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Bloomberg Audio Studios Podcasts Radio News.
- [01:54]
Ed Ludlow (Bloomberg Tech Host)
Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, Matter goes after the cloud giants with plans to develop its own cloud infrastructure business. Plus, the Trump administration lifts foreign access restrictions on anthropic Fable 5Amodel. And we're joined by Lime CEO Wayne Tang as the company gets ready to debut on the nasdaq. Meta is taking on the cloud giants. That's the headline driving the stock to its biggest jump in in a year after Bloomberg reported the company's developing plans to build a cloud business with two parts. First, selling API access to AI models running on Matters infrastructure. Second, renting out raw AI computing power from its massive data center footprint. That's all according to sources. Now the market reaction is telling. Core Weave is heading for its biggest drop since February, down 15% as investors weigh a new powerful competitor in AI compute. But you see Amazon Microsoft higher. Maybe that reflects the scale of opportunity. Maybe they're just so entrenched in cloud computing the market's not worried let's get straight to Bloomberg Tech managing editor Lynn Duan. Okay, let's go back over the reporting. This is us saying that matter is moving forward with something in two parts. What do we need to know?
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Bloomberg Tech Reporter
That's right. So they're developing the plans as we speak to develop a cloud business. And that could come in the form of many things, right? It could come in the form of them taking the giants, the giant hyperscalers like Amazon, Microsoft and Google head on in supplying the kind of cloud computing that, you know, people like Bloomberg and other companies use through these companies. It could also mean that they're just talking about selling excess AI computing power specifically. In that case, they would go head on with the so called Neo Clouds, like cloud, like Core Weave, as you mentioned, which is why Core Weave is, I was just looking at the Bloomberg terminal and the share moves on both of the stocks. Core Weave is now officially down more than Metta is up. And so clearly a lot of investors are fearing that Metta is going to take that second route and go head on with the companies like Core Weave.
- [04:10]
Ed Ludlow (Bloomberg Tech Host)
The idea of matter leveraging its excess compute capacity is something that Mark Zuckerberg talked in the most recent earnings call. But we actually have more detail in our report. We know who's running this plan, who are the executives involved and I guess like, do we have a sense of how much progress they've made?
- [04:28]
Bloomberg Tech Reporter
Yeah, I mean, clearly they are still in conversations about. Conversations about it. As we pointed out in the story, the conversations are early on enough that they may decide to change their minds. But as you, as you, as you had pointed out, Zuckerberg has telegraphed this not just in the last earnings call, but in several earnings calls over the past several months. I remember as far back as January when analysts were asking him as part of their earnings call what they were going to do if they didn't need all of the AI computing power that they were buying up in the market. And Zuckerberg was even back then saying, don't worry, if we don't use it, somebody else will and we'll find a way to resell it. And so I can imagine that this has been in the works and has been talked about internally at Matta for several months now.
- [05:13]
Ed Ludlow (Bloomberg Tech Host)
We're reporting this is called Meta Compute, led by Santos Shinobin, met his head of infrastructure, Daniel Gross on the super intelligence team and met a president, Dina Palmer Cormack. Lots of detail, lots of impact in the markets. Bloomberg's Linda and thank you very much, let's widen The Lens Matters plan was initially seen as a big win for the company. Right. That's reflected in the stock. But it has also raised fresh questions about the rest of the trade. With investors reassessing some of the companies powering the build out bigger picture, this is what markets look like. The NASDAQ 100 is down a percentage point. As we enter the second half of this year and the third quarter of this year, the story hasn't changed. Spending remains enormous, earnings are holding up and investors are looking beyond hyperscalers for the next opportunity. The picks and shovels are being impacted in the moment. Right. The Philadelphia semiconductor index also much softer in the session but as we've just reported, it's come off its biggest course rev in the second quarter. There's a lot to unpack seem ashore. Chief global strategist at Prince west management is with us. It's interesting for the market to get a news story like that. Hold on. You guys have been saying for a long time you're compute constrained, you're trying to raise capex, build more, spend more, but now you are talking about renting out excess capacity. How much of a struggle will that be for the market to digest?
- [06:37]
Sima Shorer (Chief Global Strategist, Principal Asset Management)
So good to be on. I don't know if it's necessarily a thing that the market is going to struggle to digest. It's interesting. The kind of key questions that we always get is what is the thing that's going to, that could potentially topple the tech trade. And the one thing that we keep coming back to is, you know, return on investment. That's what people are increasingly looking for. And I think with matters with, with this announcement that certainly does help in that case that they'll be moving to get that return invest and give hopefully people a little bit more confidence that everything that these hyperscalers that these large companies are doing is actually going to pay off and then think of more innovative ways in order to deliver.
