Tech Stocks, Apple in China, and the Paris Olympics | Bloomberg Technology
ANNOUNCER: THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM LONDON AND SAN FRANCISCO, COMING UP, FULL COVERAGE OF A WILD WEEK OF TECH STOCKS. ED: APPLE LOSING GROUND IN CHINA. CAROLINE: AS THE OLYMPICS KICKOFF, THEY BRACE FOR CYBERATTACKS. EXTRAORDINARY WEEK. DOWN FOR THREE STRAIGHT WEEKS, NASDAQ 100. THIS WEEK LOST 3%.
TRADING AT THE LOWS SINCE MAY. ED: MAGNIFICENT SEVEN. IT IS THE GO TO. THE PAST TWO SESSIONS, A TRILLION DOLLARS MARKET CAP ERASED. THAT HAS A BROADER IMPACT. LARGELY GOOGLE. VOLATILITY IN NVIDIA TOP OF MIND FOR INVESTORS. LET'S TALK ABOUT IT.
IT IS FRIDAY. NOT ENOUGH COFFEE. MARKET VOLATILITY GETS ME. I FRAMED IT SPECIFICALLY WITH A MICRO FOCUS ON THE MAG SEVEN. FOR SOMEONE LIKE YOU LOOKING AT MARKETS, IS THAT THE CASE? >> NEXT FEW WEEKS ARE ALL ABOUT EARNINGS.
IF YOU THOUGHT THIS WEEK WAS VOLATILE, WAIT UNTIL NEXT WEEK. ALL THE COMPANIES ARE REPORTING. THERE WILL BE A LOT OF ATTENTION ON EARNINGS FROM THESE NAMES. IN AUGUST WE WILL SEE NVIDIA. THERE IS TREPIDATION AROUND EARNINGS. I THINK THEY WILL BE FINE.
THERE IS TREPIDATION IF THEY MEET EXPECTATIONS, WHICH ARE HIGH. VALUATIONS ARE HIGH. THE MARKET IS STARTING TO PAY ATTENTION TO THE STOCKS THAT DIDN'T KEEP PACE WITH THE MAGNIFICENT SEVEN. THESE ARE THE AREAS DRIVING THE MARKET NOW. CAROLINE:
DID YOU THINK VALUATIONS HAD BECOME ABSURD? ANTHONY: IT'S FAIR TO QUESTION VALUATIONS IN BIG TECH NOW. CERTAINLY BASED ON AI AND THE PAYOFFS THAT MAY TAKE QUARTERS OR YEARS TO DEVELOP. IT'S RIGHT FOR INVESTORS TO QUESTION. SECULAR DRIVERS OF AI ARE REAL AND WILL GENERATE PROFIT.
THEY ARE ALREADY GENERATING PROFITS FOR COMPANIES LIKE NVIDIA, MICROSOFT, ALPHABET. ARE THEY MEETING ELEVATED EXPECTATIONS NOW? IT'S NORMAL TO SEE OVER A CYCLE INVESTORS GET AHEAD OF WHERE PROFITS ARE. TAKE THOSE EXPECTATIONS BACK. PROVIDES OPPORTUNITY FOR INVESTORS TO LOOK AT STOCKS HIGHER, MAY BE AT A CHEAPER PRICE? IF YOU HAVE A BALANCED VIEW OF GROWTH AND CYCLICAL OPPORTUNITIES DEVELOPED, YOU CAN USE A PULLBACK IN BIG TECH AS A MEANS TO PUT DOLLARS TO WORK. ED:
ALPHABET GOES FIRST. IT GIVES INDICATION OF HOW CLOUD WILL DO, ALSO ADVERTISING, THEN THAT SETS US UP FOR THIS WEEK NEXT WEEK. THERE'S MORE TO THE MARKET THAN EARNINGS.
ARE YOU ABLE TO APPORTION SOME WAITING AS TO HOW THE MARKET IS LOOKING AT THE CYCLE? ANTHONY: GREAT QUESTION. IN THE FIRST HALF THERE WERE QUESTIONS ABOUT THE ECONOMY, INFLATION, RATES. A LOT OF INVESTORS PILED INTO BIG TECH. THE PROFITS WERE VISIBLE. SECOND-HALF START, THERE'S MORE CLARITY ABOUT SOFT LANDING. INTEREST RATES LOOK LIKE THEY MAY COME DOWN STARTING SEPTEMBER. INFLATION MODERATING, LOWER.
THE PCE DATA THIS MORNING. THERE IS MORE CONFIDENCE IN THE OTHER 493 COMPANIES, THAT THEIR OUTLOOKS MIGHT IMPROVE IN THE SECOND HALF. THE MACRO BACKED UP THAT WAS MORE UNCERTAIN IN THE FIRST HALF, STARTING TO GET CLARITY. THAT'S WHY YOU SEE MONEY ROTATING OUT OF BIG TECH AND INTO AREAS LIKE SMALL CAPS, FINANCIALS, INDUSTRIALS, MATERIALS, WHICH ARE PERFORMING BETTER. INVESTORS ARE STARTING TO GIVE
A SECOND LOOK. CAROLINE: THE REASON WE LOVE YOUR EXPERIENCE IS BECAUSE YOU DON'T JUST LOOK AT CERTAIN EQUITIES BUT YOU LOOK GLOBALLY. THIS ROTATION HAS BEEN HAPPENING IN THE JAPANESE NAMES, EUROPEAN CHIPMAKERS. INTERESTED WHETHER OR NOT YOU ARE SEEING GLOBAL NARRATIVES BUILD? ANTHONY: PRAY QUESTION. YOU SEE NORMALIZATION IN ECONOMIC GROWTH PATTERNS, INFLATION AND RATES IN THE U.S. AND EUROPE, JAPAN. JAPAN WILL HAVE THEIR MEETING NEXT WEEK.
THEY ARE TALKING ABOUT NORMALIZING POLICY BY HIKING RATES. EUROPE, THE ECB CUTTING IN JUNE, ON PACE TO CUT AGAIN IN SEPTEMBER BECAUSE THERE IS A BALANCE BETWEEN GROWTH AND INFLATION. THE NARRATIVE OVER THE LAST TWO YEARS IN THE U.S. AND ACROSS THE GLOBE, OF HIGH INFLATION, HIGH-GROWTH AND HIGH INTEREST RATES.
