Bloomberg's Caroline Hyde and Ed Ludlow break down Broadcom's fall after a disappointing forecast despite robust demand for AI products. Plus, tech stocks flirt with their worst week since 2022 ahead of Apple's big launch event, and the White House is targeting China again with plans for a fresh round of chip-related export controls.
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Live from New York and San Francisco. This is Bloomberg Technology Broadcom. It's falling hard after a disappointing forecast despite robust demands for AI products.
Tech stocks flirting with their worst week since twenty twenty two ahead of Apple's big launch event, and the.
White House is targeting China again, planning a fresh round of chip related export controls. We discussed, but first we have some macro breaking news from the Federal Reserve and the Mann To bring us the details is one McKee Bluemost, Chief International Economic Suppose, the correspondent coming from FED speak.
Well, this is what everybody's been waiting for all day. The job's number comes in at one forty two and unemployment falls back to four point two. What will the Fed do fifty or twenty five? We get a hint from Chris Waller, the Federal Reserve governor, often seen as the leading guide to FED activity, and he says today's data show it's time to cut rates. Determining the pace of rate cuts and ultimately the total reduction in the policy rate are decisions that lie in the future. As of today, I believe it is important to start the rate cutting process at our next meeting. If subsequent data show a significant deterioration in the labor market, the FOMC can act quickly and forcefully to adjust monetary policy. Now, while Waller says we are not in recession and it doesn't necessarily look like we are going into recession, the economy looks pretty strong. He says the risks are now tilted towards the downside on growth, Inflation has gotten better. He doesn't say whether it'll be fifty or twenty five, but says that's a decision that's coming up team.
Once we get through the yield, show me the Nasdaq one hundred, or show me the S and P five hundred, and let's show our audience that the market's kind of changed direction on those headlines. Mike, I want to read one specific bit back to you, which is the current batch of data no longer requires patients. It requires action, but there's no size and scope to what action means. We don't have a basis points number do we.
We don't, And that's a little bit odd.
And in the sense that Chris Waller goes on to say that he was an advocate of front loading rate increases when inflation went up, and if the data supported he would be an advocate of front loading rate cuts.
What data is he talking about.
We really don't get much more before the next FED meeting, So I'm not sure why he wasn't more specific, other than perhaps he doesn't want the markets to get ahead of themselves in pricing.
That's what markets do. They get ahead before dugging. Michael McKee, just brilliant to have you on this market moving story. We appreciate it. Let's get analysis from the market. Shannon Sicil is with us for more, CEO of Bannery and Capital Management, which helps independent advisors with alternative investing options. And currently you've got four billion dollars under advice. And I'm really interested into ultimately how much macro the FED is guiding investment choices right now, or how much you can think about AI and productivity and technology still winning out.
So I think you've got to think of those things in two separate ways. Right there is the current economic environment in which the FED has been tightening, They've been raising rates for a while, they've tried to get inflation under control. The ramifications of that is that it softens labor markets, it slows growth. The goal, of course, is for it to slow growth, not growth go negative, and we're seeing that kind of play out because it's more expensive to borrow money in the capital markets are reacting accordingly. You can think of that as the current environment and still believe that technology trends like AI win longer term. And it doesn't change the fact that companies, when they look at where they're going to deploy capital and where the opportunities lies, are going to do it in the places they think they need to develop in order to compete going forward. And so as they make those capital deployment decisions, they are looking at things like AI, which is the number one thing that they need to be considering to continue to stay competitive. A great example is Apple, Right, everybody was down on the stock prior to their announcements of how they were going to be incorporating AI into their iPhone platform and into their other devices. Right before that, everybody was like, oh, there behind the eight.
Ball shown on the stock.
Hurt let me jump in there, and I'm sorry to cut you off. I actually want to continue with some of the real time reaction to those fed wallheadlines. One of the alternatives that you track closely is bitcoin, right, And when we got the jobs numbers, bitcoin jumped and was in positive territory for much of the session. Going into those fed wallheadlines at the top of the eleven east an hour, it was markedly lower, about two and a half percent.
It came off that a little bit.
Use that case study of one single session to explain why you track bitcoin so closely for your clients.
