Bloomberg's Caroline Hyde discusses the increasing pressure faced by Chinese tech names as the sector enters bear territory. And, what's next for Google's Chrome browser after the DOJ says it must be divested. Plus, Project Liberty on a potential opportunity to buy out TikTok.
From Mahart where Innovation, Money and Power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde and ed Luod.
Love live from New York. This is Blue Meg Technology coming up. Chinese tech stocks enter a bear market by do PDD under pressure following earnings results.
Meanwhile, Amazon boosts its stake in Anthropic investing another four billion dollars in the open AI arrival, and the CEO of Binance discusses bitcoin near one hundred thousand dollars and the impact of a Trump White House.
At first we check.
On these markets that a little bit of just caution and sensitive training. On the last day of the week, we're up a tenth of a percent in fact, and that's that one hundred is at one point eight percent for the last five training days, making up some of last week's sell off. And more broadly, we are up for the month of November. We're looking at the Golden Dragon over in China. We've seen the trade be on the downward trajectory, in particular the Hangsting for example, being sold off. And I'm looking at the tech focused US ETFs and other areas that you can really track how Chinese ets, Chinese tech names are doing. And when you look at the NaSTA Golden Dragon here, we're off by one point eight percent. We want to dig into what's the anxiety that's growing in this particular index. Now, technically in the bear market, we've got Baidu, you've got PDD for example, really on the lower side due to their earnings weakness. They sold off in trading in China. We're off by two point six percent. As you see on the US ADRs. These are both US ADRs PDD as well, off by five percent.
All of this as we see the PDD.
For example, pledging to keep investing amid rising competition in home and abroad. But it's competition and indeed a Chinese economy that continues to weaken. We go out to Henry Wren, who's based in London, just talk us through what seems to be ever mounting pressure on Chinese tech names.
Yeah, so we can start from Baydo and the nation's biggest search engine operator. And clearly a tough quarter for by Do because we saw the revenue declined by three percent in a quarter, which was the weakest growth place that by the I seen in more than two years. And that weakness was clearly driven by its core business of online advertising and marketing. That part declined revenue by five percent in a quarter, and CEO Robin Lee on the earning statement said that the macro has been weak, while CFO on earnings call acknowledged that despite paging stimulus measures in late September, consumers are still cautious and advertisers spending are still subdued. There are still silver lining though AI business. AI and cloud business is still growing revenue by double digit but there are some concerns on monetization as well, because those AI driven search query are monetized at a lower rate and that compare with general queries. And competition is of course stepping up with other platforms such as short form video platforms like Going and Quite show gaining more user attention as well.
Let's just talk about the competition also for PDD as well, and look both of these companies. PDD in particular has been trying to make inroads into a US consumer. What seems to also be depressing some of these Chinese names is the fact that perhaps US investors are going to be less likely to be able to access these sorts of investments you just look at what's happening with the governor of Texas trying to limit that at the moment, that seems to a center shiver Daana spine.
Yeah, that indeed hit investor sentiment again for today's trading. As to PDD, the competition is stepping up. We're talking about domestic business in terms of JD and Ali Ababa keeps on investing as well, but also overseas for a team move because Amazon is stepping up its game as well. So on pdd's earnings call, the company set again for the second quarter in a role that in the to step up investments to keep up its game versus competitors.
And we have been seeing this in the.
Results as well, because its margins has been trending downwards again for this quarter and the company needs to reimburse more in terms of its merchants, giving merchants more perbs, reimburse merchants fulfillment costs as well as lowering the technology service costs for those merchants as well. So clearly it's reimbursing more, the margins is going down and it needs to keep up its growth to invest more, and that has hit investor sentiments Henry.
Ran with the inside track on what's happening with Chinese tech names. Let's broaden out the conversation now. Later it is with US chief Investment Officer for the Matic Innovation Equities at the Alliance Burnsteed, and we want to read across just generally sentiment around international technology names. But when you look at China, I know that within the ETF that you particularly manage, there are some companies with exposure to China.
How do you feel about the economy? How do you feel abut consumer that?
I think it's you know, we do our stock selection pretty carefully. We look at whether exposed to rather than making a macro call, we look at what they're exposed to and then whether they have competitive pressure there. And we are our ETF and a lot of stocks were investing in broadly speaking, are driven by secular tailwinds. So regardless of economic outlook cyclically, we believe the selection that we have, we select them carefully, will enjoy sustained growth tailwinds.
