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- [00:01]
Deloitte Narrator
The right technology can strengthen human judgment. That's why Deloitte brings together AI and data analytics with multidisciplinary teams who can help you connect the dots across your enterprise, from risk to operations to customer needs. So opportunities don't slip by and surprises don't spread. Because the smarter your systems, the sharper your instincts. That's how technology makes people better at what they do best. Deloitte Together makes progress. Learn more@deloitte.com TogetherMakesProgress so there's a lot
- [00:35]
Ed Ludlow
of noise about AI. But time's too tight for more promises, so let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Business let's create smarter business IBM when
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The Hartford Representative
you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy. Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property liability or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one time decision. the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day to day operations. And when losses do happen, the Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering and claims experience developed over time. Learn more@the Hartford.com riskmitigation
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Caroline Hyde
Bloomberg Audio Studios Podcasts Radio News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York
- [02:20]
Ed Ludlow
and Ed Ludlow in San Francisco. This is Bloomberg Tech Coming up. Microsoft and OpenAI have agreed to drop exclusivity rights on AI models, opening the doors for rivals to make new deals. Plus, China blocks matters $2 billion deal for AI startup Manus in a surprise move that unwinds a controversial deal. And Elon Musk and Sam Altman head to court with the Tesla CEO alleging that the Open Air founder abandoned its founding mission. Let's get to our top story of the day, and this is an interesting one. Microsoft Shares are now basically flat. But when hit that they had ended their exclusivity pact with OpenAI, the stock was down 4% in free market. Amazon shares shot up on the logic it would benefit. All of that has been undone. It is a complicated story. Bloomberg's Brody Ford joins us on set in San Francisco. The bits that are new, are there changes in the structure of the agreement between Microsoft and Open Air. Let's start there. What do we need to know? What can open I now do that it couldn't do 24 hours ago.
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Brody Ford
So the big headline of what has changed is that the models for a long time were exclusive on Microsoft Azure. And that was really kind of the last bit of exclusivity in this storied partnership that helped usher in the era that now is kind of going away. And so this is meaningful for OpenAI because they're in a world where compute is constrained. They need as much as they can get and they want to be able to distribute their products onto all the major platforms.
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Ed Ludlow
Microsoft still gets access to to the models through 2032. It's just open. I can sell them and make them available in other places. So you and I were talking before the show, who benefits? Well, Amazon in the first instance where it shares jump in pre market. Now I think that they're lower again, but that's the idea. This is hot on the heels of a deal between OpenAI and US, which I think was in January, maybe February. Yeah.
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Brody Ford
In recent months, you know, OAI and NWC have been working together to distribute on that platform, which is still the leading cloud infrastructure platform. Microsoft reportedly was not super happy about that. We have to imagine the changes today are downstream of those discussions, or at least discussions like that. And what Microsoft gets in return here is that they're no longer paying a revenue share.
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Ed Ludlow
Yeah.
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Brody Ford
Effectively they're saying, look, you can go and hang out with other people, but I'm not going to pay you to do it.
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Ed Ludlow
So this is really interesting and again, complicated. Basically Microsoft was paying OpenAI a revenue share from revenues where it used OpenAI's technology in some form. Right. But the bit is hard to understand is OpenAI is still a customer of Microsoft. They basically pay them for various reasons. OpenAI pays Microsoft and at the same time, Microsoft is the biggest investor in OpenAI. Right.
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Brody Ford
It's right, because it all stems from that original partnership with Microsoft and oai, where for a long time folks saw it as OAI was almost a part of Microsoft.
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Tim Curry
Right.
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Brody Ford
So Microsoft gets access to these models. Everybody else has to pay for but they just get to access them for free at least for the next couple of years.
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Ed Ludlow
Bloomberg's Brody Ford Again two red headlines from the from the report. Markets have behaved very strange and we'll get more on that later in the program. Let's turn to matter. China has blocked the social media giants $2 billion acquisition of AI startup Manus. The country's National Development and Reform Commission ordered the cancellation of the deal, stating it was prohibiting the foreign investment in accordance with laws and regulations. Without further elaborating here with more Bloomberg's executive editor for Asia Tech, Peter Ellstrom. Again, another complicated story. Let's start with the what we need to know. This is a body in China unwinding it what we thought was a done deal.
