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This is Bloomberg Technology with Caroline Hyde and Ed Lovelove.
I'm Caroline Hyde at Bloomberg's World headquarters in New York.
And I'm Ed Lovelow in San Francisco. This is Bloomberg Technology. We're back and coming up.
The full market coverage ahead is Kathy Wood Sells into the video Frenzy by coming Hunt, SMC, Steak, rewaiting or something more details to come.
Plus, the Supreme Court will hear challenges today on two laws that aim to prevent social media platforms from censoring posts. We'll have the latest and.
Jeff Bezos and video and join open Ai to back in company developing human like robots. We'll discuss that and so much more throughout the hour, but first checking on these markets. Little Croquie, as is my voice, We're currently up about a ten tove percent. Look, we're clawing into a big macro week. We really revert our attention to FED speak to economic perspective when we get their core PCE details.
Really, how is inflation.
Going at the moment? Yesterday all about in vinear and in earnings. This week it is all about, of course, the eyes on macro. We're looking at socks European six hundred, actually just down off of its record high, so a little bit of course is training in Europe as well. Tenure years up three basis points as we look for
that inflationary reader. Let's look at what's happening in the world at crypto though, because bitcoin as dollar basically flat on the day, Crypto is spiking up about two percentage points.
Hopefull you got on the micro I'm signing the week with some m and a Monday. KKR is buying a software unit from broad Con for about four billion US dollars. This is a unit that basically provides the software for remote desktop connection. It's something that Broadcom got out of the VMware deal last year. You can see avgo the tick of Broadcom. It shares up almost a percentage point. Now kk are not doing much but an interesting way
of starting the week. It's something that Bloomberg had previously reported. The other kind of mover story that we're looking at, as we always are at the moment, is in Vidia, but also the US ad rs or US listed shares of TSMC, both moving to the upside in video up one point two percent, TSMC hiring US trading four tenths percent. As you said, what we saw is our the innovational politics is have sell down its physician about nine thousand
ADRs on TSMC. Now, you can kind of look at it as a rewaiting, but the main point is it's the first time they've offloaded TSMC shares since twenty twenty one. The story seems to be reduce exposure also to Nvidia because TSMC the lead contract manufacturer semeis globally, so much of the run up in the space has basically been the carry through from the AI hyper around in v year in the age one hundred. We can get deeper
into that. It's something that I'm sure many money managers around the world care are having to deal with right now given the recent performance.
Let's talk to one of them. So it does money with us head of longtime un Constrained Strategies at Martin Curry and Vidia largest holding among so is global long term unconstrained portfolios. So it is so good to have a focus like yours. After the week we've just had are you still committed to a name like in video when I know you talk about valuation discipline, What does one look at an evaluation perspective the forward pes or actually just the sheer scale of a two trillion number.
Yeah, it's a good question, Caroline, Thank you very much for having me on your program. For us, it's still a case of looking at how the gross opportunity translates and how the gross profile for Nvidia comes through. So when you look at the AI basket that we follow over fifty stocks, there's been a rapid appreciation. So we've got over the last twelve months, sixty percent moving share prices on average for earnings that have only moved by
seven percent. And you compare that to Nvidia over the last twelve months is up almost two hundred and eighty percent, but its earnings have been upgraded by three hundred and eighty percent plus, so you've had multiple contraction. So that's one aspect to highlight. We want to focus on companies that can monetize from AI and where there's more likely to be earnings momentum that really follows through.
So as you've been reporting with the likes of a kathe word and a managed gtfare. Do you rewait on a more regular basis, Do you have to think about broadening your perspective away from an video at SMC to some of the other names that perhaps haven't been run up as quite so far so fast.
Yeah, we still focused on companies that can monetize, which for us are the companies that provides a pix and shovels to the AI opportunity, So the enablers of AI or in other words, companies that will benefit from the significant investment spend that is going on both by the hyperscalers but also corporates will be spending more on AI, and so which are the companies that can monetize from that?
