Lagging Demand for Nvidia and Apple's M&A Slowdown (Podcast)

about just how long the slump could last. Plus, Apple is being picky when it comes to M and A, why the iphonemaker has slowed down its buying spree despite a one seventy nine billion dollar war chest. And is Facebook really the underdog now or are we underestimating it will count the way in which TikTok still doesn't even

come close to Meta. All of that in a moment, but first, sticking with in video, the graphics chip giant missing its own quarterly revenue projections by more than a billion dollars evidence that demand for electronics components is drying up after a two year pandemic boom boom. Brooks I and King, who covers all things semiconductors, joins US now and wow, a billion dollars miss is not something you

normally associate with Jentsen Wong and in video what happened? Yeah, I mean, it's it's not a surprise that it happened, given what Intel had said, what am D had said, what other PC related kind of components make as it said. But I think the extent to which they fell short and the sort of rapidity with which demand has obviously fallen away has obviously caused a lot of concern. And that's what the analysts and investors have been talking about today.

Why did they get their own projections so wrong? Yeah, I mean they said, oh, it just happens, how quickly it fell off, so so rapidly that we didn't see this coming. The concern, or, if you like, the underlying fish is that it's not just consumers and not just gaming related, but also this crypto dependency that they said that they've shared, Our chips aren't good for crypto mining anymore, you don't need to worry about that. But then we see cryptocurrency has obviously been to a rough time, no

reason to be mining in a lot of situations. Now, maybe those cards are coming back into the gaming market. They also pre announced. I mean, how unusual? Is this relatively unusual? But again, to be fair to Nvidio, at least they did. One of the big themes on Intel's kind of disaster at call last week was why didn't you pre announce when it was so bad? You know, investors don't like surprises. The fact that they did is,

as you say, unusual. But at least they're being forth right and they're being given some credit by at least some of the analysts for doing that. So are they clearing inventory? And is this something that will be cleared, you know, say by the next quarter. That's that's the positive scenario. The positive scenario says, this is what the chip industry does. They over build, They get it wrong. They can't match these supply with short term demand movements.

As soon as we clear out the inventory, we're back to normalize situation. Everything's okay. That's a positive picture. The negative is like consumer demand. Meantime, they've been investing in the server market and that's actually helped kind of cushion the blow. Right, Yeah, no, absolutely right. That's why they're the world's most valuable chip company because they've built this

incredible service business. But even that missed today. So what does they say about the broader state of the chip industry. I mean, did anybody expect the pandemic boom to to last indefinitely? I mean, come on, you're remembering it perfectly. How many times, right did we talk about this? How many times did chip an industry CEOs tell you things are different now? The PC market is a much higher level. Everything's okay. Every household needs three or four PCs. Everything's

going will be okay. And here we are in the middle of two two saying that's absolutely not true. All right, and King, thank you for all the extra details there. We'll be watching shares of Galaxy Digital rising Monday despite reporting a five million dollar loss. Bloomberg Shinneli Bassa and Caroline I spoke with Novegrats about the state of the crypto winter. Take a listen. We've had one credit loss in the history of our company, and uh, you know,

I disclosed the name today. It's a manageall lost relative to our balance sheet, relative our credit business. Our credit business actually was profitable on the on the quarter. I feel pretty good about that. What we saw away from us was huge concentration in this one name, which created a lot of the systemic risk that we saw. Uh, and the and the cascading of bitcoin all the way eighteen thousand um. You know, I I don't have a crystal ball when I add up the total planes that

people filed. Uh, it doesn't feel like there'll be a lot comes back in that case. You know, you've got Celsius, You've got Voyager, You've got lots of other places where both institutions and retail lost a lot of money, and there will be a business for that where people are bidding up. I want to double down on retail because you brought it up. You know, you mentioned earlier that your skeptical of a soft landing, and to the extent that means you mean there's a recession coming that it

will be a hard landing. How much money will there really be on the sidelines to put into crypto, let alone any risk asset. Listen, you know, the FED increased money to supply at a rate that we've never seen before, and they're slowly withdrawing that. There's still a ton of money in the system, right There was excess savings in retail that's getting worn down some. But there's monster casualties. People got really nervous, and we had a pretty dramatic

