March 21, 2024 • 45 mins
Bloomberg's Caroline Hyde and Ed Ludlow get an exclusive interview with Micron CEO Sanjay Mehrotra as the company's shares surge to a record high, boosted by its outlook on AI growth. Plus, they break down everything to know about Reddit's long-awaited IPO with Reddit COO Jen Wong.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
From Mahard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 3 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4 (00:32):
I'm Caroline Hyde and Bloomberg's weld head quarters in New York.
Speaker 5 (00:34):
I'm Ed Lodlow in San Francisco. This is Bloomberg Technology.
Speaker 4 (00:38):
Coming up, we have an exclusive interview with the CEO
of Micron, Sanjay Mahotra, is going to be joining us
as shares surge to a record high. That's after the
company boosted its outlook on AI growth.
Speaker 5 (00:50):
Plus, we push ahead to Reddit's long awaited IPO and
sit down with reddits COO Jen Wong later this hour.
Speaker 4 (00:57):
And of course we go live to the Department of
Justice as they announ an antitrust lawsuit against Apple.
Speaker 5 (01:03):
We're also thinking a lot about Micron. Shares of Micron
at a record high, biggest jump since twenty eleven. The
outlook for the fiscal third quarter a recovery and commoditized
d RAM prices, but also a ramp in the next
generation HBM three E that is the memory that supports
the GPUs in training AI that is the conversation that
(01:24):
we'll have. Let's dive right into microns earnings with CEO
Sanjay Morotra as Sanja, good morning to you, and that's
how i'd frame it. Let's get right to the outlook
for the fiscal third way up the factors for us.
Was this all about the recovery in d RAM traditionally
commoditized or is this more about the ramp up in
HBM THREEE that is going in support of things like
(01:46):
the h two hundred from Nvidia.
Speaker 1 (01:49):
First of all, thank you Caroline and ED for having
me on the show here. Our recovery is really driven
by a demand related to AI with tight supply and
actually demand that is strong across most of our end markets,
particularly data centered driven demand. And Micron has a strong
portfolio of products. Very excited about our latest offering of
(02:14):
HV and three E that you refer to earlier. We
have just begun shipments of this and we see strong
growth in the several quarters that are ahead of us.
And supply is tight, leading edge nodes in particular, and
and tight supply that's leading to price increases as well.
So as we look ahead at twenty twenty four, our
(02:36):
year of recovery. We see increasing prices driven by the
demand supply fundamentals, and we look at twenty twenty five
to be a record year for Micron's revenue with significantly
improved profitability as well.
Speaker 4 (02:53):
Twenty twenty five supply also mostly already allocated. You sold
out on twenty twenty four. Say let's dig in on
the high bandwidth memory because was it Jason Wyang over
at in video calling this a technology miracle? Will it
not get commoditized? Will prices remain elevated?
Speaker 1 (03:12):
First of all, our sr HBM product that is sold
out for calendar year twenty four, and a vast majority
of the supply for our twenty twenty five is allocated
as well. This is a critical product. HBM three E
is in very very early stages here and it's key
enabler of what AI platforms, generative AI platforms are able
(03:37):
to do. Just think about it. I mean the latest
Blackwell platform that has been announced. It has sixty four
die of memory in it, so tremendous amount of silicon.
HBM is growing fast, expected to be about fifteen percent
high teens, mid to high teens of the industry revenue
(03:58):
over the course of next years compared to being just
half of that last year. And as you look ahead
at the new platforms being announced Nvidia earlier this week,
Broadcom yesterday, they're all placing tremendous emphasis on the performance
and the power of HPM memory. As AI becomes bigger,
(04:19):
data becomes bigger, data lives in the products that Micron
makes for AI applications, lives in the kind of products
such as HPM three E, but high density DIM modules
as well as other products that Micron makes DDD ARE
five memory and data center SSDs. So AI is really
driving tremendous growth trajectory. HBM THREEE is absolutely going to
(04:43):
be critical. This is in very early innings and you know,
even if there are any perturbations in supply, they will
get absorbed over time. And what's important to understand is
because HPM THREEE product is extremely silicon intensive across the industr,
it is really leaving not enough supply for non HBM
(05:04):
products and those are in tight supply, and that's what
is driving tremendous strength in terms of demand supply fundamentals
in pricing trajectory for memory.
Speaker 5 (05:15):
And the question is, Sanjay, how do you keep up
right HBM THREEE running at five point two gigabits per second.
You've already mentioned blackwell, you're going to have to bring
that next generation HBM nine gigabits per second faster. Just
walk us through the real term ramp of your products,
getting them into the real world and when they show
up in your financials in the near and medium term.
Speaker 1 (05:39):
Well, we talked about yesterday in our earnings call that
we have begun shipments of HBM three E product. It's
an industry leading product. It has the best performance in
the lowest power in the industry, which you know for
data center applications, power is critical. Thirty percent better power
for our HBM three E product. So we have really
(06:01):
long legs in this HP and three E product for
foreseeable future here and HPM three E has begun shipments,
and we mentioned in the call yesterday that it will
be a creative to our gross margins and we'll have
several hundred million dollars of revenue of this HPM three
E product in our fiscal year which will end in
(06:23):
August timeframe. And of course we look at significant growth
ahead for HPM three E as well. Our production has begun.
We are extremely focused on continuing to ramp this product.
Our target is to get our share in HBM three
E equivalent to our DRAM industry share, and we're going
to remain extremely disciplined key will be absolutely managing the
(06:46):
supply and demand fundamentals overall for the DRAM industry. So
we look at strong growth ahead for our HPM three E.
Keep in mind that HBM is expected to have a
KAGHER greater than fifty percent over the course of next
a few years in terms of bit growth that HPM
will be driving. Of course, it will be all the
(07:07):
GENAI applications that we'll be driving this And I just
want to add here that of course data center is
a big driver of our growth. We are shifting our
business more toward data center given the demand and the
profitability profile of that part of the market. We are
doing that with our DTA and products as well as
with our SSDs. But just want to point out that
(07:30):
other markets such as smartphones and PCs, they too are
implementing AI enabled devices and you'll start seeing them coming
out from later this year, and of course twenty twenty
five will be the first full year of all these
devices on the edge, such as smart AI enabled smartphones
and PCs. They take much higher memory content than their
(07:54):
prior generation devices. You're really, we're exciting about the opportunities
for that AI enables for US enables for memory, which
is at the heart of AI revolution in terms of
from data center all the way to the edge.
Speaker 4 (08:10):
Going back though, to this high bandwidth memory and going
back to that market share that you say you want
to own, can you articulate exactly what that share is
going to be for our audience right now when we
have Heinex Samsung likely to.
Speaker 6 (08:23):
Be unveiling their products at the first half of this year.
Speaker 1 (08:27):
Our share in DAM today in the industry is approximately
twenty three percent, and we are targeting that our HBM
share would be in line with that DRAM industry share.
Of course, it will be ramping gradually over time. Sometime
in twenty twenty five if we expect to be getting
to our shared in HBM equal in to DM share.
(08:48):
It's a product that has greater profitability and as we said,
it really will be a driver of our revenue and
profit growth along with the rest of the market that
has strengthening fundamentals well for a bloom bag television right
and let me just point out the most important thing
is that our product has leadership specs, and that's why
(09:09):
it's getting a strong customer pull. Leadership products. Again in
terms of performance, bandwidth being about ten percent better than
other competitive products, power being thirty percent lower. Data centers
today take up about three percent of the world's energy
over the course of next several years, expected to continue
(09:30):
to increase, getting to closer to high single digit percentage.
That's where memory becomes extremely important in making sure that
these accelerators for Jenai are running lower power, low power memory.
Our thirty percent lower power solution is extremely attractive to
our customers.
Speaker 5 (09:50):
Sanjay, for our Bloomberg television and radio audience worldwide, you
can point out a lot of things. We have a
lot of questions for you to bear with us. Let's
go back to on device because you clearly want to
talk about that. We talk about on device a lot
on this program, the smartphone and PC context. You are
saying that there is a tangible benefit that you're seeing
(10:11):
in orders for that, but.
Speaker 7 (10:12):
Is that happening right now?
Speaker 5 (10:14):
There is a lot of skepticism that on device processing
of llms and generative AI tools is somewhere away. Are
you telling us that this is material now or you're
predicting that it's coming soon.
Speaker 1 (10:28):
Well, earlier this year you saw Samsung S twenty four
getting announced at Mobile World Congress, on it announced its
Magic six Pro. And these are great examples where AI
is being implemented, great examples of influencing on the edge.
AI is being implemented, that's intent based, and that's really
(10:49):
going to drive tremendous opportunity. Of course, these kind of
high end next gen AI capabilities and PCs and smartphones
will start getting to the marketplace later this year, twenty
twenty five will become the first full year. Over the
course of next few years, next few short years, we
(11:09):
would see that AI enabled devices will be representing let's
say about a third of smartphones and PC markets, and
they take much more content anywhere from forty percent two
hundred percent more content in flagship AI enabled PCs and
smartphones versus flagship AI in PC devices today, Sanjai, we've
(11:35):
got flagship smartphone and PC devices.
Speaker 4 (11:37):
Today, We've got a couple more key questions. We're going
to keep it tight, fee, Sanjay, because we have been
thinking about the CHIPSAC, We've been thinking about Intel getting
that money. We've been thinking about you still building out
in China and in India. Will you still be committed
to putting money into Boise, into New York as well?
Are you going to get the money from the government.
Speaker 1 (11:58):
Well, we'll respeak to the chips ACKed and are previously
announced plans for leading edge memory manufacturing in Boise and
in the Syracuse area. Our application for chips ACT is
underprocessing with the chips Program Office making good progress there.
Of course, we will make the announcements when that process
(12:20):
is completed. Important thing is that chips ACT enables us
to bring with CHIPSACKED grants sufficient level of CHIPSACK grants,
investment tax credits, and local state government support. It helps
bridge the cost gap with Asia operations. So it helps
us bring leading edge memory manufacturing into semiconductors and of
(12:44):
course that creates many jobs. It supports economic as well
as national security, and memory is pivotal. We just talked
about how pivotal memory is to AI applications. So think
about it. Today, only two percent of world's memory total,
world's memory production is here in the US. Of course,
(13:04):
it's all by micron at our facility in Manassas Virginia.
