From Mahard where Innovation, money and power collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
I'm Caroline Heider, Bloomberg's World headquarters in New York and now Med Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up the FTC.
It gears up to sue Amazon this month after a four year antitrust investigation into the company.
Will bring you all the details.
Plus after years in development, Microsoft's highly anticipated Starfield hits the marketplace to some rave reviews. We discussed with the heads of Bethesda Game Studios and Microsoft Gaming.
And the US is seeking more details into Huawei's made in China chip as they start to wonder about the effectiveness of US curbs on the carries vast technology sector. But let's dig into these markets first and foremost, as we look at what is again a macro picture ed overall, we are seeing ism services, the data, the macro picture of health here in the United States, whereas it is lackluster.
Over in Europe and over in China. And what does that.
Mean, Well, we actually see rates rise here in the US. We see the dollar rise in particular up two tents of percent.
And as we.
Start to see a question of whether the Fed has to go further in terms of interest rate hikes to cool down the inflationary pressure here in the US, that of course means further sell off in the Nasdaq. We're off by more than one point one percent. The two year yield as we see crescendoing up some six basis points. We're above that five percent level, so notable in the minds of many at this moment. We're also looking what's happening in the Bloomberg Dollar Index, as I said, up two tens percent.
What does that mean for the rest of the risk assets out there?
Well, we know that Japan, China they start to talk up really trying to fight back on preserving their own currencies. What does it mean for crypto where we're seeing actually, of course continue pressure from the US dollar visa v bitcoin. We're now twenty five thousand, five seventy eight. Is this more risk a version that's playing in? Is it a strong dollar? But we're off by five ten percent. But dig into some of the micro that's dragging down the Nasdaq.
Yeah, Karray, these are the biggest points movers to the downside on the Nasdaq one hundred. Clearly that hot ism print is impacting equities at the single name level, but there's news flow as well. Overnight the Wall Street Journal reporting that China Central government is telling specific agencies some agencies as the language they use to get their people to move away from using foreign handsets to domestic handsets,
with particular focus on Apple's iPhone. We will discuss that later in the show, along with what's happening with Huawei, Tesla and Nvidia also big drags on the index at the innex level the Nasdaq one hundred. Two other big names that we're watching at the megacap level. Well, the first is Microsoft. As you heard later in the show, we will speak to Microsoft's gaming chief and the head
of the prefers to Studio Starfield available today. So many of you have reached out to Karen and I with your thoughts on the title.
We'll dig into that.
But we also had the Gatekeeper's list out of the EU, which has some relevance to all of these megacat names. Then Amazon down one percent, as you know, Caroline. According to our sources, the FTC will finally act later this month with that suit.
Yeah, as soon as September. That's, of course what's currently being reported by our own people on the ground. And we know that the company has been trying to well win the ear of regulators, but it's failed thus far to really offer what has been a substantive reason as to why it's marketplace in particular hasn't been deemed well overall some sort of competitive.
Threat at the moment.
So we're going to be digging into all of these lack of concessions.
Thus far, it seems Blooms, Lea, Ninel and Lea.
What is it that Amazon really has failed to show to the FTC.
Yeah, the FTC has been looking at Amazon now for four years and it has a lot of concerns about the way that it has organized its marketplace. In order to get the prime badge, which you know is the one that most people buy, It's the one that when you go into the website and click on the buybox, that's the one right there. In order to get that, you have to use Amazon's logistics service, and the FTC is concerned that that unfairly ties access to the marketplace
to using these other services that Amazon buys now. Amazon has tried to assuage some of the concerns about that, such as by opening up this new program called Prime Prime Sellers so that you could do your own logistics by using like ups or FedEx.
But that doesn't seem to.
Have resolved any concerns by the FTC.
Leah, we know that in mid August, representatives from Amazon met with the three commissioners of the FTC. We talked so much about it with you on this program, but what we didn't really learn was are there any concessions or anything. Carol talked about that that Amazon tried to do to avert this from happening or is it always just going to happen?
Yeah, what we've heard about that meeting. It took place in mid August. They had a video chat with all of them commissioners and sort of laid out what they think are their defenses to these things.
There were no settlement talks.
