Altman's Chip Venture and Sony Scraps Zee Deal | Bloomberg Technology
>> FROM THE HEART OF WHERE MONEY AND POWER COLLIDE IN SILICON VALLEY, THIS IS BLOOMER TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE HYDE IS OFF TODAY. COMING UP, REPORTS THAT OPENAI CEO SAM ALTMAN WILL MEET WITH SAMSUNG EXECUTIVES JUST DAYS AFTER OUR REPORT ON PLANS TO RAISE BILLIONS OF DOLLARS FOR AI CHIP FACTORIES. PLUS, SONY SCRAPPING ITS DEAL AFTER TWO YEARS OF DRAMA AND DELAY. DETAILS ON THE STILL MADE THE LEAD TO THE COLLAPSE. AND A BIG WEEK FOR BIG TECH AS
THEY GEAR UP TO REPORT EARNINGS RESULTS. ALL THAT AND SO MUCH MORE AHEAD. THIS IS WHAT FINANCIAL MARKETS LOOK LIKE NOW. BE CLOSED FRIDAY WITH FRESH RECORDS AND WE ARE CONTINUING TO BUILD ON THAT.
A LOT OF CHAT IN THE MARKET ABOUT WHAT THE FED WILL DO WITH RATES, BUT THIS IS A BIG WEEK FOR TECHNOLOGY EARNINGS TO START . NETFLIX, TESLA, INTEL. SO INSIGHT FOR SOME MARKETS WE ARE CONCERNED ABOUT, BUT OF COURSE THE AI STORY IS ALSO PRESENT. THEN THERE IS BITCOIN, AN INTERESTING ONE. IT HAS LOST MOMENTUM IN RECENT SESSIONS.
THE EUPHORIA WE SAW ON THE MARKET AFTER THE POSTAPPROVAL OF THE ETF HAS FADED AWAY. WE ARE NOW BACK CLOSER TO 40,000 U.S. DOLLARS PER TOKEN THEN WE WERE TO THE UPSIDE IN THE IMMEDIATE SESSIONS THAT FOLLOWED THOSE APPROVALS. WE ARE KEEP TRACKING AT -- WE WILL KEEP TRACKING IT, BUT WE ARE MOVING TO THE DOWNSIDE. THERE IS A BIG STORY HAPPENING IN THE WORLD OF TECHNOLOGY THAT WE CONTINUE TO TRACK, SAM ALTMAN. HE WILL MEET WITH SAMSUNG CHIP EXECUTIVES LATER THIS WEEK ACCORDING TO KOREAN REPORTERS.
THE TIMING OF THIS REPORT IS INTERESTING BECAUSE FRIDAY WE ARE REPORTING THE FOCUS OF HIS INITIATIVE TO RAISE TENS OF BILLIONS OF DOLLARS IS FOR CHIP CAPACITY, CALL IT WHAT YOU WILL. NOW SAMSUNG. IAN: IF YOU ARE SERIOUS ABOUT DOING THIS, YOU HAVE TO SPEAK TO THE KOREANS. THE FOCUS IS ON TMS SEE WHAT THE MARKET LEADER. IF THERE IS A STRONG NUMBER TWO, IT IS NOT INTEL. THEY HAVE THE TECHNOLOGY.
ED: THERE'S ALWAYS BIG FOCUS ON TSMC. SAMSUNG IS A HEAVYWEIGHT IN THE MARKET. IAN: THAT IS RIGHT. EVERYONE FOCUSES ON THEM. MEMORY IS A COMMODITY, GREAT. THEY ARE THE SECOND-BIGGEST CONTRACT MANUFACTURER.
THEY HAVE HAD BIG CUSTOMERS LIKE NVIDIA AND APPLE HAVE SOME SERIOUS CAPABILITIES AND THEY ARE AHEAD OF THE THIRD GUYS, INTEL. ED: THE BASICS OF THE STORY REPORTED FRIDAY IS IT IS A LOT OF MONEY BECAUSE CHIP FACTORIES COST A LOT TO MAKE AND A LONG TIME TO MAKE BUT IT IS THIS ANXIETY THAT IN THE FUTURE SUPPLY OF A SPECIFIC CHIPS WILL NOT BE THERE TO MEET DEMAND. IT IS DIFFERENT FROM WHAT WE PREVIOUSLY REPORTED, THE IDEA OPENAI WANTS TO TAKE ON SOME OF ITS BIGGEST SUPPLIERS COME LIKE NVIDIA. IT DOES NOT SEEM TO BE A DESIGN OF THEIR OWN SHIP, JUST GUARANTEEING WHEN THE TIME COMES YOU CAN GET YOUR HANDS ON WHAT WE CALL AI ACCELERATORS. IAN: THAT IS RIGHT. OPENAI, ALL THESE CHIP DESIGNERS HAVE A SHARED INTEREST AND GOAL.
