Microsoft and Alphabet's AI Struggle, Musk's Pay Package

From the Heart where Innovations of Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed.

Ludlow and Plaine Hyde at Bloomberg's World headquarters in New York.

And I'm Ed Lovelow in San Francis. This is Bloomberg Technology.

Coming up, Microsoft, Alphabet amdo they struggle to meet high AI expectations?

Will break down the earning supports and.

Discuss just how these big tech chants can prove themselves down the road.

Plus the fifty five billion dollar question, should Musk's payday go away?

At Delaware?

Judge thinks so and as voided the Tesla's CEOs compensation package. We speak to the lawyer that beat Musk in court and.

The heads of five of the largest social media platforms for Congress today testifying about what their companies are doing to keep kids safe online.

We're live from DC.

Later in the hour, the three big AI names have reported their earnings. Get right to AMD it is concerned about their outlook for the current period and a lack of rebound in end markets and echo from what we heard with Intel, and at the same time, their AI accelerator the MI three hundred ramps really well in the quarter gone, and they exceeded that guidance they'd given us that there will be a four hundred million dollar contribution to revenues from the three hundred. So what's going on here?

Story is here.

Similarly with Alphabet parent of Google, the markets zeroed in on the miss in the core search business, but also a worry about margins. Interesting because the cloud outperformed. If you look at operating in club for the cloud in the quarter gone, double what the street was looking for. And when I spoke to Ruth pro actually said very matter of factly, there is a contryution from generative AI to what's happening in cloud, as well as our efforts to cut costs.

Perhaps the winner of the three.

Microsoft growth in the Azure unit thirty percent year on year, up sequentially from the prior quarter. A six percent contribution to growth in cloud from AI, according to the CFO Amy Hood in an interview at Bloomberg. But we're down one point two percent. This was a high high bar quarter. We knew what Microsoft had invested. We wanted to see evidence that we got a boost in sales on software and a boost in sales on cloud, and we got that, but the market had very high expectations.

Caroline, I mean to have cloud revenues up twenty four percent year on year, and that's still not meet those lofty goals. Let's just talk to an investor in really what her reaction is, Iako Yashioka, where police of Say joins our senior portfolio consultant Wealth Enhancement Group holding both Google and Microsoft, among many other names, and I go, the overall feeling is that these companies delivered, but not enough to meet the anticipation. Do you think let's talk

I don't necessarily think so, and thanks again for having me today. You know, these stocks were up substantially year to date, up over eight percent. You know, Microsoft itself was up over our near seventies percent on a trailing twelve month basis. So expectations have been by sort of

Yeah, Alphabet less detail on really what contribution AI will have, particularly on search IAGA. What about the capital expenditure that both companies are having to give it the moment, the investment to bring about the AI process.

Is it too much?

I don't know if it's too much, it is definitely what is needed. I mean, Nvidia has talked about the pricing of their chips in both Alphabet and Microsoft talked about cappex increasing substantially in twenty twenty four relative to twenty twenty three, and so that will be an extra spend by both of these into data centers and servers, and that's going to help build out the infrastructure in which AI and all the applications can be built on.

Erco Dan Ives at Webbush has this note out that Setia and Adella delivered a masterpiece that should be hung up in the loover. The stock is down one point two percent. Expectations were high as I went on about earlier. I guess the question from someone like you that holds a decent chunk of Microsoft shares is did you see enough in the financial to keep buying into the stock long term and believe in the AI story?

I think in the near term, and you know, we can.

We obviously expected a little bit of a pullback.

As I said, the.

Stocks really reflected a lot of high expectations, and so you know, with any pullback there is an opportunity. I think it would be nice to have the stock pullback additionally in order to have you know.

New entry points.

And you know, for most people, I think Microsoft is already at core position, So we just have to let the dust settle on the stock, at least in the near term.