So again we think bitcoin is using or even ease it's crypto in general. Art right are taking advantage of a technology of the future in blockchain.
You know, blockchain is.
A protocol, and we've seen the revolutions of protocols throughout out the history of the Internet. You know, everything from voiceover Internet protocol to HGTP is a protocol, like these are all protocols.
Blockchain is a protocol.
Bitcoin works on that protocol, and that is a future technology that we believe will be great.
You know, more largely adopted.
What we saw in the short term reaction to information had more to do with a risk on risk off trade, not necessarily the adoption of the protocol. So you can believe two things at once. This is the difference between a trader and a long term investor. Right, you can believe that in the short term you're going to have the market movements that you can profit from, and you can also believe that, I don't care about what happens on one individual day, but the longer term trend wins out in the long term.
That's what happening when we're looking at the likes a Broadcom today or in video last week, that it's the trading that said them so much lower on actually pretty fundamentally decent numbers in the long term, but they disappoint because expectations have run so far so fast.
It's exactly right now. There's two different type of analysis in finance, right, there's technical and there's fundamental. So the fundamentals remain strong, but the technicals broke down, and the technicals drive a lot of the algorithms that move the markets these days, and so that's why you can see these short term price dislocations that occur even though fundamental information and the actual company itself is in good shape.
Seana, you stated the line that I've been using all week, which effectively is one session a market does not make. But I just want to stick with what's happening right now. You know, we had that statement from Waller, you know, tie it all together the post mortem of Nvidia, what the expectation of what the FED will or won't do this month is, and where you go from here.
So the post mortem of in Vidia is that in Vidia is a great company doing great things, and that has really attractive growth, just not the attractive growth that they had before.
So when you were experienced in three four hundred percent increases in revenue and you fall to one hundred and fifty, that is a decline in your earnings momentum, but it's still one hundred and fifty percent increase in your revenue. And so overall, as a long term holder of in Video, personally, I believe that the stock wins in the long term. I follow the stock forever and the short term, what you're seeing is that disappointment and the stock coming back to reflect more closely, it's fundamentals when you start to look at price to earnings and things of that nature. So post mortem, I think long term and vida good short term would probably have some volatility in terms of the FED and what happens next. I think today's data and the comments that came from Waller suggests that the FED is still in line to make a rate cut this month, and it will be the first of many. And the question really becomes how big will that ratecut be? And there was nothing that came out in today's data that suggests that it should be anything more than twenty five basis points in my opinion.
Shanna Sisters CEOBE, you messed up?
Did I miss another question you asked?
I think you have no?
I mean, my goodness, you took what I asked and you really ran with it. We appreciate it. Shanna Sissl's CEO of Bandary and Capital Management, Thank you very much. Docu sign shares up in today's trading after the signature company reported second quarter results, posting revenue of seven hundred and thirty six million dollars billings growth of two percent. But it's margins where a lot of the streets focuses. Let's bring in doc you sign CEO Alan Tigerson, who here in San Francisco with me. I just want the story, the DOCU signed story, right. I think historically you've beat the market's expectations on billings, and so everyone was very excited. They're a little concerned on that. The story behind billings growth.
Well, you know, so.
When I joined a little out of two years ago, I think there were three questions. One, could we stabilize the business, could we become more efficient? And then could we develop our next chapter? And so this quarter I think is a nice milestone. I think we have really stabilized the business. We've made the business much more efficient, the profitability as you mentioned, and we are now poised, I think for growth. We've launched our new product line, which is much broader than the signature that everyone's so familiar with, and we saw some early, very positive results this quarter. It's still early, but we're very encouraging.
Dig into those positive results. AI Infused. We're thinking about broadening out from contracts. How is it working for the companies that use it?
Yes, So we launched it to North American commercial customers and we've had a number of folks that have not only ordered, but deployed, and the early results are really good. You see, what they're saying is They love the fact that we can ingest all of their agreements and give them immediate insight into every contract that they have. And this is valuable for every role in the company. Whether you're a CFO or a frontline seller or purchasing agent or an HR recruiter. You want to know the agreements that are relevant to you, what are the essential terms, and how are things going. And that's what we provide, and we can do that fairly instantaneously.