THEY BELIEVE AI IS GOING TO BE PERVASIVE IN THE ECONOMY AND TECHNOLOGY. ACCORDING TO SOME PROJECTIONS, IT WILL BE MORE CHIPS, A HIGH END LOGIC CHIP. IF YOU BELIEVE THAT SCENARIO, THEN WE NEED TO START POURING CONCRETE. ED: SO SAM ALTMAN'S VISIT TO KOREA AND SEOUL IS ACCORDING TO LOCAL REPORTS, BUT WE WILL CONTINUE TO TRACE THE STORY. SONY AND ZEE ENTERTAINMENT HAVE CALLED OFF A PLANNED MEDIA MERGER IN INDIA AFTER TWO YEARS OF DRAMA AND DELAY. FOR MORE ON WHAT HAPPENED, I WANT TO BRING IN ALEX WEBB IN LONDON. WE HAVE DONE SO MUCH REPORTING
AROUND THE IDEA THIS WAS NOT GOING TO HAPPEN. THE STICKING POINT SEEMS TO HAVE BEEN WHO WOULD HAVE RUN THIS ENTITY, HAD IT BEEN CLOSED. >> THAT IS AT THE CORE OF THE ISSUE. THE CEO OF ZEE, THE SON OF THE FOUNDER, HE HAS BEEN CAUGHT UP IN A REGULATORY INVESTIGATION FOR ALLEGEDLY FAKING THE RECOVERY OF LOANS TO COVER PRIVATE FINANCING DEALS, ALLEGATIONS HE DENIES. INITIALLY, THERE WAS AN INTERIM RULING SAYING HE WAS NOT ALLOWED TO HOLD DIRECTORSHIPS. THAT WAS REPRIEVED. HE WAS STILL ALLOWED TO HOLD
THIS CEO POSITION, BUT THE INVESTIGATION IS ONGOING. SONY APPEARS TO THINK THIS IS A RISK. THEY WOULD ONLY BE HAPPY TO CLOSE THE DEAL IF HE WAS NOT LEADING THE NEW COMPANY. THE FAMILY WOULD OWN ABOUT 4% OF THE NEW COMPANY. SONY WOULD OWN CLOSE TO 51%, SO SONY IS THE BIGGER FISH HERE AND THEY WERE NOT ABLE TO REACH AN AGREEMENT. ED: A LOT OF OUR AUDIENCE ARE GOING TO SAY, WHY IS SONY INTERESTED IN DOING A MEDIA DEAL IN INDIA WITH ZEE? THE REALITY IS IT IS JUST A BATTLEGROUND IN THE MOST POPULOUS COUNTRY. JUST EXPLAIN WHAT ZEE IS.
MY UNDERSTANDING IS AND HAS A DECENT CATALOG OF CONTENT BUT FINANCIALLY IS SHAKY. ALEX: IT IS. THE CHALLENGE IS IN INDIA ONE OF SCALE BECAUSE OF PRICE SENSITIVITY. ZEE WOULD HAVE ENDED UP WITH 75 CHANNELS, A HUGE BACK CATALOG, BUT WITHOUT THAT SKILL IT IS HARD TO MAKE THE ECONOMICS ADD UP. YOU HEAR PEOPLE SAY THAT INDIA IS WHERE CHINA WAS MAYBE 6, 8, 10 YEARS AGO.
THAT MEANS IT COULD BE QUITE ATTRACTIVE IN A FEW YEARS. RIGHT NOW, IT IS NOT NECESSARILY HYPER ATTRACTIVE BUT PEOPLE ARE TRYING TO GET IN ON THE GROUND FLOOR SO IF THE WEALTH DOES FINALLY ARRIVE IN INDIA THEN YOU HAVE QUITE A BIG MARKET SHARE. THEY WOULD HAVE HAD 37% MARKET SHARE BY SOME ESTIMATES. DISNEY, WHICH IS MERGING ITS LOCAL BUSINESS WITH A SHAREHOLDER, WOULD HAVE HAD -- IS GOING TO HAVE 24% MARKET SHARE, SO HAVING GONE FROM A MORE DOMINANT POSITION, NOW THE SEPARATE SONY AND ZEE ARE LIKELY TO BE STRONGER THAN THIS NEW DISNEY RELIANT ENTITY. ED: THE STREAMING MARKET IN INDIA WAS A STORY IN 2023 AND WILL BE IN 2024. THANK YOU.
COMING UP, WE WILL PUSH AHEAD TO BIG TECH EARNINGS AS THEY KICK OFF TOMORROW WITH NETFLIX. JANET MUI COMING UP ON THE SHOW. THESE ARE THE NAMES SET TO REPORT OF THE NEXT FEW DAYS. NETFLIX, IBM, TESLA. TESLA HAS BEEN THE BIGGEST POINTS DRAG. THE ONLY MEMBER OF THE SO-CALLED MAGNIFICENT 7 -- DO WE MOVE BEYOND THOSE SEVEN MEGA CAP NAMES AND THINK ABOUT TECHNOLOGY MORE HOLISTICALLY THIS EARNINGS SEASON? THIS IS BLOOMBERG TECHNOLOGY.
ED: EARNINGS SEASON IS HERE. THIS WEEK, WE GET FOURTH-QUARTER RESULTS FROM NETFLIX AND INTEL. WHILE THE MARKET IS FOCUSED ON RATES AND THE GLOBAL ECONOMY IN 2024, JOINING US NOW, JANET MUI, HEAD OF MARKET ANALYSIS AT RBC BREWIN DOLPHIN. TO LOOK FORWARD, YOU HAVE TO LOOK BACK. THE MAGNIFICENT SEVEN ACCOUNTED
FOR SO MUCH OF THE INDEX PERFORMANCE IN 2023. WE GO INTO THIS EARNINGS SEASON SAYING THEY ARE PROBABLY GOING TO ACCOUNT FOR THE MAJORITY OF PROP IT -- PROFIT GROWTH AS WELL. IS THAT HOW YOU LOOK AT IT? JANET: THAT IS LIKELY. AS YOU LOOK BACK LAST YEAR, THE MAGNIFICENT SEVEN DROVE TWO THIRDS OF THE RETURN LAST YEAR.
