0:07:39.960 accuratetit risk, you know, preventing. 0:07:39.640 --> 0:07:41.120 SBB types of crisses. 0:07:41.440 --> 0:07:43.600 So we're just at the beginning of what is going 0:07:43.640 --> 0:07:45.920 to be a major innovation in the way that we 0:07:46.040 --> 0:07:48.320 use technology for the next decade to come. 0:07:48.720 --> 0:07:51.720 It was interesting and yesterday when we had Scale AI 0:07:51.880 --> 0:07:54.040 on and he was saying there's a lot of AI 0:07:54.200 --> 0:07:56.920 tourists is what he's calling them, not much actually being 0:07:56.920 --> 0:08:00.240 applied in the market right here right now. But are 0:08:00.280 --> 0:08:02.920 you thinking along the hype or the reality side of things? 0:08:03.600 --> 0:08:06.400 Well, I think it's interesting in your case, Sylvia, because 0:08:06.400 --> 0:08:10.520 Defiance operates the Defiance quantum etf right, real emphasis on 0:08:10.960 --> 0:08:14.840 those companies' best position to take advantage of developments and 0:08:14.880 --> 0:08:16.960 machine learning and quantum computing. 0:08:17.600 --> 0:08:19.320 It's not performed as well. 0:08:19.360 --> 0:08:21.679 Here today is an as that one hundred down thirty 0:08:21.720 --> 0:08:26.520 percent last year. What within that basket has worked well 0:08:26.560 --> 0:08:28.640 for you and what has let you down. 0:08:30.000 --> 0:08:30.280 Well? 0:08:30.320 --> 0:08:32.240 So we kind of look at it a little bit differently. 0:08:32.320 --> 0:08:34.640 I think what we try to you know, the way we. 0:08:34.600 --> 0:08:37.760 Try to really cater this product and build this product 0:08:37.800 --> 0:08:40.480 is to give investors access to everything that has to 0:08:40.559 --> 0:08:44.679 do with the future of technology, machine learning, and artificial intelligence. 0:08:44.720 --> 0:08:47.040 So in order to do that, you have to include 0:08:47.200 --> 0:08:49.880 the big generals that are performing well, like the Apples 0:08:49.880 --> 0:08:55.040 and Microsoft's you know, ibms NA videos on the semiconductor side, 0:08:55.080 --> 0:08:56.600 and then you also have to include some of the 0:08:56.640 --> 0:08:59.640 smaller companies like Amberella for example, that will be part 0:08:59.640 --> 0:09:01.720 of the you know, the visual aspect of it. 0:09:01.800 --> 0:09:03.800 So there are a lot of things that have to 0:09:03.840 --> 0:09:05.959 happen in order for AI to work right. 0:09:06.000 --> 0:09:08.240 You need to be able to gather data, you need 0:09:08.280 --> 0:09:10.640 to be able to process data. You need a computer 0:09:10.720 --> 0:09:12.600 that's fast enough to do it. So that's you know, 0:09:12.600 --> 0:09:15.200 that's why it's called quantum, right. Quantum computing and the 0:09:15.240 --> 0:09:18.240 speed to sort of process and use all of the 0:09:18.320 --> 0:09:19.720 data is really the key to. 0:09:19.640 --> 0:09:20.679 All of this working right. 0:09:20.679 --> 0:09:22.920 And we already hear the criticisms of that that you 0:09:22.960 --> 0:09:26.520 know AI or you know the initial Bard presentations. 0:09:25.960 --> 0:09:27.920 About bad data, right, so you need all of that. 0:09:28.240 --> 0:09:30.920 So what performed badly well, you know, high interest rates 0:09:30.920 --> 0:09:33.880 and small cap growth stocks perform badly. But when they 0:09:33.880 --> 0:09:37.400 do really, really well is when this innovation truly starts 0:09:37.400 --> 0:09:40.319 to you know, transform industries and take off interest rates 0:09:40.360 --> 0:09:43.080 start coming down, and then you get the whole basket performance. 0:09:43.080 --> 0:09:44.640 For you put the hedge right now or the top 0:09:44.720 --> 0:09:47.160 leading tech companies that are guiding it forward. 