When you have an AI enabled product, or a product is made more valuable by AI, it's usually required an investment on the talent side or the compute side. What can you tell me and your investors and the audience convince us that that investment is paying off fully?
Yeah, well, so as if you look at our past performance here, we've been doing AI for a long time. We've had AI embedded our products since before the allms came out, and that's been feature that we've embedded as well as charged separately for. But obviously with the advent of these new models, we were able to take a significantly forward. And the feature that I just described is AIAI enabled so we take your contract data, run it through some of these models, score them and then give you back the central data about your agreements, and we could do that in a very lightweight, instantaneous way. From an investment perspective, we have ramped up our investment in product and technology, and we are moving to the public cloud. We have a big partnership with Microsoft. But I think we're holding the line pretty well on expenses. We can do this efficiently, and of course the costs of AI continue to drop. The cost of processing and agreement has dropped tremendously to the last six months.
We're looking at the moment at an interday, you're up three point seven percent. I look back over the five years. At one point your share price it clips three hundred, And I'm just wondering as to whether you think this AI, your foury, is ever going to infuse itself into the capitalization the market capitalization of your business once again on as the pandemic did once before.
Well, I think you know those were days when doc time's growing at fifty sixty percent a year. So I don't know that we have a path to that yet. I certainly love that, but I'm not projecting that. I think for now we're setting ourselves a milestone and return to double digit profitable growth.
I think we have a.
Path to that, and the early signs here are encouraging, and we'll see how the market's response to that. We're obviously a much more profitable company now and operating at bigger scales, so I'm not going to predict where the market's going to value us, but we are really really pleased with the early progress here.
It's very quickly.
Something you just said, Alan, the cost of AI is dropping. I don't know that I've heard many people say that to me at least, what do you mean.
Well, so, if you look at the efficiency of these models and the cost per item process, whether it's an image or an our case in agreement, the cost has dropped very significantly, by a couple orders of magnitude. With that said, obviously people are taking on more ambitious tasks, the models are getting larger, and so the compute costs for the large vendors, for example, the amount of capital investment they're making is going up and up. I think it's because of the expansiveness of the opportunity that they see. But I'm telling you, as a customer on a per item process perspective, costs of dropping very.
Rapidly fascinating take. We thank you so much, doctor side An anti Guison for joining us. Now let's go elsewhere in the C suite. Shares of enterprise automation and AI software company UiPath that they're down in today's training following the software companies actually ten percent revenue growth results and a small upward revision and its recurring revenue forecast. That's amid a CEO transition and job cuts. AT's bringing UiPath CFO and COO Ashim Gutta for more. You're taking on more roles and responsibilities. We're seeing an investor base that wants certainty, that wants confidence in this period of change, you're showing execution. Can you give them that at the moment issue?
Yeah, And I think this quarter was a good testament to that, Caroline. We beat our mental across the board from what we got into last quarter. We raised our overall operating margin and free cash flow by twenty five million dollars, which projects our confidence in our ability to execute both efficiently and at the same time with minimum distraction on the top line results that we're going to continue to drive. And then we've also executed well against our buyback. We increased our authorization for another five hundred million dollars, bringing to a billion dollars in total. I think that really projects the confidence that we have in the company and our ability to execute, and then that's translating well in the investor discussions that we've had today.
What about executing against your competition A shame Your role before was with about customer excellence and look service now salesforce, they are rolling out AI agents, they're fueling productivity aims. I'm interested to seeing your ability to compete here.
Yeah, it's a great question.
We feel very good about actually our position and the execution of our field competing. We close the largest test automation deal in the history of the company in one of the world's largest tech companies. We've expanded our cloud platform significantly. You saw that cross almost eight hundred and fifty million dollars of arr now into our into our overall top line results. And when you look across our customer base, we've increased our customers greater than a million dollars by fifteen percent year over year, and that cohort of customers or customers greater than one hundred thousand and two a million is expanding at one hundred twenty percent. That shows that we're winning in the market. There's increased competition in personal productivity, you know, smaller ROI mundane tasks type automations. But where we're competing and where where we're winning is in large scale enterprise automations and where AI and automation come together. That is what customers want, and we are winning in those types of use cases, as evidenced by the demo that we actually provided in our earnings call that shows them do we can have with healthcare customers as the across the industry for a simple use case that can save them hundreds of millions of.