Speaker 7 (13:08):
With chipsec support.
Speaker 1 (13:10):
As we expand our leading edge memory manufacturing in Boise
and Syracuse next decade, Sometime in next decade, we'll be
able to get to ten percent over ten percent of
world's leading edge memory production here in the US. And
that's really Sunji significantly moving the needle, and Micron of
(13:31):
course is committed to.
Speaker 5 (13:32):
That, Sanjay, We're running out of time here. Bloomberg's reported
that the US is considering restricting one of your Chinese rivals, CEXMT.
My understanding is that Micron has been in support of that.
Could you just outline Micron's position on the US restricting CXMT.
Speaker 1 (13:53):
Look, the governments make their own decision and we are
not going to speculate or speak on behalf of any
of the actions. What we can tell you is that,
of course China is an important market for US, just
like China is an important market for the entire semiconductor industry,
and we are veil engaged with the customer ecosystem there
(14:13):
in terms of bringing value of our leading edge products
in memory and storage, helping them drive their innovation road maps.
Speaker 4 (14:22):
We want to thank you so much for your time
today walking us through your numbers through the industry with
which is growing at such pace. Micron CEO Sanjay Erroltra,
thank you. Now turning our attention to the Department of
Justice holding a key press conference as they announce their
antitrust suit against Apple, which has been five years in
(14:43):
the making. We just want to be dipping in and.
Speaker 6 (14:44):
Bringing you some of those headlines. Of course, Merrit Garland.
Speaker 4 (14:47):
The Attorney General, saying that Apple has monopoly power in
the smartphone market. He's also been articulating that Apple has
maintained power via exclusionary behavior at the moment, so to
be turning our attention listening in to that press conference
for a moment today.
Speaker 8 (15:04):
The Department alleges that Apple, one of the world's largest
tech companies, cross the line from rigorous competition to anti
competitive exclusion, unlawfully maintaining a monopoly in violation of the
Sherman Act. The complaint makes clear that for years Apple
has tightened its grip on the smartphone market.
Speaker 6 (15:27):
It has done so not through.
Speaker 8 (15:29):
Product improvements, but by maintaining a chokehold on competition, locking
its customers in to the iPhone while locking its competitors
out of the market. As a result, and, as the
complaint details, Apple has gone from revolutionizing the smartphone market
to stalling its advancement. This shift has smothered an entire industry,
(15:55):
from users to app developers to the next generation of innovator.
Apple's anti competitive conduct must stop. Sixteen other Attorneys General
agree and have joined us in bringing this lawsuit against Apple.
Speaker 6 (16:12):
I want to thank the women and the.
Speaker 8 (16:14):
Men of the Anti Trust Division for their commitment to
promoting competition and protecting consumers and workers in all of
their work, and I want to thank Assistant Attorney General
Canter for his leadership. Their work makes clear that no manual.
Speaker 4 (16:31):
Has how fast the Deputy Attorney General LA speaking Lisa Monaco.
But meanwhile, there's more breaking news, all focused in on Apple.
I just want to bring you the headlines that Apple
and Google are likely to be hit by the first investigations,
the first probes under the EU Digital Law. So of
course there's the DMA which came into force just earlier
this month, And of course there has been a keen
(16:52):
eye on some of these labeled key gatekeepers as the
EU singles out big tech, Apple and Google among them.
The Digital Markets Act investigation could pay the way for fines,
some big fines. Meta is also expected to be facing
some scrutiny in the EU's big tech clampdown. So much
to discuss from EU, and indeed, what's happening right here
with of course, the Department of Justice and sixteen attorneys general.
(17:15):
Let's bring in bloombergs Ana Edjuton and anaag Rana for
more on this. Anna, I want to begin with you,
and let's start with what has been the culmination of
a five year investigation. The key takeaways is to where
exactly Apple has been monopolistic and shutting out others in
the market.
Speaker 9 (17:34):
Yeah, so we have been expecting this complaint for a
long time. It started in twenty nineteen under the trub administration.
And we see how Jonathan Cancer, the Assistan Attorney General
for Anti trust, has really tried to tell a narrative
with this complaint. He's really tried to not just lay
out the facts of what he alleges as anti competitive
behavior by Apple, but tell it in a compelling way
(17:56):
so that it's not just being decided in a court
of law, but it's also compelling to normal consumers who
you know, love their iPhones, love their Apple products. They
can look at this complaint and see that this is
behavior that's in some cases causing them higher prices that
could give them less choice. So that's really the goal
of this complaint that you know, could also help its
chases in the court of law.
Speaker 5 (18:16):
Let me bring in Bloomberg Intelligence senior analysts and rag
Rana an Arag. I'm looking at the shares with down
three point four percent the low of the session. That
decline is three point eight percent, put Apple on track
for its biggest decline since August of last year.
Speaker 7 (18:29):
You and I have talked about this for years.
Speaker 5 (18:31):
Is the markets finally starting to price in the antitrust
threat that Apple is facing?
Speaker 2 (18:38):
I think, as you know, products slow down antitrust risks.
I mean, Apple doesn't have much going on right now,
so it's going to be interesting to see what they
pull out in June in terms of anything, JENNYI because
other than that, I mean, it's going to be a
very gloomy year for them in terms of sales growth.
Speaker 4 (18:53):
And I go want to follow up on that because
this isn't just the US with its anti trust concerns.
It's the EU as well with that and Google being
hit potentially by the Digital Markets Act which come into force. Ultimately,
Apple has at the edge has already been trying to
change some of its business model, trying to appease with
whether or not it's reducing certain payments that you're making
for the app store, but it seems to be begging
(19:17):
from Peter to pay Paul. How much do you think
Apple can change its business model without impacting its margins
too much?
Speaker 2 (19:24):
Yeah, I think the services business or the app store
business will see some depression at least in the near dum.
Speaker 5 (19:32):
And let's get back to this DOJ situation. I think
it's worth for you re explaining to audience the basics here.
The DOJ has been looking at Apple for like five years.
It's the third time in a decade that they filed
a suit. What are the specific allegations here?
Speaker 9 (19:47):
This really focuses on the iPhone and the way the
iPhone business runs and acts as a kind of moat
around around the business. As a long suffering Android user
who's always the green bubble in the family group chat,
you know, you can see how there are certain things
that you benefit iPhone users and being interoperable with other
Apple devices. So that's really the behavior that this complaint
(20:09):
lays out, and it's interesting that Biden's anti trust enforcers
came in kind of pushing the balance of anti trust
law and wanting to really look at the behavior of
these big American especially tech companies. But when it comes
down to this complaint, the harm that is really being
laid out is consumer prices, which of course is classic
(20:29):
anti trust. So there's an interesting balance between pushing anti
trust law as far as it will go and really
sticking to the arguments that they think will be successful
in court.
Speaker 4 (20:39):
Anna, As you mentioned, this has been long anticipated and
has been going on for a long time five years.
It is under President Trump that this first investigation began.
It's the third time, in fact, in fourteen years that
Apple has been focused on in this anti trust way
from the DOJ. How quickly are we likely to see
any real actions taken, any real implication in response to Apples.
Speaker 9 (21:02):
Well, it's interesting that they file the case in federal
court in New Jersey, so we'll learn more about why
that was the case, but we know they do want
to move quickly on this. If the Department of Justice
has been a little frustrated with how slow their case
against Google has gone. So the Justice Department also has
more targets to finish.
Speaker 6 (21:20):
Up the rest of this year.
Speaker 9 (21:21):
They're working on another case against Google, so they have
high ambitions. They want to take big swings, and Biden's
first term is coming to an end, so there's definitely
a big ambitions and limited resources and time to check
all of those off.
Speaker 5 (21:37):
Anna Rag, you really see a threat of this getting
to consume as a window to jump to Android from iOS?
Speaker 2 (21:43):
Oh No, I don't think that's going to be the case, frankly,
because those things are extremely sticky from that point. I mean,
I don't think one bubble is going to make a
difference for people to jump from the other. Apple's really
loyal customer base. What I'm concerned about is, you know,
whether they can charge for the app store in the
same frame book as they were before. I think that's
going to be the bigger outcome in our view, rather
(22:04):
than anything else.
Speaker 4 (22:06):
And so a just interesting from the perspective that we
are seeing this share price reaction down some three percent.
That's not nothing for the second most valuable company out there.
So do you think more weakness has to be factored in?
Even though they have a very loyal base that perhaps
might not be shifting to an Android or competitor on
(22:27):
any changes to business models.
Speaker 2 (22:29):
Yeah, I mean, as I said, services business is extremely
important for them, both in terms of margin and diversification.
If you compress those c it is going to have
an impact on their boath, their top line as well
as the bottom line. So this is a new overhang
on the stock that you know, tops.
Speaker 7 (22:45):
Up what's happening in Europe.
Speaker 2 (22:46):
So there isn't much going on for Apple this year.
You know, sales are growing, sales are not growing in
terms of the products, and now the service is under pressure.
So you know, that's really what's happening.
Speaker 5 (22:56):
Here in our view and behind every doc move and
appleys down three point three percent, as I said at
the session, low three point eight percent. There are some people,
some human beings. Tell me about this DOJ team that
was up on the stage one moment ago that are
leading this anti trust initiative against Apple.
Speaker 6 (23:17):
Yeah, that's a great question.
Speaker 9 (23:18):
I mean, Jonathan Cancer came into the anti trust division
being labeled you know, Google's foe.
Speaker 6 (23:24):
We knew that. You know, he had his.
Speaker 9 (23:25):
Site set on big tech and that's part of this
kind of neo Brandisian school of anti trust that we
see also at the FTC with Lena Khan, the commissioner there,
So you know, they've in some cases really worked together
to reshape the understanding of anti trust law and really
try to show how corporate behavior, even corporations that are
(23:45):
well loved that produce products that people really enjoy, their
behavior results in higher prices for consumers. So you know,
we see this also from the app developers like Spotify,
Match Sonos who have complained for years that Apple's behavior
puts them at a disadvantage competing with products like Apple Music.
So that's all a part of this equation and is
(24:07):
all going to be tried now in a court of
law and we'll we'll see how it comes out.
