Tech Earnings and Bitcoin Rally | Bloomberg Technology
>> THIS IS BLOOMBERG TECHNOLOGY, WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I MET BLOOMBERG WORLD HEADQUARTERS IN NEW YORK. ED: I'M IN SAN FRANCISCO. CAROLINE: COMING UP, FULL EARNINGS COVERAGE AHEAD. SALESFORCE, PARAMOUNT, TO NAME
A FEW. ED: BITCOIN PUSHES TOWARD A RECORD HIGH AMID MASSIVE INFLOWS INTO EXCHANGE TRADED FUNDS. THE STATE OF DIGITAL CURRENCIES AMID THAT RALLY. CAROLINE: APPLE FACING WEAK DEMAND FOR THE IPHONE IN CHINA. THE RECENTLY SLASHED THE PRICE
OF THE LATEST MODEL. WE WILL DISCUSS THAT AND MORE. FIRST, LET'S CHECK ON MARKETS. THE MACRO FIELD TO THE DAY -- THE PCE DEFLATOR -- WHAT IS THE INFLATIONARY PRESSURE THE FEDERAL RESERVE IS LOOKING AT? CAME IN, IN LINE WITH EXPECTATIONS. WRITE FOR THE FEDERAL RESERVE THEREFORE TO BE PAUSING ON RATE CUTS. A RELIEF TO THE MARKET.
WE SEE 10 YEAR YIELDS COME DOWN FROM FOUR BASIS POINTS, DOWN ACROSS THE CURVE. I'M LOOKING AT A VOLATILITY AND A FEAR GAUGE THAT STRENGTHS -- SHRINKS LESS THAN A POINT. LOOK AT WHAT YOU ARE JUST OUTLINING. WHERE THE ACTION HAS BEEN IS THE TECHNOLOGY, BITCOIN, UP 4%, $63,000 THE PREVIOUS RECORD IN NOVEMBER 2021. WHERE ARE YOU LOOKING IN THE MICRO? ED: A LOT IN THE EARNINGS. SNOWFLAKE IS THE BIG MOVER, DOWN 18%, BUT ON TRACK FOR ITS BIGGEST DROP ON RECORD. TWO PIECES OF NEWS.
THE CEO IS STEPPING DOWN. HE WILL BE REPLACED. THE SALES OUTLOOK FOR THE CURRENT PERIOD, EVEN AT THE HIGH END OF THE RANGE, IS $20 MILLION BELOW WHAT THE STREET WAS EXPECTING IN TERMS OF CONSENSUS. THE STORY FOR SNOWFLAKE WAS SHARP DECELERATION IN GROWTH IN 2023. THE UPWARD TRAJECTORY, THERE IS A LOT MORE HAPPENING IN THE EARNINGS CONTEST. DIFFERENT COMPANIES WE WILL GET TO THROUGHOUT THE SHOW. THE FIRST IS PARAMOUNT, UP 4.8%. THEY CALLED IT -- THE AD SLUMP
IS OVER. WE ARE REBOUNDING. HP IS DOWN 1%. IT TRADED A BIT CHOPPY THIS MORNING. LOOK SPECIFICALLY AT SALES OF PC'S TO CONSUMERS. THE STREET EXPECTED THEM TO RETURN TO GROWTH, BUT SALES FELL 1% IN THAT CATEGORY.
THEY ARE SAYING 2024 WILL BE BETTER FOR THE CUSTOMER. SALESFORCE IS UP ONE POINT 5%. IT'S OUTLOOK FOR THE YEAR SUGGESTS ANNUAL GROWTH OF FISCAL 25, 10.8%.
I WANT TO GO VERY SPECIFIC WITH THE NUMBERS. THE REASON THAT IS IMPORTANT IS THAT THEY GREW JUST ABOVE 11% LAST YEAR. IN OTHER WORDS, WE EXPECT DECELERATING GROWTH. THAT'S NOT WHAT THE STREET
HERE, BUT WE GOT THE FIRST DIVIDEND THE BUYBACK. STOCKS UP 1.5%. CAROLINE: LET'S DIG IN WITH AN EXPERT ACROSS ALL OF THOSE NUMBERS. YOU BRING US THE TAKEAWAYS.
A CLOSER LOOK AT SOME OF THESE RESULTS -- BRODY, THERE DOES SEEM TO BE THIS WORRY ABOUT THE FORECAST. BRODY: EVERYBODY WANTS SMART GROWTH. THERE IS NO CUSHION. SNOWFLAKE IN PARTICULAR, THEY ARE ALWAYS INTERESTING. UNLIKE THE SOFTWARE COMPANIES THAT CHARGE YOU FIVE OR 10 YEAR CONTRACTS, SO YOU CAN PREDICTED PRETTY WELL, THE CHARGE YOU BASED ON HOW MUCH YOU USE THE PRODUCT, KIND OF LIKE AN WS OR AZURE, WHICH MEANS IT IS A LITTLE VOLATILE.
WE ARE NOT SURE WHAT WE ARE GOING TO GET. THIS FORECAST, IT MADE PEOPLE FEEL ANXIOUS BECAUSE IT SHOWED GROWTH CONTINUE TO DECELERATE. YOU LOSE ONE OF THE MOST FAMOUS CEO'S IN THE INDUSTRY, THAT'S GOING TO BE A SHAKEUP. ED:
LET'S TALK ABOUT SALESFORCE. I JUST GO SO NERDY ON THE DETAILS. I USE MO D.L. ON THE BLOOMBERG TERMINAL. MY UNDERSTANDING IS -- WHERE DO WE FIND THE AI READTHROUGH? THEY OUTPERFORMED IN THE QUARTER GOING INTO FISCAL 2024, WITH LIKE 11.2% GROWTH, AND THEY ARE GUIDING US TO 10.8% GROWTH THIS YEAR. WHAT IS OR IS NOT HAPPENING FOR
SALESFORCE RIGHT NOW? BRODY: IT IS FUNNY BECAUSE THEY ARE GUIDING THAT ABOVE 10% NUMBER WHEN IT COMES TO THE NON-CONSULTANT REVENUE. WHEN IT COMES TO TOPLINE, THEIR FORECAST IS BELOW THAT PSYCHOLOGICAL 10% MARK. ALL OF A SUDDEN, YOU BECOME A VALUE STOCK RATHER THAN A GROWTH STOCK. SALESFORCE, THE STORY THEY ARE TELLING IS THAT AI IS GOING TO BUFFET THE NEED FOR A LOT OF THEIR SOLUTIONS. THE EARLY STAGE I WILL BE IN
THEIR DATA PRODUCTS -- DATA CLOUD, WAREHOUSING, ANALYTICS. THAT DID OUTPERFORM. THEY ARE SEEK UPTICK. THEY ARE SAYING IT IS THE HIGHEST DYNAMIC GROWTH OF ANY PRODUCT THEY HAVE HAD. STILL, I THINK THE AI IMPACT ON THESE NUMBERS IS RELATIVELY LOW. I THINK THAT IS THE CASE FOR A LOT OF THESE APPLICATION SOFTWARE MAKERS. THEY WANT TO TELL AN AI STORY, IN REALITY, IT IS STILL EARLY DAYS. IT IS HARD TO QUANTIFY THE IMPACT AT THIS POINT, EVEN IF
