Alibaba's Trajectory and Apple's Card Debacle | Bloomberg Technology
>> BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I'M CAROLINE HYDE. ED: I AM ED LUDLOW. THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: AFTER STAYING OUT OF PUBLIC VIEW FOR YEARS ALIBABA FAMILY --FOUNDER JACK MA SPEAKS OUT TO EMPLOYEES URGING THEM TO CORRECT THE COMPANY'S COURSE. WE HAVE MORE ON THE E-COMMERCE GIANT'S PLANS. ED:
AND WE HEAR FROM THE AMAZON WEB SERVICE CEO ON THE BACK OF THE REINVENT CONFERENCE DISCUSSING AI, AND VIDEO, AND MORE. CAROLINE: GOLDMAN SACHS OFFERS APPLE AN EXIT RAMP FOR ITS TROUBLED CAR PARTNERSHIP. FIRST, A MUTED DAY IN OVER ALL BENCHMARKS FROM A TECHNOLOGY PERSPECTIVE GAINS UP AT 1%. MORE ACTION UNDER THE BOND MARKET AND ABROAD. IN CHINA THAT NASDAQ GOLDEN
DRAGON MANAGED TO BE UNDERWATER ON THE DAY. IT WILL BE DELVING INTO THE MICRO NEWS AND SENTIMENT SHIFTS. WE ARE OFF BY 1.25%. THE MOVEMENT IS CLEAR IN THE BOND MARKET SEEING WHAT THE BIGGEST PRICE INCREASE YIELD FALLS SINCE 2020. EVERYBODY WANTS BACK INTO U.S. TREASURIES ANTICIPATING THE FEDERAL RESERVE MAY BE CUTTING AS SOON AS MAY AS NEXT YEAR. OFF BY SEVEN BASIS POINTS ON THE FRONT END OF THE CURVE. IN CRYPTO THE DOLLAR HAS BEEN
MAYBE A LITTLE BIT OF A STRENGTH TODAY AFTER WEAKENING. CURRENTLY OFF BY .6% ON BITCOIN AT THE MOMENT. TRADING AT AN ELEVATED $37,000 LEVEL. AN -- ED: A LOT OF NEWS OUT OF THE CHINESE TECHNOLOGY SECTOR.
A SURPRISE NEWS FOR JACK MA WHO HAS NOT BEEN OPERATIONALLY INVOLVED AT ALIBABA SINCE 20 20 PUTTING OUT AN INTERNAL MEMO SAYING THEY NEED TO CORRECT THE COURSE. U.S. LISTED SHARES DOWN 2.6%. WHAT WAS INTERESTING WAS HIM CRAIG -- PRAISING HIS RIVAL. IT'S NOT STRAIGHTFORWARD, BUT A SURPRISE MOVE MOVING MARKETS AT LEAST ON U.S. LISTED SHARES. ANOTHER BIG STORY IS APPLE.
BLOOMBERG IS REPORTING THEY ISSUED A TERM SHEET TO GOLDMAN SACHS SAYING WE HAVE WAY TO UNWIND THE RELATIONSHIP ON THE CREDIT CARD ON'S -- AND SAVINGS ACCOUNT. IT'S NOT STRAIGHTFORWARD. WE WILL GET THE SILICON VALLEY TECH FROM MARK GURMAN AND THE WALL STREET TAKE FROM SONALI BASAK DATA. AMAZON DOWN POINT 4%.
I JUST FLAGGED THAT BECAUSE WE WILL HEAR FROM THE AWS CEO ON A CHATBOT. IT IS CALLED Q. TELL YOU WHY LATER. IT HAS NOT MOVED THE NEEDLE ON SHARES DESPITE ANNOUNCEMENTS YESTERDAY AFTERNOON. CAROLINE: SO MANY ANNOUNCEMENTS COMING FAST WHETHER WORKING WITH NVIDIA OR CHIPS INTERNALLY. BEFORE THAT, LET'S GO TO THE MACRO PICTURE. LOOKING THROUGH THE BOND MARKET AT THE IMPACT ON THE TECH SECTOR MORE BROADLY, WITH US WE HAVE THE SENIOR PORTFOLIO MANAGER OF INVESCO. THE AMOUNT OF RUN-UP WE HAVE SEEN IN TECH STOCKS HAS BEEN PHENOMENAL FOR NOVEMBER.
WE KNOW HOW MUCH IT HAS LED BENCHMARKS. WILL THIS CONTINUE FROM THEIR PERSPECTIVE? >> AND FOR HAVING ME. --THANK YOU FOR HAVING ME. WE THINK FOR GLOBAL YIELD BACKDROP YOU HIGHLIGHTED IS LIKELY TO STIMULATE A CYCLICAL REBOUND INTO YEAR END AND NEXT YEAR. TECH HAS BEEN DRIVEN PRIMARILY BY A THEMATIC FOCUS OF AN ARTIFICIAL INTELLIGENCE NARRATIVE AND ALSO SUPPORTED BY DECLINING GLOBAL BOND YIELDS OF LATE. WE THINK WHAT IS HAPPENING IS THE DECLINE IN BOND YIELDS WILL LEAD A CYCLICAL REBOUND BECAUSE IT IS PRIMARILY DRIVEN BY A FALL IN INFLATION EXPECTATIONS AND ACTUAL INFLATION THAT WILL IN OUR MIND CREATE A MORE SUPPORTIVE NERDY FOR A SOFT LANDING AND ALLOW MARKET PARTICIPANTS TO BELIEVE AGAIN IN A CYCLICAL REBOUND IN A CYCLICAL SECTOR. WE THINK TECH HAS OUTPERFORMED BECAUSE OF QUALITY CHARACTERISTICS. ITS DEFENSIVE CHARACTERISTICS.
ENTIRE DURATION CHARACTERISTICS. NOW WE EXPECT A ROTATION MORE TO THE SECTORS THAT HAVE BEEN NEGLECTED AND UNLOVED LIKE SMALL-CAP AND VALUE ORIENTED SECTORS. CAROLINE: THE FTSE COMING OUT WITH AN ANNUAL REPORT TALKING ABOUT HOW BANK PROFITS ARE DIPPING. THEY SAY ULTIMATELY LOANS ARE THE NEXT PAIN POINT AT THE MOMENT.
MOST NOTABLY, THEY SAY THE BANKING INDUSTRY WITH THE QUARTERLY FOCUS HAS UNREALIZED LOSSES INCREASING THIRD-QUARTER. IT IS NOW THE TIME TO GET INTO BANKS? ALESSIO: YOU ARE ALLUDING TO A VERY IMPORTANT POINT. WE HAVE DEALT FOR OVER A YEAR OF YIELD CURVE INVERSION THAT WE KNOW CREATES A PARTICULARLY CHALLENGING ENVIRONMENT FOR FINANCIALS. THE YIELD CURVE IS BEGINNING TO READ -- RE E-STEEPEN AND IF WE SEE RATE CUTS NEXT YEAR THAT WOULD IMPROVE BANK PROFITS.
