One Year Since the War in Ukraine and Nasdaq 100 Takes a Hit

is more important now than ever. All that and so much more coming up broadly invested today. We were shunning risk and mid fears of that impact of higher rates. However, Kate More of black Rock, speaking earlier today to our John Ferries, see some silver lining scarrow for the tech sector. There was a decent amount of over hiring across tech and in software in parts of Sammy's and we've seen those companies get out ahead of the market in terms

of announcing layoffs. So that's been really productive, and so I expect these companies are going to weather this economic and policy storm pretty well. What I've been really encouraged with is how honest the guidance was during reporting fourth quarter. Okay, encouragement with certain moves coming from the tech sector. Let's dig in with Nancy Tangla. You know her, of course, Lafa Tangla Investments. She would cause heading over there, the CEO role, the CIO role, Nancy and as great as

always to have some time with you. So do you agree there with the black Rock view that actually companies in technology space are taking the action necessary? I did, Thanks for having me, Caroline and Ed loved the new show. Thanks. Yeah, I do. I think we felt that way for a while. We were arguing in the fourth quarter that it was time to start adding risk back into your portfolio, the

attack and consumer discretionary. And the reason for that is that these companies, the ones that we own and like, are the ones they're delivering strong beats every quarter of last year, raising guidance, and they're still not feeling the love from Wall Street. So we like the names that

are reliable, earning sprowers with strong management teams. And yeah, I mean technology and energy are the two most productive sectors on a revenue per employee basis, And if you just look at it, just use Apple as an example there, per employee's five hundred and fifty thousand dollars in revenue versus the rest in the market one hundred and forty thousand.

So they're already very productive companies. And yeah, some of them got very fat and they've they've had to shed employees, and I think that's a good thing for the bottom line. But the two companies that we like the most haven't had to do that because they managed through the pandemic pretty well. Yeah, Nancy, I want to get some of those specific names that I do feel like there's energy in this idea around a more hawkish FED, and it's

really relevant to the technology set. You know. PC Friday was the latest of a series of data points and FED speak that kind of change the mindset, it seems like, at least in the short term. Do you agree with that. Well, I've been pretty critical of the FED, and I think I understand why the market hasn't believed what they've said. These are you know, we've said we thought that inflation peaked in June, that it rises mostly symmetrically, and I'm the same on the way down, but it's never linear.

So you know, the market's paying such close attention to numbers that ultimately get revised, and they're not looking so much at the trends. So I see this as an opportunity to step in and continue to buy these names, because as soon as the market stops trading on interest rate fears and starts trading on the fundamentals, these names are going to be You're going to be well positioned for the next three to five years, which is our investing time. Horizon Nancy, you teased us with two specific

names that you're excited about. Would you care to share a little bit more about what they are? Yeah, so I'm I'm actually hiding out it in client village, trying to finish my book. But so's a book as well, The End of Senses. But yeah, So the two names that we liked the most, one just reported and of course it has had a nice run from the report.

But that's Palo Alto Network. So what we have said in our portfolios is we want to own old economy companies that are embracing the digital and AI revolution and then the suppliers of those tools. And so Paaloatto is a cloud cybersecurity company. They beat on revs, they beat on Bill billings. They their next gen security software is at sixty three percent gross margins beat. I mean, there's there's nothing not to like about this company and the report.

So that's one and then the other is a neighbor of yours service now Bill McDermott is by far the best CEO in corporate America in my view. They turned in an excellent quarter. They beat and they raised and their margins holding up very nicely. So solution on the cloud, paddle out to a cybersecurity solution, and I think both those names are members of our twelve Best Ideas portfolio. Shout out for a Bill, who's joined this show many

a time. Talk to us a little bit about the AI hype nancy and whether or not you really feel it will ultimately change in every industry. I do think so, Caroline. However, you know it's we're early innings. One of my colleagues chat GPT me and I learned a lot of things about myself that I didn't know. So there are problems, right,

and then there's the creepy factor. But if you look at a company like Deer, they are using AI to target fertilizing a single seed, and this becomes very important as young people don't want to become farmers as we're hitting up against a structural labor shortage in this country. I really do believe I'm the last baby bone were

still working. The people that retired are not coming back, and so I think we have to solve our problems with technology, and many companies are doing it simplistically, like a public storage that allows clients to sign up and access their storage locker without any human contact, all the way to Asylum, which is correcting water infrastructure problems digitally from a central area, and that's one and a half