OVER THE LAST 6-12 MONTHS, MORE NORMALIZATION IN INFLATION, OPPORTUNITY TO NORMALIZE RATES AND A SOLID ECONOMIC ENVIRONMENT IN EUROPE AND JAPAN. THESE AREAS ARE PERFORMING WELL AND COULD CONTINUE IF INVESTORS LOOK FOR CYCLICAL TRADES OUTSIDE BIG TECH, WHICH IS DOMINATING U.S. THE SEASON. CAROLINE: ALWAYS GREAT TO CATCH UP. HAPPY WEEKEND.
COMING UP, APPLE LOSING GROUND IN ITS KEY CHINA MARKET. THE IPHONE DECLINE NEXT. ED: ANOTHER CHINESE NAME, IN A WEEK THAT HAS BEEN RUBBISH FOR EV MAKERS, CATL IS BUCKING A TREND. THEY REPORTED IMPRESSIVE Q2 NET INCOME NUMBERS.
THE BATTERY MAKERS ARE DOING WELL. ENERGYSOLUTIONS HAD NOT DONE AS WELL. IT'S HARD TO UNDERSTAND THE STORY BUT IT IS ONE NAME WE WATCH IN CHINA. ♪ ED: APPLE LOSING GROUND IN CHINA WITH THE IPHONE FALLING OUT OF THE TOP FIVE IN THE NATION. INTERESTING TABLE. A CHART IN THE STORY SHOWS THE SLIDE IN POSITION APPLE HAS HAD RELATIVELY SHORT-TERM, TOWARD THE END OF '23, OVER SIX MONTHS.
WHAT DOES THE DATA TELL YOU? >> WHEN IT COMES TO APPLE AND CHINA, OVER THE LAST FEW YEARS, THE GROWTH HAS NOT BEEN THERE BUT WHAT THEY SAID IN THE LAST EARNINGS CALL THEY SAID THEY GREW IN CHINA. THERE IS ALWAYS A TIMING ISSUE, WHEN THE PRODUCT IS SHIPPED OUT OF THE U.S. VERSUS WHEN IT IS ACTIVATED VERSUS WHEN IT IS KNOWN AS REVENUE.
NEXT WEEK WILL BE IMPORTANT FOR APPLE. TO BE BLUNT, THAT'S THE MOST IMPORTANT THING OVER THE NEXT 12 MONTHS FOR APPLE, FAR MORE THAN ANYTHING ELSE. CAROLINE: THE WAY IN WHICH THE IDC TRACKS DATA, WHETHER GOVERNMENT OR SEEING WHAT THIRD PARTIES ARE UP TO, WE CAN TRY AND DIG INTO THE NUANCE. THE OVERALL NARRATIVE SEEMS TO BE APPLE LOSES POSITION AND HUAWEI GAINS. ANURAG: OVER THE LAST 12 MONTHS, WE'VE SEEN A MASSIVE UPGRADE IN HUAWEI PHONES. PEOPLE WHO HAD OLDER PHONES WERE GOING OUT TO REFRESH AND BY THE NEWER ONES.
IPHONES, WE ARE SEEING AN ELONGATION IN THE CYCLE. IT IS MORE RELIABLE AND EXPENSIVE. PEOPLE ARE KEEPING IT LONGER. THAT HAS BEEN THE ISSUE FOR APPLE IN THE LAST 2.5 YEARS. ED: THE DOMESTIC HANDSET CHINESE MAKERS ARE A FACTOR. GOVERNMENT POLICY DIRECTING GOVERNMENT EMPLOYEES OR STATE BACK ENTERPRISES TO LEAVE THE IPHONE AT HOME. HOW DO YOU MODEL THAT POLICY
PERSPECTIVE? ANURAG: LAST QUARTER EARNINGS, ALL THESE THINGS WERE AT PLAY. APPLE SAID THEY GREW IN THE GREATER REGION. I AM MORE INCLINED TO WAIT FOR APPLE'S COMMENTS RATHER THAN DATA SOURCES. HAVING SAID THAT, APPLE WILL HAVE A TOUGH TIME IF YOU SEE THE REPUBLICAN PRESIDENT COMING IN. IF CHINA RHETORIC GOES UP OVER THE NEXT THREE YEARS, APPLE WILL BE RIGHT IN THE MIDDLE OF THE ISSUE. APPLE IS NOT AS CLEAR-CUT AT THIS POINT COMPARED TO AMAZON OR MICROSOFT IN TERMS OF VISIBILITY. CAROLINE:
MICRON AND APPLE EXECUTIVES VISITING CHINA OF LATE TALKING TO GOVERNMENT OFFICIALS. GOOD TO HAVE TIME. POLITICS AFFECTING CHINA-U.S. RELATIONSHIPS MORE. THEY ARE GOING ALL OUT IN WASHINGTON TO KEEP TIKTOK FROM BEING BANNED. MIKE SHEPPARD, YOU UNDERSTAND
MORE THAN MANY THE INTRICACIES OF U.S. AND CHINA RELATIONSHIPS AND TIKTOK IS FIGHTING THIS HARD BECAUSE THEY HAVE TO OR THEY WILL BE OUT. MIKE: THIS IS EXISTENTIAL FOR TIKTOK AND BYTEDANCE TO MAINTAIN THIS ACCESS THROUGH TIKTOK AND 170 MILLION USERS TO WHAT MAY BE MIGHT BE THE MOST LUCRATIVE ADVERTISING MARKET IN THE WORLD. THEY ARE NOT GOING QUIETLY INTO THE NIGHT IN THE FACE OF THIS LAW PASSED IN APRIL. IT REQUIRES THE COMPANY TO BE SOLD BY BYTEDANCE BY JANUARY 19 OR IT WILL FACE A BAN ON U.S.
