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Love live from New York. This is Bloomberg Technology.
Let's get to it with n Video back beating Microsoft in market capitalization.
We talk with a top shareholder in the chip.
Giant mean while Palatin jumps one better than expected earnings.
We talk turnaround efforts.
As it pushes for profitability, and Apple's app store reorg. We discussed the executive shake up as made a regulator scrutiny. That is so much more coming up. Let's get to what has been the market capitalizing story that we reference.
Nvidia clipsing Microsoft again to tech chalants, when you have been justing over the world's second most valuable company title a few time said for the past week, pace to say Emoni Graffeo joins us to talk it all through, and in Vidia, just as we look towards earnings August the twenty eighth, still seems to be getting momentum from who's purchasing what from them?
Yeah, I mean that's exactly right. We haven't had in Video's earnings yet. But from the earnings that we've seen so far, we're noticing and investors are noticing, that these big tech companies are still willing to spend a lot on AI, and in Vidia is the biggest beneficiary of that. If you look at just Microsoft, Amazon, Alphabet, and Meta all in their earnings reports, they kind of underscored this idea that we want to continue to spend on AI.
And I was looking at a note this morning from Nick Colos of Data Trek, and he pointed out that for Amazon, Microsoft, and Meta, the operating cash flow growth exceeds capex, so that means that these companies still have a lot more cash toy on the capex. So he takes that as a sign that the companies will continue to spend even more on AI and that's going to benefit in Video. Whether or not we'll see that in
the results next week, that's really the big question. But like you said, the stakes are very high right now, especially after TSNC earnings were good. Everyone's just watching for Nvidia to see if they can keep up with that, and.
There's a load of anxiety.
We have seen how basically bullish the market was and a few concerns and then the market the beginning of August and we saw a significant sell off, and we've actually been seeing the sell off since July. What do flows telling in terms of people's appetite to get into a company that has got such a high market cap?
People are buying the dip.
It's surprising because all year I keep asking sources, okay, well is it time to finally pivot out of big tech? But we're actually seeing people the rotation into small caps that's really not a theme anymore. Investors still have this appetite to hide out in big tech, even in mid concerns that the economy is slowing.
If you look at the.
Flows QLD, this is an ETF that goes two x QQQ, so big tech but going ultra bullish QQQ. It's taken in flows nearly every day for the last two weeks, and just in the last session it took about two hundred and fifty million dollars in, which is the biggest flow since April. So even after the sell off that we saw to start August, we're still seeing that appetite to buy.
Okay, we're seeing some long positions in this market. Emini Graffe talks us through it when it comes from video. Look, let's talk about one.
Of those lungs. Tony Wong is one of them, one of the key holders of.
In Vidia, portfolio manager at tro Price Trow. In fact, Tony holds what about two percent of video shares outstanding, that.
Fifty six billion dollars worth.
That makes you the seventh largest individual shareholder as an overall company. But at your fund, the Science and Technology Fund, why remain vullish on Nvidia?
Yeah, Well, I think there's a lot of reasons to still like the company. I mean, they've driven a salary compute about one thousand x for the last ten years, and they continue your leaders in the space, and AI is right now just too important of an area to let up the gas. And so I think that the large companies will still spend. I think there's a tension of like, just you know, what does spending more mean
and does that need expectations? And that's what the market's really going to be focused on going forward, And so I think like there's a lot of great reasons to like the stock long term. I think that at the same time, you have to remember that semi conductors are very cyclical and they're also secular. So I think that's part of our job to navigate navigate the environment.
So basically, brace yourself with potential short term volatility, but longer term you're still bullish on money coming into the likes of video. But does it broaden out. At the moment, it's felt like in video is the only picks and shovels game in town. You're started seeing Rawcom doing relatively well on some AI wins. What do you make of in video really raining the main place to win on AI?
