A (4:08)

Boy, a lot has changed since then. And that was a long time ago. Cut. But we still will get. Well, the idea that we'll have augmented reality, we're still focusing in on the glasses. It's just not the actual virtual worlds and working out. That's right. And the virtual worlds aren't going away, to be clear. It's still going to be something that they invest in, just not quite as aggressively as they had. And what was explained to me by sources this week is that part of that is that the market has not really materialized. You know, I think they originally spent a lot of money building out this Metaverse group, thinking that they would have competition from others in the industry rushing towards a Metaverse like product as well. That has not happened. And so it's not necessarily that Mark Zuckerberg no longer believes in this. I'm told that he still does. But clearly they have overspent to try to build this thing. And I think the ultimate goal is to get to these. You know, I inspired glasses and AR glasses and maybe the Metaverse was A stepping stone to that all, all the way. So actually it signals a commitment to AI hardware distinct from Metaverse hardware. I thought it was really interesting that shares of SLR Luxottica who they partner with to make the Ray Ban metas kind of rose a little bit after the story. And all of the analysts notes, and there are many actually reacting to our reporting say this is probably bullish for AI spending. At the same time, Bloomberg reporting that Apple's most senior design executive going to matter. Right. They are not giving up on hardware. Right. The VR virtual reality group is expected to be hit by these Metaverse cuts. Right. That is the, the immersive Metaverse product. But they are still investing in AI glasses. The Ray Bans that you mentioned, Ed, they are still obviously bringing in big talent and you know, poaching people to design these things. This is what Mark Zuckerberg talks about on earnings calls. He talks about the glasses. Those things are not going away. It is the specific kind of immersive virtual stuff that it looks like they're taking a second look at a reallocation of resources. Kurt Wagner, a huge market moving story. Thank you for joining us on it. Let's talk more about the market moves. Nancy Curtin's with us. She's global Chief Investment officer at ltdman Global. Nancy, you've actually been writing really saying that we are currently in an innovation driven bull market. But what does this move from matter and sort of the moving around of capital expenditure tell you about where we are in the cycle? I mean, I think the thing is about innovation driven bull markets and we've had, you know, pretty much three of them before this one, which is they tend to be characterized by a couple of different risks. You know, capex expenditure is quite large. Companies need to tap the debt markets and they're shifting perceptions of the winners and losers. So volume, you know, these, these bull markets last longer. They go beyond people expect. They tend to come with productivity improvements. But you do get some shifting perceptions and shifting priorities. So let's just bring that back to matter. You know, they've got a lot of money that they want to spend on gen AI. The market hasn't liked the fact they've tapped into the debt market to do that. You know, they've got less in a way cash flow than some of the other companies making similar levels of capex spend. So I think this is a good and you know, sane reallocation of resources towards AI, which is the prize. Nancy, I want to go saying, you just said I think it's critically important cash flow. If you look at the reaction to this Bloomberg report on matters, many would note that matter was headed for negative free cash flow next year. That's right. This year the story was about Oracle hitting negative free cash flow for the first time since 1992. Is that a worrying set of data that you're seeing on your desk? Yeah, because I think the market's been more discerning now. It's recognizing that some companies have cash flow that can support this and some companies really need that. And Oracle is a good poster child for not only being late to cloud, spending quite a lot of money, being very tied into the open air in terms of contracts and the risks associated with that, but also using debt. And I think their debt to EBITDA is like four times. So it's in a completely different category. You know, it's kind of in the core weave department in terms of indebtedness and investors quite rightfully are becoming more discerning about the risk associated with, you know, financial leverage. And then there's the risk of the private markets. How are you seeing open air playing as a virtuous or a vicious circle right now? Is it a single point of failure or is it the one that you need to be allocated to? It's a little of both. Let's face it, OpenAI declared Code Red yesterday, the day before yesterday. Look, it's facing competition. It recognizes that Gemini is really. And if you use the Gemini 3 it's pretty, it's pretty impressive. It's not as friendly as chat cbt. You know, that's a personal relationship thing going on. But it really is quite interesting in terms of nano Banana, you know, the image editor as well as I would say complex reasoning is really quite good in Gemini 3. So OpenAI is facing competition. They got to focus. They've been spread across a lot of different dimensions. I think they're refocusing now on personalization, reliability speed and continuing to build out that open AI large language model to maintain their lead. Right. Nancy, we came into this morning when we met as a team thinking probably we focus on Salesforce and Snowflake earnings and then we got the matter report Right. Your thesis is that you have innovation cycles driven by heavy capex monetization follows actually if you take the different part of the stack with Salesforce and Snowflake tepid outlook in terms of profits and top line growth from all the investment. Is that, is that a fair point I've just made? Yeah, because I think that the problem is in innovation bull markets is capex starts and you've got to build out the capex and the revenue follows, you know, sometimes years later, sometimes within a couple of years. And so investors have to extrapolate, is the investment really going to deliver the revenue and profits and the rate of return? And not everyone's going to get there. And that's the risk of innovation driven bull markets. There are some winners, there are some losers, but along the way. But you know, I think the key is you've got to really focus on who is delivering the revenue today or at least the visibility of that and who has the wherewithal. And just an example, you know, I mean, Alphabet's got what, 150 billion of operating income. Open air is losing 9 billion a year. So, you know, the wherewithal, the financial might probably, I think investors are thinking may sit with Alphabet at the moment. We're going to go very deep later in the program on the earnings from Salesforce and from Snowflake. But that was a very interesting across the board look. Nancy Kerr and Global Chief Investment Officer, LTT Team and Global. Thank you very much. Coming up, Nvidia's Jensen Huang looks to win over Washington on chip export rules. But could it be too late for the chip maker in China? We've got more on that next. This is Bloomberg Tech.