OPERATIONS. THAT WOULD BE DEVASTATING TO THE COMPANY AND U.S. USERS WHO HAVE GROWN TO DEPEND ON IT, AS A SOURCE OF ENTERTAINMENT AND INCOME AND BUSINESS. MANY SMALL BUSINESSES ARE ACTIVE ON THE APP. TIKTOK IS DEPLOYING THEM AS
PART OF THIS CAMPAIGN. ED: THE ISSUE OF LANGUAGE HERE I FIND CRUCIAL. WHEN THIS LAW WAS PASSED IN APRIL, IT WAS A DIVEST OR BAN LAW. SEEMS LIKE THE DIVEST PART IS NOT A TALKING POINT FOR TIKTOK OR THE U.S. GOVERNMENT. MIKE: GLAD YOU BROUGHT THAT UP. VICE PRESIDENT HARRIS JOINED TIKTOK YESTERDAY TO HELP BOOST HER CAMPAIGN AGAINST FORMER PRESIDENT TRUMP.
THERE IS GREAT UTILITY IN THIS APP. THE APP IS NOT THE ISSUE. IT IS OWNERSHIP. HOWEVER WE SEE ZERO MOVEMENT ON A SALE. BYTEDANCE SAYS IT IS NOT UP FOR SALE. CHINESE GOVERNMENT EXPRESSED
OBJECTIONS TO ANY IDEA THIS CROWN JEWEL OF BYTEDANCE WOULD BE FORCED TO BE SOLD BY THE U.S. GOVERNMENT. ED: MIKE SHEPPARD LEADS OUR COVERAGE OF TECH AND POLITICS. IN THE CONTEXT, VICE PRESIDENT HARRIS JOINED WITH HER FIRST PERSONAL ACCOUNT, SINCE SHE BEGAN HER PRESIDENTIAL CAMPAIGN FOUR DAYS AGO. SOCIAL MEDIA HAS SEEN A GROUNDSWELL OF VIRAL MEMES. PRESIDENT BIDEN SIGNED THAT LAW IN APRIL FORCING BYTEDANCE TO SELL THE APPLICATION BY JANUARY OR FACE THE PROSPECTS OF BEING BARRED FROM OPERATING IN THE U.S. ASTONISHING SITUATION.
CAROLINE: ALSO HOW EXPENSIVE THOSE POWERBROKERS ARE. LET'S TALK CHINA MORE BUT IN THE CONTEXT OF E-SPORTS. NIP KICKS OFF TRADING ON THE NASDAQ. MARIO HO JOINING. ♪ ED: THE SEC SUING CITRON CAPITAL. THEY ARE ACCUSING HIM OF COMMITTING FRAUD.
HE WOULD ALLEGEDLY MAKE A RECOMMENDATION, THEN CAPITALIZE ON THE RESULTING MOVEMENT ON PRICES FAR DIFFERENT FROM WHAT HE RECOMMENDED. LEFT HAD NO IMMEDIATE COMMENT. APPLE SET TO ADOPT VOLUNTARY PROTECTIONS. APPLE WILL JOIN OPENAI AND ALPHABET, AS WELL AS MICROPHONE US -- AS WELL AS MICROSOFT TO TESTING FOR NATIONAL SECURITY RISKS. TAIWAN REOPENED DUE TO A GLOBAL ROUTE, AS INVESTORS RETHINK THEIR POSITIONS. CAROLINE: NIP BEGAN TRADING TODAY.
THE COFOUNDER AND CHAIRMAN, MARIO HO. WHY GO PUBLIC IN THE U.S.? MARIO: THIS IS THE BIGGEST CAPITAL MARKET IN THE WORLD. WE NEED TO BE AT THE BIGGEST EXCHANGE. THAT IS NASDAQ. CAROLINE: GIVE US THE THESIS.
YOU'RE TRYING TO WOO THE INVESTOR BASE ON THE BUSINESS MODEL. FOR US, WE THINK CHINA, REGULATORY CRACKDOWN, GAMING BUT E-SPORTS IS DIFFERENT. MARIO: IT IS WELL LOVED EVERYWHERE IN THE WORLD, EXEMPLIFIED BY THE RECENT NEWS. THE OLYMPICS WILL BE IN SAUDI ARABIA IN '25. WHETHER AN INVESTOR FROM CHINA OR THE U.S., THE BUSINESS MODEL OF RUNNING E-SPORTS TEAMS CAN BE UNDERSTOOD BY EVERYONE. ED:
FANS WILL KNOW YOU ARE THE PARENT COMPANY BEHIND NINJAS IN PAJAMAS IN SWEDEN. YOU TALK A LOT ABOUT THE OPPORTUNITY. E-SPORTS WILL BE A 100 BILLION DOLLAR PER YOUR MARKET BY 2027. YOUR TEAMS DO WELL. FOR THE INVESTORS WATCHING, HOW DO YOU MAKE THE NUMBER BIGGER? MARIO: PRIZE MONEY IS ONE PART OF OUR REVENUE.
WE ALSO DO TALENT MANAGEMENT. WE SIGN AND MANAGE A LOT OF TALENT. WE DO OFFLINE PRODUCTION LIKE THAT E-SPORTS LIVE NATION. WE ARE GOING INTO NEW AVENUES LIKE E-SPORTS HOTELS, GAME PUBLISHING. WE ARE RAISING THE OVERALL REVENUE PIE OF THE COMPANY. NOT JUST PRIZE MONEY, BUT THAT IS SOMETHING WE CARE ABOUT BECAUSE WE HAVE WINNING BRANDS. ED:
THE IMPACT OF HAVING E-SPORTS AT THE SAUDI ARABIA OLYMPICS. THAT'S AN INTERESTING GLOBAL VIEW OF THE MARKET. COMPARE AND CONTRAST THE HEALTH OF E-SPORTS IN THE U.S.
AGAINST A MARKET LIKE CHINA? MARIO: IN TERMS OF MONETIZATION AND SPONSORSHIPS, BECAUSE THE U.S. HAS A WELL-FUNCTIONING TRADITIONAL PLATFORM FOR SPORTS, THE E-SPORTS TEAMS TEND TO DO VERY WELL HERE. ON THE OTHER SIDE, AND CHINA, YOU WILL SEE A BIGGER FOLLOWING.
