Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a live from Coast to Coast with Caroline Hyde in New York and Vla Low in Sentrancisco.
This is Bloomberg Tech coming up. Intel shares tumble after the CEO sparse concerns that he's more focused on cost cutting than innovation class.
Tesla said to roll out it's robotaxi service in San Francisco this weekend, according to reports, But how robo is it with a person in the driver's seat?
And the FCC approves Paramount's merger with sky Dance after a few concessions to appease the Trump administration.
But first ed we check in on these markets after a week that has been a relatively turbulent one in the face of the micro that is the earnings story and the macro that is Japan trade deal, and what we see in terms of the Federal Reserve, whether it cuts or whether it doesn't, and that relationship between fedshare pal and Trump as he visits, of course, the new
building site of the Federal Reserve. We're actually up eight tenths of percent over the last five trading days because big tech has managed to win out in the pot of the AI action plan some semiconductor outperformance. Move on to some of the individual names though, because some earnings on the semiconductor front have not been pleasant. But I also want to look what's happened in the world a crypto for you before you get to the micro ed I'm down three percent on bitcoin. That's more about the
Fed story. That's more about the fact that maybe the Federal Reserve won't be cutting in the near term with pressure off of fedschare Pal's role. It seems Trump and him meet over the course of the last day or so. We're down three percent.
What if you've got Yeah, Intel, Intel's probably our top tech story, and it's probably our top earning story. The stocks down more than nine percent, on track for its biggest drop since the first week of April. The print was fine, and we'll get into that in just the moment. But all it took was just a few words from lit Boutan on the earnings call. Basically a focus on cost cutting, not on the pro not an innovation. The
result is after ours pre marketing. Now in the session, tumble, Caroline, bring us the details.
Yeah, let's get all the results from Ian King, I have to say this almost felt like an emission of defeat, the fact that they're pulling back on their manufacturing, but they're also pulling back on almost innovating in Yeah.
I mean this is the way that analysts have interpreted what he said, which is that this future production technology, this you know, this key to them being more competitive. Maybe we won't do it. Maybe we won't do it if we don't get commitments from outside customers, and that is not being taken well at Harbye analysts who have been listening to the company telling them, Hey, this technology, there's fourteen A, this is the key to our future. This gets us back in the game. And now maybe
we're not going to do it. So there's a lot of a lot of like what's going on here sort of reaction to them.
In the headline that's driving the stock lower is that the CEO is struggling to convince Wall Street that the turnaround is intact. You had some time on the phone with the CFO Daves Instare, and part of what you guys discussed was where they will pull back, probably in Europe, and where they'll continue to invest. What can you tell us?
Yeah, I mean they under pat Gelsinger had all of you know, laid out a map of basically covering the world of all of these new projects that they were going to do that you know that they were going to make themselves this manufacturing powerhouse again Germany, Poland packaging facilities here there and where all of those are going, right, And even the keystone project of Ohio, which we already know has been delayed, is going to be delayed even further.
So we're seeing a kind of a retreat on that building. And what they said was, look, we're not we're not going to build ahead of demand. We're going to wait until we get demand. And you know, they alerts a quite good well done, that's sensible. But then when we talk about future technology, then that's when things get tricky, and that's when people get.
Concerned, concern that they're not going to build fourteen A until they get the commitments in. But what I'm really interested in is how this fits in the context of security of supply chain here in the United States. How can the federal government that wants an AI action plan and manufacturing here in the US just let Intel delay Ohio back to at least twenty thirty.
Yeah, I mean probably more important than Ohio would be fourteen A, which because if they don't go to fourteen A, there's new production technologies, and they're effectively saying that's it, we're done, We're.
Frozen in time.
So US indigenous semiconductor leading edge capability grind, store, halt and doesn't advance. So clearly that would be a massive concern to the government were that scenario to unfold. And that's something which is obviously people are going to focus on very heavily.
Bloombergsy and King who leads our semiconducts of coverage. Thank you very much. It's actually been a really busy week of tech earnings across the world of tech, software, hardware, chips, in some of the hyperscalers as well. Let's get out to Brent Hill Jeffrey's analysts, and it's been a week that's really interesting. I just got back from Washington, DC, right Brent for the AI action Plan. I listened to
the President. I appreciate that Intel is not actually on your coverage list, but it was interesting that Intel wasn't in the room there in DC. Alphabet wasn't either. They had their earnings print. Would you say there's kind of one core lesson right now about what's happening in infrastructure in America and what the biggest result of this week has been from the administration.
