From Marhard.
We're Innovation, Money and Power Collie in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Hyde Bloomberg's worldtad quarters in New York, and I'm Med Ludlow in San Francisco. This is Bloomberg Technology coming up the US.
It plans titan measures against China to restrict its access to advanced chip technology. We're going to break down the details and the market implications.
And we have the latest updates from the Israel Hamass war and discuss the role social media plays in delivering up to date and accurate news.
Plus, we're going to kick off the coverage of New York Tech Week as industry titans gather in the Big Apple for a full week of panels, events and much more.
The top story is Bloomberg reporting expanding technology export curbs to China in the semiconductor's space. It had a pronounced impact in markets in Asia and Europe, ovin Night, also in US pre market. Actually a lot of those names are now markedly higher. But pay attention to the chip equipment makers because that is a focus of these curves.
Let's get the specifics and bring in Bloomberg's Mackenzie Hawkins, one of the reporters on that Bloomberg exclusive and Mackenzie Bloomberg sources are telling us these chip curbs are going to be expanded, how so in what ways?
So these chip curbs are building on initial restrictions that the Biden administration posed in October of last year, and there's a couple venues for the tightening. So first, we're going to see some additional restrictions on graphics chips sales to Chinese companies and advanced manufacturing equipment sales to Chinese companies. And we're also going to see some tightening on potential attempts by Chinese companies to avoid country specific restrictions by
routing their shipments through other countries. And the last thing to keep an eye on is adding Chinese chip design firms to a US trade restriction list that basically requires overseas manufacturers to get a license from the US government before filling orders from those companies.
McKenzie, what prompted this tightening? Is it well the Republicans or is it Huawei? And late more recent events that shows that maybe some of these cubs just all working.
So the US announced as initial rule in October of last year and took a couple of months to get key allies, particularly the Netherlands and Japan on board, and they've been working on a final version of that rule for a while. So this is not to be interpreted as a reaction to the huge tech breakthrough in China in August when Huawei released a smartphonem powered by an
advanced chip. But that has pretty much defined the conversation in US China tech relations in the month and a half since, and we'll be looking to the administration to see what actions specifically they might take on Huawei and its chip making partner.
Snick indeed keeping a close eye on the implications, and so too will of course, the Chinese, who have notably said that they don't want this to be weaponized or indeed politicized when it comes to technology and trade. Mackenzie Hawkins, great bit of reporting, me, thank you. Let's continue the conversation.
Joanne Phoenie's with US partner and portfolio manager at Advisor's Capital Management, with deep knowledge expertise when it comes to semiconductors in the landscape and ultimately, is this ever an efficient way of trying to curtail what is ultimately an ability to make it home really advance chips in China.
It's never going to be efficient, you know, let's not try to guess the ultimate goals of the US policy. One effect likely though, is that it will slow down China's ability to deploy really advanced chips for use in AI oriented servers.
So it will slow China down now.
In the meantime, though it's harmful to to the US companies that want to sell China those chips, you know, potentially like in video that Fortunately, we're in a period of time when there's such strong demand for AI capabilities in servers that even if in Vidia loses some sales in China because of more restrictions, it will likely be able to sell them in the United States or someplace else in the world.
So it'll slow China down.
But the horse has really left the barn in terms of the ability of China to ultimately produce advanced chips.
They just can't do it in a lot of volume right now.
But ultimately, over some years, you know, they'll be able to do this because chip technology, you know, has reached sort of the limits mostly of Moore's law, and so it's hard for you know, our companies to stay ahead when all China has to do is copy what we've done so far.
Juanne, good to see you.
We're just showing the names actually now moving to the upside in video and a m D on the GPU or graphics side, and then the chip equipment makers LAMB PLA also positive. You said that this won't slow China down, but there's a refocus on the chip equipment makers, in particular with those US based companies with exposure to China. Is this more of a concern now than it was to you yesterday?
Yeah, So you know, we've been avoiding exposure to most of the equipment guys for a while because of these tensions with China, and so you know, our position on that hasn't really changed. We have some selective exposure, but not to the major players like A Lamber applied. And I think what happened earlier, right when when China saw this coming, you know, and saw the timing of these restrictions, they actually imported a boatload of equipment.
