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- [00:00]
David Gura
At CES. Michael McDermott, EVP of Samsung, spoke with Bloomberg Media Studios about what the company calls its next AI chapter, your companion to AI living. It's a shift from AI as a feature to AI as a trusted partner in everyday life.
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Christina Raffini
you shouldn't talk about going to the bathroom in public, so we decided to sing about it.
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David Gura
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Christina Raffini
Charmin Ultra Strong Booty pass the clean
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David Gura
text salmon weave texture. It's the best. Study up, teach a lesson on fresh
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Christina Raffini
your booty past the clean text. Charmin Ultra Strong Charmin Ultra Strong with diamond weave texture cleans better than the leading one plaid brand so you can use less.
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Rob Dumble
Enjoy the Go with Charmin.
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David Gura
Bloomberg Audio Studios Podcasts Radio News.
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Christina Raffini
Bloomberg Tech is live from coast to
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David Gura
coast with Caroline Hyde in New York
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Christina Raffini
and Ed Ludlow in San Francisco. This is Bloomberg Tech Coming up. Open Air is close to finalizing the first phase of a new funding round that could bring in more than $100 billion. Plus Mark Zuckerberg testified in a landmark social media trial and said it is quite very difficult to enforce Instagram's age limits. And the DOJ is taking a closer look at the potential impact of a sale of Warner Brothers Discovery on theater chains. We'll get the reaction From Netflix Co CEO Ted Sarandos at 12:30pm Eastern right here on Bloomberg. Okay, let's get to the top story OpenAI is close to finalizing the first phase of new funding that could bring in more than $100 billion according to sources that could boost its valuation to $850 billion. Post money the first round of strategic investors include heavy hitters Amazon, SoftBank, Nvidia and Microsoft. And overnight when we broke this story In Japan trading softbank jumped as much as percent ending up closing down up sorry 2.6%. I think the US ADR are actually a little softer team effort but led the way by Bloomberg Shereen Ghafari who's been tracking this story for, for a little while now, I think. Let's get into the details. Right. It isn't that straightforward to understand. So let's call it phase one. The strategic investors. What do we need to know?
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Shereen Ghafari
So phase one are the major companies that are going to be partners investors in OpenAI. So names like Amazon which as we've it could Invest up to 50 billion, SoftBank up to 30. You also have Microsoft, Nvidia and others. So that is the first kind of part of this round or securing those allocations. And that could come as soon as the end of this month. Then they'll move on to the VC sovereign wealth funds and other financial investors.
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Christina Raffini
Yeah, I think you know the sources I've been speaking to in that next bucket, the sovereigns, the venture capitalists is probably a line around the corner so to speak of people who want an allocation here. There's some interesting detail that I want to get to with you. So like Amazon for example, a first time investment at that scale, super interesting. But also there's some kind of technology agreement as part of this, right?
- [04:27]
Shereen Ghafari
That's right. So part of the deal as we reported is that this will involve an expansion of OpenAI's partnership with Amazon on using their cloud compute to run OpenAI's products as well as the chips Amazon Trainium chips projects to be used in OpenAI's development.
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Christina Raffini
I think it's also important to be sort of transparent with the audience. These numbers have moved around a little bit. Right. And so particularly like some of our reporting on what the pre money valuation would be, how we're kind of getting to that post money valuation of $850 billion. Again just give us the specifics that we need to know.
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David Gura
Sure.
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Shereen Ghafari
There have been a lot of numbers out there and of course with a deal this big that's been in talks for months. Right. Things kind of can shift. But you might have heard the 730 billion number in terms of OpenAI's potential valuation in this round. That is still the, you know, as far as we know it today, the pre money valuation being discussed for OpenAI. But with a round this big, once you add in that money, obviously the post money valuation could go up significantly. So what we're hearing is now that once you add up all the strategics which could easily top 100 if things go well and then you have the financial investors, you could get to that 850 post money valuation.
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Christina Raffini
I just want to point out to the audience that all of the companies we've mentioned either declined to comment or didn't respond to our requests for comment. And for what is worse overnight, Bloomberg says Linda Amin spoke to Chris Lehane and put it to him our reporting about this round and he didn't answer the question. Frankly, what is consistent is the broader context. OpenAI has said for a little while it's compute constrained and in other words, you know, if it had more access to compute, we know about its ambitions to build more infrastructure, it could do more things, it could release more products, it could broaden API access, etc. Paint a little bit more of a picture for us in that respect.