WE DO PLACE FINANCIALS AND BANKS AS PART OF A CYCLICAL SECTOR LIKELY TO BENEFIT TOGETHER WITH OTHER THAT FAR --OTHERS IF OUR THESIS OF CYCLICAL REBOUND ENTRY STEEPENING OF THE YIELD CURVE PLAYS OUT. ED: FROM A CAPITAL ALLOCATION STANDPOINT YOU ARE MORE HEAVILY WEIGHTED TOWARDS EQUITIES. TECHNOLOGY IS BIG. WE TALKED ABOUT TECH NOT -- CHINA. WE ARE INCREASINGLY TALKING ABOUT EUROPE. HOW DO YOU FEEL ABOUT TECH IN THE U.S. VISA VR BAND PARTS OF ASIA? ALESSIO: WELL, TEXT, THE CLEAREST EXPRESSION FROM A GLOBAL STANDPOINT OF THE TECH SEAM OR THE PARTY THEME THAT COMES WITH IT, LARGE PROFIT MARGINS OR RETURN ON ASSETS, THAT IS A U.S.
THEME. OUTSIDE OF THE UNITED STATES, THERE IS MORE SMALLER CAPITALIZATION COMPANIES LIKELY TO BENEFIT MORE FROM THE CYCLICAL REBOUND. IT IS REALLY THAT THERE IS A BIT OF POLARIZATION HAPPENING IN THE STRUCTURAL CAPITAL MARKETS, AS YOU ALLUDED TO, WERE BEING OVERWEIGHT COMMITTEE U.S. RELATIVE TO THE REST OF THE WORLD, BASICALLY MEANS BEING OVERWEIGHT TECH RELATIVE TO VALUE, RELATIVE TO CYCLICALS. THOSE ARE TWO MANIFESTATIONS OF THE SAME RISK AND RETURN PROFILE. ED:
SOMETIMES, LOOKING A LITTLE DEEPER TELLS A SLIGHTLY DIFFERENT STORY, RIGHT? THINK ABOUT THE S&P 500 COMMUNICATIONS ARE INFORMATION-TECHNOLOGY BOTH UP 50% YEAR TO DATE. A LOT OF THAT IS ATTRIBUTABLE TO THE MAGNIFICENT SEVEN. THINK ABOUT MICROSOFT AND APPLE ACHIEVING RECORD HIGHS MULTIPLE TIMES THIS YEAR. HOW YOU FEEL ABOUT THAT? WHAT DOES IT TELL YOU ABOUT THE DYNAMIC OF THE MARKET? ALESSIO: IT IS REMINISCENT OF MANY SITUATIONS WE HAVE SEEN BEFORE WHERE THE TECH SECTOR IN PARTICULAR IS VERY PRONE TO BOOST AND BUST CYCLES BY THE VERY NATURE OF WHERE IT'S RETURN EXPECTATIONS ARE COMING FROM.
THESE ARE GROWTH STOCKS WHERE THEY TEND TO OVERREACT TO EXTRAPOLATION OF GROWTH EXPECTATIONS. WE HAVE SEEN A MEANINGFUL RUN-UP IN THE LAST SIX MONTHS. AND COMMITTED A COMPETITION OF MARKET RETURNS YOU JUST ALLUDED TO CLEARLY DOES NOT REFLECT THE PERFORMANCE IN THE U.S.
ECONOMY, RIGHT? THE S&P 500 DRIVEN FRED MINELLI BY THE DISPROPORTIONATE TECH RUN-UP RELATIVE TO OTHER SECTORS. IT'S NOT REPRESENTATIVE OF U.S. ECONOMIC PERFORMANCE. IT IS REPRESENTATIVE OF THE TECH SECTOR GREATER DYNAMICS FOR THE MARKET GOING FORWARD, WE BELIEVE THERE NEEDS TO BE REBALANCING FROM THE MAGNIFICENT SEVEN. A REBALANCING WHERE THERE IS MORE PARTICIPATION. WIDER LEADERSHIP RATHER THAN NARROW LEADERSHIP ACROSS SECTORS AND INDUSTRIES. THAT SHOULD BE MORE REFLECTIVE OF THE OUTPERFORMANCE WE SEE FOR THE GLOBAL ECONOMY AND THE RECOVERY WE SEE FOR THE U.S.
ECONOMY. THE POSITIVE NEWS IS DESPITE THE S&P 500 BEING UP 20 PERCENT YEAR TO DATE, WE BELIEVE THAT IS NOT REFLECTIVE OF A CYCLICAL REBOUND IN THE CARDS. THAT STILL HAS PLENTY OF ROOM TO BE PRICED IN THROUGH A ROTATION WITHIN SMALLER CAPITALIZATIONS, MORE CYCLICAL SECTORS, AND VALUE ORIENTED COMPANIES IN THE EQUITY MARKET.
CAROLINE: TALKING ABOUT THE REORIENTATION. OUR COLLEAGUE JOHN AUTHERS WAS WRITING ABOUT HOW IF YOU STILL BELIEVE IN A RUN-UP IN OVERALL TECHNOLOGY BUT NOT THE MAGNIFICENT SEVEN THE WAY TO PLAY THAT IS EQUAL WEIGHTED BENCHMARKS RATHER THAN GOING FOR THE ONES THAT TAKE INTO ACCOUNT THE ACTUAL OVERALL MARKET CAPITALIZATION OF THESE BEHEMOTHS. IS THAT SOMETHING YOU ARE SEEING PLAYED A LITTLE MORE? ARE THERE WAYS TO REMAIN EXPOSED TO TECHNOLOGY BUT TACTICALLY BE MORE LONG AREAS BEATEN UP OF LATE? ALESSIO: THAT IS VERY WELL SAID. YOU HIT THE NAIL ON THE HEAD.
IF YOU LOOK AT EQUALLY WEIGHTED STRATEGIES WITHIN TECHNOLOGY RELATIVE TO THE MARKET, WHAT THEY WILL DELIVER IS A SMALLER CAPITALIZATION BIAS AND MORE VALUE ORIENTATION. WHEN YOU LOOK AT THE BREAKDOWN OF LARGE-CAP GROWTH VERSUS MID-CAP GROWTH AND SMALL-CAP GROWTH, YOU CAN CLEARLY SEE THE SMALLER CAPITALIZATION EFFECT. I THINK FOR A PORTFOLIO MANAGER, FOR A PORTFOLIO STRATEGY THAT WANTS TO RETAIN A DEDICATED TECHNOLOGY EXPOSURE, REBALANCING WITHIN THAT STRATEGY TOWARDS SMALLER CAPITALIZATION AND CHEAPER VALUATIONS IS THE WAY TO MAINTAIN THAT EXPOSURE AND PARTICIPATE TO THAT BROADENING OF THE CYCLICAL REBOUND. ED: THANK YOU. COMING UP ON BLOOMBERG TECHNOLOGY, AS WE HINTED AT, JACK MA SPEAKS TO ALIBABA EMPLOYEES TO RALLY THEM TO " CORRECT COURSE" FOR THE COMPANY.
CAROLINE: TALKING OUTSIDE TECHNOLOGY, IT'S IMPORTANT TO THINK ABOUT AND IN. --MANDATE. TWO INSURANCE PER HUMUS MIGHT BE COMBINING, HUMANA AND CIGNA ARE IN TALKS TO COMBINE IN A STOCK AND CASH DEAL. CIGNA CURRENTLY FALLS OFF BY MORE THAN 5%. CIGNA WORTH MORE THAN 80 THREE BILLION DOLLARS.
HUMANA IS WORTH ABOUT 60 $2 BILLION. FROM NEW YORK THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: ALIBABA FOUNDER JACK MA SPEAKING OUT TO EMPLOYEES AT THE COMPANY IN AN INTERNAL MESSAGE URGING ALIBABA TO "CORRECT ITS COURSE START".
