Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Ed Lovelow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up, Bloomberg Reporting. President Trump
Speaker 2: moves to have tech companies pay for surging energy prices
Speaker 2: following the rise of AI data centers plus AI coding
Speaker 2: startup RECLT could hit evaluation of nine billion dollars in
Speaker 2: a new round of funding. We have the details, and
Speaker 2: we'll be joined by the Chairman of the Federal Trade
Speaker 2: Commission for a conversation on antitrust, consumer protection, and AI
Speaker 2: regulation that is later this hour. Our top story to
Speaker 2: Trump administration and governors from Northeastern states are taking an
Speaker 2: unprecedented step to get tech companies to pay for surging
Speaker 2: energy price is as data centers gobble up more electricity,
Speaker 2: the administration will direct the country's largest grid operator, PJAM
Speaker 2: Interconnection to hold an emergency power auction. That's according to
Speaker 2: a White House official. Those companies will be able to
Speaker 2: bid on fifteen year contracts for new electricity generation, which
Speaker 2: could support potentially fifteen billion dollars worth of new power plants.
Speaker 2: To fuel the AI boom. Also, according to the official Bloomberg,
Speaker 2: Senior Tech editor Mike Shepherd joins us, Now, what do
Speaker 2: we need to know here, shep, I mean, this is
Speaker 2: very much in the consciousness of this administration, but also
Speaker 2: at the forefront of what the hyperscalers are thinking about too.
Speaker 3: Bill really is in a lot of ways, while the
Speaker 3: administration is trying to find a way to make the
Speaker 3: tech companies pay for some of this new power that
Speaker 3: they would need to sustain and keep the AI boom going,
Speaker 3: they are also giving the tech industry, in large part,
Speaker 3: especially the biggest companies the hyperscalers, what they've wanted. They
Speaker 3: are willing to pay for some of their extra power generation,
Speaker 3: but they need somehow the wherewithal from the grid operators
Speaker 3: themselves to add that infrastructure. So this would provide some
Speaker 3: stability in the funding, and it would also provide a
Speaker 3: slug of money for the grid operator in this case
Speaker 3: PGM Interconnection, to start laying the groundwork for some of
Speaker 3: that infrastructure. Now, what's interesting about this is PGM actually
Speaker 3: runs these kinds of so called emergency auctions on a
Speaker 3: somewhat regular basis, and they almost have one in the
Speaker 3: pipeline for this very need for the question of data centers,
Speaker 3: but they usually go on twelve month intervals, not fifteen
Speaker 3: year intervals, so this really would provide pricing stability for
Speaker 3: those buyers. Now, one other question, though ed, is how
Speaker 3: the grid operators will proceed with this, and PGM was
Speaker 3: not invited to the White House event. We are expecting
Speaker 3: an announcement shortly from Interior Secretary Doug Bergham and Energy
Speaker 3: Secretary Chris Right, and it's unclear exactly how enthusiastically they
Speaker 3: will be embracing this.
Speaker 2: The other big news overnight, the United States and Taiwan
Speaker 2: have reached a deal to lower tariffs on some goods
Speaker 2: but critically cooperate and co invest in semiconductor capacity.
Speaker 4: What do we need to know, they might.
Speaker 3: Well, what's really key in this deal is that not
Speaker 3: only are we seeing the tariff rate on goods from
Speaker 3: Taiwan dropped to fifteen percent from the current twenty percent,
Speaker 3: just as importantly, we are seeing the outlines of a more,
Speaker 3: much more significant investment in American semiconductor of manufacturing. And
Speaker 3: the announcement from the White House didn't name any names
Speaker 3: in terms of companies, but you and I our heads
Speaker 3: are going to go right to Taiwan Semiconductor Manufacturing Company.
Speaker 3: They are the top maker of AI chips and they
Speaker 3: are really the leading edge of vanguard of tai chip
Speaker 3: production in Taiwan. And under this deal, we have been
Speaker 3: told by sources, TSMC would commit to building for additional
Speaker 3: semiconductor manufacturing plants here in Arizona are through the twenty thirties.
Speaker 3: And that's on top of six plants that they have
Speaker 3: already planned to build in two advanced packaging pros. So
Speaker 3: we're looking for additional investment and the total added investment
Speaker 3: would be as much as one hundred billion dollars, and
Speaker 3: that is what we're hearing from Comerace Secretary Howard Lutnek.
Speaker 2: TSMC's US sisters shares hitting record highs on track for
Speaker 2: their best week since June, and it has a lot
Speaker 2: of momentum to do with their earnings print as well.
Speaker 2: But of course cooperation with the US members. Mike Sheppard,
Speaker 2: thank you very much. Both of those stories that that
Speaker 2: might just outlined are playing out in markets. Let's start
Speaker 2: with the energy auction piece. First, Utilities probably the second
Speaker 2: biggest decliner as a group within the s and P
Speaker 2: five hundred SMP Utilities Index down seven ten percent, and
Speaker 2: within that you see single names like Constellation, like Vistra
Speaker 2: with very market almost double digit declines in the session.
Speaker 2: The big story on semiconductors still is the bottleneck that
Speaker 2: is memory. But the bottleneck in memory drives up the
Speaker 2: main players. Micron again another name in equity markets. So
Speaker 2: this pushing record highs. It is on track for its
Speaker 2: eighth straight week of gains, eight straight weekly gain. That's
Speaker 2: his best run since twenty sixteen.
Speaker 4: Price is a high.
Speaker 2: Supply is tight, and that's good when you're one of
Speaker 2: the main players. Let's talk more about markets. Martin Norton,
Speaker 2: mpower chief investment strategist joins us now, and I want
Speaker 2: to start with the memory bottleneck.
Speaker 4: It seems to me to be severe justin in the
Speaker 4: control room.
Speaker 2: Let's get that chart ready on DDR four, because as
Speaker 2: we enter the new year, this has become a great
Speaker 2: story for all parts of the data center supply chain.
Speaker 4: How are you looking into that, Marta.
Speaker 5: Well, I think it seems like as we're entering twenty
Speaker 5: twenty six, we're reaching that phase that we had anticipated
Speaker 5: within the AI life cycle, and that's the bottleneck phase
Speaker 5: where the building and the demand and the supply are
Speaker 5: exponential moving higher, and that's putting us at a point
Speaker 5: where we're facing constraints and running headlong into them every
Speaker 5: which way we turn. And I think the memory element
Speaker 5: is a big one, not just because it relates to
Speaker 5: the AI trade, but because it has ramifications outside of AI.