- [06:21]
Shereen Ghafari
Yeah, if you think about it, OpenAI has hardware ambitions. They have to build out all these data centers that they promised with Stargate. They have to go and train these models that become bigger and bigger in terms of the amount of compute needed to get to what they, they want to call AGI. Right. So I think that there's, there's obviously a lot of room for them to expand and go beyond just chat GPT into other business lines with this as well as just this. There's this fierce horse race to make the next big model. They have anthropic Google X. Everyone is going after the same prize here, so they need to be constantly investing in the best development to get ahead and stay ahead.
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Christina Raffini
Bloomberg sharing Ghafari thank you very much. Now sticking with Open Air, the chat CBT maker is partnering with Tata Group and its tech services arm Tata Consultancy Services on a massive deal that could end could speed up OpenAI's enterprise adoption. As part of the deal, TCS will develop a 100 megawatt data center that may be expanded to 1 gigawatt. Tata would also infuse AI throughout its operations and the pair will work together to build agentic solutions for specific industries. The deal was announced while OpenAI CEO Sam Altman was in New Delhi for the India AI Summit, where he told the crowd early visions and versions of artificial general intelligence may not be far off. India, the world's largest democracy, is well positioned to lead in AI, not just to Build it, but to shape it and decide what our future is going to look like. And it's important to move quickly on our current trajectory.
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David Gura
We believe we may be only a
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Christina Raffini
couple of years away from early versions of true superintelligence. Altman wasn't the only tech leader making that kind of prediction. Demis Hassabis, head of Google DeepMind, said AGI could be five years away. And if having all these AI leaders in one place singing the praises of the technology was giving you the impression of unity, think again. There was this moment when former colleagues turned rivals, Sam Altman and anthropic CEO Dario Amodei awkwardly refused to clasp one another's hands. It happened during a photo op orchestrated by India's Prime Minister, Narendra Modi. Okay. As countries race to keep pace with the AI boom, investors are increasingly turning to energy as the next big opportunity. Tortoise Capital senior portfolio manager Rob Dumble joins us now. And actually, you know, let's go back to the top story. You know, a $100 billion or more round from OpenAI where the lead investors are Amazon, Softbank, Microsoft and Nvidia. You know where that capital is going to go, right? In terms of infrastructure. As somebody that is trying to seize the opportunity in the energy sector, supporting that build out, your reaction to the reporting?
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David Gura
Yeah, thanks for having me. So when we look at that at Tortoise, we know we've been focused on infrastructure for a long time, and, and when we see more capital going into AI, you know, who's, who's going to win out of that? Well, I fundamentally is two things. It's data and it's, and it's energy. And so, so we created an AI infrastructure fund here at Tortoise. It's an active ETF that focuses on the data infrastructure. So, so who's going to win from that perspective? You need more data storage, right? You need, you need more cabling, you need more liquid cooling. So the companies that provide that, centers, and you're going to need more data centers as you highlight. Then you're going to build more of those. Those are the companies that are going to, going to benefit from, from this $100 billion of spend. Now you also need energy, you need electricity, right? And so that's, that's where the electrification infrastructure is going to be really important. And so companies that, that have electric generation in the areas where these data centers are going to be built are going to win as well.
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Christina Raffini
Rob, earlier this week, I had an extended conversation with Mary Daly, President of the Federal Reserve bank of San Francisco very focused on, I guess the inflationary impact of what's happening in the data center build out. The argument that the hyperscalers, PG and E. Right. The utility in Northern California argue is it will lower electricity prices at the wholesale level because those, those mega cap tech names take on the capital burden of modernizing the grid, but also, you know, paying up front. Could you just weigh in on that?
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David Gura
Yeah, no, I think it's an absolutely valid point, is something we all need to keep our eye on. And Mary has some great points. Ed, you have some great points as well. There's some really innovative solutions that are happening right now. You know, we're investing in a company like Williams Companies who owns the largest natural gas pipeline network in the US they're actually helping to try to reduce retail electricity prices by building electric generation to support AI data center build outs. But the contracts that they have are between Williams, who's going to build electric generation and the hyperscalers basically ultimately. And so why does that matter? It matters because that from a cost perspective, the cost of that electricity generation to develop AI is going to be put upon the hyperscalers, not the retail consumer, not the retail electricity provider, whether in California or Texas or where I am in Kansas City. And so you're seeing a lot of those innovative solutions start to happen and, but the goal is to not have this build out and to win the race. We're going to need a lot of electricity but not have that be paid for by the retail consumer and as a result have inflation rise because of that. The goal is to have the hyperscalers pay for that. And there's multiple innovative solutions that are,
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Christina Raffini
that are resulting in that open air raising more than $100 billion. I'm going to go back to it with this kind of bigger goal of $1 trillion of commitments. Right. You know, if you try and top them all up, up, how much of a risk is it that the center of what's happening there is just this sort of single entity? I'm not, I'm not necessarily talking about circular financing. I'm talking about the build out. The main tenant of that being one single company. And of course, you know, anthropic and An XI and Google will factor into that, but increasingly it's open air and everything.