times more profitable. So I do think it's real. I think AI, as I said early in the innings, and that's also why we like you know name like Microsoft that's also in our twelve Best Ideas portfolio. They sort of span the gamut of cloud and AI, and I think you have to be exposed. So we're looking for opportunities all the time. Now, see always owning your experience, not what generation you're born in. Just tell us a little bit lastly about where you look now we've all

been sort of perhaps trading off earnings. We're now looking towards you know, Morgins a focus on efficiency. What are the next key words, fores or data points you're going to be trading off. So I do think inflation is still the overriding concern that the market has, that the FED let it go for too long. And you know, you know this ed being in a Californian you know, you get a controlled burn and it can easily turn

into a wildfire. And that's really what we saw. And so now the question is can they can they rain it back in? I think the leading indicators that we look at indicate they can. I also think the leading indicators indicate we're going to go into a mild recession. And so those are the key words that the algas and the hedge funds are going to be trading off. And we're going to use that volatility as an opportunity

to add to holdings in our portfolio. So smart always using tech, whether it's for investment or investing in tech. That's a tanglaan leaf. Tangler investments take us some time out of writing a bookhead there, Yeah, up in Incline Village, of all places, that's one place I'd love to be

this weekend. But she makes the same point that guests a week have made that you want to be positioned with those names who are best place to take advantage not necessarily around hype with AI, but around the investment that succumb when companies need to have access to those tools. And it's interesting as to whether we continue to see themes. You know, there's been these themes borne out whether you're like in Palo Alto, whether you're liking it in video.

There's also been the themes on the downside having it, and I feel each earning season brings us whether we can just broad brush retail as one sector where we can dig into the likes of e commerce players all having this sort of sticking point that we've seen this week. I mean, let's just reflect for a moment some of the earnings coming from the likes eBay, the sell off

that we saw so painful in wayfare. Etsie actually outperformed on the day of its numbers and actually it showed some sort of growth, but again there was some concerns about its forward looking guidance. And I wonder what we'll see from like more the bricks and mortar stores next week and where they're managing to lean into digital, whether

e commerce is just a concern there. Two. Yeah, and our colleagues of Bloomberg News have kind of crunched the numbers at the index of online retailers about how far off we are from the pandemic highs. What those names all having common is a drop off in activity. That's the concern that actually their end users, consumers have stopped spending and the outlooks murky as well. There's really very few glimmers of hope. But we all bought too much online.

We did our spending on weight there. We're still deciding that it's about experiences, is about getting on flights as going out to moost places in California and visiting you ed. Is the pendulum just swinging somewhat? And are we over reacting to it? Not so fast? Adobe. The Justice Department is preparing a suit to try and block Adobe's twenty billion dollar purchase of Figma. According to sources, it could come as soon as next month. This is a big deal. Literally.

You likely know Adobe tools like Photoshop or Premium for video editing. Figma is known as software for designing app or website interfaces. It's trouts Todobe's competing XD products In recent years now, buying Figma is a big bet. Buy Adobe. The creative work is going to be important for small businesses and everyday users on the web, and that's a

market Figma's rapidly controlling. Adobe made multiple attempts to buy Figma in twenty twenty and twenty twenty one, and ultimately they sealed the deal with a price tag that was double Figma's then valuation, a pretty premium. Now an antitrust suit makes the deal a little more shaky, and it's Adobe's most serious spat with antitrust regulators since the nineties.

One to watch story of the Day, one of the stories of the week, Caroline looking at the shares of Adobe this Friday as well, down almost eight percent, but

it was the biggest drop since September. You know, you and I've been talking for twenty four hours, right about the idea that sort of some regulator somewhere looking at this deal wasn't surprising, but how quickly the DOJ moved was And certainly when I was reading the cell side notes earlier this morning, there's a little bit of jitters out there about the risk of Adobe not being able

to seal a deal with Figma. Yeah, and isn't it kind of ironic that the shares of Adobe fell so hard when we first learned about the deal, people felt they were over paying, and now they're worried about the time, the investment, the focus that they've given less they get into some of maybe the arbitrage that could be played

in this current environment. Bloom Bag's intelligence chen Fani is with us, So it's been on all day, relentlessly bringing your analysis to now the probabilities we have to decide whether this gets through or not. I suppose we're not surprised that the US administration once again is eyeing such a deal. You know, that's right. This is the timing

is really tough for Adobe. You know, we have a really aggressive administration right now when it comes to M and A and particularly tech companies, and particularly a deal like this where you see what looks like in incumbent buying a scrappier, newer, kind of nascent startup, really one that's really rivaling and could become a bigger competitor in the future. So it sort of looks like a defensive deal where it's just trying to take competition out of

the market. And there's particular sensitivity to that. So you know, the thing is about probability. It's really hard once the DOJ SEUs to really understand what's going to happen in that trial. These cases can be hard for the DOJ to win, and it hasn't had such a great track record. But in this case, we'll have to see how the evidence shakes out, because I think at least superficially, it looks like the DOJ may have a decent case here.