A (11:19)

Resilience isn't just about bouncing back. It's about being ready. It's how you show up every single day. Because every name in your system is a person who trusts you and every password is a door you're responsible for locking. And when the threat comes, and it always comes, you hold back the chaos. Learn more@cohesity.com.

A (11:48)

Did you know Tide has been upgraded to provide an even better clean in cold water? Tide is specifically designed to fight any stain you throw at it. Even in cold butter. Yep. Chocolate ice cream. Sure thing. Barbecue sauce. Tide's got you covered. You don't need to use warm water. Additionally, Tide pods let you confidently fight tough stains with new coldzyme technology. Just remember, if it's gotta be clean, it's gotta be tied. Hello. Hello. I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them, Pick areas you can scale. Don't pick the shiny little toys on the side. Mm. For example, if anybody has more than 10% of what they had for customer service, 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

A (13:41)

Going toe to toe against anyone, the American technology industry has nothing to fear. We are mighty, we're fast, we're inventive, we'll take anybody on. In the case of China.

A (13:54)

We shouldn't concede the entire market to them. They're formidable. But conceding that entire market, we ought to go compete for it. Nvidia CEO Jensen Huang speaking on American Air leadership at the CSIS conference in Washington yesterday. Huang also met with President Trump to discuss export controls on his chips, noting some uncertainty over whether China would even accept the processes if restrictions were indeed eased. Here with the latest is Bloomberg senior Tech editor Mike Shepherd. And Mike, we're talking about H2 hundreds in particular here. And it feels as though maybe Jensen thinks the ship has already sailed. They're limited and wanting to focus on domestic. Really? Yeah. It's unclear exactly where things stand internally inside the administration on the H200 and whether Donald Trump will give the ultimate green light for those chips to be sold to China. You'll remember just a few weeks ago, before the holiday, we broke the news that administration officials have been deliberating the this idea of allowing the H200 to be sold to China to be exported to China. And this would be a significant relaxation of the export controls that have been in place on AI chips since 2022 and have really hampered Nvidia's ability to sell into China, which is the world's second largest AI and chip market right now. And it's something that he has made a priority. Even though Nvidia is not putting the China market on its forecasts or anything else yet, he's identified it as a $50 billion opportunity for the company. The baseline assumption is zero China revenue. Right. But Jensen Huang's keeping himself in proximity not just to the administration, but to Congress as well. Whether China wants those chips. We'll talk about that with Peter Elstrom in just a minute. The Gain AI act is also a part of this lobbying effort and it's an area where, where maybe in video is nearer to a win. Could you explain the basics of legislation or a piece of it that was omitted in Nvidia's favor? Of course, Ed. And this was actually a big portion of his visit to Washington. It was another whirlwind day in the nation's capital for Jensen, who has become a regular here in Washington, both on Capitol Hill, but even more so at the White House where he has forged that close bomb with President Donald Trump. What Nvidia has been trying to do is fend off this gain AI act, which would prevent or make it at least very hard for India to sell to China and other U.S. adversary nations without explicit permission from the U.S. government. The company has argued that, look, we don't need these restrictions in place. The Commerce Department already has the authority to do so, and there is no competition between customers in China and the customers here in the U.S. the bill also would have required the company to give first dibs to American buyers. It looks like lawmakers are going to exclude this provision