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David Gura
Yeah, I think we're going to a world of autonomous everything though.
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Brad Smith
Right.
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David Gura
And so, and we'll see where that, where, where that ends up. Look, I have a lot of confidence and you know, you, you give the tech tools to to the tech experts and what can they do? And we've already seen it's been incredible in terms of the opportunities in AI. And we're, if you think about it, we're just getting started. I mean as far as what, what opportunities there are for agency AI and other ways. Right. Whether it's health care or, or education or just every area in our lives is going to be impacted over the next several decades. And so the technology is there. We just need to get the energy there and we need to get the electricity consistent.
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Christina Raffini
So how great is the risk that the supply of energy will not catch up with where demand is currently and where it will be?
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David Gura
Well, look, I've been investing in energy sector for 30 years and you know, you give these energy sector, this sector a challenge and it always steps up to the, to the plate. And I, and I do think that the sector will, and so, so there are plans in place to continue to expand the US Electricity grid. And if you do that, you mentioned earlier your discussion yesterday, you can, you can make the grid more reliable. And so, so we, I don't think there's going to be a big risk of that actually.
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Christina Raffini
Let me ask you just really quickly, Elon Musk has this target of 100 gigawatts of solar capacity in this country. Is that achievable? Rob?
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David Gura
Well, I think you're going to need all the above approach to meet that. So you're going to need solar. Solar, you're going to need wind, you're going to need hydro, we're going to need nuclear, obviously, we're going to need more natural gas. And so we've got, the US has got an advantage and it's going to win this global air race because it can provide low cost electricity. It's going to do that by this all of the above approach that includes solar, wind, nuclear, natural gas and frankly, probably a little bit of coal as well.
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Christina Raffini
Rob Tortoise Capital, great to have you back on the show. Thank you very much. Coming up, DoorDash serves up a first quarter growth forecast. We break down the food delivery giant's latest earnings next. This is Bloomberg Tech. New York Governor Kathy Hochul has pulled a proposal that would have allowed for commercial robotaxi services outside New York City. This comes as a blow to Alphabet's Waymo, which is looking to aggressively expand its driverless fleet this year. A Waymo spokesperson said the company will work with the state legislature to advance the issue and bring its service to New York. That story was broken by our consumer apps and Gig economy reporter Natalie Long, who joins us now to break down some of the other earnings on her beat. And you've been busy. I'm looking at shares of DoorDash up around 6% or 5% right now. They have been as high as 7% on track for their best day since April last year. Company issuing a first quarter order growth forecast that tops estimates the food delivery platform beat estimates on gross order volume in the fourth quarter. Earnings and revenues missed expectations. I guess the way to look at Natalie is if you take the lid off the, the food Tupperware in the delivery bag. What's the story with DoorDash here?
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Natalie Long
So the demand for on demand delivery is, is very strong as evidenced by DoorDash strong gross order forecast for the first quarter. And that follows sort of the strong demand outlook that Uber had earlier this month. But the bigger story here for DoorDash is their investments into some of the new products, including Deliveroo, the UK business they acquired, as well as like a back end system upgrade that they're talking about to reconcile all of these new businesses they've been building and acquired.
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Christina Raffini
So, so the back end system upgrade is really interesting. Whenever executives from the company come on the show, they always talk about how good they are at software in particular. What is it that they're rebuilding here?
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Natalie Long
Yeah, so last year they went on this multibillion acquisition spree including UK's Deliveroo. And earlier a few years ago they acquired the Eastern European delivery business, Walt. And so now they have these three different apps, DoorDash, WOT and Deliveroo. And they all worked on different systems. And so the CEO Tony Xu wants all these systems to work on the same platform so that engineers can work on the same projects and analytics teams can look at the same common data sets. And so he says this is a painful but necessary exercise to conduct this year and they are having to invest a lot into it that could weigh on profits.
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Christina Raffini
You've also been looking at booking holdings, stock down relatively significantly. I don't know. Some analysts are saying like global travel seems strong, that's supporting them. Others are debating and questioning their growth forecast to interpret that. What do you see?
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Natalie Long
So it's, it's actually a similar story there in bookings. They are, it's going to be a big year for reinvestments for them. Last year they talked about this transformation program where they had to cut a few jobs and reorganize some of their businesses and now they're investing those savings back into the company for AI and they talked about how customer service has been improved with AI and so there's always, you know, concerns or skepticism on how that would play out for them.