MORE PEOPLE, BIGGER POPULATION THAT FOLLOWS GAMES AND E-SPORTS. FOR THEM TO RACK UP A HUGE FOLLOWING, WOULD ALSO BE EASIER. IT'S A DIFFERENT DEMOGRAPHIC BUT IN TERMS OF COMPETITION, IT'S THE SAME EVERYWHERE IN THE WORLD. SAUDI ARABIA, I WOULD BE EXCITED TO SEE HOW THE U.S. TEAMS PITCH AGAINST THE CHINA TEAMS. CAROLINE: WHAT SORT OF COMPANIES WANT TO GET IN ON E-SPORTS? MANY THINK BACK TO THE COLLAPSE OF PHASE IN THE U.S., AND LARGER-THAN-LIFE CELEBRITIES
INVOLVED BUT ALSO THE COMMITMENT TO SPONSORS. WHAT COMPANIES WANT TO CORRAL AROUND YOU AND SUPPORT THE TALENT YOU ARE MANAGING? MARIO: IT'S GOOD TO HAVE A CORRECTION IN THE E-SPORTS MARKET GLOBALLY. WE ARE NOW CREDITED WHEN YOU ARE ABLE TO PROVE A PATH TO PROFITABILITY. THAT'S GREAT FOR THE INDUSTRY
WORLDWIDE. WE HAVE INSANE SPONSORSHIP FROM ALL OVER THE WORLD. RED BULL, BYD, CHINA MOBILE, FILA, PUMA, BRANDS THAT ARE TARGETING TOWARD YOUNG PEOPLE AROUND THE WORLD WILL STILL FIND THAT ATTRACTIVE TO BE REPRESENTED. ANOTHER REASON, SOME COMPANIES WANT TO YOUNGIFY IN TERMS OF AUDIENCE. FOR THOSE COMPANIES, WE ARE GOOD PARTNER FOR THEM. ED:
JACKSON WANG IS A HUGE STAR, MAINLAND CHINA, HUGE FOLLOWING, AND YOU HAVE TIED LEAGUE OF LEGENDS INTO HIS FOLLOWING. WILL YOU REPLICATE THAT STRATEGY WITH ANOTHER CELEBRITY IN EUROPE OR THE USA? MARIO: WE ARE NOT SAYING NO TO THAT. THE SUCCESS OF JACKSON, ALSO COMBINING WITH THE AUDIENCE HAS TAKEN THE MARKET BY STORM. IF I AM ABLE TO FORM A
FRIENDSHIP AS STRONG AS THE ONE I HAVE WITH JACKSON, WITH A U.S. CELEBRITY, ABSOLUTELY. FROM A BUSINESS PERSPECTIVE, THOSE ARE POSSIBILITIES WE ARE LOOKING TO SEEK IN THE U.S. MARKETS. ED: MARIO, THANK YOU. COMING UP, LENA CON ON HER AVA I PRIORITIES -- LINA KHAN ON HER AI PRIORITIES. GOOGLE ON TRACK FOR ITS BIGGEST WEEKLY DROP SINCE OCTOBER.
EARNINGS ARE A FACTOR BUT YESTERDAY, NEWS FROM OPENAI ON A BETA SEARCH GPT. I WAS OFF BUT I NOTICED THE STOCK WAS UNDER PRESSURE IN THAT MOMENT. OPENAI GIVING US SOMETHING TANGIBLE ON THE AMBITIONS FOR SEARCH. HOW THEY DO? WHO KNOWS?
CLEARLY IT IS IMPACTING ALPHABET'S SHARES. WE WILL BE RIGHT BACK. ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." ED LUDLOW IN SAN FRANCISCO. CAROLINE: CAROLINE HYDE IN LONDON. LET'S CHECK THE MARKETS.
IT HAS BEEN TUMULTUOUS TO SAY THE LEAST. WE ARE UP ON THE NASDAQ, UP 0.6%, EVEN THOUGH WE HAVE BEEN DOWN THREE STRAIGHT WEEKS AND LOST ABOUT $1 TRILLION WORTH OF MARKET CAP AND THE NASDAQ 100. RUSSELL 2000 GAINS, SMALL CAPS OUTSHINING BIG TECH. BITCOIN, LITTLE BIT OF LOVE. WE HAD PREVIOUS PRESIDENT TRUMP SPEAKING AT THE BITCOIN EVENT IN NASHVILLE THIS WEEKEND. WE WILL SEE WHAT HE HAS TO SAY.
RISK ASSETS TO BETTER ACROSS THE BOARD. INDIVIDUAL MOVERS, WE HAVE GOT SOME IN PLAY. WHEN YOU LOOK AT LEADERBOARD, CHARTER COMMUNICATION SPEECH ON EARNINGS COME UP SOME 15%. DOORDASH DOING WELL. WE FINALLY GET PROP 22 BEING SIGNED OFF BY THE SUPREME COURT IN CALIFORNIA. AND ANALYSTS OPERATING ON THE STOCK. DEXCOM, WHAT A WIPE OUT. 41%.
THIS IS A BLOOD SUGAR MONITORING DEVICE MAKER FOR DIABETICS. WE ARE STARTING, POTENTIALLY, TO SEE THE IMPACT OF A -- OF OZEMPIC AND OTHER WEIGHT-LOSS DRUGS. THE CEO WOULD NOT TALK ABOUT COMMON TYPE TWO DIABETES -- WHAT ARE YOU LOOKING AT? ED: GLASSES. THE WORLD'S BIGGEST I MAKER -- I GLASSMAKER SAYS META IS INTERESTED IN GETTING A STAKE. THEY SHOWED THEIR FIRST RAY-BAN MAKER GLASSES IN 2021. ANOTHER META STORY, META FACING ITS FIRST E.U.
FINE OVER ALLEGATIONS IT ABUSED ITS DOMINANCE IN THE AD MARKET BY TYING FACEBOOK MARKETPLACE TO ITS SOCIALS. WALK ME THROUGH THE E.U. PERSPECTIVE ON THIS, THE ANGST THE COMMISSION HAS AGAINST WHAT META DID.
