The FTC's War on Big Tech

of a virtual reality company. We had the story straight from the San Jose Federal courtroom, and Russia builds on Elon Musk and his bankers. That's as they consider providing him with new margin loans backed by Tesla Stock to replace the riskiest Twitter debt. We've got details of that later. But first the FTC did what we thought the FTC might do. They've stuck to the promise they're going tougher on Big M and A, particularly in the text space.

Lena Carna Coles promised that and she follows through. And let's dig into all of this in d C. I want to follow the news. You want to get to where the regulators are looking to block that. So it's seen nine billion dollar deal and of course, it's all about a question of competition, whether or not it would be harmed by this deal. Lea. Nilan has been breaking this. You had the scoop Leah and back before we got the announcement from the FTC. Just talk to us about

the reasoning behind this decision. Yeah, it's really interesting. I mean, a lot of the focus in the Microsoft Activision deal has been on the console market, but the FTC said that it's actually not as worried about the console market as it is about where gaming might be going in

the future, which is into subscriptions and the cloud. UM. And they said that's a major reason why they have concerns about this deal is acquiring Activision is going to give Microsoft a great library of games that will give it sort of an insurmountable lead in these two sort

of emerging markets. UM. Given that Microsoft also already has some advantages with its you know, cloud based um cloud based service, making it a little bit cheaper for it than other gaming companies to offer this kind of a service. And yet, and yet Microsoft had been trying to get ahead of this, been trying to do deals a decade deal done of course just yesterday with Nintendo for access

to cool of duty. UM. We understand that they sat down with Lena Khan yesterday to trying to explain the reasoning. It seemingly hasn't landed. No. I mean, the FTC, particularly under Lena Khan, has been very, very worried about the sort of deals that the tech giants are doing. As you mentioned, you know, today the FTC started its lawsuit

against Meta over the acquisition of a virtual reality startup. UM. You know, the Microsoft folks came to d C. They had offered a lot of concessions, I mean, not just these ten year deals with the other console makers. They had reached an agreement with the Communication Workers of America to offer labor neutrality if any of the gaming studios wanted to unionize, which they thought, you know, FTC would

look kindly upon. Um. They had also offered some uh conditions related to employment noncompetes that they thought that FTC would like, and that was not quite enough to do it for in the end. I guess Leah, those conditions or offers that Microsoft made are academic, right, they weren't enough. What's the timeline from this point? Just because the FTC has voted in this direction, it doesn't mean the deal is dead. No, No, this is UM. They voted for

an administrative complaint. That means that from here it goes to a trial within the FTC before the FTC's in house UM administrative law judge. That sort of a process is going to take several months. You know, probably we would not have a decision, an initial decision, until next summer, next fall, UM. And from there, you know, Microsoft can still appeal several times. So this is by no means

the end. And Microsoft says it intends to litigate UM there is this is not the only regulatory approval they need. They still need approval in the UK and also in the EU are the two main other ones, and UM, neither of those jurisdictions we're going to make a ruling on on this deal until at least the spring March or April. So Microsoft is still going to keep forward with moving towards regulatory approval there as it tries to

litigate here in the US. I kind of love this story because there's a process that happens, but there's also fighting talk. I saw headlines crossing the Bloomberg from Activision CEO, for example, what is their public position the companies about what they want out this. Yeah, I mean both companies have said, we want this deal to close. We want

this deal. We think it's good for consumers because it expands access to gaming UM in ways that they wouldn't have now through these cloud and subscription based products UM. Right now, Activision does not have any its games on any of these subscription uh subscription based products, and you know, so obviously this would expand access UM and both of

them say that they are committed to fighting. Now. You know, the deadline for the deal isn't until next summer, so they'll probably have to look at it extending it because of the length of the FTC's process, but you know they might be willing to do that. Bloomberg's lead Nylon