At that meeting, so the FTC wasn't particularly interested in hearing about a settlement. Which Amazon had offered a settlement to resolve these sort of concerns in both Europe and the UK, but here in the US the FTC was not particularly interested, so that was sort.
Of the last step before.
A suit is filed, and we're hearing that it will probably come sometime later.
This month, and just give us the context.
Remind us if you've.
Forgotten, of course, Lena Khan, many you expected this was likely to come. It's the big beefy world visa VI Amazon, And actually they've taken steps to sue already in May and then in June.
Yeah, so this will actually be the fourth lawsuit that the FTC has filed against Amazon this year. They filed two earlier over the privacy related to Amazon's devices. Those were the ring doorbell and the echo speaker. Amazon to pay thirty million dollars and fines related to that. They filed a second suit that remains pending. Amazon can tests that one over consumer protection allegations related to Prime. The FTC says that Amazon has deliberately made it too difficult
for consumers to cancel their Prime subscriptions. Amazon, as I said, is contesting that, and that lawsuit is ongoing. But this will be sort of like the big one, you know. Lena Khan was well known before she became FTC chair for this paper she wrote about Amazon. Someone was joking to me the other day that like this lawsuit is going to be like inscribed on her tombstone when she dies.
So you know, the FTC has been like looking forward to this for at least the past two years, and it's going to be one of the biggest moves that they make during the administration.
All right, Blombos Leah Eylan on the antitrust beat at a DC, thank you sticking with these kind of geopolitical tensions. The US is working to establish a full detail of Huawei's advances in chit technology, news of which is Chinese nationalizard and ignited speculation about the effectiveness of Washington's curbs
on the country's vast technology sector. For more, let's bring in Bloomberg's and Marie Orden amh DC A calling for what they see as a warranted investigation into Huawei and the seven nanometer processor.
Will we get one.
Well, we heard from.
Jake Salvin yesterday and he really didn't want to make a prediction. All we saw at of Huawei interesting and a coincidence if you will, or potentially on purpose. When Gina Ramando, the individual in charge of the Commerce Department which is enacting those export controls and would likely be the ones to be leading that investigation when she was
leaving China. But when we heard from Jake Selva and the President's national security advisors that they need more information, they certainly want to.
Look into this.
But today and they might get some political pressure because today we heard from Representative Michael McCall, he's the Republican chairman of the House Foreign Relations Committee.
And he was asked about this.
He was asked if China's chopped chip maker SMIC warned in an investigation.
He said he certainly thinks it does.
And he says it sure looks like they did in
terms of violating sanctions. So this is not just going to be political pressure on the White House from Congress on the Republicans side of Democratic side, it does look like they want to see how Huawei was able to come up with this phone, given the fact that SMIC is on the entity's list, Whawei itself is on the entity's list, and given the fact that you have US technology present within SMIC components, if they were to want to give it to Huawei, they would need to get
release and call Washington and get and get that review before they were should be allowed to do so.
According to the current rule and law.
Smoothyard Highens. That's basically, well the tactics have been thus far. Do you think that ultimately gets cooled into question because Jake Sullivan seems to be sticking to that particular calls.
Yeah, it was interesting.
What Jake Sullivan wanted to say yesterday is that they still maintain that there is a lot of business between or seemed like he was trying to say business between Washington and Beijing on the commercial side. But these export controls, these sanctions, these investigations, if they have one, is really has to do with.
National security concerns.
That was the message from Gina Ramundo when she was in China, and that seemed to be the message yesday from the podium in the West Wing.
I'm Mary Holden, brilliant, Thank you very much for bringing us the inside track from Washington. Meanwhile, look, let's just talk a little bit more about what's happening in China.
Because the government agencies.
Have in fact band staff from using iPhones, Apple iPhones and other foreign random devices at work. That's all as we understand to the Wall Street Journal, China is Apple's largest international market. Remember, and iPhones are common in both government and in the private sector, so we'll see how that continues to unfold.
Time for some talking tech first up Right to Repair supporters are increasingly bullish about their chances of advancing legislation in states nationwide after Apple unexpectedly got behind a California bill that cleared a key herd all last week. Final approval of the proposal will make the Golden State the latest to pass a law requiring the electronics companies loos in control over the parts and technical know how necessary
to fix their products. Microsoft and Apple face fresh investigations from EU regulators as part of the block's landmark Digital markets clamp down. Those companies are among a list of twenty two services for under the EU's Digital Markets Act, which gives them six months to fall in line with the new rules or challenge.