Alphabet pairent of Google is down severely, and we're trying to understand what the focus is here. Initially it seemed like the anxiety was the core search business. Then people started talking about margins. But if you take into account the one time charge from headcount reduction and cost margins look a bit better. And on an operating income basis, the clouds did great. You know, they're saying, well, we think jenn Ai is contributing here. Why are they not getting credit for that cloud story?

Sure?

And you know they focused on operating income efficiencies over the last year, and I think that's been a great story for Alphabet, and you know, they've delivered on those promises. I think the issue with Alphabet is really just getting out there and telling the story and quantifying the impact

The k Senior portfolio consultant at Wealth Enhancement. Great to have you on the show. Across so many earnings.

Thank you.

The next earnings on the doc is a MD let's break down those results with Pierre Faragu, heads up the Global Technology Infrastructure Research team at New Street Research.

Per great to see you.

You know, for me, the story on AMD is which is more concerning or important to the market, right the outlook for the current period, which makes us worried about broad end markets or the progress they made on mi I three hundred, because they showed a lot of progress.

Where's your head at?

Well, if you look at the stoke over like let's say a two three year horizon, very clearly, the way we get it is as a CPU business is going to stabilize until he's coming back. That market is going to balance sowood and really aimed. You managed to build over the last five years of very sustainable challenge acquisition, so not much is going to happen, but it's.

A very strong, very solid base.

Then, like the embedded part of the business, exiling start of the business is very cyclical, and it's going down at the moment, it's three coming down.

It hasn't reached the track yet, but the truff.

Is in line of sight, and then you have this amazing opportunity in AI.

The way I read the situation today.

Is that MD is the only alternative to MVDR with like a relatively general purpose, very similar GPU architecture, which means that for all these people who number one find it difficult to get enough Nvidia ships and number two want to have an alternative supplier MD with the MI I three hundred is probably a no brainer, and that

I mean, Pierre, you got a two hundred and twenty five dollars price target, you got a buy recommendation. I mean, what therefore is the catalyst to get us from one hundred and sixty five to that two to five? Is it articulation from Lisa to how they're going to end up seeing the rewards of the AI.

That's a great question. Let me give you first what I look look at.

My only question on Nvidia on a sorry on AMD is execution. Does m I three hundred get into the hand of clients and do these clients find it reasonably easy because it's never easy to rent that new architecture along with with Nvidia, and if that happens, then it's like my price is actually probably far too you know, cautious. So that's the way we look at it. So between now and the end of this year, I want to

And that's the reason why the stucky is today.

Pierre, in terms of what you still want to hear.

And I would never ask you to do my job for me, but I am going to speak to Lisa Sue a little later on this morning, what is the question that's not been answered in this earning cycle?

What would you ask her?

First?

Say hello for me and the question the question I would ask her at this at this stage is when do you think you will have like a very strong visibility on whether your clients are comfortable ramping for the long run, for the long term I three hundred along Nvidia. It's like it's very too early to say does she need six months to have confidences that, does she need a year?

And not too sure.

We really appreciate you, yeah, yeah, giving you a few little hints for ED. A little bit later with Lisa Soup Pierre Faragu, we thank you so much. New Street Research Global Tech Infrastructure need coming up, Well, we're going to be discussing in on masks fifty five billion dollar

Has been struck down by judge and Delaware.

That's after shareholder Richard Tanetta challenged it as excessive that the ruling leaves the fortune of the world's richest man now kind of up in the air.

He'll only be the third world's richest person. Cry cry.

Joining us now for more is Bloomberg's Max Traffkin, And of course one of the lawyers for Richard Tanetta, this Greg Ferrallo. He's from Bernstein, Littowitz Berger and Grossman. Bloomberg reached out to Musk and his lawyer Evanchesla, but we have not received a response thus far.

But Greg, I turned to you.

This was a long, hard fought case, and I think actually the judge said, look, the defense tried very hard, but it was the most an impossible task.

Will you expect and appeals?

Now, do you think that the board will go back and just try to restructure some sort of payment for Alon?

