Tech Brings Market Down and Twitter and Covid Misinformation

first aid, let's bring in Rob Cantwell. Here's portfolio manager Upholdings and Rob, it's great to have you with the show. And we actually source a little bit of data ourselves nowadays from Twitter. We go out with our daily poll and we wanted to ask our audience whether they are currently selling big tech, whether the reasons around, whether they're blaming the Federal Reserve and rate hikes, whether they're blaming

the economic slowdown, whether they're blaming political headwinds. And actually, Robbed, we've got some British sentiment. They're not selling, they're buying in majority roll. Are you buying at this point, Well, it's tricky to go on a technology platform and ask

them if they want to buy more technology. We certainly are finding plenty of good deals in the space, but it's a it's a it's a fascinating time to be an investor in big tech, small tech, medium tech, because big tech has gotten so big it's now more than the SMP five hundred that it has become intertwined with macro economic factors and statistics, and that hasn't been the case for the past twenty years. Google hasn't had to care about currency headwinds up until about six months ago.

And so you've now got all these tech analysts that have been scrambling because the earnings calls this past quarter everybody missed due to currency. So now you've got all these tech analysts that have to become currency experts, and it's thrown things a little bit upside down. But really, what's that done is it has created plenty of opportunities for those that are willing to wait some of this stuff out, because there's there's obviously you want to be

buying when when folks are selling. We've been saying this line on blue bag technology for weeks now about higher rates discount the present value of future profits. Why that's why we care about the FED. In the context all of the text exit, I'm gonna ask you a slightly different question, what is the bigger risk to the technology sector the FED or inflation? Well, interest rates actually affect

a lot of things. Uh. They can push your multiple down from the discount factor that you just discussed, it also pushes down your growth rate, and a lower growth rate also drives the lower multiple. And if you look back over long enough periods of time, higher interest rates also means lower margins. So you're talking about a triple hit here of your discount factor, your margins for the company, and the growth rate expectations. And that's why you've seen

stocks like Meta trade down almost seventy this year. They obviously have some other factors as well. So it'sest rates where we sit right now. Interest rates are more of

a risk to the global economy than inflation. Inflation has started calming down over the past thirty days or so, but we're now in a low growth world and most central banks are saying they're not done raising interest rates, and so there isn't a single analyst out there that is forecasting a re acceleration and growth because until we see that interest rates have pause, that that effect that interest rates have on growth for the worldwide economy is going to continue to be an issue valuing a lot

of these companies and the impact that raising rates has on the labor market in particular, that is the other side of the coin and of sacrifice that the federal Reserve is willing to swallow. At the moment, we're seeing those job layoffs coming thick and fast to the tech sector first and foremost. Rob is that the way you want to see companies controlling costs, and we likely to see them being the canary in the cold mine and

this sweeping into other sectors. You know, it's job layoffs are are a tricky one because you saw the onset of COVID In early every company laid off too many employees and then six months later they were scrambling to rehire again. So you get these strange booming bus cycles where companies fire, profit margins start improving, and then they start chasing employees all over again. So whether or not we've gone recent history tells us that companies are likely

going too far again in these recent playoffs. This this coincidental thtcent layoff number that became the socially accepted average for the amount of your workforce you can let go, we found to be a little bit peculiar and was a bit more reflective of companies just trying to hide in the average and not trying to stand up by not firing, but also not trying to stand out by

over firing their their overall workforce. But inaggregate, it's just volatility in an economy is a risk because it doesn't allow the managers to plan and execute their strategies as smoothly as they could if there was less volatility. So we're certainly in a very volatile moment, uh, and interesting to see what comes out the other side. We we know it's been a toughier right You look at it as that one hundred with down thirty percent as of Tuesday's close, as we know, the worst year since two