0:09:49.080 --> 0:09:51.719 Defines quantum ETF up around twelve percent year today. I 0:09:51.720 --> 0:09:53.319 think the a's that one hundreds up and twenty two 0:09:53.320 --> 0:09:56.760 percent of something single names. What are the companies that 0:09:56.880 --> 0:09:59.080 excite you most of what you just outlined? 0:10:00.559 --> 0:10:03.960 Yeah, so I mean for now, just because of the 0:10:04.000 --> 0:10:06.839 type of market environment you know we're in, I'm sort 0:10:06.880 --> 0:10:09.600 of sensitive to that. So I'll kind of give you 0:10:09.640 --> 0:10:14.400 the obvious ones. I think Microsoft, I think Google, Apple, Amazon, Navidia, 0:10:14.559 --> 0:10:17.160 A M D on semiconductor. You know, all of these 0:10:17.160 --> 0:10:20.760 companies I name first because right now, they have balance sheets, 0:10:20.760 --> 0:10:22.680 they have cash, they can invest in R and D, 0:10:23.040 --> 0:10:25.320 they can do M and A acquisitions, and you know, 0:10:25.440 --> 0:10:27.680 take over companies like in the case of you know, 0:10:27.720 --> 0:10:29.440 Microsoft big investment in open. 0:10:29.240 --> 0:10:31.360 Ai to get chat GBT going, right. 0:10:31.559 --> 0:10:33.680 So I think that right now they're the companies that 0:10:33.720 --> 0:10:36.040 are going to be sort of the performers and this 0:10:36.320 --> 0:10:38.240 you know, kind of the safest place to sit. 0:10:38.760 --> 0:10:40.439 But some of the smaller. 0:10:40.080 --> 0:10:42.480 Plays out there, I think again, like an umbrella we 0:10:42.559 --> 0:10:44.480 just haven't heard about for a really long time, or 0:10:44.520 --> 0:10:46.160 Eve going to pound here. You know, you saw them 0:10:46.200 --> 0:10:48.160 crush earnings. I think these companies are going to start 0:10:48.160 --> 0:10:49.280 coming to the forefront in the. 0:10:49.240 --> 0:10:51.400 Next couple of years as they. 0:10:51.320 --> 0:10:54.400 You know, kind of improve and exceed expectations with their 0:10:54.400 --> 0:10:55.679 innovations that they're working on. 0:10:55.880 --> 0:10:59.719 And Sylvia taking a more macro perspective, can those light 0:10:59.840 --> 0:11:03.440 now aims outperform even if we see growth continue to 0:11:04.000 --> 0:11:06.120 even slow down if we worry that we do hit 0:11:06.240 --> 0:11:08.840 some sort of recessionary environment because the jury seems to 0:11:08.840 --> 0:11:10.440 be out as to whether the tech is some sort 0:11:10.440 --> 0:11:14.160 of safety play in this environment or whether it is 0:11:14.200 --> 0:11:16.520 beholden to macrowing economic environments. 0:11:17.280 --> 0:11:18.800 Well, I think it's a great question. 0:11:18.880 --> 0:11:21.760 And I think that all of the you know, major 0:11:21.840 --> 0:11:25.680 kind of indices and sectors and the top performing stocks 0:11:25.679 --> 0:11:27.680 in those sectors are susceptible to what happens in the 0:11:27.679 --> 0:11:30.560 macro environment. And you know, that feels like an obvious answer, 0:11:30.640 --> 0:11:32.199 but it's sort of not. I mean, we have a 0:11:32.280 --> 0:11:34.560 unique situation now where we have a FED that has 0:11:34.640 --> 0:11:36.920 you know, kept hitting the gas pedal and rising rates 0:11:36.920 --> 0:11:39.720 and slowing down growth. So there are very few companies 0:11:39.760 --> 0:11:42.840 that can truly, truly withstand that and come out. 0:11:42.720 --> 0:11:44.240 With you know, double digit performance. 0:11:44.280 --> 0:11:47.040 But we have to believe that we're getting towards the 0:11:47.120 --> 0:11:47.559 end of that. 0:11:47.600 --> 0:11:49.480 You know, we saw a PPI member. 