Micron's Earnings and Reddit's IPO | Bloomberg Technology
>> THIS IS "BLOOMBERG TECHNOLOGY," WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I'M CAROLINE HYDE AT BLOOMBERG'S HEADQUARTERS IN NEW YORK. ED: AND I'M ED LUDLOW IN SAN FRANCISCO. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: WE HAVE AN EXCLUSIVE INTERVIEW WITH THE CEO OF MICRON AFTER THE COMPANY BOOSTED ITS OUTLOOK ON AI GROWTH. ED: WE PUSH AHEAD TO REDDIT'S IPO AND SIT DOWN WITH REDDIT COO JEN WONG. CAROLINE:
WE GO LIVE TO THE DEPARTMENT OF JUSTICE AS THEY ANNOUNCE AN ANTITRUST LAWSUIT AGAINST APPLE. LET'S CHECK IN ON THE SHARES. THEY HAVE BEEN UNDER PRESSURE ON THE NEWS THAT AFTER A FIVE-YEAR INVESTIGATION THE U.S. JUSTICE DEPARTMENT AND 16 ATTORNEYS GENERAL HAVE SUED APPLE, ACCUSING THE IPHONE MAKER OF VIOLATING ANTITRUST LAWS BY BLOCKING RIVALS FROM ACCESSING FEATURES ON ITS DEVICES. ALLEGEDLY APPLE HAS OF -- HAS REFUSED TO SUPPORT CROSS MESSAGING APPS, AND NON-APPLE SMART WATCHES. WE ARE CURRENTLY OFF BY ALMOST 2%. WE HAVE SO MUCH MORE TO BE DEBATING. THIS IS A RUSH OF NEWS ACROSS
THE DAY, AND WE HAVE NOT ONLY GOT RECORD HIGHS ACROSS BENCHMARKS, HAVE ALSO GOT IPO'S. ED: WE ARE ALSO THINKING A LOT ABOUT MICRON. SHARES AT A RECORD HIGH, BIGGEST JUMP SINCE 2011. THE OUTLOOK FOR THE FISCAL THIRD QUARTER, A RECOVERY IN THE RAM PRICES, BUT ALSO A JUMP IN HBM 3E. THAT IS THE MEMORY THAT
SUPPORTS TRAINING AI. THAT IS THE CONVERSATION WE WILL HAVE. WELCOME TO OUR AUDIENCES WORLDWIDE. LET'S DIVE INTO MICRON'S
EARNINGS WITH SANJAY MEHROTRA. THAT IS HOW I FRAME IT. LET'S GET TO THE OUTLOOK FOR THE FISCAL THIRD. WAS THIS ALL ABOUT THE RECOVERY IN THE RAM -- DRAM, OR HBM3E FROM NVIDIA? SANJAY: THANK YOU FOR HAVING ME ON THE SHOW HERE. OUR RECOVERY IS REALLY DRIVEN BY A DEMAND RELATED TO AI, WITH TIGHT SUPPLY, AND DEMAND THAT IS STRONG ACROSS MOST OF OUR END MARKETS. PARTICULARLY DATA CENTER-DRIVEN MAN. MICRON HAS A STRONG PORTFOLIO
OF PRODUCTS. REALLY WE HAVE JUST BEGUN SHIPMENTS AND WE HAVE SEEN STRONG GROWTH IN THE QUARTERS THAT ARE AHEAD OF US. SUPPLY IS TIGHT. LEADING-EDGE NODES ARE PARTICULARLY IN TIGHT SUPPLY. AS WE LOOK AHEAD AT 2024 OUR
YEAR OF EVERY, WE SEE PLEASING PRICES DRIVEN BY THE DEMAND/SUPPLY FUNDAMENTALS. LOOK AT 2025 TO BE A RECORD YEAR FOR MICRON'S REVENUE, WITH SIGNIFICANTLY IMPROVED PROFITABILITY AS WELL. ECAROLINE: 2025 SUPPLY ALSO MOSTLY ALLOCATED. IT'S TAKEN THEM ON THE HIGH-BANDWIDTH MEMORY. JEN-HSUN HUANG AT NVIDIA, CALLING THIS A TECHNOLOGY MIRACLE.
WILL PRICES REMAIN ELEVATED CHECK -- ELEVATED? SANJAY: WE ARE SOLD OUT FOR CALENDAR YEAR 2024, AND THE VAST MAJORITY OF THE SUPPLY FOR 2025 IS ALLOCATED AS WELL. THIS IS A CRITICAL PRODUCT. HBM3E IS IN EARLY STAGES, AND IS A KEY IN A BUBBLE -- ENABLER OF WHAT AI PLATFORMS ARE ABLE TO DO. JUST THINK ABOUT IT.
THE LATEST BLACKWELL PLATFORM THAT HAS BEEN ANNOUNCED, IT HAS 64 DIE OF MEMORY. A TREMENDOUS AMOUNT OF SILICOM. HBM IS GROWING FAST, EXPECTED TO BE ABOUT 15%. MID TO HIGH TEENS OF THE INDUSTRY. COMPARED TO BEING JUST HALF OF THAT LAST YEAR.
AS YOU LOOK AHEAD TO THE NEW PLATFORMS BEING ANNOUNCED, NVIDIA EARLIER THIS WEEK, BROADCOM YESTERDAY, THEY ARE ALL PLACING TREMENDOUS EMPHASIS ON THE PERFORMANCE AND POWER OF HBM MEMORY. AS AI BECOMES BIGGER, DATA LIVES IN THE PRODUCTS THAT MICRON MAKES FOR AI APPLICATIONS LIVES IN THE PRODUCTS SUCH AS HBM3E, BUT HIGH AGENCY DIMM MODULES, AS WELL AS OTHER PRODUCTS MICRON MAKES. AI IS REALLY DRIVING TREMENDOUS GROWTH TRAJECTORY. HBM3E IS GOING TO BE CRITICAL. THIS IS IN VERY EARLY INNINGS. EVEN IF THERE ARE ANY PERTURBATIONS IN SUPPLY THEY WILL GET ABSORBED OVER TIME. WHAT IS IMPORTANT TO UNDERSTAND IS, BECAUSE HBM3E PRODUCT IS SILICON-INTENSIVE, ACROSS THE INDUSTRY IT IS REALLY LEAVING NOT ENOUGH SUPPLY FOR NON-HBM PRODUCTS. THAT IS WHAT IS DRIVING
TREMENDOUS STRENGTH IN TERMS OF DEMAND/SUPPLY FUNDAMENTALS AND PRICING TRAJECTORY FOR MEMORY. ED: THE QUESTION IS, HOW DO YOU KEEP UP, RIGHT? HBM3E RUNNING AT 5.2 GIGABITS A SECOND, YOU HAVE ALREADY MENTIONED BLACKWELL, YOU ARE GOING TO HAVE TO BRING THAT NEXT-GENERATION HBM FASTER. TALK US THROUGH THE RAMP OF YOUR PRODUCTS, GETTING THEM INTO THE REAL WORLD AND WHEN THEY SHOW UP IN YOUR FINANCIALS IN THE NEAR AND MEDIUM TERM.
SANJAY: WE TALKED ABOUT YESTERDAY IN THAT EARNINGS CALL THAT WE HAVE BEGUN SHIPMENTS OF HBM3E PRODUCT. IT IS AN INDUSTRY-LEADING PRODUCT. IT HAS THE BEST PERFORMANCE AND THE LOWEST POWER IN THE INDUSTRY. FOR DATA CENTER APPLICATIONS POWER IS CRITICAL. 30% BETTER POWER FOR OUR HBM3E PRODUCT.