Yeah, I think the key takeaway is that the AI investment boom is still happening at a rapid rate.
There's no slowdown.
Google raised their entire CAPEX from seventy five to eighty five billion on their cloud business, not their AD business. So that's selling Google Cloud to enterprises, and I think it tells you that we're still in the infrastructure buildout. We continue to see the dirt, the energy, the power lines, the core servers. That's really been the focus. And the AI trade has not come to applications. That has not gone to Salesforce or Adobe, to many those names.
They're not monetizing this.
Yet.
We think that happens, and that has to happen for AI to work. In our view, that we have to go up through the infrastructural layer of the application layer. And so I think that's the next chapter. But I'd say so far alive and kicking in doing very well in AI infrastructure. There's been no signs of slowdown. You heard Mark Zuckerberg talk about spending hundreds of billions of
dollars in CAPEX. Just a couple of weeks ago, Google just raised their CAPEX by ten bill and then we've got Microsoft Amazon on deck, and we think that ultimately in our checks, the demand for hyperscale er infrastructure is accelerating.
They we're seeing the terrifories starting to shake off.
Brent. The AI Action Plan largely focuses on deregulation and expedited permitting. Of all of the companies that you cover, where that's relevant, how will it help them?
Well, I think it should help the entire industry.
If we have lower bars and lower regulation, we're going to see hopefully a lot more consolidation. I think the one thing we're seeing is there's a lot of companies that say their AI first. We saw this movie and the Internet boom in the nineties. We saw this in the cloud boom. There's going to be massive consolidation. So you're seeing already the beginning.
Of an M and A wave.
So I think it will help M and A, It should help the buildout, It should help protect the US in terms of what we're.
Doing as a country in AI.
So I think, you know, the President has this right, and certainly you look at our allies and building this. It's a collection of different technology companies and I think what we're we thought what happened at the beginning of AI is that we consolidate power to a few, and what we're finding is it's consolidating power to many, and so there's just not enough capacity. Everyone's capacity cans train. Google said their capacity constrain. Microsoft said they were going
to be constrained. But what's happening now is that you're seen demand gets spread all over and that's actually good for the ecosystem and good for many vendors over time. Again, I think you're going to see a tremendous amount of cleanup in M and A, and that needs to happen because there's probably going to be too many comedies chasing this long term. But short term, I think, you know, there's no question we're an AI boom, and it's really exciting.
And I think it's real.
I don't think this is this is fake like we've seen in other tech trends.
It's interesting service now. Bill mcdermin yesterday saying this is an existential issue for many in CRM who aren't on the AI bandwagon. I'm thinking about to IBM, and they look like they're selling well in terms of consulting into AI. The software bit was a little bit woolly, and people pulled back from what had been a ramp up in the stop Brent, just before we push forward to what's next week?
What did you make of some of the.
Weaker plays and how much do they get beaten.
Up this week? I mean, IBM didn't have a phenomenal quarter.
They introduced, you know, a new infrastructure cycle and that kind of possum man. They also are integrated and Ashi, which is a deal they did, and so the software business decelerated the point you know, it wasn't it wasn't terrible, but the stock could run up and is almost sitting at the same multiple that Microsoft was at. And I think, you know, IBM is a single digit grower. Microsoft is a double digit grower. So I think the stock got mismarked. We don't have a buy on IBM. We like what
they're doing, We like Arvin's software centric strategy. So we're we're fundamental fans with stock. Just had a big move and it kind of didn't didn't make sense. Maybe where it was at based on the results.
Yeah, so I don't.
I went to look at IBM's results and say, you know that they're a proxy.
Actually, the CEO upgraded the overall.
Economy from cautiously optimistic to optimistic, and I said, well, what's next. Is there ludicrous feed or is there another speed above optimistic? But you know, Arvin, you know, has a pretty good lens and what he sees. And I think that was probably the most interesting thing, which is to us that that's a good telltale what's about happened next week?
