WEBVTT - Intel Looks Outside the Box, Microsoft Faces FTC Troubles 0:00:02.920 --> 0:00:13.320 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.400 --> 0:00:14.080 From the Heart where Innovation, money and power Collie in 0:00:14.160 --> 0:00:15.680 Silicon Valley n Beyond. 0:00:16.000 --> 0:00:20.079 This is Bloomberg Technology with Caroline Hyde and Ed lud Love. 0:00:33.640 --> 0:00:34.960 Welcome to Bloomberg Technology. 0:00:34.960 --> 0:00:38.040 I'm Caroline Hyde in Bloomberg's World headquarters in New York. 0:00:38.120 --> 0:00:40.600 There is a lot to get to this hour, but 0:00:40.680 --> 0:00:42.920 let's start with some of the political turmoil in France, 0:00:43.280 --> 0:00:46.000 that no confidence vote that could topple the country's current 0:00:46.080 --> 0:00:50.239 government Blouemost. Caroline Conan is there for the latest in 0:00:50.320 --> 0:00:54.120 Paris debate finally getting underway. But for our global audience 0:00:54.120 --> 0:00:56.640 and our technology audience, Caroline, for listen to. 0:00:56.520 --> 0:00:58.880 What we expect in the next hour or so. So 0:00:58.960 --> 0:00:59.880 the debate just started. 0:01:00.120 --> 0:01:02.800 Here behind me inside the National Assembly, you've got Erie 0:01:02.840 --> 0:01:06.160 Cokrel at the moment speaking, is the leader of the 0:01:06.200 --> 0:01:09.480 far left group in the National Assembly, and this is 0:01:09.520 --> 0:01:13.000 the group that is proposing this motion of no confidence 0:01:13.040 --> 0:01:17.120 in order to topple Michelle Bannie's governments and make Michelle 0:01:17.120 --> 0:01:20.440 Bannie's government collapse. That vote could happen in the next 0:01:20.480 --> 0:01:24.000 couple of hours, and we're pretty sure of the outcome 0:01:24.240 --> 0:01:27.640 as we speak given the national value. So the far 0:01:27.760 --> 0:01:31.000 right party of Marin Lupen has said that they will 0:01:31.040 --> 0:01:33.880 back this motion of no confidence even if it was 0:01:33.920 --> 0:01:37.319 presented by the far left, So the two extremes joining 0:01:37.360 --> 0:01:40.800 forces in order to overthrow this Banne government. 0:01:41.360 --> 0:01:43.440 We can see the impact on the euro, we've seen 0:01:43.480 --> 0:01:46.440 the impact on the price of French debt. But for 0:01:46.520 --> 0:01:49.200 those that are running businesses for a technology audience that 0:01:49.280 --> 0:01:53.000 cares about the French technology startups, for example, what does 0:01:53.040 --> 0:01:56.640 a change or collapsing government mean for them? 0:01:57.040 --> 0:01:59.160 Of course, the main question is that we're going to 0:01:59.200 --> 0:02:02.600 have a twenty two twenty five budget and what is 0:02:02.840 --> 0:02:06.120 left in this budget. There will probably be some special 0:02:06.200 --> 0:02:09.840 laws in order to roll over the twenty twenty four budget, but. 0:02:09.760 --> 0:02:12.240 That means a lot of help and. 0:02:12.680 --> 0:02:18.280 For example, a reduction of contributions from companies in order 0:02:18.360 --> 0:02:22.240 to hire lowest income employees. These are not going to 0:02:22.240 --> 0:02:25.120 be automatically indexed on inflation, meaning that it's going to 0:02:25.160 --> 0:02:27.840 be harder. It's going to cost more for those companies 0:02:28.360 --> 0:02:32.160 to hire some of those employees. So technically, in the 0:02:32.240 --> 0:02:35.080 short term it's a little unclear. But in the longer term, 0:02:35.200 --> 0:02:38.160 if there is still no budget over the next few 0:02:38.200 --> 0:02:41.360 weeks before the end of December, that will have a 0:02:41.360 --> 0:02:42.919 big impact on companies. 0:02:43.320 --> 0:02:44.560 That will because we'll. 0:02:44.360 --> 0:02:47.359 Have this twenty twenty four budget saying the same we 0:02:47.560 --> 0:02:48.359 had any increase. 0:02:49.080 --> 0:02:51.680 Carolyn, We thank you so much for the latest from Paris. 