Speaker 5: So I think that's something that we're going to need
Speaker 5: to watch in earning season to get a sense for
Speaker 5: what that looks like, not just for the AI trade,
Speaker 5: but for some of these other areas like PC's and
Speaker 5: get a sense for how folks are navigating that.
Speaker 2: There are many still grappling with the demand supply supply
Speaker 2: demand equation.
Speaker 4: Three things have happened. We went through memory.
Speaker 2: PGM actually downgraded and cut its peak time demand forecasts
Speaker 2: because a lot of the data centers aren't actually being
Speaker 2: built right. There are issues with construction and actually securing
Speaker 2: electricity supply, and then there's the actions of this administration.
Speaker 2: Is that any of that giving you kind of paused
Speaker 2: for thought on how intact cycle.
Speaker 5: Is well, I guess, just taking say the downgrade of
Speaker 5: energy there, I think one consideration is that timelines have
Speaker 5: always been in flux. When you look at what it
Speaker 5: takes to build a data center, the permitting that goes
Speaker 5: along with it, the construction, all the different elements. It's
Speaker 5: a multi year proposition, and so it's no surprise that
Speaker 5: it's hard to really understand when exactly the data center
Speaker 5: is coming online. So I think, you know, the progression
Speaker 5: creates clarity. I don't know if that's a change to
Speaker 5: the AI narrative. And then of course you have President
Speaker 5: Trump and the affordability issues running headlong into the AI trade,
Speaker 5: so another factor to consider. But I guess what we'll
Speaker 5: be looking for in earning season is does the boondazzel continue? Yes,
Speaker 5: we have all these factors that I think create moments
Speaker 5: of doubt for investors over the course of twenty twenty six,
Speaker 5: But are we seeing the boondazzel continue? Can we take
Speaker 5: comfort from the idea like we did with with Taiwan Semi,
Speaker 5: that Capex continues, that revenues continue, And that's what I
Speaker 5: think is really the focus as we as we move
Speaker 5: into Q four earning season.
Speaker 2: Let's go back to our top story, Bloomberg reporting that
Speaker 2: the White House, in association with governors from the northeast
Speaker 2: wants to force an auction for the data center operators.
Speaker 2: We talk about the heavy hand of the White House
Speaker 2: or Washington, but how heavy is that hand?
Speaker 4: To your mind, Well, it's.
Speaker 5: We're still I think somewhat I mean, broadly speaking around
Speaker 5: the affordability issues and a trial balloon phase right where
Speaker 5: different ideas are suggested and we see how the market
Speaker 5: anticipates and how we actually implement this those ideas. This
Speaker 5: one seems a little bit more fully baked, simply because
Speaker 5: it's coming not just from truth Social but from the
Speaker 5: administration officials more broadly, and it's you know, to Bloomberg's reporting,
Speaker 5: it's not just focused on the affordability issue, but really
Speaker 5: directed at the heart of the need of AI, which
Speaker 5: is bringing energy online. So it seems as though it's
Speaker 5: serving multiple per P says. What will be interesting to
Speaker 5: see is how the AI providers respond to this. Is
Speaker 5: this considered a good news, does it bring on and
Speaker 5: leieve some constraint for them, or is there frustration on
Speaker 5: what it could mean for their margins? And I think
Speaker 5: that's something we're going to need.
Speaker 4: To watch your margins.
Speaker 2: We'll find out about, as you said, during earnings, which
Speaker 2: start in earnest next week, can we discuss that a
Speaker 2: bit more marked to finish. You know, where are you
Speaker 2: looking within the earnings window? What kind of data points
Speaker 2: are going to drive your thesis for this coming year
Speaker 2: in the tech sector.
Speaker 5: Well, we're in an AI moment of doubt as we speak.
Speaker 5: I mean, really since Oxtober twenty ninth, we've seen this
Speaker 5: kind of malaise hit AI names as folks start to
Speaker 5: worry about some of the very issues we're discussing, and
Speaker 5: also including things like circular financing and all the big
Speaker 5: spending that we're seeing. And so I think at a
Speaker 5: very high level, we're still going to look for those
Speaker 5: things around revenue, for those things around cafex, to just
Speaker 5: get a sense for whether the company's confidence remains and
Speaker 5: whether they're continuing to improve their collection of rents from
Speaker 5: this space. I also think we're going to want to
Speaker 5: look more broadly at the overall market and get a
Speaker 5: sense where are we seeing AI implementation? And I think
Speaker 5: that can mean looking at what folks are spending on clouds, costs,
Speaker 5: looking at what they're spending on software. Are we beginning
Speaker 5: to see more than just general purpose implementation? I think
Speaker 5: that's something that we're going to need to watch as well.
Speaker 5: So I think in this earning season it's really casting
Speaker 5: a wide net and as always listening to guidance and
Speaker 5: how companies are planning to navigate the challenges that they're facing.
Speaker 4: Martin Awson, Empire, thank you very much.
Speaker 2: Now coming up, AI coding startup Replic could be reaching
Speaker 2: evaluation of nine billion dollars. We have more in the reporting. Next,
Speaker 2: this is Bloomberg Tech. Open Ai and Microsoft fail to
Speaker 2: avoid a try over. Elon Musk claims that open ai
Speaker 2: betrayed its founding mission as a public charity when it
Speaker 2: took billions in funding from the software giants and made
Speaker 2: plans to operate as a for profit business. The case
Speaker 2: was ordered to proceed to a jury trial in late April.
Speaker 2: Another top story AI coding startup replet It's nearing a
Speaker 2: deal for a new round of funding that would roughly
Speaker 2: triple its valuation to nine billion dollars. That's according to sources.
Speaker 2: Let's get the details with bloomberg'sventure capital reporter Natasha Mascaraine
Speaker 2: is part of the team that broke the story.
Speaker 4: Let's start with the round.
Speaker 2: What do we know about the size, Who's participating and
Speaker 2: the emphasis on that big jump in valuation totally.