IN THE EARNINGS CALL YOU ARE GOING TO HEAR THOSE LETTERS OVER AND OVER AGAIN. CAROLINE: BRODY FORD, WE THANK YOU FOR BRINGING US THE INSIDE TRACK ON SNOWFLAKE AND SALESFORCE. LET'S DIG IN WITH BOTH THOSE COMPANIES AND THE BROADER ECOSYSTEM RIGHT NOW. THE CEO AND PRINCIPAL OF A TECHNOLOGY FIRM PROVIDING RESEARCH ADVISORY SERVICES TO LEADERS WITH A FOCUS ON THE VALUE OF TECHNOLOGY -- TELL US ABOUT THE VALUE PROPOSITION OF SALESFORCE. I'M YOUR PERSPECTIVE, ARE THEY
OFFERING THE RIGHT OFFERINGS AT THE RIGHT PRICE POINT, WITH THE RIGHT FOCUS ON MARGIN? REBECCA: THANKS FOR HAVING ME TODAY. SALESFORCE GOT THE TIMING RIGHT WITH DATA CLOUD. JUST AS EVERYONE RECOGNIZES THAT DATA AND METADATA IS WHAT MAKES AI WORK, THEY HAVE GOT TO GET THAT IN PROTECTION. THEY'RE DOING A LOT, OFFERING CREDITS TO CUSTOMERS TO START TO ADOPT DATA CLOUD, SO THEY CAN EXPERIENCE THE BENEFITS OF AI. SALESFORCE HAS RUNWAY IN OTHER
AREAS AS WELL. WHAT WE HAVE SEEN IN THE PAST YEAR IS THEY HAVE PUSHED TO IMPROVE EFFICIENCY AND IMPROVE MARGINS WITH OFFERINGS LIKE THE AID OF U.S. MARKETPLACE AND OTHER SELF-SERVICE THINGS THAT HELP THEM KEEP THEIR COST OF SALES UNDER CONTROL AS WELL. CAROLINE: IT'S INTERESTING WHEN I HEAR MARKETING COMING MY WAY FROM SALESFORCE. IT IS ALWAYS ABOUT THE SAFETY, USING YOUR OWN PROPRIETARY DATA. STICKING WITH SALESFORCE, WHAT
IS YOUR VIEW ON WHETHER THE INCUMBENT WINS IN THIS SPACE? THEY HAVE SONY DEALS IN THESE CORPORATE THAT THEY ARE GOING TO WIN OUT ON THE AI OFFERINGS, OR WHETHER CHALLENGES THAT ARE VC BACKED COULD MAKE SOME INROADS? REBECCA: IT IS INTERESTING YOU ASK THAT BECAUSE WE JUST DID A STUDY ASKING PEOPLE ABOUT WHO THEY WOULD TRUST WITH THEIR AI. WHAT THEY FOUND WAS THAT IT WAS NOT NECESSARILY THOSE ESTABLISHED VENDORS. BUYERS WERE MORE LIKELY TO TRUST AI SOLUTIONS THAT CAME BACK TO ORGANIZATIONS THAT HAD TRACEABLE DATA AND CLEAR ETHICS AND PRIVACY POLICIES -- NOT NECESSARILY AN ESTABLISHED VENDOR. THERE IS STILL A LOT OF ROOM FOR INNOVATORS OUT THERE. ED: THIS IS HOW I THINK ABOUT AI AND SALESFORCE.
AI MEANS THEY CAN CHARGE MORE. THEY ARE MORE EXPENSIVE PREMIUM PRODUCTS. IT ADDS VALUE TO WHAT THEY ALREADY DO. THAT DID NOT SHOW UP IN THEIR
NUMBERS. DO YOU AGREE WITH THAT? REBECCA: I WOULD AGREE, BUT WE ARE SEEING THAT THE PENETRATION STRATEGY -- CUSTOMERS NEED TO MAKE THAT LEAP. THEY GET DATA CLOUD CREDITS. THEY'RE GOING TO WORK ON
BUILDING THAT UP, AND IT SALESFORCE FACTION AND THEN BE ABLE TO TURN ON THE SWITCH. ED: WE KNOW ALL ABOUT TRUE SALESFORCE FASHION. HERE IS THE REALITY. THERE IS A COMPANY THAT GREW IN THE MID-20% RANGE EVERY YEAR FOR A DECADE, AND IT IS GOING THE WRONG WAY. SNOWFLAKE HAD A SHARP DECELERATION IN GROWTH LAST YEAR. IT IS NOT GIVING US EVIDENCE THAT IT IS TURNING AROUND.
WHAT IS YOUR CONCLUSION ON THE CORPORATE ENTERPRISE SPENDING ENVIRONMENT BASED ON THE RESULTS THOSE COMPANIES GAVE? REBECCA: I THINK SNOWFLAKE MADE IT CLEAR WHEN THEY SAID THIS IS RECOVERY, NOT REVAMPED. WE ARE CORRECTING ON THE SOFTWARE SPACE. I DO THINK SALESFORCE HAS RUNWAY WITH OTHER PRODUCTS LIKE SLACK. THERE IS STILL A BIG REVENUE
OPPORTUNITY THEY HAVE NOT TAPPED. ED: WE HAVE A CHANGE OF LEADERSHIP AT SNOWFLAKE. DOES THAT EXCITE YOU? REBECCA: NO ONE LIKES A SURPRISE CHANGE IN CEO'S. FRANK WAS BROUGHT IN AT A CERTAIN POINT, JUST LIKE WITH SERVICE NOW.
WE HAVE A DIFFERENT PERSON AS WE LOOK AT SNOWFLAKE MOVING FROM CLOUD STORAGE TO MORE OF AN AI COMPANY. CERTAINLY, SCHROEDER IS A GOOD PERSON IN THAT SPOT. ED: GREAT TO HAVE YOU ON THE PROGRAM. A REALLY WIDE RANGE OF ANALYSIS. WE ARE TO SWITCH TO BITCOIN, THE RISK ASSET OF CHOICE IN CRYPTO MARKETS. WE DISCUSS ALL OF THAT AND MORE WITH FRAMEWORK VENTURES VANCE SPENCER. THERE ARE OTHER STOCKS ON THE
MOOD -- THE MOVE. CAROLINE: AFTER THE BELL, WE LOOK AT WHAT DELL HAS TO REPORT. HEWLETT-PACKARD, WE GOT THE FOCUS ON HPE. WE HAVE ALREADY HAD HP UP 8%. I UNDERSTAND THE CEO WILL BE JOINING THE NETWORK TOMORROW. ANOTHER DARLING IN THE AI SPACE
UP 220%. SO FAR THIS YEAR. UP ANOTHER 7%. CAN THIS COMPANY DELIVER THE EXUBERANCE WE SEE FACTORED INTO THE SHARE PRICE? FROM NEW YORK AND SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: LET'S CHECK ON OTHER RISK ASSETS TODAY, BECAUSE THEY ARE HIGHER, DECIDEDLY SO.
WE ARE ON A TEAR WHEN IT COMES TO CRYPTO. COULD WE BE EYEING THE $69,000 HANDLE WE HAVE HAD AT RECORD NUMBERS FOR BITCOIN? NOT JUST BITCOIN GETTING THE LOVE. IT IS BEING SPREAD THROUGH OTHER AREAS. ETHEREUM IS UP 2.3 ON THE DAY. OTHER LAYER ONE PROTOCOLS ARE DOING PARTICULARLY WELL. UP MORE THAN 11% ON THE DAY.
