Micron's Chip Win, Omnicom and Interpublic Merge | Bloomberg Technology
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE, THIS IS "BLOOMBERG TECHNOLOGY." WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY." COMING UP, A VICTORY FOR MICRON AS THE COMPANY GETS ITS $6 BILLION GRANT FROM THE U.S.
GOVERNMENT. PLUS, WE BREAK DOWN THE TECH EARNINGS, WITH ORACLE FOLLOWING THE MOST IN THE YEAR AFTER POSTING LUKEWARM QUARTERLY REVENUES. AND WE SIT DOWN WITH THE CEOS OF OMNICOM AND INTERPUBLIC DISSECT THE DEAL CREATING THE WORLD'S LARGEST ADVERTISING COMPANY. BUT FIRST WE CHECK IN ON THESE MARKETS. KEY POINTS CAN TO THE UPSIDE ON
THE NASDAQ IS UP 3.7%. IT IS ALL ABOUT ALPHABET. WE HAD THAT HEAD OF QUANTUM AI ON THE SHOW YESTERDAY DISCUSSING QUANTUM COMPUTING AND THE WILLOW CHIP. THIS FEEDS INTO A VIRTUOUS CYCLE AS TO WHETHER IT IS ABOUT QUANTUM, AI, AND CLOUD LOOK AT THE DRAGS TO THE DOWNSIDE. THEY ARE ALL IN THE CHIPS SPACE, WE ARE LOOKING AT CLOUD AND SOFTWARE WITH ORACLE, OFF BY 7%. AN 80% RAMP-UP IN THESE SHARES THIS YEAR.
THEREFORE, HAD A HIGH BAR FOR ITS EARNINGS AND THE FORECAST DID NOT MEET EXPECTATIONS. NEITHER DID THE 9% GROWTH IN REVENUE. I'M LOOKING AT TSMC, ALSO NAME UP 80% THIS YEAR. WE ARE DOWN 1.7% EVEN THOUGH THEY SHOW NOVEMBER SALES ARE RAMPING UP MORE THAN 30%. MICRON AS WELL OFF BY 2.2%. FINALLY THEY GET CERTAINTY AROUND THAT $6 BILLION GRANT COMING FROM THE U.S. GOVERNMENT TO BE ABLE TO EXPAND
MEMORY OFFERING AND MANUFACTURING IN THE UNITED STATES. LET'S TALK ABOUT IT WITH PETER ELSTROM. THIS IS A RELIEF. IT WAS AN OVERHANG ON THE STOCK BECAUSE WE WERE BURIED THE TRUMP ADMINISTRATION WOULD DENY IT. PETER: THAT IS EXACTLY RIGHT. THIS IS A PROGRAM WHERE THE BIDEN ADMINISTRATION HAS TRIED TO REBUILD THE SEMICONDUCTOR INDUSTRY IN THE UNITED STATES. CHIPS ACT IS ONE OF THE
LANDMARK PROGRAMS THE ADMINISTRATION HAD AND THEY WANTED TO MAKE SURE THEY WALKED DOWN THIS MONEY BECAUSE TRUMP PERSONALLY HAD CRITICIZED THESE AGREEMENTS AS SO BAD AND THE REPUBLICANS HAD FLOATED THE IDEA THAT THEY TRY TO REPEAL THIS. EVEN THOUGH IT WAS PASSED WITH BIPARTISAN SUPPORT. SO EVEN THOUGH CONGRESS IS TRYING TO FINALIZE THE DETAILS AS MUCH AS THEY CAN BEFORE THIS TRANSITION IN JANUARY, MICRON, THE REALLY BIG U.S. MAKER OF MEMORY CHIPS, WON THIS AWARD, THAT'S GOING TO HELP THEM BUILD OUT FACILITIES IN IDAHO AND NEW YORK.
TWO VERY KEY STATES, AND TRY TO BUILD UP THEIR ABILITY TO DEVELOP MORE ADVANCED MEMORY CHIPS, INCLUDING THESE HBM MEMORY CHIPS USED WITH AI TO TRAIN AI MODELS. CAROLINE: THE MANUFACTURING KING IS TSMC, AND THEY ARE SHOWING HOW STILL THAT FOCUS ON AI IS A LIVING, BREATHING THING, EVEN THOUGH WE HAD PERHAPS BEEN WORRIED ABOUT THE BUILDOUT AND, MORE BROADLY, SLOWING DOWN. PETER: TSMC SITS IN AN UNUSUAL MARTIN -- UNUSUAL MARKET. WE GET DRIBS AND DRABS OF INFORMATION THROUGHOUT THE QUARTER BEFORE WE GET THAT FINAL RESULT.
THESE ARE MOSTLY REVENUE THAT THE COUNTRY PUTS OUT THERE. WHAT WE DID SEE FROM TSMC IS THAT REVENUE IS UP 130%. THEY ARE THE BELLWETHER FOR AI BECAUSE THEY MAKE THE MOST ADVANCED CHIPS IN THE INDUSTRY, INCLUDING CHIPS NVIDIA USES TO SELL TO THE LIKES OF MICROSOFT AND OPENAI AND GOOGLE.
IT GIVES US AN EARLY INDICATION OF HOW THAT DEMAND IS HOLDING UP. AND OF THE QUESTIONS OVERHANGING THE AI BOOM IS WHETHER COMPANIES ARE GOING TO BE ABLE TO FIGURE OUT WHETHER THERE IS A PROFITABLE WAY TO DEPLOY THESE MODELS. WHETHER THEY CAN MAKE SOME MONEY AFTER INVESTING TENS OF BILLIONS OF DOLLARS AT THIS POINT.