WE HAVE REALLY LONG LEGS IN THIS HBM3E PRODUCT FOR THE FORESEEABLE FUTURE HERE. HBM3E HAS BECOME -- BEGUN SHIPMENTS. WE MENTIONED IN THE CALL THAT IT WILL BE ACCRETIVE TO OUR GROWTH MARGINS, AND WE HAVE SEVERAL HUNDRED MILLION DOLLARS OF REVENUE OF THIS PRODUCT IN OUR FISCAL YEAR, WHICH WILL END IN AUGUST TIMEFRAME. OF COURSE, WE LOOK AT SIGNIFICANT GROWTH AHEAD FOR HBM THREE AS WELL. WE ARE EXTREMELY FOCUSED ON CONTINUING TO RAMP THIS PRODUCT. OUR PRODUCT IS TO GET OUR SHARE IN HBM3E EQUAL TO OUR INDUSTRY SHARE. AND WE ARE GOING TO REMAIN
EXTREMELY DISCIPLINED. WE WILL BE MANAGING THE SUPPLY FUNDAMENTALS FOR THE INDUSTRY. WE LOOK AT STRONG GROWTH AHEAD. KEEP IN MIND THAT HBM IS EXPECTED TO HAVE A -- IT IS THAN 50% OVER THE NEXT FEW YEARS IN TERMS OF BID GROWTH THAT HBM WILL BE DRIVING. OF COURSE IT WILL ALL BE IN GENAI APPLICATIONS. I JUST WANT TO ADD THAT DATA
CENTER IS A BIG DRIVER OF GROWTH. WE ARE SHIFTING OUR BUSINESS MORE TOWARD DATA CENTER, GIVEN THE DEMAND AND PROFITABILITY PROFILE OF THAT PART OF THE MARKET. WE'RE DOING THAT WITH OUR SSDS. I WANT TO POINT OUT THAT OTHER MARKETS, SUCH AS SMARTPHONES AND PCS, ARE IMPLEMENTING AI-ENABLED DEVICES. YOU WILL SEE THEM START COMING OUT FROM LATER THIS YEAR, AND OF COURSE 2025 WILL BE THE FIRST FULL YEAR OF ALL OF THESE DEVICES ON THE EDGE, SUCH AS AI-ENABLED SMARTPHONES AND PCS. THEY TAKE MUCH HIGHER MEMORY CONTENT THAN PRIOR-GENERATION DEVICES. AI ENABLES FOR US, ENABLES MEMORY, WHICH IS THE HEART OF AI REVOLUTION IN TERMS OF FROM DATA CENTER ALL THE WAY TO THE EDGE. CAROLINE: GOING BACK TO THIS
HIGH-BANDWIDTH MEMORY AND GOING BACK TO THAT MARKETSHARE YOU SAY YOU WANT TO OWN, CAN YOU ARTICULATE EXACTLY WHAT THAT SHARE IS GOING TO BE FOR OUR AUDIENCE RIGHT NOW? WHEN WE HAVE SAMSUNG LIKELY TO BE UNVEILING THEIR PRODUCTS AT THE FIRST HALF OF THIS YEAR? SANJAY: OUR SHARE IN THE INDUSTRY IS APPROXIMATELY 23%, AND WE ARE TARGETING THAT OUR HBM SHARE WOULD BE IN TARGET WITH THE INDUSTRY SHARE. IT WILL BE RAMPING OVER TIME. SOMETIME IN 2025 WE EXPECT TO BE GETTING TO OUR SHARE IN HBM EQUAL TO SHARE. IT IS A PRODUCT THAT HAS GREAT PROFITABILITY AND IT WILL BE A DRIVER OF REVENUE AND PROFIT GROWTH, ALONG WITH THE REST OF THE MARKET THAT HAS STRENGTHENING FUNDAMENTALS AS WELL. ED: FOR OUR BLOOMBERG TELEVISION AND RADIO AUDIENCE -- SANJAY: OUR PRODUCT HAS LEADERSHIP SPECS. THAT IS WHY IT IS GETTING A STRONG CUSTOMER POLE. LEADERSHIP PRODUCTS, AGAIN, IN TERMS OF PERFORMANCE, BANDWIDTH, KING ABOUT 10% BETTER THAN OTHER COMPETITIVE PRODUCTS. POWER BEING 30% LOWER.
DATA CENTERS TODAY TAKE UP ABOUT 3% OF THE WORLD'S ENERGY. OVER THE COURSE OF THE NEXT SEVERAL YEARS, EXPECTED TO CONTINUE TO INCREASE, GETTING CLOSER TO HIGH-SINGLE-DIGIT PERCENTAGE. THAT IS WHERE MEMORY BECOMES EXTREMELY IMPORTANT IN MAKING SURE THAT THESE ACCELERATORS FOR GENAI ARE RUNNING LOWER POWER, LOW POWER MEMORY, 30% LOWER POWER SOLUTION IS EXTREMELY ATTRACTIVE TO OUR CUSTOMERS. ED: FOR OUR BLOOMBERG TELEVISION AND RADIO AUDIENCE WORLDWIDE, YOU CAN POINT OUT A LOT OF THINGS.
WE HAVE A LOT OF QUESTIONS FOR YOU, SO BEAR WITH US. GO BACK TO ONDEVICE. WE TALK ABOUT THE SMART PHONE AND PC CONTEXT. YOU ARE SAYING THAT THERE IS A TANGIBLE BENEFIT THAT YOU ARE SEEING IN ORDERS FOR THAT. BUT IS THAT HAPPENING RIGHT NOW? THERE IS A LOT OF SKEPTICISM THAT ONDEVICE PROCESSING OF GENERATIVE AI TOOLS IS SOME WAY AWAY. ARE YOU TELLING US THIS IS MATERIAL NOW OR YOU ARE PREDICTING THAT IT IS COMING SOON? SANJAY: EARLIER THIS YEAR YOU SAW SAMSUNG S24 GETTING ANNOUNCED AT MOBILE WORLD CONGRESS.
THESE ARE GREAT EXAMPLES, WHERE AI IS BEING IMPLEMENT IT. GREAT EXAMPLES OF INFERENCING ON THE EDGE. AI IS BEING IMPLEMENTED. THAT IS INTENT-BASED.
IT IS GOING TO DRIVE, OF COURSE, THESE KIND OF HIGH-END CAPABILITIES AND PCS AND SMARTPHONES. THEY WILL START GETTING INTO THE MARKETPLACE LATER THIS YEAR. 2025 WILL BECOME THE FIRST FULL YEAR. OVER THE COURSE OF THE NEXT FEW SHORT YEARS YOU WOULD SEE THAT AI-ENABLED DEVICES WOULD BE PRESENTING ABOUT ONE THIRD OF SMARTPHONES AND PC MARKETS. AND THEY TAKE MUCH MORE CONTENT. ANYWHERE FROM 40% TO 100% MORE CONTENT IN FLAGSHIP AI-ENABLED PCS AND SMARTPHONES VERSUS FLAGSHIP AI AND PC DEVICES TODAY. SMARTPHONE AND PC DEVICES TODAY. ED: CAROLINE: WE HAVE A COUPLE MORE KEY QUESTIONS.