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Christina Raffini
Bloomberg's Natalie Long, terrific reporting all morning long. Thank you very much. I also look at shares of Figma. The company gave an annual revenue outlook that topped estimates and it kind of eased Wall street's anxiety over AI threats to its own business. It's up around 7% but also I think showed a lot of what it's doing in the field of AI. Bloomberg's Brody Ford is on the other side of town from me where it's raining heavily. I've learned a lot this morning through your reporting about what on the face of it seems a pretty boring term, net dollar retention rate. But actually like if you kind of dig into it, it basically shows Figma had a lot of existing customers, it launched new products, those existing customers were willing to pay for those new products on top of what they already have.
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David Gura
That's exactly right.
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Brad Smith
Yeah.
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David Gura
And that's the trend that investors wanted to see. I mean Figma is one of these names that's gotten caught up in the SaaS apocalypse. You know, the fear that as it gets easier to build software, these application leaders aren't going to have the pricing power they once did. But Figma showed us they did because on average if I gave them a dollar last year, I'm giving them a $35 this year. And so that clearly shows that the amount of products customers are buying is expanding.
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Christina Raffini
We, we kind of zeroed in on by the way we're showing the shares kind of over a longer time period since the IPO in July of last year, down 22% basically. Figma make, they basically said like here's an AI tool that we have, it is growing. What do we need to know?
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David Gura
Right? Figma make is essentially you type in a prompt and it kind of gives you a pretty good app, right? I mean it's in the Vibe coding realm. And that matters because there's a lot of these startups like Bolt or Replit that promise to be able to vibe co apps pretty well. And so it was really up to Figma to show that no, we are the incumbent here and we're going to out innovate our peers and you know, at least last night they took a step towards convincing the market of that.
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Christina Raffini
Bloomberg's Brody for terrific reporting. Thank you, thank you very much. A lot more coming up. ByteDance aims to compete with the world's leading US based AI companies literally on their own turf. We have more on that next. This is Bloomberg Tech.
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David Gura
How do you shift AI from being a flashy feature to a trusted partner in consumers everyday lives on the ground at CES Bloomberg Media Studios, asked Michael McDermott, EVP of Samsung. Our 2026 vision is built around an AI companion. It understands you and responds intuitively. This intelligence works quietly in the background across TVs, home appliances and mobile devices. By putting AI at the center of everything we do, we're simply improving everyday life for everyone everywhere. The news doesn't stop on the weekends.
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Christina Raffini
Context changes constantly, and now Bloomberg is the place to stay on top of it all.
- [20:55]
David Gura
Hi, I'm David Gura. Join us every Saturday and Sunday for the new Bloomberg this Weekend.
- [20:59]
Christina Raffini
I'm Christina Raffini. We'll bring you the latest headlines in depth analysis and big interviews, all the stories that hit home on your days off.
- [21:07]
David Gura
And I'm Lisa Mateo.
- [21:08]
Christina Raffini
Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people and culture.
- [21:15]
David Gura
On Saturday mornings, we put the past week's events into context, examining what happened
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Christina Raffini
in the markets and the world. Then on Sundays, we speak with journalists, columnists and key political figures to prepare you for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you.
- [21:31]
David Gura
Watch us on Bloomberg Television, listen on Bloomberg Radio, stream the show live on the Bloomberg Business app, or listen to
- [21:38]
Shereen Ghafari
the podcast that's Bloomberg this weekend.
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- [21:44]
Christina Raffini
Make us part of your weekend routine on Bloomberg Television Radio and wherever you get your podcasts. It's time for talking tech and first up, the UK has proposed rules requiring tech companies to remove abusive images within 48 hours or face fines of up to 10% of global revenue or even a UK service ban. The move comes amid investigations in Ireland, Spain and other countries over non consensual undressed images created by X's AI chat bot Grok. Plus, Morgan Stanley is cutting fees in half for clients trading private company shares on its newly acquired equities and platform. Charges for buyers and sellers will be lowered to 2.5% from 5% on most transactions, undercutting competitors as it looks to take advantage of an expanding market. And finally, Amazon has officially overtaken Wal Mart as the world's largest company by revenue. The online retail giant posted $717 billion in sales for 2025, edging past Wal Mart's 713, a big driver of that growth? Amazon's cloud computing business. And we strip that out. It's not quite apples to apples. Another story. Chinese tech giant ByteDance is hiring in the US for nearly 100 open rocks roles within its AI division. The push comes after it announced a deal to sell parts of its US Tik Tok business to non Chinese owners to address US national security concerns. Bloomberg social media reporter Alex Levine has the story. Let's talk specifics like what are these roles? Where are these roles?