I THINK IT WILL CONTINUE GIVEN A LOT OF INVESTORS ARE JUST ABOUT NEUTRAL OR SLIGHTLY UNDERWEIGHT AT THE MOMENT IN TERMS OF EQUITIES, SO I THINK IN TERMS OF THE MOMENTUM IT IS GREAT. THE FLOWS COULD BE COMING FROM THE ALLOCATIONS FROM RETAIL INVESTORS. I THINK IF YOU LOOK BACK NOT JUST LAST YEAR BUT IN THE PAST FIVE YEARS, THE ANNUAL GROWTH RATES OF MANY COMPANIES HAVE BEEN FROM 15% TO EVEN 30%, SO I THINK EARNINGS IS LIKELY TO BE JUSTIFIED. THEY WILL CONTINUE TO DELIVER GROWTH, SUPPORTED BY THE STRUCTURAL TALENT THAT IS ARTIFICIAL INTELLIGENCE. >> TO DIFFERENTIATE BETWEEN STOCK PERFORMANCE AND ACTUAL GROWTH IN EARNINGS, THE AVERAGE ESTIMATE IS ACROSS THE MAGNIFICENT SEVEN, 40%, WHICH IS SLIGHT DECELERATION FROM 53% IN THE PRIOR QUARTER. THE ONLY SUBSECTOR COMPARABLE
IS UTILITIES AND WE KNOW EVERYTHING GOING ON IN ENERGY MARKETS. WHAT IS IT THE MAGNIFICENT SEVEN ARE ABLE TO DO TO KEEP BOOSTING THE BOTTOM-LINE THAT THE BROADER SECTOR CANNOT? JANET: THERE ARE BOTH CYCLICAL AND STRUCTURAL ASPECTS. THE SEMI CONDUCTOR SECTOR, THERE IS EVIDENCE THE CYCLE HAS COME TO AN END. LOOK AT THE GUIDANCE.
THERE IS EVIDENCE THIS IS OVER AND YOU'RE STARTING TO SEE THAT PICK UP IN THE GLOBAL SEMI CONDUCTOR ORDERS. ONE THAT IS LACKING IS SEMICONDUCTORS, STILL SOME INVENTORY DRAG, BUT GENERALLY WE TALK ABOUT UPGRADES FOR PHONES. THAT IS A THREE-YEAR CYCLE AND WE ARE STARTING TO GET RECOVERY THERE. SO I THINK IT IS CYCLICAL FOR THOSE COMPANIES AND STRUCTURALLY IS THE ARTIFICIAL INTELLIGENCE BOOM THAT TO US IS STILL PRETTY MUCH IN THE EARLY STAGES. BUT BROADER, IT IS GOING TO THE OTHER APPLICATIONS, STILL IN THE EARLY STAGES. THAT IS CREATING NEW DEMAND FOR THESE HIGH-PERFORMANCE AI CHIPS. ED:
YOU SAID YOUR FIRM IS KIND OF CONSTRUCTIVE ON SEMI'S. THE ONE WE ARE WATCHING CLOSELY IS INTEL THURSDAY. WE WILL SPEAK TO THE CEO FRIDAY. WITHIN THAT YOU HAVE TEXAS
INSTRUMENTS, WHICH IS THE OTHER END OF THE EXCITEMENT GAUGE, A MUCH WIDER RANGE OF MARKETS. DO YOU CARE MORE ABOUT LEARNING BY THE HEALTH OF THE END MARKETS OR THE FORWARD-LOOKING COMMENTARY ON HOW AI WILL CHANGE THE GAME FOR THESE COMPANIES? JANET: FOR THE MORE BORING KIND OF AREAS OF SEMI CONDUCTORS, IT WAS DRIVEN BY INVENTORY FOR LAPTOPS BECAUSE WE HAD SUCH A BOOM DURING THE PANDEMIC. THERE IS JUST MORE EVIDENCE OF THAT COMING TO AN END, SO THE NEXT UPLIFT COULD LAST 1.5
YEARS PLUS. THAT IS EXCITING. THAT IS IMPORTANT AND OF COURSE THE AI COMMENTARY WILL BE IMPORTANT. I THINK INVESTORS WILL BE LOOKING FOR EVIDENCE THAT THIS GROWTH IS INDEED ROBUST AND WILL CONTINUE TO JUSTIFY THE SHARE PRICE. ED: WE ARE ABOUT 50 MINUTES AWAY FROM THE CLOSE OF TRADE IN EUROPE. SOMETHING INTERESTING HAPPENED TODAY. THE CHIP EQUIP INTO MAKER WILL LEAP FROM NESTLE -- EQUIPMENT MAKER WILL LEAP OVER NESTLE TO BECOME THE THIRD MOST VALUABLE STOCK AND YOU GOT ME THINKING ABOUT EUROPEAN TECH.
THE ASML STORY IS CAUGHT UP IN THE GEOPOLITICS OF THE U.S.-CHINA RELATIONSHIP AND THE CONTEXT OF AI. WITH ASML JUMPING UP THE VALUE CHAIN, HOW DO YOU VIEW THEM AND EUROPEAN TECH IN 2024? JANET: WE HAVE ASML ON OUR INDIVIDUAL EQUITY LIST, PRIMARILY BECAUSE IT IS A MONOPOLY FOR THESE ADVANCED MACHINE MAKING. WITH EUROPEAN TECH, THERE ARE NOT A LOT OF CHOICES IF YOU LOOK AT THE MEGA CAP TECH SPACE. I THINK IT IS ONE OF THE FEW OPTIONS THAT DELIVERS PROMISING GROWTH PROSPECTS. IN TERMS OF GEOPOLITICS, I THINK THE CHINA RISK IS IN THE BACKGROUND BUT A LARGE PART OF IT HAS ALREADY BEEN DIGESTED BY INVESTORS.
WE ALREADY KNOW THEY ARE NOT GOING TO SEND HIGH END CHIPS TO CHINA. THERE HAS BEEN SOME SENSITIVITY TO THE STOCK PRICE, BUT WE HAVE ALREADY DIGESTED IT. THE LONG-TERM STRUCTURAL D AMOUNT GLOBALLY IS EXCITING. THAT MAY NOT BE FULLY REFLECTED IN THE STOCK PRICE YET. WE HAVE A CONTINUAL CONSTRUCTIVE YOU ON ASML IN GENERAL AND THE GLOBAL CHIP MANUFACTURING SECTOR. ED: THERE ARE TIMES WHEN I SOUND LIKE A BROKEN RECORD BUT WE ARE LOOKING AT THE FED AND RATES BECAUSE HIGHER RATES DISCOUNT TO THE PRESENT VALUE OF FUTURE CASH FLOWS IN THE CONTEXT OF BIG TECH.