So they're pretty well positioned. You know. Again, it's going to slow them down in terms of deploying.
Really high end AI based servers because they're not going to be able to get all those chips, but they have a lot of equipment from lithography out of you know, the metalin from ASML to the etching machines to the deposition machines, right so they can do an awful lot right now with the equipment that they have. There are always ways to get the smaller and smaller future sizes to those more advanced chips using the older technology. It just takes many more steps to get there. It's much
more expensive. So your question earlier ed, is it efficient. It's not going to be efficient for China to make these advanced chips, but they're going to be able to make almost everything with the equipment they have except for the most the very most advanced ships. And that's where US policy, I think wants to be binding, and it will be for a while until China can make further advances in their own deployment of equipment or refinement of the equipment that they already have in place.
Bloomberg's reporting that these expanded restrictions could come early this week. For what it's worth, the US Commisces Department and National Security Council declined to comment on the story, but a Chinese Foreign Ministry spokeswoman called this the US politicizing, instrumentalizing, and weaponizing trade and tech issues. Our colleague me and Mackenzie Hawkins pointed out that this is not sort of an escalation from the US, It's a rethink of a
year long policy. Where do you stand on what this is or is not the US doing?
So you're asking me to sort of put on a policy walk head.
I'll do my best. I mean, clearly, the US wants to slow.
Down China's ability to use AI and to develop AI applications, particularly in the military, and so to the extent that the US can succeed in that by restricting their access to these most advanced chips and the equipment to make the most advanced chips, the US will be successful. It's not the first time that trade policy has been used for things other than you know, tamping down illegal trade.
I mean, clearly this is a political objective, not an unfair trade practices response, and so you know, it's certainly not something that's probably authorized under WTO rules. Nevertheless, under national security reasons, clearly the US is pursuing the strategy and it will be effective. It'll just slow China down. But as many have been saying, we have also it's only going to accelerate China's own investments in developing their
own capabilities. Now, we think they're a long way off from being able to replicate what ASML has done or.
What WEAM has done.
But again by repeating the processes that the intels and ibms and global founderies and tsmcs of the world used, SMICK can get to pretty close to some of the most advanced chips, as they've shown in that Huawei chip for example.
Joan, we ask you sometimes to put a policy hat on, and to that point, do you try and take that policy hat off when it comes to actually having exposure to such companies? He said, how you've limited your exposure to chip equipment makers because of some of the issues with US and China. Well, what about an Nvidia that at the moment can sacrifice Chinese sales? But ultimately do you want to be out of companies that have such exposure to China?
Yeah?
No, so right, So the investor hat, the portfolio manager hat, requires that you look at policy.
Obviously, you need.
To handle have a little bit what is going to be in the US interests, what they're going to try to do, as well as sort of the economic outlook. So you know, at ACM, at Advisor's Capital, what we do is both the top down macro and political situation, and we then build up the bottom up analysis of companies by companies.
So in video is a great example, they have so.
Many different opportunities because demand is so strong right now for AI capabilities in servers that.
We think if they lose a little bit from China, they'll be able to make it up elsewhere. It looks to us like.
They have kind of a waiting list, if you like, of companies that would like their most advanced chips. So you know, China could potentially hurt in the longer run if China is able to replicate the level and quality
of chip that Invidia could otherwise supply. But if they can't, and we don't think they'll be able to do that for some years, China's going to have to be satisfied with lower end graphics chips out of the likes of Nvidia and amb So ultimately we don't think there's going to be a big shift in spending by China, They're going to have to be satisfied with lesser chips, even more so than they were.
After last Octobers a level of.
Restrictions and Video will be able to sell again more of its ultimately higher endships to US and European and other Southeast Asian customers.
To FOMI partner and portfolio manager and advisors capital management, but also just long, long time.
Researcher in the field of semiconductors. Thank you.
