December 23, 2025 • 43 mins
Bloomberg’s Caroline Hyde discusses ServiceNow’s plan to buy cybersecurity startup Armis for $7.75 billion, its largest acquisition to date. Plus, Nvidia's biggest buyer in Southeast Asia, Megaspeed, faces a chip-smuggling probe. And it was supposed to be crypto’s big year, but some of the sector's billionaires have been hit hard by recent price drops.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and ever though in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech Coming up.
Speaker 3 (00:24):
Service now agrees to by cybersecurity startup Armists for seven
points seventy five billion dollars, its largest acquisition to date. Douz,
Invidia's biggest Southeast Asia buyer, faces a chip smuggling probe
despite the tech giants insistence that chip diversion doesn't exist.
And crypto's big year that wasn't a win for all
(00:44):
the billionaire's hit hardest by recent price drops. First rechecking
on those markets and bigcoin continues to be on the downside.
We're off five percentage twin eight, three and sixty one,
so once again another annual loss for the OG in
the crypto space.
Speaker 2 (00:57):
But we're seeing risk on perpetuate a little bit.
Speaker 3 (01:00):
And then as that one hundred, we're higher on the day,
we're higher on the month, and boy are we higher
on the year, up more than twenty percent. And of
course today's figures the US economy expanding at four point
three percent annualized pace. Maybe just easing back a little
bit of risk on feeling if indeed the FED doesn't
cut as much as I'm in anticipated because this economy.
Speaker 2 (01:17):
Looks like it's doing fine.
Speaker 3 (01:18):
Let's talk about some of the animal spirits in the
market right now, particularly when it comes to M and A.
And let's look at Service Now. We're currently trading lower
on that particular stock.
Speaker 2 (01:26):
We're off by two and.
Speaker 3 (01:27):
A half percent because well, they're going to use cash,
They're going to use debt for his biggest acquisition so far.
Speaker 2 (01:32):
It's all about the world of cyber and it's actually.
Speaker 3 (01:34):
A story that Bloomberg broke where ahead of the formal announcement.
Let's get to it at Bloomberg's Andrew Martin, and it
was last week that you made clear to the market
that Service Now was looking at this particular acquisition.
Speaker 2 (01:45):
Why is it building up in.
Speaker 4 (01:46):
Cyber Well, I think there's sort of following a path
that Microsoft and Google were already followed, which is, you know,
combining a enterprise software product and our cyber is sort
of a bonus. And so you know, Microsoft sort of
perfected this idea of.
Speaker 5 (02:07):
Having a package of.
Speaker 4 (02:08):
Their software offerings in the cloud and bringing in cyber.
Google bought Whiz to do something very similar and now
Service now, you know, is basically saying as we automate
you know, they basically automate it and personnel, and now
they're offering cyber is sort of a broader package to
entice customers.
Speaker 3 (02:27):
So the safety of Agenda KI is crucial. Wise, armis
the right holding. Tell us about the founding team and
other reason.
Speaker 5 (02:34):
Armist is an interesting company there.
Speaker 4 (02:36):
Like a lot of cyber startups, it was started by
Israeli military veterans who had worked in one of their
elite cyber units. And what these guys do is they
they call it cyber exposure management. It's basically looking across
your whole digital footprint and finding in real time flaws
and vulnerabilities and fixing them quickly. And it's something that
(02:58):
really lends itself to AI see that being automated, and.
Speaker 5 (03:03):
You know, the company has grown incredibly fast.
Speaker 4 (03:07):
And uh you know, for for a company that uh
that that automates processes, automating cyber just makes sense as
part of that.
Speaker 2 (03:16):
What's interesting is, as you said, this is part of
a theme.
Speaker 3 (03:18):
The fact that the mega deal of the year was
Whiz with alphabet Are we expecting yet more and more
these platforms looking to bolt on cyber acquisitions.
Speaker 4 (03:26):
It just makes sense, right, I mean, it just makes
sense to to offer cyber as part of a broader package.
And you know, among the big cyber players, Microsoft being
the biggest, Google, CrowdStrike, palom Alto, they're all trying to
build a bundle that can attract users with with sort
of one stop shopping and cyber.
Speaker 3 (03:47):
That word platformization, which a horrible words, horrible word, but
they love it. Megs, Andrew Martin, we so appreciate you
coming on about the latest deal. Let's turn our attention
to another huge, huge piece of reporting by Bloomberg. In
Vidia's largest buyer in Southeast Asia, it's under investigation by
the US government over whether it smuggled advanced chips into China.
(04:09):
Now Singapore based Megaspeed imported at least four point six
billion dollars worth of in Vidio hardware through November since
it's founding back in twenty twenty three. The company wasn't
its obscure spinoff of a Chinese gaming enterprise could become
a prime example of Washington's fears of Beijing gaining access
to advanced chips For commercial and military uses. Megaspeed denies
(04:30):
any wrongdoing, says it abides by all regulations from the
US and elsewhere relevant to its operations. Let's get the
details on what was a very long running investigation for
Bloomberg's chips reporter Ian King and the deep dive the
reporters have done to understand whether we really understand how
many GPUs are going to megaspeed and where they're ending
up in.
Speaker 2 (04:50):
Talk us through it.
Speaker 6 (04:52):
Yeah, I mean there's a lot of evidence. It's important
to point out, as you already did that in Nvidia
says there's nothing going on here. Speed itself says there's
nothing going on here. But you know our colleagues reporting here, Caroline,
is that there is an investigation going on, and you
know Southeast Asian governments and also Washington are looking at
(05:13):
this and still trying to find out whether there has
been anything significant going on the go ahead.
Speaker 3 (05:21):
Sorry, Well, from what we know, it's a Singapore based company,
Megaspeed operating fully in compliance, as they say, with applicable laws.
But what ultimately has had to spring up ever since
the Biden administration back in twenty twenty two was a
restriction on sophisticated chips kind of from Nvidia to China.
So suddenly you saw other Asian countries become real areas
(05:42):
of focus for importing chips, so that Chinese companies could
actually do the workload, could do the compute outside of
their own country.
Speaker 6 (05:48):
Correct, Yeah, now that's absolutely right. There's nothing illegal with
setting up a data center and serving Chinese customers, providing
those customers don't have links with a band entity in
the US, whether that's the military or some company which
the US government has decided serves China's military. However, there
(06:10):
is a suspicion about these links, about who's in control
of what. There is a you know, and this is
the problem that in Vidia has to face and in
video you know say, look that there's nothing to see here,
there's nothing.
Speaker 5 (06:23):
To worry about.
Speaker 6 (06:24):
But as you'll see from our story, there's a lot
of links between individuals in China. There are you know,
there's a lot of lack of clarity in the relationships,
which I think everybody is trying to work through to
make sure that there is nothing untoward going on.
Speaker 3 (06:42):
Because Bloomberg didn't find evidence of any megaspeed in video
chips actually being divert into China. But there's all these inconsistencies,
as you say, in Megaspeed's Southeast Asia demand and ship
inventory and wherever all they all end up in.
Speaker 2 (06:56):
What's so interesting is this is a moment.
Speaker 3 (06:58):
Where maybe actually in we'll get more access to China.
H two hundreds have in theory or at least according
to a truth social post been allow it back into China.
Speaker 2 (07:07):
The question is where the China wants them.
Speaker 3 (07:09):
But also where the megaspeed will actually have Chinese demand
going forward if indeed we start to see access once
again to mainland Yeah.
Speaker 6 (07:16):
I mean there's again we're in a kind of a
transition period where we're trying to find out exactly how
this will all play out. In Vidia wants to do
business directly in China, that's absolutely true. At the moment,
it cannot do that because of these restrictions. What we're
trying to find out is whether the Chinese want to
do business directly within VideA, and if that's the case,
(07:39):
what level of demand that they will be there. In
Vidia has really kind of had a good year in Washington.
It's gone from really restrictive rules to freeing up of
some of them. But again that has to translate into
shipments into that Chinese market, and we haven't seen that
yet and we don't know that that will actually happen. Clearly,
(07:59):
stories like this that there are suspicions about smuddeling that
we know perhaps should be more secure and more kind
of careful in how we deal with China and Chinese
entities don't help that case. So again, there's a lot
at stake here, and we really need a lot more
clarity about the details of how this is all going
to work out.
Speaker 3 (08:17):
It's a very fairo incredibly complex story, and you broke
it down perfectly for us Bloomgazine, King, thank you very much. Indeed,
go read more about the Invidio supplier on your terminal
or online. But let's talk more now about chip and
trade news because the US it's actually accused today China
of engaging in unfair trade practices in the semiconductor sector,
(08:38):
but Washington won't place additional tariffs on chip imports till
at least mid twenty twenty seven. Chinese embassy in Washington
did not immediately respond to the request for comment. That's
going the details of blombgs, Jordan Fabian and so we
understand that USTR, that's the Office of US Trade Representative saying, look,
what they're doing isn't fair.
Speaker 5 (08:58):
Exactly.
Speaker 7 (08:59):
It's an interesting development. This investigation actually started under the
administration of former President Joe Biden, with the expectation that
Donald Trump, who talked tough on China during the campaign,
would follow up on it when he became president. But
in the interim he started a trade war with China.
He then struck a deal with Jijenping to take off
(09:19):
those tariffs. And so the US right now, if you
listen to what Jamison Greer, the Trade Representative, has said
other senior administration officials, they want a stable relationship with
China on trade, and so they're not going to look
to hike tariffs at the current moment, which is why
you have this odd outcome of an investigation saying the
obvious really, which is that China is using non market
(09:43):
practices to dominate the chip industry. But at the same time,
the US isn't really going to do anything about it,
at least not for the foreseeable future.
Speaker 3 (09:52):
So ESDO was legally required to publish the outcome and
the investigation the three to Zho one investigation, but is
being thought of that China is up to in terms
of unfairly supporting its industry. They say, China's targeting in
the semiconductor industry for dominance is unreasonable and burdens or
restricts US commerce and thus is actionable.
Speaker 2 (10:13):
Jordan, what are they being told or accused of.
Speaker 7 (10:18):
You know, they're being accused of using non market practices
to bolster their domestic industry. You'll sell those chips that
perhaps below market rates into various countries to get them
hooked on the Chinese technology stack and thereby increasing the
market share of their chip industry. The irony is that
(10:40):
the US is pretty much trying to do the same thing,
which is basically doing a take it or leave it
deal with countries around the world, saying that you need
to use the US tech stack. We want to make
sure that countries are not on the Chinese tech stack
and had been for a while, you know, trying to
limit X worts to China to other countries that are
(11:03):
deemed unfriendly, and also crack down on the Chinese market.