And for us, it's companies like Nvidia that's really well positioned, and we believe in Vidia is probably in the same position as ASML was ten fifteen years ago as a quasi monopoly and enabler of the AI opportunity. And then you have companies like Microsoft, which is really positioned across three fronts. Firstly their stake in open Ai, secondly their cloud provision, and thirdly the fact that they have a
connection with enterprises. And we believe corporates are the most likely entities in the economy that will need to harness AI to ensure that they stay productive competitive, because ultimately, you don't get competed away by AI when you're a corporate, you get competed away by another corporate using AI better and faster than you do.
ZERI. This is what Kathy would had to say on X the social media platform. You know, she's been in the name long time. She feels that she was early to the kind of ball fesis around AI. But our own Eric Bautunis, he's our Bloomberry intelligence specialists on ETF. She kind of makes the point that don't get bogged down and the selling on any given position, think about
it from a waiting perspective, which Caroline mentioned. So this is the table right, and if you look at the waiting of TSMC, the ADRs at least and also in video within ARKQ, it's remained relatively constant. What you seem to have in common with her is that the ball thesis is intact, that there is going to be a big infrastructure build out. And this is something and I've been talking about for quite a long time now, where
do you look for that infrastructure benefit? If you're an investor, Yeah, and that's right.
I think we were here in September last year and at the time we discussed the Nvidia valuation and we felt that there was still a lot of support and since and the stock is up i think over eighty percent, so it's had a very strong run.
For us.
It's still about focusing on those companies as I mentioned, that can monetize, and NVDA is really well positioned for that. The debate will be what is a runway of growth and for us over the last twelve months, we've really just seen the tip of the iceberg in terms of
spend being channeled in AI. If you look at some of the big tech companies, there's plans to increase capex visue by twenty two percent to about one hundred and eighty billion dollars when you add up the various big tech companies that we follow.
Sarah, you mentioned Microsoft, You mentioned being able to monetize. Do you have the same attitude towards Google or Alphabet the parent of Google.
We're actually one of the investors that is very underweight the Magnificence seven in terms of names. So of the seven, we only hold two companies in our global strategies, and these are Nvidia and Microsoft. So we do that through a fundamental assessment, which for US is an assessment of growth, returns, profile and valuation as well as taking into a kound of various fundamental risks.
That we assess.
You have such a global perspective, which we love, and in your notes you really talk about some of the risks, and one of those is geopolitical. How are you factoring, for example, a commitment coming from in video and Jason Jensen saying I will remain in China and want to still be owning that market when geopolitics or as they are.
It's a really good question.
The geopolitics is probably the most important risk that investors should focus on. Unfortunately, it's also the most difficult to quantify. So for us, as you and I discussed Caroline, we took the view that we wanted to reduce the geopolitical risk and move to the beneficiaries of technological and geopolitical fragmentation, which is when we switched out of TSMC into a SML. We believe SML will be a beneficiary of the fragmentation in production sites that's currently going on, with plans being
built in the US, in Japan, and in Europe. So for US, when we then look at Nvidia, we believe that indeed it will have some challenges in operating in China, but it will be adapting its products to make sure to be on the right side of the regulation.
Ziri. About ten days before in Video reported earnings, I spoke with Jensen Hwang about the idea of sovereign AI and he sees a world in which in Video starts doing more business directly with nation states, right countries. It's one of your top holdings, and I wondered if the analysts on your desk a sign in their models any future growth that comes from a purely government contract for h one hundreds away from the private sector.
We believe there's upsite to our forecast from that angle, but we certainly agree with Jensen that there will be a growing demand coming from sovereign AI as well. There is an element of duo political angle to it, and Jensen has explained that very well on his earning school and we believe that that again create some element of tailwind to the earnings momentum, but also it highlights importance
of making sure that when we forecast companies. We always use different type of scenarios and that those scenarios to capture some of those eventuality.
S ried.
It's always great to have you here. Thank you for popping in with us. Usmani of Martin Curry and.