THERE IS AN INTERESTING INFLATIONARY HAPPENING AROUND THE WORLD AND A QUESTION IN THE MARKET OF WHETHER WE ARE GETTING OUR RATES EXPECTATIONS WRONG. ARE WE GETTING IT WRONG? JANET: THERE IS A POSSIBILITY GIVEN WE INITIALLY EXPECT -- THE MARKET EXPECTS SIX AND NOW THEY HAVE TO TRIM IT TO FIVE RATE CUT EXPECTATION, BUT DURING THIS PERIOD OF RECALIBRATING INTEREST RATE EXPECTATIONS THE MARKETS CONTINUE TO GO UP IN THE U.S.. IT IS NOT THAT THE INTEREST RATE CUT EXPECTATION DOES NOT MATTER, BUT ALL THESE QUALITY COMPANIES, I THINK THEY DEMONSTRATED THEY MANAGED TO DO WELL LAST YEAR IN A RISING INTEREST RATE ENVIRONMENT AND I THINK IT COULD BE TWO RATE CUTS, THREE RATE CUTS. GENERALLY, RATES HAVE PEAKED AND THAT PROVIDES A STABLE ANGER FOR INVESTORS.
IT IS STILL MORE LIKELY THAN NOT WE WILL SEE A COUPLE RATE CUTS THIS YEAR, SO IN GENERAL INVESTORS ARE FOCUSED ON THE SOFT LANDING DIRECTION, WHICH WE SAW ESPECIALLY FROM LAST FRIDAY'S SURVEY. LOWER INFLATION EXPECTATION, HIGH CONSUMER CONFIDENCE. I THINK THE DIRECTION IS DRIVING MORE COMPARED TO THE RATE EXPECTATION. ED: THERE IS SOMETHING REFRESHING AND THE HONESTY OF SAYING WE DO NOT NOW. JANET MUI AT RBC BREWIN DOLPHIN, GREAT TO HAVE YOU ON THE PROGRAM.
COMING UP, ELON MUSK’'S AI COMPANY GETS A $500 MILLION BOOST. THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: AND NVIDIA CO-FOUNDER CELEBRATED THE CHINESE NEW YEAR WITH STAFF DURING A TRIP TO CHINA COME HIS FIRST IN TWO YEARS, A LOCAL KEY TOUR THAT COINCIDED -- A LOW KEY TOUR THAT COINCIDED WITH ATTEMPT TO GET ROUND-TRIP -- AROUND CHIP PRESCRIPTIONS. CHINA IMPORTS OF CHIP ACHING MACHINES JUMPS TO ALMOST 40 BILLION U.S. DOLLARS. THE SECOND LARGEST AMOUNT ON RECORD SINCE 2015, PLUS THE SUPREME COURT ASKED THE BIDEN ADMINISTRATION TO RESPOND TO AN APPEAL BY ELON MUSK, SEEKING TO OVERTURN AN AGREEMENT HE REACHED WITH THE SEC TO HAVE HIS SOCIAL MEDIA POSTS ABOUT TESLA SCREENED IN ADVANCE.
IN OTHER NEWS, HIS ARTIFICIAL INTELLIGENCE COMPANY SECURED 500 MILLION DOLLARS IN COMMITMENTS FROM INVESTORS, THE END GOAL BEING $1 BILLION ACCORDING TO BLOOMBERG SOURCES. YOU AND I REPORTED THIS STORY TOGETHER. LET'S GET RIGHT TO IT. AFTER WE PUBLISHED THE STORY, ELON MUSK SAID THAT THIS IS FAKE NEWS, BUT WHAT ARE THE DETAILS WE REPORTED? >> IT IS NOT CLEAR WHAT PART OF THE STORY HE IS DENYING, BUT A NUMBER OF SOURCES HAVE TOLD US THERE HAVE BEEN CONVERSATIONS AND EVEN A FILING ABOUT THIS, THAT THEY ARE SEEKING ROUGHLY $1 BILLION FOR HIS AI PLATFORM, AND WE HAVE HEARD THEY HAVE RECEIVED MAY BE 500 MILLION DOLLARS IN COMMITMENTS SO FAR. THESE ARE WHAT I WOULD CALL SOFT COMMITMENTS BECAUSE THE VALUATION IS STILL BEING SET. THEY HAVE DISCUSSED NUMBERS THAT INCLUDE $15 BILLION, BUT THEY HAVE NOT DECIDED, SO IT IS POSSIBLE THAT IS WHAT HE IS ALLUDING TO, THAT THE VALUATION HAS NOT BEEN SET IN STONE. ED: WHAT I HEARD FROM MY SOURCES IS
WHAT YOU HEARD. THERE IS A LOT OF INTEREST IN GETTING IN ON THIS ROUND AND INVESTING. WHAT IS INTERESTING TO ME IS $1 BILLION DOES NOT SEEM THAT MUCH IF YOU LOOK AT THE VAST SUMS THAT OTHER LEADING MAKERS OF AI TOOLS HAVE RAISED. HOW DO THESE THINGS NORMALLY SHAKE OUT? >> THE TARGET SIZE OF A ROUND CAN AND DOES CHANGE.
