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- [00:00]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real, lasting value at scale. When AI fits how you actually work, that is EY Consulting.
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- [01:16]
Bloomberg Tech Host (Ed Ludlow)
Grit or American Energy through innovation, Venture
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Bloomberg Tech Analyst/Reporter
Global is not only building some of the largest energy facilities in the world right here in the United States, but
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Bloomberg Tech Host (Ed Ludlow)
delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global.
- [01:38]
Bloomberg Tech Analyst/Reporter
That's unstoppable energy.
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Chase Sapphire Reserve Business Advertiser
Bloomberg audio studios podcasts radio news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
- [02:06]
Bloomberg Tech Host (Ed Ludlow)
This is Bloomberg Tech. Coming up, Rocket Lab makes its biggest bet yet, buying iridium in an $8 billion deal to challenge Space X in the orbital economy. We'll speak with CEO Peter Beck. Plus South Korean firms including Samsung and SK Hynix will spend at least 880 billion on chips and data centers as the country seeks to maintain its edge in the era. And Anthropic wins US Approval to restore some access to its meat. Those five AI model After resolving concerns about the technology's potential threats to national security, M and A Monday is blasting off into orbit here on Bloomberg Tech. Rocket Lab making its biggest acquisition ever, agreeing to buy iridium in an $8 billion deal as it looks to challenge Space X in the rapidly growing Earth orbit economy. This is how the shares are reacting. The deal terms $54 a share in a cash and stock transaction for the satellite telephone pioneer, valuing Iridium at an enterprise value of about 8 billion. The offer $54. That's about a 27% premium to Friday's close. We just showed Iridium shares just a little shy of 54.
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Hugging Face CEO Clem DeLong
But why?
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Bloomberg Tech Host (Ed Ludlow)
Joining us now is Peter Beck, Rocket Labs founder and CEO, live from Auckland, New Zealand. Let's start there. Peter, welcome to why buy Iridium and why now?
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Peter Beck, Rocket Lab CEO
Yeah, it's great, great to talk to you but look, I think it's become pretty obvious, and we've talked about it for quite some time, that the really large space companies of the future are going to be a little bit blurry about what a space company even is. And you know, Rocket Lab today with a second most frequently launched rocket and we have a large spacecraft business and components business, but really the third leg of the stool was always an application. And by combining Rocket Lab and Iridium together, we really make that complete, complete picture. And what that essentially means is we are a self launching company. And I think if you look at other companies that have their own rockets and can build their own satellites, it's a pretty powerful combination.
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Bloomberg Tech Host (Ed Ludlow)
You know, very early this morning people got very quickly to this deeper level of vertical integration, the basics of it. There's also the idea of spectrum, right? So really has valuable but a limited source of spectrum. Can you just quantify that for us how much spectrum you get access to and kind of like how you leverage that to Rocket Labs advantage?
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Peter Beck, Rocket Lab CEO
Yeah, you're exactly right. I mean you can have all the spacecraft and all the rockets in the hangars you want, but if you don't have the spectrum to actually utilize them, especially for communications, then it's all for nothing. And the very unique thing about Iridium spectrum is its L band spectrum. So you know, L band is particularly effective in those very difficult and harsh conditions. So not supporting surprisingly, Iridium has built a very, very strong business for servicing safety critical things in the defence, the defence network. And so this obviously enables us to build on this. It's a very established and profitable business to date. But the spectrum is an incredibly valuable asset for sure.
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Bloomberg Tech Host (Ed Ludlow)
Peter, going forward, does Rocket Lab just more generally become a buyer of spectrum and an acquirer of assets that give you access to more spectrum?
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Peter Beck, Rocket Lab CEO
No, no, not at all. I think, I mean this, the spectrum gives us a fantastic baseline and head start if you think about the opposite. You know, we've always said we want to do an application that would take years and years and years to first build the constellations of satellites, deploy them and then, then, then of course, you know, that's before you even see your first dollar of revenue. So this, this really supercharges you know, our kind of interest into applications and you know, it's a, it's a wonderful business to build upon. But our intention here is to, you know, leverage the spectrum and, and what Iridium have built to, you know, provide a whole bunch of new services.
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Bloomberg Tech Host (Ed Ludlow)
Okay, so we have launch, we have satellite manufacturing and now communications. One of the questions I got from the audience is for you, Peter, is how do you take Iridium's technology and improve it? You know, they themselves have been very focused on chips, right. Custom electronics. What can you do to kind of make best use of it but also make them better?
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Peter Beck, Rocket Lab CEO
Yeah, sure. So I mean, I think, you know, just the economics alone and the synergies alone, when you have, you know, control over the most expensive and the most longest lead time items being launch in spacecraft manufacture, I think that just puts, you know, that level of vertical integration just puts everybody into a totally different league. So you know, instead of scratching out business plans on a whiteboard where you have to spend billions of dollars on launch and spacecraft manufacturing, when all of a sudden that those costs evaporate, you know, your ability to innovate and, and execute different business plans becomes, you know, vastly superior.