But remind us of that track record of late right. Well, the thing is, the DOJ and FTC have both decided, look, we're going to bring the tough deals. We're going to challenge the tough deals. In the past, they really would sue those deals where they were pretty sure they could win. The evidence is sort of stacked in their favor. They're going to go into court and it's going to be easy for them. But they've said, look, this hasn't worked.

We've allowed too much consolidation, particularly big tech companies buying up small, scrappy competitors. We regret some of these deals we've cleared in the past, like Facebook and Instagram or Google YouTube or double Click, and we have to we have to be more careful about this, and even we have to go take these cases to court even if they're tough, and when they do that, they're going to lose some. So the DOJ recently law to challenge in

court to stop United Healthcare from buying Change. That was one deal that where had had a tough time. The FDC recently lost its challenge to Murder trying to buy a small virtual reality company called Within. They have had successes not so much in through litigating, but through getting the companies to abandon the deal prior to getting to that final decision by a judge. I think it's important to point out as well, Jennifer Wright, that according to sources,

you know, this is what the DOJ is considering. One source said that this could happen as soon as next month. Meetings between the DOJ and Adobe have been taking place. Adobe issued US this statement, we are engaged in constructive and cooperative discussions with regulators in the US, UK and EU. I wanted to bring that up because actually not just to get Adobe side of the story across, but it raises a point that actually globally they're going to have

to pass a number of tests anyway. I wonder could you distill for our audience what that test is likely to be. It seems to center around XD, Adobe's kind of existing offering, that's right. I mean, XD looks like it's a competitor to Figma's offering, and in fact, you know, there's been a lot of news about the fact that Figma's taking customers from Adobe, and that's pure competition in

the market right now. The regulators tend to be really coordinated, so there's a lot of discussion between the Federal Trade Commission, the European Commission, the regulators in the UK, and they tend to be pretty aligned about being aggressive with big tech. So to the extent that Adobe can work out some sort of settlement or compromise that would allow this deal to clear, it's going to have to get all three of those regulators to come together to agree to that.

Maybe it would be the divestment of Adobe XD. You know, possibly that would fix the issue, but I'm not so sure that that will be enough, particularly for the US and for the UK regulators who might also be concerned about the possibility that Figma could grow into a bigger competitor to Adobe in the future. Beyond just the XD product. The other dailway tracking of course moment is Microsoft Activision. You're our senior analyst for antitrust litigation. Could you draw

in your experience for us? How is this environment compared to those you've seen in the past. It seems really tough to pull off a big piece of tech M and A right now. It is really tough. I mean, all of these tech deals are going to get a lot of scrutiny by the FTC and DJ and the Microsoft Activision deal is just a perfect example of how things have changed. I mean, five or ten years ago.

That deal, which we call a vertical deal because the companies don't really compete head on, they're just at different levels of the supply chain. For a video game making creation and for video game distribution, which would be the Microsoft piece with its consoles and its subscription service. That kind of deal years ago was pretty much a shoe in.

Sometimes the companies would have to agree to behavioral conditions to get the deal to clear, but it was pretty much a given that that's the route it was going to go. Today, we have this challenge by the FEC already and possibly by the UK and Europe as well. Bloomberg Intelligence is Genuary. Thank you so much for joining us late on a Friday top top story this week, We're grateful for your analysis and Caroline, as we always do, we went to our audience and said, what do you

make of this? What do you make of M and A right now for tech in You know, the answers are kind of consistent with what we've heard the clamp down underway, I mean front and center. We know that this isn't as we're just saying, a US theme. This is a European theme, this is a UK theme. This is across the spectrum, whether it's Microsoft, Activision, Blizzard, whether it's Adobe, and it feels as though our audience are pretty much well aware of it. It's just one step

in a multi step process and we'll continue to track it. Now. Coming up, what's new in the world of AI? A clamp down on chat GPT from China to Wall Street. That's all in our Talking Tech Next. This is Bloomberg time out for Talking teg China will introduce rules to govern the use of AI across a swath of industries in an effort to regulate emergencepheres as chat GPT fever

sweeps the world's second largest economy. The government says it will push for the safe and controllable application of AI services, which it considers a strategic industry, and will continue to monitor its evolution over the longer term to gain a better understanding of the ethical concerns around AI and sticking with AI, Meta just introduce a research tool for building AI based chatbots and other products, seeking to create a buzz for its own technology and compete with Google and Microsoft.