Speaker 6: So the last time we reported that replat was raising
Speaker 6: it was only four months ago in September, at a
Speaker 6: three billion valuation. Now we're hearing that it's at a
Speaker 6: nine billion valuation, gone to raise four hundred million from
Speaker 6: an existing investor, led round Georgian, and we're not surprised.
Speaker 6: Back to back fundraising is more common than not an
Speaker 6: AI startup to these, and Replet as a coding company
Speaker 6: is no exception.
Speaker 2: It is more common than not, and so is a
Speaker 2: discussion around vibe coding and the different coding platforms that
Speaker 2: are out there. I guess the best place to go
Speaker 2: next is is why there's an attraction to replt and
Speaker 2: why it's different from the others.
Speaker 3: Yeah.
Speaker 6: When I think about coding startups, I think about two buckets.
Speaker 6: I think about the ones that are focusing on selling
Speaker 6: to enterprises, the big corporations. I think that's cursor and anthropic.
Speaker 6: Then there's a second bucket, and that's where I really
Speaker 6: place Replet. It's focusing on getting the non developer to
Speaker 6: use vibe coding at their organization, and it's a big
Speaker 6: theme I'm hearing as I asked CEOs what they're thinking
Speaker 6: about for twenty twenty six. They want you to prototype
Speaker 6: and not be living in your docs and decks too much.
Speaker 6: So when I think about investor interest in Replet, it's
Speaker 6: really a bet on getting the non technical coders start
Speaker 6: shipping apps and trying it themselves.
Speaker 2: The Attasha Mascarinus making the Bloomberg Tech debut starting twenty
Speaker 2: twenty six strong, what do we expect? What is the
Speaker 2: Replet round signal for the fundraising environment for AI? My
Speaker 2: hunch is that you're going to be pretty busy.
Speaker 4: It's going to be a very busy year.
Speaker 7: You know.
Speaker 6: When I think about what used to be the standard
Speaker 6: in Silicon Valley, I used to think you need an
Speaker 6: outside investor to value each new round, to give you
Speaker 6: sort of a new mark in Silicon Valley of being
Speaker 6: deserving of that valuation. For me, now that's a retired concept.
Speaker 6: Seeing Georgian come in and back an existing investment at
Speaker 6: that higher evaluation is considered them making a smart and
Speaker 6: savvy move with asymmetric information. So I expect to see
Speaker 6: a lot more existing investors marking up their stakes, looking
Speaker 6: to double down on their big bets and get bigger
Speaker 6: chunks of those startups, because we definitely know they're going
Speaker 6: to be raising more and maybe diluting that ownership as
Speaker 6: time goes on.
Speaker 2: Bloomberg's and Tash Mascarinus thank you. Another story in the
Speaker 2: world of private markets, German investor Digital Transformation Capital Partners
Speaker 2: is gearing up to raise what would be Europe's largest
Speaker 2: ever venture capital fund focused on defense startups, with the
Speaker 2: target of about five hundred and eighty million US dollars.
Speaker 2: Tech reporter Christina Kuriosoglu has been following the story. Joins
Speaker 2: us now from Berlin. Tell me about the fund, you know,
Speaker 2: the size is the headline, but the players and what
Speaker 2: they hope to do with the money raised.
Speaker 4: Yeah.
Speaker 8: So TDCP is a firm that's Hamburg based and they
Speaker 8: will be looking at supply chains, materials, robotics and all
Speaker 8: kinds of things that are concerned with the defense infrastructure
Speaker 8: in Europe. And you know, the process here, it's been
Speaker 8: pretty slow. Russia's full scale invasion into Ukraine happened nearly
Speaker 8: four years ago, and just now we slowly see more
Speaker 8: and more funds being raised across Europe that are looking
Speaker 8: at at the tech Even though that conflict has shown
Speaker 8: how important drones become and what kind of like modern warfare.
Speaker 8: Questions have come.
Speaker 2: Up that there are companies and telling out there, but
Speaker 2: in your reporting, do you get a sense for why
Speaker 2: it's been so slow if the techs there in the
Speaker 2: capital is finally there as well, Yes.
Speaker 8: So a couple of reasons, of course. So what we've
Speaker 8: been hearing from our sources is that, for example, DTCPS
Speaker 8: funds now is being anchored by Porsche, the family holding,
Speaker 8: and by Deutsche Telecom and this marks a massive shift
Speaker 8: in mentality that these companies are now investing in a
Speaker 8: fund that potentially will back weapons systems. So private companies
Speaker 8: put a lot of restrictions on themselves when it came
Speaker 8: to weapon investments, and also public funds were very slow
Speaker 8: to adjust. And at the same time, you know, it's
Speaker 8: not just the companies, it's also a market question in
Speaker 8: terms of if you're looking to develop weapons and military
Speaker 8: then you need a founder that has the respective experience,
Speaker 8: and you also probably only have one customer, and that
Speaker 8: is the government or a government for that matter, and
Speaker 8: that's a tough customer to have because the procurement processes
Speaker 8: are slow and the you know, it's very complex, so
Speaker 8: I think to come back to DTCP, they kind of
Speaker 8: like broadened the space that they want to invest in
Speaker 8: in a bit to look at products that are being
Speaker 8: made for civilian and military technologies and for weapons, to
Speaker 8: kind of like circle around that question.
Speaker 2: Bloomberg Tech reporter Christina curious Oglu, Great to have you
Speaker 2: on the show, Thank you so much. Coming up the
Speaker 2: rise of humanoid robots and why Barclays says it could
Speaker 2: be the next two hundred billion dollar market.
Speaker 4: This is Blouemberg Tech.
Speaker 9: Just a few years ago. The robots here were kind
Speaker 9: of yankee.
Speaker 10: They were wobbly, and they had wires coming out of
Speaker 10: their head, and they looked like science experiments. And it's
Speaker 10: really fascinating to see just how quickly humanoids are turning
Speaker 10: it into a real product.
Speaker 2: That was Open Mind CEO Jan Liphart speaking of US
Speaker 2: at CEES, where humanoid robots dominated the conversation. This week,
Speaker 2: Barkley's published its forecast for the humanoid market, with expectations
Speaker 2: that it could grow to two hundred billion dollars by
Speaker 2: twenty thirty five. Here to break down that research is
Speaker 2: zonitza Tudor rover Barkley's Somatic FICC research team director. Really
Speaker 2: timely piece of research as well. And what is interesting
Speaker 2: is there's the two hundred billion dollar market forecast, but
Speaker 2: you identify two or three key factors about why you
Speaker 2: now see the commercial viability.