So they're saying, essentially, you know, you know, China can't
try to dominate the market. We're going to try and
dominate the market. But right now they're again going to
sort of stand off our whole back on increasing terrorists
further on Chinese chips to address that.
Speaker 2 (11:24):
Problem complex trade web. Jordan Fabian, thanks so much for
talking us through it. We really appreciate you.
Speaker 3 (11:30):
Meanwhile, coming up, thing about Larry Allison, his big bet
on paramount that could alter his vast Oracle fortune.
Speaker 2 (11:38):
One on that. Next, this is Blomberg Tech.
Speaker 3 (11:53):
Larry Alison no stranger to bold bets, but his biggest
one yet maybe in media. A potential personal guarantee more
than forty billion dollars to backstop paramounts all cash bid
for Warner Brothers Discovery.
Speaker 2 (12:04):
He could dramatically we shape the.
Speaker 3 (12:06):
Oracle founder's fortune and Meg's Dylan Sloane joins us for
more as we're picking apart how Larry Ellison is basically
helping his son, David Ellison potentially by Warner Brothers Discovery.
What's so extraordinary about your reporting on the billionaire is
that he has sold very little of Oracle stock over
the years.
Speaker 8 (12:22):
He has Yeah, and even amongst the billionaires that we're
looking at on the Bloomberg billionis Index, he really stands out.
He's sold about seven and a half billion dollars worth
of stock lifetime, no more than a billion dollars in
a single year since twenty ten, So that pair that
really pales in comparison in looking at some other founders.
You know, he still earns about forty percent of the company,
which is, you know, multiples higher than a lot of
(12:43):
comparable tech founder peers. So his strategy in terms of
his wealth management has been to stick really closely to
holding his Oracle stock, not cashing out at any point,
which has been very successful for him as a stock
has done well. But it does raise some questions about
the cash that he has on hand and whether or
not he would be able to imediately meet those equity
financing comitment should he be called on to do so.
Speaker 3 (13:03):
Yeah, because like forty billion in the grand scheme of things,
is actually not that much compared to his two hundred
and fifty two billion dollar net worth. But how liquid
is any of that? Where has money gone? What could
he sell to help out?
Speaker 8 (13:14):
Yeah, And you raise a good point, which is it's
important to say that he can afford this. Of course
many times over third richest man in the world he
has got more than.
Speaker 5 (13:20):
Enough assets to be able to cover this, but historically.
Speaker 8 (13:23):
Ellison's has relied on debt to finance money of his investments,
his lifestyle purchases. Currently about thirty percent of his Oracle
stake is pledged to secure loans, which he uses to
raise cash and fund his many lifestyle purchases. He has
a really extensive real estate portfolio. You may remember even
earlier this year. It feels like a lifetime ago, but
he put up a big chunk of the equity for
(13:44):
his son David's acquisition of National Amusements, the acquisition of Paramount.
So should he need to raise cash down the line,
of course, selling shares would be one option if he's
called on to backstop this steal, which again would constitute
a pretty significant change from his his strategy over the
past few decades, or potentially increasing the size of those loans,
which is something that the Oracle board would need to
(14:05):
go through a review process of to give the okay.
Speaker 3 (14:07):
Just like Tesla learn when El muskport now X was
Twitter Dolan sloan. It's great reporting, go and check it
out on all things billionaires. But let's talk a little
bit more about the potential bid or deal of Paramount, binding,
Water Brothers, Discovery, and indeed Netflix to the legal stakes
of the Megamedia mergers. Fiona Scott Morton, Professor of Economics
(14:29):
over at the Yale University School of Management and adjunct
professor of Yale Law School, is with us. Now let's
just go back to whether or not any of these
will get through regulatory approval. Let's start with Paramount buying
Warner Brothers Discovery.
Speaker 2 (14:43):
Does it cut legal mustard?
Speaker 9 (14:44):
Do you think, well, all three of the bidders, remember
there was Comcast in there to begin with, have overlapped
with Warner Brothers. If you think about three buckets of
say content, production, streaming, and then channels or networks, they
a overlap and Paramount in particular has a lot of
production studio kinds of assets, particularly because of course Paramount
(15:08):
merges with sky Dance first, so that's a big issue
for them, and they have a significant share of streaming
as well.
Speaker 3 (15:15):
You served as Deputy Sistant Attorney General for Economic Analysis,
chief Economist, you can basically helped with anti trust division
in your time. When ultimately it comes down to it,
as courts are going to say, who's the competitor here.
Speaker 2 (15:27):
Do you think it's right that.
Speaker 3 (15:28):
They bulk in YouTube and new ways of consuming content,
even TikTok versus us all be on linear, certainly on cable.
Speaker 9 (15:37):
Yes, I think this is the tricky thing for the
paramount BID. I mean, we all understand what producing content is,
and I think we have a pretty good grip on
who does that and why it's different and what sort
of market there is there. Streaming, however, is much trickier
because we have user produced funny cat videos, we have
(15:58):
user produced videos that actually sustain those users in terms
of income. We have professionally produced short things, professionally produced
long things, and so we're getting a kind of a
continuum of content, and that includes YouTube, as you point out,
which has a big chunk of that continuum. And it's
going to be very difficult to draw the line on
(16:18):
what is what we call the relevant market, which in
antitrust is what matters because that's where you get head
to head competitors.
Speaker 3 (16:25):
It feels as though Netflix, for its part, which thus
far is meant to be the front runner for buying
Warner Brothers, or at least the streaming and the studio
side of it, they've tried to front run this sort
of argument by making clear they think the market competitors
are YouTube and they are TikTok and they are just
where are eyeballs at? Who do they need to convince
in this because many would say, oh, the Allisons have
(16:47):
got the air of the administration, but really it's the
courts that's right.
Speaker 9 (16:52):
The president can say he wants the Ellisons to have it,
and he can say that about his friends or the
people who give him money, or silence the voices that
he doesn't want to hear. But ultimately, we have a
law in the United States that can be enforced not
only by the public, the federal public authorities, but the
states and actually buy private plaintiffs as well. And so
(17:13):
if there's some harm to competition and that can be
shown by a state or a private plaintiff, then they
can go to court and try to block the transaction
just like the federal government can. And indeed we have
seen states coalitions of states being very active and antitrust
lately when they have felt that the federal government is
not doing a good job.
Speaker 3 (17:33):
Fear and a Scott Morton, I'm a feeling this story
is going to run. So we get to have you back,
Yale University School and Management. We appreciate your expertise. It's
been a wild year in crypto. Despite big regulatory wins,
hasn't been kind to everyone, even as prices and interest
surged early on. Billionaires tied to the space they're chatting
(17:56):
very different paths. Setting into twenty twenty six, let's state
the vinkle of twins. They saw their fortunes pressured as
Gemini Space Station continues to face losses after the exchange's
shares for one sixty percent following September IPO. On the
other side, Jeremy Elaire's Circle benefited from growing adoption of
its USDC stable coin, helped by clearer regulation, and the
shares have almost tripled since listening in June, although you
(18:19):
can see they're well off their previous highs. Meanwhile, let's
talk my novograts. Galaxy Digital has actually seen some sort
of a rebound alongside bitcoins gains earlier in the year,
but it has had a tough stretch. Then there's Michael
Saylor's wild ride as too, as the Strategy founder doubled
down on his high conviction bitcoin bet, further tying his
(18:39):
wealth to the token's price wings his net worth has
collapsed almost forty percent this year. So what next for
crypto in twenty twenty six?
Speaker 2 (18:48):
Not just the billionaires.
Speaker 3 (18:49):
Nisa Colleens, Stillmark Managing.
Speaker 2 (18:51):
Partners, says she's going to see momentum.
Speaker 3 (18:54):
She writes, we expect to continued progress through increased MNA activity,
expanded entrepreneurial innovation, and a deeper, more robust base of
both retail and institutional uses. She joins us Now, for you,
at least reflecting on twenty twenty five, what was the
biggest landmark move?
Speaker 2 (19:09):
Was it institutional adoption?
Speaker 10 (19:12):
Well, twenty twenty five was one of the most consequential
years in bitcoin's history, not because of price appreciation, but
because of structural progress, and that includes policy, product, and
institutional adoption. Across all of these fronts, Bitcoin moved meaningfully
into the mainstream as an embedded part of the financial system,
(19:33):
and twenty twenty six will be able to take advantage
of that foundation.
Speaker 11 (19:37):
What does advantage look like, Well, what it looks like
is recent regulatory clarity and an effort by regulators and
policy makers to acknowledge bitcoin as part of the financial
system and to lay the foundational groundwork in terms of
policy so that the US can continue to lead both
(19:59):
in terms of innovation distribution as well as institutional adoption
that can provide efficiencies and gains for US based institutions
from bitcoin, the acid and bitcoin technologies at.
Speaker 3 (20:11):
Least reminds us of that quickly, just remind us where
we are on policy. Because Genius Act tick, that helps
sable coins and pass through Congress. But the Clarity Act
what will that give us if India does get through
the Senate.
Speaker 10 (20:26):
So in addition to the Genius Act passing this year,
we've seen advancement of the What the Clarity Act attempts
to do, or aims to do, I should say, is
to create a framework for bitcoin and other digital assets
can create clarity as well as consumer protection and can
offer definitions of what these digital assets are. So, for example,
(20:48):
we expect that bitcoin will be defined as a commodity
along with other decentralized assets under the purview of the CFTC,
and that will help drive institutional adoption both in terms
of institutionals institution's.
Speaker 12 (21:03):
Own interaction with bitcoin, but.
Speaker 10 (21:05):
Also institutions comfort with distribution bitcoin to their own clients.
Speaker 2 (21:10):
We've got but a minute left.
Speaker 3 (21:11):
But your put photo is so interesting because it's all
around the bitcoin ecosystem and one of us energy focused.
Speaker 2 (21:17):
How is that playing and also this need for energy
and power in the AI era as well.
Speaker 12 (21:24):
That's right.
Speaker 10 (21:24):
So we began the year talking about bitcoin and the
intersection of bitcoin with other critical trends, and that included
AI and energy infrastructure. What we've seen as the year
comes to an end is an acknowledgment or recognition of
the opportunity at the intersection of bitcoin and energy. We've
seen this with large transactions such as those advanced by
(21:48):
major AI stakeholders seeking energy development and looking for a
way to drive efficiencies and especially in terms of pace
of development, including through partnership with bitcoin miners and bitcoin
mining development institutions.