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Peter Ellstrom
Yeah, this was a surprise. As you alluded to earlier, the NDRC jumped in today. It was only a one sentence announcement that they made. They didn't name matter, they just said that this foreign deal with Manus had to be undone. So what the DRC is doing here is they're trying to reverse a deal that was announced in December. The reason is the is that Manus founders originally started the company when they were in mainland China. They decided to move to Singapore in the middle of last year. They declared themselves a Singapore company that did set up shop there legally. And so when they cut the deal with Meta Meta and and Manus agreed to the deal and they did not get explicit regulatory approval from Beijing. But there were people inside of China who were saying that this is essentially losing critical AI technology to our biggest geopolitical rival in the United States in media in particular. So they wanted some sort of pressure put to this. And we wrote a story last week about how regulators now are pressing other AI companies not to take money from US Investors in particular. Now it's not clear whether China is going to be able to force Matter to undo this deal. These two companies have been operating together quite closely already. Metta employee Manus employees have gone into the Metta offices. The executives are cooperating. All the investors in Manus have already gotten paid. They have their checks at this point. So it's not clear how they can unwind this.
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Ed Ludlow
There's a technicality that Manus would say was headquartered in Singapore, but it shows that China has reached if there's an origin within country. The political dimension is that President Trump in just a few weeks time will visit Xi Jinping and speak with Xi Jinping. And that relationship is a negotiation that's had chips, semiconductors at the heart of it. What about software? What about AI and what we expect to be a negotiation there.
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Peter Ellstrom
Yeah, as you allude to, the technology transfer between the two countries has been a very significant deal. China would like more access to Nvidia chips in particular that are used to train some of these more advanced models. At the same time, Beijing has decided that they do need to develop their own semiconductor industry. It's not clear how big of a strategic priority this deal is going to be for the Trump administration. We've reached out to them for comment on this. They haven't weighed in so far. It's not clear that that's that big of a deal. Metta, of course, is kind of playing catch up against Alphabet and Microsoft, as you were alluding to earlier, Open Air. So it's not one of the leading players in AI right now. But this deal was designed to get them back into the race. So we'll see whether Washington picks up the ball here and decides to make this a priority in those negotiations would be a bit of a surprise Matter
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Ed Ludlow
said in its own statement that they did the deal in compliance with applicable laws and that they expect a resolution, but didn't say any more than that. Bloomberg's Peter Elstrom who leads our coverage of Asia Tech, thank you very much saying with AI models and another story out of China. China's Deep Sea is aggressively rolling out low cost plans for its newly released flagship model, intensifying competition in the country's sector. The company is offering developers a 75% discount on its Deep Seat V4 Pro model and has cut fees for input cache hits to 110 of previous pricing. The moves expected to heighten competitive pressures across the industry and could reignite a price driven race to the bottom. Here is another story that broke this morning. Shares of Qualcomm are now down 1.1%. They had jumped 14% in the pre market. The company initially surged 8% at the open after a closely watched industry analyst suggested the chip maker was working with open AI on a smartphone. Here with the details, Bloomberg's equities reporter Ryan Vlastelica. This was about an analyst who posted a report on X and the market reacted. What are the details?
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Ryan Vlastelica
Hey, good morning. Thanks for having me. So this is a very closely followed and highly respected analyst and it really excited investors because Qualcomm right now is going through pretty uncertain times. It has been pretty strongly pressured this year. The shares in large part because of the rise in memory prices, prices for memory related chips, which is having a negative impact on consumer Electronics, especially its handset chips. So it's facing that kind of weaker backdrop. And at the same time this has been a longer term story. But Apple is developing more of its own modem chips in house, developing more of its own internal hardware. That has been a major problem for Qualcomm, which used to count Apple as a major, major customer. So the prospect that they would get a new big customer in the form of OpenAI, a new market, new smartphone market is obviously very exciting for investors. But I guess it's maybe a little bit too far out there. It's too hard to price what this would really mean as far as revenue or anything else like that goes. We did see the stop. The stock pulled back after a pretty pronounced initial gain.
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Ed Ludlow
We're showing that right now Qualcomm's down 8, 10 of a percent. The analyst we're talking about is Ming Chi Quo of TF International Securities. And you know, the basics of it are we know OpenAI is planning some kind of device. We don't know much more than that. We know from January they were trying to establish US supply chain. Qualcomm is the biggest maker of smartphone processors. What else is there to discuss, Ryan? I mean, that's the extent of our knowledge at this point, right?
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Ryan Vlastelica
Exactly. And the report did say that mass production will begin in 2028. So again, two years out, how do you begin to price something like that or factor it into a share price? Very hard to do, especially with so few details out there. We did reach out to all the companies involved. So far we haven't heard back. So a lot of the stuff remains sort of speculative. But like I said right now people are very focused on the memory situation and how Qualcomm is going to navigate that. It does report its results, I believe Wednesday afternoon. So that's going to be a very closely watched report this week. You know, less in focus than some of the other mega caps, but certainly a, a notable one to come out. And I think maybe people are hoping that we'll get a little bit more clarity on the situation then.