Speaker 4 (24:12):
I want to just return to you, Ana Rag for
a moment and just think about ultimately where Apple has
to stay from now in terms of its oval prioritizations.
As you said, there's a worry about general to AI
and being behind the curve there, will that stymey any
relationship that it's trying to be brokering with Google. Will
we still see sort of the ongoing build up of
(24:35):
Apple and its presence in general to AI and still
trying to refocus the business when it is having to
be distracted in this way.
Speaker 2 (24:42):
Yeah, I think that's going to be the biggest thing
that we find out over the next few months. If
they are able to pull off this, you know, you
could say deal with Google. It's going to be symbiotic
and beneficial for both the companies and that has the
potential to improve iPhone sales in the second half of
this year. You know, botting that there isn't much going
on Apple at this point, both in terms of current
(25:02):
status as well as you know the outlook for second half.
Speaker 4 (25:06):
Anna Agrana, fantastic analysis. Thank you for being there at
the moment. Rerumkexana Egerton as well with a breakdown of
this anti trust move and the years that it's taken
to get here.
Speaker 3 (25:23):
Apple actively encourages banks, merchants, and other parties to participate
in Apple Wallet, but it simultaneously exerts its monopoly power
to block these same partners from developing alternative payment products
and services for iPhone users.
Speaker 4 (25:41):
Eric Garland, Attorney General, that is, as the DOJ in
sixteen attorneys general weigh in bringing enforcement to Apple at
the moment, announcing an antitrust lawsuit against Apple, and of
course ed this is as we see the share price
really being not by this off by more than three percent.
It is the second most valuable company out there, So
that knocks some twenty ninety two billion off of its
(26:01):
market capitalization overall on the day training at the lowest
that we've seen since the start of the year. And
all of this ultimately should have been expected.
Speaker 6 (26:09):
It's a five year investigation, That's.
Speaker 7 (26:11):
The observation I've made.
Speaker 5 (26:12):
Though, So at the session low, the stock was down
three point eight percent, putting Apple on track for its
biggest decline since August last year. Bloomberg reported all these
details last night, and yet when the press conference came
and the official confirmation came, the stock continued to slide.
And if you go on your Bloomberg terminal look at
the street wrap.
Speaker 7 (26:29):
There is an acknowledgment of.
Speaker 5 (26:31):
A regulatory overhang, which every time you and I talk
about anti trust over the last few years, it never
shows up in the stock.
Speaker 4 (26:37):
Yeah, and then you have to add in on that
the other bloomberg scoop that came within this time of
the fact that the EU is now weighing a full
blown investigation on its part as well into Apple and
Google when it comes to the digital markets app. So
this is an antitrust global fixation on Apple right now.
Speaker 7 (26:54):
Yeah.
Speaker 5 (26:54):
The one point on that EU reporting is that I
think the EU is looking at a lot of people
alphabet and all, so we're reporting meta and that eventually
that could lead to fine. So that is a story
out of Europe that will continue to watch. There is
another big story happening we may have forgotten. Let's turn
to Reddit listing day. Here's some video of them ringing
the bell at the NYC earlier. Have a great listener,
(27:26):
I would say that, I say them, I don't think
that's Steve Huffman in a mascot.
Speaker 7 (27:30):
Suit, but I'm sure he was there.
Speaker 5 (27:33):
That was Reddit ringing the ny Stock Exchange bell earlier
this morning. Let's get some of the key numbers with
Bloombo's Katie Ruth, and we have an indication of where
Reddit might open.
Speaker 10 (27:42):
Yeah, so we don't know exactly where it's going to
open just yet, but last night it priced at thirty
four dollars a share at the top of the range,
which was, you know, a positive indication based on the
road show and showing where you know, the street thinks
it's going to open at you know, right now. What
they're doing is they're sorting out the book. They're figuring
(28:04):
out precisely, you know, for the very very first trade
to the public where it should trade at, because the
IPO is actually just for insiders, and so a lot
of ours are watching Reddit. There's been a dearth of
tech IPOs in recent years. I mean, twenty twenty one
is a very active year with over one hundred, and
then in twenty twenty two there were nine, and then
(28:26):
last year we only saw instacart, klaviow an arm, you
know for the big ones. And this week with Reddit
in Astera, people are hoping might finally open that tech
ipo window.
Speaker 5 (28:40):
Just looking at this headline crossing the Bloomberg terminal that
Reddit shares indicated to open between forty two and forty
six dollars a share, clearly a premium on that thirty
four dollar IPO pricing.
Speaker 7 (28:52):
There is interest in this one, right.
Speaker 5 (28:53):
It's been a long road because we thought they might
go twenty twenty one, as you said, was an excellent
year for US IPOs, and they didn't.
Speaker 10 (29:00):
Yeah, they announced in twenty twenty one they had filed
for IPO in twenty twenty two. I broke that they
had hired bankers, and they did. It just took a
little while for them to actually do it. But you know,
I think it's it's a matter of are people interested
at what price? You know, they priced at something that
valued them above six billion, but they were last valued
at ten billion in twenty twenty one, and so yes,
(29:21):
there is interest in Reddit at this price, it looks like,
especially if it's popping, But it's a matter of, you know,
will it will it be able to sustain that price?
Will it be able to achieve the price it had
in twenty twenty one at market highs at.
Speaker 4 (29:35):
My named seeing a blue bug intelligence saying, yes, a
ten billion valuation is really where Reddit should be, Katie.
But I'm interested in the allocation and where it went
when it was priced. To course, money flowing into institutional hands,
but also into the retail investor and into the redditors themselves.
How much volatility might this add well, I.
Speaker 10 (29:52):
Think it depends on whether these longtime Reddit users that
got access at the IPO price are are willing to
stay Reddit stockholders. Part of the idea behind some of
these consumer facing companies giving access to their top users
at the IPO price. Is the idea that these would
(30:13):
be long term stockholders. The IPO is only given to insiders,
so people that are close to the banks normally and
they get there's expected to be a pop on day one,
and so it's seen as a gift that they get
access to those games on day one. And so this
(30:33):
is meant to be a good thing for Reddit shareholders,
Reddit users, and also for Reddit.
Speaker 4 (30:39):
Yeah, Katie Roof has been across this IPO, We thank
you so much for bringing it to us and ed,
I mean there's a question of course future drive growth
drivers not just being advertising but AI too.
Speaker 5 (30:50):
Yeah, that's the idea sell the very unique user data
to the companies building large language models. And BI has
this very wide range saying thirty to eight of Reddit
users only use Reddit, they don't use other social media platforms.
Speaker 4 (31:05):
And really it's that focus on the desire to be
engaging there and what it means for some of these
large language models as well for a future direction of
travel when it comes to a diversification of revenue. Now,
we want to welcome to our Bloomberg TV and radio
audience worldwide. Reddits listing day, it's arrived.
Speaker 6 (31:22):
Let's bring in.
Speaker 4 (31:23):
Reddit's chief operating officer, Jen Wong for more on the
big day, live from the New York Sock Exchange. Jen,
it's a day to remember, and I'm interested as to
really for you how much you are excited about redditors
having part of the process here or worried a bit
about the volatility to come.
Speaker 6 (31:43):
Thanks for having me today.
Speaker 11 (31:45):
It's been our dream, our dream to have our users
and our communities to be able to be shareholders in Reddit.
Speaker 6 (31:51):
Everything on Reddit is built.
Speaker 11 (31:53):
By our users and communities, so having them be owners
makes a lot of sense.
Speaker 6 (31:57):
We're so excited about that.
Speaker 5 (32:00):
Jane, good morning, it's ed in San Francisco. What's the
main benefit of the IPO. You know, we always talk
about the money raise, the doll evaluation, but I always
reflect an IPO gets your name out there. Not everyone
is on Reddit, not everyone is a redditor. How do
you weigh up the pros and cons of listing?
Speaker 11 (32:19):
Well, it's certainly a lot of press on a day
like today. It is a special day, but becoming a
public company has just made us a better company. We've
actually been in this process longer than most almost two
years actually, and that process has made us more disciplined,
more operationally rigorous, and actually allowed us to get to
(32:41):
know investors better and tell our story. And so this
whole process has made us a better company, and we're
prepared to be a public company. I think it's actually
been really good for us, and I think companies that
you can go public it's sort of a duty. It's
part of the process of maturing as a company.
Speaker 6 (33:03):
And then the benefit of having.
Speaker 11 (33:05):
Our sharehold our employee employees have liquidity which we promise
in them, and in addition, have our communities and users
be able to be shareholders makes a lot of sense
for Reddit.
Speaker 7 (33:17):
Jen.
Speaker 5 (33:18):
The evolution of the story is for you moving away
from a solely advertising based business model to one way
you license your user data to the companies that are
building large language models. I just asked if you could
explain to our audience how that works in practice, how
you're going to grow that business.
Speaker 11 (33:37):
Yeah, well, just ahead of addressing that, I just wanted
to provide context. One of the things that's so special
about Reddit is that we play in three big addressable markets.
Speaker 6 (33:48):
We have this core advertising business. Adds is a great business.
Speaker 11 (33:51):
It's still early we have great traction and momentum. That's
our core business. We have an emerging data licensing business
that we built the foundations for last year because reddits
corpus of information is incredibly important to the training of
large language models and also for insights for different kinds
of businesses.
Speaker 6 (34:09):
And the third is a.
Speaker 11 (34:10):
User economy where our communities go beyond conversation into being able.
Speaker 6 (34:15):
To transact with each other.
Speaker 11 (34:16):
Now you asked about the data licensing business, which we've
built the foundations for last year. That has two pieces
to it. It is a piece that's sort of well established,
where there's social listening for marketing for companies who want
to understand what's happening on reddits and for marketing campaigns.
There's also financial services companies who are interested in that.
Those are well established markets. And then there's the new
(34:39):
emerging market of AI where large language models need data
to train on. And when you look at Reddit's corpus
nineteen years of human experience organized by topic with well
moderation and relevance, that's incredibly important to building both a
chat capability and the freshness of information. So that's an
(35:02):
area where you know we see opportunity. I think what
that signals, you know, whether it shows up honestly in
our revenue or what it shows up in the value
of Reddit is how valuable.
