From Mahart.
We're Innovation of Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Hide at Bloomberg's World headquarters in New York and ourm Ed Lovelow in San Francisco.
This is Bloomberg Technology coming up.
Full coverage of Salesforce's annual Dreamforce conference where guess what AI will take center stage, will break down what to expect, and.
We'll go live to Washington as tech leaders descend on Capitol Hill for a meeting with sentences to discuss none other than artificial intelligence.
More details ahead, and we're going to stay in Washington to get the latest from Google's antitrust trial and break down the biggest takeaways from Apple's wonder last event and the continued China concerns. All that and has always so much more aheading, including.
Right now here in San Francisco. Dream Force underway. The story for Salesforce has been about integrating AI into their existing CRM and other offerings. For more on dream Force. Who else Bloomberg's Brody Ford is in town in the flesh, Brodi Ford, What's going on?
At dream Force.
Yeah, I mean it is back Dreamforce forty k people here in downtown San Francisco. I am one of them, and the big thing for them, like every other company, is AI. And the subtext here is that Salesforce has been grappling with They were growing above twenty percent every year and now it's come to slow down, and there's a bit of anxiety among the investor community. But of course AI looks like this beautiful accelerant to bring them
back up. And their pitch is like a lot of the incumbent players that yeah, sure you can get your data and plug it into these llms, but you know, can you trust that through our platform you can trust the use of the AI.
That's the pitch.
I mean, we get the Einstein Einstein indeed upgrades and it's sort of being injected across the entire offering a Salesforce PRODI and you can see therefore the nuance come with us.
It's safe.
But this comes in a context of well, anxiety across investors. Post Oracles numbers the fact that maybe all this talk.
Of AI, or this desire to have AI.
Doesn't always immediately mean revenue picks up in quite the way we were anticipating.
How do you think Salesforce navigates that one.
Salesforce has been pretty intentional about communicating it's going to get what the pricing is going to look like. And it's also it's really not that hypothetical. What a lot of their AI use cases? All right, you're selling software
for salespeople. If you can automatically draft some outreach emails, I mean, as a journalist, I would use that for sure, Right, So I think a lot of their use cases are going to be a lot more immediate than some of the other AI we hear about, meaning as you say, quicker revenue, uplift love.
That context for us as journalists and across any industry. Of course, body Ford, we thank you so much for it. Have fun out there as people get back together in the flesh. But meanwhile, well let's say virtual for a moment and get to Gil Lurio's Da Davidson, managing director and head of institutional research, who I know is keeping a keen eye on all of the announcements coming out of Salesforce and mark many of really talking about why you would want to be with their AI offering.
Is this a very crowded space.
Are there some significant winners clearly burning ahead.
In this Our perspective is that AI, artificial intelligence is going to yes. Our perspective is that artificial intelligence is going to transform a lot of software business, if not all software business and technology businesses, but it's going to take a while. There's going to be very few companies that benefit in the short term. It's really Nvidia and Microsoft have a very clear story of how their businesses are going to get transformed and accelerate in the short term.
For everybody else, they have to build AI products. They have to get better at AI. Their customers want that, their customers expect that, but it's going to take a while, and their customers, for as much as they're asking for it, are also skeptical of products that have been rushed to market, and they're going to be patient about making investments in AI. They're going to want to see mature, ready for market products before they implement them in their business.
Kil I know you have folks from your desk on the ground at Dreamforce. You're keeping a close eye on what's going on. Does anything of substance actually come out of Dreamforce in terms of what you then pass on to institutional investors about what you learned.
Well, they are very good about relaying the product roadmap and how they're going to incorporate artificial intelligence into products like Tableau, like MuleSoft, like the core sales and marketing offerings, how they're going to do it holistically, how they're going to protect the customers data. This is what their customers want to hear. It doesn't mean their customers are ready to push the button and buy new software, but they want to hear that this is.
On the roadmap.
They want to hear that it's going to be part of the products and going forward, and maybe they'll push the button next year or the year after that. So it's critical that Salesforce presents a good vision, and it sounds like they are.
So.
Gail.
The story of Salesforce has been top line growth above twenty five nineteen, twenty twenty. When I pose to an investor the other day that AI could return Salesforce's growth to that level, he just laughed and just gave an audible hap. Where do you see AI taking this company?