Speaker 4: What are those factors?
Speaker 11: Hello and Capornik, and thanks for having me on the show.
Speaker 11: AI is indeed getting very physical, and I think humanoid
Speaker 11: robots are the forefront of his strength. But I think
Speaker 11: the reason why the proposition is changing and why there's
Speaker 11: going to be demand for these robots is because the
Speaker 11: demographics of the war population is changing. The reality is
Speaker 11: that humans are getting older. I think by twenty fifty
Speaker 11: the share of people aged about sixty five is going
Speaker 11: to double. Also, humans don't really want to live in
Speaker 11: rural areas anymore. They want to be based in cities.
Speaker 11: But the factories and the manufacturing facilities are actually located
Speaker 11: outside of these cities, which creates a bit of a
Speaker 11: structural issue. And then let's not forget that.
Speaker 7: Workers' preferences are changing.
Speaker 11: So which means that they will be certain essential jobs
Speaker 11: yet undesirable which might not be sealed. And I think
Speaker 11: this is precisely where humanoid enter the picture. I think
Speaker 11: they could be taking on these repetitive jobs, this now dirty,
Speaker 11: potentially dangerous jobs of maintain productivity and producing efficiency gains
Speaker 11: for the industry as a whole.
Speaker 2: The main players in this field talk a lot about
Speaker 2: the labor shortage in particular manufacturing and heavy industry. You're
Speaker 2: saying it's going to be a two hundred billion dollar
Speaker 2: market by twenty thirty five. In your research, do you
Speaker 2: have any sense of how real the market is today,
Speaker 2: how many humanoids are actually out there in manufacturing contexts
Speaker 2: around the world in present day.
Speaker 11: The reality is that I think that humanoid robots are
Speaker 11: no longer confined to research labs. They're stepping out of
Speaker 11: the lab and they're getting into the real economy, into
Speaker 11: the real world. They are a couple of thousand humanoid
Speaker 11: robots already deployed on factory floors doing actual work in manufacturing,
Speaker 11: which I think is a natural starting place. Goes the
Speaker 11: jobs that are more structured, more easily defined, so it
Speaker 11: is the place to start for humanoids. But I think
Speaker 11: this is going to change in the next five to
Speaker 11: ten years as the technology matures and as this market
Speaker 11: picks up space. So I think I wouldn't be surprised
Speaker 11: that by twenty thirty five, when we actually project that
Speaker 11: the humanoids market is going to be as big as
Speaker 11: two hundred billion dollars, that we'll see tens of thousands,
Speaker 11: potentially even millions of humanoid robots.
Speaker 2: The supply chain for the humanoid robot is fascinating. I
Speaker 2: think a lot of emphasis at CES was on the
Speaker 2: breakthroughs in the models themselves, the ability to solve, in
Speaker 2: particular the real world data limitations. But you've got some
Speaker 2: interesting pricing you're talking about, like you know, per unit
Speaker 2: three million down to one hundred thousand, the economics changing
Speaker 2: fifteen thousand dollars for a humanoid robot. What's happening that
Speaker 2: gives you conviction that you'll see that change in the
Speaker 2: economics of a humanoid robot?
Speaker 3: Right?
Speaker 11: So, I think that there are a couple of things
Speaker 11: happening at the same time. First of all, over the
Speaker 11: past three to five years, we've seen really significant breakthroughs
Speaker 11: in cognitive AI models. But it's not only the AI
Speaker 11: that is getting better. The batteries are also getting better,
Speaker 11: more efficient, more powerful, and they also have been significant
Speaker 11: breakthroughs in high precision manufacturing and When I put all
Speaker 11: these three components together, the result is that the unit
Speaker 11: costs for producing humanoid robots is coming down. We estimate
Speaker 11: in our research that costs have been thirty have declined
Speaker 11: by thirty times over the past five years, from three
Speaker 11: million dollars per unit to one hundred thousand dollars per unit,
Speaker 11: and this means that the economics are getting optically more attractive.
Speaker 11: The use cases are expanding, and hence I think that
Speaker 11: the investment opportunity is also becoming more real and stronger.
Speaker 2: Right, very quickly, Zanita, who's ahead? We have fifteen seconds
Speaker 2: China or the United States here.
Speaker 11: I think it's going to be a tough competition. I think,
Speaker 11: for the moment if China, this is where we've seen
Speaker 11: most of the Roberts being deployed. But I think the
Speaker 11: US is quickly catching up.
Speaker 2: So I need to throw over Berkley to again out
Speaker 2: this week with the forecast that humanoid will be a
Speaker 2: two hundred billion dollar market by twenty thirty five. Thank
Speaker 2: you so much for joining us on the program. Now
Speaker 2: coming up an important conversation, We're going to be joined
Speaker 2: by the Chairman of the Federal Trade Commission to discuss antitrust,
Speaker 2: consumer protection, and AI regulation. A lot has happened this
Speaker 2: week with regards to the FTC. A conversation also about
Speaker 2: aqua hiers, which in the technology industry was a mainstay
Speaker 2: story of twenty twenty five.
Speaker 4: That conversation is next.
Speaker 2: This is what your markets look like, flat at the
Speaker 2: index level, outperformance in chips.
Speaker 4: This is Bloomberg Tech.
Speaker 2: Welcome to our Bloomberg TV and radio audiences around the world.
Speaker 2: A recurring theme of recent tech m and a has
Speaker 2: been deals to bring in talent in so called aquahiers.
Speaker 2: The Federal Trade Commission is taking notice. One member of
Speaker 2: the FTC worn Thursday that these quote creative deal structures
Speaker 2: could raise antitrust concerns. Let's discuss and delighted to welcome
Speaker 2: Andrew Ferguson, Chairman of the FTC, to the program. We
Speaker 2: cover the topic of aquahiers on Bloomberg Tech regularly. It
Speaker 2: was a mainstay story in twenty twenty five. When does
Speaker 2: a talent deal stop being a talent deal and become
Speaker 2: more than that, become a merger? What are the rules
Speaker 2: based approach that the FTC would take chairmen to look
Speaker 2: at that?
