Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live from coast to coast with Caroline Hide in New York and Eva Low in San Francisco.
This is Bloomberg Tech coming up. Planerzon agrees to buy satellite operate a Global Star in an eleven point six billion dollar deal all about Spectrum Plus. We speak exclusively.
To Lucid's new incoming CEO, Sylvio Napoli, as the company announces a fresh injection of capital and deeper Robotaxi push, and.
The US Treasury Department looks to use anthropics mythos Ai model to find vulnerabilities in its own systems.
First we check out the markets which have actually been on a tear ten straight days of gains, and then as that one hundred, we haven't seen this sort of eleven percent charge. We haven't seen this longer stretch of gains. So this is all the way back to twenty twenty one. Today.
The hope is there that we'll have a second round of talks between the US between Iran, maybe it happens in Pakistan, and whether we are not managed to put an end to this conflict, the market is getting ahead of those hopes, and we're currently seeing we'll gain up three trillion dollars in terms of market cap over the course of those ten days.
In Okay, we have some M and A and it's confirmation of a deal we've been tracking on the show for a little while. Amazon to buy Global Star eleven point six billion dollar deal. The offer is basically the equivalent of ninety dollars per share for Global Star and cash whrip just around eighty dollars right now, So there's a premium on where the start's currently trading, even with that big jump on confirmation of the deal. What's it about.
It's about director sell from satellite. There's some spectrum in there, there's some strategy in there. It's time to get the details character it.
Certainly as we get more of them from Blomberg Senior does report to Michelle Davis and just the timeline here, because we knew this asset, this Global Star business was in play. When did Amazon start getting interested?
So we've heard that Amazon started getting interested last year and Global Star is an asset that's kind of been out there for years. People have always talked about it as the key kind of the jigsaw piece and the puzzle that you know, if you bought it because of all of its spectrum, it would help you get up to speed and kind of dominate the satellite market. So that's what it really is about. It's the spectrum. We heard that SpaceX had also looked at this asset last year.
Of course, Amazon prevailed, and you know, both of these players had been racing to dominate the space based connectivity market and Starlink is clearly ahead. But what this does is it really accelerates for Amazon their plans to be a formidable competitor to starlink.
Michelle a really interesting one for the deal's team. Right, Like, Amazon, the tech giant that it is, has never gone that big on M and A. But I think I'm right in saying that Global Star pending clothes, et cetera would be its second biggest ever deal. You know, what do we make of an what was the reporting around the offer, how competitive was and how Amazon really wanted to go for this.
You're right, I mean, this is Amazon's biggest deal since twenty seventeen when it bought Whole Foods. Amazon's been known to kind of go after different parts of the market, you know, everything from healthcare to movie studios to now
of course this big spectrum satellite play. And what we were hearing is that Global Star was really looking for a value above ten billion dollars and the deal that was announced today is that a huge premium to you know, more than one hundred percent premium to where the stock was trading when the leak first hit, you know, last October. And so I mean, it clearly shows there aren't that many players out there that can afford to spend this
much money on something like this. But if you want to win in this market, that's what it takes, clearly.
And the advice they've been getting from banks is the way in which they structure this not just in terms of premium, but in terms of what's on the offer. It's either shares or indeed it's straight out cash exactly.
Yeah, so it's a mix of stock and cash. There's a forty percent cap on the amount of cash that shareholders can get, and that means we'll get up to a cap of ninety dollars per share up to forty percent. The way that works is basically, a few days before the deal is going to close, shareholders will get to elect what they want do they want. You could say I want all stock or I want all cash, because
of course Amazon stock is valuable. But at the end of the day, assuming everyone elected all cash, the most you could get is forty percent forty percent in cash, So it'll be pro rated depending on what folks elect.
Really appreciate you breaking down the deal structure. You know, this has been out there for a couple of weeks now it's confirmed. In that period, what was industry saying about this, right, Like, the big picture is, oh, Amazon's going to go off to Starling, but they're actually if you look at the specific details, you know, in terms of Loo, they have a lot of existing assets Amazon does. What was our read on the strategic play from Amazon.