Yeah?
I think the burden of proof is on Salesforce, and again on every other software company that's talking AI right now, Salesforce's revenue growth right now is barely double digits, and they really have to come up with a new set of very compelling products for that to accelerate. Either that or enterprise software spend has to pick up, and we're not seeing that yet either. So, just like a lot of other software companies, and we'll talk about Oracle in the second AI is a big part of what they
have to do. It doesn't mean that it's driving revenue acceleration anytime soon.
Yeah, I think, Caroline, for that reason, that is why we're thinking about Oracle right because the implications of that name are the same for the Salesforce as well. Caroline.
Yeah, and give us that sense of well, whether you were as shocked as the rest of the market, Gil, I mean the fact that we saw Oracle shares tumbel the most is two thousand and two, even while posting thirty percent levels of growth for Cloud when it comes to Cloud AI offerings, it builds as though that just cannot live up to the insatiable expectations of investors.
Right now, Oracle is still a single digit grower. It was masked over the last twelve months by the Certner acquisition, and they are growing the OCI cloud hosting business very rapidly, but it's still a relatively small business for them, and most of their other businesses are flat declining. We're growing very slowly. They said, expectations that AI.
Care, I'm going to jump I'm going to jump in here, Gil, I think we have some technical issues, but we really appreciate your analysis of both companies, Salesforce and Oracle. That was Gil Luria of DA Davidson up in Portland, Oregon. I Phone fifteen Pro six point one inch screen nine hundred and ninety nine dollars, I Phone fifteen Pro Macs six point seven inch screen one one hundred and ninety nine dollars for the starting version, two hundred and fifty
six gigabytes of memory. When you hold both handsets in your hand, what jumps out? We'll turn them on their end and you'll see the USBC connector or poor ending almost twelve years of Lightning connector, which Apple introduced in twenty twelve. By the way, goodbye ringer mute switch button thing, Hello action button. Then you look around the edges and the sides, and it's those titanium sides that are new
to the iPhone fifteen Pro and Promax generation. The colors are interesting, more kind of limited options on the color side for Pro and Promax compare with fifteen and fifteen plus where you get these kind of brighter pastel colors. And then for Pro and Promac, it's really what is
on the inside. The A seventeen processor, Apple's fastest ever smartphone chip, brings much speed, but also more memory and higher performance, and for Promax in particular, new camera technology up to five x zoom or magnification, which is kind of pushing things forward on the photo side for iPhone. So you see Tim Cook there Carrie taking selfies with the crowd, and it.
Was so active.
Did you get one egg?
Honestly, the weight was hours and I had bigger things to report on. I wanted to get hands on with the phones. But just take my word for it. If there were one thousand people in the room, ninety percent of them were just going oh USBC on the bottom. That's the reality of it.
We can be quite basic sometimes, can't we add it all comes down to charging.
Yeah, and look, this was European Union mandated. It had a deadline of twenty twenty four. Apple sort of jumped before they were pushed on it. But it brings that device in line with other Apple devices and every other product that's out there from other brands. So I thought that was really impoint by the way, which color would you go for of what you just saw? What was your favorite?
I mean anything goldie look can chain? I'm into.
The only issue being I then have to get some enormous black plastic contraption to go over the top so or don't hurt it. So kind of honor agnostic nowadays.
And as we know, no more leather in Apple accessories and on gold I'm going to ask Mark German about that in just a moment, so let's bring him in Bloomber's Mark German to recap the day that was in the Apple event, I mean Mark. The emphasis from the street at Lease has been the pricing of iPhone fifteen Pro Max. They raised the price by one hundred dollars. What technology do you get in return?
So the price increase is really interesting because they went as minor and stealth as they could on this price increase. What they've done is they've eliminated the one hundred and twenty eight gigabyte capacity option.
For the Promax starting at.
That two fifty six gigabyte, so they didn't raise the price of that storage tier, but they raised the price of the phone by removing that entry level tier. So about a nine percent price increase in the US, but you're having more sizeable price increases elsewhere. There's a minor price jump in China. There's a fourteen percent price increase
on the Pro models in India. In Canada, you have a fifty Canadian dollar increase on the regular Pro and a two hundred dollars Canadian dollar increase on the Promax. The differences this year between the Promo Pomacs are broader than ever before it just was battery life and stream size.