from must pass defense legislation. That has to be done before the end of the year. However, we can't consider it completely dead. Our sense is that Congress may try again. There is bipartisan support for this idea. And we do get a sense that some lawmakers still have concerns about allowing China to have access to some of those advanced AI chips from Nvidia. Bloomberg's Mike shepherd in Washington, D.C. thank you. @ the same time, China's ramping up support for domestic chip production to occupy a vacuum that's been left by Nvidia's forced exit. According to sources, Beijing based Camerocon is set to triple production of AI chips in 2026, with plans to deliver half a million AI accelerators, the vast majority of which are advanced. Bloomberg's technology executive editor Peter Elstrom joins us. Camera. Khan is another example of a domestic player with an AI accelerator product. It is reliant on smic, China's domestic version of tsmc. And this is an interesting piece of reporting. Bring us the details. But also technologically speaking, the differences of where Camera Con and SMIC are versus Nvidia because the scale is completely different. Yeah, this is exactly what Jensen Huang is talking about. This is exactly what he's concerned about within China, that after the Biden administration first decided to cut off shipments of Nvidia chips into that country, the government and the companies there saw the market opportunity, they saw their own vulnerabilities, and they decided to invest very, very, very aggressively in their own production technologies for chips and also AI design. So Huawei is really the primary competitor that we have been talking about. They have quite a bit of momentum in building these AI chips. They've been used in a number of different places. Their cameracon is really the second player. It's sort of like the AMD for that market. They're quite. They're quite small at this point. They don't have the kind of half that Huawei does in particular, but they are making a lot of progress. So what our sources have told us is that their plans are to triple their production of chips into next year. They'll be a pretty significant second to Huawei and supplying those chips. So to the broader question about what US export controls do to this market, as Jensen Huang is talking about, it certainly has opened it up for domestic production. Chinese companies are being told by Beijing that they should buy domestic chips whenever possible. They've also turned down this idea that they're going to buy Nvidia's H20 chips. They don't think that those are good enough for the market. So, as Mike Shepard was talking about earlier, there may be a discussion about H2 hundreds, but there's no putting this genie back in the bottle. China has decided they are going to make their own chips domestically and they're making a lot of progress. They're making a lot of progress in designing them, but then they've got to get them spat out by smic. And it feels as though ultimately the production that what you're really garnering isn't very many.

A (19:44)

Yeah, that's a. That's a very good point. They are way, way behind the global standards. There is some desperation here that if you have to produce at lower standards, you will. But if you look at some of the details, it's very, very interesting. So SMIC is still producing these chips at 7 nanometers, so well behind the 3 nanometer that we see from TSMC at this point. Also, the yields, we've got some insights into the yields. Only about 20% of the chips they're making right now are actually usable. So that's only one out of five chips that they produce they're actually able to use. You compare that with the TSMC, which is up at 80 or 90% yields. Their economics are just totally different. But it's a sign of how badly Beijing wants to be able to catch up in this market that they're just going to eat those costs. They're going to eat four times the cost of what it would cost some other globally competitive manufacturers to make these chips because they feel like from a strategic standpoint they need to make this progress. From brilliant reporting, thank you very much indeed.