Carrol said it fantastic reporting. Thank you. All right, let's move on to San Jose, where federal regulators are opening their campaign to block Metas acquisition of the virtual reality company within Bloomberg's Alex Brinka is down at the courthouse. She's been there all day long. What was the story of the day and how did things play out? Yeah,

so they started opening statements. Witnesses are starting right now, and the big story of the day is the FDC is trying to kind of push this novel argument uphill to prove that this deal could hurt future competition in the virtuality fitness space. You're just talking about the Microsoft activision also looking at future competition. This is kind of a torch that FDC chair Um has been taking saying, Look, we need to get the regulations um right now before

a company has a monopoly. So they tried to make that argument. The FDC also laid out some really interesting evidence showing their case Um that Meta has been was

building a VR fitness app internally and they scrapped that. Actually, when Apple had some interest in the company they ended up acquiring, they scrapped that instead to acquire the company called Within, and in doing so, they basically took a potential future rival, that internal potential UM app that Meta would build off the table, and that's what hurt competition. So some back and forth there on both sides in

terms of what the two litigants are pushing for. Talk to us about the back and forth from metas perspective, how are they trying to argue that, look, they weren't actually building something internally. Uh, there was charts and there were words. They basically threw up an organ chart saying, look from Mark Zuckerberg all the way down the chain, it was a no at every step In terms of the effort to build this internally. It was only a

brainstorming exercise. And then they realized that actually building this app internally there were too many obstacles. It was too hard to do, so the best course of action was to go out and acquire. We also heard metas Council more Hanson come out and say, look, this this nascent

competition argument the FTC is making. They think that they have no evidence here and that it could have a chilling effect on any vertical deals in the future because companies might be afraid to go out and buy companies they don't compete with just because they're big, because the FDC might then get involved. So some real pushback. They're saying, look, the core of of the FTCs argument is not true in terms of what they layout over the next eight days.

I think that's so important that you really bring the context more broadly here, Alex, because this isn't just also about the nacency of this particular type of technology, but also the nacency of Meta zone pivot into the Meta BHUs. What does it mean for them the fact that they pegged everything on this space and then being stopped from doing in organic growth in it, and Met as a

company who has pushed into new spaces through acquisition. We saw that with Instagram, we saw that with with WhatsApp, So you can imagine that them going out inquiring an app like this is meant to layer on top of their oculus, which was also an active position headset to move into this space. They are a year in to being renamed Meta after the Metaverse, which is the virtual reality world that they're working on building. It is a strategy that Mark Zuckerberg has caught a lot of detractors

UM coming his way. The stock is way down because of the money they're pouring into this, so this kind of test for them in this court. They say, if the judge blocks this, if they award the injunction, they're gonna walk away from this transaction. So pretty high stakes here for Meta in terms of what they're trying to build in virtual reality, which they say is not only the future of Meta, but the future of computing in general. UM in the next generation of the computing era and

exploring care. It has been so good to have you on the ground there in San Jose. We thank you so much. And and we've got to break it down. We've got to go throughout the FTCs focus on M and A. And we can do that with the perfect guest, American Antrtrust Institute President Diana Moss down in d C, Diana today just is emblematic of what currently it feels like the administration's focus on M and A, particularly within technology.

We shouldn't be surprised, Nakanist did us this direction. What do you make of the doubling down from the FTC at the moment, I think this is very much in keeping with the chairs promises, UH and the Assistant Attorney General's promises to really take a hard look at the digital sector. And for good reason. You know, the digital

sector is um has grown dramatically in the last twenty years. UH. They are coming off an acquisition spree that peaked in about It is absolutely a growth by acquisition model as opposed to a in our get a do it yourself model. It's sort of the buyer build question. So with the digital business ecosystems that is the name of the game.

It is to acquire and grow largely through ocquisition, and both the Microsoft Activision and the Metal within are really really good leading examples of this growth by acquisition strategy and the competition problems that they raised because they are

very large companies with dominant positions. Diana, that word competition, That's the bit that I think consumers, investors struggle to understand or at least struggle to sympathize with the FTC with, Right, Is the FTC doing this because it wants to foster competition? In other words, have many players in the metaverse, which, let's be honest, isn't a real thing yet, or they want to prevent monopolies or is it the same idea?

I think it's they're the same idea, right. The antitrust laws in the United States are designed to promote and preserve and protect competition for the benefit of consumers and workers and smaller businesses that might be trying to get

a foothold in markets or expand in markets. Um of course, that rationale, which is very consumer facing and worker facing and smaller business facing, can run up against rationales for why companies might need think they need to be bigger, to innovate more or innovate more quickly, and be more dynamic to ultimately bring new products to market and serve consumer demands. So there is a very strong tension there.