Speaker 3 (22:07):
At Least, it's been great as always getting your take
throughout the year of twenty twenty five and very much
looking forward to checking in with you in twenty twenty
six as well. And apologies for a technical glitch we
had throughout that interview at least Clean, We thank you
so much of still Mark, Welcome back to Bloomberg Tech.
Let's check in on these markets for you as we
(22:28):
head towards one is a very shortened week.
Speaker 2 (22:30):
We're up two tens percent on the Nasdaq one hundred.
Speaker 3 (22:32):
At the moment, stock's actually driving near all time highs,
very close on the S and P five hundred as well,
four straight session agains. We've got some renewed appetite for
tech in particular. This is even as the US economy
span the fastest that we've seen in two years four point.
Speaker 2 (22:46):
Three percent analyzed pace.
Speaker 3 (22:47):
But does that mean the FED won't cut as much?
Maybe that's why Bitcoin's under pressure. We're off by five
ten percent on cryptot eighty eight hundred and twenty eight.
It's expected to have a down year. Telly what's also
had a down month, and also we're down on the day.
The last quarter has been pretty painful for some of
these neo clouds. Core we've off by three percent, but
off way almost forty percent in the last trading quarter.
Neibeus is another neocloud, basically these new types of companies
(23:10):
that come out to offer compute for the ever necessary
need for AI or off by two percent on NEBBEUS
alphabet though at one point two percent, as it's actually
really thinking about the energy side of this AI equation
and it bought, of course, a power company. We saw
yesterday intersect power to be able to offer more climate
friendly energy for its AI needs, and that's been a
(23:31):
big theme for the year, and data centers energy demands
is one that we keep on intersecting with Bloomberg. Josh Saul,
who covers energy, been highlighting the strain that it's all
wimputing on the power grid. So I'm interested as to
if you flect on twenty twenty five how energy markets
were disrupted by the AI glut gold market rush that
we saw.
Speaker 5 (23:50):
It absolutely changed so much.
Speaker 13 (23:52):
We've never seen so much money rushing into the power sector.
Speaker 5 (23:56):
The numbers are are just wild.
Speaker 13 (23:58):
I mean, the four biggest tech companies spending three hundred
and forty four billion dollars this year. The power sector
expects to invest one point one trillion over the next
five years on the power grid in order to both
work on decaying infrastructure but also to connect all these
(24:19):
new data centers.
Speaker 3 (24:20):
And they will get the financing from the end need
or are they having to turn to the consumer.
Speaker 2 (24:27):
As well to help finance all this infrastructure? Is the
government who pays.
Speaker 3 (24:30):
For the one point whatever trillion dollars?
Speaker 2 (24:33):
It is of improvement.
Speaker 13 (24:34):
Tech companies kick in a lot of money, and utilities
especially have been good about setting up contracts where they
get paid whether or not the tech companies use that
much power over time, so there's some built in protection
for customers there.
Speaker 5 (24:48):
But when tech drives up.
Speaker 13 (24:50):
The wholesale cost of electricity, that cost is then passed
on to consumers, so they do see some upward pressure
on bills from that.
Speaker 3 (24:58):
Many anticipating in the twenty twenty six midter this is
going to come a lot about that. You saw issues
in New Jersey, We've got it in Virginia those areas
of data center build up.
Speaker 2 (25:06):
Are you seeing the utilities.
Speaker 3 (25:10):
And power companies also trying to get an easy regulatory environment.
I mean, we've talked a lot about fast tracking of
these big projects. If they've got a lot to put
money into.
Speaker 13 (25:19):
It's hard because utilities, for sure want to hook up
the data centers.
Speaker 5 (25:23):
That's a huge new customer for them.
Speaker 13 (25:25):
That's like seven hundred thousand people just moving to their
territory who wouldn't want that business. But it can be
tough for them because if it makes prices go up,
that gets consumers mad, that gets regulators and politicians focused
on the issue, and you can have what we saw
in Georgia where regulators are voted out and new regulators,
democratic regulators who are expected to be less friendly to
(25:47):
the power company are voted in.
Speaker 3 (25:50):
Josh, So can I have a busy twenty twenty six
thanks of breaking down what has been a wild ride
for twenty twenty five.
Speaker 2 (25:55):
Let's talk more.
Speaker 3 (25:55):
About that impact of energy demand on the tech industry.
Jason Oxman's with US President CEO of the Information Technology
Industry Council. You represent some of the biggest players in
the AI domain. I'm thinking of video open AI, a
lot of the demand for compute or indeed the supplies
to compute. Jason, what are you seeing in terms of
the regulatory equation changing to help speed up some of
(26:15):
this infrastructure investment.
Speaker 14 (26:18):
Well, great to be back with you, Carolina, and your
absolutely right. Policymakers are paying a lot of attention to
this issue and the demand created by the construction of
new data centers demands new access to energy sources. Look,
we've seen over the last few decades under investment in
the energy grid, under investment in alternative forms of energy,
and there are a lot of moves afoot here in
(26:38):
Washington to address those issues. The biggest one that I've
seen in recent weeks and that we're supporting, is something
called the Speed Act, which Congress moved through the House
on its last day here last week. The Speed Act
would invoke regulatory reforms to speed up the permitting process
for construction of new energy projects. It would reduce some
regulatory burden on those construction projects. It takes years and
(26:59):
years to put new energy on the grid. Those grid
modernization efforts take a lot of time and effort and
financial resource. The one piece that Washington is trying to
address is reducing the regulatory burden to make sure we
can make those investments that we need to make. Data
centers are not new. You mentioned Northern Virginia. They've been
a data center hub for decades. Two thirds of the
world's Internet traffic passes through Northern Virginia because it's been
(27:21):
a traditional hub. But we're seeing the new construction of
data centerplace new energy demands, and as you noted, policymakers
are trying to take action and make it move more quickly.
Speaker 3 (27:28):
Well, what about the checks and balances than are needed?
Because I think very much we've been reporting a lot
about new players coming on the scene, companies that have
never built data centers before.
Speaker 2 (27:37):
I mean, boy Oracle itself.
Speaker 3 (27:39):
I mean, one of the biggest data center infrastructure investors
out there at the moment, has never actually formally built
a data center of its own.
Speaker 2 (27:47):
So how do get a lot of other ownerships?
Speaker 14 (27:50):
You know, a lot of partnerships are happening. You'll recall
in January on day two of the Trump administration, project Stargate,
which Oracle was involved in, also involved SoftBank, open A
other companies that are more traditional investors in these kind
of projects. Data centers have been around for a long time,
but a lot of new companies are getting into it.
As your graphic and your conversation with Josh showed, only
(28:11):
about eighteen percent of the current demand for data centers
is from the tech industry. Financial services other related industries
are also building data centers, and I think, as you noted,
there's a lot of attention being paid by consumers to
this issue. They don't want to see their power bills
go up as a results of these investments in data centers,
and that's why we're pursuing these alternative projects. You've seen
tech companies like Microsoft invest in nuclear power. We're trying
(28:34):
to move forward with small module reactors that can power
these data centers. And I do think it's important for
consumers to understand.
Speaker 12 (28:41):
The value to the US economy, the value to job growth.
Speaker 14 (28:44):
It was this great report that Vanguard put out last
week that said that job growth in AI affected industries
is one point seven percent, job growth in non AI
affected industries zero point eight percents, so twice the job
growth in AI effected industries.
Speaker 12 (28:57):
This has an enormous economic benefit.
Speaker 14 (29:00):
Need to make sure these data centers are constructed, that
AI can continue to power the US economy, power wage
growth and the like. But there are some things that policymakers,
like the Speed Act can do to help move these
projects forward.
Speaker 3 (29:11):
Well, many would say that actually that job's growth is
short term in nature. You need a lot of engineers
a lot of builders to build them, but actually don't
mean that many people to manage a data center, which
once it's up and running, And there's that short term,
long term perspective as well, when you think about the
inclimate impact, how much are the big tech companies really
realizing the responsibility when they're having to bring up all
this compute and power.
Speaker 2 (29:31):
They're also seeing their emissions go up into the right.
Speaker 14 (29:34):
Well, I think you're right about the long term versus
the short term. It does create a lot of construction jobs,
a lot of jobs to build these data centers, and
there are also jobs created in the data centers themselves.
Speaker 12 (29:45):
But I think the long term effect.
Speaker 14 (29:47):
Is really what does AI mean for improving productivity and
creating not only the job growth but also the wage growth.
That Vanguard report that came out last week that I
mentioned also noted that wage growth in AI related industries
this was three point eight percent versus point seven percent
in non AI related industries. That wage growth is enormously important.
(30:07):
It's what's made possible by the data center. So you're right,
the data centers themselves create a lot of construction jobs.
We're going to see that continue to move forward. But
it's what the data centers do. They're buildings that contain
the future of technology for the country, and the AI
servers that are in there and the services that are
powered for consumers and for productivity for businesses is really
(30:28):
what we need to be focused on going forward, and
that's the real.
Speaker 12 (30:30):
Benefit of all of this.
Speaker 3 (30:32):
It's a global theme, and we're seeing servers and the
GPUs that go inside them being put up everywhere. Now
there's a story, a really deeply reported story out today
from Bloomberg around Nvidia and the potential that we are
seeing chips GPUs from Nvidia get into China's hands, maybe
through middle parties, And there's some concerns that Megaspeed in particular,
(30:54):
it's a single, poor based company might have been making
that able. Jason, how much your companies thinking about diversion
of chips and how much are they comping down on it?
Speaker 14 (31:05):
Well, I think it's important to remember that in the
reporting that you're talking about, that in Vidia didn't do
anything wrong, that there was no actual evidence that any
chips were diverted. But it's an investigation of one of
Nvidia's customers, which I think will play out by government.
But the broader question that you asked is an important one.
This is the question of national security and economics security
(31:25):
and where they overlap. The Biden administration took a very
clear approach to this, which I think was the wrong approach,
quite frankly, and that was to cut off access to
the world to US technology. What Trump administration has done
has recognized that there are enforcement matters that will occasionally
arise that they need to look into, and they will
do that. But as a general matter, the US economy
benefits in the US consumers benefit if the world can
(31:47):
buy American technology. This is a race against China, and
cutting off China and denying China access to technology really
just provides an incentive for China to bypass the US
market and build its own technology for the world. Denying
US companies the access to the global market is the
wrong approach. There are certainly national security questions that need
(32:07):
to be answered. They are enforcement matters that need to
be addressed on occasion. But as a broader matter, the
idea as the Biden administration did, and I think did wrong,
of cutting off the world's access to American technology, not
just China, but the rest of the world. That was
what the Biden administration did. That's the wrong approach. We
need to make sure that we recognize that the success
of American economic activity, the success of American technology, is
(32:31):
dependent on America having access to the rest.
