Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast, with Caroline Hide in New York and VLA low into San Francisco.
This is Bloomberg Tech coming up.
I RAN chooses its new leader as the conflict spreads further and sends oil prices jumping us.
Oracle and OpenAI won't expand a flagship Texas data center to two gigawatts. Oracle maintains the BIGAI buildout as intact.
An n Scale raises two billion dollars in new funding, valuing the UK based AI data center developer at fourteen zero point six billion dollars.
But we start ed just broadening the scope of the market that we look at. At the moment, we're down four tens percent. We are off of our lows and the NASBAK one hundred. But once again, the conflict with the Middle East, the fact that we're and what with the RAN and that continues is still walking markets. We're currently up ten percent when you're looking at New York crewed.
If we're looking at Brent at one point and it clicks one hundred and twenty dollars a barrel, there is clear fear consuming asset classes that have lost that's six trillion since the beginning of the conflict, and therefore we want to bring in Bloomberg Washington correspondent Tyler Kendall for a little bit more set the scene. What happened a new leader and continuing barrage.
Yeah, Hey Caroline, good morning. While at the moment, it doesn't seem like there is any let up when it comes to the conflict, and that a diplomatic off ramp isn't on the table at the moment. In fact, we heard from President Trump over the weekend threatening to widen the war. In a post on truth Social he said that the US was looking to expand its list of targets as the President maintains that he is quote not happy with the new Supreme Leader that has been chosen.
Analysts say that the fact that the sun of the late Supreme Leader is now the new one indicates that the regime is going to continue its hardline stance. In fact, we heard from Iranian state media over the weekend after the pick that the government maintains that it has enough weapons stockpiles to sustain a high intensity conflict for the next six months and that Iran will start to deploy
more advanced and longer range weapons. Of course, this is all contributing to questions about the timeline here and what will be sustained disruptions when it comes to the oil market caroline. As you know, earlier this morning G seven finance ministers had met, but the potential to tap a coordinated release of strategic reserves. Ultimately French France's finance minister came out and said that the group of countries was not there yet, but the option still remains on the table.
Tyler, the story in markets, stocks and bonds slide, but really it's oil. Right, You either look at Brent or West Texas. What's the President had to say about what is happening in oil markets as a result of the conflict in Iran. You know, energy affordability, oil prices a thing central to his platform.
Right, you're really threading the needle there, ed, because at this point President Trump has downplayed the oil spike, telling Americans to be patient and that ultimately it's not going to be long sustained. We heard from the Energy Secretary over the weekend in an interview saying that this is not a long term conflict and other US officials have said that this is going to be a short term disruption in order for the long term gain of achieving
the US's objectives when it comes to Iran. Still, we know that the White House has been trying to reassure Americans when it comes to the economy before this conflict even happened, and now as we see those higher prices trickle down to retail gasoline, that's putting the White House on the defense. Now our understanding is the administration is
looking at some potential options to help domestic consumers. There had been reporting that the White House was set to ask Congress for a gas tax holiday to help lower prices,
but we haven't really seen that emerge either. It appears that the Administration has taken off the table for now tapping the Strategic Petroleum Reservement questions about its REPS punishment, which was really at this point leaving the administration to have to reassure Americans that this ultimately is going to be worth the long term success of the military campaign and broader peace in the Middle East.
The President calling one hundred dollars oil a small price to pay in the context of getting the war completed. Bloomberg Stylo Kendl with the latest from DC Oil surges past one hundred dollars as Saudi Arabia begins cutting production, with storage facilities nearing capacity amid disruptions tied to the straight of fuel moves, according.
To a source.
For more, let's talk about global energy the upheaval. Julianne Edwards, the nuclear company chief development officer, is with us. So this, as Tyler put it, is a difficult need order thread as well, because you know, long term you're going to say that the war in Iram puts a spotlight on American energy security. But you also have a firm grasp with the data, right So tell us what you on your desk are seeing right now in terms of oil disruption and oil supply, and then we'll get to.
The UCULO part.
Good morning and happy to see you guys this morning from our nation's capital. Yes, we are watching the oil prices continue to escalate. Our hope is that this will have only an indirect effect for a short period of time and that we will start to see resolution and i RAN soon.
But that being said, these are long term.
