Altman's Chip Venture and Sony Scraps Zee Deal

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This is Bloomberg Technology with Caroline Hyde.

And Ed Ludlow.

I Meed Ludlow in San Francisco. Caroline hides off today. This is Blombow Technology. Coming up on the program, reports that open Ai CEO Sam Outman will meet with Samsung chip executives just days after our report on his plans to raise billions of dollars for AI chip FECh factories. Everything you need to know ahead, plus Sony scrapping its ten billion dollar deal for India's z after two years of drama and delay, Details on the CEO stalemate that led to the collapse, and a big week for big tech.

The timing of this.

Report is interesting because Friday we myself Dina Bass reporting that the focus of Sam Oltman's initiative to raise tens of billions of dollars is for chip capacity factories fabs call it what you will, and now Samsung, Yeah.

I mean, if you're going to do this, if you're serious about doing this, then you have to speak to the Koreans.

Right.

Obviously a lot of the focuses on TSMC. They are the market leader. But if there's a strong number two, it's not Intel, it's some song. They have the money, they have the resources, and they have the technology.

So I think what's interesting here in is that there's always a big focus on TSMC because it's the big market incumbent.

Right, it's the big market leader.

Samsung is a heavyweight in the market for contract manufacturing chips in and of its own.

Right, that's right. I mean, everybody focuses on them.

Mary the memory guys. You know, memory is a commodity or you know, great, it's a big business. But no, they are the second biggest contract manufacturer they have had in the past, big customers like in video, like Apple, they have some serious capabilities and they are way ahead of where the third guys they're talking about it Intel would be at this point.

So, you know, the basics of the story of a reported Friday is it's a lot of money because chip factories cost a lot of money to make in a very long time to make. But it's this anxiety that in the future the supply of AI specific chips won't be there to meet the demand. It's different from what we kind of previously reported, which was this idea Well wants to take on some of its bigger supplies. Like in video, it doesn't seem to be a design of

On what we call day to day AI accelerators.

Yeah, no, that's absolutely right open AI in Video, AMD. All of these chip designers have a shared interest, right, a shared goal. They believe that AI is going to be utterly pervasive in the world economy and in technology, and if according to some of the projections, it's going to need more chips, more of a certain type of chip, a very high end logic chip than we are currently on course to make. If you believe that scenario, then we need to start pouring concrete.

So sam Otman's visits, career and soul is according to local reports from al but will continue to trace that story of Bloomberg, Z and King, thank you very much. Meanwhile, another big story overnight, Sony and Z Entertainment have officially called off a plan ten billion dollars meter media merger in India after two years of drama and delay. For more on what happened, I want to bring in Bloomberg's

Yes, that's very much at the core of the issue. The CEO of Z, who is the son of the founder. He has been caught up in a regulatory investigation. He can word this very carefully for allegedly faking the recovery of loans to cover private financing deals by its founder. These allegations, of course, that he denies. Initially, there was an interim ruling saying he was not allowed to hold directorships and that was then subsequently reprieved.

He was still.

Allowed to hold this CEO position, but the investigation is ongoing. Sony appears to think that this regulatory overhang is a risk would only have be, according to the reporting, to close the deal if he was not leading the new company. The family would have owned about four percent of the new company. Sony would own fifty close to fifty one percent. So Sony very much is the bigger fish here and they weren't able to reach an agreement.

The deal has fallen. The part.

A lot of our audience around the world, Alex are going to say, why is Sony interested in doing a media deal in India with Z And the reality is that it's just a battle ground for eyeballs in the world's most populous country.

Just explain what Z is.

My understanding is it has a pretty decent catalog of content, but financially it's a bit shaky.

Yeah, it is in slightly.

Was The challenge is in India it is one of scale because of price sensitivity. So Z in this deal with Sony, they would have ended up with seventy five channels, as you say, a huge back catalog, but without that scale, it is quite hard to make the economics add up. You hear plenty of people saying, not least Tim Cook, that India is where China was maybe six, eight, ten years ago. That means that it could be quite attractive

This week we get fourth quarter results from Netflix, Tesla, IBM, and Intel. While the market is super focused on what on earth happens with rates and the global economy in twenty twenty four, joining us now Janetmuie, head of market analysis at RBCBRA and Dolphin.

And to look forward, you have to kind of look back.

You know, the Magnificent seven, those megacaps accounted for so much of the index performance in twenty twenty three, and we go into this earning season saying they're probably going to account for the majority of profit growth as well. Is that how you look at it?