TSMC IS GETTING A LOT OF THAT BENEFIT. THE QUESTION IS WHETHER IT IS A LONG-TERM TREND THAT TSMC AND OTHERS ARE GOING TO BE ABLE TO BENEFIT FROM OR WHETHER THERE IS TAPERING COMES UP -- THAT COMES UP. CAROLINE: WHAT IS THE KILLER APPLICATION? THANKS SO MUCH. MEANWHILE, LET'S STICK WITH XI JINPING SAYING THAT CHINA HAS FULL CONFIDENCE IN ACHIEVING ITS 5% ECONOMIC TARGET THIS YEAR. HE ALSO TOLD INTERNATIONAL ECONOMIC ORGANIZATIONS THAT CHINA IS GOING TO PROMOTE THE DEVELOPMENT OF RELATIONS WITH THE U.S. JUST TAKE A LISTEN. >> I HAVE REPEATEDLY EMPHASIZED THAT HUMAN BEINGS ARE COMMUNITY OF SHARED FUTURE. WE SHOULD TREAT EACH OTHER'S
DEVELOPMENT AS AN OPPORTUNITY RATHER THAN A CHALLENGE. WE SHOULD SEE EACH OTHER AS PARTNERS RATHER THAN RIVALS. SOLIDARITY, UNITY, COOPERATION, MUTUAL BENEFIT AND WIN-WIN PROGRESS BECOME THE MAIN THEME OF THE TIMES. CAROLINE:
OF COURSE MICRON AND NVIDIA HAVE IN UNDER PRESSURE WITH RISING TENSIONS BETWEEN THE U.S. AND CHINA AND WHAT THAT MEANS FOR SOME U.S. CHIPMAKERS. LET'S DIG INTO THOSE TENSIONS AND ECONOMIC GROWTH WITH JANET MUI. INTERESTINGLY, YOU HAVE NOT BEEN FULL OF POSITIVE, BUT LEADING ON SOME INTEREST IN CHINESE NAMES AND CHINESE ECONOMIC STIMULUS THAT SEEMS TO BE BEING PROMISED MORE FORCEFULLY. JANET: THANKS FOR HAVING ME. PROBABLY OUR STRONGEST
CONVICTION IS U.S. STOCKS. PARTICULARLY BECAUSE OF U.S. EXCEPTIONALISM. I THINK THIS IS GOING TO TRADE INTO THE NEW YEAR AND THE FACT THAT U.S. COMPANIES ARE SO MUCH MORE COMFORTABLE. WE STILL MUCH PREFER U.S., HOWEVER FOR CHINESE STOCKS
SENTIMENT HAS BEEN VERY DEPRESSED. INVESTORS ARE STILL DOUBTFUL ON THE SCALE AND WHETHER IT IS GOING TO WORK. IT IS NOT THAT MUCH OF A CONSENSUS TRADE. I THINK THIS TRADE IS STILL
HAVING A LOT OF RESISTANCE. EVALUATIONS ARE VERY CHEAP. THERE IS A CASE TO MAKE THAT THE FACT THAT ECONOMIC DATA IS STABILIZING. I THINK THERE IS A CASE FOR INVESTORS TO DIVERSIFY AS WELL. CAROLINE: SMALL OVERWEIGHT IN ASIA. WHAT OF, THEREFORE, THE DAILY DAILIES WE GET ON RAMPING UP THE CHINA-U.S. TENSIONS? YESTERDAY IT WAS ABOUT NVIDIA
BEING INVESTIGATED BY THE REGULATORS. HOW HAVE YOU BEEN TRYING TO PRICE THAT IN? JANET: I HAVE TO SAY, IT IS VERY DIFFICULT. I DO BELIEVE THAT INSTITUTIONAL INVESTORS HAVE SO MUCH AND YOU CAN SEE THAT IN SOME OF THE SELLOFF IN THE U.K. STOCKS, FOR EXAMPLE. IT IS DIFFICULT TO PRICE IN, BUT I GUESS SOME OF THAT IS ALREADY REFLECTED IN MARKETS. OUR VIEW IS THAT THE TRADE
TARIFFS LIKELY ARE GOING TO BE TIT-FOR-TAT AND A NEGOTIATION TACTIC. DOUBTFUL THAT THE FULL EXTENT OF THE THREAT IS GOING TO BE FULLY IMPLEMENTED, ALTHOUGH IT IS ACKNOWLEDGED SOME OF THAT WILL BE. KEEPING AN EYE ON THAT, BUT IT IS NOT NECESSARILY A DETERRENT TO THE ONGOING RALLY IN THE U.S. EQUITY MARKET, FOR EXAMPLE. CAROLINE: THE LIKES OF AN NVIDIA, THAT HAS GONE ENORMOUS VALUATION, CONTINUED TO RALLY THROUGHOUT 2024, DOES THAT CONTINUE INTO 2025? CAN WE VINDICATE THE RUN-UP WE HAVE SEEN IN ORACLE AND THE LISTED DEPOSITORY NOTES OF TSMC? JANET: WE SING ABOUT NVIDIA THERE. THIS IS OBVIOUSLY A GREAT STOCK, HUGE PROFIT MARGINS, AND THE BLACKWELL CHIP ARCHITECTURE. THIS IS A GREAT COMPANY. OBVIOUSLY INVESTORS HAVE THIS
ON A HIGH VALUATION. INVESTORS STILL LIKE STRONG QUALITY GROWTH. SO I WOULD FEEL THAT INVESTORS WILL STILL VERY MUCH BE LEANING ON THE SEMICONDUCTOR SECTOR. TECH IN GENERAL. I ALSO FEEL INVESTORS ARE
ROTATING INTO MORE SOFTWARE-RELATED STOCKS INSTEAD OF JUST HARDWARE. I THINK THAT MAKES SENSE BECAUSE THERE IS LIKELY TO BE MORE COMMERCIALIZATION POTENTIAL AND REALIZATION AS AI MOVES FORWARD FROM THE INFRASTRUCTURE BUILDOUT TO THE APPLICATIONS. CAROLINE: YOU WILL HAVE NAMES LIKE PALANTIR COMING UP LATER. JANET MUI, GREAT TO GET YOUR EXPERTISE. THANK YOU.
COMING UP, C3.AI'S FOCUS ON GENERATIVE AI ARE DRIVING REVENUE, BUT AT WHAT COST? THE COMPANY'S CEO JOINS US NEXT. LET'S CHECK BACK IN ON ALPHABET, HAVING ITS BEST DAY AT ONE POINT SINCE APRIL 2024. HE WAS WHAT GOOGLE QUANTUM AI'S FOUNDER TOLD US YESTERDAY. >> THERE IS STEADY PROGRESS COME AND OUR NEW CHIPS WE JUST RELEASED, WILLOW, WILL FORM THE BASIS TO START DOING CAROLINE: LET'S GET TO ANOTHER SET OF EARNINGS. C3.AI RAISING ITS SALES FORECAST. GENERATIVE AI HELPING RAISE SALES, BUT ANALYSTS
CAUTIONING. JOINING US FOR MORE, CEO TOM SIEBEL. YOUR SHARES ARE DOWN A LITTLE BIT, BUT THEY HAVE RAMPED UP 60% IN LESS THAN A MONTH. A LOT OF OPTIMISM GOING INTO THESE NUMBERS. WHAT DROVE YOU TO RAISE THE FORECAST? TOM: IT WAS A GREAT QUARTER. THE YEAR-TO-DATE HAS BEEN GREAT.
I THINK OUR REVENUE GROWTH YEAR-OVER-YEAR LAST QUARTER WAS 29%, WHICH IS HUGE. MOST IMPORTANTLY, WE INFORMED THIS MASSIVE STRATEGIC -- WE FORMED THIS MASSIVE STRATEGIC ALLIANCE WITH MICROSOFT. ALL OF MICROSOFT'S SALESPEOPLE WILL BE SELLING C3.AI'S SOFTWARE SOLUTIONS.
GETTING CREDIT, BEING SOME -- BEING COMPENSATED. C3.AI GOES FROM 100 SALESPEOPLE IN SEPTEMBER TO PERHAPS TENS OF THOUSANDS OF SALESPEOPLE IN NOVEMBER. SO, THAT IS A VERY STRONG TAILWIND THAT BODES EXTRAORDINARILY WELL FOR C3.AI. CAROLINE:
THERE IS, THOUGH, THIS WORRY ABOUT PROFITABILITY. SAYING THAT BASICALLY YOU ARE PRIORITIZING GROWTH RELATIVE -- RATHER THAN PROFITABILITY. WHAT DO YOU SAY TO THAT? TOM: IN THE SHORT TERM WE ARE PRIORITIZING GROWTH. I HAVE THIS HUGE ENTERPRISE SALES ENGINE IN MICROSOFT WE NEED TO ENABLE. TO INVEST IN THAT CHANNEL, TO GET THOUSANDS OF PEOPLE SELLING AND SERVICING OUR PROJECT AND NOT INVEST IN THAT IS CRAZY. GOODNESS, WE HAVE ROUGHLY THREE
QUARTERS OF A BILLION DOLLARS CASH IN THE BANK. WHAT AM I GOING TO DO WITH THAT IF NOT INVEST IN GROWTH? IF NOT INVEST IN MARKET SHARE? IF NOT INVEST IN MARKET LEADERSHIP? I ASSURE YOU THE CASH FLOW AND PROFITABILITY FOLLOWS. CAROLINE: HOW PROFITABLE WOULD A DEAL LIKE MICROSOFT BE? WHY DIGGING IN ON THAT PARTNERSHIP. BUT HOW MUCH REVENUE DO YOU
HAVE TO GIVE UP FOR THAT? TOM: ACTUALLY, VIRTUALLY 100% OF THE REVENUE ACCRUES TO C3.AI. MICROSOFT GETS THE BENEFIT OF SELLING THEIR INFRASTRUCTURE AND CLOUD SERVICES. C3 GETS THE BENEFIT OF SELLING THE C3.AI APPLICATIONS.
