Loading summary
Transcript142 lines
- [00:00]
Anna Rathman
Adobe is turning AI promise into marketing reality, a reality where personalization feels more human, automation feels authentic, and customers feel
- [00:11]
Ed Ludlow
more connected to your brand.
- [00:13]
Caroline Hyde
From AI frenzy to roi it starts with Adobe.
- [00:18]
IBM Representative
The thing about AI for business, it
- [00:20]
Ed Ludlow
may not automatically fit the way your business works. At IBM, we've seen this firsthand.
- [00:27]
IBM Representative
But by embedding AI across hr, it's
- [00:30]
Ed Ludlow
and procurement processes, we've reduced costs by
- [00:33]
IBM Representative
millions, slashed repetitive tasks, and freed thousands
- [00:36]
Ed Ludlow
of hours for strategic work.
- [00:38]
IBM Representative
Now we're helping companies get smarter by
- [00:40]
Ed Ludlow
putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM Sonesta Travel Pass is the most rewarding way to travel. Sign up@sonesta.com for instant savings, bonus points and perks like early check in, late checkout, room upgrades and free stays. Choose from 1100 hotels across 13 brands and unlock their best rates when you book with Sonesta Travel Pass. Here today, roam tomorrow. Join now@sonesta.com Terms and conditions apply.
- [01:18]
Caroline Hyde
Bloomberg audio studios podcasts radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
- [01:38]
Ed Ludlow
This is Bloomberg Tech. Coming up, Iran chooses its new leader as the conflict spreads further and sends oil prices jumping.
- [01:45]
Caroline Hyde
Oracle and Open Air won't expand a flagship Texas Data center to 2 gigawatts. Oracle maintains the big build out is
- [01:53]
Ed Ludlow
intact and N scale raises $2 billion in new funding valuing the UK based datacenter developer at $14.6 trillion.
- [02:03]
Caroline Hyde
But we start at just broadening the scope of the market that we look at. At the moment we're down 4, 10%. We are off of our lows on the NASDAQ 100. But once again the conflict with the Middle east, the fact that we're at war with Iran and that continues is still rocking markets. We're currently up 10%. When you're looking at New York crude we're looking at Brent. At one point it eclipsed $120 a barrel. There is clear fear consuming asset classes that have lost about 6 trillion since the beginning of the conflict. And therefore we want to bring in Bloomberg Washington corresp Tyler Kendall for a little bit more. Set the scene. What happened? A new leader and continuing barrage.
- [02:41]
Tyler Kendall
Yeah. Hey Caroline, good morning. Well at the moment it doesn't seem like there is any let up when it comes to the conflict and that a diplomatic off ramp isn't on the table at the moment. In fact we heard from President Trump over the weekend threatening to widen the war in A post on Truth Social. He said that the US Was looking to expand its list of targets as the President maintains that he is, quote, not happy with the new Supreme Leader that has been chosen. Analysts say that the fact that the son of the late Supreme Leader is now the new one indicates that the regime is going to continue its hard line stance. In fact, we heard from Iranian state media over the weekend after the pick that the government maintains that it has enough weapons stockpiles to sustain a high intensity conflict for the next six months and that Iran will start to deploy more advanced and longer range weapons. Of course, this is all contributing to questions about the timeline here and what will be sustained, sustained disruptions when it comes to the oil market. Caroline, as you know, earlier this morning G7 finance ministers had met about the potential to tap a coordinated release of strategic reserves. Ultimately French France, France's finance minister came out and said that the Group of Countries was not there yet. But the option still remains on the table.
- [03:55]
Ed Ludlow
Tyler, the story markets stocks and bonds slide, but really it's oil. Right. You either look at Brent or West Texas. What's the President had to say about what is happening in oil markets as a result of the conflict in Iran. You know, energy affordability, oil prices, things central to his, to his platform.
- [04:16]
Tyler Kendall
Right. You're really threading the needle there, Ed. Because at this point President Trump has downplayed the oil spike telling Americans to be patient and that ultimately it's not going to be long, sustained. We heard from the Energy Secretary over the weekend in an interview saying that this is not a long term conflict. And other US Officials have said, said that this is going to be a short term disruption in order for the long term gain of achieving the US Objectives when it comes to Iran. Still, we know that the White House has been trying to reassure Americans when it comes to the economy before this conflict even happened. And now as we see those higher prices trickle down to retail gasoline, that's putting the White House on the defense. Now our understanding is the administration is looking at some potential options to help domestic consumers. There had been reporting that the White House was set to ask Congress for a gas tax holiday to help lower prices. But we haven't really seen that emerge either. It appears that the administration has taken off the table for now, tapping the Strategic Petroleum Reserve amid questions about its replenishment, which was really at this point leaving the administration to have to reassure Americans that this ultimately is going to be worth the long term success of the military campaign and broader peace in the Middle East.
- [05:29]
Ed Ludlow
The President calling hundred dollar oil a small price to pay in the context of getting the war completed. Bloomberg's Tyler Kendall with the latest from DC Oil Sur past $100 as Saudi Arabia begins cutting production with storage facilities nearing capacity amid disruptions tied to the Strait of Fuel moves, according to a source for more let's talk about global energy, the upheaval. Julianne Edwards, nuclear company chief development officer is with us. So this, as Tyler put it, is a difficult needle to thread as well because you know, long term you're going to say that the war in Iran puts a spotlight on American energy security but you also have a firm grasp of the data, right? So tell us what you on your desk are seeing right now in terms of oil disruption and oil supply and then we'll get to the nuclear part.