>> HELLO FROM RUSSELL'S.-- B RUSSELLS. WE RESPECT THIS FIND TO BE ISSUED AGAINST META. THE COMMISSION HAS A NUMBER OF CONCERNS WITH HOW THE COMPANY TIED FACEBOOK MARKET PLACE TO THE FACEBOOK SOCIAL MEDIA NETWORK AREA WHAT IS SET TO SAY IS FACEBOOK SHOULDN'T MAKE ACCESS TO MARKET PLACE OBLIGATORY ON USERS HAVING A SOCIAL MEDIA ACCOUNT, AND IT ALSO SHOULDN'T USE THE DATA FROM ITS RIVALS -- AND I AM TALKING ABOUT NONPUBLIC DATA BELONGING TO CLASSIFIED ADS RIVALS, LIKE EBAY, CRAIGSLIST, ETC. -- TO COMPETE AGAINST THEM. WHETHER COMMISSION HAS FOUND IS, OVER THE YEARS, FACEBOOK HAS BEEN A SPACE FOR THOSE TYPES OF COMPANIES TO ADVERTISE AND PROMOTE THEIR SERVICES, BUT WHAT FACEBOOK HAS DONE WITH THAT DATA COULD BE PROBLEMATIC IN TERMS OF AN ABUSE OF DOMINANCE. SO THE FINE IS SET TO COME IN THE COMING MONTHS.
WE DO NOT KNOW EXACTLY HOW MUCH IT WILL BE, BUT BRUSSELS DOES HAVE RELATIVELY HIGH FINDING POWERS, UP TO 12% OF GLOBAL ANNUAL REVENUE, SO IT COULD BE A HEFTY BILL FOR THE FIRM TO PAY OFF. CAROLINE: META SPOKESPERSON SAYING THE CLAIMS BY THE COMMISSION ARE WITHOUT FOUNDATION AT THE MOMENT, AND THE ORGANIZATION CONTINUES TO WORK CONSTRUCTIVELY WITH REGULATORS OVER THE ISSUE CARE WHAT ARE THE CHANCES THEY CAN WORK ATTRACTIVELY HERE, BECAUSE AS A USER OF FACEBOOK MARKETPLACE, YOU CAN UNDERSTAND WHY YOU WANT IT TIED TO THE SOCIAL MEDIA PLATFORM, BECAUSE YOU WANT TO UNDERSTAND ABOUT THE BUYER PUTTING IN THE INTEREST AND IT IS ULTIMATELY HARD TO SELL THINGS THROUGH THESE TYPE OF PLATFORMS. SAM: IT HAS BEEN WORKING WITH REGULATORS SINCE THIS CASE WAS FIRST LAUNCHED IN THE E.U. MID 2021. FACEBOOK DID TRY TO STOP THIS INVESTIGATION BY OFFERING SOME CONCESSIONS. IT MADE AN AGREEMENT WITH THE U.K.'S COMPOSITION AUTHORITY TO
STOP USING THIS NONPUBLIC DATA TO COMPETE AGAINST CLASSIFIED AD RIVALS. THAT WAS ENOUGH FOR THE U.K. REGULATOR, BUT IT WASN'T ENOUGH HERE AT THE EUROPEAN COMMISSION. IT WANTED MORE. META WAS NOT PREPARED TO OFFER MORE. WE ARE IN A SITUATION NOW WHERE IT IS -- WHERE IT IS BASICALLY A STANDOFF. LIKE THEY ARE HEADING TOWARDS THAT FINE AND BEHAVIORAL ORDERS AS WELL, WHICH WE EXPECT TO INCLUDE IN ORDER FOR FACEBOOK TO CREATE A SEPARATE PORTAL THAT USERS WHO DO NOT HAVE A FACEBOOK'S SOCIAL MEDIA ACCOUNT CAN USE TO ACCESS THE FACEBOOK MARKETPLACE. CAROLINE: REALLY APPRECIATE YOU TAKING IT
ALL DOWN, BECAUSE IT IS COMPLEX. SAM STOLTON, HAVE A WONDERFUL EVENING. MEANWHILE, LET'S TALK ABOUT ANOTHER KEY PROBLEM ON META, WHATSAPP. IT HIT 100 MILLION MONTHLY ACTIVE USERS IN THE UNITED STATES, GROWING ITS MONTHLY ACTIVE USERS BY DOUBLE DIGITS. MARK ZUCKERBERG ANNOUNCED THE NEWS ON HIS WHATSAPP PAGE YESTERDAY. MORE U.S.
USERS WOULD IMPROVE META'S EFFORT TO BUILD OUT WHATSAPP. NOW BACK TO GOOD, OLD ANTITRUST. FDC CHAIR LINA KHAN WAS IN SAN FRANCISCO. SHE HAD BEEN MEETING WITH
MEMBERS OF THE BUSINESS AND VC COMMUNITY. SHE DISCUSSED HER THOUGHTS, STARTING WITH HER THOUGHTS AROUND GENERATIVE AI. LEENA: WE SEE OPENNESS AND OPEN SOURCE CAN BE A CRITICAL VECTOR OF INNOVATION. WHAT HAPPENS TRADITIONALLY WHEN YOU RENDER SOME OF THESE -- LINA: WE SEE OPENNESS AND OPEN-SOURCE CAN BE A CRITICAL VECTOR OF INNOVATION. WHAT HAPPENS TRADITIONALLY WHEN YOU RENDER SOME OF THESE CAUSES IT CAN LOWER COSTS AND ENABLE THEM TO INNOVATE MORE FREELY, SO WE WANT TO MAKE SURE THAT TRADITION CONTINUES.
