From Bhart where Innovation, Money and Power Collie in Silicon Valley, n Beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm scarletfu In for Caroline hide a Bloomberg's World headquarters.
In New York, and I'm Alex Brinka and for Ed Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up, We'll hear from the CEO of TikTok as the company sues Montana following the state's decision to ban the popular app. What steps is TikTok taking to alleviate US scrutiny.
Plus will sit down with the CFO of Zoom as the company faces growth hurdles when it comes to enterprise customers.
And we'll be speaking to executives from Amazon and Adobe to discuss product launches, generative AI, and the state of the consumer. All that and more coming up, But first let's get you check on the financial markets.
Here.
It's another day of modest moves in US equities because it's really groundhog day when it comes to the big themes.
Sailing talks.
No agreement yet, even though we're about nine days away from that June first X date when Washington runs out of cash. We know that President Biden and Kevin McCarthy, the Speaker of the House, will be scheduled to speak and meet daily. They began meeting at about eleven am Eastern time. And of course the big question of whether we'll get a recession or no recession. Today's data showed that business activity grew the most in a year, so
that's pointing to perhaps a soft landing. When you add it all up, we're looking at the yield on the tier moving up to towards four point four percent. At one point it did rise to that level. But the NASAC one hundred is down a quarter of one percent, still holding near.
It's thirteen month high.
The euro is losing ground, losing four tens of one percent after data show manufacturing Europe contracted the most in three years, basically since pandemic and I included the Topics index. The broad market measure in Japan down by two thirds of one percent after chip related names led the drop there. Now that the country is tightening its export controls starting
in late July. Now, if you put everything into context, we know the rally in big tech has made the NAZAK one hundred, a star performer, and if we pull up a chart, what you'll see is that it's up
twenty six percent this year alone. But that's got to be put into context here, right, because you go back to the end of twenty twenty one, start of twenty twenty two, and what you see is the NASAC, which is the blue line there, really playing catch up with the broader market, which is the white line, the SMP five hundred. At the start of twenty twenty three, which is right around here. Fund managers who were underweight tech because of their big losses last year, increase their exposure.
They rebalance their portfolios. Then in March, when the banking crisis banking stresses began, small caps, which is the yellow line, really broke apart from the broader market, the white line, the SMP five hundred, and investors what did they do?
They found safety.
They found a haven in big tech because of their dominant market share, their free cash flow, and their robust balance sheets. Alex, what are you taking a look at.
I'm looking at the biggest movers on the day today.
First up, we have Zoom.
It's sliding about seven percent. That's the biggest decline in almost six months after the company reported earnings last night that really disappointed the street. Their customers, their consumer customers, their business customers. Growth there has plateaued, and their big plan to grow sales with big enterprise customers might not happen as soon as the market expected. We'll have more on that later in the show. Next, I have Ali Baba.
It's down one point five percent. That's pairing some earlier losses. The company said it's cutting seven percent of its staff in its cloud business. You'll remember this is a company that's planning to split itself up six ways. This would be one of the business units that it's eventually planning on spinning off.
And taking public.
Now we have a record high for Broadcom, the third stock i'm watching here. It's ticked up about two and a half percent today. It's the all time high because this chip maker has inked a multi billion dollar deal for five G radio frequency parts with Apple for Apple's iPhone. Now I want to take over to kind of our biggest.
Rise on the day.
That would be Yelp up flirting with ten percent.
That's a six month high.
It's been climbing on a report that an activist TCS Capital Management has come knocking the firm. TCS plans to deliver a letter to yup's board urging the site to potentially sell itself or look into strategic options. Investors seem to be down with that idea. And it's not the first time yelp has actually seen an activist if you rewind to twenty nineteen, as QN investors urge management to make changes, they did so, perhaps some bullishness on some
potential for change here at yelp. If this new activist is successful, Scarlett.
It's great context there and certainly something we'll be keeping an eye on now. Around the globe, the Cutter Economic Forum is currently underway where key global business and investment leaders are converging in the Middle East, and of course, our very own Caroline Hyde sat down with the CEO of TikTok and he spoke about how it's working with Oracle to review its code and oversee US user data. He also talked about the recent bill banning the platform in Montana.