thousand and eight. If they're all green, green sheets or bright spots in the technology sector, where are they? Well? What what? What's remarkable is that the usage of technology remains incredibly strong. You know elon reporting record, you know users sign ups and usage of Twitter that's not unique to Twitter. That's happening everywhere. That's happening in Instagram, that's happening in TikTok. And there's a couple of other technology

transitions that are happening. The cloud computing one. We think Data Dog is an incredibly well positioned company that's already making money and is expanding margins and end payments, where Stripe as a private company adian as their public competitor. Those are two areas where, even though there's been a slowdown in growth as a whole, you're still seeing that the technology has such an advantage over the incumbents that

the growth rates of those companies has remained penetrating. So those are the areas that were the most focused on over the next twelve months or so. Simultimism there. From one voice in the investment community, Rob Campbell, portfolio manager at Upholdings, thank you. Now. Let's turn to Twitter, which scrapped its policy preventing the sharing of false or miss leading information about COVID nineteen. That was done quietly announced on the company's website over the holiday week last week,

and it's been effective since November. Bloomberg Sarah Fryer is here with more details and Sarah, why was this announced so quietly? Well, I think that what we're seeing here is this company is not as focused on being proactive with his communications except directly through Elon Musk. What we've seen is he's the one who's tweeting out what's happened

with Twitter. He's explaining his spots almost stream of consciousness to the public, and then when it comes to these policy changes, we might not see abroad announcement or blog posts like we would in Twitter past. It just isn't They don't know, they're not staff to do it. They

laid off the entire communications staff. So I think that we're just going to see either this is a private company right now, we as reporters have to ask questions of our sources and keep paying attention to what the leadership says dramatically reducing the size of the team devoted to tackling child sexual exploitation as well as one of the key stories out on the Blue Bow terminal today. So and your team driving that home talk to us

about where he therefore is focused. If he's not focused on some of the prs around this, or indeed some of the content which many brands are worried about. He seems to be more worried about where people are sitting in the office and how they're all coming together right. I think he's absolutely concerned right now with making sure that there is a sense of momentum, a sense of of all the engineers together trying to build the next

iteration of the product. He wants to launch a new form of verification on Twitter very soon, and he's crossing his fingers that it doesn't cause those kind of public disasters we saw the last time it happened. So I think I think he's getting a trial by fire in understanding how social media businesses work. We saw him talk in the last couple of days about the app stores for Apple and Google and how he thinks that they're unfair,

and so I really think that this is um. This is a moment where, like the constant moderation stuff we will see far by the wayside a bit um as he tries to prove that he can grow Twitter. I just want to bring you some breaking headlines crossing the Bloomberg Caroline oathkeeper leader Rhodes was convicted of the January six sedition charge. You'll remember jury has been considering the charges against that militia group and its leader five individuals

for a number of weeks. But that is the headline crossing the Bloomberg terminal overkeeper leader Roads convicted of January six sedition charge. We'll bring you more as we get that. Interestingly, Sarah, some more headlines crossing the Bloomberg. Twitter's former troughs and safety boss, yould Wrath speaking publicly saying that he fears not enough Twitter employees left to police content. That's coming from somebody who knew the trust and safety side of

the business. Well, uh, well, the way police content on and police is a weird way to put it. It's really about having the expertise to know where to draw the line between something being um, you know, an opinion or a necessary thing that they want to they want to say to their audience, versus something that could be harmful, that could insticate violence, that could that could cause issues. And when you don't have subject matter experts in various areas of content, you may not be able to make

that determination. So I think that you know, Twitter by cutting a lot of its staff would be recently reported today that the the team that works on on child exploitation, exploitation content. The highly specific expertise to to be able to weed that stuff out effectively has been cut in half. Um, you end up, you will end up with a lot of trouble on one thing we reported, and in fact

you helped us report the story out. The team that was working with governments, UM, trying to understand what to do about about content takedown requests from certain governments or asking for data and users. I mean that team has been decimated. So I think they are going to be in a really tough, smart and a lot of these very difficult decisions going forward. Sarah fr we want to