Speaker 12: Yeah, so we are examining look, aqui hiers have been around,
Speaker 12: especially in the sort of startup founder space, for a
Speaker 12: long time, and they've gotten bigger basically in the last
Speaker 12: ad men and a lot of people were of the
Speaker 12: view that these things were sort of being constructed in
Speaker 12: these big deals to try to escape you know, Hart
Speaker 12: Scott Rodino review, which is pre merger anti trust review
Speaker 12: in the United States, because the Biden administration was trying
Speaker 12: to block all deals, and I think generally they were
Speaker 12: that isn't you know, necessary anymore. We don't need clever
Speaker 12: workarounds for around anti trust review anymore because at the
Speaker 12: FTC under the Trump administration, you get a fair shake.
Speaker 9: I'm not saying your deal will go through.
Speaker 12: I've sued to block several deals this year and I've
Speaker 12: won those cases. But if your deal's not illegal, we
Speaker 12: get out of the way and sort of let the
Speaker 12: market take care of things. So we are beginning to
Speaker 12: examine that the HSR Act has a provision that says
Speaker 12: you're not allowed to structure deals in order to escape
Speaker 12: pre merger review. And so we are beginning to examine
Speaker 12: these actly hires to make sure that they aren't an
Speaker 12: attempt to get around HSR.
Speaker 9: Review.
Speaker 12: But the message I want to send sort of Silicon
Speaker 12: val and so the M and A infrastructure generally is
Speaker 12: you don't need to structure deals as a clever, you know,
Speaker 12: attempt to get around pre merger review. You'll get a
Speaker 12: fair shake at the FTC. Deal may not go through,
Speaker 12: but if your deal is legal, I will get out
Speaker 12: of your way very quickly. And if it's not, I'll
Speaker 12: take you to court and I'll fight to win there.
Speaker 12: We're not going to let the process be the punishment anymore.
Speaker 4: But jem, you know it is.
Speaker 12: It is important to us, to us to make sure
Speaker 12: that people aren't going to use clever deal.
Speaker 9: Structures to get around pre merger review.
Speaker 2: The language of clever or creative deal structures that I've
Speaker 2: cited at the beginning of our conversation was from your
Speaker 2: colleague and fellow commissioner Mark made or Right, who is
Speaker 2: speaking at a conference in California yesterday. I think what
Speaker 2: the industry hopes to understand from you is what the
Speaker 2: threshold is or what the set of rules would be
Speaker 2: where a hiring proposal situation should be reported to antitrust
Speaker 2: author It should be Yeah, as simple as that, it
Speaker 2: should be reported.
Speaker 12: Yeah, and you know, we are beginning to examine how
Speaker 12: these deals work. Aqui higher deal structures vary from deal
Speaker 12: to deal, and so there wouldn't necessarily be sort of
Speaker 12: a one size fits all rule, but we are beginning
Speaker 12: to examine these big aqui higher deals that raise a
Speaker 12: lot of attention so that we can understand when an
Speaker 12: aqui hier is in fact an acquisition that might be
Speaker 12: covered by the pre merger review laws and when it's not.
Speaker 9: And we need to understand them before.
Speaker 12: We're sort of out there telling people what the rules are.
Speaker 12: But this is you're right, this has become a big
Speaker 12: enough deal that we are beginning to work very closely
Speaker 12: at how these things work, including you know, determining whether
Speaker 12: we need to promulgate additional guidance here in the coming
Speaker 12: months about how we understand these aqui hiers.
Speaker 2: Is there a fact that that matters more to you,
Speaker 2: you know, the number of employees hired, or putting a
Speaker 2: value on the intellectual capital or the competitive advantage that
Speaker 2: such a transaction would give the.
Speaker 12: Aquara So the value that matters for HSR is set
Speaker 12: by the statute that's not really here or there, but
Speaker 12: the HSR Act applies to deals where assets or stock
Speaker 12: are being purchased, and that's what triggers HSR review. And
Speaker 12: so what we need to understand, which is why we're
Speaker 12: beginning to examine this question now, is when does an
Speaker 12: aqui hier you know, involve the sale of the acquisition
Speaker 12: of assets or stock in a way that would trigger
Speaker 12: the statute. Look, at the end of the day, I'm
Speaker 12: a lawyer and a law enforcer, and I enforced statutes,
Speaker 12: and those statutes have texts, and so it's my job
Speaker 12: to understand whether things happening in the marketplace trigger the
Speaker 12: text that Congress is actually passed for us. But that's
Speaker 12: what we're looking at. We're not trying to set sort
Speaker 12: of we wouldn't be setting like aqui hier rules generally,
Speaker 12: we would be looking at deals and trying to understand,
Speaker 12: you know, does this in fact involve the acquisition or
Speaker 12: sale of assets or stock and is anything being structured
Speaker 12: as an attempt to circumvent review. But you know, I'm
Speaker 12: not here to say this is what the rules are.
Speaker 12: There will be you know, hard and fast, clear rules.
Speaker 12: There aren't even for the ordinary deals. We've got the
Speaker 12: you know, the HSR Act and the HSR rules. But
Speaker 12: deal structure is even an ordinary in then a very
Speaker 12: widely and so we have to apply the text that Congress.
Speaker 9: Actually wrote to specific deals.
Speaker 12: But aqui hiers have become frequent enough and large enough
Speaker 12: that we are beginning to look at the appropriate way
Speaker 12: to apply the law that Congress actually adopted to aquihiers.
Speaker 9: I don't it's not my job.
Speaker 12: As an enforcer to sort of fit square pegs into
Speaker 12: round holes. But it is my job to make sure
Speaker 12: that the will of Congress, which is the will of
Speaker 12: the people at the end of the day, is being followed.
Speaker 12: And that's what we're here to try to do. We're
Speaker 12: trying to figure out how that applies in the case
Speaker 12: of aquehiers.
Speaker 2: CHAM and how common is this in the field of
Speaker 2: ofstficial intelligence or how often is this particular scenario, And
Speaker 2: crossing your desk from the AI industry.
Speaker 9: We've seen a couple in the last twelve months.