sell off in the first half of the year. And so I don't think we're going to see what we saw last year when money is flowing in and it's all it's all booming. But I don't think it's armageddon here yet either. Uh And so again I I, you know, will Bitcoin get through thirty thousand on this move up, We'll see. I'm doubtful. I think we're gonna probably be in this range now. I'm quite frankuively be happy if we're in a a you know, twenty two thousand or

twenty thousand thirty thousand range for a while. With the next move breaking up, hearium has got a little bit more juice at the top of its range. It can be you know, makes out, it could go higher. That's got a real story. But I don't see, you know, the mania that we saw in one or twenty seventeen reigniting. Listen. I hope are wrong. Galaxy Digital CEO Mike novograts there. Meantime, Apple used to acquire a company every three to four weeks,

but it's dramatically slowed. It's dealmaking in the last two years. Apple spent one a app billion dollars on payments tied to acquisitions in fiscal year twenty, but just over two hundred million dollars in the last ten months. Brig Smart German here to discuss. So why is Apple slowing down

the pace of deal Smart that's a good question. Well, when you look at this chart, when you think about it, the first two things you might you know, the reasons you might propose as one, COVID Right, COVID messed up. You know everyone's business plan. You have to tear it all up and start over. Right. The second is regulation.

Obviously you have the FTC going after in video Microsoft deals, you have the act Division deal for nearly seventy billion dollars, you have Meta Amazon, all these players spending so much money and the regulators assuming them and trying to get in their way. And so maybe Apple is fearful of that, as a new note inside of the regulatory filings to the SEC may suggest. But I think it's really neither of those, because you look, that was really the height

of the pandemic. In that year they spent more than they had since right. I also think that Apple is not spending amounts of money that necessarily would lead to scrutiny from the FTC. You know, their government's globally right, So I think this is a matter of fact of their product development schedule. One, two investing in other areas, and three maybe they're trying to go at it more alone, right, without needing to acquire companies. But at the same time,

this is extremely odd. I would bet that most people don't know that Serie face, I D Touch, I D Apple Music, Apple News, the weather app. I could sit here for ten minutes giving you a list of iPhone features that we all use every day. Those all stemmed from acquisitions, and so buying smaller companies and startups and core technologies and engineering teams has been core to the Apple development process ever before, since Steve Jobs even returned

to the company in the late nineties. That's interesting because Apple has never been one to make big acquisitions, certainly not to the scale that Mark Zuckerberg has. For example, How how is them not making these smaller acquisitions over at least the last year going to impact the product development cycle? You know, I would look at it this way.

I think that these acquisitions have helped Apple get to where they want to get much more quickly, right and at lower costs, you know, per se Right, I'll give you my favorite Apple acquisition is probably authentic back in right, they bought that company, and all that company did was make very secure and reliable fingerprint scanners, right, and that that led to touch I D on the iPhone five s.

Remember how cool that was? Right? And so those little things, even though they're not big deals, led to some pretty cool features that have helped them sell new phones. Right. And to answer your question, I think they should really be snapping up autonomous car companies, car companies in general car manufacturing to really bring that Apple car closer to fruition.

Remember when Elon Musk said that Apple buying Tesla on the table for a market cap around sixty billion, was on the table about five years ago before the Model three came out. Imagine if Apple would have bought Tesla back then, how different the our industry would look today for just a sixty billion dollar deal. And when I say, just if you compare a sixty billion dollar deal compared to Apple's cash balance over the last decade or so, right,

it is small potatoes. So I think their acquisition strategy has paid off in a lot of ways, but we're seeing some changes here, at least for the last two fiscal years. All right, Mark German and Ali, Thanks Mark as always. Thanks all right. Coming up digital rights in a post row world. How to navigate what can and can't be used against you when it comes to your web searches. That is next. This is Bloomberg. Their companies provide a very important service that allows people to access

information about their healthcare. Tech companies could choose to uh provide that information, provide free security services to websites disseminating that information so they're protected from vigilante hackers. The other things that tech company can do is become very prepared to go into court and actually pushed back against the requests that they get from law enforcement. They have enough data on all of us to serve their business model.