I WANT TO BRING IN BLOOMBERG HENRY GRAHAM AND ISABEL LEE. ISABEL, IS THIS A RALLYING CRY? IS THIS A NEGATIVE IMPACT? WHAT DOES IT DO TO MORALE WHEN HE IS BRINGING A COMPETITOR SAYING THERE IS OPPORTUNITY IN AI? IS THAT TO HELP WITH MORE HOUR ORBIT TRUCK -- DETRACT FROM IT? ISABEL: IN 2020 JACK MA LARGELY STEPPED AWAY FROM PUBLIC EYE WHEN HE CRITICIZED THE CHINESE REGULATORS. MANY ARTICLES WERE LIKE, WHERE IS JACK MA? THE FACT SHE COMMENTED WAS ENCOURAGING BUT ANALYSTS SAY IT MIGHT HAVE DONE THE OPPOSITE BECAUSE WHY ARE YOU COMMENTING? THE SECOND IS WHERE. HE DID IT IN A FORUM AND PRAISED PDD, IS RIVAL, A FORMIDABLE COMPETITOR OF RECENT YEARS SAYING ALIBABA NEEDS TO COURSE CORRECT.
THAT IS THE SECOND AND THIRD IS TIMING. IT COMES SHORTLY AFTER PDD REPORTED BLOCKBUSTER RESULTS. I AM NOT SURE IF IT ACTUALLY MOTIVATED FOLKS, BUT IT'S REALLY INTERESTING THE FACT HE COMMENTED. ED:
IT'S A SURPRISE IN AND OF ITSELF THAT SOMEBODY HAS NOT BEEN OPERATIONALLY INVOLVED SINCE 2020 COMMENTED AT ALL AND THEN CALLS OUT ONE OF THE BIGGEST RIVALS SAYING THE FOLLOWING ABOUT THEM. "HERE IS THE STORY AS I SEE IT. SHOW THE PERFORMANCE ON THE ADRS AT LEAST OF THE OWNER OF TEEMU VERSUS ALIBABA. THE CHART SPEAKS FOR ITSELF. EXPLAIN TO THE AUDIENCE, HENRY, THAT BATTLEGROUND BETWEEN ALIBABA AND TEMU OWNED BY PDD ON THE E-COMMERCE SIDE. HENRY:
ON ONE HAND, ALIBABA IS STRUGGLING TO GAIN GROUND IN THE DOMESTIC MARKET WITH ITS STRATEGY CHANGE. IT RECENTLY CANCELED A PLAN TO SPIN OFF ITS DISCOUNT UNIT AND AT THE SAME TIME IS GOING THROUGH A MANAGEMENT RESHUFFLE. ON THE OTHER SIDE YOU HAVE THE CHALLENGE OF AND ITS OWNER PDD. IN THE DOMESTIC MARKET PDD IS GAINING SHARE RAPIDLY BY COST-CUTTING AND PRICE CUTTING. ON THE OVERSEAS PLAYGROUND PDD
IS WINNING SHARES WITH ITS TEMU SUPER UP PLANNING -- APP AND PLANNING TO ROLL OUT AND ADD DURING THE SUPER BOWL SHOW. THAT SHOWS PDD IS REALLY GAINING GROUND. FROM THE TWO SPECTRUMS COME ON ONE HAND ALIBABA IS WHINING AND PDD IS GAINING GROUND RAPIDLY. CAROLINE: I LIKE YOU DIG INTO THE RESTRUCTURING AND THE ON-AGAIN OFF-AGAIN VERSIONS OF IT. BLOOMBERG INTELLIGENCE BUT OUT OF A SAYING ACTUALLY THE QUALIFIED --CALL OUT BY JACK MA SEEMS TO REAFFIRM RESTRUCTURING WILL STILL BE UPON US. WHAT DOES THAT END UP LOOKING LIKE? HENRY: REMEMBER JACK MA SEATED CONTROL AS CEO OF ALIBABA IN 2014.
HE BARELY ENTERED A PUBLIC APPEARANCE IN THE LAST TWO YEARS DUE TO THE TECH CRACKDOWN AND NOW HE IS REENTERING THE PUBLIC SPHERE. NOW HE IS COMMENTING IN THE COMPANY'S INTERNAL MESSAGING BOARD. THERE IS A LOT OF ANALYSIS ABOUT THIS.
IT HAS BEEN SOMETIME IN THE COMPANY'S HISTORY THAT THEY HAVE BEEN RUN BY SOME EXECUTIVES DOUBT --THAT DO NOT HAVE A CLOSE LINK WITH JACK MA HIMSELF. NOW JACK MA REENTERING THE PUBLIC SPHERE MIGHT MEAN HE HAS MORE CONTROL OF THE COMPANY STRATEGY. MORE COMPANY MANAGEMENT AS WELL. IT IS SOMETHING THAT WE WILL
WAIT AND SEE. ED: THERE WAS A TIME WHEN ALIBABA WOULD BE CHINA'S TRILLION DOLLAR MARKET CAP COMPANY. IT WAS GOING TO BE CHINA'S EQUIVALENT OF THE SILICON VALLEY DARLINGS, APPLE, ETC.. A LOT HAS HAPPENED THIS YEAR. THERE HAVE BEEN LEADERSHIP SHUFFLES.
IT IS WORTH REMINDING EVERYONE WHO REALLY RUNS ALIBABA AS IT STANDS. ISABELLE: RIGHT. IT'S BEEN A TOUGH YEAR FOR ALIBABA. THEIR MARKET CAP IS AROUND 100 $90 BILLION AND PDD HAS LEAPFROGGED TO AROUND $170 BILLION.
TENCENT IS STILL EATING. ALIBABA WAS GROWING FAST AND NOW IT HAS SLOWED. I DON'T WANT TO PUT WORDS IN JACK MA'S MOUTH. IT SHOWS HE IS CONCERNED ABOUT THE DIRECTION FOR WHERE ALIBABA IS GOING.
IT IS ONE, TOO SLOW, AND IT'S ANOTHER THING FOR ALL YOUR RIVALS TO SURPASS YOU. THAT'S KEY NOW. JACK MA THIS MONTH HIT THE BRAKES ON HIS PLAN TO REDUCE THE STAKE ON ALIBABA BECAUSE THE STOCK PRICE WAS NOT AT A LEVEL HE IS HAPPY WITH. FOR NOW ALIBABA IS A FRACTION OF WHAT IT WAS IN 20 20, TRADING AT THE LOWEST LEVEL OF THIS YEAR. ED:
IT IS A NEGATIVE YEAR TO DATE WHILE PDD IS UP TRIPLE DIGITS. GREAT TEAM COVERAGE ON AN IMPORTANT CHINA STORY. MEANWHILE, STICKING WITH CHINA, CHINA'S FIVE WAY CAPITAL AN EARLY BACKER OF XIAOMI IS ON TRACK TO RAISE $700 MILLION FOR A CLOSELY WATCHED VENTURE FUND, ASSIGN INVESTORS ARE RACING CONFIDENCE IN THE WORLD'S BIGGEST INTERNET ARENA. THE U.S. DOLLAR FUND HAS A HEART CAP OF 8 MILLION DOLLARS AT IS SET TO CLOSE EARLY NEXT YEAR ACCORDING TO BLOOMBERG SOURCES. CAROLINE:
LET'S MOVE THE ATTENTION TOWARDS THE WORLD OF CRYPTO. BINANCE APPOINTED A NEW CEO AFTER ITS FOUR .3 BILLION DOLLARS SETTLEMENT WITH THE U.S. DEPARTMENT OF JUSTICE THAT FORCED THE U.S. CO-FOUNDER TO STEP DOWN.