THERE IS MORE ALARMED BROADLY IN THE CRYPTO SPHERE. LOOK AT WHAT IS HAPPENING IN THE EQUITY SIDE OF THE EQUATION. AS SOME OF THESE UNDERLYING ASSETS DO WELL, IF YOU ARE HOLDING OR MINING, THEY ARE DOING WELL FOR YOU AS WELL. WE KNOW MICROSTRATEGY ARE UP 3.3%. ON THE DOWNSIDE, MARATHON. ANY WORRY ABOUT ACCOUNTING
PRACTICES AND WHETHER THEY ARE SHOWING UPLIFT TO OVERALL EARNINGS BECAUSE THEY ARE ABLE TO SHOW THE CURRENT INCREASE AND VALUE OF THE UNDERLYING HOLDINGS OF BITCOIN. IT IS UP 15%. SOME ANALYSTS FELT THE NUMBERS DID NOT HIT THEIR MARK. MEMBER, THE STOCKS HAVE NOT RUN-UP IN RECENT MONTHS. TOTALLY IN SYMPATHY WITH THE OTHER MINOR, MARATHON. AT THE
MOMENT, THERE IS A SUPPLY/DEMAND DYNAMIC THAT SEEMS TO BE WORKING IN BITCOIN'S FAVOR. ED: WE HAVE VANCE SPENCER, COFOUNDER OF THE WEB THREE FOCUSED VENTURE FIRM FRAMEWORK VENTURES, 1.4 BILLION DOLLARS IN ASSETS UNDER MANAGEMENT. CAROLINE SET THIS OUT REALLY
NICELY. WE HAVE MOVED BEYOND BITCOIN TO A BROADER POSITIVITY IN DIGITAL ASSETS, AND THE SUPPLY/DEMAND EQUATION. GIVE ME A HEALTH CHECK OF HOW YOU FEEL GENERAL SENTIMENT IS TOWARD CRYPTOCURRENCY. VANCE: EXTREME A POSITIVE, TO SAY THE LEAST. THEY ARE ON PACE TO BUY ABOUT A MILLION BITCOIN PER
YEAR. I HAVE IT UP ON MY SCREEN. THERE IS ABOUT ONE POINT 9 MILLION BITCOIN TOTAL ON ALL OF THE EXCHANGES WORLDWIDE. THIS IS WHAT IS DIFFERENT IN THIS CYCLE VERSUS THE PREVIOUS CYCLES. WE DID NOT HAVE LARRY FINK FIND 85,000 BITCOIN IN THE LAST 20 TRADING DAYS. THESE ETF'S ARE A WATERSHED MOMENT, 11 YEARS IN THE MAKING.
THAT IS WHEN THE FIRST APPLICATION WAS FOUND -- FILED. THERE IS A MAY 29 APPROVAL OR DENIAL DAYS. THE LAST THING I WILL SAY IS THERE IS A TON OF WORK THAT HAS HAPPENED SINCE THE BIG CRASH IN 2022. WE HAVE DEFIED -- DEFI STARTING TO PRODUCE EARNINGS, GAMING BRINGING IN PEOPLE. THE ECOSYSTEM IS EXTREMELY
COHERENT. IT IS HARD TO FADE ALL OF THE WORK THAT HAS HAPPENED. ED: YOU TAKE THE MOVEMENT IN BITCOIN, BUT WE HAVE BEEN TALKING ABOUT THE OFFSHOOTS TO OTHER ASSET CLASSES.
YOU LOOK AT THE DATA OF NFT VOLUME IN DECEMBER. THE REASON I AM GLAD TO HAVE YOU ON THE SHOW IS A LOT SEEMS TO BE RELATED TO GAMING, AND AREA YOUR FIRM IS FOCUSED ON. VANCE: GAMING IS PROBABLY THE MOST POSITIVE STORY IN CRYPTO RIGHT NOW, BUT ALL THE GAMES THAT WERE FUNDED IN THAT 2021/2022 RUN HAVE JUST STARTED TO LAUNCH. PIXELS IS THE BIGGEST APPLICATION BY FAR IN TERMS OF USER ACCOUNT. WE ARE MOVING BEYOND THIS PROCESS, WHALE DRIVEN CRYPTO ECONOMY, TO SOMETHING MORE MASS-MARKET. PEOPLE HAVE BEEN WAITING FOR
THAT ADOPTION MOMENT. I THINK IT MIGHT BE HERE. YOU HAVE THESE NARRATIVES REALLY FIRING -- THE ETF'S, DEFI, EFF --WHAT IS THE BEER CASE? MAYBE THE INFLOWS START -- STOP. BUT THE NUMBERS THAT WE HEAR ARE 1% TO 3%. THAT IS WHAT FIDELITY SAYS, OF THE PORTFOLIO YOU SHOULD HAVE IN CRYPTO. THAT IS ABOUT $150 BILLION COMING INTO THE SPACE OVER THE NEXT COUPLE OF YEARS. WE ARE ONE OF THE LARGEST ASSET MANAGERS IN CRYPTO, FRAMEWORK. WE HAVE BOUGHT NINE FIGURES IN
CRYPTO OVER THE PAST TWO YEARS. THIS MIGHT SOUND STRANGE, BUT IT IS ACTUALLY HARD TO GET THE COINS. THESE MARKETS ARE NOT AS LIQUID AS PEOPLE THINK. WHAT HAPPENS WHEN THAT MONEY COMES IN? IT COULD GET WILDER THAN PEOPLE THINK, IS MY GUESS. ED:
I REMEMBER READING ABOUT YOU GUYS IN 2022. HANNAH MILLER WAS WRITING ABOUT HOW YOU WERE RAISING MONEY AT A TIME WHEN EVERYONE WAS RAISING MONEY. THAT WAS HAPPENING. IT DID NOT HAPPEN IN 2023. WHERE ARE YOU FOCUSED NOW IN THE DEPLOYABLE -- TO PLUMMET CAPITAL AND YOUR APPETITE TO RAISE MORE FUNDS? VANCE: I DON'T KNOW HOW MUCH I CAN SAY ABOUT OUR RAISING PLANS. ED: IS JUST YOU AND I ON THE SHOW. JUST GIVE US THE DETAILS, VANCE. VANCE: WE RAISED 200 MILLION TWO WEEKS BEFORE LUNA COLLAPSED.
YOU CAN IMAGINE WHAT THAT WAS LIKE. WE SPENT THAT YEAR BUYING. REALLY, NOBODY WANTED TO TALK TO US. BUT 3500 PEOPLE HAVE NOW TURNED AROUND.
ALL THE LP'S ARE EXCITED AND THERE IS MORE INTEREST IN THE SPACE. LET ME PUT IT IN PERSPECTIVE FOR YOU. I WAS AT A PENSION FUND CONFERENCE THIS WEEK, A MULTI-STRATEGY PENSION FUND CONFERENCE. THE CRYPTO PEOPLE GOT ONE PANEL AT 8:30 IN THE MORNING.