- [06:16]
Julianne Edwards
Good morning and happy to see you guys this morning from our nation's capital. Yes, we are watching the oil prices continue to escalate. Our hope is that this will have only an indirect effect for a short period of time and that we will start to see resolution in Iran soon. But that being said, these are long term decision making that occur with these infrastructure projects. And so the fact is is that these disruptions that we are seeing from these geopolitical tensions are going to have a direct impact on our energy prices, our oil and gas prices domestically and why it's so critical to continue to invest domestically in onshore capabilities related to baseload energy related to onshoring and manufacturing so that we're less vulnerable to these market disruptions that can happen overseas.
- [07:01]
Ed Ludlow
There's a note out there this morning from, from Jefferies saying that despite the sort of volatility and uncertainty, clients should be encouraged to continue to stick with clean tech, you know, renewable tech stocks in that, in that instance do you, do you take a sort of reputational hit in an environment like this for your industry when there is such a micro focus on oil?
- [07:24]
Julianne Edwards
I'm seeing the actual pivot towards understanding the importance of reliability and dependability. Nuclear energy has long been a backbone of our electricity system and producing electrons for 90 to 95% of the time, so almost 24,7 power. And I'm seeing that there's more of an understanding and an informative set of policymaking and tied to that versus its clean air attributes. But it is no secret that nuclear energy is a zero carbon source of electrons, but it is a baseload source that is dependable for 60, 80 years. And we are hoping that this administration will continue to push to investing more into that infrastructure so that we can continue to be resilient to times like these.
- [08:04]
Caroline Hyde
And Julian, how quickly can that sort of energy get online? Because you're thinking about how currently useful technology can be deployed. How kind of useful is any that is in the United States?
- [08:17]
Julianne Edwards
These are long term capital projects. I mean you're thinking you're looking at roughly two to four years for pre development and then roughly a five to eight year build cycle before you can put electrons on the grid. But we're seeing in China that they're able to build nuclear power plants in roughly seven years. And so the United States needs to keep needs to keep up and ensure that we continue to invest streamline regulatory and that's actually why I'm here in our nation's capital today at the regulatory Information Conference where we're seeing a strong push in delivering on this administration's executive orders to have more sensible regulations when it comes to nuclear energy.
- [08:51]
Caroline Hyde
Go there about the seven years in China. Is that just a, just a quicker turnaround in terms of getting the ability, the capability of putting it in certain jurisdictions? Basically the regulatory sign off is faster.
- [09:04]
Julianne Edwards
That's a large component. You need to have sensible policymaking and regulations that are applied to these. You also have to have premier locations that have access to water and to the grid. And in China it's a very much state backed program where in the United States it's a little bit government endorsed but it's industry led. And so we're seeing this administration extend things like the investment tax credits, the production tax credits and extending the timeline for the loan program office. These are all great things that are going to enable the industry to keep up with China and making sure that we maintain our nuclear dominance.
- [09:37]
Ed Ludlow
In October we got an $80 billion deal for nuclear. Right? You are a company that wants to develop nuclear reactors. In fact you're one of the names, few names that wants to actually go out and develop a big nuclear plant. What progress have you made on that? What details can you share? And again in the context of what's happening with the war in Iran, how is that impacting your ability to execute on it?
- [10:02]
Julianne Edwards
Our company has been laser focused on building the bench strength and capability, a muscle that our country actually has lost since we have not built any new reactors in 30 years with exception to the two plants down in Georgia. So we've been focusing on all the front end loading activities required for mega projects, so siting and characterizing land, making sure that we're building out our governance structure and capability set especially working with the government closely and also working with the design firms, those that design reactors like the GE and Westinghouse of the world.
- [10:33]
Caroline Hyde
You've talked about U.S. energy security, talked about how we're seeing China evolve. Talk about Europe for a minute here because it's interesting on this day with that pitching an infrastructure fund at the moment, billions and in terms of almost $803 billion equivalent to try and speed up their own infrastructure, make it clean and make it more effective perspective. But how much are we seeing Europe ever thinking more about nuclear?
- [10:55]
Julianne Edwards
We're seeing a large uptick in activity in nuclear in Europe. And I think what's driving a lot of that is recognizing that national security and energy security are interconnected. We saw this really unfold as they become became more vulnerable during the Ukraine war and their over dependence on Russian gas started to create vulnerabilities in their system. So they want to make sure that they have their domestic manufacturing capability set for their own energy infrastructure and less dependent on neighboring nations. So I think we're going to see a rapid incline of building nuclear infrastructure in Europe, especially Eastern Europe and even in the Nordics we're seeing a large amount of activity tied to US Technology wondering when will our technology be ready and how quickly can we export that to those countries.
- [11:41]
Caroline Hyde
Julian Edwards of the nuclear company, thank you so much for joining us today from D.C. meanwhile, coming up, Oracle OpenAI have scrapped plans to expand the Stargate data center project. We'll have the details of why and what comes next after the break. Is it a break? This is Bloomberg Tech.