Yeah, I mean Avin told me his he's really looking at M and A at the moment, and also that he's more optimistic about consulting for twenty twenty six in years about twenty twenty five push forward then for next week, and the optimism around what this means to Microsoft spend, what this means for Amazon spend, and how much their cloud units are growing.
Yeah.
So Microsoft, they're on acceleration path. They've said their capacity can train. They're accelerating the guide to an acceleration. We're now looking at a mid thirty percent Azure infrastructure build for Amazon. Last quarter they put up twenty percent backlog and that was up from fourteen, So their backlogs growing.
Which is a sign of what was going to happen with revenue.
So we continue to see right now continued acceleration across the board. And again I would highlight we haven't even seen AI hit these numbers in a big way. I mean for all those brand communies, it's less than five percent this whole revenue.
Sorry, sorry to in trouble. We just have thirty second steft by When to ask that is Capex still the data point to watch or you want to see top line growth as a result of Capex the prior.
Year booking bookings is number one revenue growth and then are Capex in that order.
Brent Till Jeffrey, it's great to have you back on Bloomberg Tech. We really appreciate your time. Thank you very much. Now coming up, Tesla's reportedly set to expand its robotaxi roll out this weekend to the city of San Francisco. We'll find more on that next. This is Bloomberg Tech.
Time now for Talking Tech and first up Lift and it has pants to deploy autonomous shuffles in the United States in late twenty twenty six. Because it tries to catch up to Uber's driverless Rise. Now Lift will partner with Austria based manufacturer has been Teller Group to test its pull on electric shuffles in cities and airports. Plus Alphabet Cio Sunda pitch Eye is now worth over one
billion dollars according to the Bloomberg Billionaires Index. Now the CEO holds just zero point not two percent economic stake in the company. But how that has added more than eight trillion dollars in market value since twenty twenty three. ASPACEX is starlink satellite internet service network. Well, it's been restored over an hour's long outage. The Elon must lead unit said in a post on x that the issues had
been resolved. We didn't say how widespread the issue was or how many subscribers were affected.
Ed Okay, let's get to elsewhere. In Elon Inc. Tesla is reportedly set to plan a rollout or expansion of its robotaxi service to San Francisco beginning this weekend. That's according to a report from Business Insider. I want to bring in Bloomberg's Max Chaffkin, one of the Elon Inc. Team, and I find this interesting. The specifics are that it's
planned for maybe today Friday. On the earnings call earlier in the week, which you participated in, Ashle Kelaswami, who's the Robotaxi chief, said that they were doing this anyway. But there some bits that we don't know what was in the Business Insider reports and what do you make of it?
So the Business Insider report is based on a memo, an internal memo you know, within Tesla, promising a sort of robotaxi service, albeit one with a driver in the driver seed. So so I don't I'm not sure if you can really call it a robotaxi if there is a it's a driverless car that does have a driver. But you know, what they're saying is that they're testing this. The other thing I'll say is California has a pretty robust permitting system for driverless cars. In fact, you know,
this has been around since like twenty eighteen. I believe the first company that had this permit was Zoukes, but Waimo, Cruz, lots and lots of companies for years have been operating these services with permits. As anyone who lives in the Bay Area knows, Tesla does not have any of these permits.
Yet what they have is.
Something called a TCP permit.
This is basically a permit to operate a charter service with human drivers, so effectively like a black car service, a chauffeur service or whatever.
And so my guess is that.
Is how they're they're going to justify this, which is to say, you know, it's not really an autonomous car as far as the law is concerned. Of course, Tesla has blurred the lines between like what constitutes an autonomous car for years and years.
We were just seeing the Tesla VP of AI software what he said about the rollout of robotaxing more broadly on the earnings call, and I'm really interested ultimately here Max as to how you get to this vision that by I think it's the second half of the year, half of Americans are meant to be able to access a robotaxing, But at the moment they're but a handful in Austin and maybe a few with a driver at the well at least a person that the driver's seat is starting to do San Francisco.
I mean, look, Tesla doesn't really have a robotaxi service today. Like what it has is, you know, eleven or so cars in Austin that have a safety observer.
And of course we know that there.
As I said before, there are other companies that are operating actual robotaxi service. WEIMO has something like fifteen hundred vehicles in five cities without drivers. I think if it just all depends on how you define it, my guess is what they're going to say is they have these testing vehicles, they have relatively wide ranges.