Speaking of and sticking with chips in Video's H one hundred GPU has been one of the technology stories of the year. Before the Israel hamass war broke out. The chip giant had planned on holding its AI summit today in Tel Aviv, with insight into its AI strategy expected, but then canceled the event. Bloomberg Technology visited in VideA and took a look at what the H one hundred GPU used to train AI models looks like in the
real world. This is an individual H one hundred GPU or graphics processing unit in Videa's AI accelerator, but in reality it's not just a chip that comes out of a plant. When we talk about the H one hundred GPUs training AI models. We're likely talking about dgxh one hundred, Nvidia's AI supercomputer. That's eight h one hundred GPUs combined, capable of thirty two quadrillion floating point operations per second, crazy computer performance. It's a server design, and this is
what it looks like under the lid. It starts with an h one hundred GPU seen here in the form of an SXM module. Eight individual sxms are topped with heat six, designed to dissipate heat generated from running big AI workloads. Those are connected on a single baseboard by interconnectors, and that assembly alone weighs sixty pounds. Add CPUs and other components, and a finished DGX system weighs almost three hundred pounds. But the scale in the real world is
bigger still. Some of the most powerful large language models are trained on the Nvidia DGX super Pod, that is thirty two DGX eight one hundred systems combined into what's called a scalable unit. At its absolute most mind modeling scale, DGX Superpod can be up to sixty four scalable units. That's more than sixteen thousand individual h one hundred GPUs an AI company may use several superpods to train their LLLM.
In the end, the DGX infrastructure sent out to the hyperscale cloud providers to put in their massive data centers. I wanted to get my hands on an H one hundred Caroline, but it isn't just this little chip. That's the reality of what we're talking about.
You happen to do squatz squats to be able.
To I just wanted to demonstrate that in the real world sometimes you have to deadlift what we're talking about. And I've already got a lot of flak for that on the show, but check it out online. Really interesting experience going down to Nvidia.
It's a great piece to just digest really what is behind technology. We thank you for it. Meanwhile, coming up, we are going to get serious and turn our attention back to the latest in Israel and Hamas the war and discuss the wall of social media during the times of isis One. Next this is Bloombog technology.
Mid ongoing war between Israel and Hamas. President Biden is weighing a visit to nation. Want to get more in the latest from the ground of bringing Bloomberg's Oliver Crook, who's life for us in Tel Aviv. Biden's visit largely speculative at this point. There are other leaders both from North America and the EU coming to town.
What is the latest on the ground, Oliver.
Yeah, so let's talk for us about the military action. Over the weekend, we got sort of confirmation from something that we've widely anticipated, but basically Israel saying that the next stage of this war is going to involve a ground operation of some kind, and that was sort of confirmed over the weekend. Their focus right now has been on the aerial assault. They have been absolutely pummeling Gaza
for at least the last week. They've had a few evacuation passages a few hours where they say they're not going to bomb major arteries so that people can move south. We had one today, yesterday and on Saturday as well. And the main question on the ground there is a question of AID. There is AID that is not really
being able to get through. There have been speculation all day and reports about potentially AID being able to move through the Egyptian border at the checkpoint at Rafa, but that has not been.
Confirmed by US.
In terms of the diplomacy side, yes, we're expecting all Off Schultz, the German Chancellor, to arrive tomorrow, and whether or not Biden comes, you know, to try to again as a sort of deterrent, but also to show the support of the United States for Israel, which has been fairly vocal at this point.
Meanwhile, I mean, you bring our attention to the human cost, Oliver, and we appreciate it. Just talk to us about the timing and time running out. According to Iran, at least Auran's foreign minister really talking about and if we're going to avoid some sort of expungeon to the conflict.
Yeah, so this has been we've been hearing from Iran kind of on the sidelines of this for the last few days. On Friday was sort of the first kind of ominous threat. And then we had the other foreign ministries today saying that the time for the political the political solution is running out and the expansion of the war to other fronts approaching is inevitable, they said in on An X And again, this is part of the whole reason that Lincoln has been going to uh Qatar,
the UAE, Saudi Arabia, Egypt, Bahrain. This is where he has been because it's in one side to get sort of the back channels communicating with Tehran, but also deterrence. We also have a second aircraft carrier fleet that is coming to the Eastern Mediterranean. This is all about trying
to provoke that sort of deterrence. But it's not just Iran, right So, just in the same way that the Israelis saw all of the horror on their phones, they were glued to it, the rest of the Arab world is seeing the exact same thing on what's going on in Gaza right now. And you've had protesters through the streets throughout this process.