Them in an EU court.
Plus, Saudi Telecom is taking a nearly ten percent stake in Spain's Telefonica for roughly two point twenty five billion, as the struggling the Did based carrier prepares to lay out a new strategy for future growth. The acquisition is bound to draw scrutiny from the Spanish government, which views Telefonica as a company of strategic importance operating in this structure that is critical to the nation's defense and security.
Caroline, Meanwhile, I mean so many other stories to be digging into today. One of them is, of course, after their reverse stock split one to forty we work back at three dollars forty three, but under pressure once again, we're down by three percent. And this, as we understand, the CEO is putting out really a letter talking about how they're looking to renegotiate nearly all of their leases with landlords and they plan to exit what they call unfit and underperforming locations.
Really, David totally here, Ed is sort.
Of at a race against time, really, isn't it. Ultimately a lot of businesses haven't been returning to the office. We now get the feel that it's back to school Septembers upon us. But ultimately they are running low on the money and they need to be renegotiating now. Of course, they've already warned that whether or not this business can be a going concern.
Yeah, so that happened last month.
But the reality is there are people in the tech industry that still use we work, you know, small startup shared spaces and are. Part of what Tolly said is that if we're going to close locations down just like they've done in the past, as part of this process, they're going to have to go and tell everyone that's currently working in them.
Yeah, off for alternative arrangements, additional support to minimize any disruption or indeed inconvenience, but inconvenient it is if you are in someone who enjoys going into the office in some of these key locations. But we keep a close eye on what is now at three dollars forty three stock and has continued to be under pressure from New York and San Francisco.
This is Bloomberg Technology.
Let's go global and take a look at India's economic transformation. With multinational giants like Apple and Samsum looking to diversify their manufacturing away from China, Here's the question, is India prepared to take China's path and emerge as the next global factory to become the next economic powerhouse. Here's Bloomberg's Minarkadoshi.
India is the world's second largest phone market, over two hundred million sold last year.
A decade ago, most of them were important.
Now the country is a net exporter with Samsung and.
Apple leading the charch.
Crimnisterner in the movie wants to repeat this phone success across electronic goods, electric vehicles, green energy, chemicals, textiles.
The neartome goal is to reverse the.
Declining share of manufacturing in GDP, targeting one trillion dollars in goods exports and most importantly, creating jobs for the largest working age population.
In the world.
But standing in the way of this manufacturing nvision are some old challenges, land acquisition problems, high logistics costs, and some new ones as well automation lack of skilled labor take phones, for instance. The government has implemented a mix of high import tariffs on finished phones and production incentives to boost local manufacture, but supply chain in digitization is.
A long way off.
According to one report, Indian factories add eighteen percent in value to the electronic devices they assemble for export, compared with thirty eight percent in China and twenty four percent in Vietnam. Manufacturing in Vietnam is also cheaper by at least a tells the mag in India campaign will benefit from record investments in infrastructure and logistics. There's also the
lure of a potentially large domestic market. And now there's the China plus one wave as large global corporations seek to mitigate geopolitical risks, and they are slow in China economy by diversifying their supply chains.
Since the liberal i of.
Its economy in the nineties, India has come to be known as the back office to the world. After becoming a developed economy, the government also needs it to become the factory to the world.
That was Bloomberg's Monarkadoshi right. Top story Microsoft shot for the sky was Starfield. It's ambitious new space role playing video game and so far looks like a pretty decent bet The highly anticipated title arrives after seven years in development. It's the first time Bethesda has entered a new universe in twenty five years. Starfield available today to everyone through
Xbox Game Pass. Delighted to bring in some of the giants behind the game, Phil Spencer, CEO of Microsoft Gaming, and Todd Howard, executive director of Bethesda Games Studios and the executive producer on the title. Todd, I'm going to start with you. I asked our audience, what would you ask Todd? Big question from many, why did you not optimize this game for PC.
We did.
It's running great. It is a next gen PC game. We really do push the technology, so you may need to upgrade your PC for this game. But it's got a lot of great stuff going on in it, and the fans are responding awesome.