Now you're getting that periscope camera that gives you that five x zoom on the optical side, so hardware zoom five x, which means no degradation, and then twenty five x zoom on the digital side, so the quality will dip a little bit, but you have that intense twenty five x zoom. So it's an interesting strategy. But I do think that camera will come to the lower end model next.
Year, and strategy is so necessary because we know the context with which Apple not only puts its new phones into the market where we're worried about the Chinese consumer, but also more broadly, revenue's been on the downside.
iPhone is still so integral.
Is it obvious to you that this is going to be a hot seller as we head towards holidays?
You know, I'll tell you I've had some time to digest the announcements. I would say that these are pretty minor refreshes overall. But there is a new casing on the iPhone fifteen Pro and promax right that titanium and what I think consumers that are jumping for iPhones, those early adopters, but those big Apple fans, they want to buy what looks new, and these new phones look new.
So they're going to buy them, right.
But the technology itself, the feature set, it's not going to feel much different. It's not going to operate much different than the year prior. If you have a fourteen Pro, you probably don't need to update to a fifteen Pro. This is going to bring in people who are on thirteen's, twelve to elevens and earlier. But I certainly think despite that, that new design.
Is going to do enough and they are going to.
Get done what they need to get done, and that is to probably meet their sales expectations for the holiday order and titanium. You can see why their marketing is all in in titanium because that's really what they got this year.
Mark.
We got the investors perspective on Bloomberg Television earlier today on Cole Crawford, who's a portfolio manager at Alja. Just have a listen to what she had to say.
Forty percent of Apple's earnings comes from their services revenue, and that services revenue is almost utility like in nature.
It's the storage that you pay.
On your iPhone, which you know, we're only increasing the amount of storage and the number of photos that we have in the cloud, and so there is almost a stability aspect to the stock. Although granted, I do worry that the handset numbers are going to come under pressure, not only in China.
But also in the US.
Mark China is a concern. Timing is everything we heard from the Chinese government overnight about the reports of clamping down on foreign handsets. What do we know?
What is the latest?
Yeah, two things I'd argue on that first point, services are not forty percent of Apple's overall revenue. If that was the case, we would be having a much different discussion. It's about twenty percent. But I will note that they did announce new iicloud storage tiers, going from a ten dollars maximum two terabytes to a sixty dollars a month maximum at twelve terabytes. I'd be shocked if anyone could fill up twelve terabytes in two and a half lifetimes,
but certainly those options are there. In terms of the China situation, it seems like we're doing two things. They seem to be walking back some of these claims and reports by saying there has not been a ban. Just because China is saying that doesn't mean it to be true. I definitely still believe that government agencies are pushing their employees and their workers to not bring iPhones into work.
But you know, publicly they are walking that notion back, and privately they are probably still discussing, you know, the future of Apple and that relationship there. In terms of the other claims they said, they said they've seen security issues on iPhones, I personally think they're referring to some of the reports you've seen around iPhone security up in recent.
Weeks, always bringing us the full picture, Markham and going into national when it comes to Apple, we thank you so much. I mean, let's talk about what's coming up as well, because we're not just talking about hardware and services. We're thinking about what goes on inside the world of technology right now and how it affects the way you work.
Work shifting is upon us to see you of GitHub.
Well, we're going to be thinking about all the artificial intelligence viewpoints there as the bloombag technology time now for work shifting, where we look at the changing landscape of the labor market amid advances in technology.
If you're a developer, it's changing fast.
Gethubs Ai coding assistant Copilot for example, has tens of thousands of enterprise customers. Are millions of users getting excited about it. Hit to explain how it's actually boosting productivity in the here and the now. Thomas Donkey, he's GitHub CEO. It's great to have you in the studio Thomas. And what I'd love a sense of is how much we're seeing a speed up, how much productivity and how you measure that at the moment.
Yeah, thank you so much for having me really exciting times. You know, every company now is a software company. It's not only the big tech you know on the West Coast, it's really every bank, every supermarket, every automaker.
They all have to write software.
