Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hide and Ed Ludlow.
Live from New York Home. Caroline Hyde and.
I'm Jackie Devalas in San Francisco. This is Bloomberg Technology coming up.
Anxiety builds with China chip controls weighing on semi stocks all ahead of Nvidia's numbers tomorrow, plus Tesla sales in Europe plummet forty five percent last month to a two year low in the region, and Bitcoin it slides below ninety thousand, its lowest level since mid November, as a
crypto selloff gathers steam. But first we check in on these markets that identify the anxiety, whether it's around consumer sentiment here in the United States, whether it's around chip curves into China, technology access to China once again under the focus. And that's that one hundred off by one and a half percent. That is the longest losing streak as well, four straight days that we've seen since the beginning of this year. We're looking at Bitcoin under pressure,
down by more than seven percent. Is it the macro picture. Is it concerns around a hack? Is it all just dialing into the selling pressure that we see across one is of course an asset risk asset of choice for the show move over and have a look at the individual movers that we want to cast a light on. Because Tesla off by eight percent, it has lost a third of its market capitalization since it's high back in December, and we're looking at currently once again under pressure on
the sales side of the equation. We'll dig into it in a moment. Biggest points drag on the Nastak swiftly followed by Nvidia off by more than three percent ahead of its numbers tomorrow. We worry about the limitations of its chips into China once again, Trump extending the focus of the Biden administration here and the Magnificent seven just a tidle in a bow is off by two point
eight percent. We are now in correction territory. This total return indexes off by more than ten percent from its highs. We're going to dig into the key focus of the day, that is the chip controls that's bringing Brnenbergs, Mike Shepard, Mike just an extension of Biden's focus here, and once again it is going to be impacting European technology players and the key ones here in the US.
Yeah, Cara, this is a rare moment where you see the Trump administration picking up where their Biden administration predecessors left off, and that is pressuring governments in Japan and the Netherlands to get two signature companies, Tokyo Electron and ASML, to stop servicing chip making equipment that they have sold in China. Now this matters because those photo lithography machines that make semiconductors are really finicky. They're sensitive. Think of a Formula racing car.
They need a.
Lot of upkeep and regular upkeep to continue working at that level. And if you cut that off, it under what China and China's chip makers may be able to do with those machines.
Mike, what does this mean for Trump's approach to chip policy towards China broadly? Are there any other signs that we're seeing that might make it different from the approach as Biden took.
Well, Jackie, I'm glad you asked that, because this really does signal a broader direction of travel from the Trump administration, and that was one of the big questions coming in as they took office. Might they actually pull back a little bit on some of these restrictions as Trump tries to negotiate something with trade. Remember he is someone who tries to think of himself as a deal maker on everything,
and why not throw chips into the mix. But he has also declared that artificial intelligence is an area where the US must maintain dominance, and the way to keep China at bay really is to deny a lot of that technology. So we've talked about possible restrictions on Nvidia's China's access to Nvidia chips used in a This is
after the deep Seek breakthrough. We're also looking at another area that Trump may pick up where Biden left off, and that is possible measures against Chinese chip makers SMLIC and CXMT that are really critical to the domestic production in that country. And then, finally, the Trump team is also wage whether to further tighten those AI diffusion rules. Remember that three tiered system that the Biden folks unveiled
just a week before the president left office. This is a signal to the market and to China that the Trump team really is trying to get tough and companies will have to brace maybe for more, especially when you consider that there are already ten percent tariffsu on Chinese imports with more to come. We may hear from Jensen Wang about this too. He's expressed a lot of concern and misgivings about this direction of travel.
What about hearing from China. We know that they're trying to speed up their own independence. We hear of the latest developments out of Huawei and their chips, for example.
Mike, that's a great question, Carol, because we are seeing Ali Baba investing Chinese going on the offense with rhetoric of course decrying these kinds of measures from the Biden administration, and now rumbling is about the same possibly coming from Trump. We heard that when the ten percent tariffs on Chinese imports were announced. They are also trying to invest heavily
in their area. We saw the heads of Deep Seek and Ali Baba meet with Chinese President Xi Jianping just a few weeks ago to talk about how to get China tech back not only on the map, but really in the vanguard of Chinese industry. And this is after a few years of estrangement, and we're also seeing Ali Baba,
as I said, investing heavily in this area. But you know a way to counter what we're seeing from the likes of Microsoft and US based companies that are trying to really dominate in this technology.