Take a listen.
We believe that the Montana builder was recently passed is simply unconstitutional, and as you pointed out, we very recently filed a lawsuit to challenge this in the courts, and we are confident that we will prevail. Separately, you know, I've noticed that some of our creators have also filed a separate lawsuit challenging the same bill in the courts, and I do want to say that, you know, they
care because TikTok is really important to them. And this is the part of the story that I think is the most important part you know of TikTok, which is that now that we have more than one hundred and fifty million Americans on our platform on a very active basis, more than a billion around the world. You know, people
use TikTok as a place for expression. It's a very different experience as you may know from the other apps they are available in the market, and this is one for discovery, for expression, for free expression, and a lot of our users use TikTok to find their communities, to discover and to express themselves, you know. Moreover, you know, there are five million small businesses in the United States that depend on TikTok and millions more around the world,
including here in this country and in the region. So I think, you know, ultimately it is about providing value to these users. And making sure that you know, we continue to provide them with a great service that benefits them. And that's some you know, our key focus at this moment.
In time, expressing oneself.
Was that quite hard to express yourself.
Most recently when you're in Congress, when you are having to try and tell your story of why TikTok is important in the United States.
I think it was a very important process and I'm very grateful for the opportunity to show up and to tell our side of the story.
Would you tell your side of the story.
Throughout the five hours? I believe I had time to do that, And I think it's a good opportunity for us to explain ourselves because there are some myths and misconceptions about our company out there.
Dig into them, because the key issue that many would have is data and the concern the anxiety that ultimately the Chinese government can have access to US user data. That is why Montana is wanting to ban TikTok. What do you wish you could have said to make that land that that isn't going to happen, because it felt as though you didn't manage to prove that point well.
TikTok is not available in inland China today. As we say it many times, the Chinese government has actually never asked us for US user data and we will not provide even if fast.
Now.
Beyond that we have built over the last two years something we call internally Project Taxes, and what it really is is to ensure that American data is stored on American soil by an American company and overseen by American personnel. And this is truly an unprecedented project that none of the other companies in our industry have ever attempted. And we believe that we have taken steps there above and beyond what our industry has done to protect the safety of US user data, which is very important.
And where are you with Project Texas, Because there's been some reporting and I know that you've come out and said, very soon Oracle will have the unprecedented access to our data or indeed to your the ways in which of your source code.
But that's not now.
When will Oracle be able to enact this sort of unprecedented overseeing and transparency of your company.
Project Texas is a very complicated project and a lot of the elements of the project is already in place and operational. For example, today, by default, all US data is stored in the Oracle Cloud service, already in Oracle Cloud infrastructure and no longer in our own service in Virginia.
And seeing you've already run that transfer.
It's already done by default correct. Separately, Oracle has begun to source the review of the code, although it's, as you can understand, you know, a complicated project that will take time for us to finish the details. So it's on track. Oracle and ourselves are working together with the US government to finalize the details of Project Texas.
Bloomberg Technology co hosts Caroline hight is standing by with Mark Caroline lots of making his case. They're telling a story, or is your big takeaway from your conversation.
While I was pressing in Alex on your reporting, because it was your story that really instigated this warrior as to whether the Oracle deal was really in place, and he did try and push back that that is on track, as you heard, and the fact that actually they've moved
that data from their servers onto Oracles already. But ultimately the takeaway for me was this is also coming in a moment where Meta, where he was once on intern We've got to remember, is also being fined a record amount by the EU regulators at the moment.
Why because US may.
Be able to access EU data, They're worried ultimately about exactly what the US is worried about China can do. This is a global issue that is currently ongoing, and of course that's why they've not just got Project Texas, They've got Project Clover over in Europe where they're also trying to understand how they can protect user data. This feels to me like a moment of deglobalization and another level when it comes to technology and his key point. It felt like Alex was.
Look, how can we do this?
How can we ensure we have data sovereignty without ultimately breaking the Internet and I'm sure without breaking his business because he really didn't seem to say in any way way that they have a plan B for if they get banned. He felt that they are here to stay when it comes to United States presence for TikTok, or.