Speaker 12: My understanding is that the act we hire sort of structure,
Speaker 12: if you want to call it that, where you know,
Speaker 12: a firm acquires a lot of the talent and another
Speaker 12: firm is pretty old, has been going on for a
Speaker 12: long time, but it often involves very small firms, and
Speaker 12: I think the reason that a lot of people are
Speaker 12: starting to notice it is because now it involves much
Speaker 12: larger firms, and the sort of price being attached to
Speaker 12: obtaining the talent into licensing IP is in the billions.
Speaker 9: So I've definitely seen a couple in the.
Speaker 12: AI space this year, which is why has attracted a
Speaker 12: lot of the attention, and it's why we're beginning to
Speaker 12: try to examine how are these working and how does
Speaker 12: the law that Congress passed governing pre merger review actually
Speaker 12: apply here as well as the provision in the pre
Speaker 12: merger review law that says you can't structure deal in
Speaker 12: order to try to escape HSR review. So that is
Speaker 12: what we are trying to understand now. But certainly, I
Speaker 12: mean you are reported on them, you can read them
Speaker 12: about them on the Wall Street Journal. It's definitely true
Speaker 12: that there have been a couple of these big ones
Speaker 12: in the AI area.
Speaker 4: You're alive with.
Speaker 2: Us on Bloomberg Television, Bloomberg Radar around the world. We're
Speaker 2: speaking to Andrew Ferguson, Chairman of the FTC. I think
Speaker 2: the biggest case study of late which just to give
Speaker 2: an example of the structure is Nvidio and GROC because
Speaker 2: you know what in video CEO Jens Mung told me
Speaker 2: a couple of weeks ago is they hired about four
Speaker 2: hundred engineers, but it also included the licensing of the
Speaker 2: core technology at a twenty billion dollar value. But over
Speaker 2: a set time Horizon Grock exists as a company still,
Speaker 2: but with a focus on one of its business lines,
Speaker 2: that hiring and licensing of technology format. Is there anything specific.
Speaker 12: There, Chairman, Yeah, so I can't talk about specific deals
Speaker 12: or specific buttial investigations. As a law enforcer, you know,
Speaker 12: I have to maintain a lot of confidentiality about the
Speaker 12: work of the commission. But I mean, you know, that
Speaker 12: particular structure of the equahier was different from example, from
Speaker 12: the one that Meta conducted earlier in the year. These
Speaker 12: things vary pretty wildly.
Speaker 9: The terms of the.
Speaker 12: Aile I'm sorry, of the software and IP licensing can vary.
Speaker 12: The number of employees obtained in the transaction can vary.
Speaker 12: So we're trying to understand these things first of all,
Speaker 12: because the last thing I want to do is sort
Speaker 12: of blindly charge ahead with a bunch of you know,
Speaker 12: sort of pre determined assumptions and start trying to apply
Speaker 12: the law to something we don't understand. But it is
Speaker 12: very important to me, because it's very important to Congress
Speaker 12: that people not try to come up with ways to
Speaker 12: attempt to get around pre merger review.
Speaker 9: And that's what we're looking at. And again, it's just
Speaker 9: not necessary.
Speaker 12: I get why people wanted to do this in the
Speaker 12: previous administration, where the anti trust enforcers tended to use
Speaker 12: the process as a way to block deals rather than
Speaker 12: you know, sort of being a lot more honest about
Speaker 12: it than taking people to court. But under the Trump administration,
Speaker 12: we are either going to get out of your way
Speaker 12: very quickly or.
Speaker 9: We are going to take you to court.
Speaker 12: We're not letting the process be the punishment, and so
Speaker 12: people don't need to try to come up with ways
Speaker 12: to get around HSR.
Speaker 9: You will get a fair shake at the FTC.
Speaker 2: Chivan, there's a lot of interest in the FTC and
Speaker 2: consumer protection and what the FTC's remit is in the
Speaker 2: domain of AI.
Speaker 4: It's an example.
Speaker 2: I know you won't comment on specific cases, but x
Speaker 2: and Elon musk s XAI and Grock have been in
Speaker 2: the news because of the use of the tool to
Speaker 2: generate non consen sensual sexualized images. Does the FTC have
Speaker 2: a role in regulating from a consumer protection standpoint that domain?
Speaker 9: Yeah, I mean the President.
Speaker 12: Congress passed and the President signed in spring of last
Speaker 12: year the Take a Down Act, which is seminal groundbreak
Speaker 12: legislation to protect people from artificially generated non consensual intimate images.
Speaker 12: The criminal component of that law that the Department of
Speaker 12: Justice enforces is already in effect.
Speaker 9: The part that we enforce where we.
Speaker 12: Have to compel platforms to take down these images and
Speaker 12: then bring enforcement actions if they fail, will take effect
Speaker 12: in the spring.
Speaker 9: We are getting ready for that.
Speaker 12: I have been meeting with the elite child protection prosecutors
Speaker 12: and investigators at the Department of Homeland Security to make
Speaker 12: sure that we're synced up on that mission. This is
Speaker 12: relatively new to the FTC, and I want to make
Speaker 12: sure we hit the ground running when the authority takes effect.
Speaker 12: Right now, we are hiring specialists, prosecutors, lawyers, investigators, and
Speaker 12: IT experts to enable us the second that this thing
Speaker 12: takes effect to start bringing enforcement actions wherever these things
Speaker 12: are happening. And I don't care what kind of company
Speaker 12: you are, if you are a platform.
Speaker 9: Whether you're a.
Speaker 12: Legacy social media company a burgeoning AI company, I don't
Speaker 12: care if you are violating to take a down Act.
Speaker 12: You are going to hear from us, and we are
Speaker 12: going to be ready to do it. This is incredibly
Speaker 12: important legislation. I'm really excited that the FTC has a
Speaker 12: role in this. I lobby Congress very heavily to make
Speaker 12: sure that we had enough money to get this program
Speaker 12: off the ground. When it takes effect in the middle
Speaker 12: of this year. You're getting that money and we will
Speaker 12: be ready.
Speaker 4: Chairman.
Speaker 2: President Trump has nominated David McNeil to the Commission.
Speaker 4: Our audience have asked.
Speaker 2: Me to ask you your thoughts on that someone perhaps
Speaker 2: without antitrust experienced legal experience, the Commission experience, and somebody
Speaker 2: you know, frankly with high net wealth.
Speaker 4: Your thoughts please.