BUT A VERY SMALL PORTION OF THE REVENUE IS GIVEN UP, AND THIS IS A DRAMATIC ACCELERATOR. THIS IS THE LARGEST SOFTWARE COMPANY IN THE WORLD AND THEY HAVE CHOSEN C3.AI AS THEIR PREFERRED AI SOLUTIONS PROVIDER. STRATEGIC PARTNERSHIPS DO NOT GET BIGGER THAN THIS. CAROLINE: THEY DON'T, AND CERTAINLY THE ANALYSTS ARE SAYING THIS POTENTIALLY DRIVES MATERIAL UPSIDE. THERE ARE, THOUGH, AND I HATE TO GO BACK TO THE SUM OF THE OINTMENT, JUST WORRYING ABOUT THE DIFFERENTIATION OF YOUR AI OFFERING, HOW DO YOU MAKE CLEAR VERSUS RIVALS THERE? TOM: THERE IS ONE COMPANY ON EARTH THAT OFFERS OVER 100 TURNKEY ENTERPRISE AI APPLICATIONS FOR UTILITIES, FOR OIL AND GAS, FOREIGN -- FOR INTELLIGENCE, FOR PHARMACEUTICAL. ONE COMPANY ON PLANET EARTH
THAT OFFERS THESE KIND OF SOLUTIONS, AND THAT IS OUR DIFFERENTIATION. CAROLINE: AND FEDERAL STRENGTH. YOU LISTED A LOT THERE, WITH DEFENSE, AND ULTIMATELY YOU HAVE A GOVERNMENT FOCUS THAT HAS SEEN A LOT OF SELLING INTO FEDERAL. WILL THAT CONTINUE? THE ISSUES ABOUT THE ADMINISTRATION UNDER TRUMP? TOM: OUR BUSINESS IN THE DEFENSE, INTELLIGENCE, AND FEDERAL COMMUNITY HAS BEEN STRONG.
I EXPECT THAT TO SELL -- TO ACCELERATE IN THE TRUMP ADMINISTRATION, WITH PEOPLE LIKE GETTING INVOLVED. -- LIKE ELONG GETTING INVOLVED. THERE IS ONE TOPIC ON THE AGENDA AND THAT IS AI APPLICATIONS, AI APPLICATIONS, AI APPLICATIONS. AND THEN THEY ALSO TALK ABOUT CYBER.
BUT THIS IS CLEARLY GOING TO BE A HUGE PRIORITY FOR MAKING GOVERNMENT MORE EFFICIENT, AND IT IS THE FUTURE OF OUR DEFENSE AND INTELLIGENCE COMMUNITY. THIS BODES EXTRAORDINARILY WELL FOR THE COMMERCIAL SOFTWARE PROVIDERS LIKE C3.AI AND PERHAPS LESS WELL FOR THE TRADITIONAL BELTWAY SYSTEMS INTEGRATORS. I THINK THE TIDE MIGHT BE GOING
OUT FOR THOSE GUYS. CAROLINE: TOM SIEBEL, OPTIMISTIC ON C3.AI, OF COURSE THE CEO. LET'S STICK WITH EARNINGS AND LET'S CHECK OUT WHAT IS HAPPENING WITH ORACLE. IT HAS BEEN ON A TEAR OF LATE, 80% SHARE. THEREFORE IT'S OPTIMISM DID NOT LIVE UP TO -- WELL, THE HYPE WAS THERE BUT THE NUMBERS DID NOT QUITE THAT HIGH. WE ARE DOWN AFTER WE SAW A 9%
INCREASE IN REVENUE. THERE WAS A STRONG INFRASTRUCTURE GROWTH THERE. ANURAG RANA BREAKS IT DOWN. IT WAS NOT ENOUGH, WAS IT? >> THEY BEAT ON CURRENCY, SO IN THE REPORT IT WAS SLIGHTLY BELOW, BUT THAT -- BUT AT THE SAME TIME, AS YOU MENTIONED, THE EXPECTATIONS ARE GETTING HIGH FOR SOME OF THESE NAMES. THE BEAT HAS TO BE MATERIAL ENOUGH. WE THINK THE DEMAND IS STILL THERE. THE QUESTION IS WHETHER THE SECOND HALF GROWTH RATE IS GOING TO BE IN THE HIGH 50'S OR LOW 50'S.
BUT STILL, THAT IS A PRETTY IMPRESSIVE NUMBER OF ALL SAID AND DONE. CAROLINE: THAT IS A 52 PERCENT INCREASE IN CLOUD INFRASTRUCTURE SALES. WHAT ABOUT THE REST OF THE BUSINESS? HOW IS CLOUD CONTINUING TO PERFORM FOR THEM? HOW ARE SOFTWARE SALES GOING? ANURAG: BEFORE THE CLOUD INFRASTRUCTURE PUSH HAPPENED THIS COMPANY WAS GROWING IN THAT 4, 5, 6% RANGE.
-- 4%, 5%, 6% RANGE. GENERALLY IN LINE WITH WHAT IS HAPPENING WITH SALESFORCE. BUT THAT SPACE HAS BEEN UNDER PRESSURE OVER THE LAST 12 MONTHS. THE REAL AREA OF GROWTH IS CLOUD INFRASTRUCTURE. BECAUSE OF AI WORKLOADS. THAT IS WHERE THE BULK OF THE INTEREST LIES AT THIS POINT. CAROLINE:
ANY MENTION AROUND TIKTOK? THEY ARE A KEY CLIENT. ANURAG: THAT WAS NOT REALLY DISCUSSED ON THE CALL, BUT WE THINK IF THERE IS AN IMPACT NEXT YEAR, FIRST OF ALL, THAT IS NOT GOING TO BE IMMEDIATE. THAT IS GOING TO TAKE SOME TIME. BECAUSE OF THE BACKLOG THEY HAVE THEY SHOULD BE ABLE TO OFFSET THAT RISK WITH A QUARTER OR TWO, BUT OVERALL WE THINK THE BACKLOG IS THERE FOR THAT. CAROLINE:
THEY MENTIONED CLIENTS, MET IN PARTICULAR AND INCREASING FOCUS ON THAT AREA. ANYONE ELSE THEY HAVE MANAGED TO SNAG? IT IS A KEY OFFERING NOW IN CLOUD, WHEREAS WE HAD DOUBTED IT PREVIOUSLY. ANURAG: I WOULD SAY ALMOST ALL MAJOR CLIENTS OUT THERE, WHETHER THAT IS META OR ANY OTHER VENDOR, IS GOING TO GO OUT AND TRY TO TAP INTO ALL CLOUD PROVIDERS. UNLESS THEY HAVE SOME
ADVERSARIAL RELATIONSHIP. JUST BECAUSE THERE IS NOT MUCH CAPACITY OUT THERE. IN ORACLE'S CASE IS GETTING WORK FOR MICROSOFT RIGHT NOW BECAUSE MICROSOFT IS FULFILLING THE WORKLOADS COMING FROM OPENAI. IT IS PLEASING TO ORACLE TO GET SOME OF THAT WORK. SO THE ENTIRE SPACE IS GOING UP. IT IS NOT JUST ONE OR TWO VENDORS. CAROLINE: ANURAG RANA ON ALL THINGS
ORACLE. WE THANK YOU. COMING UP, YOU WILL BE GOING OUT TO BLOOMBERG'S ONE, POWER, AND MANY EVENT FOR CONVERSATION ON AI AND FINTECH. MEANWHILE, CHECK IN ON SOME SURPRISING RALLIES THAT MAY HAVE GONE UNNOTICED.