thank you so much for all of that. Let's get to those all important crypto markets said, because worries about contagion from the implosion of FDx still hangs over the digital asset class. Nevertheless, they're pushing hard on Tuesday. Yeah, it's interesting. We found a little bit of momentum across a number of cryptocurrencies digital tokens throughout Tuesday's main session. We hit five pm East and we spill over into

the following day. We're finding our feet even so, I want to get straight to the Bloomberg Galaxy Crypto Index. It's an interesting index because it trades very similar to the equity markets and inequity index that it has an opening and closing point, and it's waited based on the biggest digital tokens by market value, so largely bitcoin, ether tether.

But you can see since that tweet, that original tweet from cz where we first had those concerns or revelations as he called them, raised about f t X, we're down now more than across the basket of cryptocurrencies that the Boomberg Galaxy Crypto Index is tracking. The question posed in the story today is that is more and more of the fallout kind of becomes unveiled, in which direction

does this index go. It's still has some downward momentum, and it looks like we're gonna have to have something very serious to snap out of this fundamental downward trend we're seeing in this broad basket of cryptocarac Yeah, and let's get a little bit more into the ft X collapse right here, right now too. As you give us the macro, let's go in a little bit more on the micro because there's been much handwringing about or whether it's got a wider impact on the growth of crypto

at large. Many have tried to highlight that actually ft X is demise actually underpins the reason that decentralized finance is needed because ft X was too centralized. Just take a listen to Tim Draper of Draper Associates. What do you have to say about it. F t X was very centralized. It was all centered around this one guy. And when you centralize anything, bad things can happen. Let's now talk about all of this with our next guest, Va Saidath. She is the co founder of the Collective

Intelligence Project. Unlike Tim Draper, don't think centralization is inherently bad. But I first and foremost want to make clear to our audience that in your own funding for your project, you did take some re granted funds from f t X Future Fund. It's widely known that they've given money to an awful lot of organizations. You're an experimental research organization. Just tell us a little bit why the Future Fund would have had interest in getting to grips with democratic

effective governance that you study. Yeah, I think there's actually a lot of it relaxed between that question and the one about centralization and decentralization, because a lot of the posit promise of crypto on the decentralized side was to say there is something about democratic, effective governance and self determination that is enabled by these technologies, right, Um, that we are able to do more decentralized, less intervention oriented

institutional structures. Uh. And we were experimenting with democracy and technology and so got some regranted funds from ft X in that process. But I think it speaks to also this question around whether centralization is good or bad, because in my point of view, accountability is really a big part of the goal of both decentralization and centralization, and the ecosystem is often much more focused on the kind or the degree of decentralization as opposed to the type

of decentralization. So you ran this quote of Tim Draper, for example, who was saying t X is too centralized, but comparing that to banks, which haven't failed in quite a while, are very centralized entities in some sense and are regulated as such. Right And so I think it's quite complicated to call something as a whole purely centralized and say all of its faults are down to that. Dave, We've had this debate over centralized decentralized. You've introduced us

to a third term, poly centralism or polycentrism. What is that? Yeah, it's a bit of an academic term. Um, but I find myself often saying we don't want either decentralization or centralization. What we want is polycentrism. Uh. And the term is a bit what it sounds like. So having many centers, and I think the problem is, you know, decentralized systems often carry a grain of centralization within them. A great

example of this is the Internet. And so the t c P I P protocol that underpins a lot of the communication capabilities and packet switching of the Internet is decentralized, and it has successfully been decentralized, right, But the way that that happened is actually through this complex polycentric having many systems, sorry, many centers, a standard setting, organizations and regulatory agencies and private companies that kind of sprung up

around it that allowed for that decentralization to stay in place. However, you know, the Internet as we know it now is not decentralized. Most of us spend our time on the and then on five websites. And why did that happen because many of the layers of the stack under over that decentralized protocol centralized because there was no kind of clear polycentric structure keeping them decentralized. And you know, decentralization tends to centralize without some checks and balances. So I