Speaker 1 (32:33):
Of the world.
Speaker 3 (32:34):
Very briefly, what about the approach being taken from federal
versus state regulation of AI. The actual large language models
new Act here in New York and in California.
Speaker 2 (32:43):
But are we ever going to getting clarity from a
federal level.
Speaker 14 (32:47):
Yeah, there were more than one hundred AI laws adopted
at the state level this year, and there are more
than one thousand bills pending heading into twenty twenty six. Look,
technology is best deployed not with fifty different regulatory regimes applicable,
but one common regime. And this is another thing that's
on our twenty twenty six roadmap. President Trump just signed
an executive order tasking the administration with proposing legislation to
(33:11):
Congress that will replace those fifty potential separate regimes with
one federal regime. We think that's the right way to
go because technology doesn't necessarily need to stop at state borders.
Speaker 12 (33:22):
We want to have one uniform.
Speaker 14 (33:24):
National regime rather than a patchwork of fifty regimes. That'll
be better for the technology, it'll be better for consumers
and businesses that want to make use of that technology.
Speaker 12 (33:33):
That something we're really helping happens in twenty twenty six.
Speaker 3 (33:35):
Jason Nxman, come join us again in twenty twenty six.
Speaker 2 (33:38):
Until then, have a very happy holiday.
Speaker 3 (33:40):
CEO of Information Technology Industry Council, we thank you. One
of the biggest questions facing investors in twenty twenty six
and beyond is whether the billions being spent on AI.
Speaker 2 (33:54):
Infrastructure will pay off.
Speaker 3 (33:56):
Bank of America CEO Brian Monorhans But yesterday with my
colleague David.
Speaker 2 (33:59):
Weston said it was starting to see the impacts kickin.
Speaker 15 (34:03):
The A investment has been building during the year. It
is probably a bigger contributor next year in the years beyond,
and so if you look at the data center build out,
which is one of the ways that evidence itself, that's
a big deal. If you look at customer client spending,
like US spending on AI, that's higher it was last year.
But frankly, overall spending levels are shifting towards that not
necessarily growing at a mid single digit rate type of numbers.
(34:27):
So I think that's part why the reason we feel
constructive for next year. We think AI spending continues. We
think there's benefits the American taxpayer from tax rebates, lower
taxes due to the tax built going through and being
effective for next year. And we think the expense expensing
and other bonuses for businesses are good. So all that
(34:48):
leads to our confidence that we go from basically at
two percent type of growth letter level this year plus
or minus up to two point four percent, which is
all due to that. And AI is kicking and more
and more, and so it's not only tributable to AI,
but that's having a marginal impact. That's pretty strong.
Speaker 16 (35:03):
So much of the American economy is supported by the consumer,
and you at Back of America have a really powerful
viewpoint into the American consumer. How's the American consumer doing?
Because it has been very strong. There have been some
people saying it's starting to slow down.
Speaker 5 (35:15):
You have to step back.
Speaker 15 (35:16):
We look at American consumers, seventy million consumers putting four
and a half trillion dollars plus into the American economy
every year, and we've tracked the way that goes in
the American county for many years. And so in the
third quarter it was up about five percent of last year.
As we look at the fourth quarter here so far
in October November, i'd say it in a four to
four and a half percent, which is very consistent with
a very solid growing economy. You know, at the end
(35:39):
of the day, it's going to work against wage growth
and we see in the underlying consumers we have wage growth.
I either paychecks are going up, and so the labor
markets flattened out a little bit in terms of job
growth and things like that. It's normalizing in terms of unemployment,
but you still see underlying wage growth. So the American
consumer spending a fours percent more November this year versus
(36:00):
November last year is a very solid backdrop. The credit
quality American consumer is strong. And then you hear a
lot about this discussion about different rates of growth among
different income tursiles or third.
Speaker 5 (36:12):
So we look at the.
Speaker 15 (36:13):
Bottom third, middle third, and top third American income people
in the Bank of American customer base, we do see
differences either higher income and middle income or growing faster.
But even the lower income third is still growing. And
that's all good. And that means why is that true?
Companies are employing people, they're paying people. Now, the labor
market's got a little soft and as we look forward
(36:34):
to four point five four point six unemployment that is
gotten worse so to speak. You know, it was the
beginning year. But frankly, this.
Speaker 5 (36:42):
Goes back to the normalization question.
Speaker 15 (36:44):
If you look at the tenure average unemployment a twenty
year to thirty year or forty year it's five and
six percent, you know, as you go back through time,
and so a four and a half to four point
six unemployment rate is a very strong relative unemployment rate.
It's just a lot of years it's been below four
and a half percent, has actually been in the last
ten years. So people are very used to numbers now
which were part of the tightness and labored in the
(37:06):
twenty seventeen eighteen nineteen era, and you had the pandemic
and it retightened, and so it's normalizing. But we feel
good about all that in the consumers in pretty good shape.
Speaker 2 (37:16):
Thankry Macaci.
Speaker 3 (37:17):
Obrian Weynhan speaking to bluemeg's David Weston and coming up
new details and the decisions behind Tesla's door design. Those
electric doors are now in a spotlight following at least
fifteen fatalities or.
Speaker 17 (37:29):
On that next a blue meg Tech, a decision made by.
Speaker 3 (37:46):
Tesla executives a decade ago. It's being linked to fatalities
in car crashes now. The incidents have prompted increased scrutiny
of Tesla's electric doors, triggering lawsuits over whether.
Speaker 2 (37:56):
The design can leave passengers trapped. Take a look.
Speaker 18 (38:01):
Tesla for years has built its reputation on being a cool, safe,
good looking car maker.
Speaker 19 (38:11):
Tesla's engineered to be the safest card in the world,
and to be fair to them, they have done very
well on US crash tests. They often get five star ratings.
Flush door handles were very much part of the aesthetic
and the engineering. You know, it looks very cool.
Speaker 2 (38:28):
For so many years.
Speaker 18 (38:29):
People who drive Tesla's love their Tesla's. They think their
cars are safe, but these accidents reveal that there's actually
something bigger going on.
Speaker 20 (38:41):
When you push this button, says it sagal to the
twelvel barriers say okay, pop the door opened. Now, if
you have no TWELEVEO power, the first thing you're going
to do is push this button over and over again.
You're going to stop freaking out and realize this thing
isn't working. In my opinion, this isn't terribly obvious that
this opens the door. This is not a physical lever.
This does not pull a cable. The actual way that
(39:04):
you open a Tesla is you use this unmarked square
right here. That's how you open it.
Speaker 12 (39:11):
Is that the same on every model of Deeslo.
Speaker 20 (39:14):
It is not the same.
Speaker 12 (39:15):
What if you're in the backseat.
Speaker 20 (39:17):
Now, the backseat is a scary part.
Speaker 18 (39:19):
So in the front seat there by the handle. In
the back seats, they might be under the rug, or
behind a speaker grill, or behind the trim on the
door or I actually found one in a model. Why
it was in the door pocket under a plastic flap.
Speaker 2 (39:38):
A lot of Tesla owners themselves.
Speaker 18 (39:40):
Don't know that these manual releases exist.
Speaker 19 (39:43):
You can design the best vehicle in the world, but
you have to also think about what happens to a
human being after a crash. You are panicking and you're
going to go to that muscle memory. And for most
of us, muscle memory is like an old car where
you just open the door.
Speaker 3 (40:08):
And we now have more reporting on that decision making
process behind the dual design. According to multiple accounts from sources,
the electric door handle was demanded by Tesla CEO in
a musk despite safety warnings.
Speaker 2 (40:20):
Let's get more on this. We've been about.
Speaker 3 (40:22):
BusinessWeek columnist Max Chafkin goes back a decade and it
really goes back to almost this era of very sleep
design where less is more.
Speaker 21 (40:31):
Yeah, and this is a design aesthetic that comes from
Elon Musk. So in certain ways, it's very interesting that
he was involved in these conversations because this looks like
a mistake in retrospect, we're.
Speaker 5 (40:45):
Seeing these deaths.
Speaker 21 (40:47):
You know, Tesla's has said it's working on redesigns, there
are inquiries and so on. It's not surprising that Musk
was involved in this, because he's involved in sort of
all aspects of the cars design. On the other hand,
it's interesting because you do because again this is this
kind of undercuts some of the claims that the company
has made about the safety of its vehicles.
Speaker 3 (41:08):
There's this line in the story that basically is what
Mars said is the best part is no part, right,
And so this desire for something that was good looking
and sophisticated and sci fi.
Speaker 2 (41:21):
But it's not just test as I have them.
Speaker 3 (41:23):
Everyone else talked to this designs ecesthetic as well.
Speaker 21 (41:25):
Yeah, this has spread to the entire auto industry. You've
seen in a lot of higher end cars, many evs,
as well as some gas cars. It's not only you know,
sort of attractive from a design point of view, although
I think people have.
Speaker 2 (41:36):
Different points of view.
Speaker 21 (41:37):
It's also less expensive because fewer parts you know, means
you know, less cost and that's one of the things
that Tesla has been very successful at making cars with
much fewer parts. They have this famously vertically integrated you know,
manufacturing system. It's help, it's allowed them to cut costs. Obviously,
you see their their their potential problems when you diverge
from the way the auto industry has done things for
(41:58):
a really long time.
Speaker 2 (41:59):
Now.
Speaker 3 (42:00):
Chief designer has been on Bloomberg and said that they're
looking to change things up.
Speaker 2 (42:04):
How quickly will that get into new models? And what
about the old models.
Speaker 3 (42:08):
That usually we see an update through software upgrade?
Speaker 21 (42:12):
Right, Well, so Tesla has said, you know, unlike other men,
unlike other automakers, they're continuously updating their cars. So in theory,
I suppose they could get this done pretty quickly. Though again,
this is not as simple as a software update. This
is going to require tooling, It's going to require factories,
retrofits potentially in cars. The Stumber story Bloomberg Bran earlier today,
(42:34):
you know, mentions a similar example around the shifter in
I believe it was the Model X or the Model Y,
where they took away the column that you used and
replaced it with a button that didn't work out. They
had to retrofit that so you could see something similar here.
Although this is not something that's going to be taken
care of overnight.
Speaker 3 (42:53):
Mean Well shares no record highs as it seemed more
of a robotaxi humanoid robot kind of a company right now. Max,
great to get your take on what has been a
theme throughout twenty twenty five. This deep investigation into teslatle
handles by Bloomberg. Now, that does it for this edition
a Bloomberg Tech. Don't forget to check out our podcast
hand on the terminal, as well as online on Apples, Spotify,
(43:14):
and iHeart from New York, This is Bloomberg
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and ever though in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech Coming up.