THERE IS A TON OF INTEREST, THAT THE PENSION FUNDS AND LARGEST ENDOWMENTS ARE STILL BEHIND ON THIS STUFF. I THINK IN THE FULLNESS OF TIME WHEN YOU LOOK BACK AND THINK ABOUT WHAT IT MIGHT MEAN TO MISS THE BIRTH OF AN ASSET CLASS, PARTICULARLY INTO AN ETF STYLE PARADIGM, A LOT OF THOSE PEOPLE ARE GOING TO BE UPSET AND WORRIED ABOUT WHAT HAPPENED. I THINK WE ARE EARLY. ED: REALLY APPRECIATE HAVING YOU ON THE SHOW AND I'M GLAD THERE WERE SOME THINGS YOU COULD SAY. CAROLINE, WHAT HAVE YOU GOT? CAROLINE: COMING UP, WE GO BACK TO PUBLICLY TRADED COMPANIES. PARAMOUNT REPORTING STREAMING REVENUE THAT BEAT EXPECTATIONS. WE ARE GOING TO BREAK DOWN WHAT
THE OVERALL REVENUES AND AD MARKET ARE LOOKING FOR IN THE COMPANY. ULTIMATELY, IT IS STILL NOT LOOKING THAT PRETTY. ED: TIME FOR TALKING TECH. ELECTRONIC ARTS SAID YESTERDAY
THAT IT WOULD BE CUTTING 5% OF ITS WORKFORCE, ABOUT SIX AND 70 PEOPLE, DUE TO SHIFTING CUSTOMER NEEDS AND A REFOCUSING OF THE COMPANY. THEY WILL ALSO BE HALTING DEVELOPMENT ON UNDISCLOSED TITLES AND PULLING BACK ON REAL ESTATE HOLDINGS. THE CEO TOLD STAFF AND A MEMBER -- IN A MEMO THAT THE COMPANY WOULD BE MOVING AWAY FROM DEVELOPMENT OF FUTURE LICENSED IP THAT WE DO NOT BELIEVE WILL BE SUCCESSFUL IN OUR CHANGING INDUSTRY.
EA JOINS SONY, TENCENT, RIGHT GAMES, AND OTHER TOP STUDIOS IN LAYING OFF EMPLOYEES AS GAME DEVELOPMENT COSTS INCREASE. AND BINANCE, THE WORLD ARE JUST CRYPTO EXCHANGE, SAID IT RECOVERED $4.4 BILLION WORTH OF DIGITAL ASSETS FOR USERS WHO MISHANDLED THEIR DEPOSITS WITHIN THE PAST TWO YEARS.
USERS CAN MISHANDLE THEIR FUNDS IN A VARIETY OF WAYS, INCLUDING ENTERING INCORRECT WHILE IT ADDRESSES, AND PROBLEMS FROM BLOCKCHAIN UPGRADES, ACCORDING TO THURSDAY'S REPORT. THE CRYPTOCURRENCY EXCHANGE SAID IT RESOLVED MORE THAN 381,000 CASES OF CRYPTOCURRENCY THAT WAS DEPOSITED BY USERS BUT NOT CREDITED IN 2022 AND 2023. PLUS, ALIBABA IS ROLLING OUT ITS SECOND MAJOR PRICE CUT FOR CLOUD SERVICES IN YEARS.
THEY ARE GOING TO WIN BACK USERS FROM RIVALS LIKE TENCENT, COMPETING TO PROVIDE TOOLS CRITICAL TO TRAINING AI. THEY WILL CUT PRICES ON SCORES OF INTERNET-BASED SERVICES BY 20% ON AVERAGE. THE CUTS WERE PRESENT ONE OF THE MORE AGGRESSIVE MOVES BY THE COMPANY TO STAY AHEAD OF TENCENT AND BAIDU IN THE CLOUD BUSINESS AND RISK TRIGGERING A PRICE WAR AND WHAT IS ALREADY A HOTLY CONTESTED AREA -- SECTOR IN CHINA. CAROLINE: TALKING ABOUT CONTESTED SECTORS, LET'S TALK ABOUT STREAMING AND FOCUS ON PARAMOUNT. YOU SEE A BIT OF A REPRIEVE, UP 3.3%, AFTER REVENUE FOR ITS DIRECT TO CONSUMER STREAMING BUSINESS, PARAMOUNT PLUS, WHEAT EXPECTATIONS.
OUR BLOOMBERG INTELLIGENCE ANALYST JOINS US FOR MORE ON THE RESULTS. THERE WAS OPTIMISM SHOWING, BUT ULTIMATELY THE REVENUES, THE AD SIDE, STILL CLOUDY. >> YOU ARE RIGHT IN TERMS OF THE DTC BUSINESS, THE STREAMING BUSINESS. THERE WERE GREEN SHOOTS. OVERALL, WHAT WE CAME UP WITH WERE TONES OF STABILIZATION IN PARAMOUNT RESULTS. I'M JUST NOT SURE IT IS GOING TO BE ENOUGH. YOU DO HAVE THE LINEAR TV
BUSINESS WHICH BRINGS IN ABOUT 55% OF THE REVENUE FOR THE COMPANY -- ALMOST 90% OF ITS PROFITS. THERE IS OF IS THE A LOT OF FOCUS THERE, AND THAT SECTOR HAS BEEN SO CHALLENGED WITH CORD CUTTING AND THE WHOLE MOVEMENT TO STREAMING AND THE MOVEMENT OF EYEBALLS FROM LINEAR TV NETWORKS TO THE DIGITAL PLATFORMS. THE ADVERTISING DOLLARS ARE MOVING AWAY. THAT MARKET HAS BEEN UNDER STRESS. TV ADS WERE DOWN 10%. PARAMOUNT WILL GET THE BENEFIT
IN THE FIRST QUARTER WITH THE SUPER BOWL. THERE WILL BE LINGERING BENEFITS THROUGHOUT THE YEAR WITH THE POLITICAL AD CYCLE. AT THAT IS NOT GOING TO BE ENOUGH. THE COURT ADVERTISING TRENDS REMAIN VERY, VERY CHALLENGED. THAT REMAINS A PAIN POINT.
BUT I THINK THE BRIGHT SPOT IS THE STREAMING METRICS LOOK GOOD. ED: THERE IS A LOT GOING ON IN THE BACKGROUND WITH PARAMOUNT. FOR ME, IT ALWAYS COMES BACK TO THE LOSS IN THE STREAMING BUSINESS WAS MORE NARROW THAN EXPECTED, BUT WE DON'T HAVE ANY BETTER SENSE ON HOW PARAMOUNT DOES ANYTHING, ORGANICALLY OR ENERGETICALLY, TO MAKE THAT BUSINESS PROFITABLE. GEETHA: SO THEY DID ARTICULATE A STRATEGY. THIS WAS, I THINK, ONE OF THE
THINGS THAT INVESTORS ARE CHEERING A LITTLE BIT THIS MORNING. THEY SAID THEY ARE HOPING TO GET TO PARAMOUNT PLUS DOMESTIC PROFITABILITY BY 2025. THAT IS THE FIRST TIME THEY HAVE GIVEN US A TIMEFRAME.
YES, LOSSES HAVE NARROWED. THEY SEEM TO HAVE SOME PLANS IN PLACE FOR CUTTING DOWN COSTS, FOR OPTIMIZING CONTENT COSTS ACROSS THE BOARD FOR THEIR LINEAR NETWORKS AS WELL AS STREAMING. I'M NOT SURE THAT IS ENOUGH TO MOVE THE NEEDLE. WE DID SEE WARNER BROS.
DISCOVERY POSTING A MODEST PROFIT IN IT STREAMING BUSINESS. BUT INVESTORS ARE STILL VERY SKEPTICAL THAT THE PROPHETS ON THE STREAMING SIDE WILL BE COMPLETELY OFFSET ON THE -- OFFSET LOSSES. ED: COMING UP, THE MAKER OF "GRAND THEFT AUTO" IS CALLING FOR ALL OF ITS EMPLOYEES TO RETURN TO THE OFFICE FOR FIVE DAYS A WEEK STARTING IN APRIL.