think that's where this idea of polycentrism comes from. Instead of just allowing chaotic centralization from chaotic decentralization, can you intentionally allow checks and balances? And by the way, this is basically the principle that underpins federalism and the U. S Government and all of these kinds of things that say there should be something between the local and the federal to that end of you Therefore, is it regulation that helps with transparency, the checks and the balances within

inevitably centralized parts. How do you get to the utopia of polycentrism. Does it become organic or do you need actually real fundamental rules in place to drive back. I think it's a great question. I mean, I think regulation is one thing, and regulating harms is always important, but many of six feessibule polycentric systems. Whether we think about it as federal agencies, wikipedia as a polycentric system, and

many open source code repositories on this way. Uh. And the word actually comes from Eleanor Ostrom, who's a Nobel Prize winner, and she looks at self governing systems, not regulation at all, not state run systems at all. And so I think a lot of this is not just rules, but can you have different kinds of institutions. Can you have public input and private input in civil society input? And that's how the standard setting process of the Internet

currently runs. And so polycentrism won't work if it's just rules top down. It's this ecosystem of different centers that's necessary. And I do think you know, the crypto industry where where it goes next is unclear, but to succeed it will need to develop this kind of polycentric ability to not just invite in certain forms of regulation, but actually have different groups at the table because otherwise a lot

of these you know, uh, tend towards either centralization or plutocracy. Okay, Debious ad Off, co founder of the Collective Intelligence Projects, thank you. Coming up, we'll bring you the latest venture can a round up from around the world. This is Bloomberg time for talking tech in today. A venture capital

round up starting with farm robots. That's what Cleveland Avenue, the VC firm founded by a former McDonald CEO, is investing in, leading a forty six point five million dollars Series A funding round for the agriculture tech startup Verdant Robotics. This as farmers increasingly rely on technology to produce enough food for a growing population, while also facing a shortage of workers and pressure to reduce their environmental impact. And while the venture market is in the middle of a downturn,

there are still plenty of emerging players. Seed Stars has launched a platform called seed Stars Capital along with the Swiss based investment holding company x Multiplied, the goal to fund as much as five million dollars of new funding into emerging and diverse VC managers in Africa, Asia, the

Middle East, Latin America, and Central and Eastern Europe. And staying in the world of global vcs, Evolution Equity Partners is betting on cyber security and scouting for more investors from Asia and the Middle East for its latest fund. The firm has raised five million dollars for this fund so far, with a target of seven and fifty million dollars expected to close in the first quarter of three Carol,

and loving how you follow the money. Meanwhile, coming up a WS CEO Adam Slipsky discussing layoffs, discussing the chip sector and growing competition. This is Bloomberg. Welcome back to

Bloomberg Technology. I'm Caroline hard in New York. Now Amazon's Reinvent Carl Computing conferences underway in Las Vegas, and the company announcing it will build its own chips for a WS customers looking for high performance computers pleased to say Bloomberg examily changs in fact San Francisco joining well, Thank you Caroline and joining us now from Reinvent in Las Vegas. Is AWS CEO Adam Selipsky. Conference off to a good start. Adam,

thank you for joining us. You've got a pronounced economic downturn happening. You've got layoffs happening across the board, including at Amazon, but still record Cyber Monday sales against that backdrop. What has been made message you want customers to take away from Reinvent this year. It's great to see you, Emily,