RICHARD TANG EARLIER DISCUSSED HIS VISION FOR THE COMPANY CEO. RICHARD: THE RESOLUTION WITH THE U.S. AGENCY IS VERY IMPORTANT. THERE ARE HISTORICAL ISSUES, NONCOMPLIANCE, REGISTRATION, AND SANCTIONS. WITH THE RIGHT SOLUTION WE MOVE ONTO A NEW CHAPTER MOVING PAST A VERY CHALLENGING TIME IN CORPORATE HISTORY. GOING FORWARD WE CONTINUE TO FOCUS ON THINGS LIKE USER GROUPS. ON THAT FRONT, I NEED TO STRESS
THE ASSETS ARE BACK TO ONE-TO-ONE. WE WILL CONTINUE TO FOCUS ON USER NEED. AT THE SAME TIME, WE DID MAKE SOME MISTAKES ALONG THE WAY. WE ACKNOWLEDGE IT IS IMPORTANT FOR US AS A FINANCIAL INSTITUTION TO DO SO. WE LEARN FROM THOSE AND CONTINUE TO BUILD ON THAT JOURNEY.
I THINK YOU WILL ASK, WHAT ABOUT OUR QUARTERS? WE MAKE THOSE DISCLOSURES. THAT IS PART OF THE RESOLUTION. THERE ARE CERTAIN THINGS WE WILL PUT IN PLACE. INCLUDING THE BOARD OF DIRECTORS. THIS ANNOUNCEMENT WILL BE COMING SOON. SO, WATCH THAT SPACE. CAROLINE: GIVE US A SENSE OF WHAT PEOPLE WANT. IF THEY WANT MORE NORMAL STRUCTURE WITH A HEADQUARTERS
THAT IS PROBLEMATIC IN THE PAST BECAUSE THERE WAS NO ONE SINGLE PLACE, HOW FAST DO YOU THINK THAT WILL BE DONE? I WILL ASK ABOUT THE BOARD OF DIRECTORS. WHAT KIND OF FRAMEWORK WILL BINANCE HAVE? >> IN THE PAST WHEN INDUSTRIES WEREN'T NASCENT, YOU LOOK TODAY THE DIRECTION OF TRAVEL IS VERY CLEAR. MANY MORE REGULATIONS FOR THE CRYPTO INDUSTRY. BUT, THE DIRECTION OF TRAVEL IS VERY CLEAR. ALONG WITH THAT, ALONG WITH THE MATURING OF BOTH INDUSTRIES AS WELL AS THE CORPORATE OURSELVES, ALL THESE THINGS WILL BE PUT IN PLACE, AGAIN, AS I MENTIONED. THE BOARD OF DIRECTORS WILL BE INSTITUTED.
THERE IS A VERY ROBUST TIMELINE. SAME FOR THINGS LIKE THE QUESTION YOU ASKED. CAROLINE: TODAY'S BIG TAKE LOOKS AT AN ISSUE ARISING ALONG WITH AI GENERATED CONTENT COMING CLOSER AND CLOSER TO REAL IMAGES. EXCLUSIVE REPORTING FROM
BLOOMBERG BUSINESSWEEK FOCUSES ON A GROUP OF DEEPFAKE PORNOGRAPHY VICTIMS AND HOW THEY BANDED TOGETHER FIGHTING BACK DESPITE THE ABSENCE OF FEDERAL LAWS TO PROTECT THEM. OLIVIA CARVILLE JOINS US NOW, ONE OF THE KEY REPORTERS ON THIS. THIS ALL GOES BACK TO NEW YEAR'S EVE 2020 WHEN A TEXT CAME THROUGH TO WHAT ARE IS WOMEN IN LONG ISLAND. THEY HAVE MANAGED TO NOW FEEL THEY WERE PAST VICTIMS AND FOUGHT BACK NOW WINNING OUT HERE. OLIVIA: RIGHT. THIS IS A STORY OF FEMALE EMPOWERMENT IN A NEW ERA OF GENERATIVE AI WE ALL LIVE IN. THE TECHNOLOGY IS BOTH
TERRIFYING AND EXCITING. I THINK THAT WE WANTED, WITH THIS STORY, TO HIGHLIGHT SOME OF THE POTENTIAL HARMS. THAT IS WHAT LED US TO LONG ISLAND. ED: IN ALL GOOD BIG TAKES THERE IS A CASE STUDY OR CASE STUDIES AND A NARRATIVE AROUND THE BROADER STORY. IT HIGHLIGHTS A LACK OF LEGAL PROTECTION. A DEFICIT IN THE LAW. EXPLAIN THAT TO US. OLIVIA: ACROSS THE COUNTRY THERE IS A
PATCHWORK OF LAWS FOCUSING ON DEEPFAKES AT THE MOMENT. THIS STORY IS SYMBOLIC OF THE FACT THERE ARE NO VERY STRONG LAWS TO TARGET DEEPFAKE CONTENT. RIGHT NOW IN THE U.S. THERE IS NO FEDERAL LAW AGAINST CREATING FAKE PORNOGRAPHIC CONTENT ONLINE. WITH THE RISE OF GENERATIVE AI, THAT PUTS US IN A VERY SCARY PLACE.
FOR THIS STORY WE ANALYZED SOME STATUTE THAT HAVE BEEN PUT IN PLACE ACROSS THE COUNTRY TO FIND THIS PATCHWORK OF CIVIL CASES, SOME OF THE STATUTES ARE CRIMINAL AND SOME ONLY TARGET ELECTION-RELATED CONTENT AND SOME ARE JUST AMENDMENTS TO REVENGE BORN LAWS. IT MEANS THERE IS VERY LITTLE RECOURSE FOR VICTIMS OF DEEPFAKE PORNOGRAPHY TODAY. CAROLINE: IT IS AN EXTREMELY GRAPHIC INTERNET ADDRESS, WHERE THEY FOUND THE CONTENT THAT WAS FAKE, BUT SEEMINGLY OF THEMSELVES. YOUNGER GIRLS IN SCHOOL. I AM INTERESTED, YOU ALSO GO TO
NEW ZEALAND FOR THIS STORY. A LEGAL ENTANGLEMENT IS HAPPENING OVER THERE. IS THIS AN ISSUE IN THE U.S. ALONE OR A GLOBAL ISSUE OF REGULATION TRYING TO KEEP UP WITH GENERATIVE AI PUSHING OUT INCREASINGLY REALISTIC PHOTOS THAT ARE NOT PHOTOS? OLIVIA: THIS IS A GLOBAL ISSUE. WE HAVE SEEN CASES ACROSS THE COUNTRY.
