Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and ever though in San Francisco.
This is Bloomberg Tech Coming up.
Service now agrees to by cybersecurity startup Armists for seven points seventy five billion dollars, its largest acquisition to date. Douz, Invidia's biggest Southeast Asia buyer, faces a chip smuggling probe despite the tech giants insistence that chip diversion doesn't exist. And crypto's big year that wasn't a win for all the billionaire's hit hardest by recent price drops. First rechecking on those markets and bigcoin continues to be on the downside.
We're off five percentage twin eight, three and sixty one, so once again another annual loss for the OG in the crypto space.
But we're seeing risk on perpetuate a little bit.
And then as that one hundred, we're higher on the day, we're higher on the month, and boy are we higher on the year, up more than twenty percent. And of course today's figures the US economy expanding at four point three percent annualized pace. Maybe just easing back a little bit of risk on feeling if indeed the FED doesn't cut as much as I'm in anticipated because this economy.
Looks like it's doing fine.
Let's talk about some of the animal spirits in the market right now, particularly when it comes to M and A. And let's look at Service Now. We're currently trading lower on that particular stock.
We're off by two and.
A half percent because well, they're going to use cash, They're going to use debt for his biggest acquisition so far.
It's all about the world of cyber and it's actually.
A story that Bloomberg broke where ahead of the formal announcement. Let's get to it at Bloomberg's Andrew Martin, and it was last week that you made clear to the market that Service Now was looking at this particular acquisition.
Why is it building up in.
Cyber Well, I think there's sort of following a path that Microsoft and Google were already followed, which is, you know, combining a enterprise software product and our cyber is sort of a bonus. And so you know, Microsoft sort of perfected this idea of.
Having a package of.
Their software offerings in the cloud and bringing in cyber. Google bought Whiz to do something very similar and now Service now, you know, is basically saying as we automate you know, they basically automate it and personnel, and now they're offering cyber is sort of a broader package to entice customers.
So the safety of Agenda KI is crucial. Wise, armis the right holding. Tell us about the founding team and other reason.
Armist is an interesting company there.
Like a lot of cyber startups, it was started by Israeli military veterans who had worked in one of their elite cyber units. And what these guys do is they they call it cyber exposure management. It's basically looking across your whole digital footprint and finding in real time flaws and vulnerabilities and fixing them quickly. And it's something that really lends itself to AI see that being automated, and.
You know, the company has grown incredibly fast.
And uh you know, for for a company that uh that that automates processes, automating cyber just makes sense as part of that.
What's interesting is, as you said, this is part of a theme.
The fact that the mega deal of the year was Whiz with alphabet Are we expecting yet more and more these platforms looking to bolt on cyber acquisitions.
It just makes sense, right, I mean, it just makes sense to to offer cyber as part of a broader package. And you know, among the big cyber players, Microsoft being the biggest, Google, CrowdStrike, palom Alto, they're all trying to build a bundle that can attract users with with sort of one stop shopping and cyber.
That word platformization, which a horrible words, horrible word, but they love it. Megs, Andrew Martin, we so appreciate you coming on about the latest deal. Let's turn our attention to another huge, huge piece of reporting by Bloomberg. In Vidia's largest buyer in Southeast Asia, it's under investigation by the US government over whether it smuggled advanced chips into China.
Now Singapore based Megaspeed imported at least four point six billion dollars worth of in Vidio hardware through November since it's founding back in twenty twenty three. The company wasn't its obscure spinoff of a Chinese gaming enterprise could become a prime example of Washington's fears of Beijing gaining access to advanced chips For commercial and military uses. Megaspeed denies any wrongdoing, says it abides by all regulations from the
US and elsewhere relevant to its operations. Let's get the details on what was a very long running investigation for Bloomberg's chips reporter Ian King and the deep dive the reporters have done to understand whether we really understand how many GPUs are going to megaspeed and where they're ending up in.
Talk us through it.
Yeah, I mean there's a lot of evidence. It's important to point out, as you already did that in Nvidia says there's nothing going on here. Speed itself says there's nothing going on here. But you know our colleagues reporting here, Caroline, is that there is an investigation going on, and you know Southeast Asian governments and also Washington are looking at this and still trying to find out whether there has been anything significant going on the go ahead.