Speaker 3 (00:24):
Service now agrees to by cybersecurity startup Armists for seven
points seventy five billion dollars, its largest acquisition to date. Douz,
Invidia's biggest Southeast Asia buyer, faces a chip smuggling probe
despite the tech giants insistence that chip diversion doesn't exist.
And crypto's big year that wasn't a win for all
(00:44):
the billionaire's hit hardest by recent price drops. First rechecking
on those markets and bigcoin continues to be on the downside.
We're off five percentage twin eight, three and sixty one,
so once again another annual loss for the OG in
the crypto space.
Speaker 2 (00:57):
But we're seeing risk on perpetuate a little bit.
Speaker 3 (01:00):
And then as that one hundred, we're higher on the day,
we're higher on the month, and boy are we higher
on the year, up more than twenty percent. And of
course today's figures the US economy expanding at four point
three percent annualized pace. Maybe just easing back a little
bit of risk on feeling if indeed the FED doesn't
cut as much as I'm in anticipated because this economy.
Speaker 2 (01:17):
Looks like it's doing fine.
Speaker 3 (01:18):
Let's talk about some of the animal spirits in the
market right now, particularly when it comes to M and A.
And let's look at Service Now. We're currently trading lower
on that particular stock.
Speaker 2 (01:26):
We're off by two and.
Speaker 3 (01:27):
A half percent because well, they're going to use cash,
They're going to use debt for his biggest acquisition so far.
Speaker 2 (01:32):
It's all about the world of cyber and it's actually.
Speaker 3 (01:34):
A story that Bloomberg broke where ahead of the formal announcement.
Let's get to it at Bloomberg's Andrew Martin, and it
was last week that you made clear to the market
that Service Now was looking at this particular acquisition.
Speaker 2 (01:45):
Why is it building up in.
Speaker 4 (01:46):
Cyber Well, I think there's sort of following a path
that Microsoft and Google were already followed, which is, you know,
combining a enterprise software product and our cyber is sort
of a bonus. And so you know, Microsoft sort of
perfected this idea of.
Speaker 5 (02:07):
Having a package of.
Speaker 4 (02:08):
Their software offerings in the cloud and bringing in cyber.
Google bought Whiz to do something very similar and now
Service now, you know, is basically saying as we automate
you know, they basically automate it and personnel, and now
they're offering cyber is sort of a broader package to
entice customers.
Speaker 3 (02:27):
So the safety of Agenda KI is crucial. Wise, armis
the right holding. Tell us about the founding team and
other reason.
Speaker 5 (02:34):
Armist is an interesting company there.
Speaker 4 (02:36):
Like a lot of cyber startups, it was started by
Israeli military veterans who had worked in one of their
elite cyber units. And what these guys do is they
they call it cyber exposure management. It's basically looking across
your whole digital footprint and finding in real time flaws
and vulnerabilities and fixing them quickly. And it's something that
(02:58):
really lends itself to AI see that being automated, and.
Speaker 5 (03:03):
You know, the company has grown incredibly fast.
Speaker 4 (03:07):
And uh you know, for for a company that uh
that that automates processes, automating cyber just makes sense as
part of that.
Speaker 2 (03:16):
What's interesting is, as you said, this is part of
a theme.
Speaker 3 (03:18):
The fact that the mega deal of the year was
Whiz with alphabet Are we expecting yet more and more
these platforms looking to bolt on cyber acquisitions.
Speaker 4 (03:26):
It just makes sense, right, I mean, it just makes
sense to to offer cyber as part of a broader package.
And you know, among the big cyber players, Microsoft being
the biggest, Google, CrowdStrike, palom Alto, they're all trying to
build a bundle that can attract users with with sort
of one stop shopping and cyber.
Speaker 3 (03:47):
That word platformization, which a horrible words, horrible word, but
they love it. Megs, Andrew Martin, we so appreciate you
coming on about the latest deal. Let's turn our attention
to another huge, huge piece of reporting by Bloomberg. In
Vidia's largest buyer in Southeast Asia, it's under investigation by
the US government over whether it smuggled advanced chips into China.
(04:09):
Now Singapore based Megaspeed imported at least four point six
billion dollars worth of in Vidio hardware through November since
it's founding back in twenty twenty three. The company wasn't
its obscure spinoff of a Chinese gaming enterprise could become
a prime example of Washington's fears of Beijing gaining access
to advanced chips For commercial and military uses. Megaspeed denies
(04:30):
any wrongdoing, says it abides by all regulations from the
US and elsewhere relevant to its operations. Let's get the
details on what was a very long running investigation for
Bloomberg's chips reporter Ian King and the deep dive the
reporters have done to understand whether we really understand how
many GPUs are going to megaspeed and where they're ending
up in.
Speaker 2 (04:50):
Talk us through it.
Speaker 6 (04:52):
Yeah, I mean there's a lot of evidence. It's important
to point out, as you already did that in Nvidia
says there's nothing going on here. Speed itself says there's
nothing going on here. But you know our colleagues reporting here, Caroline,
is that there is an investigation going on, and you
know Southeast Asian governments and also Washington are looking at
(05:13):
this and still trying to find out whether there has
been anything significant going on the go ahead.
Speaker 3 (05:21):
Sorry, Well, from what we know, it's a Singapore based company,
Megaspeed operating fully in compliance, as they say, with applicable laws.
But what ultimately has had to spring up ever since
the Biden administration back in twenty twenty two was a
restriction on sophisticated chips kind of from Nvidia to China.
So suddenly you saw other Asian countries become real areas
(05:42):
of focus for importing chips, so that Chinese companies could
actually do the workload, could do the compute outside of
their own country.
Speaker 6 (05:48):
Correct, Yeah, now that's absolutely right. There's nothing illegal with
setting up a data center and serving Chinese customers, providing
those customers don't have links with a band entity in
the US, whether that's the military or some company which
the US government has decided serves China's military. However, there
(06:10):
is a suspicion about these links, about who's in control
of what. There is a you know, and this is
the problem that in Vidia has to face and in
video you know say, look that there's nothing to see here,
there's nothing.
Speaker 5 (06:23):
To worry about.
Speaker 6 (06:24):
But as you'll see from our story, there's a lot
of links between individuals in China. There are you know,
there's a lot of lack of clarity in the relationships,
which I think everybody is trying to work through to
make sure that there is nothing untoward going on.
Speaker 3 (06:42):
Because Bloomberg didn't find evidence of any megaspeed in video
chips actually being divert into China. But there's all these inconsistencies,
as you say, in Megaspeed's Southeast Asia demand and ship
inventory and wherever all they all end up in.
Speaker 2 (06:56):
What's so interesting is this is a moment.
Speaker 3 (06:58):
Where maybe actually in we'll get more access to China.
H two hundreds have in theory or at least according
to a truth social post been allow it back into China.
Speaker 2 (07:07):
The question is where the China wants them.
Speaker 3 (07:09):
But also where the megaspeed will actually have Chinese demand
going forward if indeed we start to see access once
again to mainland Yeah.
Speaker 6 (07:16):
I mean there's again we're in a kind of a
transition period where we're trying to find out exactly how
this will all play out. In Vidia wants to do
business directly in China, that's absolutely true. At the moment,
it cannot do that because of these restrictions. What we're
trying to find out is whether the Chinese want to
do business directly within VideA, and if that's the case,
(07:39):
what level of demand that they will be there. In
Vidia has really kind of had a good year in Washington.
It's gone from really restrictive rules to freeing up of
some of them. But again that has to translate into
shipments into that Chinese market, and we haven't seen that
yet and we don't know that that will actually happen. Clearly,
(07:59):
stories like this that there are suspicions about smuddeling that
we know perhaps should be more secure and more kind
of careful in how we deal with China and Chinese
entities don't help that case. So again, there's a lot
at stake here, and we really need a lot more
clarity about the details of how this is all going
to work out.
Speaker 3 (08:17):
It's a very fairo incredibly complex story, and you broke
it down perfectly for us Bloomgazine, King, thank you very much. Indeed,
go read more about the Invidio supplier on your terminal
or online. But let's talk more now about chip and
trade news because the US it's actually accused today China
of engaging in unfair trade practices in the semiconductor sector,
(08:38):
but Washington won't place additional tariffs on chip imports till
at least mid twenty twenty seven. Chinese embassy in Washington
did not immediately respond to the request for comment. That's
going the details of blombgs, Jordan Fabian and so we
understand that USTR, that's the Office of US Trade Representative saying, look,
what they're doing isn't fair.
Speaker 5 (08:58):
Exactly.
Speaker 7 (08:59):
It's an interesting development. This investigation actually started under the
administration of former President Joe Biden, with the expectation that
Donald Trump, who talked tough on China during the campaign,
would follow up on it when he became president. But
in the interim he started a trade war with China.
He then struck a deal with Jijenping to take off
(09:19):
those tariffs. And so the US right now, if you
listen to what Jamison Greer, the Trade Representative, has said
other senior administration officials, they want a stable relationship with
China on trade, and so they're not going to look
to hike tariffs at the current moment, which is why
you have this odd outcome of an investigation saying the
obvious really, which is that China is using non market
(09:43):
practices to dominate the chip industry. But at the same time,
the US isn't really going to do anything about it,
at least not for the foreseeable future.
Speaker 3 (09:52):
So ESDO was legally required to publish the outcome and
the investigation the three to Zho one investigation, but is
being thought of that China is up to in terms
of unfairly supporting its industry. They say, China's targeting in
the semiconductor industry for dominance is unreasonable and burdens or
restricts US commerce and thus is actionable.
Speaker 2 (10:13):
Jordan, what are they being told or accused of.
Speaker 7 (10:18):
You know, they're being accused of using non market practices
to bolster their domestic industry. You'll sell those chips that
perhaps below market rates into various countries to get them
hooked on the Chinese technology stack and thereby increasing the
market share of their chip industry. The irony is that
(10:40):
the US is pretty much trying to do the same thing,
which is basically doing a take it or leave it
deal with countries around the world, saying that you need
to use the US tech stack. We want to make
sure that countries are not on the Chinese tech stack
and had been for a while, you know, trying to
limit X worts to China to other countries that are
(11:03):
deemed unfriendly, and also crack down on the Chinese market.
So they're saying, essentially, you know, you know, China can't
try to dominate the market. We're going to try and
dominate the market. But right now they're again going to
sort of stand off our whole back on increasing terrorists
further on Chinese chips to address that.