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Ed Ludlow
That's right. Invested. Thank you very much. Now coming up, we're going to speak with Tim, our Curry UBS analyst and global co head of AI. You just had the trio of top stories. Well, this is a guy who can react to all three of them. That's next. This is Bloomberg Tech. Okay, three big technology stories driving markets. The first, Microsoft is down 710 for percent. It has ended and broken its exclusivity packs with OpenAI Meta has had its deal with Manus AI, an agentic AI platform blocked by regulators in China. That stock is up 6 cents of 1%. And then the one that I don't think any of us really saw coming, Qualcomm is now down about a percentage point, 8, 10 of a percent. In the pre market it was up 14%. In the open it was up 8%. All on an analyst report that it is working with OpenAI as the Silicon provider on a future device. And that is all we know. Tim Curry, UBS Semi and semi cap analysts also UBS Global co head of AI is with us and I'm extremely grateful to have you on a day like today. Tim. The basics of what we know is that there are, there are Talks, right, between OpenAI. Qualcomm Media Tech was also named. Qualcomm is the biggest maker of smartphone processors and the stock went ballistic and then quickly fell away. Your interpretation of the headlines.
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Tim Curry
Yeah, look, I mean we haven't commented on this deal in particular, but you know, what I would say is that, you know, Qualco has had a server, you know, effort now for a while and it makes sense that they're going to be a player in an agentic world and, and, and you know, certainly, you know, certainly they have a big effort and you know, the thing I would say about OpenAI would be OpenAI tends to do a lot of deals with a lot of different companies. And so I typically put a little bit of a discount factor on, you know, any deal that gets signed with OpenAI because they're doing deals with, you know, virtually everybody.
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Ed Ludlow
Tim, When I think about my use of an AI tool, I spend a lot of time at my desk. Obviously I access that any given tool through a browser on desktop, but most of the time it's on this thing. Right. The smartphone is the form factor by which I engage with AI in my daily life. In your research, is that the direction of travel that you see?
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Tim Curry
Yeah, I mean we do, we think that, you know, engagement with Air is going to be across a multitude of different platforms and a multitude of different devices, including, you know, smartphones, obviously. So, you know, Qualcomm is going to have a play here. Qualcomm is, is, has a, you know, very, very strong edge franchise and, and they will be a player. I think the issue with Qualcomm, of course, is that 70% of the operating profit today comes from phones. And, and you had mentioned in the show previously that the situation with Apple, and we've talked about that, where Once Apple doesn't need their modem anymore, I don't think Apple is going to pay them a license either. And so there's, there's more angles to this Apple story. So I think you're going to have to get through this period before we can then look ahead to Qualcomm being a player in an, a genetic world.
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Ed Ludlow
I just want to update our audience on Bloomberg Tech that Intel went to the market for the investment, investment grade bond market this morning. They want some help financing what they're building out in Ireland. But it was an astonishing news week for intel last week as well. Where do you see intel in its evolution, in its turnaround under, under lip. Bhutan. Yeah.
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Tim Curry
You know, we've been talking for some time now about being more optimistic about their foundry business and about how they're turning around manufacturing. And I think that there's a lot of different customers that are potentially very interested in doing a deal with intel on the foundry side. And I think you're going to hear more about that this fall. You know, we've talked about many, many different customers. So I think they are turning things around from a manufacturing point of view. They have a lot of, you know, very good packaging IP to offer to these customers. I think the issue is their product roadmap and that's kind of where I've been really stuck for now. I think because of Magentic, the server CPU market's growing so much that that's what people are, are getting excited about from a stock point of view. So I would just, you know, my caution really is on the product side. I think that they're turning things around. I think in foundry the, you know, turnaround will come a little bit faster than it comes on the product business.
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Ed Ludlow
Tim, we, we ended Friday show with the Philadelphia semiconductor index or SOX, up for an 18th straight day, 18 sessions, its longest winning streak on record. We're giving some of that back this morning. A 19th day would have been interesting, I'm sure, but intel was a big part of that story. What else was driving investor sentiment around semiconductors conductors that put us on that historic streak.
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Tim Curry
Yeah, look, I think there's been a resurgence in the realization that the analog sector for one is not dead. I was pretty bullish on that sector into earnings. You know, TI came out and gave, you know, pretty good guidance. I think that customers are seeing the capacity constraints get closer and closer to them, you know, customers in the industrial world. And so I think that customers pretty much across the board are beginning to think that they are going to have to start to build some inventories to protect against all of this. And that was one of the things that fueled this rally last week was when, you know, TI came out and basically guided, you know, gave, you know, pretty good guidance and pretty good commentary. And I think you're going to hear more of that. So that was a big driver. I think also, you know, I've been bullish on semicap equipment. I think, you know, you're going to hear more of that this week from KLA and from some others, you know, upping guidance there. There just is so much capacity that has to get built out over the next three years. So I think it's a myriad of things driving the sector right now.