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Bloomberg Tech Host (Ed Ludlow)
Let's talk about the economics real quick. Is debt going to play a role in financing this?
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Peter Beck, Rocket Lab CEO
Yeah, initially for sure. You know, Rocket Lab is a very strong balance sheet. And you know, Iridium historically has had had some deb course. You know, it's throwing off a lot of cash to service it. But you know, you know, we have a, you know, a debt bridge that you know, we intend to take out.
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Bloomberg Tech Host (Ed Ludlow)
I get a lot of questions for you about Neutron next gen launch system that you're working on. I think one reason we get a lot of questions from the audience now about Neutron is, is that people want you to kind of explain how dependent this, this future business line is on Neutron Constellation based connectivity.
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Peter Beck, Rocket Lab CEO
Look, I mean the, the, the Achilles heel in space applications and space infrastructure right now is launch. You know, launch is an incredibly valuable and rare asset. And you know, as I mentioned before with we launched the Electron rocket, which is the second most frequently launched rocket in the world and Neutron's coming online by the end of the year. And you know, luckily also you know, the Iridium Constellation, it's a relatively fresh Constellation, so it doesn't require immediate launch. There's a number of years left in that const or over a decade. So we've got a little bit of time to refresh the Constellation. But I mean, you know, we, we can throw stuff up with either electron or neutron to, to experiment and develop new technologies almost immediately.
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Bloomberg Tech Host (Ed Ludlow)
Okay, the big question is Rocket Lab developing the sort of mega scale constellation specifically to take on space X, Amazon astronaut, not just direct to cell, satellite based Internet connectivity, etc.
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Peter Beck, Rocket Lab CEO
Well certainly, you know, Iridium has a direct to device system and plan that they're rolling out later on this year. And look, this is the very beginning for us. This is our first foray into applications. We've talked about it for a long time and I think this is a very smart deal where you know, we're not, we're not you know, acquiring a field of dreams and starting from scratch we are, you know, acquiring a very valuable spectrum, a profitable business and you know it's a very typical smart Rocket Lab deal. But you know, our clear intention here is to not stop. We're at this acquisition and continue to grow for sure.
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Bloomberg Tech Host (Ed Ludlow)
A lot of folks this morning kind of pointed the idea that you know, Starlink has, has a lead in terms of bandwidth, speed, speed, latency. So, so I think people would love to just hear you be very granular and specific about the niches that you can go after. What you see is the total addressable market, but also like definition of that total addressable market that Rocket Lab is like zero zeroed in on as opposed to like going after all of it.
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Peter Beck, Rocket Lab CEO
Yeah, look, I mean to your point before, you know, spectrum is key and the spectrum, the L band spectrum is very, very unique in the fact that it's unaffected by weather and harsh conditions. And as a result, you know, this L band spectru, widely used in all the safety critical stuff you would imagine, whether it be Mariners, pilots, defence forces, I mean I'm myself personally a user of the Iridium network. I'm a helicopter pilot. When I get like 10 minutes of my own time and there's a little thing on the top of my dash with an Iridium logo that I push the button that I know if I have a super bad day and end up in the bushes, someone's going to come and get me for sure. So, so you know, our focus and you know initially is, is on maintaining, you know, that super important constellation. I mean it is completely global. So no matter where you are on the planet, air, sea, land, wherever you are connected and that's something that, that really only Iridium has.
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Bloomberg Tech Host (Ed Ludlow)
Two final quick questions. I guess given the landscape, landscape the regulatory risk on this, you guys feel confident that this deal will close and that it will get done?
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Peter Beck, Rocket Lab CEO
Yeah, no, I think, I think from a regulatory standpoint this is pretty straightforward. I mean, it's, it's, it's, you know, a very, very strong deal and, you know, not controversial at all.
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Bloomberg Tech Host (Ed Ludlow)
And then just for 2026, the balance of this year, next year, has Rocket Lab got a refreshed launch target for what we could see on Electron and then Neutron in aggregate?
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Peter Beck, Rocket Lab CEO
Yeah, look, you know, certainly Electron is launching crazy flat out. You know, we just broke the world record for the fastest time that someone calls up a rocket and launches. So we did that in 16 hours, 42 minutes for the Space Force and Neutron comes online by the end of the year.
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Bloomberg Tech Host (Ed Ludlow)
Rocket Lab CEO Peter Beck live from Auckland, New Zealand, where it's the middle of the night. Back on Bloomberg Tech. Thank you very much. Sticking with M and A, I want to take a look at shares of comcast, now up 7%, kind of off session highs, but the company unveiled plans to split itself in two, spinning off NBC Universal and Sky into a standalone public company while leaving Comcast focused on its broadband, wireless and cable businesses. The company says the separation is designed to sharpen each business's strategic focus returns and create more value for shareholders who remain shareholders in both. It's about a year away from that vision being realized. Okay. Still ahead, spending is booming, but will those investments deliver? We are seven. I am Shanti Kellerman that question. This is Bloomberg Tech.