Maybe you do.
Some some math and and theoretically you can justify have it saying that half the population is covered. But I think by any normal person's definition that that just isn't going to be true, just because technically we are not that close to that being possible.
The other big story out today is about Ultimus in March. This is how Ela Musk outlined the plan for Optimists in twenty twenty five. Listen to this Max.
This year, we hopefully will be able to make about five thousand Optimist robots. We're technically we're aiming for enough parts to make ten maybe twelve thousand.
But since it's a.
Totally new product with totally new you know, like everything is totally new, I'll say like we're succeeding if we get to half of the ten you know, half of the ten thousand now, but even five thousand robots, that's that's the size of a Roman legion. If I which is like a little scary thought, like a whole legion of robuts, I'd be like, WHOA, Okay, but I think I think we'll literally both a legion at least one legion of robots this year.
There's a report from the Information out today that disputes what Ela Musk outlined, that they actually nowhere near to five thousand.
What do we know, Max, Yeah, this Information report, it's pretty it pours some cold water on the statements that that Musk has made. It talks about, you know, real difficulty manufacturing hearts of these robots, particularly the hands. I mean, one thing in that clip that's worth noting. Elon Musk is right when he says this is new, and this is hard, and so so you know, in a weird way,
you know. Where whereas with robotaxis, there are lots of other companies that have been doing what Tesla is doing for for quite some time with optimists. If they were actually able to make this work or really get close to making it work. That would be amazing, that would be really impressive. But from this information story, you know, it seems like they're just not progressing where they are.
Must talked about what was it a legion? I think where what the information said is they have something like fifty optimists optimize, you know, kind of walking around and picking stuff up and putting it down in the factory, not not doesn't sound like doing actual work yet. I don't know how many fifty is, but definitely less thann Allegian My.
You know what Musk is somebody who.
Is totally focused and his sort of expertise is getting investors to look at the future, not to look at the near here and now, but to look ahead. And so I think if you look at the timing of this robotaxi launch, one possible reason would be you have this information report coming out that makes this other futuristic thing look like it's much further out.
So hey, let's let's speed up the robotaxis.
Let's get investors excited about something.
And I don't know what fifty is. Two soccer squads Bloomberg's match Chafkin, thanks so much, Brigade. Meanwhile, coming up less about OPTIMI and more about the US and China both pushing ahead to lead the global AI rights. We're going to speak with Teresa Carlson of the General Catalyst Institute on a conversation on how governments can support cutting
edge check. This is Bloomberg Tech, Chinese tech leaders, government officials, investors. Well, they're headed to Shanghai this weekend for the World Ai Conference. It comes as Beijing looks to propel its AI ambitions forward in the face of the new AI Action Plan from Washington meant to cement US dominance in the space for more. We're joined by Teresa Carlson Fanning, president of the General Catalyst Institute. And you've been applauding this AI
Action Plan. Is there enough there for startups as well as big tech?
It's definitely got an amazing basis for it. It was it was broad, and it was reaching, and I've never seen an administration access quickly. And I think one of the biggest issues here is that we need to be ahead of China and all aspects. And the only way that this is going to occur if we have a public private partnership where you have both government ensuring that they're cutting all the regulatory tape, and you have private sector both developing and providing capital into these markets.
Theresa, I've been trying to write down everything that I learned from being in the room and speaking to all those officials and CEOs, and the thing I keep writing down is no software people on stage. There were none of the frontier or model making names. Everything was about energy, chips and deregulation. Do you have a view on that?
Yes, it really stood out.
I was in that room with you and it was the one thing we were all talking about. But I actually thought it was very energizing because we backed over eight hundred startups at General Catalyst in all different areas from energy to finance, to defense to healthcare, and a lot of these companies now are way outside of their not just doing software. A lot of them are doing rebuilding, wire harnessing new capabilities that we're seeing that are really required.
So for me, it was actually very energizing from a software you know, I've been doing software for twenty five years, so seeing more hardware capabilities and look, what do you need for true AI? You need energy, right, you need chips, you need land, you need all these capabilities we've got to rebuild American manufacturing in order to have AI dominance. So I believe that they did focus on the right things from that event on Wednesday.