Some more news. Yeah, another story in the AI space. French AI company Mistrau announced a strategic partnership with Microsoft today that includes making the startups latest artificial intelligence models available to customers of Microsoft's Azure cloud. The move comes as Microsoft faces mounting political scrutiny globally for its deep
ties to Open Ai, which competes with miestrob. Today, the Supreme Court is hearing arguments over whether to state laws preventing so social media companies from moderating content violate the First Amendment. Here for more is Bloomberg's Emily Burnbam, You've got a fantastic quick take explaining what is a complicated legal situation. Let's start with the basics. What is this case about.
So this case is a challenge from two of the tech industry's biggest lobbies. So that's net Choice in CCIA. They are challenging laws in Florida and Texas that are aimed at preventing social media companies from taking down certain kinds of political speech. So the question in the case is are the social media companies protected by the First Amendment? And the arguments are going on right now.
When I'm reading your quick take, I'm reminded of what happened in twenty twenty the last election cycle when I was on the road. The content moderation or the policy from the tech companies kind of came as a reaction to what happened in that election cycle and the political story. To me, it seems like in certain sections of DC that they overdid it. That there's a feeling that conservative voices in particular were over censored. That is that the political story. Emily.
Definitely, both the Florida and Texas laws were written and then ultimately passed in the wake of the biggest social media companies booting or suspending Trump from their services. So a lot of what we're seeing now is fallout from that. You know, should the social media companies be allowed to take such a prominent politician off their platform? Can you write a law that prevents them from doing it again, or do you ultimately sweep in all kinds of speech?
That is you know, perfectly reasonable for them to have some editorial control over.
It's hard on your beat, but I'll ask you anyway, what do you think the Supreme Court is likely to do with your crystal ball?
Well, I've been listening to the arguments for the past hour, and there's so much skepticism already of.
The Florida law.
There are distinctions between the Florida and Texas laws, but basically the questions at the center of them are the same. We're hearing skepticism from the liberals and the conservatives, including some of those swing justices like Kavanaugh.
They all are kind of confused about the law.
They say, this is so broad sweeping, How does this even get implemented? Why are we even talking about this? So it's not looking very good for the States.
It's just really great to have you on the show, Emily, But I do urge the audience go and check out Emily's quick take on the Bloomberg terminal Bloomberg dot com because you get a clear understanding of what is a complicated story. Thank you. Now, sticking with DC, we're actually waiting on some news from the Commerce Department. It could come at any time, potentially regarding grants from the Chips Act.
Gina Romondo due to speak momentarily. Guess who's with us Bloombers Kaylee lines, we always have our eye on the flow of capital out of this key piece of law making. What do you think is going on? Well, we've already heard from.
The Commerce Secretary, not today, but last week when she hinted there should be a drumbeat of bigger announcements related to allocating funds and loans from the Chips Act in the next six to twelve weeks. And Bloomberg's own reporting indicates they want to have many of these grants announced by the end of March. So the question is, could we get more hints from the Commerce Secretary when she speaks expected in just moments to give an update on
Chips Act implementation. As you well know ed ed, we're talking thirty nine billion dollars in direct grants here another seventy five billion dollars in loan and loan guarantees. And among the companies that could perhaps getting access to these incentives next could be according to Bloomberg's reporting, Intel, TSMC, and Samsung, all of them are expected to be major recipients.
Of course, the Intel CEO Pat Gelsinger last week said it could be coming soon, and Bloomberg has reported that Intel's incentive could be in the tune of ten billion dollars, which would be the largest any Chips Act funds granted so far as the Commerce Secretary is trying to do all these out and she's actually just beginning to speak now at the CSIS event, So of course we'll be watching for the headlines that she makes and bringing you off the latest on that news.