Yeah, well, I think that the reason why in video has been so good in terms of it's because it's a platform, right, It's not just a chip, and so they have a big ecosystem with a loss of developers writing on their code and Kuda and so it's all built like an ecosystem and platform, and so I think
that's why it's such a defensible business. And you know there it's available everywhere, is ubiquitous on the cloud, you can have it on prem and they've got great support for their for their chips, and so I think that's largely the reason. I know, I think it is it could be changing in terms of the complexion going forward is more concentrated the hyperscale players, and they're very sophisticated
buyers of chips. They can do a lot of their own software, and so I think there will always be a balance between the hyperscale making their own chips with like significant volumes like you see in Google with their TPU that's very aimed at search, and so I think that will continue, you know, in other ways, and so I think they can coexist essentially.
I like that point that you've been making, and we were just hearing how data track is seeing the same thing that there is a willingness on a capital expenditive perspective coming from hyperscalers. You are in a number of those hyperscalers Microsoft Meta, for example, Alphabet and metas seem to manage to nuance the argument of why they put money in there, whereas Alphabet people were worried about just
spending capex at all costs. What do you make of the hyperscale is decision to keep on putting money in.
Yeah, I think that that Marke did a nice job of kind of illuminating why he's spending so much in AI, like with personalized chatbots, and like how that can go through the platform. You know, I think that you should Google out at the same time, and they have a lot of AI expertise, they've been leaders in the field, that they have great chips as well, and so, you know, I think that it's too early to call who's going
to be the winner or loser. They all have big platforms and user bases where they can scale their AI investments, and so you know, it's it's I think it's too early call like who's going to win or lose. But at the same and at the same time, they all have really great businesses.
Return on AI ro o AI is this horrible acronym that's suddenly coming into the marketplace.
What do you make of though, the that we need to start seeing?
You're a keyholder in Apple, I think again tro Price of Rule is about the seventh biggest holder of Apple stock out there. That company again managing to tell us why they can be an AI bet. Where does the money end up flowing in terms of return on an AI investment.
Yeah, I think that we'll be looking for return on AI investment. I think Apple specifically is in a great position because they're kind of the ecosystem owner, right so they can integrate great technologies into their phones, into their hardware, you know, just like they did with Google Search, and so they didn't have to develop Google Search, but they definitely benefit from users using Google Search, and so CHATCHBT is the same thing going forward. They don't have to
develop a frontier model, they can integrate it with their phones. Now. I think you can argue whether long term a company should own the frontchier model here, but right now, Apple strategies really focus on what they're really good at, which I think is design and integration with your life of their products and services. So it's an interesting way to like be a capital like player and this kind of AI proliferation here.
It's interesting that you're in Salesforce and that's been a company that's trying to show off it's AI prowess, but make clear that they are going to be able to reap rewards from their investment.
Do you think it can?
You know, I think that Salesforce is a really sticky software company. I don't think it's going anywhere. It's kind of like they're kind of game to lose I think at this point. And so I think they have a good mode. They have AI products that are coming out. I think the question is like, how do they price them,
how do they drive ROI for their customers. And I think the whole space is kind of going through this seat versus consumption of AI, and so like if AI works you, well, you might not have many seats that you need. So I think there's that business model that's
being figured out. But I do think that if you look at startups that are in the space, it can be hard for them to get into large enterprises where salesforce sits just because you need to let them into your your whole system, and that can be actually a pretty big mode.
Well said, there has been other companies that we've been questioning how much they can align themselves with the AI tailwinds.
One of them Cisco, for example. Dell.
Initially we thought, yes, really, within this ecosystem, they're going to be there for the service, for the networking, and then every now and then we get caught off guard and feel that perhaps they're not so well placed. What do you make of like the bottoming out story of a Cisco for example, Yeah.
Well, you know, I think that what we've seen is that kind of legacy tech has in some ways reinvented itself like Dell and become an AI beneficiary. And I think here Cisco has been largely kind of not on the AI beneficiary list, and I think in the recent quarter they have some of AI revenue coming through. The
business is bottoming. It's a value idea. It's you know, it's got a lot of a good amount of cashflow and dividend yield, and so from that aspect, it adds a little bit to the portfolio that you know the rest of the tech stocks might now not offered. So you know, I think that there's a place for you know, various stocks in portfolio construction and with bonding fundamentals and potentially like an attractive valuation. You know, it could be good.