But in the digital sector, I think the balances have tipped, as we've seen in these two cases, but also UH the d o j's case in Google, the FTCs case in in Facebook, and and several state cases that uh, there is a significant dominance problem in in some of the leading digital tech players and that competition really needs to be scrutinized very carefully. And M and A of course is one of the leading ways that these companies grow. DIN. Do you have any sympathy for within in this in

this instance would matter in the startup within? You know, one thing we've learned is, of course that the metaverse is a nascent idea. It needs capital, access to talent to grow and to continue. You worried that there would be an over stifling of innovation if bigger tech companies aren't allowed to go out and acquire smaller companies. So that's a that's a really good question, and it comes up a lot in like discourse. UM, but what is

the better pathway to innovation. Is it to encourage competition by smaller rivals, independent market players, and have them grow into significant market players that could then challenge these incumbent companies right the large digital text um? Or is it

and we do that through promoting antitrust enforcement? Or is it to provide a pipeline or a feed of these startups and smaller companies into the big digital ecosystems knowing that they will be acquired and uh and claiming that that somehow will increase the ability of companies to increase innovation. There's a real tension there. Um. But again I think

the balances have tipped. And and for example, in the meadow Within case, the purchase of Within, which has this leading VR fitness app supernatural um takes out a really important source of competition in a market that is all that that already does not have very much competition. So we worry about that when you eliminate competition in an

already concentrated market. In the Microsoft Activision case, that also that acquisition also eliminates important competition on the outside of a digital business ecosystem, and we worry about those acquisitions when there isn't already a lot of competitions. So if you're in the camp where competition serves the interests of innovation, or in the other camp, which is we need big companies to acquire smaller companies to continue to innovate, that

really frames out the debate. It's also an interesting debate to be having as we head towards basically a real pullback already upon us in terms of VC funding, real pullback in terms of the free money that we're also

used to. And I'm wondering what ways do we tend to see big companies that are sitting on a ton of cash be able to foster innovation in the space they want to see grow if it isn't just by trying to do deals and actually acquire them out right right, the very good question, and again the growth by acquisition model really serves as a as a funnel for a lot of a lot of the free cash that companies have.

But I think you have to look a little bit deeper at the culture of the companies, at the way the digital ecosystems are structured with with a platform with lots of cloud technology, where we've seen lots of acquisitions in the last many years, but also these constellation of apps that exists in the ecosystem. That's a complex business model and it's the value proposition, and it's really supercharged.

So if you have market power in a platform or in cloud technology, all of those pieces of the ecosystem work together where where um um uh market power can be leveraged throughout the ecosystem. And so that complicates the

innovation story as well. And in fact, my charge supercharge incentives to buy smaller rivals because by buying a new application like a like gaming content or VR app content, fitness app content, you're able then to connect that content to um to the platform a platform, and to supercharge it with value with cloud technology. So it's a very complex business proposition. It's a value proposition, but also poses really complicated problem strand I trust enforcers in crafting complaints.

But the ultimate concern, I'm sure as you know, is that all of all of this gets locked up in a single ecosystem, which makes it very difficult for for small arrivals to get into those markets. I think, Diana, we're just starting this conversation and will certainly continue it in the weeks and months to come. American Anti Trust

Institute President Diana Moss, thank you coming up. Elon Musk under pressure as bankers struggle to find buyers for the Twitter debt used for the purchase of the company after the billionaire promised to turn around its finances. This is Bloomberg, So Elon Musk's bankers and considering replacing some of the riskiest and level the costliest debt that he led on Twitter with new margin loans back by Tesla stock that

he'd personally be responsible for repaying. Is actually but one of three pretty big bloomberg scoop surrounding Tesla today and Ed, as always, you were behind a couple of them. Just run us through some of the other stories that play when it comes to you. Yeah, I mean the debt burdens important, right, one point two billion dollars of payments

and least they something had to give there. The other two are the testers cutting production as in Shanghai, so the market's a bit worried about demand in China, which is the biggest TV market currently and the second. As we reported, the China chief at Tessa has moved to Austin to kind of get things going there, which is a really interesting time when everyone's questioning what is Elon

Musk doing any given day with which company? Yeah, and rumors swirl as to his leadership at all these various companies. And we want to get back to the reason that people think is distracted, which of course is Twitter. And Shini Vassa was one of the by lines on this scoop that came out last night and just has continued to fascinate us today of the debt. Talk to us a little bit about how much pressure this shows that

all of them are under at the moment. Listen, the unsecured part of this debt is the part that the banks are most worried about. They had promising interest rate of eleven point seven per cent, and we know that junkie debt, risky debt, junk debt here has really gotten much more expensive for the banks to be carrying, so they could take real losses here because of that promised

rate there. Remember, there's a benefit here potentially, and this is just a discussion that the bankers are really having here four musques to be doing this, and that one benefit would be to really start to lower that burden of that one point two billion dollars worth of interest payments. He would have to make Twitter revenue right even that

last year. Absolutely, So you know, if you're paying more than you're essentially making, it is a very difficult burden to be taking on as you're trying to turn the ship around. Now, I want to like shadow this a little bit with the scuttle butt that's going on in