Wouldn't surprise me at all if we saw an appeal Delware practice. There is a direct appeal to the Delaware Supreme Court, which is the final word on matters like this, So it's likely there'll be an appeal.

And Max from Elon inc your expertise of all things, I mean, he has been avidly against Delaware. More broadly and clearly, there has been concerns about from Elon himself a lack of control of his own company.

Now what do you think happens after this payper?

I mean, this is a huge development, not just because of the amount of money that is at stake in these options. The value of the options I've seen, you know, figures as high as fifty billion reported of course he hasn't exercised them yet, but also because this kind of throws not just Tesla in the chaos. They have to figure out a way to try to retain Elon Musk.

Know, Mars explorations. You have to ask where every where all of this goes.

Last thing I'll say is this is another big loss on Della. Remember Delaware forced him to buy Twitter for forty four billion dollars. So now even for the world's richest man. Forty four billion, fifty billion. That's starting to add up.

Greg, good morning. It's ed in San Francisco.

As far as I can tell, you and your clients are the only ones to actually ever take a look at the compensation package. So as a starting point, Greg, what was it in the first place that worried you or that you thought was unusual about the package that caused you and your clients to look.

You know, I have to say that I have a hard time articulating fifty five billion dollars. I often misspeak and say fifty five million dollars. Fifty five billion dollars are such a large pay package that it basically skewed dramatically upward the entire data set for the compensation consulting industry.

I think we.

Put out a press release yesterday referring to it as a gargantuan package. Let me start by saying it was so large that we looked at it specifically because no one had ever tried to come this close. And oh, by the way, when you look at the nearest comparable, it's Elon's prior pay package.

Okay, but Greg, here's the thing. It may be the biggest compensation package in history. But there are a really large body of Tesla investors out there that say, so what. Seventy three percent of those investors voted in favor of the package in twenty eighteen when it was awarded, And there are is a big body of people out there, Greg, I hope you don't mind me saying that, are pretty mad at you and your client who had Tesla shareholders, because they say, look at the share performance of Tesla

Well, you know, there's this idea in efficient capital markets that shareholders ought to have a say in things like this, and this package was in fact put to shareholders, but it was put to shareholders on approxy that the court found to be materially misleading in several respects. And look, the bottom line is, capital markets don't work if you don't tell stockholders material facts when asking them to take action. And that's exactly what happened here.

Max. This puts into question the board.

In particular, the accusations from many an investor is that there is no pushback, and the judge articulated there was at no point any sort of questioning that this pay package was ever perhaps successive. What does it mean for the board of Tesla.

Well, it's not clear to me.

You know, it's as Ed is kind of hinting at many Tesla shareholders were aware that the Tesla boarder of directors was essentially a rubber stamp.

You have a lot of people who are very.

Close friends with Elon, and I think one of the reasons he lost his case is because you had nominally independent directors who were going on vacation with him, and we had clearly had a close relationship with Now that's kind of like how Elon Musk has done business and by Elon.

What's so I think.

Difficult about this going forward is that that's kind of been If you asked Elon Musk, like, what is your playbook?

How have you been able to achieve so much?

He would say, well, it's because I have a you know, I've been able to do essentially whatever I want to do. And again, as I said earlier, he's been asking for even more control from where he got so I don't know where that goes.

I do think there is some piece.

Of risk that probably didn't exist yesterday that Elon Musk could either threaten to or even And again I think this is a far off possibility to decide to walk away from Tesla.

I mean, this is why the share price is somewhat underpression, not massive, Moss Gregg. But the articulation from the judge was, at no point did it seem that this fifty five billion or these options awarded was necessary to keep Elon motivated. But then to that end, why not recompense the leader, a founder with such a significant upside if he's going to deliver for shareholders.