So Amazon really needed the Spectrum to really accelerate its desire to get into that director device market, which it's said today it's going to do in twenty twenty eight. And what that'll do is it means, you know, consumers will be able to get text, video data, you know, voice using satellite service rather than than cell towers kind of like a cell tower in space. But it really what it does is helps Amazon catch up. They haven't been able to launch as many satellites as SpaceX has.
That's the biggest, one of the biggest reasons why they've been behind. But this, this piece is really complimentary to everything that they do already have.
Bloomberg's Michelle Davis with the reporting, Thank you very much. So what does Amazon get out of the deal. Let's get the reaction. According to Bloomberg Intelligence, the company's eleven point six billion dollar agreement gives it a foothold in the direct to sell satellite market, along with access to valuable spectrum, narrowing the gap with Starlink, an sat space mobile. Bloomberg Senior telecom analyst John Butler joins us with his research.
That's start with the Russian. Now, why do you think Amazon's doing this?
It's all about the spectrum that you know. There's a lot of spectrum out there, mostly in use by terrestrial wireless carriers. And I stress the word terrestrial because the FCC will only allow most of the spectrum now that's accorded to wireless services to be used on a terrestrial basis. But there is a band called Mobile Satellite Service or the MSS bands that allow for direct communication from satellite to cell phone and Global Star owns some of that
valuable L and S band spectrum as it's called. So in my mind, this deal is all about the spectrum. It's not about the satellites that.
Are up there.
GST actually has a pretty thin constellation as satellite networks go.
So coup for LEO, Amazon's LEO potentially is Apple as well. John, So how much does this make this a cementing of that? How do we see Amazon really going neck connect now with the likes of SpaceX.
Well, SpaceX has a big lead here at Caroline. I mean they you know, they have both broadband and directs to sell satellites. Their fleet numbers ten thousand satellites, six hundred and fifty of which are direct to sell. So Amazon has a lot of catching up to do, both on the broadband front and the direct to sell front. My suspicion is what they'll do is throw more funds into gst's next generation satellite development program. They're developing these
next generation SATs called I believe C three's. They will be higher capacity, they'll be able to offer full wireless services for the most part, voice, video, and browsing. And so that's the key here is the Amazon has Jopper pockets.
Let me jump in hre that that is key because there is a really big present day distinction between broadband and the capabilities that starlink offers you and what you can do with direct to sell. Direct to sell is text messages right now, right, and not a lot more. Could you just go through the basics of that distinction.
Yes, So broadband satellites offer high capacity links. So if you look at starlink, they have one hundred two hundred, four hundred megabit plans. The users are static, they're not moving, and so those satellites are really designed specifically for that. Direct to sell is a different animal. You need to go from the satellite directly to a cell phone, and cell phones have very very low their signals are very low power. So you need specialized satellites with big antennas
to do that link. And Amazon have the funds to develop those next generation satellites. Again, Amazon has a little catching up here to do. Ast is also a big player in this market. They have very sophisticated satellites. So I guess I guess I would say this ed the race is only interesting.
Em and A is certainly helping JOMP start at John Butler of Broomberg Intelligence. It's been great to have your expertise or analysis today. Let's get a broader take on the markets. There certainly a bit of a tech M and A field to it till today laid shows with us alliance Bensteam please to be welcoming your portfolio manager, and we don't want to do individual names. What's notable is that there is some desire to be been making purchases
at this moment despite the volatility in the market. What do you make of M and A coming to the foe.
Well, as there's definitely the race is on, I think that's a good description of the current state of the market.
There are a lot of disruptive changes happening across different themes AI is one of them, but there are the things as well, and because of that, I feel that incumbent in particular, with such strong balance sheet historically, they are looking to bolster their war chest because when disrupt changes happen at this pace, everybody is spending, and you can think of spending as in capex, but M and A is another factor that it plays in and then sometimes can help you get a lead. But I would
say the bottom line is the race is on. Everybody's playing both offensive and defensive, and that's what makes an interesting and exciting market to invest.
How have you seen the disruption and the race in space in defense tech, because that been something you've been leaning into with the funds.