Speaker 9: Look.
Speaker 12: I am generally of the view that Washington has too
Speaker 12: many lawyers. I think it is great that the President
Speaker 12: has decided to nominate someone who isn't a lawyer, who
Speaker 12: doesn't sort of think in the pathways that lawyers always think.
Speaker 12: I think it's great that the President has nominated. You know,
Speaker 12: I've never met mister McNeil I've talked him a little
Speaker 12: since the nomination. The man is a true American patriot.
Speaker 12: He's created thousands of jobs in this country. He has
Speaker 12: been one of the most outspoken proponents of manufacturing here
Speaker 12: in America. That has been one of the President's principal
Speaker 12: economic priorities is to make sure we make and build
Speaker 12: things in America. David McNeil has done that. He has
Speaker 12: been successful in doing that, and I think it's great
Speaker 12: that there is going to be sort of someone with
Speaker 12: that perspective who isn't coming at this like I am
Speaker 12: from fancy law schools with a long sort of litigation
Speaker 12: and law enforcement background. He's coming at it as a
Speaker 12: job creator, as a wealth creator, and as one of
Speaker 12: the most outspoken proponents of manufacturing in America that there
Speaker 12: is in this country. You know, is it an unconventional pick, Yeah,
Speaker 12: of course it is. But part of what has made
Speaker 12: President Trump so successful is that he doesn't always think
Speaker 12: in the conventions that governed DC. And I think that
Speaker 12: this is a really, really good idea to bring someone
Speaker 12: with mister McNeil's perspective here to the Commission.
Speaker 2: The major concern for the consumer right now is affordability.
Speaker 2: What is the FTC able to do on pricing pressure,
Speaker 2: bringing prices down, addressing that consumer concern.
Speaker 12: Yeah, I mean, it's one of my main concerns too.
Speaker 12: We're doing a lot on this front. On the merger
Speaker 12: review front, my first two merger enforcement actions were in
Speaker 12: the healthcare space. Just won one of those healthcare enforcement
Speaker 12: actions last week and several months before the judge denied
Speaker 12: our injunction, but only because after I sued them, they
Speaker 12: offered to divest the assets that were the problem, so
Speaker 12: that was a win for the Commission as well. Another
Speaker 12: merger enforcement action I brought is about industrial adhesives that
Speaker 12: are used to build homes. We have a real home
Speaker 12: building crisis in this country. Although under President Trump, home
Speaker 12: sales went up last year for the first time in
Speaker 12: a while, we still have a home affordability crisis in
Speaker 12: this country. And I have focused intently on the competition side,
Speaker 12: on making sure that we are active in markets grocery, healthcare,
Speaker 12: homes to try to bring prices down consumers and to
Speaker 12: make sure that all Americans get the advantages that come
Speaker 12: with vigorous competition. On the other side, I sued ticket
Speaker 12: Master and a groundbreaking lawsuit charging them with having basically
Speaker 12: inflated all the prices of tickets in violation of multiple
Speaker 12: federal laws. Americans have been complaining justly for a long
Speaker 12: time that it has become almost impossible to take your
Speaker 12: family to a ballgame or to a concert without having
Speaker 12: to fork over the value of a mortgage payment to
Speaker 12: do it. We have been very active in the ticketing
Speaker 12: space to make sure that those prices are going to
Speaker 12: come down. We have been bringing actions on the consumer
Speaker 12: protection side in the healthcare space. We've also been bringing
Speaker 12: a lot of consumer protection cases and competition cases to
Speaker 12: protect the value of wages against non competes, against job scams.
Speaker 12: The FTC is a little agency. Our budget is even
Speaker 12: half a billion dollars, but we have returned literally billions
Speaker 12: of dollars of wrongfully taking money just in the last
Speaker 12: year back in the pockets of the American consumers. We
Speaker 12: are doing everything we can within our little remit to
Speaker 12: try to bring down prices and to make this country
Speaker 12: a more affordable place to live, which is exactly what
Speaker 12: President Trump has been telling us to do.
Speaker 4: Chairman.
Speaker 2: Very quickly, Bloomberg's reported that the White House is considering
Speaker 2: you for a DOJ fraud role. What would that entail
Speaker 2: and legally would it be possible for you to take
Speaker 2: on that role while remaining chair of the FTC.
Speaker 12: I can tell you definitively, I'm not leaving the Federal
Speaker 12: Trade Commission and I'm not going to the Department of Justice.
Speaker 12: This is an important full time job that the President
Speaker 12: entrusted me with to try to help the American people
Speaker 12: that just voted in their tens of millions to make
Speaker 12: Donald Trump president.
Speaker 9: That's what we have done.
Speaker 12: We've sent billions of dollars of wrongfully taking money back
Speaker 12: to Americans, and I'm focused on fighting fraud and protecting
Speaker 12: competition right here at the FTC.
Speaker 2: Andrew Ferguson and FTC Chairman, thank you for your time here.
Speaker 2: On Bloomberg Tech. Okay, coming up, Jermaina Alaman of Prometeer
Speaker 2: joins us to discuss the future of banking within AI.
Speaker 4: That's next. This is Bloomberg Tech.
Speaker 2: After TSMC reported huge profits in the fourth quarter, CFO
Speaker 2: Wendel Huang sat down with Bloomberg Tech's Annibal Drawlers to
Speaker 2: affirm his strong conviction in the mega trend of AI demand.
Speaker 2: He first weighed in on whether the company is prioritizing
Speaker 2: certain markets as part of his expansion plans.
Speaker 4: Listen to this.
Speaker 13: We don't look at it this way. It really depends
Speaker 13: on customer demand. In the US, A lot of customer
Speaker 13: wants to go there, so we will expand over there.
Speaker 13: But for the leading edge technologies, it will be in
Speaker 13: Taiwan because it's a heavy cooperation between the R and
Speaker 13: D people and operation people for practical reasons.
Speaker 14: And leading edge will continue to be led by Taiwan.
Speaker 14: You think over the US market and that no changes
Speaker 14: to that at all, even with you adding a lot
Speaker 14: more capacity in the States.
Speaker 7: Yeah, that's for practical reasons.
Speaker 14: Is it possible though, to speed up how quickly that
Speaker 14: advanced tech can be shifted from Taiwan to the States.