At least a Plan B that he intends to reveal for now. Caroline, you did a great job in pushing him on whether he actually got the chance to tell his story. I'm curious now that you're in Cutter, who else have you been talking with? What else did you glean from the executives who are attending the forum.
Well, I think that globalization issue, worry about investment in China is ringing true throughout Molus CEO speaking to Francine a little bit about that. I was speaking interestingly with well, Peter Chen and he himself is a big investor in content Love is Blind anyone was He now owns the production company behind that. He of course ran Fox for
fourteen years. We were talking really ultimately about how he's trying to be more globalized, trying to buy production and content in Mexico, in Turkey to ensure that actually the streaming companies they now become ultimately that much more powerful.
He thinks bea by the.
Way cable is done, that they be able to have natural language, new language, and access the emerging markets in that much more of a way. It was interesting, of course, AI has been front and center. I spoke to the CEO of TikTok shows you about out official intelligence about large language models. He wouldn't go there as to whether he himself are already creating an LLM for TikTok, but
he certainly thinks it's going to galvanize video production. And I also spoke with Ursula Burns, who many will know her as basically the first African American woman to run a Fortune five hundred company. She run a tech company, Xerox, but she's also now the chair of Toeneo. She's also an investor with Integram. It's a private equity or investment company that invests in tech companies ultimately, and she's really
excited by the opportunities in AI. Thinks it can be a real force productivity, but is also look worried about the regulatory environment.
Just take a listen.
This is a technology that is developing, right it's developing. We know that if we just leave it to everyone we generally leave it to, there'll be a huge amount of avnots small amount of habs. This is a place that we should have a community working towards, working together technical community, government, communities, education, not for NGOs or on this unbelievable gift right that we haven't trying to figure out a way to make it better good for.
All that haves have not said something that actually, of course is core to U.
Suli Burns.
She's got a key focus on diversity at board level. We've got a key focus on AI and how that maybe just amplifies biases already in the system. So this is something she's looking at front and centive, but seems to be much more on the optimistic side the force for good that AI could ultimately be.
Absolutely Caroline had great reporting Bloomberg's Caroline Hide at the Cutter Economic Forum, which is powered by Bloomberg, And of course Caroline will be back in New York later this week.
Now moving on to Zoom, which released its first quarter earnings yesterday, sending shares down after posting mixed results, Let's bring in it's CFO Kelly Steckelberg for more. Kelly, when I look at the market reaction here today, it seems like folks are reading in to the guidance that there's some pressure on that really important enterprise business for you all.
What seems to be.
Kind of putting a dent in that kind of core selling into enterprise customers that you guys have been focused on.
So Hi, nice to see you.
We were really pleased with our results that we announced last night. We exceeded both the high end of our revenue guidance as well as our profitability metrics, and we were able to raise our outlook for the full year on both the top and the bottom line. Some of the key highlights of the quarter was we saw stabilization in our online business earlier than we expected this year, as well as peak gross margins at eighty point five percent and our Zoom Phone, which is our cloud PBX solution,
crossing the ten percent of revenue threshold. We did talk of the fact that we had a reduction as well as a restructuring in our direct sales organization, and while we saw some traction in the SMB portion of that team, you know it's going to take a little bit longer for the rest of the organization as expected when you have such a significant transition to return to full productivity. And that all of that is reflecting in our guidance and what you're referring to now.
Zoom during the pandemic obviously had kind of a growth moment. I think the market was looking at you guys as a growth stock under those conditions. As you're talking about this kind of online consumer piece of your business plateauing a little bit and some of this pressure through the sales org on your enterprise business, do you look for
growth elsewhere? Is something like an acquisition or attack on something that you guys would consider to kind of juice that top line or find some growth out of those two key business units.
So we have really been investing in innovating across the platform and we are so when you look forward to not only Zoom Phone, but also Zoom Contact Center that was released last year. We announced in March some new beta features around zoom Iq, which is levering AI to be a smart companion to do things like chat or email composition, to do meeting summaries, or even think about summarizing a long chat thread that maybe you missed earlier
in the day. We also have announced just in lat q one, an acquisition of work Vivo, which will bring front and Center a collaborative employee data hub that leverages both you know, social as well as intranet. So we have an amazing platform that has continued to grow and that is what we're looking for to drive the future growth of the company.