II thank you so much for most Oliver Krook there with an latest on the ground from Tel Aviv, But I mean lot of it just painted the picture there of how much everyone has turned to social media in this moment, and indeed, well the Uranian foreign minister actually posting on x You want to understand really how people are using social media and what they should be looking at if at all nor A Benavidez is with us just free press and or are You're a senior counsel,
your director of Digital Justice and civil rights, and really you run the organization's platform accountability, the digital civil rights work there and how accountable ultimately are x, Meta, TikTok, Town, and bike Dance. How much are they looking for this moment of responsible nurturing of what's being put onto the platforms right now?
Well, thanks for having me, both of you. You know, most of the major platforms have really failed the massive stress test over the last week and a half. In particular, Twitter or x now has created the perfect environment for disinformation to thrive. And as your colleagues mentioned, people are turning to social media now more than ever as their
primary way of getting rapid information. Most of us are hungry to figure out what's going on on the ground and whether it's family members, journalists, or others returning to these platforms only to be met with a deluge of mislabeled videos, images that are taken from other time places, regions, et cetera. Ultimately, Elon Musk has shown that Twitter has failed, I think with a kind of grandeur. You know, his
bad decisions have literally led us to this moment. He gutted critical teams as other platforms have, like Meta and TikTok and YouTube.
Elon Musk has also changed the blue check.
Mark feature, which is in the scheme of all of these swirling forces.
One of the really big problems.
It incentivizes people to now subscribe and they pay us small fee, but their content gets boosted. So if you're willing to pay that eight dollars, your content might be featured in more people's feeds. He also needs add money because advertisers have been fleeing the platform for a lot of these reasons, and one of his incentives has been to pay people for engagement and virality.
Yeah, it's crazy, Naura Nora. Just for our audience.
X's response to this has been to basically call an all hands on deck situation. They've told us here on Limo Technology that all staff are focused on the Israel hamass war. They've given us data on community notes action, and for Meta's part, they have a special operations team in place now with fluent Hebrew and Arabic speakers that are basically working twenty four to seven to review content.
But at issue specifically seems to be video content, videos purporting to show one thing when in reality they are another. What is your view on the role video is playing here?
Video is one of the last frontiers.
It's really very difficult to moderate video content, and frankly, Elon Musk pointing to community notes as a way for users to do his job is inadequate. It's also inadequate that a week and a half after the conflict escalated, now is the moment that social media companies are pulling their rapid crisis centers together.
That is days and days too late.
Citing to the ability to remove hundreds of thousands of posts is also inadequate, because we have to understand the environment here is there are millions and millions of posts going out every day about this subject, and billions of active monthly users trying to get that content, and so the lack of teams, the lack of policies in place, the slow to respond crisis centers are just not enough to rain in the level of toxicity.
All right, Nora Benavidez a free Press thank you for
your time here on the show. This is Talking Tech First up kPr raising seven hundred and twenty three million dollars in Japan's largest listing in nearly five years, that of chip equipment maker Kokutse Electric Shares a expence to begin trading on October twenty fifth, plus Indonesia's biggest tech firm, go To, plunged it's most on record earlier today after revelations of a stock sale by a co founder, which ignited a selloff, but go To recovered after anlis argued
the selloff was overdone and not some more supported by Fundamental School.
Welcome back to Blue Meg Technology. I'm Caroline Hid in New.
York, Meed Lovelow in San Francisco, Cara A very quick check in on the market. So we started the week with the NASDA one hundred higher fi percentage point. Remember we're coming off three straight weekly gains on the NAZAQ one hundred amid all of the volatility of global markets,
worries about China's economy. We're ahead of earning season, but two of those weeks we notched again of just like a tenth of one percent, and that's inclusive of the IPO window that we had, which hasn't done much to give us sort of that much momentum to the upside.
This week's big a lot of FED speak.
We get China g GDP reading on Wednesday, but there is a growing list of factors and if you read that story about on the Bloomberg. A lot of hope pinning on those big five megacap tech names this earning season in terms of owning's growth to bring that positive story back to tech, but also tech continuing to lead the way amid a broader market that's kind of not sure where it stands.