And that's how we do it. One by one really, and.
When you're looking at the one by one tailwinds, how much you have to bake in the anxiety around a headwind of geopolitical tension of a new administration that comes in that makes relationships with China ever harder, particularly for US exporters.
We we certainly are not here to make any predictions about political outcome or policy. It's a very difficult thing for us to do. But rather what we do is we do take into consideration in terms of the risk factors, you know, if they are exposed, and we certainly will increase a discount way when we think about the valuation. But then again it goes to one by one and see how they are positioned.
Okay, well, when we're talking therefore more thematically are the tailwinds for you still all about artificial intelligence. Whether or not a particular chip maker has a large exposure to selling their very high end chips into China. The tailwinds are so strong that at the moment you can still stick by these names. I know you can't go into individual selections, but I mean we've all been talking about in video this week, for example, when.
We look at these companies, so what we look is the overall exposure. So China is part of it, but China is not the sole driver for the growth. So when we look at it and we can see, you know, the immedia, for example, China is part of their business, but that's not the majority of their business, and the other parts of the business is so strong that you know, we can do scenario analysis whether or not China goes up or down, what does it do to the overall And then given the applied demand constrain, the constrained environment that we're in, they can't easily be allocate to other areas. So that's kind of really how we think about its overall geographic exclosure.
Let's talk therefore about the hype cycle that we've been in, the huge valuations baked into certain AI exposed names. You're comfortable with that at the moment you feel that the demand is so strongly indeed supply issues are limited, that you can continue to plow money into companies that have risen so far so fast.
Already, what we.
Think about it is on evaluation front. What we care is over a long term, can they sustain the profit pool? Who has the pricing power? I think that's what ultimately matters. In a fast growing phase, some of these companies will look very expensive, but we really need to look out over the ten year Horizon. Are they going to be the market leader? Do they have competitive differentiation therefore they can garner a bigger part of the profit pool. Not every single one of those are going to be a winner, So it's actually a great time for alpha investors. Frankly, you get to choose the one that you truly believe in, and then there are ones, says Frathi, that we do not believe in and we choose now to invest in them.
Well, you've got a whole array of winners for the last year in the ab Global Disruptors and international technology portfolios that you manage. Nature Chief Investment officer for Alien Spernstein, So it's great to have her expertise and themes here. Meanwhile, coming out Amazon boosting its staking a propic. We're sticking on AI folks. This is Blume Meg Technology. Let's talk about anti trust and Google, because the latest is that perhaps the tech giant will be forced to unwind it's partnership with AI startup Anthropic if a federal judge accepts the US Justice Department's proposal to resolve this landmark anti trust case over online search. Let's stick into all of it. Adam Kovokovich is with US CEO and founder of the Chamber of Progress for more on your expertise that we must make clear that used to work for Google, you really help really think about strategy and lobbying there. And now you are CEO one of the key tech lobbies out there, Adam, so we know which side of the equation perhaps you're coming from. But did that take you by surprise when the UK has already said, look, we're okay, we're at ease with this anthropic investment, but then the US takes a second look.
Absolutely, and you're absolutely right that I think a loser from these remedies would be anthropic. The AAR startup, the DOJ wants to unwind Google's investment in anthropic, they want to go beyond that. I think it's a testament and a symbol of how sweeping these remedies are. And I think one of the things that's kind of interesting about this case is that it was brought by the Trump the first Trump administration. I don't think they cared that much about the search default deals, but they wanted to kind of punish Google. And now I think what you see happening now that Biden's Justice Department has won the case.
They don't seem that interested in the core.
Of the case, which is really search default agreements, and instead are treating the as a kind of vehicle or pretty broad sweeping changes to Google's business, like unwinding things like their anthropic investment.
The main one that Bloomberg had been reporting on and then was need substantiated by the DOJ was the setting off of Chrome, and many like you said. This doesn't seem to be going into the payments that were being made to Apple or to Samsung and other Android device makers to make.
Google Search the default.
But the fact that Chrome has about sixty percent market share when it comes to the browser market, and then a lot of people access searched through it, would it not be a good idea to start peeling off some of the ways in which it dominates and search.
Well.
The key point is that if the Justice Department thought that Chrome was a problem, it should have included Chrome.
In its original argument.