You've been great at articulating why you believe AI is such a winning story. But JUX suppose that with the overall macro picture here we see the market get hit on the fact.
The whether or not we will have interest rate cuts.
How much do you factor that in in the here and now when you're looking at a portfolio allocation.
Yeah, I mean it's definitely an area that you can't ignore. The macro is super important. You have to be aware of like what's going on top down. At the same time, I think that we kind of take a stock by stock and look at where expectations are, like the likelihood that they beat expectations, how well the company is positioned. So no matter you're like what direction the macro is going, like, you should be able to like create alpha either way
just by relative selection of stocks. And so you know why I think about kind of in Nvidia, like a lot of it, you know, is it's going to be a really big point here, Like we never had this amount of debate I think in terms of, you know, are we kind of near the sickle peak or is it going to continue? And so you know, we do a lot of fundamental work to understand like kind of where the products are positioned and how to think about the setup of the.
Stock you're managing the Science and Technology Fund. Does it suddenly amaze you that the whole world now thinks in video is a macro moment its earnings might dictate the rest of the benchmarks.
Yeah, it's a phenomenal moment. I mean you think about it. The stock as has just been amazing, and I remember I started covering it about seven eight years ago and
you never have thought it would be three trillions. So everybody has like underestimated the company, you know, through like multiple cycles, and so it's been you know, phenomenal because you know, they offer so much value and and like we've seen this like kind of AI vision of cellar compute play out, and so I think everyone now recognizes it and so you know, it is it is pretty
fun opmble. And I think that's part of the reason why in video is so important, is because there are a lot of AI multipliers through the economy and there's a lot of market captreation because in video is doing well, and there is this like kind of idea that long term value creation productivity driving through the economy. So I think it's a big moment for the market for sure, and so we're we're excited to see what happens in the.
Next Political risk in any way affect.
That sorry, can you say again?
Political risk in any way affect that.
The macro risk?
Yeah, the politics, the element that maybe we have a change change in the White House, would that in any way change the innovation focus?
Yeah, you know, it's really hard to kind of call politics. I think, you know, I think there's a tension of like how much you regulate AI and Nvidia as such a dominant player perhaps you know, pushing computing versus like there we are in an AI space race kind of with other countries, and at the same time we're trying to kind of signy China's efforts to develop AI, like I think that we can. Also it's hard to then
also like kind of restrict our own companies. So my view is that, like the space is moving so fast, we're trying to push the envelope here. I don't think, you know, politics will really change that given how important AI is to the economy in the future.
Well said, we really appreciate your time today such an important shareholder and indeed view on AI from t row Price Science and Technology Fund portfolio manager Tony One Stay, well, look, there's an update on a story that we've been following. Italian search and rescue teams now say they have retrieved a fifth body from a sunken yacht of Sicily, but it's tech tycoon Mike Lynch and Morgan Stanley International chair
Jonathan Bloomer are among those feared to have died. The fifth body was recovered Thursday morning as search on the wreck resumed for a fourth day. According to an Italian official, No statements identifying any of the bodies have so far been issued officially. Now we move on and coming up, we're going to be assessing Platon for you shares as you'll see on the up and up, because maybe we see signs of a turnaround paying off details. Next, this
is Bloomberg cany of earnings to be digesting. Look, let's take a look at both Zoom and Snowflake Zoom as well.
See on the up more than twelve percent high. This is the biggest moves. That's November twenty twenty two.
Forecasts looking good even as the CFO is handing over the rains, Kelly Steckelberg saying she's going to be moving from the business mean while Snowflake the polar opposite perspective here forecasts not living up to expectations, worrying about AI with down more than twelve percent. Let's get to brodie forward on these because Snowflake first and foremost, what's the worry the anxiety here, Berdy.