WE ARE GOING TO KEEP IT TIGHT FOR YOU, BECAUSE WE HAVE BEEN THINKING ABOUT THE CHIPS ACT. WE HAVE BEEN THINKING ABOUT INTEL GETTING THAT MONEY. WE HAVE BEEN THINKING ABOUT YOU BUILDING OUT IN CHINA AND INDIA. WILL YOU STILL BE PUTTING MONEY
INTO BOISE AS WELL? SANJAY: WITH RESPECT TO THE CHIPS ACT AND OUR PREVIOUSLY-ANNOUNCED PLANS FOR LEADING-EDGE MEMORY MANUFACTURING IN NOISY AND -- BOISE AND THE SYRACUSE AREA, WE ARE WITH THE CHIPS PROGRAM OFFICE MAKING GOOD PROGRESS THERE. WE MADE THE ANNOUNCEMENTS WHEN THEIR PROCESS IS COMPLETED. IMPORTANT THINGS IS THE CHIPS ACT ENABLES US TO BRING, WITH CHIPS ACT GRANTS, INVESTMENT TAX CREDITS, AND LOCAL, STATE GOVERNMENT SUPPORT, IT HELPS BRIDGE THE COST GAP WITH ASIAN OPERATIONS. IT HELPS SO SPRING LEADING-EDGE MEMORY MANUFACTURING INTO SEMI CONDUCTORS. OF COURSE, THAT CREATES MANY
JOBS. IT SUPPORTS ECONOMIC AS WELL AS NATIONAL SECURITY. AND MEMORY IS PIVOTAL. JUST TALKED ABOUT HOW PIVOTAL MEMORY IS TO AI APPLICATIONS. THINK ABOUT IT. TODAY ONLY 2% OF THE WORLDS
MEMORY PRODUCTION IS HERE IN THE U.S. OF COURSE, IT IS ALL BY MICRON AT OUR FACILITY IN VIRGINIA. WITH CHIPS ACT SUPPORT, AS WE EXPAND, OUR LEADING-EDGE MEMORY MANUFACTURING IN BOISE AND SYRACUSE SOMETIMES IN THE NEXT DECADE WE WILL BE ABLE TO GET TO 10%, OVER 10% OF WORLD'S LEADING-EDGE MEMORY PRODUCTION HERE IN THE U.S. THAT IS SIGNIFICANTLY MOVING THE NEEDLE. MICRON IS COMMITTED TO THAT. ED: WE ARE RUNNING OUT OF TIME HERE. BLOOMBERG HAS REPORTED THAT THE U.S.
IS CONSIDERING RESTRICTING ONE OF YOUR CHINESE RIVALS, CXMT. MICRON HAS BEEN IN SUPPORT OF THAT. COULD YOU OUTLINE MICRON'S POSITION? SANJAY: LOOK, THE GOVERNMENT HAS MADE THEIR OWN DECISION AND WE ARE NOT GOING TO SPECULATE OR SPEAK ON BEHALF OF ANY OF THE GOVERNMENT ACTIONS. WHAT WE CAN TELL YOU IS THAT, OF COURSE CHINA IS AN IMPORTANT MARKET FOR US. JUST LIKE CHINA IS AN IMPORTANT MARKET FOR THE ENTIRE SEMICONDUCTOR INDUSTRY. AND WE ARE WELL-ENGAGED WITH THE CUSTOMER ECOSYSTEM THERE, IN TERMS OF BRINGING VALUE OF OUR LEADING-EDGE PROJECTS, HELPING THEM DRIVE THEIR INNOVATION ROADMAPS. CAROLINE:
WE WANT TO THANK YOU SO MUCH FOR YOUR TIME TODAY, WALKING US THROUGH YOUR NUMBERS. MICRON CEO SANJAY MEHROTRA, THANK YOU. SANJAY: THANK YOU. CAROLINE: NOW TURNING OUR ATTENTION TO THE DEPARTMENT OF JUSTICE, HOLDING A KEY PRESS CONFERENCE AS THEY ANNOUNCED THEIR ANTITRUST SUIT AGAINST APPLE, WHICH HAS BEEN FIVE YEARS IN THE MAKING.
YOU WANT TO BE DIPPING IN AND BRINGING YOU THOSE HEADLINES. MERRICK GARLAND SAYING THAT APPLE HAS MONOPOLY POWER IN THE SMARTPHONE MARKET. HE HAS ALSO BEEN ARTICULATING THAT APPLE HAS MAINTAINED POWER VIA EXCLUSIONARY BEHAVIOR AT THE MOMENT. WE ARE GOING TO BE TURNING OUR ATTENTION, LISTENING IN FOR A MOMENT. >> TODAY THE DEPARTMENT ALLEGES THAT APPLE, ONE OF THE WORLD'S LARGEST TECH COMPANIES, CROSSED THE LINE FROM RIGOROUS COMPETITION TO ANTI-COMPETITIVE EXCLUSION. UNLAWFULLY MAINTAINING A MONOPOLY IN VIOLATION OF THE SHERMAN ACT. THE COMPLAINT MAKES CLEAR THAT
FOR YEARS APPLE HAS TIGHTENED ITS GRIP ON THE SMARTPHONE MARKET. IT HAS DONE THROAT -- DONE SO NOT THROUGH PRODUCT IMPROVEMENTS, BUT BY MAINTAINING A CHOKEHOLD ON COMPETITION, LOCKING ITS CUSTOMERS INTO THE IPHONE WHILE LOCKING ITS COMPETITORS OUT OF THE MARKET. AS A RESULT, AND AS THE COMPLAINT DETAILS, APPLE HAS GONE FROM REVOLUTIONIZING THE SMARTPHONE MARKET TO STALLING ITS ADVANCEMENT. THIS SHIFT HAS SMOTHERED AN
ENTIRE INDUSTRY. FROM USERS, TAP DEVELOPERS, TO THE NEXT GENERATION OF INNOVATORS. APPLE'S ANTICOMPETITIVE CONDUCT MUST STOP.
16 OTHER ATTORNEYS GENERAL AGREE. AND HAVE JOINED US IN BRINGING THIS LAWSUIT AGAINST APPLE. I WANT TO THANK THE WOMEN AND MEN OF THE ANTITRUST DIVISION FOR THEIR COMMITMENT TO PROMOTING COMPETITION AND PROTECTING CONSUMERS AND WORKERS IN ALL OF THEIR WORK. I WANT TO THANK ASSISTANT ATTORNEY GENERAL CAN FOR HIS LEADERSHIP. -- CANTOR FOR HIS LEADERSHIP. CAROLINE: THE DEPUTY ATTORNEY GENERAL THEIR SPEAKING. MEANWHILE, THERE IS MORE BREAKING MOOD -- BREAKING NEWS. APPLE AND GOOGLE ARE LIKELY TO
BE HIT BY THE FIRST PROBES UNDER THE EU DIGITAL LAW. OF COURSE, THIS IS THE DMA, WHICH CAME INTO FORCE EARLIER THIS MONTH. THERE HAS BEEN A KEEN ION SOME OF THESE KEY GATEKEEPERS. APPLE AND GOOGLE AMONG THEM.
THE INVESTIGATION COULD PAVE THE WAY FOR FINES, SOME BIG FINES. METRO IS ALSO EXPECTED TO BE FACING SOME SCRUTINY. SO MUCH TO DISCUSS FROM THE EU AND WHAT IS HAPPENING HERE WITH THE DEPARTMENT OF JUSTICE AND 16 ATTORNEYS GENERAL. LET'S BRING IN ANNA EDGERTON AND ANNA RIDE RON UP. LET'S START WITH THE COMBINATION OF WHAT HAS BEEN A FIVE-YEAR INVESTIGATION. THE KEY TAKEAWAYS AS TO WHERE
APPLE HAS BEEN MONOPOLISTIC AND SHUTTING OUT OTHERS FROM THE MARKET. >> WE HAVE BEEN EXPECTING THIS COMPLAINT FOR A LONG TIME. IT STARTED IN 2019 AND WE SEE HOW JONATHAN CAN TOUR HAS REALLY TRIED TO TELL A NARRATIVE WITH THIS COMPLAINT. HE HAS REALLY TRIED TO NOT JUST LAYOUT THE FACTS OF WHAT HE ALLEGES'S ANTICOMPETITIVE BEHAVIOR BY APPLE, BUT TELL IT IN A COMPETITIVE WAY SO IT IS NOT JUST BEING DECIDED IN A COURT OF LAW, BUT TO NORMAL CONSUMERS. THEY CAN LOOK AT THIS COMPLAINT AND SEE THAT THIS IS BEHAVIOR THAT IS IN SOME CASES CAUSING THEM HIGHER PRICES. THAT COULD GIVE THEM LESS CHOICE. THAT IS THE GOAL OF THIS
COMPLAINT THAT COULD ALSO HELP ITS CHANCES IN THE COURT OF LAW. ED: I'M LOOKING AT THE SHARES. WE ARE DOWN 3.4%, THE LOWER THE SESSION. YOU AND I HAVE TALKED ABOUT THIS FOR YEARS. IS THE MARKET FINALLY STARTING TO PRICE IN THE ANTITRUST THREAT APPLE IS FACING? >> I THINK PRODUCT SLOWDOWN, ANTITRUST RISK, APPLE DOESN'T HAVE MUCH GOING ON RIGHT NOW. IT WILL BE INTERESTING TO SEE
WITH A PULLOUT IN JUNE, BECAUSE OTHER THAN THAT IT IS GOING TO BE A GLOOMY YEAR FOR THEM IN TERMS OF SALES GROWTH. CAROLINE: I WANT TO FOLLOW-UP ON THAT BECAUSE THIS IS NOT JUST THE U.S. WITH ITS ANTITRUST CONCERNS. IT IS THE EU AS WELL. THE DIGITAL MARKETS ACT HAS COME INTO FORCE. APPLE HAS ALREADY BEEN TRYING TO CHANGE SOME OF ITS BUSINESS MODEL, TRYING TO APPEASE WITH WHETHER OR NOT IT IS REDUCING CERTAIN PAYMENTS FOR THE APP STORE. IT SEEMS TO BE BEGGING FROM PETER TO PAY PAUL.