Speaker 6 (35:10):
Reddit is, you know, the more that we move.
Speaker 11 (35:13):
Toward this AI world, that corpus and that knowledge and
refreshment of human experience becomes more valuable.
Speaker 4 (35:19):
To our TV and radio audience. We are speaking with
Reddit Chief operating Officer Gen Wong and to that ongoing
value of your data to AI and to the large
language models being developed. I mean those llms, the models
are being.
Speaker 6 (35:33):
Built in new and different ways.
Speaker 4 (35:35):
This actual technology also develops. I'm interested as to really
whether this goes on in perpetuity. Do you see this
sort of licensing being steady and secure for ten years
from now?
Speaker 11 (35:49):
What I'd say is this is so early in this
emergence of this technology, it's hard to see far out.
The way I think about it, the way we think
about it, is this the read its corpus of data
is incredibly valuable, and it gets more valuable because as
there's more more content that's generated maybe by AI or computers,
(36:11):
original human thoughts and ideas increase in value. Right if
you think about it, a new car comes out who's
going to review it.
Speaker 6 (36:19):
A real life family of six.
Speaker 11 (36:21):
Can actually tell you what it's like to drive that car.
That's always going to be valuable, and so you know,
whether that shows up in data licensing or in the
products that Reddit builds, it is valuable.
Speaker 4 (36:32):
Let's talk about a community that has been very valuable
at times and extraordinary at others.
Speaker 6 (36:38):
To wool Street more broadly.
Speaker 4 (36:40):
Has been the reditors who are very active on wool Street.
We go back to woll Street bets. We just think
about what happened to GameStop for example. There is a
double edged sword here for you involving your.
Speaker 6 (36:50):
Editors as investors.
Speaker 4 (36:52):
How secure are you that you won't become a meme
frenzy yourself to the up and to the dam.
Speaker 11 (36:59):
Look, I love the ethos of that community in all
of our investing communities, and who knows, I mean, it's
it's Reddit, right, I mean, who knows what's going to happen,
So we'll see.
Speaker 6 (37:09):
I mean it's hard to say, but in the end, I.
Speaker 11 (37:12):
Think having our users and communities be shareholders is a
good thing and I think ultimately will be judged on
our performance, and that'll take time for people to know
but ultimately I think that's what investors Judge Judge.
Speaker 9 (37:23):
Us on.
Speaker 5 (37:25):
Jen we're awaiting the opening trade Bloomberg reporting. The indication
is the stock will open somewhere between forty two or
forty six dollars a share. It's quite a premium on
the IPO price. You're one of the biggest shareholders as well.
Just give me your personal feeling in this moment.
Speaker 6 (37:45):
You know, it's kind of like a wedding day.
Speaker 11 (37:47):
I guess lots of different emotions, joy, relief, jitters, all
of it in one I haven't even processed it, frankly,
but it is a special moment. It is one milestone
in a history of a nineteen year company that I
think has a lot of runway. You know, we're nineteen
(38:10):
years old, but we're really young as a company, and
this is sort of the start of the next chapter.
Speaker 7 (38:17):
Read it.
Speaker 5 (38:18):
Chief operating Officer Gem Wong, live from the NYC. We're
grateful for your time on listing Day.
Speaker 6 (38:23):
Thank you.
Speaker 7 (38:33):
Okay, time for VC Spotlight and.
Speaker 5 (38:35):
Sequoia has just wrapped up its AI Ascent event right
here in San Francisco, which brought together some of the
best and biggest minds in artificial intelligence. Let's bring it
SCOA Capital partner Constantine Butler to explain who was there?
There were big names in the building. Why did you
do that?
Speaker 12 (38:52):
Well, first, ad Caroline, thank you so much for having
me again.
Speaker 7 (38:56):
You're right.
Speaker 12 (38:57):
Yesterday we had one hundred of the leading minds in AI.
We brought them together because we want to discuss the
state of.
Speaker 5 (39:04):
The AI industry, just portfolio companies or the community, the
whole community, right, not just portfolio companies.
Speaker 12 (39:09):
We're talking the leading minds in AI. We wanted to
talk about the state of the industry today, but also
where we're going, what's next, and.
Speaker 7 (39:17):
What was the conclusion.
Speaker 12 (39:18):
Well, one thing I think will surprise your audience is
that everybody knew that we had to be patient in
this process. It feels like we started the AI process
as a sprint, but everyone knows this is a marathon.
So what's ahead of us is the long haul, and
every everyone's getting ready for that long haul.
Speaker 4 (39:34):
Custinton, I'm sure a topic of conversation must have been inflection,
basically going in house to Microsoft and yes, licensing some
of its technology. At the same time you're speaking with
the likes of the co CEO of Anthropic, which has
a deal with Amazon. You're also talking with Mistrale, which
is of course got a deal with Microsoft. How is
(39:55):
that whole ecosystem ultimately building itself? There seems to be
it'll be some very interesting partnerships that end up looking
like MNA. How do you feel as someone who's putting
money into these businesses.
Speaker 7 (40:07):
Caroline, You're exactly right. There was a lot of talk
about that.
Speaker 12 (40:10):
And one of the major trends that I think will
surprise your audience is that the leaders we're talking about
how ais are gonna actually work together. So we're talking
about this concept of networks of ais, not just so
you're gonna have one AI, but you're gonna have multiple
ais that are good at different tasks, and they're gonna
work together, cooperate and compete. I'll give you a very
(40:32):
tangible example. I use a product called dust. It also
happens to be a wonderful Sequoia portfolio company. It allows
me to call both GPT four and mistraw large, and
also Claude three from Anthropic in parallel. I can have
the models compete against each other, I can have them collaborate,
and this yields an even better outcome.
Speaker 7 (40:53):
That's the future of AI.
Speaker 12 (40:54):
It's gonna be many models working together in a network.
Speaker 4 (40:57):
Another portfolio company being hugging face, which are cool. So
allays bring together the entire ecosystem in that manner. And
there must be an awful lot of debate ultimately about
well open versus closed. You've got open AI, and many
would argue that open AI ain't that open anymore, and
some would say for good reason, how are you seeing
the overall AI community divide itself on how open large
(41:20):
language models should be.
Speaker 7 (41:22):
I'll tell you what we heard yesterday.
Speaker 12 (41:24):
We heard a lot of enthusiasm about open source. And frankly,
it wasn't just from the builders. So a lot of
the builders, of course want open source so that they
can run these models in their own clouds, but it
was also.
Speaker 7 (41:36):
From the application layer.
Speaker 12 (41:38):
We had CJ the COO and president of service Now,
and he talked about how service now is using AI
internally to deflect twenty percent of tickets that's for it
stuff like ordering a laptop, that's for HR, stuff like
leave and he made it very clear, we need the
open source because that's going to help us drive costs down.
That's going to help us preserve margin. So customers want this.
(42:00):
We've heard it from customers. We've also heard it from
the founders and the builders.
Speaker 5 (42:04):
Just a headline on the Bloomberg to make our audience
where reddit share is now indicated to open at forty
four to forty eight dollars to share a premium on
the thirty four dollars that they price the IPO at.
We were just talking to gen want at redit the
idea that they are in an available data set for
training large language models.
Speaker 7 (42:21):
The difference in the.
Speaker 5 (42:22):
Data is the focus of reddits. They only use Reddit, right,
was that something you've discussed about the availability of data
and Reddit?
Speaker 7 (42:30):
I mean, what are people saying about that? Absolutely? First
of all, we're so happy for Reddit.
Speaker 12 (42:34):
This is an amazing milestone and Junge just seve it
and IPO is an important milestone in the journey.
Speaker 6 (42:40):
And this is an.
Speaker 12 (42:41):
Example of how the fact that they created an online community,
a true community where they were actually working together, is
going to pay off, not just for advertising that's the
obvious business, but for data.
Speaker 7 (42:51):
We know they have a.
Speaker 12 (42:51):
Big partnership with Google and we're going to see a
lot more businesses like this that have accumulated that data
advantage being partners for.
Speaker 7 (42:59):
Great AI products that need to train on that data.
Speaker 5 (43:02):
It's core capital partner Constemula. Great to have you back
in the studio, San Francisco. What a day it's been carried.
This for now is been big technology. Thanks ed, Thanks Jian.
Speaker 3 (43:25):
We oglage that Apple has employed a strategy that relies
on exclusionary anti competitive conduct that hurts both consumers and developers.
For consumers, that has meant fewer choices, higher prices and fees,
lower quality smartphones, apps and accessories, and less innovation from
Apple and its competitors.
Speaker 4 (43:48):
Attorney General Garland there of the Department of Justice, speaking
earlier today, Apple facing global anti trust allegations, of course
not known from the US, but also the EU. We
understand they're going to do a full probe Google and Apple.
You commissioned a EVP, Margravestdaya told us this earlier in
the month.
Speaker 13 (44:06):
We see an illegal abuse that has been ongoing for
a number of years, which has made it, you know,
virtually impossible for customers to choose if they want the
payment service in app by Apple paying the fee, or
they would want to go, for instance, to a website
and have a cheaper subscription price.
Speaker 4 (44:28):
Bags margam and for more What's apples take.
Speaker 14 (44:33):
Yeah, Apple certainly disagrees across the board on this lawsuit,
implying that the lawsuit is not legal, saying the iPhone
is not a monopoly, and pushing back heavily on the
bevy of claims The Department of Justice is going after
Apple from everything from green Bubbles to car play to
(44:53):
how iCloud storage integrated, blaming Apple for hurting consumers, hurting choice,
hurting developers. Certainly, Apple has squashed developers and made it
difficult for developers to.
Speaker 7 (45:07):
Compete in some instances.
Speaker 14 (45:10):
On the other hand, a lot of this comes down
to user interface and philosophical decisions Apple made many years
ago about its integrated experience. So we'll have to see
where Apple is willing to meet the DOJ how they
can work together to create some solutions here to keep
the iPhone still a secure, integrated platform, but certainly it
(45:30):
needs to get a bit more open and a bit
more competitive for third party developers and accessory makers.
Speaker 4 (45:36):
The man who can explain the Apple philosophy, Mark German.