Sorry, Well, from what we know, it's a Singapore based company, Megaspeed operating fully in compliance, as they say, with applicable laws. But what ultimately has had to spring up ever since the Biden administration back in twenty twenty two was a restriction on sophisticated chips kind of from Nvidia to China.
So suddenly you saw other Asian countries become real areas of focus for importing chips, so that Chinese companies could actually do the workload, could do the compute outside of their own country.
Correct, Yeah, now that's absolutely right. There's nothing illegal with setting up a data center and serving Chinese customers, providing those customers don't have links with a band entity in the US, whether that's the military or some company which the US government has decided serves China's military. However, there is a suspicion about these links, about who's in control
of what. There is a you know, and this is the problem that in Vidia has to face and in video you know say, look that there's nothing to see here, there's nothing.
To worry about.
But as you'll see from our story, there's a lot of links between individuals in China. There are you know, there's a lot of lack of clarity in the relationships, which I think everybody is trying to work through to make sure that there is nothing untoward going on.
Because Bloomberg didn't find evidence of any megaspeed in video chips actually being divert into China. But there's all these inconsistencies, as you say, in Megaspeed's Southeast Asia demand and ship inventory and wherever all they all end up in.
What's so interesting is this is a moment.
Where maybe actually in we'll get more access to China. H two hundreds have in theory or at least according to a truth social post been allow it back into China.
The question is where the China wants them.
But also where the megaspeed will actually have Chinese demand going forward if indeed we start to see access once again to mainland Yeah.
I mean there's again we're in a kind of a transition period where we're trying to find out exactly how this will all play out. In Vidia wants to do business directly in China, that's absolutely true. At the moment, it cannot do that because of these restrictions. What we're trying to find out is whether the Chinese want to do business directly within VideA, and if that's the case, what level of demand that they will be there. In Vidia has really kind of had a good year in Washington.
It's gone from really restrictive rules to freeing up of some of them. But again that has to translate into shipments into that Chinese market, and we haven't seen that yet and we don't know that that will actually happen. Clearly, stories like this that there are suspicions about smuddeling that we know perhaps should be more secure and more kind of careful in how we deal with China and Chinese
entities don't help that case. So again, there's a lot at stake here, and we really need a lot more clarity about the details of how this is all going to work out.
It's a very fairo incredibly complex story, and you broke it down perfectly for us Bloomgazine, King, thank you very much. Indeed, go read more about the Invidio supplier on your terminal or online. But let's talk more now about chip and trade news because the US it's actually accused today China of engaging in unfair trade practices in the semiconductor sector, but Washington won't place additional tariffs on chip imports till at least mid twenty twenty seven. Chinese embassy in Washington
did not immediately respond to the request for comment. That's going the details of blombgs, Jordan Fabian and so we understand that USTR, that's the Office of US Trade Representative saying, look, what they're doing isn't fair.
Exactly.
It's an interesting development. This investigation actually started under the administration of former President Joe Biden, with the expectation that Donald Trump, who talked tough on China during the campaign, would follow up on it when he became president. But in the interim he started a trade war with China. He then struck a deal with Jijenping to take off
those tariffs. And so the US right now, if you listen to what Jamison Greer, the Trade Representative, has said other senior administration officials, they want a stable relationship with China on trade, and so they're not going to look to hike tariffs at the current moment, which is why you have this odd outcome of an investigation saying the obvious really, which is that China is using non market
practices to dominate the chip industry. But at the same time, the US isn't really going to do anything about it, at least not for the foreseeable future.
So ESDO was legally required to publish the outcome and the investigation the three to Zho one investigation, but is being thought of that China is up to in terms of unfairly supporting its industry. They say, China's targeting in the semiconductor industry for dominance is unreasonable and burdens or restricts US commerce and thus is actionable.
Jordan, what are they being told or accused of.
You know, they're being accused of using non market practices to bolster their domestic industry. You'll sell those chips that perhaps below market rates into various countries to get them hooked on the Chinese technology stack and thereby increasing the market share of their chip industry. The irony is that the US is pretty much trying to do the same thing, which is basically doing a take it or leave it deal with countries around the world, saying that you need
to use the US tech stack. We want to make sure that countries are not on the Chinese tech stack and had been for a while, you know, trying to limit X worts to China to other countries that are deemed unfriendly, and also crack down on the Chinese market. So they're saying, essentially, you know, you know, China can't try to dominate the market. We're going to try and
dominate the market. But right now they're again going to sort of stand off our whole back on increasing terrorists further on Chinese chips to address that.