They don't need data about people's private health choices in order to make money. And if they are disregarding the rights and welfare of the people that they are serving through the technologies that they provide, those people are going to be less and less able to participate. As abortion restrictions tighten in various states across the United States, questions remain about privacy. How will new laws be enforced in

the digital age. Privacy advocates warn that location and other kinds of data could be used to track individuals who visit abortion clinics or travel across state lines. Joining me out to dig deeper into this is Alexandra Gibbons, President of the Center for to Democracy and Technology. Alexandra, thank you so much for joining us. So what's not being talked about? Um when we think about the power that these companies have and that the threat that our information

could be used against us. I think this really is a wake up moment for the tech companies to think about the sheer amount of information that they have and to know that their users want that information to be protected. So we need companies thinking about just how much data they collect, how long they store it for, where they're sharing it with, and getting really smart about how they

respond to law enforcement requests as well. What kind of data are you most worried about that these companies have. So right after the news of the overturning of rovi weight came out, there was a big conversation about period tracking apps and that matters. But users need to realize that there's a lot more they should be focused on.

We're talking about your browser information, what websites you visited, your search history, your online purchases of some he purchases, medication that could be used in the case of an abortion, and then also the subject matter of your texts and emails, and finally your location information, which we can be collected by your phone, by apps on your phone, and also by your Internet service provider as well. How should tech companies prepare themselves to deal with this? They need to

think about a couple of different things. One is just their data collection practices. In the first place, we're about to enter a world where law enforcement is asking these companies to hand over their customers most sensitive information for prosecutions that are wildly unpopular when you look at the broader American public. So companies need to think about what they're collecting, how long they're keeping it for, and then also how they are responding to these law enforcement requests.

If they get them. They need to be requiring a warrant. They need to be fighting to make sure that those warrants are narrowly tailored. They need to be pushing back for law enforcement doing overbroad phishing expeditions, and they need to be telling users about the request that they're getting so we can have more transparency in the space. You've also talked about how worried you are about a chilling effect on free speech when it comes to information around abortion.

Can you explain that there's a big conversation to be had here around online content moderation, So how companies can make sure that they're helping people get access to reliable, accurate information about abortion services, pushing away miss and disinformation, and then also just pushing back on the growing number of state laws were likely to see of state legislatures trying to make it illegal to post online information about

how to access reproductive care. So we need the companies to be thinking about what they're curating, what are the signals they can put online to help give access to good health care information fairly similar to what they've had to do under COVID really um and also make sure that they are not, you know, falling for these statutes that try to access limit access to good information about

reproductive air. Are there ways that big tech companies could help women wanting to make this choice or who feel like they have no choice but to make this quote unquote choice. Yeah, I mean, it's all about knowing your options, right. It's about a woman being able to understand the circumstances

that she's in and make an informed decision. And so some of the things that we've seen companies do which I admire and like, is, for example, of a person searches for abortion services, what are the ads that can come up against that search, you know, down the bar on the side of your search engine. How do we make sure that those are from certified providers, They are trusted ads, They're not from places that actually are trying to trap people that are seeking information about abortion care.

And we have reason to believe in this climate, the crisis pregnancy centers, which come from the anti abortion movement might well be trying to target people who are running those searches. So there are things like that, What are the indicators for trusted information that platforms can do? And then how can they really quickly respond to fraudulent websites, websites that are trying to entrapt people seeking information for care and d escalating the spread of viral miss and

disinformation about abortion services as well. What are your biggest fears about how technology could potentially be used against us. I think they're starting to become true already, which is the care of the fear that these are going to

be used in prosecutions. And also when you look at some of these state statutes, it's not just law enforcement prosecutions against people who are seeking or providing reproductive care, but there are some statutes out there that authorized individual citizens to go out as private bounty bounty hunters and follow their own lawsuits against people that they suspect of

aiding and abetting abortions. That's really dangerous because it creates this incentive system for you know, the Wild West, for lone rangers to go out there be tracking down information about their neighbors, bringing these lawsuits with the promise of the state paying them a ten thousand dollar bounty if they do so. That is a really worrying environment for

people's privacy and ability to access good information online. So that is the type of landscape that the tech companies just should not want to get themselves in the middle of. And that is why we need the tech companies really limiting their collection of sensitive health information that could be used to create an inference that somebody has accessed abortion services or any other type of reproductive care that could expose them to litigation or prosecution. It's potentially very terrifying.