0:02:51.919 --> 0:02:53.960 We'll come back to you on any of the breaking news, 0:02:54.000 --> 0:02:55.000 but first let's kind. 0:02:54.880 --> 0:02:56.880 Of check on the markets, because despite. 0:02:56.600 --> 0:03:00.600 Political termol worldwide, it fails often. ZAC is at a 0:03:00.639 --> 0:03:02.480 record high, the S and P is at a record high, 0:03:02.520 --> 0:03:03.880 and we have tech to thank for it. 0:03:04.080 --> 0:03:04.680 In large part. 0:03:04.720 --> 0:03:07.560 We see Salesforce also at a record high, up eight 0:03:07.600 --> 0:03:10.320 point seven percent off the back of its earnings, really 0:03:10.360 --> 0:03:13.240 managing to pull out the power from its AI agent 0:03:13.280 --> 0:03:14.079 force focus. 0:03:14.320 --> 0:03:15.560 We're looking at Octa, this is. 0:03:15.560 --> 0:03:18.120 Application software company also rising at one point up more 0:03:18.160 --> 0:03:19.960 than thirteen percent. We're now up five percent on the 0:03:19.960 --> 0:03:22.200 back of a beaten raise for its earnings after the 0:03:22.200 --> 0:03:26.640 bell yesterday. And Marvel Technology it's now up some twenty percent, 0:03:27.040 --> 0:03:29.800 sawing its world to a record high. This is the 0:03:29.880 --> 0:03:32.800 chip company had better than expected results and stronger earnings 0:03:32.840 --> 0:03:36.240 forecast as well. What's notable is also Marvell's CEO Matt 0:03:36.320 --> 0:03:39.160 Murphy said on the call that he is committed to 0:03:39.200 --> 0:03:42.800 the company despite being a potential contender. We understand to 0:03:42.880 --> 0:03:45.440 lead Intel and that is where we want to go next. 0:03:45.480 --> 0:03:48.600 Because Intel's search for a new CEO is the focus 0:03:48.640 --> 0:03:50.960 for many at the moment, and is it going to 0:03:50.960 --> 0:03:54.240 be focusing heavily on outsiders. The chip maker is considering 0:03:54.240 --> 0:03:57.320 candidates such as Matt Murphy, but also the former Cadence 0:03:57.360 --> 0:04:00.280 Design System CEO Lip Bhutan, who actually recently quit the 0:04:00.320 --> 0:04:03.400 board of Intel, as bringing in Bloomberg's Ryan Gold for 0:04:03.520 --> 0:04:07.520 more Ryan. Is it surprising to see Intel not go 0:04:07.600 --> 0:04:08.760 to its own bench. 0:04:09.240 --> 0:04:10.880 Carol, I think it is when you think this is 0:04:10.920 --> 0:04:13.640 the first time since nineteen sixty eight when Intel was founded, 0:04:13.680 --> 0:04:16.040 that they will actually sort of think about looking outside. 0:04:16.240 --> 0:04:17.760 I think that kind of gets to the heart of 0:04:17.760 --> 0:04:19.560 what it means to be in semi conductors right now. 0:04:19.720 --> 0:04:22.240 Semi Conductors takes a lot of expertise, It takes a 0:04:22.240 --> 0:04:24.520 load of nows and you know, some of the decisions 0:04:24.560 --> 0:04:26.760 that were made excuse me, over the years, you know, 0:04:26.920 --> 0:04:30.640 and the pet even the Bob Swan Krasnich before him. 0:04:30.800 --> 0:04:33.839 You know, these are decisions that will pay if you 0:04:33.880 --> 0:04:35.479 make them, might in ten years time. 0:04:35.600 --> 0:04:36.880 That's how long it takes. 0:04:36.600 --> 0:04:38.880 To get some things over the line in semiconductors and 0:04:39.000 --> 0:04:41.279 to go out and think about who your next CEO is. 0:04:41.880 --> 0:04:42.880 It's not only easy toss. 0:04:42.880 --> 0:04:44.640 Well, many are going to look at Pat Keilsinger didn't 0:04:44.640 --> 0:04:47.719 actually get that much time. He came from VMware EMC, 0:04:47.960 --> 0:04:50.160 but he was in many ways an Intel life though 0:04:50.200 --> 0:04:53.960 he had started his career there. And what therefore is 0:04:54.560 --> 0:04:57.040 really the attractiveness of this role at the moment, Marvel, 0:04:57.120 --> 0:04:59.400 for example, Matt Murphy doing a great job showing the 0:04:59.400 --> 0:05:02.440 power of a strategy. Is it not going to be 0:05:02.680 --> 0:05:04.920 that appetizing a role to be taking on right now? 0:05:05.040 --> 0:05:07.480 I think it's a it could be a poison chalice. 