What's interesting about these two companies is it's a similar set of concerns. Can you expand from a hit core product to Zoom with video conferencing, Snowflake with data warehousing, to a new set of products. Expand your portfolio, especially with AI as it relates to Snowflake. Yeah, it's that concern that you were a hit viral product a couple of years ago, but a lot of folks want the
AI products now. These are things that people associate more with data bricks, increasingly with Microsoft, and so Snowflake is working to expand. It has released a lot of new products this year. But what set off investors is them saying last night that maybe we're not going to see money from them until fiscal twenty twenty six, and that's further out than folks who are hoping.
Meanwhile, I just want to pivot to a story that you've been chasing throughout, which is Autodesk and the accounting risks there. Can you just get us up to speed what Starboard, the activist investor, is saying.
Yeah, Essentially, Autodesk had a issue with their accounting earlier this year, caused some disruption, and now activist investor Starboard is saying that there's got to be some accountability. This morning, they have a statement out saying that the board needs to hold management accountable and really ask themselves if the CEO, who interestingly enough, has been there since a previous activist episode, is still the right guy for the job.
We'll keep an eye and then it's one that you've been breaking a lot of news on Brady for me.
Thank you so much on all those stocks.
Meanwhile, sticking with the earning story more and Peloton beating estimates on this quarter, just announced I made a turnaround effort that does look like it is working. However, the outlook for revenue a little bit of a concern. This comes to the company is continuing to search a course.
For a new CEO.
Stretch Conjuria is with us of courst managing director at Wolf Research, and you put your notes out.
You're sort of saying that they're rolling along.
More broadly, what did you make for the fourth quarter versus though the first quarter forecasts?
Well, first of all, thanks for having me, I guess the results for the fourth quarter were pretty good, partly in our view because the guidance itself was a bit conservative, but also because they did a lot of cost cutting and so revenue EBIDA as well as connected fitness numbers came in relatively in line or better slightly soft and
connected fitness actually, but nothing to worry about. The guidance clearly was lower than expected on all fronts on the top line, but better on the IBIDAH, largely because of the restructuring. Our view is that this is going to be a very difficult transition. You can we don't think that you can make growth by cutting costs. They'll have to eventually show top line growth and that they're not tapping out of the market. With a down nine percent decline in year of a year revenue for next year,
that's not a good sign. Whether it is macro or whether it is pulling back on their marketing spend because they have to, and whether it is restrategizing as the new CEO comes in and there's this leadership change, it's just not a good sign.
Where should they be leaning into.
Is it more app users, is it more online and subscription. Should they back away from the hardware or do they need to re up some of the marketing around the hardware, which for many there have been too many recalls and worriesover.
Well, it's a very tough challenge. One is because their hardware is premium quality or premium priced, and so it's not for any average consumer, which is why they're going through with the rental as well as they're refurbished. In our view, we think that they should focus more on the app subscription piece, even if the churn is hired, just because of the margin profile.
If the app.
Product experience is very, very good and superior to everything else in the market, even if it is a crowded market, they could gain shared and show some real margin expansion while they deliver product expansion, whether it is an international
markets or in North America. The other question with hardware is is there any way they can bring their prices down for hardware, whether it is through supply chain changes or product innovation or technology innovation to drive greater adoption because an average consumer it could be prohibitive.
And never realizes.
The issue is that suddenly it was a luxury one and everyone pivoted, just very quickly shorted the CEO.
You're expecting that anytime soon.
Yes, they are expecting to make an announcement before or at least during the next earnings quarter earnings call, so it'll be another quarter. We think that they may lean towards a retail CEO. I'm not sure and I don't want to speculate, but I wouldn't be surprised if a retail CEO is broad on board.
Short extra Juria, great to have you on. We thank you. WILF search there memhile.