- [12:07]
Ed Ludlow
We have some breaking news crossing the Bloomberg Terminal. Anthropic has sued the Defense Department over being labeled a supply chain risk. That red headline Anthropic is sued the Defense Department over being labeled supply chain risk, which happened at the end of last week. You'll remember that we had reported ongoing negotiations between Dario Amadei, the CEO of Anthropic, and the Pentagon and Department of Defense. And basically what are red lines for Anthropic in how their technology is used throughout the hour. Carol, I'm sure we'll get more when we have somebody able to come to set and we get more details in the suits filing. But that is the headline for now. Yes, another story that we are across and working on. Oracle and OpenAI won't expand their flagship Texas data center from 1.2 gigawatts to 2 gigawatts after negotiations stalled over financing and shifting computing needs. Bloomberg reported that story on Friday. The existing campus is still being built and Oracle's broader agreement to develop 4.5 gigawatts of datacenter capacity for open air remains on track. Developer Crusoe is now seeking a tenant for the shelved expansion. With Matter in talks and in video helping facilitate discussions. Bloomberg's Brody Ford, part of the team that broke the story. A lot of names in there, but that's the basics of it, right? There was an expansion due to take place 1.22 gigawatts. Our understanding is it's not happening. The other details, as you said, it's
- [13:31]
Brody Ford
a lot of names involved here. And what this story really shows is that so much money is tied up up in these huge data center projects that require some pretty tight logistics. In this specific case, the flagship Stargate data center, they're going to expand it further. But the negotiations had dragged on for months and months, and eventually Oracle and OAI decided that they're not going to take this additional capacity.
- [13:55]
Caroline Hyde
Brody, what has OpenAI and indeed Oracle's response been to your reporting about how deeply aligned they are with on continuing to build infrastructure?
- [14:07]
Brody Ford
The message we've essentially received is that their overall work together is still on track. And that is also our understanding what is.
- [14:15]
Ed Ludlow
We put it in the original story. Exactly. Please, please, carry on.
- [14:19]
Brody Ford
Yeah, exactly. But I think what's interesting is just looking at, you know, how do these projects actually play out, right? The big contract is there, but certain sites that they thought they wanted, maybe they don't, Right. And you think about all the capital that's tied up in these projects. It's interesting to see how these are going to progress.
- [14:38]
Caroline Hyde
Remarks Brody Ford across that reporting along with Ed Ludlow. Brilliant scoop. Thank you very much. Let's stick on Oracle on the global race to build out data centers with Anne Rathman, CEO of Grenadilla Advisory. And talk to us about whether or not these sorts of stories about the difficulty of actually ensuring you're building where you want it when you want, affects the overall investment attitude you have towards the datacenter build out.
- [15:03]
Anna Rathman
Hi, good morning. You know, these are the type of stories that would make the private credit investors a little bit nervous, right? Because private credit has been really into the infrastructure buildout. The big players have been. But if there are hiccups like this where what you intended doesn't actually happen. Of course, of course Metta may be coming in, maybe a different story, but certainly what happens to your collateral? What happens to the project? Is it going to keep going? I mean, this situation is different, but if it happens again, these are the things that make people take a step back and take a look at the private credit again.
- [15:43]
Caroline Hyde
And certainly that has an impact on certain stocks like, well, Blue Owl and others that are very much dependent on the private credit story. But how much does it affect the Oracle story?
- [15:53]
Anna Rathman
Well, I think it impacts the Oracle story as well. I think this is the type of news that can actually have investors actually stop because we are hearing about $650 billion going into these AI projects. Right. And we haven't heard of big hiccups like this in big names like Oracle and OpenAI. And so I think people will be stopped, be stopping and taking a look at whether or not this is going to be a more widespread thing. Right. Because there are data centers being built everywhere and in some minds indiscriminately. Right. So we may be hearing more of this and we may be hearing of investors taking a pause.
- [16:31]
Ed Ludlow
The macro point, right, is that there's so much money tied up in what is something very complex to achieve in terms of the build out. By the way, over the weekend prior to the Oracle post on Index, the Open Air executive who's responsible for infrastructure also posted and explained they are not proceeding with the expansion there because they put the resources into other sites, just as Brody had explained in his reporting. But a part of it is that capital tied up. I mean, do you see that kind of anxiety? Focus on capital expenditures, focus on the credit that's underpinning all of these projects?
- [17:06]
Anna Rathman
Yeah, I mean there would be, but I mean, if you were worried about private credit, you should also be worried about some of the equity that is being tied up.
- [17:13]
Brody Ford
Right?
- [17:13]
Anna Rathman
I mean, we have to think about the capital structure. This is where I mean, I keep saying we're still in the nascent part of AI development, even in the infrastructure part, which is why the spend is so high. So it actually makes sense that companies can change their minds and perhaps say, okay, we don't need this here anymore. Perhaps we're putting our assets, assets over there and sometimes investors can remain stranded. So I just think that this is part of the story of being very, very early in the story.
- [17:46]
Ed Ludlow
One of the considerations of the market this morning as it relates to Iran is just generally what will happen with inflation across everything, energy, materials. You know, that to me would really seem to be a factor when you're building out mass, massive infrastructure, datacenter infrastructure across the country. Do people start to remodel the costs of everything going into this build out?
- [18:09]
Anna Rathman
You know, I think it's too early. I mean, it's been, you know, eight, nine days of war. The Trump administration says that it's going to be short term. I don't know what that actually means. Does that mean a few weeks, a few months, a few days? It is sort of a wait and see thing, you know, kinetic war. War is completely unpredictable because you have people making decisions out of existential fear. Right? So it could be tomorrow, it could be, you know, several weeks from now. So I think it's a little too early to be pricing in such high inflation and maybe making changes to the underwriting process and the models. It really is a wait and see, maybe sometimes even by the hour.
- [18:49]
Ed Ludlow
Anna Rathbun of Grand Zillow Advisory, thank you very much. Coming up next, we have more details on anthropic suing the Defense Department. But Carrie, you also looking at other
- [18:57]
Caroline Hyde
names and other legal news, shares of Live Nation actually pushing higher 5.6%. This is its Ticketmaster subsidiary along with Live Nation have reached a settlement with the federal antitrust authorities. The DOJ have been saying this Monday it kind of throws a bit of a wrench into this mid trial of an antitrust case that accused the company, remember, of illegally monopolizing the live music industry. This is Bloomberg Tech.