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Premier Protein Advertiser
The roles are mainly in California and Washington. We have them across Los Angeles, San Jose and Seattle, which are all cities that that TikTok also has offices in. And I think what's so fascinating about these AI roles is really just how much they run the gamut. You've got roles that are focused on producing international data to feed to ByteDance's LMS. You've got roles doing research to to to make AI more human like and you've also got these really interesting roles building science science models that are really looking for talent in biology, chemistry and physics. And these are more roles focused on helping ByteDance pursue drug discovery and development.
- [24:08]
Christina Raffini
So the reason this is a notable story, right? You just said that these roles will be in proximity to or in U.S. tikTok offices. Right. But the broader thing is, you know, Chinese parent hiring for roles in the field of AI in the United States national security competition take us there to
- [24:27]
Premier Protein Advertiser
clarify the these not necessarily in the same as the TikTok offices, but they are in the same cities where TikTok has a large footprint. And as you just mentioned, these are also cities where some of the leading American AI companies also have a lot of, a lot of talent and their own footprint. I think what's so interesting is that to this point in the US we've really thought about ByteDance as a social media company. It is also a dominant AI company and it really seems that that has been a bit like lost on the US until now. And I think the turning point has really been over the last week since ByteDance unveiled some new AI models for video generation, for example, and image generation that has really caught on and raised concern, especially from Hollywood in a very big way.
- [25:11]
Christina Raffini
All right, Bloomberg's Alex Levine. It's a must read report on the Bloomberg about ByteDance building out teams in the US coming up, we're going to discuss what Mark Zuckerberg had to say about teen social media use when the Meta CF CEO testified in a landmark trial. We have those details coming up next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. We're just going to take a quick look at where financial markets are right now. We had a lot of economic data to pass through the morning. Our markets team on the Bloomberg Terminal and On.com are really emphasizing the geopolitical risk that's out there. Also ongoing concerns about inflation. The NASDAQ 100 very tech heavy, modestly lower down 3.10of a percent. Chip stocks taking a breather down 8.10of a percent. And then Bitcoin now further below 67 US thousand dollars per token. Remember, it's a shorter week in the United States. It was a holiday on Monday, but, but Bitcoin trades 24 7. And we came back from that holiday weekend with bitcoin under pressure. One headline, by the way, Goldman Sachs CEO David Solomon saying he owns a very modest amount of bitcoin. But remember, he's long been a crypto skeptic and that's not doing much to support the asset either way. We'll keep you posted. Another top story today, Meta CEO Mark Zuckerberg took to the stand in the landmark social media addiction trial. Bloomberg's Riley Griffin was in the corner courtroom for that testimony. And look, we were building up to this on the program throughout the week. Take us through the lines of questioning and I guess what the top line of what Mr. Zuckerberg had to say in response to those questions.
- [26:53]
Riley Griffin
Yeah, and a great question. It was an intense day here in Los Angeles and yesterday we saw Mark Zuckerberg testify to a number of things. Questions about company documents that showed that Metta had been focused on increasing time spending spent among young users. Questions about the under 13 demographic on the platform despite policies that suggest they're not allowed to be there. Still millions of Americans under that age on the platform. Questions about decisions he personally made regarding beauty filters. All of this came to a head with him on the stand. At times rather uncomfortable, very subdued. He did score a couple of wins here and there. But overall the picture was painted of a company that made deliberate and could potential user health the youngest users.
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Natalie Long
Right.
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Christina Raffini
You know, Instagram does have age limits and other tools that already exist. And Mr. Zuckerberg basically explained it was very difficult to enforce them. Did he go a step further and explain why it's difficult to enforce them? I think he also talked a little bit about other tools that they are being, let's say, proactive, active on.
- [28:08]
Riley Griffin
Yeah. So one of the cases that Mr. Zuckerberg made was to say that for the youngest users, particularly those without driver's license, it's really hard to verify age. He took a line that has come up a lot these days, particularly in lobbying efforts, which is to say that phone makers like Apple should do a little bit more to help with that age verification process. In fact, a email was brought forth by Meta's defense to show that he had made efforts to reach out to Tim Cook in the past to look for efforts where they could collaborate on improving teen safety. So he said, it's an open secret. They all know that many users are lying about their age. The plaintiff's attorneys suggested that Meta had not done enough to enforce that. And there were some documents that showed that Nick Clegg, for example, a former policy chief, had said these, these, these policies were basically unenforceable and show that they weren't doing all that they could. So we saw it go back and forth. But Mark Zuckerberg's take here was that it's a really difficult challenge, even as they create proactive tools to remove under 13 users.
- [29:20]
Christina Raffini
Bloomberg's Riley Griffin, who is on the ground and will continue to cover the trial, thank you very much. Let's discuss the broader legal implications of the case case with Marianne Franks. She's a professor at George Washington University Law School in intellectual property, Technology and civil rights. And a moment ago, the team was showing the data around what else is happening in parallel with this specific trial? Right. There are 3,000 such suits running in parallel. You also have states attorneys general, 40 plus looking at this issue. But in the here and now with this specific legal proceeding, could you just help us understand what is at question here, please?