I mean, your expertise and experience is so important here because you've led large businesses. I think is splunk. I also think of the startups like Flexboot, but you've been in house in Microsoft in AWS and I'm really interested as to whether or not some of the startups that you helped now back and invest in are going to be able to get a direct line into federal government. Are they going to be selling more easily in this environment.
We actually just took We've had two what we call fly ins at the General Kellos Institute. March, we took six of our top healthcare AI companies in to both meet government agencies, the White House and Congress. Two weeks ago, we took seven defense and industrial startups in to meet DoD the White House and congressional leaders and it was fantastic. They were amazing. They are very commercial, very business like.
They are getting the red tape. We do need them to do more, especially ensuring that not just traditional partners and vendors have access but the startups. But I can see that they're working to make this connection and they also yes, just.
Really quick, so we only have twenty seconds. Your assessment of the President and his handle on AI, just real quick.
Well, you know, we were very excited to see him take this stance. I think he made it very clear this is top of mind for him. He also made it clear by having all of his cabinet members on stage and talking about this, and he was very direct with everybody on Wednesday what needs to occur, and he gave federal mandates for his agencies to get going. So we are very excited about it.
So, mister Zelden of the EPA, the most important guy in the room. Theresa Carlson, founding president of General Catalyst Institute, thank you very much. Like coming up Meta stop selling political ads in the EU. We're gonna have more in that story next. Stay with us.
We will be right back.
This is Bloomberg Tech. Welcome back to Bloomberg Tech. It's been a good week in financial markets, particularly for technology investors. Then as that one hundred up a percentage point, but I think Karen noted earlier in the show and has all week then as that one hundred is kind of my go to index because there's such a high concentration ATTACH continuing to push record highs. Some single names also
continue to push record highs. Think about what's happened this week in video in particular ending the week pushing a fresh record high but front and center in the President's speech in the AI action plan out of DC Wednesday, A and D also having a good session and a strong week. Then we push ahead, right you know, Alphabet was the earning story this week where we AI fueled
growth kind of story. Will Meta is also interesting, Like there's been a lot of ad hoc talk from Mark Zuckerberg about what they're going to do in infrastructure with a superintelligence group. But actually I get excited about earnings, as you know, Carora, and I think that there's a really exciting in print around the corner.
Yeah, we wonder what happens in terms of capital expenditure. But more on Meta elsewhere right now, because it's set to stop selling political and issue focused ads in the EU now, the social media giant is citing new regulations that create quote an untenable level of complexity and legal uncertainty.
Meta is to just found the business. Beginning in early October, for more blue most kut Wagner joins US, and then now it just seems again and again the EU regulation is just in friction and combat with big tech here in the United States.
This is just the latest Caroline. It's been a pretty steady stream of combative, you know, back and forth between Meta and regulators in the EU. Obviously, the latest, as you mentioned, has to do with targeting.
Of political ads.
Meta there is no regulation I believe it's coming online in October that makes it very difficult to target without getting very direct data source from the user themselves with permission to target.
Them with political ads.
And Meta has obviously decided that juice is not worth the squeeze here.
In that regard, and so they're going to just get rid of that business entirely.
Well, I'd like to ask a little bit more about that. More than four hundred and fifty million people in the European Union, so on paper, it's a big market. But I think that Meta and specifically the CFO Susan Lee, have talked about how generally political advertising isn't that material or contributed to revenue anyway.
Yeah, you're absolutely right.
At the beginning of last year or so At the beginning of twenty twenty four, as we were heading into the US election cycle, Susan Lee, the CFO of Meta, was asked on an earnings call about, you know, the political ad business.
She basically said, it's not material.
I believe in twenty twenty it wasn't even in the top ten categories in terms of advertising spend on.
Various platforms.
So you can see why they're willing to walk away here from that business because it does not, you know, it is not a material revenue growth driver for them anyways.
What it all sets us up for KAT is also seeing how alphabet I think Google had already pulled away in terms of their focus on political ads. But when we're thinking in the context of the AI action Plan in the US and what that means for EU regulation and trying to lead the charge, it really feels as though the US is just walking away from the EU in many ways, like they have done with their generative AI offerings in the EU as well when it comes to Meta.