Mike Shepard, thank you so much. Let's get the investment analysis now. Angelo Cacafa is with us. He a senior investment strategist, and Edward Jones. Angelo, we look at basically the only mag seven company now in the green for this year is Matter. All the rest are in the red. Are you expecting this going into twenty twenty five.
I think one of our themes has been that of rotation and broadening, and that's playing out at the sectorial level, investment style and also a regional geographic Many people probably
are surprised by the market's resilience. If you told the investors six months ago that six of the seven Magnificent names would be lagging the market down the group five percent for the year, most people have thought the market would be lower, which is not and I think that speaks to the still supportive backdrop that we have.
Angelou what does this tell us about how investors are feeling or perhaps some of the reasoning behind it is this because of the uncertainty that Trump has injected into tech markets, more so as of way or our investors growing more discerning about tech growth prospects.
Yeah, the market has had to navigate a lot of news, thinking about deep sick thinking about all the tariff announcements and uncertainty and the last hatter than expected CPI print. All that has been weighing on sentiment, and right now we are navigating a growth scare. It's not the first, it will not be the last. But at the same time, looking at the last three years, it's been a pattern that we do see some seasonality, negative seasonality in the
first quarter of the year. Part of that probably related to weather, some snowstorms that are dragging down consumer spending, but the broader trend remains that where corporate profits are accelerating, so they don't have a need for layoffs to protect profit margins, and we have a federal reserve that is not looking to go back into tightening mode. So all
that to us remain supportive. But at the near term we're going to experience probably a type of soft patch for the economy in first world and I hate.
To say this sort of healthy flush out or what people like to suk about it, but many are thinking, look, this is froth that needs to come out. There were so called tourist investors that have come in and not assessed really the geopolitical element of these names. Look and videos traded lower than this this year. But are we going to start seed deep baying do you think?
Yeah?
I think that's exactly right. We have seen some froth and we are seeing some froth come out of the market. And we all know that sentiment is a contrarian indicator. So that sets up well for the second potentially half of the year where for a long term investors standpoint, these pullbacks can be opportunities to really deploy capital first capital divers fire portfolios. We think that broadening in rotation
theme has legs to it. And for those that worried about tariffs and the impact of policies, we have domestic cyclical companies and sectors that can benefit from the pro growth policies that are likely coming down the road. So far, we're getting the vegetables before the cake. In the first tip administry, we get the cake first with tax cats, and then the vegetable, so we have to navigate through this bumbierd path earlier in the year.
But everyone ate the Tesla cake the minute that basically Trump was announced as the winner in Elod's relationship. But how idiosyncratic, how focused on individual names. You have to get and actually read through what are fundamental changes and the views on certain companies like European Sales testl which will dig into later in the show.
Yeah, I think you know, certainly the concentration is an issue for investors and people that manage money. But at the same time, we know that the four ninety three earnings are accelerating and actually are the strongest in three years. So there is a lot more beyond these seven names. Yes, they are important, but they're becoming less important than the we're in the past, and I think the versification is going to be a key theme for investors to pay attention to.
San Angelo krakoffa senior investment Strategies at Edward Jones. Thanks for joining us. Let's get a look at Tesla shares are down after sales plummeted by nearly fifty percent across Europe at the start of twenty twenty five. That drag Tesla markets cap now below a trillion dollars. Bloomberg's Craig Trudell joins us now for more. Craig, what's behind this disconnect because the UK's EV sales actually grew by forty percent, but you're seeing Tesla registrations fall.
Yeah, they grew in the UK, they grew in Europe broadly. I think there's a couple of things going on here. Of course, there's a lot of questions about, you know, how much of this is a sort of backlash against Elon Musk and how much of it is you know, something's going on specific to Tesla, And I think, you know, it's probably a mix of both. I think we'll be able to untangle that a bit more as the year
goes on. But we know that earlier this year the company is changing over its factories as part of a redesign of a model why that is a really important vehicle for them, and so that's definitely coming out into play here. But I think the fact that he inserted himself in politics in in Germany and in the UK so emphatically last month really raises a lot of questions.
Has that been much data drawn from whether This is a consumer reaction, knee jerk reaction to Elon Musk's own behavior, because one month doesn't an entire trend make as you point out, yeah.