So their employee software developers. And what they do is, you know, they're they're writing code on their machines and get a copilot pretrix that next word, the next line, even even multiple lines of code. And so in the last two years since we launched get up copilate, we saw that half the code is written by copilot in those file to US enabled and it increases productivity of up to fifty five percent.
And so we're seeing like the.
First real use case for AI way whole sector of the workforce is adopting US to care productivity.
Also fascinating because you're within the Microsoft overall family. So open AI has got this relationship. There's also open AI code Interpreter. You've also think got some open source applications sort of coming to the pipeline. We're looking at some exuberance. It feels like in the developer world for open interpreter, where do you go open source, non open source, open AI GitHub, open interpreter, what are the offerings here.
I mean all of those will be probably covered and cover different use cases. The opening I could and Torpreter really helps you with analyzing data. It's really for the Microsoft Excel user to process some data and broad charts and those kinds of things with copartnered GitHub and then quite frankly, at Microsoft we've always been a developer tools company. Microsoft's first ever product was altair Base, you know, basic Interpreter almost forty almost fifty years ago, forty eight years ago.
And so with giithub we're going.
Where the developer is there, then the editor. They're writing code, they're debugging code. They have to you know, understand code that comes as far back from the sixties programming language called cobol all the way to you now of the modern stacked, the cloud native companies that build you know, the e commerce world of today, all of them use code to build the innovation.
Thomas, how big a player or contributor is GitHub in the open source AI movement? Do you consider GitHub a leader there?
Getub is the home of open source.
You now, many, if not, if not the most, the majority of open source projects is hosted on GitHub in As such, you know, many of those new AI projects are also hosted on GitHub and and getub is supporting them by providing them free hosting for their source code, you know, for their project, for their issue tracking, for discussions, and of course we're enabling them to use get up copilot to build their AI innovation.
Thomas, I speak to all kinds of founders, software engineers about copilot. Are you able to tell me what specific coding projects are happening with copilot and do you track them? Do you have the data that can tell you the specific areas of focus.
So we don't track, you know, on the large scale of what project that would be a violation of our private principles. But for individual organizations, we can show them the data in which repositories, in which projects they're most successful.
With the use of copilot.
You know, there are certain programming languages like Python or JavaScript that see really strong benefits from the use of Copilot and a lot of lines of code written for these projects.
Meanwhile, Blosso Microsoft sat in Adela's in Washington, along with an awful lot of other key leaders thinking about the future regulation when it comes to artificial intelligence. Are you positive and feeling that's going to be written well for GitHub to continue to see this evolution on your own platforms.
It's great that these conversations are happening, and we really need to have these conversations happening in Washington because we need the regulation happening.
Fast, right.
We need the legal security, the legal safety to apply these tools and get the productivity gains. And think about like many companies now have software developers spread a whole
around the whole world. You know, they're sitting here in the United States, that's in Germany, in India, in Australia, and so we also need to have regulation that is somewhat equal across these countries because otherwise, as a software developer, myself, as the manager of you now thousands of software developers, I don't want my software developers in the United States that have a different productivity gain than those that sit in Germany and those that sit in India, right, we don't.
We want a.
Balance across all these countries, not not a competition between these countries.
Fascinating. Thomas Doomkey of GitHub, we thank.
You, welcome back to Umore Technology.
I'm Caroline Heard in New York and.
I'm Ed Ludlow in San Francisco Cara quick check in on the markets and as that one hundred, this tech heavy index, It's been a choppy week of trading up Monday, down Tuesday, and now we're up Wednesday modestly. CPI data a little hotter than expected. We ask questions therefore about what the Federal Reserve does in the rest of the year. Do they raise rates one more time again? And when?
Why do we care? Because higher rates impact the present cash values of future cash flows for tech companies, particularly on Then as that one hundred, you have lots of software names trading at higher multiples. That's what we care about. In terms of specific movers.
We're watching a lot of the leaders in the.
Artificial intelligence space, some names behind me, all of them moving to the upside. Microsoft up one point, sent a big point boost on then as that one hundred, Palenteer and Meta. What all three stocks have in common is that their CEOs are all in one place right now in a very important meeting. That is one of our top stories. More than twenty tech and civil society leaders are current taking part in a closed door Senate meetings talk about how to shape AI regulation. Heavy hitters like
Elon Musk. Sam Altman andson Depitchai are present. We caught up with Senator Elizabeth Warren and got her take and talks about Musk.