Yeah, that Chips Act money is one of the key pillars of Pat Gelsinger in Intel's smart capital approach, particularly on the foundry business. Bloombergs key lines sticking across those headlines are coming up here on the program. Some of the biggest names in tech are investing in a business developing humanoid robots. It might not be the one that you think. More on that next. The news keeps coming at a DC we're looking at shares of discover and
Capital one. A group of lawmakers led by a Senator Elizabeth Warren and also Representative Alexandria Ocasio Cortes are urging the FED the OCC to block this deal that broke last week. When I was on VACA a big one in the financial technology and consumer credit card space. The share is not really reacting to that kind of push back in DC both up a tenth of percent. This Bloomberg Technology. Okay, it's time for talking tech and first
up in the news. Mark Zuckerberg will travel across Asia, with stops in Japan, South Korea, and India as the Meta CEO works on artificial intelligence services and forges ties with businesses and government leaders across Asia. In Seoul, Zuckerberg will meet with partners, and according to sources, he's tentatively scheduled to meet with South Korea's president. Local media also report that Zuckerberg will meet Samsung chairman Jy Lee to discuss cooperation in AI and LGCEO to talk about joint
development of an extended reality headset. And A group outbid Citadel Securities for Credit Swee's investment bank venture in China. The surprise move there'll be subject to close regulatory scrutiny. The bid by the Jackmar backed fintech giant to build a securities business using Credit Swiss's operations will face a thorough review, as China favors of foreign buyer UBS group which now owns Credit Suisse, will have to choose between the higher local bid from ANT or the lower Citadel
offer that's more likely to win government approval. All of that is according to Bloomberg sources. Plus, following an inquiry from the US SEC, Ali Barber disclosed a wider web of Chinese government states in its business units than previously known, with state ownership in more than twelve business units. In the notice, the company said the disclosures were made in response to certain comments from the staff of the SEC
as an amendment to its earlier filing from July. The filings come as China's ruling Communist Party says it will play a bigger role in steering the country's technology and science development. Another big story Jeff Bezos and Nvidia and other big tech names investing in a business developing human like robots. The startup figure Ai, also backed by Open Ai, Microsoft, is raising about six hundred and seventy five million dollars in funding that carries a pre money valuation of about
two billion dollars. That's all according to Bloomberg's sources, and that was reported by Bloomberg's Mark German, who joins US now humanoid robot. You think Tesla an optimist, but I've been digging in to this company. It's an interesting round. The numbers are big. What have you learned?
Yeah, figure, this is an alternative to optimists. What Elon Mask is building. This company, like you said, is building humanoid robots. And the idea here is one to address labor shortages in the labor market at some point, but also to substitute for humans for more dangerous jobs, perhaps
on production lines and such. And what we're told is that there could be an announcement this week for a slew of funding topping six hundred and seventy five million dollars, like you said, at that two billion or about two billion premium evaluation. And you have a lot of big names in one funding round, which is quite rare. You
have Jeff Bezos's personal investment firm Explore. You have Intel coming in with a twenty five million dollar investment, in Nvidia coming in at a fifty million dollar investment, Amazon's VCRM, Samsung's VCRM, lg'svcr plus, Microsoft coming in with ninety five million, open Ai coming in at five million. So certainly you have the who's who they're of companies interested in artificial intelligence,
robotics and these types of future technologies. So this is going to be quite interesting to see how it all develops.
You know, the Nvidia piece is interesting. You know, they've invested all over the place privately, and as we learned in the thirteen FS, in some public companies as well. I think I'm right in saying at one point open Ai thought about just buying figure ai outright, What can you tell me about the company's progress? Do they have anything to show for their work in humanoid robotics so far?
You know, before Sam Altman was ousted as CEO last year, there were some pretty deep negotiations regarding an acquisition a figure by open Ai. There were also more extensive conversations around bigger investments, and the open Ai investment ultimately came down to only five million dollars. And I say, only you compare to the fifty million from Nvidia, one hundred million from Bezos, you have one hundred million from a
venture capital firm called Parkway. So certainly the open Ai deal sort of really fell apart amidst the whole Sam Altman situation last year in terms of the progress that figure has made. You know, they've published some videos and some specifications on their website. It's unclear who's further ahead, Figure or you know, Elon Musk's optimist, but clearly they're selling the goods to these investors and getting enough money
from them. You can see the video they're playing. It's unclear if that's real or some sort of you know, AI created markup or you know, preview of what's to comet. Certainly it's going to be years or even a decade plus before what you've seen that video is a reality. But clearly these companies have enough money to put in you know what is what amounts to change under their couch, to play some bets here and there and hope that figure works out for them.