Have you seen any particular examples, UM, where this has happened or where this is happening already? So there have already been cases, even before the overturning of Roe v. Wade, there were women who were being prosecuted for their pregnancy outcomes, being accused of self inducing miscarriages late in their term. And what was used in those prosecutions where people's browsing histories, their online purchase history evidence that they had purchased certain

medications online. And then even in one case, the subject and the contents of a woman's text messages with a friend as she was trying to get it vice on what to do. So we've seen already in these cases that digital evidence can be used in evidence against you. And so that's a reason why users need to be careful and why the companies really need to be watching us as well. Chilling indeed, Alexander Gibbons, thank you for

shedding light on this issue. Really appreciated. President of the Center for Democracy and Technology, UM, thank you for stopping by. Welcome back to Bloomer Technology, and Emily Check in San Francisco. SoftBank says it will sell some or all of its shares in so far reported holdings equivalent to a nine percent steak. Soft Bank reporting a record net loss as a self and Global Tech Stocks continues to hammer its Vision Fund portfolio. I want to get back to markets now.

Shares of EV makers and clean energy companies jumping after the US Senate passed a landmark bill on climate or at Ludlow back with the movers. Yes, So the bill moved those you'd expect them to a lot of EV main names. Three seventy four billion dollars of energy and climate spending is ear marks. You look at names like Tesla actually been up much higher around five percent, but closing up eight tenths of one percent, and some of these smaller EV makers and legacy names like GM and Ford.

It ends the per manufacturer limit on the seventy dollar tax credit, which is something we'd expected, had been negotiated for many months, and of course that scene as a tail wind for demand. But there are price limits. Anything over fifty five dollars for an evy car or sedan is not eligible, and anything over eighty dollars for a pickup or suv is not eligible. But this is what we've been waiting for the government to kind of give this industry a bit of a push get it going.

Not done much for the stock so far this year, though, you look at the performance of Tesla versus legacy names like G and Forward year to date, there's still under pressure and we're still seeing different declines. But I walk over to this side of the screen and you do see Forward in particular closing that share gap on tests or in terms of year to date performance because they are starting to ramp up their own activity, and again with government support, there is hope that they'll see more.

It wasn't just evs as well. There are measures within the bill for support for renewable energy, not just in the form of solar, but also in hydrogen plug in as well, and you see some names here across solar moving pretty significantly on the back of that bill being

negotiated overnight. Not all the way there goes to the House next for the expectation, even though this is trimmed out down from where we started a year ago, is that this is a really big play ultimately to reduce common mission from where we were in two thousand five. Interesting development, All right, thank you well. Mark Zuckerberg's new narrative from matter has consistently involved pitching Facebook's platforms as the underdog, especially when it comes to regulation and competition.

But Facebook may be in a better position to take on TikTok than Zuckerberg is leading the public to believe, according to Bloomberg Business Weeks Max Chaffkin, in a different regulatory environment, Zuckerberg might simply try to buy TikTok. That's not possible at the moment. Thus his strategy is evolving. Max Chafkin joins me, Now, so does anybody really believe

Mark Zuckerberg when he says Meta is an underdog? Well, I mean we've seen, uh yeah, a bunch of raft of stories all about the the you know, existential challenges facing Facebook, and of course investors have sent the stock down something like since February, so so they're definitely people out there with concerns, and I think what's happening is

that Zuckerberg is kind of leaning into them. So you do have um economic challenges, right, So Facebook really benefited from COVID stay at home orders and the sort of explosion of e commerce shopping that's all gone away, and then you do have this kind of cultural challenge where TikTok is, you know, getting a lot of mind here. It seems like a lot of the younger people, of course, are are into TikTok. They're not into Facebook. And Z were using that and saying, you know, we're we're really

in trouble. We need to We're gonna have this intense period. He's kind of rattling the saber in terms of hiring, telling employees you know, they shouldn't take vacations and and you know they need to weed out the bad performers.