Decision makings that occur with these infrastructure projects. And so the fact is is that these disruptions that we're seeing from these geopolitical tensions are going to have a direct impact on our energy prices are oil and gas prices domestically, and why it's so critical to continue to invest domestically in onshore capabilities related to baseload energy, related to on shoring and manufacturing so that we're less vulnerable to these market disruptions that can help it overseas.
There's a note out there this morning from Jeffreys saying that despite the sort of volatility and uncertainty, clients should be encouraged to continue to stick with clean tech, you know, renewable tech stocks in that in that instance, do you take a sort of reputational hit in the environment like this for your industry when there is such a microfocus on oil.
I'm seeing the actual a pivot towards understanding the importance of reliability and dependability.
Nuclear energy has long.
Been a backbone of our electricity system and producing electrons for ninety to ninety five percent of the time, so almost twenty four to seven power, and I'm seeing that there's more of an understanding and an informative set of policy making and tied to that versus its clean air attributes.
But it is no secret that nuclear energy is a zero carbon.
Source of electrons, but it is a base load source that is dependable for sixty eighty years. And we're hoping that this administration will continue to a push to investing more into that infrastructure so that we can continue to be resilient to times like these.
Jdian.
How quickly can that sort of energy get online? Because you're thinking about how currently useful technology can be deployed, how currently useful is any that is an United States.
These are long term capital projects.
I mean you're thinking you're looking at roughly two to four years for pre development and then roughly a five to eight year built cycle before you can put electrons
on the grid. But we're seeing in China that they're able to build nuclear power plants in roughly seven years, and so the United States needs needs to keep up and ensure that we continue to invest streamline regulatory and that's actually why I'm here in our nation's capital today at the Regulatory Information Conference, where we're seeing a strong push and delivering on this administration's executive orders to have more sensible regulations when it comes to nuclear energy.
Go there about the seven years in China? Is that just a quicker turnaround in terms of getting the ability the capability of putting it in certain jurisdictions.
Basically, the regulatory sign off is faster.
That's a large component.
You need to have sensible policy making and regulations that are applied to these. You also have to have premier locations that have access to water and.
To the grid. And in China that's very much state backed program.
We're in the United States, it's a little bit government endorsed, but its industry led. And so we're seeing this administration extend things like the investment tax credits, the production tax credits, and extending the timeline from the Loan Program Office.
These are all great things that are going to.
Enable the industry to keep up with China and making sure that we maintain our nuclear dominance.
In October, we got an eighty billion dollar deal for nuclear Right, you are a company that wants to develop nuclear reactors. In fact, you're one of the name's few names that wants to actually go out and develop a big nuclear plant. What progress have you made on that? What details can you share? And again in the context of what's happening with the war in Iran, how is that impacting your ability to execute on it.
Our company has been laser focused on building the bench strength and capability, a muscle that our country actually has lost since we have not built any new reactors in thirty years, with exception to the two plants down in Georgia.
So we've been focusing on all the front and loading activities required for megaprojects, so citing and characterizing land, making sure that we're building out our governance, structure and capability set, especially working with the government closely and also working with the design firms those design reactors like the ge and Westinghouse of the world.
You've talked about US energy security, talked about how we're seeing China revolve. Talked about Europe for a minute here because it's interesting on this day. They're pitching an infrastructure fund at the moment and billions in terms of almost eight hundred and three billion dollars equivalent to try and speed up their own infrastructure, maying it clean and make it more effective. But how much we see in Europe ever, thinking more about nuclear.
We're seeing a large uptick in activity in nuclear in Europe, and I think what's driving a lot of that is recognizing that national security and energy security are interconnected.
We saw this really unfold as.
They become became more vulnerable during the Ukraine War and their overdependence on Russian gas started to create our abilities in their system.
So they want to make sure that they have their.
Domestic manufacturing capability set for their own energy infrastructure and less dependent on neighboring nations. So I think we're going to see a rapid incline of building nuclear infrastructure in Europe, especially Eastern Europe, and even in the Nordics. We're seeing a large amount of activity eyeing to US technology wondering when will our technology, if you're writing.
And how quickly can we export that to those countries.
Juliana Edwards of the Nuclear Company, thank you so much for joining us today from DC. Meanwhile, coming up Ora Cool Open AI have scrapped plans to expand the Stargate Data Center project. We'll have the details of why and what comes next up in the break.
Is it a break? This is blit a beg tech.