They're sitting at a big round table all by themselves.
All of the senators are to sit there and ask no questions.
That's the setup.
For more.
Let's bring in Bloomberg's Anda Eduton on the ground in DC. What's going on inside that romana.
Well, I'm speaking with several people who are actually in the room with the CEOs, and they're saying that right now there's a discussion going on about open source and the security of sharing open source resource research. You have people like Clement DeLong of Hu Hugging Face and others who are saying that open source is good and important for innovation. You have others like Mark Zuckerberg who is
saying that it presents and security risk. So there have already been some interesting exchanges and we'll see how the rest of the session develops this afternoon they go into more conversation.
How fascinating. Let's just go. We have of course Elo masks coming live to us. We understand. Let's just dip in for a seconds in.
Order I think the general.
I think it's clear that there's a strong consensus of woman's with sensus that there should be some AI regulation that would be in the best.
Interests of the people to do so. And I think we'll probably see something happen.
I don't know what, on what time frame or exactly how it will manifest itself.
Questions what are they going to do? I don't know.
I mean, there's this, there's clearly we've created regulatory agencies before, and actually just recently just before leaving, made the point that, you know, while our regulatory agencies are not perfect, and I deal with regulators on a very frequent basis with automotive you know, communications starling and then a with with rockets, so I've had transfiy interaction with regulators for you know, decades a please, and well, regulators are not perfect.
There's no regulatory agency, but I'm aware of that.
I think we should at the federal level at least that that we should delete.
Yeah, I should be I think I or something like that someone.
Yeah, I don't know what exactly, perhaps perhaps an apartment of AI.
And probably listen, I think the probably any.
Of there being some sort of a regulatory agency that sends on its own, similar to the f A or FC.
Is likely at some point, you think so, I think so. Now.
The reason that I've been such an affable AI safety in advance of sort of anything terrible happening is that I think the consequences of AI going wrong are are severe.
So we have to be proactive rather than reactive.
Uh, you know in the past, if he takes a but I'm being somewhat late, full of speaking of regulators. I'm a little late for the f A. I'm meeting with the FA and holds you up, sure, but.
Yeah, if you if you take the exact of safety belts. Seatbelts were opposed by.
The auto industry for a very long time, even though the data was very clear that they're safe, that they radically improve.
Deaths and injuries.
So, you know, we don't want to be in that situation where we're fighting regulations even though you know there's a safety thing.
We can't wait for millions of people to die in auto accidents, as you know, constutely like. And it's important to just elevate the question here.
Question is is really one of civilizational risks, So just it's it's not like one group.
Versus another, one group of humans us another.
It's like, hey, this is something that's potentially risk people, whole humans everywhere.
Very important to understand that is there an equally.
Hunger sufficiently premar.
No, no, no, no, the sequence of events will not be jumping at the deep end and making the rules.
But it saw us with insight tract.
This is actually how all of the regulatory bodies performed their believe as you start with a group formed to create insight to understand the situation, then you have proposed rule making. You'll get some rejections from industry or whatever, and then ultimately you get sort of a consensus sort of role making.
Their rulemaking then becomes a law regulation.
There you have it. You must speaking to reporters.
Of course, it seems to be as they draw to a close for the lunch time break, and and we understand that some people are going to be subbing in for the CEOs of their companies for the second half of the discussions with senators, and we'll broadly we heard from me La Must they're really talking about whether or not we will see some sort of regulator start to oversee artificial intelligence.
Just tell us if you.
Can summarize the arguments we've heard thus far of how you really get to grips with regulating AI more broadly.
I mean, that's the question.
I think you have most of the people in that room agreeing that there should be so kind of regulation, but there's no agreement about how and when it comes to, like a licensing regime or a regulatory agency like Musk was just talking about. We know that other companies like IBM actually oppose that proposal, whereas you know others like Microsoft and open Ai think that would be a good idea. So we'll see more policy discussion about that as we
go into the afternoon. And an interesting thing about Musk. In his opening statement, he tried to make the point that the AI that powers self driving cars is not as dangerous as the kind of deep mind AI that emulates human intelligence. However, he did get some pushback on that from deb Raji, one of the researchers from Berkeley, who made the point that self driving car powered AI could also make mistakes that could prove to be fatal.