Problem complex trade web. Jordan Fabian, thanks so much for talking us through it. We really appreciate you.
Meanwhile, coming up, thing about Larry Allison, his big bet on paramount that could alter his vast Oracle fortune.
One on that. Next, this is Blomberg Tech.
Larry Alison no stranger to bold bets, but his biggest one yet maybe in media. A potential personal guarantee more than forty billion dollars to backstop paramounts all cash bid for Warner Brothers Discovery.
He could dramatically we shape the.
Oracle founder's fortune and Meg's Dylan Sloane joins us for more as we're picking apart how Larry Ellison is basically helping his son, David Ellison potentially by Warner Brothers Discovery. What's so extraordinary about your reporting on the billionaire is that he has sold very little of Oracle stock over the years.
He has Yeah, and even amongst the billionaires that we're looking at on the Bloomberg billionis Index, he really stands out. He's sold about seven and a half billion dollars worth of stock lifetime, no more than a billion dollars in a single year since twenty ten, So that pair that really pales in comparison in looking at some other founders. You know, he still earns about forty percent of the company, which is, you know, multiples higher than a lot of
comparable tech founder peers. So his strategy in terms of his wealth management has been to stick really closely to holding his Oracle stock, not cashing out at any point, which has been very successful for him as a stock has done well. But it does raise some questions about the cash that he has on hand and whether or not he would be able to imediately meet those equity financing comitment should he be called on to do so.
Yeah, because like forty billion in the grand scheme of things, is actually not that much compared to his two hundred and fifty two billion dollar net worth. But how liquid is any of that? Where has money gone? What could he sell to help out?
Yeah, And you raise a good point, which is it's important to say that he can afford this. Of course many times over third richest man in the world he has got more than.
Enough assets to be able to cover this, but historically.
Ellison's has relied on debt to finance money of his investments, his lifestyle purchases. Currently about thirty percent of his Oracle stake is pledged to secure loans, which he uses to raise cash and fund his many lifestyle purchases. He has a really extensive real estate portfolio. You may remember even earlier this year. It feels like a lifetime ago, but he put up a big chunk of the equity for his son David's acquisition of National Amusements, the acquisition of Paramount.
So should he need to raise cash down the line, of course, selling shares would be one option if he's called on to backstop this steal, which again would constitute a pretty significant change from his his strategy over the past few decades, or potentially increasing the size of those loans, which is something that the Oracle board would need to go through a review process of to give the okay.
Just like Tesla learn when El muskport now X was Twitter Dolan sloan. It's great reporting, go and check it out on all things billionaires. But let's talk a little bit more about the potential bid or deal of Paramount, binding, Water Brothers, Discovery, and indeed Netflix to the legal stakes of the Megamedia mergers. Fiona Scott Morton, Professor of Economics over at the Yale University School of Management and adjunct
professor of Yale Law School, is with us. Now let's just go back to whether or not any of these will get through regulatory approval. Let's start with Paramount buying Warner Brothers Discovery.
Does it cut legal mustard?
Do you think, well, all three of the bidders, remember there was Comcast in there to begin with, have overlapped with Warner Brothers. If you think about three buckets of say content, production, streaming, and then channels or networks, they a overlap and Paramount in particular has a lot of production studio kinds of assets, particularly because of course Paramount merges with sky Dance first, so that's a big issue for them, and they have a significant share of streaming as well.
You served as Deputy Sistant Attorney General for Economic Analysis, chief Economist, you can basically helped with anti trust division in your time. When ultimately it comes down to it, as courts are going to say, who's the competitor here.
Do you think it's right that.
They bulk in YouTube and new ways of consuming content, even TikTok versus us all be on linear, certainly on cable.
Yes, I think this is the tricky thing for the paramount BID. I mean, we all understand what producing content is, and I think we have a pretty good grip on who does that and why it's different and what sort of market there is there. Streaming, however, is much trickier because we have user produced funny cat videos, we have user produced videos that actually sustain those users in terms
of income. We have professionally produced short things, professionally produced long things, and so we're getting a kind of a continuum of content, and that includes YouTube, as you point out, which has a big chunk of that continuum. And it's going to be very difficult to draw the line on what is what we call the relevant market, which in antitrust is what matters because that's where you get head to head competitors.