No, that's it's very fair, and I mean we we don't unfortunately, have you know, sort of the equivalent of exit polls at dealerships right where people tell us, you know, well I bought this Renault or this Volkswagen because I didn't like Elon Musk. But what we do know is that, you know, some poles were taken in some of the biggest ev markets in Europe in January and they did
not look very good for Elon Musk. And so you know, for him to be increasingly unpopular in some of these places, and you know, for him to take these sans stances that you know are are unpopular, you know, whether it's it's uh, you know, kind of taking these reporting far right parties or taking this hardline stance against Ukraine, these sorts of things, you know, potentially, you know, put the Tesla brand at risk more so than even in the US.
Craig, who's gaining from this? What Tesla rivals are benefiting from from this lag?
I think it's it's really honestly kind of diffuse in terms of who's benefiting. It's it's pretty consistent that, you know, other manufacturers are seeing increases in their EV sales and that's probably no coincidence. We do know that, you know, in Europe in twenty twenty five, everyone's going to have to meet a tougher CO two regulations and so everyone really has to sort of put the pedal to the
metal and sell more electric vehicles. That means more competition for Tesla this year in Europe, and that's also likely coming into play and going to be a sort of lasting thing that Tesla's going to have to face the rest of the year.
All eyes on BYD in the UK, for example, Craig Drudell is a great story. Meanwhile, Elo Musk SpaceX is seeking to deploy Starling satellite Internet terminals to help upgrade the IT networks that support the Federal Aviation Administration's National Air Base System that's here in the US as all. According to sources who say this latest effort really raises questions about conflicts of interest for Musk's business empire. New
Meg's Allison Firstville is here with us for more. What exactly is the FAA going to do with these Starling terminals, so.
Right now they're really in a testing phase. We know that they're starting to test them out in Atlantic City, which is kind of the air traffic control lab, if you will, where they do a lot of R and D.
There also testing them out in Alaska. And the FA statement that came out last night confirming this reporting, they essentially said, you know, we're looking to fix telecommunications connections and remote areas to provide more reliable information such as weather information, which has been a problem in places like Alaska.
At this point, we're still, you know, waiting to see how expansive the use of starlink might get, but we do know that, you know from talking to our sources that Elon Musk has approved the shipment of four thousand terminals in total to the FAA.
So, you know, it seems like Morris to.
Come, Allison, what does this mean for Verizon, who has an existing contract with the agency?
That's right, So Verizon has this existing two billion dollar contract to provide all of these types of telecommunications services, and you know, in kind of dueling statements last night, Elon Musk said on social media platform x that you know, the Verizon system isn't working. Verizon said, you know, the enhancements that it is doing are critical to air safety. So we're still waiting to see exactly what happens with the Verizon contract. That's something that we're continuing to talk
to people about. And the folks that we talked to already said they weren't sure exactly where that was going to go.
And there is indeed the statement that you don't put out on X a little bit earlier reaction to your reporting. The next steps are going to be about conflicts of interest here. I'm sure that's something that everyone is considering. Is it something that Verizon considers, the government considers, so.
I mean, it's certainly something that lawmakers on Capitol Hill are considering. We already saw when Transportation Secretary Sean Duffy first announced that SpaceX would be involved in modernizing the US aviation systems in air traffic control. You know, you saw lawmakers like Senator Maria Cantwell, who's the top Democrat on the Senate Commerce Committee, saying, you know, Elon mus shouldn't be involved in this effort. He has a company with SpaceX that's regulated by the FAA, and he has
had penalties proposed against him from that same agency. And then you have others like Senator Tammy Duckworth, who have you know, questioned, can we afford to move this quickly like Elon Musk likes to do with some of his companies, because this is something you really don't want to break.
That's Bloomberg's Allison Versuspaile, Thanks so much for joining us. Elon Musk is doubling down and said federal workers will be given a second opportunity to respond to a government wide email detailing what they did last week and threatened to fire any employee who doesn't need as demands. But the federal agency sent that email said that Monday. It's up to agency leadership, not Musk. What happens to those who ignore the message? Caroline coming up, Jackie super Micro.
We're keeping an eye on the stock as it's a crucial day the AI server maker.