- [07:11]
Ed Ludlow (Bloomberg Tech Host)
We're in a moment of time where we've sort of reflected on what was a pretty astonishing quarter. So the Sox has had its best quarter ever, but the story has also been global. I'm thinking quite a lot about South Korea. Highly relevant to the memory trade. You see a global momentum in the trade. Right. Not just here in the United States.
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Sima Shorer (Chief Global Strategist, Principal Asset Management)
Absolutely. And I think that's really the new narrative that's been coming about. I mean that we've been talking for years and years about us and US exceptionalism. The thing that we now talk about, this new exceptionalism which yes, it's still centered on the US but because of this enormous global ecosystem, you also have the parallels moving in with other countries, other segments, and specifically as you mentioned, Korea, Taiwan, they're so heavily and closely intricately combined with, with us that you are starting to see that play through, or at least we have seen that play through over the last couple of quarters. I think the move that we've had though in the last three months probably does raise some questions about froth and you are of course seeing investors question about where else do we go now that we've seen such a big move there. But I think this is all part of that story of this is a global ecosystem, a global narrative. It's not simply just about the US anymore.
- [08:24]
Ed Ludlow (Bloomberg Tech Host)
Sima, how closely are you tracking the hyperscaler capex? Not just in this year, but going into next calendar year as well?
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Sima Shorer (Chief Global Strategist, Principal Asset Management)
I mean, it's absolutely key to all the conversations, all the perspectives that we have to have is these capex plans have been increasing very, very significantly. How are they going to fund them? What, what does the implication mean for equity in debt markets? So I think you can't almost separate any of the conversations from those discussion around CapEx. I mean, interestingly, you know, before we would just talk about tech, just the one sector. Increasingly, as you talk to analysts across fixed income, across equities, in different segments, different sectors, AI and the CapEx plans actually keep coming back in all of those conversations. So I do think it's very, very heavily ingrained in all of the investment decisions that people are making. Even as far as to say that when we investors, when they're worried about things and they're worried about, they're obviously looking for diversification. This still comes back to that CapEx question. Which countries, which regions, which markets are going to be there for these, these hyperscales to go to. So I do think it's part of every single narrative that we're having.
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Ed Ludlow (Bloomberg Tech Host)
You just use the word regions. God, I'm going to get myself into trouble with this. My DMs are open, you all know where to find me on the socials. When is Europe going to stop being such a boring story? Like when is Europe going to have something to say about AI and start feeling some of what we're feeling over here in the States?
- [09:49]
Sima Shorer (Chief Global Strategist, Principal Asset Management)
You know, I feel your pain on this. It's, it's a, it's a disappointing story to have to tell every single time when investors are questionable. When does Europe get on the trade? I mean, they are going to be beneficiaries. You have seen invest companies really investing to try and benefit from the productivity gains that could come through. We do have the data center build out there is infrastructure spending coming into play. But increasingly what you do see is that Europe is considered as the diversification trade. So it's not really about playing into the benefits of AI in a way, but it's about look, if things go horribly wrong for a quarter or two, if there are some disappointments, at least as Europe to fall back on, that's not a very inspiring story at all. But I think it can certainly help Europe go through. And remember, even though the story has been pretty negative over the last quarter, European markets have actually still delivered despite not being part of the talk.
- [10:41]
Ed Ludlow (Bloomberg Tech Host)
Sorry Europe, a lot of swings in chip stocks of late. See Mashallah Principal Asset Management the Thank you very much indeed. A win for Anthropic and a shift in US AI policy the Trump administration has lifted foreign access restrictions on the company's Fable 5AI model after Anthropic addressed government safety concerns. Blue Shereen Ghafari's with us broke the story last night. It's been complicated, but essentially let's start with the idea that Anthropic can now go about reinstituting access to Fable 5. What have we said about how they'll do that? And then we'll get to the safety bit.
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Shereen Ghafari (Bloomberg Reporter)
Sure. So Anthropic said they are going to start letting users access Fable 5 model as soon as today, so that should be starting now. And that's a big win for them because this is really their latest and greatest right in terms of how powerful it is. Now. People may have heard a lot more about Mythos because that made quite a splash when it was released because of how strong it was in its cyber abilities feature. Fable is a very similar model, just sort of with additional safeguards so that the average user cannot in theory hopefully go and let's say, hack someone's phone or get into their bank account. And so being for Anthropic, being able to serve Fable not just to a select group of trusted partners as they can with Mythos, but to the broader public is is very crucial to keeping their business kind of going.
- [12:04]
Ed Ludlow (Bloomberg Tech Host)
We're showing the chronology of how that played out over recent weeks. In the post on X, Anthropic explained that they've been notified by the Commerce Department they could do this. There's also been correspondence between the Commerce Department and the company. Do we know what it is Anthropics agreed to do to address those sort of safety concerns that the government had.