TODAY APPLE IS UP .4%, BUT IF YOU CHECK IT OVER NOVEMBER THE STOCK IS UP 9%, DESPITE SLOW REVENUE GROWTH. DESPITE TARIFF RISKS. INVESTORS ARE OPTIMISTIC ABOUT ITS ABILITY TO NAVIGATE THAT, AND OF COURSE THE APPLE INTELLIGENCE OFFERING. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: TIME NOW FOR TALKING TECH.
FIRST UP, A DOORDASH-FUNDED STUDY FOUND MOST OF ITS GIG WORKERS PREFERRED TO REMAIN INDEPENDENT CONTRACTORS. THIS AFTER THE COMPANY BEGAN OFFERING PAYMENTS INSTEAD OF BENEFITS. PLUS, TAKE TOP -- TIKTOK SHOP COMES TO EUROPE. THE ROLLOUT REFLECTS TIKTOK'S PUSH TO SEEK OUT ALTERNATIVE MARKETS IN THE FACE OF POTENTIAL U.S. SHUT UP. TALABAT LOST GROUND AFTER AN IPO IN DUBAI.
THIS ADDS TO A SLEET OF DISAPPOINTING ISSUES IN THE MIDDLE EAST. DESPITE THE U.S. AND ALLIES SANCTIONS FOLLOWING RUSSIA'S INVASION OF YOU TRAIN, MOSCOW HAS CONTINUED ITS ABILITY TO PROCURE AMERICAN TECH, INCLUDING CHIPS FROM INTEL. BLOOMBERG REPORTING THAT IT HAS DISCOVERED THAT THE SUPPLY CHAIN PATH RUSSIA HAS BEEN ABLE TO SECURE, UNBEKNOWNST OF THE COMPANIES MAKING IT, HAS BEEN PRETTY EASY. FOR MORE, ALBERTO NEW DELHI JOINS US. JUST HOW EASY IS IT TO ORDER
THESE SORTS OF PIECES OF EQUIPMENT FROM RUSSIA RIGHT NOW? >> IT IS RELATIVELY SIMPLE IF YOU THINK ABOUT THE FACT THAT IT HAS BEEN A FEW YEARS NOW THE WAR HAS BEEN ON IN UKRAINE. THERE ARE WEBSITES WITHIN RUSSIA WHERE COMPANIES WORKING TO PRODUCE MISSILES AND OTHER WEAPONS CAN SEE THE CATALOGS OF COMPANIES LIKE TEXAS INSTRUMENTS ON THEIR OWN WEBSITES. STOCKS AVAILABLE, PRICES, AND DETAILS LIKE THAT. AND THEY ARE ABLE TO PLACE ORDER REQUESTS, AND THE GOODS ARE ORDERED BY INTERMEDIARIES. THEY GET SENT TO THIRD COUNTRIES, OTHER COUNTRIES, AND FROM THERE THEY GET TO RUSSIA.
OVERALL THAT IS PRETTY CYNICAL, GIVEN THE FACT THAT THE WAR HAS GONE ON FOR SOME YEARS NOW. CAROLINE: THE U.S. HAS BEEN WARNING THE SUPPLIERS TO CRACKDOWN ON THIS. SHANNON THOMPSON, THE ASSISTANT COUNSEL FOR TEXAS INSTRUMENTS SAID, TI STRONGLY OPPOSES THE USE OF OUR CHIPS IN RUSSIAN MILITARY EQUIPMENT. HOW ARE THEY ABLE TO STOP THIS?
ALBERTO: THAT IS A VERY GOOD QUESTION. IT IS PROBABLY A QUESTION FOR THE COMPANY MORE THAN FOR ME. I THINK COMPANIES ARE TRYING TO STOP THESE PRACTICES FROM HAPPENING. AND WHEN ISSUES ARE FLAGGED THEY DO INTERVENE. THERE WAS, HOWEVER, FOR EXAMPLE EARLIER THIS YEAR, A SENATE REPORT THAT CAME OUT THAT SUGGESTED COMPANIES ARE NOT DOING ENOUGH.
SO, THEY ARE DOING CERTAIN PRACTICES THAT WOULD ALLOW THEM TO PROBABLY BETTER-DETECT THESE ACTIONS BEFORE THEY HAPPEN. SO, LOTS OF ACTIONS HAPPEN LATER ON IN THE SALES PROCESS RATHER THAN EARLY ON TRYING TO IDENTIFY BAD ACTORS AND THINGS LIKE THAT. CAROLINE: ELBOW TURN THE DELI, THANK YOU FOR TALKING US THROUGH IT. WE SPEAK EXCLUSIVELY WITH THE CEOS.
CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." WE WANT TO WELCOME OUR TV AND RADIO AUDIENCES WORLDWIDE TO "BLOOMBERG TECHNOLOGY." ON HAS ANNOUNCED THEY WILL BE BUYING IT -- THEY WILL BE BUYING INTERPUBLIC GROUP.
HERE TO DISCUSS IN AN EXCLUSIVE INTERVIEW, JOHN WREN AND PHILIPPE KRAKOWSKY. GENTLEMEN, WELCOME. I'VE SAID HERE ON THE TECHNOLOGY SHOW THINKING ABOUT THE TECHNOLOGICAL DISRUPTION THAT HAS HAPPENED TO ADVERTISING. IS THIS IN RESPONSE TO THAT? IS THIS TO TAKE ON ALPHABET AND CALLED MORE OF GLOBAL REVENUE? JOHN: TECHNOLOGY DOES PLAY A ROLE IN THIS. BOTH PHILIPPE AND I HAVE FOCUSED ON THAT IN OUR CONVERSATIONS OVER THE COURSE OF THE LAST YEAR.
WHEN YOU CUT THROUGH QUITE A BIT OF WHAT WE WERE DISCUSSING, IF YOU LOOK AT OUR INDUSTRY FIVE YEARS AGO, 10 YEARS AGO THE BARRIER TO ENTRY WAS VERY LOW. YOU JUST HAD TO BE A BRILLIANT PERSON, RIGHT? CAROLINE: JUST A BIT OF BILLIONS. JOHN: WITH A GREAT IDEA. NOW IN ORDER TO PROPERLY SERVICE CLIENTS IN THIS NEW ERA IT IS KEY TO HAVE THOSE VERY BRIGHT, VERY TALENTED PEOPLE. IT IS INCUMBENT ON US TO ENABLE THEM WITH THE BEST TECH AND DATA WE POSSIBLY CAN FOR THEM TO GARNER THE INFORMATION AT SCALE SO THEY CAN REACT TO THE ENVIRONMENT AS THEY NEED.