Hi Ed, thanks for having me. I think that's entirely likely. As you mentioned, you you looked back last year the mane cent seven, It is the thirty percent of the SMP, but drove two thirsts of the return last year. How do you think that the busiasm for the Magnificent seven will continue given that? I think actually a lot of investors are just about neutral or even slowly underweight at

You have to differentiate between stock performance and then actual growth in earnings, right, I think the average estimate or the Bloomberg Intelligence forecast is across the Magnificent seven EPs growth of forty six percent, which is like slight deceleration

Well.

I think there are both cyclical and structural aspects. In terms of second coal, we're actually quite constructive on the semiconductor sector. That's primal because there is evidence that that infratructory cycle has come to an end, particularly if you look at the guidance from TSMC. There's further evidence that the destock kit is over and you're starting to see that you pick up in the global semiconductor orders. I

That makes for an interesting week. You said that your firm kind of constructive on semis. You know, the one that we're watching closely on the show is Intel Thursday, and we'll speak to the CEO on Friday. But within that you also have Texas Instruments, which is kind of the other end of the excitement gauge, right, more analog device is a much wider range of end market.

Do you care more.

About learning about the health of the end markets or the forward looking commentary on how AI is going to change the game to these companies?

To be honest, I think it's both really So for the more boring kind of areas of semiconductors, it was really dragged by the infantry d stocking for our films for the laptop, for example, because we had such a boom during the pandemic, right, So, as I said, there's just more evidence of that coming to an end, and so the mexicoical outlooks could last one and a half

Janet, we're about fifteen minutes away from the close of trading in Europe. Something interesting happened today. As it stands, ASML, the chip equipment maker, is going to leap frog Nesle you see just at the right hand bottom of your screen, to become the third most valuable European stock behind lvmh Nova. Notice, and it got me thinking about European tech. The SML story is caught up in the geopolitics of the US

We actually we have ASML on our individual equity list, so we're constructive on the launcher prospect for ASML, primarily because it is a monopoly for these advanced set making and I think that you are for European tech. Arguably, there's not a lot of choices if you look at the megacap TAC space, so I finger ASMAN is one of the few options there that would deliver promising prospects.

Janet, there are times on this program where I sound like a bit of a broken record. I'm going to say the same thing again. We're looking at the FED and we're looking at rates because higher rates discount the present value of future cash flows. In the context of big tech, you know, there is an interesting inflation happening around the world, and there's a question in the market of whether we are getting our rates expectations wrong.

Are we getting it wrong? Janet?

I think there is a possibility, given that we initially expect sex, I mean, the marketing expects sex, and then now they have to tribute to five rate cut expectations. But interestingly, during this period of recalibrating interest rate expectation, the markets continue to go up in the US. I think it's not saying that this interest rate cut expectations

Hey, there's something refreshing in the honesty of saying we just don't know. Janet Mouly, headed market analysis at RBCB and Dolphin. Great to have you on the program and coming up here on Bloomberg Technology, Elon Musk's AI company gets a five hundred million dollars boost. Get those details coming up next. This is Bloomberg Technology. Okay, time for

Sure?

Yeah, so it's not clear what part of the story he's denying. But a number of sources have told us that there have been conversations about a new fundraising round. There's actually even been a filing about this, that they are seeking roughly a billion dollars for XAI, his AI platform, and we've heard that they've received maybe five hundred million

You know what I heard from my sources, what you heard, and Lizette Chapman, who we reported this with, heard as well. It's like there's a lot of interest of getting in on this round and investing in a Musk led company. What's interesting to me is like a billion dollars doesn't really seem that much if you look at some of the vast sums the other leading makers of the l lms and generative AI tools of rais, how do these things normally shake out?

Right?

It's a number of weeks that the rounds are often oversubscribed, sure, and.

So the target size of around can and often does change a lot of times. Usually it's actually not completely set until they know the valuation because it's hard to know, you know, if you don't know the sheer price, it's hard to know what people are going to pay and how much you know, how much they're going to invest. So we could see the number go up, and we can also see the number go down. It's also possible they'll do another round in a few months at a

Ultimately, we know the aim was to raise money and up to a billion dollars because of a regulatory filing that Musk and Xai made. There's two interesting parts here. One the X Corps or x the company formerly known as Twitter investors seem to be those most likely to participate. And one element we reported. Instead of getting equity, something being discussed is having access to computes in lieu of equity, which is an interesting situation for an investor to find themselves in.

Sure right now, you know, obviously there's it's very competitive to get in on the next big AI business, and so anything they can do to leverage their technology that could be used maybe for other startup investments that investors are making, or you know, help you know, potential strategic you know, we have relationships with Microsoft and OPENINGI for example, anything that any sort of partnerships that add value to a company could be mutually beneficial for XAI.