- [12:26]
Shereen Ghafari (Bloomberg Reporter)
So while the discussions were obviously private, Anthropic has said that they have worked with government on some stronger safeguards. So those are things like blockchain hacking requests, if there is someone who's really trying to sort of jailbreak the system and get around, you know, the ability to, to get a malicious kind of answer to help them hack something. Now, Anthropic is that they've worked harder to, to hopefully bulletproof their models from that. And they've also said that they're working with some other industry partners, including Amazon others to come up with a framework. They hope to address any kind of concerns like this in the future coming from government about if there are holes in AI systems, how they can sort of resolve them on a more systematic rather than ad hoc basis.
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Ed Ludlow (Bloomberg Tech Host)
Just very quickly. 30 seconds. They also released a scientific research model yesterday that made quite a lot of waves in industry.
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Shereen Ghafari (Bloomberg Reporter)
Yeah, that was a surprise. So they are going into the business now of actually doing in house preclinical trial research, they say, to find drugs that may be unaddressed by the major pharma companies. So that, you know, obviously it's still very new and they're just getting it up and running. But more to come on that Bloomberg
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Ed Ludlow (Bloomberg Tech Host)
sharing a fire with both stories on the Bloomberg and on dot com. Thank you very much. Anthropic standoff with the U.S. government may be over for now, but it raises bigger questions about how Washington regulates frontier AI. Let's bring in Ali Mellon for more principal analysts for us and also author of Code War How Nations Hack, Spy and Shape the Digital Battlefield. This is so interesting because Anthropic has basically become Ali the case study in the first instance of how the different arms of government have oversight of the most powerful frontier models. Would you just reflect quickly on the news that the Anthropic is allowed to proceed with re enabling Fable access to entities around the world?
- [14:23]
Bloomberg Tech Reporter
Absolutely.
- [14:23]
Ali Mellor (Forrester Research Analyst)
Well, first off, thank you so much for having me. This is a very big win for Anthropic, of course, and also for the US government because the reality is we need the space and time to innovate, especially on something this important in these frontier models. And hopefully this is a good way for the US moving forward to understand exactly what needs to happen to make sure that we are protecting national security while also enabling innovation. Because of course, course there are two sides to national security. There's the element of protecting us against what could attack us, but there's also the element of making sure that we have the defenses to do so, which requires using these models.
- [14:58]
Ed Ludlow (Bloomberg Tech Host)
I think it's really hard to understand some of this. The jailbreak concern is that actually there are guardrails in place to ensure that a malicious or bad actor doesn't use the model for malicious purposes. Right, but that doesn't. Banning outright doesn't kind of solve the problem totally. You're an expert in this domain, just trying in layman's terms, explain that concept.
- [15:29]
Ali Mellor (Forrester Research Analyst)
Unfortunately, the reality with models like this is very similar to what we see with software. There's always going to be bugs and vulnerabilities that we just don't know about yet in software because we can't test every single variable in every single way. The same is true for some of these models. There are different ways of asking questions, suggestions to these models, any way that you can possibly think of that are going to change the output. And so while Anthropic and other model providers have put safeguards in place to try to limit that and limit the risk as much as possible, we have to accept a more dynamic reality where there are going to be prompts that we don't expect that are going to give access that we also don't expect. Now Anthropic is doing a lot to limit the potential damage of this, including making sure sure that they're monitoring the prompts that are coming in, that they're putting very strict guardrails so that even if there is some access that's gained, it's very limited compared to what could be possible and compared to what could be dangerous. But it takes a balance of controls. It's not a black and white issue where we can just outright block access and have no problems. We to a certain extent are going to continue to experience issues like this. We just need to handle them in a much better way than outright blocking access. Success and causing challenges for organizations.
- [16:44]
Ed Ludlow (Bloomberg Tech Host)
Industry wants certainty. In your analysis of the government's behavior and action so far, how do you assess the level of certainty that we will or won't get on policy?
- [16:58]
Ali Mellor (Forrester Research Analyst)
Unfortunately, this was not the best instance of establishing certainty and trust between the US Government and a lot of these model providers and organizations. One of the things that we've seen is that organizations have started to try to diversify the models that they're using to prevent an issue like this from affecting their organizations again. But I will say especially Anthropic has put out a lot of great information around this about how they're working very closely to give pre release government access to these models to do information sharing on when jailbreaks happen and the severity of them to provide dedicated resources to work with the U.S. government. And these types of playbooks are what's going to help make sure that there is certainty in the future of potentially less limited access or certainly for a shorter period of time than we saw in this instance. There are going to be bumps in the road, as there is always with innovation, but it seems like moving forward, they've at least established some common ground to move forward in such a way that organizations should face less of a hurdle in the future.
- [18:00]
Ed Ludlow (Bloomberg Tech Host)
Ali Mellon of Forrester Research, thank you very much. Now, coming up, we're going to speak with Lime CEO Wayne Tang as the company gets set to make its market debut on the nasdaq. Scooters Bikes Lime thus next this is Bloomberg Tech.