Speaker 2 (11:24):
Problem complex trade web. Jordan Fabian, thanks so much for
talking us through it. We really appreciate you.
Speaker 3 (11:30):
Meanwhile, coming up, thing about Larry Allison, his big bet
on paramount that could alter his vast Oracle fortune.
Speaker 2 (11:38):
One on that. Next, this is Blomberg Tech.
Speaker 3 (11:53):
Larry Alison no stranger to bold bets, but his biggest
one yet maybe in media. A potential personal guarantee more
than forty billion dollars to backstop paramounts all cash bid
for Warner Brothers Discovery.
Speaker 2 (12:04):
He could dramatically we shape the.
Speaker 3 (12:06):
Oracle founder's fortune and Meg's Dylan Sloane joins us for
more as we're picking apart how Larry Ellison is basically
helping his son, David Ellison potentially by Warner Brothers Discovery.
What's so extraordinary about your reporting on the billionaire is
that he has sold very little of Oracle stock over
the years.
Speaker 8 (12:22):
He has Yeah, and even amongst the billionaires that we're
looking at on the Bloomberg billionis Index, he really stands out.
He's sold about seven and a half billion dollars worth
of stock lifetime, no more than a billion dollars in
a single year since twenty ten, So that pair that
really pales in comparison in looking at some other founders.
You know, he still earns about forty percent of the company,
which is, you know, multiples higher than a lot of
(12:43):
comparable tech founder peers. So his strategy in terms of
his wealth management has been to stick really closely to
holding his Oracle stock, not cashing out at any point,
which has been very successful for him as a stock
has done well. But it does raise some questions about
the cash that he has on hand and whether or
not he would be able to imediately meet those equity
financing comitment should he be called on to do so.
Speaker 3 (13:03):
Yeah, because like forty billion in the grand scheme of things,
is actually not that much compared to his two hundred
and fifty two billion dollar net worth. But how liquid
is any of that? Where has money gone? What could
he sell to help out?
Speaker 8 (13:14):
Yeah, And you raise a good point, which is it's
important to say that he can afford this. Of course
many times over third richest man in the world he
has got more than.
Speaker 5 (13:20):
Enough assets to be able to cover this, but historically.
Speaker 8 (13:23):
Ellison's has relied on debt to finance money of his investments,
his lifestyle purchases. Currently about thirty percent of his Oracle
stake is pledged to secure loans, which he uses to
raise cash and fund his many lifestyle purchases. He has
a really extensive real estate portfolio. You may remember even
earlier this year. It feels like a lifetime ago, but
he put up a big chunk of the equity for
(13:44):
his son David's acquisition of National Amusements, the acquisition of Paramount.
So should he need to raise cash down the line,
of course, selling shares would be one option if he's
called on to backstop this steal, which again would constitute
a pretty significant change from his his strategy over the
past few decades, or potentially increasing the size of those loans,
which is something that the Oracle board would need to
(14:05):
go through a review process of to give the okay.
Speaker 3 (14:07):
Just like Tesla learn when El muskport now X was
Twitter Dolan sloan. It's great reporting, go and check it
out on all things billionaires. But let's talk a little
bit more about the potential bid or deal of Paramount, binding,
Water Brothers, Discovery, and indeed Netflix to the legal stakes
of the Megamedia mergers. Fiona Scott Morton, Professor of Economics
(14:29):
over at the Yale University School of Management and adjunct
professor of Yale Law School, is with us. Now let's
just go back to whether or not any of these
will get through regulatory approval. Let's start with Paramount buying
Warner Brothers Discovery.
Speaker 2 (14:43):
Does it cut legal mustard?
Speaker 9 (14:44):
Do you think, well, all three of the bidders, remember
there was Comcast in there to begin with, have overlapped
with Warner Brothers. If you think about three buckets of
say content, production, streaming, and then channels or networks, they
a overlap and Paramount in particular has a lot of
production studio kinds of assets, particularly because of course Paramount
(15:08):
merges with sky Dance first, so that's a big issue
for them, and they have a significant share of streaming
as well.
Speaker 3 (15:15):
You served as Deputy Sistant Attorney General for Economic Analysis,
chief Economist, you can basically helped with anti trust division
in your time. When ultimately it comes down to it,
as courts are going to say, who's the competitor here.
Speaker 2 (15:27):
Do you think it's right that.
Speaker 3 (15:28):
They bulk in YouTube and new ways of consuming content,
even TikTok versus us all be on linear, certainly on cable.
Speaker 9 (15:37):
Yes, I think this is the tricky thing for the
paramount BID. I mean, we all understand what producing content is,
and I think we have a pretty good grip on
who does that and why it's different and what sort
of market there is there. Streaming, however, is much trickier
because we have user produced funny cat videos, we have
(15:58):
user produced videos that actually sustain those users in terms
of income. We have professionally produced short things, professionally produced
long things, and so we're getting a kind of a
continuum of content, and that includes YouTube, as you point out,
which has a big chunk of that continuum. And it's
going to be very difficult to draw the line on
(16:18):
what is what we call the relevant market, which in
antitrust is what matters because that's where you get head
to head competitors.
Speaker 3 (16:25):
It feels as though Netflix, for its part, which thus
far is meant to be the front runner for buying
Warner Brothers, or at least the streaming and the studio
side of it, they've tried to front run this sort
of argument by making clear they think the market competitors
are YouTube and they are TikTok and they are just
where are eyeballs at? Who do they need to convince
in this because many would say, oh, the Allisons have
(16:47):
got the air of the administration, but really it's the
courts that's right.
Speaker 9 (16:52):
The president can say he wants the Ellisons to have it,
and he can say that about his friends or the
people who give him money, or silence the voices that
he doesn't want to hear. But ultimately, we have a
law in the United States that can be enforced not
only by the public, the federal public authorities, but the
states and actually buy private plaintiffs as well. And so
(17:13):
if there's some harm to competition and that can be
shown by a state or a private plaintiff, then they
can go to court and try to block the transaction
just like the federal government can. And indeed we have
seen states coalitions of states being very active and antitrust
lately when they have felt that the federal government is
not doing a good job.
Speaker 3 (17:33):
Fear and a Scott Morton, I'm a feeling this story
is going to run. So we get to have you back,
Yale University School and Management. We appreciate your expertise. It's
been a wild year in crypto. Despite big regulatory wins,
hasn't been kind to everyone, even as prices and interest
surged early on. Billionaires tied to the space they're chatting
(17:56):
very different paths. Setting into twenty twenty six, let's state
the vinkle of twins. They saw their fortunes pressured as
Gemini Space Station continues to face losses after the exchange's
shares for one sixty percent following September IPO. On the
other side, Jeremy Elaire's Circle benefited from growing adoption of
its USDC stable coin, helped by clearer regulation, and the
shares have almost tripled since listening in June, although you
(18:19):
can see they're well off their previous highs. Meanwhile, let's
talk my novograts. Galaxy Digital has actually seen some sort
of a rebound alongside bitcoins gains earlier in the year,
but it has had a tough stretch. Then there's Michael
Saylor's wild ride as too, as the Strategy founder doubled
down on his high conviction bitcoin bet, further tying his
(18:39):
wealth to the token's price wings his net worth has
collapsed almost forty percent this year. So what next for
crypto in twenty twenty six?
Speaker 2 (18:48):
Not just the billionaires.
Speaker 3 (18:49):
Nisa Colleens, Stillmark Managing.
Speaker 2 (18:51):
Partners, says she's going to see momentum.
Speaker 3 (18:54):
She writes, we expect to continued progress through increased MNA activity,
expanded entrepreneurial innovation, and a deeper, more robust base of
both retail and institutional uses. She joins us Now, for you,
at least reflecting on twenty twenty five, what was the
biggest landmark move?
Speaker 2 (19:09):
Was it institutional adoption?
Speaker 10 (19:12):
Well, twenty twenty five was one of the most consequential
years in bitcoin's history, not because of price appreciation, but
because of structural progress, and that includes policy, product, and
institutional adoption. Across all of these fronts, Bitcoin moved meaningfully
into the mainstream as an embedded part of the financial system,
(19:33):
and twenty twenty six will be able to take advantage
of that foundation.
Speaker 11 (19:37):
What does advantage look like, Well, what it looks like
is recent regulatory clarity and an effort by regulators and
policy makers to acknowledge bitcoin as part of the financial
system and to lay the foundational groundwork in terms of
policy so that the US can continue to lead both
(19:59):
in terms of innovation distribution as well as institutional adoption
that can provide efficiencies and gains for US based institutions
from bitcoin, the acid and bitcoin technologies at.
Speaker 3 (20:11):
Least reminds us of that quickly, just remind us where
we are on policy. Because Genius Act tick, that helps
sable coins and pass through Congress. But the Clarity Act
what will that give us if India does get through
the Senate.
Speaker 10 (20:26):
So in addition to the Genius Act passing this year,
we've seen advancement of the What the Clarity Act attempts
to do, or aims to do, I should say, is
to create a framework for bitcoin and other digital assets
can create clarity as well as consumer protection and can
offer definitions of what these digital assets are. So, for example,
(20:48):
we expect that bitcoin will be defined as a commodity
along with other decentralized assets under the purview of the CFTC,
and that will help drive institutional adoption both in terms
of institutionals institution's.
Speaker 12 (21:03):
Own interaction with bitcoin, but.
Speaker 10 (21:05):
Also institutions comfort with distribution bitcoin to their own clients.
Speaker 2 (21:10):
We've got but a minute left.
Speaker 3 (21:11):
But your put photo is so interesting because it's all
around the bitcoin ecosystem and one of us energy focused.
Speaker 2 (21:17):
How is that playing and also this need for energy
and power in the AI era as well.
Speaker 12 (21:24):
That's right.
Speaker 10 (21:24):
So we began the year talking about bitcoin and the
intersection of bitcoin with other critical trends, and that included
AI and energy infrastructure. What we've seen as the year
comes to an end is an acknowledgment or recognition of
the opportunity at the intersection of bitcoin and energy. We've
seen this with large transactions such as those advanced by
(21:48):
major AI stakeholders seeking energy development and looking for a
way to drive efficiencies and especially in terms of pace
of development, including through partnership with bitcoin miners and bitcoin
mining development institutions.
Speaker 3 (22:07):
At Least, it's been great as always getting your take
throughout the year of twenty twenty five and very much
looking forward to checking in with you in twenty twenty
six as well. And apologies for a technical glitch we
had throughout that interview at least Clean, We thank you
so much of still Mark, Welcome back to Bloomberg Tech.