STUDYING THIS PARTICULAR WEBSITE WE SAW EXAMPLES OF DEEPFAKE PHOTOGRAPHY OF WOMEN FROM COUNTRIES ALL OVER THE WORLD. IT IS NOT JUST A U.S. PROBLEM, BUT THIS CASE IS THE FIRST EXAMPLE OF A DEEPFAKE RELATED CONVICTION WHERE WE COULD HIGHLIGHT IN THE STORY HELP PROSECUTORS AND THE POLICE REALLY TRIED TO FILE CHARGES AGAINST THE YOUNG MAN THAT WAS BEHIND THE CONTENT, BUT ULTIMATELY, FAILED TO DO SO BECAUSE THERE ARE NO LAWS TO PROTECT VICTIMS OF DEEPFAKE PHOTOGRAPHY HERE. SO I FEEL AS THOUGH THIS STORY, THIS NARRATIVE, YOU ARE RIGHT, IT CROSSES FROM RIVERTOWN ALL THE WAY TO NEW ZEALAND. IT IS SYMBOLIC OF A BROADER PROBLEM. ED: BLOOMBERG OLIVIA CARVILLE WITH THE BIG TAKE. ANOTHER BIG STORY COMING UP. APPLE REPORTEDLY TAKING STEPS
ED: WELCOME TO BLOOMBERG TECHNOLOGY. ED LUDLOW IN SAN FRANCISCO. CAROLINE: CAROLINE HYDE IN NEW YORK. THE MACRO PICTURE DRIVES BENCHMARKS IN THE BOND MARKET. GDP LOOKS STRONG. WE HAVE INFLATIONARY PRESSURE FROM THE PCE, THE WELL-LIKED NUMBER THE FEDERAL RESERVE ANALYZES, COOLING DOWN IN PRICE APPRECIATION AND NOTABLY THE FACT THE FEDERAL RESERVE IS STILL SEEING A LOT OF SPEAKERS OUT THERE TALKING ABOUT HOW INFLATION LOOKS UNDER CONTROL AT THE MOMENT WITH THE POLICY WHERE IT STANDS. BIG MOVES IN THE BOND MARKET AGAIN. WE SEE THE YIELD: DOWN ON THE TWO-YEAR, THE 10
YEAR. BITCOIN ON THE DOWNSIDE VERSUS A U.S. DOLLAR SLIGHTLY REBOUNDING ON THE DAY. MAYBE THAT IF THE DRIVER. DOWN BY .6%. INDIVIDUAL NAMES IN THE MICRO.
IN THE WORLD OF THE GOLDEN DRAGON CHINA INDEX, THE NASDAQ GOLDEN DRAGON, THE CHINESE NAMES TRADED IN THE U.S.. ADR UNDER PRESSURE AFTER MAY 12 NUMBERS SHOWED A LACK OF RESILIENCY AND WE ARE STILL WORRIED ABOUT THE CHINESE CONSUMER AND ALIBABA. JACK MA COMING BACK TO SPEAK OUT SAYING YOU NEED TO TAKE ON PDD, DOING INCREDIBLY WELL IN NUMBERS. HPE CAME OUT WITH NUMBERS YESTERDAY AFTER THE BELL. A REBOUND UP SOME 7%. WHY?
NOT IT'S SO -- SERVER BUSINESS. IT'S RESILIENCY IN ARTIFICIAL INTELLIGENCE MANAGES TO BOY THIS STOP -- BUOY THIS STOCK. AMAZON OFF BY ABOUT .4%, BUT THEY DID WELL EARLIER ON THE DAY. WE START REINVENT, THE ANNUAL GATHERING OF ITS CUSTOMERS MANAGE TO PAINT A PICTURE OF POSITIONING IN A COMPETITIVE NATURE AMAZON IS COMING OUT WITH ITS CHIPS IT IS MAKING, MANAGING TO MAKE GENERATIVE AI PART OF THE CORPORATE LEXICON TOO. ED: I THINK COMPETITIVE IS WHAT THEY WOULD SAY.
AMAZON WEB SERVICES KICKED OFF A GIANT CONFERENCE IN LAS VEGAS TODAY. THE NEW ANNOUNCEMENT WAS UPDATED VERSIONS OF IN HOUSE SILICA AND PARTNERSHIPS WITH NVIDIA. I CAUGHT UP WITH THE AWS CEO ADAM SOLESKY. ADAM: OUR STRATEGY IS CONSISTENT. TO PROVIDE A CHOICE POWERFUL OPTIONS ET AL. LAYERS OF THE INFRASTRUCTURE LAYER OF WHAT YOU NEED TO DO GENERATIVE AI REALLY WELL, YOU MENTIONED WE BOTH HAVE BEEN INVESTING IN OUR OWN SILICOM AND WE HAVE HAD -- SILICON AND WE HAVE HAD A LONG-STANDING WONDERFUL RELATIONSHIP WITH NVIDIA.
WE HAVE BEEN THE FIRST TO BRING PRETTY MUCH EVERY SIGNIFICANT NVIDIA CHIP TO THE CLOUD INCLUDING THE LATEST H 100 THIS PAST SUMMER AND I WAS EXCITED TO HAVE THEIR CEO ONSTAGE WITH ME THIS MORNING TALKING ABOUT AN EXPANSION OF THE PARTNERSHIP WITH AWS, BRINGING THEIR GW X CLOUD TO AWS. NVIDIA ITSELF WILL STAND UP A HUGE SUPERCOMPUTER OF A CLOUD FOR THEIR OWN INTERNAL R&D ON AWS. THAT'S A FANTASTIC EXPANSION OF A GREAT RELATIONSHIP THAT BENEFITS MUTUAL CUSTOMERS. ED: ARE THERE STILL SUPPLY CONSTRAINTS AROUND NVIDIA GP USE? ADAM: THEY ARE VERY POPULAR. IT REMAINS TRUE THERE ARE PROBABLY MORE PEOPLE THAT WANT THEIR HANDS ON THEM THAT ACTUALLY CAN.
THAT IS ONE OF THE REASONS WHY WE ALSO ANNOUNCED THIS CONCEPT OF CLUSTERS. FOR CHIPS. YOU CAN ACTUALLY NOW GO RESERVE UP TO HUNDREDS OF GP USE FOR YOUR SHORT-TERM GENERATIVE AI NEEDS FOR THINGS LIKE TRAINING MODELS THAT TENDED TO BE EPISODIC. NOBODY ELSE OUT THERE IS OFFERING ANYTHING LIKE THAT SERVICE. ED: HAVE YOU HAD TO SHIFT ANY CUSTOMERS TO TRAIN HIM BECAUSE OF THE LIMITED SUPPLY OF NVIDIA GP USE? ADAM: IT'S NOT ABOUT SHIFTING.
DIFFERENT CUSTOMERS NEED DIFFERENT THINGS. THE SAME CUSTOMER NEEDS DIFFERENT THINGS FOR DIFFERENT USE CASES. AWS FOR OVER 17 YEARS HAS BEEN DOING THIS. IT HAS BEEN ALL ABOUT CHOICE,
ALL ABOUT DEMOCRATIZATION, PUTTING TOOLS IN THE HANDS OF CUSTOMERS SO THEY CAN MAKE CHOICES ABOUT WHAT THEY NEED. WE ARE EXCITED WE ANNOUNCED THE SECOND GENERATION OF OUR TRAINING SPECIFIC CHIP FOR TRAINING GENERATIVE AI WORKLOADS, TRAINIUM TWO. IT WILL HAVE FOUR TIMES THE COMPUTE THAN THE ORIGINAL GENERATION. WE HAVEN'T BEEN INVESTING IN OUR OWN SILICOM FOR YEARS. WE ARE SHIPPING OUR FOURTH GENERATION OF GENERAL PURPOSE CHIP GRAVITON FOUR. WE ARE NOT TALKING ABOUT IT OR SHOWING SLIDES ON IT. IT IS NOT FUTURE LOOKING LIKE A
LOT OF OTHER CLOUD PROVIDERS, YET, IT'S SHIPPING TODAY. OUR FOURTH GENERATION. THES POWER IS INCREDIBLE. THE PRICE-PERFORMANCE WILL BE INCREDIBLY ATTRACTIVE. OUR CHIPS HAVE INCREDIBLE ENERGY EFFICIENCY BENEFITS, REALLY IMPORTANT TO CUSTOMERS THESE DAYS. ED: A BIT OF SHADE THROWN THERE, CAROL.