Well, said Anna edgeton getting all the inside track and the closed door meeting and us wringing you what was happening just on the outside of that, we need a musk as well.
Let's continue this conversation.
I'm pleased to say Dominique Shelton Leipzig is with a privacy and cybersecurity partner at Maya Brown Needs of the firm's global day to renovation team, offering CEO and more level advice basically on exactly this on the impact of multiplagy intelligence and how it should be adopted without some sort of a regulatory framework. Are you positive that we will get a regulator or will it be down to self regulation once more?
You know, thank you so much Caroline for having me, and thank you also. This is such an important issue and just hearing what the CEO Musk was talking about how AI is really going to impact all of our lives, medical, financial, educational. So this conversation that's happening with the senators is so important. We are going to see regulation. The only question will be whether the United States moves first.
What we've got we're very close.
To right now is legislation being adopted in Europe to govern AI, and we're expecting that by December twenty twenty three.
So the issue is there are thirty.
Seven countries and six continents that have draft legislation already before their legislatures, and Europe looks like it will go first with the US behind, and EU.
Sort of shifted tone.
Originally it felt as though they were going to be regulating application of AI, but then suddenly it turned its attention more to the actual building of the foundational models. That seems to be an argument being pushed back against these some US CEOs. They don't want to see the building of foundational models being under some sort of scope here is that already thrown out with the bath water.
I think this is going to be an ongoing debate, and there's a discussion at the US level and also the international level about having the actual deployers, the users of the AI having guardrails as well as the providers and the foundation models as well of a generative AI large language models. So I think we're starting to see proposals like the one that came out yesterday with Senator
Blumenthal and Holly. They have a framework that would encompass the large language models as well as the other types of AI.
Dominique Guenela Musk was speaking just a few moments ago. He gave the analogy of acting on AI safety as being akin to the seat belt that with the seat belt action came after many tragedies and crashes, and he just wants to be proactive rather than reactive. Is that an approach that you think will work based on what DC's saying right now.
Yes, I think it's very exciting to see this number of CEOs. We have literally the most important and largest tech companies that are present in DC right now to discuss this issue because they do see it as being important and they are being proactive. I think it's wonderful that the academics are there as well and the community groups are present at Senator Schumer's forum because the point is that we all need.
To grapple these issues together.
There is going to need to be a communication from proactive steps taken by the leadership of our tech companies, and they're doing that just by their presence of being present to have these very important discussions.
So I'm excited for the future.
Dominie.
Do you get the sense that policy makers legislators are as collaborative on this issue as the private sector is. They're actually engaging on it with those that are leading the development of the technology.
Yes, what I'm seeing is cross party in the US, cross party and bipartisan support around answering the call of many of these CEOs to put in place the opportunities and governance and guardrails that will allow AI to be just amazing. So what we want is the ability to innovate and create understanding where there are limits or areas where safety needs to come first, and this is something that the regulators and the business community are aligning on.
I also will say what's good this time is that there is also the use of research scientists, large language model experts to engage them on how this technology actually works and therefore how we can craft common sense legislation.
What is it being talked about?
What's not being.
Talked about are the nitty gritty of the sort of unanimity of thinking around the world in terms of what the legislation should look like. What we're seeing all around the world is a focus on ranking risk ranking of AI, focus on high risk, treating that differently than we're treating low risk AI.
There's also a focus.
On testing and monitoring and auditing of the systems themselves to make sure that they are amazing and they're doing exactly what the companies want them to do and with the public wants, and so I'm very excited for the way the legislation, the draft legislation has been put together and the framework that has been floated in Washing, Frameworks being floated in Washington as well as around the world, because we're getting at tackling the actual governance that will make AI amazing.
Dominique Caroline and I speak to companies and executives of all shapes and sizes and sectors, and they're talking to talk and it's really hard for us to discern if they're walking the walk. Do you see clients actually spending money and hiring the right people to operationalize any of what we've just discussed.
Absolutely, you know what has been so exciting and what we've seen. We have an AI task force that we put together at our firm because it's a cross disciplinary issue, and we every day I'm speaking to clients that are from Fortune five hundred companies that are very serious about getting AI governance right are already looking at.