AND WE HAVE EACH BEEN ON THAT JOURNEY, AS ALL OF OUR COMPETITORS HAVE AS WELL. FROM AN OMNICOM POINT OF VIEW WE HAVE MADE GREAT STRIDES WITH THE CREATION OF M -- OMNI, AND FLYWHEEL. THAT PROGRESSES, AND TODAY WE ARE CREATING TOOLS FOR OUR FOLKS. PHILIPPE COME ON THE OTHER SIDE, CAN TALK TO IT AS WELL BECAUSE HE IS AT A VERY STRONG ADVANTAGE. PHILIPPE: TECHNOLOGY IS PLAYING SO MUCH MORE IMPORTANT A ROLE IN OUR SECTOR, AND THAT IS BECAUSE FOR OUR CLIENTS, THE CONSUMERS THEY NEED TO REACH EXPECT A HIGH DEGREE OF PERSONALIZATION IN THE MESSAGING THEY GET AND A HIGH DEGREE OF ENGAGEMENT IN THE EXPERIENCES WE DELIVER. TO JOHN'S POINT, HE BROUGHT FLYWHEEL INTO THE FAMILY.
IT IS A COMPANY THAT HAS THIS QUITE DISTINCTIVE ABILITY TO UNDERSTAND EVERYTHING THAT IS HAPPENING IN THE DIGITAL RETAIL ECOSYSTEM, DOWN TO THE INDIVIDUAL TRANSACTION LEVEL. FOR US, ACXIOM IS LARGELY IS THE -- IS THE LARGEST CONSUMER DATABASE OUTSIDE OF WALLED GARDENS. IF WE CO-INVEST IN GENERATIVE AI WE ARE VERY STRONGLY POSITIONED TO HELP OUR CLIENTS NAVIGATE THIS TECH-ENABLED WORLD. CAROLINE: HOW DOES IT STRIP OUT COSTS? YOU HAVE IDENTIFIED COST SAVINGS, BUT THE TALENT WHEN IT COMES TO GENERATIVE AI IS EXPENSIVE. HOW DO YOU STRIP OUT THOSE COSTS? PHILIPPE: JOHN HAS BEEN REALLY CLEAR THAT IT IS ABOUT ENABLING THE FOLKS WHO INTERACT WITH CLIENTS.
THOSE BRILLIANT PEOPLE, GIVING THEM MORE TOOLS. THERE ARE WAYS IN WHICH WE ARE NOT GOING TO INVEST MORE THAN ONCE AND WE ARE GOING TO LOOK AT INFRASTRUCTURE THAT IS PERHAPS LEGACY INFRASTRUCTURE IN BUSINESSES LIKE OURS. SO, THERE IS A MEANINGFUL OPPORTUNITY THERE TO PUT THE MONEY AGAINST THE FUTURE. CAROLINE: SOME OF THE CONCERN MAY BE -- MAY BE BEING PRICED IN AT THE MOMENT. PEOPLE ARE TRYING TO DIGEST HOW THIS DEAL WORKS. CITI SAYING THAT THERE IS THIS SYNERGY. -- DIS-SYNERGY.
JOHN: NATURALLY THERE IS TURN IN EVERYBODY'S BUSINESS EVERY YEAR. FORTUNATELY OR UNFORTUNATELY I HAVE BEEN TO THIS MOVIE ONCE BEFORE BUT DID IT BADLY AND DID NOT COMPLETE. THIS ONE IS A LOT MORE THOUGHTFUL. CAROLINE: YOU ARE REFERRING TO THE PUBLICIST DEAL IN 2014? JOHN: BUT CLIENTS WHO LISTEN TO US AND SEE THE CAPABILITIES WE HAVE DEVELOPED BETWEEN US ALREADY, THE POWER OF WHAT WE ARE GOING TO BE ABLE TO CONTINUALLY BRING TO THE MARKETPLACE, THE CHANGES IN THE FOCUS AND SINGLE POINT OF ENTRY AND INVESTMENT WE ARE GOING TO MAKE TO ENABLE THAT TO SUCCEED, I'M NOT NEARLY AS CONCERNED AS THE NAYSAYERS WHO ARE LOOKING FOR SOMEBODY TO KNOCK ON THE DEAL. I SUSPECT NOT, BECAUSE I THINK THE OFFERINGS WE HAVE IN THE RESPONSE TO CLIENTS IS AT THE CORE OF WHAT WE HAVE BEEN DISCUSSING FOR THE LAST YEAR.
AND THAT HAS BEEN FIRST AND FOREMOST. WE ARE FOCUSED ON, WHAT IS THIS GOING TO MEAN FOR OUR CLIENTS? WHAT IS IT GOING TO MEAN FOR ATTRACTING TALENT GOING FORWARD? AND ENABLING THOSE PEOPLE? AND MOST VERY TALENTED PEOPLE WANT TO WORK WITH AND FOR THE VERY BEST AND BRIGHTEST AND HAVE AVAILABLE TO THEM THE MOST STATE-OF-THE-ART TOOLS. THAT IS WHAT WE ARE PROVIDING. PROGRESS IS EVERYDAY. I HAVEN'T EVEN FOCUSED IN ON THE ADVANCES THAT -- WHAT WAS GOING ON THIS MORNING. CAROLINE: OPENAI? JOHN: THAT HAS A POSITIVE IMPACT, AS A TOOL AVAILABLE TO OUR KNOWLEDGE WORKERS. OTHERS WILL TRY.
SOME WILL SUCCEED, BUT WE WILL WIND UP AT THE END OF THE DAY WITH THE VERY BEST TALENT IN THE INDUSTRY, I THINK AS WE ALWAYS HAVE. CAROLINE: THAT TALENT WANTS TO BE ENABLED WITH THE LATEST AND GREATEST TOOLS. JON WAS TALKING ABOUT HOW THE BARRIERS FOR ENTRY WAS LOW, BUT AI MAKES THE BARRIER FOR ENTRY INCREDIBLY LOW.
DO NOT BELIEVE IN THAT? PHILIPPE: I'M NOT SURE I WOULD AGREE WITH THAT. ULTIMATELY WHAT YOU HAVE TO HAVE IS CONDUCTIVITY TO A VERY BROAD RANGE OF CAPABILITIES. SO I THINK THAT IF YOU ARE THINKING ABOUT IT IN A VERY REDUCTIVE SENSE AND SAYING, ANYBODY CAN CREATE A PIECE OF CONTENT, SURE. BUT THE REALITY IS UNLESS THE CONTENT IS CONNECTED TO A VERY SOPHISTICATED PLATFORM WITH A GREAT DEAL OF TECHNOLOGY AND A LOT OF DATA, THEN FUNDAMENTALLY IT IS NOT VERY USEFUL TO THE CLIENTS WHO NEED ACCOUNTABILITY, NEED OUTCOMES, AND ARE VERY SOPHISTICATED THEMSELVES. CAROLINE: WE ARE SPEAKING WITH PHILIPPE KRAKOWSKY OF INTERPUBLIC GROUP AND JOHN WREN OF AN. -- OF OMNICOM.
BYTEDANCE IS IN THERE TAKING SPACE, AMAZON AS WELL. YOU THINK ULTIMATELY THE AGENCIES WILL OWN AS MUCH IS THE $1 TRILLION OF THE MARKET THAT IT DOES TODAY, OR WILL THAT CONTINUE TO ERODE? JOHN: WELL, MANY OF THESE PLAYERS HAVE BEEN COMPETITORS OF OURS NOW FOR QUITE A WHILE. SO, IT IS NOT NEW. SOME OF THE TOOLS, SOME OF THE CAPABILITIES BEING CREATED TODAY, ON ONE HAND ARE VERY WELCOME AND USABLE BY SMALLER MARKETERS. BUT LARGER MARKETERS, WHAT PHILIPPE WAS MENTIONING A MINUTE AGO, ARE GOING TO HAVE TO BE -- YOU HAVE TO BRING BRAND SAFETY INTO CONSIDERATION AS YOU DO THIS. YOU HAVE TO BRING IN CONSIDERATIONS.