We have some breaking us crossing the Bloomberg terminal. Anthropic has sued the Defense Department over being labeled a supply chain risk red headline. Anthropic has sued the Defense Department over being labeled supply chain risk, which happened at the end of last week. You'll remember that we had reported ongoing negotiations between Dario Amma Day, the CEO of and Thropic, and the Pentagon and Department of Defense and basically what our redlines around Thropic in how their technology is used
throughout the hour. Carra, I'm sure we'll get more when we have for somebody able to come to set and we get more details in the suits filing, But that is the headline for now. Another story that we are across and working on, Oracle and open Ai won't expand their flagship Texas data center from one point two gigawatts to two gigawatts after negotiations stalled over financing and shifting
computing needs. Bloomberg reported that story on Friday. The existing campus is still being built, an Oracle's broader agreement to develop four point five gigawats of data center capacity for open Ai remains on track. Developer Cruso is now seeking a tenant for the shelved expansion, with Meta in talks Nvidia helping facilitate discussions the most Brady Ford part of the team that broake the story. A lot of names
in there, but that's the basics of it, right. There was an expansion due to take place one point two gig watts. Our understanding is it's not happening. The other details, As.
You said, it's a lot of names involved here, And what this story really shows is that so much money is tied up in these huge data center projects that require some pretty tight logistics. In this specific case, the flagship Stargate data center, they are going to expand it further. Whether the negotiations had dragged on for months and months and eventually Oracle and OI decided that they're not going to take this additional capacity.
Brady, what has Open AI and indeed Oracle's response been to your reporting about how deeply aligned they are on continuing to build infrastructure.
The message we've essentially received is that their overall work together is still on track, and that is also our understanding.
What is it in your regional story? Exactly? Yeah, please carry on, yeah, exactly.
But I think what's interesting is just looking at, you know, how do these projects actually play out?
Right?
The big contract is there, but certain sites that they thought they wanted maybe they don't. Right, and you think about all the capital that's tied up in these projects, it's interesting to see how these are going to progress.
Most Bradie forward across that reporting along with Ed Ludlow brilliant scoop.
Thank you very much.
Let's stick on oracle on the global race to build out data centers with Anna Rathman, CEO of Grenadilla Advisory, and talk to us about whether or not these sorts of stories about the difficulty of actually ensuring you're building where you want it, when you want it, it affects the overall investment attitude you have towards the data center build out.
Hi, good morning.
You know these are the type of stories that would make the private credit investors a little bit nervous, right because our private credit has been really into the infrastructure bill out, the big players have been. But if there's are hiccups like this where what you intended doesn't actually happen, of course meta may be coming in maybe a different story, but certainly what happens to your collateral, what happens to the project? Is it going to keep going? I mean
this situation is different. But if it happens again, these are the things that make people take a step back and take a look at the private credit again.
And certainly that has an impact on certain stocks like Well, Blue, Oul and others that are very much dependent on the private credit story. But how much does it affect the Oracle story.
Oh, I think it impacts the Oracle story as well. I think this is the type of news that can actually have investors actually stop because we're hearing about six hundred and fifty billion dollars going into these AI projects, right, and we haven't heard of big hiccups like this in big names in Oracle and Open AI, and so I think people will stopped, be stopping and taking a look whether or not this is going to be a more widespread thing, right, because there are data centers being built
everywhere and in some minds indiscriminately, right, So we may be hearing more of this, and we may be hearing of investors taking a pause.
The macro point, right, is that there's so much money tied up in what is something very complex to achieve in terms of the build out. By the way, over the weekend prior to the Oracle post, on x. The Open AI executive whose response for infrastructure also posts and explained they are not proceeding with the expansion there because they put the resources into other sites, just as Brody had explained in his reporting. But a part of it
is that capital tied up. I mean, do you see that kind of anxiety focus on capital expenditures, focus on the credit that's underpinning all of these projects.
Yeah, I mean there would be.
But I mean if you're worried about private credit, you should also be worried about some of the equity that is being tied up, right, I mean, we have to think about the cap structure. This is we're I mean, I keep saying, we're still in the nascent part of AI development, even in the infrastructure part, which is why the spend is so high. So it actually makes sense that companies can change their minds and perhaps say, Okay, we don't need this here anymore. Perhaps we're putting our
assets over there, and sometimes investors can remain stranded. So I just think that this is part of the story of being very very early in the AI story.
One of the considerations of the market this morning as it relates to Iran, is just generally, what will happen with inflation across everything, energy, materials. You know, that to me would really seem to be a factor when you're building out massive infrastructure, data center infrastructure across the country, to people start to remodel the costs of everything going into this build out.