- [18:23]
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- [21:02]
Ed Ludlow (Bloomberg Tech Host)
IPO window showing even more signs of life Uber backed Lime raised $174 million in its public debut. Pricing right at the midpoint of its expected range. Joining us from the Nasdaq is Lime CEO Wayne Ting. Right now I'm seeing shares indicated opening around 27, having price at 25. But this is an IPO that Bloomberg saying is about six times oversubscribed right now. You joined Lime from from Uber in 2018. It's been a long journey. Just reflect on what this moment means
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Bank of America Representative
to you for sure.
- [21:36]
Wayne Ting (Lime CEO)
I think it's a huge day for line and I think to see our business validated in this way is wonderful. We operate in 230 cities around around the world, 29 countries, five continents and we have built a differentiated business model. I think a lot of other companies have tried and not succeeded but we have great unit economics, we are free cash flow positive, we continue to expand our EBITDA margins and I feel like with this IPO we have more capital to invest back into the city to bring Limes very important service to more markets around the world.
- [22:11]
Ed Ludlow (Bloomberg Tech Host)
When you point out you're already in so many cities around the world, what then is the growth opportunity? Where can you go that you're not already in?
- [22:20]
Wayne Ting (Lime CEO)
The biggest growth opportunity is actually deepening in our existing markets because only in our existing markets do we have the reliability where people can use Lime every single day. So we often see the fastest growth rates in some of our biggest, most mature quote unquote quote mature markets for example, like a London last year grew faster than Lime as an overall company. So I think what you'll continue to see us is to deepen deployment into our existing markets. We also still have lots of cities around the world who can benefit from Lime that doesn't have Lime. So I grew up in Lincoln Nebraska and I would have never expected lime to work in Lincoln Nebraska. But we have a great business there. During football games, during lots of major events, there are congestion, parking shortages in Lime offers a great complement to their transportation system. And there are a lot of Lincoln Nebraska's in this world that can, they still can benefit from Lime. So I feel very bullish about future growth.
- [23:17]
Ed Ludlow (Bloomberg Tech Host)
When, when I came to San Francisco in 2018, scooters were the story, but it was so different. Scooters were everywhere. Bay Area residents were throwing them into the bay. The relationship with the city from a sort of permitting perspective was pretty fractious. And then Covid came and that really impacted the business. Does any of that still remain? How different are things now?
- [23:43]
Wayne Ting (Lime CEO)
The world is very different today than back in 2018. 1 I think the value and the. The value proposition of micromobility is more clear to cities. Urban transportation is broken in lots of major cities around the world. Congestion is a challenge, affordability is a challenge, pollution is a challenge and the impact of climate change. And the incredible thing is Lime is a solution to every one of those transportation problems. So I think when we show up in a way that is obviously in support of the city's transportation goals and we come with a commitment to compliance and safety and right in supporting the city's transportation goals, I think we've improved those relationships quite a bit. We are in hundreds of cities around the world. Most of those relationships are multiple years. And we feel very good about the future partnership with cities.
- [24:36]
Ed Ludlow (Bloomberg Tech Host)
You went public because you needed to. You needed the capital. So the balance sheet's kind of cleaned up now. But a story of this IPO moment is very quick return to the the capital markets. So will you do that? Will you look at debt? How will you continue to fund that capex?
- [24:53]
Wayne Ting (Lime CEO)
I just want to challenge the idea that we have to. I think there's lots of different ways we could have dealt with any sort of debt maturity. The reason we're going public is because we think this is a great opportunity for new investors to come into line. We'll have great places to deploy that capital and it'll be a very fantastic returns to the investors who are coming in during this ipo. That excitement for the future growth opportunity and the business prospects is why we're going public thing.
- [25:22]
Ed Ludlow (Bloomberg Tech Host)
What about some M and A? Let's think a little bit about New York City. Right. If you wanted to get deeper into cities like New York, would you look at other bike businesses?
- [25:32]
Wayne Ting (Lime CEO)
I think M and A is definitely one area we can we can look into now that we have public equity and more capital on the balance sheet. I would say our bar is very high because we get 50% plus cash margins on the average trip, less than one year payback on the bikes and scooters. Our competitors are nowhere near those margins and returns and many of them have been donating share to us very, very kindly and I think we can just out execute them and get a lot of that market share from them. And so we have to believe there's something to be to buy that is accretive to our investors. But I'm certainly going to take a look at all the companies out there and I think consolidating the long tail is one of the opportunities that I see.