Thanks so much. We are so excited to be here in Las Vegas at our eleventh Reinvent with over fifty thou customers and partners live here, as well as over three hundred thousand registered around the world for the for the virtual part of the event, I think they're the big Probably the biggest message here to reinvent is that companies and all sorts of organizations continue to transform themselves using the cloud, that particularly in times of economic concertainty,

that that's the best time to lean in big as the cloud is the most efficient place to be running cost savings, at least for most enterprises who move work close to the cloud. Clouds also the place to be flexible. You can grow and shrink your capacity at will, and it's a place to to innovate where you can do more with fewer resources. So precisely because of the economic uncertainty and not despite it, we see a lot of companies leaning in. Now, Amazon in a way has already

reinvented cloud technology. What is the next era of reinvention actually look like. Well, I think we're still very early in cloud adoption Emily, despite the fact that AWS is the significant leader UH in the cloud space, and as you said, did did a pioneer starting in two thousand

and six. Probably depending what study you look at maybe ten of i T workloads have moved to the cloud, and that's a lot of That's a lot of dollars because there's a lot of I T in the world, but it's still only a small percentage, and we firmly believe that in the fullness of time, most i T will move to the clouds. So I think that we're

seeing companies leaning in. A lot of acceleration happening, tremendous interest in our continuing to improve price performance for customers, interest in data and machine learning and analytics, and interest in specialized purpose boat solutions for different vertical industries and horizontal business functions. Now, if indeed this is a recession, it's a first for AWS as a sort of company within a company. Amazon has seen this before, but AWS hasn't.

You know. Now you've got big company sales but also big company problems. What are you cutting in? Where? Where are you pausing? And why? Well, Emily, actually AWS was founded in well, launched in two thousand and six, and so we're already in business for the Great Recession and two thousand and two thousand and nine, and it was

really interesting. We didn't know then if that would would help US or hurt US quite frankly, and it turned out I I think it was actually a significant tail wind because a lot of companies who didn't have the money for capital expenditure were easily able to move to the cloud and get moving quickly on AWS really with with just operating expense and being able to turn capacity

on and off. Now, I don't know if we're going to have a recession now, and I don't know exactly how that will impact our customers and US if we do, but I think there's at least a reasonable hypothesis that again a lot of companies could actually turn to the cloud in the case of a recession. And we're very focused always on helping companies be extremely cost effective in

good times, in lean times, and any times. We want customers to spend as little as they possibly can for any particular unit of work, and we know they'll bring more workloads to the cloud if if the economics makes sense. But how are you applying that to AWS itself? I mean, Andy Jassey has said that cuts are going to continue into next year and the plan is to lay off thousands of corporate employees. How many of those employees are coming from within AWS. Is there a hiring freeze? How

are you changing your spending strategy. Well, we have taken a pause in AWS on hiring new employees. We've actually expanded tremendously over the past several years, I mean very high employee growth for a number of years in a row. It really all to support our business growth and of course to support all the things that our customers want

to do. So we have actually a significant amount of resources all across the company and development, sales and marketing, and I think we were well positioned right now to make sure we're being really efficient with all those people we've hired, and I think we're gonna have uh, certainly all the capacity of people that we need for right now. We've got a lot of things done for our customers, so we are going to take that pause, but I

think we'll still be able to deliver. Okay, Now, on the last call, you said, uh, the growth rate of a W has trailed off in Q three. Has that continued into QU four? You seeing customers pull back? You mentioned financial services, crypto mortgages. Are those still the weaker business lines? And it's anything bucking the trend? Well, as

we said on the on the last call. I think there's some uh, you know, there's a mix of headwinds and tail winds, and we d see customers, some customers tightening their belts which I mentioned earlier, and just getting efficient with their cloud spent and frankly, they should be doing that all the time, and we help them do that all the time, but I think more of them

are doing that right now. At the same time, you see other customers leaning in because of the cost efficiencies, because of the flexibility in their in their overall usage, and and and and spend. So I think you see a mix of these things. Um. I think regardless of whatever happens in the short term that you know, in any medium term scenario, really the secular trend of very

strong long term adoption of the cloud is going to continue. Now, data centers consume a lot of water, and Amazon Web Services has promised to replenish the water that it consumes. But you're still not disclosing the amount of water that AWS actually uses, which is something that Google does do. Why not release that number when the industry and some of the stakeholders really want more transparency. Well, Emily, we're a leader and sustainability Overall, we've released a lot of statistics.