It feels as though Netflix, for its part, which thus far is meant to be the front runner for buying Warner Brothers, or at least the streaming and the studio side of it, they've tried to front run this sort of argument by making clear they think the market competitors are YouTube and they are TikTok and they are just where are eyeballs at? Who do they need to convince in this because many would say, oh, the Allisons have got the air of the administration, but really it's the courts that's right.
The president can say he wants the Ellisons to have it, and he can say that about his friends or the people who give him money, or silence the voices that he doesn't want to hear. But ultimately, we have a law in the United States that can be enforced not only by the public, the federal public authorities, but the
states and actually buy private plaintiffs as well. And so if there's some harm to competition and that can be shown by a state or a private plaintiff, then they can go to court and try to block the transaction just like the federal government can. And indeed we have seen states coalitions of states being very active and antitrust lately when they have felt that the federal government is not doing a good job.
Fear and a Scott Morton, I'm a feeling this story is going to run. So we get to have you back, Yale University School and Management. We appreciate your expertise. It's been a wild year in crypto. Despite big regulatory wins, hasn't been kind to everyone, even as prices and interest surged early on. Billionaires tied to the space they're chatting very different paths. Setting into twenty twenty six, let's state
the vinkle of twins. They saw their fortunes pressured as Gemini Space Station continues to face losses after the exchange's shares for one sixty percent following September IPO. On the other side, Jeremy Elaire's Circle benefited from growing adoption of its USDC stable coin, helped by clearer regulation, and the shares have almost tripled since listening in June, although you can see they're well off their previous highs. Meanwhile, let's
talk my novograts. Galaxy Digital has actually seen some sort of a rebound alongside bitcoins gains earlier in the year, but it has had a tough stretch. Then there's Michael Saylor's wild ride as too, as the Strategy founder doubled down on his high conviction bitcoin bet, further tying his wealth to the token's price wings his net worth has collapsed almost forty percent this year. So what next for crypto in twenty twenty six?
Not just the billionaires.
Nisa Colleens, Stillmark Managing.
Partners, says she's going to see momentum.
She writes, we expect to continued progress through increased MNA activity, expanded entrepreneurial innovation, and a deeper, more robust base of both retail and institutional uses. She joins us Now, for you, at least reflecting on twenty twenty five, what was the biggest landmark move?
Was it institutional adoption?
Well, twenty twenty five was one of the most consequential years in bitcoin's history, not because of price appreciation, but because of structural progress, and that includes policy, product, and institutional adoption. Across all of these fronts, Bitcoin moved meaningfully into the mainstream as an embedded part of the financial system, and twenty twenty six will be able to take advantage of that foundation.
What does advantage look like, Well, what it looks like is recent regulatory clarity and an effort by regulators and policy makers to acknowledge bitcoin as part of the financial system and to lay the foundational groundwork in terms of policy so that the US can continue to lead both in terms of innovation distribution as well as institutional adoption that can provide efficiencies and gains for US based institutions from bitcoin, the acid and bitcoin technologies at.
Least reminds us of that quickly, just remind us where we are on policy. Because Genius Act tick, that helps sable coins and pass through Congress. But the Clarity Act what will that give us if India does get through the Senate.
So in addition to the Genius Act passing this year, we've seen advancement of the What the Clarity Act attempts to do, or aims to do, I should say, is to create a framework for bitcoin and other digital assets can create clarity as well as consumer protection and can
offer definitions of what these digital assets are. So, for example, we expect that bitcoin will be defined as a commodity along with other decentralized assets under the purview of the CFTC, and that will help drive institutional adoption both in terms of institutionals institution's.
Own interaction with bitcoin, but.
Also institutions comfort with distribution bitcoin to their own clients.
We've got but a minute left.
But your put photo is so interesting because it's all around the bitcoin ecosystem and one of us energy focused.
How is that playing and also this need for energy and power in the AI era as well.
That's right.
So we began the year talking about bitcoin and the intersection of bitcoin with other critical trends, and that included AI and energy infrastructure. What we've seen as the year comes to an end is an acknowledgment or recognition of
the opportunity at the intersection of bitcoin and energy. We've seen this with large transactions such as those advanced by major AI stakeholders seeking energy development and looking for a way to drive efficiencies and especially in terms of pace of development, including through partnership with bitcoin miners and bitcoin mining development institutions.