0:11:49.640 --> 0:11:53.240 It looks like inflation is coming down across all sides CPI, PPI, 0:11:53.640 --> 0:11:55.920 we're seeing, you know, kind of grow slow. So if 0:11:55.960 --> 0:11:58.160 the FED kind of gives us a little bit of 0:11:58.200 --> 0:12:00.720 relief there and these companies that have stood all of 0:12:00.760 --> 0:12:03.640 this can now actually start to spend and increase and 0:12:03.640 --> 0:12:04.520 speed up there R and. 0:12:04.480 --> 0:12:05.320 D and roll out. 0:12:05.480 --> 0:12:07.120 You know, I think it will be a different story, 0:12:07.120 --> 0:12:09.760 and I think tech will need the market. We need 0:12:09.800 --> 0:12:11.880 tech right. We don't have enough people filling jobs. We 0:12:11.880 --> 0:12:14.200 don't have enough factories that can you know, kind of 0:12:14.240 --> 0:12:18.319 meet the supply and demand function out there. We had 0:12:18.320 --> 0:12:20.680 so many inventory issues. So tech solves all of this. 0:12:20.760 --> 0:12:23.400 So if anything, the need for tech and increase of 0:12:23.840 --> 0:12:25.360 spending there is going to increase. 0:12:25.480 --> 0:12:28.240 And what about you know, we talk a lot about 0:12:28.240 --> 0:12:30.160 the FED, which is a central bag to the world. 0:12:30.559 --> 0:12:31.720 What about world stocks? 0:12:31.720 --> 0:12:34.160 So what about I looked at Quantum has orangine there 0:12:34.200 --> 0:12:36.760 of course the French company Airbus. How much are you 0:12:36.840 --> 0:12:42.040 thinking about positioning yourself globally? Are there winners in Asia 0:12:42.080 --> 0:12:43.360 as well that you want to be owning? 0:12:44.559 --> 0:12:44.800 Yeah? 0:12:44.840 --> 0:12:47.320 Absolutely, And this is very much a global story, right, 0:12:47.360 --> 0:12:50.320 I mean it's it's been, you know, very much discussed 0:12:50.360 --> 0:12:53.920 that the US isn't a race towards artificial intelligence, for example, 0:12:54.040 --> 0:12:54.720 versus China. 0:12:54.840 --> 0:12:55.959 So you are going to. 0:12:55.880 --> 0:12:58.280 Have some companies in China that are leading the charge there, 0:12:58.280 --> 0:12:59.880 and you're going to have some companies in the US 0:13:00.000 --> 0:13:01.880 that are, you know, kind of catching up there. But 0:13:01.920 --> 0:13:04.560 over all, the ideas to get this global exposure to 0:13:04.640 --> 0:13:08.280 the top companies that are investing in machine learning, AI 0:13:08.400 --> 0:13:09.480 and quantum computing. 0:13:09.679 --> 0:13:13.280 All right, thanks to Sylvia Jablonski's CEO and CIL the 0:13:13.360 --> 0:13:14.400 defiant ETFs. 0:13:14.480 --> 0:13:20.040 Good to see. 0:13:23.559 --> 0:13:26.000 We take a number of steps to try and increase 0:13:26.040 --> 0:13:27.400 the factuality of the information. 0:13:27.840 --> 0:13:30.640 The first that we do is we train our models. 0:13:30.480 --> 0:13:33.160 To actually understand what is the information on the web 0:13:33.160 --> 0:13:35.320 that corroborates it, that backs up the information, and if 0:13:35.320 --> 0:13:37.880 we can't corroborate it, then we will not output. 0:13:37.480 --> 0:13:39.520 It, and you just won't show We just want to 0:13:39.559 --> 0:13:40.199 do the US. 0:13:40.559 --> 0:13:42.280 We won't show a piece of information. And if we 0:13:42.360 --> 0:13:46.080 think a particular query is unsafe, it's harmful, then we 0:13:46.080 --> 0:13:48.080 will also not provide an AI power. 0:13:48.080 --> 0:13:54.920 At Snapshot, Liz Read Carolina, twenty year veteran of Google, 0:13:55.400 --> 0:13:58.280 we wanted to know what search with generative AI looks like. 0:13:58.440 --> 0:14:00.920 They went on stage and demoed it and it became 0:14:01.040 --> 0:14:04.360 really clear what it actually looks like to the consumer. 