Draft legislation and mapping to that now, so.
They are prepared and ready to pivot when final regulations come in.
They're going to be already ahead of the game.
That's the way to approach this because, as mister Musk said earlier, regulation is going to come, and so the key here is really being prepared. And we're seeing clients and companies every day. I talk to clients and companies that are focused laser focused on getting this right and being amazing with their AI.
And global regulation at that. Good to have a global law firm with us. We thank you so much. Of course, Dominique coming into the studio. Dominique Shelton Leipzig partner ever at Mett bram ed.
All right, let's get some talking tech and first stop. ARM is expecting to price its initial public offering at the top end of its range or even higher. Bloomberg sources say that the soft bank done chip designer could be a dollar or more above its fifty one dollar target. ARM sets begin trading on the Nasdaq tomorrow, and game maker Square NX is hoping to rebound from the underwhelming sales of Final Fantasy sixteen, the latest installment of its
global hit series. Nearly tw two billion dollars. Sorry of its value has fallen since the game's release. Now, investors are wondering if the legacy franchise has run its course. Plus, the CEO of Binance US has left the company. Brian Schroeder, stepped down from his role, just as the struggling crypto platform conducted its second round of layoffs. More than one hundred jobs have been cut from its workforce amid a regulatory crackdown from the US Securities and Exchange Commission.
Caroline Mean, Well, look, let's talk about what else is happening over in Washington and ten week and trust trial between Google and the Department of Justice is underway, and the government is accusing the search shound, of course, of spending ten billion dollars a year to maintain what it calls as a monopoly with us.
Is going to be really a moment to.
Dissect how we're hearing the arguments laid out ed. We ultimately know that it feels as though we're trying to reminisce to a nineteen nineties feeld of Microsoft. How much is this a time that we're going to see timately Alphabet be able to fight back on the grounds that, yes, it is actually easy to be able to change your ways in which you search. The point is that they're so good no one wants to do that.
Ed, Yeah, And what I would say is the reason we love hearings in court documents is sometimes you get crazy stories like what Google was doing twenty years ago to fight off its competition. Let's bring in Bloombergs near Lylan out in DC on the antitrust beat. And that was kind of a mainstay of your latest reporting, Leah, what was going on inside Google two thousand and three and what the Justice Department kind of unearthed in those disclosures? What have we learned?
Yeah, So the very first witness who started last yesterday afternoon is Hal Vari and he is Google's one time chief economist, and he was sort of the one who came up with this strategy that they ended up pursuing to make Google's search engine that fuck across browsers and
mobile devices. It sort of came out of these memos that he wrote in two thousand and three two thousand and five timeframe, when they sort of discovered that if people had set Google as their homepage, they ended up doing a lot more searching than if they had their homepage as something else like yeahoo aol MSN some of
the other big web pages of the day. So that sort of made them realize that when you make it really easy for people to do it, make it automatic, it ends up leading to much more traffic and making it, you know, Google, a much better product.
So hal Varian, he's been cooled, I understand, and course to testify that was one of the first moves made. Are we likely to see this momentum build in terms of the argument of how long Google's been aware of how important it is to dominate the world of search, and ultimately whether it will ever bring about some sort of breakup.
Yeah.
So, as you know, we were saying, this is a ten week trial, so there's going to be a lot of different witnesses, both within Google and from outside Google talking about how It's power in search has sort of grown over time. You know, hal Varin is the person that they sort of decided to start with as sort of like the origin story of this this conduct, as
the Justice Department alleges. But we're also going to hear from a lot of other interesting people, including some of the people who helped develop search, some of Google's search rivals, like folks at Goo and Microsoft and the now defunct Geneva. And we'll also hear from Sunder Pshai himself, who is now the CEO, but you know has actually already come up in some of these emails as such, because back in the early days he was very involved in helping develop the search engine.
Do mostly and iland that on the ground anti trust reporting from DC. Thank you. Let's keep the conversation going, joining us now William Kovacic GW Professor of Law, and William, you know, the trials are exciting. They give newsflow, they give new disclosures. But the only question is is this a serious threat to Google as a whole entity.
It is a serious threat, and the threat goes back to the experience with the Microsoft case which the Department of Justice brought over twenty years ago, and the most important concept to come out of that case is that there are important limits on what a dominant enterprise can do by way of buying up inputs channels of distribution that it and its rivals need in order to compete.