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Bloomberg Tech Reporter (Natasha Mascarena)
Foreign.
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Bloomberg News Reporter (April Hong)
South Korea has laid out an ambitious plan to cement its status as a global tech powerhouse. Among the mega investment pledges, Samsung Electronics and SK Hynix, the world's two biggest memory makers, are set to build four chip fabs in a roughly $518 billion project in the country's southwest. Now, Korea aims to to double its DRAM production capability in the next five years. They'll also build chip packaging facilities in the south central region. And Korea plans to spend about $650 billion in data centers by 2035. Now, what stands out from the investment pledges so far is how different regions will focus on specific technologies and industries, which underscores the need for more balance with regional development at a time where there are concerns that the benefits from the AI boom are not being spread evenly across the country. President Niche Myung said Korea needs to accelerate building its chip base to meet demand and that Korea has to move faster than its rivals. You can almost hear the sense of urgency for Korea to maintain its competitive edge. And of course, this comes amid questions of sustainability, of profits as competition heats up. All in the numbers are more or less in line with what SK Hynix and Samsung Electronics have already committed to spend for 2027 and underscores how Korea is looking to capitalize on the boom with chips and AI front and center as part of Korea's long term industrial strategy. April Hong, Bloomberg News, Singapore Bloomberg's Abraham
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Bloomberg Tech Host (Ed Ludlow)
Reporting that brings us to the bigger question for global investors. Can the current trade last Joining us now is Shanti Kellerman, co chief investment officer at 7am, who says markets have rewarded the beneficiaries of AI spending while penalizing the companies funding it. That dynamic isn't sustainable if those investments fail to generate real value. Chanty, welcome back to the program. I think in recent days and weeks we've been talking about this idea that there is a distinction between capital expenditure deployers and capital expenditure recipients and that seems to be very top of mind for you. South Korea is a case study. But why do you think that that that psychological approach to the trade is not sustainable?
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Shanti Kellerman, Co-Chief Investment Officer at 7am
Well, I think in the long run the investments will stop at some point if they aren't delivering value. A lot of those companies that are investing in AI, they do have very long term time horizons. I don't think they, you know, they're not going to get out of the game anytime soon. But if you start looking ahead, you know, three, five, 10 years, there will be a point where it has to deliver returns. I think we're at the point where you're starting to see that across the corporate world you're starting to see more companies focus on what's the ROI from IT and adoption. So I think there's, you know, there's certainly risks, but I think the early signs that it can deliver value are there.
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Bloomberg Tech Host (Ed Ludlow)
What is 7ims attitude towards those South Korean names? I mean principally it's Samsung and SK Hynix, but the Cosby had had some real outperformance so far this year on the idea that a lot in the trade is happening in South Korea.
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Shanti Kellerman, Co-Chief Investment Officer at 7am
Yeah, I think a really interesting dynamic has been how emerging markets has kind of been a beneficiary of the trade where historically the US and emerging market equities were a little bit uncorrelated. So that's going to change for this year in our strategy we run strategies that are linked to different global sectors as well as doing general asset allocation. And so we've had more in technology companies for some time and also communic services. So things like Metta and Alphabet have done really well. I think what we see when we look at it is though, even though we've had a lot of growth the valuations are still fairly attractive because earnings growth has been so strong. So you throw it together. The momentum, the earnings growth. There certainly are risk and we've had so much momentum so quickly. But when you look at those quantitative factors, it's still a pretty strong case to be in technology stocks.
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Bloomberg Tech Host (Ed Ludlow)
That's the other story that we've been really focused in. Like Micron as a case study has had really interesting performance, but actually trades at a pretty reasonable multiple. SK Hynix looking at a US listing in part because they want to bridge the valuation gap with Micron. Could you talk a little bit more about that?
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Shanti Kellerman, Co-Chief Investment Officer at 7am
Yeah, I think, you know, if you look at the Russell 1000 value index, that's now like tech is the second highest weight and it's got, you know, some of those companies like I think Microns and Intel, you know, so I think, I think kind of those distinctions between value and growth don't work so well anymore because you've had huge growth. But also that earnings growth, I think that the discount on valuations from the US versus other places is, you know, is a perpetual thing. And some of that will be linked to corporate governance that you have where there probably is still more that can be done in some of those nations like Korea and Japan, who have been improving dramatically. But some is also about where the capital is and where, where people want to allocate their money to sort of,
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Bloomberg Tech Host (Ed Ludlow)
yeah, a lot of new equities flooding the market. But it's not just IPOs. Right. Later in the program, we're going to look at the data to kind of where we are so far in 2026. Space X the Easy example. But what do you make of that dynamic, the relationship between Wall Street's fundraising activity in public markets and like, what is happening in private markets still being pretty insane.