Yes, and for our portfolio, we have been looking at disruptive changes across and space, and defense tech is certainly one area that we're seeing tremendous amount of capital flowing into it. And so while the market has been spending a lot of time and AI is certainly part of it where a lot of capital has float into its space defense tech, it is an area particularly in developed markets,
we have actually underinvested and perhaps underestimated. So when we look for secular changes longer term, these are two buckets how we see sustainable growth trends.
Lebe bear with us. One second, we have some breaking news on the Bloomberg terminal. Disney is announcing it's cutting one thousand jobs the first wave of layoffs under new CEO Josh Tomorrow. The layoffs are company wide, but they will fall particularly hard in marketing and the marketing department, which has been consolidated under new leadership. An interesting one.
Disney shares up around a percentage point right now in response to this, But one thousand jobs in the context of this company Caroline is a relatively big move, but it's a company of two hundred and thirty thousand people. So we're going to continue tracking that and bring you a fuller picture later in the program. What you were just saying, Ley is so interesting. When you've come on this program, we've been taught looking in the context of
the AI race on terrestrial based assets. For many people, the next wave, particularly you know, running inference at the edge is going to be above our heads. And so in the context of what we went through Amazon Global Star Satellite Communications generally, what is the Alliance Burned Steene thesis on that.
I think from our perspective when we think about it, a lot of attention has been clearly focused on the GPUs at the core and then on the training side. And this year with the rapid adoption of AI as what we have seen the token adoption, we see increasing evidence the edge is taking off and the data center infrastructure as we see it is rapidly evolving. So if you look at from an investment perspective, from our fund
is we're seeing a broadening out. We're seeing the players, the incumbent, annual entrants, thinking about what the future of infrastructure would look like. We talked about the shortages at
various levels. We talked about the training, the power, but increasingly we're also seeing, just even at the commodity level, across the board, we're seeing the adoption and that gives us confidence that you know, there is increasing confidence in the cap expend the sustainable trend of that, and then beyond that in terms of different buckets that will benefit from it, which really seem the broadening out of different
ways that we're trying. Because at the end of the day, as incredibly capital intensive, data intensive, bandwidth intensive, so everything has to catch up. There are just a lot of investment opportunities across the board.
Have you done an assessment on the viability of the economics of orbital data center.
I think it's probably too early to say that, you know, to say definitively viable and not viable. But that said, we're just using today's revenue numbers. But this is really about the rebuild of the future of infrastructure as we see it in the digital world. So I would venture to say some of the changes that we have seen thus far in terms of how rapidly we have hidden an inflection point in the AI adoption. Just look at the arrs of some of the new entrants is staggering.
How fast it's actually ramping. So if we take that as a starting point and then we look out, I would say, you know, if historically in technology and when there is disruptive trends, what we have seen is on the short term basis, it looks like everything could be overbuilt. But if you actually look out on the long term basis, as consumption is taking off, we actually don't have enough
capacity to address all the needs of the future. And in this particular case, it's really about looking out long term and having a secular view and then say what do we see as the future and then invest accordingly. They're not all going to be winners. There will be some losers, and so we actually have to be very selective as well nimble.
And therefore how much you divert towards the energy focus towards the actual infrastructure rather than just the deployment and the applications.
Yes, we actually just look across the board at all times, right,
all investments. When we look at it we think about you know, I always say we don't look at valuation as the first starting point, but ultimately we do look at the long term potential and look at how much the stocks have been buid up, and then how sustainable it is the growth and the margin profit pools that we're looking at, and whether that justify the valuation, so that all times it does require you to be more nimble as an active investor in this kind of environment.
Wow, we love having you on ed Yeah, Lachue of the lines. Bernstein back on Bloomberg Tech. Let's turn to some whiplash in the markets and the story we brought you yesterday. Nvidia has denied that it's trying to buy a large PC company. The report from the website semi at sent shares of the two of the world's top PC vendors hire yesterday. Dell climbed over six and a half percent. Hp was up over five and a half percent.
That was Monday, after we brought you that original report. Today, after that denial, we're back down on both of those names a little softer, three percent on Dell, almost two percent on HPN. It got people talking. Carro we brought you the original report yesterday. We've had the denial. I think we just wanted to close the loop on that one.