That's right, I think we're seeing, you know, two very different paths between regulators and the US regulators in the EU. As you mentioned, Caroline in the beginning of this conversation constantly in a combative mode with EU regulators.
Meta is not so much here in the US.
Obviously they are still dealing with antitrust related stuff and the FTC and all of that, but generally a much more friendly regulatory environment in the US, a lot of self.
Regulation from these tech companies.
Europe is not really taking that same stance, and it feels like it's getting wider and more dramatically different, you know, by the month here.
Were we best kut Wagner on the latest side of Europe for Meta, thank you very much. Is stay on Meta. The biggest tech companies clashing with the social media giant over ultimately who's responsible for age checks meant to protect children online. Metas arguing that app stores from the likes of Apple and Google should be the ones to verify a user's age bloombergs Emily Bernbaum joins us, Now, this is something Caroline I were talking about before the show.
Has kind of been a thing for a while, but clearly there is a point of difference on approach and even philosophy between what Meta believes and what other big tech company believes. Could you just explain the differences of opinion.
Yes, absolutely so.
Over the last year or so, we've seen this rise of child safety bills. But in order to take care of children online, to give them a different experience, you need to verify that they are minors.
So basically that's.
The hurdle that all of these state legislatures are grappling with. And until very recently, the idea was social media platforms themselves would be responsible for verifying children's ages.
Now Meta has taken that debate.
Into its own hands, and it says, actually, the app stores are better positioned to do this kind of age verification.
And so there's a there's an analogy there's sort of sparring over.
So Meta says that Apple and Google are analogous to the liquor store, essentially that they should be responsible for checking IDs. And then Apple and Google say the analogy is a little off, and actually, you know, maybe Meta is maybe Meta is just the mall and you know Apples the mall.
Yeah, I love this. On analogy, the Apple is the male and then metas the liquor store. And it just depends on what point you're ideing people basically, but Meta would respond saying, look, on average, young people have about forty apps, and it's exhausting for parents and for children. I like to permanently be getting signed off on each and every app. It's easier on an app store basis,
But obviously Alphabet and Apple would dispute that. I'm just interested em andy as to what this means the states. Who is winning out in this argument, because there is a lot of regulatory change going on from a state level.
I think right now, when you look at the broader landscape, there are more laws that would hold Meta accountable for these kinds of age checks. But Meta has successfully convinced three different states since the beginning of this year to pass their vision of legislation putting the onus on app stores. So I think the debate is really shifting right now. So many of these laws are tied up in court.
There is also a pending uh, there's something pending at the Supreme Court asking the Supreme Court to weigh in on the constitutionality of age verification at all. So they're almost neck and neck right now, and I think Meta has successfully created a big pivot in the conversation.
We'll see how that conversation continues. How many Van boun It's a great story. I urge people to go read it. Meanwhile, let's talk hardware because as Bloomberg Tech Asia took a deep dive into South Korea's biggest conglomerate and it's also the world's largest electronics empire, and it's Some Sung and an exclusive interview with some Sung president and mobile division chief would you enjoy well?
He weighed in on.
The context of US Harris and talked about how some Sung thinks about competition in the smartphone market.
You know, rather than focusing on competition, I think we have been focusing on our consumers. What are the experience that we can bring to the consumers and how complete they are. So we've been focusing on those and I think a healthy competition with other companies I think will bring more innovations and then bring more venefies to consumers.
So we are welcoming.
Others to join this category which we created back in two thousand ninety.
When we see the pressure on Samsung semiconductors and we see the success in mobile, does that change you're thinking about how heavy your shoulders are at this point.
No, I mean our pressure has been there for all the time. I mean nothing has changed, and I think there's a you know, I think one of the someting is one of the companies who has every aspect of this supply chain, not only from I mean not only from the components to all the way to the devices
and also application and services. So we believe there would be a big synergy we can we can have across all these differ different business units and that will continue to kind of utilize this this complete ecosystem that we have.
Let's talk a little bit about the tariff concerns around the world, because President Trump says that potentially there could be a twenty five percent tariff on some song zhones not produced in the United States. How are you preparing for that?
Very good question and tough fun. So some song has long it's stabis, multiple manufacturing facilities in key regions around the world that kind of give us US a flexibility in dealing with or responding to any changes in other countries kind of trade passes, not.
Just the US.