- [18:57]
Ed Ludlow
We didn't even have time to talk about Terraform and whether you and the team are modeling that in as well. But we will next time. Tim Curry of ubs, really great to have you on the program. Thank you. Now, coming up, it's a huge week for tech earnings and two of the biggest names are slashing jobs. I see spending is surging. Headcount is shrinking. What's really going on? We'll discuss that next. This is Bloomberg Tech.
- [19:24]
Deloitte Narrator
The right technology can strengthen human judgment. That's why Deloitte brings together AI and data analytics with multidisciplinary teams. People with deep industry experience who can challenge assumptions and help you connect the dots across your enterprise enterprise. From risk signals to operational pressure points to shifting customer needs, Deloitte helps you see what's coming sooner so opportunities don't slip by and surprises don't spread. It's not just dashboards. It's real clarity in the moments your decisions are made. When models reveal patterns, people can ask better questions. When data and people are connected, leaders can move faster with confidence. And when your teams are aligned, smart choices can scale from the frontline to the C suite. Because the smarter your systems, the sharper your instincts. That's how technology makes people better at what they do best. Deloitte Together makes progress. Learn more@deloitte.com TogetherMakesProgress.
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The Hartford Representative
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- [21:37]
Caroline Hyde
business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more@chase.com business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JP Morgan Chase Bank N A Member FDIC Copyright 2026 JPMorgan Chase Co.
- [22:41]
Ed Ludlow
On Wednesday, two of the biggest names in tech step up to report earnings. Matter and Microsoft. And they do it under a cloud of contradiction. Just days ago, both companies signaled cuts that could touch as many as 23,000 roles combined. Matter planning to slash about 10% of its workforce. Microsoft offering buyouts on a scale it's never attempted before. At the same time, both are spending at record levels, pouring billions into AI data centers and chasing the next wave of growth. Here to discuss attention Sarah Franklin, Lattice CEO the platform form just sees massive flow of data, right? It's an HR platform and analytics platform that sees the world through numbers. And that's why I love having you on the program. I just outlined the story two of the biggest companies in this country and in the world cutting levels that we've not Seen, but spending a lot. Is that the trade off that companies are managing right now?
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Sarah Franklin
We're seeing this across the board. It's a trend in tech ed and it is really important right now that we look at people and their performance and not just what they're doing with tokens or what they're doing with AI. It's very interesting right now how you see leaders that are investing in severance and not necessarily the skills. It's a transformation in tech and we need to have leaders with the courage to take people from here to there.
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Ed Ludlow
You know, job cuts and roles being eliminated is not pleasant. Right. You know, and if anyone from Matter or Microsoft is watching, you know, reach out, tell us what you, what your experience has been. But what you said on performance is so interesting. So what, the managers are measuring this in revenue per employee or output per employee to make that decision?
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Sarah Franklin
You see a lot. You see revenue per employee. You also see token maxing as a
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Ed Ludlow
trend right this day and age.
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Sarah Franklin
Yes. Right. But ask yourselves, like, would you look at the person at your company that sends the most email as the most productive? It's a new thing that we can use to measure. It's not necessarily the correlation to performance. And what we need to do is help people get from where we are today to where we're going to with AI.
- [24:48]
Ed Ludlow
You know, a lot of people would look at the overall size of a Microsoft or a matter and say, you know, while 10,000 roles or 8,000 roles is, is or isn't a lot to anyone's point of view, from the payroll perspective, does cutting that level really free up capital? Does it take the pressure off the finance teams?
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Sarah Franklin
It doesn't really relieve the pressure. And it also deeply impacts culture. Whether it's one person or a thousand people or ten thousand, it is a human and people care about what happens to other humans. So there's a real cost on the spreadsheet. There's also a real cultural cost to what it means, means to lay off people.
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Ed Ludlow
I always try and look deeper. What's the underlying story? I remember when you and I were talking kind of more immediately after the pandemic, the idea was to undo pandemic era exuberance and hiring. Now it's, you know, it's about the era. Right. And freeing up for CapEx. But what those two things have in common is when you see wave waves of layoffs to that level, they're really experienced people in there. Sometimes they go and found companies of their own.
- [25:52]
Sarah Franklin
Yeah, no, it's what we're Seeing right now is a big transformation in tech. And it's not just for the companies. It's also for the people with the careers they've spent years, decades even working on, refining their craft and what it means to be told to change overnight. It's like me telling you be in Europe in an hour. Unless you know how to teleport, it's not possible. But you can get there in a day. And so, so everybody's looking right now, how do I transform, how do I evolve with AI? And it's something that's the responsibility of leaders and also people to take it into their selves to learn as well.