We thank you so much for jumping in on the.
Speaker 6 (45:41):
News and boy that does it for
Speaker 4 (45:44):
This extremely busy edition of Blue meg Technology
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
From Mahard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 3 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4 (00:32):
I'm Caroline Hyde and Bloomberg's weld head quarters in New York.
Speaker 5 (00:34):
I'm Ed Lodlow in San Francisco. This is Bloomberg Technology.
Speaker 4 (00:38):
Coming up, we have an exclusive interview with the CEO
of Micron, Sanjay Mahotra, is going to be joining us
as shares surge to a record high. That's after the
company boosted its outlook on AI growth.
Speaker 5 (00:50):
Plus, we push ahead to Reddit's long awaited IPO and
sit down with reddits COO Jen Wong later this hour.
Speaker 4 (00:57):
And of course we go live to the Department of
Justice as they announ an antitrust lawsuit against Apple.
Speaker 5 (01:03):
We're also thinking a lot about Micron. Shares of Micron
at a record high, biggest jump since twenty eleven. The
outlook for the fiscal third quarter a recovery and commoditized
d RAM prices, but also a ramp in the next
generation HBM three E that is the memory that supports
the GPUs in training AI that is the conversation that
(01:24):
we'll have. Let's dive right into microns earnings with CEO
Sanjay Morotra as Sanja, good morning to you, and that's
how i'd frame it. Let's get right to the outlook
for the fiscal third way up the factors for us.
Was this all about the recovery in d RAM traditionally
commoditized or is this more about the ramp up in
HBM THREEE that is going in support of things like
(01:46):
the h two hundred from Nvidia.
Speaker 1 (01:49):
First of all, thank you Caroline and ED for having
me on the show here. Our recovery is really driven
by a demand related to AI with tight supply and
actually demand that is strong across most of our end markets,
particularly data centered driven demand. And Micron has a strong
portfolio of products. Very excited about our latest offering of
(02:14):
HV and three E that you refer to earlier. We
have just begun shipments of this and we see strong
growth in the several quarters that are ahead of us.
And supply is tight, leading edge nodes in particular, and
and tight supply that's leading to price increases as well.
So as we look ahead at twenty twenty four, our
(02:36):
year of recovery. We see increasing prices driven by the
demand supply fundamentals, and we look at twenty twenty five
to be a record year for Micron's revenue with significantly
improved profitability as well.
Speaker 4 (02:53):
Twenty twenty five supply also mostly already allocated. You sold
out on twenty twenty four. Say let's dig in on
the high bandwidth memory because was it Jason Wyang over
at in video calling this a technology miracle? Will it
not get commoditized? Will prices remain elevated?
Speaker 1 (03:12):
First of all, our sr HBM product that is sold
out for calendar year twenty four, and a vast majority
of the supply for our twenty twenty five is allocated
as well. This is a critical product. HBM three E
is in very very early stages here and it's key
enabler of what AI platforms, generative AI platforms are able
(03:37):
to do. Just think about it. I mean the latest
Blackwell platform that has been announced. It has sixty four
die of memory in it, so tremendous amount of silicon.
HBM is growing fast, expected to be about fifteen percent
high teens, mid to high teens of the industry revenue
(03:58):
over the course of next years compared to being just
half of that last year. And as you look ahead
at the new platforms being announced Nvidia earlier this week,
Broadcom yesterday, they're all placing tremendous emphasis on the performance
and the power of HPM memory. As AI becomes bigger,
(04:19):
data becomes bigger, data lives in the products that Micron
makes for AI applications, lives in the kind of products
such as HPM three E, but high density DIM modules
as well as other products that Micron makes DDD ARE
five memory and data center SSDs. So AI is really
driving tremendous growth trajectory. HBM THREEE is absolutely going to
(04:43):
be critical. This is in very early innings and you know,
even if there are any perturbations in supply, they will
get absorbed over time. And what's important to understand is
because HPM THREEE product is extremely silicon intensive across the industr,
it is really leaving not enough supply for non HBM
(05:04):
products and those are in tight supply, and that's what
is driving tremendous strength in terms of demand supply fundamentals
in pricing trajectory for memory.
Speaker 5 (05:15):
And the question is, Sanjay, how do you keep up
right HBM THREEE running at five point two gigabits per second.
You've already mentioned blackwell, you're going to have to bring
that next generation HBM nine gigabits per second faster. Just
walk us through the real term ramp of your products,
getting them into the real world and when they show
up in your financials in the near and medium term.
Speaker 1 (05:39):
Well, we talked about yesterday in our earnings call that
we have begun shipments of HBM three E product. It's
an industry leading product. It has the best performance in
the lowest power in the industry, which you know for
data center applications, power is critical. Thirty percent better power
for our HBM three E product. So we have really
(06:01):
long legs in this HP and three E product for
foreseeable future here and HPM three E has begun shipments,
and we mentioned in the call yesterday that it will
be a creative to our gross margins and we'll have
several hundred million dollars of revenue of this HPM three
E product in our fiscal year which will end in
(06:23):
August timeframe. And of course we look at significant growth
ahead for HPM three E as well. Our production has begun.
We are extremely focused on continuing to ramp this product.
Our target is to get our share in HBM three
E equivalent to our DRAM industry share, and we're going
to remain extremely disciplined key will be absolutely managing the
(06:46):
supply and demand fundamentals overall for the DRAM industry. So
we look at strong growth ahead for our HPM three E.
Keep in mind that HBM is expected to have a
KAGHER greater than fifty percent over the course of next
a few years in terms of bit growth that HPM
will be driving. Of course, it will be all the
(07:07):
GENAI applications that we'll be driving this And I just
want to add here that of course data center is
a big driver of our growth. We are shifting our
business more toward data center given the demand and the
profitability profile of that part of the market. We are
doing that with our DTA and products as well as
with our SSDs. But just want to point out that
(07:30):
other markets such as smartphones and PCs, they too are
implementing AI enabled devices and you'll start seeing them coming
out from later this year, and of course twenty twenty
five will be the first full year of all these
devices on the edge, such as smart AI enabled smartphones
and PCs. They take much higher memory content than their
(07:54):
prior generation devices. You're really, we're exciting about the opportunities
for that AI enables for US enables for memory, which
is at the heart of AI revolution in terms of
from data center all the way to the edge.
Speaker 4 (08:10):
Going back though, to this high bandwidth memory and going
back to that market share that you say you want
to own, can you articulate exactly what that share is
going to be for our audience right now when we
have Heinex Samsung likely to.
Speaker 6 (08:23):
Be unveiling their products at the first half of this year.
Speaker 1 (08:27):
Our share in DAM today in the industry is approximately
twenty three percent, and we are targeting that our HBM
share would be in line with that DRAM industry share.
Of course, it will be ramping gradually over time. Sometime
in twenty twenty five if we expect to be getting
to our shared in HBM equal in to DM share.
(08:48):
It's a product that has greater profitability and as we said,
it really will be a driver of our revenue and
profit growth along with the rest of the market that
has strengthening fundamentals well for a bloom bag television right
and let me just point out the most important thing
is that our product has leadership specs, and that's why
(09:09):
it's getting a strong customer pull. Leadership products. Again in
terms of performance, bandwidth being about ten percent better than
other competitive products, power being thirty percent lower. Data centers
today take up about three percent of the world's energy
over the course of next several years, expected to continue
(09:30):
to increase, getting to closer to high single digit percentage.
That's where memory becomes extremely important in making sure that
these accelerators for Jenai are running lower power, low power memory.
Our thirty percent lower power solution is extremely attractive to
our customers.
Speaker 5 (09:50):
Sanjay, for our Bloomberg television and radio audience worldwide, you
can point out a lot of things. We have a
lot of questions for you to bear with us. Let's
go back to on device because you clearly want to
talk about that. We talk about on device a lot
on this program, the smartphone and PC context. You are
saying that there is a tangible benefit that you're seeing
(10:11):
in orders for that, but.
Speaker 7 (10:12):
Is that happening right now?
Speaker 5 (10:14):
There is a lot of skepticism that on device processing
of llms and generative AI tools is somewhere away. Are
you telling us that this is material now or you're
predicting that it's coming soon.
Speaker 1 (10:28):
Well, earlier this year you saw Samsung S twenty four
getting announced at Mobile World Congress, on it announced its
Magic six Pro. And these are great examples where AI
is being implemented, great examples of influencing on the edge.
AI is being implemented, that's intent based, and that's really
(10:49):
going to drive tremendous opportunity. Of course, these kind of
high end next gen AI capabilities and PCs and smartphones
will start getting to the marketplace later this year, twenty
twenty five will become the first full year. Over the
course of next few years, next few short years, we
(11:09):
would see that AI enabled devices will be representing let's
say about a third of smartphones and PC markets, and
they take much more content anywhere from forty percent two
hundred percent more content in flagship AI enabled PCs and
smartphones versus flagship AI in PC devices today, Sanjai, we've
(11:35):
got flagship smartphone and PC devices.
Speaker 4 (11:37):
Today, We've got a couple more key questions. We're going
to keep it tight, fee, Sanjay, because we have been
thinking about the CHIPSAC, We've been thinking about Intel getting
that money. We've been thinking about you still building out
in China and in India. Will you still be committed
to putting money into Boise, into New York as well?
Are you going to get the money from the government.
Speaker 1 (11:58):
Well, we'll respeak to the chips ACKed and are previously
announced plans for leading edge memory manufacturing in Boise and
in the Syracuse area. Our application for chips ACT is
underprocessing with the chips Program Office making good progress there.
Of course, we will make the announcements when that process
(12:20):
is completed. Important thing is that chips ACT enables us
to bring with CHIPSACKED grants sufficient level of CHIPSACK grants,
investment tax credits, and local state government support. It helps
bridge the cost gap with Asia operations. So it helps
us bring leading edge memory manufacturing into semiconductors and of
(12:44):
course that creates many jobs. It supports economic as well
as national security, and memory is pivotal. We just talked
about how pivotal memory is to AI applications. So think
about it. Today, only two percent of world's memory total,
world's memory production is here in the US. Of course,
(13:04):
it's all by micron at our facility in Manassas Virginia.
Speaker 7 (13:08):
With chipsec support.