Dollars A shame.
Congratulations on being given a second job on top of the one you've already got, CFO and COO.
Now, I actually want.
To talk to you about saying I think we probably looked at earlier in the year, which is this bigger picture of license to subscription. There are lots of people that watch this program where that is something that they will confront each day because they either administer software agreements or whatever. Can you just extrapolate out from your earnings of what that trend looks like for you guys going forward.
Yeah, when you.
Look at our you know, we really look at our annual recurring revenue as akin to our subscription model, and that is growing nineteen percent at a billion five five of skill. So we really look at that as a very good indicator of where we are as a company and how customers look at us as a long.
Term part of their architecture.
The second piece is our net dollar expansion rate that is still at one hundred and fifteen percent at the.
Scale that we're at.
So when you look at you know, customers buying in not just for one time type project, but really subscribing to us, it's because we provide continuous and long term value in their enterprise processes. So as you extrapolate that forward and you say one hundred and fifteen percent net dollar expansion rate, continuing to launch new products such as Autopilot that is that brings natural language processing for automation developers and puts that in their hands, and expanding our platform into test automation, and continuing to drive more and more complicated use cases.
We feel very good about the trajectory of that subscription model for US.
A shame. How is your day to day going to be different now that you so as well?
Look, I think I have a great team in finance that has done so much and has built a great foundation. Really, Daniel and I look at execution and driving prioritization and then dividing and conquering where he can spend time continuing to lead us into this agentic wave that is there. And agentic is such a powerful wave that requires both go to market and product innovation, and continuing our leadership in that area is great for me to be able to help Daniel and help the team by providing day to day ownership over the enabling functions that really drive our ability to execute against our broader vision. That's where I'm going to spend more and more of my time. It's frankly an honor and a really good part to be a part of the larger team of viipath.
It's a hard time because you're cutting people. How much is AI able to offset and replace some of that talent?
Yeah, we look.
I think first, as you're right, it's never easy to part with employees. And at the same time, I think driving continuing to drive shareholder value is important for us and efficiency and making sure we have streamlined processes that are there.
I think AI is a really important part of us.
We actually use our platform internally than three hundred and fifty automations live doing everything from invoice processing to even complex areas like vendor engagements.
That is a big part of our productivity.
With autopilot, we're able to launch that into other areas such as our sales processes. And I think that efficiency gives us not just productivity and dollars, but really of mind shure to spend more time with customers and customer centricity is a really key tenant of Daniel's priority for the company.
As we go forward, UIPAF CFO and now COO as well. Actually, and goodt thank you very much. Like coming up on the program, Americans are shifting their stance on a potential TikTok ban. We'll have all the details next And as we head to the break, take another look at the NASDAQ one hundred actually trading their session lows, now heading for its biggest weekly decline since November twenty twenty two, down two and a half two point four percent. In this session, you can see the little sort of spike or pair in those losses. After the faire wallerheads, we'll talk more about the markets in the hour. This has boonbo technology. It's time now for talking tech and first start. Americans are less supportive of a possible TikTok ban than they were eighteen months ago. According to a new Pew Research survey, just thirty two percent of US adults back a TikTok ban, while that number was at fifty percent back in March of last year. Plus TikTok parent Bike Dance is raising as much as six hundred million dollars for its car information and trading platform, dong Cheede. According to sources, The fundraising round values the platform at close to three billion dollars. And Telegram CEO Pavel Durov defended the encryptive messaging app in his first public comments since being arrested in Paris last month. He acknowledged quote growing pains from a rapid expansion to nine hundred and fifty million users and promise to tackle criminal abuse.
Character it's just take a look at these markets and anticipate what we're discussing next. Broadcon I mean slumping on the back of its numbers. They were pretty strong in Ai but the forecast disappointed word by nine percent and the NASAQ one hundred offer five point six percent over the last five training days, the worst week since November twenty twenty two. This is Blue Meg Technology. Welcome back to Blue Meg Technology. I'm Caroline Heid in New York.
