Speaker 1: I'm Caroline Highe at Broomberg Studio right here in San Francisco,
Speaker 1: and me Lovelow, also in San Francisco. This is Blombo
Speaker 1: Technology and Caroline Tech. Earnings are here Texas Instruments. Microsoft.
Speaker 1: The market treading water until those numbers hit, and this
Speaker 1: is why we're in San Francisco for this week. This
Speaker 1: is why we look at what is already some optimism,
Speaker 1: some hope, as a futures market already signaling it. Let's
Speaker 1: talk about all those headlines Microsoft rising after profit Cloud
Speaker 1: revenues they've beat estimates. Plus the Justice Department in eight
Speaker 1: states are suing to break up Google's a business, and
Speaker 1: senators blast ticket masters CEO over soaring ticket prices and
Speaker 1: a terrible customer experience. Let's flip it on the Microsoft,
Speaker 1: because this is the key name. The first megacat to
Speaker 1: report profit was the focus strong fiscal second quarter at
Speaker 1: EPs at two dollars thirty two cents to share above
Speaker 1: and list expectations. The other way of looking at it
Speaker 1: is that actually EPs did not drop as much from
Speaker 1: the same period a year ago as the street had
Speaker 1: been looking for the broadest story. If you look into
Speaker 1: my Bloomberg terminal. When we talk about that bottom line
Speaker 1: was the performance in strength in as your cloud. How
Speaker 1: often has that unit, Carol been in the headlines of
Speaker 1: late And that's what we'll go straight to first with
Speaker 1: Jeffreys analyst Brent Hill, who has a by rating on Microsoft.
Speaker 1: Welcome to the show. Brent. Simple question to start with
Speaker 1: this is once again as you're saving the day, isn't it? Yes?
Speaker 1: As here's one component. Office was also very good. I
Speaker 1: think the balance of growth and profitability is keeping Microsoft alive. Remember,
Speaker 1: going into the print, everyone was super fearful that Nidela
Speaker 1: had shared, you know, a textra up for two years.
Speaker 1: The US was going to get worse. So they certainly
Speaker 1: brought expectations down in front of the print, but delivered
Speaker 1: what was in okay quarter. No one was going to
Speaker 1: do backfloods over these numbers. There's no question technology spence
Speaker 1: slowing in the get worse in the back. After the year,
Speaker 1: they have another quarter of to tough comps, so you know,
Speaker 1: let's let's let's not not break up the champagne glasses
Speaker 1: at this point. But it relative to the fear way
Speaker 1: better than expected. Yeah. I think that's an interesting point.
Speaker 1: I think when we look at asual the business a
Speaker 1: hundred basis points better than than guided, then you kind
Speaker 1: of think about this idea that I think EPs drop
Speaker 1: six and a half percent. The street was looking for
Speaker 1: a seven point five pc drop year on year. When
Speaker 1: we look forward to the rest of the year, what
Speaker 1: is this story for Microsoft with this broader economy. Is
Speaker 1: it going to have to rely on its cloud business? Yeah,
Speaker 1: I mean it's all about the cloud. I mean, there's
Speaker 1: no other story here. Uh, it is the cloud. Um.
Speaker 1: I think as we go deeper into the year, I
Speaker 1: think this concept of I T budgets are shrinking? Can
Speaker 1: Microsoft do more with less? And what we're hearing in
Speaker 1: a lot of the interviews is ce I O s
Speaker 1: are continuing to consolidate their spend onto Microsoft. Microsoft has
Speaker 1: been vicious about contract renewals. They don't budge when when
Speaker 1: ce IO is trying to renew. So relative to a
Speaker 1: overall tech environment that is slowing into can Microsoft is
Speaker 1: going to do relatively better in that environment? And and
Speaker 1: it's about consolidation in taking spend from other vendors. So
Speaker 1: I think other vendors are in a way worse position.
Speaker 1: The portfolio, the durability of the revenue. The quality of
Speaker 1: this management team should be able to cut through this.
Speaker 1: But I think really investors are trying to ask, you know,
Speaker 1: what do I pay for the stock that's got ten
Speaker 1: dollars of earning power trains out of mid twenty multiple.
Speaker 1: So it's not exactly cheap, it's not expensive, it's just
Speaker 1: kind of right in the middle. So I think that's
Speaker 1: a concern. Okay, so your price target, of course, Brend,
Speaker 1: is to eighty. What takes us that? And what do
Speaker 1: you want to hear on the coolt I think we
Speaker 1: continue on to hear about they haven't guided in this release,
Speaker 1: so we need to hear guidance. Uh and and that
Speaker 1: are things you know. Nidella said this that things may
Speaker 1: get worse inside the US, what's happening in the US
Speaker 1: market and the rest of the world. Ultimately, can they
Speaker 1: commit to double digit growth? They've talked about a framework
Speaker 1: of having double digit growth with margin improvement. Can they
Speaker 1: hold that? And so I think overall everyone is really
Speaker 1: just all eyes on what's going to actually happen with
Speaker 1: with overall growth for the rest of the year. Brent,
Speaker 1: You'll be sticking with us, Brent, Phille just hold on
Speaker 1: one moment, because we've got another key technology news of
Speaker 1: the day, we've got to digest Justice Department eight States
Speaker 1: as well also in Google over the search giants ad dominance.
Speaker 1: Blomberg's Emily bern Broum is with us in d C.