Wall Street right now. Why this matters so much because as the banks trying to offload this debt, you have the by side really negotiating just so hard to bring the cost of that debt down because a lot of big firms would love to be buying this debt cheaply sixty cents on the dollar maybe last the banks are like, no way, is that happening in our lifetimes hopefully, but because if they did that, they would have to take

bigger and bigger losses. But the negotiation, if they were to sell this debt below par, which might happen, is one option. But the other option here could be these martinal laws. Yeah, well the markets changed since April. Don't ask me what it's going to look like throughout my lifetime. Bloomberg Shonali Bassek. Let's get to Disney streaming service Disney Plus,

which is debuted. It's ad supported service, coming with strict rules, no alcohol commercials, no political spots, no ads from competitors Carrot Interesting, isn't it because it's about a month on from Netflix's ads sponsored one, and they do have a beer ad ed right, But they've learned from the experience with Hulu where they already have ads just half as much now on Disney Plus. We'll be right back. This

is Bloomberg against almost any measure. It was a record year, not in terms of the amount of funding going to private companies, but the number of deals that were actually done. So we were moving at a pace of almost a hundred companies being funded every day. In a lot of ways, it felt like there were there was too much money chasing despite the fact that it was so many deals,

too few deals. Oh where we were in CB insights Brian Lee there and interestingly, actually, as we keep talking about the slowdown in BC funding at the moment, amid all the concerns, we actually that learned that phone paid today and some Walmart owned digital payments Bran is actually seeing as much as one billion dollars from the likes of General Atlantic and Tiger Global, Catter Investment Authority and Microsoft. So it seems that some deals potentially still getting done

if you're the right size, right space. Yeah, the headline is that the value overall globally VC value deals down right, But actually what we learned from the Prequeen data we learned from CB Insights in the last twenty four hours is that it does depend on geography. So in that case that deals in India in China the dollar value is down fift twenty two year on year in USA it's according to greet Queen. But those are just two markets. So the question I guess is where is money still flowing?

Where is the opportunity which subsectors? And luckily, you know, we can talk about this a week long if you're like, yeah, we're going to keep on talking about until the year is done, until the next year is through. But what the perfect guests to talk about it in the here

and the now. It's needed to Horney. Here's with us, director of research at pitchbook for more and just talk to us about what you're learning at pitch but what you're seeing in terms of the great highs that we came from what two and now looking into twenty three

is going to look like for VC checks. Yeah, I mean, it's been truly astonishing a couple of years, and I think as you look forward over the next eighteen months, I think the most important thing to do is actually look backwards and get a sense of what's happening over the past couple of years in the venture markets, which is in a lot of ways led us to worry

out today. And so if you think about the dry powder number, so money that hasn't been invested in the end vehicles, there's five and sixty plus billion dollars globally, and I think the narrative over the past couple of years was that even in the case of a downturn, you're gonna end up in a world where there was enough money to help supplement the industry and prop it up.

If you you pull that layer back a little bit and you take a look at what's happening under the hood of the fundraising numbers, well, you see as the majority that has actually in late stage vehicles, you know, we've raised a trillion five right over the last five years, and that's more money than we raised in the twenty years before that. And so you've had this enormous run

of capital that's really bottlenecked. And so I think the story of the venture today it's actually a story of concentration. So when you have money raised in the late stage of that capacity, if you if you think about where it's gonna go, it's gonna have to flow into larger check sizes. And so over the last call it, six or seven years, you've seen the medium check size and

the average check size literally triple. And then if you think about where that money is flowing from a company size perspective, you've seen forty six percent of the entire market cap of venture capital effectively um sit in unicornpanies. And that's relative to sixteen percent just a decade ago.