I appreciate your answering that, but just to follow on what Alex was asking, looks like you've made two acquisitions this year.
Last year six acquisitions.
The biggest was one hundred and twenty five million dollars. Perhaps users are looking for a bigger transformative purchase.
How are you thinking about that?
Yeah, we always watch what's available in the market, and as you indicated, we've done Solvy and wor Vivo this year, both really helping us accelerate the development of parts of our platform. And you know, there's three caricteria that we look for. We look for technology, we have a very high bar. We look for cultures, We want to make sure that it would be a great addition to our team. And then of course we look to valuation, which you know, given what's happening in the market, has.
Become more attractive over time.
But we want to make sure that any acquisition we would do would really benefit our customers, and that's what we look for. How would it transform the customer experience and we keep watching for those opportunities.
I got to ask you about your competition as well, because we hear more about companies consolidating their software onto Microsoft teams.
Does this concern you? How do you counter that?
So you know, Microsoft is a great partner to us. We always, again think about things through the customer's viewpoint, and what we do is we work with our customers to help them leverage whatever products they want. Sometimes they want to use Zoom phone and Zoom contact Center or Zoom meetings and couple that in with potentially another Microsoft products, So we have seamless integrations with them. And we saw one of the ways that I measure the strength in
our business is through our renewals. Q one is our largest renewal period, trending all the way back to that uptick. We saw the early stages of the pandemic and we saw very strong renewals in Q one and very little logo trem which tells me that customers might be right sizing, but they're sticking with Zoom as they know and love us.
Kelly, really appreciate your joining us. Kelly Steckelberg is the CFO of Zoom.
Thank you so much.
Now, coming up on Bloomberg Technology, we're watching shares of Apple and Broadcom after the true signed a multi billion dollar deal. More details on that next. This is Bloomberg and some breaking news here. Jpal, the Chairman of the Federal Reserve, has arrived on Capitol Hill. He's meeting with House Democrats, the New Democratic Coalition. This was a long planned meeting and according to the NBC, the organization, it
has nothing to do with the debt limit discussions. So once again, Jpal at Capitol Hill, we'll keep you posted if there are any developments out of that meeting. Let's go back to the tech sector, because we looked at Apple and it is just signed a multi year, multi billion dollar deal with Broadcom to develop five G radio frequency components. The stock is lower on the day, Broadcom is moving up two and a half percent. Let's get some more contexts on this and bring in on Grana
of Bloomberg Intelligence An. What's interesting here is that Apple has a relationship clearly with Broadcom. It is one of Broadcom's biggest customers, but they have a contentious relationship. What does this deal do when it comes to that contentious relationship.
Yeah, I think when you look at Apple, I think this is a little bit more diversify, you know, away from qualcong is. I think what I'm reading more into this because for Apple's you know case, it needs to diversify not just from you know, one region, which is Asia. It needs to broaden its you know, partnership partner network as well when it whereas sourcing parts across the world.
Now anurag, I have to think about Apple's kind of big push to bring in homegrown chips and ask the question, does this mean that these specific chips, these radio frequency chips for five G that Apple Bloomberg's reported is considering bringing in house for the creation Does this mean that maybe that effort by Apple is not necessarily going as well as they had initially thought.
Now, remember, Apple is never going to do these things just for cost alone. It's going to always go for the best part that's out there, you know. At the same time, and again I say not for cost freeson, but for performance. It is designing all sorts of parts internally so that the next generation for or next generation device that's coming up with can achieve what it wants to achieve. Sometimes the partners are not able to provide that.
I mean, I cannot say that you know whether the in house efforts are not you know, going as planned or not. But it's just again as I said, it is just planned, you know way of looking at things and say, I don't want to be dependent on one supplier for all my needs. I want to go. You know, across the board, the.
Ever consistent front of me is in tag honorag Run of Bloomberg Intelligence. Thank you for breaking that down for us.