Speaker 7: Yeah, we can try to do that to shorten the gap.
Speaker 14: What does that transfer gap look like then? If right
Speaker 14: now it's several years Taiwan is ahead, what does that
Speaker 14: actually look like in the future.
Speaker 13: We don't have a specific timeline now, but we do
Speaker 13: we can try.
Speaker 7: To accelerate that. We think we can try to accelerate.
Speaker 14: Could it be shortened months? Do you think it will
Speaker 14: be difficult challenging? Okay, so it stays at least one
Speaker 14: one year behind.
Speaker 2: Then there was tsmc CFO when Huang along Bloomberg texts
Speaker 2: Annibal drawers president Trump's call for a ten percent cap
Speaker 2: on credit card interest rates. Since shares of financial firms
Speaker 2: tumbling this week, with bank CEOs in particular warning the
Speaker 2: move could harm the economy, not just their bottom lines.
Speaker 2: Let's talk through it with Shamena Alamann, co CEO of Promiteo,
Speaker 2: which provides technical infrastructure to help corporations connect to financial institutions.
Speaker 2: I find this very interesting because rate caps also may
Speaker 2: have an impact on how unsecured credit and that's the conversation,
Speaker 2: right is essentially engineered. It's also about access, your reaction
Speaker 2: to the week's events.
Speaker 15: Okay. So I think that what's most striking about these
Speaker 15: news is somehow how it has shown the US commerce
Speaker 15: dependency on grade guards and great guard rails. And so
Speaker 15: we're talking about eighty percent of the population access in
Speaker 15: grade through grade guards plus gradecard bands being one point
Speaker 15: two trillion, which I think it's a very relevant number
Speaker 15: because it shows its sizes the opportunity, you know, and
Speaker 15: it's a massive opportunity. Okay, And so I think that
Speaker 15: when we talk about a limitation like this, like a
Speaker 15: restriction on an intervation on the rates. We are talking
Speaker 15: about somehow reshaping the infrastructure. You know, we always tend
Speaker 15: to think as financially infrastructure as a given, but it's
Speaker 15: actually designed, you know. And what we're having here is
Speaker 15: a direct intervention, and what basically forces a conversation on
Speaker 15: the underlying infrastructure and the underlying product. And the conversation
Speaker 15: is the question is basically what needs to happen at
Speaker 15: the product level in order to meet this constraint, in
Speaker 15: order to meet this new condition, you know. And so
Speaker 15: I think that the question goes to, well, basically, what's
Speaker 15: the design, you know, like what's the shape of the
Speaker 15: great car system? Right now?
Speaker 2: So this time, right, she may let me just jump in,
Speaker 2: like this time, we're also going to wait and see
Speaker 2: if this happens. What the behavioral reaction is. So let's
Speaker 2: say that a section of the economy is closed to
Speaker 2: the credit card. Well, we spoke to the Klana CEO
Speaker 2: earlier this week, Right, there's a lot of those that
Speaker 2: would talk up buy now, pay later, account to account payments.
Speaker 2: Does that kind of phase out credit card reliance?
Speaker 15: Well, I think that what will happen is that you
Speaker 15: have a one point to trillion opportunity, you know, and
Speaker 15: if we talk about the actual shape of the great
Speaker 15: card system right now, it's a bundle tool. You have
Speaker 15: a payment tool plus a credit line tool, okay, and
Speaker 15: these tool are combined. If we see what has happened
Speaker 15: in the payment space over the last ten years is
Speaker 15: massive disruption, which is basically New Entrance leveraging technology to
Speaker 15: provide better and most efficient solutions, more cost effective solutions.
Speaker 7: Okay.
Speaker 15: And I think that that gives us a glimpse, you know,
Speaker 15: like a on what would happen at the credit line
Speaker 15: infrastructure level, you know, like we could expect a movement
Speaker 15: like that, and that means New Entrance very interested seeing
Speaker 15: the size of the opportunity jumping into the space, leveraging
Speaker 15: new technology in order to meet the requirements of this
Speaker 15: demand because the demand won't go anywhere, you know, and
Speaker 15: it's a huge demand.
Speaker 2: Samana, It was a big week for bank earnings where
Speaker 2: we hope to find out about how banks are using
Speaker 2: AI in real terms. A lot of questions to JP
Speaker 2: Morgan about how much they're spending on AI. But what
Speaker 2: was your takeaway on the transition how we go from
Speaker 2: like analysis to the banks running function using AI.
Speaker 15: Okay, Well, I think that twenty twenty five marks the
Speaker 15: year in which AI moved from being an experimentation to
Speaker 15: full deployment, you know, And I think that's very interesting.
Speaker 15: Perhaps the most popular initiative was open Ai since and
Speaker 15: checkout powered by Stripe. Definitely we will see more of that,
Speaker 15: especially in the financial institutions banks landscape over this year,
Speaker 15: you know. And I think that that will bring a
Speaker 15: lot of innovation and a lot of news over the
Speaker 15: coming year. I think that what we've seen over twenty
Speaker 15: twenty five is AI becoming an efficiency lever and not
Speaker 15: an innovation toy anymore, you know. And so what financial
Speaker 15: institutions banks have done is use AI internally. Initially it
Speaker 15: was mostly chatbots, small projects. But what we've done, what
Speaker 15: they have noticed is that basically AI can impact the
Speaker 15: main areas of the financial institution, and especially four banks
Speaker 15: that have been historically very site have had stortally a
Speaker 15: very siloed tech stack, you know, with different parts of
Speaker 15: the bank having different databases, different technologies, different systems.
Speaker 4: AI helps all of these to.
Speaker 15: Come together, you know, and work as a comprehensive tech stack,
Speaker 15: you know. And so now we are seeing initiatives in
Speaker 15: fraud and credit of course, in middle and back office,
Speaker 15: you know, and creating efficiencies in speed okay, and this
Speaker 15: is real time responses to anything that an user can need.
Speaker 2: Samana Adaman, co founder Coco Prevateere, great summary of the
Speaker 2: banks in an AI. Thank you very much. That does
Speaker 2: it for the edition of Bloomberg Tech. What a week
Speaker 2: it's been. Recap on the pod. You know exactly where
Speaker 2: to find it. Have a great weekend. This is bloombag
Speaker 2: Tech