- [26:18]
Ed Ludlow (Bloomberg Tech Host)
Wang Tang Lime CEO Again, Bloomberg reporting that this IPO 6x oversubscribed shares indicated open I think around 27. Let's see what happens. Thank you so much for your time here on Bloomberg Tech. Welcome back to Bloomberg Tech. Our top story is matter getting in the cloud computing game. Take a look at shares of matter up 11% on track for their best day in a year. Bloomberg's reporting that they're looking at Meta Compute, either just selling spare excess capacity as a hyperscaler and on the other side, basically API access to models on Meta infrastructure akin to AWS bedrock. How's that playing out with some of Meta's peers and rivals? Well, Core Weave is down a lot 12% on track for its worst day since February. And then those established cloud computing players, Amazon, aws, Microsoft, higher.
- [27:16]
Bank of America Representative
Why?
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Ed Ludlow (Bloomberg Tech Host)
Not clear on the logic. Maybe their market position is so strong the market's just kind of chill about it. But we will get some more analysis on that. Bloomberg Intelligence senior analyst Mandeep Singh writes that matters planned cloud infrastructure business might signal that Met is feeling pressure to show a return on the capital spending through compute rental while Asian offerings take longer to scale up buys. Mandeep Singh's with us right now. So interesting because like for quite a long time Mark Zuckerberg's been getting questions about this. Well, what happens if you guys build too much compute and Capex is too high? Like what would you do while Bloomberg's reporting citing sources and you're reacting to a pretty crystallized business plan. Give me the rest of your thesis.
- [28:00]
Mandeep Singh (Bloomberg Intelligence Analyst)
Yeah, I mean, look, I think when they formed the Superintelligence lab, they hired a lot of people to train and improve their llama model. And they have talked about Mu Spark, you know, being on frontier with Anthropic and OpenAI's models across the benchmarks that they measure upon. But it looks like there still isn't a product like a standalone Meta Air app that they expect to take off or an agent AI offering that they want to roll across their family of apps. If it's about compute rental, then they could have done this, you know, 12 to 24 months back when everyone started really doubling down on inferencing. I feel they are late to this inferencing party and obviously Space X had that big deal with Google where Google was renting for $12 an hour of GPU capacity and that was quite attractive. Maybe that is what swayed them to get into this cloud infrastructure business. But to my mind, I would have really been more excited if they talked about some agent AI offering here.
- [29:10]
Ed Ludlow (Bloomberg Tech Host)
So that's so interesting because they could have looked at the success X I had on our Space X AI and said we want a little bit of that market. You also talk about, well, Met is trying to get its act together on how it monetizes its AI work. Right. Agent tech or literally just subscription for meta AI. And you seem to think that's going to take time to yield, at least on the top and bottom line.
- [29:35]
Mandeep Singh (Bloomberg Intelligence Analyst)
Yeah, look, I think they do have a model, but it seems like the adoption of that model when I measure it in the context of coding agent, where Anthropic has clearly gotten a lead over everyone else. Cursor is something that XI will look to scale up on the coding agent side. Meta AI doesn't have a big use case. I mean obviously they don't have coding agent functionality. And when it comes to other use cases, yes, they could do basic summaries and document analysis, but to my mind they're still missing that big use case around AI where they would want to dedicate all their compute on the application side. And that for me is critical in terms of maintaining those margins. The compute rental is a crowded space and for a company like meta, which is 50%, you know, operating margins, this is not going to be a very high margin business in the long run.
- [30:33]
Ed Ludlow (Bloomberg Tech Host)
Bloomberg intelligence analyst Mandeep Singh. So fast with the react on this big story. Thank you very much. We've got other tech headlines to go through. Bloomberg's Yahara Anand is standing by. Hi.
- [30:43]
Yahara Anand (Bloomberg Reporter)
Hi Ed. It's time now for talking tech. First up, a massive wall of capital is flooding into infrastructure. Abu Dhabi's MGX has secured nearly $50 billion for one of the largest dedicated tech funds in history. At the same time, Starwood Capital has raised $10.2 billion specifically targeting high power data center property build outs. Plus TikTok parent Binance is taking its AI ambitions to Brazil. The company plans to build its largest data center outside of China in the 39 billion dollar project, with the first facility expected to open by late 2027. The move gives ByteDance access to Brazil's abundant renewable energy and staying with TikTok. The company is trying to avoid a courtroom showdown. It's close to a confidential settlement that would help it avoid a jury trial in Los Angeles this July over claims the app is addictive to minors. But thousands of similar lawsuits are still still pending against TikTok and other social media companies.
- [31:46]
Ed Ludlow (Bloomberg Tech Host)
Ed, thank you. Your hire. Some breaking news on the Bloomberg Terminal the United States has decided against renewing its trade deal with Canada and Mexico. Instead it's going to conduct annual reviews of that pact. This is all according to U.S. trade represent Representative Jameson Greer. The U.S. mexico Canada Agreement remains in force for another decade decade provided that no one country decides to exit it. But the annual reviews instead of a longer term renewal process, mean that the United States essentially can avoid years of contentious negotiations over the rules that govern continent wide supply chain. So we'll continue tracking that. But that's some breaking news from the U.S. trade Representative. Another big story and the latest twist list in Apple's long running legal battle with Epic Games. The Supreme Court has agreed to hear an appeal by the iPhone maker. Justices will review a lower court content ruling that penalized Apple over how it handles payment options outside of its own app store. For more, Bloomberg's Managing editor for Consumer Tech Mark Gurman is with us. Another twist in what has been a multi year saga complicated story. Explain the basics of it to us. Mark.