YOU HAVE THE RIGHT TO USE YOUR IMAGE AND VOICE. EVEN THOUGH IT MIGHT BE A PERFECT SETTING FOR WHAT I'M TRYING TO ACCOMPLISH. SO THERE ARE A LOT OF CONSIDERATIONS. EUROPE IS DIFFERENT THAN THE U.S.. CHINA IS GOING TO BE DIFFERENT THAN EVERYBODY ELSE. THAT HAS ALWAYS BEEN OUT THERE.
WE, WITH THE RESOURCES WE HAVE, DEFENDING OURSELVES IN THIS ENVIRONMENT, HAVE BEEN VERY SUCCESSFUL AND WILL CONTINUE TO BE SUCCESSFUL. WILL BE MORE SUCCESSFUL NOW. THIS WILL BE MORE FOCUSED AND WILL HAVE MORE RESOURCES TO RESPOND TO THINGS THAT CHANGE. CAROLINE: THINGS THAT CHANGE, LIKE A NEW ADMINISTRATION. EVERYONE HAS BEEN SAYING, WHAT ABOUT THE REGULATORY OUTLOOK? HOW CONFIDENT ARE YOU THAT THIS DEAL ACTUALLY GETS THROUGH? PHILIPPE: IT HAS BEEN A LONG TIME IN THE MAKING. WE HAVE BEEN VERY DELIBERATE. YOU CAN ASSUME THAT WE TOOK ADVICE AS WE WERE HEADING INTO THIS, BECAUSE WE ARE GOING TO BE LOOKING AT A DOZEN OR MORE JURISDICTIONS IN WHICH THIS WILL NEED TO CLEAR THAT HURDLE.
WE HAVE A HIGH DEGREE OF CONFIDENCE THAT THAT IS SOMETHING WE CAN ACHIEVE. CAROLINE: DO YOU HAVE A HIGH DEGREE OF CONFIDENCE IN THE MACRO PERSPECTIVE YOUR CLIENTS CURRENTLY HAVE? I WILLING OUR PEOPLE TO COMMIT TO BIG CAMPAIGNS IN THIS MACROENVIRONMENT? WE DO HAVE SO MUCH GEOPOLITICAL UNCERTAINTY. JOHN: CLIENTS STILL WORK UP IN THE MORNING, RUNNING THEIR BUSINESSES AND FACTORIES. MAYBE THE NATURE OF WHAT THEY ARE ADVERTISING, OR THE CHANNEL IN WHICH THEY ARE TRYING TO REACH THEIR CUSTOMERS CHANGED, BUT THAT IS WHAT WE ARE INVESTED IN. AND THE VELOCITY OF THAT CHANGED.
PEOPLE DO DIFFERENT THINGS TO RESPOND TO THE MARKETPLACE TO FAMILY. I THINK THE CHANGE IN ADMINISTRATION IS PROBABLY A POSITIVE THING. I SUSPECT THE NEW MINISTRATIONS GOING TO BE MORE BUSINESS-FRIENDLY THAN ANYBODY HAS COMPLAINED ABOUT THE EXISTING ADMINISTRATION. I AM NOT ANTICIPATING, AND WE HAVE BEEN WELL ADVISED THAT WE HAVE TO GO THROUGH THE PROCESS. THERE ARE A LOT OF COMPETITORS OUT THERE. SO, THAT WILL NOT BE AN ISSUE
IN THE FINAL DAYS. NO, THE WHOLE FOCUS IS ON THE FLEXIBILITY AND THE AGILITY. EVEN THE PEOPLE WHO TEND TO LOOK AT SIZE AND THE NEGATIVE ASPECTS OF SIZE, WE SEE SIZE AS EMPOWERING BECAUSE IT WILL GIVE US MORE RESOURCE. AND WHAT IS KEY IS TO KEEP THE AGILITY AND LEAVE CREATIVITY TO THE TALENTED PEOPLE WE BOTH HAVE IN OUR EMPLOYEE, AND ARE RESPONSIBLE FOR US BOTH BEING HERE TODAY. ENABLE THEM WITH THE BEST TOOLS, CUTTING EDGE, SO THEY CAN GO TO THE LARGEST ADVERTISERS IN THE WORLD AND WITH GREAT CONFIDENCE TELL THEM THAT IT IS ALWAYS CHANGING.
YESTERDAY DOES NOT EXIST ANYMORE. IT IS TOMORROW. BUT WE ARE THE PLACE TO COME TO. CAROLINE: THANKS FOR COMING TO US TODAY. JOHN WREN OF OMNICOM AND PHILIPPE KRAKOWSKY OF INTERPUBLIC GROUP.
MEANWHILE, TODAY BLOOMBERG TELEVISION IS HAVING LIVE CONFERENCE OF AN INAUGURAL WOMEN, MONEY, AND POWER EVENT. TO DISCUSS THE FUTURE OF BUSINESS. THEY HAVE TO TALK AI AND GLOBAL FINANCE. TAKE A LISTEN TO THE PANEL HAPPENING UNDERWAY. >> WHEN IT COMES TO DATA-DRIVEN SELECTION OF CUSTOMERS, THIS IS SOMETHING THAT WE LEVERAGE FOR ALL OF THE INSIGHTS WE CAN PROVIDE.
INSIGHTS ABOUT THE MARKET THAT BUYERS AND SELLERS FROM DIFFERENT REGIONS CAN BENEFIT FROM. >> ALL OF YOU HAVE TALKED ABOUT THIS IDEA OF ASSESSING RISKS. AS I WAS WALKING ON STAGE HEARD, WE WORRY ABOUT EVERYTHING, THE EXISTENTIAL CRISIS OF AI. WHOSE VALUES ARE ENCODED IN THESE THINGS. WHAT ARE THE RISKS OF THE SCENARIOS YOU ARE DESCRIBING? WHAT ARE THE RISKS OF HAVING YOUR AI LOOK AT A CONTRACT AND GO, SEEMS GOOD? >> I DON'T KNOW ABOUT RISK, BUT IT IS BEING DISCUSSED A LOT ABOUT, RIGHT? FOR ME, THERE IS A FACT WHICH APPARENTLY NOW IS CONTROVERSIAL, WHICH IS IN A FEW YEARS FROM NOW, 2050, AI WILL BE THE MOST INTELLIGENT BEING ON THE PLANET.
>> KEEPING ELON MUSK UP AT NIGHT? >> BUT BY FACTOR IT IS NOT EVEN 10. WE NEED THINK ABOUT IT THIS IS THE FIRST TIME IN HISTORY THIS HAS HAPPENED. ALL OF A SUDDEN IT CAN BE STARE. AND THE RISK ASSOCIATED WITH IT OR A LOT. ALL OF A SUDDEN YOU COULD LOSE CONTROL. IN THE SHORT TERM EVEN WE CAN DELEGATE TOO MUCH AND LOSE A SENSE OF REALITY. DONE WELL OR NOT.