You know, I think it's too early. I mean it's been you know, eight nine days of war. The Trump administrations says that it's going to be short term. I don't know what that actually means. Does that mean a few weeks, a few months, a few days. It is sort of a wait and see thing. You know, Kinetic war is completely unpredictable because you have people making decisions out of existential fear. Right, So it could be tomorrow,
it could be, you know, several weeks from now. So I think it's a little too early to be pricing in such high inflation and maybe making changes to the underwriting process and the models. It really is a wait and see, maybe sometimes even by the hour.
Anna Rothband of Grende Dillar Advisory, thank you very much. Coming up next, we have more details on Anthropics suing the Defense Department to carry You're also looking at other names.
And other legal news, shares of Live Nation actually pushing high on five point six percent. This is its ticket Master subsidiary, along with Live Nation, have reached a settlement with the federal anti trust authorities.
The dj have been saying this Monday. It kind of.
Throws a bit of a wrench in to this mid trial of an anti trust case. It accuse the company, remember of illegally monopolizing the lie music industry.
As a Bloomberg Tech.
Back to the breaking news just moments ago, Anthropic is suing the Defense Department after it was labeled a supply chain risk, a designation usually reserved for foreign advasarys. Let's get to our AI editor Bloomberg Seth Figureman for more, and actually, what it is that Entropics challenging, it would appear from the suits, is the Department's decision to shift the contracts to others.
Essentially.
Yeah, and what we're hearing from Anthropic here in a statement as they're taking this step to protect their customers and their business. At the same time, though, they're telling us that they intend to pursue all avenues here to track immediate this relationship with the government, including direct conversation with the government. So they're not foreclosing the continuation and talks here, but they are still pursuing litigation.
These actions are unprecedented and unlawful, the company said in the complaint that was filed over in San Francisco Federal court, and they say the constitution does not allow for the government to wield its enormous power to punish a company for its protected speech. What's been so extraordinary is the way in which anthropobists continue to speak out against the government. Dario Amade basically told us already he was going to go and do this.
That's right.
Yeah, they're clearly being outspoken and taking a stand on this issue here. They're not just taking this sitting down. But it's clear behind the scenes that the tone might be a little bit different privately, but they're looking for a resolution. They're also not looking to just take this, you know, sitting down.
A part of what's happened in parallel stef in recent days is that, you know, Open AI has negotiated with the Department of Defense, you know, basically to come in, do we know what the status quo is now, what the latest is in where the department stands on its AI tool policy, and who it's using.
Yeah, I mean, the last we've heard is has been seeking additional protections and safeguards for some of the same concerns that Anthropic I previously raised publicly and privately. We don't know yet if the Pentagon has agreed to all those provisions, but it does seem that the tenor of the debate between Opening AI and the Defense Department has been much more civil in some respects and what we've seen with Anthropic.
But what about the reporting of how this is affecting those that work for the businesses. A lot of these compans who say they're nothing without their talent, and we already know a key senior Open AI leader and the robotics department is left.
Yeah. I think we're still waiting to see if there's a meaningful attrition from either or both companies as a
result of the uncertainty and tension here at the moment. Yes, there's one high profile example over the weekend, but we haven't yet seen others, And of course we're still waiting to see on the customer side of things, or people rallying to the defense of Anthropic for taking the stand, or are they at risk of losing more business even if they're not legally required to cut business with Anthropic, might some still do it?
So, if we're going back to a question that we've asked you and your team will report is quite a lot recently. But do we have any sense of like how important from a financial standpoint a deal with the Defense Department actually ates to Anthropic or open AI, like you say, a major part of their business we're fighting for sorry now.
Of course, now from a pure dollars perspective, it seems pretty marginal. At least at the current moment. The Anthropic Pentagon deal was worth up to two hundred million, but our understanding from procurement records was that it was really just a couple of million to day. That's good to think about how much a might have been over the
long term. And again, the larger blast radius of customers who either legally might feel that they can't do visits with Anthropic now or just optically or for fear pressure from the administration might rethink how much they commit. So that is much harder to quantify.
We've obviously putting all of this in the context of an actual war that seems to have erupted over the course of the internal dialogue that we're having between Anthropic or AI providers in the military in the United States. Is this something that is happening abroad as well? Is it something that is causing tension about use of AI in Europe and elsewhere.