That's the strange part about including it as a remedy. The DJ never brought any charges against Google over Chrome. They never made any allegation that Google had, you know, improperly referenced its search engine in Chrome. Now they're invoking in the remedy sphase. So I think it's coming out of left field and the way that judge will reject. But Chrome is clearly very valuable for Google as a way to encourage people to spend time on the Internet.
Good for Google's business, that's clearly true.
But the idea that you know it's valuable to other people, I just don't think it doesn't have any revenue of its own. It's not valuable if it's decoupled from Google's search results.
Frankly, I just think it's very unlikely.
I think it's about as likely that Google will be forced to sell Chrome as you know Elon musk Doze Commission is actually going to make the government more efficient.
Ah, that's taking us into a completely different avenue, Adam so another time. But I'm interested more broadly in some of the other areas. I mean ones that took perhaps people are back was the idea that they'll be forced to license, sell off, at least hand over their data, unique data to other rivals, even as large a rival as Microsoft when it comes to the world of search. How technically feasible is that and ultimately how pro competition is that sort of an outcome.
Yeah, well, I think technically technical feasibility that with the Justice Department said as there should be a technical committee that really has full access to Google's a source code.
And that's obviously very invasive.
You're absolutely right that things like spinning off Chrome got a lot of attention. But if you bear a look in the details that this filing, you're absolutely right. They're proposing that Google have to make its secret sauce algorithms available to rivals, share its users data with rival search engines, including by the way, foreign search engines like Baydoo and the Index. There actually is a provision in there that would make Google pay for consumers to switch to consume competing search engines, which is like PEPSI paying you know, their customers to try coke. It would make them fun paid advertising campaigns for rivals, like being induct dot Go. And I think that, you know, all these extreme remedies, I don't think. I think they would not only deter Google from continuing to invest in search innovations if they have to share everything. But they're so extreme and they're so beyond the judges findings. They're a bit like prescribing and amputation just because the patient has a hangnail.
The arguments you make are very clear, and we therefore try and play devil's advocate here me as the consumer, would any of this be good for me as a consumer? If indeed Google is forced to open up any parts of the ideas coming from the DOJ remedy.
Well, I think the vast majority of people just want their search engines to work right, and they want their search engines to answer questions for them.
And you know, one of the things I think is interesting is that.
Obviously the AI layer that people that Google's building into its search engine is a direct response to the success of things like chat GPT. We saw a news report yesterday that OpenAI was going to probably build its own browser.
But these remedies would take direct aim at there.
They wouldn't allow Googled, for example, to put in AI generated results into its search results, and so I do think that would be a pre direct violation of the consumer Welfare Standard, which has really been kind of the load star for anti trust enforcement.
I conceive that all of these remedies would be great.
For Microsoft and great for Duck Duck Go, But you know, that's just not the way we historically do anti trust enforcement in the US.
Many had felt that actually there had been a slight changing and viewpoint of how you do anti trust in the US, particularly under Lena Kahan and under now the current DOJ. What's notable, though, is this is going to change. We've got a new administration coming in in twenty twenty five, and it's likelihood is that Jonathan Canter, who's been leading the charge on this particular case, hands over the rains.
Do you think anything changes on the back of that.
As you mentioned, it was the Trump administration that first brought this case.
That's right, and I think, frankly, the fact that Jonathan Canter is on its way out is probably the main reason why these remedies are so sweeping. He's not going to be around for the trial about the remedies next year. A lot of the attorneys who've been prosecuting the case are, you know, shopping their resumes around Washington. Trump's gonna have a goal turnover in agencies like the DOJ, so cantor doesn't have to own what happens next, and I think that's why he swung for the fences. I do think it's an open question about what the Trump administration will do. Trump named Pam Bondi, a former Attorney General of Florida, as his next attorney general. She will then decide who the head of the Anti Trust.
Division will be. And there might be slight changes.
I think that Trump likes having cases a big against big tech because frankly, they provide him some kind of punishment or leverage over big tech services. But there might be changes in how they manage the case, might be different approaches to how they approach things like remedies.
Adam Kovakovich, we thank you for the expertise chamber of a progress CEO on all things Google. Meanwhile, we're just talking about how Google might have to unwind its anthropic and investment. Well, another company is piling in there, Amazon pumping an additional four billion dollars in its stake and anthropic and we know that it's the builder of Claude generative artificial intelligence software, where a key competitor to open ai and Bloembg's Matt Day is here with more and Matt. When you saw this extra enormous set of money going towards anthropic.