Welcome back to Bloomberg Technology.
I'm Scarlett Foo in New York and I'm Alex Marinkan in San Francisco. All right, we've got about three and a half hours to go before the market close here in New York, so let's going to check on what's going on. Debt ceiling debate talks, ongoing negotiations still wing on the market here with the S and P five hundred losing a third of one percent, led by materials
companies and tech companies. Notably to point out that oil prices are moving higher to w RETI up by one point eight percent after Saudi Arabia's energy minister issued awarding to short sellers telling them to watch out. That was at the Cutter Economic Forum, where our very own Caroline Hide currently is at. And of course because of the rise and oil prices, we're looking at XL, the ETF that tracks big cap energy names also moving up by
two percent. Now a couple of individual company names to highlight here because we're at the tail end of the US earning season when retailers in particular report on their results, and what we're seeing is Low's moving up by two point four percent, even though it cut its full Your outlook saying that it sees a slowdown in spending on
home improvement. The difference here is that it's reporting gains among professional contractors and in some ways and by some measurements, doing better than its large arrival Home Depot, which last week pretty much said the same thing that it's lowering its full your forecast because of broad based spending cutbacks by its consumers, by its customers and Home Depot, both and Lows both up fight lead two percent on the
day alex Well. Ten years after the launch of its first tablet, Amazon is releasing its newest, the Firemax eleven, and what the company is calling its biggest and most powerful tablet yet. Joining us now is David Limp, Amazon's Device and Services Senior vice president, David I have to ask you, guys have been pretty strong in kind of the lower price point market for a tablet. This Firemax eleven has a higher price point. It feel looks and feels a little bit more premium.
Who are you trying to capture with this latest tablet.
Well, I think we've really found a place with our tablet products where we build premium tablets but at non premium prices. And as customers have demanded more from tablets, they've increasingly said they wanted larger screens. We have had ten inch screens for a while, so like bringing out the eleven inch now it's a real big difference for us because we did go to an all aluminum design, it's thinner. It's really a great opportunity for customers to have a.
Large tablet form factor.
That can also be used for productivity as well as entertainment, but also be able to do it at an incredibly affordable price.
It's just two hundred and twenty nine dollars.
Right, and this one is definitely geared.
It seems to increase productivity for workers. But I noticed that a lot of your products have a kids version the Echo Show five Kids that are designed for kids, or they're designed for kids like the now canceled Amazon Glow. How do you think about incorporating and building out generative AI and LLLM when it comes to serving the kids, Because there's a privacy factor obviously that is critical to retaining, to building, to preserving that trust with your customer base.
Yeah, and we've been We've had a version of our kids products, as you said, for a long time.
Now.
We have it for Kindle, we have it for our tablets, we have it for our echos, and even for our TV. And the key around that is we really try to build a kind of a sandbox that the parents can ensure they feel safe putting their kids in that environment. For example, on our tablets, all apps that are available through Kids Plus don't have any embedded advertising in them. And I think the same thing's true with Alexa and Generative AI, that the AI has to be aware of
the age group that it is talking to. So if a child that's six years old asked where do babies come from, it's going to give a different, more parent friendly answer than if an adult asked that question.
I know chatbots are certainly having their moment. Generative AI seems to be the phrase we can't stop talking about. But you guys with Alexa, with the echoes, chatbots have been around with you for a minute. I'm curious what you think at this moment, in time of all the calls for regulation around Generative AI and chatbots is an industry that you guys have clearly been in and I think I remember Amazon asking for regulation around facial recognition software.
What's your take on AI these days?
Are you going to go to Congress and say, hey, you need to help us out here.
Yeah.
I think there's a wide spectrum of what AI can deliver, and you know, on one end of the spectrum, when you start talking about these generative AI techniques and assistance and things like that, I think there's very much room for regulation and we think that we want that to happen as Amazon, there are other sides that are just not as risky, and think about things like fraud detection and then those kinds of places you probably want to have less regulation so you can keep the speed of
invention happening and protect consumers with those AI techniques.
But in the long run, we think for the.