Speaker 1: Having the details for US, Emily taken away. What overall
Speaker 1: is the argument coming from the United States against Google? Right?
Speaker 1: So today the Justice Department in eight US States announced
Speaker 1: their long awaited case against Google. UM. They're alleging that
Speaker 1: Google has abused its dominance in online marketing. UM that
Speaker 1: for every one dollar that advertisers spend on its litany
Speaker 1: of online advertising tools, UM, Google takes thirty cents, So
Speaker 1: essentially that they have UM, they've harmed competition online, They've
Speaker 1: made life harder and were expensive for advertisers. UM. And
Speaker 1: this is the second case that the Justice farm it
Speaker 1: has brought against Google. UM and some experts say this
Speaker 1: is UM potentially a more winning case. UM. And I
Speaker 1: know everyone in the tech industry is watching really closely.
Speaker 1: They certainly including Google, which has itself responded E many member,
Speaker 1: we thank you for that. And NETS get the take
Speaker 1: of Jeffreysans Brentville, who has a by rating on the
Speaker 1: Google parent alphabet and regulatory headwins. We know they're abound
Speaker 1: for many a tech name. But from your perspective, the
Speaker 1: fact that Google is saying there isn't sort of legal
Speaker 1: founding for this, do you agree. Look every legal case
Speaker 1: it's calmed, they thown away around it, and so it
Speaker 1: hasn't slowed them down yet. I don't think this is
Speaker 1: gonna low down. It's hard to handicap the case, to
Speaker 1: be honest, um, but we've been living with regulatory headwinds
Speaker 1: and the Internet for so long. Um, it's really hard
Speaker 1: to handicap. I don't believe this is going to have
Speaker 1: any impact. Ultimately, at the end of the day, Google's
Speaker 1: providing service that's helping us as consumers get places, find items.
Speaker 1: I do not right now have any belief that this
Speaker 1: will have any material impact in the business. Um. There's
Speaker 1: been tons of legal scare tactics. UM, So right now
Speaker 1: it's really hard to handicap. And I think this is
Speaker 1: why Google's training at such a low multiple, as everyone's
Speaker 1: concerned at some point could something happen. We we there's
Speaker 1: been no precedents that it has any had any issue
Speaker 1: on side the core business that has slowed them down
Speaker 1: still far, I mean, Brent Google said in a blog
Speaker 1: post that the lawsuit quote attempts to pick winners and
Speaker 1: losers in a highly competitive advertising technology sector. They say
Speaker 1: logic duplicates an unfounded lawsuit by the Texas Attorney General,
Speaker 1: much of which was recently dismissed by federal art is
Speaker 1: this though, Brent, Even if they managed to win, it's
Speaker 1: a cost headache, but it's also perhaps costing them in
Speaker 1: terms of innovation. Is it just a distraction? What do
Speaker 1: you worry about the opportunity cost hit? Yeah, it's a distraction.
Speaker 1: They're they're focused on innovation. Their innovation has not dropped.
Speaker 1: I mean, it's like every other turn we hear some
Speaker 1: legal case. And again this has been across Internet, across
Speaker 1: a lot of tech names. It has not cost them
Speaker 1: any innovation yet and ultimately they broke up pieces of
Speaker 1: the business to be a concern, but so far we
Speaker 1: just haven't seen it. So really, in our opinion, not
Speaker 1: much to say at this point other than it's a
Speaker 1: distraction and their job and they have done this very
Speaker 1: well is kept their eyes on the road and kept focused.
Speaker 1: I'm looking at the share reaction during Tuesday's session with
Speaker 1: down one point seven all told, once the market had closed.
Speaker 1: This is a department the DJ that looked at this
Speaker 1: under the Trump administration, it continues to look at it
Speaker 1: under the Biden administration. When you're an analyst covering this stock,
Speaker 1: how much is the risk of serious action with serious
Speaker 1: results modeled into your price target. It's modeled in because
Speaker 1: you have a multiple that now is training at a
Speaker 1: very big discount. So I don't think anyone that's investing
Speaker 1: the Internet names is investing right now with all the
Speaker 1: understanding that this is an issue. This is an issue
Speaker 1: for Amazon, it's an issue for Microsoft, It's an issue
Speaker 1: for Facebook and Meta UH, it goes across the board.
Speaker 1: So I don't really see an issue that is going
Speaker 1: to create at this point a big concern. And again,
Speaker 1: you've seen Google stock or the last decade, UH continue
Speaker 1: to power higher. So we'll keep an eye on it.
Speaker 1: We're certainly cognizant of it, but but so far, I
Speaker 1: don't think there's enough for us to really hang or
Speaker 1: hat on anything at this point. And the other story
Speaker 1: dominating the headlines is layoffs. You know, we cannot get
Speaker 1: away from alphabet and Google being another company that is
Speaker 1: that is pulling back what surprise Caroline and I with
Speaker 1: some of the specific airs, even off ficial intelligence where
Speaker 1: competition with Microsoft is heating up again. What do you
Speaker 1: think that means for Alphabet's business, the action it's taken
Speaker 1: on headcount reduction. They needed it. They hired, you know,
Speaker 1: in the mid twenty growth rate. So we think this
Speaker 1: is pretty common, Microsoft, Amazon, everyone is taking action the
Speaker 1: environment sloin for tech. They all have to slow their
Speaker 1: head count and they all have to effectively go through
Speaker 1: and really re examine who they've hired and not everyone's
Speaker 1: gonna work in any business, right, So at least five
Speaker 1: percent of this is just removing hires that don't work.