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Marianne Franks
The primary question that they're trying to address here is are the harms that are being experienced by these plaintiffs? And those are some really extensive and really serious ones, including in some cases, suicide. But depression, body anxiety, body dysmorphia, Are these things attributable to the design of certain platforms, in particular things like Instagram and Facebook? And so really the question is, who is causing this harm? What is responsible? Is it the content that these kids are seeking out, or is it the way that these platforms have designed their tools and services to entice really vulnerable users to stay on the platform for longer and longer periods of time?
- [30:46]
Christina Raffini
It was Mr. Zuckerberg who was giving testimony. And, you know, the, I suppose, top line of that testimony was that it is difficult for matter in particular through the Instagram app, to enforce what are existing rules. You know, how do you feel that that argument will carry from him?
- [31:08]
Marianne Franks
It's not really clear how well that's going to serve. I think the defense, because really what Zuckerberg seemed to be reiterating Was, well, we have all of these really dangerous tools that we know can cause harm. And you know, it's just really hard for us to keep them out of the hands of certain individuals. But that's just sort of accepting the premise that these kinds of products and services should exist at all and that, that it's just an intractable problem about who is going to access them when the question really should be, you know, why are you creating these types of features, procedures, what's the actual use of something like a beauty filter that you know is going to be really attractive to nine and ten year old girls. So I think that he's very much trying to say, well if you assume a world where all of these things have to exist, then it's really hard for us to control access. That's true enough. But why do these things actually have to exist?
- [31:57]
Christina Raffini
We're showing a February 11th statement from Matter specifically tied to this trial. And the back half of it says the evidence will show she plaintiff faced many significant difficult challenges well before she ever used social media. I'm just putting that, that that is matters statement prior to that in November, you know, they had said they strongly disagree with these allegations and confident the evidence will show our long standing commitment to supporting young people. I'm going to ask the same question again in a slightly different way that you have the CEO of the company defending what our existence, existing policies and practices, but explaining how difficult it is to enforce them. Would you just help us understand, you know, what pressure will be put on him as the CEO of that company or what changes or what outcome the court could affect how that company does business.
- [32:52]
Marianne Franks
Yes. So a lot of things could happen at this point because this isn't just about whether liability is found in these particular cases. This is also the first moment that we're really seeing the general public get a look at what did Mark Zuckerberg know and when did he know it. And so even if in individual cases it's an uphill battle to show absolute causation for these injuries. Now we've got information in the hands of the public, in the hands of regulators, in the hands of policymakers. And you've already seen that this kind of attention is causing these companies to change some of their practices. So they've been giving the kind of PR propaganda about, about how well we're doing our best, but it's really challenging. But every time there's serious consequences that might loom over these platforms, they do start making some changes, although usually they're a little too little too late.
- [33:41]
Christina Raffini
We, we put in writing that this trial will run through the end of March. And again, it's in parallel with a number of other legal proceedings that involve other parties. How much does one trial influence all the others that may happen after to very quickly, quite a bit.
- [33:56]
Marianne Franks
These are, this is a bellwether trial. And the entire reason why it's been chosen is because it's supposed to give both parties a sense of how this is going to play out. And so if it looks as though things are going badly for the defense, that could really have an effect on settlements and possibly agreements going forward to have safer products and platforms.
- [34:12]
Christina Raffini
Marianne Franks from George Washington University Law School, thank you very much. What about the business impact? Minda Smiley, senior analyst, analyst at E Marketer, has been looking into teen social media use and joins us now. And again, going back to Mr. Zuckerberg's testimony, his argument was that this category or demographic is a small part of the Instagram business. Does your research support that?
- [34:37]
Rob Dumble
Yeah, I mean, I think the reality is a little bit murkier than that.
- [34:39]
Shereen Ghafari
Right.
- [34:40]
Rob Dumble
I mean, I do think he maybe has some points when he says they're not a, they're not demographics, there's a majorly monetized and that they maybe don't bring in a ton of ad revenue, but that does not mean they're not significant. I mean, when you look at our marketer data, we see that in the US at least about 11% of Instagram users are under the age of 18. And so again, not a huge majority, but that's a significant percentage. And also, I think, you know, the numbers tell one story, but the reality is these platforms gain a lot by, you know, essentially hooking these users young because the younger that they get on these platforms, the more likely they are to continue using them in the future. So again, you can look at the numbers, you can look at maybe how much they, how much revenue they're generating from teens per year. But really it's about setting these behaviors early and benefiting in the long term.