WE FINALLY GOT A CHATBOT FROM AMAZON. IT IS CALLED Q. ANY IDEA WHY? CAROLINE: IS IT TO DO WITH THE BRITISH SECRET SERVICE? ED: IT'S NOT. Q STANDS FOR QUESTION. CAROLINE: BORING. NOT STAR TREK, NOT BOND. A WELL. CHATBOTS TAKING OVER THE WORLD. LET'S TALK ABOUT WHETHER OR NOT APPLE'S FOCUS ON FINTECH HAS BEEN TAKING OVER THE WORLD ARE NOT. IT IS TAKING STEPS TOWARDS WINDING DOWN ITS CREDIT CARD DEAL WITH GOLDMAN SACHS.
APPLE RECENTLY SENT A TERM SHEET TO, PERHAPS, A DIFFERENT INSTITUTION. WHICH HAS BEEN TRYING TO ULTIMATELY SEE A PULLBACK FROM A CREDIT CARD BUSINESS FOR GOLDMAN SACHS AT THE SAME TIME. LET'S GET MORE CONTACTS FROM BLOOMBERG NEWS WALL STREET REPORTER SONALI BASAK AND CORRESPONDENT MARK GURMAN. MARK, WE WILL START WITH YOU ON THE APPLE GOLDMAN SACHS RELATIONSHIP. IT HAS NOT BEEN AS POSITIVE AS THEY BOTH WOULD HAVE LIKED IT FEELS LIKE. MARKET: THE APPLE GOLDMAN SACHS RELATIONSHIP HAS BEEN A FROM THE BEGINNING. THE APPLE CARD DEVELOPMENT,
EVERYTHING DONE ON THE APPLE SIDE AND THE GOLDMAN SIDE, IT WAS A ROCKY DEVELOPMENT PROCESS, TWO COMPANIES GETTING INTO A NEW GAME TOGETHER FOR THE FIRST TIME. A LOT OF BACKEND CHANGES HAD TO BE CREATED AT APPLE AND GOLDMAN SACHS. YOU HAD TWO COMPANIES RUN BY PEOPLE WITH BIG PERSONALITIES, ENGINEERS WITH DIFFERENT BACKGROUNDS COMING TOGETHER TO BUILD SOMETHING. THAT IS WHAT THE PARTNERSHIP IS. WHEN YOU HAVE TWO INTENSE COMPANIES, TWO INTENSE OPINIONATED GROUPS OF PEOPLE THAT BELIEVE THEY ARE DOING IT BEST, SOMETIMES THAT CAN COME TO A HEAD. YOU HAVE SEEN PRETTY GOOD CONSUMER RECEPTION TO THE APPLE CARD AND OTHER FINTECH PRODUCTS FROM APPLE OVER THE PAST FEW YEARS. YOU HAVE ALSO SEEN SOME
STRUGGLES. GOLDMAN IN PARTICULAR, THIS HAS BEEN A MULTIBILLION-DOLLAR LOSS AND A PROPOSITION FOR GOLDMAN SACHS. SO, THERE SKIN IN THE GAME HAS BEEN LITTLE MORE THAN A BRANDING EPISODE -- EXERCISE.
GOLDMAN HAS BEEN PULLING BACK FROM CONSUMER BUSINESSES. THEY PULLED BACK ON OTHER CREDIT CARDS AND SUCH. APPLE NEEDS TO SORT OF SAVE FACE HERE. IF THEY NEED TO HAVE A STRONG PARTNER IN THE CREDIT CARD GAME. AND BEING WITH A COMPANY THAT HAS BEEN PUBLICLY ONE FOOT OUT THE DOOR, MAYBE ONE POINT FIVE FEET, TWO FEET OUT THE DOOR, THAT REALLY DOES NOT SERVE OUT WELL LONG-TERM. IF THEY SEND A PROPOSAL TO GOLDMAN SACHS TO GET OUT OF THE PARTNERSHIP. THIS IS BEING ABLE TO GET OUT
IN ABOUT TWO, THREE YEARS FROM NOW VERSUS -- VERSUS WHEN THE DEAL IS SUPPOSED TO END IN 2029. I DON'T KNOW IF THIS MEANS GOLDMAN HAS TO MAKE A PUBLIC ANNOUNCEMENT ABOUT EXITING, PAY A CERTAIN AMOUNT, IF I PAUSE TO REDUCE PAYMENTS TO GOLDMAN. BUT THEY SENT A PROPOSAL TO GOLDMAN TO LET GOLDMAN WALK ABOUT FIVE YEARS EARLY FROM THE PARTNERSHIP WHILE APPLE CAN GO LOOK FOR SOMEONE ELSE TO REPLACE THEM. ED: WE CAN GET INTO APPLE'S POSITION LONG-TERM.
IT LOOKS LIKE THE APPLE SIDE OF THE CARD AIN'T GOING ANYWHERE. THERE HAS BEEN ADMISSION FROM GOLDMAN THEY MOVED TOO QUICKLY TOO EARLY. THEY MADE MISTAKES WITH THE PRODUCT. SOME OF THE DATA AROUND THE DEPOSITS WERE REALLY GOOD. WHERE ARE THEY COMING UP THIS FROM FROM THE GOLDMAN SACHS SIDE? SONALI: LOOKING ACROSS PRODUCT LINES IS IMPORTANT HERE. ON ONE HAND, OLDMAN LIKES TO PULL IN DEPOSITS.
THE MARKET DEPOSIT RATES ARE STILL QUITE HIGH. FOR A BANK THAT EXTRA CONSUMER DEPOSIT BASE HELPS LOWER THE COST OF FUNDING. BUT THE CREDIT CARD BUSINESS WHERE THEY HAVE STRUCK DEALS WITH GM, MAJOR CLIENTS COME APPLE. YOU HAVE THEM STARTING TO STEP
BACK FROM THE BUSINESS. IT IS THE LAST MAJOR PIECE OF THE CONSUMER STRATEGY THEY WILL TRY TO EXIT FROM AREA -- FROM. THEY HAVE LOOKED TO SO GREEN SKY ALREADY, UNITED CAPITAL. THAT BROUGHT THEM DEEPER INTO THE WEALTH BUSINESS.
THEY SCRAPPED THE IDEA OF LARGER SETS OF ACCOUNTS FOR DIFFERENT CUSTOMERS AS WELL. THIS LEAVES THEM WITH ALL THESE CARD DEALS. THIS FOR GOLDMAN COULD HAVE BEEN A PROBLEM THAT LASTED YEARS. THE APPLE CARD AT A PARTICULAR, ONE MAJOR PROBLEM WAS THE SERVICING OF THE CLIENTS AS WELL AS LOSS RATES.