What did you think, Well, we knew Anthropic was raising money, but This really underlines for us that Amazon has gone full bear hug on Nthropic. You know, much like Microsoft pumped a ton of money to Open Ai to get some exclusive rights and sort of preferred cloud provider for chat GPT, Amazon has decided that, you know, hey, cloud is a good enough product that if they can, you know, seek to tie it to their platform, they're gonna They're going to do that.
How exclusive, therefore will Anthropic be?
We know that actually Google currently has like an investment that it's hoping to keep in it, so Whennthropic can.
Still run on other clouds, it's not like the Microsoft open A ideal in that regard. But one exclusive bit that Amazon has been pushing for is Anthropic using more of Amazon's hardware to train its models. Right, This is a key differentiator Amazon thinks for its cloud in the long term. They think, if Anthropic can help them make a really good AI chip, then you know, that's just another advantage for a cloud platform that already brings and a ton of money for Amazon.
And they're spending a ton of money. Matt Day, great to have you, thank you time now for talking tech. First up, Paramount is promising a one million dollar retention bonus to its head of government relations and of human resources. That's all depending on the merger with Skydance. Just last month, Paramount announced that it's three co CEOs will receive three million dollars in cash bonuses even if they no longer are with the company. Plus DirecTV has notified EchoStar that it intends to terminate this acquisition of Dish Network.
This is after the bondholders failed.
To consent to a key dead exchange, effectively killing the deal that would have created the largest PATV provider in the United States. And Apple is readying to revamp Siri now. According to sources, the tech giant is developing a more conversational version of its digital assistant BACLY, aiming to catch up with rivals like Opening Eyes Chat GPT. The new sery is said to use more advanced lllms and will have the ability to handle more sophisticated requests. Now talking of AI, AI leaders and safety institutes and gathered in San Francisco this week to discuss the impact of artificial intelligence on society, but one looming topic dominated conversations, what will policy look like under a second Trump administration. For more bloom Sharene Gafari joins US now and you were there alongside was it? Sexutreen, Romando and all awful lot of heads of various AI safety networks and cummings together, What are we currently thinking about that maybe the US version of AI safety is dismantled in some.
Way, That's right.
So we had a who's who there?
You know, tech leaders like Athropic CEO Dario Armadae, officials from international countries around the world who have all just agreed to be part of this international consooratum of different AI safety institutes. But the looming question of uncertainty is what will happen on the US side to its own AI safety institute that was leading the talks if there is a new administration that will take a different approach to AI policy.
Elizabeth Kelly currently heading up that institute, What did she think of the future of AI innovation and guard rails under our next administration?
Right, So, she really made the case that despite the fact that incoming President Trump has said that he will repeal the or his party rather platform has said it will repeal the Biden Executive Order on AI, Elizabeth Kelly really made the case to me in an interview on the sidelines of the conference, that this Safety Institute should not be seen as a politicized group, that it is part of a nonpartisan, larger government institute called NIST, which is all about evaluating and making safety standards. And they've long been doing this for things like facial recognition technology, for example, measuring how good it is and what the risks are. And so she's saying that, look, no matter who's president, we're happy to be continuing our work as we have. And you know, that's sort of the best case scenarios that this work continues. But the big question is that of incoming President Trump does try to take a different approach, repeals the EO. Will we see change with this institute as well?
How disconcerting is it for AI companies trying to build in what feels like a bit of a vacuum of direction, because I know that very positive words were said about the AI Safety Institute the US version by for example, the leaders of Anthropic.
Yeah, it does provide some level of uncertainty because what these companies don't want is a patchwork of legislation in all these different countries. And of course the asif stitudensty isn't doing actual legislation, but it is providing some kind of standardized testing to say, this is how you make sure that you're this is how we can say your models are actually risky in terms of biological threats or cybersecurity threats. So if they're having to run, you know, one hundred different tests for one hundred different countries and the US's version of those tests is constantly changing, that's not good for them.
Right.
So it's in these companies like Anthropic and opening Ice interest to have standardization, and they're calling for the Trump administration to keep the USAI Safety Institute.
What about more local government officials.
You've been interesting in reporting that Sam Altman, for example, going to be helping the new San Francisco math.