HOW MUCH CAN APPLE CHANGE ITS BUSINESS MODEL WITHOUT IMPACTING ITS MARGINS MUCH? ANURAG: THE SERVICES BUSINESS OR APP STORE BUSINESS WILL SEE DEPRESSION IN THE NEAR TERM. ED: LET'S GET BACK TO THIS DOJ SITUATION. I THINK IT IS WORTH YOU EXPLAINING TO OUR AUDIENCE THE BASICS HERE. THE DOJ HAS BEEN LOOKING AT APPLE FOR FIVE YEARS.
IT IS THE THIRD TIME IN A DECADE THEY HAVE FILED SUIT. ONE OF THE SPECIFIC ALLEGATIONS HERE? ANNA: THIS FOCUSES ON THE IPHONE AND THE WAY THE IPHONE BUSINESS ACTS AS A MOAT AROUND THE BUSINESS. AS A LONG-SUFFERING ANDROID USER WHO IS ALWAYS THE GREEN BUBBLE, THERE ARE THINGS THAT BENEFIT IPHONE USERS, BEING INTEROPERABLE WITH OTHER IPHONE DEVICES. THAT IS THE BEHAVIOR THIS COMPLAINT LAYS OUT. IT IS INTERESTING THAT BIDEN'S ANTITRUST ENFORCERS CAME IN PUSHING THE BALANCE OF ANTITRUST LAW AND WANTING TO REALLY LOOK AT THE BEHAVIOR OF THESE BIG AMERICAN TECH COMPANIES. WHEN IT COMES DOWN TO THIS
COMPLAINT THE HARM BEING LAID OUT IS CONSUMER PRICES, WHICH IS CLASSIC ANTITRUST. THERE IS AN INTERESTING BALANCE BETWEEN PUSHING ANTITRUST LAW AS FAR AS IT WILL GO AND STICKING TO THE ARGUMENTS THEY THINK WILL BE SUCCESSFUL IN COURT. CAROLINE: THIS HAS BEEN LONG-ANTICIPATED AND HAS BEEN GOING ON FOR A LONG TIME. IT WAS UNDER PRESIDENT TRUMP THAT THIS INVESTIGATION BEGAN. THIS IS THE THIRD TIME IN 14 YEARS APPLE HAS BEEN FOCUSED ON IN THIS ANTITRUST WAY.
HOW QUICKLY ARE WE LIKELY TO SEE ANY REAL ACTIONS TAKEN, ANY REAL RESPONSE FROM APPLE? ANNA: IT IS INTERESTING THAT THEY FILED THE CASE IN NEW JERSEY. WE WILL LEARN MORE ABOUT WHY THAT IS THE CASE, BUT WE KNOW THEY WANT TO MOVE QUICKLY. THE DEPARTMENT OF JUSTICE HAS BEEN FRUSTRATED WITH HOW SLOW THEIR CASE AGAINST GOOGLE HAS GONE. THE JUSTICE DEPARTMENT ALSO HAS MORE TARGETS TO FINISH UP THE REST OF THIS YEAR. THEY ARE WORKING ON ANOTHER
CASE AGAINST GOOGLE, SO THEY HAVE HIGH AMBITIONS. THEY WANT TO TAKE BIG SWINGS AND BIDEN'S FIRST TERM IS COMING TO AN END. THERE ARE BIG AMBITIONS AND LIMITED RESOURCES AND TIME TO CHECK THOSE OFF. ED:
YOU REALLY SEE A THREAD OF THIS, GIVING CONSUMERS A WINDOW TO JUMP FROM IOS? ANURAG: I DON'T THINK THAT IS THE CASE. THOSE THINGS ARE EXTREMELY STICKY. I DON'T THINK ONE BUBBLE IS GOING TO MAKE A DIFFERENCE. APPLE HAS A REALLY LOYAL CUSTOMER BASE. WHAT I CONCERNED ABOUT IS WHETHER THEY CAN CHARGE FOR THE APP STORE IN THE FRAMEWORK THEY WERE BEFORE.
THAT IS GOING TO BE THE OUTCOME IN OUR VIEW, RATHER THAN ANYTHING ELSE. CAROLINE: JUST INTERESTING FROM THE PERSPECTIVE THAT WE ARE SEEING THIS SHARE PRICE REACTION, DOWN SOME 3%. THAT IS NOT NOTHING FOR THE SECOND-MOST VALUABLE COMPANY OUT THERE. DO YOU THINK MORE WEAKNESS HAS TO BE FACTORED IN, EVEN THOUGH THEY HAVE A VERY LOYAL BASE THAT PERHAPS MIGHT NOT BE SHIFTING TO A COMPETITOR? ANURAG: AS I SAID, SERVICES BUSINESS IS EXTREMELY IMPORTANT FOR THEM.
BOTH IN TERMS OF MARGIN AND DIVERSIFICATION. IF YOU COMPRESS THOSE FEES IT IS GOING TO HAVE AN IMPACT ON THEIR TOP LINE, AS WELL AS THEIR BOTTOM LINE. THIS IS A NEW OVERHANG ON THE STOCK THAT TOPS UP WHAT IS HAPPENING IN EUROPE. THERE IS NOT MUCH GOING ON FOR APPLE THIS YEAR. SALES ARE NOT GROWING IN TERMS OF THE PRODUCTS, AND HOW THE SERVICES ARE UNDER PRESSURE. THAT IS REALLY WHAT IS HAPPENING. ED:
BEHIND EVERY STOCK MOVE, AND APPLE IS DOWN 3.3%. AT THE SESSION LOW, 3.8%. THERE ARE SOME HUMAN BEINGS. TELL US ABOUT THIS DOJ TEAM THAT WAS UP ON THE STAGE ONE MOMENT AGO THAT ARE LEADING THIS ANTITRUST INITIATIVE AGAINST APPLE. ANNA: THAT IS A GREAT QUESTION. JONATHAN CANTOR CAME IN BEING LABELED GOOGLE'S FOE. THAT IS PART OF THIS SCHOOL OF ANTITRUST THAT WE SEE ALSO AT THE FTC WITH THE COMMISSIONER THERE.