A (20:48)

Shares of UiPath having their best day in two years after the automation software provider reported earnings that showed accelerating growth in the third quarter, I'm pleased to say founder CEO Daniel Dines joins us for more. You like the og? You've been doing this for two decades. Aids automating processes. You're thinking about repetitive administrative administration and the tasks you can take away from a human, how you're building an agent into that.

A (21:14)

Agents are very complementary to our automation engine. We specialize over the year in bringing rule based automations and agents is bringing something that is much more closer to human intelligence. We believe that the key aspect of bringing reliable AI to enterprises is to have a solid foundation of automation and then AI comes on the top of it and we connect basically using our orchestration technology, we connect AI agents with robots and humans.

A (21:56)

Daniel I've been digging into RPA and trying to think about like what is new about RPA in a world. I think that was kind of the root of Caroline's question. One of the ideas is that there's a potential addressable market for you where desks with less technical staff can use your software because it's better at reasoning across documentation and those kinds of workloads. Just explain how you kind of grab grow the business beyond your traditional customer base.

A (22:28)

Well, first of all, within our traditional customer base there is a lot of room for expansion and we are seeing tremendous opportunities in health care and financial services. So we really are expanding the reach of our RPA technology with this new agentic proposition. Even for the traditional RPA itself, we are bringing the power of gen AI to make the development faster and in some instances even more reliable when for instance the applications changes a lot. We are combining now computer use type of technology with traditional rpa. So this combination of agentic rpa, API and orchestration is really what is the crux of our platform and it resonates quite well with our, with our customers. And again talk about that resonating Daniel because we're hearing more and more that really the barriers are at the moment adoption or a willingness to pay. How are you seeing clients deal with that? I mean because many clients were initially investing mostly in like chatbots and they don't get really the high, you know, the outcomes, they don't have an impact on the bottom line. Eventually what we are bringing on the table is the capability of delivering autonomous Agent automation and this is even from rba. We specialize in bringing this autonomous agents and now we we show to our customers that they can get significant benefits and that can go directly into the bottom line. Daniel our colleagues at Bloomberg Intelligence, that's our in house analysts are a little bit cautious on your subscription revenues. If you look at where the street thought they'd be basically in line slightly B and they're worried about the sustainability of subscriptions. Are they right or they wrong? Well I think they are totally wrong. Guys, I have, I have yet to see one piece of AI that was capable of replacing one of our robot. I think this is the most misunderstanding piece of technology when you feel that I can replace RPA rba it's a great last my technology it's rule based driven, it's fast, is reliable, is precise. It works very well across regulated industries in health care and AI is just a complement to it. I would say that agentic right now actually it helps improving our subscription business.

A (25:21)

Daniel Dines, CEO of UiPath with the earnings breakdown.

A (25:31)