0:05:07.520 --> 0:05:09.160 I think some people do you as a poison cholie, 0:05:09.240 --> 0:05:11.160 just given the challenges because when you think about am 0:05:11.240 --> 0:05:14.560 dference and it's a big rival to Intel. It made 0:05:14.560 --> 0:05:17.120 the decision to go Fablus years and years ago. Intel 0:05:17.240 --> 0:05:19.520 is still you know, still a fab chip company. 0:05:19.600 --> 0:05:20.919 It'll be more of a fast. 0:05:20.640 --> 0:05:22.640 Exactly, and you know rival t SMC and we all 0:05:22.640 --> 0:05:25.560 know how that went. So whoever comes in has a 0:05:25.600 --> 0:05:28.280 massive challenge on their hands. That said, though you know 0:05:28.360 --> 0:05:30.080 the fact that we were probably sid them at Murphy 0:05:30.120 --> 0:05:32.799 is being considered, lip bout ten being considered. Let's remember 0:05:32.800 --> 0:05:35.960 that lip Boo is a big advocate for you know, 0:05:36.040 --> 0:05:41.080 making Intel more sort of industrially manufacturing sound, so you 0:05:41.120 --> 0:05:42.760 know that could be interesting. But you know there are 0:05:42.800 --> 0:05:44.800 many others too, because we're told, for instance, when we 0:05:44.800 --> 0:05:47.320 talk to sources that anyone who puts their hand up 0:05:47.360 --> 0:05:50.360 who has a remote degree of expertise in semiconductors will 0:05:50.440 --> 0:05:52.560 likely be considered. And you know, I can tell you 0:05:52.600 --> 0:05:55.640 that Spencer Stewart that's running the process to higher than UCO. 0:05:55.760 --> 0:05:58.320 Right now, they're saying that we're probably going to look 0:05:58.320 --> 0:06:00.280 for four or five candidates and then shortliss to one 0:06:00.320 --> 0:06:00.560 to two. 0:06:00.640 --> 0:06:01.840 Which can we get a timeframe? 0:06:02.640 --> 0:06:04.480 I think they're looking to this as soon as. 0:06:04.320 --> 0:06:07.680 Possible, Ran keeping us up to speed. We thank you 0:06:07.760 --> 0:06:09.640 Rangel there. Meanwhile, let's just. 0:06:09.600 --> 0:06:13.080 Get a deeper look at the chip space tech market 0:06:13.120 --> 0:06:15.680 more broadly, turning one of t RO prices with US 0:06:15.720 --> 0:06:18.760 managing the Science and Technology Fund more than nine billion 0:06:18.800 --> 0:06:21.400 dollars under management there and basically, you look like you're 0:06:21.440 --> 0:06:24.000 in every chip name apart from Intel in many ways, Tony, 0:06:24.120 --> 0:06:26.680 is that right? And and how are you looking at 0:06:26.680 --> 0:06:28.120 the ecosystem and its strength. 0:06:29.080 --> 0:06:30.440 Yeah, I think that's a great question. 0:06:31.080 --> 0:06:33.239 You know, when you look at our holdings, we currently 0:06:33.480 --> 0:06:36.520 are focused on the compute aspect of things, and so 0:06:36.920 --> 0:06:39.080 looking at AI, you know in video is a big 0:06:39.120 --> 0:06:41.400 holding as well as Marvell and Broadcom. 0:06:42.600 --> 0:06:44.480 On my view is that the compute. 0:06:44.120 --> 0:06:47.960 Tam is growing significantly as the foundational models are kind 0:06:48.000 --> 0:06:51.800 of growing exponentially every year, and so the chip Coneys 0:06:51.839 --> 0:06:54.120 that had the scale, the expertise of tape out the 0:06:54.200 --> 0:06:57.080 leading edge, you know, are I think going to be 0:06:57.120 --> 0:07:00.920 advantageous in terms of capturing this compute TAM. So I think, 0:07:01.080 --> 0:07:04.560 you know, I like the space long term. But you know, 0:07:04.600 --> 0:07:08.200 we are selective in our in our holdings here, you know, 0:07:08.320 --> 0:07:10.720 specifically those three especially well. 0:07:10.640 --> 0:07:13.400 Let's talk about Marvel for example, would it be a 0:07:13.440 --> 0:07:17.440 worry as the leader did jump ship to Intel. 