The tool, Lama Believe It or Not, is Meta's latest entry into the realm of large language models, which CEO Mark Zuckerberg says quote have shown a lot of promise in generating text, hamming conversations, summarizing written material, and more complicated tasks like solving math theorems or predicting protein structures and back. In the US, a growing amount of global investment banks aping down on chat GPT, particularly on Wall Street.

Bank of America, City Group, Deutsche Bank, Goldman, sax Group, and Wells Fargo are among lenders that have recently banned use of the chat bot, with Bank of America telling employees that chat GPT and open AI tools are prohibited from business use, that according to sources. This follows earlier reports that JP Morgan had implemented equivalent measures this week.

And I find this so interesting, Caroline. It goes back to what Nvidia CEO Jensen Huang told Ari and King earlier this week, which is basically, chat GPT is great. The momentum around it is great. But when business needs a tool, they don't need chat GPT. They need something appropriate, something that is customed for them, and they also don't need the risk of people sharing internal information that then

suddenly gets spit up. In another inquiry down the line, there was reporting from other news sources that Amazon had taken a very similar view. Some of the general counsels they're worried about the fact that certain terms of phrases, certain types of conversation looked remarkably like relatively sensitive information of theirs. So I'm sure that there is trying to be this clamping down on this software. And we've talked about it, haven't we. The cyber risk that has built

into this large language models, this generative AI. It's always exciting, but I'm sure companies want to keep herain on it. Yeah, and the content risk as well. We've reported about the inaccuracies that some of these AI tools are generating. Think about Bard's launch week, right, and then how difficult that was for for bet shares because of an inaccuracy which was brought to light. So it's a real risk on the content side as well. Welcome back to the MED technology.

I'm Carline Hide in New York and La Medlove Low in San Francisco, and carry this bits me because I want to take a look at cryptocurrencies. Right. It's been an interesting week for risk assets in particular, and the point I would make here is these are the four biggest tokens by market value globally, right, And what we see actually, particularly in Bitcoin's case, is a relatively high degree of correlation between, for example, than as that one

hundred in bitcoin. And you know on the week relatively substantive declines on bitcoin ether binance. And you know what we're reading on the Bloomberg terminal, particularly good piece from Vildana, our colleague on the Cross Asset team, about a bit of a liquidity crunch at times of crisis. That's what the market's starting to see now. And as you and I discussed on Twitter spaces earlier, right, the key thing about the SBFFTX developments. While nothing to do with market mechanics,

is still impacts the psychology of this market. So I thought that was really interesting to look at how these crypto currencies have behaved in a week where risk assets are taking on board the future outlook for the FED, and maybe we can try to draw some kind of

conclusion going forward. Let's draw more conclusions with Jill Gunta, Espresso Systems chief strategy officer and dig in there a little bit about the correlations, because actually we've started to see maybe a movement away the fact that crypto had been relatively well bid. While textox has still been under some pressure, Crypto has actually performed very robustly over the

course of the year so far. This week notwithstanding, perhaps I think it's taken a lot of people in the industry, both asset allocators and also builders by surprise and sort of a running joke in the industry has become what bear market, you know, it almost feels like we deserved

much worse in terms of price action. So yeah, I would say overall, I think crypto has been very well bid over the course of the start of this year, particularly when you take into account the hangover psychologically, as you mentioned from of course the fts fall out at the end of last year, but also in the United States, the spate of regulatory pressure that the industry has been coming under over the last several weeks, and we've had time and time again some of the frustration around that

is a lot of its backward looking, a lot of its regulation by enforcement. Jill, When you're trying to build, when you are creating what especial systems is all about the infrastructure, how to try zact, how to interact online, do you really got enough guidance? I would say yes and no. You know, I think we tend to talk about when we're talking in the media about the government as sort of one monolith, and that's just not the case.