Karen and I have been reviewing the gameplay. We've also been reviewing some of the discussion online. Phil, Good to see you Xbox game Pass. Okay, it's available to anyone that subscribes, so how can you guarantee from a sort of sales perspective that you kind of hit the heights that Skyrim has. If it's available to anyone through game Pass, how do you ensure people actually play it?
Well, we can see people playing, which is great on the platform. You might know, the game has been in preview for the last week and it's already our most played next Gen exclusive game on Xbox, so we're seeing huge success. It's our biggest wish listed game on Steam across Xbox and Bethesda Game Studio's history. And now, as you said, tens of millions of Game Path subscribers and the Standard Edition retail customers all get to play today. So incredible day New franchise launching.
It's a lot of.
Fun and I'm sure you want to dwell on the here that now, Phil, But You've been asked and I'm going to ask it again. You mentioned exclusive, so does that mean being able to scroll six will be How do you mark as to whether this is the right track, Phil?
Yeah, we look at it on a case by case basis. With the games that we build, we want to make sure our games are available in so many different places on our Xbox consoles, on.
PC, also via cloud.
These games can come to almost any web enabled device. We're looking at. You know, millions and millions of players who will have had access to Starfield and other Xbox Game Studios games. It's really about giving players choice around how they want to play and they build their library of games.
What then, todd about timing? What then about other names, other games Calder for example, Wilder'sgate that have done significant well, how do you think about ultimately making sure everyone's addicted to your current offering right here right now?
You know, I think if you look at video games now, it is so competitive. I think this year twenty twenty three could be the greatest year ever in video games. I don't know, but to have Starfield be out there and the response that we've gotten has just been incredible for everybody here at the studio. And the other thing is, yes, it's about launch, it's about today, but our games they are played for years. You know, we're twelve years after
Skyrim still one of our most played games. So we like to build these worlds that people can really really get lost in the fan feedback and what it means to everybody, It really is incredible for all of us here.
Todd, I want to go to another one of the audience questions, and it's very specific, but so many people asked it, why are there no vehicles on planets? Space is one thing, but what about terra firma.
It's a great question. Actually it's something we consider. You know, we're going to do our space, we're going new planets. Once you do vehicles, it does change the gameplay. So by focusing once you land in your ship that you're on foot, it lets us really for the players, make it an experience where we know how fast they're seeing things.
In one sense.
You do have a vehicle, which is obviously have your spaceship. You can go around in space, but then on the surface you do have a jetpack which you can upgrade, which is super fun new experience for us. And obviously planets have different levels of gravity which make that unique for many planets.
Phil this is so closely tied to Xbox, and I find it interesting. I have to ask you about the latest offer from Microsoft and Activision to the uk CMA. Do you think that that structure will be accepted with the UKCMA.
You know, we're working cooperatively with the regulators as we've had through this whole process. As you're well aware, it's been a long process. We remain confident in the work that we're doing with the CMA and the European Commission and here with the FTC and the UA, that we will close this acquisition.
Another rather specific question for you, Todd.
What's been your favorite means and operation, like what you'll build out there? What's been your favorite build or indeed favorite well means of traveling through space.
Favorite means of traveling through space? Well, you know, when I'm doing my ship, I like to focus on shields and defense because you never know where it's going to happen when you jump into a new system in the game, as far as character builds, it's one of the things we love to do, which is.
There's so much you can do in the game.
It's almost like five or six games at once, and we usually tell people just get comfortable, do what you want to do. If you want to zen out and scan planets and explore them, great, If you want to join the pirates, great, if you want to do this epic main quest. It's really whatever you want to do, whatever you're comfortable with, and really for us it is we do these worlds, but it's about the players making it their own.
Todd This game took seven years to make. Generative AI now allows studios like you to expedite the creation process quickly.
Well, it seems we want to do that every time.
We want to do it faster, and there are areas where we can go faster, but these are complex projects. They're big technological innovation going on. There's so much design. This game has over three million words in it, so we do like to make really big games. Those will take some time, and as you mentioned before, the competition our industry is quite high. The bar is high, and we want to get there for all of our fans.