0:07:18.000 --> 0:07:20.240 Well, I think Matt Murphy has created created a ton 0:07:20.280 --> 0:07:23.160 of value over the years. You look at when they 0:07:23.160 --> 0:07:25.960 picked it up, it was in the sub ten billion 0:07:26.000 --> 0:07:29.960 dollar mark cap, and he's over the years, I've done 0:07:29.960 --> 0:07:32.600 a lot of great m and A and capital allocation, 0:07:33.320 --> 0:07:36.920 spun businesses off, acquired a world class custom team that 0:07:37.040 --> 0:07:40.080 is right now delivering a lot of AI custom uh 0:07:40.680 --> 0:07:44.600 compute ships for like the likes of Amazon, for example, 0:07:44.680 --> 0:07:46.680 and so you know, I think that it would be 0:07:46.680 --> 0:07:49.880 a concern if you jump ship. I do think it's 0:07:49.920 --> 0:07:51.960 it's uh, you know, He's put a lot of work 0:07:52.000 --> 0:07:52.640 in to Marvell. 0:07:52.720 --> 0:07:53.200 He's got a. 0:07:53.120 --> 0:07:55.920 Great team there and they're kind of firing on all 0:07:55.960 --> 0:07:59.960 cylinders coming out of the last few years. So you know, 0:08:00.760 --> 0:08:03.800 from my perspective, it seems like he does have a 0:08:03.840 --> 0:08:05.360 lot of good reasons. 0:08:04.920 --> 0:08:05.840 To stay at Marvell. 0:08:06.120 --> 0:08:09.520 And so I'm you know, I'm taking his word what 0:08:09.600 --> 0:08:12.160 he said last night kind of face value here. 0:08:12.560 --> 0:08:14.880 Looking at your top ten holdings, Marvel is one of 0:08:14.880 --> 0:08:17.200 them at the end of October is about two percent 0:08:17.240 --> 0:08:19.280 of the fund. The top holding is in video, as 0:08:19.280 --> 0:08:23.200 you mentioned. Interestingly, we had as CEO Matt Garman on 0:08:23.240 --> 0:08:26.600 the show Well on the pro across our network yesterday 0:08:26.640 --> 0:08:27.920 and we're going to be playing out a bit of 0:08:27.960 --> 0:08:31.520 that sound later. But Amazon is the best points contributor 0:08:31.960 --> 0:08:34.880 to the NASDAC. Today they had a whole raft of 0:08:34.960 --> 0:08:38.160 chip announcements. What does that mean for Invidia? What does 0:08:38.160 --> 0:08:41.199 it mean in terms of their own customers building custom silicon? 0:08:41.880 --> 0:08:44.080 Yeah, I think I don't think that story is anything new. 0:08:44.559 --> 0:08:48.079 It's just generally the evolution of compute. Essentially, you have 0:08:48.160 --> 0:08:52.560 the new workloads that need more general purpose in video chips, 0:08:52.559 --> 0:08:55.520 and then over time, as the workloads get bigger and 0:08:55.920 --> 0:08:58.400 they mature and stabilize, you kind of bring in the 0:08:58.440 --> 0:08:59.760 custom compute. 0:08:59.760 --> 0:09:00.880 And so, you know, I. 0:09:00.880 --> 0:09:03.280 Think the two kind of coexists, and they have co 0:09:03.360 --> 0:09:07.120 existed over the last decade, and so going forward, I 0:09:07.160 --> 0:09:10.000 think of them as kind of you know, kind of 0:09:10.160 --> 0:09:13.600 symbiotic relationship in some ways, and that it is just 0:09:13.640 --> 0:09:17.280 an evidence that the chipped kind of TAM is increasing 0:09:17.320 --> 0:09:20.120 in the compute TAM, and the demands continue to increase 0:09:21.040 --> 0:09:23.320 because you the workloads are argating to be so big, 0:09:23.360 --> 0:09:25.760 you it, then it makes sense to have a custom chip. 0:09:26.559 --> 0:09:29.680 But you know, what's what's special is that, like you know, 0:09:29.760 --> 0:09:33.600 previously kind of five ten years ago, we thought AI 0:09:33.720 --> 0:09:37.160 would just be you know, subject to just only like 0:09:37.280 --> 0:09:39.440 identifying what's a cat and what's not a cat. 0:09:39.960 --> 0:09:41.480 I can mentioned. So now it's like. 0:09:41.559 --> 0:09:44.480 Transformed into something that we no one could have thought 0:09:44.520 --> 0:09:45.400 about or predicted. 0:09:45.440 --> 0:09:48.079 So, you know, I think that it's just we've had 0:09:48.080 --> 0:09:48.960 this debate. 