Talking about succession planning, Disney has a new chair in its succession plan Committee. It's former Morgan Stanley CEO James Gorman, who will be taking the lead in the search for Bob Eiger's successor now. Gorman joined the Disney board earlier this year and oversaw the recent succession process, of course at Morgan Stanley in his time. Now for Talking Tech first Up by Doo, sales stall revenue for the three months ending in June came in below estimates, dropping two
four point seven billion dollars. This is the company transitions from ADS to AI Amerjan economic downturn in China. Now by Do founder Robin Lee has hopes for creating Chinese equivalent to chatchupt plus. Shaomi may be set up for a sales boost, with potential revenue growth for twenty twenty four near the mid twenty percent level held by its premium phones and new electric vehicles now. According to Bloomberg Intelligence, China's tech giant may experience some tailwinds from its expansion
of overseers, channels, internet services, and it's EV push. Of course, here's what the Shomi CFO told Bloomberg earlier about the EV growth.
So if you look at our delivery right now, we are over ten thousand vehicles that we delivered per month in June and in July, most likely in August as well. So we've been able to scale our production facility as well as our delivery capabilities.
Alan Lamb there now coming up, we're going to be joined by Robert Lane, senior crypto analyst at Pitchbook, to walk through the company's latest insights into the world of venture capital in the crypto space.
From New York.
This is the Blue Meg Technology. Welcome back to Blue Meg Technology and Caroine Hyde. We just also wanted to keep an eye what's happening in the world of crypto because well, overall benchmarks are on the downside. Nasdaq of by five ten percent s and P five hundred had been near that all time high. We're back lower by three tens percent as we ij Powell, And of course what's happening at Jackson holl tomorrow. Within that risk of tone, bitcoin is off by one and a quarter percent, but
it's still about sixty thousand dollars level. But let's just talk about the inner workings of what's happening in the crypto space right now. Finance, we understand, is hiring one thousand people this year, with many earmarked for compliance roles. Now that the crypto exchange is annual, spending to meet regulatory requirements has been boosted, including US oversight under a Plea deal. It's now apparently going to be topping two
hundred million dollars promotional anybasi joins US for more. And really this is as we see a new leadership come and really trying to make sure that they're taken seriously by regulators and taking more boxes than they were.
Well, what's incredible here is that you've had cz step down after that Plea deal, and you're going to wake that Plea deal rather and Richard Tang take over in the United States, really because they have monitors here assigned to them from the US Department of Justice and also through the Treasury's Financial Crimes Enforcement Network. Now, what he didn't say to US is whether he met with the SEC here as well, who is suing Finance.
What's interesting is this two hundred million.
Dollar figure is an increase over the last couple of years, and he told us that he expects to increase that figure more. And of the thousand people he's hired in the past year, five hundred, more than five hundred are solely really dedicated to compliance and regulatory matters. That number will go up to about seven hundred hundreds of people really being hired for compliance. So when it comes to the goals that Finance has here, compliance is certainly chief
among them. Remember, Finance is also privately held and cz is still a major major shareholder here. So what we don't know, like you can look at Coinbasis stock and their financials every quarter and know how well they're doing in the crypto boom. How much is two hundred million compared to how well they've done this year. Certainly they want to clear up a lot of these compliance issues so they can continue to grow around the world. They
are seeking to go around the world. We don't understand quite what their strategy will be in the US, but their compliance figure issues being cleared up here will set the state for further clarity and what that could look like in years ahead.
I mean, this new CEO says he's a regulator at his heart, always has been, so he's got a lot of experience there.
He does have a lot of experience. But you can't shake this idea here that you still have CZ still a major shareholder. He's not allowed to really be involved in the company and its operations, but still is able to have this financial claim over Binance. Ultimately, in the past, CZ has received dividends through that stake. I don't believe he has had any this year, but it is unclear on what that would look like for the future, what
the parameters would be around it. So certainly a fascinating thing, Caroline. I know you guys are also watching something else here when I am to Finance exactly. I think this is a fascinating one too, because claims being resolved all over
the place, including with Finance's promoters. Let's say, Jimmy Butler, the Miami Heat basketball star, and also Ben Armstrong, a YouTube influencer, agreeing to resolve claims to the tune of three hundred and forty thousand, three hundred and forty thousand dollars here from a class action and lawsuit that also cites that Department of Justice issue and the sec issues
that finance has been facing. And this idea here that clients have been privy to buying unregistered securities by the quest here of these promoters, that really helped push more people into these tokens.