- [33:05]
Mark Gurman (Bloomberg Managing Editor, Consumer Tech)
Well the basics of this situation is come October when the new year begins for the Supreme Court, they will hear Apple's appeal to reverse a contempt ruling that was issued by a judge in California related to its ongoing saga with Epic Games. Apple was held in contempt for the way that it addressed a ruling that they need to open up the App Store payment system to third parties. And this, as you know, all started several years ago when Epic Games started allowing consumers to buy v. Bucks or upgrades using outside credit cards, bypassing the 30% Apple payment fees within the Fortnite app on the iPhone. So this is yet another installment in that saga and it comes down to how Apple makes money on its platform.
- [33:56]
Ed Ludlow (Bloomberg Tech Host)
How has Apple responded to the Supreme Court's decision to allow a review and appeal? And how has Epic responded to this development?
- [34:05]
Mark Gurman (Bloomberg Managing Editor, Consumer Tech)
Yeah Apple's pleased. They say that this is an important moment. They call it an important question and they're very much looking forward to making their case to the Supreme Court. Obviously Apple is dealing with a lot of legal matters right now. I mean, this is just one drop in the bucket here. The bigger issue is what it's going through with the European Union, with the Digital Markets Act. That is a legal related issue where the DMA is trying to upend the way Apple sells products, that software features, how it operates its App Store. So this is a lot of stuff in the legal department that Apple is dealing with right now. Obviously you have the DOJ lawsuit as well, all related to regulatory matters in addition to these App Store issues.
- [34:50]
Ed Ludlow (Bloomberg Tech Host)
Bloomberg's Mark Gurman, who leads our coverage of Apple and also the consumer technology team, thank you very much. Coming up, investors appetite for rebuilding and rearming the US Is still going strong when to talk to the CEO of marlinspike Partners, Neil Keegan, about its latest oversubscribed fund that aims to do just that. That's next. This is Bloomberg Tech.
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Ed Ludlow (Bloomberg Tech Host)
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let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling the system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in home care. And then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions. Optum is working to bring costs down, save patients money and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how the
- [37:30]
Bank of America Representative
thing about AI for business, it may
- [37:32]
Mark Gurman (Bloomberg Managing Editor, Consumer Tech)
not automatically fit the way your business works.
- [37:35]
Ed Ludlow (Bloomberg Tech Host)
At IBM, we've seen this firsthand. But by embedding AI across hr, IT
- [37:41]
Mark Gurman (Bloomberg Managing Editor, Consumer Tech)
and procurement processes, we've reduced costs by millions, slashed repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by
- [37:52]
Ed Ludlow (Bloomberg Tech Host)
putting AI where it actually pays off, deep in the work that moves the business.
- [37:57]
Mark Gurman (Bloomberg Managing Editor, Consumer Tech)
Let's create smarter business.
- [37:58]
Ed Ludlow (Bloomberg Tech Host)
IBM, let's take a look at today's big number. 98,000. That's how many private sector jobs the U.S. labor market added in June. That's pretty good. It caps the best three month hiring run in more than a year. Job openings have risen, layoff figures are low. But there are areas where the picture is different and we're talking about it on this show. So I think where you know, I'm going to go with this AI, it appears to be dragging down two sectors in particular financials and tech. And you can see here the decline of jobs in those sectors and hiring in other sectors growing. Let's discuss with Bloomberg economics reporter Matthew Bozart. It is so confusing to pass through the data, put the charts up and say where, where is having the impact?
- [38:48]
Shereen Ghafari (Bloomberg Reporter)
Impact?
- [38:49]
Ed Ludlow (Bloomberg Tech Host)
How is it having an impact? I leave that job to you. What do we need to know?
- [38:53]
Bank of America Representative
Well, yeah, and I think it's getting clearer as you just showed in that chart. You know, we're seeing a real split now between the broader economy and really two sectors where we're seeing a lot of this weakness, finance and tech. And you know, I think your viewers will probably be pretty familiar with the story that's been going on in tech the last several years and you know, been kind of continuing apace this year with all of the big investments that those companies are making in AI. I think it's really interesting the story that we're seeing emerging on the finance side because something to keep in mind is that the finance sector is three times the size of the information sector in terms of employment. And you know, there are a lot more jobs in the finance sector that deal with kind of routine processing of various documents, insurance claims, loan applications, that sort of thing. And so that's the place where we should really be looking this year if we're expecting AI to have a bigger imprint on the workforce. And that's what we're seeing so far in the numbers.