And I think this is as you say, it's strategic. Um, it's both an effort to try to get more productivity out of his staff um, and also kind of a positioning thing because Facebook faces um serious and I trust scrutiny on a couple of different fronts, and playing up challenges from competition is of course one way to uh to kind of diffuse a situation. How would you assess Facebook position of power with respect to TikTok? You know, what does Facebook have on TikTok and what is TikTok's

actual advantage. Yeah, so Facebook, it's really easy to to sort of forget this. But Facebook is like way, way, way bigger than TikTok. We we don't know, uh, exactly how much money TikTok is making, but you know, independent estimates put it at at four billion dollars in revenue in and so on. Facebook, you know, is something like over a hundred billion dollars right there. They're making like eight times TikTok's revenue in profit for the year. Now, TikTok could you know, and and there is a lot

of chatter about this. You know, TikTok gonna sort of turn on the cash machine and and it's going to find ways to make money. But but they haven't done that yet. And there's really no reason to think that they will be any better at monetizing than Mark Zuckerberg is. Because what Facebook is, Bill, is this kind of incredible

cash machine for turning online attention into into revenue. And he has, as you know, has been well documented, basically a monopoly on on social media advertising, and TikTok is certainly eating into that. But but really it's a very long way away from um, you know, eating Mark Zuckerbook's lunch that said, TikTok does seem to be way way way inning the attention war with Facebook, or is that

also a misperception. Well, I think that's absolutely true, but it's easy to forget that lots of other companies have won this attention word Facebook. You know, there's been a lot of people have pointed out that Facebook's kind of lost it's cool or something like that. But what that kind of overlooks is it's lost it's cool for like the last ten years, right, Facebook lost its school first to Instagram. Uh there was you know, Twitter was the hot thing for a while, and over time Mark Zuckerberg

has found ways to maneuver the company. And now there is one important difference. Whereas in the past, you know, he would have just bought TikTok, right, that is not possible because of FTC scrutiny. You know, he could try, but it seems almost certain that the government would try to block it, given that they're trying to block this much smaller acquisition. So that's something that is not available

to him. But what is available to him is copying, and we're seeing Facebook do that with its reals product and with these efforts to to have more you AI driven discovery, basically a TikTok like intervace. Those are the complaint that that's what led to all these complaints from um,

you know, Instagram influencers and Kardashian adjacent UM types. UM. Now, But the thing is, we know this is working in part because Facebook has said one reason their revenue is lower has been lower, is because they're driving users into these TikTok like platforms which do not monetize as well. So they're making a choice. They're choosing, you know, copying TikTok versus driving revenue. And on one hand, you can say, well that that bodes ill, right, that that suggests they're

not monetizing. Well, on the other hand, it does look like they're making progress in terms of this copycat approach. And again I don't don't see any reason to think that it won't work. It's worked, you know, many times before in the history of this company. All right, great piece by you, UM Bloomberg Business Week, Max Chafkin as always great to have you come up. Bitcoin and coin based both rallying is winter getting a little warmer? F t x U S president Brett Harrison joins to weigh

in on that question. Next, this is Bloomberg coin Bay shares rallied for a fifth straight day as investors continue to pile into the largest US crypto exchange following news of its partnership with black Rock to help institutional investors manage and trade bitcoin. This as Bitcoin also rallying breaking above the dollar mark. Welcome news for the crypto platform ahead of its second quarter results after the close of

market later this week. Here to discuss what's happening this winter, I want to bring in f t x U S president Brett Harrison for his read on this and much more so, what do you make of this coin based black Rock news, Brett? So, it does seem to be that the winter is starting to though here. Um, you know, prices are obviously rising, and what's what are we actually seeing here? A lot of these forced liquidations in the market,

they're start they're starting to come to an end. Um, No more news about different either exchanges or lending platforms going under, voyagers returning funds, large undeployed, bigger capital starting

to be deployed again. And then of course this news coming out with coin base and with black Rock, showing that the institutional demand to be able to trade crypto through some of the more traditional huge players in the market is not slowed down, and in fact, as the saying goes that this is the time to build, people are obviously building now, and as we start to come out of this win term, people are trading again the tools the capital will be in place to do so.