- [19:25]
Anna Rathman
Effective marketing is smarter, not louder. Cutting edge technology alone won't deliver better experiences or outcomes. Adobe helps marketers use data and AI to drive smarter engagement, reduce noise and use AI effectively and responsibly. The brands winning in the AI era aren't the ones chasing every trend. They're the ones with the right systems and strategy. It's time to lead with insight, agility and innovation.
- [19:54]
Caroline Hyde
It starts with Adobe.
- [19:56]
Ed Ludlow
So there's a lot of noise about AI.
- [19:58]
IBM Representative
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.
- [20:07]
Ed Ludlow
Now a global workforce of 300,000 can
- [20:09]
IBM Representative
use AI to fill their HR questions,
- [20:12]
Ed Ludlow
resolving 94% of common questions, not noise
- [20:16]
IBM Representative
proof of how we can help companies
- [20:18]
Ed Ludlow
get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM, Adobe, Acrobat Studio, your new foundation. Use PDF spaces to generate a presentation. Grab your docs, your permits, your moves. AI levels up, your pitch gets it in a groove. Choose a template with your timeless cool. Come on now let's flex those two draft design, deliver, make it sing. AI builds the deck so you can build that thing. Do that, do that, do that with Acrobat. Learn more@adobe.com do that with Acrobat. Back to the breaking news. Just moments ago, Anthropic is suing the Defense Department after it was labeled a supply chain risk, a designation usually reserved for foreign adversaries. Let's get to our editor, Bloomberg, Seth Figgman, for more. And actually, what it is that Anthropic is challenging, it would appear from the suit, is the department's decision to shift the contracts to others. Essentially, yeah.
- [21:26]
Brody Ford
And what we're hearing from Anthropic here in a statement is they're taking this step to protect their customers and their business. At the same time, though, they're telling us that they intend to pursue all avenues here to try to mediate this relationship with the government, including direct conversation with the government. So they're not foreclosing the continuation of talks here, but they are still pursuing litigation.
- [21:51]
Caroline Hyde
These actions are unprecedented and unlawful, the company said in the complaint that was filed over in San Francisco. Federal court support, and they say the Constitution does not allow for the government to wield its enormous power to punish a company for its protected speech. What's been so extraordinary is the way in which Anthropics continue to speak out against the government. Dario Amade basically told us already he was going to go and do this.
- [22:12]
Brody Ford
That's right. Yeah. They're clearly being outspoken and taking a stand on this issue here. They're not just taking the sitting down, but it's clear behind the scenes that the tone might be a little bit different privately, but they're looking for a resolution. They're also not looking to just take this down.
- [22:27]
Ed Ludlow
A part of what's happened in parallel in recent days is that, you know, OpenAI has negotiated with the Department of Defense, you know, basically to come in. Do we know, like, what the status quo is now, what the latest is in where the department stands on its, its AI tool policy and who it's using?
- [22:45]
Brody Ford
Yeah, I mean, the last we've heard is that Open Air has been seeking additional protections and safeguards for some of the same concerns that Anthropic had previously raised publicly and privately. We don't know yet if the Pentagon has agreed to all those provisions, but it does seem that the tenor of the debate between OpenAI and the Defense Department has been much more civil in some respects, what we've seen with Anthropic.
- [23:06]
Caroline Hyde
But what about the reporting of how this is affecting those that work for the businesses? A lot of these companies say they're nothing without their talent. And we already know a key senior Open Air leader in the Robotics department has left.
- [23:16]
Brody Ford
Yeah, I think we're still waiting to see if there's a meaningful attrition from either or both companies as a result of the uncertainty and tension here at the moment. Yes, there's one high profile example over the weekend, but we haven't yet seen others. And of course we're still waiting to see on the customer side of things, are people rallying to the defense of Anthropic for taking the stand or are they at risk of losing more business? Even if they're not legally required to cut business with Anthropic, might some still do it?
- [23:40]
Ed Ludlow
So if we're going back to a question that we've asked you and your team of reporters quite a lot recently, but do we have any sense of like how important from a financial standpoint a deal with the Defense Department actually is to Anthropic or Open Air, like, is it a major part of that business worth fighting for?
- [23:55]
Brody Ford
Sorry, no. Of course, from a pure dollars perspective, it seems pretty marginal, at least at the current moment. The Anthropic Pentagon deal was worth up to 200 million. But our understanding from procurement records was that it was really just a couple of million to date. That said, you have to think about how much it might have been over the long term. And again, the larger blast radius of customers who either legally might feel that they can't do business with Anthropic now or just optically or for fear of pressure from the administration might rethink how much they commit. So that is much harder to quantify.
- [24:24]
Caroline Hyde
We've obviously putting all of this in the context of an actual war that seems to have erupted over the course of the internal dialogue that we're having between anthropic providers in the military in the United States. Is this something that is happening abroad as well? Is it something that is causing tension or use of AI? AI in Europe and elsewhere?
- [24:43]
Brody Ford
Yeah. I don't know if we've seen it play out quite the same way as it has here, but I think that question of how who has a say over this powerful technology, how much can the government dictate the way that it's used and how much can they force private companies to sort of cow to that? I think that is a very much a global debate. It's just taking place here in a more prominent way. And these are the companies at the
- [25:03]
Caroline Hyde
forefront of that technology and American companies at that. Seth Fagan Cross the breaking news. Of course, as anticipated, Anthropic is indeed suing the US Government. Coming up, we go back to Iran after it destroyed a key million radar system used to guide U.S. missile defenses in the Gulf. That is next. And this is Bloomberg Tech.