Well, the judgemente the point I think very coachingly, and that is, I believe his net worth increased in increments of ten billion dollars based on the stock he already held without this pay package, for each increment that was identified in this pay package. And so I think the judges point of view was, if you look at other successful founders, Bezos, Zuckerberg, others, they don't take pay packages,

If you're watching us live now on Bloomberg Television and you're eternal subscriber, you can send questions to us via ib greg I told our audience on social media you were coming on and that there were lots of questions. I think the most common is is just a want for deeper understanding of what the pathway forward is, so you talk with Caroline about a likely appeal. I think

Well, the simple answer to that is that's a question for the board to determine in the first instance, and assuming it fulfills its fiduciary duties and uses ordinary and reasonable means to arrive at a result, my guess is I won't be involved at all, And my guess as well as the judge won't be involved at all if the Board comes out with a package which either facially is ridiculous, gargantuan, or otherwise raises concerns from a fiduciary perspective.

Right Max, There's so much to discuss here. I guess the board could also say, well, here's another fifty five billion dollar package. Looks different, same number.

I mean, one thing I'm curious about.

You know, musk Overnight was sort of threatening to leave Delaware and to reincorporate in Texas. I believe or you know, I think X he moved from Delaware in a.

Is that a re Can he do that?

And is that like, like, will there be another sort of leg you know, transfer of lawsuits if it happens? Because shareholders will saying, oh, he's he's just doing this to reduce our rights or something.

So look, the simple answer to that is Musk can't do anything himself. That's a matter that the board has to decide in the first instance, and then it's presented to shareholders for a vote. If shareholders, upon the board's recommendation, decide to move to Nevada, they have a right to

Right, Hey, Greg, real quick an audience question, and I'm just going to read, do you worry about changing the norms around Delaware corporate law? Way from non intervention? That was a follow on from what Max asked we have about thirty seconds.

No, not at all.

I think it's very important to recognize, and this is something that's deeply embedded in Delaware law that every decision is twice tested both from a legal perspective and an equitable perspective. And when fiduciaries act in a way that's not equitable or in violation of their duties, you're squarely within the long tradition of the Delaware law to call them on that.

I point out that Tesla had a sharp reaction after ours. It's now down just four tens of one percent. We thank Greg Varari, lawyer at Bernston Littlwitzburger Engrossman, and of course friend of the show of Bloomberg's Max Chafkin.

Actually, I'm very boolished for the SMP five hundred, not just for the Magnificent seven.

The DZSM for the Maneficent seven will continue.

As you look at the mag seven, you know there are companies that have a broad exposure.

I think semi conductors will continue to be strong.

I think we have to look at areas like semiconductor where AI could drive a lot more than they and going forward, I.

Think twenty four is really about differentiation. Some will be determined that they really aren't true AI beneficiaries.

Some of them were right and some of them were wrong.

Welcome back to Bloomberg Technology Ed Lovelow here in San Francisco, and in the market's context, this is what the session looks like right now in the moment. You can see then, as that one hundred softer by one point four percent. The earning story a big contributor to that. Microsoft off one point three percent despite delivering what was a strong quarter.

There was evidence that AI.

Made meaningful contributions to the top and bottom line, but it was a high bar quarter. Investors just wanted more. But largely that was the positive story. More worrying, AMD now softer three percent gave a worrying outlook for the current period. Remember, they go into lots of end markets where we're just not seeing the rebound we thought we would. But the AI story was strong, right their AI accelerator

It had been much higher.

What about that conversation we were having in Caroline about Paramount and Warner Brothers Discovery And then in the back of your mind, remember somebody recently suggested that ESPN plus goes on Netflix and what is happening here? No, I think we have a conversation coming up.

Yeah, so much.

Discuss activist investors meets desire to.

Make some big bids on some TV assets.

That's returned to the comedian turned TV media mogul Byron Allen because his latest take of attempt is a massive one head fourteen billion dollars is offering for Paramount in a text, the media mogul made basically that offer for voting shares of the company and a fifty percent premium to recent training. According to sources. Now, when you include existing debt of Paramount, total value the deal thirty billion him with more as US media analyst so Brie bag Intelligence, KEITHA.