USUALLY IT IS NOT COMPLETELY SET UNTIL THEY KNOW THE VALUATION BECAUSE IT IS HARD TO KNOW -- YOU DO NOT KNOW THE SHARE PRICE, IT IS HARD TO KNOW WHAT PEOPLE ARE GOING TO PAY AND HOW MUCH THEY WILL INVEST. SO WE COULD SEE THE NUMBER GO UP AND WE COULD SEE THE NUMBER GO DOWN. IT IS POSSIBLE THEY WILL DO ANOTHER ROUND IN A FEW MONTHS, SO I WOULD NOT SEE THIS AS AN END GOAL. ED: WE KNOW THE AIM WAS TO RAISE MONEY BECAUSE OF A REGULATORY FILING. THERE ARE TWO INTERESTING PARTS
HERE, ONE THAT X, FORMERLY KNOWN AS TWITTER, INVESTORS SEEM TO BE THOSE MOST LIKE IT -- LIKELY TO PARTICIPATE. INSTEAD OF GETTING EQUITY, SOMETHING BEING DISCUSSED IS HAVING ACCESS TO COMPUTE, WHICH IS AN INTERESTING SITUATION FOR AN INVESTOR TO FIND THEMSELVES IN. >> SURE. RIGHT NOW, IT IS COMPETITIVE TO GET IN ON THE NEXT BIG AI BUSINESS, SO ANYTHING THEY CAN DO TO LEVERAGE THEIR TECHNOLOGY THAT COULD BE USED MAY BE USED MAYBE FOR OTHER START UP INVESTMENTS THAT INVESTORS ARE MAKING OR HELP POTENTIAL STRATEGIC INVESTORS THAT WE HAVE RELATIONSHIPS WITH MICROSOFT AND OPENAI, FOR EXAMPLE, ANY SORT OF PARTNERSHIPS THAT ADD VALUE TO A COMPANY COULD BE MUTUALLY BENEFICIAL FOR XAI. ED:
BLOOMBERG'S KATIE ROOF. COMING UP, FLOOR TO GOVERNOR RON DESANTIS -- FLORIDA GOVERNOR RON DESANTIS OUT THE ♪ ED: WELCOME BACK TO BLOOMBERG TECHNOLOGY. THE HIND ME IS THE PICTURE IN EQUITY MARKETS. REMEMBER FRIDAY WE CLOSED AT RECORD HIGHS ON THE NASDAQ 100 AND S&P 500. THERE ARE ALL KINDS OF
COMPETING FORCES IN THE MARKETS. IT IS A BIG WEEK FOR TECHNOLOGY EARNINGS, BUT THERE IS STILL DEBATE ABOUT WHAT THE FED WILL OR WILL NOT DO IN THE CONTEXT OF WHEN THEY WILL CUT RATES, IF THEY WILL CUT RATES, AND HOW DEEPLY THEY WILL CUT RATES. AT THE SAME TIME, STILL DEBATE ABOUT THE STRENGTH OF THE GLOBAL ECONOMY. SAME STUFF AS LAST YEAR. WE CARRY ON THE CONVERSATION COULD U.S.
10 YEAR JUST BELOW 4.1%. IT IS AN ELECTION YEAR AND THAT SHOWED ITSELF OVER THE WEEKEND. RON DESANTIS DROPPING OUT OF THE RACE ON X. KAILEY LEINZ IS LIVE ON THE
GROUND AHEAD OF THE PRIMARY. WHAT DID YOU MAKE OF THE TIMING AND ALSO CHOOSING X AS THE PLATFORM TO MAKE THE ANNOUNCEMENT? >> THE TIMING WAS INTERESTING. LAST WEEK, HE CAME IN SECOND IN IOWA AND HAD BEEN SAYING HE WAS FOCUSED ON SOUTH CAROLINA BUT WAS GOING TO COMPETE IN NEW HAMPSHIRE. NOW HE IS OUT OF THE RACE. IT SEEMS LIKE A FITTING END THAT THIS ULTIMATELY CAME ON THAT PLATFORM BECAUSE IT WAS ALSO ON THAT PLATFORM THAT HE LAUNCHED HIS CANDIDACY IN THE FIRST PLACE. THEY TRY TO SAY THEY BROKE THE
INTERNET, BUT IT DID NOT SEEM LIKE IT WENT OFF WITHOUT A HITCH. YESTERDAY, ANNOUNCING THE END OF HIS CAMPAIGN, HE SAID IF THERE WAS SOMETHING HE COULD HAVE DONE TO HAVE A MORE FAVORABLE OUTCOME HE WOULD HAVE DONE SO BUT HE DID NOT JUST SEE A PATH TO VICTORY, SO THAT MX. TOMORROW THE FIRST IN THE NATION PRIMARY ALL THE MORE INTERESTING BECAUSE NOW IT IS A TWO PERSON RACE BETWEEN FORMER PRESIDENT DONALD TRUMP AND NIKKI HALEY. PULLING WE ARE GETTING SHOWS TRUMP LEADING BY A SIGNIFICANT MARGIN. WE ARE TALKING 19 POINTS OR 18 POINTS.
WHAT IS INTERESTING ABOUT THAT POLE IS IT SHOWS VOTERS WHO WERE GOING TO SUPPORT DESANTIS, WHO WAS POLLING IN THE LOW SINGLE DIGITS, THEY ARE TWICE AS LIKELY TO SAY THEIR SECOND CHOICE IS TRUMP. SO THE THINKING GOES NOW THAT HE IS OUT OF THE RACE THE MAJORITY OF THOSE VOTES WILL GO TO THE FORMER PRESIDENT. ED: BLOOMBERG'S KAILEY LEINZ. BE SURE TO TUNE IN.
LET'S MOVE ON TO THE ELECTION FOCUSED ON MISINFORMATION. EVEN AS AI TOOLS HAVE MADE IT EASIER TO CREATE FALSE CONTENT, SOCIAL MEDIA GIANTS HAVE BECOME RELUCTANT TO COUNTER IT. ANNA EDGERTON HAS BEEN WRITING ABOUT THIS FOR BLOOMBERG. THAT IS WHERE WE STAND. IT IS AN ELECTION YEAR. IT IS EASIER THAN EVER TO CREATE FAKE CONTENT OR MISINFORMATION, AND THE APPROACH FROM A POLICY PERSPECTIVE OF THESE SOCIAL MEDIA COMPANIES AND THEIR PLATFORMS IS THE MAIN FOCUS OF YOUR STORY.