Why the company is facing a deadline to file it's already delayed financials. We are off twelve percent on the day. This is Blue Meg Technology. The crypto sell off is gaining traction, Bitcoin tumbling to the lowest level since November tenth, that worst day since August. As we stand, the Trump victory rally reversing under the pressure of industry setbacks and of course tariff policy and macro perspective in Emily, Nicole,
is it macro? Is it idiosyncratic? Can we worried about the hats example?
I think it's a mix of everything.
To be honest, with crypto, you can never rule out the macro impact that's going on around it. It's definitely still an asset that does move in tandem with traditional markets, and so the pain that we're seeing in treasury is the pain that we're seeing in stocks that is also
spilling into crypto. But with the market having overcome a one point five billion dollar hack on Friday, you can't ignore that either, and so we're definitely seeing a tandem effect happening and Bitcoin is really suffering because of that.
Nicole, Emily, I'm sorry. What catalyst are we waiting for here? What are crypto markets looking for over the next couple months that could turn the tides? Is it going to be another Trump? Mean coin?
There are a few things that might be on the horizon.
So for example, in Solana, one of the smaller tokens, a lot of people pay attention to these days. We have a big unlocked coming next month about a one point seven billion dollars worth in tokens that could hit the market, So that's something that might weigh on price and for bitcoin as well. You know, with Trump, every day there's something new that's coming out of Washington.
There could be.
Signs of things coming on the possible US Strategic Reserve for bitcoin that he floated last summer. There could be things coming in terms of bills on stable coins. So all of that will be weighing on sentiment, but none of it is really big enough that you know, could push it really back above that one hundred thousand dollar mark, and that's what crypti traders really want to see at the minute.
No, we just saw eth that was indeed more the focus of that by bit hack. There are issues that you see globally, Javier Mille over in Argentina getting embroiled in mean coin fiasco as well. This is a global sentiment indicator. But how much are you seeing people pull away from some of the more sordid sides of crypto more broadly.
Well, I mean crypto as a whole is an asset cast that really does run that gammut. You know, you've got bitcoin now being considered firmly a bit of an institutional bet because of the debut of US spot ets tied to it last January. It's definitely one that is kind of ingratiated itself there, at least.
On Wall Street.
But then if we look at something like Solana. The last year for that folk chain has been a lot about pump un dump schemes, meme coins assets that like the one supported by Malai can go to four billion and then down to almost nothing in the same day. So there's definitely a bit of a wait and see it the minute as to how these tokens really kind of go forward this year, whether or not institutions might
look more favorably on coins in future. A lot of that will depend on how the regulatory landscape pans out.
That's Bloomberg's eminente look, Nicole, thanks so much for joining us. Super Micro is set to submit outstanding financial reports today to remain listed on the Nasdaq. The stock, which recently rallied is hinging on the company's ability to trade on the exchange. Bloomberg's Brody Ford joins US now for more Brody, Why are they taking this down to the wire. Has the company said anything about its plans to actually meet this deadline?
They've said a couple of times, and backing up a bit, I mean, super Micro's had a rough couple of months. They weren't able to file some financials back in August. Their auditor dropped them with some pretty colorful language, some things you never want your audit or to say privately, let alone publicly. But you know what, they picked up a new auditor and they said, we're going to be able to get it in time. We believe we'll be
able to do it. They were saying this as recently as a week or two ago, and so the consensus at least until today was that they were going to be able to make it. The stock right now suggests there's some anxiety creeping in, certainly, but we don't have any reason to believe that, you know, their plans have changed or they're not going to be able to make it.
Yeah, the CEO but a week or so ago sounding pretty confident. There are five by ratings on this stock. There are two cells where are general fundamental analysis on the company, even headed Brody Well.
They are for sure in the AI story they're making money. I mean, if you look at their revenue chart over time, I think their revenue annually is going to be up like you know, four times where it was a couple of years ago. When you need to buy these Nvidia chips, you need to buy them in a server, and super Micro is done a really good job selling into the major customers. The margins are pretty bad because chips are expensive, and you know it's a competitive market, but they have
been a clear beneficiary. They have picked up a lot of investor interest, including the retail side, and there's a lot of you know, forums given a lot of theories on the current situation, and so you know, the stock movements we are seeing can be a bit unpredictable.
I mean, look, a twelve percent decline is actually the only worst sell off since January the twenty seventh. We're used to this volatility. But how has the investor base changed. Is it more largely retail now or is it predominant institution.