Yeah, I don't know if we've seen it play out quite the same way as it has here. I think that question of how who has a say over this powerful technology, how much can the government dictate the way that gets used, and how much can they force private companies to sort of cow to that, I think that is a very much a global debate. It's just taking place here in a more prominent way. And these are the companies at the forefront of that technology.
And American companies of that.
Soeth Figermann across the breaking news, of course, has anticipated. Anthropic is indeed suing the US government. Coming up, we go back to Iran after it destroyed a key million radar system to guide US missile defenses in the Gulf.
That is next, and this is Bloomberg Tech.
Welcome back to Bloomberg Tech.
Over the last hour, equity markets technology shares in particular, actually raised a lot of the declines that we saw earlier in the session, and that's that one hundred is now effectively flat. The story with regards to what's happening to the ongoing war in Iran is once again oil. You're looking at New York crewed at ninety five ninety six dollars a barrel, but at one point above one hundred dollars a barrel Brent similar picture up to one
twenty down to one hundred. Partly disruption and partly the market trying to interpret how long this will go on for you know, the administration is Tyler Kendall outlined earlier, thinking and communicating it will be short, but actually a lot of evidence to the country.
Carract Yeah, disruption and destruction because Iran has destroyed a key three hundred million dollar radar system used to guide US missile defenses in the Gulf. And that's according to a US official, it's a blow the cold widen gaps in the region's ability to counterfeuture attacks.
For more, Bloombair Defense.
Editor Jerry Doyle joins, US just give us the context, because we're not suddenly completely down by defense systems here, Jerry.
But it is a key target that was managed to be struck.
That's right.
It was the one that we know that was destroyed was located in enjoyed as part of the bad radar battery. Now that that is called terminal high altitude air defense, right, It's meant to shoot down advanced ballistic missiles traveling extremely fast above the atmosphere, and the radar guides these missiles and has an extremely high resolution, can spot targets extremely long ranges. It's very useful, very high power, very expensive. Now with that radar gone, the bad battery is still operational.
It just had to take queuing from other US advanced radars, such as those that work with the nearby Patriot missile systems.
Jerry on Blueberg Tech, We've been looking at technology on the battlefield.
Essentially.
One of the data sets that Bloomberg has been tracking is Iran's use of drones, particularly against what are neighboring countries in the Gulf. What is the latest data tell us about Iran's munition stockpile, where they are in their use of drones versus ballistic missiles, etc.
Well, to some degree, it's impossible to say, you know how many drones Iran has left, whether the temple of operations has slowed down because they simply don't have as many ammunitions. Whether their commund and communications have been disrupted from strikes, whether production has been disrupted, whether they're husbanding their resources for a larger attack, is really difficult to say.
We can, however, say that the number of strikes has decreased quite a bit from the opening days of the war, and that Iran has started to rely more heavily on the use of these Shah had one thirty six drones, which are essentially low cost, rudimentary cruise missiles as opposed to using more expensive long range ballistic missiles which Iran started the war was somewhere in the neighborhood of two thousand to twenty five hundred of but clearly has many fewer now, Jerry.
The market's also trying to interpret long term how this changes the defense technology industry. There's a note from Turis, for example, that puts the spotlight on the use of autonomous maritime technology in the context of the war of Iran. For you and the team at Bloomberg across the defense desk, like, what are we seeing? What are some of the stories coming out of this conflict?
Well, so far we haven't seen, as far as I know, the use of autonomous maritime strike platforms in the Persian Golf. We have seen those obviously use quite a bit in the Ukraine War, so we know they can be effective, and we know they can be built relatively cheaply and operated in sort of an ad hoc way, again to
great effect. It's not clear how many of these Iran has, or how it might be able to deploy them, or whether the US has destroyed them over the course of strikes in the last week, but platforms like those would be extremely useful in a scenario which Iran finds itself in right now, where it's trying to shut down a waterway and narrow waterway like the Strait of Homos. Obviously, we've seen a lot of autonomous aerial platforms such as Ahead one thirty six drones, which have been used in
strikes all across the Gulf. Those are not controlled by the ground but are guided by GPS technology. They're fairly easy to make, fairly cheap to produce in large numbers, and we've actually seen in this war the US use its own version of the Shahead one thirty six. It's called Lucas I believe a long range unmanned combat aerial system,
I think is what that's a strange acronym for. But we've seen that use and the US of course has plans to manufacture these at scale and use them in a way that Iran sort of is to use them to overwhelm or confuse or deplete enemy air defenses or enemy defenses in general, in advance of a more advance or higher end type strike bimbag defense out.