Let's check in on these markets for you as we
(22:28):
head towards one is a very shortened week.
Speaker 2 (22:30):
We're up two tens percent on the Nasdaq one hundred.
Speaker 3 (22:32):
At the moment, stock's actually driving near all time highs,
very close on the S and P five hundred as well,
four straight session agains. We've got some renewed appetite for
tech in particular. This is even as the US economy
span the fastest that we've seen in two years four point.
Speaker 2 (22:46):
Three percent analyzed pace.
Speaker 3 (22:47):
But does that mean the FED won't cut as much?
Maybe that's why Bitcoin's under pressure. We're off by five
ten percent on cryptot eighty eight hundred and twenty eight.
It's expected to have a down year. Telly what's also
had a down month, and also we're down on the day.
The last quarter has been pretty painful for some of
these neo clouds. Core we've off by three percent, but
off way almost forty percent in the last trading quarter.
Neibeus is another neocloud, basically these new types of companies
(23:10):
that come out to offer compute for the ever necessary
need for AI or off by two percent on NEBBEUS
alphabet though at one point two percent, as it's actually
really thinking about the energy side of this AI equation
and it bought, of course, a power company. We saw
yesterday intersect power to be able to offer more climate
friendly energy for its AI needs, and that's been a
(23:31):
big theme for the year, and data centers energy demands
is one that we keep on intersecting with Bloomberg. Josh Saul,
who covers energy, been highlighting the strain that it's all
wimputing on the power grid. So I'm interested as to
if you flect on twenty twenty five how energy markets
were disrupted by the AI glut gold market rush that
we saw.
Speaker 5 (23:50):
It absolutely changed so much.
Speaker 13 (23:52):
We've never seen so much money rushing into the power sector.
Speaker 5 (23:56):
The numbers are are just wild.
Speaker 13 (23:58):
I mean, the four biggest tech companies spending three hundred
and forty four billion dollars this year. The power sector
expects to invest one point one trillion over the next
five years on the power grid in order to both
work on decaying infrastructure but also to connect all these
(24:19):
new data centers.
Speaker 3 (24:20):
And they will get the financing from the end need
or are they having to turn to the consumer.
Speaker 2 (24:27):
As well to help finance all this infrastructure? Is the
government who pays.
Speaker 3 (24:30):
For the one point whatever trillion dollars?
Speaker 2 (24:33):
It is of improvement.
Speaker 13 (24:34):
Tech companies kick in a lot of money, and utilities
especially have been good about setting up contracts where they
get paid whether or not the tech companies use that
much power over time, so there's some built in protection
for customers there.
Speaker 5 (24:48):
But when tech drives up.
Speaker 13 (24:50):
The wholesale cost of electricity, that cost is then passed
on to consumers, so they do see some upward pressure
on bills from that.
Speaker 3 (24:58):
Many anticipating in the twenty twenty six midter this is
going to come a lot about that. You saw issues
in New Jersey, We've got it in Virginia those areas
of data center build up.
Speaker 2 (25:06):
Are you seeing the utilities.
Speaker 3 (25:10):
And power companies also trying to get an easy regulatory environment.
I mean, we've talked a lot about fast tracking of
these big projects. If they've got a lot to put
money into.
Speaker 13 (25:19):
It's hard because utilities, for sure want to hook up
the data centers.
Speaker 5 (25:23):
That's a huge new customer for them.
Speaker 13 (25:25):
That's like seven hundred thousand people just moving to their
territory who wouldn't want that business. But it can be
tough for them because if it makes prices go up,
that gets consumers mad, that gets regulators and politicians focused
on the issue, and you can have what we saw
in Georgia where regulators are voted out and new regulators,
democratic regulators who are expected to be less friendly to
(25:47):
the power company are voted in.
Speaker 3 (25:50):
Josh, So can I have a busy twenty twenty six
thanks of breaking down what has been a wild ride
for twenty twenty five.
Speaker 2 (25:55):
Let's talk more.
Speaker 3 (25:55):
About that impact of energy demand on the tech industry.
Jason Oxman's with US President CEO of the Information Technology
Industry Council. You represent some of the biggest players in
the AI domain. I'm thinking of video open AI, a
lot of the demand for compute or indeed the supplies
to compute. Jason, what are you seeing in terms of
the regulatory equation changing to help speed up some of
(26:15):
this infrastructure investment.
Speaker 14 (26:18):
Well, great to be back with you, Carolina, and your
absolutely right. Policymakers are paying a lot of attention to
this issue and the demand created by the construction of
new data centers demands new access to energy sources. Look,
we've seen over the last few decades under investment in
the energy grid, under investment in alternative forms of energy,
and there are a lot of moves afoot here in
(26:38):
Washington to address those issues. The biggest one that I've
seen in recent weeks and that we're supporting, is something
called the Speed Act, which Congress moved through the House
on its last day here last week. The Speed Act
would invoke regulatory reforms to speed up the permitting process
for construction of new energy projects. It would reduce some
regulatory burden on those construction projects. It takes years and
(26:59):
years to put new energy on the grid. Those grid
modernization efforts take a lot of time and effort and
financial resource. The one piece that Washington is trying to
address is reducing the regulatory burden to make sure we
can make those investments that we need to make. Data
centers are not new. You mentioned Northern Virginia. They've been
a data center hub for decades. Two thirds of the
world's Internet traffic passes through Northern Virginia because it's been
(27:21):
a traditional hub. But we're seeing the new construction of
data centerplace new energy demands, and as you noted, policymakers
are trying to take action and make it move more quickly.
Speaker 3 (27:28):
Well, what about the checks and balances than are needed?
Because I think very much we've been reporting a lot
about new players coming on the scene, companies that have
never built data centers before.
Speaker 2 (27:37):
I mean, boy Oracle itself.
Speaker 3 (27:39):
I mean, one of the biggest data center infrastructure investors
out there at the moment, has never actually formally built
a data center of its own.
Speaker 2 (27:47):
So how do get a lot of other ownerships?
Speaker 14 (27:50):
You know, a lot of partnerships are happening. You'll recall
in January on day two of the Trump administration, project Stargate,
which Oracle was involved in, also involved SoftBank, open A
other companies that are more traditional investors in these kind
of projects. Data centers have been around for a long time,
but a lot of new companies are getting into it.
As your graphic and your conversation with Josh showed, only
(28:11):
about eighteen percent of the current demand for data centers
is from the tech industry. Financial services other related industries
are also building data centers, and I think, as you noted,
there's a lot of attention being paid by consumers to
this issue. They don't want to see their power bills
go up as a results of these investments in data centers,
and that's why we're pursuing these alternative projects. You've seen
tech companies like Microsoft invest in nuclear power. We're trying
(28:34):
to move forward with small module reactors that can power
these data centers. And I do think it's important for
consumers to understand.
Speaker 12 (28:41):
The value to the US economy, the value to job growth.
Speaker 14 (28:44):
It was this great report that Vanguard put out last
week that said that job growth in AI affected industries
is one point seven percent, job growth in non AI
affected industries zero point eight percents, so twice the job
growth in AI effected industries.
Speaker 12 (28:57):
This has an enormous economic benefit.
Speaker 14 (29:00):
Need to make sure these data centers are constructed, that
AI can continue to power the US economy, power wage
growth and the like. But there are some things that policymakers,
like the Speed Act can do to help move these
projects forward.
Speaker 3 (29:11):
Well, many would say that actually that job's growth is
short term in nature. You need a lot of engineers
a lot of builders to build them, but actually don't
mean that many people to manage a data center, which
once it's up and running, And there's that short term,
long term perspective as well, when you think about the
inclimate impact, how much are the big tech companies really
realizing the responsibility when they're having to bring up all
this compute and power.
Speaker 2 (29:31):
They're also seeing their emissions go up into the right.
Speaker 14 (29:34):
Well, I think you're right about the long term versus
the short term. It does create a lot of construction jobs,
a lot of jobs to build these data centers, and
there are also jobs created in the data centers themselves.
Speaker 12 (29:45):
But I think the long term effect.
Speaker 14 (29:47):
Is really what does AI mean for improving productivity and
creating not only the job growth but also the wage growth.
That Vanguard report that came out last week that I
mentioned also noted that wage growth in AI related industries
this was three point eight percent versus point seven percent
in non AI related industries. That wage growth is enormously important.
(30:07):
It's what's made possible by the data center. So you're right,
the data centers themselves create a lot of construction jobs.
We're going to see that continue to move forward. But
it's what the data centers do. They're buildings that contain
the future of technology for the country, and the AI
servers that are in there and the services that are
powered for consumers and for productivity for businesses is really
(30:28):
what we need to be focused on going forward, and
that's the real.
Speaker 12 (30:30):
Benefit of all of this.
Speaker 3 (30:32):
It's a global theme, and we're seeing servers and the
GPUs that go inside them being put up everywhere. Now
there's a story, a really deeply reported story out today
from Bloomberg around Nvidia and the potential that we are
seeing chips GPUs from Nvidia get into China's hands, maybe
through middle parties, And there's some concerns that Megaspeed in particular,
(30:54):
it's a single, poor based company might have been making
that able. Jason, how much your companies thinking about diversion
of chips and how much are they comping down on it?
Speaker 14 (31:05):
Well, I think it's important to remember that in the
reporting that you're talking about, that in Vidia didn't do
anything wrong, that there was no actual evidence that any
chips were diverted. But it's an investigation of one of
Nvidia's customers, which I think will play out by government.
But the broader question that you asked is an important one.
This is the question of national security and economics security
(31:25):
and where they overlap. The Biden administration took a very
clear approach to this, which I think was the wrong approach,
quite frankly, and that was to cut off access to
the world to US technology. What Trump administration has done
has recognized that there are enforcement matters that will occasionally
arise that they need to look into, and they will
do that. But as a general matter, the US economy
benefits in the US consumers benefit if the world can
(31:47):
buy American technology. This is a race against China, and
cutting off China and denying China access to technology really
just provides an incentive for China to bypass the US
market and build its own technology for the world. Denying
US companies the access to the global market is the
wrong approach. There are certainly national security questions that need
(32:07):
to be answered. They are enforcement matters that need to
be addressed on occasion. But as a broader matter, the
idea as the Biden administration did, and I think did wrong,
of cutting off the world's access to American technology, not
just China, but the rest of the world. That was
what the Biden administration did. That's the wrong approach. We
need to make sure that we recognize that the success
of American economic activity, the success of American technology, is
(32:31):
dependent on America having access to the rest.
Speaker 1 (32:33):
Of the world.