I can't say the exact split, but certainly if I write a story about super Micro, I'm getting a call from a retail trader, right, I mean, that doesn't happen
if I write about Bellar HPE. So they are a sizeable presence here and yeah, there will be a lot of They are watched often as the kind of bell Weather for a video because as if super Micro says, hey, we'll be able to ship a lot more servers and the second half of twenty five, like they said, people understand that is okay, invading a supply gets better in twenty twenty five. The two companies are pretty interestingly linked.
Most Brodie Ford, thanks so much, Welcome back to bloomg Technology. I'm Caroline hid in New.
York and I'm Jackie Devalas and San Francisco.
We've got to check in on these markets, Jackie, because it is a turbulent day. The NASDAG will broadly under pressure as we see consumer sentiment take a hit. From a macro perspective, we're also worrying about the Magnificent seven in particular, we are currently off more than ten percent now in complete correction territory. When it comes to the more mag seven index that we focus here on Bloomberg, there are total return index under pressure from its peak
that we saw back in December. We're questioning valuations We're questioning, of course, the run into Nvidia's numbers that come after the Bell. We're questioning ultimately about some of the crackdown on going into China and what that means for local players. Move on and have a look at what we're seeing under duress. Look, we've seen Alphabet off by more than
fourteen percent from the beginning of the year. You've also seen other key names will Meta in the red, but in video is now off by more than three percent. It's of fifteen percent from its highs. And this is on the back of worrying about valuations, about the curtailment of geopolitics. But there is good news out there. They're deepening their relationship with the likes of Cisco Networking player here to make the rollout of AI easier more broadly, Jackie, that's right.
Now, let's dive into the AI race between the US and China following the latest restrictions on chip sales from the Trump administration. Let's bring in Jennifer Huddleston, Senior Tech policy fellow at the Cato Institute. Jennifer, We've been talking a lot about how the Trump administration is going about AI policy, chip policy, but A key component of this is also competition and the agency that oversees it, the
Federal Trade Commission. I think a lot of people were expecting Lina Khan's departure to mean perhaps a friendlier FTC towards tech deals. But what are you expecting in this administration?
Well, thank you for having me today, And I think when it comes to anti trust in this administration, it is important to remember that many of the anti trust cases against the leading tech companies actually began.
In the prior Trump administration.
And what we've seen so far, particularly in the tech space, is that it seems like this administration is going to continue an aggressive approach to anti trust, whether it was recent statements from the FTC that they planned to continue the merger guidelines that were passed under Chair CON's FTC, or whether it's things like last week's requests for information on tech censorship that brought up questions of competition and content moderation, indicating that we could again see the Trump
administration FTC seeking to perhaps use anti trust enforcement as a way to try and get changes it perceives to content moderation, which could raise a lot of concerns both for tech companies for online speech, as well as for the overall approach to antitrust in general.
We've seen some creative deals, specifically in the AI space, with some of the big hyper scalers taking stakes and smaller startups. Do you expect those to come under additional scrutiny in this administration as well?
The AI space is still really early in its infancy and it's a very broad ecosystem. One of the reasons that mergers are important is not only to large companies, but to small players as well. Small players are going to need a variety of exit strategies, particularly in the AI space, and particularly when we look at the global
nature of this competition. For some small players, they may be the next real innovative product that forever changes our market, and they may be seeking to IPO and go public. For others, they may be seeking to improve an existing product or operate further down the stack and a merger might make sense. And in some cases they may be great innovators or serial entrepreneurs who just don't want to
take the time to full run a company. As a result, we need to ensure that they have a variety of exits strategies and that we don't wrongly demonize mergers just because of beliefs in certain amounts of concentration rather than looking at the actual impact they could have on consumers, because in many cases mergers can benefit both small players and consumers.
I just want to go a bit broader here, Jennifer, because we are in this context of US China and what seems to be this competitive race, whether it's a straw man or real. Ultimately, when you think about how the administration is overseeing E merging technology, as I know you focus on how are we seeing the US able to propel itself forward versus China when we are also seeing restrictions on sales of key technology into other countries.
One of the ways we've heard a lot of this discussion is in the approach to AI policy. The Trump administration very early on revoked the Biden administration's AI Executive Order, something that was seen as having a much more regulatory approach.
You also recently saw Vice.
President Vance really pushing back against the European approach to AI that he felt would strongly impact American companies and American leadership in AI. At the same time, while there seems to be a lot of indications, particularly in the AI space, that the Trump administration plans to.