THEY HAVE IN SOME CASES WORKED TO RESHAPE THE UNDERSTANDING OF ANTITRUST LAW, AND REALLY TRIED TO SHOW HOW CORPORATE BEHAVIOR, EVEN CORPORATIONS THAT ARE WELL LOVED, THAT PRODUCE PRODUCTS PEOPLE ENJOY, THEIR BEHAVIOR RESULTS IN HIGHER PRICES FOR CONSUMERS. WE SEE THIS ALSO FROM THE APP DEVELOPERS LIKE SPOTIFY, SONOS, WHO HAVE COMPLAINED APPLE'S BEHAVIOR HAVE PUT THEM AT A DISADVANTAGE. IT IS OF THIS EQUATION AND IS ALL GOING TO BE TRIED IN A COURT OF LAW AND WE WILL SEE HOW IT COMES OUT. CAROLINE: I WANT TO RETURN TO YOU, ANURAG, AND THINK ABOUT WHERE APPLE HAS TO STAY NOW IN TERMS OF ITS PRIORITIZATION'S. THERE IS A WORRY ABOUT GENERATIVE AI AND BEING BEHIND THE CURVE. WILL THAT RELATIONSHIP IT IS BROKERING WITH GOOGLE, WILL WE SEE THE SORT OF ONGOING BUILDUP OF APPLE AND ITS PRESENCE IN GENERATIVE AI, AND TRYING TO REFOCUS THE BUSINESS WHEN IT IS DISTRACTED IN THIS WAY? ANURAG: THAT IS GOING TO BE THE BIGGEST THING WE FIND OUT OVER THE NEXT FEW MONTHS. IF THEY ARE ABLE TO PULL OFF
THIS DEAL WITH GOOGLE IT IS GOING TO BE SYMBIOTIC AND BENEFICIAL FOR BOTH COMPANIES. THAT HAS THE POTENTIAL TO IMPROVE IPHONE SALES IN THE SECOND HALF OF THIS YEAR. BARRING THAT THERE IS NOT MUCH GOING ON FOR APPLE AT THIS POINT, BOTH IN TERMS OF CURRENT STATUS, AS WELL AS THE OUTLOOK FOR SECOND HALF. CAROLINE:
ANNA ROB REINER -- ANURAG RANA, FANTASTIC ANALYSIS. MEANWHILE, WE HAVE SO MUCH MORE FOR YOU. MEMBER, THERE IS AN IPO GOING ON, AND TRADING. THE CHIEF OPERATING OFFICER AT REDDIT FOR MORE ON THE COMPANY'S BIG DAY. THAT IS NEXT. WHAT ARE YOU WASHING? ED: THERE WAS ANOTHER IPO, UP 12%, HAVING JUMPED 72% DAY ONE.
PRICED AT $36 APIECE. IT IS TRADING JUST BELOW $70 A SHARE. WE HAD THE CEO ON THE PROGRAM YESTERDAY. IT IS A COMPANY THAT MAKES THE SEMI CONDUCTORS OR HARDWARE THAT ALLOWS A SERVER RACK OR DATA CENTER, ALL OF THE DIFFERENT COMPONENTS TO SPEAK TO EACH OTHER.
THE 46% PREMIUM IT TRADED DAY ONE, THAT IS INTERESTING IN THE CONTEXT OF REDDIT. WHAT IS GOING TO HAPPEN WITH REDDIT? IS THIS A 24 HOUR IPO WINDOW? >> APPLE ACTIVELY ENCOURAGES BANKS AND OTHER PARTIES TO PARTICIPATE IN APPLE WALLET, BUT IS -- BUT IT SIMULTANEOUSLY EXERTS ITS MONOPOLY POWER TO BLOCK THE SAME PARTNERS FROM DEVELOPING ALTERNATIVE PAYMENT PRODUCTS AND SERVICES FOR IPHONE USERS. CAROLINE: MERRICK GARLAND, ATTORNEY GENERAL AS THE DOJ AND 16 ATTORNEYS GENERAL WEIGH IN ON BRINGING ENFORCEMENT TO APPLE, AND ANNOUNCING AN ANTITRUST LAWSUIT AGAINST APPLE. THIS IS AS WE SEE THE SHARE PRICE OFF BY MORE THAN 3%. IT IS THE SECOND-MOST VALUABLE COMPANY OUT THERE, SO THAT KNOCKS $92 BILLION OFF OF ITS MARKET CAPITALIZATION ON THE DAY, TRADING AT THE LOWEST SINCE THE START OF THE YEAR.
ALL OF THIS ULTIMATELY SHOULD HAVE BEEN EXPECTED. IT IS A FIVE-YEAR INVESTIGATION. ED: AT THE SESSION LOW THIS STOCK WAS DOWN THREE POINT 8%, PUTTING APPLE ON TRACK FOR ITS BIGGEST DECLINE SINCE AUGUST OF LAST YEAR. BLOOMBERG REPORTED THESE DETAILS LAST NIGHT. YET WHEN THE OFFICIAL
CONFIRMATION CAME THE STOCK CONTINUED TO SLIDE. IF YOU GO ON YOUR BLOOMBERG TERMINAL THERE IS AN ACKNOWLEDGMENT OF AN -- OF A REGULATORY OVERHANG. EVERY TIME YOU AND I TALK ABOUT ANTITRUST IT NEVER SHOWS UP IN THE STOCK. CAROLINE: THEN YOU HAVE TO ADD IN THE OTHER SCOOP THAT CAME WITHIN THIS TIME, THE FACT THAT THE EU IS WEIGHING AN INVESTIGATION ON ITS PART INTO APPLE AND GOOGLE WHEN IT COMES TO THE DIGITAL MARKETS ACT. THIS IS AN ANTITRUST GLOBAL FIXATION ON APPLE RIGHT NOW. ED: THE ONE POINT ON THAT EU
REPORTING IS I THINK THE EU IS LOOKING AT A LOT OF PEOPLE. ALPHABET, AND ALSO META. EVENTUALLY THAT COULD LEAD TO FINES. THERE IS ANOTHER BIG STORY
HAPPENING. WE MAY HAVE FORGOTTEN. LET'S TURN TO REDDIT. LISTING DAY. HERE IS SOME VIDEO OF THEM RINGING THE BELL -- RINGING THE BELL EARLIER. HAVE A LISTEN. [APPLAUSE]
[BELL RINGING] I SAY THEM, I DON'T THINK THAT IS STEVE HUFFMAN IN A MASCOT SUIT. CAROLINE: IT WOULD BE GREAT IF IT WAS, WOULDN'T IT? ED: LET'S GET SOME OF THE KEY NUMBERS WITH KAILEY RUTH. >> WE DON'T KNOW EXACTLY WHERE IT IS GOING TO OPEN YET, BUT LAST NIGHT IT PRICED AT $34 A SHARE AT THE TOP OF THE RANGE, WHICH WAS A POSITIVE INDICATION BASED ON ROADSHOW AND SHOWING WHERE THE STREET THINKS IT IS GOING TO OPEN THAT. RIGHT NOW WHAT THEY ARE DOING IS THEY ARE SORTING OUT THE BOOK. THEY ARE FIGURING OUT PRECISELY
FOR THE VERY FIRST TRADE TO THE PUBLIC WHERE IT SHOULD TRADE AT, BECAUSE THE IPO IS FOR INSIDERS. A LOT OF EYES ARE WATCHING REDDIT. THERE HAS BEEN A DEARTH OF TECH IPOS IN RECENT YEARS.