0:14:04.760 --> 0:14:08.240 But what's so interesting about the path that Alphabet and 0:14:08.240 --> 0:14:10.800 Google are taking is a cautious one that almost sort 0:14:10.800 --> 0:14:12.800 of the antiphasis to the way in which Microsoft has 0:14:12.800 --> 0:14:15.760 folded it in with being they're really aware that this 0:14:15.840 --> 0:14:17.559 can't go wrong. I thought it was interesting that they're 0:14:17.600 --> 0:14:18.400 calling it a lab. 0:14:19.920 --> 0:14:22.720 Yes, so just like with BARD, they will do a 0:14:22.920 --> 0:14:28.280 waitlisted slow roll out for access testing initially, but we 0:14:28.400 --> 0:14:31.000 also saw how it relates to docs and sheets and 0:14:31.080 --> 0:14:32.480 everyday things that people use. 0:14:32.520 --> 0:14:35.120 And you look at the market reaction. They've really cheered it. 0:14:35.240 --> 0:14:39.520 So slow rollout, but substantive evidence of progress. Here's another 0:14:39.560 --> 0:14:42.440 Google story for you. By the way, Caroline, SAP and 0:14:42.480 --> 0:14:46.640 Google Cloud just announced an extensive expansion of their partnership 0:14:46.840 --> 0:14:49.400 to make enterprise data more open and valuable and to 0:14:49.480 --> 0:14:53.360 advance enterprise AI development. I spoke all about that with 0:14:53.400 --> 0:14:56.200 the Google Cloud CEO Thomas Currian and the SAP CEO 0:14:56.560 --> 0:14:57.880 Christian Client earlier this week. 0:14:57.920 --> 0:15:01.960 Have a listen, sales teams can sell the new offering. 0:15:02.360 --> 0:15:04.600 It will happen, you know, on one paper, with one 0:15:04.600 --> 0:15:09.040 commercial offering, so we actually simplifying it. And actually for us, 0:15:09.080 --> 0:15:12.400 it was actually very important that it comes with an 0:15:12.440 --> 0:15:14.600 attractive price because this has. 0:15:14.480 --> 0:15:16.400 To be a win win win situations. 0:15:16.720 --> 0:15:19.480 Of course, yeah, we want to give our customers more 0:15:19.520 --> 0:15:22.880 reasons to go to SAP and Google, but of course 0:15:22.920 --> 0:15:26.520 we also want to offer this new solution at a 0:15:26.640 --> 0:15:28.520 very attractive price point. 0:15:29.320 --> 0:15:31.440 And Thomas, we come to you and ask how does 0:15:31.480 --> 0:15:33.920 Google Cloud make money from this arrangement? 0:15:35.040 --> 0:15:39.000 Most importantly, I would say, what's the value that customers 0:15:39.000 --> 0:15:42.240 get out of this? Customers get the value they can 0:15:42.280 --> 0:15:46.640 improve their understanding of customer, of their end customers or helping, 0:15:46.720 --> 0:15:51.320 for example, Reschmall in the luxury industry, do that customers 0:15:51.360 --> 0:15:54.800 can improve the way they manage inventory. The work that 0:15:54.880 --> 0:15:58.440 are two organizations that done at home depot, customers can 0:15:58.480 --> 0:16:03.120 be more recise in responding. For example, if you're e 0:16:03.160 --> 0:16:08.040 commerce company and you're making commitments to deliver products on time, 0:16:08.600 --> 0:16:12.840 as we've done with Marcado Libre, customers can plan better 0:16:13.240 --> 0:16:16.760 as our two organizations have helped Motiformed. So the value 0:16:16.840 --> 0:16:21.640 that we both bring is helping people use their business 0:16:21.680 --> 0:16:26.560 systems SAP and Google cloud their data and to transform 0:16:26.640 --> 0:16:29.360 the way that this of customers and manage their business. 