At Least, it's been great as always getting your take throughout the year of twenty twenty five and very much looking forward to checking in with you in twenty twenty six as well. And apologies for a technical glitch we had throughout that interview at least Clean, We thank you so much of still Mark, Welcome back to Bloomberg Tech. Let's check in on these markets for you as we head towards one is a very shortened week.
We're up two tens percent on the Nasdaq one hundred.
At the moment, stock's actually driving near all time highs, very close on the S and P five hundred as well, four straight session agains. We've got some renewed appetite for tech in particular. This is even as the US economy span the fastest that we've seen in two years four point.
Three percent analyzed pace.
But does that mean the FED won't cut as much? Maybe that's why Bitcoin's under pressure. We're off by five ten percent on cryptot eighty eight hundred and twenty eight. It's expected to have a down year. Telly what's also had a down month, and also we're down on the day. The last quarter has been pretty painful for some of these neo clouds. Core we've off by three percent, but off way almost forty percent in the last trading quarter.
Neibeus is another neocloud, basically these new types of companies that come out to offer compute for the ever necessary need for AI or off by two percent on NEBBEUS alphabet though at one point two percent, as it's actually really thinking about the energy side of this AI equation and it bought, of course, a power company. We saw yesterday intersect power to be able to offer more climate friendly energy for its AI needs, and that's been a big theme for the year, and data centers energy demands
is one that we keep on intersecting with Bloomberg. Josh Saul, who covers energy, been highlighting the strain that it's all wimputing on the power grid. So I'm interested as to if you flect on twenty twenty five how energy markets were disrupted by the AI glut gold market rush that we saw.
It absolutely changed so much.
We've never seen so much money rushing into the power sector.
The numbers are are just wild.
I mean, the four biggest tech companies spending three hundred and forty four billion dollars this year. The power sector expects to invest one point one trillion over the next five years on the power grid in order to both work on decaying infrastructure but also to connect all these new data centers.
And they will get the financing from the end need or are they having to turn to the consumer.
As well to help finance all this infrastructure? Is the government who pays.
For the one point whatever trillion dollars?
It is of improvement.
Tech companies kick in a lot of money, and utilities especially have been good about setting up contracts where they get paid whether or not the tech companies use that much power over time, so there's some built in protection for customers there.
But when tech drives up.
The wholesale cost of electricity, that cost is then passed on to consumers, so they do see some upward pressure on bills from that.
Many anticipating in the twenty twenty six midter this is going to come a lot about that. You saw issues in New Jersey, We've got it in Virginia those areas of data center build up.
Are you seeing the utilities.
And power companies also trying to get an easy regulatory environment. I mean, we've talked a lot about fast tracking of these big projects. If they've got a lot to put money into.
It's hard because utilities, for sure want to hook up the data centers.
That's a huge new customer for them.
That's like seven hundred thousand people just moving to their territory who wouldn't want that business. But it can be tough for them because if it makes prices go up, that gets consumers mad, that gets regulators and politicians focused on the issue, and you can have what we saw in Georgia where regulators are voted out and new regulators, democratic regulators who are expected to be less friendly to the power company are voted in.
Josh, So can I have a busy twenty twenty six thanks of breaking down what has been a wild ride for twenty twenty five.
Let's talk more.
About that impact of energy demand on the tech industry. Jason Oxman's with US President CEO of the Information Technology Industry Council. You represent some of the biggest players in the AI domain. I'm thinking of video open AI, a lot of the demand for compute or indeed the supplies to compute. Jason, what are you seeing in terms of the regulatory equation changing to help speed up some of this infrastructure investment.
Well, great to be back with you, Carolina, and your absolutely right. Policymakers are paying a lot of attention to this issue and the demand created by the construction of new data centers demands new access to energy sources. Look, we've seen over the last few decades under investment in the energy grid, under investment in alternative forms of energy, and there are a lot of moves afoot here in
Washington to address those issues. The biggest one that I've seen in recent weeks and that we're supporting, is something called the Speed Act, which Congress moved through the House on its last day here last week. The Speed Act would invoke regulatory reforms to speed up the permitting process for construction of new energy projects. It would reduce some regulatory burden on those construction projects. It takes years and
years to put new energy on the grid. Those grid modernization efforts take a lot of time and effort and financial resource. The one piece that Washington is trying to address is reducing the regulatory burden to make sure we can make those investments that we need to make. Data centers are not new. You mentioned Northern Virginia. They've been a data center hub for decades. Two thirds of the world's Internet traffic passes through Northern Virginia because it's been
a traditional hub. But we're seeing the new construction of data centerplace new energy demands, and as you noted, policymakers are trying to take action and make it move more quickly.
