Bloomberg Tech — AWS Races to Address Widespread Outage

Host: Caroline Hyde in New York, Ed Ludlow in San Francisco
Date: October 20, 2025

Overview

This episode of Bloomberg Tech focuses on a major AWS (Amazon Web Services) outage that disrupted a wide range of critical online services, explores market reactions, and examines the vulnerability of global digital infrastructure. The show also moves through other pressing tech stories: trade negotiations between the US and China (with a focus on rare earths and the chip supply chain), major litigation targeting social media giants, Apple’s record-breaking rally, and renewed momentum in the crypto and AI sectors.

Key Discussion Points & Insights

1. AWS Outage: Causes and Impact

Segment: [01:44]–[06:37]

• What happened:
  A significant outage at AWS’s US East (Northern Virginia) data center hub caused widespread disruptions affecting firms such as Zoom, Snapchat, Coinbase, Robinhood, Lloyds, HMRC, and AI platform Perplexity.
• Repercussions:
  • The outage underscored overdependence on a few hyperscale cloud vendors and brought flashbacks of the 2024 CrowdStrike failure, which “paralyzed nearly half the world’s computers.” (Yajo Son, [03:20])
  • Public and private sectors, as well as everyday technology platforms, were affected globally.
• Amazon’s response:
  • The company claimed the issue was largely fixed but noted “residual effects.”
  • AWS had yet to fully explain the root cause at air time, but DNS systems (web address translation) and DynamoDB (database service) were speculated as possible culprits.
• Broader lesson:
  • The incident "speaks to the fragility of overdependence on the very few hyperscaler cloud operators" (Yajo Son, [04:37]).
  • Amazon is projected to invest $100 billion to build data centers and train AI models, with cloud revenues expected to hit $126 billion ([04:37]).
• Market reaction:
  Despite the outage, Amazon’s stock rose with the rest of the tech sector, reflecting resilience or perhaps underlying unease about concentration risk.

Notable Quote:

“A very small part of the digital infrastructure can create such a ripple effect throughout the global economy.”
—Yajo Son ([05:56])

2. Market Concentration & Infrastructure Sovereignty

Segment: [06:37]–[10:01]

• Anna Rathbun (Grenadellar Advisory):
  • Warned about the dangers of both market and infrastructure concentration, likening cloud infrastructure to utilities that are now indispensable.
  • Highlighted investor excitement as AI's influence expands into different sectors, making it "stickier" in the economy.
  • Discussed Europe’s dependence on US cloud and chip providers amid growing debates on achieving “sovereign AI and cloud.”

Notable Quote:

“You really can’t live without it. And so from that standpoint … we need to start thinking about sort of diversifying our exposure.”
—Anna Rathbun ([07:08])

3. Apple’s Record High & Market Optimism

Segment: [09:46]–[11:48]

• Apple’s surge:
  • Hit its first record high of 2025, driven by iPhone upgrade cycles and US sales.
• Investor behavior:
  • Many buyers are “pulling forward” purchases due to anticipated price hikes.
• Trade & earnings:
  • Ongoing US-China trade talks figure into market sentiment, especially around rare earths essential for tech manufacturing.
  • Rathbun balanced earnings vs. trade negotiations as risks, but saw the former as more fundamental.

Notable Quote:

“We need each other. So I think the markets are saying, okay, the deal is probably going to get done. It's just a matter of time.”
—Anna Rathbun ([11:00])

4. Social Media Litigation: A ‘Massive Legal Siege’

Segment: [14:07]–[18:16]

• Backdrop:
  • Meta, Snap, ByteDance, Alphabet face consolidated US lawsuits alleging platforms intentionally addict users, causing mental health crises among youth.
  • Sparked by the 2022 Facebook whistleblower revelations; cases consolidated for trial in 2026.
• Legal shield challenge:
  • Social platforms have long relied on the Communications Decency Act’s Section 230 for liability protection, but plaintiffs are “sidestepping” it by targeting design—alleging harm comes from addictive platform mechanics, not just user content (Olivia Carville, [16:02]).
• Industry response:
  • Defendants have updated child safety policies (e.g., Instagram), but litigation is proceeding.
  • For the first time, juries will hear direct testimony from youth, experts, and insiders.

Notable Quote:

“As of next year, we're going to see the alleged victims of social media into the courtroom for the first time in the US. … A jury will have to face that question for the first time next year.”
—Olivia Carville ([17:17])

5. US–China Trade Talks: Rare Earths, Chips, and Tensions

Segment: [19:20]–[23:07]

• President Trump’s priorities:
  • Stated goals for ongoing Malaysia negotiations: resume soybean purchases, halt fentanyl, and secure rare earths for US industry ([19:20]).
  • China accused of US cyberattacks on critical infrastructure.
• Tech supply chain:
  • Rare earths vital for electronics, autos, defense—Chinese export controls a key US concern.
• Case study:
  • Netherlands-based Nextperia faces US scrutiny over potential Chinese tech-transfer and management control.
• Market context:
  • Stakes include possible relaxation of US chip-related export controls in exchange for trade concessions ([21:50]).