- [35:26]
Christina Raffini
Mr. Zuckerberg stated that teens equate to 1% of revenue, which I thought was an interesting data point. This, this question about the future of Instagram in particular. But, you know, the other metal family of apps is, well, what would they change? You know, and part of the discussion in the testimony was the tension on the rules they have in place and the privacy of the individuals that are signing up for them. Does that tension have any bearing on how they do business going forward?
- [35:59]
Rob Dumble
Yeah, I mean, I Think it's still really early to say, but I mean, for sure, I think depending on how these lawsuits play out, if they end up having to fundamentally change, change how their platforms work, whether it's. Whether it's the algorithms or autoplay, infinite scroll, whatever it might be, that will in turn have an impact on how teenagers use these platforms. And something we've noticed is that, you know, it was interesting to see him really kind of downplayed to what extent Metta has really prioritized time spent as a metric when our numbers show and just, you know, paying attention to the company, company in general. We know that time spent is definitely a crucial metric for Formita and all social networks. And we have seen time spent among teenagers specifically rise year over year on Instagram. And so we do see that, you know, anything that would kind of chip away at that time spent if they would have to make changes to the platform, what would have an impact.
- [36:48]
Christina Raffini
But your research shows that teens are spending significantly more time on Tik Tok than on Instagram, I think I'm correct in saying. Right. I just want to point out that with this trend trial, Tick Tock and also Snap are not parties to the case because they had settlements prior to it. But if we look bigger picture at the industry, how will these other players be be looking at this trial, do you think?
- [37:14]
Rob Dumble
Yeah, I mean, I think they're all probably looking at it through, through a similar Lens. I know YouTube is trying to really make the case that it operates very differently than a, than a matter, than a TikTok, than a Snapchat. And so I think, you know, that could potentially see. See you to play out a little bit differently. But I think in general, yes, especially a company like TikTok, which is kind of, you know, it's really equated with teenage use. Right. A large part of why it became so popular in the US in the first place was because of young people, because of teenagers. So. And like, as you said, yes, our figures do show that teenagers spend a ton of time on Tik Tok, definitely more than Instagram. Although we are see that seeing that time spent come down a little bit year over year, which kind of suggests that TikTok isn't maybe the shiny new object it was, you know, five, six years ago.
- [38:03]
Christina Raffini
The difficult question is what happens next? Right. And your research, others point to lawmakers, you know, putting out a new set of rules. Is there momentum behind that pathway?
- [38:17]
Rob Dumble
So, yes and no. I think there is momentum at the state and the federal level level. We are Seeing lawmakers and regulators try, try to address a lot of these concerns independent of this lawsuit, these lawsuits. That being said, they're running up, running up against a lot of challenges. For one is big tech lobbying. I mean, these companies are lobbying against a lot of these, these bills and laws. There's challenges happening in court and then even, you know, generally this tends to be a bipartisan issue. I mean, we see lawmakers on both sides of the aisle want to kind of rein in the power of, of these platforms and rein in what they perceive to be harms, but the way they want to go about it often differs. And so that's another challenge. Enforcement is a challenge. We're seeing that play out in Australia with the ban under sixteens. You know, they're having a lot of success in some ways, but they are having some enforcement challenges and actually getting people under 16 to completely stay off these platforms. And so, so it's a messy area to regulate.
- [39:15]
Christina Raffini
Linda Smiley Marketer Senior Analyst thank you. Now, coming up, we're going to hear from Microsoft President Brad Smith on the company's relationship with Open Air. That's next. This is Bloomberg Tech. Microsoft President Brad Smith says the company is on track to see spend $50 billion by 2030 to expand AI infrastructure to the global South. He sat down with Bloomberg's Haslinda Amin on the sidelines of India's Impact Summit. He also weighed in on the state of Microsoft's partnership with Open Air. Take a listen.
- [39:53]
Brad Smith
I think it remains a critically important partnership for Microsoft. We bet on each other, but it's not as exclusive as it was say, a few years ago. OpenAI uses our compute. They train models in our data centers, but they work with other companies as well. We Critically rely on OpenAI's Frontier models. They are among the best. Many days they are the best in the world. But we have a relationship with anthropic. We use open source models, we're developing our own models. So on both sides, we work with more partners. But I think the partnership between the two of us remains an imperative. It's a huge priority for us at Microsoft.
- [40:38]
Christina Raffini
The question is why is it a hedge? Is it a strategic pivot? How would you describe that move, looking at alternative partners?