It's definitely a solid deal, Caroline. I mean that the premiums are solid, and this is really the first full cash bid that Paramount has received for all of the company. Having said that, though, I mean, you're absolutely right Byron Island has kind of been in the take of all of the media conversations, right. He's been making bids all over the place, whether it was for you know, Disney's linear assets, whether it was for bt TV stations from Scripts.

Gita, I want to do the math.

You're right, fifteen point six billion on the debt side, the offer is fourteen billion. Paramount's current market capitalization is nine point nine five billion. But I guess what I don't understand is like, where's Barron getting this number from? Where is the value? Forget the kind of risk on the debt side. But what is it the Paramount offers or can be fixed.

Paramount actually offers a lot. I mean, it is a very compelling collection of assets. One could argue that, yes, they do have a very heavy exposure to TV networks, you know, linear networks like the CBS broadcast network, like Nickelodeon, you know Comedy Central, which are all in secular decline. And remember, I mean, you know, advertising every quarter, if you look at TV advertising, it's down about ten fifteen percent.

Well Nickelodeon Blast from the Past.

When I was a kid, rug Rats, Wild Thorn Breeze, that was my jam. And if you know what I'm talking about on social media at me, I don't care, no shame there US media analysts for Bloomberg Intelligence Geeta rang and eighth and Nickelodeon. My goodness, let's keep a conversation going and bring in Laura Martin's senior entertainment analyst at need him and let's get right to it. Byron buying Paramount thoughts.

Right, fantastic for Paramount shareholders. This company is too small. It needs to have a different management team. I like the idea of splitting it up. It's worth more on pieces than together. We need new management here. Great idea.

So this is the stock that you cover in Caroline and I've been talking over recent days kind of broadly what's happening here, you know, take into account this proposal that ESPN plus from Nelson Peltz, according to Bloomberg Sources, does something with Netflix. It's still an industry where they're trying to kind of right size and find the formula for profit.

Is at least my read on all this newsflow.

So on ESPN, I don't think Nelson Puts will actually win his board seats, so I think ESPN will stay part of the Walt Disney company. I think a far more interesting value creative solution for ESPN is to take to get the MBA and the NFL to take pieces like equity pieces in ESPN and they become basically ESPN become the anchor tenants streaming like linear its TV streaming for the leagues. That's a good idea, sort of like

Just taking that step back, Laura and the idea that M and A seems inevitable in twenty twenty four in some way, shape or form. Who become the key players left? In your mind's eye? Who are the winners from all of this?

Bigger?

You must be bigger, So who you're competing with here is Amazon Prime Video and Amazon It never needs to make money from streaming, so that's your competitor. My opinion is Apple comes in eventually, but they're not really a serious player today. They spend two billion dollars on content and as we know, Netflix spends seventeen billion without sports content.

What's interesting, Laura is also we were originally bringing you on to talk about the earnings and the fact that we have, you know, advertising looking pretty good when you're looking at YouTube for example, and Alphabet out there managing to still bring in the ad revenue when everyone really wants to hear about AI. But from your perspective, Laura, what is it that some of these tech companies in Alphabet for example, can bring to the table when it comes to our own consumption of content?

So I think what's really interesting about yeah, Google's strategic position alphabet strategic position is YouTube is now the number one streamed entity, and YouTube advertising grew sixteen percent and they're now up to we think three billion dollars in subscription revenue, which is sort of hidden in the other line. You have to sort of go digging, but they said they had fifteen million subscribe one hundred million subscribers and fifteen billion.

Dollars in subscription revenue last year.

So this is another revenue stream sort of building up under the sheets, and it's all video all the time.

YouTube is a YouTube TV with the.

NFL Sunday ticket really really rapid adoption, It's almost doubled their subscribers that product.

Laura, I guess going into the earnings and coming out of it, it simply came down to understanding the AI story in a way that Google or alphabet demonstrates they can make money from all of this investment in chat. Do you now have a better understanding of that?

Yeah.