And I'm Ed Ludlow in San Francisco.
It is a brutal end to this week. When it comes to being long these markets, it is the macro data, the job's data showing once again a calling in that job's market. Wage growth ticked up, but overall we are looking for reasons to sell it fields this Friday and we are down on the NASA by two point three percent. In fact, the Nasdaq one hundred having its worst week since twenty twenty two. We're on a risk averse environment, so bomb market catches a bid. The two year yield falls down some nine basis points, off of some fourteen basis point collapse earlier in the day. This as we start to bake in, is there a fifty basis point cut as soon as September. I'm looking at bitcoin also basically in line with risk sentiment. We're off by three point three percent. Look at what so many individual movers are doing. I just want to shine a light on what a brutal week it has been also for chips. More broadly, the socks off by another four percent. We're basically down nine ten percent on the week. Broad Com today is the victim of choice, and we're currently seeing it collapse in percentage point perspective, even though it's forecast like relatively bright. We're going to dig into that on a micro basis, but also super microcomputers. Get this, JP Morgan slashing its price target on this company all the way down to five hundred, nine hundred and fifty after short seller note we're worried about it's ten k. When it gets back into compliance is when you're going to have to sit on the sidelines until ed. But let's just dig into what's happening with Broadcon.
Yeah, the Broadcom story is important.
Falling after the company delivered it's sales forecast, which was hurt by the parts of its business that are not tied to artificial intelligence. I want to bring in Congensubani from Bloomberg Intelligence and Okay, so the fistful fourth quarter overall revenues fourteen billion not as strong as hoped full fiscal year twelve billion dollars in AI sales.
That's good.
So we're basically concluding that this sort of more legacy businesses for Broadcom aren't doing as well right now?
Is that your Reid exactly?
I mean, that was the only negative, But in my opinion, it was not very surprising if we have heard the same story across of most of its peers who have already reported, because remember Broadcom is the last one to report, so that should not have caused this kind of a reaction. I think another thing going here is the AI which was upsided to twelve billion. Maybe investors were hoping for even stronger upside there.
That's been the story of this entire earning season. I do want to look at the sort of non AI part because, as you know, Apple and Monday and the iPhone, did we learn anything new about that business?
Yes, and perhaps the trajectory of it not.
Really from along with Broadcom and Qualcom and other chip players, we have not seen significantly stronger than seasonal outlooks coming into this iPhone launch, despite the reports that we have been hearing that Apple iPhone shipments are preparing for five to ten percent higher shipman volume this year now, twenty twenty three was a down year, so we do expect volumes to be higher because of that, but we are not seeing anything out of ordinary from at least Broadcom.
Yesterday. I want to go to what sort of truest securities are saying. I hope to name other people on the street, congen because your expertise is so important to us, But he's saying, basically, it's unpredictable. It's a lumpy when it comes to AI revenue growth. Because as and when we're going to get customers named, we were thinking there might be more. When will we hear of actual customers warning that chips made by Broadcom?
Well, at this point it's not clear, but you know the fact about being it lumpy, that's true. However, does that should not take away anything from the strength of the growth.
We expect both the.
Ask and the connectivity businesses to grow even stronger next year. And remember these are still very highly concentrated, few customers three at this point, so you are going to expect lumpiness from quarter to quarter as they adjust their timing of purchases and buildouts.
We asked you yesterday a slightly unfair question, but I ask it to you again because you are a fundamentally driven person. But the market just seemed to be so exuberant around these AI names. We've got a deja vu. Nvidia sold off when its numbers were good, broadclm doing.
The same exactly. I mean, what we're seeing is even solid or strong reports are not strong enough because the expectations are just stronger higher than that. But I just remind people to go back to fundamentals and see. We saw the same thing again from Broadcom, we saw from in media. The demand signals keep going stronger and stronger. Their bookings and backlocks continue to increase. So there's no such real fundamental risk factors here, especially when it comes to AI chips.
Kanjan Sabani, thank you for your expertise being meg Intelligence. Now let's talk about another chip name. Intel is considering options for its stake and it's struggling automated driving systems to provide a Mobili as part of a major strategy overhaul. That's all according to sources who say the chip maker could offload just some of its eighty eight percent holding a Mobili on the public market or via sale to a third party shares a mobili as you can see, falling to a record loan in King joining us. The nuance is important here Ian, but this is a company struggling to do something to change its poor fortunes.