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Ed Ludlow
I also want to make the distinction matter is doing cuts. Microsoft is doing what, what I used to call in the UK voluntary redundancies. But buyouts here, here in America, is there, is there something to learn from that distinction or it, it's just a different means to the same end.
- [26:46]
Sarah Franklin
It's still an investment in severance and not in the skills and your people. And that's the big difference. And so the more that we can invest in how we train people, how we get them from point A to point B, the better that we will all be because it's a short term gain on the spreadsheet, but a long term loss in the knowledge that you have in the workforce.
- [27:04]
Ed Ludlow
Sarah Franklin, Lattice it's great to have you back on Bloomberg Tech. And we are just at the start of what is a big week in earnings. Now coming up, Elon Musk and Sam Altman will face off in an Oakland court this week in a battle that could determine the future of open AI. There's going to be a big one and we're going to look at it right now. This is a market that's being driven by news flow. It's kind of a situation where there have been so many headlines through the morning, everyone needed a moment to make sense of it. I would linger for a second on the Philadelphia Semiconductor index or stocks. We just talked about it with Tim Curry from UBS on Friday. We ended the show by saying that that index was up for an 18th straight day, a record. We're giving some of that back. We're off by 2%. Also what we used to say was our risk asset of Choice, Bitcoin at 76,600 USD per token. Also, I guess we're saying this is a risk off environment. That's what the world looks like. We're only halfway through the program. It is half time and this is Bloomberg Tech. Welcome back to Bloomberg Tech. Our top story, Open Air has broken free from its exclusivity pact with Microsoft. Microsoft's down 4.10 of a percent. When this story broke two red deadlines on the terminal, Microsoft fell 4% and then it came back. Everyone's assessing what this means, but basically OpenAI is free to distribute and sell its models with other cloud providers. And that is the reaction from Bloomberg Intelligence. A lot of focus on Amazon and us. Our colleague Anurag Rana Bi kind of leads the coverage of hyperscalers is saying that this amended partnership is going to be a net positive enterprise prize, AI adoption, but more broadly for us, something he's been writing about all year. And of course OpenAI did that deal. Amazon jumped in the pre market. It's now kind of given up some of the momentum. Let's head to another Open Air story. One of the biggest feuds in tech heads to court today. Elon Musk claims OpenAI abandoned its founding mission as a nonprofit. He's suing the company, two of its co founders, Sam Altman and Greg Brockman, and Microsoft. Musk is seeking up to $134 billion in damages that he says should go to OpenAI's charitable arm if he wins. Let's bring in Bloomberg's editor Seth Figgman. We should note that there was a developing story at the end of last week when Musk actually dropped a number of the claims that he was making. So let's start there. We go to court today. There's jury selection. What are the claims that Musk is sticking with?
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Seth Figgman
Yeah, I mean Ed, this is a years long saga that's really culminating in the court case this week. And at the heart of it, Elon is alleging that Altman and other leaders at OpenAI effectively tried to enrich themselves by pursuing a for profit push at OpenAI, which was originally founded by Musk, Altman and a group of others as a nonprofit research organization. And he's claiming that he has effectively been defrauded as part of that. And he is asking, asking for up to $134 billion in damages. But in some ways, even more crucially than the amount of money he's asking for are some of the remedies for that which range from seeking to have Altman pushed out as CEO and his other official positions at the company and also trying to unwind the for profit conversion that was completed late last year.
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Ed Ludlow
We were just showing some of those that are due to testify to pretty block buster list who's who. Right? Sam Altman is going to testify Elon Musk himself. Mira Moratti, formerly OpenAI CTO, now of Thinking Machines, Microsoft CEO Satya Nadella. There is some historical beef here, which you should explain. The relationship between Musk and Altman plays out on social media. Musk, of course, is also the founder and leader of a rival Frontier Lab xr.
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Seth Figgman
That's right, yeah. I mean, these were two close colleagues for a time who were instrumental in the founding of OpenAI more than a decade ago. Elon, in some ways as very much the benefactor of the organization in its early days. Sam has previously said that he considers Elon Musk to be a hero of his. But there was a falling out within the first few years of the company's launch, seemingly in OpenAI's telling of it, because Elon Musk wanted more control. He wanted to operate as part of Tesla. He seemed to want to be CEO of the organization himself. Altman and others refrained from that, and Musk ended up leaving OpenAI around 2018. Since then, there's been a lot of name calling on both sides, with Musk in particular loving to call Sam Altman scam. Altman, among other things. Elong has also taken steps to try to undercut the organization, not just through launching a rival company, but making a hostile bid, as some might recall, to try to basically take over the nonprofit that controls opening. This court case should be understood in that larger fight.