Take a very light touch approach.
There also have been some indications that we could still see regulation, particularly around issues as it might relate to labor and again to the kind of impact that some of these anti trust cases could have on the development of AI technology, particularly by some of our larger leading tech companies.
Okay, the larger leading tech companies, Are they at the moment getting enough transparency on the future direction of policy makings?
Do you think?
I think it's still early in the administration. We've certainly seen a lot of statements already made, and so it remains to be seen fully what the trajectory will be when it comes to various issues around particularly AI policy. As mentioned, the Biden executive Order was revoked, but we haven't fully seen what the Trump administration might plan to replace that with. On anti trust, there do seem to be clear signals that it's unlikely to have a significant change, particularly around.
The cases that are already filed.
What remains to be seen is kind of some of the questions around We had to start to hear rumblings around potential competition investigations in for example, the AI space, and given some of the other comments, is that the type of thing where we will see anti trust enforcement really directed at kind of the concerns related to content moderation, or at concerns related to quote unquote big tech companies which could have significant impacts on the future of anti
trust policy as well as on consumers, or what we see something that's much broader the way that we saw, for example, in the Biden administration under Lena khns FTC.
Jennifer, as you mentioned, you spent a lot of time thinking about content moderation. Where do you see that going in an administration that has really decried woke social media and AI models.
It will be interesting to see, particularly how the changes from the prior Trump administration in the social media marketplace might impact the positioning that we see towards content moderation.
Elon Musk, of course has bought.
X and made significant changes to content moderation policy there. We've also recently seen Mark Zuckerberg saying that he's making significant changes to Meta and Facebook's content moderation policy, and of course President Trump himself now has True Social which has a very different content moderation policy. We continue to see a great amount of competition in the content moderation
policy space. However, we did recently see this request for information from the FTC around tech censorship, which could raise concerns that we could see the administration or the government via the FTC seeking to intervene into the speech rights of Americans and into the rights of private actors to make decisions around the content that they host.
Jennifer Steenwolshing. But take it out to the States for a minute, because we had a key guest yesterday, Victoria Espinancies over at the Business Software Alliance yesterday, We're be talking about how important the states are at regulating AI at the moment.
What is there a disconnect that there certainly has been a lot of state level activity around AI. Several hundreds of bills have already been introduced or considered at a state level, and this is something to certainly watch because a state AI patchwork could impact the overall development of this industry, particularly when we're looking at bills like we saw last term in California or Colorado that could really impact the development side.
As well as any potential deployment.
This is important not only for large players who may be operating across state lines, but of course will certainly impact small players and in their ability to even launch their products in various states.
Tennifa Huddleston. Great to have you from the Cato Institute. Now, let's talk about AI more because Deep Seek has reopened access to its core programming interface after a three week pause. Now, the Chinese startup stopped allowing customers to top up credits for use on its application due to capacity shortages. Team Sek's AI chatbought reinvigorated the Chinese tech scene and stunned Silicon Valley when it was revealed last month.
Jackie Anthropic is nearing a deal to raise three point five billion dollars at a sixty one point five billion dollar valuation. It comes as the company releases a new artificial intelligence model that allows users to decide the complexity of the response that they want. Bloomberg Seth Figureman joins us now for more on this, Seth, let's talk about the fundraise first, who participated in the deal and how does it stack up to some of the other players that have raised in recent months.
Yeah, I mean it's a smaller amount that we're seeing open thee and reportedly XAYI go after open the I is seeking you know, forty billion dollars of staggering some this one is three point five billion order magnitudeless, but still large by any other standard in tech history. Light Speed Capital seems to be the one that's really leading the way here as we understand that they kind of introduced the idea of doing a funding round and now
it's oversubscribed. The most interesting one to me is that MGX, the Middle East Abu Dhabi Fund is now also way an investment here on MGX is kind of sprinkling its money across the AI sector as we speak.
So and when it comes to wanting to get in on these names, many have worried about the commoditization of these large language models more broadly set. But it's interesting that here I TOP it's trying to set itself apart, trying, for example, turn off and on the reasoning in Sonnet three point seven.
Yeah, it's a really novel hybrid approach. If we talked a year ago, they're really worrying any of these reasoning models. Now we're seeing Deep seek, Open AI, Anthropic XAI all push in this direction. But the reality is for the average consumer, You may not always need some advanced reasoning engine to answer your question. You may just want to ask for a quick recipe or synonym for a word.