And that's in the public markets. Of course, this all feeds into the private markets as well, and we're going to be talking about both right here in New York because it's Tech Week upon us officially kicking off in the Big Apple with industry titans, startups gathering well basically throughout the entire week for events, there's can be panels, conversations, breakfast,
much more, a week on blueing bog technology. Look, we're going to be speaking with those founders, with those investors, with those executives to discuss the tech ecosystem here in New York City and why they choose to call it home NYC. I please to say we're now joined by two key players when it comes to investing in the area.
David Haber, General Partner Andrews and Horowitz, who focuses on technology investments, particularly in financial services, and Julie You and general partner in the bio and health team at Andrewson, who needs investments in companies that are transforming how we access, pay, and experience healthcare, a lot of which is an epicenter
here in New York. And David, I start with you, because what do you see at the moment in New York that is making more people put boots on the ground, particularly Andrews and what You've got eighty plus New York based employees, now you've got new office space.
Absolutely why Yeah. Look, I've always believed that opportunities live between fields of expertise, and I really enjoy exploring those intersections.
And I think it really is a metaphor for New York City because technology has a tendency of cunning across industries, and I think the companies that really represent New York best are those really live at the intersection between technology and many of the large incoming industries that exist here in New York, whether that's media, advertising, fashion, or financial services.
And indeed healthcare. And it's interesting, Julie, that's the area that you focus on, and how much are you seeing that health is becoming some of the deals the checks the VC count that so we're currently seeing a chart just showing that about four hundred and three in the third quarter is how many per metro area we've seen the share of us VC deals, the count that is in New York. How much of that as healthcare and how much should it be?
Absolutely, I mean healthcare in many ways. When I started investing here at the firm about four years ago, I sort of likened it to the nineteen ninety nine of the Internet era, and so I feel like we're really at the beginning of a dawn of this new digital health era in domain.
And to David's point.
I think maybe a little known fact about the New York tech scene is that, whereas most people think about fintech is really the biggest sort of cohort of startups and venture capital activity, it turns out that depending on what charge do you look at, health tech is also number one or number two within the New York tech
scene as well, because of the incumbency. In the same way that we have financial services, bank companies and such in the New York scene, we also have tremendously huge healthcare companies, whether they be insurance companies, whether they be biopharmaceutical companies, whether they be hospital systems also based in that city, and it creates a really unique ecosystem for innovation, and so we've really seen a ton of activity in recent years in that domain.
Julia, let's show that chart again, which is deal count right in San Francisco or the Silicon Valley area has kind of led historically from a deal count even dollar volume perspective. But if you extrapolate back, the gap in terms of deal count and dollar volume is closing between New York and San Francisco.
What does that tell you?
Yeah?
Absolutely.
This is one of the reasons that we've invested so heavily in the New York tech scene is that healthcare in particular has really seen a rise there. One of the feces that we have about why that's the case is that we have this concept of what's called a digital health native founder, someone who has actually grown up in digital health companies that have been quite successful and are now coming out and starting their own businesses and
really seeding the next generation of entrepreneurs. And many of those companies, most of those companies, in fact, have actually
been based in New York. So we have the legs of companies like Oscar Health, which is a publicly traded insure tech business that has now spawned a number of entrepreneurs that we've backed that have again grown up in a company that sits at the intersection of healthcare, technology and financial services and can now take those skills into the next wave of companies that are being built.
David, the story in San Francisco Bay Area Silicon Valley is well told, right, you have the Stanford Computer science drop out and they start a company here because the funding was here and the like minded people were here.
And in some.
Sense that's still true, right, We talk about it on the show all the time.
What is the equivalent story in New York?
Look, as I said, I think New York is such a unique ecosystem.
I joined.
I first moved to New York City in two thousand and nine in the wake of the financial crisis, you know, and at the time, technology was sort of this cute little underdog industry again in the shadows of you know, many of the large kind of incoming industries here in New York. As I mentioned, you know, bea media, you know, advertising,
you know, fashion, or financial services. And again, I think the companies that are really sort of indicative of this ecosystem are those that sort of intersect with those in industries. You know, obviously I'm quite biased, but fintech is you know, a huge presence here in New York and it's really a great place to become sort of bridge between the startup ecosystem and a lot of these you know, decision makers at a lot of these large companies.