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Ed Ludlow
Bloomberg, Seth, Megan, thank you very much. Let's talk through the legal claims that the jury will be asked to weigh in more detail with Dorothy Lund, professor of law at Columbia Law School, where she specializes in corporate ownership, governance, securities regulation. Let's start with the legal claims in the case. I mean, technically speaking, what is it that Elon Musk is suing for? And based on what? And hoping to achieve what?
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Dorothy Lund
Yeah, so at this point, there are only two claims that remain. A lot of others have been dropped or dismissed. And so the first is that Altman and OpenAI violated a promise to Musk that OpenAI would have a permanent charitable mission to develop safe open source technology for the public good and not private gain. And this was violated when in 2019, OpenAI created a for profit affiliate. So that's the first allegation. And the second is that, and it's related, is that Altman and OpenAI respond, received undeserved benefits such as Musk's investment because of these broken promises.
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Ed Ludlow
Professor Lund, does it matter that this is a jury trial?
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Dorothy Lund
You know, this is a jury trial, yes, but the jury in this case is only being used as an advisory to Judge Gonzalez Rogers, so she actually doesn't have to follow their opinion, although it will certainly give her some cover if she does. And so today, you know, we're starting jury selection, and it's a really interesting process. And the law here, you know, doesn't require that jurors have never heard of Elon Musk, or they've never used OpenAI, but instead, you know, the goal will be to find people that can put aside what they've heard, what they know about these people, and to decide the case only on the evidence presented in court. But, you know, these are two very infamous figures, right? Musk and Altman. Musk has been aggressively moving companies to Texas and out of California, has been leaning hard into MAGA politics. Altman isn't as well known, but he's had some recent episodes suggesting he faces some real personality challenges as well. You know, the recent Molotov cocktail attack on his house. You know, I think in general, there's just growing unease and skepticism about whether AI is going to visit its dystopian future on all of us. Unemployment, data center, environmental effects, power consumption. So, you know, I think here it's going to be the jury's views may be colored on these specific views on each of these individuals. And also AI generally.
- [34:57]
Ed Ludlow
Well, Mr. Altman is well known to regular viewers of this program, but just in case, he's the CEO of Open Air, which is regarded probably as the most consequential AI lab at this moment in time. But therein lies an interesting point. Elon Musk is also at the helm of X AI, which is now owned by Space X, a company of which he is CEO. Does that matter going into the case that he leads a rival company to the one that Sam Altman now leads?
- [35:29]
Dorothy Lund
Absolutely. I mean, you know, it's very easy to view this suit cynically because Musk is operating his own rival AI company, and he's. He's tried to partner with or take over OpenAI multiple times. He's been spurned. So I think absolutely, there's a reason to be suspect about his motives here. And even the judge in this case has called this out, you know, in some pretrial motions. You can in fact, see in his IPO letter for Space X that they disclose that GROK is going to benefit if this suit is successful. So I think at the end of the day, the judge and jury are going to have to determine whether Musk is disingenuously using this lawsuit to kneecap OpenAI and create more room for his own for profit initiatives to thrive with less competition. And this is essentially what OpenAI is, is, you know, pointing to in this litigation.
- [36:27]
Ed Ludlow
Dorothy, we just have two minutes left here. But the central issue is the nonprofit origin of open AI. And within the world of AI, of course, we have public benefit corporation structures as well. Is there a chance that this case sets precedent for the legal structure of companies that operate that way?
- [36:50]
Dorothy Lund
Yeah. So, I mean, you know, there's a lot to say about this structure. You know, one of the arguments that Musk has, has made is that, you know, if we're not careful here, this is going to cause other nonprofit to follow the same path as open AI. They're going to, you know, make promises and then fall behind on them and we're going to see other nonprofits kind of going, going this way. You know, I think this is ultimately a weak argument. For one, OpenAI is not your typical startup, Right. This is a very unique company and business. It's had a very unique sort of governance history. Each of its iterations has looked really different in interesting ways that we could spend far more than two minutes on. You know, the other thing I think is, is important to note in this conversation is that something that's true of corporate law is that it's enabling, it allows businesses to change their forms based on their unique business needs. Right. And so, you know, over time, you know, the argument that OpenAI has made is that we started off as a nonprofit, but this is a really capital intensive business and we just needed more money in order to continue to, to pursue our mission and develop this technology. And this is why we made these changes. And this is all sort of consistent with our initial goals and the promises that were made up front. And so again, I think that this is, this is something you would expect from organizations, that they change their business form over time and you wouldn't necessarily want to deter that either.
- [38:25]
Ed Ludlow
Dorothy Landman, professor at Columbia Law School. Again, the open air must trial jury selection starts today in Oakland. Thank you very much. So coming up, we're going to speak with Undersecretary of State for Economic Affairs Jacob Halberg about strengthening the US Tech supply chain. Big focus on chips and silicon. This is Bloomberg Tech.