WE ARE WATCHING CLOSELY. THERE IS STILL AN OPEN QUESTION ABOUT WHAT OPENNESS REALLY MEANS IN THE AI CONTEXT. OUR TEAM HAS BEEN FOCUSING ON THIS IDEA OF OPEN WEIGHT MODELS, WHICH WE THINK COULD SIMILARLY ENGENDER A LOT OF COMPETITION AND INNOVATION AND MAKE IT EASIER FOR STARTUPS AND ENTREPRENEURS TO COMPETE ON A LEVEL PLAYING FIELD. . OF COURSE, WE NEED TO REALLY CLOSELY UNDERSTAND WHAT ARE ANY RESTRICTIONS, LICENSING RESTRICTIONS BEING INCLUDED HERE, AND COULD THOSE BE FORECLOSING COMPETITION? MORE GENERALLY, WE NEED TO BE AWARE OF HOW THERE ARE SIGNIFICANT INCUMBENTS THAT MAY HAVE AN OUTSIZED ROLE TO BE PLAYING, BECAUSE THEY HAVE KEY CONTROL OVER THE RAW MATERIAL AND KEY INPUTS, SO WE NEED TO BE AWARE OF THE BROADER POTENTIAL COMPETITION ISSUES OR BOTTLENECKS OR CHOKEPOINTS THAT COULD EMERGE IN WAYS THAT COULD INHIBIT INNOVATION AND INHIBIT COMPETITION. THAT IS WHAT WE WILL BE TALKING ABOUT FOUNDERS AND VC'S AND OTHE RS TODAY. EMILY:
I HAVE TO TALK ABOUT THE PRESIDENTIAL ELECTION. A NUMBER OF PROMINENT TECH FOLKS ENDORSED PRESIDENT TRUMP FOR A VARIETY OF REASONS, BUT I HEARD SPECIFICALLY ALTERABLE TECH INVESTORS COMPLAIN ABOUT HOW THEY CAN'T DO DEALS ON YOUR WATCH. DO YOU HAVE ANY CONCERNS THAT YOUR AGENDA HAS AT ALL ALIENATED THE TECH COMMUNITY? OR COULD IMPACT -- THE IMPACT OF YOUR AGENDA GOING FORWARD? LINA: IT HAS BEEN SUCH AN HONOR TO SERVE IN THE BIDEN-HARRIS ADMINISTRATION. WE ARE JUST FOCUS ON DOING OUR WORK. WHAT I OFTEN TIMES HEAR FROM THE BUSINESS COMMUNITY, INCLUDING SMALL BUSINESSES, ENTREPRENEURS, IS THEY WANT MARKETS TO BE MORE OPEN AND MORE FAIR AND MORE COMPETITIVE, RATHER THAN INCUMBENTS BEING ABLE TO SQUASH OUT NASCENT COMPETITIVE THREATS. OUR FREE ENTERPRISE SYSTEM IS
ONE WHERE THE BEST IDEAS ARE SUPPOSED TO WIN. WE HAVE HISTORICALLY SEEN IT IS THE DISRUPTORS AND ENTREPRENEURS WHO HAVE BEEN A KEY FACTOR OF INNOVATION, SO OUR JOB AT THE FTC, WHEN WE ENFORCE ANTITRUST LAWS, IS MAKE SURE OUR MARKETS STAY OPEN AND FAIR AND COMPETITIVE. THAT IS SOMETHING THAT MOST BUSINESS, MOST ENTREPRENEURS SHOULD REALLY BE ABLE TO GET BEHIND. ED: THAT WAS FDC CHAIR LINA KHAN AND BLOOMBERG'S EMILY CHANG. COMING UP, WE WILL BE JOINED BY HILLEL ZIDEL, MANAGING DIRECTOR AT KENNET PARTNERS, ON THE FIRM'S BRAND-NEW FUNDS FOCUSED ON ALL THINGS SAAS. THIS IS "BLOOMBERG TECHNOLOGY."
WELL AS APPLE, SPOTIFY, AND IHEART. THIS IS BLOOMBERG. TRANSATLANTIC GROWTH EQUITY FIRM KENNET PARTNERS JUST RAISED ITS LARGEST AMOUNT TO DATE, BRINGING ITS ASSETS TO MORE THAN $1.4 BILLION. RINGING IN HILLEL ZIDEL, MANAGING DIRECTOR AT KENNET. WE WANT TO UNDERSTAND ABOUT THE REPUTATION, THE RETURNS YOU HAVE ALREADY GIVEN YOU WHAT SORT OF RETURNS HAVE YOU GOT? HILLEL: HEY, THANKS SO MUCH FOR HAVING ME ON THE SHOW.
IT IS GREAT TO BE HERE. WE ARE INVESTING KENNET VI RIGHT NOW K WE HAVE A LONG TRACK RECORD OF MORE THAN 20 YEARS IN THE SECTOR, FOCUSING ON BUSINESS-TO-BUSINESS SOFTWARE COMPANIES AS WELL -- PARTICULARLY THOSE WHO HAVE BEEN BOOTSTRAPPED AND GETTING TO A GREAT CLOSE ON KENNET VI, IN ORDER TO DO THAT, YOU NEED TO HAVE A STRONG TRACK RECORD. KENNET VI IS A CONTINUATION OF WHAT WE HAVE BEEN DOING. WE ARE REALLY EXCITED. ED: WHAT IS THE BACK STORY FOR WANTING TO FOCUS ON SAAS? HILLEL: A FEW THINGS. FIRST, SCALABILITY. THESE COMPANIES CAN SCALE RAPIDLY.
THEY HAVE HIGH-GROWTH MARGINS. THEY ARE EDUCABLE BUSINESSES. WITH SAAS, WE FOCUS ON BUSINESS-TO-BUSINESS COMPANIES AND REALLY THOSE THAT ARE MISSION-CRITICAL OR ESSENTIAL TO THEIR UNDERLYING CUSTOMERS. WHAT WE REALLY CARE ABOUT IS, IS HIS COMPANY SOLVING A REAL PROBLEM OF THEIR CUSTOMER? ONE OF THE UNIQUE ASPECT OF OUR PARTICULAR STRATEGY IS ON BOOTSTRAPPED SAAS COMPANIES, BUSINESSES THAT HAVE BEEN BUILT ON THE FOUNDERS WITHOUT RELYING ON EXTERNAL CAPITAL. THESE ARE COMPANIES THAT HAD A VERY DIFFERENT FROM THE TRADITIONAL VENTURE CAPITALIST COMPANIES. THE COMPANIES WE ARE INVESTING IN HAVE BEEN BUILT TO SCALE BY THEIR FOUNDERS WITH VERY LIMITED RESOURCES OR THAT IS A STRATEGY WE THINK GIVES COMPELLING RISK ADJUSTMENT RETURNS. CAROLINE: I AM INTERESTED IN TRYING TO
AVOID HYPE CYCLES HERE. I AM LOOKING AT SOME OF THE PREVIOUS INVESTMENTS. CROSS-BORDER SOLUTIONS, AN AI DRIVEN TAX AND PARTNER SOLUTIONS. YOU HAVE A FINANCIAL PLATFORM. I CAN IMAGINE A LOT OF THE FOUNDERS HAVE HAD COME IN SOME WAYS, TRIED TO DESCRIBE THEIR BUSINESSES, ARTIFICIAL INTELLIGENCE AT HEART. HOW DO YOU GET OUT OF THE HYPE-Y VALUATIONS? HILLEL: THAT IS A SUPER RELEVANT QUESTION. WE CAME OUT OF A MOMENTUM CYCLE
OF 2020 TO 2022, WHERE PRICES WERE REALLY HIGH, LOTS OF INVESTORS WERE INVESTING IN TECHNOLOGY. THAT'S CORRECTED. THEN AI COMES ALONG, AND IT IS CREATING ANOTHER LEVEL OF HYPE. OUR VIEW IS WE NEED TO BE INVESTING IN GOOD BUSINESSES, GOOD MANAGEMENT TEAMS, GOOD STRATEGIES AT THE RIGHT PRICING.