More complicated use scenarios that regulation is needed and we're big supporters.
I want to go back to products for a moment, because I'm so glad that Alex brought up Alexa and you did as well. When you talk about generative AI, can you give us a sense of what capabilities are going to be first through the door as you try to upgrade Alexa and make it more prevalent in people's lives. What are you doing to make Alexa smarter? Essentially?
Yeah, well, the first thing we hit a big milestone.
We've now sold well over half a billion Alexa enabled devices, and last week we announced the Echo pop here. This is the first product I've ever brought home that my daughter said was adorable, So I'm very proud of the team's ability to do that. But with over a half a billion end points, we have a great access to customers and we are using generative AI techniques to improve
it every day. And I'll give you an example, which is on the back end, we have a large language model that runs that takes multiple pieces of information from various parts of the web and own our own repositories.
And comes up with a concise answer.
So if if a child asks a homework question or a parent asked a question, then we give a better answer than we did just weeks ago. And this is all because of the power of these large language models. And over the course of time, you're going to see us roll out even more and alex is just going to get more proactive and more conversation.
David, I have to ask about Astro, the adorable home robot that was released as a prototype. Is everyone going to be able to get their hands on Astros? Their water release coming up for that product.
We continue to make progress on Astro. We're shipping a lot of them every week now. We've kind of ramped up the manufacturing, but we're still an invite. There's still a few areas that we're working on in terms of navigation, but it seems like it's a pretty tractable problem right now, and I would anticipate it to go into wide release over the course of the not too far in the distant future, as we get through the last of the issues. But I will tell you that customers are loving the product.
We've had over three hundred thousand people request invites. We're shipping lots every week, and customers have kind of if there was a spectrum of products on your phone was on one end and PET was on the other, Astro is kind of closer to the PET end of the spectrum that it is pure iPhone good stuff.
David really appreciate it.
Talking products with David Limp, we talked about Astro, the Echo, and of course they are a new fire tablet as well.
Thank you so much.
Coming up, Generative AI in Creative Cloud. We're going to speak with Adobe's president of Digital Media Business about its new feature for users of Photoshop. But before we go to break, let's take a look at how Adobe shares are performed right now. Little change on the day off just largely this is Bloomberg.
It's time now for talking tech.
First up, yealf shares are on track to rise the most since August, since a Wall Street Journal report that an activist investor has called for the company to look into a sale and other strategic options. TCS Capital Management plans that deliver a letter to Yelp's board today to make the case for a sale, arguing that the firm could fetch more than double its current share price plus. Ali Baba's cloud division has begun a round of job cuts that could reduce its staff by about seven percent.
It's all a part of its overhaul of the business at preparing the once fast growing unit for a spinoff and an eventual IPO, China's largest cloud service, has begun in forming affected staff on the layoffs and is offering several employees or transfers to other parts of the Alibaba empire, and Apple clashing with the European Union over a fourteen
billion dollar tax deal. The iphonemaker and Ireland hitting back at the EUSE anti trust watchdog, saying they made legal errors when they concluded Apple was given vast amounts of unfair tax aid from Ireland and issued an order to repay that money.
All right, let's talk about Adobe alex because it is taking its generative aim models to the next level by integrating the Generative Fill tool into its popular Photoshop software.
Users will now.
Have a creative code pilot to help with precision and speed up production when they use Photoshop. For more on this, we're joined by David Wadwani. He is Adobe's president of Digital Media Business. David good to speak with you. Let's just start with the generative Phill tool and if you could tell us how in practice it would work and how would meaningfully change the end product and perhaps create demand for new uses of the software.
Absolutely, Scarlett, thank you for having me on. Today's a big day for Adobe with the introduction of generative technology going into Photoshop for the first time. We actually launched Firefly, which is our core generative capabilities seven weeks ago as a standalone capability, so people could create images, they could
create text effects. Today, the massive step forward for us and the industry is that we've taken that and we've natively integrated it into our Creative Cloud applications, starting with Photoshop first. So now someone working in Photoshop can, as you see on the screen here, start to affect the images and save hours of work simply by using text
to help generate and fill information around it. And we do that in a way that leverages all of the authoring capabilities of Photoshop, including its layers, so that the work enables a lot more iteration, a lot more exploration, and a lot more productivity because of the way people are able to use it in their existing work flows.