Yeah. Two things here.
First one is, let's put this in a world context. Right Intel needs money to execute on.
This ambitious plan that it's put together.
Doesn't really have that amount of money from its operations right now, is having to scale back some of the ambitions. And it's also looking at, you know, other parts of what it has and whether those can be monetized in some way or find better value in some way. MOBILEI would obviously be a part of that, and it's already made moves in that direction, selling a stake in the IPO and then selling a further steak.
But and the important but here is if you look at where MOBILEI is a relative to what Intel.
Paid, which is considerably lower, it wouldn't make sense to just be dumping it right now unless you could find an individual seller that would be willing to pay the price that you paid or better.
There are some basics that we should go over.
I think you know, Intel has been over a period of time chipping away at its stake in mobili anyway. But our understanding from sources in right is that Intel's looking at a lot of different things, and I think on the Mobilize side, you know, their board's got to get together at some point embrace for something that might potentially happen.
Yeah.
I mean again, putting Mobile in the general context of Intel is probably the safest thing to do.
Here, what used to be called Terror another Intel acquisition.
They've already started to move that towards independent status. There are other business divisions within Intel that perhaps aren't as central to the care of what it does.
And you know, we had this FO this week talking at a conference.
We had the CEO last week talking at a conference on They're saying, look, we're looking at these things.
We want to be streamlined.
We want to be quicker to respond to the circumstances that we're in and be able to make the kind of decisions and rapidly deploy capital to make sure we take hold of opportunities. At the same time, Mobilized not in the great shape the old terror business is and the fantastic shape. So it's a difficult set of circumstances and they've not really made concrete decisions yet, is what we've been made to understand.
I mean, this is a bad time to have to offload Mobile. I when shares have been off by what's seventy percent year to date, can you remind us of the issues that are going on there?
Yeah?
I mean, anybody who has been playing into the auto market going back two three years ago, was you were a bell of the ball.
You were fantastic.
The whole world was going ev the whole world was going self driving, we were going to have robot taxis on every street corner. Clearly, what's happening and this, whether your mobilize, whether you're Intel, whether you're in video, whether you're anybody, that hasn't happened at the pace with which some had projected. And Mobile has been a victim of that kind of up and down cycle, and if you look at you know it clearly has had a bad particularly in the first quarter earnings.
Reports that have obviously dim sentiment considerably.
Long term, everybody believes in the direction that they're heading in and believes that they have an important role to play, but right now they're into.
Spot Bloombergsine and King along with the team reporting so deeply on this thank you. In the chip sector, TSMC achieved production yields and it's Arizona facility on par with established plants back home, an early indicator that its Marquee US project is on track to achieve its targets. That's according to a source, TSMC had said it started engineering wafer production in April with advanced four nanometer process technology, and we've been tracking their progress there. I think, Caroline, we should go back to what's happening in markets. And basically, since we got those comments from fed Waller, bonds have rallied, and despite a moment of relief, the story is still equities under pressure with that pressure coming from technology, I think.
Yeah, if you're looking at some of the key points drags on the SMP, it is currently no Surprise in video dragging us down by some fourteen points. We've got Broadcom dragging us lower. But then who's who of the mags seven, Amazon, Microsoft, Tesla, Google, Meta, Apple, No wonder you're seeing such a pressure across the board on the benchmarks. And then this has been an ugly week. More broadly, then aw's that one hundred having its worst week since twenty twenty two.
And real quick just bitcoin for what it's worth, continuing this slide down more than three percent below fifty five thousand US dollars for token. Good job getting that up, guys, I appreciate it. I went a little bit rogue there. But there's a lot happening in real time on the week, as you know, Carro a tough week broadly for risk.
Assets totally and volumes actually up on the SMP for this Friday. But coming up, we want to dig into the micro news again. A UK watchdog is sending a warning to Google saying it abuses one area of its business that accounts to eighty percent total revenue. You can guess what it is. This is a blood technology. Now the Biden administration is preparing strict to export rules for quantum computing and semiconductive products. It's once again taking aim at China Room Megs Mackenzie Hawkins joins us for more and this is getting ever clutting edge. Mackenzie right.