0:09:48.640 --> 0:09:51.720 Before of like but I think what you've seen is 0:09:51.720 --> 0:09:55.800 that both kind of Nvidia and the custom chip providers 0:09:55.840 --> 0:09:57.960 have done well as the TAMA has increased. 0:09:58.480 --> 0:10:01.640 I am not a cat forever to be part of 0:10:02.000 --> 0:10:06.920 Internet's story. What then, about in Vidia's valuation at these 0:10:07.040 --> 0:10:09.400 levels You're talking about how finally we're getting the return 0:10:09.440 --> 0:10:12.040 on investment from an application layer perspective of AI. We're 0:10:12.040 --> 0:10:14.280 actually using it in our everyday life. While work life 0:10:14.559 --> 0:10:17.559 can in video grow in terms of its own valuation, 0:10:17.640 --> 0:10:18.560 Have we priced it all in? 0:10:18.880 --> 0:10:20.080 Yeah, I think that's a great question. 0:10:20.120 --> 0:10:24.520 I mean, three point three four trillion dollars that's marketcap 0:10:24.600 --> 0:10:28.120 right now is pretty astounding. If you look at like 0:10:28.200 --> 0:10:31.000 the profitability in the in the free cash flow, I mean, 0:10:31.040 --> 0:10:34.480 it's kind of pretty reasonable, like thirty thirty five times 0:10:34.520 --> 0:10:38.840 forward earnings, and so while the stock price has gone 0:10:38.920 --> 0:10:41.120 up a lot, I think that when you look at evaluation, 0:10:41.240 --> 0:10:45.360 it's not an extreme at one hundred times earnings, which 0:10:45.720 --> 0:10:48.800 I think that says the market You're saying there is 0:10:48.840 --> 0:10:51.280 a little bit of concern of like how sustainable the 0:10:51.360 --> 0:10:57.320 numbers are, whether profitability can continue to be at these levels, 0:10:58.280 --> 0:11:00.160 and so, you know, I think the valuation in that 0:11:00.240 --> 0:11:06.160 face value is actually relatively moderate. You know, given its 0:11:06.240 --> 0:11:08.080 history and its growth, it. 0:11:08.000 --> 0:11:09.880 Is extraordinary just to take a step back and think 0:11:09.880 --> 0:11:11.400 that on this day we're at a record high for 0:11:11.440 --> 0:11:13.560 the NAST, that one hundred apples at a record high. 0:11:13.760 --> 0:11:16.559 We've got Nvidia continuing to rise in terms of market cap, 0:11:16.960 --> 0:11:20.720 and then you have the salesforce numbers and its own 0:11:20.800 --> 0:11:23.560 record high in terms of share price today, what do 0:11:23.600 --> 0:11:26.760 you make of their application of AI agent force and 0:11:26.800 --> 0:11:29.800 whether actually it's going to make the more profitable as 0:11:29.840 --> 0:11:31.199 well as getting revenue off the ground. 0:11:31.880 --> 0:11:34.560 Yeah, I think it's an exciting time in tech in 0:11:34.800 --> 0:11:39.239 that you know, AI could be this next productivity revolution 0:11:39.559 --> 0:11:42.760 and so, you know, kind of uncapping labor as we 0:11:42.800 --> 0:11:46.520 know it with digital agents and digital labor that essentially 0:11:46.520 --> 0:11:48.439 doesn't need a sleep, doesn't need to take breaks, operate 0:11:48.520 --> 0:11:51.960 twenty four to seven, and can operate alongside humans. 0:11:52.040 --> 0:11:53.560 And so I think that's what's really exciting. 0:11:53.600 --> 0:11:57.760 And all these software companies are now kind of seeing 0:11:57.800 --> 0:12:01.280 the opportunity and going after and everyone wants to be 0:12:01.280 --> 0:12:05.040 the platform where you soar your data, you operate and 0:12:05.080 --> 0:12:08.560 so whether that's Mirosoft Service now you know, Salesforce, like 0:12:08.679 --> 0:12:10.840 I think it's a bigger opportunity. And so we've kind 0:12:10.840 --> 0:12:14.599 of seen, you know, the first year of chativity or 0:12:14.640 --> 0:12:20.120 to be dominated by the chip companies like Invidia dominate 0:12:20.240 --> 0:12:23.240 infrastructure layer and so now I think that we're seeing 0:12:23.240 --> 0:12:26.040 it on the appware, which is really exciting because you 0:12:26.160 --> 0:12:28.440 need to see it in the appwere for kind of 0:12:28.480 --> 0:12:31.720 the chip companies to continue doing well, and you know, 0:12:31.760 --> 0:12:33.200 I think we are kind of seeing that in the 0:12:33.240 --> 0:12:34.319 last kind of earning season. 