All right, bombers. Katie Ruth one of the co by lines with me on that one. It's a big week for technology earnings, Netflix, Tesla, IBM, and Intel towards the end of the week. But there's still a debate about what the Fed will or will not do in the context of when they'll cut rates, if they'll cut rates, and how deeply they'll cut rates. And at the same time, still a debate about the strength of the global economy soft landing here in the US versus entering into a recession.

Same stuff as last year.

We carry on the conversation that reflected kind of in the movement in yields as well US tenure just below four point one percent. It is an election year and my goodness did that show itself over the weekend.

Let's turn to politics.

Ronda scentists dropping out of the race on X in a video.

Interesting his choice to do that on that platform.

Let's go out to New Hampshire and join Kaylee Lions, who's live on the ground ahead of that primary. Kayley, what did you make of the DeSantis timing the announcement but also specifically choosing X as the platform to make that announcement?

Well at The timing certainly was interesting, as he just last week came in second in Iowa and had been saying he was focusing his energy and resources on South Carolina but still was going to compete in New Hampshire and before we even got to primary day. Now he's

Blue moos Kyliones part of the big team on the ground there in New Hampshire. Really looking forward to your coverage. Be sure to tune into the team and New Hampshire. Thank you so much. Look, let's move on to the election, but specifically for because on misinformation. Because even as AI tools have been made to make it easier to create false content, social media giants have become reluctant to step

That's where we stand.

It's an election year, it's easier than ever to create fake content or misinformation, and the approach from a policy perspective of these social media companies and their platforms is the main focus of your story.

That's right.

I mean, what it seems like these social media companies have decided is that it's hard to decide what's true. And that's especially the case when it comes to political information. They can be very opinionated. In some cases, they've gotten burned from the past for trying. You know, for example, during the COVID pandemic, they were trying to respond in real time to changing health guidance, and it was very hard to monitor information to curtail misinformation in that environment.

Let's go specific then, you know, I think back to twenty twenty when I was on the road for that election. The micro focus on policy for the Facebook platform and Instagram versus policy for X. What are some of the key grounds that they have set out if any Well, you know, it's.

An easy call. For example, when you have a post that says you don't actually have the vote on election day, you can vote the following day, that's not true. It's interfering with an election that is not allowed on any platform. But then you have other information that could make claims about a candidate that is in many cases allowed. Meta platforms even allows paid advertisements to express things that aren't true.

All right, Bloomberg exaner edgit him with a very significant look ahead to this year's election in the context of social media. Let's keep the conversation going with Mark Joblanowski, Managing Partner, Chief Technology Officer, DS Political, a digital advertising company for Democratic candidates and progressive Causes, which has come up with its own ad targeting technology, and Mark, thank you for your time here on Bloomberg Technology.

Let's just set the scene.

How do you see social media as a battleground for this election cycle in twenty twenty four?

Thank you for having me. This is going to be an unbelievably consequential presidential election, and it is going to be more difficult for citizens to understand what is true and not based on the platforms social media platforms, regulations

We're showing a chart right now which sets out pretty clearly where Americans go to consume their news. The source of that data is the Pew Research Center. We're focused so much on x formerly known as Twitter, but Facebook is a big, big platform here thirty percent, if Pew is to be believed, how do you view the safety of the Facebook platform. When I say Facebook, we're talking about Facebook dot com and the Facebook app.

Yeah, I think Facebook has as well as other platforms, really pulled back a lot of the sensible protections that they put into place after the January sixth insurrection and during the COVID pandemic. Some of these productions still exist in the paid media space. It's but on the organic side, you really are having a world where they're not wanting to police what's true or not anymore, and that really could pose some serious threats.

The newspeg is DeSantis choosing to drop out of the race in a video that was posted on x first before it was posted anywhere else. You know, you largely are on the Democratic side of this election and debate, but do you see any clear strategic difference in how GOP candidates and that party use social media versus the Democratic Party.

Well, you've seen Twitter X really welcome back a lot of people that had previously been banned from the platform and creating this safe free speech haven that really is anything goes. And you have a certain type of candidate that is going to race messaging on a platform that is that open, versus on the other side of the aisle.

There's the tech and policy side of this, so Meta's view and you can see it and anegs and stories that they lead the industry in their review of.

Content and safety.

Elon Musk has disclosed that X got rid of the election Integrity team for reasons that he's put out there. And then there's the political side of it, in other words, the political pressure these companies are under from DC.

How do you view that tension.

Well, you're seeing certain Republican lawmakers really try and take a view that any sort of content moderation is censorship that is detrimental to the Republican Party. And so you are seeing subpoenas and you're seeing just hugely burdensome requests from members of Congress trying to put a stop to

Now, Mark, we have thirty seconds. How is your technology going to make the ads you do in support of democratic candidates safe and clear.