Speaker 1: The other five percent plus is trimming. We're not discounting
Speaker 1: there's going to be potentially more changes to headcount. I
Speaker 1: think that that is a still open and I think
Speaker 1: we we expect more cuts to happen across tech. So
Speaker 1: I think this is the first wave, but I think
Speaker 1: this is very common, and to be honest, I think
Speaker 1: Google should have acted faster than one of the last
Speaker 1: ones to jump in the cost cut pool. Salesforce. You
Speaker 1: go through the list, everyone's really dying they have indeed,
Speaker 1: and we'll still see if Morris to come. Brent, so
Speaker 1: great to have you across these two key stories. Brent Hill,
Speaker 1: he's Jeffrey's analyst. Meanwhile, let's get to another key story.
Speaker 1: Rupert Murdock is scrapping plans for a proposed merger between
Speaker 1: Fox and News Corp. Murdock had, of course sent plans
Speaker 1: to put back together a media empire, then he split
Speaker 1: back in but he indicated that he and his son
Speaker 1: Lachlin have determined that a combination is not optimal for
Speaker 1: the shareholders of Fox and News Corp. At this time.
Speaker 1: The Murdock family, remember, has about thirteen nine voting stake
Speaker 1: in both News Corps and approximately of Fox Bank of America.
Speaker 1: Some stock compensation being announced and for those who are
Speaker 1: earning up to half a million, so five hundred thousand dollars,
Speaker 1: they are now eligible to receive once again a pool
Speaker 1: of restrict restricted stock. This is rewarding basically a majority
Speaker 1: of the entire EMP employee base, which was to about
Speaker 1: who are earning five or below, so still sticking to
Speaker 1: that reward compensation to try and keep their talent, even
Speaker 1: though they saw some downdraft on their revenues of let's
Speaker 1: shift gears, and let's talk about staff and relationships with
Speaker 1: with executives elsewhere. Alphabet apparently is illegally using return to
Speaker 1: office policies as a tool to try to derail YouTube
Speaker 1: contract workers from organizing in Texas, As, all according to
Speaker 1: a complaint filed by the Alphabet Workers Union on Tuesday.
Speaker 1: Bloom Mark Bergen joins us Now for more on this,
Speaker 1: and Mark fascinating that we're seeing this move. Who of
Speaker 1: YouTube are trying to organize? What parts of the business?
Speaker 1: What kind of contract us. Yeah, these are contract workers
Speaker 1: for YouTube Music, which is their Spotify competitor. They're based
Speaker 1: in Texas and they're alleging here of this complaint to
Speaker 1: the Natural Labor Board that as soon as they started
Speaker 1: ramping up their unionization effort, they got calls to come
Speaker 1: back to the office and if they didn't come back
Speaker 1: that they might find themselves determinated as Googles, we remember
Speaker 1: as one of those companies that has this three day
Speaker 1: a week policy, um that they're sort of enforcing. It's
Speaker 1: unclear house strictly they're enforcing it. In this case, it
Speaker 1: seems to be pretty strict. Here in the Bay area.
Speaker 1: Lots of Alphabet employees, lots of Google employees, lots of
Speaker 1: them are contractors. That's what's been surprising, especially in the
Speaker 1: recent headlines around layoffs, that's become a flashpoint for the company.
Speaker 1: Why why is this an issue? It's something that's come
Speaker 1: up in from a lot of their full time employees
Speaker 1: that have complained here that they have this this two
Speaker 1: tier system where their contract workers they don't have the
Speaker 1: same benefits, they don't have the same equity as a
Speaker 1: regular sort of Google engineer might have. You know, this
Speaker 1: is sort of like you were just talking about regulation
Speaker 1: with the big tech companies sort of baked into like you,
Speaker 1: We're seeing this at Apple right with their retail employees,
Speaker 1: were seeing this an Amazon, their warehouse workers, Microsoft their
Speaker 1: video game employees, and then various parts of the Alphabet
Speaker 1: Google empire um have been raising this issue around contract workers.
Speaker 1: In this complaint, they explicitly said, no, Alphabet, you are
Speaker 1: the joint employer as an addition to Cognizant, which is
Speaker 1: the actual employer. That's something that that Google Alphabet has
Speaker 1: actually pushed back on in court filings and said no, no,
Speaker 1: we're not the employer here. This is the contractor to
Speaker 1: the employer. Dig into that a little bit more because
Speaker 1: representatives of both Alphabet and Cognizant didn't immediately re sponsor
Speaker 1: request or comment. But ultimately this is about the contractors
Speaker 1: being employed through Cognizant and Alphabet trying to say that
Speaker 1: we were sort of a step removed here. Yeah, this
Speaker 1: is something I mean, it's not just the tech industry,
Speaker 1: but they've adapted this practice reason in the decades. You
Speaker 1: know'll be interesting to see with the layoffs you're just
Speaker 1: talking about. Uh, it's more like you know, Google YouTube,
Speaker 1: they still want to grow YouTube music, still wants to
Speaker 1: compete with Spotify. They still want hundreds and thousands of
Speaker 1: employees out there that do with these workers in Texas
Speaker 1: to which is actually come through the library to make sure,
Speaker 1: Like that's what I was going to ask you. I mean,
Speaker 1: is there a specific job function that their argument allows
Speaker 1: them to leverage this rule in the return to office argument?