6. Tesla Shareholder Revolt over Musk’s Pay

Segment: [23:07]–[25:32]

• Proxy adviser Glass Lewis recommends Tesla shareholders reject Elon Musk’s compensation package, echoing prior opposition and referencing concerns over dilution and corporate governance.
• Tesla defends the package, citing Musk’s results and alignment with stakeholders.

Notable Quote:

“There is a question … to what degree is it necessary or appropriate to hand over more control of this company and issue so many shares that would dilute the current shareholder base of Tesla?”
—Craig Trudeau ([23:39])

7. Crypto: Miners Pivot, ETF Expansion, and US Policy

Segment: [27:30]–[34:16]

• Miners & AI:
  • With steady energy contracts and infrastructure, miners are entering AI data center space, seeking higher returns.
• Market maturity:
  • Despite high-stakes liquidations ($19B in one day), Bitcoin now reacts with more stability than in past years.
• ETF and regulation:
  • Flood of new ETF applications (especially leveraged products and altcoins) reviewed by SEC; concerns about complexity and risk transparency.
• US legislative stance:
  • Industry leaders now feel greater support and hiring traction in the US—credit given to the administration championing regulatory clarity and dollar-backed stablecoins.

Notable Quote:

“We have been able to hire in the United States … a year ago, that was just not possible. … We’re really, really excited about the communication and support.”
—Nora Melinda ([33:05])

8. IBM-Grok Partnership for Enterprise AI Inference

Segment: [34:16]–[42:29]

• What’s new:
  • IBM and Grok announce a partnership to deliver ultra-high-speed, low-latency inference capabilities for enterprise AI via IBM’s sales force.
• Technical edge:
  • Grok’s LPU tech described as “broadband in the dial-up era” ([35:06]), offering 5x performance at 20% the cost for AI operations (Rob Thomas, [36:09]).
• Integration:
  • Grok LPUs will plug directly into IBM’s WatsonX, with seamless user experience expected.
• Go-to-market:
  • Leveraging IBM’s deep enterprise relationships with Grok’s developer community for scale.
• Demand & supply constraints:
  • Supply for such AI compute is extremely tight globally. Grok claims its supply chain ramps faster, but “the sooner you get access … the sooner you’re going to have it” (Jonathan Ross, [39:39]).
• Open partnership:
  • IBM remains open to partnerships beyond Grok, emphasizing ecosystem growth with various model providers (including Anthropic, Mistral, Llama).

Notable Quote:

“Our LPU’s are just significantly faster … Just imagine if you were to offer broadband and you charged more per bit of data … Broadband increases the demand.”
—Jonathan Ross ([35:06])

“This partnership is all about … 5x performance at 20% of the cost. We’ve seen it with Watson X running on Grok.”
—Rob Thomas, IBM ([36:09])

9. Amazon’s Contract Delivery Firm Tensions

Segment: [45:41]–[47:40]

• Issues:
  • Amazon’s 4,500+ “Delivery Service Partners” facing rising costs and “lopsided agreements.”
  • Some small business partners quitting after years, finding little to show for it.
  • Logistics risk—accidents, insurance costs, and tight, AI-monitored targets—eroding profits even as Amazon increases per-package rate.
  • “They've got 4,500 of them globally. … Have to take what Amazon offers and … some are taking the ultimate step of quitting.” (Spencer Soper, [46:23])

Notable Quotes & Memorable Moments

• On the AWS Outage:

  “A very small part of the digital infrastructure can create such a ripple effect throughout the global economy.”
  —Yajo Son ([05:56])

• On Overreliance:

  “We need to start thinking about diversifying our exposure … digital infrastructure almost as utilities.”
  —Anna Rathbun ([07:08])

• On Social Media Litigation:

  “A massive legal siege on the social media industry.”
  —Olivia Carville ([14:41])

• On Crypto Industry Maturation:

  “Relative to … 2020 or 2018, we probably would have seen that move over 40%. … The maturation of the space is definitely here.”
  —Nora Melinda ([29:10])

• On IBM–Grok Partnership:

  “You put those two together and that's an amazing go to market motion.”
  —Jonathan Ross ([41:46])

Timestamps for Key Segments

• AWS Outage Impact & Analysis: [01:44]–[06:37]
• Market Concentration & Sovereignty: [06:37]–[10:01]
• Apple Rally & Earnings Outlook: [09:46]–[11:48]
• Social Media Lawsuits Overview: [14:07]–[18:16]
• US-China Trade Tensions: [19:20]–[23:07]
• Tesla Pay Controversy: [23:07]–[25:32]
• Crypto: Mining, ETFs, Regulation: [27:30]–[34:16]
• IBM x Grok AI Partnership: [34:16]–[42:29]
• Amazon Delivery Partner Challenges: [45:41]–[47:40]

Summary

This episode painted a vivid picture of how tech sector shocks ripple through global industry and markets. The AWS outage exposed our digital dependency and raised tough questions about infrastructure resilience. Meanwhile, legal, business, and geopolitical forces—from social media litigation to AI and chip supply wars—highlighted the increasingly complex web tying together technology, finance, regulation, and everyday life.

For listeners wanting a pulse on tech’s big moving parts—from cloud vulnerabilities to litigation, trade, and innovation—this episode delivered a dynamic, real-time tour.