0:16:29.840 --> 0:16:33.520 That's what drives value and that's what brings customers to 0:16:33.520 --> 0:16:34.360 both of us. 0:16:35.040 --> 0:16:39.360 Christian In the competitive landscape for corporate applications, you look 0:16:39.360 --> 0:16:43.120 at what Microsoft's done to move early to bring AI 0:16:43.440 --> 0:16:46.480 into corporate applications. I'm thinking about of course Dynamics three 0:16:46.560 --> 0:16:50.880 sixty five Copilot is one example. How much of this 0:16:51.000 --> 0:16:55.000 arrangement is you being conscious of that competitive landscape right now? 0:16:56.160 --> 0:16:59.800 And a good piece is at a lot of partners, 0:17:00.320 --> 0:17:05.320 especially in AI, they are reaching out to SAP because 0:17:05.400 --> 0:17:08.879 I feel a lot of companies have one challenge today 0:17:09.359 --> 0:17:13.439 they are buying AI technology, but what about adoption? And 0:17:13.440 --> 0:17:16.680 now thick about it, eighty percent of the world's transactions 0:17:16.680 --> 0:17:19.840 are touched by an SEP system. So if you're going 0:17:19.880 --> 0:17:24.480 to embed machine learning and going forward generative AI in 0:17:24.520 --> 0:17:28.520 our products, you're immediately going to see high adoption and 0:17:28.560 --> 0:17:32.200 you immediately unfold a lot of value for the customers 0:17:32.440 --> 0:17:35.640 in their business processes. And this is why we are 0:17:35.680 --> 0:17:39.159 so excited about AI and about this partnership, because you 0:17:39.200 --> 0:17:43.399 also need high quality data to really pring AI to 0:17:43.480 --> 0:17:44.200 the next level. 0:17:45.240 --> 0:17:48.760 And to that point, Thomas, both parties are expressing confidence 0:17:48.920 --> 0:17:53.720 that open data cloud is going to basically spur innovation 0:17:54.359 --> 0:17:55.560 in the field of AI. 0:17:55.840 --> 0:17:56.760 What does that look like. 0:17:58.960 --> 0:18:02.560 First of all, we've fundamentally believe data has a critical 0:18:02.600 --> 0:18:07.240 asset for a company, and it's both SAPA and Google's 0:18:07.359 --> 0:18:10.400 joint belief that that should be open so people can 0:18:10.520 --> 0:18:14.680 use whatever tools they want to access the data. Second, 0:18:15.480 --> 0:18:20.399 we are unlocking data and simplifying the use of that 0:18:20.560 --> 0:18:24.800 data in the context of business processes that large customers have. 0:18:24.880 --> 0:18:28.760 I mean, the world's largest, most sophisticated companies in virtually 0:18:28.760 --> 0:18:33.119 every industry round SAP, many are using Google Cloud. The 0:18:33.320 --> 0:18:37.960 combination is unlocking how AI is applied every day. Think 0:18:38.000 --> 0:18:41.680 about a merchandising manager in e commerce trying to figure 0:18:41.720 --> 0:18:44.640 out how much inventory and what product do I maintain 0:18:44.680 --> 0:18:48.399 in what location? A supply chain manager trying to figure 0:18:48.400 --> 0:18:51.680 out where do I need to put capacity in which country. 0:18:52.240 --> 0:18:55.439 Every one of those customers and many more will be 0:18:55.480 --> 0:18:59.960 able to use our joint solution to open up how 0:19:00.160 --> 0:19:03.439 AI is going to help them every day in their 0:19:03.520 --> 0:19:04.359 day to day work. 0:19:04.960 --> 0:19:08.520 Well, on that note, Thomas, are there any specific verticals 0:19:08.560 --> 0:19:11.960 where you expect this relationship with SAP to help you 0:19:12.080 --> 0:19:14.719 do better than AWS and azure? 0:19:16.000 --> 0:19:23.240 Well, we have very strong partnerships in many verticals manufacturing, automotive, retail, healthcare, 0:19:23.920 --> 0:19:27.800 supply chain, and logistics. These are all different industries in 0:19:27.800 --> 0:19:31.119