Certainly was a hit for a few influences over the years. We thank you so much, nanibassec on all things crypto. And look, we actually want to stick with crypto in the fundraising environment, actually because it's increased slightly.
In the second quarter of this year.
According to the latest Pitchbook data, startups secured two point seven billion dollars across five hundred and three deals, but there was a twelve and a half percent decline in deal volume compared with the previous quarter. It's been in Robert Lay, senior crypto analysts at Pitchbooks, So what's happening here? A few amount of businesses isn't getting bigger checks?
Thy care larn here, thanks for having me again.
Yeah though, so like you said, although deal value is upder deil kalns down. So what this means is that investors are writing larger checks into a smaller number of projects, and so what you're seeing is really a concentration of capital into you know, the fact the teams that investors think are the shamas and the ones that are building, you know, projects that have real value. And you know, I think also when you look like just a total
deal value that's being invested. You know, part of what's driving this is also a lot of the crypto funds that were raised in twenty twenty one and twenty twenty two, they're nearing the end of their deployment periods. And then there's also new capital, new funds that are coming to market as well. So we do expect a lot more capital to be invested and these checks sizes to over time over the next year to become larger and larger.
Also kind of sawt in the last cycle.
So you just see at that, Okay, I mean that's not going to be music to many people's is that basically they're fighting a timeline issue here and going to have to start allocating as quickly as possible or hand it back. Where are they allocating, Where are vcs seeing value being created?
What problems are being solved.
Right now?
We've been seeing a lot of capital go into infrastructure, even like last quarter we saw two hundred million dollars plus rounds going into mo net and bear Chain, which are later one blockchains. I think the challenge is that they're from our views, there's way too much capital going into infrastructure and not enough going into applications. You know, you know, you go back to cycles ago, most of
the capital went into applications, coin basis and circles. Right the last cycle was you know, FTX and block five and Celsius, and that relapsed. I think at the end of the day, you still have to go to where your end users are. And right now investors are not funding projects and applications and services that are serving those end users, whether they're retail end users or whether they're
they're business end users. Right now, most of it is going into infrastructure, and you know, we just see way too much capital going into that area. But I think that's going to change over the next year of two years, where you're going to see more investment dollars go into the application later.
Why is there a reticence to get into the application layer.
Again with the last cycle we saw what happened. I just mentioned those names right, FTX block by Celsius, So there's a huge residence to get into that because of what happened.
You know, there's also a regulatory overhang.
You know, investors think a lot about that because these a lot of these projects have tokens associated with it, but it doesn't necessarily have to be. You know, we saw Parcasters they raise one hundred and fifty million dollars round in May, and they're building a decentralized version of Twitter. So I think that is kind of the bell weather where we're going to see investment go like Farcaster doesn't have a token and they're serving end users who are using social media for instance.
It's interesting that you mentioned tokens and also still nervousness. I mean, it was all in the press yesterday the day before the McDonald's instagram seemed to get hack and it was all regarding a scam of a cryptocurrency named Grimace that was involved. But how much when we're seeing these vcs putting money to work, are they generally just wanting equity at this moment? Are any of them deploying capital into tokens rather part of the layer of capital structure.
I think there has been a shift over the last year to invest in more equity deals versus you know, only token deals that we saw on the last cycle. But honestly, I think even from our view point, a lot of investments are still going to tokens. We're looking about seventy percent plus of the projects have some kind of token, whether it's an equity deal with a token warner, or is a staff which is you know, a promise.
For future tokens. So there's still a lot of it out there.
I think, you know, what investors are betting on is that these segans will have utility, and if they have utility, then they're little out of the purview of you know, being in security.
We just don't We just don't know yet.
It's still really early, but there are still a lot of investments for tokens in this cycle.
Well, I know you've been doing a deep dive on how the AI and cryptospheres intersect. Would love to have you back on when you've finished up some of those reports. Robert Lee, senior crypto analyst at Pitchburg. Now, after a litany of battles with regulators over the app store, Matt Fisher, who has run Apple's app Store Businesses twenty ten.