And in that scenario, maybe you don't need the computer or the system to take a long time to show you every chin of thought step Degga takes along the way. On the other hands, some people are trying to use it for advanced coding, mathematical questions and the like, and so I think for Anthropic that gives them a chance to kind of control a little bit of experience, simplify it, and perhaps also limit the amount of computing resources that needs to devote to all the queries.
On a whole. We're going to be hearing from Salesforce later this week when they report results, and it's widely seen as a gauge for how the market, for how the company's really navigating agents. This is kind of the next big thing. How is Nthropic going about it?
It were really early here this idea of a computer use program that could basically take your computer and start clicking around the web on your behalf. But I don't think we've seen it quite make a dent in the workspace. It's being deployed gradually, but most people we speak with I've not seen it fundamentally change their jobs. That's Open Eyes moving in distrection, Salesforce, Microsoft, the whole slew other startups. This is supposed to be the year of AI agents, but it's early in that.
Year, sefta human. Great to have you, Thanks so much. Now coming up, we're going to dig into gaming. Josh Chapman from Convoy joining us on the landscape and how AI could change that industry to the subrume BG technology.
Let's get to VC Spotlight. China just approved over one hundred domestic video game titles this month, underscoring the country support for the game industry after an earlier crackdown. Josh Chapman, managing partner and co founder of Convoy, joined us now, Josh Geopolitical tensions between the US and China play a.
Huge role in big tech, but it's also kind of veering its way into the gaming sector with Tencent, one of China's largest vcs is also has staken some of the largest games Fortnite, League of Legends and those makers.
How are you seeing this play out in the gaming sector?
Absolutely, and thanks for having me.
This is certainly a very tense moment for not only the world geopolitically, but certainly within gaming, giving that so much of the Chinese companies have such large ownership state into gaming companies around the world. A notable one is that ten Cent owns Riot Games that has legal legends right over one hundred million monthly active players and based
out of Los Angeles. If geopolitical tensions continue, you could see things like the TikTok thing play out into the gaming space, which would lead to divestments or you know, a forced sale due to government tensions. So yes, it has a huge impact on the future of gaming as an industry and broadly globally.
I mean, many were shocked to see Tencent placed on a sort of watch list, a military watch list. So how much do you think that we could see an unfolding of what's happened with TikTok across the gaming space.
So I think, you know, high level, we are very excited that the United States is taking a firm stance and against what is you know, a you know, categorically a foreign adversary of the United States, which is the Chinese Communist Party. I think when you see that, you know what companies come under that WAT. Unfortunately, there are lots of great people that work at ten cents, and there's lots of great people that work at place like Riode Games and other companies that will be subject to
whatever happens to you politically. So I think this is absolutely going to impact the space. And I think to your question, we're going to see the gaming industry kind of rally around finding a solution to keep these games going regardless of the ownership.
And I think there are solutions in.
The private markets but also the public markets to find potential new homes for these assets if we get there right, and I think there is a big if, but if that plays out, that's probably where it's going to land.
And much of this is in the context of the feeling of a race in terms of AI and China and US who's winning. It's interesting that we just saw Microsoft really show the future of AI within a gaming context last week with news AI tell us where we land in terms of US use of AI in gaming versus China, for example.
So there's basically two ways that I would highlight how AI is impacting gaming. First and foremost, it's impacting the creating content by making the content game developers more efficient. Now it's not necessarily making them eight times more efficient, but we're seeing anywhere from twenty to fifty percent improvement
on costs at the content creation level. The second way that you're seeing this even in the public markets is groups like app love and or even Unity that are using AI to improve their ad monetization strategies, and this has led to huge gains for both stocks app Love and most notably even though just recently they kind of gave back a lot of those gains in the past week, but Unity just popped because they're also using AI.
To improve their own ad monetization platform.
So I think you're seeing this absolutely play out in gaming, and it's leading to a lot of enterprise value creation for enterprises in the private markets and in the public markets.
Josh, last year we saw Roadblocks attract a lot of scrutiny over child safety on its platform. Do you think this scrutiny is going to continue into this year because it seems like one of the spots where it really gained by part is in support.