And one of the things I think it's really interesting is if you take the total value of unicorn companies and you run that against net asset values of the entire global venture market, that value is actually twice the size of the entire net asset value of venture. So what that tells you is that the market, the money that's been flowing into these companies, it's not even coming from the venture ecosystem. And so what you've seen is that you've got corporates that are actually buoying UM a

lot of these transactions and nontraditional investors. And I think today on a global basis, close to half of venture capital use of the late stage are being led by by corporation like phone playing Walmart backed company Microsoft is getting in there alongside traditional vcs like General Atlantic just talk us. Therefore, where all this money that is sitting there looking for a home is going to go? Are they going to start to spread out more than there?

Are they going to get more excited about the seed rounds once again, or are they going to have to look for bigger, more assured deals in this of nervous So what I think is most interesting about the dynamic today is that it's not like there's an incredible amount of money that's ready to be deployed. I think the pace of investments in the venture ecosystem was masked a bit by capital that was coming from non traditional ventures

and corporate balance sheets. And so I think today what you're gonna see is a shift, probably not in terms of opportunity sets in terms of how fast money gets deployed to the ecosystem, but I think you're gonna see people look for complete different dynamics within the balance sheets and the capital structures of the management teams that they're

investing in. And so you might still have early stage rounds and midstage rounds, late stage rounds, but that capital is not going to come to market unless those companies can actually put that money to work efficiently, and they're gonna look for signs of that. So I actually don't think over the next twelve eighteen months you're gonna find people shifting their investment strategy, deploying to different sectors or areas.

I think it's going to be shifting in the operational capacity of the teams and the ability to manage capital at scale. Needs are One of the questions we've been asking is that about valuations, right, And there's a lot that's top of mind right now, higher rates, costs of capital. How do you justify evaluations for private companies? They've come down?

But I guess that when you're Avenge captist and you look at them as that one hundred for for example, and you see that then as that one hundred performance here to day and some of the piers of these private companies, how are we valuing growth companies? How are we valuing and benchmarking what's out there in those companies

they're still yet to go public. Yeah, I think it's a great question and one that a lot of people are trying to figure out right now, because I think the pace at which private companies are marked down tends to lack what we're seeing in the public markets right now. I think that creates a lot of noise for the limited partners that are trying to invest in net new funds because they're trying to get a sense of truly what those marks look like relative to the public markets.

You know, one of the things we talked about a pitchwork quite a bit is that in times of market distortions, um or or of excess what we've seen our last couple of years, every sleeve of the market tends to operate in its own little silo, whether it's series A, seed, late stage, etcetera. And I think what you're seeing today is that the markets are actually operating relatively similar and

they're taking their cues from each other. And so the chart you just held up, you look at our venture back TYPO index down sixty plus percent relative to a NAZEX down. If you were to pull our pull out the sas companies of that index, for example, and you were to run a sales number for each of the aggregate of those companies in that index, and then look at the price of sales multiple. You would have seen that gone from fifty three times to three times today.

And then if you were to look at that index for companies that actually had any free cash flow and ran the same exact metric of price of sales, you would see those companies straighting at twenty two times. And so the market is telling you, effectively that we need profitable growth and a unit of a r R is not worth the same without free cashual to justify it.

And I think what you're gonna see is that those companies are gonna end up getting following on funding and their marks are going to be higher on a relative basis um. And then those who don't have that, I think you're gonna see the valuations declined precipitously. So, going back to what Caro and I were discussing at the beginning of the segment, right, the high bar set in one and that not all markets are created equally. We actually asked our audience, what is T three look like

for startups in terms of fundraising. These are the results for almost fifty bleak. Almost fifty depends on sector and size. Needs are bleak or depends on sector and size. I think it depends on sector and size, and I think the gap between bleak and man bleak is going to be a lot wider for a lot of companies. All right, needs, I'll tell any director of research at pitch book, thank you very much. So here's another story we're watching, Peter tile placing a two and fifty million dollar bet on

a venture debt fund. The venture debt firm to Cora Capital was started this year by Kerry Finley, a former partner at well known Third Point. Its targets private companies industry in industries like property, technology and fintech with predictable cash flows and assets that too, Cora can used to actually underwrite the risk. It is un usually large investment by Peter Shills standards, the size of which has not yet been previously reported. I think what's interesting about this

carries I've come across venture debt in the past. I've done a few stories over the years where it's included alongside the traditional venture equity investment. But usually what happens is the venture debt party were saying, Oh, we're confidently lending this money to you based on the money you raise in the future to pay us back. Role right now, Look, think about what we've just spoken about. That seems a little bit of a hairy proposition. Yeah, And I think