We've pledged to be NETS are a carbon, NETS are a carbon as a company across Amazon BY we said we're going to be a renewable energy as a company BY We're already of the way there towards that goal. So there's lots of stats we've released. And then this week we did make a pledge to be water positive BY, meaning that we're going to return more water to the communities than we use in our direct operations BY and we released our actual energy efficiency usage stat this week.

We consume zero point to five leaders of water per kilo what hour in our data center. That is not a stat which every other cloud provider releases, and those who do UH do not have as good performance as we have. We're the leader in the cloud space with that, and we'll continue to UH to release more data as the months and the years go on. So I think it will be good transparency from AWS and most importantly, I think will continue to be a leader and to

actually build towards the sustainable future, including with water. Now, you're continuing to develop your own chip technology, which is we've talked about in the past. You're promoting it at Reinvent, and it does make a lot of sense, But I wonder how it impacts your relationships with suppliers. Why wouldn't in Video, Intel, a m D give better prices or better supply uh to other competitors, to Google, to Microsoft

when you've got your own silicon in the making. Well, Emily, we have great relationships with all of those chip manufacturers and including the ones you mentioned UH, Intel and A m D and Video etcetera. And we're going to continue to have those great relationships. We continue to sign long term deals with with with with many of those suppliers. I mean, AWS is is large now. Last quarter we were an eighty two billion dollar a year run rate,

and we have tremendous capacity needs around the world. Our customers have a just a vast heterogeneity of different needs, and so I think there are lots of use cases for all of those chip vendors to be working with us to service our customers. And there's going to be increasing use cases and big, big time utility for our our own custom design chips as well. All Right, Adam Selipsky, CEO of AWS joining us from Reinvent in Las Vegas. Good luck with the rest of the conference. Guys, I'll

send it back to you, all right. Thanks Emmy. Block fine, which is going through its own bankruptcy proceedings now, is looking to collect money from the other bankropt empire, some my and Freed's bankrupt empire, including from Alameda Research to the tune of six or eighty million dollars. It's not only about what I can said to explain the dispute and the huge amount of documents you've been waiting. Three uh.

There has certainly been a lot of legal documents because of course there are multiple bankruptcies as well as a lawsuit. So let's bring you through this for a second here. Because you have money that Block five was owed from Alameda, as you said, six million dollars, and then f t X had also had a credit line over to Block five. They are owed two d seventy five million dollars. They had a credit line in which they were not able. Block five was not able to get the entire extent

of their money. And remember when it comes to the money that they lent to Alameda. Interestingly, Block five is seeking the collateral and they're doing it in the means of a separate regulatory filing here. Now I'm holding here Block Five's lawsuit against Emergent Fidelity Technologies. Remember that is in the company that had bought the Robin Hood shares. This entity is not included in the bankruptcy filings, which

is what makes this interesting. Interestingly, also defended in this law suit is E D and f Man Capital Markets, which had held the collateral that is being disputed here. And according to the Financial Times, which saw the loan documents between Block five and UM and Emergent Technologies, here Emergent Fidelity and Technologies the collateral and dispute as the Rock and Hood shares. So they want them back. They want them back because this is what was liquid inside

the sam Bankment freed Empire at large. Remember this is not an entity that is in the bankruptcy procedees when it comes to f t X. However, that draws a lot of questions in terms of how Block five gets paid and frankly, how other people get paid. Because Block Fi wants to get paid to pay everybody else. This is deeply confusing. For money ultimately get you hearing from lawyers how likely they are to get a significant amount of the six D eighty million they're off the back.

You know, it's an interesting question because six D and eighty million in the scope of billions of dollars here, it's a signific gain amount of money, especially when you look at the rest of what block fives creditors are owed here remembered a large group of creditors or owned seven hundred million or so, so that means that six D fifty would really help on that regard. But something interesting to just kind of bring you into the background here.