0:12:35.040 --> 0:12:37.720 Get we've seen that shift, as you say, movement from 0:12:37.840 --> 0:12:41.880 all in on chips then shifting into software. But boy, 0:12:41.960 --> 0:12:43.679 is it playing out in some of the valuations. I'm 0:12:43.720 --> 0:12:46.160 looking at Palenteer training at one hundred and eighty times 0:12:46.160 --> 0:12:49.559 future earnings that had been the darling of the AI story. 0:12:50.040 --> 0:12:52.760 Will other companies rip to to get to those sorts 0:12:52.800 --> 0:12:56.400 of valuation levels or is Palenteers overdone as well? You 0:12:56.880 --> 0:12:59.640 talk about how are at this crucial moment where AI 0:12:59.679 --> 0:13:01.679 is going to disrupt the workforce, But I feel that 0:13:01.720 --> 0:13:03.360 the market's been trying to price that in for quite 0:13:03.400 --> 0:13:03.760 a while. 0:13:04.800 --> 0:13:05.040 Yeah. 0:13:05.080 --> 0:13:08.280 Absolutely, and I think that not every company can be 0:13:08.400 --> 0:13:10.480 like what Paluneer is doing. I think to do AI 0:13:10.600 --> 0:13:13.720 is really really hard, and they've been the AI leader 0:13:13.880 --> 0:13:16.120 for the last decade, and I think I think of 0:13:16.160 --> 0:13:20.760 them bringing AI to the government and the the the enterprise, 0:13:20.840 --> 0:13:23.240 and so I think what's special about them is that 0:13:23.240 --> 0:13:27.160 they've got this like very centralized ontology for AI, and 0:13:27.200 --> 0:13:30.960 then they can kind of customize that for clients and 0:13:30.960 --> 0:13:32.040 clients can build on that. 0:13:32.160 --> 0:13:33.760 So I think them as like a platform. 0:13:33.840 --> 0:13:35.800 And you think about what the United States government is 0:13:35.800 --> 0:13:38.760 trying to doing now is to be more efficient, and 0:13:38.760 --> 0:13:42.200 part of that is bringing AI and technology to automate 0:13:42.240 --> 0:13:46.920 things and to modernize people's peoples are processing and data. 0:13:46.960 --> 0:13:50.240 And so I don't think every company can be like Puenteer. 0:13:50.360 --> 0:13:53.680 I think there's like some special ones in kind of 0:13:53.679 --> 0:13:57.800 the AI software kind of madcaps area, like you know, 0:13:57.880 --> 0:14:00.720 kind of like app love in for example, or AX, 0:14:00.880 --> 0:14:03.600 and I like, you know, where there's like specific vertical 0:14:03.640 --> 0:14:07.079 application where AI can be applied and really drive a 0:14:07.120 --> 0:14:09.400 lot of automation and in intelligence. 0:14:10.040 --> 0:14:11.640 I love that you take us out to some of 0:14:11.679 --> 0:14:14.720 the different names as well. Tenuang of t row Price 0:14:14.880 --> 0:14:15.719 brilliant to have you one. 0:14:15.760 --> 0:14:16.120 Thank you. 0:14:24.400 --> 0:14:29.280 Last week, Bloomberg reported that the FTC is investigating into Microsoft, 0:14:29.600 --> 0:14:32.760 which is focusing on how the tech Giant is bundling 0:14:32.840 --> 0:14:36.080 its Windows operating system with other software as well as 0:14:36.120 --> 0:14:40.320 its dominance in cybersecurity. Now reports from the Information are 0:14:40.360 --> 0:14:42.840 saying that the agency is asking about Microsoft steel with 0:14:42.920 --> 0:14:46.160 open Ai, which grants the course the cloud giant exclusive 0:14:46.240 --> 0:14:49.000 right to run the startup models on the cloud servers, as. 0:14:48.880 --> 0:14:51.840 Well as of the company's revenue and trust. 0:14:51.880 --> 0:14:54.440 Lawyer David Belto shows us now he previously worked as 0:14:54.480 --> 0:14:57.400 former policy director of the FTC's Bureau of Competition, someone 0:14:57.400 --> 0:14:59.400 who's well versed in how long these. 