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Shanti Kellerman, Co-Chief Investment Officer at 7am
Yeah, I mean, there is still a lot of cash on the sidelines in private markets. And that is cash, you know, could go into private markets or public markets. The amount of money that's kind of waiting in the pipeline for the IPOs is, you know, if it does all come through, will be one of the biggest years ever. I think we need you to take count that people will put cash into those, but they probably will also reduce a bit of what they're already holding to make space for those things. So I think that's a little bit of a downward pressure on markets. And I think it's also, you know, keeps in mind that I think investors will scrutinize some of these deals. I think the interesting Thing is less some of the equity issuance and more the bond issuance. With the equity issuance, you do have a bit of, you know, retail fanfare around it. With the bond issuance there's no, you know, index inclusion. It's just kind of, you know, looking at the credit risk. So I think that's been interesting, the divergence between performance. We've had some of the bond issuance and also the equity issuance.
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Bloomberg Tech Host (Ed Ludlow)
Space X Bond Market Nvidia Bond market Are you saying that that's something that worries you or you think that's a good mechanism for, for funding what's happening in AI?
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Shanti Kellerman, Co-Chief Investment Officer at 7am
I think right now the amount of funding that's going to bond markets is, is very healthy. It's by no means overstretched. And a lot of those companies have very solid long term cash flows. I think more, what I'm saying is if you look at, I think some of the equity markets can get caught up in a bit of the hype, whereas the bond market markets, you have a bit less of that and I think you get sometimes a truer picture of the outlook.
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Bloomberg Tech Host (Ed Ludlow)
Chanti Kellerman of 7am Back on Bloomberg Tech, thank you very much indeed. Coming up, Bob Iger and Joshua Kushner are considering a bid for an NBA expansion team in Las Vegas. Got the Bloomberg exclusive next. This is Bloomberg Tech.
- [20:17]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real lasting value at scale. When AI fits how you actually work, that is EY Consulting.
- [20:47]
Bloomberg Tech Host (Ed Ludlow)
So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can
- [21:01]
Hugging Face CEO Clem DeLong
use AI to fill their HR questions.
- [21:03]
Bloomberg Tech Host (Ed Ludlow)
Resolving 94% of common questions. Not noise proof of how we can
- [21:08]
Hugging Face CEO Clem DeLong
help companies get smarter by putting AI
- [21:10]
Bloomberg Tech Host (Ed Ludlow)
where it actually pays off.
- [21:12]
Hugging Face CEO Clem DeLong
Deep in the work that moves the business.
- [21:14]
Bloomberg Tech Host (Ed Ludlow)
Lets create smarter business.
- [21:16]
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EY Consulting Representative
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- [22:33]
Yahirah Anas, Talking Tech Host
It's time now for Talking Tech. I'm Yahirah Anas. First up, Millennium Management is stepping up its AI drive, launching a dedicated lab to accelerate early access to cutting edge tech tools. The new lab will go live over the next few weeks and coincides with sweeping changes in the hedge fund industry to adopt AI capabilities. Plus, Verizon is taking a heavy hit to grow its global footprint. The telecom giant projects a second quarter loss of up to 800 million after striking a deal with the UK's BT Group to merge their international businesses. The new $4 billion joint venture includes a $625 million equalization payment from Verizon to BT. And Hollywood's animation industry is facing an AI reckoning. Some predict the tech will elevate storytelling, but others expect it will slash production costs by 30 to 90% percent and eliminate many jobs, leading major players like Disney, DreamWorks and Netflix to proceed with caution.
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Bloomberg Tech Host (Ed Ludlow)
Ed so we're really focused right now. Media, entertainment and sports Former Disney CEO Bob Iger and Thrive Capital founder Joshua Kushner are joining forces. The two are discussing making a bid for an NBA expansion team in Las Vegas, according to sources. Bloomberg's Natasha Mascarena wrote the story. Okay, give me the details here. This is interesting. I don't know the historic relationship between Mr. Kushner and Bob Iger, an expansion team. What have you learned?
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Bloomberg Tech Reporter (Natasha Mascarena)
Yeah, I mean, absolutely not on my bingo board this year, but this is a really interesting extension of a relationship that the two have actually had for quite some time. So Bob Iger has previously been a venture partner at Thrive in between both of his stints as CEO of Walt Disney Co. He stepped down from that CEO role earlier this year and rejoined Thrive as an advisor. Now we're seeing both Bob and Josh team up together as they discuss whether they want to make a bid for the NBA expansion team in Las Vegas through Thrive Eternal, another new effort which Bob is advising on. And the whole idea between Thrive Eternal is that they want to invest in iconic franchises, cultural assets, everything from collectibles, interesting sports teams in this case.