Right, And I know that Adobe is all about serving the creative community. I know also that Adobe ignited some anger earlier this year for potentially training AI models on user files by default.
I know that that's been resolved. What did you learn from that episode?
Communication is key.
We've never trained on user files that are part of Creative Cloud. We've been incredibly transparent through throughout this process and in fact, I think we've taken industry leading position on this. Everything that we've used to train our models, we have absolute right to use it, so it's you know, and we are we have the complete origin of that content, so that we've been able to be completely transparent with
everyone how our models are trained. We've also been able to you know, to announce that because we know where the content is coming from, principally Adobe Stock. We are also going to be compensating the contributors for the benefits that we get and the industry gets from the content. So we're very excited about how this can be positive.
For creators now, David, I think that incident is a good example of just how sensitive folks are approaching the
use of AI in creation of assets. When I think about kind of the impact outside of Adobe of what your customers are using your products for, I have to ask the question that I think a lot of folks are asking these days when it comes to AI misinformation, when it comes to tools to creating that misinformation, Where is the role of folks like yourself in making sure that we don't have kind of AI generated misinformation out
in the world. How is Adobe thinking about what I'm sure will continue to be a tricky issue as generative AI really gets into the hands of people at large.
Yeah, I think we all in the tech industry you need to take a very lenient position on working with governments and regulators to address this issue. So our position has been and we've worked with both the White House and Capitol Hill. We've also been very involved with the You with their AI Bill of Rights, and we believe that the right approach she here is to do something
called content credentials. What content credentials effectively does is it's a nutrition label for every piece of content you see online.
And we make sure that anything that flows through our products, whether it's the AI generated capabilities of Firefly or whether it's our core flagship applications like Photoshop, have the providence are the origin of all that content in it, so that when someone sees it ultimately on a website, they can go and look at it and say, well, what was this and how was it generated, so they can use their own judgment about whether this is content that
they want to depend on or content that they don't trust.
So I spent a lot of time in the social media space. I spend a lot of time with creators and advertisers.
They're trying to move really fast.
They are looking at things like cap cut, some of your competitors, Canva. There's a slew of new kind of startups who are pushing in and seemingly trying to take some of Adobe's traditional creations. How are you facing competition from these kind of younger players who perhaps not providing that digital provenance that you guys are committing to.
Well, first of all, you know, the Adobe core business for creative and our business overall continues to grow. I think we as you probably saw on our last earnings call, we had a great quarter, we beat and then we raised our guidance for the year. So the core machinery continues to grow, both in terms of what we're doing for creative professionals, but also this massive and growing population of creativity for all everyone that's part of the creator economy.
That are the younger generations and students that are looking to add more content that stands out. So we're benefiting
from all of that. At the foundation, you know, we think innovation is key, and we think the way that works is having a set of products from Firefly which you can use just for fun and enjoy yourself to Adobe Express, which is perfect for knowledge workers and creator creator professional creator economy all the way to photoshop and then enable everyone to sort of create along that continuum
and enable them to work together on that. So we feel very good about the breadth of offerings and the onboarding that users have into those offerings.
Well, speaking of startups, of course, you led the purchase of the design startup Figma not so long ago, and the US government is preparing a lawsuit to potentially block it, and we know the UK has already done. So your CEO has said that you're working to convince authorities that it's not not anti competitive.
How's that going very quickly.
We're cooperating and sharing all the information that we have with the regulators around the world. Our core belief and continues to be that the substance of the case is that this is an adjacency that's good for the industry and good for consumers. We see a lot of potential benefits and we're confident in the case and we just have to let the process play out.
David Wadwani, president of Digital Media Business for Adobe, Thank you more.
Next, this is Bloomberg.
TikTok is not available in midland China today. As we said many times, the Chinese government has actually never asked us for US use of data and we will not provide even a vast.
That was TikTok.