0:14:59.160 --> 0:15:01.600 Investigations could go on and with what right they take. 0:15:02.000 --> 0:15:04.760 So the way which the FDC is pursuing Microsoft, does 0:15:04.800 --> 0:15:06.040 it seem significant to you? 0:15:06.360 --> 0:15:09.360 I think it's very important. You know, that Microsoft case 0:15:09.440 --> 0:15:12.240 brought by the Department of Justice in the late nineteen 0:15:12.280 --> 0:15:16.480 nineties was critical to the expansion and growth of the Internet. 0:15:16.600 --> 0:15:20.600 Many of the things that we benefit from in competition 0:15:20.680 --> 0:15:24.280 on the Internet are specifically because of that earlier case. 0:15:24.720 --> 0:15:28.400 What's interesting is, of course we've heard back from the 0:15:28.440 --> 0:15:32.400 Microsoft Deputy General Council Ruma Ali, who put on LinkedIn 0:15:32.640 --> 0:15:35.640 saying on behalf of Microsoft, the FDC Inspector General to 0:15:35.680 --> 0:15:40.440 investigate whether the FDC management improperly leaked confidential information about 0:15:40.440 --> 0:15:44.840 a potential anti trust investigation. How do you see these 0:15:44.840 --> 0:15:49.320 sorts of investigations involving and becoming publicly known before Indeed, 0:15:49.520 --> 0:15:52.560 Microsoft has a chance to ultimately lead the way here. 0:15:53.040 --> 0:15:56.720 I'm extraordinarily skeptical about whether or not the agency would 0:15:57.680 --> 0:15:59.840 there would be some kind of leak from the agency. 0:16:00.240 --> 0:16:06.400 That's extraordinarily unusual. Third parties, however, who receive civil investigative 0:16:06.440 --> 0:16:10.360 demands can disclose whatever they want, and maybe this is 0:16:10.360 --> 0:16:14.000 a situation where one of those parties disclosed information to 0:16:14.080 --> 0:16:18.040 the press about the requests it had received from the TC. 0:16:19.120 --> 0:16:20.600 Of course, this is wide ranging. 0:16:20.640 --> 0:16:23.040 It would see Bloomberg initially reporting on how it's going 0:16:23.080 --> 0:16:25.200 to be focusing on the way they intertwine their operating 0:16:25.280 --> 0:16:28.640 system and also their dominance and cybersecurity. Now the information 0:16:28.720 --> 0:16:31.160 talking about the open Ai Microsoft deal, I want to 0:16:31.160 --> 0:16:32.800 just take a listen to a conversation I have with 0:16:32.840 --> 0:16:36.520 the AWS CEO yesterday, Matt Garmon talking about how he'd 0:16:36.560 --> 0:16:40.080 like to offer his own AWS clients access to open 0:16:40.120 --> 0:16:41.680 aiye models but can't at the moment. 0:16:41.720 --> 0:16:42.320 Just take a listen. 0:16:42.920 --> 0:16:45.640 I believe that we would love open ai models inside 0:16:45.640 --> 0:16:50.000 of aws. Absolutely, it's we listen to our customers and 0:16:50.040 --> 0:16:51.440 if that's something the customers want. 0:16:51.320 --> 0:16:52.200 We're absolutely game. 0:16:52.760 --> 0:16:55.360 Obviously, with the partnership, it takes multiple sources, and there's 0:16:55.400 --> 0:16:58.040 probably some complexities in there, as you allude to, but 0:16:58.720 --> 0:17:00.840 I think in the fullness of time as likely. 0:17:00.760 --> 0:17:01.200 Is the case. 0:17:01.840 --> 0:17:04.560 So there in lies some of the issue that maybe 0:17:04.560 --> 0:17:08.600 the FTC is investigating this relationship with open Ai Microsoft 0:17:08.680 --> 0:17:11.040 and whether it should be indeed broken open a little. 0:17:11.080 --> 0:17:14.119 It seems as though Matt Garman is positive that it will. 0:17:14.200 --> 0:17:17.080 Do you think that ultimately that be done by self 0:17:17.119 --> 0:17:19.160 regulation or actual FTC regulation. 