Speaker 1 (13:10):
As we expand our leading edge memory manufacturing in Boise
and Syracuse next decade, Sometime in next decade, we'll be
able to get to ten percent over ten percent of
world's leading edge memory production here in the US. And
that's really Sunji significantly moving the needle, and Micron of
(13:31):
course is committed to.
Speaker 5 (13:32):
That, Sanjay, We're running out of time here. Bloomberg's reported
that the US is considering restricting one of your Chinese rivals, CEXMT.
My understanding is that Micron has been in support of that.
Could you just outline Micron's position on the US restricting CXMT.
Speaker 1 (13:53):
Look, the governments make their own decision and we are
not going to speculate or speak on behalf of any
of the actions. What we can tell you is that,
of course China is an important market for US, just
like China is an important market for the entire semiconductor industry,
and we are veil engaged with the customer ecosystem there
(14:13):
in terms of bringing value of our leading edge products
in memory and storage, helping them drive their innovation road maps.
Speaker 4 (14:22):
We want to thank you so much for your time
today walking us through your numbers through the industry with
which is growing at such pace. Micron CEO Sanjay Erroltra,
thank you. Now turning our attention to the Department of
Justice holding a key press conference as they announce their
antitrust suit against Apple, which has been five years in
(14:43):
the making. We just want to be dipping in and.
Speaker 6 (14:44):
Bringing you some of those headlines. Of course, Merrit Garland.
Speaker 4 (14:47):
The Attorney General, saying that Apple has monopoly power in
the smartphone market. He's also been articulating that Apple has
maintained power via exclusionary behavior at the moment, so to
be turning our attention listening in to that press conference
for a moment today.
Speaker 8 (15:04):
The Department alleges that Apple, one of the world's largest
tech companies, cross the line from rigorous competition to anti
competitive exclusion, unlawfully maintaining a monopoly in violation of the
Sherman Act. The complaint makes clear that for years Apple
has tightened its grip on the smartphone market.
Speaker 6 (15:27):
It has done so not through.
Speaker 8 (15:29):
Product improvements, but by maintaining a chokehold on competition, locking
its customers in to the iPhone while locking its competitors
out of the market. As a result, and, as the
complaint details, Apple has gone from revolutionizing the smartphone market
to stalling its advancement. This shift has smothered an entire industry,
(15:55):
from users to app developers to the next generation of innovator.
Apple's anti competitive conduct must stop. Sixteen other Attorneys General
agree and have joined us in bringing this lawsuit against Apple.
Speaker 6 (16:12):
I want to thank the women and the.
Speaker 8 (16:14):
Men of the Anti Trust Division for their commitment to
promoting competition and protecting consumers and workers in all of
their work, and I want to thank Assistant Attorney General
Canter for his leadership. Their work makes clear that no manual.
Speaker 4 (16:31):
Has how fast the Deputy Attorney General LA speaking Lisa Monaco.
But meanwhile, there's more breaking news, all focused in on Apple.
I just want to bring you the headlines that Apple
and Google are likely to be hit by the first investigations,
the first probes under the EU Digital Law. So of
course there's the DMA which came into force just earlier
this month, And of course there has been a keen
(16:52):
eye on some of these labeled key gatekeepers as the
EU singles out big tech, Apple and Google among them.
The Digital Markets Act investigation could pay the way for fines,
some big fines. Meta is also expected to be facing
some scrutiny in the EU's big tech clampdown. So much
to discuss from EU, and indeed, what's happening right here
with of course, the Department of Justice and sixteen attorneys general.
(17:15):
Let's bring in bloombergs Ana Edjuton and anaag Rana for
more on this. Anna, I want to begin with you,
and let's start with what has been the culmination of
a five year investigation. The key takeaways is to where
exactly Apple has been monopolistic and shutting out others in
the market.
Speaker 9 (17:34):
Yeah, so we have been expecting this complaint for a
long time. It started in twenty nineteen under the trub administration.
And we see how Jonathan Cancer, the Assistan Attorney General
for Anti trust, has really tried to tell a narrative
with this complaint. He's really tried to not just lay
out the facts of what he alleges as anti competitive
behavior by Apple, but tell it in a compelling way
(17:56):
so that it's not just being decided in a court
of law, but it's also compelling to normal consumers who
you know, love their iPhones, love their Apple products. They
can look at this complaint and see that this is
behavior that's in some cases causing them higher prices that
could give them less choice. So that's really the goal
of this complaint that you know, could also help its
chases in the court of law.
Speaker 5 (18:16):
Let me bring in Bloomberg Intelligence senior analysts and rag
Rana an Arag. I'm looking at the shares with down
three point four percent the low of the session. That
decline is three point eight percent, put Apple on track
for its biggest decline since August of last year.
Speaker 7 (18:29):
You and I have talked about this for years.
Speaker 5 (18:31):
Is the markets finally starting to price in the antitrust
threat that Apple is facing?
Speaker 2 (18:38):
I think, as you know, products slow down antitrust risks.
I mean, Apple doesn't have much going on right now,
so it's going to be interesting to see what they
pull out in June in terms of anything, JENNYI because
other than that, I mean, it's going to be a
very gloomy year for them in terms of sales growth.
Speaker 4 (18:53):
And I go want to follow up on that because
this isn't just the US with its anti trust concerns.
It's the EU as well with that and Google being
hit potentially by the Digital Markets Act which come into force. Ultimately,
Apple has at the edge has already been trying to
change some of its business model, trying to appease with
whether or not it's reducing certain payments that you're making
for the app store, but it seems to be begging
(19:17):
from Peter to pay Paul. How much do you think
Apple can change its business model without impacting its margins
too much?
Speaker 2 (19:24):
Yeah, I think the services business or the app store
business will see some depression at least in the near dum.
Speaker 5 (19:32):
And let's get back to this DOJ situation. I think
it's worth for you re explaining to audience the basics here.
The DOJ has been looking at Apple for like five years.
It's the third time in a decade that they filed
a suit. What are the specific allegations here?
Speaker 9 (19:47):
This really focuses on the iPhone and the way the
iPhone business runs and acts as a kind of moat
around around the business. As a long suffering Android user
who's always the green bubble in the family group chat,
you know, you can see how there are certain things
that you benefit iPhone users and being interoperable with other
Apple devices. So that's really the behavior that this complaint
(20:09):
lays out, and it's interesting that Biden's anti trust enforcers
came in kind of pushing the balance of anti trust
law and wanting to really look at the behavior of
these big American especially tech companies. But when it comes
down to this complaint, the harm that is really being
laid out is consumer prices, which of course is classic
(20:29):
anti trust. So there's an interesting balance between pushing anti
trust law as far as it will go and really
sticking to the arguments that they think will be successful
in court.
Speaker 4 (20:39):
Anna, As you mentioned, this has been long anticipated and
has been going on for a long time five years.
It is under President Trump that this first investigation began.
It's the third time, in fact, in fourteen years that
Apple has been focused on in this anti trust way
from the DOJ. How quickly are we likely to see
any real actions taken, any real implication in response to Apples.
Speaker 9 (21:02):
Well, it's interesting that they file the case in federal
court in New Jersey, so we'll learn more about why
that was the case, but we know they do want
to move quickly on this. If the Department of Justice
has been a little frustrated with how slow their case
against Google has gone. So the Justice Department also has
more targets to finish.
Speaker 6 (21:20):
Up the rest of this year.
Speaker 9 (21:21):
They're working on another case against Google, so they have
high ambitions. They want to take big swings, and Biden's
first term is coming to an end, so there's definitely
a big ambitions and limited resources and time to check
all of those off.
Speaker 5 (21:37):
Anna Rag, you really see a threat of this getting
to consume as a window to jump to Android from iOS?
Speaker 2 (21:43):
Oh No, I don't think that's going to be the case, frankly,
because those things are extremely sticky from that point. I mean,
I don't think one bubble is going to make a
difference for people to jump from the other. Apple's really
loyal customer base. What I'm concerned about is, you know,
whether they can charge for the app store in the
same frame book as they were before. I think that's
going to be the bigger outcome in our view, rather
(22:04):
than anything else.
Speaker 4 (22:06):
And so a just interesting from the perspective that we
are seeing this share price reaction down some three percent.
That's not nothing for the second most valuable company out there.
So do you think more weakness has to be factored in?
Even though they have a very loyal base that perhaps
might not be shifting to an Android or competitor on
(22:27):
any changes to business models.
Speaker 2 (22:29):
Yeah, I mean, as I said, services business is extremely
important for them, both in terms of margin and diversification.
If you compress those c it is going to have
an impact on their boath, their top line as well
as the bottom line. So this is a new overhang
on the stock that you know, tops.
Speaker 7 (22:45):
Up what's happening in Europe.
Speaker 2 (22:46):
So there isn't much going on for Apple this year.
You know, sales are growing, sales are not growing in
terms of the products, and now the service is under pressure.
So you know, that's really what's happening.
Speaker 5 (22:56):
Here in our view and behind every doc move and
appleys down three point three percent, as I said at
the session, low three point eight percent. There are some people,
some human beings. Tell me about this DOJ team that
was up on the stage one moment ago that are
leading this anti trust initiative against Apple.
Speaker 6 (23:17):
Yeah, that's a great question.
Speaker 9 (23:18):
I mean, Jonathan Cancer came into the anti trust division
being labeled you know, Google's foe.
Speaker 6 (23:24):
We knew that. You know, he had his.
Speaker 9 (23:25):
Site set on big tech and that's part of this
kind of neo Brandisian school of anti trust that we
see also at the FTC with Lena Khan, the commissioner there,
So you know, they've in some cases really worked together
to reshape the understanding of anti trust law and really
try to show how corporate behavior, even corporations that are
(23:45):
well loved that produce products that people really enjoy, their
behavior results in higher prices for consumers. So you know,
we see this also from the app developers like Spotify,
Match Sonos who have complained for years that Apple's behavior
puts them at a disadvantage competing with products like Apple Music.
So that's all a part of this equation and is
(24:07):
all going to be tried now in a court of
law and we'll we'll see how it comes out.
Speaker 4 (24:12):
I want to just return to you, Ana Rag for
a moment and just think about ultimately where Apple has
to stay from now in terms of its oval prioritizations.