Welcome back to Bloomberg Tech. Our top story is Bloomberg's Kurt Wagner reporting that Matter is considering cutting budgets for its Metaverse initiative by up to 30% next year as part of its budget planning cycle. That's all according to our sources. The stock reacting positively to the report up 4% at the moment on track for its biggest jump since July. Nothing's being decided yet. There will be an element of layoffs according to our reporting, part of a quite a broader look at the company and refocusing from Metaverse to AI. But really interesting move in the stock car. Yes stock reaction. Now let's get you an analyst reaction because Bloomberg Intelligence has been out there writing that these meta cost cuts add along with potential use of Google's TPUs could actually improve the company's free cash flow at least 10 to 12 billion dollars. Person helping pen that is Bloomberg Intelligence tech analyst Mandeep Singh and Mandy, we've been worrying about free cash flow matter the capex spend. Is this helping offset that concern a bit? Yeah and look, I mean based on consensus right now we are talking about at least a 50% increase in capex or matter next year and no one I think would mind that given everyone fees there will be lift in revenue from AI down the line in the near term. And I think they needed some offset because the stock was very expensive on a free cash flow basis. So this is a nice offset and I think the TPU news was also quite productive in that direction simply because they will be spending close to $50 billion on accelerator chips next year if $110 billion the capex numbers. So some portion allocated to TPU's which cost maybe 25, 30% cheaper I think bring down that free cash like help offset that free cash flow which is going to be negative next year. Mandy, a part of why the stock is, is pushing higher I guess is just the, the commitment to AI, right? The Metaverse and Meta's AI ambitions have overlap but they are distinct in many ways. My question is, does is there a Bloomberg Intelligence House view on what the story is with matter? Metaverse or AI or a hybrid of the both? I mean I like to think of you know, Metaverse ambitions as a moonshot for Metta. And look at you know, Google's moonshot for example like self driving Vemo that is a lot real than in terms of driving, you know, tangible revenue top line growth compared to what Metta has accomplished with that aggregate, you know, 70 plus billion dollars in spend over the last three, four years. And to me it's still a moonshot. And that's where you know, paring back and allocating that capital towards probably a more productive use case in AI where they will see some top line lift is the right thing to do. And I think the year of efficiency that matter had a few years back maybe repeat I think in 2026. It's interesting though because they've been spending a lot on talent and they've just recommitted to talent when it comes to hardware and design and then really poaching a key executive. Alan Dai over at Apple. Is that what you want to see more leaning in maybe to the virtual reality offerings that we've seen that have been amplified by AI. The Ray Ban glasses for example. I mean I would say at this point virtual reality would be de emphasized over the glasses, the Ray Ban glasses as you said. And clearly, you know, if they want to distill their model into a smaller version, that would run most likely on the augmented reality glasses. And that is a much better form factor than the virtual reality where they have been subsidizing the hardware costs. But it really hasn't seen the kind of adoption that they could see with the ribbon glasses for example. I'm smiling, Carol Mandy, because like the stock being driven by Metaverse, you just said year of efficiency coming back in 2026. It's happening all over again. Mandeep Singh from Bloomberg Intelligence, thank you very much for the research. Let's turn to Snowflake and look at Shares of the company, one of the big underperformers, big decliners. The company issued operating margin forecasts that fell short of analysts estimates, raising concerns about the profitability of new AI based tools. Joining us now is Derek Wood, deep TD Cowan, Managing director, senior analyst covering the stock. Bring us your call on the stock and how you've reacted to this earnings print. I'm trying to understand like how real the anxiety is. It's a big move in the stock and Snowflake finding its, its bottom line in this world.

A (30:15)

Yeah. The stock had had a big run into the quarter. I think expectations were running high. We were a little cautious thinking that the upside on the top line would be a little softer than last quarter. We saw that, we saw a pullback. I think this is a great opportunity to get back in in terms of the margin outlook. Yes, Q4 was below but the full year was intact. Was it in line? We don't typically see the company raise full year margins intra year and so this was not a surprise. And the feedback was that they remain committed to driving margin expansion. They didn't give guidance for next year but we absolutely expect margins to continue to grow next year. So I don't think the Q4 guide should be of concern and remain constructive on the top line. The Q4 guide on revenue was, was, was above and fundamentals remain. We're still bullish on it. To your point, we're showing the year to date gain on the name which is above 50% at this point. That is important context. Look, I've just returned from Re Invent in Las Vegas where you know, Snowflake comes up as does Salesforce. Right. In the context of two companies that will benefit from a move into an era of agentic AI. But you know, if you look again at the stock, the market doesn't seem to believe that Snowflakes are beneficiary of that, at least right now. In the near term, again near term their expectations were a little too high. But year to date performance is great. They gave disclosures of hitting 100 million in air are from AI products this quarter. That was one quarter ahead of targets. And they did just release Snowflake Intelligence which is their new agentic capability that came out one month ago. We think that's going to unlock a whole new product cycle and really accelerate the adoption on AI. And you know, of course Salesforce has their own agenda with Agent Force and we think they both have great swim lanes to go after. It's interesting. Let's compare and contrast the context of both of these stocks because as you've rightly pointed out, we've seen Snowflake up and to the right this year. Not so for Salesforce, which has lost about a third third of its market value so far this year. Currently seeing off now about a quarter 26%. Did it come in with a lack of optimism and therefore managed to steer that? Maybe it'll get back to double digit revenue growth next year.