I think you'll find that, you know, certain agencies and certain departments within the US government are very proactive in terms of being hands on working directly with builders. I would say the Treasury Department in particular has done a really good job of creating clearer guidance and being very

friendly to builders and innovators. I would say that other areas of the US government have been much horror opaque in terms of what they want out of the industry, and it has been more regulation by enforcement, and that does create challenges, but that's just the US government. You know.

One of the beautiful things but also challenging things about cryptocurrency, of course, is that it's highly global, and so you know, it's a it's a much larger chess game than just that jelly you mentioned this week kind of being an outlier based on performance of different digital assets so far

this year. But you probably heard me talking about this idea in the market that there's some caution which is impacting liquidity or in other words, you know, the kind of negative headlines that keep on rolling around this industry, are you know, kind of directly inducing a liquidity crunch.

Is that something that you're seeing. It is a concern, I would say, but again I think that for most people in the industry it's been actually a pleasant surprise of how much liquidity it is still slashing around in the market again following the really serious fallout at the end of last year. And so I would say it is a concern and certainly has been over the course of this week, and you know, especially as people are keeping an eye on what the FED is doing, and

as risk assets trade down. More broadly, it is on people's minds, but at least from where I'm sitting, less so than I might have expected. And I think a part of that is also a lot of people in this market, a lot of both investors in this market as well as builders in this market, tend to take a longer term outlook and play less on the short

term time horizons of weeks to months. And I think that there's a lot to be bullish about, and therefore a lot that's keeping liquidity in crypto assets and in this system from again that much longer, longer term perspective. With that in mind, you talked there about there being a lot to be bullish about. What are those things?

You know? I remember on a daily basis referring to bitcoin as an inflation hedge, and we don't say that as much anymore, But but I wonder what are the underlying fact is that long term investors in different digital assets consider. It's honestly, a lot of it is deep

in the weeds, infrastructure building that's happening. So just this week, coin base came out and announced that they were working on their own version of a layer to scaling solution for ethereum, and so you can think of this as you know, a layer that would sit on top of ethereum that would make the underlying protocol more accessible, more scalable, lower fees, faster throughput all of these complaints that users and developers have had for years about the issues in

the space that are keeping it from being actually useful for mainstream applications outside of things like the inflation hedge story that the industry has been hanging its hat on for real use cases along the lines of payments and real financial infrastructure, and so it's it's been a lot of again deep in the weed sort of technical development R and D. It's not the kind of stuff candidly that's making headlines every day, but when you're in those weeds,

it can feel very promising and very bullish, and a lot of investors in the space do spend time deep down those rabbit holes as well. And you had been one of those investors and came across to sort of be one of those builders, and those focus points for infrastructure tell us them what headlines should be being written. What is the decentralized application that we're going to be Is it payment? Is it storage. Where does it end up being practical in our every day do you think

most swiftly? Yeah, Well, I mean to answer your first question in terms of the headlines that should be being written, I think that this layer two story around Ethereum scaling again that means lowering fees for end users, and that means faster transaction rates, higher throughput, all of these types of things. That is a major story that I think

that should be written. Of course, there was a lot of attention last year to the upgrade of Ethereum to move it being proof of work, which of course was very computationally intensive and also very bad for the environment. I think that if part of Ethereum's bid over the course of the beginning heard of this year has actually been following on from again that's sort of deep in the weed's infrastructure work, and I think we've yet to see, Caroline,

what applications will end upcoming of this. We're really in like an infrastructure building phase for the industry as opposed to an application building phase as of right now. But I personally am very bullish on the payments use case. It's been sort of the holy grail of cryptocurrency, even going back to bitcoin. That was sort of, you know, the original vision of bitcoin that we've yet to see come to fruition. But looking around at the infrastructure being built,

I really do think it's happening this time, Joe. Really interesting that you end on infrastructure. There was a headline that crossed the Bloomberg term and all this Friday that the court my coincidentally about Puerto Rico giving basically tax

support tax breaks for blockchain developers. And the reason I bring that up is that we're trying to gauge Caroline and I about how supportive the United States says as a place to foster the underlying technology as a regulatory environment, and all the headlines this week, and with that in mind, what's your assessment about the health of this industry in

America right now? I'll be honest. I think it's I think it's a challenge for the United States, and I think that it's a challenge that the folks in DC are doing well to start paying attention to. And I say that in the present tense because I think many

of them are one of our investors. Electric Capital. They put out a developer report every year, and overwhelmingly what was notable to me on this Developer Report this year was the exodus of developers who are domiciled in the United States versus in other parts of the world over the last two to three years. And I think a lot of that does come down to the regulatory environment here.