It's a Jerry Doyle, thank you very much, Caro. Plenty more news headlines today.
There are ed and it's time now for talking tech.
And first up, the head of Open a Eyes Robotics team, Caitlin Kalinowski, resigned Saturday. So I think companies deal to deploy its AI models when then Pentdican's classified network. Kalanowski said in a post on x and on LinkedIn that those issues needed quote more deliberation before signing the deal. Plus, Ceubrus has picked Morgan Stanley to lead as IBO. That's according to sources who say Cerebras says.
Filed fresh paperwork for the IPO and.
Is set to meet with analysts and prospective investors this month. The offering could raise about two billion dollars in a listing as soon as April, and ten Cent it doesn't tend to invest several one hundred million dollars in Paramount's acquisision of Warner Brothers Discovery, according to sources who say the Chinese company would be acting as a passive financial investor, though it might still decide not to invest. Ten Cent and Paramount declined to commentment.
Okay, coming up, we're going to discuss how AI is shaking up the legal profession with Harvey CEO Winston Weinberg.
That's next. This is Bloomberg Tech Harvey.
You know it is the AI platform for the legal profession today unveiling new tool to let law firms build custom AI agents even faster that should give more control over multi step processes they ask AI to complete. Let's discuss with Harvey's co founder and CEO, Sin Weinberg and Whinson. What's so interesting is about the human in the loop, the oversight, the control. How do they maintain that when you're leaving AI agents to go and do work for multi step processes.
Yeah, thank you so much for having me. I'm excited to be here. Also for legal Week, which has basically all of the legal tech industry in New York for one gathering. The way that we think about it is in law. It's incredibly complex and it's multiplayer. And so if you're building this agentic system that is kind of the infrastructure for completing legal work, you need it to be able to actually interact with all of the different
specialized agents to do that task. The multiple law firms working on a project, and the Fortune five hundred that is thinking about buying another company or involved in a litigation or something like that. And so it's a really complex process of integrating with all the correct data, having the humans in the loop when they need to be, and handing off between the different experts that are specialists in that particular domain.
Let's talk about your specialization and the fact that you have all these integrations and have such a wide scope of legal companies you're already working with. Because the age old criticism is you're just a wrapper of GPT or whether it's anthropic, you're agnostic to the model's underlying How are you making yourself so necessary for the legal profession?
Yeah, the best way to think about this is in these incredibly highly regulated industries, the work that they have to do is very complex, and all the data is in all these different silos, right, and again it's multi party and collaborative, and so what you need to solve is which model is the best for this particular part of a task, how do you route that to the human And then what's going to become really important is how do you actually review all those outputs and evaluate
them for accuracy. If you think about what's going to happen in the next ten years, think about how complex an international merger is going to be. Right now that we're using AI to produce more products, to produce more msas more contracts, etc. We're viewing those Honestly, in ten years, I think you can't do it. A human cannot do this without aisystems that can integrate with everything else.
Winston, I want to hold you to this to be succinct.
This is a tool that makes a practicing lawyer more productive and better at their job. Or it is a tool that in the future displaces the role will function of certainty members within illegal practice.
Yeah, the best way to think about this is this is task automation, and I think it will always be task automation. Right, So, if you think about like a very complex fund formation that involves fifty LPs or something like that, there are certain tasks like doing comment memos or something like that that are going to get automated away.
But a lot of the high value is that strategic advice on top of those tasks, right, And so as these task get automated, the job of a lawyer is just going to level up over time.
I ask you that because one of the show's biggest fans, my father is almost certainly watching, who has more than three decades of practice in English and European law, and our member as a kid the whole billable hours thing, right, You know, lawyers across the world used to scan bar codes for fifteen minutes of work. Really interested therefore, for
how you price this? You know, I think you guys run a subscription based model, right, which can also be priced depending on the volume of use of any customer. But that's the debate, where's the value?
Yeah?
Exactly so, right now, that is how we do our all of our pricing. Over time, what we're starting to do a lot more of is how do you do
custom build for a lot of different customers? And the reality is doing these custom builds, these forward deployees solutions is with how good the coding models are getting a lot lot stronger gross margins, right, And so a lot of what we're starting to do is we'll work with like a large bank or private equity or telco and a law firm that's partnered with them, and we'll actually redesign or transform how they deliver those services entirely right,
and that we are going to price much differently and probably closer to do the outcomes work? And how does consumption on top of that work.