>> WHAT IT SEEMS THESE SOCIAL MEDIA COMPANIES HAVE DECIDED IS IT IS HARD TO DECIDE WHAT IS TRUE, ESPECIALLY WHEN IT COMES TO POLITICAL INFORMATION. THEY HAVE GOTTEN BURNED IN THE PAST FOR TRYING, FOR EXAMPLE DURING THE COVID PANDEMIC. THEY WERE TRYING TO RESPOND IN REAL TIME TO CHANGING HEALTH GUIDANCE AND IT WAS HARD TO MONITOR INFORMATION MUCH A CURTAIL MISINFORMATION. GOING INTO AN ELECTION YEAR, THEY ARE SAYING, WE DO NOT WANT TO BE THE ARBITER OF POLITICAL TRUTH. WE WILL LET CONTENT BE ON THE PLATFORM. WE WILL TAKE DOWN WHAT IS ILLEGAL, BUT WE WANT TO HAVE A MORE OPEN DEBATE AND ALLOW MORE ROOM FOR AMERICANS TO EXPRESS THEIR POLITICAL OPINIONS. ED:
LET'S GO SPECIFIC, BACK TO 2020 WHEN I WAS ON THE ROAD FOR THAT ELECTION. THE FOCUS ON POLICY FOR THE FACEBOOK PLATFORM AND INSTAGRAM, WHAT ARE SOME OF THE KEY GROUNDS THAT THEY HAVE SET OUT? ANNA: IT IS AN EASY CALL WHEN YOU HAVE A POST THAT SAYS YOU DO NOT HAVE TO VOTE ON ELECTION DAY, YOU CAN VOTE THE FOLLOWING DAY. THAT IS NOT TRUE. THAT IS NOT ALLOWED ON ANY PLATFORM. YOU HAVE OTHER INFORMATION THAT
COULD BE CLAIMS ABOUT A CANDIDATE THAT IS ALLOWED. PLATFORMS EVEN ALLOW PAID ADVERTISEMENTS TO EXPRESS THINGS THAT ARE NOT TRUE. THIS COMES TO AN ENVIRONMENT WHERE YOU HAVE GENERATIVE AI MAKING IT EVERMORE EASY TO CREATE CONTENT THAT IS NOT TRUE. WE COULD HAVE A FLOOD OF INFORMATION MAKING IT HARD FOR VOTERS TO PARSE WHAT IS REAL AND WHAT IS NOT. ED: A VERY SIGNIFICANT LOOK AHEAD THE CONTEXT OF SOCIAL MEDIA.
LET'S KEEP THE CONVERSATION GOING WITH A CHIEF TECHNOLOGY OFFICER AT A DIGITAL ADVERTISING COMPANY FOR DEMOCRATIC CANDIDATES AND PROGRESSIVE CAUSES, WHICH HAS COME UP WITH ITS OWN AD TARGETING TECHNOLOGY. LET'S SET THE SCENE. HOW DO YOU SEE SOCIAL MEDIA AS A BATTLEGROUND FOR THIS ELECTION CYCLE? >> THANK YOU FOR HAVING ME. THIS IS GOING TO BE A
CONSEQUENTIAL PRESIDENTIAL ELECTION AND MORE DIFFICULT FOR CITIZENS TO UNDERSTAND WHAT IS TRUE AND NOT BASED ON THE PLATFORMS -- SOCIAL MEDIA PLATFORMS REGULATIONS AND TAKEDOWN POLICIES. WHEN YOU BRING IN GENERATIVE AI CAPABILITIES THAT ARE WIDESPREAD NOW WITH THE HIGH-STAKES CAMPAIGNS WE ARE GOING TO SEE THIS YEAR, IT IS GOING TO BE A NEW FRONTIER FOR CAMPAIGNS TO HAVE TO DEAL WITH THIS TYPE OF MISINFORMATION. ED: WE ARE SHOWING A CHART NOW THAT SETS OUT CLEARLY WHERE AMERICANS GO TO CONSUME NEWS. THE SOURCE OF THE DATA IS THE PEW RESEARCH CENTER. FACEBOOK IS A BIG PLATFORM HERE, 30%. HOW DO YOU VIEW THE SAFETY OF THE FACEBOOK PLATFORM? WE ARE TALKING ABOUT FACEBOOK.COM AND THE APP.
MARK: FACEBOOK AND A WEALTH OF OTHER PLATFORMS PULLED BACK SENSIBLE PROTECTIONS AFTER THE JANUARY 6 INSURRECTION AND COVID PANDEMIC. SOME OF THESE STILL EXIST IN THE MEDIA SPACE, BUT ON THE ORGANIC SIDE YOU ARE HAVING A WORLD WHERE THEY ARE NOT WANTING TO POLICE WHAT IS TRUE OR NOT ANYMORE AND THAT COULD POSE A SERIOUS THREAT. ED: THE NEWS PEG IS DISSENT IS CHOOSING TO DROP OUT OF THE RACE . IN A VIDEO POSTED ON X FIRST. YOU LARGELY ARE ON THE DEMOCRAT EXCITED THIS ELECTION AND DEBATE, BUT DO YOU SEE ANY CLEAR STRATEGIC DIFFERENCE IN HOW GOP CANDIDATES USE SOCIAL MEDIA VERSUS THE DEMOCRATIC PARTY? MARK: YOU HAVE SEEN TWITTER WELCOME BACK A LOT OF PEOPLE THAT PREVIOUSLY WERE BANNED FROM THE PLATFORM IN CREATING THIS FREE-SPEECH HAVEN THAT REALLY IS ANYTHING GOES AND A CERTAIN TYPE OF CANDIDATE THAT IS GOING TO EMBRACE MESSAGING ON A PLATFORM THAT IS THAT OPEN VERSUS ON THE OTHERS OF THE AISLE.
I THINK X IS A GREAT EXAMPLE OF A PLATFORM TRYING TO DO THE RIGHT THING AND UNDER NEW OWNERSHIP HAD A CHANGE OF HEART AND DECIDED TO ADJUST -- DECIDED TO JUST LET THE FLOODGATES OPEN. ED: THERE IS THE TECH AND POLICY SIDE OF THIS. YOU CAN SEE DAILY THE INDUSTRY IN THE REVIEW OF CONTENT AND SAFETY. ELON MUSK DISCLOSED THAT X GOT RID OF THE ELECTION INTEGRITY TEAM AND THERE IS THE POLITICAL SIDE OF IT.