THE IDEA WAS APPLE WANTED MORE CLIENTS TO GET CREDIT THROUGH THESE CARDS. THEY PUSHED FOR THAT TO HAPPEN. NOW YOU HAD GOLDMAN STUCK WITH THE LOSS RATES BRINGING DOWN THE PATH LIDDY --PROFITABILITY OF THE BUSINESS OVERALL. SOME OF THE PEOPLE THAT COULD POTENTIALLY TAKE ON THE CARD BUSINESS ALONGSIDE APPLE COULD INCLUDE AMERICAN EXPRESS, SYNCHRONY. SOME ISSUES OUTLINED FOR YOU AT GOLDMAN WOULD STILL HOLD TRUE FOR THEM AS WELL. ED: MARK GURMAN AND SONALI BASAK. APPLE'S COMMENT ON THE STORY SEEMS COMMITTED TO A CARD IN THE FIRST INSTANCE LONG-TERM.
CAROLINE: FROM FINTECH TO WHERE YOU WOULD SPEND YOUR MONEY. PROBABLY NOT AT THE MOVIES TO SEE WISH BECAUSE DISNEY'S NEW ANIMATED MUSICAL IS A BOX OFFICE AND DARDEN DELIVERING 50 PERCENT OF TICKET SALES OVER THANKSGIVING WEEKEND. NOW DISNEY STUDIO EXECS HAVE TO ASSESS WHAT WENT WRONG. IT HAS BEEN A YEAR SINCE WE HAVE SEEN STRONG FEMALE LEADS WHEN HE BOUGHT BIG --WHEN BIG IN THE BOX OFFICE. IT MAY BE CLASSIC PHOTO PRINCESS STORIES ARE NOT AS APPEALING AS THEY WERE ONCE. OR, MAYBE IT IS A BIT SCARY. FOR NOW, A FLOP. WE WILL TAKE THE PULSE OF THAT
EUROPEAN VC AND TECH INDUSTRY WITH OXX CO-FOUNDER MIKAEL JOHNSON. ED: CIGNA AND HUMANA IN TALKS TO MERGE. CIGNA IS AN $80 BILLION COMPANY AND HUMANA IS A $60 BILLION COMPANY. BLOOMBERG HAS NOT YET CONFIRMED THAT REPORT.
STOCKS MOVING CIGNA DOWN 4.5. HUMANA DOWN ONE POINT 1%. THIS IS BLOOMBERG TECHNOLOGY. ED: STABILITY AI HAS EXPLORED SELLING THE COMPANY WITH MANAGEMENT FACING INCREASED PRESSURE FROM INVESTORS OVER ITS FINANCIAL POSITION ACCORDING TO BLOOMBERG SOURCES. A DEAL IS NOT EMINENT. THE COMPANY COULD OF COURSE CUT THE PROCESS SHORT WITHOUT SELLING. BLOOMBERG'S RACIAL MATS BROKE THIS.
WE HAVE BEEN CHASING WHAT IS GOING ON IN SIDE STABILITY FOR A WHILE NOW. IT LOOKS LIKE THERE'S A FOR-SALE SIGN IN THE DIGITAL WINDOW. WHAT HAVE YOU LEARNED? RACHEL: ONE OF THE COMPANY'S KEY INVESTORS SENT A LETTER TO THE COMPANY IN OCTOBER PRESSURING THEM ON TO STEP DOWN. ASKING QUESTIONS ABOUT THE COMPANY'S FINANCIAL STATUS, HOW MUCH IS CERTAIN PEOPLE ARE BEING PAID, THINGS LIKE THAT. THIS IS ALSO PUTTING PRESSURE ON THE COMPANY TO SEE IF IT CAN FIND A BUYER FOR ITSELF. AT THIS POINT IT DOES NOT HAVE A TON OF CASH. IT HAS BEEN REACHING OUT TO A
FEW COMPANIES. IT REACHED OUT TO COHERE, JASPER. THOSE ARE TWO COMPANIES WE KNOW FOR SURE IT HAS BEEN REACHING OUT TO. THOSE COMPANIES AS FAR AS WE KNOW ARE NOT INTERESTED.
CAROLINE: MEANWHILE SPOKESPEOPLE AT THE COMPANY STABILITY FIGHT BACK SAYING IT'S NOT FOR SALE AND INVESTORS BELIEVE IN LEADERSHIP. DO YOU BUY THAT? RACHEL: I THINK THESE THINGS ARE ALWAYS COMPLICATED. IT COULD BE BOTH WAYS AT ONCE. THEY HAVE PLENTY OF INVESTORS. IT'S CLEAR SOME KEY INVESTORS ARE NOT HAPPY WITH THE DIRECTION THE COMPANY HAS BEEN GOING IN FORECLOSURE. CAROLINE:
RACHEL METZ, THANK YOU FOR KEEPING US UP-TO-DATE WITH WHAT IS PERHAPS THE THOUGHT OF AS A I HEIGHT. ONE FIRM IS GOING ANTI-HEIGHT. OXX ANNOUNCED THE CLOSE OF THE SECOND FUND WITH 100 $90 MILLION TO GROW EUROPEAN SOFTWARE STARTUPS. OXX COFOUNDER AND GENERAL PARTNER MIKAEL JOHNSON IS JOINING US NOW.
CAN THE STORE BE AI LEVERAGED, GENERATIVE AI APPLIED IF YOU ARE SAYING YOU ARE ANTI-HYPE AT THIS MOMENT? MIKAEL: VERY MUCH SO. WE ARE SPECIFICALLY LOOKING TO MAKE AI INVESTMENTS WITH A SECULAR BENT, PER SE. BUT WE THINK AI IS PROVIDING A FOUNDATIONAL WAVE OF INNOVATION THAT WILL UNDERPIN ALL OF SOFTWARE THE NEXT 10-20 YEARS. VERY MUCH SO, YES. ED: I HAVE BEEN EXCITED TO HAVE YOU ON THE SHOW.
IT IS TIME TO DEFINE SOFTWARE AS A SERVICE. FOR MOST PEOPLE IT MEANS A PIECE OF SOFTWARE OR APP YOU CAN USE OVER THE INTERNET. IN MANY CASES THAT AIN'T COMPENSATED. IS THAT YOUR DEFINITION OF WHAT YOU ARE LOOKING FOR IN A PORTFOLIO COMPANY? MIKAEL: THERE ARE A COUPLE THINGS TO THINK ABOUT. THE UNDERLYING INFRASTRUCTURE, THEN, THE BUSINESS MODEL.
THE INFRASTRUCTURE USUALLY ASSOCIATED WITH SAS IS CLOUD INFRASTRUCTURE WITH ELASTIC SCALABILITY AND MULTITENANT HOSTING. SAS IS A BUSINESS MODEL THAT CAN WORK WITH A LOT OF DIFFERENT SITUATIONS AS WELL. IT COULD BE A PIECE OF SOFTWARE THAT SITS IN A DATA CENTER, A SHARED SERVICE OR A TRUE MULTITALENTED CLOUD SERVICE. WHAT IS ALSO IMPORTANT FOR SAS IS WHAT USED TO BE SAS WAS A TRADITIONAL SUBSCRIPTION, MONTHLY, WITH --WITH A MONTHLY OR ANNUAL FEE. WE ARE SEEING MORE SOPHISTICATED PRICING MODELS EITHER CAPACITY-BASED OR VALUE-BASED. IT IS EVOLVING CONTINUOUSLY. AT THE CORE, IT IS ABOUT BUYING SOFTWARE ON A SUBSCRIPTION BASIS, RATHER THAN BUYING A PERPETUAL LICENSE. CAROLINE:
YOU BROUGHT BACK KEY LPS, BRITISH PATIENT CAPITAL, SAM INVEST, AND SOME NEW. WHAT IS IT THEY LIKE ABOUT EUROPEAN VC INVESTING AT THE MOMENT? MIKAEL: WE ARE HAPPY TO RAISE THE FUND FOR AVENGER AS AN ASSET CLASS AND VENTURE BACKED GROWTH COMPANIES IN GENERAL. OUR MODEL IS FOCUSED ON LONG-TERM CREATION AVOIDING HYPE CYCLES AND THAT RESONATED REALLY WELL WITH BOTH RETURNING AND NEW INVESTORS SPECIFICALLY AS IT RELATES WITH --TO EUROPE AND INVESTING IN SOFTWARE IN EUROPE. THERE IS A SORT OF COMING OF AGE WHERE A LOT OF PEOPLE ARE RECOGNIZING THAT THE FACTORS WHICH HAVE HISTORICALLY FAVORED PERHAPS MUCH MORE U.S. COMPANIES ARE NOT AS IMPORTANT TODAY WHEN IT COMES TO THE AVAILABILITY OF TALENT, WHEN IT COMES TO THE AVAILABILITY OF ACTUALLY DEALING WITH DISTRIBUTION, AND, IN TERMS OF THINKING ABOUT SCALING COMMERCIALLY, EVEN IF YOU START OUT IN EUROPE WITH AN AMBITION TO HAVE A GLOBALLY LEADING COMPANY.