That's right. So at a local level, Daniel Lurie, our new mayor here in San Francisco, has appointed Sam Altman to be part of his transition advisory team.
You know, he's said in.
A past interviews that Sam Altman is one of the most important people in the world, and he's living here in our city. So you know, there's an obvious incentive, I think, on both sides for the mayor both to you know, take advice from someone who's so powerful, and also for open AI to be a potentially bigger part of civic engagement here in the city.
Sharane Gafari, We thank you all things AI. Welcome back to Blue Meg Technology. I'm Karen Hide in New York. Let's get a quick check on these markets. Halfway through the show, almost halfway through the training day, we're up one point five percent of the course of the trading week on the Nasdaq one hundred, best weeks since the start of the month, when, of course we learn the outcome of the election, when the Nasdaq one hundred rallied more than five percent. We're making up some of last week's erosions. Let's move on to some of the individual assets and indeed names under the hood, and Nazak one hundred is actually down on the day, just slightly, largely because of Nvideo. It's the biggest points drag. We're off by more than three percent after earnings came after the bell on Wednesday night and we seem to shake off some of the anxiety and yesterday's trade, But so we head towards the weekend, maybe a little bit more of profit taking happening on this name.
Bitcoin up seven tenths of a percent. We're at ninety and forty one.
The ramp up has been extraordinary in crypto since the outcome of the election, and it continues to be a risk on ASCID of choice. Meanwhile, on a play getting some sort of proxy effect of Bitcoin. Many have turned their attention to MicroStrategy. We're up another eight percent. Remember it sold off yesterday after Citron Research came out and said, look, even Michael Sailor himself would say that this stock has run too far, too fast. It's time to perhaps perhaps better against it, even though four years ago they'd said use it as a Bitcoin proxy. But for now we've got to dig in a little bit more about what's happening with MicroStrategy, and indeed what's happening in terms of leveraged ETFs around the name.
Look, over the last two days, we're off by nine percent.
That's going to hurt if you perhaps in these two x ETFs ones that are dining out on leveraging any move that happens with micro Strategy. But it's actually proving a pain point for some of the banks that trying to make the markets around these ETFs Bloomberg's Deniza Tinkover is here with us, so just talk us through who are the players that allow you to go two times and move on MicroStrategy and the difficulties that they're having well with some of the swap market around it.
Yeah, so it's very interesting that these are very recent players. They weren't around just a few months ago. They actually increase their levelage. So currently there are two main big ETFs that have two times the exposure of micro strategy, which means they obviously go up when micro strategy rallies, but also.
The losses can be quite seep. And what we have seen is actually.
From a lot of trading desks, including no Mura and other people on the street actually flagging the effect of those two ETFs, which are now around four billion, which doesn't seem that big, but the amount of risk and leverage exposures they take is quite is quite important. The way they do it is they do it via swaps, and that has become a problem. Not many people are ready to take that risk and to follow that volatility. In fact, there are three prime brokeages of one of the ETFs is working at the moment, and it's really hard to get more levelage going forward to chase that rally and potentially obviously if we go down.
So just get technical for us for a moment, because there are a lot of retail investors who are in these leverage gtfs. I'm hearing from neighbors about how they're taking options out on some of these leverage ETFs and it makes the eyes water. But basically, when trying to fulfill the promise of these instruments, the risk limits of a prime broker are being tested. So what is the ETF manager.
To do well?
The ETF managers can also We've seen a lot of people use co options sometimes to chase that upsite or just being limited with very few prime brokers. But the way those product works is that they offer rebalance within the last thirty minutes of the trading day. So if you look a little bit deeper in some of those charts, you often see really big gurations in the last thirty minutes, which is what actually trading dests are looking at.
And for example, if you've seen a.
Big update, a lot of those products need to buy a lot more of the underlying stock or some kind of exposure to it to chase back to the needed exposure to have two times leverage. Seemed that really big effect in the last thirty minutes, which can be up or down depending on the.
MOLF t rex two x long MSTR daily target ETF. The ticket is MSTU. There's also Sylvia Deablonski who we have on the team often. She runs the defiance daily target to X longing MSTR ETF ticket MSTX. Fascinating Taniza takover on all things MicroStrategy and the leverage play there. Meanwhile, digital assets being flagged as unregistered securities by the SEC are rallying after the agency's chair, Gary Gensler, and that's that he prans to step down. Cryptos supporter Donald Trump, of course, has vowed to fire Gensler, who now intends to exit in January on his own accord, on the day the President elect is due to be inaugurated. Meanwhile, Bitcoin's wild ride has been continuing. We know it's near that one hundred thousand dollars level, very psychologically important, and the cryptocurrency surging since Donald Trump's re election. Finance CEO Richard Teng sat down with Blue Megs Trancy Laqua to discuss the impact of the second Trump administration on crypto markets.