Yeah, some MNA on, some MNA off, keeping us up to speed. Meanwhile, coming up, we're going to hear from Lucid's incoming CEO, Silvio and Nepolie on the ev maker's latest injection and capital. That's a lot as through med tech.
Okay.
Shares of Lucid are all over the place. Frankly, with down almost six percent in the pre market when news broke up twelve percent. We opened higher in the main Tuesday session. The company has named former Shindler Holding chief Sylvia Napoli as its new CEO. The ev maker also announced one hundred and fifty million dollars in fresh investment from its two largest backers, Uber and Saudi Arabia's public Investments Fund. I spoke with Naplie about the new capital
and the company's path forward. Listen to this.
Discussing with PIF discussing with a chairman was an absolutely vital element of my decision making.
They were involved in your talks to become CEO of Lucid.
We have a chairman of the board with RPF of course they were, and again equally I was keen to understand their engagement. Today's announcement is a confirmation or their continued support or they believe in Lucid as a company and in his future. And therefore, absolutely the role is the absolutely heat and they are a very sub investor and it is for Lucid a competitive advantage to be able to rely on that type of support in a very competitive market.
What did the PIF, the chairman, but the PIF's representatives convey to you on what their priorities are, how they see the to do list for you at Lucid.
Yeah, these type of discussions, of course, where there was an element of strategic discussion to be now taken further. But the most important element of that was their belief, their willingness to bring on board someone like me with industrial global experience in turning around in growth in businesses around the world, combining industrial manufacturing and service and building a brand. And we saw it the same way.
I've been reading about you as discreetly as possible, been asking people about you. You are about discipline, reality in your approach cost discipline as well. You look at all these projects that Lucid has some of them may or may not carry forward right at the investor day, a prototype of a specific ROBOTAXI design. How much is that on your list to look at the existing plans, existing products and say let's just focus on the main thing.
It's very high on the priority. As a matter of fact, I believe deciding what we don't do is going to be as important, is no more than deciding on what we do. I'm an engineer myself. I can see the excitement engineers experience when given a new challenge, and so our goal will be to channel that excitement in the projects that are the highest return for our shouolders and then taking them one other time.
A lot to talk about with the incoming Lucid CEO Sylvie and Apolie Great interview ed mean while coming up Oracle It's agreed to purchase fuel cell power from Blue Energy as it scales up the AI boom More on that next. As a boombag tech and the race to build out AI infrastructure, Oracle is moving to solve that power pinch by striking another big deal with Blue Energy
for its fuel cell power remotes. Brodi Ford has more the share prices have reacted, Brodie, And what is it the blue energy brings that others.
Don't they bring power?
Right?
I mean, that's the big bottleneck right now. You can really get the chips, you can get the customers, certainly, but in a lot of cases you just can't get the power to get these big data centers running. And so what Bloom Energy offers is fuel cells. That's going to be a lot quicker than if you're going to go out and try to buy some gas turbines yourself. And you know, Oracle has clearly said that they are willing to pay what is likely a pretty hefty premium
here to get power online quickly. And again they have the giant contract with open Ai. They're on the hook for a number of gigawatts and within a year or two, and so Oracle is ready to give out the cash to Bloom to make sure that this plan goes accordingly.
That scale is interesting because we talk about the hyper scalers and then Oracle from a capacity standpoint, we're covering great detail the hyper scalers securing long term energy supply. Talk a bit more about oracles broader strategy and making sure it can power all of that capacity.
Effectively, Oracle promised something pretty large to open AI. They promised four and a half gigawatts and a pretty unprecedented timeline. And so yes, they are not a traditional hyperscaler, but right now they are building at hyper scale. They have a similar deal with a company called Voltagrid, which offers kind of gas turbines as a service, and they're paying them a lot of money, right, I mean, out of
their Shackelford campus in Texas, that's one data center. They're paying over a billion dollars per year to power it. And so we have to imagine this is a similar scale deal and that's why the bloom shares are so happy this morning.