As you said, there's a worry about general to AI
and being behind the curve there, will that stymey any
relationship that it's trying to be brokering with Google. Will
we still see sort of the ongoing build up of
(24:35):
Apple and its presence in general to AI and still
trying to refocus the business when it is having to
be distracted in this way.
Speaker 2 (24:42):
Yeah, I think that's going to be the biggest thing
that we find out over the next few months. If
they are able to pull off this, you know, you
could say deal with Google. It's going to be symbiotic
and beneficial for both the companies and that has the
potential to improve iPhone sales in the second half of
this year. You know, botting that there isn't much going
on Apple at this point, both in terms of current
(25:02):
status as well as you know the outlook for second half.
Speaker 4 (25:06):
Anna Agrana, fantastic analysis. Thank you for being there at
the moment. Rerumkexana Egerton as well with a breakdown of
this anti trust move and the years that it's taken
to get here.
Speaker 3 (25:23):
Apple actively encourages banks, merchants, and other parties to participate
in Apple Wallet, but it simultaneously exerts its monopoly power
to block these same partners from developing alternative payment products
and services for iPhone users.
Speaker 4 (25:41):
Eric Garland, Attorney General, that is, as the DOJ in
sixteen attorneys general weigh in bringing enforcement to Apple at
the moment, announcing an antitrust lawsuit against Apple, and of
course ed this is as we see the share price
really being not by this off by more than three percent.
It is the second most valuable company out there, So
that knocks some twenty ninety two billion off of its
(26:01):
market capitalization overall on the day training at the lowest
that we've seen since the start of the year. And
all of this ultimately should have been expected.
Speaker 6 (26:09):
It's a five year investigation, That's.
Speaker 7 (26:11):
The observation I've made.
Speaker 5 (26:12):
Though, So at the session low, the stock was down
three point eight percent, putting Apple on track for its
biggest decline since August last year. Bloomberg reported all these
details last night, and yet when the press conference came
and the official confirmation came, the stock continued to slide.
And if you go on your Bloomberg terminal look at
the street wrap.
Speaker 7 (26:29):
There is an acknowledgment of.
Speaker 5 (26:31):
A regulatory overhang, which every time you and I talk
about anti trust over the last few years, it never
shows up in the stock.
Speaker 4 (26:37):
Yeah, and then you have to add in on that
the other bloomberg scoop that came within this time of
the fact that the EU is now weighing a full
blown investigation on its part as well into Apple and
Google when it comes to the digital markets app. So
this is an antitrust global fixation on Apple right now.
Speaker 7 (26:54):
Yeah.
Speaker 5 (26:54):
The one point on that EU reporting is that I
think the EU is looking at a lot of people
alphabet and all, so we're reporting meta and that eventually
that could lead to fine. So that is a story
out of Europe that will continue to watch. There is
another big story happening we may have forgotten. Let's turn
to Reddit listing day. Here's some video of them ringing
the bell at the NYC earlier. Have a great listener,
(27:26):
I would say that, I say them, I don't think
that's Steve Huffman in a mascot.
Speaker 7 (27:30):
Suit, but I'm sure he was there.
Speaker 5 (27:33):
That was Reddit ringing the ny Stock Exchange bell earlier
this morning. Let's get some of the key numbers with
Bloombo's Katie Ruth, and we have an indication of where
Reddit might open.
Speaker 10 (27:42):
Yeah, so we don't know exactly where it's going to
open just yet, but last night it priced at thirty
four dollars a share at the top of the range,
which was, you know, a positive indication based on the
road show and showing where you know, the street thinks
it's going to open at you know, right now. What
they're doing is they're sorting out the book. They're figuring
(28:04):
out precisely, you know, for the very very first trade
to the public where it should trade at, because the
IPO is actually just for insiders, and so a lot
of ours are watching Reddit. There's been a dearth of
tech IPOs in recent years. I mean, twenty twenty one
is a very active year with over one hundred, and
then in twenty twenty two there were nine, and then
(28:26):
last year we only saw instacart, klaviow an arm, you
know for the big ones. And this week with Reddit
in Astera, people are hoping might finally open that tech
ipo window.
Speaker 5 (28:40):
Just looking at this headline crossing the Bloomberg terminal that
Reddit shares indicated to open between forty two and forty
six dollars a share, clearly a premium on that thirty
four dollar IPO pricing.
Speaker 7 (28:52):
There is interest in this one, right.
Speaker 5 (28:53):
It's been a long road because we thought they might
go twenty twenty one, as you said, was an excellent
year for US IPOs, and they didn't.
Speaker 10 (29:00):
Yeah, they announced in twenty twenty one they had filed
for IPO in twenty twenty two. I broke that they
had hired bankers, and they did. It just took a
little while for them to actually do it. But you know,
I think it's it's a matter of are people interested
at what price? You know, they priced at something that
valued them above six billion, but they were last valued
at ten billion in twenty twenty one, and so yes,
(29:21):
there is interest in Reddit at this price, it looks like,
especially if it's popping, But it's a matter of, you know,
will it will it be able to sustain that price?
Will it be able to achieve the price it had
in twenty twenty one at market highs at.
Speaker 4 (29:35):
My named seeing a blue bug intelligence saying, yes, a
ten billion valuation is really where Reddit should be, Katie.
But I'm interested in the allocation and where it went
when it was priced. To course, money flowing into institutional hands,
but also into the retail investor and into the redditors themselves.
How much volatility might this add well, I.
Speaker 10 (29:52):
Think it depends on whether these longtime Reddit users that
got access at the IPO price are are willing to
stay Reddit stockholders. Part of the idea behind some of
these consumer facing companies giving access to their top users
at the IPO price. Is the idea that these would
(30:13):
be long term stockholders. The IPO is only given to insiders,
so people that are close to the banks normally and
they get there's expected to be a pop on day one,
and so it's seen as a gift that they get
access to those games on day one. And so this
(30:33):
is meant to be a good thing for Reddit shareholders,
Reddit users, and also for Reddit.
Speaker 4 (30:39):
Yeah, Katie Roof has been across this IPO, We thank
you so much for bringing it to us and ed,
I mean there's a question of course future drive growth
drivers not just being advertising but AI too.
Speaker 5 (30:50):
Yeah, that's the idea sell the very unique user data
to the companies building large language models. And BI has
this very wide range saying thirty to eight of Reddit
users only use Reddit, they don't use other social media platforms.
Speaker 4 (31:05):
And really it's that focus on the desire to be
engaging there and what it means for some of these
large language models as well for a future direction of
travel when it comes to a diversification of revenue. Now,
we want to welcome to our Bloomberg TV and radio
audience worldwide. Reddits listing day, it's arrived.
Speaker 6 (31:22):
Let's bring in.
Speaker 4 (31:23):
Reddit's chief operating officer, Jen Wong for more on the
big day, live from the New York Sock Exchange. Jen,
it's a day to remember, and I'm interested as to
really for you how much you are excited about redditors
having part of the process here or worried a bit
about the volatility to come.
Speaker 6 (31:43):
Thanks for having me today.
Speaker 11 (31:45):
It's been our dream, our dream to have our users
and our communities to be able to be shareholders in Reddit.
Speaker 6 (31:51):
Everything on Reddit is built.
Speaker 11 (31:53):
By our users and communities, so having them be owners
makes a lot of sense.
Speaker 6 (31:57):
We're so excited about that.
Speaker 5 (32:00):
Jane, good morning, it's ed in San Francisco. What's the
main benefit of the IPO. You know, we always talk
about the money raise, the doll evaluation, but I always
reflect an IPO gets your name out there. Not everyone
is on Reddit, not everyone is a redditor. How do
you weigh up the pros and cons of listing?
Speaker 11 (32:19):
Well, it's certainly a lot of press on a day
like today. It is a special day, but becoming a
public company has just made us a better company. We've
actually been in this process longer than most almost two
years actually, and that process has made us more disciplined,
more operationally rigorous, and actually allowed us to get to
(32:41):
know investors better and tell our story. And so this
whole process has made us a better company, and we're
prepared to be a public company. I think it's actually
been really good for us, and I think companies that
you can go public it's sort of a duty. It's
part of the process of maturing as a company.
Speaker 6 (33:03):
And then the benefit of having.
Speaker 11 (33:05):
Our sharehold our employee employees have liquidity which we promise
in them, and in addition, have our communities and users
be able to be shareholders makes a lot of sense
for Reddit.
Speaker 7 (33:17):
Jen.
Speaker 5 (33:18):
The evolution of the story is for you moving away
from a solely advertising based business model to one way
you license your user data to the companies that are
building large language models. I just asked if you could
explain to our audience how that works in practice, how
you're going to grow that business.
Speaker 11 (33:37):
Yeah, well, just ahead of addressing that, I just wanted
to provide context. One of the things that's so special
about Reddit is that we play in three big addressable markets.
Speaker 6 (33:48):
We have this core advertising business. Adds is a great business.
Speaker 11 (33:51):
It's still early we have great traction and momentum. That's
our core business. We have an emerging data licensing business
that we built the foundations for last year because reddits
corpus of information is incredibly important to the training of
large language models and also for insights for different kinds
of businesses.
Speaker 6 (34:09):
And the third is a.
Speaker 11 (34:10):
User economy where our communities go beyond conversation into being able.
Speaker 6 (34:15):
To transact with each other.
Speaker 11 (34:16):
Now you asked about the data licensing business, which we've
built the foundations for last year. That has two pieces
to it. It is a piece that's sort of well established,
where there's social listening for marketing for companies who want
to understand what's happening on reddits and for marketing campaigns.
There's also financial services companies who are interested in that.
Those are well established markets. And then there's the new
(34:39):
emerging market of AI where large language models need data
to train on. And when you look at Reddit's corpus
nineteen years of human experience organized by topic with well
moderation and relevance, that's incredibly important to building both a
chat capability and the freshness of information. So that's an
(35:02):
area where you know we see opportunity. I think what
that signals, you know, whether it shows up honestly in
our revenue or what it shows up in the value
of Reddit is how valuable.
Speaker 6 (35:10):
Reddit is, you know, the more that we move.