ROCKSTAR GAMES. WE DISCUSSED THAT NEXT. ED: WELCOME BACK TO BLOOMBERG TECHNOLOGY. ED LUDLOW IN SAN FRANCISCO. CAROLINE:
CAROLYN HYDE IN NEW YORK. TODAY, THE PCE NUMBER, THE FAVORED VIEW OF INFLATION PRESSURES FROM THE FEDERAL RESERVE, WAS POSTED AT 8:30 A.M., AND WAS A RELIEF. IT CAME IN A LONG LINE WITH EXPECTATIONS. THE FED SEEMED RIGHT TO BE PAUSING ON ANY CUTS. BUT THE RELIEF THAT IT CAME IN AS EXPECTED MEANS THAT TECH STOCKS PUSHED HIGHER UP. THE 10 YEAR YIELD COMES DOWN THREE BASIS POINTS. MOVING ASIDE FROM ANY OF THE
MACRO DATA POINTS, BITCOIN HAS BEEN ON ITS OWN ROLE OVER THE LAST FEW TRADING DAYS AND WEEKS. WE ARE CURRENTLY UP 62,000. LILY REALLY TRYING TO I THE NEW RECORD HIGH. WE WILL DIG INTO THAT WITH ONE OF OUR VC GUESTS. WE WILL HAVE A LOOK AT SOME OF THE INDIVIDUAL MOVERS. EARNINGS HAVE COME THICK AND FAST. A LOT OF THESE SOFTWARE AI PLACE. OKTA, MASSIVE MOVE. A BREACH HAPPENED RECENTLY.
THE NUMBERS THAT CAME IN SEEM TO GIVE ANALYSTS SOME REPRIEVE. THEY SEEM TO BE LIKING THE FACT THAT THEY ARE MANAGING TO UPSCALE WHERE THEY THINK THE PRICE POINT FOR THIS COMPANY IS GOING. SUBSCRIPTIONS WERE A RELIEF. DUAL LINGO -- DUOLINGO UP TO 5%. PEOPLE WANT TO LEARN ON THIS AI ENABLED PLATFORM. WE'RE LOOKING AT C3 AI, 24%
HIGHER. THAT IS ALSO A RELIEF. MANY THOUGHT THIS HAD JUST BEEN AN AI HYPE CYCLE. C3 AI NEEDED TO PROVE THAT SUBSCRIPTION GROWTH WAS REALLY THERE. AND IT IS. ANALYSTS UPGRADING ON THE BACK OF THESE NUMBERS. BIG MOVES AND SOME OF THESE SOFTWARE AND AI PLACE TODAY. ED: BREAKING NEWS -- A RED HEADLINE IN THE VIDEOGAMES INDUSTRY. SWEDISH VIDEOGAMES OUTFIT
EMBRACE HER IS GOING TO SELL ITS SABER SUBSIDIARY IN A DEAL VALUED AT AROUND 500 MILLION U.S. DOLLARS, ACCORDING TO A BLOOMBERG SOURCE. LET'S BRING IN THE REPORTER THAT JUST BROKE THAT STORY FOR BLOOMBERG, JASON SCHREIER. THIS IS AN INTERESTING ONE. I AM FAMILIAR WITH THE NAMES BECAUSE I AM A LONGTIME PLAYER OF KNIGHTS OF THE OLD REPUBLIC, THE STAR WARS GAME I USED TO PLAY ON PC. TELL US ABOUT THE DEAL WE ARE REPORTING ON.
>> IT IS HAPPENING AS WE SPEAK. THE EMBRACE OR GROUP IS SELLING A SECTION OF SABER, WHICH IS A BIG SUBSIDIARY. IT IS GOING TO GO PRIVATE. A LITTLE BIT OF CONTEXT.
THE SWEDISH GAMING CONGLOMERATE MADE A LOT OF HEADLINES A COUPLE OF YEARS AGO BECAUSE IT WAS BUYING UP COMPANIES ACROSS THE VIDEOGAME INDUSTRY. A HUGE SPENDING SPREE BACK IN THE HALCYON DAYS OF 2021, WHEN THE INTEREST RATES WERE LOW AND BUYING WAS EASY. OF COURSE, THINGS HAVE CHANGED. ERASER GROUP HAS SINCE EMBARKED ON A COST-CUTTING INITIATIVE THAT HAS LED TO CARNAGE ACROSS THE VIDEOGAME INDUSTRY. IT HAS SHUT DOWN STUDIOS, LAID PEOPLE OFF, AND IS LOOKING TO SHED COSTS WHENEVER POSSIBLE. THIS IS THE LATEST MOVE ON THAT
FRONT. CAROLINE: OVERALL, WHEN YOU SEE THE CANCELLATION OF PROJECTS, COMPANIES DOING DEALS WITH THIS, DOES IT SPEAK TO PRESSURE POINTS WE ARE SEEING ACROSS THE ENTIRE INDUSTRY? JASON: IT DEFINITELY DOES. THIS WEEK ALONE, IT HAS BEEN A BLOODBATH. SONY HAS LAID OFF 900 PEOPLE. EA SAID IT WAS LAYING OFF 600 PEOPLE. THERE ARE A FEW FACTORS BEHIND ALL OF THESE LAYOFFS, BUT I THINK THE BIGGEST ONE IS THAT DURING THE PANDEMIC, WHEN THERE WAS A LOT OF GROWTH IN THE VIDEOGAME INDUSTRY AND A LOT OF THESE COMPANIES JUST SWELLED -- THEY HIRED TOO MANY PEOPLE, AND NOW THEY ARE FACING THE MATH. THEY ARE LOOKING AT THE NUMBERS.
THE NUMBERS HAVE GONE DOWN A LITTLE BIT. THE GROWTH HAS NOT BEEN WHAT IT WAS WHEN EVERYBODY WAS STUCK AT HOME PLAYING VIDEO GAMES. THE OVERALL HIRING IS STILL THERE. PEOPLE WHO MADE THOSE DECISIONS ARE STICKING AROUND. IT IS THE PEOPLE WHO GOT HIRED THAT ARE SUFFERING AS A RESULT OF THIS.
ED: THE OTHER TOP STORY OUR AUDIENCE IS FOLLOWING IS ROCKSTAR GAMES, THE STUDIO BEHIND GRAND THEFT AUTO, TELLING ITS EMPLOYEES, ACCORDING TO YOUR REPORTING, TO COME BACK TO THE OFFICE FIVE DAYS A WEEK, STARTING IN APRIL. WHAT DO YOU KNOW ABOUT THE DECISIONS BEHIND THAT MOVE? JASON: IT IS INTERESTING. A LOT OF INDUSTRIES OBVIOUSLY ARE GRAPPLING WITH THIS QUESTION OF RETURNING TO THE OFFICE AFTER EMPLOYEES HAVE GOTTEN USED TO EITHER WORKING HYBRID OR WORKING REMOTELY. WITH THE GAMING INDUSTRY, IT
PLAYS OFF ON THE TOPIC WE WERE JUST TALKING ABOUT, BECAUSE THE VOLATILITY OF THE VIDEOGAME INDUSTRY IS SUCH THAT PEOPLE HAVE TO APPROVE THEIR LIVES CONSTANTLY FOR NEW JOBS. SO REMOTE WORK IS VERY MUCH A SHIELD AGAINST THAT VOLATILITY. FOR A COMPANY LIKE ROCKSTAR, WHICH IS ONE OF THE LEADING VIDEOGAME DEVELOPERS, COME OUT AND SAY WE NEED YOU TO COME IN FIVE DAYS A WEEK, STRIKES A BIG CONTRAST BETWEEN WHAT WE ARE SEEING ELSEWHERE.