Bloomberg'smark going, by the way, check out Mark's latest power on as well for a great photograph of you wearing the next generation of smart glasses, just putting it out there. Check it out. Okay, welcome back to Bloomberg Technology, Ed Ludlow here in San Francisco. It's Monday's go. It's a very business one. Let's start with some markets. This is more of like a PSA from last week. But Amazon has replaced Walgreen's Boot Alliance on the Dow Jones Industrial Average.
Remember that's an index where waitings are done on a share price basis, not on a market capitalization basis. Something that was announced last week after Tuesday's market close, but I was on vacate I missed it. The point being it's effective as of Monday sessions. So if you look on your Bloomberg terminal, you'll see at Amazon flat, Walgreens
Boots Alliance down two percent. What precipitated it was actually a three for one stock split, not by Walgreens but by Walmart, which had a reshuffle for the whole of that index. Another stock that we're watching closely to the downside is Alphabet, parent of Google. There has been so much discussion, particularly on x about the image generator on Gemini. An update from Google out in literally the last hour
or so. The company plans to resume the image generator on Gemini, which it had paused at some point in the next two weeks. Remember that Alphabet pulled the image generator of Gemini last week because of criticism over the
inaccurate historical depictions of race. You will have seen that Elon Musk in particular, has been very vocal about this issue of the Gemini and image generation on Gemini in the last twenty four to four day eight hours, Okay, a slur of states have been targeting AI deep fakes ahead of the November election, and now that also includes
New York State. New legislation from Democratic Governor Kathy Hochel would make New York the first in the nation to explicitly empower voters to file lawsuits against AI made political deep fakes. I want to bring in Zach Williams from Bloomberg Law, who's been writing about this. This would be New York going first on something. What is the proposal that's on the table here.
So Governor Kathy Hockel is proposing in the state budget do April first, that New York State take action against deep fakes on a number of fronts, intimate images, child pornography, and of course deep fakes in elections within sixty days of election day. Now, what's so interesting about this one compared to the handful of states that have of current laws or those considering similar legislation, is the enforcement mechanism. There's no civil or criminal penalties for creating a deep fake.
Under Hocal's proposal, but she would empower voters to actually file lawsuits of their own seeking injunctive relief. They see a deep fake, whether or not it concerns them personally, they can sue to have it, to have someone remove it from online or anywhere else that they see it.
When you look at the language in the build, there are some similarities with other states, right, I think first of all of Arizona, but broadly, even though New York is kind of getting early at this, there is momentum behind the same initiative in other parts of the country. Yeah, a big.
Issue facing states is not only just how to enforce these laws, but the type of behavior to actually cover. You know, five states currently have existing laws against AI created deep fakes, and most of them apply to you know, people that are or trade or to political candidates specifically. You know, the New York proposal and a few others before states out there you know, really get at, you know, defikes that arguably try to influence a voter or influence election,
which is a much wider type of behavior. You know, think of you know, the AI deep fake of Joe Biden in New Hampshire. You know, that's very specific to a candidate. You know what Hocals proposal and some others across the country might do is actually, you know, make any type of AI phony, you know, material illegal, whether or not it shows a real person.
All right, Zach Williams of Bloomberg Law. Great to have you on the program for Morbany. Keeping across that in the coming weeks and months, Let's keep the conversation going with Denver Riggleman. He's the founder of the security firm Rogoman Information and Intelligence Greeve. He's also former Republican congressman for Virginia's sixth district. Served as an Air Force intelligence Officciety's also the co author of The Breach, The Untold
story of the investigation into January sixth. Denver Rigman joins US now at Denver. We just heard from our reporter about at the state level action on deep Face. We heard earlier in the program from our reporter in DC about the Supreme Court's consideration of content moderation. Leaning on your own work, research and your political career, how big an issue is content going to be in this election cycle twenty twenty four.