Bloomberg's Brodie Ford, thank you very much. All Right, So the state of play is that the NAZDAK one hundred, it's a very tech heavy index, is up for a tenth straight day, best run of gain since twenty twenty one. Despite everything that's happening around the world, technology is plowing on. Coming up, we're going to speak to Denny Fish, portfolio
manager on the Global Technology and Innovation Team. Janis Henderson Investors, somebody that has funds in the billions and billions of dollars is zeroed in on the biggest names of technology, and I hope can tell us why tech powers forward amid all these geopolitical crises. It is hard time and this is Bloomberg Tech.
Welcome back to Bloomberg Tech and check on these markets that are continuing to ramp hire. We've had ten straight days of gains and then as like one hundred. We'll dig into that at moment, but today what fuels us higher optimism that we'll have a second round of peace
talks between the United States and Iran. And we're up more than a percentage point on the nast That one hundred Amazon m and A spending eleven point six billion dollars to buy a satellite company, and global start jumps almost ten percent, and that's from the back of a nice little premium being paid by Amazon. Move on and have a little look at what has been an extraordinary
stretch for technology amid all the volatility geopolitical acts. We saw the S and P five hundred shake off those losses of the conflict yesterday and now we have a tenth day of gains. Three trillion dollars added to the NASTAK one hundred ed, the question is can we continue.
Let's get more on the perspective and the markets with Denny Fish, portfolio manager on the Global Technology and Innovation Team Janis Henderson Investors. Something we looked at yesterday is one case study was an Intel right and gaining more than fifty percent over nine sessions. But then as that one hundred is on track for ten straight days of gains while we have a war in Iran, while energy prices are spiking. Given the technology sect has momentum, what
is it that investors are basing that on, Denny? What are the facts as they're assessing in their optimism.
Yeah, I think the primary factors are that regardless of what the geopolitical environment looks like. And you know, obviously I have to couch out a little bit because if it got extreme, this won't hold. But the trends that have persisted for the last three years because of the advances and expected advances in artificial intelligence just won't slow.
And so unless you have a belief that we are starting to plateau in some form as it relates to the models, or that there's some other major constraint that's going to constrain our ability to actually advance these technologies, you kind of have to participate in the investment cycle because this could go on for several years. And you know, having covered technology or worked in the technology industry for over thirty years, you know these trends persist much longer
than investors could ever imagine. And this is the most profound technology shift in our lifetimes. And I think that's why the market has quickly come back to the stocks that were working before the conflict actually started.
Denny, Before the conflict started, software wasn't working, and actually today it is. But that hasn't been consistent in the last few days, particularly when you think about mythols, the latest models coming out of Anthropic and what that means for software written large. What's your take on how beaten up the sector's got.
Yeah, it's really hard because the fundamental thing that's going on right now in software is that the market broadly speaking, is questioning the terminal values of the companies. And once you start questioning the terminal values of the companies, it's
really really hard to disprove a bare case. And the reason that this just continues to get questioned and we've seen it really it started in mid December, when you know, with the launches of CLAW four dot five and Codex from open AIY, those were step function changes, and I think in an environment where investors were expecting maybe more moderate increases in capabilities, we saw saw a step function change. And then with four dot six from Claude, we just
saw another step function change. And what's important is, you know, these context windows are getting much longer, the agentic capabilities are becoming amazing. You combine those two things, these these products, now, these models can do things that humans, the best humans
can barely do when it comes to software development. So really what it comes down to then is what is going to be the barrier to injury for software and how sustainable are the competitive advantages of the existing incumbents.
And I think one of the challenges is that not only do you have threats from the models at the moment, but all these capital market cycles generally kind of look and feel the same, and as we get into twenty twenty seven twenty twenty eight, we're likely to see an environment where you see a whole slew of agentic first software companies that have been funded in the venture community over the last three or four years that are then going to becoming a scaled enterprises growing really fast, and
typically that's a more attractive environment.
And so Joe vin to software at these levels. Denny like, how do you make that decision? Or is it safe to be with the picks and the shovels, with the energy of the infrastructure of the chips.