ROCKSTAR, THEIR RATIONALE -- IT IS LARGELY BECAUSE OF SECURITY. THEY SUFFERED FROM SOME HUGE LEAKS OF THE NEXT GRAND THEFT AUTO GAME. A BUNCH OF EARLY FOOTAGE FROM THE GAME GOT LEAKED AND DROPPED ON THE INTERNET. LAST DECEMBER, JUST A COUPLE MONTHS AGO, WHEN THEY WERE PLANNING ON RELEASING THEIR NEW TRAILER, THE FIRST TRAILER FOR GTA 6 -- IT WAS LEAKED ON TWITTER A FEW HOURS BEFORE IT WAS DUE TO GO UP. IT WAS PRETTY RIDICULOUS. IT WAS LEAKED WITH A GIANT CHIRON IN THE MIDDLE, SAYING BY BITCOIN. THE GAME IS SET IN FLORIDA.
I JOKED AT THE TIME THAT IT IS THE MOST FLORIDA THING EVER FOR A GAME TO LEAK IN THAT FASHION. THIS IS ONE OF THE MAIN REASONS THEY ARE DOING THIS. THEY BELIEVE THEIR SECURITY WAS COMPROMISED AS A RESULT OF PEOPLE WORKING REMOTELY. CAROLINE: WE HAVE SEEN WITH OTHER NET -- OTHER TECH COMPANIES, GRINDR SAID COME BACK TO THE OFFICE, AND IT HELPS THEM REVERSE -- REDUCE THE WORKFORCE WITH MORE OF A NATURAL ATTRITION. IF YOU ARE NOT GOING TO ABIDE
BY OUR RULES, DO NOT COME BACK. IS THAT PLAYING INTO THESE? JASON: THAT IS AN EXTREME COMMON THEORY. BLIZZARD LAST YEAR WAS BIG ON RETURN TO OFFICE. NONE OF THE THEORIES WAS, IS THIS JUST A SOFT LAYOFF? IS THIS A WAY WE CAN LAY PEOPLE OFF WITHOUT LAYING PEOPLE OFF BECAUSE WE KNOW THAT A PERCENT OF THE PEOPLE WILL LEAVE WHEN THEY ARE FORCED WITH THE PROSPECT OF HAVING TO GO BACK TO THE OFFICE FIVE DAYS A WEEK? I DO NOT HAVE ANYTHING THAT CAN PROVE THAT, BUT IT IS CERTAINLY LOGICAL. CAROLINE: JASON, BRILLIANT TO HAVE YOU ACROSS A VERY TALKED OF INDUSTRY GROUP WITH ALL THE COMPANIES MOVING AND SHAKING.
MEANWHILE, LET'S TURN TO APPLE FOR A MOMENT. PRICE POINT ACTION IN CHINA, RESELLERS SLASHING THE PRICE OF THE IPHONE 15 BY AS MUCH AS $180. A SIGNAL THAT WE CAUGHT AN UNUSUALLY PROLONGED SLUMP IN DEMAND. THIS IS MORE THAN WE ARE USE TO. WHAT TOOK MY ATTENTION IS SOME
OF THIS IS DRESSED UP AS DEALS TO BE MADE BEFORE INTERNATIONAL WOMEN'S DAY. I HAVE NOT SEEN MANY DEALS BEING MADE MY WAY FOR INTERNATIONAL WOMEN'S DAY, FOR OBJECTS TO BE CHEAPER THAN USUAL. THE FACT THAT $180 DOES SEEM TO BE MORE THAN WE USUALLY SEE AT THIS TIME OF YEAR, GOING INTO HOLIDAYS. ED: THERE ARE DIFFERENT DATA SETS YOU CAN POINT TO. THE MAIN ONE THAT BLOOMBERG FOCUSES ON IS THAT IPHONE 15 SALES ARE JUST NOT DOING AS WELL AS PRIOR GENERATIONS.
SO AT ALIBABA, YOU CAN GET A $180 DISCOUNT. THIS YEAR, MORE DOMESTIC PRESSURE. I HANDSET FROM HUAWEI IN THE MARKETPLACE. CAROLINE: THE HEADWINDS CONTINUE. WE TALK ABOUT THE GEOPOLITICAL TENSIONS THAT HAVE AFFECTED THE SUPPLY CHAIN -- THE SUPPLY CHAIN OF APPLE. DEMAND, THIS GOVERNMENT -- THE
P.R. AROUND IT HAS BEEN DIFFICULT TO FIND THE NUANCE. ULTIMATELY, GOVERNMENT AFFILIATED COMPANIES NOT WANTING THE APPLE PHONE, ONE YOU TO BUY LOCAL. AND THIS INCREDIBLY POWERFUL RIVAL.
ED: IT IMPLIES WEAKNESS IN CHINA. THE NEXT POSSIBLE AI HUB. WE WILL DISCUSS. WHAT IS HAPPENING IN THE MARKETS? CAROLINE: GOING BACK TO APPLE -- THIS IS A EUROPEAN-RELATED COMPANY.
A SWISS CHIPMAKER ABSOLUTELY PLUNGING IN EUROPEAN TRADING AFTER A MAJOR CUSTOMER -- ANALYSTS BELIEVE THIS CUSTOMER TO BE APPLE -- CANCELED THE KEY PROJECT AROUND MICRO OLED'S. THIS RESULTS IN CHARGES OF UP TO 900 MILLION EUROS. YOU CAN SEE THE IMPACT ON THE TO DATE CHART.
CAROLINE: YOU JUST SAW THAT MIKE NOVA GRATZ -- NO VIGRATZ IS GOING TO BE ON. BITCOIN UP. WE SEE DEMAND AND SUPPLY -- ULTIMATE IMBALANCE AS WE START TO SEE THE ETF'S COME TO BEAR, AND SOME OF THE TALK OF HAVING-- HALVING HAPPENING IN APRIL. WHETHER IT IS THE NEXUS OF AI -- LOOKS CAPITAL PARTNER JOINS US NOW FOR VC SPOTLIGHT. WHAT IS SO INTERESTING IS YOU HAD A VERY HIGH FOCUS ON WHAT NOW SEEMS TO BE ALL OF OUR TALKING POINTS AT THE MOMENT. WHAT ARE YOU MAKING OF THE ECOSYSTEM IN CRYPTO WHEN YOU ARE LOOKING AT PUTTING VC DOLLARS TO WORK? YOU COULD THINK OF IT AS SOME KIND OF ASSET WE COULD TRACK AND SPECULATE. BUT WHAT IS THE UNDERLYING
BUILDING OF INFRASTRUCTURE LOOKING LIKE RIGHT NOW? >> IRONICALLY, IT IS THE SAME BUILDING BLOCKS FOR BOTH. WHO ARE THE CUTTING EDGE TECHNOLOGISTS, WHETHER IT IS IN CRYPTOGRAPHY OR MACHINE LEARNING, TAKING THAT PROBLEM FOR THE END-USERS? THE INFO STRUCTURE ON THE CRYPTO SIDE AND ON THE AI SIDE, WE CONTINUE TO SEE A LOT OF EXCITING INNOVATION. CAROLINE: EXCITING INNOVATIONS -- YOU HAVE JUST BEEN TO SAN FRANCISCO. THERE IS A LOT OF TALK ABOUT HOW CRYPTOGRAPHY CAN BE THE -- THERE CAN BE ACCESSED ACCESS TO COMPUTER. ARE YOU SEEING THAT?