We make sure that we're reviewing the content of the ads that we run for factual information, making sure that we're working with only people that we know who are actually purchasing the ads. We make sure that we are working with all of the state and local regulatory environments, which has become increasingly complex, and ultimately we try and make that in a turnkey package that allows democratic candidates and causes to run effective media campaigns.

All right, Mark Jablonowski, Managing Partner, Chief Technology Officer, a DS Political Thank you for your time on the show. Now, keeping an eye on shares of Rumble, the video platform jumping eighteen twenty percent, now up twenty six percent, biggest in today jump since March of last year, after announcing

Now coming up on the.

Program, we're going to be speaking with former Deputy Director of the NSA, George Barnes about his new VC role and investing in earlier stage cyber firms.

More on that.

Next, we have reports of an enormous fluffy pink monster struttling its stuff through Downtown.

Fluffy Bird in downtown weird. Let's switch the setting to something more comming.

That was an AI generated piece of voice content from eleven Labs, the startup that uses artificial intelligence to replicate voices in more than twenty four languages, which just raised a new round of funding that places the two year old company's valuation more than a billion dollars. The company said today that it raised eighty million dollars in funding led by the Venture Fund and Dreesen Horowitz, as well as Sequoia, Smash Capital, and s v angel. The company

Thanks so well, I'm really great to be here here. So Number one, I spent my whole adult life in national security at the NSA. I was there at thirty six and a half years, the last six and a half of which I was deputy director, and that gave me a unique knowledge and position on what's happening in our world, the threats that are posed against us, most

The threat has been made clear by the events of the weekend. Microsoft, who shares down three tenths of a percent in the session disclosing that a Russia Link group was able to get access to a small percentage of employee emails. I find this so interesting because one it is a nation state actor as the threat. But number two, Microsoft is the most valuable company in the world and they are still vulnerable.

What do you make of that?

I think what we all have to realize is number one, Russia is extremely sophisticated. They have three different services, the SBR, the GRU and the FSB, all training their sites on things like Microsoft. Because Microsoft is a global company, they and China expend many, many resources. With highly sophisticated people, tools and techniques they have, they will continue to find fissures in vulnerabilities in any globally used operating system or capability.

You know, Microsoft cyber practice is a twenty billion dollar a year or security practice twenty billion dollar a year business. JP Morgan Analysts have this note out, saying that this could be an example of some of Microsoft's competitors getting a bit of a leg up in offering their services. You are now in the investment world.

How do you apply the.

Events of the weekend to your thesis going forward in which startups want to target?

Sure, So, number one, we have many companies that are providing cybersecurity services. We have, of course, all of our companies that are globally distributed and providing services IT and communication services around the world. Cybersecurity is something that is going to be a continuous struggle really for our society. It's not something we can fix and be done. And so my effort here at red CEL will be looking at what are those areas that have been underserved or unappreciated.

There are many startups out there working on all sorts of tools. The common message that I get is the threat actors have the same access to AI technology that we do in building the defense. How will you use your experience at the NSA to kind of help them on the strategy side build out a business think about how they're thinking about the threats.

One of the neat things that I am able to bring is the mindset of hunting. So NSA is both intelligence and cybersecurity. So part of my role at NSA was trying to learn the psyche of trying to penetrate foreign adverssary systems.

And so bringing that psyche.

It's very hard to defend, it's much easier to attack, and so bringing that experience looking at things from a different angle, understanding how to align talent with different perspective is something that I think I bring and I'm hopeing to bring. We have a broad landscape of very highly technical people in government, in industry, and so how can we bring them together in different ways with different experiences that I bring to the table.

They call him the Hunter.

George Barnes, President of Red Cell Partners Cyber Practice, thank

Right, It's an interesting situation that Apple's created for the Vision Pro. So there's basically three types of applications. You can run your existing iPad apps, right, you can run your existing iPhone apps, or you can run new native applications created for the Vision Pro Operating System vision OS. So you're going to have about a million iPad and iPhone apps. They'll run in the system, they'll float as a window, but they're.

Not optimized for the price of the device.

What you really want are applications that are completely native, and so far it seems there's going to probably be between two hundred and fifty and four hundred native Vision OS apps at launch. Now you can compare that to the two thousand iPad apps they hit at the launch of the iPad app Store, where the five hundred iPhone apps they had at the launch of the original app store back in two thousand and eight. But for twenty twenty four having only a few hundred native apps, that's

Bluembos Mark German and lays power on thank you. That does it for b tech