I think it's still safer to be with the picks and shovels and the infrastructure that's building out, you know, for these models. And I mean if we just look, I think a great data point that we just recently got if you read Anti Jassey's shareholder letter from Amazon, and he just clearly lays out what's going on within their infrastructure. And once you really understand kind of the constraints that we're still facing and the returns that these companies expect to get over time, you can start to
get more comfortable with that. But you know, as far as the I can see, I was just in Asia. I mean, we are supply constrained in AI infrastructure, likely you know, well through twenty twenty seven, maybe into twenty twenty eight, depending on you know what components or you
know that you're looking at. But nonetheless, this building this buildout is going to continue, and I think we're going to continue to see the same thing that we've seen the last three years, where we get closer to the end of the year and then the expectations around CAPEX, whether it's the hyperscalers, enterprises or governments, just continues to exceed expectations.
So to illustrate that point, the top two holdings in the two biggest funds that you're across any are in Nvidia and then TSMC. And the state of play so far in twenty twenty six is that then, as that one hundred is up modestly and the socks excuse me is massively outperformed. I think, going back to Caroline's last question, when does that change? When do you which point in times you adjust stieholdings to reflect more dominance of the software names benefiting from the investment.
Yeah, I think a couple of things would need to happen. I mean, the reason that AI infrastructure continues to work is number one, the fundamentals remain quite strong and continue to exceed expectations. And that's not just TSMC and Nvidia. That's the memory complex, that's optics, that's energy. I mean, we can you know, data center infrastructure. You can go, you know, down the whole list and they all continue
to participate. But you would either need those fundamentals really to start to slow, you know, lower than what investor expectations are, or the valuations to blow out to levels where then you just get really uncomfortable at what your
return could be despite really strong fundamentals. And so far, fundamentals continue to be strong and valuations are reasonable across a lot of the ecosystem, and you can trast that to software, for example, where maybe fundamentals are stable, maybe they're not declining yet, but as I mentioned, you have
terminal value risk. And then you actually, if you're looking at these things and comparing them on say like a gap basis or adjusted for stock based compensation or the things that a lot of generalist investors would do, the valuations actually might not look that attractive in many cases. And that's why I think you have to be careful.
We're still investing in software, to be clear, but we're taking what I call a rifle shot approach versus a shotgun approach when we think about the names that we'll invest in, and more likely than not, the better place to be invested. Is in infrastructure software that's based on consumption that's really going to benefit from this build out as well versus the application space.
Danny Fisher, Jenis Henderson. We so appreciate it. It's even on the road a lot. Thanks for checking in. And look, let's check out another era that in Vidia is injecting some life into quantum. Now we understand in Video is launching its world's first family of open source quantum AI models called Nvidia Icing. That's named after a mathematical model. And really this is a design how researches enterprises that
build quantum processes actually capable of running useful applications. Look at the stock market reaction, D Wave, IONQ inflection, which is part of this partnership in particular, all up into the right end.
Okay, coming up the Treasury Department's tech team. Once access to Anthropics Mythos, we'll discuss the air model's cybersecurity impact. Next, this is Bloomberg Tech.
The US Treasury Department is seeking access to Anthropics mythus model so it can begin hunting for vulnerabilities. Now that's according to a source, Anthropic has worn the powerful model, maybe capable of powering cyber attacks and has released it only to a limited group of institutions. Thus far s get the latest Bloomberg cyber editor justone. Is it as
powerful as all? This is a good reason why part of the government, I might say, while the Pentagon is currently in a legal fight with anthrops be getting access to the.
Model, Anthropic hasn't released this model publicly, which is really important for everyone, especially in the general public cybersecurity research. Cybersecurity researchers don't have access to this tool, so we can't independently verify that. Initial feedback has been that this
tool is quite powerful. This is the kind of thing that it's essentially what Anthropic describes as the ultimate kind of red team tool that if you unleash it within your systems, you're going to use it to find as many bugs and vulnerabilities and potential points of exploit before.
The bad guys can so. According to our source, right the Treasury Department want access to it to identify vulnerability. Is there any more flesh to that that you can take us through, Jeff, what the Treasury Department would do with it. There's also the background that Treasury Secretary Besson was part of the official group that warned Wall Street about taking this seriously, right.
That's right.