Speaker 3 (32:34):
Very briefly, what about the approach being taken from federal
versus state regulation of AI. The actual large language models
new Act here in New York and in California.
Speaker 2 (32:43):
But are we ever going to getting clarity from a
federal level.
Speaker 14 (32:47):
Yeah, there were more than one hundred AI laws adopted
at the state level this year, and there are more
than one thousand bills pending heading into twenty twenty six. Look,
technology is best deployed not with fifty different regulatory regimes applicable,
but one common regime. And this is another thing that's
on our twenty twenty six roadmap. President Trump just signed
an executive order tasking the administration with proposing legislation to
(33:11):
Congress that will replace those fifty potential separate regimes with
one federal regime. We think that's the right way to
go because technology doesn't necessarily need to stop at state borders.
Speaker 12 (33:22):
We want to have one uniform.
Speaker 14 (33:24):
National regime rather than a patchwork of fifty regimes. That'll
be better for the technology, it'll be better for consumers
and businesses that want to make use of that technology.
Speaker 12 (33:33):
That something we're really helping happens in twenty twenty six.
Speaker 3 (33:35):
Jason Nxman, come join us again in twenty twenty six.
Speaker 2 (33:38):
Until then, have a very happy holiday.
Speaker 3 (33:40):
CEO of Information Technology Industry Council, we thank you. One
of the biggest questions facing investors in twenty twenty six
and beyond is whether the billions being spent on AI.
Speaker 2 (33:54):
Infrastructure will pay off.
Speaker 3 (33:56):
Bank of America CEO Brian Monorhans But yesterday with my
colleague David.
Speaker 2 (33:59):
Weston said it was starting to see the impacts kickin.
Speaker 15 (34:03):
The A investment has been building during the year. It
is probably a bigger contributor next year in the years beyond,
and so if you look at the data center build out,
which is one of the ways that evidence itself, that's
a big deal. If you look at customer client spending,
like US spending on AI, that's higher it was last year.
But frankly, overall spending levels are shifting towards that not
necessarily growing at a mid single digit rate type of numbers.
(34:27):
So I think that's part why the reason we feel
constructive for next year. We think AI spending continues. We
think there's benefits the American taxpayer from tax rebates, lower
taxes due to the tax built going through and being
effective for next year. And we think the expense expensing
and other bonuses for businesses are good. So all that
(34:48):
leads to our confidence that we go from basically at
two percent type of growth letter level this year plus
or minus up to two point four percent, which is
all due to that. And AI is kicking and more
and more, and so it's not only tributable to AI,
but that's having a marginal impact. That's pretty strong.
Speaker 16 (35:03):
So much of the American economy is supported by the consumer,
and you at Back of America have a really powerful
viewpoint into the American consumer. How's the American consumer doing?
Because it has been very strong. There have been some
people saying it's starting to slow down.
Speaker 5 (35:15):
You have to step back.
Speaker 15 (35:16):
We look at American consumers, seventy million consumers putting four
and a half trillion dollars plus into the American economy
every year, and we've tracked the way that goes in
the American county for many years. And so in the
third quarter it was up about five percent of last year.
As we look at the fourth quarter here so far
in October November, i'd say it in a four to
four and a half percent, which is very consistent with
a very solid growing economy. You know, at the end
(35:39):
of the day, it's going to work against wage growth
and we see in the underlying consumers we have wage growth.
I either paychecks are going up, and so the labor
markets flattened out a little bit in terms of job
growth and things like that. It's normalizing in terms of unemployment,
but you still see underlying wage growth. So the American
consumer spending a fours percent more November this year versus
(36:00):
November last year is a very solid backdrop. The credit
quality American consumer is strong. And then you hear a
lot about this discussion about different rates of growth among
different income tursiles or third.
Speaker 5 (36:12):
So we look at the.
Speaker 15 (36:13):
Bottom third, middle third, and top third American income people
in the Bank of American customer base, we do see
differences either higher income and middle income or growing faster.
But even the lower income third is still growing. And
that's all good. And that means why is that true?
Companies are employing people, they're paying people. Now, the labor
market's got a little soft and as we look forward
(36:34):
to four point five four point six unemployment that is
gotten worse so to speak. You know, it was the
beginning year. But frankly, this.
Speaker 5 (36:42):
Goes back to the normalization question.
Speaker 15 (36:44):
If you look at the tenure average unemployment a twenty
year to thirty year or forty year it's five and
six percent, you know, as you go back through time,
and so a four and a half to four point
six unemployment rate is a very strong relative unemployment rate.
It's just a lot of years it's been below four
and a half percent, has actually been in the last
ten years. So people are very used to numbers now
which were part of the tightness and labored in the
(37:06):
twenty seventeen eighteen nineteen era, and you had the pandemic
and it retightened, and so it's normalizing. But we feel
good about all that in the consumers in pretty good shape.
Speaker 2 (37:16):
Thankry Macaci.
Speaker 3 (37:17):
Obrian Weynhan speaking to bluemeg's David Weston and coming up
new details and the decisions behind Tesla's door design. Those
electric doors are now in a spotlight following at least
fifteen fatalities or.
Speaker 17 (37:29):
On that next a blue meg Tech, a decision made by.
Speaker 3 (37:46):
Tesla executives a decade ago. It's being linked to fatalities
in car crashes now. The incidents have prompted increased scrutiny
of Tesla's electric doors, triggering lawsuits over whether.
Speaker 2 (37:56):
The design can leave passengers trapped. Take a look.
Speaker 18 (38:01):
Tesla for years has built its reputation on being a cool, safe,
good looking car maker.
Speaker 19 (38:11):
Tesla's engineered to be the safest card in the world,
and to be fair to them, they have done very
well on US crash tests. They often get five star ratings.
Flush door handles were very much part of the aesthetic
and the engineering. You know, it looks very cool.
Speaker 2 (38:28):
For so many years.
Speaker 18 (38:29):
People who drive Tesla's love their Tesla's. They think their
cars are safe, but these accidents reveal that there's actually
something bigger going on.
Speaker 20 (38:41):
When you push this button, says it sagal to the
twelvel barriers say okay, pop the door opened. Now, if
you have no TWELEVEO power, the first thing you're going
to do is push this button over and over again.
You're going to stop freaking out and realize this thing
isn't working. In my opinion, this isn't terribly obvious that
this opens the door. This is not a physical lever.
This does not pull a cable. The actual way that
(39:04):
you open a Tesla is you use this unmarked square
right here. That's how you open it.
Speaker 12 (39:11):
Is that the same on every model of Deeslo.
Speaker 20 (39:14):
It is not the same.
Speaker 12 (39:15):
What if you're in the backseat.
Speaker 20 (39:17):
Now, the backseat is a scary part.
Speaker 18 (39:19):
So in the front seat there by the handle. In
the back seats, they might be under the rug, or
behind a speaker grill, or behind the trim on the
door or I actually found one in a model. Why
it was in the door pocket under a plastic flap.
Speaker 2 (39:38):
A lot of Tesla owners themselves.
Speaker 18 (39:40):
Don't know that these manual releases exist.
Speaker 19 (39:43):
You can design the best vehicle in the world, but
you have to also think about what happens to a
human being after a crash. You are panicking and you're
going to go to that muscle memory. And for most
of us, muscle memory is like an old car where
you just open the door.
Speaker 3 (40:08):
And we now have more reporting on that decision making
process behind the dual design. According to multiple accounts from sources,
the electric door handle was demanded by Tesla CEO in
a musk despite safety warnings.
Speaker 2 (40:20):
Let's get more on this. We've been about.
Speaker 3 (40:22):
BusinessWeek columnist Max Chafkin goes back a decade and it
really goes back to almost this era of very sleep
design where less is more.
Speaker 21 (40:31):
Yeah, and this is a design aesthetic that comes from
Elon Musk. So in certain ways, it's very interesting that
he was involved in these conversations because this looks like
a mistake in retrospect, we're.
Speaker 5 (40:45):
Seeing these deaths.
Speaker 21 (40:47):
You know, Tesla's has said it's working on redesigns, there
are inquiries and so on. It's not surprising that Musk
was involved in this, because he's involved in sort of
all aspects of the cars design. On the other hand,
it's interesting because you do because again this is this
kind of undercuts some of the claims that the company
has made about the safety of its vehicles.
Speaker 3 (41:08):
There's this line in the story that basically is what
Mars said is the best part is no part, right,
And so this desire for something that was good looking
and sophisticated and sci fi.
Speaker 2 (41:21):
But it's not just test as I have them.
Speaker 3 (41:23):
Everyone else talked to this designs ecesthetic as well.
Speaker 21 (41:25):
Yeah, this has spread to the entire auto industry. You've
seen in a lot of higher end cars, many evs,
as well as some gas cars. It's not only you know,
sort of attractive from a design point of view, although
I think people have.
Speaker 2 (41:36):
Different points of view.
Speaker 21 (41:37):
It's also less expensive because fewer parts you know, means
you know, less cost and that's one of the things
that Tesla has been very successful at making cars with
much fewer parts. They have this famously vertically integrated you know,
manufacturing system. It's help, it's allowed them to cut costs. Obviously,
you see their their their potential problems when you diverge
from the way the auto industry has done things for
(41:58):
a really long time.
Speaker 2 (41:59):
Now.
Speaker 3 (42:00):
Chief designer has been on Bloomberg and said that they're
looking to change things up.
Speaker 2 (42:04):
How quickly will that get into new models? And what
about the old models.
Speaker 3 (42:08):
That usually we see an update through software upgrade?
Speaker 21 (42:12):
Right, Well, so Tesla has said, you know, unlike other men,
unlike other automakers, they're continuously updating their cars. So in theory,
I suppose they could get this done pretty quickly. Though again,
this is not as simple as a software update. This
is going to require tooling, It's going to require factories,
retrofits potentially in cars. The Stumber story Bloomberg Bran earlier today,
(42:34):
you know, mentions a similar example around the shifter in
I believe it was the Model X or the Model Y,
where they took away the column that you used and
replaced it with a button that didn't work out. They
had to retrofit that so you could see something similar here.
Although this is not something that's going to be taken
care of overnight.
Speaker 3 (42:53):
Mean Well shares no record highs as it seemed more
of a robotaxi humanoid robot kind of a company right now. Max,
great to get your take on what has been a
theme throughout twenty twenty five. This deep investigation into teslatle
handles by Bloomberg. Now, that does it for this edition
a Bloomberg Tech. Don't forget to check out our podcast
hand on the terminal, as well as online on Apples, Spotify,
(43:14):
and iHeart from New York, This is Bloomberg
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