Take a listen, president from being elected suddenly give a boost and give greater clarity to this. But I would say that twenty twenty four has been a landmark year and that momentum started earlier this year. So if you look at what happened in January this year with Big Coin ETF being approved firstly in the United States and is subsequently all around the world from Brazil to Canada to Australia, Hong Kong and at least goes on, it gives a lot of recognition and finally the respect that this sector deserves all along and with the likes of all the largest money manager and all the top financial institutions around the world starting to recognize the value of this space. Have Larry fin CEO of the largest money manager Black Role in the world that went from a crypto skeptic to a crypto believer. I think that it selfpiacks value. So if you look at the Bigcoin ETF is the best performing ETF so far in the I think, in the history of ITTF. Right again, it shows that institutionalization has started and mainstreaming has started.
Could the Trump administration change everything from for cryptocurrencies.
Well, it's a big positive. I think the last four years, especially if you're in the United States, I think the last four years has been pretty tough, right in terms of you know, regulation by enforcement, which is not necessarily the best form of regulation. But President we have a very pro crypto president. And if you look at it's not only President Trump himself, by the House of Representative two thirds of the legislature being elected a pro crypto seen stories happening at the Senate level, many pro crypto legislators and policy makers have been elected.
Finance CEO WHOCHI Tank there speaking with our own frontcy Lacar. Now just a note and a reminder that Finance itself remains under a consent order with the formal monitoring requirements in place. Plus there is an ongoing sec but none of its currency suite executives have been charged in the most recent.
Round of indictments.
Now coming up, we'll talk about where enterprises are allocating their dollars when it comes to AI men adventures.
Tim Tully's with us.
This is bloom Meg Technology, still private. Fintech giant Stripe is again buying back some of its shares and a roughly seventy billion dollar valuation. The deal is likely to see hundreds of millions of dollars in shares change hands according to sources numbers. Katie roof choices once again with yet another secondary market activity. Katie and just who are they purchasing from? Who needs the liquidity?
So this is actually for ex employees rather than current employees. And then also venture capitalists and other large investors. So Stripe has done several tender offers I believe at least the third.
One this year.
This is different than the Sequoia one a couple months ago where they purchased a lot of shares. Our understanding is it actually could be Striped itself buying back a lot of its shares, and this could be a potential move to clean up their cap table in case they want to ips someday.
Okay, clean cap table always helps.
Talking of potential IPOs, you were reporting on one for One Password.
Yeah, exactly. So One Password is having early conversations with banks. Our understanding is they're hoping to go public next year. This is a Toronto based company, the password management business. They've been around for a while. They originally bootstrapped and then they started taking outside capital. Maybe five years ago Excel was knocking down their door to get into that one, and now it looks like they're getting closer to providing a liquidity event for their shareholders.
Oooh, some activity ahead, Katie Ruth.
We appreciate it as always an all things VC backed investments, So that stick with VC now because investment in AI native applications get this reach four point six billion dollars in twenty twenty four, almost eight times what it was in twenty twenty three. It's all coming from the latest insight report from Meno Ventures, who are looking at where enterprises are spending now on general to AI and where it is all going for.
Twenty twenty five.
Tim Talley, Menlo Ventures partner, can deep dive with us a bit now and it's an interesting amount of conversations I'm having that are pivoting away from the infrastructure, the large language models, over to where in the application layer this is going to be most valuable. Where are you seeing that activity to write checks to applications in general to AI.
Yeah, just to be technical for a moment, A lot of that is driven by the fact that these foundation models are translating texts into other text well, so what you're seeing is the money's flowing into places where applications can do well with text as you can imagine. So that's really legal tech, it's healthcare, it's fintech, And largely that's because the architectures are settling in terms of how developers build applications. In twenty three, books are still trying to figure out how to build applications using generative AI. That has changed greatly in twenty twenty four as applications move into more agentic architectures.