- [39:49]
Ed Ludlow (Bloomberg Tech Host)
Outside of the numbers, there's just like communication. And so tech companies are saying more and more ise a factor and the bankers are saying that the technology will eliminate some roles. Summarize that part of it for us.
- [40:05]
Bank of America Representative
Yeah, so I mean, you know, they're really being pretty open and upfront about this. You know, you, you listen to the bank CEOs and they're, you know, outright talking about job cuts, the potential for automation in a lot of these, these roles. And so I think, you know, you're hearing a pretty clear signal from them. And you know, one of the other interesting differences too is that if you look at the information sector, the tech sector, right, you're kind of coming canonical role as a software developer. And these are people who are pretty highly paid, making more than $100,000 a year. And there's a real question there as to how much AI is going to replace those jobs versus augment those jobs and make them more productive.
- [40:45]
Ed Ludlow (Bloomberg Tech Host)
Right.
- [40:45]
Bank of America Representative
And therefore maybe even make some of those software developers more valuable to those companies. Whereas in finance you've got again, a lot of low paying jobs, a lot of customer service representatives, a lot of bank tellers. So hundreds of thousands of bank tellers working in the US that are expected to be, you know, especially vulnerable to automation over the next decade. And so that's really where we're starting to see the job losses accelerate.
- [41:11]
Ed Ludlow (Bloomberg Tech Host)
Bloomberg's Matthew Bozer, thank you very much indeed. Let's move from hiring to financing and some private markets news. Marlin Spike Partners has just raised a $127 million for fund to, in its words, Rearm America. The oversubscribed fund is the latest sign that investors are still piling into defense tech startups. Last year was a record year for venture investment in that sector and this year we are on track to surpass that. Joining us now is Marlin Spike co founder and CEO Neil Keegan, also served six years as a US Navy surface warfare officer. Neil, welcome back to the program to Bloomberg Tech. There was a lot of interest in the fund. I want to Kind of start with mechanics. So you raise your next fund. We say it's oversubscribed. Clearly LPs are increasingly interested in exposure to defense tech. How did you raise the fund? What was the process like? How did you settle on the amount?
- [42:08]
Neil Keegan (Marlinspike Partners CEO)
Sure. Thanks, Ed. Well, it's great to be back here. Was on about a year ago when we were discussing Operation Midnight Hammer, so, so it's, it's terrific to be back here on your show. Well, and before I dig into those questions, I'd like to just say, you know, we're very thrilled to be here, particularly ahead of America's 250th anniversary. This is a great country. Each generation inherited a stronger country from the last. So our central question is what are we going to do to build for the next generation? And you know, that's why we set out to start Marlinspike. That's why we just went after Fund two. And we don't see the, the fund to closing as, as the end of the road. We really see it as the beginning of Marlin Spike as an enduring investment institution. And so to get to the fund mechanics, we set out to raise $75 million. This was a continuation of our fund one, which was raised in 2022. Very, very challenging capital raising times. But we feel really good about the team and our portfolio companies and our strategy and mission for that fund. So Fund two is really a continuation of that. We're pleased that we more than tripled assets. We wanted to have a fund size that was, that was modestly sized relative to some of the big multibillion dollar funds and firms out there so we could stick to our knitting, be, be leaders in our companies, take concentrated conviction positions.
- [43:25]
Ed Ludlow (Bloomberg Tech Host)
Right.
- [43:25]
Neil Keegan (Marlinspike Partners CEO)
And really help and guide our companies to put up on cap returns for our investors.
- [43:30]
Ed Ludlow (Bloomberg Tech Host)
We just showed some of the existing portfolio and you know, Andrew jumps out and now is, is a, let's call it late stage growth name. What is the rest of the market in the field like? What else is out there to, to find?
- [43:48]
Neil Keegan (Marlinspike Partners CEO)
Well, I mean, clearly Anduril is a special company. You know, when I ran a family office, I invested in Space X 12 years ago when we invested in pounds here, before they went public, before we launched Fund Fund 1. And Andrew is one of our key names in Fund 1 along with Armada. So we've had a, we've got a history of looking at these interesting opportunities and in many cases investing before it becomes obvious. I mean, now obviously Andrew is obvious. They've absolutely executed and killed it. And we think there's still a lot more room to grow. And what's important about, you know, the leading companies in our space is that they have broken through and they have shown that they can execute, operate and scale. And so what we're really looking for is who are the next batch of leaders that are coming up. And I saw in your, in your logos there for fun too, we have a number of these already in the fund. We actually launched the fund in 24. So we were, we like to say building the plane while flying it, which is, which is a neat trick where you're raising money and investing along the way. So we see companies like Layup and Advanced Manufacturing, Kodiak and Autonomous Trucking Jet Zero, we think is going to be the next national champion for aerospace for our country. So these are the companies you might not know about now, but we think you're going to know about them pretty soon.