Speaker 1: And what is it that they're doing. Yeah, my understanding
Speaker 1: of these workers, they're not like the content moderators that
Speaker 1: YouTube that will screen for violent footage or child pornography.
Speaker 1: They're actually like looking at, oh this video is the
Speaker 1: music video? This one's not this Mudia music video comes
Speaker 1: up from this label. Right, These are all these kind
Speaker 1: of behind the scenes ghosts in the machine laborers that
Speaker 1: the YouTube relies on. You. My guess is they might
Speaker 1: actually have to rely on these people more now that
Speaker 1: they just cut twelve thousand full time employees. All right,
Speaker 1: Bloomberg's Mark Berg, and thank you very much as you
Speaker 1: want to stick with Alphabet and its research lab deep mind,
Speaker 1: it's taking a hit outside of the U S. The
Speaker 1: AI unit will close it's Edmonton, Alberta outpost and lay
Speaker 1: off some operational staff in the UK as part of
Speaker 1: the tech giants recent effort to cost costs that we've
Speaker 1: just been talking about. Impacted engineers and researchers will be
Speaker 1: offered the option to relocate to other offices for those
Speaker 1: and other roles unfortunate carry will be laid off. Meanwhile,
Speaker 1: coming up, let's flick gears and look at innovation coming
Speaker 1: from Amazon. It's a five dollar a month subscription for
Speaker 1: generic drugs. Latest venture coming from that in commerce giants, Bloomberg.
Speaker 1: So you pay a hundred and thirty nine dollars a
Speaker 1: year for Amazon Prime in the US, would you pay
Speaker 1: another five dollars a month for a drug subscription service
Speaker 1: from Amazon. The e commerce giant has started r x Pass.
Speaker 1: You have to be a Prime member and you can
Speaker 1: order from a menu of fifty three generic medications, which
Speaker 1: Amazon says can treat more than eighty health conditions. R
Speaker 1: x Pass is available in most US states, but if
Speaker 1: you're in California, Pennsylvania, in Texas, you're going to have
Speaker 1: to wait the pitch low priced simple medications on a
Speaker 1: monthly basis, but you can't use government insurance. And it's
Speaker 1: not clear what's new in Amazon subscription offering. The tech
Speaker 1: giants already offered Amazon Pharmacy since where Prime users can
Speaker 1: already pay for subscriptions using their insurance, or you can
Speaker 1: get discounts on medicine if you want to pay cash.
Speaker 1: So this is a Bloomberg story that caughter I on
Speaker 1: Tuesday morning, mostly because I thought i'd heard it before.
Speaker 1: Amazon announced back in Amazon Pharmacy, where you can use
Speaker 1: insurance and if you choose not to pay a bit
Speaker 1: of cash, but you get a big discount on on drugs.
Speaker 1: So this is very similar, but it seems to be
Speaker 1: that subscription part of it, and there was some reaction
Speaker 1: out there today to this news. There was particularly from
Speaker 1: competitors stocks which fell unsurprisingly. Good our X has been
Speaker 1: a company that time and time again, when we've questioned
Speaker 1: the CEO, he said, look, Amazon is not our threat.
Speaker 1: We can be innovative. But now a lot of analysts
Speaker 1: are out there and saying, well, innovate because if you
Speaker 1: think about what Amazon is offering five dollars and months,
Speaker 1: it's not going to compete versus Good or X if
Speaker 1: you're ordering just one drug, but if you if you're
Speaker 1: ordering one to three, five dollars a month is really
Speaker 1: cheap versus what they're going to be. As we said
Speaker 1: in the piece, you can't use government insurance. There was
Speaker 1: another part of that which was interesting. Not available in
Speaker 1: California or Texas, in other ways, the country's most popular states.
Speaker 1: And Amazon actually did not give us an explanation as
Speaker 1: to why, which I thought was interesting. Kind of got
Speaker 1: check it and think there must be to do with
Speaker 1: regulation or signing off, crossing the t s, donning the eyes.
Speaker 1: But overall, this is a company that has time and
Speaker 1: time again focusing on how we can become more addicted
Speaker 1: to prime well seemingly by offering some healthcare that's the
Speaker 1: way to do it. Google has engaged in exclusionary conduct
Speaker 1: just severely weakened, if not destroy competition in the air
Speaker 1: deck industry. As detailed in our complaint. We alleged that
Speaker 1: was an a competitive CONDAC extends to three significant elements
Speaker 1: of the digital ad buying process. US Attorney General Merrit Garland.
Speaker 1: They're speaking at a press conference on Tuesday, so let's
Speaker 1: get right back to that key story of the day,
Speaker 1: the US lawsuit to break up Google's ad unit. Let's
Speaker 1: bring in an expert in the space. David Cohen, CEO
Speaker 1: of the Interactive Advertising Bureau, an organization that develops industry standards,
Speaker 1: conducts research, provides legal support for the online advertising industry.
Speaker 1: Both about seven hundred members in fact, including Google, but
Speaker 1: also Netflix, Twitter, Metas, Spotify, many many more. Just off
Speaker 1: the back of your annual leadership meeting, David, and I
Speaker 1: know you can't speak as if your Google, but tell
Speaker 1: us everyone must have been discussing this from your perspective.