What's been so interesting is, for example, you're an investor in Nthropic, we announced today that Amazon is taking another four billion dollar cash and fusion into the business. It really wants to make it a bedrock or bedrock. It wants to really ensure that it's offering its own well cloud technology but off to other clients with the help of Anthropic, but also having Anthropic train its own data on its own chips.
What's interesting.
I'm talking to some application generative AI application makers and they're saying the support coming from cloud providers for their businesses too is extraordinary. How are you seeing these application makers also dining out from Amazon, Microsoft, and the rivalry there, Like.
It's really really expensive to train and provide inference for these things, and you know, seeing a four billion dollar cash infusion from the likes of Amazon is not shocking at all. I think it's great for developers who sit in the Amazon ecosystem. They've already been us to use services within that ecosystem and to move over to Anthropic I think makes things really really easy for them in Anthropic is obviously benefiting from that.
Just from the research that you've done. Are we seeing money stop going towards these foundational layers and instead finding a new home in the application makers or are people still writing checks in both directions. It's just very different valuations.
It's going in both directions.
Store you saw it in the report. The amount of spend in foundation models went up six point five x from a billion in twenty twenty three to six point five billion in twenty twenty four. That's a huge increase. And as you mentioned earlier, we saw the amount of spending the application layer go up about eight x to about four point six billion dollars in twenty twenty four. So the dollars are flowing in both directions.
Frankly and you mentioned some of the sectors where this makes most obvious sense, and we've had a lot of these these startup founders on the show that are particularly helping serve the legal industry, the healthcare industry.
How much money.
Are you starting to see these ultimate end clients purchasing? How much are we seeing product market fit? How much we actually seeing clients spend money on these products.
I think that we call it PMF in the venture industry, a product market fit that you know, it's definitely there right You know, I have a legal type startup called Eve that's seeing huge, huge benefit from plaintiff side case management, and the throughput is definitely there, So you know, plaintiff sid lawyers are getting the benefit and they're spending the dollars and you know, like you asked earlier, the product market fit is certainly there right now, and people are buying up and slaping up the software left and right. So we're really excited.
But everyone keeps on question return on AI investment. Are these companies in healthcare, in the legal services finding that it's productivity that gets boosted?
What else is giving them the return?
Oh?
Absolutely, I mean they're not going to be buying the software for not getting the value. So you know, we hear it anecdotally from folks that they're getting tons and tons of value out of software and the spend is just increasingly rapidly. So you can imagine that the value is certainly there.
Push us forward, because where is the next vang god of money to be made within the AI hype cycle or AI reality?
Tim, Where else are you looking to put money to work?
Yeah, I mean it's really focused around the application layer right now. I think architectures like I mentioned earlier are settled, and because the architectures are settled, makes it easier to build the applications, and so you're going to see the velocity of applications come out much much more quickly. So, you know, I think legal definitely, workflow, automation, chat, customer support is certainly a space marketing human resources.
So I think I think really any vertical.
Right now is right for a disruption for AI AI.
Right now, Tim Tally come back when you're starting to write even more of those checks to some of these new companies men Ventures partner, it's great to have you on.
Creators from all around the world come to TikTok that the discovered to find an audience to live their dreams of fame and for.
Now.
In addition to launching countless Global Stars, the discovery and authenticity that defined the TikTok experience, I've also made the platform home the serious issues that are vital to the global good.
Talking about the positive angles of TikTok.
They're the CEO show cho recently speaking in at Apex in Peru. Back in the United States, questions about the future of the app continue to loom. That says lawmakers potentially going to be looking at changing all of it within the administration. Right now, in Washington, Project Liberty is hosting its inaugural summit on the Future of the Internet to explore how policymakers and citizens can come together to create a better online experience for all Americans.
Here with the future of TikTok and the Internet.
Rit large Frankmincourt, junior founder of Project Liberty, and before we get onto your bid and interest in TikTok, just tell us a little bit more about the summit that you're having, because it's all about trying to have whether it's lawmakers or whether it's TikTok creators in and of themselves talking about their experience on the Internet and how it can be improved.
Right, yeah, exactly, Caroly, Nice to see you again. And it's really a great gathering of many, many different people, nearly five hundred people here, almost one hundred speakers, really brilliant people who are really concerned about our broken internet and want to fix it. It's not just complain about it. And so as you pointed out, it's an array of folks, not just technologists or just investors, or just influences or just parents. It's all of the above plus others. So the conversations are really really extremely interesting and the level of energy is very high because people are talking to people they otherwise might not be talking to if they were just in their own bubble. So yeah, and it's very solutions oriented. We're making a number of announcements yesterday and today, and I'm thrilled with how things are going.