a lot of people are being attractible. The companies are being attracted if they need money to go the debt route because they don't want to be having to mark down what the valuations are from an equity perspective. And I think this is really speaking to pitch books entire point and the idea that perhaps people are just going to have to think that much more creatively in the ways in which they want to invest. Yes, it's like what different ways in which is the money going to

be operationally used? But also which bit of the capital structure do you want to be in, and just more thoughtful about the way in which you're gonna put your money to work in this space. I think it's really interesting that what is it you fifty million coming from Peter Teal, but there's a hundred a million alongside that, and clearly carry she's got a lot of experience in this space. Yeah, and also global look around the world, not just US and China. I think that's the story

of this week. Yeah, I was hoping. Sadly, I'm not hearing all that much about being deployed in Europe right here, right now. But let's talk about some other areas and which perhaps the money has actually been driving drying up a little bit. And remember and how excited we got in the world of e sports, how much he thought the industry was going to boom, how much celebrities and and people were really diverting some of their funding towards the space. And now actually the sources we understand are

actually dwindling. The signs pretty abound that athletic competition via video games doesn't really have anywhere near the earnings potential that investors are originally anticipated. And we want to therefore go to a great story on the Terminal dot com

that you can read today done by Cecilia. Does that Antarsio of course, who is here with the insight, and Cecilia talked to us about the deep dive you've done, the money, the share more of money that went towards this space pre COVID then COVID suddenly sort of shut down all these gatherings of together away. You'd watch the E sports unfold, then it take back up what's sort

of going wrong in this space at the moment. Sure, so four point five billion was invested in the sports in two thousand and eighteen, a lot of which was from sports business billionaires who believed that the sports could one day scale on the level of maybe the National Basketball Association. But over the last couple of years, E sports organizations who field teams for these competitive leagues have

had trouble becoming as profitable as money had hoped. Part of that was due to COVID due to lockdown restrictions that prevented fans from watching the sports live at a stadiums, But some analysts say that actually this is something that's masking a greater problem in E sports, which is the challenge of structuring a business allows a company to turn a money, to turn a profit off of I P

that publishers ultimately own. Talk to us about where perhaps money is still from a fledgling perspective going what people are still seeing opportunities in these sports, but fees it

feels like it's more individuals right, rather than teams. Sure, so players are the sports players are learning are earning large salaries um playing competitive gaming a very small percentage though, So if your kids are thinking about it, tell them that there are slim chances fix and seven figures are going to top the sports players in games like League of Legends. Gaming publishers are also earning some amount of

money from the sports ventures um through franchise fee. So teams that do decide to feel the sports teams in their leagues might offer payments as large as twenty million dollars to participate. Cecilia is a brilliant read, and we've loved being able to dissect a little bit more with you, Cecilia. To Anastasia, there we thank you. Meanwhile, coming up, we've got to do it F t X. The drama it continues to unfold, of course, is the new CEO and

the bankruptcy lawyers. They're said to be meeting with federal prosecutors. What's interesting, though, is someday will seeing some money to be made in the space. Sylvia Jablonsky is among us defiance E t S has talked about how short E t F that she's developed as a bloom Bag, well f t X, and many other frankly crypto related companies

are feeling the heat. Defiance. C ETFs has been benefiting from turmoil in the cryptocurrency industry, with its daily Short Digital Economy e t F staring more than twenty since his inception this September. Definance TTS CEO and c O and please to say, Sylvia Jablonsky joins us now to discuss. Can we start with the basics, what is the e t F and then we'll get onto why is it benefiting? Sure, thank you so much for having me. So what are

et F does? I bit is it gives investors access to the inverse performance of some of the stocks that are correlated to or best represent the crypto ecosystem, So for example, stock side coin based, Galaxy, micro Strategy, Block robin Hood. These are names that are highly correlated to the price of bitcoin, for example, and and really popped

when bitcoint bitcoin popped over the past year. But since bitcoin has fallen from seventy seventy thousand to where it is now, these names have fallen in tandem along with the overhang of macro risks. So a lot of trainers out there know about short currency bitcoin funds and they

get their exposure that way. But at a fight, we thought, well, there's a much bigger picture here actually, because there's so much contagion between equities that are related to crypto and really benefit from and generated revenues from crypto as it rises. So if that's going any other way, you know, there's got to be a product to capture the short there,

and that's what we're trying to do. Okay, So what happens if the market takes a pause and we, over a longer term period start to see both crypto related equities and just more broadly digital assets rebound. Yeah, yeah, So in that case, so what you want to do is you want to look at a fun like IBIT when you have the view that markets are going to fall,