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Bloomberg Tech Host (Ed Ludlow)
Okay, look, I am a fair weather warriors fan at best. The Bleed Tech team in New York is still pretty high on the Knicks success. What I do know is that the NBA has looked at the idea of a potential franchise expansion in Las Vegas. Where is that process at?
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Bloomberg Tech Reporter (Natasha Mascarena)
Yeah, I mean this is something that they have approved, you know, the actual expiration of doing this. And so this would mean that they would be expanding the NBA to include teams in both Las Vegas and Seattle. In this case, the bid is for a majority investment. It's yet to be submitted according to my sources. But this is an attempt at taking a controlling stake in that potential team. And what's also interesting here is it's not Thrive's first investment in sports. Earlier this year we reported that Thrive was making a smaller investment in the San Francisco Giants a little bit closer to home for both of us. And so this is, you know, a bigger, bigger deal, literally. But, but really kind of show is interesting given that they have made a few bets in sports.
- [25:58]
Bloomberg Tech Host (Ed Ludlow)
Just to point out that for the story, representatives for five Capital and Bob Iger declined to comment. But I would check out Natasha's story. One of the most read things today on Bloomberg, Bloomberg's Natasha Mascara. Thank you very much. Coming up, Space X helps power a record year for Wall street fundraising. We look at how AI is driving the deal.
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EY Consulting Representative
Boom.
- [26:19]
Bloomberg Tech Host (Ed Ludlow)
We're about halfway through the program and right now we're in a place where markets feeling pretty good. Nasdaq 100 up a percentage point. Semiconductors up almost. Almost a percentage point. Just a quick check on Bitcoin. $59,129 per token. A little softer. But there's nothing in the news cycle really driving that. As I said. It's half time. We'll be right back. From San Francisco, this is Bloomberg Tech. Welcome back to Bloomberg Tech. I want to get back to that comment. Comcast deal. So Comcast is going to spin off NBC Universal and Sky basically separating into two separate public company. This is something that's about a year out and existing investors will have exposure to both. But it's really interesting to see how the streets kind of reacting to this. In fact, Bloomberg Intelligence and our own analysts kind of see this as something that opens up and sets the stage for more M and A in the, in the cable media space.
- [27:22]
Bloomberg Tech Analyst/Reporter
Right.
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Bloomberg Tech Host (Ed Ludlow)
So you have a separate entity that is focused on the media business, NBC Universal, while Comcast doubles down on more of that kind of legacy infrastructure business. And as Geeth Irang and Nathan writes, the transaction also enhances strategic flexibility and could pave the way for M and A. Interesting. It's kind of like what happens next. Let's take a look at today's big number as well. $570 billion. That's the amount of of market value Microsoft is set to shed in the month of June with the stock at one point down as much as 20% during the month. So right now it's on track for its worst monthly drop since December of 2000 or its worst month of performance in almost 26 years. One we're tracking. A wave of fundraising tied to the AI build out has pushed US IPOs and ships share sales to a record $251 billion this year so far. Blockbuster offerings from Space X and Alphabet have led the way and bankers say there's plenty more in the pipeline. For more, Bloomberg's Bailey Lipschultz is here on the IPO and equity beat. Like the big picture story is one we've talked about, right? Lots of equity is going to flood the market. But the line of what I just read that is interesting is that, you know, the bankers is hope and the bankers see that there's more to come. What do we know?
- [28:41]
Bloomberg Tech Analyst/Reporter
Bankers get paid to be optimistic, so we got to take everything they say with a grain of salt. But when you look at the record year so far, the record half we've already seen again north of $251 billion raised. That doesn't even fully encapsulate that Google raise because it's an atm, which means not the market offering, which it technically hasn't been fully penciled in. So that number should be even larger. Again, we are looking at numbers we have never seen before, beating 2021. The expectation for the weeks and months ahead SK Hynix expected in the coming weeks that's going to be potentially $30 billion fundraise here in the US so that'll take the baton and get us off to a quick start in July. Expectations do broaden out quite a bit as we look for the likes of private equity, maybe in the retail consumer space. Jersey Mike's is a name that continues to come to mind, but certainly continuing to keep an eye on anything and everything around artificial intelligence. I also want to call out that we're expecting C Square, which is a data center company to kickstart its process on the other side of the fourth of July holiday.
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Bloomberg Tech Host (Ed Ludlow)
Going to say thank you for bringing it back to tech, bringing Jersey Mike's to the show. Unbelievable. Part of it is like we're showing this amazing chart. Let's go back to the number so far in 2026. You know this is a big number. This is something that we have not seen for quite a few number of years now.