A (32:47)

Yeah, I mean the, the compare and contrast between these two, the apps group and software has been under a lot of pressure and it's because they're seat based revenue models. People are concerned about employee headcount, people are concerned about disruption from AI natives. Whereas on the flip side, Snowflake is a consumption based pricing model. They're in the data infrastructure. And so there has been this big divergence between infrastructure software and app software and Salesforce is falling in that apps bucket. But it was encouraging to see the numbers were, you know, were in line and the guide was in line. But there were encouraging metrics around Agent 4 Force and AI that show some good signs of acceleration. There were 3,500 net new paid Agent Force customers signed in Q3. That was up from 2,000 in Q2 and 1,000 in Q1. So we are seeing good acceleration on that front. And the percentage of customers that are coming back and refueling the tank to buy more credits and burn as they're burning more consumption, that also went up. So both of these metrics going in the right direction is highly encouraging on, you know, starting to see some inflection in Agent Force. I mean Derek, just broadly, are we getting any signs that software's lunch isn't being eaten by the large language model providers that they can withstand this?

A (34:10)

There's still a lot to prove, no doubt about that. And investor sentiment is super skeptical right now. I mean we've always thought that 2026 will be the year of inflection in the software space around AI. It takes a lot longer to go through sales cycles, new product development than some of the consumer stuff that we see taken off so quickly. And so we're hoping that 2026 is going to be the year where a lot of these new products kick into new gear. People get through proof of concept, move into production, start getting more comfortable with new pricing models. And we're hoping that that is going to turn the corner on the sentiment for investors in the, in the, in the, in the application software bucket. Derek Wood, TD Cowan, Great to get your analysis today. Thank you. Coming up, Anthropic CEO Dario Amade is suggesting some AI companies taking too much risk by committing to spend hundreds of billions of dollars to develop and support AI systems. Remember, he's just committed to spending quite a lot to himself. We'll discuss that next. This is Bloomberg Tech.

A (35:29)

Hello. Hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna and I asked him, how can companies use AI to its full, fullest potential to create smarter business? My one advice to them Pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their development developers who write software 30% more productive today with the goal of being 70% more productive. Yeah. Wow. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology, is getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

A (36:47)

Hey, Ryan Reynolds here wishing you a very happy half off holiday because right now Mint Mobile is offering you the gift of 50% off unlimited. To be clear, that's half the price, not half the service. Mint is still premium unlimited wireless for a great price. So that means a half day. Yeah. Give it a try@mintmobile.com Switch upfront payment of $45 for three month plan equivalent to $15 per month required new customer offer for first three months only. Speed slow 135 gigabytes of network busy taxes and fees extra see mint mobile.com Stay cozy, stay home and save big online during Lowe's December deal drops. Because honestly, why go anywhere when the deals come to you? Check this out. Lowe's is going to give you two free select tools from dewalt, Craftsman or Cobalt when you buy a select Batter combo kit. Yep, two tools free. It's basically a holiday miracle. Plus rewards members get free standard shipping all month long. Yet another reason not to leave your couch. Kick back, click around. Let the savings roll in. Shop new December deal drops on Lowe's.com every week this month. Fresh deals, cozy vibes, zero effort.

A (37:58)

