Investors Look To Apple's WWDC For Guidance
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Live from New York, this is Bloomberg Technology. Coming up, Apple kicks off its annual developers conference in Cupertino. Will the event help ease or inflame its struggles with artificial intelligence? Plus, US and China trade talks get underway. Tariffs, rare earth minerals and advanced technology topping the agenda. And Warner Brothers Discovery separates into two publicly traded companies, splitting its streaming and cable businesses.

But first, what's happening over the course of Apple? And we head straight out to Cupertino, of course, where our own Ed Ludlow is standing by. We're up four-tenths of a percent. Look, there is a lot of anxiety on investors' minds at the moment, Ed, and largely it's about AI. Will that get resolved today?

Yeah, it's one of those situations where expectations are high that Apple will tell us something about AI strategy, but actually it's highly unlikely to be the case, right? That's not the point of WWDC. The main thing with Mark Gurman's reporting in particular, I think is about third party developer access to Apple's LLMs, right? If you think about the work going on inside of OpenAI, Microsoft, Gemini, Google, a lot of the innovation is built on that third party developer front.

And for Apple, it's critically important just as you look at the history of the App Store and its services offering, that's built on a history of developer innovation. And so, right, the stock's down 18% year-to-date. It is underperforming its peers in that context.

But that trading year to date has largely been on the trade or tariff risk context, not about what's happening with AI. And I think the point our colleagues are making on the Bloomberg terminal this morning is, well, what if today's the day that it changes? Because one year ago at WWDC, there was that same high expectation and people on the AI side didn't get what they want. But Mark Gurman's got all the details, right?

He does. Ed Ludlow, hold on for a moment because Mark Gurman, who has broken so much news ahead of what's expected from Apple today, joins us now in L.A. And Mark, just walk us through whether any of that AI misstep can be walked back and can be indeed invigorated today, do you think? They're going to try to tell a good story on AI, right? They're going to come out

full force, talk about how they're different, talk about how they're highly integrated, talk about privacy, talk about how the other companies are stealing your data, right? But the reality is they're not going to show much of substance when it comes to AI. The big thing is they're going to open up their

Apple intelligence, they're called the AFM or the Apple Foundation Models, to third-party developers. So developers will be able to use Apple's AI technology if they want to, to build their apps and build their features. There's going to be an upgraded version of their Shortcuts app for consumers to allow customers and users on the iPhone, iPad, and Mac to create shortcuts or little widgets and features themselves using AI technology.

The biggest thing when it comes to AI is that translation. This is something Google has had for a couple of decades now. It's now going to be a very core system element. So you'll be able to live translate a phone call. You're speaking to someone in another language. You'll be able to hear that back in your native language.

Likewise, in text messages, there's going to be changes in the Messages app, new backgrounds and polls to better compete with WhatsApp. But the biggest announcements today will be around the user interface. They're coming out with a new liquid glass digital material.

a new look for all of their operating systems across all of their devices, and then the iPad getting a big productivity lift to make it more usable like a Mac, particularly for things like multitasking and PDF management.

I think it's seen largely by developer community, right Mark, that the move from version to year version labeling for the operating systems, that's kind of helpful. But when I read your reporting around liquid glass, it's almost as if there's a roadmap as well down the road to future generations of hardware. Could you explain that bit?

So the new user interface is very glassy, lots of use of transparency, translucency throughout the operating system, letting your wallpaper and light shine through different user interface elements. It's very similar to the UI you're seeing on the Vision Pro.

Apple's working on a new mostly glass iPhone for 2027, the iPhone 20, as I'm calling it, for the 20th anniversary of the iPhone. And so you're going to see that hardware software really

make it difficult to understand where it begins, where it ends. More of a unified product experience. Things that Apple has had in the past. They've done the iPhone 5C in 2013. The idea was the same. Molding color from the operating system to color on the phone. And so this is going to be pretty exciting. And so yes, this portends to some major hardware developments in the coming years. But in terms of this year and the short term,

Nothing that exciting coming from Apple, other than the UI, I would say. And therefore, Mark, the age-old question is, is it going to be enough to really invigorate purchasing? Because there's a laundry list of issues that Apple faces. And yes, it's about AI and indeed the product, but it's also about the supply chain and it's also about regulation here in the United States.

I mean, for this fall, you've got the iPhone 17 Pro. That's going to have a redesigned back, a redesigned camera area. And anytime Apple does a design change, whether it's for usability or just aesthetic, right, that gets lines flowing, gets people interested. So I do think the iPhone 17 Pro will be a success. By then, the AI features will be a bit better.