- [30:00]
Bloomberg Tech Analyst/Reporter
No, we've, we've never seen it and I think when you look at the breadth so we're talking about obviously the big fundraise from space X. Again record setting number kind of bolsters this. SK Hynek would potentially be the second largest IPO ever. So these would be two deals in consecutive months, something we've never seen before. Again going back to the broader equity issuance, whether that's regular way equity, equity or convertible debt. That big fundraising from Alphabet potentially puts the pressure on other hyperscalers to sell equity. So diverting away from debt which has kind of been the bread and butter for the build out of this AI boom, this data center boom and the expectations that there will be more lying on the other side of the midway point again on the other side of the fourth of July holiday. Again just want to call out things have been working across the ecosystem. Sarah Bros. Again, not really trading as well as many had expected or at certain certainly was day one. But that's a north of $6 billion IPO and then you just go down the list. There's about a dozen raising $1 billion or more. Bankers expect that number to continue and be matched in the second half and even some some of these conversations with these big bankers at the likes of a Morgan Stanley or Goldman Sachs. They expect the third quarter to be critical as we kind of get towards potentially Anthropic coming in the fall towards
- [31:12]
Bloomberg Tech Host (Ed Ludlow)
year end the most baited up Schultz, thank you very much. Now coming up, Anthropic wins US approval to restore some access to its powerful methods 5AI model. We'll discuss what that means for model development and AI regulation with Hugging Face CEO Clem DeLong. That's next. This is Bloomberg Tech.
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Bloomberg Tech Host (Ed Ludlow)
late on Friday, anthropic 1 US approval to restore some access to its powerful methods 5 AI now you may remember two weeks ago, the US government abruptly barred Anthropic from letting foreign nationals have access to its most powerful models over cybersecurity concerns. In response, Anthropic disabled all access to those models. And right now, after furious negotiations, mythos5 is back. Sort of. In a letter to the company seen by Bloomberg News, Commerce Secretary Howard Lutnick wrote, the model could be Released to quote certain trusted partners. The Fable 5 model or variant wasn't mentioned. Let's get into it, starting with the business impact. Theresa Payton. She is the CEO of Cybersecurity, Advisor for Delete Solutions politicians and a former White House CEO during the George W. Bush administration. I rely on both your expertise in industry and experience of being on the government side of the table. The June 12th export control. The parameters of it are very interesting and maybe you can unpack them a little. But what they said was there's been significant progress in risk mitigation and I'm finding it hard to understand what that progress looks looks like.
- [35:28]
Theresa Payton, CEO of Waterly Solutions and former White House CIO
I mean, where do we begin? I mean, the greatest AI breakthrough is one that people can actually use. And what we're saying in this instance is it's the greatest breakthrough. It scares us, but we're not going to let people use it. But my understanding of what's been reported is that there will now be roughly more than 100, but not much more than that. Federal departments and agencies, private sector companies that have already been vetted, which will have access to this model and they will not have sort of the constraints around foreign employees to be able to use this model. And then I guess more to come. It's sort of a stay tuned and
- [36:04]
Bloomberg Tech Host (Ed Ludlow)
let's see the thing. The tension here is that because of the capabilities of the model, industry wants access to it, right? They want to use it for its benefits from the government side of the table. How do they hear that? How do they get that part right?
- [36:25]
Theresa Payton, CEO of Waterly Solutions and former White House CIO
I think this is a tough one and you know, this should be a wake up call for everybody, not just the AI companies who are producing, you know, agentic AI, generative AI and frontier AI models as well as businesses implementing them that, you know, we saw. OpenAI actually just got told recently that they needed to limit model access for new capability. So what we need to do here is, you know, we know that the rest of the world, including China, is investing aggressively. Increasingly there's capable open source, in some cases free models that are narrowing the gap. So leadership in this moment really depends on responsibly getting these breakthroughs as fast as possible into the users. So what's going to have to happen here is a much faster vetting process for allowing these incredible capabilities to be in the hands of people in business who need to have this to protect and defend their enterprises.
- [37:23]
Bloomberg Tech Host (Ed Ludlow)
Theresa, you teed us up really nicely for our next conversation with Hugging Face. Here comes Long in a moment, particular focus on open source. You said what needs to happen. I guess there's a distinction with what is likely to happen. And so, you know, again, reflecting on your experience, do we need to expect tighter US restrictions, particularly on the frontier labs each generation of powerful model they put out?
- [37:47]
Theresa Payton, CEO of Waterly Solutions and former White House CIO
I think we run a huge risk if we don't create a framework that provides certainty in the process and fairness in the process. And you know, so if you, if you don't create a framework and we don't know who's next, you know, the markets don't like uncertainty and certainly our global partners don't like uncertainty. You're already starting to see global partners say, well, maybe we're, we need to develop our own models. Maybe we need to do things our own way. Maybe we need to install open source models right here within our country. So we really need to see leadership come out from Washington D.C. to say this is the framework, this is the certainty. Here's the process. It may change, but at least publish a process so we all know what the test looks like and we can all perform according to the test.