I spent again another day with the bankruptcy experts and lawyers, and something interesting they told me is one thing that hasn't happened here yet is credit or committees getting together, which could become very interesting because in this instance, if you watch normal bankruptcy play out on Wall Street, you're seeing big creditors, you know, big hedge funds or private equity firms banned together to get their money back or

fight against each other. But in this case, because the depositors are key here, you might see more aligning of interest between these big institutional investors and the customers themselves that are working with trusts to get their money back. I have a feeling this will go on and on Shnati Bassak is going to go back to those bankruptcy expects. I'm sure, but there's a lot of money being passed around some very interconnected woven parts him. Meanwhile, that's switch

gears a little bit. Let's talk about, unfortunately once again layoffs because AMC Networks, the network responsible shows like Breaking Bad, like The Walking Dead, like top Gear, says it is planning to lay off about of its US workforce. Now. This follows an announcement earlier on Tuesday that it's chief executive has stepped down less than three months after taking the reins has become the latest media company rocked by lots of viewers to streaming services such as Netflix and

Disney Plus. Meanwhile, coming up, we're going to get digging deep into the chip sector, into Chinese exposure of US giants such as Land Research. The CFO Doug Betting is going to be joining us the changing semiconducted chip landscape. Amiddle all these geo political tensions, Lisa Blomberg. Now to the fast changing power struggles in the semiconductor chip industry. Major companies like Apple and Amazon are jump starting plans to make in house chips for their products. As geo

political tensions get in the way of manufacturing. For instance, COVID lockdowns and worker protests. Apple's key assembly plant in China have pushed back delivery times for the iPhone four teen Pro models in the US as long as thirty seven days, according to Counterpoint Research. Now White House trade restrictions with China are creating more headaches for chip makers and chip equipment makers. Land Research, for example, says it could lose nearly half of its China revenue in because

of those new policies. For more we bring in LAMB CFO Doug Bessenger. He's at the Credit Swiss Annual Technology Conference in Arizona. Doug, let's get right to it. How do you navigate a world where the US, your home country, has policy seas in place that prevent you selling to China,

your biggest potential market. Yeah, And what I observed going on is there were some technology lines that were drawn some of the most advanced manufacturing process capability not requires a license to be able to ship to China, which presumptively is is going to be not granted. And so um, what that has done is we we as we look in the next year it's impacted to to two and a half billion dollars of our revenue has has gone away from the customers that were impacted by that. Um.

You know, the regulations are what they are. You have to comply with them at the end of the day. And that's exactly what we're doing. Uh. You know, having said all that, we we just finished the best quarter financially in the history of our company, our forty two year old company, uh, just north of five billion dollars in revenue, and looking into the December quarters seeing strength continuing there in spite of the fact that we have to deal with these restrictions in terms of certain customers

and certain technology used in China. There is some evidence that some names have been able to be a bit nimble were the restrictions and the license is actually as hard to come by as you feed. Um. You know,

we had seen that, we knew this was coming. I mean, we we had been interacting with the Department of Commerce, US government relative to kind of how the industry works, how we were positioned in the industry, how how the equipment sector supports the customer base, and so it was an educated process, I guess is what I would describe, and we understood it was coming and we were prepared for. Do you understand more could be coming, tougher rules coming

from the United States, the TIP attack continuing. You know, as as we sit here today, I don't see anything incremental to what has already been communicated and out there. So I kind of think we are where we are, UM, and it's it's part of just doing business. UM. China is going to be a little bit different, but the broad business is still pretty strong. UM. And you know, we're we're doing our best to support our customers in no matter where they are geographically, So you remain committed

to China, you remain as invested in that country going forward. Uh. Yeah, we still have a lot of customers that we're shipping too in China. UM. Some we no longer can at certain process technology nodes, and some of those customers they have process technology that doesn't need the license, so we still be business with them. And yeah, we're still absolutely committed to the China region and everywhere our customers are