CEO show too there, speaking during a Bloomberg interview at the Qatar Economic Forum in Doha. Now, let's continue that conversation about rising US China tensions around tech and AI with Linda Moore, President and CEO of tech Net, a bipartisan network of tech CEOs and senior executives promoting the growth of innovation in this economy. Now, Linda, when I think about kind of the dialogue that's gone on between the US and China, it's verged from contention to kind
of techno nationalism. But I think at the end of the day, I have a big question as to when we will actually see some kind of regulation happen that protects the US if that's what lawmakers want.
What's your take on that specifically on AI.
Federal policymakers and state policymakers are in fact finding mode right now, working closely with them and all of our member companies at tech net to make sure they understand that the technology can be rolled out in a safe, responsible way. We saw an instance yesterday that was very unfortunate. We certainly want to avoid that anytime going forward, and I think that Twitter probably learned some things from that
instance and we'll hopefully safeguard it going forward. But all of the companies that I work with, and all the federal policy makers I work with, understand the great potential of AI, especially in the medical realm, and so we don't want to, you know.
Not take advantage of that.
It can help us solve a lot of issues and a lot of problems that we face. But it will take some time for federal policy makers to put some regulations in place. I think that we'll see that in the coming year.
And you know, Congress has been nothing if not reactive when it comes to regulating tech.
There have been.
Industries like social media where we've seen whistleblower after executive touted down to Capitol Hill with big concerns but no actual regulation. Do we need a big moment, a big scary moment, for that kind of fact finding mode to end and for actual regulation to take place.
Well, I think that policy makers at the federal level are being very wise and that they don't know all that they need to know about the technology, and I think that they're taking that very seriously. We've seen a huge uptick in hearings and people appearing in Congress.
You saw Sam Altman just recently.
Others will continue to meet with Majority Leader Schumer and also other committee chairs, and also the White House and the agencies are also putting forward their own task forces on this. I do hope that it's not a big scary moment that does, you know, cause everyone to clamp down on this.
I think that all.
Of our American technology companies are very focused on safe, responsible rollout of artificial intelligence. It is already being used and used well in lots of instances, and we just want to increase that activity and apply it to a lot of different really great applications. And policymakers are wisely trying to really understand what they don't right now about how it can be used and used well.
Right, we certainly need the right policies in place to move forward on that. Sometimes it's easier to identify the wrong policies. What would be an example of the wrong policy when it comes to regulating, potentially regulating.
AI well I think that you know, in some instances, if you saw just a complete clamp down on there will be no use of AI at all, and we will be looking for companies to prosecute if that happened.
That's an extreme situation. I don't see that happening.
But you know, policy makers, as I mentioned before, they very much understand the wonderful potential of AI, how it's being used right now to increase output. For example, the Madrona vaccine for COVID that was found so rapidly because AI can find so many tests and solutions to a problem.
So there are wonderful applications of this technology, and I think that policy makers are wisely under standing that and are wanting to take it slow and make sure they understand exactly all the things that they don't know, good and bad for how it can be used. And American technology companies take that very seriously too.
You've seen all kinds of.
Frameworks put out, especially by Google and Microsoft that really lays out the responsible and safe use of artificial intelligence, and I think that that's the right way to go.
In the meantime, there's a lot of talk of perhaps maybe putting together a federal data privacy law that would protect the databall consumers and businesses, give people some certainty to what extent is europe a model for what to do or what not to do?
Yeah, you know, there are a lot of good things to learn from the European model. First of all, they made sure that there was one national standard for the continent. Right now, we have nine states already that have enacted their own privacy laws. California was the first, but a to others have followed, And just this year alone we had twenty eight states that introduce fifty six different privacy laws.
TECH that is very involved with federal policymakers on a daily basis advocating for one national standard.
We want one.
National privacy law that will give all businesses in America the rules of the road that they need to adhere to their responsibilities and also so consumers will know their data is protected and they know exactly what to expect.
Thank you so much.
Linda Moore is president and CEO of TechNet in San Francisco. And that does it for this edition of Bloomberg Technology.
Don't forget to check out the Bloomberg Technology podcast. You can find it on the terminal online, on apples, Spotify, and iHeart this is Bloomberg.