I think what's really interesting about they said AI sixty seven times in their transcript, and they said generative AI twelve. I think what's really interesting is their margins. They hired zero extra headcount, they grew revenue at thirteen percent with no extra costs, so guess what's happening to free cash flow. Operating margins went up five hundred basis points to twenty seven percent.

These companies that are now integrating.

Generative AI and AI not only are having faster product innovation and product introductions, they're also cutting costs already, they're not using as many people.

You keep seeing alphabet.

You know, a release seeing statement saying it's cutting more people.

This is all about automation.

So my opinion is the faster companies adopt generitive AI and machine learning AI, the faster costs go down because you're replacing people with machines.

It's tough, but from a bottom line, it's positive. Laura Martin, it's so good to have you on the show.

As always. We thank you.

Just going the whole gamut of the media landscape with our senior entertainment analyst over at Needham Stay well. Meanwhile, coming up, look tech leaders, they've just sent it on Capitol Hill to testify at a Senate herring focused on children's digital safety. We have so much more on this as we go live to Washington.

That's next. It's a really big technology.

There is a problem with accountability. Okay, tech CEOs across Meta, X, Snap, TikTok, and more have descended on Capitol Hill to testify at a Senate hearing focused on children's online safety. Joining us live from Washington, Bloomberg's Alex Brinka and in any of these hearings, you have to take the prepared remarks of the speakers, the CEOs themselves, and then see what happens with the line of questioning, which can sometimes be outside the scope of the brief What have we learned so far?

Well?

So far.

Both the tech CEOs and the senators in the hearing room came to the room with a lot of vigor for those prepared remarks. It started with Senator Durbin showing a somber video of victims who had experienced sexual exploitation online, and went into Senator Graham telling Mark Zuckerberg, the CEO of Meta, and the other CEOs on the witness table inexplicably that they have quote blood on their hands.

The hearing room erupted in applause.

After those prepared remarks, we did get some new news from the likes of Linda Yakarino, the CEO of X, who said that her company would be the first to support the stop see SAM Act, an act that is meant to protect victims of who have their sexual images uploaded online and expand the reporting process for them with

All of this comes as bills and legislation is debated, but ultimately goes nowhere.

Alex, is there any sense.

That some sort of rules will change for ultimate liability for these companies or in general? Is this more about self regulation still?

I can tell you.

Senator Klobuchar had her seven minutes of questioning, and she had an exasperated tone because she said, this conversation has been going on for more than a decade now.

She had a really pointed statement.

She talked about the issues with the Boeing plane, saying, if we have a piece of a plane fall off and threaten lives, we ground those planes. If there are children dying from interactions online by suicide or by coming in contact with sexual credits, why aren't we doing that? So that exasperation is certainly felt from in the members on both sides of the aisle.

But we did hear folks like.

Republican Senator Lindsay Graham come to the table today saying Republicans are happy to come to the table. Meanwhile, there is kind of folks across the aisle who have bills in motion. That being said, we've seen bills before that aim to reign in the power of big tech when there are children's lives and children's safety on the line. Perhaps this is the moment that they can actually get things over the line.

Ale's kind of in parallel and adjacent to this Bloomberg's reporting with regards to Meta that previously some executive went to Mark Zuckerberg and said we need to hire more people focused on child's online safety in terms of headcount, and that proposal was rejected by Zuckerberg. What's the story there and what has the company's response been.

Sure, And I actually heard from Senators Blackburn and Blumenthal yesterday before the hearing who talked about these emails that the Committee is releasing in accordance with this hearing. They're from around the time of September twenty twenty one from a letter from those two senators. In response, Nick Klegg met As head of Policy, basically came to Mark Zuckerberg saying, Hey, I have a plan here for additional investment in wellness.

Can we look at this plan and invest in it.

Those emails went unanswered for a number of months, and ultimately that investment was pushed back upon.

I do expect that the senators.