- [25:34]
Ed Ludlow
Welcome back to Bloomberg Tech. Over the long last hour, equity markets, technology, shares in particular actually erase a lot. The declines that we saw earlier in the session, and that's at 100 is now effectively flat. The story with regards to what's happening to the ongoing war in Iran is once again oil. You're looking at New York crude at 95$96 a barrel, but at one point above $100 a barrel. Brent, similar picture up to 120 down to 100, partly disruption and partly the market. Trying to interpret how long this will go on for. You know, the administration, as Tyler Kendall outlined earlier, thinking and communicating it will be short but actually a lot of
- [26:13]
Caroline Hyde
evidence the contrary and disruption and destruction. And because Iran has destroyed a key $300 million radar system used to guide U.S. missile defenses in the Gulf, and that's According to a U.S. official, it's a blow that could widen gaps in the region's ability to counter future attacks. Attacks. For more Bloomberg Defense editor Jerry Doyle joins us. Just give us the context because we're not suddenly completely down by defense systems here, Jerry. But it is a key target that was managed to be struck.
- [26:42]
Jerry Doyle
That's right, it was. The one that we know that was destroyed, was located in Jordan as part of the Thaad radar battery. Now that that is called terminal high altitude air defense. Right. It's meant to shoot down advanced ballistic missiles traveling extremely fast above the Earth's atmosphere. And the radar guides these missiles and has an extremely high resolution, can spot targets, extremely long ranges. It's very useful, very high power, very expensive. Now with that radar gone, the Thaad battery is still operational. It just has to take cueing from other less advanced radars, such as those that work with the nearby Patriot missile systems.
- [27:19]
Ed Ludlow
Things Jerry, on Bloomberg Tech we've been looking at technology on the battlefield. Essentially, one of the data sets that Bloomberg's been tracking is Iran's use of drones, particularly against what are neighboring countries in the Gulf. What is the latest data tell us about Iran's munitions stockpile, where they are in the use of drones versus ballistic missiles, etc.
- [27:45]
Jerry Doyle
Well, to some degree, it's impossible to say how many drones Iran has left, whether the tempo of operations has slowed down because they simply don't have as many munitions, whether their command and communications have been disrupted from strikes, whether production has been disrupted, whether they're husbanding their resources for a Larger attack? It's really difficult to say. We can, however say that the number of strikes has decreased quite a bit from the opening days of the war and that Iran has started to rely more heavily on the use of these Shahed 136 drones, which are essentially low cost rudimentary cruise missiles as opposed to using more expensive long range ballistic missiles which Iran started the war was somewhere in the neighborhood of 2000-2500 of, but clearly has many fewer now.
- [28:35]
Ed Ludlow
Jerry, the market's also trying to interpret long term how this changes the defense technology industry. There's a note from Trace, for example, that puts a spotlight on the use of autonomous maritime technology in the context of the war of Iran for you and the team at Bloomberg across the Defense desk, like what are we seeing? What are some of the stories coming out of this conflict?
- [28:57]
Jerry Doyle
Well, so far we haven't seen, as far as I know, the use of autonomous maritime strike platforms in the Persian Gulf. We have seen those obviously used quite a bit in the Ukraine war. So we know they can be effective. We know they can be built relatively cheaply and operated in sort of an ad hoc way again to great effect. It's not clear how many of these Iran has or how it might be able to deploy them or whether the US has destroyed them over the course of strikes in the last week. But platforms like those would be extremely useful in a scenario which Iran finds itself in right now where it's trying to shut down a waterway and narrow waterway like the Strait of Hormuz. Obviously we've seen a lot of autonomous aerial platforms such as Shahed136 drones which have been used in strikes all across the Gulf. Those are not controlled by the ground but are guided by GPS technology. They're very easy to make, fairly cheap to produce in large numbers. And we've actually seen in this war the US use its own version of the Shahed 136. It's called Lucas for I believe. Yeah, a long range unmanned combat aerial system I think is what that's a strange acronym for. But we've seen that use and the US of course has plans to manufacture these at scale and use them in a way that Iran sort of is to use them to overwhelm or confuse or deplete enemy air defenses or enemy defenses in general in advance of a more advanced or higher end type strike.
- [30:30]
Ed Ludlow
Bloomberg Defense editor Jerry Doyle thank you very much, Carrie. Plenty more news headlines today.
- [30:34]
Caroline Hyde
There are Ed and it's time now for talking tech. And first up, the head of OpenAI's robotics team. Caitlin Kalinowski resigned Saturday, citing the company's deal to deploy its AI models within Pentagon's classified network. Now, Kalinowski said in a post on ex and on LinkedIn that those issues needed, quote, more deliberation before signing the deal. Plus, Cerebral has picked Morgan Stanley to lead its ipo. That's according to sources who say Cerebrus has filed fresh paperwork for the ipo, is set to meet with analysts and prospective investors this month. The offering could raise about $2 billion in a listing as soon as April. And Tencent, it does intend to invest several hundred million dollars in Paramount's acquisition of Warner Brothers Discovery, according to sources who say the Chinese company will be acting as a passive financial investor, though it might still decide not to invest. Tencent and Paramount declined to comment.