Speaker 1: How does the advertising tech world currently function? Is it
Speaker 1: a competitive space? Well, it's great to be here and
Speaker 1: thank you for the question. We just hosted about twelve
Speaker 1: hundred folks in Marco Island across the digital ecosystem, and
Speaker 1: we had two and a half days of conversation around privacy,
Speaker 1: public policy, address ability, the future of streaming. UM A
Speaker 1: healthy and open and supported ecosystem, I will tell you
Speaker 1: from where we sit UM, and we we kind of
Speaker 1: go out to our membership every year with a a survey.
Speaker 1: There is widespread belief that there is healthy competition. We
Speaker 1: have a very very long tale in the Internet aid ecosystem.
Speaker 1: We have millions of small businesses that rely upon advertising,
Speaker 1: and yes we do have some larger players. But this
Speaker 1: news which actually just wrote today, I certainly did see it. UM.
Speaker 1: We have not dived into it, dove into it in
Speaker 1: any way, just finished our conference about two hours ago,
Speaker 1: but obviously we'll be closely watching. What was interesting is
Speaker 1: that many have used the anecdote that this is like
Speaker 1: City Bank or Goldman owning the New York Stock Exchange.
Speaker 1: How is it different? Can you get us under the
Speaker 1: skin of how the infrastructure that Alphabet owns and operates
Speaker 1: It's different from say a bank owning the Nicely there
Speaker 1: are there are lots of companies that own multiple parts
Speaker 1: of the tech ecosystem, of the supply chain in the
Speaker 1: digital ecosystem and the and the end beneficiary is consumers.
Speaker 1: Consumers like convenience, they're like lower price, they like its supported,
Speaker 1: they like free internet, they like free information, entertainment, communications.
Speaker 1: There are there are lots of examples of this beyond
Speaker 1: just Google. Um, so I'm not sure why it's It's
Speaker 1: not just a Google situation. Folks do play on both
Speaker 1: sides of the equation, and the end recipient of that
Speaker 1: is a consumer winning. Hey, David, Let's let me come
Speaker 1: at it this way. The d J states alleges that
Speaker 1: Alphabet or Google in particular, dominates the market for search,
Speaker 1: but also dominates the market for advertising technology. You lead
Speaker 1: an industry association for advertising. Does Google dominate the market
Speaker 1: for advertising technology? There was a report that recently came
Speaker 1: out I believe it was in the Wall Street Journal
Speaker 1: about a month ago that reported that between Google and Meta,
Speaker 1: they represent less than fifty of the ad supported ecosystem
Speaker 1: in the US. That is a change, that is a
Speaker 1: decrease over time. Are there players that have significant influence
Speaker 1: and significant share? Yes, in lots of cases in the industry,
Speaker 1: whether you talk about detergent chocolate, autos, there are lots
Speaker 1: of examples of leading players that have significant market share.
Speaker 1: I do not think the AD supported ecosystem is any
Speaker 1: different than other categories. Of course, David, you're the Interactive
Speaker 1: Advertising Bureau CEO, and I know one thing top of
Speaker 1: your mind right now is streaming. It was interesting this
Speaker 1: weekend gone actually Lucas Shaw how In l a our
Speaker 1: correspondent covering that industry, interviewed the new CEOs of Netflix,
Speaker 1: and I'm paraphrasing, but they basically said they got to
Speaker 1: an ad supported tier and they got to add tizing
Speaker 1: when they realized they better get moving because of the
Speaker 1: competitive landscape. Where do we stand with the streamers, those
Speaker 1: newer players and those longer legacy players, and how they
Speaker 1: are contributing to that marketplace. It represented a lot of
Speaker 1: our conversation over the past two and f days. In fact,
Speaker 1: we had Jeremy Gorman from Netflix as a speaker on
Speaker 1: the stage. She talked about their UH. They're getting into
Speaker 1: the AD supported streaming space. It's still early days. They
Speaker 1: have a minimum viable product and they're very excited about
Speaker 1: growing that, driving innovation and UH and scale. There is
Speaker 1: absolutely no doubt that we are seeing a very very
Speaker 1: quick shift from linear television to the streaming space, and
Speaker 1: supported streaming is clearly where the action is at, and
Speaker 1: there's obviously lots of competition in that area. We host
Speaker 1: something every year what's called the New Fronts, which is
Speaker 1: basically a celebration of what is the opportunity in the
Speaker 1: streaming space, which is coming up in May for the
Speaker 1: general upfront season when advertisers go to the market and
Speaker 1: buy for the upcoming year, and we'll just the environment.
Speaker 1: Seemed like, David, everyone's been worrying. The earnings are about
Speaker 1: to be upon us, and we're waiting to hear how
Speaker 1: these companies have navigated a slowing advertising environment. Is that
Speaker 1: what people are worrying and seeing in that business? But
Speaker 1: I think that's exactly the right word, is slowing what
Speaker 1: we have seen, and we actually do research on this topic.
Speaker 1: We go out to the market, we interview buyers, and
Speaker 1: we believe that this year will be a growth year
Speaker 1: for the digital environment, but it will be a far
Speaker 1: slower growth here than it has been historically. Overall, we
Speaker 1: see that the advertising space will grow about six percent
Speaker 1: in te and there are areas that will decline linear
Speaker 1: television as an example, and there are areas that will
Speaker 1: grow significantly. CTV we have growing four year on year,
Speaker 1: and once again that is coming off of a year
Speaker 1: of explosive growth in two So a year of growth,
Speaker 1: but a year of slowing growth. A year of growth
Speaker 1: but a year of slowing growth. I think that something
Speaker 1: we've heard time and time again from this industry. Caroline
Speaker 1: David Cohen, CEO of the Interactive Advertising Bureau, thanks for
Speaker 1: joining us hot on the tails of your annual meeting.