You've got some heavyweight investors to quire, kPa, sixt, ZGV, the.
List goes on.
They want to hear about how you're able to monetize this. When someone is sat within the innovation part of the legal business and I do I do a claud plug in, Do I do Harvey?
Do I keep with Lexus and Nexus? What's your answer?
Yeah?
The best way I think about this is everything else out there is a points solution, and what we're building is a platform, right, And with that platform you have all of the integrations, you have security, you respect, ethical walls, permissions, We grab the correct data, so we ground it in truthful data into instead of bad data that is going
to give you a bad answer. And as this scales over time, you really just have to outrun these model providers that are trying to build the general system right and the best that I have and I'm very confident in my team's ability to deliver on this is we can raise faster in the legal vertical than they can generally.
Wins In Weinberg, CEO of BE really good to have you here on Bloomberg Tech.
Thank you very much.
Now, coming up on the program, we're going to discuss the top generative AI apps for consumers and Resa Horowitz partner Olivia Moore joins us for that conversation.
A's next, This is Bloomberg Tech.
Enscale has raised two billion dollars in new funding. The deal values the UK based AI data center developer at fourteen point six billion dollars and places it amongst Europe's most valuable startups. Nscale has also named a trio of high profile tech leaders to its board of directors, including shel Samdberg, Nick Clegg, and Suzanne Decca Carot.
Fascinating.
Now, let's just think about how for a few years our AI native firms had the edge with consumers for generative AI apps.
As the market matures, that's kind of fading.
It's one of the findings and report released today by Andrews and Horowitz on the top generitor AIAI. I asked a sixteen Z partner Olivia Moore has been doing this for three years and what's so interesting is number one is still CHATCHYPT.
We have Gemini, but where are we starting.
To see just if we're thinking about the consumer and consumer focused, that's Claude coming in and how are we seeing people using different chapels.
Yeah, absolutely, there were a lot of This was actually the most fun and exciting report to do out of the six we've done.
Because there were a lot of changes.
First, as you mentioned, we did add for the first time companies that are not AI native but are significantly AI in hand so Notion as an example, they reported that fifty percent of their arr is now coming from
AI features Canvas another one free pick Grammarly. Then beyond that, I think the other really interesting trend in this edition of the list is just the continued battle between Chad Chat, GBT, Claude, and Gemini for the mainstream consumer, and we've seen some pretty significant changes there over the last couple months.
What sparks the change other than press and coverage of what's happening with the Pentagon is that a model comes out and eclips is it people are actually using these things that.
Working out which one is better than the other.
Yeah, it's a great question. So for a while we saw consumers were using one generative AI product, if fat even and now they're multi tenanting across products but for different use cases. So Gemini, if you look at their user growth, it's basically perfectly correlated to the release of like Nano Banana Vo three, all of these new creative models. Where Claud is really starting to shine, I think is in the prosumer and work tools. So Claud Code of course had a crazy ramp to a billion in arar.
Claud Cowork is now their product for consumers that's being picked up pretty quickly.
They also put Claud.
In Excel in Google Sheets. Probably the best way to understand this is both Claud and CHATCHYBT now have their own app stores. They each have more than two hundred apps that they offer access to, but there's only eleven percent overlap between them. CHATCHYBT is leaning in on the mainstream consumer like fashion, shop, thing, travel, transportation. Sam Altman
has said he wants CHATCHYBD to be for everyone. Claude is leaning in on like deep premium data sets for scientific work, medical work, data analysis, and so I think we're seeing them go in slightly different directions in terms of the audience they're trying to win.
Team.
Let's bring back up the top one hundred ranking and then focus in on I guess the top five ten. I'll find this Olivia is so interesting that deep seek is so high up. Maybe through explaining the methodology of how you put the ranking together. Like some of these names, you kind of touched on it there, but you more associate them with enterprise, you'd associate their use outside of the United States potentially.
What are you seeing in the data?