- [31:25]
Ed Ludlow
Okay, coming up, we're going to discuss how AI is shaking up the legal profession with Harvey CEO Winston Weinberg. That's next. This is Bloomberg Tech.
- [31:37]
IBM Representative
The thing about AI for business, it
- [31:39]
Ed Ludlow
may not automatically fit the way your business works. At IBM, we've seen this firsthand.
- [31:46]
IBM Representative
But by embedding AI across hr, IT
- [31:49]
Ed Ludlow
and procurement processes, we've reduced costs by
- [31:52]
IBM Representative
millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by
- [31:59]
Ed Ludlow
putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM, Adobe Acrobat Studio, your new foundation. Use PDF spaces to generate a presentation. Grab your docs, your permits, your moves. AI levels up, your pitch gets it in a groove. Choose a template with your timeless cool. Come on now let's flex those tools. Draft, design, deliver, make it sing. AI builds the deck so you can build that thing. Do that, do that, do that with Acrobat. Learn more@adobe.com do that with Acrobat.
- [32:37]
Brody Ford
Support for the show comes from Public
- [32:40]
Ed Ludlow
Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who
- [32:53]
Matthew Shettleman
are serious about building their wealth on public.
- [32:55]
Ed Ludlow
You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.commarket add paid for by Public
- [33:21]
Brody Ford
Holdings Brokerage Services by Public Investing Member
- [33:24]
Ed Ludlow
FINRA SIPC Advisory Services by Public Advisors
- [33:27]
Brody Ford
SEC Registered Advisor Crypto Services by 0/
- [33:31]
Ed Ludlow
all investing involves risk of loss. See complete disclosures at public. Com disclosures.
- [33:38]
Caroline Hyde
Harvey, you know it is the platform for the legal profession today. Unveiling new tool to let law firms build custom agents even faster. That should give more control over multistep processes they ask AI to complete. Let's discuss with Harvey's co founder and CEO Winston Weinberg. And Winston, what's so interesting is about the human in the loop, the oversight, the control. How do they maintain that when you're leaving AI agents to go and do what? Work for multi step processes?
- [34:03]
IBM Representative
Yeah, thank you so much for having me. I'm excited to be here also for Legal Week which has basically all of the legal tech industry in New York for, for one gathering. The way that we think about it is in law, it's incredibly complex and it's multiplayer. And so if you're building this agentix system that is kind of the infrastructure for completing legal work, you need it to be able to actually interact with all the different specialized agents to do that task. The multiple, multiple law firms working on a project and you know, Fortune 500 that is thinking about buying another company or involved in a litigation or something like that. And so it's a really complex process of integrating with all the correct data, having the humans in the loop when they need to be and handing off between the different experts that are specialists in that particular domain.
- [34:46]
Caroline Hyde
Let's talk about your specialization and the fact that you have all these integrations and have such a wide scope of legal companies already working with. Because, because the age old criticism is you're just a wrapper of GPT or whether it's anthropic, you're agnostic to the models underlying. How are you making yourself so necessary for the legal profession?
- [35:05]
IBM Representative
Yeah, the best way to think about this is in these incredibly highly regulated industries the work that they have to do is very complex and all of the data is in all these different silos. Right. And again it's multi party and collaborative. And so what you need to solve is which model is the best less for this particular part of a task. How do you route that to the human? And then what's going to become really important is how do you actually review all those outputs and evaluate them for accuracy. If you think about what's going to happen in the next 10 years, think about how complex an international merger is going to be right now that we're using AI to produce more products, to produce more MSAs, more contracts, etc. Reviewing those, honestly, in 10 years, I think you can't do it. Human cannot do this without AI systems that can integrate with everything else.
- [35:49]
Ed Ludlow
Winston, I want to hold you to this to be succinct. This is a tool that makes a practicing lawyer more productive and better at their job. Or it is a tool that in the future displaces the role or function of certain team members within a legal practice.
- [36:06]
IBM Representative
Yeah, the best way to think about this is this is task automation and I think it will always be task automation. Right. So if you think about like a very complex fund formation that involves 50 LPs or something like that, there are certain tasks like doing comment memos or something like that that are going to get automated away. But a lot of the high value is that strategic advice on top of those tasks. Right. And so as these tasks get automated, the job of a lawyer is just going to level up over time.
- [36:37]
Ed Ludlow
I also ask you that because one of the show's biggest fans, my father, is almost certainly watching, who has more than three decades of practice in English and European law. And I remember as a kid the whole billable hours thing. Right. You know, lawyers across the world used to scan barcodes for 15 minutes of work. Really interested therefore for how you price this. You know, there's, I think you guys run a subscription based model, right. Which can also be priced depending on the volume of use of any customer. But that, that's the debate. Where's the value?
- [37:09]
IBM Representative
Yeah, exactly. So right now that is how we do our all of our pricing over time. What we're starting to do a lot more of is how do you do custom build for a lot of different customers. And the reality is doing these custom builds, these forward deployed solutions is with how good the coding models are getting. A lot, lot stronger gross margin. Right. And so a lot of what we're starting to do is we'll work with like a large bank or private equity or telco and a law firm that's partnered with them and we'll actually redesign or transform how they deliver those services entirely. Right. And that we are going to price much differently and probably closer to how do the outcomes work and how does consumption on top of that work?
- [37:49]
Caroline Hyde
You've got some heavyweight investors, Sequoia, KP, A16Z, GV, the list goes on. They want to hear about how you're able to monetize this when someone is sat within the innovation part of the legal business and I do, I do a cloud plug in. Do I do Harvey, do I keep the Lexis Nexus? What's your answer?