Speaker 1: Now onto Elon Musk. Who else? He told a jury
Speaker 1: he was confident he could have pulled off his proposal
Speaker 1: four and a half years ago to take tests the private,
Speaker 1: saying he's never had any trouble raising money for his companies.
Speaker 1: I want to get straight to my colleague over at
Speaker 1: that San Francisco court room, Bloomberg's Malati Nayak, who has
Speaker 1: been covering Musk testimony for the last three days. This
Speaker 1: all about, of course, those tweets in to take test
Speaker 1: the private, Malachi, what was the takeaway from day three?
Speaker 1: So looking at deep Sea, indeed two it was almost
Speaker 1: like a day of two Musks. Yesterday we saw Musk
Speaker 1: whose mumbling looking forwards a judy. We had a very
Speaker 1: confident muskod the stand. You know, he was making very
Speaker 1: good I gonta with the jury. And yesterday he had
Speaker 1: admitted that he didn't get enough sleep, but don uh
Speaker 1: this you know, he probably slept last night it and
Speaker 1: and was back in court today in full form um.
Speaker 1: Some of the takeaways today were Must basically touted to
Speaker 1: the jury his record when it came to UM investing
Speaker 1: raising funds when it comes to investors, and he said
Speaker 1: that he, uh, every financing rep around that he has
Speaker 1: ever had, you know, under his watch, has been oversubscribed.
Speaker 1: He talked about how he had the best record in
Speaker 1: the world perhaps of raising money when it came to investors,
Speaker 1: and he also said that he was always truthful to
Speaker 1: investors and that's why investors would just give him the money. Um.
Speaker 1: And we also had a lot of questioning from his
Speaker 1: own attorney, Alex Biro, so I think he was a
Speaker 1: lot more comfortable. And then we had the attorney from
Speaker 1: the claensive side who tried to sort of land some
Speaker 1: of these gotcha moments, but they didn't quite happen, although
Speaker 1: he did get musked too, uh to say that you know, uh,
Speaker 1: he hadn't previously talked about the space x um you
Speaker 1: know shares, which he said yesterday he would adapting to
Speaker 1: the finance the deal, ultimately taking a step back. Malati,
Speaker 1: Is he doing enough of what's required of him to
Speaker 1: fight off the allegations of the shareholders? Um? I think,
Speaker 1: you know, he came with these good catch phrases talking
Speaker 1: about how he really cares about investors and wanted to
Speaker 1: do right by investors. Uh. He repeated, how you know, um,
Speaker 1: there was an equivocal support from Saudi Arabia and when
Speaker 1: he said finding secured, he actually, you know, believed that
Speaker 1: Saudi Arabia was committed to this deal. UM. So I
Speaker 1: think that you know, he definitely brought his a game today. Um,
Speaker 1: and he definitely sort of you know um um ensured
Speaker 1: that there weren't any punches that landed from the plaintiff's
Speaker 1: attorney except for a few here in there. Malatti, this
Speaker 1: is probably the three days of this trial that everyone
Speaker 1: was most excited about and most tuned into. But we
Speaker 1: have a little way to go, don't we what's left
Speaker 1: in this process, So we have a few more witness
Speaker 1: is lined up and this is a two week trial,
Speaker 1: so things are fluent and in fact that the judge
Speaker 1: was concerned they were running behind schedules. So I'm guessing
Speaker 1: the trial could end around the first week of February,
Speaker 1: and then we'll have to see how long the jury
Speaker 1: takes to uh come out with a verdict on on
Speaker 1: where there must you know, what is thinking was behind
Speaker 1: these tweets? Mala Niack, We thank you so much taking
Speaker 1: time out at that very courtroom to come and speak
Speaker 1: with us. Thank you. Meanwhile, coming up, we've got to
Speaker 1: get into the world of crypto. For example, Celsius might
Speaker 1: create a token of its own to get itself out
Speaker 1: of bankruptcy. What else is happening in the crypto space
Speaker 1: at the moment. We're going to talk about it all
Speaker 1: with Blockchains Associations that Kristen Smith, this is broom back.
Speaker 1: There were clearly interpart transactions and loans that we're not
Speaker 1: well understood by the various stakeholders. Uh, and we'll see
Speaker 1: what the courts have to say about that. So there's
Speaker 1: multiple entities that will likely file suit. The Binklbas brothers
Speaker 1: have said there there's this pending fir Tree has one.
Speaker 1: So we'll see if the court forces disclosure of all
Speaker 1: this and what that means for illegal ramifications. That was Vanek,
Speaker 1: head of diusital Assets, talking about the commingling of crypto
Speaker 1: funds within firms like fd X. Today Tuesday, Bloomberg learned
Speaker 1: Celsius is considering a new token to repay creditors and
Speaker 1: exit bankruptcy. And other headline that's caught my eye on
Speaker 1: the Bloomberg in the last twenty four hours. Binns conceding
Speaker 1: it mistakenly placed user funds with its own reserves. A
Speaker 1: lot to pass over. Let's bring in Kristin Smith, executive
Speaker 1: director the Blockchain Association. I guess it's a group you
Speaker 1: serve as a liaison between policymakers, industry participants. Negative headline
Speaker 1: binance considers well, concedes sorry, using funds mistakenly stalled with
Speaker 1: its reserves, issuing a token to make up to creditors.