So the rules that we saw the Baden administration released yesterday as an interim final rule, meaning there's still a comment period, nothing is quite set in stone. Are trying to take aim at sort of the next generation of technologies, looking at a chip architecture called gate all Around that's expected to be widely introduced into the market next year, as well as cutting edge quantum computing and computer components, sort of trying to align with countries around the world that have also introduced similar or in some cases identical rules and by doing so limit themselves from the impact of US export control.
So we have this sort of global coalition forming.
It includes the US, Japan, and the Netherlands, which are home to key countries and the chip supply chain, as well as other allies such as the UK, Canada.
And Italy. Mackenzie and your story.
You quote Alan Estevez, who runs the Commerce Department's Bureau of Industry and Security, and in the quote he talks about the alignment of controls being I'm going to read it frankly difficult for our adversaries. So adversaries is different kind of words competitives. Can you just explain the strategy from the US.
So a lot of the US measures on chips and other emerging technologies are specifically geared towards China as well as Russia, North Korea and Iran. So we're talking about geopolitical adversaries as opposed to just cutting edge technological rivals.
The US has companies that of.
Course have significant foreign rivals headquartered in US allied countries, and this is not trying to get at those companies, but rather at the ability of particularly Beijing, to develop cutting edge technologies that Washington warriors could run China a military edge. And the US has been leading this push for several years. But you know, while this particular rule is an example of pretty significant multilateral alignment, there are also really difficult measures that the US is asking allied governments to impose. Who are worried about retaliation from China or don't necessary only buy into the same degree of national security and geopolitical threat felt here in DC.
Bloomberg's Mackenzie Hawkins with more important reporting, thank you very much from China to the United Kingdom. Britain's Competition and Markets Authorities says Alphabet's Google is abusing its dominant position in advertising technology, paving the way for potential finds and changes to one of Google's most lucrative businesses. Bloomberg's Catherine Gammill joins US and reported on the news the CMA what is the basic conclusion that they've reached.
Yes, So today the CMA announced its statement of objections that it's sent to Google. So these are preliminary findings that Google has broken competition law here by using its dominant market possession and the add tech sector to favor its own services. So these preliminary findings are still at the primary stage, but this basically means that Google's using its powers to take the competition away, and it means that you know, UK advertisers and other services are losing out.
Because of that. The CMA, it's got tathe, right, Catherine, kind of exists some pressure.
Yeah, it does have teethe and we've seen that with its recent probes over the years, and you know, it's grown prominence. I think that it's really interesting that now the UK has joined the EU and the US and these similar probes. And on Monday we've got the DJ's case against Google for ad tech and last year as well in Europe we got these charges laid out on the ad tech sector. So, you know, Google is in a bit of trouble here because it's got three major global regulators that are on its back for this.
It's in trouble because also it could be fined quite a lot of money. I just want to go into what Google's actual responses said, Catherine, what have they told you, because ultimately they dispute it. Yeah, one hundred percent.
So Google's response today was that the cmea's findings are based on flawed understanding of the markets.
It said, it's this agreed and it will respond to this.
So at this stage with the statement of objections, Google can respond and then the cme will then come to a final conclusion from a separate panel. After that, in the UK, findings from these sorts of investigations it can be up to ten percent of global turnover.
That's a really extreme end.
Or they can also, you know, offer other sort of remedies that might be able to solve this issue.
Whatever issue have got.
I mean, it is worth bearing in the mind of the US and the EU have both said that they would like divestments of.
Google's ad tech as well.
I've heard this before, sort of Google basically saying, you don't understand the market that you're trying to address, but there are other participants in the market. I'm assuming the CMA spoke to the advertisers themselves what's their position.
In all of it.
Yeah, so, I mean this has been a long run in investigation from the CME. These competition sort of probes can go on for years. This one has been going on for two years, and the CMA does talk to a broad range of market participants. We didn't get specifics on that today, but that's something that they've they've brought up previously in their studies on digital advertisement and other things as well.