Well, what about the checks and balances than are needed? Because I think very much we've been reporting a lot about new players coming on the scene, companies that have never built data centers before.
I mean, boy Oracle itself.
I mean, one of the biggest data center infrastructure investors out there at the moment, has never actually formally built a data center of its own.
So how do get a lot of other ownerships?
You know, a lot of partnerships are happening. You'll recall in January on day two of the Trump administration, project Stargate, which Oracle was involved in, also involved SoftBank, open A other companies that are more traditional investors in these kind of projects. Data centers have been around for a long time, but a lot of new companies are getting into it. As your graphic and your conversation with Josh showed, only about eighteen percent of the current demand for data centers
is from the tech industry. Financial services other related industries are also building data centers, and I think, as you noted, there's a lot of attention being paid by consumers to this issue. They don't want to see their power bills go up as a results of these investments in data centers, and that's why we're pursuing these alternative projects. You've seen tech companies like Microsoft invest in nuclear power. We're trying to move forward with small module reactors that can power
these data centers. And I do think it's important for consumers to understand.
The value to the US economy, the value to job growth.
It was this great report that Vanguard put out last week that said that job growth in AI affected industries is one point seven percent, job growth in non AI affected industries zero point eight percents, so twice the job growth in AI effected industries.
This has an enormous economic benefit.
Need to make sure these data centers are constructed, that AI can continue to power the US economy, power wage growth and the like. But there are some things that policymakers, like the Speed Act can do to help move these projects forward.
Well, many would say that actually that job's growth is short term in nature. You need a lot of engineers a lot of builders to build them, but actually don't mean that many people to manage a data center, which once it's up and running, And there's that short term, long term perspective as well, when you think about the inclimate impact, how much are the big tech companies really realizing the responsibility when they're having to bring up all this compute and power.
They're also seeing their emissions go up into the right.
Well, I think you're right about the long term versus the short term. It does create a lot of construction jobs, a lot of jobs to build these data centers, and there are also jobs created in the data centers themselves.
But I think the long term effect.
Is really what does AI mean for improving productivity and creating not only the job growth but also the wage growth. That Vanguard report that came out last week that I mentioned also noted that wage growth in AI related industries this was three point eight percent versus point seven percent in non AI related industries. That wage growth is enormously important. It's what's made possible by the data center. So you're right, the data centers themselves create a lot of construction jobs.
We're going to see that continue to move forward. But it's what the data centers do. They're buildings that contain the future of technology for the country, and the AI servers that are in there and the services that are powered for consumers and for productivity for businesses is really what we need to be focused on going forward, and that's the real.
Benefit of all of this.
It's a global theme, and we're seeing servers and the GPUs that go inside them being put up everywhere. Now there's a story, a really deeply reported story out today from Bloomberg around Nvidia and the potential that we are seeing chips GPUs from Nvidia get into China's hands, maybe through middle parties, And there's some concerns that Megaspeed in particular, it's a single, poor based company might have been making
that able. Jason, how much your companies thinking about diversion of chips and how much are they comping down on it?
Well, I think it's important to remember that in the reporting that you're talking about, that in Vidia didn't do anything wrong, that there was no actual evidence that any chips were diverted. But it's an investigation of one of Nvidia's customers, which I think will play out by government. But the broader question that you asked is an important one. This is the question of national security and economics security
and where they overlap. The Biden administration took a very clear approach to this, which I think was the wrong approach, quite frankly, and that was to cut off access to the world to US technology. What Trump administration has done has recognized that there are enforcement matters that will occasionally arise that they need to look into, and they will do that. But as a general matter, the US economy benefits in the US consumers benefit if the world can
buy American technology. This is a race against China, and cutting off China and denying China access to technology really just provides an incentive for China to bypass the US market and build its own technology for the world. Denying US companies the access to the global market is the wrong approach. There are certainly national security questions that need to be answered. They are enforcement matters that need to
be addressed on occasion. But as a broader matter, the idea as the Biden administration did, and I think did wrong, of cutting off the world's access to American technology, not just China, but the rest of the world. That was what the Biden administration did. That's the wrong approach. We need to make sure that we recognize that the success of American economic activity, the success of American technology, is dependent on America having access to the rest.