- [38:07]
IBM Representative
Yeah, the best way to think about this is everything else out there is a point solution and what we're building is a platform. Right? And with that platform you have all of the integrations, you have security you respect, ethical walls, permissions. We grab the correct data so we ground it in truthful data instead of bad data that is going to give you a bad answer. And as this scales over time, you really just have to outrun these model providers that are trying to build the general system. Right. And the bet that I have, and I'm very confident in my team's ability to deliver on this, is we can race faster in the legal vertical than they can generally.
- [38:44]
Ed Ludlow
Winston Weinberg, CEO of Harvey, really good to have you here on Bloomberg Tech. Thank you very much. Now coming up on the program, we're going to discuss the top generative AI apps for consumers. And Jason Horowitz partner Olivia Moore joins us for that conversation. That's next. This is Bloomberg Tech. N scale has raised $2 billion in new funding. The deal vacation values the UK based datacenter developer at $14.6 billion and places it amongst Europe's most valuable startups. N Scale has also named a trio of high profile tech leaders to its board of directors including Sheryl Sandberg, Nick Clegg and Suzanne Decker.
- [39:29]
Caroline Hyde
Car Fascinating. Now let's just think about how for a few years native firms had the edge with consumers for generative AI app gaps. As the market matures, it's kind of fading. It's one of the findings from a report released today by Andreessen Horowitz on the top generative apps. A16C partner Olivia Moore has been doing this for three years and what's so interesting is number one is still ChatGPT. We have Gemini, but where are we starting to see just if we're thinking about the consumer and consumer focused apps. Claude coming in and how are we seeing people using different chat bots?
- [40:03]
Olivia Moore
Yeah, absolutely.
- [40:03]
Tyler Kendall
Absolutely.
- [40:04]
Olivia Moore
There were a lot of. This was actually the most fun and exciting report to do out of the six we've done because there were a lot of changes. First, as you mentioned, we did add for the first time companies that are not AI native but are significantly enhanced. So notion as an example, they reported that 50% of their ARR is now coming from AI features Canvas, another one Freepik Grammarly. Then beyond that, I think the other really interesting trend in this edition of the list List is just the continued battle between Chad, Chat cbt, Claude and Gemini for the mainstream consumer. And we've seen some pretty significant changes there over the last couple of months.
- [40:41]
Caroline Hyde
What sparks the change other than press and coverage of what's happening with the Pentagon, is it that a model comes out and eclipses it? People are actually using these things, they're working out which one is better than the other.
- [40:52]
Olivia Moore
Yeah, it's a great question. So for a while we saw consumers were using one generative AI product, if, if that even. And now they're multi tenanting across products but for different use cases. So Gemini, if you look at their user growth, it's basically perfectly correlated to the release of like nano, banana, VO3, all of these new creative models. Where cloud is really starting to shine, I think is in the prosumer and work tools. So cloud code of course had a crazy ramp to a billion in ar. Cloud coworkers is now their product for consumers. That's being picked up pretty quickly. They also put Claude in Excel in Google sheets. Probably the best way to understand this is both Claude and Chat CBT now have their own app stores. They each have more than 200 apps that they offer access to, but there's only 11% overlap between them. Chachi Beat is leaning in on the mainstream consumer like fashion, shopping, travel, transportation. And Sam Altman has said he wants Chachi Beauty to be for everyone. Claude is leaning in on like Deep Premium data sets for scientific work, medical work, data analysis. And so I think we're seeing them go in slightly different directions in terms of the audience. They're trying to win.
- [42:02]
Ed Ludlow
Team, let's bring back up the top 100 ranking and then focus in on I guess the top five, 10. I find this Olivia, so interesting that Deep Seek is so high up. Maybe through explaining the methodology of how you put the ranking together, like some of these names, you kind of touched on it there, but you more associate them with enterprise. You'd associate their use outside of the United States potentially. What are you seeing in the data?
- [42:27]
Olivia Moore
Yeah, Deep Seek is a fascinating one because it was actually higher on prior versions of the list and has dropped down. What basically is happening with Deep Seek on a country by country basis is that China and Russia are blocked from using many of the Western AI tools. So China is heavily Deep Sea gets their number one product, then something like a Dow Bao from ByteDance, something like a Kimi. And Russia is the number two market for deep Seq. It has fallen off a cliff in terms of usage in the U.S. i think it's fair to say. And I actually think that goes back to the question about what's going to happen with Clod, because what we saw with Deep Seek in the US Was all press, was good press, even if it was bad press, just because people didn't know about the product. And I think the same thing happened with Cloud in the past week in that a couple months ago market awareness of clawed amongst US consumers was maybe 2% and so now they're topping the App store just because many people have never heard of the product and they're downloading it for the first time. So it'll be interesting to see if they're able to retain those users or if like Deep Seek, they will only keep users in countries that can't access access other products.
- [43:33]
Ed Ludlow
Olivia Moore, Andreessen Horowitz, it's great to have you back on the program. Thank you very much. Want to get back to that breaking news from earlier in the hour. Anthropic is suing the Defense Department after it was labeled a supply chain risk, a designation usually reserved for foreign advocates. Matt Shettleman, helm of Bloomberg Intelligence, joins us now. And Matt, appreciate you. You're running in it's a breaking news scenario. But from the Bloomberg Intelligence president's perspective, what is the react to this latest development where essentially Anthropic is pushing back on the Department of Defense saying hold on, we don't want you to look elsewhere, we want you to use our tech. Explain it.