The best meeting that he had with fed Share Powell is a really important piece of context to this when they summon these Wall Street leaders to a meeting with them in Washington to urge them to say, hey, you should unleash this tool. You should try to find your own kind of flaws and vulnerabilities before outside attackers. Do you know at that time, we know that Treasury and some government agencies were in discussions with Anthropic about using
this tool. They want it for the same reasons that they're encouraging so many of their partners to use it.
Bloomberg Jeffstone with the reporting, Thank you very much. Let's get more on the capabilities an impact of Anthropics Mythos that speak with Jaya Blue. She's the chief operating Officer and chief Information security Officer at the AI cybersecurity firm Aisle. A week ago, I spoke to Mike Krieger, who leads Anthropics Labs team, and in the context of Mythos, who was saying, when you have a model this powerful, you
can't actually isolate one capability. But what's so confusing about that is we are only talking about Mythos's ability to identify vulnerabilities quicker at great expense. But that's the very narrow use case. What have you made of that?
Well, So, actually it was never in doubt that we can use AI to discover vulnerabilities, and at Aisle we've been doing that since August twenty twenty five. We found all of the vulnerabilities, and something that's been a very hard code base, like open SSL, we've been finding those vulnerabilities. So using AI to find vulnerabilities is not a unique capability. What I think is interesting about Mythos is it's supposed to be the most powerful model yet, and I have
to say, like there is a contention here. I disagree with that because I think one of the things you see is that you know, the vulnerabilities that they've actually surfaced and disclosed are not impossible to find, not with a closed source model like Mythos, but also with small, tiny, open source models. And that's incredibly significant. Because Mythos has now been restricted use to only like forty companies, they
are incredibly deterministic about who gets access to it. And I think that what we should expect is that if we really want to maintain a state of security, specifically with open source security vendors, then we need to make sure that they also have the capability to do this. So one of the things that we're really intent on is releasing something open source that is comparable the finding those same kind of vulnerabilities, and we've proven that we can actually do it.
How can you do that safely? And do you think therefore that this is being done safely from a mytho's general purpose model perspective, or is it more hype that's happening around it.
Well, I think there's always you know, I think with all of this stuff, there is always a degree of hype and the real effect you can only actually validate it when you have access to the model and you
compare it to other models. But if you just take a look at the vulnerabilities that they disclosed, we can confirm that we can find those vulnerabilities not with a closed source model from nthropic, but an open source model like GPT five point four, And that is the tiniest model that we can test with, and we can confirm
that we can find those same vulnerabilities. And the reason to make this more widely available, this open source tiny LM model is this is something that I believe that we should always do because defenders now globally, are you worried about who else can build this? If we've already proven previously you can do this with open source, it's just a matter of time before someone else figures out how to do it. So without making it open source,
we're actually giving defenders a disadvantage. And I think the real issue is how can you get defenders up to scale globally and not just forty companies in Selicon Valley, but everybody on a level playing field in order to defend their stuff. So open source maintainers need to be able to find their own villabilities in order to fix them.
Our attack is already looking at these smaller open source models. What have you seen, particularly as we are in the midst of a global conflict where Iran has very sophisticated cyber attackers.
At least I think the best example that we saw is the recent example that was hit by the towards the Mexican government, where you saw a bunch of compromise happening because of AI, because of an attacker using AI to hack the government in Mexico, so I think we
are definitely going to see more of this. I worry about again the ability for people who are trying to build like foundational Internet capabilities to have access to things, to find issues in their own code base and then defend them proactively, versus having sort of small community only have access. I think we need to democratize this because the building blocks of the Internet are democratized. They are in the hands of everyone.
JII.
This is the view of Bloomberg Intelligence are in house and this right, and that is that mythos on paper, because you quite rightly point out the limited scope of access lacks the capability to replace leading cybersecurity providers like yourself. Beyond vulnerability assessment, right, it's good at identifying memory corruption, logic vulnerabilities. Do you accept that that that's where it's
limits end. Because the conversations I've had every day for seven days is that this is a model more capable than any we've seen before.
And you know what I think Mythos is actually doing. Let me just maybe cavy up this by saying, I think they're doing a really good job. I think it's hard for us to actually validate some of that that it's the greatest model ever unless you can actually do it, because we can reproduce this with three and I want to emphasize the word free here. Free open source models. The smallest models are capable of finding the same thing.