- [38:46]
Peter Ellstrom
We were the chip capital of the
- [38:47]
Ed Ludlow
world and now, you know, intel, and
- [38:50]
Jacob Halberg
now they're coming back.
- [38:52]
Ed Ludlow
All the chip companies are coming back.
- [38:57]
The Hartford Representative
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Caroline Hyde
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Ed Ludlow
for peace of mind. But every year millions of claims are denied. Not because people did anything wrong, but because their policies quietly excluded what happened. Insurers know every policyholders rarely do. That's why my policy advocate exists for just 27 cents a day. Their platform reads your policies and explains where you are vulnerable. They don't sell insurance, they deliver transparency. Before you trust your policy to protect you, let my policy advocate tell you what it really says. Go to mypolicyadvocate.com let's get back to one of our top stories today. China has blocked Meta's $2 billion acquisition of AI startup Manus, effectively unwinding a deal that we thought was done. It's a clear move by Beijing to keep advanced AI technology from flowing to the US Just weeks before the expected Trump Xi meeting. Joining us on the show today, Under Secretary of State for Economic Affairs Jacob Helberg, who's been shaping the US Strategy on exactly this kind of thing, economic and technology competition. This is about statecraft. You know, we are going to talk a lot about silicon. You know, that's been a big focus for you. But this move by China and one of its regulatory bodies to block this deal, how do you interpret that as strategy and statecraft on China's side?
- [42:29]
Jacob Halberg
Well, it's, it's great to be here and great to be with the Bloomberg team. So I think this is just the latest example of how China's economic diplomacy branded itself self to the rest of the world as being all about connectivity. And in fact, it's really been about coercion and practice. What we have done at the State Department is built an economic security coalition with 14 countries called PAC Silica. In January, I gave a speech at Hudson that really laid out the blueprint. And last week we announced a forward deployed industrial base with our partner or our oldest ally in Asia, the Philippines, which really is the beginning of the build. And we're incredibly excited to get to hit the ground running.
- [43:11]
Ed Ludlow
When we talk about China and from a policy standpoint this program, we talk about Belt and Road, the initiative. How is PAC Silica different? Why is the strategy through Pac Silica a better form of statecraft? Yeah.
- [43:24]
Jacob Halberg
So we are obviously building this effort with the benefit of having been able to study what China has done through the Belt and Road Initiative for the past 25 years. And the easiest way to understand the Belt and Road initiative is it was China's attempt to build government owned roads and government operated bridges and railways with state owned enterprises. The Chinese government has done this entirely in house. We have a totally different model. We believe America's superpower is the power of its private companies and its ability to build products that, that delight and enchantment billions of users around the world. And so we decided to partner with the private sector to create, to really roll out platforms. The forward deployed industrial base is our first major rollout that will be a platform for American companies in partnership with a strong sovereign partner in the Philippines. And ultimately the framework that we adopted is a framework where both the US and the Philippines have skin in the game and share and the upside of success. And it's that kind of positive sum approach that we hope to bring to all of our partnerships.
- [44:31]
Ed Ludlow
Let's discuss the Philippines a little bit more as a case study. Beyond its, its geographic position on the map, why is that an important partner? I guess if you looked at it through an economic lens or through a trade lens or a supply chain lens.
- [44:46]
Jacob Halberg
Well, we're very excited to partner with the Philippines because it's our oldest ally in Asia. We is a defense treaty ally. It's also a country that has very rich manufacturing capabilities. And so ultimately that kind of is the potential.
- [45:02]
Ed Ludlow
The forward looking bit.
- [45:03]
Jacob Halberg
The forward looking bit. But they already today have a very deep manufacturing sector. And so the values alignment combined with the complementary industrial capabilities we thought provide the Philippines with a very compelling value proposition as a first testbed for the forward deployed industrial base as well as for American companies and for Filipino workers. So we're thrilled to be partnering with them and we think American companies will be very excited to go there.
- [45:32]
Ed Ludlow
Under Secretary, this is the first opportunity we've had to speak, I think since in January actually. But of course in between we've had the conflict in Iran, the war in Iran, and we spent a lot of time on this program talking about the impact to chip supply chains because of helium, for example, key stabilizer in the chip manufacturing process. Has that had an impact in the work that you were doing? You know, some of those Gulf partners are key to what you're trying to do.