IN OTHER WORDS, THE POLITICAL PRESSURE THESE COMPANIES ARE UNDER FROM D.C.. HOW DO YOU VIEW THAT TENSION? MARK: YOU ARE SEEING CERTAIN REPUBLICAN LAWMAKERS TRY TO TAKE A VIEW THAT ANY SORT OF CONTENT MODERATION IS CENSORSHIP THAT IS DETRIMENTAL TO THE REPUBLICAN PARTY. SO YOU ARE SEEING SUBPOENAS AND BURDENSOME REQUESTS FROM MEMBERS OF CONGRESS TRYING TO PUT A STOP TO PLATFORMS PREVENTING FAKE INFORMATION FROM GETTING OUT THERE. WHAT I WORRY ABOUT OUR GENERATIVE AI CREATED LIKENESSES OF CAMPAIGNS, CANDIDATES, AND WHAT WILL BE ULTIMATELY PROVEN OR DISPROVEN ABOUT WHAT IS SAID WITH THEM. THE ISSUE IS NOT GOING TO BE AS MUCH ON THE TOP OF THE TICKET WHERE YOU ARE SEEING A LOT OF CAPABILITY AND CAPACITY TO COMBAT REAL-TIME INFORMATION WITH TRACKERS AND VIDEO CAMERAS THAT ARE ALWAYS ON YOURSELF AND THE OPPONENT BUT BELOW THAT, WHERE IT IS STILL A CONSEQUENTIAL ELECTION BUT YOU DO NOT HAVE THE SAME RESOURCES TO DISPROVE SOMETHING GOING VIRAL ONLINE THAT MAY OR MAY NOT BE TRUE. ED: HOW IS YOUR TECHNOLOGY GOING TO MAKE THE ADS YOU DO IN SUPPORT OF DEMOCRATIC CANDIDATES SAFE AND CLEAR? MARK: WE MAKE SURE WE ARE REVIEWING THE CONTENT THAT WE RUN FOR FACTUAL INFORMATION, MAKING SURE WE ARE WORKING ONLY WITH PEOPLE WHO ARE ACTUALLY PURCHASING THE ADS. WE MAKE SURE WE ARE WORKING
WITH ALL THE STATE AND LOCAL REGULATORY ENVIRONMENTS, WHICH HAS BECOME INCREASINGLY COMPLEX AND WE TRY TO MAKE THAT A PACKAGE THAT ALLOWS DEMOCRATIC CANDIDATES AND CAUSES TO RUN EFFECTIVE MEDIA CAMPAIGNS. ED: CHIEF TECHNOLOGY OFFICER AT DS POLITICAL. KEEPING AN EYE ON SHARES OF A VIDEO PLATFORM JUMPING 20%, NOW UP 26% BIGGEST SINCE THEY JUMPED SINCE MARCH OF LAST YEAR AFTER ANNOUNCING A PARTNERSHIP FOR ADVERTISING IN CLOUD SERVICES, THIS IS INTERESTING IN THE CONTEXT OF HOW MANY EYEBALLS THESE VIDEO PLATFORMS, SLIGHTLY MORE CONSERVATIVE RIGHT-LEANING, RUMBLE MAY GET. THAT STOCK UP 26%. COMING UP, WE WILL SPEAK THE FORMER DEPUTY DIRECTOR GEORGE BARNES ABOUT HIS NEW ROLE INVESTING IN EARLIER STAGE CYBER FIRMS. MORE ON THAT NEXT. THIS IS BLOOMBERG TECHNOLOGY. ♪ >> WE HAVE REPORTS OF AN ENORMOUS, FLUFFY PINK MONSTER STRUTTING HIS STUFF THROUGH DOWNTOWN.
>> FLUFFY BIRD IN DOWNTOWN? WEIRD. LET'S SWITCH THE SETTING. ED: THAT WASN'T AI GENERATED PIECE OF VOICE CONTENT FROM 11 LABS, A START UP USES ARTIFICIAL INTELLIGENCE TO REPLICATE VOICES IN MORE THAN 24 LINKAGES, WHICH JUST -- LANGUAGES, WHICH JUST RAISED A NEW ROUND OF FUNDING. THE COMPANY SAID TODAY IT RAISED $80 BILLION IN FUNDING LED BY A VENTURE FUND. THE COMPANY HAS RAISED $101 MILLION TO DATE. A FORMER TO P DIRECTOR OF THE NSA HAS A NEW JOB, PRESIDENT OF THE CYBER PRACTICE FIRM RED CELL PARTNERS, MAKING HIM THE LATEST FORMER GOVERNMENT OFFICIAL TO JOIN THE TECH WORLD, INVESTING IN DEFENSE AND SECURITY TECHNOLOGY START UPS.
GEORGE BARNES JOINS US NOW TO TALK MORE ABOUT HIS NEW POSITION. THIS IS HAPPENING, THIS KIND OF MOVE FROM THE PUBLIC TO PRIVATE SECTOR. THERE ARE CONCERNS ABOUT CYBER AND OTHER THREATS IN 2024.