So it's not about the model, although anthropic makes it about the model, It's really about the system and the scaffold and everything you build around it. Because what we see is that this is this capability is quite jagged, so it's not good at everything. Equally as well, it's good at some things, like you pointed out that it's not good at everything, and this is something that we also see in the open source model. But given enough open source model, you can highly paralyze all of this stuff.
So instead of relying on one exceptionally intelligent model, you can take this kind of raw intelligence capability, farm it
across many models and then actually find more. This is something that we've proven we can actually find bugs that Mythos has missed, and we're doing this together with the open source community, for example hugging face models and you know a GPT five point four and again like doing this for free means that there's a certain degree of asymmetry right now that's being held by anthropic that asymmetry will decline, and to your point, we will have other
actors also capable of doing this. So it's about giving defenders the leverage here to figure out their on issues. And six.
Then it's great catching out with you, Javalu A Vile. We really appreciate your time. Now coming up US residential electricity prices. They have spiked in the last five years, and how much blame is AI getting for that jump? What's it going to mean for the midterms? More on that next.
This is a boombog peg.
The rapid build out of AI infrastructure has seen the spike in energy prices wholesale electricity in areas with significant data center activity, so there isn't as much as two hundred and sixty seven percent in five years. That's making the cost of electricity for the twenty twenty six midterms well what the price of eggs was in the twenty
twenty four election. That's the focus of the latest Bloomberg Big Take, and one of our reporters on it, Energy reporter Josh Saul, is here with us now and I want to clear something up first and foremost, because is the wrap the bad rap coming to data centers the right target right now in amidst oil price issues, amid just supply demand constraints, the up grade of the utilities.
More broadly, people are really angry about their utility bills. Data centers are part of the reason that those bills are getting higher, but they're not the whole reason. There's other things like investments needed for an aging grid, overall inflation. But when you ask people, when I was in the Lehigh Valley in Pennsylvania, when I would ask them about their utility bills, they would say, I'm so mad about the data centers. They would go right to.
That, right, Josh, you know there is when it comes to data center impact on any given zip code. There is not in my backyard, right, Nimbi. That's one movement, But specifically with energy prices and how it relates to the mid terms, How do we measure the movement of the electorate in how they feel about this issue, in how it might sway votes in key races.
The NIMBI issue is more about green space. It's more about what's right next to you. People worry about power prices, but the way that the power prices travel across the grid. Whether you can see a data center or whether it's ten or even one hundred miles away, it's still going to be affecting your power bills.
And look, it's affecting Japanese power bills. It's affecting UK pawables, and some of them are data center related to some of them are also energy and import related. But take us to Pennsylvania and take us to whether or not this is being deemed more one side, more Democrat issue, more Republican issue, because of course it is the administration, the current administration that is all in on data center expansion.
It's shaping up as an anti incumbent issue. So there's a Republican incumbent in the Lehigh Valley and people are angry about their power bills, and often that anger is taken out on an incumbent, whether it's a local representative in the Lehigh Valley or whether it's President Trump.
I want to thank Bloomberg Joshaul, who has the big take and it's a must read. Let's get back to Disney, the story that we broke at the top of the hour. Disney is cutting around one thousand jobs. That's according to Bloomberg's sources, Bloomberg reporting that the cuts will be company why, but impact marketing most This would be the first layoffs under new CEO Josh Tomorrow, who took over from Bob
Iger in March. Separately, Bloomberg is reporting and has seen a memo from Josh Tomorrow to Disney's staff that says that they will start eliminating roles in some parts of the company, and they've begun notifying those impacted employees. The stock didn't really move when the story broake carry you know, there's been reports on this in prior weeks, but yeah, a big piece of news.
Yeah, more agile, technologically enabled workforce, that's what they want. Well, we talk about that technology and the enablement and it does it for this edition of Bloombog Tech.
Yeah, recap on the pod. You know where to find it. A lot of important markets, news, technology conversations. That's where you find it. From New York and San Francisco. This is Bloomberg Tech