BUT IF YOU PROJECT IN THE LONG-TERM IT CAN BE AN EVEN BIGGER RISK. IT IS ABOUT LOSING CONTROL. SO, HOW DO WE PUT SOME BOUNDARIES, HOW CAN WE MAKE SURE WE ARE IN CHARGE? I DON'T THINK THERE IS A SOLUTION YET. BUT THERE ARE PROBABLY TWO WAYS. ONE IS THE USUAL WAY OF CONTROLS AND BOUNDARIES.
NOW, FOR EXAMPLE, WHICH IS QUALITY ASSURANCE, LIMITATION ON THE LEVEL OF DELEGATION. FOR EXAMPLE, IF WE USE AI FOR A CONTRACT, SOMEBODY SHOULD REVIEW IT. >> A HUMAN SHOULD REVIEW IT? >> A HUMAN SHOULD REVIEW IT. TO YOUR POINT, HAVING ANOTHER AI REVIEW IS ALREADY HAPPENING.
AT SOME POINT, AS THE MODEL GETS ADVANCED, YOU NEED TO INGRAIN THE RULES OF BEHAVIOR IN THE MODEL ITSELF. THAT IS WHY THAT -- THAT IS WHY THERE IS A LOT OF STUDY ABOUT, HOW CAN YOU MAKE IT HAPPEN? I THINK THAT IS A RISK. HOW DO YOU MAINTAIN CONTROL WITHOUT LEVERAGING THE POWER OF AI? IT WILL BE FASCINATING TO SEE WHAT KIND OF SOLUTIONS COMMONPLACE. >> IN TERMS OF THE DEPLOYMENT OF DIGITAL SOLUTIONS, IN TERMS OF PEOPLE USING THEIR PHONES FOR ALL OF THESE THINGS, ONE OF THE REALITIES -- I'M THINKING ABOUT THE APPLE CONTEXT -- TO USE AI ON AN IPHONE YOU HAVE TO HAVE THE LATEST, MOST EXPENSIVE VERSION OF WHAT IS ALREADY A VERY EXPENSIVE SMARTPHONE.
OPERATING IN A CONTEXT WHERE NOT ALL OF YOUR CUSTOMERS MAY NOT HAVE THE MOST EXPANSION -- EXPENSIVE VERSIONS OF THINGS. HOW ARE YOU INCLUDING THE HUNDREDS OF MILLIONS OF PEOPLE WHO DO NOT HAVE ACCESS TO TAKE ADVANTAGE OF SOME OF THE TECHNOLOGY WE ARE TALKING ABOUT? >> IT IS VERY DEPENDENT ON THE COMMUNITY YOU ARE OPERATING IN. WHEN YOU LOOK AT THE AFRICAN CONTINENT, A PRODUCT THAT PROVIDES ACCESS TO FINANCIAL SERVICES TO PEOPLE ON THE AFRICAN CONTINENT, IT WORKS ON THE MOST BASIC OF MOBILE PHONES. ANYBODY THROUGH THE USE OF MOBILE TELEPHONY CAN TRANSFER CAPITAL OR WHATEVER THE CASE IS. IN THAT CASE IT SHOWS THE
EXTENT TO WHICH FINTECH AT ITS MOST BASIC LEVEL HAS BEEN ABLE TO ACTUALLY, YOU KNOW, GET THROUGH MANY, MANY LEVELS OF INDUSTRY THAT WERE ACTUALLY NOT EVEN THERE. BECAUSE THE FINANCIAL INDUSTRY HAS NOT BEEN VERY ROBUST ON THE AFRICAN CONTINENT. SO, MOBILE MONEY HAS ENSURED THAT YOU CAN LEAPFROG THAT. BUT CAMINO, FROM THAT PERSPECTIVE YOU CAN USE THE MOST BASIC PHONES FOR SOME OF THE MOST BASIC PRODUCTS YOU CAN MAKE AVAILABLE.
BECAUSE IN TERMS OF SOPHISTICATION THE LEVEL OF SOPHISTICATION IN TERMS OF TECHNOLOGY IS NOT THE SAME EVERYWHERE. >> OR DATA ACCESS. >> ABSOLUTELY. SO, WE FOUND IT -- WE WERE ABLE TO USE IT -- IT IS APPLICABLE ACROSS THE AFRICAN CONTINENT. IN SOUTH AFRICA, WHERE MOBILE TELEPHONY IS HIGH AND YOU HAVE ACCESS TO A LOT MORE SOPHISTICATED PHONES, YOU ARE ABLE TO MAKE ACCESS TO A NUMBER OF PRODUCTS WITH THE USE OF AI TO CONSUMERS THAT ARE USING, WHETHER IT IS OUR E-COMMERCE PLATFORM OR ANY OF OUR PLATFORMS , OUR PAYMENTS PLATFORMS, OUR CLASSIFIED LANDFORMS. TO ACCESS OUR PRODUCTS.
>> YOU HAVE TALKED A LOT ABOUT FOCUSING ON SOLVING THE NEEDS OF YOUR ENTREPRENEURS. WHAT HAS BEEN THE WEIRDEST PROBLEM? THAT THEY HAVE HAD IN TRYING TO ADAPT TO ALL OF THESE CHANGES THAT SEEMS TO BE HAPPENING AT LIGHTSPEED? >> WE TALK ABOUT S&P'S SOMETIMES. YOU'RE TALKING ABOUT A COUNTRY WITH -- A COMPANY WITH LESS THAN 10 PEOPLE. I THINK ONE OF THE CHALLENGES
FOR US IS TO DEVELOP TECHNOLOGIES AND INNOVATIONS AND AI SOLUTIONS. THIS IS TARGETING FOR WHAT THEY NEED. THIS IS WHERE WE HAVE BEEN WORKING FOR OVER 25 YEARS AND WE ARE VERY HAPPY TO HAVE SUPPORT. CAROLINE:
YOU CAN CATCH MORE RIGHT HERE ON NUMBER TELEVISION. FOR NOW WE CHECK IN ON THESE MARKETS AS THE NASDAQ TURNS INTO THE RED. A KEY CONTRIBUTOR TO THE DOWNSIDE IN THE S&P HAS BEEN ORACLE.
ITS FORECAST DID NOT LIVE UP TO EXPECTATIONS, AND IN GENERAL WE ARE SEEING 9% GROWTH IN REVENUE. NOT ENOUGH TO VINDICATE THE RAMP-UP IN SHARES WE HAVE SEEN THIS YEAR. MOVING ONTO OTHER INDIVIDUAL MOVERS, NOTABLE ONES TO THE DOWNSIDE INCLUDE DB. MARKETS ARE WORRYING ABOUT THAT DESPITE THE STRONG RESULTS. MICROSTRATEGY OFF BY 1.5%. PALANTIR UP BY .7% IN A DOWN
MARKET. THESE NAMES COULD BE THE ONES NEXT ADDED TO THE NASDAQ 100, SO WE KEEP HIM CALM -- WE KEEP KENAI. INVESTING TRENDS IN THE CYBERSECURITY SECTOR. ENRIQUE SALEM IS GOING TO BE JOINING US. THIS IS "BLOOMBERG TECHNOLOGY." IN THE FIRST HALF OF THIS YEAR PALO ALTO REPORTED MORE THAN 4% INCREASE IN RANSOMWARE VICTIMS COMPARED TO THE FIRST HALF OF 2023. THE HIGHER LEVEL OF ACTIVITY WAS NO FLUKE. THIS MAKES CYBERSECURITY HOT
SECTOR IF YOU ARE A VENTURE CAPITALIST. WE HAVE ONE, ENRIQUE SALEM, PARTNER AT BAIN CAPITAL. WE ARE ALL ABOUT THIS ON VC SPOTLIGHT.