But you know, there are those of us who still feel strongly about being US domiciled companies, about building here despite the headwinds that that brings to us, and about working directly with regulators and policymakers and even enforcement officers in Washington to make sure that we're building things right. There are still many of us, but it hasn't been easy and it does only seem to be getting harder.

But again, kudos to those in Washington who are paying attention to this dynamic and are fighting to keep the innovation on shore in the US. And kudos to you for coming and telling us about it. Those sorts of relationships, We thank you. Especial Systems Chief strategy Officer Jill Gunta was love having her on the show. Thank you. Have a good weekend coming up. It's been one year since the start of the war in Ukraine. Will come back on the state of cyber warfare among all of this.

A cybersecurity firm Arctic Wolf. That's next, and this is Bloomberg. Today it marks one year since Russia's invasion of Ukraine and the war well underway. It isn't only on the ground, but also in cyber warfare. Our next guest says, look, Russia is likely to continue carrying out more targeted cyber attacks against the EU countries in particular and companies with a goal of gathering threatentelligence damaging those companies joining US

now Nick Scheiner, CEO cybersecurity firm Arctic Wolf. Nick took us through your thinking, how do we anticipate these sorts of attacks will take place? Yeah, I think it'll be you know, steady and over time. Here what we saw at the beginning of the conflict was that Russia, Ukraine and neighboring countries kind of pointed their gaze at each other and away from European countries and companies and companies

in the US. And what we're starting to see now after what was a bit of a lull in twenty twenty two, is a resurgence of activity here in twenty twenty three, as folks start to use their time and energy and resources on targeting you know, both European companies and US companies in kind as they continue to work

and evolve their their strategy in region. I think what's interesting for me, Nick is, I know, the activity specifically around the war in Ukraine was high at the beginning of the year and was present, but actually there is some data suggesting that ransomware attacks originating from Russia in

particular have decreased. Why is that. Yeah, I think right now they're focused primarily on their defenses with the Ukraine and what they need to do to when their their current uh, you know war, and and what I think we're seeing as it relates to businesses is an increase.

And I think the reason for that is because while a lot of the nation's state you know actors are focused on quite frankly each other, we're seeing that you know, the smash and grab you know type bad actors, uh you know, have to find a way to you know, make money and have to find a way to support their you know, livelihood, and they're doing so through a resurgence of activity you know, into the European markets in the US markets, and we're seeing that both you know,

through our core business in companies trying to find ways to bolster their you know, security defenses and their security security post but also in you know activity as it relates to you know, incident incidents and incident response any types of companies in particular where the vulnerabilities are most acute, all the warriors are most pernicious. I mean, assuming its utilities, energy companies, but where else might not we think of, yeah, utilities, energies, companies,

you know, healthcare organizations, financial institutions. You know. Unfortunately, Um, we're seeing activity really across the board, and it's for a variety of different reasons, and those reasons are you know, sometimes unknown until you know after the fact. But I really don't think that there's any industry or or business that's immune to you know, the threat of cyber activity

or cyber warfare um. And you know, us as a business at Arctic Wolf, you know, our whole businesses around ensuring that we can you know, end cyber risk for our customers and help to stabilize the environment for the market wholesale. One of the tools that the United States has utilized in conjunction with allies is sanctions, and those have been largely to disrupt the movement of money across boarders.

But I wonder how do sanctions fit into the cybersecurity realm, nick Yeah, I don't think it plays as strong of a role, just given the nature of the way in which ransomware and these bad actors you know, make their

their money. A lot of this is being done through ransomware payments, you know, through cryptocurrency, uh And unfortunately there aren't you know, strong mechanisms to you know, be able to track that down, you know, and or a place you know, sanctions and things like that against it, Nickmas might be a tough question and figure me if it's out the remit. But one of the stories really focused on when this first erupted was of course the human side of all of this, and in many ways also

the talent side. In particular Ukraine, phenomenal developers, companies had big teams there in many instances. What about the talent flow out of Russia. Have we seen the really keen developers and some of those that are incredibly good at cyber hacking as well? Are they still there? Are they present?