And of course all of this against the backdrop of more progress in Congress uh Savan now Boosmen coming out with their big crypto bill, a lot of positive signs around that, all in bringing positive sentiment to crypto markets and to the equity markets that are relating to crypto. Still, you've got coin base and robin Hood slashing their head count. What mistakes do you think these companies made when they

were scaling? You know, looking across the growth text sector, there are so many companies talking about either layoffs or hiring freezes. I mean everything from guest coin based in robin Hood, but also Google and Microsoft and Tesla. I think there's a real lesson learned here, which is that these growth companies, which typically have operated under the model that headcount growth is a sign of company growth, are realizing that actually sometimes headcount growth can get in the

way of company growth. If you don't have a lean staff where you can prioritize the most important buildouts, where you can get things done, you can move nimbly. With a market that moves extremely criply, like crypto, it's going to be difficult to keep pace. And when there's a winter and things are slowing down, retail volume is drying up, and you have to focus on the most important things.

That means will have to pull back on those employees, which can be devastating to build up this giant workforce, and that have to lay those people off who have worked so hard for their company. I mean, that's why I think that companies like f t X, but of course you're not the only company to do this. Showing that you can operate with a leaner model, with a smaller team and really be able to focus on the highest priority items of all time and get things done

is super important for me. Be able to weather even the downturns in the market. F t X has been really inquisitive through this winter, and I wonder if winters start starting to thaw, how does that impact your strategy around deals. Do you expect valuations to stay low or

start to creep up. And could that mean less opportunities. Yeah, absolutely, I mean, as you said, you know, during this past let's say a couple of months, there have been a lot of opportunities presented to us as far as potential deals with you know, other companies that are looking for capital injections. UM, they need help, you know, getting back in business. There's possible merger opportunities, lower private equity valuations.

And yes, as as investor confidence starts to come back into the sector, I mean those opportunities will start to dry up as you know, these companies will start to get their volumes back, they'll start to get revenue again. Don't want to be able to increase their existing pipeline of projects and capital in the same way they were before. Um. But there's still plenty of opportunities in the market, and certainly ones that we're looking at. Ft X is expanding.

It's no stock trading fee to all of its US users, including non crypto investors. What's the end game here? Is robin Hood a competitor or still a potential target for some kind of stake. I mean, it's certainly the case that they're a competitor. I mean, they've been a competitor for a while when they started out in the stock trading business and then they added crypto the odd of the ability to trade bitcoin neither on their platform. They've

since been adding more and more assets. I think just today they added Avalanche, and so they have realized that their customer demand for retail crypto trading is incredible, and so they've been a competitor ross for quite some time. What we've realized is that we can do a great job providing a stock trading platform to our users as well. We can do so without relying on payment for order flow. We can get people more advanced analytics and tools to

be able to make smarter investment decisions. We want to make our platform more one that is involved with educating our users and how to make um you know, how to do trades in a responsible way as opposed to being more kind of gamified. And so in that sense, we think that we have a good shot at competing with them on this platform, and we're pretty excited about all of the initial user growth that we've seen in

trading stocks in f t x US. You've also, you know, made a number of different sports partnerships your name is on some arenas now partnership with Major League Baseball. How much are these sports partnership sponsorships actually paying off. Yeah, it's hard to put a quantification on that number of exactly how much it's paid off. We think that from a qualitative perspective, it's been tremendously important for our brand.

Think about that one year ago, almost no one in the US had heard of f t x U S. We were going up against you know, uh coin based and Cracking and Gemini and different companies that have been around for a day gade, and in an industry that

requires the trusts in your brands that cryptocurrency does. With all the noise out there, with exchanges going down, with hacks, with the scams, you have to establish that brand presence, especially in the United States, and for us, doing things like partnering with the major Major League Baseball or you know, putting our name in the text arena basically catapulted us into the public consciousness in a way that you know, going to more traditional advertising routes such as Google ads

or Facebook ads wouldn't have been able to achieve in such a short period of time. All Right, Brett Harrison president of f t x U S always going to have you, Brett. Thank you for Stoff and my hook. As families ease into the back to school season throughout the country, let's take a look at trends in the world of education technology. Dual Lingo, for one b analyst estimates during its second quarter earnings report last week even

boosted its revenue guidance for the year. I want to talk about this and more with Dual Lingo C and co founder Louise foun On. So going into a new school year, Louise, is the pandemic boom has that been keeping up or is it starting to wane? Well, you know, the pandemic. The pandemic was interesting for us. It wasn't a crazy boom. I mean, we we did benefit a little bit from the pandemic, but we have been growing