DOES RANSOMWARE MAKER -- TAKE A KEEN INTEREST FOR YOU? >> NO ONE IS IMMUNE. HAVE BASICALLY GOT SMALL BUSINESSES, HOSPITALS, GOVERNMENTS. YOU SO RECENTLY THAT AT STARBUCKS THE BRISTOW'S COULD NOT ACCESS THEIR SCHEDULES BECAUSE OF A RANSOMWARE ATTACK. YOU ARE SEEING IT PREVALENT ACROSS ALL INDUSTRIES TODAY.
CAROLINE: AFFECTING ONE IN 10 COUNTRIES EACH YEAR. HOW IS THE TECHNOLOGY CHANGING TO ENSURE THAT WE ARE GETTING ONE-OF-A-KIND FOUNDERS COMING TO THE SPACE? ENRIQUE: WE ARE ALWAYS LOOKING TO FIND NEW SOLUTIONS TO, HOW DO YOU PREVENT AN ATTACK FROM HAPPENING? THAT IS THE KEY, FIRST TRY TO PREVENT IT. TRY TO UNDERSTAND, WHAT IS THE ACTIVITY OR BEHAVIOR THAT A RANSOMWARE ATTACK WILL DO? WHICH IS, ULTIMATELY, CHECKED TO ENCRYPT THE DATA ON YOUR COMPUTER. BE PREPARED TO RECOVER. HOW DO YOU MAKE SURE YOU CAN DECRYPT IT SUCCESSFULLY AND GET ALL OF YOUR DATA BACK WITHOUT HAVING TO PAY THE RANSOM? WHICH IS WHAT THEY ARE TARGETING TO TRY TO GET YOU TO DO? CAROLINE: HAS THAT BEEN SOME OF THE MOST FRUITFUL AREAS? CYBER IS MORE PREVALENT GENERALLY. WE ARE WORRIED ABOUT SUPPLY CHAIN THREATS AS WELL. WHERE ELSE HAVE YOU SEEN
OPPORTUNITIES TO BE PUTTING MONEY TO WORK? ENRIQUE: WE TALKED ABOUT SUPPLY CHAIN SECURITY. WE TALKED ABOUT THE ATTACK ON SOLARWINDS, WHICH HIT 18,000 COMPANIES. WHAT WE SAW WAS AN EXECUTIVE ORDER FROM PRESIDENT BIDEN THAT SAID EVERY COMPANY NEEDS TO TAKE SUPPLY CHAIN SECURITY SERIOUSLY, AND ULTIMATELY THAT GAVE RISE TO A WHOLE NEW SET OF COMPANIES. COMPANIES LIKE STACK LOCK, CHAIN GUARD, AND A NUMBER OF OTHERS THAT ARE ACTIVELY PROVIDING SOLUTIONS TO BUSINESSES TO PROTECT THEIR SUPPLY CHAINS. CAROLINE:
WE FIND YOU INTERESTING BECAUSE YOU WERE A CEO YOURSELF. YOU ARE ALSO ON PRESIDENT OBAMA'S ADVISORY BOARD. HOW ARE YOU ADVISING YOUR PORTFOLIO COMPANIES NOW AS WE START TO LOOK TOWARD THE NEXT ADMINISTRATION IN 2025? ENRIQUE: I THINK IT IS GOING TO BE AN INTERESTING OPPORTUNITY FOR A LOT OF COMPANIES. THE BIGGEST TREND IS AI.
AI IS GOING TO CHANGE HOW MANY OF OUR BUSINESSES WORK. THE ATTACKERS, THEY CAN BE SO MUCH MORE AGGRESSIVE NOW ON TARGETED PHISHING ATTACKS THAT ARE CUSTOM-MADE TO GET SOMEBODY TO REACT. WE ARE SEEING DEEPFAKES. WE ARE TELLING ALL OF OUR COMPANIES, HOW DO YOU TAKE ADVANTAGE OF AI? THEN THE NEW ADMINISTRATION WILL GIVE US NEW OPPORTUNITIES TO DRIVE CONSOLIDATION, M&A, AND WE ARE HOPING THAT THE IP MARKET COMES BACK IN 2025. CAROLINE: ENRIQUE SALEM, ARNER AT BAIN CAPITAL VENTURES, WE THANK YOU. LET'S TALK ABOUT GEOPOLITICS LITTLE MORE. HUAWEI SUPPLIERS ARE FACING
LIMITATIONS AS LAWMAKERS ARE MOVING TO RESTRICT THE PENTAGON FROM DOING BUSINESS WITH COMPANIES THAT SELL CHIPS AND SERVICES TO THE CHINESE COMPANY. MIKE SHEPPARD JOINS US FOR MORE. THIS CONTINUES TO BE THE NARRATIVE, CHINA-U.S. HOSTILITIES DIALING UP FROM A TECH PERSPECTIVE.
ALREADY WAS PRETTY HARD IF YOU ARE SUPPLYING TO HUAWEI, BUT NOT HARD ENOUGH, APPARENTLY. MIKE: NOT HARD ENOUGH FOR LAWMAKERS ON CAPITOL HILL, WANT TO BAR ANY SORT OF DIZZINESS WHATEVER WITH HUAWEI, IT IS A NATIONAL CHAMPION IN CHINA. HERE IN WASHINGTON IT IS CONSIDERED A PARIAH. IT HAS BEEN SUBJECT TO A
GROWING LIST OF U.S. SANCTIONS AND EXPORT CONTROLS THAT HAVE LIMITED AMERICAN COMPANIES GREATLY FROM DOING BUSINESS WITH HUAWEI ALREADY. NOW WE ARE SEEING MORE RESTRICTIONS COMING THEIR WAY, THIS TIME THROUGH THE PENTAGON. THIS IS LIKELY TO BECOME LAW.
THE PROVISION IS ATTACHED TO A MOST-PASS DEFENSE POLICY LEGISLATION WE WILL SEE ACTION ON IN THE COMING WEEKS BEFORE LAWMAKERS LEAVE TOWN FOR THE HOLIDAYS. THIS IS SOMETHING COMING DOWN THE PIKE COMPANIES WILL HAVE TO DEAL WITH WITHIN A NINE MONTH SPAN. THAT IS WHEN THE PROVISION ACTUALLY TAKES EFFECT. THERE ARE VERY RARE EXEMPTIONS GRANTED UNDER THE LAW THAT WOULD ALLOW COMPANIES TO CONTINUE TO DO BUSINESS WITH HUAWEI AND THE PENTAGON AT THE SAME TIME. CAROLINE: MIKE SHEPPARD BREAKING IT ALL
DOWN IN THE LATEST TIT FOR TAT TECH TRADE TENSIONS. SO MUCH MORE TO BE DISSECTING WHEN IT COMES TO GEOPOLITICS AND THE INTERSECTION WITH TECHNOLOGY. YOU CAN DO THAT BY CHECKING OUT OUR PODCAST. GO RECAP IT ALL. YOU CAN FIND THEM ON THE TERMINAL, AS WELL AS ONLINE.
WE LEAVE YOU WITH THE NASDAQ 100 JUST UNDERWATER BY ABOUT 12 POINTS. ORACLE, A KEY DRAG ACROSS THE SECTOR. CHIPS AS WELL IN FOCUS, OFF ACROSS THE BOARD. ALPHABET, THOUGH, SHINES, AS WE
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