2021 WAS A VERY ACTIVE YEAR, THEN IN 2022 NONE. LAST YEAR WE ONLY SAW INSTACART, CLAY VIEW, AND ARM. WITH REDDIT AND S TERRA, THEY ARE HOPING IT MIGHT HOPE -- OPEN THAT TAKE IPO WINDOW. ED: REDDIT SHARES, INDICATED TO OPEN BETWEEN $42 AND $46 A SHARE. CLEARLY A PREMIUM ON THAT $34
IPO PRICING. THERE IS INTEREST IN THIS ONE, RIGHT? WE THOUGHT THEY MIGHT GO 2021 WAS AN EXCELLENT YEAR, AND THEY DIDN'T. KATIE: THEY HAD FILED FOR IPO. IN 2022I BROKE THAT THEY HAD HIRED BANKERS. AND THEY DID. IT JUST TOOK A WHILE FOR THEM
TO DO IT. IT IS A MATTER OF, ARE PEOPLE INTERESTED, WHAT PRICE? THEY PRICED AT SOMETHING THAT VALUED THEM ABOVE $6 BILLION, BUT THEY WERE LAST VALUED AT $10 BILLION IN 2021. THERE IS INTEREST IN REDDIT AT THIS PRICE. IT IS A MATTER OF, WILL IT BE ABLE TO SUSTAIN THAT PRICE? WILL IT BE ABLE TO ACHIEVE THE PRICE IT HAD IN 2021? CAROLINE: MANDEEP SINGH SAYING, A 10 BILLION DOLLARS VALUATION IS WHERE REDDIT SHOULD BE. I'M INTERESTED IN THE ALLOCATION AND WHERE IT WENT. MONEY FLOWING INTO
INSTITUTIONAL HANDS, BUT ALSO THE RETAIL INVESTOR AND REDDIT ARE THEMSELVES. -- REDDITERS THEMSELVES. KATIE: LONG-TIME USERS THAT GOT ACCESS AT THE IPO PRICE ARE WILLING TO STAY REDDIT STOCKHOLDERS. PART OF THE IDEA BEHIND SOME OF THESE CONSUMER-FACING COMPANIES GIVING ACCESS TO THEIR TOP USERS AT THE IPO PRICE IS THE IDEA THAT THESE WOULD BE LONG-TERM STOCKHOLDERS.
THE IPO IS ONLY GIVEN TO INSIDERS. PEOPLE THAT ARE CLOSE TO THE BANKS, NORMALLY. THERE IS EXPECTED TO BE A POP ON DAY ONE, SO IT IS SEEN AS A GIFT THAT THEY GET ACCESS TO THOSE GAINS ON DAY ONE. THIS IS MEANT TO BE A GOOD THING FOR REDDIT SHAREHOLDERS.
REDDIT USERS AND ALSO FOR REDDIT. CAROLINE: KATIE ROOF HAS BEEN ACROSS THIS IPO. WE THANK YOU FOR BRINGING IT TO US. THERE IS A QUESTION, OF COURSE, FUTURE GROWTH DRIVERS. ED:
THAT IS THE IDEA, SELL THE UNIQUE USER DATA TO THE COMPANIES BUILDING LARGE LANGUAGE MODELS. BI HAS THIS LARGE RANGE, SAYING 30% OF REDDIT USERS DON'T USE OTHER SOCIAL MEDIA PLATFORMS. CAROLINE: IT IS THAT FOCUS ON THE DESIRE TO BE ENGAGING THERE AND WHAT IT MEANS TO SOME OF THESE LARGE LANGUAGE MODELS AS WELL FOR A FUTURE DIRECTION OF TRAVEL WHEN IT COMES TO DIVERSIFICATION OF REVENUE. WE WANT TO WELCOME REDDIT'S LISTING DAY HAS ARRIVED. THAT SPRING IN CHIEF OPERATING OFFICER JEN WONG.
FOR MORE ON THE BIG DAY, LIVE FROM THE NEW YORK STOCK EXCHANGE. IT IS A DAY TO REMEMBER. I'M INTERESTED AS TO HOW MUCH YOU ARE EXCITED ABOUT REDDITORS HAVING A PART OF THE PROCESS OR WORRIED ABOUT THE VOLATILITY TO COME. JEN: THANKS FOR HAVING ME TODAY. IT HAS BEEN OUR DREAM TO HAVE OUR USERS AND COMMUNITIES TO BE ABLE TO BE SHAREHOLDERS IN REDDIT. EVERYTHING ON REDDIT IS BUILT BY OUR USERS AND COMMUNITY, SO HAVING THEM BE OWNERS MAKES A LOT OF SENSE.
WE ARE SO EXCITED ABOUT THAT. ED: GOOD MORNING. WHAT IS THE MAIN BENEFIT OF THE IPO? WE ALWAYS TALK ABOUT THE MONEY RAISED, THE DOLLY OF -- THE DOLLAR VALUATION. I ALWAYS REFLECT, THE IPO GETS YOUR NAME OUT THERE. NOT EVERYONE IS A REDDITOR. HOW DO YOU WEIGH UP THE PROS AND CONS OF LISTING? JEN: CERTAINLY A LOT OF PRESS ON A DAY LIKE TODAY. IT IS A SPECIAL DAY. UPCOMING A PUBLIC COMPANY HAS MADE US A BETTER COMPANY.
WE HAVE BEEN IN THIS PROCESS LONGER THAN MOST. ALMOST TWO YEARS, ACTUALLY. THAT PROCESS HAS MADE US MORE DISCIPLINED, OR OPERATIONALLY RIGOROUS, AND ACTUALLY ALLOWED US TO GET TO KNOW INVESTORS BETTER. AND TELL OUR STORY. THIS WHOLE PROCESS HAS MADE US A BETTER COMPANY, AND WE ARE PREPARED TO BE A PUBLIC COMPANY. IT HAS ACTUALLY BEEN REALLY GOOD FOR US, AND I THINK COMPANIES THAT CAN GO PUBLIC, IT IS SORT OF A DO -- A DUTY. IT IS THE PROCESS OF MATURING AS A COMPANY.
AND THEN THE BENEFIT OF HAVING EMPLOYEES HAVE LIQUIDITY, WHICH WE PROMISED THEM, AND IN ADDITION HAVE OUR COMMUNITIES AND USERS BE ABLE TO HAVE SHAREHOLDERS, -- BE ABLE TO BE SHAREHOLDERS, ASK A LOT OF SENSE. ED: THE EVOLUTION OF THIS STORY IS YOU MOVING AWAY FROM A SOLELY ADVERTISING-BASED BUSINESS MODEL TO ONE WHERE YOU LICENSE YOUR USER DATA TO THE COMPANIES BUILDING LARGE LANGUAGE MODELS. I JUST ASKED IF YOU COULD EXPLAIN TO OUR AUDIENCE HOW THAT WORKS IN PRACTICE, HOW YOU ARE GOING TO GROW THAT BUSINESS? JEN: AHEAD OF ADDRESSING THAT I WANTED TO PROVIDE CONTEXT. ONE OF THE THINGS THAT IS SO SPECIAL ABOUT REDDIT IS WE PLAY IN THREE BIG ADDRESSABLE MARKETS.
WE HAVE THIS CORE ADVERTISING BUSINESS. WE HAVE GREAT TRACTION AND MOMENTUM. THAT IS OUR CORE BUSINESS. WE HAVE AN EMERGING DATA LICENSING BUSINESS WE BUILD THE FOUNDATIONS FOR LAST YEAR, BECAUSE REDDIT'S INFORMATION IS INCREDIBLY IMPORTANT TO THE TRAINING OF LARGE LANGUAGE MODELS. AND ALSO INSIGHTS FOR DIFFERENT KINDS OF BUSINESSES. THE THIRD IS A USER ECONOMY WHERE OUR COMMUNITIES GO BEYOND CONVERSATION INTO BEING ABLE TO TRANSACT WITH EACH OTHER.
YOU ASKED ABOUT THE DATA LICENSING. THAT HAS TWO PIECES TO IT. IT IS A PIECE THAT IS WELL-ESTABLISHED WHERE THERE IS SOCIAL LISTENING, FOR MARKETING, FOR COMPANIES TO WANT TO UNDERSTAND WHAT IS HAPPENING ON REDDIT. TO INFORM MARKETING CAMPAIGNS. THERE IS ALSO FINANCIAL SERVICES COMPANIES INTERESTED IN THAT. AND THEN THERE IS THE NEW,
EMERGING MARKET OF AI, WHERE LARGE LANGUAGE MODELS NEED DATA. WHEN YOU LOOK AT REDDIT'S CORPUS, 19 YEARS OF HUMAN EXPERIENCE ORGANIZED BY TOPIC, WITH MODERATION AND RELEVANCE. THAT IS INCREDIBLY IMPORTANT TO BUILDING BOTH A CHAT CAPABILITY AND THE FRESHNESS OF INFORMATION.