- [46:01]
Jacob Halberg
Well, let me just say that we obviously have made a very conscious decision to really double down on our partnerships with the Golf Gulf. We have, we work with them incredibly closely. I hosted the US UAE Working Group in Washington with my colleagues from the Office of Science and Technology at the White House, as well as the Commerce Department. Ultimately, one of the big takeaways from an economic diplomacy standpoint of the Iran crisis is really just the importance of de risking single points of failure. Right now we have a concentration risk across our supply chains, whether it's logistics, whether it's actuators, whether it's rare earth magnets that remains unacceptably high. And ultimately that really is the genesis of what pacsilica is meant to address.
- [46:50]
Ed Ludlow
When the President meets with Xi Jinping, what's on the table as a point of negotiation or interest, both sides may well change. We spend a lot of time, time with you and other colleagues in government talking about the idea of whether China should or should not have access to leading edge chips. But there's a software component to this as well. If we take the Manus case study, do you expect the president to bring that up and use the competence of Chinese AI companies on the software side as a point of discussion, or are we just focused on chips?
- [47:25]
Jacob Halberg
I expect, I expect the president to really walk into that room with maximum leverage and decision space. His national security strategy made abundantly clear that America will secure the inputs it vitally needs for its supply chains. And ultimately, President Trump has reshaped American economic diplomacy the way only an executive could. And it is really thanks to his leadership that this historic arrangement and partnership with the Philippines was made possible.
- [48:01]
Ed Ludlow
Jacob Halberg, US Undersecretary of State for Economic affairs, back on Bloomberg Tech and what has been an astonishing start to 2026 now coming up, it's a $16 trillion test for the tech market this week. Those are the names at the heart of it. This is is Bloomberg Tech. It's time for talking tech. First up, Matter is reaching for the stars to fuel its AI ambitions. The tech giant reserved up to 1 gigawatt of power from Startup Overview Energy, which plans to beam solar rays from orbit back to Earth. Matter said it hopes to secure uninterrupted disrupted energy for its massive data centers by 2030. Plus, a former Tokyo electron engineer has been sentenced to 10 years in jail for stealing TSMC proprietary data. Taiwan is on high alert for technology leaks. The hefty prison term for the former engineer reflects the government's efforts to guard its world class semiconductor industry. Former DeepMind researcher and AlphaGo mastermind David Silver has raised 1.1 billion for his new startup, Ineffable Intelligence, at a $5.1 billion valuation. With backing from Sequoia and Video and Google, Silver's moving beyond large language models to focus on reinforcement learning and robotics. Okay, it's a $16 trillion test for the market rally. With the Magnificent Seven projected to grow profits by 19%, the stakes could not be higher. Bloomberg's current Reinecker joins us to break down. It is a make or break week for the S&P 500, the Mag 7. We can frame it in any aggregate you like, but we have big earnings Wednesday. We have big earnings Thursday. What are you watching for?
- [49:49]
Carmen Reineke
Yeah, it's really going to be a flurry of excitement, especially Wednesday after the bell. We get four of the biggest hyperscalers reporting. That's Alphabet, Microsoft, Amazon and Metta platforms. These companies are the biggest in the S&P 500. They are helped drive a lot of this rallied, that's gone back to record highs that we've seen in April. And so these earnings are so important for the entire market. And really what investors are going to be looking for is this balance between high capital expenditures on artificial intelligence infrastructure going forward and the return on that investment. So the group that we're getting this week, they're expected to spend more than 6,640 billion in 2026 on capital expenditures. That's up from more than 400 billion this year. So this is a huge jump in the amount of money these companies are spending. And investors are going to be watching for what the return on that investment is.
- [50:43]
Ed Ludlow
We've become accustomed to watching the capital expenditures numbers. It's been several quarters now. But if we put that to one side, what else is it that investors are looking for? A guess across the forum Wednesday.
- [50:54]
Carmen Reineke
Yeah, so there are a few line items that are going to be really important. One is cash flow, free cash flow. And there are some interesting facts to kind of dive into here. So for Amazon, for example, free cash flow is expected to be negative this quarter and potentially the widest since 2022, when what was happening then is that the company was investing a lot in warehouses to meet sort of demand that had been fueled by the pandemic. So that's something investors, investors are going to be watch, watching really closely met as first quarter free cash flow is also expected to be the smallest in nearly four years. And then on the flip side with some of the other companies, including Amazon and Alphabet cloud sales. So how those cloud businesses are doing is going to be extremely important. Investors really want to see growth here. It's, you know, proof for, you know, the AI trend going forward.
- [51:45]
Ed Ludlow
We didn't get to Apple, but that's on Thursday. So I'm giving us a breather. We can do it later in the week. But that was a great summary of what's to come. Carmen Reineke, thank you. And that does it for this edition of Bloomberg Tech. So many news headlines that were driving tech markets this morning. Recap on the podcast. You know where to find it on the Bloomberg Terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg.
- [52:09]
The Hartford Representative
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Ed Ludlow
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The Hartford Representative
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Ed Ludlow
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