Every time it's great having some time with you, Todd Howard and indeed Phil Spencer. We thank you both, Phil Spencer, We'll see you, Maxloft Game and Todd Howard, executive director of Bethesda Game Studios and of course the executive producer of Starfield. From New York and San Francisco. There's a Blue Meg Technology. Wellcome back to Blue Meg Technology. I'm Caroline Hid in New York.
And I'm ed Lovelow in San Francisco. Quick check in on the market. Then as that one hundred at the index level, Carro and you know, we've really started to kind of accelerate other clients down one point two percent. You talked at the top of the show about the hot print fort ism data that seems to have weighed on sentiment. But some megacap names also under pressure a lot in the newsfod that.
We've covered off.
There's one specific name that I wanted to bring you, which is by DO, China's search giant, the Google of China. There's a really interesting tech Watch column. This is by DO over the last seven days, but we're down in the last two sessions. The theory is that there could be some room to run on this stock because not only did it sort of get the regulatory approvals from China to deploy its generative AI tool to the public,
but ernie bot has hit a million downloads. And what our colleagues in Bloomberg mus have done is look at all the technical indicators, look at the options market, and say, there's a lot of hype around AI, but this is one name.
That we might want to watch for.
So I wanted to squeeze that in while we had a minute.
It's good because I'm going to be digging into the world of AI a little bit more with.
A VC air Street Capital.
Of course, Nathan Binet is going to be joining us, and he's been all focused on by Do. But let's go from bay Do to Binance. Right now the world of crypto. Two finance executives ed overseeing regions including Eastern Europe and Russia. Well they've left, and actually it's just adding the drip drip drip of continued roll revolving doors.
At the moment, the senior managers just aparting.
This comes as we know that regulators in the US and elsewhere are cracking down in the company.
But EMOTIONALI Bessek joins US.
More So, is this in any way idiosyncratic to Eastern Europe and Russia or is this.
A broader theme.
There's definitely a broader theme here.
We know that there are a number of very senior executives here. Remember the Wall Street Journal had also reported that Helen High, who ran the global feat business, is among those who have departed.
Then we also have the person.
Who as a global head of product who had left very recently as well. We also have the person who ran the finance business in the Asia Pacific region. So certainly across regions you are seeing different members of the Binance senior leadership teams start to exit. Now, remember crypto tends to be a business where people come and go a lot. However, you're only as good as your business here.
I know that this is a technology business, but it is the people who are expanding in those areas, and finance has always been kind of the central pivotal international player when it comes to the crypto community, as well as being such a large exchange across the world. So to your point on is it just Eastern Europe, the fact that we've seen such senior executives had to Global Product Asia as well, as Eastern Europe definitely indicates that you are seeing issues in different.
Areas Czy though, yes, putting a bit of a kind of we silver lining to it all saying look, they're going on to new ventures, some people will great talent are coming from outside of buy Now and for what.
It's worth, having this conversation with you and now is making me giggle. We'll hear that because you are seeing this at other companies. You are seeing places like Goldman say the same exact thing. And so as far as talent leaving going other places and having a relationship to the extent can prove that relationship is playing out. That's the benefit of having your first job or such a high level position at such a key exchange as you
build new crypto products. But again, the only benefit from the company comes if that relationship or.
To continue shannata. We're going to go pretty deep on another name in just a minute.
But Binance, like many others, is just as embattled, particularly with the SEC scrutiny, and this is a thing that CZ has to still deal with of course.
Yeah, remember that is of course a very big problem here when you come to the lawsuits that they're facing as well as the regulatory scrutiny, particularly here in the United States. I would also say it's not just the SEC that it's facing. Remember we're not too many months away from when their own stable coin product had faced scrutiny here via the issuer that it worked with.
Through the New York Department of Financial Services.
And these are all pretty critical pieces of the puzzle when you think about what the crypto industry relies on and what they trade at the end of the day.
So it is kind of coming from all sides, isn't it.
But again, these are now years long issues that Binance has been facing, and so these executives leaving is not just about regulation anymore's about business.
Away from Binance.
Shnali, It's that time of the week where I ask you what is the latest on the Bitcoin sport ETF.
Saga, And you know, we are weeks away from the next set of answers from the SEC on whether they're going to approve or punt or deny more ETFs. And given that we are just days away from when they've punted yet again on a host of ETFs tied to major providers.
You know, just a day ago we were speaking to.