Have any left? Yeah? I think certainly we've seen evidence that quite a few I have left and they're starting to form alliances with other folks that they might have known, either in Russia or otherwise as part of a previous group. And certainly I think that's also why we're starting to see changes in the way in which you know, the countries are are operating, you know, with or against each other.

So there's in some ways a talent shortage for the Nation States as it revolves around cyber both on the

defensive end on the offensive. And I think, you know, as those groups kind of start to re emerge and as they start to get back together, we're going to see that they're you know, leveraged both as part of you know, what's happening with the Nation States, but we're also going to see that they uh, you know, begin to operationalize and get stronger with regard to um, you know, their their day to day, which is to you know, attack European and US entities. Nick Schneider, Arctic Wolfsey, thank

you for joining us. It does mark one year since Russia's invasion of Ukraine, and cybersecurity played such a big rolling headlines rolling our coverage at that war. So thank you for your time. Let's get back to well, this week's big story on the Hill in the World of Technology, section two thirty. We're joined that by Nora Benevide's senior

council and director of Digital Justice. As writes over at the Free Press, it's an avocacy group that filed one of the amicus briefs in the Google versus Gonzalez case, and you also testified before Congress on the subject previously. Norah. The arguments have been made as to perhaps why from technology's perspective, it would be wrong to overdo and throw out section to thirty and the protections. But is there

nuance to that? Is there ways in which it can be more targeted, more directed, so that it can help push back on hate speech at least in some of the harassment or well, thanks for having me. You know what's been difficult about the case this week is that

the facts were so tragic. You know, the case stemmed from the killing of a young college student who was traveling abroad, and their family feels that YouTube and by extension, Google are really aiding and abetting terrorists by recommending terrorists related content because their child was killed by ISIS. Those are some of the worst facts and there has really struggled to grapple this week with where liability should rest.

Google argued that it is not liable because it is shielded from suit by Section two thirty that protects them they are arguing, and of course the family then feels like Google should be liable because it makes recommendations that its algorithms are giving people content. But it's the first time the court has heard or considered Section two thirty, and it's really when you take a step back a

monumental case in that way. I mean, for almost three hours, the court wrestled with this question, and I don't know how far they got, but they really tried to consider the distinction, if any between recommending content versus publishing content. Yeah, and it felt that they were very aware and voiced

it that they are not technology experts. Ultimately, it felt, dare I said, to generalize sort of the wrong case for them to be deciding this, because they do want to reassess Section two thirty, particularly some of the right leaning, age leaning justices talk to us about whether it can be in any way partly updated Section two thirty in the right way. From your perspective, MM, great question. You know the Justice has really covered a wide range of things.

I would say they kind of the full damn. It was from caution to confusion, as you say, about the complexities here and the complexities of ruling on something, you know, the potential liability for platforms. Ultimately, I think there seemed to be a recognition from the court that it might not be the right place, the best place to do the balancing and the trade offs that would be required from amending section to thirty, and that modification, if happening

at all, needs to come from somewhere else. So that's something that Free Press has been incredibly active on, you know. Nor I'm so glad that Caroline asked that question because for me, the other part of it is that it's not necessarily who should be considering this. What I'm hearing, you know, talking to social media companies, talking also to different parties to what's going on is that where do we ask the right questions? And what we're not hearing

is what are the technological solutions? In other words, what is it that everyone wants to fix this issue? Well, everyone was to debate Section two thirty. As we know, because of the last week, some people think that there's a kind of blunt solution. Doing away with it altogether could solve some of the problems on the Internet. I just don't think that's the case. Section two thirty is

a foundational and necessary law for a few reasons. Frankly, it lowers barriers to people sharing their own content online. Without it, platforms would be forced to vet any content that people are posting, because of course they wouldn't want to then be liable for everything that their users say and do. I think that the test right now should not be whether a platform fill truths or recommends content. It needs to be whether platforms have actual knowledge of

the grievous harms caused by content on their priforms. Nora Benevide's Senior council and director of Digital Justice and Civil Rights for the Free Press. Thank you that doesn't carry for this edition of Bloomberg Technology. I know I'm sad too. It was quite a serious way in which the ende of the show. But it's a serious topic. We're going to keep on digging into it. But I hope you have perhaps a more lighthearted weekend ahead of you. But

maybe tune in if you can to our podcast. You can find one on the terminal You can go online on Apple or Spotify on iHeart wishing you a wonderful weekend ed without the wine. I hear that's up for lent. You two