So we heavy sturbis that kind of a flexible system.
That was Samsung President and Mobile division chief one June choice along with Bloomberg's Sherry On and you can catch the full episode the Bloomberg Tech Asia online at Bloomberg dot com. Okay, coming up, Steve Jenks and Kindred Benchers joins us to talk about M and A and Meta's recent deal for Kindred's portfolio company, play Ai. That's next.
This is Bloomberg Tech. The USFCC approved Paramounts merger with sky Dance after the Trump administration extracted concessions on the company's political coverage and diversity practices for more and what those concessions were, Bloombers. Chris Palmery, our entertainment editor, joins us. So, Yep, it's happened. It's over the line. What did the parties have to do to get us there?
Chris, Well, goodbye to all those diversity equity inclusion programs. Paramount, like a lot of companies, was trying to get more people of color, more diverse people on screen behind the scenes. All of that effort is gone. Another big changes in the newsroom at CBS. There's going to be an omboodsman who's going to handle claims of media bias. This is a company that just this month settled a sixteen million dollar lawsuit which President Trump over alleged bias at sixty minutes.
So this will be a person sort of in.
The newsroom poking around for a couple of years to come at least.
I mean, the fallout continues about the Late Show with Stephen Colbert. There's a lot that has been swallowed bitter pills or not. Chris remind us of the prize, why they're doing this and what the future looks like.
Yeah, so end of an error for the Redstone family, which has controlled this media empire, is assembled by some of the redsphone over decades.
So we're talking about.
MTV, Nickelodeon, the CBS Network, Paramount Pictures, Film Studio, all wonderful brands, but in trouble. And so there's a reason the Redstones gave up. Essentially, David Ellison, who's injecting a lot of his father's money and his own media assets in here, has work to do from day one. The traditional cable channels are shrinking in double digits, and the broadcast.
Network and as people switch to streaming.
But their streaming business, Paramount Plus is still losing money. And their movie studio, as Gloria says it is, is barely profitable and really and also ran compared to the Baggies, Warner Brothers, Disney and Universal.
So he's going to have to deal with all this.
And buy some cloud from his father, Larry Ellison, it seems Chris cal Mary, it's great to have some time with you. Thanks for spelling it out.
Now, let's get more for you.
On the M and A space. But from the venture capital perspective now, Steve Jang is the managing partner and founder of kin Adventures, which has been backing early stage AI startups since well twenty nineteen, long before Chatchibt. Steve, your investments also include uber Coinbase. But in the AI space, we think of Perplexity. We also think of Playai, and let's just talk about that because it's recently been purchased
by Meta, which is on the hunt for deals. It's on the hunt to lead in super intelligence.
Are we going to get more of that? Steve?
Sure, Yeah, good question, and thanks for having me on.
You know, I think what's happening right now is, you know, in Meta's case, is that they're looking to completely overhauled all their AI research team and also their research engineering team, and so you know, I think with data centers on the rise in terms of investment, you see some major hyperscalers, Amazon.
Azure and GCP Google's Cloud.
You also see Oracle, who was just mentioned prior on the show, and then Meta and Meta is an interesting case. Meta has one of the largest data center networks, as one of the largest buyers of GPUs and is expected to be the largest buyer GPUs moving forward over the next eighteen months. They are trying to also build the largest AI front tier lab and they're competing with open
a on that front. And what I think you're going to see not only from them, but from every other private AI front tier lab like open Ai and Anthropic is it's a talent war.
And the Playai purchase means several things.
So number one teams that have both a research scientist aspect to it as well as a research engineering and product engineering capability, they're going to be really sought after in this market. And we're seeing a lot of that already among our portfolio and outside our portfolio, and so you're going to see continuous acquisition hunts. The second thing that's really interesting about this acquisition of Playai is that it's really it's really the leading signal in what's happening
in the space MULTIMODALBS. The inclusion of video and audio and images on how lms work like cheat, GPT and even applications like perplexity is super important. It's going to be ever increasingly more important, especially with generative media models, with video, generative video, generative images becoming more and more important. So that wave of generative media is going to be, in our estimation, going to be as large and as
important in society and economy as elms. And so with these two trends happening with voice AI in particular in PLAYAIS case, this is going to be a harbinger of a lot of things that are going to come down the line over the next two years in terms of multimodal as well as generative media and AI, and I.