And the theory that was endorsed by the Court of Appeals in that case is that a dominant firm can overreach when it basically seeks to preclude its competitors from getting effective access to users. And that core theory is the heart of this case, and I'm sure that's the theory that Google takes most seriously here in its defense.
William, you spent almost a decade as a non executive director at the uk CMA Competition and Markets Authority. Put your regulation to hat on and tell us what chances you think US regulators have of doing of a successful action against Google or Alphabet They.
Have a fighting chance to demonstrate that there was an infringement of law because of this core concept that is favorable to them. Obtaining relief that goes beyond prohibiting the specific conduct might be difficult.
That's proven to be a very tough.
Challenge in the United States. The other thing that will be difficult to cope with in the case itself is Google's response in talking about the placement the search engine on these devices. I suspect Google is going to ask the court, what would you have expected us to do otherwise? Should we have stood by and not even bid in the auctions that determined who was going to be on those devices? Should we have simply allowed our rivals to go ahead and obtain that precious real estate? What would
you have had us do otherwise? And by implication what should large firms do Otherwise, I think that's going to be a hard issue for the court to wrestle with. But I'd say, if I had to look at where the possibilities for success are, the government has a serious prospect of succeeding on the essential question of whether exclusivity was improperly obtained as a means of exclusion.
We had Rebecca Allensworth on yesterday and thinking about sort of the concept of ultimately, even if they win or lose this individual case, ultimately the pendulum is swinging in the way in which regulators look at big tech.
You yourself at the FTC sharing it of course the agency from March two thousand and eight, two thousand and nine. Do think conversations are permanently changed in the way in which regulators i big tech.
I think there's been a durable change in the risk appetite that regulators in the United States, in the United king as we were just mentioning before taken looking at the sector. I think there was a fairly strong belief twenty years ago, going back to the documents that Leah was describing earlier, there was a sense that this is a very dynamic sector and that unpredictable changes, changes you can't even identify at the moment, will deny any individual
firm sustain preeminence in the field. Those assumptions have been revisited, and I think globally you see a change from thinking be cautious about intervening to be willing to intervene even though the specific outcome might be uncertain. And part of that strong belief is that simply having an active presence of the regulators chasens and limits the behavior of dominant firms.
And isn't it ironic that ultimately that moment, that unpredictable moment is upon us the fact that Generative a I have swung into the mix and suddenly seems to be the most competitive threat to Google Search that we've had.
In a long time.
So I'm interested as to the perspective that already in practice, do you think companies have been withholding from making purchases, withholding perhaps making changes to the way in which they react to competitors because of the way regulators are now acting.
I think we're going to get some good insights in the trial on exactly that question. But I suspect that what companies have continued to look for our opportunities to achieve real breakthrough, So the kind that you were discussing in the previous segment with the Musk interview. I think there's no question that companies are looking for opportunities. It will astonish by allowing them to achieve true pre eminence.
On in their own right.
But a very difficult and almost unmeasurable issue in the trial is whether you advance innovation more by being aggressive in intervening, or whether you advance it more by being more permissive.
Absolutely fascinating, So we thank you, GW Professor of law, William Kovechic thank you.
Meanwhile, coming up, a.
Cyber attack takes out part of the biggest strip as hackers target MGM will have the details next.
There is a roombag Technology MGM Resorts in Las Vegas.
It was hit by a cyber attack this week, taking down payment system slot machines guess ability to.
Actually access their hotel rooms and check in.
Details of the attack, including who is behind it, though the motive the type of information that they may have obtained all remains pretty limited. A spokesperson for the FBI office in Las Vegas said they are aware of the attack they are assisting, and MGM says that hotels and casinos are currently operational, but plenty of frustration there.
It feels, yeah, some of the reporting is amazing. People being forced to use cash. Can you imagine having to use paper money in this day and age? Outrageous? But check out that story on Bloomberg because sadly, Caroline, that does it for this edition of Bloomberg Technologies, Big Show. Recap it on our podcast wherever you find your podcast on the Bloomberg terminal, but we're also on Apple, Spotify and on iHeart, as well as the Bloomberg platforms from
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