Is leaving the company.
According to people familiar the matter the most, Mark German joins us for more and actually he's been a veteran of the business for more than two decades.
Why move on, Mark, Yeah, that's right.
Matt Fisher, the vice president of the app store business across Apple's product lineup, including Apple Arcade. He's leaving the company in October. This is coming as part of a reorganization of the app store business.
Now.
The app store launched in two thousand and eight, and for the better part of a decade and a half, the app store was the only game in town. If you wanted applications on Apple devices, right, you were in Apples walled garden. You had to work within the parameters of the app store rules and the commission and Apples payment platforms. But the European Union, other regulated and developers
have all pushed for Apple to open up. So Apple really needs to change with the times, especially if it wants this business to continue to grow.
So they've essentially split the app.
Store organization within the company in two there's now a team related to the in house app store run right, the one that ninety nine percent of people are probably going to use.
And there's another team.
Now dedicated to third party app distribution, so that's alternative app stores, alternative payment methods and technologies. And those groups were being run by two sort of younger Apple executives. One is Carson Oliver, the others and Tie. They've been a big part of the app Store for the last several years. And as part of that, Matt Fisher, who has been their boss, reporting to Phil Schiller, an Apple fellow who's ultimately responsible to Tim Cook for the app store.
Fisher is leaving and the other two executives will now report.
To Shiller, so Phil Schiller stays and ultimately a lot of this is trying to crossthts dot theis when it comes to regulators, will it Ultimately, with this reorganization, shouldn't be able to make a more streamlined area of communication.
At least, what I think this reorganization is going to do is internally put more emphasis on working with regulators and acknowledging that the app paradigm is quickly shifting right.
App distribution on Apple's platforms is no longer going to be only about the app store, and Apple can no longer be stubborn about that, right, and so it has realized that there's no going back and things are only going to change, not only in the European Union potentially in other places, but probably globally over the next five years or so. So all of that needs to be re architected, right or Developers are going to continue to push back against Apple. Regulators are going to continue to
push back against Apple. So they sort of are coming from approaching this from a position of strength where they're going to enact new changes. Now they're going to put a bigger focus on app distribution from third party methods onto the iPhone. They can't afford to be stubborn about this because ultimately they're going to lose revenue over time and create more issues with developers and regulators. So I think this is a positive move for the company in
terms of that reorganization. And you know, Matt Fisher obviously had been dealing with a lot. He'd had been in a lot of meetings with lawyers, he had been in front of judges, lots of talks going on there with the regulators globally, So that's been a hard job.
For the last few years.
Well undressed, maybe pumpexs Mart Gvin. Great analysis, Thank you so much as always. Meanwhile, let's just talk about open AI, because it is opposing a bill in California that would place new safety requirements on official intelligence companies.
Now, the Sam Altman led company joins a.
Chorus of techniquas and politicians who have actually recently come out against the state level legislation, knowwhere as Sharene Gafari joins us some more so what they don't like being regulated by California, but they still do say they want regulation.
That's right.
The company is saying that they believe that AI should be regulated at a federal and not a state level, particularly because this bill deals with certain catastrophic risks such as, you know, the use of AI to create bioweapons or cause mass property damage, and they think those kinds of threats should not be ultimately left to a patchwork of state legislation.
It feels as though Scott Weena has made some adjustments, right because before developers could incur criminal penalties for potentially submitting false information about their safety plans, and now that sort of been changed up. He's been listening to some of the concerns, right, But it feels as the whole wall of voices, whether they be private companies or indeed Nazi Pelosi itself think that this is a misguided set of regulations.
Right, So, this bill has received a lot of criticism both among Silicon Valley investors as well as some other politicians at the federal and state level. However, you know, it still did pass the California Senate by a wide majority, and you know it's going to be voted on in the House pretty soon, so we'll see how it does in the California's House. But ultimately Senator Wiener's office has been trying to work with a tech community to you know,
mitigate their concerns. And as you say, he's taken out any before in a very limited capacity. If someone lied under you know, under oath to about their AI models safety testing, they could be accused of perjury and could have some criminal penalties there. Now that's totally removed from the bill. It's only civil penalties. So you know, we'll
see if that's enough to appease his critics. But we're still seeing a lot of controversy and debate about this bill, and with open AI a formidable you know, opponent and company going.