WHY DID YOU MAKE THIS MOVE? GEORGE: I SPENT MY ADULT LIFE IN NATIONAL SECURITY. AT THE NSA, I WAS THERE 36.5 YEARS. THAT GAVE ME A UNIQUE KNOWLEDGE AND POSITION ON WHAT IS HAPPENING IN OUR WORLD, THE THREATS AGAINST US, MANY OF WHICH ARE CYBER NOW. I JOB WAS TO TRY TO UNDERSTAND THE NATURE OF THOSE THREATS AND ALSO TO HELP POSITION TO DEFEND AGAINST THOSE. COMING OUT OF THAT EXPERIENCE AND FIGURING OUT WHAT TO DO NEXT, I WANTED TO STAY ENGAGED. I AM AN ENGINEER BY EDUCATION, SO I LIKE THE ORDER OF BUILDING THINGS BEING INVOLVED. EMERGING TECH HAS ALWAYS BEEN
SOMETHING I HAVE REVELED IN BECAUSE THAT IS THE ONLY WAY WE STAY VIABLE. SO THE COMBINATION OF EMERGING TECH, MY EXPERIENCES, AND KNOWING THE PLATFORM, THE CULTURE HE'S ESTABLISHING AND THE CONNECTIONS IN AREAS THAT MATTER, HEALTH CARE, DEFENSE, CYBERSECURITY IS A BIG DEAL. ED: THE THREAT HAS BEEN MADE CLEAR BY THE EVENTS OF THE WEEKEND. MICROSOFT SHARES DOWN .3% OVER THE SESSION, DISCLOSING A
RUSSIA LINKED GROUP WAS ABLE TO GET ACCESS TO A SMALL PERCENTAGE OF EMPLOYEE EMAILS. I FIND THIS INTERESTING BECAUSE IT IS A NATIONSTATE ACTOR THAT IS THE THREAT BUT MICROSOFT IS THE MOST VALUABLE COMPANY IN THE WORLD AND THEY ARE STILL VULNERABLE. WHAT DO YOU MAKE OF THAT? >> WHAT WE ALL HAVE TO REALIZE IS RUSSIA IS EXTREMELY SOPHISTICATED. THEY HAVE THREE DIFFERENT SERVICES BLOOMBERG.COM TRAINING -- THREE DIFFERENT SERVICES
TRAINING THEIR SIGHTS ON THINGS LIKE MICROSOFT BECAUSE MICROSOFT IS A GLOBAL COMPANY. THEY SPEND MANY RESOURCES. THEY WILL CONTINUE TO FIND FISHER'S -- FISSUES AND BOEHNER -- FISSURES AND VULNERABILITIES. AT NSA, WE TRY TO FOCUS ON IDENTIFYING SUCH VULNERABILITIES AND TIPPING OFF MICROSOFT WHEN WE FOUND THEM BECAUSE WE WANTED OUR SECURITY TO BE AS GOOD AS IT COULD BE BUT WE ARE ALWAYS WENT TO FIND WEAKNESSES. ED: MICROSOFT'S CYBER PRACTICE IS A $20 BILLION A YEAR SECURITY PRACTICE. JP MORGAN ANALYSTS HAD A NOTE OUT SAYING THAT THIS COULD BE AN EXAMPLE OF SOME OF MICROSOFT'S COMPETITORS GETTING A LEG UP AND OFFERING THEIR SERVICES. YOU ARE NOW IN THE INVESTMENT WORLD. HOW DO YOU APPLY THE EVENTS OF
THE WEEKEND TO YOUR THESIS GOING FORWARD AND WHICH STARTUPS YOU WANT TO TARGET? GEORGE: NUMBER ONE, WE HAVE MANY COMPANIES BUYING CYBERSECURITY SERVICES. WE HAVE ALL OUR COMPANIES THAT ARE GLOBALLY TRIBUTE IN AND PROVIDING SERVICES AROUND THE WORLD. CYBERSECURITY IS SOMETHING THAT IS GOING TO BE A CONTINUOUS STRUGGLE FOR OUR SOCIETY, NOT SOMETHING WE CAN FIX AND BE DONE. SO MY EFFORT HERE WILL BE LOOKING AT AREAS THAT HAVE BEEN UNDERSERVED OR UNAPPRECIATED, WHERE ARE COMBINATION PUNCHES WE CAN DELIVER WITH NEW COMPANIES BUT ALSO NEW COMPANIES JOINED UP WITH EXISTING COMPANIES TO BRING EXTRA DIFFERENTIATING HORSEPOWER TO PROBLEMS THAT CONTINUE TO MANIFEST WITH EVERY PASSING DAY. ED:
THERE ARE MANY START UPS WORKING ON ALL SORTS OF TOOLS. THE COMMON MESSAGE I GET IS THE THREAT ACTORS HAVE THE SAME ACCESS TO AI TECHNOLOGY THAT WE DO IN BUILDING THE DEFENSE. HOW WILL YOU USE YOUR EXPERIENCE AT THE NSA TO HELP THEM ON THE STRATEGY SIDE BUILT OUT A BUSINESS, THINK ABOUT HOW THEY ARE THINKING ABOUT THE THREATS? GEORGE: ONE OF THE THINGS I AM ABLE TO BRING IS THE MINDSET OF HUNTING, SO IN ESSAY IS INTELLIGENCE AND CYBERSECURITY. PART OF MY ROLE THAT NSA WAS TRYING TO LEARN, THE PSYCHE OF TRYING TO PENETRATE FOREIGN ADVERSARY SYSTEMS, SO BRINGING THAT -- IT IS HARD TO DEFEND, MUCH EASIER TO ATTACK.
SO BRINGING THAT EXPERIENCE, LOOKING AT THINGS FROM A DIFFERENT ANGLE, UNDERSTANDING HOW TO ALIGN TALENT WITH DIFFERENT PERSPECTIVE IS SOMETHING I THINK I BRING AND I HOPE TO BRING. WE HAVE A BROAD LANDSCAPE OF HIGHLY TECHNICAL PEOPLE IN GOVERNMENT AND INDUSTRY, SO HOW CAN WE BRING THEM TOGETHER IN DIFFERENT WAYS WITH DIFFERENT EXPERIENCES? ED: THEY CALL HIM THE HUNTER. THANK YOU FOR YOUR TIME HERE. COMING UP, TENSIONS BETWEEN APPLE AND DEVELOPERS ARE GROWING A LITTLE AHEAD OF THE RELEASE.
YOU KNOW WHO IS COMING UP NEXT. THIS IS BLOOMBERG TECHNOLOGY. ED: TENSIONS BREWING FOR APPLE AS DEVELOPERS DECIDE NOT TO DIVE HEADFIRST INTO THE VISION PRO.
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