Executive at Valkyrie, which has a penny application, who said that people believes that there's a fifty percent chance that after October they finally get an answer either way, and there is a grand hope that there will be approval. But it is pretty fascinating to see the Grayscale Bitcoin Trust, for example, how it's trading. It's still at a twenty
percent discount to its net asset value. Remember that gap had closed after the initial decision last week from the district judge regarding their law suit against the SEC.
As far as Grayscale goes, they're.
Asking the SEC for answers as well. They are only a couple days into that forty five day waiting period. But that forty five day waiting period, the longer it goes on, the more frustrating it is for everybody who has an application that is sitting on the sidelines, that is waiting for an answer in October.
Yeah, and it is an important question because the market is trying to play it. And if there's anyone that understands the moving timeline, it's Bloomberg Snali Bassek, thank.
You very much. Okay.
As the AI height brings founders and a fresh influx of VC dollars to San Francisco. One industry has been left ruing what might have been crypto. That's the view of Ripple Labs co founder Chris Last and I sat down with him yesterday here in San Francisco, a c the larcens now trying to help fixed the outlines how he feels the federal government and US regulators have cost San Francisco the title is the blockchain capital of the world.
Have listened.
That's really unfortunate because I think unfortunately this administration made a really bad call.
At the city level or the federal or the federal level.
They pretty much killed San Francisco from being what it was, the blockchain capital of the world. We owned it, and we don't anymore because the Biden administration, for whatever reason, decided they want to push this industry offshore. And so it's London, Singapore, Dubai that really are the global capitals of blockchain. That's unfortunate. Maybe our vacancy rate would behalf of what it is here in San Francisco. It's thirty percent.
It might have been fifteen percent if we still were the global blockchain capital the world.
So that was a missed opportunity.
It's really unfortunate it hurt the city.
The latest with Rippled Labs action at the federal level is that you have objected to the SEC's request to appeal the original court ruling, which was a positive for Ripple in the sense that it found the cryptocurrency xop was not a security when it was sold to the public. Could you just explain what the latest is with that legal dispute.
Well, I think the bottom line is the SEC lost on everything that was important to them and important in regulation of the industry. The case still continues. There's appeal processes that everybody has the right to do. But we think that this is really groundbreaking. This is the law of the land, and it's actually quite good news.
I think.
For again, I think the US screwed up here on crypto and blockchain policy. This is the beginning now through the court's unfortunately, instead of the regulators to get that clarity and get.
Us back in the work.
There's kind of both happening in parallel. There's your situation with the SEC. Think about the application pending for bitcoins for ETF. You know, Gary Gensler and the SEC have both decisions to make applications and fights that.
They are are on not willing to pick.
How has that reflected on Gary Gensler to your mind as the lead of that.
Well you bring up, yeah, you bring up a great point. You saw in the latest challenge on the ETF the Bitcoin ETF. Again SEC lost, but not only that, the judge really admonished the SEC. I really called them out in a way that you don't really see very often. I think it's just more proof that Gary Ginsler's decision of sort of engaging this regulation by enforcement rather than
getting clear laws. He knows they're not clear. He just likes that lack of clarity so that he can go after anybody and make up the rules as he goes along through bullying. And that's not the American way. This should be a congress. We should have clear rules from the legislatures, not through the sort of unelected, power hungry and really misplaced decision maker that you see in Gary Gensler.
Well, Cara, I mean you heard it strong words against the chair of the lead US regulator, But he's basically making an appeal, which is we want the federal government to write laws, not keep going to court over and over again with the same agency.
And yet they haven't.
And it's interesting we're getting more and more clamor that perhaps this isn't a partisan issue, perhaps this becomes bipartisan in some way. But Ed, what's interesting is just Dwell on the San Francisco element here, because this is what really took my attention. How he feels that what the sort of sucking sound of crypto and blockchain has hurt the city and indeed the district yet more.
Yeah.
So the economic data point that he cited was commercial real estate or office vacancy, which last quarter was at thirty two percent CBRO data, and he said it would be fifteen percent probably had this become such an unhappy place for blockchain companies in particular, And he's saying to newfounders, don't come here the city's to fix. You have better lot going to Singapore or Dubai because they have proactive regulation that supports the founding and building of companies in that space.