- [38:33]
Bloomberg Tech Host (Ed Ludlow)
Let's, let's recap where we stand from Friday. There are 100 U.S. companies and federal agencies that will have been approved for access. They don't require an export license for themselves or for their non US employees. But how much scrutiny will that group of 100 be under how they use the model, what they were able to get from it, rather than just anthropic itself sort of being under the microscope of this administration?
- [38:58]
Theresa Payton, CEO of Waterly Solutions and former White House CIO
Yeah, you bring up a great point. It's sort of be careful what you wish for. So now that you're in this group, if you're in a heavily regulated private sector industry, your regulators are going to ask you, when did you run it? What did you find and did you fix what you found? So there is going to be another layer of undue scrutiny on kind of these businesses. But they also have an advantage. They get to have access to this tool first. I think the other reminder for people is that running this tool isn't free. It does require tokens in. So it does cost money. It costs computer resources, it costs staffing resources to look at the results. And oh by the way, if you find something, you definitely need to get it fixed right away. And so having the capability to actually mitigate and remediate anything that's found and doing it at machine speed is not something that all businesses have.
- [39:47]
Bloomberg Tech Host (Ed Ludlow)
Teresa Payton, CEO of Waterly Solutions and former White House cio. Thank you very much. This isn't just about one company or one AI model anymore. It's about what happens when government scrutiny becomes a market signal. Our next guest has argued that being labeled too dangerous may actually be good marketing for frontier firms. Joining us now is Clem DeLong, CEO of Hugging Face. And if you're unfamiliar, Hugging Face is where more than 7 million developers discover, test, deploy AI models from leading labs to open source, giving Clem a pretty unique perspective on how AI is actually being adopted across industry. And Clem, I want to start with that post you put on the idea that that designation is good marketing. Could you explain a little bit more why you think that?
- [40:34]
Hugging Face CEO Clem DeLong
Well, first I want to point out that a lot of people are saying that, you know, it's not completely unfair for them to start being regulated given that, that they've been doing what we call doom marketing for quite, quite many years now. If you remember, GPT2, that was really, I think five, six years ago was already deemed like too dangerous to, to release. So I feel like it's fair for the US government to least try to get more transparency about what these models can and can't do. And you know, I think it's important to remember that, that these are gigantic companies, you know, fastest growing in the world, on their way to maybe be the most valuable companies by the end of this year. So I feel like they can take these kinds of regulation and interaction with the US government. I think one thing that we need to be careful of is to kind of like spread these constraints and these regulations to the rest of the ecosystem, like startups, little tech, you know, university, academia, who certainly don't have the same kind of like legal and policy capabilities than these companies have.
- [41:47]
Bloomberg Tech Host (Ed Ludlow)
I want to get to that distinction on regulating sort of the frontier labs and APIs and open source in just a minute. But to, to end the conversation on that post, do you think that the US Government have handled this correctly with anthropic and methods and fable?
- [42:05]
Hugging Face CEO Clem DeLong
Well, I think it's important to get more transparency for everyone, right? The government needs to have more transparency about what these models are capable or not capable of doing, which is hard to do through APIs, right, because there are guardrails, there are limitations that makes it hard to actually know what they're capable and not capable of doing. So I think it's quite, quite fair for the US Government to try to get more transparency on these very complex black box system. You know, obviously, like, it's hard to do that perfectly given how fast the field is moving and how uncertain some of these risks are. But I think it's not, it's not unfair.
- [42:47]
Bloomberg Tech Host (Ed Ludlow)
Overall, you argue that there should be a distinction how governments regulate frontier AI and open source. Why, why should open source be treated differently? What is it that the ecosystem needs differently on the open source side?
- [43:05]
Hugging Face CEO Clem DeLong
Well, first in terms of capabilities, I think it is broadly accepted that the most dangerous capabilities are concentrated behind like in these kind of like frontier lab apps where the majority of kind of like open source models are more like specialized, smaller, more kind of like broadly beneficial models that aren't really creating more risks. So there's a difference in terms of capabilities, there's a difference in terms of transparency. You know, like open source models it's really easy to evaluate and to look at what they can and can't do from the get go because you know you get, you get the model so you can test it really easily versus an API. It's really, really hard to do that. So you need kind of like some more kind of like access I would say to really assess them. And also of course like the provenance is different. Like open source is like an ecosystem of smaller companies, smaller organizations versus the functionality labs is a couple of companies that are concentrating a lot of power behind closed doors.
- [44:17]
Bloomberg Tech Host (Ed Ludlow)
There's been a lot of press coverage of late and other data points like your own revenue run rate, right? Open source is your lifeblood. But open source models seem to be competitive in a market against closed models. What else would you point to? To evidence that it's not just us, right?