Of the world.
Very briefly, what about the approach being taken from federal versus state regulation of AI. The actual large language models new Act here in New York and in California.
But are we ever going to getting clarity from a federal level.
Yeah, there were more than one hundred AI laws adopted at the state level this year, and there are more than one thousand bills pending heading into twenty twenty six. Look, technology is best deployed not with fifty different regulatory regimes applicable, but one common regime. And this is another thing that's
on our twenty twenty six roadmap. President Trump just signed an executive order tasking the administration with proposing legislation to Congress that will replace those fifty potential separate regimes with one federal regime. We think that's the right way to go because technology doesn't necessarily need to stop at state borders.
We want to have one uniform.
National regime rather than a patchwork of fifty regimes. That'll be better for the technology, it'll be better for consumers and businesses that want to make use of that technology.
That something we're really helping happens in twenty twenty six.
Jason Nxman, come join us again in twenty twenty six.
Until then, have a very happy holiday.
CEO of Information Technology Industry Council, we thank you. One of the biggest questions facing investors in twenty twenty six and beyond is whether the billions being spent on AI.
Infrastructure will pay off.
Bank of America CEO Brian Monorhans But yesterday with my colleague David.
Weston said it was starting to see the impacts kickin.
The A investment has been building during the year. It is probably a bigger contributor next year in the years beyond, and so if you look at the data center build out, which is one of the ways that evidence itself, that's a big deal. If you look at customer client spending, like US spending on AI, that's higher it was last year. But frankly, overall spending levels are shifting towards that not necessarily growing at a mid single digit rate type of numbers.
So I think that's part why the reason we feel constructive for next year. We think AI spending continues. We think there's benefits the American taxpayer from tax rebates, lower taxes due to the tax built going through and being effective for next year. And we think the expense expensing and other bonuses for businesses are good. So all that leads to our confidence that we go from basically at two percent type of growth letter level this year plus or minus up to two point four percent, which is
all due to that. And AI is kicking and more and more, and so it's not only tributable to AI, but that's having a marginal impact. That's pretty strong.
So much of the American economy is supported by the consumer, and you at Back of America have a really powerful viewpoint into the American consumer. How's the American consumer doing? Because it has been very strong. There have been some people saying it's starting to slow down.
You have to step back.
We look at American consumers, seventy million consumers putting four and a half trillion dollars plus into the American economy every year, and we've tracked the way that goes in the American county for many years. And so in the third quarter it was up about five percent of last year. As we look at the fourth quarter here so far in October November, i'd say it in a four to four and a half percent, which is very consistent with
a very solid growing economy. You know, at the end of the day, it's going to work against wage growth and we see in the underlying consumers we have wage growth. I either paychecks are going up, and so the labor markets flattened out a little bit in terms of job growth and things like that. It's normalizing in terms of unemployment, but you still see underlying wage growth. So the American consumer spending a fours percent more November this year versus
November last year is a very solid backdrop. The credit quality American consumer is strong. And then you hear a lot about this discussion about different rates of growth among different income tursiles or third.
So we look at the.
Bottom third, middle third, and top third American income people in the Bank of American customer base, we do see differences either higher income and middle income or growing faster. But even the lower income third is still growing. And that's all good. And that means why is that true? Companies are employing people, they're paying people. Now, the labor market's got a little soft and as we look forward to four point five four point six unemployment that is
gotten worse so to speak. You know, it was the beginning year. But frankly, this.
Goes back to the normalization question.
If you look at the tenure average unemployment a twenty year to thirty year or forty year it's five and six percent, you know, as you go back through time, and so a four and a half to four point six unemployment rate is a very strong relative unemployment rate. It's just a lot of years it's been below four and a half percent, has actually been in the last
ten years. So people are very used to numbers now which were part of the tightness and labored in the twenty seventeen eighteen nineteen era, and you had the pandemic and it retightened, and so it's normalizing. But we feel good about all that in the consumers in pretty good shape.
Thankry Macaci.
Obrian Weynhan speaking to bluemeg's David Weston and coming up new details and the decisions behind Tesla's door design. Those electric doors are now in a spotlight following at least fifteen fatalities or.