>> A COMPANY IS BASED IN SAN FRANCISCO, BUT THE CHIEF SCIENTIST IS MOVING TO NEW YORK TO BE AN ASSISTANT PROFESSOR AT PRINCETON. THEY DECENTRALIZED COMPUTE IN MANY WAYS, VERSUS USING A CENTRALIZED CLOUD PROVIDER IN ORDER TO POWER THE AI INFRASTRUCTURE STACK. ED: LET'S HAVE A LITTLE HEALTHY COMPETITION BETWEEN CITIES.
THIS WEEK, WE PUBLISHED A DOCUMENTARY CALLED "WELCOME TO CEREBRAL VALLEY. AS YOU KNOW, RIGHT NOW, THE LIONS SHARE OF DOLLAR OR INTELLECTUAL CAPITAL IS HERE. BUT NEW YORK IS GROWING BOTH ON THE PERSONNEL SIDE AND ATTRACTING MORE DOLLARS. WHAT IS LOOKS CAPITAL' IS ATTITUDE TOWARD THAT? GRACE: THE AI DEMAND IS UNPRECEDENTED BETWEEN SAN FRANCISCO AND NEW YORK, AND I THINK YOU WILL SEE CONTINUED GROWTH IN BOTH CITIES. NEW YORK IS AN EXCITING GROWING
HUB BECAUSE OF THE DEMAND WE HAVE HERE. 44 FORTUNE 500 COMPANIES ARE HEADQUARTERED IN NEW YORK. THERE WAS A RECENT UNICORN REPORT WHERE THE NUMBER OF UNICORNS IN NEW YORK ROSE FROM THREE TO 100 OVER THE LAST 10 YEARS, AND YOU ARE SEEING HUGE INDUSTRIES, WHETHER IT IS FINANCIAL SERVICES OR MEDIA. AS PERTAINS TO NEW YORK SPECIFICALLY, THERE IS A GREAT TALENT BED.
WE HAVE ALSO SEEN SEVERAL OTHER GREAT AI LABS, WORLD-CLASS, RIGHT HERE IN NEW YORK. YOU HAVE THE CHIEF SCIENTIST AT META ALSO HERE IN NEW YORK. THE PRINCETON, COLOMBIA, AND CORNELL LABS ARE BUSTLING. ED: ONE OF THE SURPRISING HEADLINES WITH AI WAS JAMIE DIMON SAYING THAT MAYORS IN TEXAS WILL PHONE HIM UP AND SAY, WHAT CAN WE DO TO GET MORE BUSINESS? OFFICIALS IN NEW YORK CITY ARE NOT AS BUSINESS FRIENDLY, ACCORDING TO JAMIE DIMON.
WHAT IS YOUR BOOT ON THE GROUND EXPERIENCE FROM THE HOST CITY PERSPECTIVE? GRACE: I HAVE SEEN BUSTLING INNOVATION AND HAVE SEEN PEOPLE CHOOSING TO LIVE IN NEW YORK BECAUSE THEY WANT TO LIVE HERE, AND GOING THROUGH WHAT OTHER HOOPS THEY NEED TO LIVE HERE. WE SAW A SIX TIME INCREASE IN APPLICANTS OVER THE LAST FIVE YEARS WHEN HE TO MOVE HERE. SEE A LOT OF INTERNATIONAL TALENT, HOOKS COMING FROM EUROPE, FROM ISRAEL, HAVING TO NEW YORK CITY. CAROLINE: WHAT OFTEN WILL BE SAID TO SOME OF THE VCS THAT SPEAK TO US -- WHAT NEW YORK HAS GOING FOR IT, EVEN IF IT IS NOT COMPARABLE IN TERMS OF THE SHEER SCALE OF MONEY BEING DEPLOYED HERE, IS DIVERSITY. WE HAVE DIFFERENT INDUSTRY GROUPS HERE. IT IS INTERESTING THAT A LOT OF THE COMPANIES YOU ARE BACKING SEEM TO BE IN IMAGE GENERATION, IN THE ADVERTISING CREATIVE SPACE. I THINK OF RUNWAY, FOR EXAMPLE.
GRACE: RUNWAY IS WORKING HAND-IN-HAND WITH FILM MAKERS AND PRODUCERS RIGHT IN THEIR OFFICES IN NEW YORK CITY. SO THEY ARE WORKING NOT JUST TO ADD AI TO WORKFLOWS, BUT TO INTEGRATE IT DIRECTLY INTO THE WORKFLOW. YOU SEE A LOT OF SUCCESS WORKING WITH FORTUNE 500 COMPANIES AND THOSE FILM MAKERS IN PRODUCTION. CAROLINE:
I'M SURE THERE IS A LITTLE HEALTHY NERVOUSNESS COMING FROM THOSE INDUSTRY GROUPS SEEING THEMSELVES DISRUPTED THE PACE OF AI. SO GREAT TO HAVE YOU AT THE NEXUS OF EVERYTHING THAT IS HAPPENING. WE'RE TALKING ABOUT ANOTHER PORTFOLIO COMPANY RIGHT NOW. ED: AS A REMINDER, THE BIG STORY WE HAVE BEEN TRACKING THIS WEEK IS THE FALLOUT FROM GEMINI. ALPHABET OR GOOGLE'S GENERATED AI TEXT TOOL HAS COME IN FOR CRITICISM AND ELICITED A RESPONSE FROM SUNDAR PICHAI, THE CEO OF GOOGLE, WHO CALLED SOME OF THE DEFICIENCIES UNACCEPTABLE.
LET'S BRING IN THE HIKING FACE RESEARCHER AND CHIEF ETHICS SCIENTIST, MARGARET MITCHELL. YOU HAVE YOUR OWN HISTORY WITH THE ACADEMIC BODY OF GOOGLE THAT WE CAN GET INTO. WE ARE SHOWING SUNDAR P CHAI'S STATEMENT RIGHT NOW ABOUT WHAT HAPPENED WITH GEMINI. THE REASON WE WERE ABLE TO GET YOU ON THE SHOW IS, CAN THIS BE FIXED, TECHNOLOGICALLY SPEAKING, IN THE SHORT TERM? MARGARET: IT ACTUALLY CAN.