- [44:36]
Hugging Face CEO Clem DeLong
Like the whole ecosystem right now is, is, is booming. We see tons of companies doing super well like the inference providers, Neo cloud or posting kind of like fantastic, fantastic growth. A million new models and data sets have been shared on hugging face just, just the past past quarter. And you see that in usage too, right? The usage of open source by American companies, American startups, American small companies is, is also booming. So this is really exciting because it basically enable empower more, more people to really own AI themselves rather than renting it with, with APIs. So this is, this is quite exciting Clem.
- [45:26]
Bloomberg Tech Host (Ed Ludlow)
Another area of real focus of the ship show of late has been robotics. We had deep Tala from Nvidia on last week talking about Halos. Hugging face is also looking a lot of robotics. What I would be really grateful for is to understand the role that open source is playing in robotics and physical AI. But also like the benefit of leaning on open source in that field.
- [45:48]
Hugging Face CEO Clem DeLong
I feel like it's even more important than in general just because you know, if you think of having a robot at home that is interacting with your environment, with your kids. I just got two daughters a few months ago. So when I think about a robot interacting with my daughters, like, I don't want to have to trust a black box controlled just by one Mega Corp being able to do anything. I want to have some transparency about what's going on on this robot, how is it built, how does it decide to interact one way or another. And for that, open source is the only way, right? Like it gives you transparency, gives you control. It creates an ecosystem of different companies that are going to be able to build robots. So that's why we excited about it. We created this little robot called Richie Mini and we've been really surprised by how Intuit people have been, we share shipped over 10,000 of them all over the world in the past past few months. And that's, that's, that's a testament to how excited people are by, you know, more open, more transparent, more open source approaches to, to robotics.
- [47:01]
Bloomberg Tech Host (Ed Ludlow)
Clem DeLong hugging face CEO back on Bloomberg Tech. Thank you very much indeed. Now coming up, AI bots are taking over remote meetings, creating new challenges for the core corporate sphere. We have a really interesting one next. This is Bloomberg Tech. AI note takers are infiltrating the corporate world. Meant to increase productivity, AI bots are instead posing privacy concerns and security risks. As AI is increasingly incorporated into the workplace, the debate is growing on what conversations constitute robots and which ones are strictly human. Bloomberg BusinessWeek contributor is he Lapowski has more brilliant BusinessWeek story. The new etiquette for navigating AI note takers. Start with the overview of the story.
- [47:59]
Shanti Kellerman, Co-Chief Investment Officer at 7am
Right.
- [47:59]
Ishe Lapowski, Bloomberg BusinessWeek Contributor
So I think we've all seen this happen in our sort of virtual remote work world. We are joining the zoom calls and Google Meets. And when you get on the the call, it's you and whoever you're supposed to have the call with and their note taker, sometimes that says, you know, otter AI or read AI or sometimes it doesn't even announce itself at all. And what these note takers do is kind of take a live transcript of what you've talked about and afterwards they hand you back a really handy summary. And a lot of people feel like it's great. This is saving me time on doing the whole recap and I can go back and look at my notes afterward. The question, the question is, are people really doing the work upfront to make sure the other person on the other side of the screen is comfortable with that as well?
- [48:41]
Bloomberg Tech Host (Ed Ludlow)
You know, that is also a question of Human responsibility. You make the piece in the point in the businessweek piece that, you know, the note takers are quite commonplace now. Some of these tools have already got millions of users apiece, but it's up to the humanity to say, how is this working?
- [48:57]
Ishe Lapowski, Bloomberg BusinessWeek Contributor
Absolutely. I mean, that's what the story is about. I think we all know that there are legal implications here of having every single word recorded and shared and saved. But there are also interpersonal consequences. Right. When you are the person who has your note taker, you know, plugged into your calendar and it goes to every meeting and sometimes you don't even show up because you forgot about the meeting, but your note taker didn't. That's a really bad look. So this story is really about the norms and common courtesy that we have to develop around these AI notetakers because we have are not all at the same place of comfort with regard to AI. We are in some cases quite polarized. And these meetings, these AI note takers, are sort of the one place where my drive for, you know, AI enabled efficiency is running up against your discomfort with having AI in your life. And so we need to navigate those things on a human to human level. And often that deals with issues of consent and, and all of that and just personal responsibility.
- [49:59]
Bloomberg Tech Host (Ed Ludlow)
That was Bloomberg Business. We contributed. Is he Lepowski? Thank you very much indeed. Let's go back one last time to Comcast shares markedly higher. There is a plan to spin out NBC Universal and Sky in Europe into a standalone public company. So there will be two. And in a year's time, if it all goes to plan, shareholders will have exposure to both. The stock up 7% on track for its best day since mid April. That does it for this edition of Bloomberg Tech. So much in the program. Check out the podcast to recap all of it. You know exactly where to find it. This is Bloomberg.
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