Well, let's go to solutions.
Because day one was held at the mccatt School of Public Policy. They're very lies the idea that this might have some sort of policy solution, and you had law makers such as Nancy Mace, Republican and Democrat Rokana sat down together to discuss it. Is it about government intervention here or is it some other solution.
Yeah, Well, the point I made yesterday and I had the privilege of helping start that school a decade ago, is that, you know, I started this adventure thinking that maybe policy intervention was the answer.
That you could see a decade ago that.
The Internet was headed in a not a great direction and it could do a lot of harm, which it has subsequently done. Well, maybe we can help get the policy making apparatus to get out in front of this. Turned out that big tech is policy making is no match for big tech. Big tech is too powerful, it's too fast, it's too big, it's too rich, it has too much influence, quite frankly. So that's when we launched Project Liberty five years ago to actually reimagine how the Internet works, build the technology, bring in partners from all over the world who share the same concerns that we have, which is, you know, the data that is now driving the Internet is being scraped from us all. It's being aggregated by big platforms, algorithms and AI being applied to it, and we're all being stripped of our humanity and never mind the value we create, So you know, think of data as personhood, and we need to reclaim ownership of ourselves. We should own and control our identity and our data. That's fundamentally the point. And now, thankfully lots of people around the world are recognizing this and wanting to build this new version of the Internet, and that's what this is about.
I want to recognize, though, on the flip side, that a lot of this social media has good in It has connections, helps people who feel alone in certain parts of the world, who don't see identity that they resemble near them, find community online. There's social there's businesses that are built on these social media platforms. So there is positive as well.
As some of the harms. And I'm interested as.
To when you look at making a bid for TikTok, for example, how you support the positive at the same time as having some sort of decentralized social network protocol that allows people to perhaps keep their identity a little bit more.
Yeah, there's massive good that can come out of technology, massive good that can come out of social media. But we don't have to have all the bad as well. I mean, it's just it's not like way, this is some good, So let's accept the bad. We want to have a Internet technology that really is amplifying good. It's really optimizing for people, it's really protecting children, it's strengthening democracy, it's helping us get smarter, not dumber. And so what we want to do with TikTok is actually move the user base over by the way, we don't want to see it shut down either. We want to move the user base over to this open source protocol where people can own and control their identity and their data, and the value proposition is shared with the users. I want to see this, at least a portion of it green Bay Packerd. And what I mean by that, just as the fans own the green Bay Packer football team, let those that are on tikto talk that create the value on a piece of the platform.
How likely is that within the next administration.
It's it's a great question.
I'm not sure. I've heard.
President elect Trump say he doesn't want to ban TikTok either. Uh, we're waiting on the legal decision. The Congress passed a piece of legislation, UH, really demanding that it either be shut down or bandits that much of a national security threat. So I assume that it will be sold and then we're in a position to buy it. Uh you know when and if it is sold. So we're watching very carefully. We expect the legal decision will be the first week of December, and then we'll see what the new Trump administration does. But uh, we're here ready to buy it. And again it's not me buying it. I don't want to be the CEO of TikTok. Uh I want to I want the people to buy it. This is a great opportunity to catalyze an alternative internet. And you know, the technology is here, it's working. We have nearly a million people using this new technology. Now we need scale.
TikTok would provide scale.
A McCourt junior come back after those December dates, founder of Project Liberty.
Thank you.
I'll let you continue with the summit. Now, let's just take a look at what's happened to this market this week.
A big round trip for Nvidio.
We're up a tenth of a percent after its earnings came out on Wednesday.
We are currently off by more than three percent on the day.
But stability in Nvidia, the world's most valuable publicly traded company, after those results and Ana's TEK one hundred. We're at one point seven percent on the week, just making back some of the losses of the previous week, and we're still.
Higher in the month of November.
Remember bitcoin never ending ninety nine thousand, one hundred, we are ever close to the psychological level of one hundred thousand dollars per bitcoin.
Eight percent on the day. That does it for this edition of Bloomberg Technology.
Check it all out on the podcast, Apple, Spotify, and iHeart This is Bloomberg