THERE ARE A FEW DIFFERENT APPROACHES TO HANDLING THE DIFFERENT WAYS PEOPLE WILL BE USING THESE SYSTEMS. ONE IS TO HAVE A BUNCH OF DIFFERENT MODELS UNDER THE HOOD, AND END UP FIGURING OUT WHAT DIFFERENT USER INTENT IS, AND PROVIDING DIFFERENT KINDS OF RESPONSES BASED ON WHAT USER INTENT IS. SO IT SHOULD BE FIXABLE. I'M A LITTLE SURPRISED IT HAS
TAKEN SO LONG, BUT I GUESS WE WILL SEE. ED: WHAT I AM TRYING TO RECONCILE IN MY MIND IS THAT GOOGLE IS AT THE ORIGIN STORY OF ARTIFICIAL INTELLIGENCE, THE BODY OF R&D OR ACADEMIC WORK THAT HAPPENED MORE THAN A DECADE AGO. HOW DO WE GET TO THIS POINT WHERE THEY PUBLISH A TOOL WHERE THERE IS CLEAR EVIDENCE THAT THE MODEL HAS SOME DEFICIENCIES AND EVIDENCE OF BIASES? MARGARET: WE HAVE SEEN GOOGLE LAYING OFF A LOT OF PEOPLE, LAYING OFF PEOPLE WHO ARE EXPERTS IN AI ETHICS, IT HELPS WITH THE KINDS OF ISSUES THEY ARE SEEING NOW. I THINK THAT GOOGLE MIGHT BE PLAYING A BIT OF CATCH UP, TRYING TO RELEASE THINGS PERHAPS BEFORE THEY ARE FULLY READY, AND ALSO NOT NECESSARILY HAVING THE RIGHT PEOPLE AT THE TABLE TO MAKE THE DECISIONS. SO GOOGLE IS IN A VERY DIFFERENT POSITION THAN IT WAS 20 YEARS AGO. CAROLINE:
IT IS WORTH SAYING WHAT SIDE OF THE TABLE YOU ARE COMING FROM AND YOUR HISTORY WITH GOOGLE. CODE LED -- YOU CO-LED GOOGLES ETHICAL AI TEAM. YOU ARE AT MICROSOFT. YOU MOVED OVER TO HUGGING FACE
TO REALLY DRIVE THE ETHICAL PERSPECTIVE OF THAT PART OF THE BUSINESS. I'M INTERESTED AS TO THE FAILINGS THAT YOU SAW A COUPLE OF YEARS AGO THAT DREW YOUR CRITICISM AND ULTIMATELY, AS YOU LEFT GOOGLE -- WHEN I THINK ABOUT SOME OF THE ISSUES THAT YOU SAY AS TO WHY THIS IS NOT GETTING FIXED AS QUICKLY, IT SEEMS TO BE FROM YOUR PERSPECTIVE A QUESTION OF PERSONNEL, AND WHO HAS GOT THE POWER TO MAKE DECISIONS. MARGARET: RIGHT. IT IS COMPLETELY WHO IS AT THE TABLE. ONE OF THE THINGS THAT SO MANY WOMEN AND PEOPLE OF COLOR SPEAK TO IN THE AI ETHICS WORLD IS THE NEED TO THINK ABOUT HOW TECHNOLOGY IS GOING TO BE USED, HOW IT IMPACTS DIFFERENT PEOPLE. THE ARE REALLY NOT SEEING THAT KIND OF CONSIDERATION IN THE WAY THAT THESE TECHNOLOGIES ARE BEING UNROLLED. IT REALLY SEEMS THAT THERE IS NOT ENOUGH CLEAR THINKING ABOUT FORESIGHT, ABOUT CONTEXT OF USE, ABOUT THE SOCIAL IMPACT.
AND THESE ARE THINGS THAT A LOT OF PEOPLE WHO SPECIALIZE IN THINGS LIKE AI ETHICS, SPONSOR WILL AI -- MANY OF WHOM ARE UNDERREPRESENTED IN TECHNOLOGY -- WE ARE NOT SEEING THIS KIND OF INSIGHT, WHICH MEANS THAT THERE MAY NOT BE THE RIGHT PEOPLE, AND THE PEOPLE MIGHT BE MORE DISEMPOWERED THAN THEY SHOULD BE. CAROLINE: AND THIS IS UNLEASHED IN THE ENVIRONMENT OF A CULTURE WAR. WHAT, FOR ME AS A CONSUMER, COULD BE MADE CLEAR? HOW CAN PROMPT TRANSFORMATION, UNDERSTANDING WHAT IS GOING ON UNDER THE HOOD, BE BETTER SERVED TO ME, SO I UNDERSTAND WHERE I CAN SHOW MY PREFERENCES, NEEDS, MY CHOICES WHEN IT COMES TO THE IMAGES BEING GENERATED? MARGARET: ONE THING PEOPLE ARE FAMILIAR WITH, WITH GOOGLE IMAGE SEARCH, IS WHEN YOU TYPE IN A PROMPT TO GET A SET OF IMAGES. IT IS A BUNCH OF DIFFERENT BOXES YOU CAN SELECT FROM THAT GET AT DIFFERENT THINGS YOU MIGHT USE. IN THE PAST, GOOGLE HAS BEEN VERY GOOD AT THIS, TRYING TO GIVE USERS AN OPTION TO SPECIFY THE KINDS OF INTENT THEY HAVE IN WHAT THEY ARE TRYING TO SEARCH FOR, AND FURTHER REFINING BASED ON THAT.
SO THAT TECHNOLOGY IS THERE. IT IS SOMETHING GOOGLE HAS A HISTORY OF DEVELOPING, AND DEVELOPING WELL. THIS SAME KIND OF APPROACH COULD BE PUT INTO ANY SORT OF CHATBOT SYSTEM, THE IT MORE GENERATIVE OR NOT, WHERE USERS ARE SHOWN A SELECTION THAT THEY CAN CHOOSE AMONG TO GET AT THE KINDS OF THINGS THEY WOULD LIKE. THERE IS ALSO THE POSSIBILITY TO HAVE A BACK AND FORTH, IN ORDER FOR THE SYSTEM TO ASK THE USER FOR A LITTLE BIT MORE SPECIFICITY. USERS COULD POTENTIALLY SET PREFERENCES. THE SYSTEM COULD ALSO SHOW A VARIETY OF DIFFERENT THINGS, REGARDLESS OF DIFFERENT BOXES USERS MIGHT CHECK.
THEY COULD SAY HERE IS A HISTORICAL IMAGE. HERE IS THE WORLD AS IT COULD BE. THAT ME KNOW MORE ABOUT WHAT YOU WOULD LIKE TO SEE.
CAROLINE: PRACTICAL TAKEAWAYS. MARGARET MITCHELL OF HUGGING FACE, WHO PREVIOUSLY CO-LEAD GOOGLE'S ETHICAL AI GROUP. REPORTS THE S.E.C. HAS OPENED AN INVESTIGATION INTO WHETHER OPENAI MISLED INVESTORS. DETAILS TO COME.
CAROLINE: THE S.E.C. IS INVESTIGATING WHETHER OPENAI INVESTORS WERE MISLED AS THE STARTUP WENT THROUGH A FEROCIOUS DEBATE OVER LEADERSHIP LAST YEAR. THIS IS ALL BEING REPORTED BY THE WALL STREET JOURNAL. THE SECURITIES AND EXCHANGE COMMISSION IS STUDYING INTERNAL COMMUNICATIONS BY THE CEO IN REGARD TO HIS OUSTER. THE S.E.C.
HAS SENT A SUBPOENA TO THE COMPANY AND ASKED SENIOR OFFICIALS TO PRESERVE INTERNAL DOCUMENTS. TO REGAIN HIS JOB, ALTMAN AGREED TO AN INTERNAL INVESTIGATION, AMONG OTHER CONDITIONS, AND WE GET TO SEE THE OUTCOME. ED: WE AWAIT THE OUTCOME. THERE IS THE COMPLEX CAP TABLE, AND THERE ARE THE MICROSOFT INVESTORS. IN THE PUBLIC MARKETS,
MICROSOFT SHARES REACTED TO THE CHAOS, ISSUE AND I BOTH LIVED THROUGH. CAROLINE: IT FEELS AN AGE AWAY. DEBATE STILL RAGES ON. ED: A BIG THANKS TO EVERYONE WHO LISTENS TO THE PODCAST. WE KNOW THERE ARE A LOT OF YOU OUT THERE. GOSH, WHAT A WEEK IT HAS BEEN.
2024-03-02 23:39