or when you're looking to the head your position. So if crypto starts to rebound, you can think about it as the hedge to having a portfolio, or you can transition to another e t F like a n f TC for example, that is long all of those types of companies as well. So there are a few crypto et F products out there. There are single stocks out there, obviously, the investors can get back into like coin based in the robinhood whatever they sort of like if their view

is changing. But the point is that, you know, you sort of have tools that represent both sides of the trade, and that's really what we're striving to do, is to give investors access to those products. And you know, they're typically hedge fun types of products, so it really democratizes this. The average retail trader who we know is highly interested in crypto and luckily a lot of these and the

publicly traded companies probabicly regulated companies. And I'm interested, though, Sylvia, what demand has been like a full long the sector. You're someone who speaks much about well where assets currently or trading where they should be trading. You can often take a view from the all perspective, all people gone about to expect some sort of pop back in some way. Yeah, Caroline, And actually you just made a really great point there.

So the other, you know, benefit of looking at shorting equities versus just shorting a cryptocurrency itself is that it's going to take a lot of these companies a while to recover. So even if crypto starts to inch up until the broader market recovers and tech recovers. Companies like coin based, robin Hood, Galaxy, the companies you mentioned before. They're probably gonna have a lag to crypto itself too, just because of the overhang of inflation and raising things

like that. So I think we have some time on this trade um in terms of investors coming in, you know, absolutely right. I mean, the time for value creation is

when markets are dismal. But I think that because of f t X and these started this, you know, in the intro there, because of f t X, there's so much sort of apprehension to get back into into the sector for some of the retail traders that dove in heavily, until we get some regulation, until we get some clarity around you know, crypto and how the end investors protected. So I do think that it's going to be a

slow role on this um longer term. You know, I'm fully bullish on blockchain technology, digital assets and tokenization, but I do think in the short term that it's going to be a little bit tough and you might benefit more on the short side than you will on the long side. So we are a bit worried about the lack of new ways in which to gain exposure from a regulator perspective, you know, I'm not There are actually a lot of good ways to gain exposure, but they're

not all costs efficient. So I think the looking at a short equity fund is a good way to do it. Obviously the way we're kind of going about it, because you just buy an ETF long in your account, right, It's is as easy as can be in terms of the short futures funds. You know, as long as there's sort of enough supply to build the fund and rebounds and on a daily aces, and you have clarity and transparency on what's in the actual fund, how much of it is actually sure bitcoin, and how much of it

is you know, sort of filled with something else. You want to make sure you're getting pure exposure. I think that's important, and there are two really great options out there. And then I think investors can also short single name stocks if they'd like to. But I think you know the broader picture about will you know products be approved in terms of um an ethery TF for you know,

some of the different types of cryptocurrencies out there. I think that this is just my sense that regulators might take some pause just because of what's going on sort of the f TX issue, and they might seek to kind of come up with some rules and stabilize the industry before you know, kind of approving the more nuanced products. Sylvia's always said, great to get your perspective, Sylvia define CTFC saying, this is a day we've worked toward for

a long time. We ever start pushing for her release. It took painstaking, the intense negotiations, and I want to thank all the hard working public servants across my administration who worked tirelessly to secure her release. President Biden, they're on the release of Britney Grinder. Now. This is a course going viral wherever you look at the w NBA

start being released from detention in Russia. After the US swapped for Victor about the so called Merchant of Death, an arms dealer that Russia has been working for years to free. Now Grinder has been sent to nine years and moved to a penal colony. Last month, the Phoenix Mercury basketball star who played in Russia during the off season, pleaded guilty to drug smuggling in July after customs officials were found vape cartridges containing cannabis or in her luggage

at Moscow Airport back in February. It has been a long journey ad and there really reminded everyone how important this story is. No matter where you were on social look to hammer home the point. I've got Google trends up on my screen. Brittney Grinder is number one by a sack of millions in terms of what people are searching for this Thursday. Everyone around the globe has been tracking this case, and it's not the first time I

think that she's actually been high up the charts on Google. Carry. Yeah, what is the seventh most sought after or searched for athletes? Two? I think the numbers say. And also there was a great video I think that you sought out from well a local sports team near you. Yeah, Steve Kerr. Yeah, everyone's talking about it. That's what matters. It does that does it? Of course? For this edition of Bloomberg Technology,

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