- [44:11]
Matthew Shettleman
Yeah. So this is exactly what we expected after the developments from not this most recent Friday but the Friday before when the government announced it was taking this action. That was a tweet from, from Pete Hegseth announcing this decision. Since then, in the middle of last week, the Defense Department sent the company a two page letter informing it of this supply chain designation. And now within hours we have this lawsuit filed by the company. It pursues. What we expected was really a claim that this violates the arbitrary and capricious standard under the Administrative Procedures act, which basically says that the government has to use reasoned decision making. It can't penalize a company just because it wants to. It has to look at the law and ask, hey, is Anthropic violating the law? And what we haven't seen really from the Defense Department is any connection between this supply chain statute and anything that Anthropic itself has done. Instead, this has been about a dispute about contract negotiations, an agreement that the Defense Department had agreed to in July. It wanted to change it. Anthropic resisted all Of a sudden it was, it was deemed a much larger supply chain risk. So I think we're going to see, you know, an immediate court fight on whether that Defense Department decision should be stayed because it doesn't constitute reasoned decision making.
- [45:41]
Caroline Hyde
They talk about how the actions are unprecedented. So what precedent, Matthew, can lawyers legal liaison go to in this moment to decide who has the upper hand in what will be a more drawn out conversation to have in front of the courts?
- [45:56]
Matthew Shettleman
Yes. So under this exact statute, it's rarely been been litigated and it's rarely been used. It only dates back from about 2018. But what Lloyd lawyers are going to look to here is defense decisions under other statutes. And you've seen that in some cases where under other supply chain risk determinations under these other laws, companies have been able to bring lawsuits and say, ok, this is not reasoned decision making, this violates the law. It's an arbitrary and capricious exercise of your authority. And, you know, it's very difficult to beat the Defense Department. That's the first thing to know. The court gives them great deference on national security. So this isn't easy at all for Anthropic. But if the Defense Department didn't try to connect it to this law, and so far we haven't seen much of a record really connecting it to this law, we've seen criticism of the company's policies, you know, criticism of it as being a woke company. It's going to take more than that to just justify this in court. And that's going to be the question for a judge. Is there a real basis under this, this supply chain law that justifies such an extreme action? The company is going to say this inflicts irreparable harm on us and it's not justified under the law.
- [47:15]
Ed Ludlow
Matthew that's why I ask about the idea that Anthropic is challenging the Pentagon in deciding to negotiate with Open Air, for example, in parallel.
- [47:24]
Jerry Doyle
Right.
- [47:24]
Ed Ludlow
They will say when this supply chain risk label was given, just quickly, well, okay, we'll turn someone else for their technology. How does that factor in?
- [47:32]
Matthew Shettleman
I think that, you know, that that raises concerns about the arbitrariness of what's going on here, especially if, if Open AI insisted on terms and restrictions that were really not that different from what Anthropic took a hard line on. That's also going to play into whether this was reasoned decision making or whether this was a desire by the Defense Department to make an example of this company.
- [47:58]
Caroline Hyde
MATTHEW Shettenham, Bloomberg Intelligence Fantastic expertise that we thank you. That does it for this edition of Bloomberg Tech.
- [48:05]
Matthew Shettleman
Ed.
- [48:05]
Caroline Hyde
Once again, your legal degree coming out strong?
- [48:08]
Ed Ludlow
Yeah, a little bit. I mean, fascinating coverage of both private markets and public markets. And obviously in the markets, the war in Iran continues to be a massive factor. Really great conversations worth recapping on the podcast. Nowhere to find it. It's on the Bloomberg terminal as well as online on Apple, Spotify and Iheart. Another big week ahead. And this is Bloomberg Tech. Shake it up with vital proteins, collagen and Protein Shake. It's a high quality, ready to drink shake with 30 grams of protein and 10 grams of collagen to support healthy hair, skin, nails, bones and joints. Joints with 0 grams of added sugar, no artificial sweeteners, and absolutely no carrageenan. It's a clean, delicious way to fuel your day so you don't just age gracefully, you age powerfully. Vital proteins stay vital. Learn more@vitalproteins.com friends like these the Murder of Skyler Nice is now streaming on Hulu and Hulu on Disney +911 do
- [49:08]
Julianne Edwards
you have an emergency?
- [49:09]
IBM Representative
I have a 16 year old daughter. Can't get a hold of her.
- [49:12]
Brody Ford
I am scared to death.
- [49:13]
Julianne Edwards
We wanted to talk to Skyler's friends.
- [49:15]
Ed Ludlow
They're not telling the full story. The truth is gruesomely horrific.
- [49:19]
Julianne Edwards
How could you do this to your best friend?
- [49:21]
Brody Ford
There's a darker secret that's not been said.
- [49:24]
Ed Ludlow
Watch the new Hulu original series Friends like these the Murder of Skylar Nese on Hulu and Hulu on Disney for bundle subscribers terms apply.
- [49:32]
Julianne Edwards
This is Bethenny Frankel from Just Be with Bethenny Frankel.
- [49:35]
Caroline Hyde
Most dog food is marketing, not nutrition. That is why Biggie and Smalls eat
- [49:41]
Ed Ludlow
just food for dogs.
- [49:42]
Caroline Hyde
Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference.
- [49:50]
Tyler Kendall
Better digestion, healthier skin, more energy. Dogs that feel better. My babies, if you've been on the fence about switching, stop overthinking it.
- [50:00]
Caroline Hyde
What's more important than your furry babies and their health? Go to justfood4dogs.com right now and get
- [50:05]
Tyler Kendall
50% off your first box. No code needed.
- [50:07]
Ed Ludlow
Just try it.