WE DON'T HAVE FOMO STYLE INVESTING. WE ARE NOT TRYING TO FIND THE NEXT UNICORN, NOT TRYING TO FIND THE NEXT BIG THING. WE BELIEVE JUST STICKING TO RATIONAL INVESTING IS THE RIGHT WAY TO BE SUCCESSFUL IN THIS CATEGORY. THAT BEING SAID, AI ISRAEL, AI IS, IN OUR VIEW, THE NEXT PLATFORM SHIFT, POST MOBILE, POST INTERNET, BUT WE ARE AT THAT PARTICULAR POINT IN THE MARKET WHERE THE REALITY NEEDS TO CATCH UP A LITTLE BIT WITH THE HYPE OUT THERE. YOU ARE SEEING THAT IN THE MARKET IN GENERAL WITH HUGE INVESTMENT GOING INTO INFRASTRUCTURE, INTO LLM'S, AND THE LIMITED COMMERCIAL VALUE THERE. IT WILL HAPPEN BUT WILL TAKE TIME. CAROLINE: -- ED:
IT'S A EURO DENOMINATED FUND AND YOU ARE IN LONDON. EXPLAIN ALL OF THAT, PLEASE. HILLEL: WE INVEST IN EUROPE, THE U.K., AND THE U.S., AND WE ARE LOOKING FOR THE BEST BUSINESSES THAT WE CAN SUPPORT IN THEIR SCALING. SO WE ARE INVESTING IN BUSINESSES IN THE U.K..
WE RECENTLY INVESTED, AS YOU SHOWED EARLIER, ON SCREENDRAGON. OUR OBJECTIVE WITH THIS, AND MANY OTHER COMPANIES, IS AROUND EXPANSION. WE ARE INVESTING IN A U.K. COMPANY, WE WANT TO BUILD A MANAGEMENT TEAM AROUND THE FOUNDERS, WE WANT TO SUPPORT THESE COMPANIES SPENDING INTERNATIONALLY. I THINK, FOR US, THE KEY POINT IS IS THE BUSINESS WE ARE INVESTING IN SERVING AN INTERNATIONAL MARKET? WE ARE NOT FOCUSED ON COMPANIES ONLY SERVING DOMESTIC MARKETS, IT IS MUCH MORE ABOUT CAN THIS BUSINESS SCALE AND SERVE CUSTOMERS ACROSS ALL PEOPLE GEOGRAPHIES? ED: HILLEL ZIDEL, MANAGING DIRECTOR KENNET PARTNERS, THANK YOU.
COMING UP, WE BREAK DOWN THE EFFECTS OF LAST WEEK'S CROWDSTRIKE OUTAGE WITH JENNIFER TEJEDA, CEO OF PAGERDUTY, AND HOW THE COMPANY PLAYS A VITAL ROLE IN IDENTIFYING AND PREVENTING INCIDENTS LIKE THIS ONE. >> THEY ARE SPENDING OVER $1 BILLION WHEN HERE IN PARIS, SO WE ARE SEEING REALLY GOOD DEMAND THIS SUMMER. Q3 WILL BE STRONG. THIS EVENT, THE OLYMPICS
, IS THE ULTIMATE DEMONSTRATION OF THE POWER OF AIRBNB. CAROLINE: TALKING OLYMPICS JUST HOURS AHEAD FROM THE OPENING SO MANY. PLANES AND TRAINS TO AND FROM THE OLYMPICS HIT AN ARSON ATTACK.
THE IDENTITY OF THE ATTACKERS IS NOT YET KNOWN. MEANWHILE, TRAIN DELAYS ARE NOT THE ONLY CONCERN. THE OLYMPICS CYBER TEAM IS BRACING FOR TAX AT THIS YEAR'S GAMES AFTER FRANCE WAS ALREADY THE TARGET OF FACTS THAT SHUT DOWN A FILM FESTIVAL LAST MONTH. AND IN FURTHER OLYMPICS NEWS, THE CANADIAN WOMEN SOCCER HEAD COACH WAS REMOVED FROM THE TEAM AFTER FLYING A DRONE OVER AN OPPONENT'S TRAINING SESSION. I HAD BEEN PRIOR INCIDENTS LIKE THIS FROM THE HEAD COACH. A LOT OF NEWS. ED: AND BACK TO CROWDSTRIKE.
99% OF CROWDSTRIKE'S SENSORS ARE BACK ONLINE AFTER LAST WEEK'S OUTAGE, BLOOMBERG REPORTED. BUT THERE ARE ROWING CONCERNS INCIDENTS LIKE THIS ARE PART OF A NEW NORMAL, SOMETHING I WROTE ABOUT IN TECH DAILY. PAGERDUTY IS A CLOUD COMPUTING COMPANY THAT PLAYS AN IMPORTANT ROLE AS AN EARLY WARNING SYSTEM FOR INCIDENTS LIKE THIS. PAGERDUTY CEO JENNIFER TEJADA JOINS US NOW FOR MORE. WHAT WAS THAT LIKE FOR YOU, THAT 24 HOUR, 40 PERIOD -- FOUR DAY PERIOD WHEN THE OUTAGE HAPPENED? YOU MUST HAVE BEEN AT YOUR DESK THINKING WE HAVE GOT FROM THING TO DO HERE. JENNIFER: THESE WERE THE MOMENTS WE ARE
DESIGNED AND BUILT AND PREPARED FOR PAID I AM ESPECIALLY PROUD OF OUR TECHNOLOGY AND SOFTWARE AND OPERATIONS TEAM. DESPITE OUR PLATFORM COMING UNDER SIGNIFICANT SURGES IN TRAFFIC INCIDENTS, WE SAW THE PE AK, A NEARLY 200% SPIKE -- OVER 2.6 MILLION EVENTS, SIGNIFICANTLY HIGHER THAN WHAT WE SEE IN ANY TYPICAL HOUR. AND 1425% INCREASE IN INCIDENT WORKFLOWS. JUST SEEING OUR TECHNOLOGY STAND UP IN A VERY RELIABLE AND RESILIENT WAY UNDER THAT KIND OF PRESSURE MAKES ME VERY PROUD OF OUR TEAM. BUT ALSO IT IS A GOOD REMINDER THAT THE EFFORT WE UNDERTAKE TO BUILD OPERATIONAL RESILIENCE, TO PREPARE FOR THESE UNEXPECTED BUT CHALLENGING MOMENTS, YOU HAVE TO ANTICIPATE THEM.