THAT IS AN AREA WHERE WE SEE OPPORTUNITY. I THINK WHETHER THAT SHOWS UP IN THE VALUE OF REDDIT IS HOW VALUABLE REDDIT IS. THE MORE THAT WE MOVE TOWARD THIS AI WORLD, THAT KNOWLEDGE AND REFRESHMENT OF HUMAN EXPERIENCE BECOMES MORE VALUABLE. CAROLINE: WE ARE SPEAKING WITH REDDIT CHIEF OPERATING OFFICER JEN WONG. TO THAT ONGOING VALUE OF YOUR
DATA, TO AI AND THE LARGE LANGUAGE MODELS BEING DEVELOPED, THOSE LLMS, THOSE MODELS BEING BUILT IN NEW AND DIFFERENT WAYS, THIS TECHNOLOGY ALSO DEVELOPS. I'M INTERESTED AS TO WHETHER THIS GOES ON IN PERPETUITY. DO YOU SEE THIS LICENSING BEING STEADY AND SECURE FOR 10 YEARS FROM NOW? JEN: WHAT I WOULD SAY IS, THIS IS SO EARLY IN THIS EMERGENCE OF THIS TECHNOLOGY IT IS HARD TO SEE FAR OUT. THE WAY I THINK ABOUT IT, THE WAY WE THINK ABOUT IT IS REDDIT'S CORPUS OF DATA IS VALUABLE, AND IT GETS MORE VALUABLE.
BECAUSE AS THERE IS MORE CONTENT GENERATED BY AI OR COMPUTERS, ORIGINAL HUMAN THOUGHTS AND IDEAS INCREASE IN VALUE, RIGHT? IF YOU THINK ABOUT IT, A NEW CAR COMES OUT. WHO IS GOING TO REVIEW IT? A REAL-LIFE FAMILY OF SIX CAN TELL YOU WHAT IT IS LIKE TO DRIVE THAT CAR. THAT IS ALWAYS GOING TO BE VALUABLE, AND SO WHETHER THAT SHOWS UP IN DATA LICENSING OR THE PRODUCTS REDDIT BUILDS, IT IS VALUABLE. CAROLINE:
LET'S TALK ABOUT A COMMUNITY THAT HAS BEEN VERY VALUABLE AT TIMES, AND EXTRAORDINARY AT OTHERS TO WALL STREET MORE BROADLY. THE REDDITORS ACTIVE ON WALL STREET. WE THINK ABOUT HALF -- WHAT HAPPENED WITH GAMESTOP, FOR EXAMPLE. THERE IS A DOUBLE-EDGED SWORD HERE AS INVESTORS.
HOW SECURE ARE YOU THAT YOU WILL NOT BECOME A MEME FRENZY YOURSELF, TO THE UP AND DOWN? JEN: I LOVE THE ETHOS OF THAT COMMUNITY AND ALL OF OUR INVESTING COMMUNITIES. WHO KNOWS? IT IS REDDIT. WHO KNOWS WHAT IS GOING TO HAPPEN? WE'LL SEE. IT IS HARD TO SAY, BUT IN THE END I THINK HAVING OUR USERS BE SHAREHOLDERS IS A GOOD THING. AND I THINK ULTIMATELY WE WILL BE JUDGED ON OUR PERFORMANCE. THAT WILL TAKE TIME FOR PEOPLE TO KNOW, BUT ULTIMATELY THAT IS WHAT INVESTORS JUDGE US ON. ED:
WE ARE AWAITING THE OPENING TRADE. BLOOMBERG REPORTING THE INDICATION IS THE STOCK WILL OPEN SOMEWHERE BETWEEN $42 AND $46 A SHARE. THAT IS QUITE A PREMIUM ON THE IPO PRICE. YOU ARE ONE OF THE BIGGEST SHAREHOLDERS AS WELL. GIVE US YOUR PERSONAL FEELING IN THIS MOMENT. JEN: YOU KNOW, IT IS KIND OF LIKE A
WEDDING DAY, I GUESS. LOTS OF DIFFERENT EMOTIONS, JOY, RELIEF, JITTERS, ALL OF IT IN ONE. I HAVEN'T EVEN PROCESSED IT, FRANKLY. BUT IT IS A SPECIAL MOMENT. IT IS ONE MILESTONE IN A HISTORY OF A 19-YOUR COMPANY THAT I THINK HAS A LOT OF RUNWAY. WE ARE 19 YEARS OLD, BUT WE ARE
REALLY YOUNG AS A COMPANY. AND THIS IS THE START OF THE NEXT CHAPTER. ED: REDDIT CHIEF OPERATING OFFICER JEN WONG, WE ARE GRATEFUL FOR YOUR TIME ON LISTING DAY. JEN: THANK YOU. THANKS FOR HAVING ME. CAROLINE:
ED, THAT WAS A NICE WAY TO FINISH UP THE CONVERSATION WITH HER. LIKE A WEDDING DAY. WE WILL ALSO BE TALKING ABOUT AI A LITTLE BIT MORE TOO. INVESTING IN SO MUCH MORE. SEQUOIA CAPITAL PARTNER KONSTANTINE BUHLER IS WITH US. WE ARE GOING TO BE GOING TO BREAK NOW. THIS IS "BLOOMBERG TECHNOLOGY." COMING UP, BRIAND LYNCH WILL JOIN TO DISCUSS THE REDDIT IPO.
THIS IS BLOOMBERG. TIME FOR VC SPOTLIGHT. SEQUOIA HAS JUST WRAPPED UP ITS AI ASSENT EVENT. WHICH BROUGHT TOGETHER SOME OF
THE BEST AND BIGGEST MINES IN ARTIFICIAL INTELLIGENCE. LET'S BRING IN SEQUOIA CAPITAL PARTNER KONSTANTINE BUHLER TO EXPLAIN WHO WAS THERE. THERE WERE BIG NAMES IN THE BUILDING. WHY DID YOU DO THAT? KONSTANTINE: THANK YOU SO MUCH FOR HAVING ME AGAIN. YOU ARE RIGHT.
YESTERDAY WE HAD 100 OF THE LEADING MINDS IN AI. WE BROUGHT THEM TOGETHER BECAUSE WE WANTED TO DISCUSS THE STATE OF THE AI INDUSTRY. ED: JUST PORTFOLIO COMPANIES OR THE INDUSTRY AT LARGE? KONSTANTINE: WE ARE TALKING THE LEADING MINDS IN AI. WE WANTED TO TALK ABOUT THE STATE OF THE INDUSTRY, BUT WHAT IS NEXT. ED: WHAT WAS THE CONCLUSION?
KONSTANTINE: ONE THING THAT WILL SURPRISE YOUR AUDIENCE IS EVERYBODY KNEW WE HAD TO BE PATIENT. IT FEELS LIKE WE STARTED THE PROCESS AS A SPRINT, BUT EVERYBODY KNOWS THIS IS A MARATHON. WHAT IS AHEAD OF US IS THE LONG HAUL. EVERYBODY IS GETTING READY FOR THAT LONG HAUL. CAROLINE: I'M SURE A TOPIC OF CONVERSATION MUST'VE BEEN INFLECTION BASICALLY GOING IN-HOUSE TO MICROSOFT, AND, YES, LICENSING SOME OF ITS TECHNOLOGY. AT THE SAME TIME YOU ARE
SPEAKING WITH THE CO-CEO OF ANTHROPIC. YOU ARE SPEAKING WITH MITHRAL. HOW IS THAT WHOLE ECOSYSTEM ULTIMATELY BUILDING ITSELF? THERE SEEMS TO BE SOME VERY INTERESTING PARTNERSHIPS THAT END UP LOOKING LIKE M&A.