0:17:20.320 --> 0:17:22.239 No, I think the FTC is going to take a 0:17:22.280 --> 0:17:26.159 serious look at this relationship and the potential of that 0:17:26.359 --> 0:17:32.280 relationship to foreclose other forms of competition other rivals. They're 0:17:32.320 --> 0:17:35.000 going to take a very close look at the nature 0:17:35.080 --> 0:17:38.440 of the agreement between open ai and Microsoft. 0:17:39.480 --> 0:17:42.160 Do you think though, that a lot of these cloud 0:17:42.200 --> 0:17:46.840 companies are having particular relationships with some of these very 0:17:46.880 --> 0:17:50.040 powerful generative AI models. Is that something that's generally going 0:17:50.040 --> 0:17:51.160 to be looked at across the board. 0:17:52.600 --> 0:17:56.520 Yes, but it's always important to realize that Microsoft is dominant. 0:17:56.600 --> 0:18:01.200 They're dominant in cloud computing, they're dominant in certain software categories, 0:18:01.280 --> 0:18:05.119 vital software categories, and when the firm takes that dominance 0:18:05.400 --> 0:18:08.800 and extends that dominance to other product markets and for 0:18:08.880 --> 0:18:13.840 closes competition in those markets, that violates the antitrust laws. 0:18:14.080 --> 0:18:17.280 I feel though AWS would have something to say about 0:18:17.359 --> 0:18:19.639 as you're being all that dominant. They feel that they 0:18:19.640 --> 0:18:21.680 have owned a lot of the market. I'm sure that 0:18:22.119 --> 0:18:24.920 even other areas Oracle fields that they've got a key 0:18:24.960 --> 0:18:29.760 state Google as well. Can you have broader provision less 0:18:29.800 --> 0:18:35.960 oligopoly like cloud operations when this ultimately is incredibly expensive 0:18:35.960 --> 0:18:36.399 to offer. 0:18:38.400 --> 0:18:40.960 I think that's one of the considerations that's kept in 0:18:41.000 --> 0:18:44.960 mind here. But we see many markets where there are 0:18:44.960 --> 0:18:52.560 not contractual arrangements that for closed competition, where competition flourishes. 0:18:52.920 --> 0:18:57.360 And it's specifically those arrangements like the arrangement between Microsoft 0:18:57.640 --> 0:19:01.920 and open Ai that will receive in ten scrutiny. And 0:19:02.680 --> 0:19:07.120 you know, especially because Microsoft is so dominant in cloud. 0:19:06.840 --> 0:19:12.120 Computing and dominant in cybersecurity and in many ways they're 0:19:12.200 --> 0:19:15.600 reporting is such that this investigation started because some of 0:19:15.640 --> 0:19:18.960 the failings to do with cyber when it came to 0:19:19.480 --> 0:19:22.639 federal provision is that what sparked all of this, David, 0:19:22.680 --> 0:19:24.040 how do you think this is going to weather a 0:19:24.080 --> 0:19:25.680 transition into a new administration? 0:19:28.000 --> 0:19:31.360 First of all, that suggests one of the real advantages 0:19:31.400 --> 0:19:34.520 of having a federal Trade Commission that deals with both 0:19:34.560 --> 0:19:39.439 consumer protection issues. They are failure to provide cybersecurity adequately 0:19:39.880 --> 0:19:43.919 and competition issues. I think this is an investigation that 0:19:44.080 --> 0:19:48.800 won't lose any steam in a new Trump administration. The 0:19:50.080 --> 0:19:54.200 kinds of legal issues here about when bundling is legal 0:19:54.280 --> 0:19:57.680 and illegal. I think there's a pretty strong consensus between 0:19:57.720 --> 0:20:01.679 Republican and Democratic and I try some forcers, so I 0:20:01.760 --> 0:20:06.480 expect this investigation will go full throughout in the next administration. 0:20:07.280 --> 0:20:10.639 David Balto, former Policy director of the Bureau of Competition 0:20:10.840 --> 0:20:13.960 at the FTC, thank you for your time. Now coming up, 0:20:14.240 --> 0:20:16.560 David Ellison is dying big changes to Paramount. 0:20:16.680 --> 0:20:39.720 We're on that next. This has pretty big technology time 0:20:39.760 --> 0:20:40.560 now for talking tech. 0:20:40.600 --> 0:20:43.400 First up, big changes may be coming to Paramount Global. 0:20:43.520 --> 0:20:47.200