But I feel that that must be something that well reflects on the US more broadly. What is it just because it's an added wound into San Francisco at a time where they're still trying to bring workers back to the city trailers still trying to ensure that their rualer state is full in some way, not just in crypto, but in software, in anything but AI.
Basically, his answer was very quick and simple. The federal government were the main sort of driver of people out, but there's no champion in San Francisco right now trying to bring them back in.
And that's why we have a vacuum.
Really interesting take on particular niche on that focus on that city. But coming up, let's go even more broad and we're interested to talk about what's happening in Europe and cultivating the startup scene there as well. Big new rays coming from air Street Capital. It's a venture firm backed by Spotify CEO Daniel Eck. We're going to be joined by Nathan Banish, he's general partner in air Street Capital. That's next. I mean, while before we go to private
let's go to the public markets. We just want to shine a light in the fact that we are at basically session lows the SMP off by more than percentage point, looking in the nasdak off by one point four percent. This is a question of macro data. Is the US economy too strong? Does a fence still have to hike the rates, go and stay above that five percent level of the two year from New York and San Francisco.
This is Blueberg Technology.
It is at time our VC round up starting with five hundred global Look.
It's one of the most active early stage venture investors over in Southeast Asia. It's an early backer of GRAB and they just raise one hundred and forty three million dollars to ramp up investments in the region. Firm now has more than two point four billion dollars in assets and the management. Meanwhile, the Blank Chech company started by former IndyCar driver, that's Michael Andretti.
Here he's imagine with AI startup. It's about it Ai. According to sources, the merger values about are at.
About two hundred million dollars plus Jared Kushner's Affinity Partners. It's acquiring one hundred and fifty million dollar minority stake in an Israeli car company. This marks the first investment in Israel for the Miami based private equity firm, which is backed by Saudi Arabia's Soften Wealth Fund, A really global one.
Ad.
Yeah, those are the VC headlines. Let's stick with the world of venture capital. Air Street Capital, venture firm focused on early stage AI startups, has just raised a second fund worth one hundred and twenty one million dollars. We're backing from Spotify's CEO, Daniel eck Let's bring in Nathan Benaish, general partner at air Street Capital for today's VC Spotlight. We asked this question, Naean every time. How quickly did you raise and close that fund?
That's a privilege to be here. Thanks for having me. Yeah, you know, it's it's definitely a great time to be investing in this space. You know, this is just a moment in time.
You know.
I tend to think that raising funds is basically a job over you're entire the career, and it's just a little snapshot in the journey. But there was a lot of interest, and yeah, we're fortunate to end up where we did.
You are well known across Europe, clearly backing from well the pinoff in the public markets that is Spotify, But I'm interested in basically the areas of opportunity. Many would say, look, AI is kind of dominated by San Francisco right now, but I think a mistrell over in Europe which had a phenomenal first race. What opportunities in artificial intelligence are you seeing from the region.
Yeah, I think the opportunities for AI are genuinely global. What's fascinating about Europe is it has this very strong academic and research base for many years. Many of the major contributors to landmark AI research papers that are going to underpin the technology that works today, you know, had their early careers in Europe. And I'm investing both in Europe and in North America. I've been particularly interested in pharmaceuticals and drug discovery, where I think AI is one
of these amazing native languages to explain biology. Interested in enterprise software and automation, and also emerging sectors like robotics and national security and defense.
Nathan can be startups in Europe building large language models compete with those being built here by the likes of open Ai by Google.
Yeah. I think the foundation model space is particularly tricky. I mean, as we all know, it's very capital intensive, and it's probably going to be just a couple of winners here that will form this kind of bedrock of web services. I'm particularly not extremely drawn to these companies because I'm not sure they make for great venture investments, particularly for early stage funds. But it's definitely an interesting domain to watch and never say never, but it's not really the focus for me.
What's interesting is we came to Nathan on a story really global, one of sort of venture backed by Saudi Arabian money investing in Israeli style, and I'm interested as to where the competition is form my allocation of checks. Are you seeing Chinese money, are you seeing Middle Eastern money coming into the startups across Europe? And are they taking it? And are you investing alongside them?