HOW DO YOU FEEL IS SOMEONE WHO IS PUTTING MONEY INTO THESE BUSINESSES? KONSTANTINE: YOU ARE EXACTLY RIGHT. THERE WAS A LOT OF TALK ABOUT THAT. ONE OF THE MAJOR TRENDS I THINK WILL SURPRISE YOUR AUDIENCE IS, THE LEADERS WERE TALKING ABOUT HOW AIS ARE GOING TO WORK TOGETHER. WE WERE TALKING ABOUT NETWORKS OF AIS. MULTIPLE AIS THAT ARE GOOD AT DIFFERENT TASKS, AND THEY ARE GOING TO COOPERATE AND COMPETE.
I WILL GIVE YOU AN EXAMPLE. I USE A PRODUCT CALLED DUST. IT HAPPENS TO BE A WONDERFUL SEQUOIA PORTFOLIO COMPANY. IT ALLOWS ME TO CALL GPT FOR, AND ALSO CLOUD THREE IN PARALLEL. I COULD HAVE THE MODELS COMPETE AGAINST EACH OTHER. I COULD HAVE THEM COLLABORATE, AND THIS YIELDS AN EVEN BETTER OUTCOME. THAT IS THE FUTURE OF AI.
IT'S GOING TO BE MANY MODELS WORKING TOGETHER. CAROLINE: ANOTHER COMPANY CALLED HUGGING FACE. THERE IS DEBATE ULTIMATELY ABOUT OPEN VERSUS CLOSED. YOU HAVE OPENAI, AND MANY WOULD
OPEN -- WOULD ARGUE THAT OPENAI AIN'T THAT OPEN ANYMORE HIM AND FOR GOOD REASON. HOW ARE YOU SEEING THE OVERALL AI COMMUNITY DIVIDE ITSELF ON HOW OPEN MODELS SHOULD BE? KONSTANTINE: I WILL TELL YOU WHAT WE HEARD YESTERDAY. WE HEARD A LOT OF ENTHUSIASM ABOUT OPEN SOURCE. IT WASN'T JUST FROM THE BUILDERS. A LOT OF THE BUILDERS ONE OPEN SOURCE SO THEY CAN RUN THESE MODELS IN THEIR OWN CLOUDS.
IT WAS ALSO FROM THE APPLICATION LAYER. WE HAD THE CEO OF SERVICE NOW, AND HE TALKED ABOUT HOW SERVICE NOW IS USING AI INTERNALLY TO DEFLECT 20% OF TICKETS. THAT IS FOR I.T. STUFF, THAT IS FOR HR STUFF.
HE MADE VERY CLEAR, WE NEED THE OPEN SOURCE, BECAUSE THAT IS GOING TO DRIVE COST DOWN. THAT IS GOING TO PRESERVE MARGIN. CUSTOMERS WANT THIS. WE HAVE HEARD IT FROM CUSTOMERS. HAVE ALSO HEARD FROM THE FOUNDERS AND BUILDERS. ED: A HEADLINE TO MAKE OUR AUDIENCE AWARE. REDDIT SHARES INDICATED TO OPEN AT $44 TO $48 A SHARE, A PREMIUM ON THE $34 THEY PRICED THE IPO ACT. THE IDEA THAT THEY ARE ON AVAILABLE DATA SET, THE DIFFERENCE IN THE DATA IS THE FOCUS OF REDDITORS IS.
THAT SOMETHING YOU DISCUSSED ABOUT THEAVAILABILITY OF DATA? AND REDDIT, WHAT ARE PEOPLE SAYING ABOUT THAT? KONSTANTINE: WE ARE SO HAPPY FOR REDDIT. THIS IS AN AMAZING MILESTONE. THIS IS AN EXAMPLE OF HOW THE FACT THAT THEY CREATED AN ONLINE COMMUNITY, A TRUE COMMUNITY WHERE THEY ARE WORKING TOGETHER IS GOING TO PAY OFF NOT JUST FOR ADVERTISING -- THAT IS THE OBVIOUS BUSINESS -- BUT FOR DATA. THEY HAVE A PARTNERSHIP WITH GOOGLE AND WE ARE GOING TO SEE OTHER BUSINESSES THAT HAVE ACCUMULATED THAT DATA ADVANTAGE BEING PARTNERS FOR GREAT AI PRODUCTS THAT NEED TO TRAIN ON THAT DATA. ED: KONSTANTINE BUHLER, GREAT TO HAVE YOU BACK.
WHAT A DAY IT HAS BEEN. THIS, FOR NOW, IS "BLOOMBERG TECHNOLOGY." >> WE ALLEGE THAT APPLE HAS EMPLOYED A STRATEGY THAT RELIES ON EXCLUSIONARY, ANTICOMPETITIVE CONDUCT THAT HURTS BOTH CONSUMERS AND DEVELOPERS.
FOR CONSUMERS, THAT HAS MEANT FEWER CHOICES, HIGHER PRICES AND FEES, LOWER QUALITY SMARTPHONES, APPS, AND ACCESSORIES, AND LESS INNOVATION FROM APPLE AND ITS COMPETITORS. CAROLINE: ATTORNEY GENERAL MERRICK GARLAND THERE, SPEAKING EARLIER TODAY. APPLE FACING GLOBAL ANTITRUST ALLEGATIONS, NOT ONLY FROM THE U.S., BUT THE EU. WE UNDERSTAND THEY ARE GOING TO DO A FULL PROBE OF GOOGLE AND APPLE EVP TOLD US THIS EARLIER IN THE MONTH. >> SEE AN ILLEGAL ABUSE THAT HAS BEEN ONGOING FOR A NUMBER OF YEARS. WHICH HAS MADE IT VIRTUALLY
IMPOSSIBLE FOR CUSTOMERS TO CHOOSE IF THEY WANT THE PAYMENT SERVICE IN-APP BY APPLE, PAYING THE FEE, OR THEY WOULD WANT TO GO TO A WEBSITE AND HAVE A CHEAPER SUBSCRIPTION PRICE. CAROLINE: MARK GURMAN, WHAT IS APPLE'S TAKE? MARK: APPLE CERTAINLY DISAGREES ACROSS THE BOARD ON THIS LAWSUIT. IMPLYING THAT THE LAWSUIT IS NOT LEGAL, SAYING THE IPHONE IS NOT A MONOPOLY, AND PUSHING BACK HEAVILY ON THE CLAIMS THE DEPARTMENT OF JUSTICE IS GOING AFTER APPLE FOR EVERYTHING FROM GREEN BUBBLES TWO-CAR PLAY, TO HOW I CLOUD STORAGE INTEGRATED, BLAMING APPLE FOR HURTING CONSUMERS, HURTING CHOICE, HURTING DEVELOPERS. CERTAINLY APPLE HAS SQUASHED DEVELOPERS AND MADE IT DIFFICULT FOR DEVELOPERS TO COMPETE IN SOME INSTANCES. ON THE OTHER HAND, A LOT OF THIS COMES DOWN TO USER INTERFACE AND PHILOSOPHICAL DECISIONS APPLE MAKING -- MADE MANY YEARS AGO ABOUT ITS INTEGRATED EXPERIENCE. WE WILL HAVE TO SEE WHERE APPLE IS WILLING TO MEET THE DOJ, HOW THEY CAN WORK TOGETHER TO CREATE SOME SOLUTIONS HERE TO KEEP THE IPHONE SECURED IN AN INTEGRATED PLATFORM, BUT CERTAINLY IT NEEDS TO GET MORE COMPETITIVE FOR THIRD-PARTY DEVELOPERS AND ACCESSORY MAKERS.
CAROLINE: A MAN WHO CAN EXPLAIN THE APPLE PHILOSOPHY, MARK GURMAN, WE THANK YOU FOR JUMPING IN. THAT DOES IT FOR THIS EXTREMELY BUSY ADDITION OF "BLOOMBERG TECHNOLOGY." ED: STANDBY FOR IPO TIME. REDDIT'S TRADE COMING UP AT THE NY ICY. -- NYSE.
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