Speaker 1: I mean, it's impossible question. What is your reaction to
Speaker 1: all of that continuous negative headlines? I said, yeah, no, listen,
Speaker 1: it's obviously been a challenging year for the crypto industry,
Speaker 1: and we're continuing to see a lot of interesting headlines.
Speaker 1: I think if there's any silver lining to all of this,
Speaker 1: this has been a real educational opportunity, particularly for policymakers
Speaker 1: as they're trying to get up to speed on a
Speaker 1: very complex industry. UM. I do think, you know, when
Speaker 1: we see headlines around finance, I think there's probably deeper
Speaker 1: details um in the backstory. I mean, I you know,
Speaker 1: binance dot com is not a US operated company, but
Speaker 1: it does pose these questions how do users who are
Speaker 1: giving their assets to of a third party know that
Speaker 1: they're actually there? And I think some of the US
Speaker 1: companies have some really innovative proof of reserve systems in
Speaker 1: order to do that. But all of this really gets
Speaker 1: back to a conversation about how do you hold digital assets? Hey,
Speaker 1: how cool you can hold digital assets yourself. You don't
Speaker 1: have to rely on a third party, or if you
Speaker 1: are relying on a third party, how do you know
Speaker 1: they're reliable? And so yeah, we're all thinking of this
Speaker 1: as one big, giant, ongoing teachable moment, and the block
Speaker 1: Tin association teachable moment that continues to kind of confound
Speaker 1: in a maze in some ways of the resolute optimism
Speaker 1: within a space where many here of perhaps the new
Speaker 1: CEO of f t X going through a bankruptcy proceeding
Speaker 1: is then talking about how they could perhaps resuscitate the
Speaker 1: ft X product here in the US, and therefore the
Speaker 1: token link to that. Jumping ahead a few steps, well,
Speaker 1: did you see the reaction rise in ft T tokens
Speaker 1: because of that uplift? Does that signal you know, seeds
Speaker 1: of chain. I'm I'm very skeptical of these tokens that
Speaker 1: are tied to a specific exchange or platform. I think
Speaker 1: real crypto assets operate decentralized crypto networks and they aren't
Speaker 1: tied to the success of any single entity or firm.
Speaker 1: So I think the activity that was happening around the
Speaker 1: f t T token was pure speculation. That's not a
Speaker 1: token that's widely traded in the United States. UM, I
Speaker 1: don't think that that is is necessarily the right answer.
Speaker 1: I think that you know, investors, as they're looking to
Speaker 1: invest in crypto assets really need to do their own
Speaker 1: research and understand what is the underlying network, because the
Speaker 1: crypto industry isn't here to build crypto tokens where the
Speaker 1: price moves up at down centralizednization. The buzzworld because it
Speaker 1: is well, it's it's it's incredibly important, and I think
Speaker 1: there are really strong use cases around it, and and
Speaker 1: and not as strong use cases around it. What we're
Speaker 1: trying to do with crypto networks is find an incentive
Speaker 1: for different parties that don't have any connection to come
Speaker 1: together and operate the infrastructure of a network. And and
Speaker 1: that is something that in order to have that economic incentive,
Speaker 1: you have to have a token. Um, if you're going
Speaker 1: around and tokenizing something related to a specific company, that
Speaker 1: looks a lot more like like a security and and
Speaker 1: sort of misses the point as to why we are
Speaker 1: here building building out crypto networks. All regulators missing the
Speaker 1: point or having to focus more on things they worry
Speaker 1: that are looking like securities. Um, yeah, no, listen, I
Speaker 1: think it depends on the regulator. Um. There, Hester Percy
Speaker 1: yesterday or a couple of days ago, gave a phenomenal
Speaker 1: speech when she truly she's a commissioner at the SEC.
Speaker 1: She absolutely understands the power of decentralization and the need
Speaker 1: to find an appropriate way for this technology to be
Speaker 1: built out. If you look get other parts of government though, um,
Speaker 1: you know, maybe not not so much. I guess that's
Speaker 1: good job security for me. The Blockchain Association, because we
Speaker 1: have never ending education to do of our of our
Speaker 1: nation's policy makers. But um, you know, listen, it's a
Speaker 1: complicated space. There's a lot that's happening really fast. I
Speaker 1: do this all day long, and I can barely keep
Speaker 1: up with all of the developments. So it's hard to
Speaker 1: judge policymakers. But I do think you know, what we
Speaker 1: saw last time we were talking about f t X,
Speaker 1: what that has done has really brought the crypto industry
Speaker 1: to the top of the fold um on every major
Speaker 1: news outlet. And I think that policymakers that before had
Speaker 1: dismissed this as something they didn't need to pay attention
Speaker 1: to do are taking a really hard look. And I
Speaker 1: think we're going to see a lot of discussion and
Speaker 1: debate in the next congress um and through this last
Speaker 1: half of the vidynamics where we have the House Financial
Speaker 1: Services Committee Subcommittee on Digital Assets, Financial Technology and Inclusion.