On that next a blue meg Tech, a decision made by.
Tesla executives a decade ago. It's being linked to fatalities in car crashes now. The incidents have prompted increased scrutiny of Tesla's electric doors, triggering lawsuits over whether.
The design can leave passengers trapped. Take a look.
Tesla for years has built its reputation on being a cool, safe, good looking car maker.
Tesla's engineered to be the safest card in the world, and to be fair to them, they have done very well on US crash tests. They often get five star ratings. Flush door handles were very much part of the aesthetic and the engineering. You know, it looks very cool.
For so many years.
People who drive Tesla's love their Tesla's. They think their cars are safe, but these accidents reveal that there's actually something bigger going on.
When you push this button, says it sagal to the twelvel barriers say okay, pop the door opened. Now, if you have no TWELEVEO power, the first thing you're going to do is push this button over and over again. You're going to stop freaking out and realize this thing isn't working. In my opinion, this isn't terribly obvious that this opens the door. This is not a physical lever. This does not pull a cable. The actual way that you open a Tesla is you use this unmarked square
right here. That's how you open it.
Is that the same on every model of Deeslo.
It is not the same.
What if you're in the backseat.
Now, the backseat is a scary part.
So in the front seat there by the handle. In the back seats, they might be under the rug, or behind a speaker grill, or behind the trim on the door or I actually found one in a model. Why it was in the door pocket under a plastic flap.
A lot of Tesla owners themselves.
Don't know that these manual releases exist.
You can design the best vehicle in the world, but you have to also think about what happens to a human being after a crash. You are panicking and you're going to go to that muscle memory. And for most of us, muscle memory is like an old car where you just open the door.
And we now have more reporting on that decision making process behind the dual design. According to multiple accounts from sources, the electric door handle was demanded by Tesla CEO in a musk despite safety warnings.
Let's get more on this. We've been about.
BusinessWeek columnist Max Chafkin goes back a decade and it really goes back to almost this era of very sleep design where less is more.
Yeah, and this is a design aesthetic that comes from Elon Musk. So in certain ways, it's very interesting that he was involved in these conversations because this looks like a mistake in retrospect, we're.
Seeing these deaths.
You know, Tesla's has said it's working on redesigns, there are inquiries and so on. It's not surprising that Musk was involved in this, because he's involved in sort of all aspects of the cars design. On the other hand, it's interesting because you do because again this is this kind of undercuts some of the claims that the company has made about the safety of its vehicles.
There's this line in the story that basically is what Mars said is the best part is no part, right, And so this desire for something that was good looking and sophisticated and sci fi.
But it's not just test as I have them.
Everyone else talked to this designs ecesthetic as well.
Yeah, this has spread to the entire auto industry. You've seen in a lot of higher end cars, many evs, as well as some gas cars. It's not only you know, sort of attractive from a design point of view, although I think people have.
Different points of view.
It's also less expensive because fewer parts you know, means you know, less cost and that's one of the things that Tesla has been very successful at making cars with much fewer parts. They have this famously vertically integrated you know, manufacturing system. It's help, it's allowed them to cut costs. Obviously, you see their their their potential problems when you diverge from the way the auto industry has done things for a really long time.
Now.
Chief designer has been on Bloomberg and said that they're looking to change things up.
How quickly will that get into new models? And what about the old models.
That usually we see an update through software upgrade?
Right, Well, so Tesla has said, you know, unlike other men, unlike other automakers, they're continuously updating their cars. So in theory, I suppose they could get this done pretty quickly. Though again, this is not as simple as a software update. This is going to require tooling, It's going to require factories,
retrofits potentially in cars. The Stumber story Bloomberg Bran earlier today, you know, mentions a similar example around the shifter in I believe it was the Model X or the Model Y, where they took away the column that you used and replaced it with a button that didn't work out. They had to retrofit that so you could see something similar here. Although this is not something that's going to be taken care of overnight.
Mean Well shares no record highs as it seemed more of a robotaxi humanoid robot kind of a company right now. Max, great to get your take on what has been a theme throughout twenty twenty five. This deep investigation into teslatle handles by Bloomberg. Now, that does it for this edition a Bloomberg Tech. Don't forget to check out our podcast hand on the terminal, as well as online on Apples, Spotify, and iHeart from New York, This is Bloomberg