Yes, So the scrutiny around child safety within gaming is absolutely going to be a trend. This is something that we at Convoy are actively investing around is child safety of whether it's the experiences that they're having, whether it's the data around them, whether it's what you can advertise to them or not advertise to them.
And so this is a huge topic that's.
Affecting families worldwide and also in our country here in the United States, and so absolutely this is going to remain a huge issue. And then most recently, just a couple of weeks ago, the SEC opened up investigation into Roadblocks, but this under Exemption seven A, which means that they don't have to disclose what they are investigating exactly. To make a delineation here, though, the FTC went after Fortnite and gave them a huge fine.
I believe it was about four hundred million dollars.
Around the misuse of child data, and Fortnite had to pay that huge fine.
This investigation, though, is not from the FTC.
It's actually from the SEC, and so this has something to do with reporting requirements. Back in the fall, we as a firm put out a piece talking about how we believe that Roadblocks may not be aging up exactly as they know are reporting and we think.
That that's not that the fact that they.
Are misreporting is the fact that users are likely misrepresenting how old they are.
So an eight year old is saying that they're over the age of eighteen.
So the data is accurate, but the input of that data is inaccurate. And this is something we challenged back in the fall, and I think that's probably what's going to play out this year.
It's an important issue. We'll be following. Josh Chapman, Managing partner of Convoy, Thanks for joining us, Caroline.
Time now for talking to Jackie. First out, Quantum Machines raised one hundred and seventy million dollars in a Series C round following advances in the technology, and that's of course by Google and Microsoft that have sparked renewed interest in quantum computing. The raise, led by PSD Equity brings it is really start ups. Total funding to two hundred and eighty million to date plus twenty three and meters. CEO and Rijiki has raised her take private offers for
the Genetic testing company. Now Jiski has secured backing from private equity firm New Mountain Capital. Together they are offering two way five three dollars a share according to a letter to a special committee A twenty three and me's board, and according to reports telecom provider Altes France, it's close to finalizing a deal to cut the company's debt by nine billion dollars in exchange, creditors will get a non controlling equity state in governance changes. Remember this is billionaire
Patrick Draghi, who retains control. Apple currently holding its annual meeting of shareholders as we speak, which includes a vote on shareholders proposal to abolish its corporate diversity, Equity and Inclusion program. The board currently recommending, of course that it votes against the proposal, and indeed they did a vote against that proposal. Mark German is here. This is very much a live event, and we just had the latest
indeed that investors have rejected the outsider shareholder proposal. Where else do we think this day will lead?
Yeah, so Apple got a clean sweep, at least some preliminary talities.
Right, So the entire boardy people.
Including Tim Cook elected, They ratified Ernst and Young as their outside accounting firm. They approved executive pay right twenty twenty four pay for Tim Cook and the other named officers. Rejected an outside proposal on artificial intelligence policies. They rejected an outside proposal that asked Apple to seese its DEI efforts. They rejected an outside proposal related to CESAM or child sex abuse material efforts at Apple, and they rejected another
proposal related to charitable giving. So that's a lot clean sweep. Apple got what it wanted across the board, both its internal proposals and its external proposals from shareholders. The AI one and the DEI ones are obviously the hottest topics right now. The AI one was related to what open ai is doing with consumer data. Some shareholders were concerned
about Apple's partnership with open ai. Apple's response was to reject that given that open AI's integration is separate from their core on device LMS Apple Intelligence, and that Apple already publishes its privacy policies related to that, so that is sort of a moot issue DEI. It's interesting projected, but Tim Cook said, as the legal landscape continues to evolve, Apple may need to make changes in the future, but they're still going to offer employees a collaborative environment.
Mark, how what do we know about how Apple has handled these sorts of DEI issues? In the past, we saw discent come from companies like Google who had employees that were disputing certain contracts that were taking in defense. Have we ever seen something similar play out with Apple thirty minut seconds.
Yeah, at a large scale, we have not seen descent at Apple related to DEI. I mean, Apple has a very inclusive culture. I don't get the sense that anything is going to happen at Apple related to its DEI efforts unless there is some sort of legal mandate to do so.
Mark German, with the very latest out of the shareholder meeting, we so appreciate it.
Now.
That does it for this edition of but Like Technology, Do not forget to check out our podcast. Do you find it on the terminal, online on Apple, Spotify, and iHeart from New York and San Francisco. This is Bloomberg Technology.