The reason, perhaps, David, that your bio hasaw that you might say, is because you were a founder. Of course, Bond Street was brought by Goldman. It was all about sort of growth financing to businesses. What is the financing like right now for entrepreneurs who want to go and build things, who want to be ensuring that they're bringing together the large caps meet the startup ecosystem? Are you writing checks? Is the see community energize right now to write checks?
Absolutely?
Again, just for context, you know, I joined in dres and Horowitz in July twenty twenty one really to help plant the flag here in New York City. At the time, we were six people in New York. Today were over eighty people in New York, which makes us likely one of the largest venture capital firms at least by headcount here in New York City. So you know, we're incredibly excited to be here and to be writing you know,
checks into the entrepreneurs in this ecosystem. And again we've seen a lot of other large firms join, you know, open up offices in New York in the last twelve months. And so while the markets are challenging, I think there's plenty of capital available for entrepreneurs starting new companies.
Julie, You're academic background MIT both as an undergrad and then have an MIT for masters. I believe how closely as an expanded group of partners in New York City in the East Coast do you track the academic basis that talent can come from. You know, there's a lot of emphasis here obviously on Stanford and Berkeley. Is there the same pool of talent being generationally created each year out of the East Coast?
Absolutely?
I mean, I think when you look at our portfolio, roughly about half of our biown health portfolio is based somewhere on the East Coast, whether it be in the Boston ecosystem largely biotech focused there. And then the majority of my personal portfolio is actually based in New York and hence I spend a ton of time there with my partner David on companies that really sit at the intersection actually of healthcare and fintech, where we see a
huge amount of opportunity. I think the other piece of this David mentioned that he is a recovering fintech entrepreneur.
I'm also a way of recovering health tech entrepreneur, and that's really where we see a huge advantage for our team in that we have all been ex builders in these domains, and really that's I would say probably more where we focus is where the pools of talent that have actually built businesses that are native to different industries that can now come together and see these unique opportunities at those intersections.
Of course, you were only member of a software engineering team that was eventually acquired by Oracle, so you know how the exit route tends to look like, Julie, and I'm interested as to whether or not it's more diversity in terms of the founders that you see in New York.
I mean, there's always been this concern that you know, when we are seeing it from the same pool of Mit and Harvard as you two sit in front of us, as there has been within that ecosystem not always as much diversity as you'd like to see in terms of people of color, women coming forward with businesses ideas.
How does that look at New York?
Yeah, I think New York has always been a huge exemplary sort of diversity pool in many ways, whether it be culturally, whether it be based on background, and more importantly, as we've talked about, in terms of the actual experience set that founders are able to bring to this next wave of startups. So we absolutely do see that in the New York scene.
David, tell me what New York Tech Week looks like for you. How many hackathons are you going to, how many mixes, what kind of events? Seriously, that's what's going on out here on the West coast. What's it like on the East coast.
Yeah, we're really incredibly exciting to be here. You know, as I mentioned in Reason has been hosting these tech weeks in cities like San Francisco and Los Angeles. York City, New York Tech Week stands to be our largest event ever. We have three hundred and fifty different events hosted not only by our firm, but by folks across the tech ecosystem, which again, I think speaks to how dynamic this ecosystem has become. So we're kicking things off with an event tonight,
which we're really excited about. And then Julie and I are hosting an event again at the intersection of healthcare and fintech and really excited to host you know a number of entrepreneurs building at that intersection and I love it.
David Haber, Julieu, thank you as your well Social Endeavors pick up a please for this particular wig. We thank you both from Andrews and Horowitz. And what else we've got coming up.
Well, digesting recovering fintech entrepreneur, recovering health tech founder. What's said about but coming up on the show talking targeted advertising on your social media feeds and how it isn't likely to change anytime soon. We're going to discuss this is bloomber technology.
We want to do a bit of a deep dive on, well, a certain business model at play at the moment, the economics of zero ad versions on mainstream social media services. They're not particularly likely to appeal to tech companies or indeed their users.
It would seem.