Speaker 11 (35:13):
Toward this AI world, that corpus and that knowledge and
refreshment of human experience becomes more valuable.
Speaker 4 (35:19):
To our TV and radio audience. We are speaking with
Reddit Chief operating Officer Gen Wong and to that ongoing
value of your data to AI and to the large
language models being developed. I mean those llms, the models
are being.
Speaker 6 (35:33):
Built in new and different ways.
Speaker 4 (35:35):
This actual technology also develops. I'm interested as to really
whether this goes on in perpetuity. Do you see this
sort of licensing being steady and secure for ten years
from now?
Speaker 11 (35:49):
What I'd say is this is so early in this
emergence of this technology, it's hard to see far out.
The way I think about it, the way we think
about it, is this the read its corpus of data
is incredibly valuable, and it gets more valuable because as
there's more more content that's generated maybe by AI or computers,
(36:11):
original human thoughts and ideas increase in value. Right if
you think about it, a new car comes out who's
going to review it.
Speaker 6 (36:19):
A real life family of six.
Speaker 11 (36:21):
Can actually tell you what it's like to drive that car.
That's always going to be valuable, and so you know,
whether that shows up in data licensing or in the
products that Reddit builds, it is valuable.
Speaker 4 (36:32):
Let's talk about a community that has been very valuable
at times and extraordinary at others.
Speaker 6 (36:38):
To wool Street more broadly.
Speaker 4 (36:40):
Has been the reditors who are very active on wool Street.
We go back to woll Street bets. We just think
about what happened to GameStop for example. There is a
double edged sword here for you involving your.
Speaker 6 (36:50):
Editors as investors.
Speaker 4 (36:52):
How secure are you that you won't become a meme
frenzy yourself to the up and to the dam.
Speaker 11 (36:59):
Look, I love the ethos of that community in all
of our investing communities, and who knows, I mean, it's
it's Reddit, right, I mean, who knows what's going to happen,
So we'll see.
Speaker 6 (37:09):
I mean it's hard to say, but in the end, I.
Speaker 11 (37:12):
Think having our users and communities be shareholders is a
good thing and I think ultimately will be judged on
our performance, and that'll take time for people to know
but ultimately I think that's what investors Judge Judge.
Speaker 9 (37:23):
Us on.
Speaker 5 (37:25):
Jen we're awaiting the opening trade Bloomberg reporting. The indication
is the stock will open somewhere between forty two or
forty six dollars a share. It's quite a premium on
the IPO price. You're one of the biggest shareholders as well.
Just give me your personal feeling in this moment.
Speaker 6 (37:45):
You know, it's kind of like a wedding day.
Speaker 11 (37:47):
I guess lots of different emotions, joy, relief, jitters, all
of it in one I haven't even processed it, frankly,
but it is a special moment. It is one milestone
in a history of a nineteen year company that I
think has a lot of runway. You know, we're nineteen
(38:10):
years old, but we're really young as a company, and
this is sort of the start of the next chapter.
Speaker 7 (38:17):
Read it.
Speaker 5 (38:18):
Chief operating Officer Gem Wong, live from the NYC. We're
grateful for your time on listing Day.
Speaker 6 (38:23):
Thank you.
Speaker 7 (38:33):
Okay, time for VC Spotlight and.
Speaker 5 (38:35):
Sequoia has just wrapped up its AI Ascent event right
here in San Francisco, which brought together some of the
best and biggest minds in artificial intelligence. Let's bring it
SCOA Capital partner Constantine Butler to explain who was there?
There were big names in the building. Why did you
do that?
Speaker 12 (38:52):
Well, first, ad Caroline, thank you so much for having
me again.
Speaker 7 (38:56):
You're right.
Speaker 12 (38:57):
Yesterday we had one hundred of the leading minds in AI.
We brought them together because we want to discuss the
state of.
Speaker 5 (39:04):
The AI industry, just portfolio companies or the community, the
whole community, right, not just portfolio companies.
Speaker 12 (39:09):
We're talking the leading minds in AI. We wanted to
talk about the state of the industry today, but also
where we're going, what's next, and.
Speaker 7 (39:17):
What was the conclusion.
Speaker 12 (39:18):
Well, one thing I think will surprise your audience is
that everybody knew that we had to be patient in
this process. It feels like we started the AI process
as a sprint, but everyone knows this is a marathon.
So what's ahead of us is the long haul, and
every everyone's getting ready for that long haul.
Speaker 4 (39:34):
Custinton, I'm sure a topic of conversation must have been inflection,
basically going in house to Microsoft and yes, licensing some
of its technology. At the same time you're speaking with
the likes of the co CEO of Anthropic, which has
a deal with Amazon. You're also talking with Mistrale, which
is of course got a deal with Microsoft. How is
(39:55):
that whole ecosystem ultimately building itself? There seems to be
it'll be some very interesting partnerships that end up looking
like MNA. How do you feel as someone who's putting
money into these businesses.
Speaker 7 (40:07):
Caroline, You're exactly right. There was a lot of talk
about that.
Speaker 12 (40:10):
And one of the major trends that I think will
surprise your audience is that the leaders we're talking about
how ais are gonna actually work together. So we're talking
about this concept of networks of ais, not just so
you're gonna have one AI, but you're gonna have multiple
ais that are good at different tasks, and they're gonna
work together, cooperate and compete. I'll give you a very
(40:32):
tangible example. I use a product called dust. It also
happens to be a wonderful Sequoia portfolio company. It allows
me to call both GPT four and mistraw large, and
also Claude three from Anthropic in parallel. I can have
the models compete against each other, I can have them collaborate,
and this yields an even better outcome.
Speaker 7 (40:53):
That's the future of AI.
Speaker 12 (40:54):
It's gonna be many models working together in a network.
Speaker 4 (40:57):
Another portfolio company being hugging face, which are cool. So
allays bring together the entire ecosystem in that manner. And
there must be an awful lot of debate ultimately about
well open versus closed. You've got open AI, and many
would argue that open AI ain't that open anymore, and
some would say for good reason, how are you seeing
the overall AI community divide itself on how open large
(41:20):
language models should be.
Speaker 7 (41:22):
I'll tell you what we heard yesterday.
Speaker 12 (41:24):
We heard a lot of enthusiasm about open source. And frankly,
it wasn't just from the builders. So a lot of
the builders, of course want open source so that they
can run these models in their own clouds, but it
was also.
Speaker 7 (41:36):
From the application layer.
Speaker 12 (41:38):
We had CJ the COO and president of service Now,
and he talked about how service now is using AI
internally to deflect twenty percent of tickets that's for it
stuff like ordering a laptop, that's for HR, stuff like
leave and he made it very clear, we need the
open source because that's going to help us drive costs down.
That's going to help us preserve margin. So customers want this.
(42:00):
We've heard it from customers. We've also heard it from
the founders and the builders.
Speaker 5 (42:04):
Just a headline on the Bloomberg to make our audience
where reddit share is now indicated to open at forty
four to forty eight dollars to share a premium on
the thirty four dollars that they price the IPO at.
We were just talking to gen want at redit the
idea that they are in an available data set for
training large language models.
Speaker 7 (42:21):
The difference in the.
Speaker 5 (42:22):
Data is the focus of reddits. They only use Reddit, right,
was that something you've discussed about the availability of data
and Reddit?
Speaker 7 (42:30):
I mean, what are people saying about that? Absolutely? First
of all, we're so happy for Reddit.
Speaker 12 (42:34):
This is an amazing milestone and Junge just seve it
and IPO is an important milestone in the journey.
Speaker 6 (42:40):
And this is an.
Speaker 12 (42:41):
Example of how the fact that they created an online community,
a true community where they were actually working together, is
going to pay off, not just for advertising that's the
obvious business, but for data.
Speaker 7 (42:51):
We know they have a.
Speaker 12 (42:51):
Big partnership with Google and we're going to see a
lot more businesses like this that have accumulated that data
advantage being partners for.
Speaker 7 (42:59):
Great AI products that need to train on that data.
Speaker 5 (43:02):
It's core capital partner Constemula. Great to have you back
in the studio, San Francisco. What a day it's been carried.
This for now is been big technology. Thanks ed, Thanks Jian.
Speaker 3 (43:25):
We oglage that Apple has employed a strategy that relies
on exclusionary anti competitive conduct that hurts both consumers and developers.
For consumers, that has meant fewer choices, higher prices and fees,
lower quality smartphones, apps and accessories, and less innovation from
Apple and its competitors.
Speaker 4 (43:48):
Attorney General Garland there of the Department of Justice, speaking
earlier today, Apple facing global anti trust allegations, of course
not known from the US, but also the EU. We
understand they're going to do a full probe Google and Apple.
You commissioned a EVP, Margravestdaya told us this earlier in
the month.
Speaker 13 (44:06):
We see an illegal abuse that has been ongoing for
a number of years, which has made it, you know,
virtually impossible for customers to choose if they want the
payment service in app by Apple paying the fee, or
they would want to go, for instance, to a website
and have a cheaper subscription price.
Speaker 4 (44:28):
Bags margam and for more What's apples take.
Speaker 14 (44:33):
Yeah, Apple certainly disagrees across the board on this lawsuit,
implying that the lawsuit is not legal, saying the iPhone
is not a monopoly, and pushing back heavily on the
bevy of claims The Department of Justice is going after
Apple from everything from green Bubbles to car play to
(44:53):
how iCloud storage integrated, blaming Apple for hurting consumers, hurting choice,
hurting developers. Certainly, Apple has squashed developers and made it
difficult for developers to.
Speaker 7 (45:07):
Compete in some instances.
Speaker 14 (45:10):
On the other hand, a lot of this comes down
to user interface and philosophical decisions Apple made many years
ago about its integrated experience. So we'll have to see
where Apple is willing to meet the DOJ how they
can work together to create some solutions here to keep
the iPhone still a secure, integrated platform, but certainly it
(45:30):
needs to get a bit more open and a bit
more competitive for third party developers and accessory makers.
Speaker 4 (45:36):
The man who can explain the Apple philosophy, Mark German.
We thank you so much for jumping in on the.
Speaker 6 (45:41):
News and boy that does it for
Speaker 4 (45:44):
This extremely busy edition of Blue meg Technology
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