I actually don't see that much for sure. In you know the news we've seen, you know, AI generally become part of the geopolitical discourse, and you know, it's one of the kind of vectors through which you know, various companies are going to be competitive going forward, and so it makes sense the government should be involved, and I think the UK government has been making some interesting moves there as well. On the investing landscape, I don't really
see them. We tend to work with European and North American partners for pretty much exclusively, but yeah, it hasn't really crossed my roadmap as much.
And Nathan, what is interesting, is of course where you're coming to us from. And indeed, well the times you have with the UK sector in particular, and that is one that we talk about time and time again. London and its ability to continue to be a dominant force in aid tech.
I think back to IVP they talked about it, Nathan, being a London based bridge to Europe. You're going to run your firm out of London. What's it like in this post Brexit world? Is it a good place to be a VC?
Yeah?
I think you know, VC's definitely gone global, particularly in the last couple of years. I think firms that have been reticent to write checks over Zoom, you know, are no longer like that. I mean for me, actually, I've invested two checks over Zoom and sold the company before I actually met the founders in person, So this can happen. I'm completely happy with that. I tend to use London as the base and then I'm very happy to travel
wherever I need to in Europe in North America. But as you say, you know, Europe is a is a hardbed for talent and you know, a deep mind kind of winning the power balance with Google to be like the de facto AI lab for the company and being based in London, I think is a big win. And with open EI joining the fray Ananthropic as well, I think it's a it's a great and to be in the space.
We've tracked all the data this year from pitch book or see the insights wherever about the flow of VC dollars to San Francisco in the context of AI and mL. I just wondered if you could explain any bright spots that you see, even if it's at a city level where there is a lot of talent, there's a lot of dollars flowing to very specific areas in Europe.
Yeah, I think it's a very distributed kind of game, and as you know, like seed is very local in a way, so you do have to be present in different ecosystems, which is you know why we try and make key contributions into the space through state of a report, through running best practice meetups and kind of trying to lift the lift sort of all boats. Basically by showing
best practices. We invest in everything from you know, a spin out in Studdeguard to you know, companies in Zurich or Paris or Stockholm, and so I think if you kind of own the megaphone online where basically the forum for machine learners to debate is based Twitter or x dot com, then that's a great place to start to meet people. And so I think when I'm in New York, people think I live there. When I'm in London, people think I live there. I just go wherever the opportunities are.
And Nathan, you of course have PhD in cancer biology from the University of Cambridge. Where is the opportunity in the biotech meets AI space.
I think it's a radical transformation for how drugs are developed, designed, marketed, how patients are selected for trials, and how we monitor successive trials as patients are going through them. And I think every one of those steps in the process that I described can be really be rethought using better data capture, better machine learning, trying to remove a lot of the biases and irreproducibility issues that you see because a lot
of this process has still been very artisanal. Many of the drug discovery companies that are publicly traded today and suffering are based on science side of the lab that is sometimes not particularly reproducible because it's all done by
you know, human people pipetting things in a lab. And so I think once you move to this industrialization of biology where you use automation and you use machine learning, then you start to create companies that I think are far more resilient because they have many more shots on gold than a single drug, and so they look like
multi portfolio companies. And we see this with Xcentia and with Recursion, you know, two companies that were privileged to be a part of And it's a really exciting generation of technology talent machine learners that are coming into biology. Is the kind of new domain to build value is far more exciting than kind of optimizing flicks on the internet.
Here's too exciting and optimism to finish the conversation, Nathan VENETI, we thank you for your time, General partner over an air street.
Capital on the rais.
Time for going viral and burning Man is still the talk of the internet. Off The annual Nevada Festival turned into a multi day mudfest. Bloomberg Technologies. Ellen Hughitt has first and experience and writes about how Wi Fi is commodity in today's tech day.
Ellen, what was it like?
Well, it's funny as a reporter to be in the middle of what we later found out was a news event. But you know, it sounded dramatic if you were reading about it on the news, and certainly there were some people for whom this was very inconvenient and a little scary.
But I think it really wasn't as bad as it sounds, and it kind of brought people together, you know, talk about a reason for everyone to band together, share resources, try to find ways to have a laugh, even though we were all a little wet and cold and very muddy.
Wet and cold and money sounds like lastomary to me.
We thank you, Ellen Hewittt getting back safely from New York from San Francisco.
That's it for this edition of Bloomberg Technology. Check out the podcast