Yeah, deep seek is a fascinating one because it was actually higher on prior versions of the list and has dropped down. What basically is happening with deep seek on a country by country basis is that China and Russia are blocked from using many of the Western AI tools, So China is heavily deep seak. It's their number one product than something like a dowbou from by Dan, something like a Kimmi, and Russia's the number two market for deep Seek. It has fallen off a cliff in terms
of usage in the US. I think it's fair to say, and I actually think that goes back to the question about what's going to happen with Claude, because what we saw with deep Seek in the US was all press was good press, even if it was bad press, just
because people didn't know about the product. And I think the same thing happened with Claude in the past week, in that a couple months ago, market awareness of Claude amongst US consumers was maybe two percent, And so now they're topping the app store just because many people have never heard of the product and they're downloading it for
the first time. So it'll be interesting to see if they're able to retain those users or if, like deep Seek, they will only keep users in countries that can't access other products.
Olivia Moore Andresen Horwitz. Is great to have you back on the program. Thank you very much.
I want to get back to that breaking news from earlier in the hour. Anthropic is suing the Defense Department after it was labeled a supply chain risk, a designation usually reserved for foreign adversaries. Matt Settlemanhelm of Bloomberg Intelligence joins us now and Matt appreciate you you're running in.
It's a breaking new scenario. But from the Bloomberg Intelligence perspective, what is the react to this latest development where essentially Anthropic is pushing back on the Department of Defense saying hold on, we don't want you to look elsewhere, we want you to use our tech will explain it.
Yeah, So this is exactly what we expected after the developments from not this most recent Friday, but the friday before when the government announced it was taking this action. That was a tweet from Pete Hegseth announcing this decision. Since then, in the middle of last week, the Defense Department sent the company a two page letter informing it of this supply chain designation. And now within ours we
have this lawsuit filed by the company. It pursues what we expected was really a claim that this violates the r arbitrary and capricious standard under the Administrative Procedures Act, which basically says that the government has to use reasoned decision making. It can't penalize a company just because it wants to. It has to look at the law and ask, hey, is Anthropic violating the law? And what we haven't seen really from the Defense Department is any connection between this
supply chain statute and anything that Anthropic itself has done. Instead, this has been about a dispute about contract negotiations, an agreement that the Defense Department had agreed to in July. It wanted to change it. Anthropic resisted all of a sudden it was deemed a much larger supply chain risk. So I think we're going to see an immediate court fight on whether that Defense Department decision should be stayed because it doesn't constitute reason decision making.
They talk about how the actions are unprecedented. So what precedent, Matthew, can lawyers legal lees go to in this moment to decide who has the uphand in what will be a more drawn out conversation to have in front of the courts.
Yeah, so under this exact statute, it's rarely been litigated and it's rarely been used. It only dates back from about twenty eighteen. But what lawyers are going to look to here is defense decisions under other statutes, and you've seen that in some cases where under other supply chain risk determinations under these other laws, companies have been able to bring lawsuits and say, Okay, this is not reason decision making.
This violates the law.
It's an arbitrary and capricious exercise of your authority. And you know, it's very difficult to beat the Defense Department. That's the first thing to know. The court gives them great deference on national security, so this isn't easy at all paranthropic, but if the Defense Department didn't try to connect it to the law, and so far we haven't seen much of a record really connecting it to this law. We've seen criticism of the company's policies, you know, a
criticism of it as being a woke company. It's going to take more than that to justify this in court, and that's going to be the question for a judge. Is there a real basis under this supply chain law that justifies such an extreme action. The company is going to say, this inflicts irreparable harm on us and it's not justified under the law.
Matthew.
That's why I ask about the idea that Anthropic is challenging the Pentagon in deciding to negotiate with open Ai. For example, in parallel right, they will say, when this supply chain risk label was given just quickly, well okay, we'll turn someone else for their technology.
How does that factor in?
I think that you know, that raises concerns about the arbitrariness of what's going on here, especially if open Ai insisted on terms and restrictions that were really not that different from what Anthropic took a hard line on. That's also going to play into whether this was reason decision making or whether this was a desire by the Defense Department to make an example of this company.
Matthew Shetenhaum bloomeg Intelligence, fantastic expertise there.
We thank you. That does it for this edition of Bloomberg Tech Ed once again your legal degree coming out strong.
Yeah, a little bit.
I mean, fascinating coverage are both private markets and public markets, and obviously in the markets, the war in Iran continues to be a massive factor. Really great conversations worth recapping on the podcast.
No where to find it.
It's on the Bloomberg terminal, as well as online on Apple, Spotify and iHeart It's another big week ahead, and this is Bloomberg Tech