The CEO of a startup Anthropic says some companies in his industry are making a risky move by committing so much money to building out the ecosystem. Dara Amadi was made in these comments. In an interview at the New York Times DealBook Summit yesterday, Bloomberg's editor Seth Feigman is here to break down why 50 billion that they've just said they're going to be spending on data centers and ecosystem is not a yolo, whereas maybe some others in the space are a really modest amount here. I mean look, it isn't order of magnitude different than the $1.4 trillion that OpenAI is committing. And while Dario did not say opening up by name, it was hard not to feel that that was the target of his criticism. I think the point that he was trying to make at a higher level was every AI company right now is taking on a certain amount of risk and embracing a certain amount of uncertainty. They are trying to anticipate what their data center infrastructure needs might be two, three, four years down the road based on what they're seeing today. Because it takes a long time to build this stuff. Dario is claiming we are making a measured, though still costly bet at $50, $60 billion. Other firms are just going off the rails and spending $1 trillion or more committing to do so. There's a real problem there. There's also a sort of methodology difference which Seth we've reported on. Right. The idea that Anthropic is probably less focused on building its own infrastructure, you know, leasing capacity, doing deals with partners, stuff like that. Did he explain that kind of technological point of difference or business plan point of difference? I think his emphasis was a bit more on they are not necessarily trying to be the mass market, consumer focused company in the way that OpenAI is, which also relates to opening eyes current anxiety about Google's ascendance. Those are two firms that are equally vying to have a billion or more users for their products. What Anthropic is obviously doing is going after the enterprise market, getting customers who are willing to spend potentially big dollars dollars to deploy this internally. And they see that as a higher profit margin business and one that may not require the extent of build out that we've seen other firms do. Probably helps with profitability more, more in line with the future and therefore an IPO more in line with the future. We have seen a lot of reporting about potentially Anthropic looking to tap the public markets. Yeah. And I think a lot of the anxiety this week for opening I was Google's ascendant, but I think Anthropic is coming at it from the other angle here where if they get to the markets first, if they prove that you can build a credible competitive AI development business without incurring the same amount of debt and bleeding as much money in the next decade. You know, investors might really gravitate towards that and rethink OpenAI's value here. So they're kind of being hit on both sides right now. But I think with Anthropic it's worth reminding the audience about who they are beholden to or not beholden to, as the case may be. When I was in Vegas, I asked CEO Matt Garman why he hadn't mentioned Anthropic in his big keynote, given that they're such a big investment for Amazon for example, and for it gets so much business through Bedrock and us. Could you just explain who their investors are and who they do rely on currently? Yeah, I mean I think the core backers for Anthropic are, you know, certainly Amazon and Google though recently and Video and Microsoft have committed to join the fray. So on the one hand it was a pretty distinct Investor base from OpenAI, but recently they're kind of overlapping more obviously. Microsoft's a key backer of OpenAI, Nvidia seems to be in both and Google and Amazon have struck some deals with opening infrastructure. So the caveat for everything Dario says is they're sharing investors, they're sharing partners. They're also spending a lot of money here, but they're trying to position themselves as a more measured and cautious compared to opening this Bloomberg. Seth Biggieman, thank you very much.

A (41:43)

Time now for talking tech. First up shares and Netflix under pressure today. According to CNBC report, the streaming giant is actually the frontrunner for Warner Brothers Discovery in the bidding with a cash offer that covers some 85% of the deal. We understand bidding is expected to wrap up early next week. Plus Morgan Stanley said to be considering offloading some of its datacenter exposure via a significant risk transfer. According to sources, the bank has held preliminary talks with its potential other investors about the transfer and is also exploring other ways to hedge part of its datacenter risk. And the EU, well, it's investigating the rollout of new AI related policies by matters messaging. Messaging service WhatsApp regulators are reportedly weighing interim measures including a temporary ban, alleging that WhatsApp's AI tools may soon unfairly block rival AI providers from offering their services through the platform.

A (42:34)

Okay, let's get back to our top story with Matter considering potential budget cuts as high as 30% for the Metaverse group next year 2026. Minda Smiley joins us for more on this. She's a senior analyst at E. Markets are focused on social media. You know what's interesting about this is the consumer's general attitude to technology. Right. Am I going to use an AI tool every day or am I going to jump headfirst into the Metaverse? It's a big share move. But I think what I find interesting about your response is that you don't find it that surprising that there is being a cut back in the Metaverse initiative.