Bloomberg's Catherine Gemmel out of London, thank you very much.
Let's get to another story that we're watching, and that's dark Trace CEO Poppy Gustaffson will be leaving the British cybersecurity firm effective today. This is the company gets absorbed by pe firm Toma Bravo. Gustavhfsen co founded dark Trace more than a decade ago and helped to position the company for its IPO in twenty twenty one, as well as its ultimate sale to Toma Bravo in April.
Apple has greenlitter version of ten cents we chat app ahead of the company's I Phoned sixteen debut. Now the tech giant approved and update that as new features like moments and live streaming to the app. That's according to sources. The approval taps down some speculation of a dispute between the two companies over app store fees, with many believing it could have smoothalled to a potential WeChat ban from the latest iPhones ed.
One of the most well read stories on bloomberg dot com this morning, Let's talk more about Apple. Apple is holding a product launch event at its head courses on Monday, where it's set to announce details of the iPhone sixteen and some other new devices. Bloomberg's Mark Gunman has already reported on and told us what to expect. But it's work going back to the iPhone sixteen. What's different? That's the question every year, what's actually going to make me upgrade this time around?
Well, if you have an iPhone fifteen Pro or Promax, I don't necessarily think you're going to upgrade this year unless you get a pretty good deal or you're on an upgrade path.
Right.
The changes here are going to be on the more incremental side. We're going to focus on Apple Intelligence, which of course the fifteen Pro in promacs will already support, and then there's also going to be some major upgrades on the camera. The ultra wide lens is.
Going to move to a forty eight megapixel to match.
The standard lens.
But if you're coming from an older phone, if you're coming from a fourteen or earlier, getting Apple Intelligence, getting those new cameras, getting the Titanium, those who are going to be some nice upgrades. There's going to be some new callers as well. The most significant feature is going to be a new camera button on the right side of the phone, next below the power button that you'll be able.
To use take pictures and videos.
It's going to be capacitive, so you can swipe on it to zoom in and out, move between still and video. So that's going to be a nice upgrade there. So it's really all about AI and the camera. The bigger changes, of course, will come to the Apple Watch.
And the AirPods.
Bless you, Mark and just talk us about the air pods and the Watch. What do we anticipate there, how big a change.
So this is going to actually be the ten year anniversary to the date of the original Apple Watch introduction in twenty fourteen, and you're going to see a new series ten Watch. It's going to have displays, it's a little bit bigger. You're going to see faster processors. You're going to see sleep apnea detection as a major new health feature. You're also going to see that sleep appne detection come to the Apple Watch Ultra, though that will retain the same design that's been running since the introduction in twenty twenty two. AirPods Apples revamping the low end of the line, so you're going to see a new entry level and mid tier AirPods bringing noise cancelation down the line from the pro models for the first time. You're going to see quite a boost there to Apples for Wearable's business between the new watches and the new AirPods, and I think that's going to be quite exciting for customers who have been waiting for a new version of the AirPods.
It happened, Mark German, we embrace ourselves. Thank you. Let's also just check in on these markets. It is an ugly finish to an ugly week, and Nvidia the biggest points drag on the benchmarks right now we're seeing off by more than five percent. We are now just a two and a half trillion dollar company. Folks. Broadcom is off by nine percent, and this is the worst day for Wallcom since March twenty twenty.
Socks also ugly, s and P five hundred down the most since I think March of twenty three. Na's that one hundred worse week since November of twenty two, in Vidia having its worst week since September of twenty twenty two. The story we're writing about Carr, though, is that you know, technology is under pressure in spite of and on top of the economic data in the Fed speet we got today.
Ugly, I think is a fair word to use.
And put it into context. These are stocks that have run up more than a one hundred percent over the course of the year to date, so we have to acknowledge that. But when you get a four hundred and thirty three billion dollar erosion in market cap in five days alone, that matters to everyone who has a four at one K who is exposed to these sorts of benchmarks.
Just one quick comment on Nvidia.
Look at the number of retail investors that have gone into that name and then think about that on a week or a day like today.
Incredible and those that are two x leveraged. That does it for this edition. Of Bloomberg Technology have.
To say, what a Friday show. It's been. Recap on the podcast.
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