ED: OXX COFOUNDER AND GENERAL PARTNER MIKAEL JOHNSON THANK YOU FOR JOINING US. NEXT MORE ON THE OUTLOOK FOR TECH INVESTING WITH NICCOLO DE MASI. THE NVIDIA CEO SPEAKING AT THE NEW YORK TIMES DEAL BOOK CONFERENCE SAYING IT WILL BE A REALLY LONG TIME UNTIL THE U.S. CAN STAND ON ITS OWN TWO FEET IN THE SUPPLY CHAIN FOR TO SAYING ANYWHERE FROM A DECADE TO TWO DECADES FOR SUPPLY CHAIN INDEPENDENCE. >> THE GREAT THING ABOUT THIS TECHNOLOGY, WHICH IS HARD TO BELIEVE, COMING ONTO THE YEAR ANNIVERSARY, IT SEEMS LIKE IT HAS BEEN HERE MUCH LONGER. THE PACE HAS BEEN INCREDIBLE.
IT IS THE FACT YOU CAN ACTUALLY PUT IT IN THE HANDS OF BUSINESSPEOPLE. THAT ABOVE ALL ELSE HAS UNLOCKED THE ABILITY FOR PEOPLE TO REALLY IMAGINE HOW THIS CAN BE USED IN BUSINESSES. CAROLINE: EARLIER I WAS ON STAGE WITH THE JP MORGAN CHIEF DATA ANALYTICS OFFICER. WE WANT TO DISCUSS MORE ABOUT HOW AI IS BRINGING IN MONEY, BOOSTING REVENUE, BEING COMMERCIALLY VIABLE NOT JUST IN FINANCE BUT ACROSS THE BOARD. NICCOLO DE MASI IS A CHAIRMAN
OF THE FUTURUM GROUP. YOU HAVE SAT ON A NUMBER OF BOARDS AND WERE ONCE NAMED A SPAC. I AM INTERESTED WITH AN EYE ON CUE THE QUANTUM COMPUTING COMPANY, HOW ARE YOU SEEING THE COMMERCIAL LIST ASIA OPPORTUNITIES OF GENERATIVE AI IN THE COMPANIES YOU HELP OVERSEE? NICCOLO: LOOK, IT IS COMING FASTER AND IT IS CLOSER THAN EVERYONE THOUGHT.
WHEN YOU'RE TALKING ABOUT QUANTUM MACHINE LEARNING AND QUANTUM COMPUTING INTERSECTING WITH ARTIFICIAL INTELLIGENCE AND MACHINE VISION. YOU ARE SEEING THIS ACROSS FRANKLY EVERY SECTOR FROM DRUG DISCOVERY LAY TO MAKING NEXT-GENERATION BATTERIES TO THE GAMING INDUSTRY. EVEN BUSINESSLIKE THE FUTURUM GROUP TAKING ADVANTAGE OF AI ACROSS THEIR OWN MARKET RESEARCH AND ADVISORY.
I THINK QUANTUM ADVANTAGE WILL HAPPEN SOONER THAN PEOPLE THINK AND IT WILL SURPRISE A LOT OF PEOPLE. I THINK YOU WILL SEE QUANTUM SUPREMACY ALSO COME EARLIER THAN PEOPLE THINK IN A NUMBER OF APPLICATION AREAS IN THE NEXT FEW YEARS. I HAVE BEEN EXCITED TO WATCH THE BREADTH OF MY PORTFOLIO HAVE AN EARLY LEAD IN RESPECTIVE SEGMENTS. I AM PROUD THAT WE INVESTED EARLY ON EVERY BOARD I AM ON, EVERY COMPANY I AM INVOLVED WITH. THEY ARE LEADERS IN THEIR RESPECTIVE AREAS INCREASINGLY PARTNERING WITH CLOUD LAYERS, , AMAZON --MICROSOFT, AMAZON, GOOGLE. AMAZON, MICROSOFT, GOOGLE.
THE STRONGEST INCOME RATES IN AI ARE ENTRENCHING THEIR LEADS NOW. ED: LOTS OF EMPHASIS ON TOPLINE REVENUE, PEOPLE MAKING MONEY. THE LESSON HAS BEEN THE COMPUTE COSTS ARE ASTRONOMICAL.
HOW WORRIED ARE YOU ABOUT LONG-TERM ANYBODY MAKING ANY PROFIT FROM ALL THE R&D AND THE TRAINING AND INFERENCE THEY ARE NOW DOING? NICCOLO: QUANTUM COMMUTING -- COMPUTING IS A SOLUTION TO THAT, ENERGY USAGE OR CLOCK TICK. QUANTUM COMPUTERS ARE TIMING. -- TINY. THEY DON'T USE A LOT OF POWER COMPARED TO SOMETHING A NATIONAL LAV IS RUNNING.
I AM BULLISH THAT BY 2030 QUANTUM AI THROUGH THE CLOUD WILL CHANGE PEOPLE'S PERSPECTIVE ON THAT QUESTION YOU JUST ASKED. BUT AT THE MOMENT YOU'RE CORRECT. THERE IS A RACE ON THAT NO INDUSTRY AND COMPANY CAN'T AFFORD TO LOSE. IF YOU ARE A FINANCIAL SERVICES FIRM YOUR PROP TRADING ARE MOST MAKE ANY MONEY IF YOU DON'T HAVE THE LATEST QUANTUM COMPUTER AND LATEST AI HELPING YOUR TEAM. SAME WITH DRUG DISCOVERY. SAME WITH DEFENSE AND AEROSPACE. SAME IN CRYPTOGRAPHY. I THINK PEOPLE NOW HAVE NO
CHOICE. THAT MEANS THAT THE VENDOR SUPPLIER RELATIONSHIPS, THE KINDS OF COMPANIES THE FUTURUM GROUP IS ADVISING OUR FRONT AND CENTER NOW HAVING TO THINK THROUGH WHERE TO PUT THEIR DOLLARS TO MAKE SURE THEY MAX IT OUT QUARTER IN QUARTER OUT. CAROLINE: THANK YOU FOR YOUR TIME NICCOLO DE MASI CHAIRMAN OF THE FUTURUM GROUP. ALL THINGS STILL FOCUSED ON AI. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY.
2023-12-03 12:25