steadily since before the pandemic. And you know a lot of people have asked us if if afterwards our users went down or anything, but we didn't see any of that, And I think it's just because we you know, we we have used this in every single country in the world, and you know, in every associomic, the whole part of the economic spectrum so what are the most interesting themes going into this particular year. Now that schools generally have

been basically open for about a year since COVID. I think one of the things that it's interesting is that we schools in general have just adopted educational technology a lot more, and we're going to continue seeing that. So we're we're expecting a big back to school bump. We usually get it around this year. You know, dual linguists. It is used by about half of all schools in the United States for teaching fore languages, and so we're

very excited about that. I think. I think generally educational technology is just scariest thing. You've actually been leaning into TikTok when it comes to add spend. Talk to us a little bit about that and why, well, it's actually not at spend. We we have been leading into TikTok. But but it's all organic. I mean, really, the spend that we have on our TikTok is really the salary of of uh, you know, our our employees who who

run the account. We're blessed that we have a very lovable mascot dual ing with the dual the owl, and we make all these videos that that go viral. Um, some of them have them, you know, are massbot dancing, etcetera. So that's what felt really well for us. UM. You know, it's approximately it's about ten percent of our users in the US new users in the US come from from TikTok, and it's it's been very efficient. I mean, again, the main spend there is just the salary of a couple

of people that run it. Interesting because we were talking about TikTok versus Facebook and Instagram earlier, and I'm curious how you would assess the impact and power of both. I mean, do you see TikTok as more powerful or potentially a lot more powerful than the other two platforms. Well, for us, TikTok has just been significantly more powerful. Um. I mean I think I think some of it I just has to do with the fact that that it's

on these days. It's kind of the cool thing. But it's also you know, the algorithm really rewards content that is that is enjoyable, and I think we've managed to create very enjoyable kind of viral content that has worked out very very well for us. To a Longo is back in China's app stores after a one year hiatus talked to us about the impact of the crackdown and and how much did that set you back? Yeah, well, China. China is a very interesting market for wellfore generally for

for everything, but for language learning. Is the largest language learning market in the world. But for US, the Chinese market has always been relatively small. It's only about one percent of our our revenue and also of our daily active users. About about nine months ago, so UM, we got taken down from the app stores, which what it meant is are all the users that already had to do a lingual could continue using us, but new users

could not get in there. UM. And and you know, about a month ago or so we were reinstated UH and we started growing again. Um. And at this point we're back to the traffic levels that we had before we we got taken down. But for us, even though it's it's it's a very interesting market. We also know that Western companies UH usually don't do super well in China. So um, you know, it's an interesting market, but but

it's only about one percent of our of our revenues. Now, you know, we're no question we're facing a difficult macro environment inflation. You know the R word we're hearing over and over again. Sometimes it's you know, more impending than than than not. Um, how are you expecting that to impact your business and the at tech market in general? Is this a discretionary market where you know, if companies

or customers are gonna have to choose, they'll spend less year. Um, well, we haven't seen any kind of weakness in our numbers. I mean we you know we we we beat our our estimates, We increased our guidance for the quarter, and I think some of it it just has to do with the fact that we're still pretty early in our journey. Language learning is a is a very large market. It's about sixty billion dollars a year, but most of it

is still offline. So if you think about language and the language learning market, most of it is kind of people learning English in night school in Brazil or something like that, and and it's shifting online like you know, the way dating shifted online over the last twenty years. Language learning is still kind of shifting online. So we're still in the in the early parts of our growth in terms of user growth and also in terms of revenue growth. So so we just haven't seen any weakness

in our numbers. Um. You know the other thing about is we have a freemium model where uh, you know, people can learn as much as they want on dueling entirely for free and then they can they can actually turn turn off the ads if you know they pay. So so far we just you know, this just hasn't affected us at all. Interesting, all right, Weles found On CEEO and co founder of Dual Lingo. Thank you so much for joining us and giving a snapchat of what's going on in your industry. That does it for this

edition of Bloomberg Technology. Later this week Tuesday, we've got Lemonade CEO Daniel Schreiber with us to talk about their results, plus how inflation is weighing on consumers. And don't forget to check out our podcast wherever you get your podcasts. I'm Emily Chang in San Francisco.