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No, I really don't find it surprising. If anything, I think people will wonder why it has, why these cuts haven't happened sooner. Because I think, you know, even though AI and social media still remain incredibly popular, the reality is, is that a lot of people are actually trying to spend less time on screens, less time with technology. Even our own forecast showed that next year, at least in the US While we do expect people to users on social media to spend less time on these social networks. And so again, that's not to say they still don't spend incredible amounts of time on social on, on with AI platforms with technology in general. But there is a bigger push to pull back. And so I think even a few years ago it really wasn't the time for the metaverse, clearly and I think now it's definitely is not to recap this reporting is according to sources and it's 30% budget cuts for Metaverse, but that will include an element of layoffs. I'm trying to understand the difference. Right. Caroline and I have both spent a lot of time using mixed and virtual reality headsets and I spent a lot of time using Ray Ban meta smart glasses, right. Through one you access the AI, the smart glasses, voice assistant based AI with camera. The other, you immerse yourself in a virtual world. But why isn't there a sort of recognition of the overlap of those two domains? Yeah, I mean there certainly is some overlap, but I think again that there's, there's sort of, even when you look at met his business overall, right. Like we are seeing how AI is helping the business incredibly so it's helping their bottom line, it's helping their algorithms become more powerful and keep people on the platform longer. But these loftier goals, these loftier, loftier ideas around super intelligence and even the Metaverse are we're just still not there yet. And I think the demand isn't even quite there yet to be justifying these massive amounts of spending. I mean if we even see this with smart glasses, I will say I do think the smart glasses are having a bit of momentum They've had some stumbles recently, but there certainly is some momentum there. But it's far from, you know, a big portion of Met his business and likely won't be so for be for quite some time. And so yeah, like you said, there is some overlap but I still think there's the reality of what consumers are comfortable with now versus what they're going to be comfortable with 10, 20 years from now, which is just really hard to predict. Okay, Minda, let's go to therefore the vast amounts of money being spent on the AI focus and that's what's got investors riled, worried about the amount of debt that's going to have to be deployed, the potential move to negative cash flow for example. Is that wise when you're thinking about the intertwining of AI with social media for matter, it really paid off because it was more effective and advertisers love the did. But what about actually our use cases and how superintelligence is going to win for their business model? Well, yeah, that's exactly right. I mean we are, like I said, we are seeing how I clearly is helping their business but I think they are stumbling a lot more with their consumer facing ventures in this space. I mean even recently when you look at Meta AI, their standalone app, it of course Meta AI has been, you know, worked in all of their major platforms. You can use it on Instagram, Facebook, WhatsApp. But the standalone app as of last month only had about three and a half million figure users globally. So that's, I mean three and a half million is a lot of people. But when you look at the billions and billions of people that use their other platforms, it's actually quite small. So again, the demand for just like a pure play AI platform from Metta is still relatively small, especially when they are competing with Chatbots and some of these other players. And so yeah, there's, there's sort of the business lane and the consumer lane and I think the consumer lane, they're really having some struggles there. But people are really using AI within WhatsApp, within Instagram. And then there's the issue of competition whether they're stifling it over in the eu. They're worried about perhaps some policy changes to what's they're offering of which companies who basically integrate in the API. And it looks as though both Copilot, Microsoft and Open Air could be pulling back from WhatsApp. Yeah, yeah, for sure. I mean I have to say I wasn't surprised to see the EU crack down on that. We've seen them kind of come down on Meadow quite a bit recently. But it kind of goes back to my earlier point of what I when I was saying that Metta AI doesn't have that many users quite yet. That's why they're really kind of relying on putting it in their more mainstream platforms, trying to get people to use it on WhatsApp, especially in Instagram and Facebook. And so I, you know, again, I wasn't surprised see that they're making that push, but I'm also not surprised to see that that pushback, that legal pushback that's happening, especially in an environment where media has really just been under the regulatory microscope lately here in the US of course that it recently won its antitrust trial. But when we look into next year, I think matter but also just social platforms in general, they're facing so much regulatory pressure at the moment. Well, on the day we put to the one side and we see its best share move since July. Minda Smiley of E Marketer it's great having some time with you now. That does it for this edition of Bloomberg Tech. But Ed, what a day. What a scoop. What a market moving story coming from Kurt Wagner. Yeah, Kurt's story raises a question for me in the future. What is the method for using AI? Is it smart glasses? Is it smartphone? Is it something else? We're back to that debate. Recap the reporting on the podcast. You know where to find it on the Bloomberg terminal and online on all those platforms listed from New York and from San Francisco. This is Bloomberg Tech.

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