YOU HAVE TO INVEST IN THE INFRASTRUCTURE, THE REDUNDANCY, AND RESILIENCE TO DELIVER WHEN THE TIME COMES. CAROLINE: IS THIS GOING TO HAPPEN MORE? JENNIFER: IT IS HAPPENING MORE. OUR CUSTOMERS SAW A NEARLY 45% INCREASE IN CUSTOMER FACING INCIDENTS YEAR ON YEAR. WE ARE SEEING THE NUMBER OF MAJOR INCIDENTS ON THE PATH INCREASED THESE ARE INCIDENTS THAT HAVE MATERIAL OR REASONABLE BUSINESS IMPACT.
THAT IS BECAUSE MOST OF CONSUMER ENGAGEMENT WITH BRANDS' FINANCIAL TRANSACTIONS TODAY ARE TAKING PLACE ON DIGITAL APPS SUPPORTED BY COMPLEX INFRASTRUCTURE, TECHNOLOGY INFRASTRUCTURE, SOME OF WHICH IS AGING, AND SOME OF WHICH IS INCREASING IN CONVEXITY, BECAUSE WE ARE ABLE TO SHIP NEW PRODUCTS AND SERVICES ALL THE TIME EVERY DAY INTO THIS ECOSYSTEM, AND THAT COMPLEXITY IS GOING TO CONTINUE TO GROW WITH THE ADVENT OF GENERATIVE AI. ED: I WANT TO POINT OUT TO OUR AUDIENCE, WE HAVE MADE EVERY EFFORT TO GET THE CROWDSTRIKE CEO ON THIS PROGRAM, ON A DAILY BASIS, AND HE IS YET TO DO THE -- DO SO. REASON I FLY THAT IS SO MANY CIOS WATCH THE PROGRAM. THEY HAVE MANY QUESTIONS FOR THE CHIEF AMONG THEM IS IS THIS A PREVENTABLE EVENT, OR IS THIS THE STATE OF DOING BUSINESS NOW IN THE WORLD WE LIVE IN? JENNIFER: I THINK THIS IS A GOOD REMINDER THAT ANYBODY WHO WAS RESPONSIBLE FOR TECHNOLOGY IN A BUSINESS AND EVERY BUSINESS NOW IS A TECHNOLOGY BUSINESS -- IS RESPONSIBLE FOR MAKING SURE THEY HAVE GOOD PRACTICES IN PLACE AND GOOD CONTROLS IN PLACE AROUND TECHNOLOGY CHANGE AND AROUND THE ABILITY TO RESPOND OR ROLLBACK WHEN A CHANGE DOES WORK INEFFECTIVELY. THE REALITY IS HUMAN ERROR, TECHNOLOGY THREAT, FRAGILITY, AND TECH DEBT IN OUR AGING TECHNOLOGY IF A, CYBER SECURITY THREAT, ETC. -- ALL OF THESE THINGS CREATE A MORE DYNAMIC AND VOLATILE VARMINT FOR THE TECHNOLOGY ECOSYSTEMS WE HAVE GROWN TO RELY ON, AND THAT MEANS WE HAVE TO MAKE THE INVESTMENTS IN OUR STRUCTURE IN MODERNIZING NOT ONLY OUR TECHNOLOGY BUT THE WAY WE OPERATE, SO WHEN THESE THINGS DO HAPPEN -- AND THEY WILL -- THAT WE CAN HANDLE THEM MORE EFFECTIVELY. ANOTHER REASONS PAGERDUTY IS
ARCHITECTED THE WAY IT IS IS THESE EVENTS, IN PARTICULAR, ARE UNSTRUCTURED, UNPREDICTABLE, YET THEY ARE HIGH-IMPACT AND HIGH-VALUE. SO GETTING BACK TO RECOVERY OF THESE SYSTEMS IS REALLY IMPORTANT, BUT ALSO, THIS IS A TREMENDOUS OPPORTUNITY FOR EVERYBODY IN INDUSTRY, NOT JUST FOLKS AFFECTED BY THE OUTAGE LAST WEEK THAT FOLKS THAT WEREN 'T TO DOUBLE DOWN ON INVESTING IN IN FISHER, ON APPROVING THEIR RESILIENCE, ON PRACTICING -- THINGS LIKE CHAOS ENGINEERING, TABLETOP EXERCISES, ALSO COMMUNICATING TO CUSTOMERS THE IMPORTANCE OF REDUNDANCY, HAVING MULTIPLE SYSTEMS, FAILOVER PRACTICES, DOCUMENTATION. EVEN HOW WE ONBOARD PEOPLE. THAT IS ONE THING I WANTED TO UNDERSCORE. ONE OF THE THINGS WE HAVE NOT
BEEN TALKING ABOUT IS THE PEOPLE WHO HAVE BEEN WORKING 24/7 TO GET SYSTEMS BACK ONLINE. WE TALK A LOT ABOUT AUTOMATION AND GENERATIVE AI RIGHT NOW, BUT THE HUMAN NEEDS TO BE IN THE LOOP. CAROLINE: WELL SAID. THE PEOPLE BEHIND THIS TECHNOLOGY. JENNIFER TEJADA, THANK YOU SO MUCH, CEO OF PAGERDUTY. HAVE A WONDERFUL WEEKEND CARE
2024-07-27 21:15