Think a foul in your portfolio companies. It's all about the ability to be making generative media now before we get into the back clash as to whether this creates slop and what that ultimately means also for a business case, so meta going forward, Steve, I just want to go to another portfolio company that's been in the I for M and A, and that's Perplexity.
That would you ever see perplexity.
Being brought up by one of these big cloud players, or even buy an Apple.
Yeah, I think you know, whenever there's a company that creates a sort of singular space and name for themselves in an important area in technology, there's always m and a interest. You know, we've seen some rumors about that in the news. I'm not describing anything new that you don't know about there. But what you are seeing right
now at this moment is a switchover. And the switchover is there are legacy companies with platforms and distribution and great products, but the AI wave itself has sort of left them flat footed. And I think a company like Perplexity, you know, it started from AI answers right competing with the legacy and traditional search and bringing AI search into
the consumer's eye. And now what you're seeing with their new commt browser is saying, how do we create a browser that not only brings in knowledge and answers, but also lets you take actions. So an agentic browser that allows you to create Spotify playlists, that allows you to deeply research your Robinhood portfolio as you're surfing it on the web, and really, if you think about it, browsers and websites.
Those are old school terms.
All of your SaaS, all of your applications are coming from through a web browser, and so perplexity is really an interesting agentic browser.
Steve. Yeah, let me jump in there because because that's what I found so interesting about your LinkedIn post when the play deal was announced, Perplexity evolved and it grew organically, right and in the history that you outline in the LinkedIn post about plai, you guys did the seed round a year ago. They grew so quickly, but ultimately they just got engulfed. They took their core tech and became
part of something else. And as somebody that backs founders and kind of instructs them on what to do, that kind of seems like the future in this domain.
Yeah, I think the I think what you're seeing is the multimodality is really important here. What you're seeing is that you know, if you have voice, what you want is you want that to be part of a lego block system with an m A language model, and that's really the ultimate expression or the ultimate product there.
And so that's what was happening with play ai.
You know.
Play Ai was was hosted on foul and Foul was providing the generative media inference for their speech models, and you know, com merging that speech model technology with a speech to speech model in their case, with something that was really exciting for Meta and Meta.
You know, metas push is to create very personal AI.
Mark Zuckerberg has talked about that publicly, and if you think about what they're building, play Ai represented a really interesting aspect of saying, how do we create multimodal ll ms, how do we create voice AI in this personal AI
vision that Meta has. And so it's a really unique purchase because most of the other things that most of the other acquisitions that Mark is executed have been higher, right, these one hundred million plus hires, but play Ai is the one company acquisition where he is not only a great team of researchers and engineers, but also of models, and so I think that's a really big push to multi model l for beta.
Regrettably, Steve Jang, we got to go. There's never enough time. Fly back from Hawaii, come to San Francisco, sit in the studio and we'll have at it. Managing partner and founder who can revenge of Steve Jang? Thank you very much. Coming up startups are spending really big on defense manufacturing in the US, but are they getting too far ahead of the demand. We have a deep dive next. This
is Bloomberg Tech. Silicon Valley investors are betting big on the reindustrialization of the US defense space, and the startups they're backing are spending billions to bring that vision to life. Bloombos Lazette Chapman has the reporting. There are a series of eos. You have the big beautiful bill now act and build, Baby Build, But it's the defense sector and startups in that domain that are responding.
There are a number of different responses, and to your point, this is part of a much larger push to reindustrialize many of the areas that the US offshore for decades. So there's this big push now by private capital to back the defense startups in expanding their manufacturing capacity. Now, a lot of these have been around for about a decade, but they're just getting to the point now where they're.
The leaders who are some of the big.
Names, andrel is building to one. They're investing over one billion dollars into a new manufacturing facility in Ohio called Arsenal One. We've got Saronic that's looking to invest two point seven billion total into a series of different projects called Port Alpha, which is going to be a modernized software defined shipyard to build massive autonomous ships.
Is that the question is the demand that let's see if it works out. Is that Chapman's great analysisco readas story. Meanwhile, that does it for this edition of Boomberg Tech End.
Yeah, don't forget to check out the podcast. You know where to find it from San Francisco and New York City. This is Bloomberg Tech