You know everybody's saying it is a massive issue what it is. But there's that flip problem righted on the other side when you're looking at technologies that people believe it. You know, when we look at the point of origin of these videos, which is why I started my company, was to look at where this disinformation line actually comes from or what the deepets actually have as far as
radicalizing language, is that people believe it. I mean a lot of people were actually radicalized with memes and que drops, So does that mean with deep pigs and AIS. I just don't know what the enforcement mechanism is going to
be on satire. I don't know how the enforcement matanism is going to work if you know, people are actually doing it because they think the AI deep pakes are actually effective, you know, and actually making fun of these candidates or asking for violence against candidates or violence in general. So it's just going to be interesting to see how this comes down as far as the legal methodology of this.
But as far as AI deep pikes are concerned, you know, I've seen Biden deep pakes with actually him on video. I'm actually working with a company on deep fakes and licensing the AI for each particular individual who wants to
use AI for themselves. And I have to tell you, Ed, I'm very worried that it's not just the fact that the deep fakes are being generated, it's that the populace, there's a credulous populast tens of millions that are going to believe this because they don't understand the technology and they're ignorant about actually what's happening on social media and ignorant about what's happening with AI.
Denver, in the body of work that your current firm is doing, do you see any specific focus or center of activity either across the two parties will focus on any specific candidates.
Yeah, I think what you're going to see with AI, which you see in the generating AI already from the far right, I think right now, I don't think independent center right Republicans or Democrats really have any idea about how effective AI can be if it's in the hands those specific individuals that have no moral boundaries. And that's the thing that really does worry me, Ed, is the lack of moral boundaries and the fact that technology is
widely available. This is not something hard to do. I mean, you can hire firms to do AI, you can do some of it yourself. It's just not that difficult. So what we're seeing also is that the foreign disinformation campaigns could be very effective with AI, with deep fake specifically, but with other type of things, just like audio. I mean,
AI audio is so easy. So now you have this ability to do deformation on a massive scale that'll make memes and drops and videos just sort of I would say pass a AI and deep fake specifically coming from foreign enemies or threats, but from people who have no moral boundaries. I think it's going to be something that could cause a lot of violence starting in the spring and summer, late spring, early summer of twenty twenty four, which is my biggest worry.
Denver, you say it's not difficult to do, I think what you're saying is in the context of content moderation, right, the actions of the platforms themselves. We talked about this earlier in the program, that what came out of the twenty twenty presidential election cycle was content moderation policies, and now the political argument is that those resulted in the over censorship, particularly of conservative views. Tie that then to the deep fakes issue. You know, either the tech companies
take action or they don't. Should it solely rest with them to be responsible.
You know, we're to a point where it might soorely rest with them based on the enforcement mechanisms, if you you know, I've done enough investigations now that government has a very tough time moving at speed against new technollogies. So when you're talking about these large companies are going to have to be some kind of ability to self moderate, you know, when you're looking at actually these AI deep fakes.
You know, my biggest fear ed you know, is that AI, as far as being able to radicalize people in a way we can't even imagine at this point, is something that we're gonna have to fight with forever. I mean, really, the information war is the forever war. So I think that's the issue that we have in these large tech companies. There's going to have to be some responsibility on how these e these AI deep fakes are actually promulgated. I just I don't see with the massive amount of AI
of platforms. You know, what do you have forty major maybe social media platforms, hundreds of minor platforms. You have emails, you still have Facebook, you have private groups, you have so much stuff out there. I don't know how you actually do it unless the tech companies actually take some responsibility for deep fakes or for AI generated content.