Will bring this this idea up today and query Mark Zuckerberg himself and pose the question, why haven't we seen additional investment. You have so many engineers, so much headcount. In twenty twenty one, you hired more than ten thousand people. Why isn't there more being done to protect kids on metas platforms?

Alex BLERINCA.

We thank you for bringing us the latest on the reporting and indeed the questioning that's going on on the hill right now.

We want to stick with that hearing and.

Ultimately what policy could potentially come from it. The Center of Humane Technology Policy Director Camille Carton joins us now to really discuss where they think real change can happen to protect children on social media and what these hearings really mean for big tech Ultimately, Kamille, what if any policy can be put in place to ensure that children

Yeah, absolutely, I think we're at a point, as everyone has said so far, where we are happy that these hearings are happening because the public needs to see it. But we're also at the point in our democratic process where it's time to push forward change. And some of the things that we look for in bills specifically around kids safety are three main pillars. We want a duty of care, which essentially means just like a doctor has a fiduciary responsibility to ensure that patients are treated in

I'm going back to that privacy focus now. Some companies I think of one in France, Youbo, that came onto the show last week saying how, ultimately you can use technology as a force for good. Here you can have some sort of ability to really age appropriately who is part of using that system, But then privacy comes into it. How do you allow the camera to identify whether a child is indeed the age they say they are without

Yeah, I think that that's a great point. But part of what's missing is that these companies already have age estimation tools that they use to know the age of their users. I mean, one thing that came out of the ag lawsuit that's happening across forty one States is the fact that Meta knows that it has millions of users under the age of thirteen on its platform, and

Emil, I still go back to the idea that when this Senate hearing is finished, what comes out of it, because many of the social media companies have codified policy rights. So if you take TikTok as an example, they have restrictions on age. I think thirteen is the barrier to using TikTok. And those are policies. The question seems to be on enforcement, and as Caroline rightly points out, either a lack of or use of technology to enforce those policies.

Yeah.

I think the fundamental difference that we're talking about, though, is self regulation policy by these platforms, which is where we're at right now, as opposed to regulation.

That's codified in law.

So these platforms at any moment can change their terms and conditions, and what we're seeing right now is that they release features that folks have been asking for for years ahead of a big pr moment, and that's great. We want, you know, we want these better features, but releasing these features because of a PR moment is no substitute for regulation that incentivizes safe innovation and appropriate strategies from the beginning.

Camille Pinterest's CEO, Bill Ready, has an op ed in The Hill this morning likening the social media industry it's a big tobacco.

That is something I've heard before.

Why do you think social media companies would do something like that? Are they trying to get in the psyche of lawmakers and show that they're on the same wavelength or something like that.

Well, I think every social media company and the ways in which they utilize their products are different. Pinterest has a different business model and a different position than other social media companies. We've seen that with Snap coming out and endorsing the Kids Online Safety Act, now with X coming out and endorsing CESUM. They're all taking slightly different positions. But I think the main takeaway here is that we're

Okay, as we say the hearings ongoing, Senator to Ted Cruz using props behind him, you can tune into that hearing for the full detail center for your main technology policy Director Quill Carlton, fantastic conversation.

Thank you.

I'm now for going what's going viral?

TikTok may find itself without music from thousands of artists represented by Universal Music Group UMG has issued an open letter to the Bytdance owned company condemning it for offering unfair terms during licensing negotiations. Now UMG is posting on X, then it must call time out on TikTok. Ed this is about TikTok saying, look, you get free promotion for your stars by the music on TikTok, but UMG saying you're using AI that is going to ultimately take away the power of our own artists.

I go to what Ceci and Nadella said on that NBC interview in the content of them in the New York Times is going to come down to intellectual property versus fair use. And that's a different medium music, but that's the case.

Yeah City Group saying, look, these are going to be difficult negotiations, but actually I think UMG is taking the right stance. The best, it secures better terms. The worst looks like they protect their artists.

That does it for this edition of Bloomberg Technology Ed.

Check out the pod This is Bloomberg