- [40:46]
Brad Smith
Well, look, if you want to think about the partnership between OpenAI and Microsoft, all you have to do is ask one question. Would any of this generative AI sector even exist if the two of us had not come together? OpenAI created something that no one else even understood was possible when they launched ChatGPT and OpenAI could never have created that without Microsoft's compute and really frontier data centers on which to train that we built something special. Will each do special things on our own. We'll each do special things with other companies. Will each do, I think, very special things with each other?
- [41:31]
Christina Raffini
Just one final question because we're running out of time, apparently. Copilot, is it losing traction?
- [41:37]
Brad Smith
I don't think so. It's gaining ground. It's getting better every week. It's getting better every month. I say this as a user, not just of M365 Copilot, but our consumer copilot pilot, our researcher, agent or other agents. You know, we're seeing usage grow. We will continue to add features and functionality. I personally think it is an important part not just of Microsoft's past and present. It is a key part of our future. It is a key part of, I think, making everyone more creative, more productive. I certainly find that in my own work work each and every day.
- [42:16]
Christina Raffini
That was Microsoft Vice Chair and President Brad Smith, along with Bloomberg's Haslinda Amin. In other news out of the summit, Microsoft co founder Bill Gates backed out of a keynote address just hours before he was due to speak, replaced instead by the president of the Gates Foundation's Africa and India offices. The foundation explained the decision as an effort to ensure the focus remains on the conference without elaborating. The withdrawal follows criticism of Gates relationship with convicted sex offender Jeffrey Epstein and speculation about whether that link could overshadow the foundation's broader mission. Coming up, there is more drama around the sale of Warner Brothers Discovery. We'll discover that next. This is Bloomberg Tech. Hollywood is no stranger to a plot twist list. Take the latest development in the saga to purchase Warner Brothers Discovery. According to sources, the Justice Department has summoned some of the country's largest theater chains to discuss the potential impact of a sale to either Netflix or Paramount Skydance. This coming on the heels of Warner Brothers reopening deal talks with Paramount. Now all this drama should be seen as one twist too many for Netflix, according to Bloomberg Intelligence. Let's bring in the all author of that research by senior analyst Geetha Ranganathan. Investors have voiced this right there is this idea that now might be the time for Netflix to walk away from some corners of the market. I think last weekend Quora came out in favor of that. But you at BI have have some pretty clear reasons why you think Netflix should walk away. Just outline them for us.
- [44:01]
Geetha Ranganathan
Yeah, absolutely. I mean this has been a major a distraction ad. Now for you know, over a couple of months right now. And we've seen that even, you know, as a reflection in the stock price. But they really, you know, it just kind of really muddies a really clean narrative for the company. And I think from our perspective, yes, we do see that, you know, Netflix obviously has a lot of financial firepower. They are an absolute free cash flow machine. They're probably going to generate about 11 billion in free cash flow this year. There's no doubt about that. But there is going to be the question of leverage. So if they do take up their offer, it's currently about $27.75, they risk pushing close to almost four times leverage as they go up to maybe $30, $32. We don't know what that final number is going to be. And then, you know, you're going to deal with how do, how do you reduce debt. So it just becomes a big problem there. And then, of course, you just have the general concerns with integration, risk, execution, risk. And remember, with this is, you know, Netflix is really acquiring a business that they always wanted to stay away from. There they're acquiring a traditional. Yes, they do get the library, the fantastic ip, the HBO library, which is one of a kind when it comes to scripted dramas. But then you also really are increasing your dependence on Hollywood. And the whole reason that Netflix has done so well, Ed, is because they have been a global powerhouse. They have not just depended on Hollywood for content. They have gone to so many different local markets. International has been such a big deal for them. But, you know, as we kind of see the union contracts kind of coming up, you know, we think that increasing the dependence on Hollywood is actually more of a negative than a positive for Netflix.
- [45:39]
Christina Raffini
Just, just very quickly, Geeta, the stock's down more than 30% since this started. Is that a signal or is it real pressure on management?
- [45:49]
Geetha Ranganathan
So, a couple of different things. I think a lot of it hinges on what the outcome of this whole Warner Brothers Discovery deal is going to be. But then Netflix also has some problems. They have shown that they haven't really been able to grow engagement, and a lot of people have argued that maybe that is why that they're pursuing Warner Brothers Discovery in the first place. So, you know, they have a couple of things to do in terms of increasing their operating margin, in terms of boosting engagement. And if they do that, then I think management has a pretty good story why they don't need Warner Brothers Discovery.
- [46:17]
Christina Raffini
Geetha Ranganath from Bloomberg Intelligence, thank you very much. And we will be speaking with Netflix Co CEO Ted Sarandos in about 30 minutes time. So stick around. That does it for this edition of Bloomberg Tech. Recap. What was incredible news show on the podcast. You know where to find it. This is Bloomberg Tech.