buying equipment and equipping their fabs. Doug, if you saw this coming, is that to to two point five billion sales hit for China? Conservative could could the picture actually be brighter than that? You know it might be. I think things are going to evolve. What ended up happening is technology lines were drawn. Excuse me, we're drawn, and the most advanced technology requires a license, which again presumptively

won't be granted. Um, it's possible that some of these customers would invest at process technology notes that don't require the license. I think those discussions and evaluations are underway. Uh, And if there's some level of success there, then it won't be as big as the two to two and a half billion dollars that we describe. But right now, that's the best I have for you, is two to two and a half billion dollars of impact to us, Doug, He's some pretty buoyant around the rest of the business.

And I'm interested about consumer demand right here right now, particularly for consumer electronics. How is that ultimately affecting your business right now? What are the headwinds there your Carolinas as we look into next year. I mean the semiconnector industry I describe as a growth cyclical industry. We grow

over time. In fact, I was I was looking at some data the other day between pre Code and kind of where we're at today from two semic connector industry has grown back from a revenue standpoint, and the spending on WAYFRO fab equipment, which is what we do, has grown by nearly Those are the trends I see continuing

into the future. Um. But it's a growth cyclical industry, So you know, as we evaluate what next year looks like, we do believe and in fact, as we talk to our customers and understand what their plans are for next year, that there will be a reduction in spending next year of the tune of twenty plus percent is what we see in terms of investment in way for FIB equipment spending. It's a growth cyclical industry. We have to be able

to manage the company when that happens. We've been doing it for a long time and and we'll manage it accordingly go into the next year. But that's not what gets me excited right UM. There was a study McKinsey published earlier this year that talked about a trillion dollar semi connector industry by the end of the decade. That's exciting. That's what I see happening in this industry. The semi connector industry is enabling all aspects of society. Data is exploding. UM.

We are the plumbing underneath making that data useful. And when an industry grows to a trillion dollars, there's a lot more equipment that's going to need to be put in play to to be able to support that level of business. Doug real quick, because we're going to run out of time in a second. R and D you make the machines that make the chips in simple terms, but you seem really bullish about investment. Talk to us very quickly about R and D. What is going to

drive you forward technologically? You know, every year, every single year, we have to bring out new capability. What our customers want in the future is beyond what we're able to do today, and so you you always have to be getting better in this business, and that's absolutely what we're doing. You know. One of the things when I when I look at the product Polkfolio Land Research, we're bringing up a brand new edge platform that we're extremely excited about.

It's the first bottoms up redesign of our EDG configuration in over twenty years. Were the leader in h technology UM, and we've got a brand new tool capability coming out that the customers are excited about, as are we. We love a bit of excitement. Thank you, Doug Bettinger, Land Research CFO over at the Credit Space event. Meanwhile, let's talk a little bit about what's going viral today because a new activist ad taking aim at big tech is

using deep fakes to mock a lack of oversight. The ad, by Demand Progress shows a monopoly man, as you can see, morph into a deep fake of none other than Mark Zuckerberg, who thanks Congress for failing to take action against big tech companies. It will air during the lame duck period in Congress as the lawmakers draft major antitrust legislation. Look tech companies lobbyists have spent a hundred and twenty million

dollars on advertising against the bill. Ed, I've already been seeing you've been making some great social content based on this very ad. Right, Well, it's all about timing, right. The Congress reset January three, the GOP comes in. They want this bill moved quickly by Pelosi and Shuma, so that's why they put the deep fake out there. Go check them out. What is it on Instagram? Is on TikTok that one and it's on Twitter at Technology, my

cross platform. On this show, that does it. For this addition of by Technology Wednesday, we have d y d X CEO Antonio Giuliano to discuss operations in the leading crypto derivatives at change There and don't forget to check out our podcasts at your usual platforms, Carow, this is Bloomberg