All right, Denvi Wrigelman, founder of Information and Intelligence Group, great conversation. Come back in the next few weeks and months as we progress this election cycle, and we'll keep the conversation going. Some breaking news crossing the Bloomberg terminal back out with DC COMMA Secretary Gina Romondo is speaking about the applications to the Chips Act for grant. She is saying that leading edge firms are seeking over seventy billion dollars from the Chips Act. You're looking at live
pictures of that event where RAYMONDA is speaking. She's talking about the US going to prioritize Chips projects that can be operational by twenty thirty. We spoke earlier with Kaylee about Intel as an example that in their smart capital approach, they are relying on access to the Chips Act grants
to operationalize and build out, particularly their foundry business. The last point is RAYMONDO giving a forecast in the US is going to make twenty percent of leading edge chips by the end of the decade, and what we're talking about in the context of leading edge chips. Is those higher performance GPUs, the ones that Ian King comes on the show and talks about so often. Will continue to
monitor the event that Ramondo's speaking about. But there is actually some significant news headlines coming out from those comments,
all right, coming up here on Bloomberg technology. The twin strikes were a hot topic of conversation at the SAG Awards this past Saturday, and saga after a President fran Drescher bought one of the union's major concerns from over the summit to the show, Artificial intelligence will have Nick Lyons is the co CEO and co founder of Flawless, a company that uses generative AI to correct out of sync dubbing and more, with his thoughts on that relationship
between AI and Hollywood. Coming up next, this is Bloombog technology. At the SAG Awards this past Saturday, the Twins strikes, the actors and writers strike, We're a major topic of conversation. Sagafter President Fran Dresher brought one of the union's biggest concerns to the stage, saying, quote, AI will entrap us in a matrix where none of us know what's real let's bring in Nick Lions, co CEO and co founder of Flawless, a company that uses generative AI to correct
out of sync dubbing and does a lot more. It's in his thoughts about what is an evolving relationship Nick, between Hollywood and AI. Just real quick on Miss Dresher's statement there about being caught in a limbo where you don't know what is real and what is you're building AI that directly impacts this world. What's your take?
Well, thanks for having me on the show, Ed, Yeah, it's I think that the reality is is we have to be careful and I think the approach that we've taken is to be Actually one of the reasons probably we're willing to come on the show is that we've been talking to Sagafra for a number of years now, have been cooperating with them and working with them to work out, you know, what the best application and uses
are for this technology. You know, we have from day one we made a stance around data that we would not you know, we wouldn't trample on artistic rights or commercial data ownership rights. I mean we've built technologies that support that, so you know, I think it's a collaboration, and I think it's a mechanism to move forward to enable an industry to re energize and go into you know, the next decade.
Let's talk a little bit about flawless and understand the work you're doing in the context of those concerns. So using generative AI to amend or correct out of saint dubbing, how does that work?
Well?
You know, you look at recent news, you know, around Warner and Paramount, and you know there's a lot of highlighting of you know, audiences under pressure, et cetera, and a lot of debt. But I think that the fundamental problem is actually production costs. You know, in people when the big studios and streamers and other production companies around the world are investing heavily in productions, it's very very heavy carbon footprint and it's also very physical and consequently very costly.
You know.
So one of the benefits that AI is going to bring. Gen AI is going to bring is the ability to
be able to reduce those production costs. But also, you know, if you imagine that a proxy for a reduction of production costs is enabling a global audience dumbing and subtitling, has you know, been the mechanism for localization now for you know, one hundred years, and you know, unfortunately, there's a lot of people that don't like that, and that's represented in the value when you're selling films and TV
series into other language territories. So the enabled the ability to have a global audience and have allow audiences to consume content in a way that's digestible and enjoyable. It just is going to also enable these same companies to be able to benefit from you know, distribution at a level that you know it will be game changing for them.
You just spoke to kind of the economics of what, frankly was one of the biggest technology stories of the year so far. When open ai released Saurra and I saw an interview my co host Caroline heid and I were talking about Tyler Perry and the Hollywood reporter saying that he had put plans for an eight hundred million dollar studio expansion on hold when he saw the results of saura And you know, I made a quip on x that most of it is just sixty second clips
of dogs or puppies doing stuff. But when they released those images that are generative AI text to video pieces of content. There was a big reaction from your industry. What was your reaction?
Yeah, well, you know, I think pauses the operative word there because I think once what were quite interesting and exciting videos, once the people understand that it's still a long long way off from perfect you know, professional production. You know, if you look at it, yes, it's sixty second scenes, you know, it's not particularly looking around corners. There's not a lot of actual performance in there, you know,
and there's also not editing tools attached. But I think most importantly we're talking about these these these videos are created from unclean data.