Speaker 1: You can forgive me for looking down at my screen
Speaker 1: for that one. My My question is actually opposite. When
Speaker 1: does the industry kind of look at itself and say,
Speaker 1: when do we get better at self policing? Yeah, I
Speaker 1: think that's an excellent question, And these are conversations that
Speaker 1: are happening within the crypto industry right now. I mean,
Speaker 1: there is so much transparency as to what's going on
Speaker 1: in the crypto industry because most of this information is
Speaker 1: on the blockchain, and so when you're dealing with these
Speaker 1: decentralized parties, there's a ton of information there. The challenges
Speaker 1: you need to be able to translate that into something
Speaker 1: that's useful, and there are companies out there that help
Speaker 1: do that translation. Um, but what we need to do
Speaker 1: is figure out there are a lot of good practices
Speaker 1: out there that different companies are doing. We need to
Speaker 1: make sure that we're picking the best ones and communicating
Speaker 1: those and sharing those best practices across the industry. So
Speaker 1: I do think we can do a better job, but
Speaker 1: self policing and that is absolutely a focus of the
Speaker 1: industry right now. I'm going to hold onto that world
Speaker 1: useful because when you go to a policy maker and
Speaker 1: say this is the most use case I'm seeing at
Speaker 1: the moment, what is it? What what's actually decentralizing assets
Speaker 1: in a useful amount of right now? Yeah, No, I
Speaker 1: mean I think that's a very good question. I Mean,
Speaker 1: one of my favorite projects, I said on the board
Speaker 1: of their foundation as the file Coin Foundation, and I
Speaker 1: think you know, file coin is trying to do a
Speaker 1: decentralized version of Amazon Web Services so that you know,
Speaker 1: you can hook up servers to the network, you can
Speaker 1: you know, provide that service. If you have storage, you
Speaker 1: could store it in a way that's cheaper and decentralized.
Speaker 1: And so you know that's maybe um not as sexy
Speaker 1: as some of the you know, n f T s
Speaker 1: or things that are out there today, but it's an
Speaker 1: example of one that I think it's very cool and
Speaker 1: we'll build a new infrastructure for the Internet going forward.
Speaker 1: Book Chain Associations executive director Kristen Swith, who are the
Speaker 1: two of us and several sois creates all the conversations
Speaker 1: we've had. Is taken a while. Thank you. Ever thought
Speaker 1: that Tims with lyrics will be quoted by a politicianal
Speaker 1: Capitol Hill? Well Tuesday they were is it hearing to
Speaker 1: try and get to groups? Actually happened? When at all
Speaker 1: you weren't able to get it to get for Wasn't
Speaker 1: that too much demand in front of the system. Was
Speaker 1: it the box was sucking on all the tickets? Or
Speaker 1: is it that there's too much control? I one key
Speaker 1: companies Live Nation. It controls a whole host of live
Speaker 1: venues across the United States, but it also owns ticket Master,
Speaker 1: which is then the only way to get the ticket
Speaker 1: when you're at that particular venue. People say that there's
Speaker 1: not enough competition, seeing CEO out there, seeing the only
Speaker 1: way to drive competition is to break up Live Nation
Speaker 1: and Ticketmaster that came together in this argument keeps coming
Speaker 1: back time and time again. Paul jam made this argument
Speaker 1: back in the nineties. It's been to be visited on
Speaker 1: Capitol Hill, and now the third straight time, they're going
Speaker 1: to digest whether they're really competition would help you get
Speaker 1: your hands and the tickets that you want, heard of
Speaker 1: thought politicians quoting swiftly, not just you. But ultimately this
Speaker 1: is kind of fascinating, isn't it that once again people
Speaker 1: just arguing there is too much consolidation in the space.
Speaker 1: Interesting On a day we were just sort of discussing
Speaker 1: the d o J looking at Google. Everyone's still looking
Speaker 1: at ticket Master. I can find in you. I bought
Speaker 1: some tickets recently. When you start the year, people say
Speaker 1: what I want to go to this year? They're often
Speaker 1: expensive and you look at how you buy them. Well,
Speaker 1: actually it's true. The Bloomberg reporting shows ticket Master is
Speaker 1: often the only option right other than in the secondaries market.
Speaker 1: But it's what people have been talking about on Instagram,
Speaker 1: Twitter and take you to TikTok as well as a
Speaker 1: kind of event about their experiences. But it reminds you
Speaker 1: why do we have oversight, Why do we have this
Speaker 1: discussion on marketplace competition, and why do you have those
Speaker 1: select committees bringing up CEO of Satgeek for example, to
Speaker 1: say the only answer is to split them up. The
Speaker 1: competition is thin. There's a secondary market StubHub. But isn't
Speaker 1: it interesting? On our own Twitter poll, we went to
Speaker 1: you the audience and asked what you thought. Most people said,
Speaker 1: where else am I going to be getting these tickets?
Speaker 1: When it's self Live Nation has more than a hundred
Speaker 1: of these really great places to go and watch music, right,
Speaker 1: And that's the the answer. Where else would I go?
Speaker 1: And it goes back to my point. You start your ego,
Speaker 1: which gig do I want to go to? Which show
Speaker 1: have I dreamed of? You only have one option? Yeah,
Speaker 1: at the moment, where else do I go? As the
Speaker 1: winner on that particular poll, but just it seems to
Speaker 1: be a day here in San Francisco. Or we've talked
Speaker 1: so much about earnings, I've also talked so much about regulation,
Speaker 1: about oversight. It's a real story of Washington meets Silicon Valley.
Speaker 1: Then it never ever goes away. It doesn't and that
Speaker 1: does it for this additional Bloomberg technology. But we never
Speaker 1: go away because Wednesday we have Arkes Pascucchini on the chef.
Speaker 1: Don't forget check out our podcast. I heart Spotify, Apple,
Speaker 1: wherever you get it. This is Bloomberg