Up against it.
I mean, ultimately, if it did get past, Kevin Newsom would then be analyzing it. But very briefly, show mean, does this help will hinder from real perspective smaller developers, smallest.
Thought ups, not just the massive open eyes. You know, I think a bill like this, it's really up for debate. I hear some smaller developers.
Saying they worry that if a company like let's say Meta, which provides major open source models, starts to limit offering those open source models because it's worried about liability through this bill, that that could hurt them. But I also hear arguments that, you know, this would kind of level the playing field and make sure that everyone's on the same page and around safety and that no one can kind of skate by with doing less than what's responsible.
So you know, it's really out to the jury and ultimately, as you say, up to Governor Newsom. Ultimately, if this bill does pass, to either sign it or vtail.
Cherin Gafari and the latest on legislation coming from California or not, just in case, maybe we really appreciate it. It is day four of the Democratic National Convention, where presidential nominee Kamala Harris is set to speak tonight.
Among those attending include.
A sm of social media influencers getting the VIP treatment at the event. Our own VIP is there, Ploomberg's Brad at Stone live in Chicago and give us the feel of what last night was like.
There's a lot of heavy hitters, a lot of Internet reaction to it all.
Hi Caroline, Yeah, no, I mean it was an amazing evening. Lots of memorable speeches. Oprah calling for common sense over nonsense, Tim Walls the appeal to patriotism. Haakim Jeffreys I thought was very memorable saying we broke up with you for a reason, talking of course about Donald Trump. But look, I mean this is sort of the triumph of a vibe based convention. Not a lot of policy details, you know, general kind of nods to affordability and lowering inflation. But look,
this is a different kind of convention. The Democrats clearly believe they can win by making one point, and that is we are the good guys.
One point, whether it be through speeches, through rap, however you want to be consuming it. It's going to be a massive night now for Kamala Harris as well, and what are.
We expecting any will surprise us as well?
I think there probably will be. You know, people are rumoring Beyonce tonight to introduce her pink is performing, But look, I mean, I do think she has to get serious and tell the American people, tell the voters what she wants to do in office. You know, I interviewed here Deval Patrick, the former governor of Massachusetts, and I asked him whether you know he believed Donald Trump's insinuation that black voters are moving away from the Democrats, and he
actually said, you know, that might be true. Democrats have to do something to make their appeal directly to those voters. And I do think that that is kind of the challenge for Democrats tonight. Tell voters what you want to do, how you're going to lower prices, what the concrete proposals are. So I think we're going to get you know, more of the broad appeal, more of the wor the good guys, but also perhaps from Vice President Harris a little bit more of a vision about what her priorities are.
I mean, I hate to bring it back to tech, but I will, Well, will you see any sort of nuance, any poss that affect the tech community. There's a lot being talked about in terms of taxes, for.
Example, right, I mean, I don't think so.
We saw a couple of weeks ago, Caroline, when Reid Hoffman, of course, the Venture Capital has talked about replacing Lena Khan at the head of the FTC, and the progressive wing of the Democratic Party really rebelled against that that a donor would be calling for that. I mean, these are issues that were Democrats themselves just don't agree. And I think you know, this party, this convention has focused
on unity and defeating Donald Trump. So I think tech brings forward some of those hot button issues that they would rather leave to another time.
Rad Stone, we so appreciate it.
Enjoypink made a little Beyonce as well later today, and of course listening in and Kamala Harris meanwhile, now does it from this edition of Bloomberg Technology, We do not want to forget to check out our podcast of course, confine it on the terminal as well as online on Apple, on Spotify, and on iHeart from New York, wishing Ed Ludlow getting well in San Francisco. This is a BlueBag technology,