- [45:01]
Ed Ludlow (Bloomberg Tech Host)
The general broad idea is that the government of today is more open to doing business with more nimble, largely Silicon Valley based technology companies right outside of the legacy prime. Do you see evidence of that? Like when you're modeling for the future growth of the portfolio companies, you have line of sight to them winning those awards through the Pentagon, Department of War, etc.
- [45:28]
Neil Keegan (Marlinspike Partners CEO)
Yes, correct. But that's not, that's not all that we do. So this is really about a new area, new era in American industrial renaissance. So we see the convergence of AI, autonomous systems, advanced manufacturing. Not only are they serving mission statements, sets for national security, but also the commercial market. So we like that convergence of those sectors because we think that that can really be the highest growth and the biggest productivity increase for, for our country and our, in our, and our portfolio company. So that's why we're doing this, because it's going to make America and our economy and national security stronger.
- [46:02]
Ed Ludlow (Bloomberg Tech Host)
Neil, would you call yourselves a venture capital firm or how would you describe the sort of mechanics of what you do? And the reason I asked that is I'm really interested in, in this sector, specifically defense, what the exit strategy looks like. Traditional path to IPO or if actually more likely, you see strategic investors come in, acquisitions happen by those bigger legacy primes.
- [46:26]
Neil Keegan (Marlinspike Partners CEO)
So look, there's three classic ways to get an exit. You know, one, company goes all the way to an IPO. Two, some type of M&A or three, the secondary markets are really building and expanding. So you know, we often look at the secondary markets, both buying and selling as a ways to augment our portfolio. But I think what you'll see from Us continually going forward is we're going to take more of a leadership role. You'll see us leading more seed rounds and Series A's leaning into series B companies where we can make a real impact with, with our team, our access and our insight. So that's really our sweet spot. And again, a lot of those companies, you know, these are ideas that might not be obvious for everybody, but they become very obvious to us. And we see these, we see these companies as potential, not only national champions, but just inevitable companies that have to happen.
- [47:14]
Ed Ludlow (Bloomberg Tech Host)
Neil Keegan, CEO Marlin Spike just closing $170 million fund to and back on Bloomberg Tech. Thank you very much indeed, Kal. She's coming off the sidelines, or should I say on joining the likes of Coca Cola and Visa as a World cup sideline advertiser. Kalshi secured the deal halfway through the tournament at $20 million, a deep discount from FIFA's initial $150 million. Ask News comes as USA is set to play Bosnia and Herzegovina tonight. 8:00pm Eastern, 5:00pm out here on the West Coast. Bloomberg's Caffeine Dufty has the story. Cauchy has done a good deal, but it's so interesting. Like Kalshi is a big part of the culture of what's happening from a tech perspective in the background of the World Cup. Just what are we reporting on the deal itself here?
- [48:02]
Yahara Anand (Bloomberg Reporter)
That's right. So Koshi has been very active, but at the beginning of this tournament, they did not have a sponsorship deal with FIFA. Adi, this is a company with ties to the Abu Dhabi family. They were the official sponsor of the FIFA World Cup. And Kalshi, meanwhile, was very active, saw billions of trades a day on both the winners of the World cup itself and individual games. So two weeks into the tournament, what we're reporting now is that Kalshi is coming in as a co sponsor with Adi and they're coming in at a significant discount. So we've reported that Adi as the official sponsor, paid around $150 million to become that official sponsor of the World Cup. Meanwhile, Kalshee coming in later has paid Adi to be a co sponsor at around $20 million. So this is giving them the official sponsorship title alongside Adi as a partner, but at a steep discount.
- [49:05]
Ed Ludlow (Bloomberg Tech Host)
Wow. They're a big company. Coca Cola, Adidas or Adidas, depending on where you come from. Visa. Let's go back to the basics of what Kalshi is and does. We just have 30 seconds.
- [49:17]
Yahara Anand (Bloomberg Reporter)
That's right, Kelsey. Prediction markets. You've probably seen them. This is a yes or no bet on who's going to win a specific game. And they've expanded not just in sports, but they're trying to grow economics alongside other political events as well. They're really coming up against some of the biggest exchanges too. You have their biggest user, their biggest competition being polymarket with a with a sponsorship that they have a deal with the stock exchanges ice and you've seen them today get very large with both the World cup and other big sporting events.
- [49:54]
Ed Ludlow (Bloomberg Tech Host)
We miss Katherine Doherty with a really top story on the Bloomberg Today. Thank you. That does it for this edition of Bloomberg Tech Recap on the pod. You know what the top story is? This is Bloomberg Tech.
- [50:07]
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