You know.
We made a decision to build a business that was based on clean data, where everything within our models and within our production system has enabled, has been signed off, and is commercially and artistically clean. And I think that there's like mixing these things together and then it's exciting for the future because it shows the power of the technology. And I think, yes, there will be a benefit here
in reduced production costs. But I think Tyler's going to find very quickly that I think the film industry is probably going to go through actually a boom time over the years that come with the reduction in production costs, and with the same tools that allow for those reductions in production costs, giving more creative control and more iterative storytelling, we're going to see an increase in the percentage of
commercially successful projects. And I think consequently for that it becomes like, you know, quite a wise investment to be investing in film, which is correctly I think some people have been cynical about so I think really what we're looking at is, you know, yes, there might be some people initially sort of a little bit scared when they're looking at something like that, but I think really it represents boom times.
Flawless co CEO, co found in it lies. Just great to have you on the program after the SAG Awards at the weekend where this was a front and center issue. Really appreciate your time. Okay, some more news here on Bluebog Technology is time for the VC Roundup, First up interview. Kickstart has raised ten million dollars from Bloom Ventures to expand a library of courses in fields from machine learning to data sciences, demand for which is surging alongside global
development in AI. The fledgending firm, co founded by early box engineer so A Meta and Excel Partners. Alarm Ryan Valors aims to help supply the skilled engineers needed to support a boom in artificial intelligence and deep Exco is close to raising ninety million dollars in a funding round to accelerate production and bankroll global expansion. The South Korean firm has secured forty five million dollars from Skylake Equity Partners, as well as twenty two point five million from existing
backer Timefolio Asset Management. The AI chip startup is also in final discussions with another investor to secure an additional tranche of money by next month. That all, according to sources, the US used artificial intelligence to identify targets that were then hit by air strikes in the Middle East this month. That's according to a defense official, and Bloomberg's Katrina Manson spoke with them and did that reporting. She joins US
now with more details. This is interesting. You have to be clear on what the AI was used for, right, Katrina, And it was to identify the targets. But that's where stops. That's right.
These are computer vision algorithms that the Pentagon has been developing really since twenty seventeen, but they are now using them operationally, and sent COOM that's Central Central Command that runs US forces in the Middle East, confirmed to me that they had identified more than eighty five targets are
for the strikes on February the second. Those are against seven facilities in Iraq and Syria, and they had used AI to help narrow down those targets that were subsequently struck using fighter aircraft and bombers.
The other way of looking at it is that sent COM in its I guess experimentation, found very clearly that there are limitations to the use of the technology, and those immediately obvious ones are the order of attack and which weapon the US should or shouldn't use.
They've been experimenting with AI and exercises for more than a year now, and Skyler Moore, whose chief technology officers at sen Com, she told me that AI is not ready to make recommendations. They worked with an AI recommendation engine, and humans are generally faring much better than AI at the moment on that, but they are using AI for computer vision algorithms and really integrating this targeting effort into the entire flow of operations, so it's not just intelligence anymore.
It really is delivering weapons with the help of AI targeting and to turning.
It very quickly. Is there any element of human verification here? In other words, did a human check the work that the AI proposed? Yes?
Absolutely, The targeting is making a series of recommendations. Humans then verify it. And I was told that it's pretty obvious when it's off, So humans are correcting it, giving that feedback, that classic way of iterating the algorithm before they go forward. And this is something that the National Geospatial Intelligence Agency, which now runs MAVAN, is really trying to improve the capabilities of Bloomberg.
Katrina Manson just terrific reporting out in New York. Thank you so much. That does it for this edition of Bloomberg Technology. Look, last week when I was off, I listened to the show as a podcast. I know so many of you download and listen to the pod on your way into work. We're on Apple, We're on Spotify, we're on iHeart, and we really appreciate the feedback about the show and so many of you listening to it in audio format. But again we're also everywhere else on
YouTube and on your television screen. As I speak from San Francisco, this is Bloomberg Technology,