Indeed, targeted advertising it totally revolutionized the media business. May Meta, for example, one of the most valuable companies in the world, A very own Bloomberg Max Chafkin writes in Today's Bloomberg Business Week, all about the pros and the cons You join us now, and basically, why will they be ultimately such a push against this unless they're regulated that way?
Right?
So, the big reason that this model is popular is that it's extremely lucrative. Facebook Meta has built a very large a business that generates more than one hundred billion dollars a year serving these targeted ads to people. It has a lot of power or over retailers anyone wants to show sell products on the Internet, as well as media companies because it's amassed this huge database essentially of personal information about people that it can then rent to third parties.
And in Europe right now, we have regulators pushing.
Back against aspects of that model, and metas sort of turning around saying, well, Okay, if you don't like it, you can pay us for Facebook and Instagram, pay us
a relatively high monthly price. It looks like they're talking somewhere in the neighborhood of twenty dollars a month and you'll see no ads at all, which you know, I would guess that very few people will actually be willing to pay for because you're talking about a price, you know, that costs more than some wireless plans obviously costs more than a lot of newspapers, Disney plus Netflix and so on.
It's a lot of money for social media.
It is, and it's also a lot of money for people who don't make as money as others. And in some way then means someone who is well has more money to spend becomes able to pay for more privacy, and that doesn't seem particularly fast.
So this is an argument that Mark Zuckerberg, under of Facebook and Meta, has long used as an argument against this, saying that it would be unfair, be unequal to allow people to sort of buy their way out of ads.
What happened, you know?
Twenty eighteen, Europe passes the GDPR, this big privacy regulation, and basically Facebook has been fighting.
Ever since over exactly how it.
Applies the company, and now this is kind of their latest gambit to make the regulators happy. Yet to be seen where the regulators will definitely sign off on this plane, although it's looking certainly possible if not likely.
Max, Let's look at the proposed subscription costs Facebook and Instagram versus everything else.
There it is twenty bucks.
I pay for X premium for example, eight dollars a month or eighty four dollars a year, depending how you look at it. And I did that because I wanted to experience those additional features. But beyond price, what this chart illustrates is choice. Right, at some point, you're just going to say this is a platform be it Facebook or Instagram, that I don't need to have.
Yeah, although the thing is you're not going to have to make that choice, and that's the whole point of this, because you will be allowed to continue looking at your personalized ads. And I think that's the bet here from from Mark Zuckerberg's standpoint that you know, most people are going to look at twenty dollars and say, you know, heck no, I don't want to pay for that, and they'll stay in the in the personalized advertising scheme, which
generates a ton of money. So the you know, average revenue per user in the United States for Facebook is something like two hundred more than two hundred dollars a year, so they're totally happy to have you continue to experience this free social network and for them to have you know, a near monopoly or a doopoly, depending on how you think about it.
On social ads, you know, on the internet.
The buzzword right now in tech across both social media and a guess e commerce's personalization and meta's whole thing has been taking data to make sure that what you look at is relevant to you. How does a premium subscription to impact that, Well, what.
They'll say is that you know, if you if you pay, if you have no ads whatsoever, then it would be fine. Right, You're still going to see the personalized feed you know, your friends and and things that you're interested in. You will no longer see personalized ads, which you know if if you're talking to like their ad sales people. That would be a huge problem for most people, it's probably
no big deal. The thing that they're really fighting against would be some kind of rule that would prevent them or allow people to opt out of personalization, or make it easy to opt out of personalization, because then they would just have to serve you ads you know, based
on you know, your location or whatever. Some essentially use context, like the way that Google does to serve you ads rather than serving ads based on things it knows about you, which from their point of view would be bad and I think would certainly be less lucrative.
Ultimately, I mean, you can in some way pay for what a blue take subscription subscription, I don't think it seemed a subscription, but to be in some way anointed someone that should be listened to on Meta and Facebook in the same way that Twitter does a little bit. But I think you actually have to take some bookses and actually whether you're someone who needs to have that privacy and needs to have it said that you are
whom you say you are and pay for it. So how is that thing going that sort of whole experiment the start.
So and we.
Should say this is something that not just Meta is playing with. TikTok is testing sort of paid paid experiences with fewer ads or no ads. Snapchat has a no ads paid experience that's piloting, and Twitter, of course x has this you know, much vaunted blue.
Check system and might go to three. You don't level and exactly.
And Linda Acarino is signal there's going to be a higher tier, you know, as EDG just said, the current subscription costs between eight and eleven dollars, depending on where you buy it. You know, maybe the new one will cost twenty dollars or something like that. For no ads, we should say none of these have done very well. Elon Musk has relentlessly promoted you know, this subscription thing.
We're talking about a tiny percentage of Twitter X's audio, you know, a revenue stream that in no way replaces the kind of revenue they were able to achieve from advertising. I mean, the problem here isn't necessarily that people don't want, you know, ad free experiences or premium social network experiences.
It's that online advertising is a much much better business than that, and so companies that are looking to, you know, change their business model would be giving up huge sums of revenue, which something maybe Elon Musk can do, you know, private company, and he's Elon Musk, but it's.
Going to be a lot harder for most public companies to pull off.
All right.
Bloomberg Business Feed columnist Max Chafkin with the breakdown, Thank you. Apple's iPhone fifteen may not be as hot a commodity on the smartphone market, at least in China. Data from Counterpoint Research estimates the iPhone fifteen sales are down nearbly five percent compared to the iPhone fourteen after the first
seventeen days post release. However, the data does lump of those phone fifteen models together in aggregate, joining us who else Bloomberg's Mark Gum and chief correspondent Mark It's an interesting data point because it's kind of counted to the commentary that Apple gave us in earnings to the end of the June quarter, right iPhone would accelerate.
We thought the iPhone fifteen be a hit. What have we learned?
Yeah, these are a couple interesting data points.
They're pointing towards the iPhone potentially going down double digits in recent weeks in terms of.
Sales in mainland China.
Now, the June quarter was very strong for Apple and China, one of their strongest in the company's history. But there's been a few things that happened since then. There was the launch of the Walway, the new mate phone. There there was discussion of some government agencies banning the use or expanding the banning of use of iPhones. There there were some concerns around nationalism and potentially some consumers in China souring on the iPhone.
Ahead of that launch.
We saw when the new iPhone fifteens went on sale in China that there was a tremendous amount of early demand the credible lines for the iPhone fifteen in China.
So these are two data points.
We won't necessarily know for sure what's going on with the iPhone, not even this earning cycle. Right Apple reports fourth quarter earnings November two. We're not going to get a full picture of how the iPhone is doing in China the latest model until the end of January or
early February when they report Q one sales. Obviously, the fourth quarter only had about a week and a half or so of iPhone sales, so we have to take all these data points into consideration, probably have to wait a few months to know the real story, but certainly I am tending to believe that there is some decline.
There on the iPhone in China.
The good news is as you're seeing a tremendous increase for the iPhone momentum in the United States and elsewhere, so you're probably going to get a bit of an offset there from going down in one country and significantly up in the other.
And talk to us therefore about the US and the executive team that they have based here, Mark, because you wrote over the weekend that actually, well, amid sort of these pushes and pulls glob there has been some more elevated titles in VP land at least.
Yeah, that's right.
So Apple obviously is run by Tim Cook, and under him is what's called the ET. That's the executive team. That's about eleven senior vice presidents. That's your head of hardware, head of software, hed illegal, CFO, etc. But below all of those people is a group called the top one hundred, right, that is their vice presidents. The top one hundred actually includes all of those people, but you have about one
hundred vps below them. They do promotions every October. They lost about a dozen vice presidents over the last two years or so, and so they're sort of refueling those ranks.
There's new vps for retail.
Actually three women have been elevated to the vice president level in the retail organization, which is pretty significant for the company in terms of the diversity efforts and putting
new lieutenants under their head of retail. There there are new vice presidents in Operations, Product operations and product manufacturing, and a few new vice presidents in software engineering, so pretty significant elevations across the board at the company, sort of creating this new generation of top executives at the Firm's.
Mart Bogerman always with the best breakdown. We thank you so much. Meanwhile, look, and that does it for this edition of Bluebot Technology.
Yeah, big thank you to those of you listening to the podcast. You can get it on all the bluebo platforms, Apple, Iheartspotify, and we're also posting the show to YouTube from SF in New York City.
This has been Bot Technology