They're doing some fundamental changes to the large language models themselves. But if you compare and contrast what you've seen from Google and OpenAI and Anthropic over the last several months to what you're going to see from Apple today, it's going to be very stark. And it's going to be very clear that Apple's behind. Of course, they're going to tell a very good story, right? They're going to market their way through this.

But if you focus on the substance, you'll see the big differences. Well, we'll see if that can change the opinion of the investor base right now. Mark Gurman, Ed Ludlow as well. Thank you both so much. Now coming up, the US and China, they're trying to avoid a clash as trade talks kick off in London with a global tech supply chain at the heart of discussions. We'll have the latest. This is Bloomberg Technology.

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Talks between the US and China, they are underway in London in a bid to restore confidence that both sides are well living up to commitments made back in Geneva. With the US signaling actually a willingness to remove restrictions on exports in exchange for assurances that China is easing limits on rare earth shipments. Let's bring in Bloomberg's Anne-Marie Hauden who is in London live. Any signal this is going well?

Well, Caroline, they have been in talks now since just a little bit after 1 p.m. So a few hours and likely we could see these talks bleed into tomorrow, which we saw actually happen a month ago in Geneva. It does seem like things are going well. If you take the word from Kevin Hassett, the NEC director or the president of the United States, who

talked about this on social media after he got off the phone from President Xi Jinping. As you said, the two big points here that they really want to try to diffuse the tension in these talks has to do with China's ability potentially to get more semiconductors, things that there's been export controls on when it comes to some semiconductors as well as jet engine chips. The question I have is what is going to be the red line? Is the United States willing potentially to ease the export controls on things as NVIDIA's

advanced chip that it built basically to comply with the Biden administration export controls when it comes to China. And then what the United States wants out of all of this is the easing of those restrictions for the rare earths, the magnets, the materials

that you need for mobile phones, for the defense industry and the high-tech industry. So coming out of this, we're really going to want to parse through the details of what was agreed upon. Of course, reading through the tea leaves, potentially we can see other matters agreed upon at this meeting. The president did say they discussed potentially traveling to China or Xi Jinping coming to the United States on that phone call. But we should just note, it's only

been four weeks since the Geneva talks and already we had to see Beijing and Washington sit down again to de-escalate. Anne-Marie, I love that you point us towards the semiconductor resilience and indeed what's been held back from China going forward. The H20 is not able to be sent now from Nvidia into China. The fact that Howard Lutnick is there, is that key?

Yeah, absolutely. The fact that you had Howard Lutnick join this delegation, remember in Geneva, it was just Secretary Scott Besson of the Treasury and USTR Representative Ambassador Jameson Greer leading that delegation. Then following the phone call between Xi Jinping and President Trump, you had Howard Lutnick added to the delegation. So all

Already, everyone was speculating how far potentially the United States would go on export controls because export controls squarely lie within the Commerce Department. So clearly that's why he's at the table. Clearly his export controls are at the table. But really the key question is what is the U.S. red line when it comes to those export controls?

How far are they going to go? And then, depending on what comes out of this meeting, what does this mean for the future? Because we have seen the United States ratchet up export controls administration after administration when it comes to China in the name of national security. Anne-Marie Horden, live from London. We appreciate it so much. Let's get more on the global tariff impact.

What to expect from today's trade talks? Ben Harberg's with us, Novo Capital managing partner, Core Values Alpha portfolio manager as well. Novo Capital, it's a private fund managing over $2 billion in assets under management. But core for us is core values, which brings particular exposure to Chinese companies. Ben...

will we see a walk back in restrictions over semiconductors and their access into China? I think we will. And I think there will be, you know, a move from these kind of broad-based numerical sanctions and tariff figures to something that's more pointed and targeted. And we've seen already those levers being pulled on both sides. Obviously, the

You know, the U.S. imposing the export restrictions on the H20 chips that could impact up to $4.5 billion of sales of Nvidia. The Chinese obviously restricting the magnets, which are hitting everything from electric vehicles to smartphones. The Americans retaliating with efforts, you know, to block the leap.

engines that are being used by Comax jets as China tries to build its own aerospace industry. So there's a lot of, I think, individual sectors or even specific companies that can be sanctioned or named rather than the broad-based sanctions. And so I think if they can kind of carve

their way around those and get through some of these very sensitive areas that really acutely pain the respective economies, then we can start to make some progress. That sensitivity, that fine line though, Ben, is one that you have walked and talked about a lot. When I think about what the core...

values alpha ETF family does, particularly the Greater China Growth ETF. You basically say on the website it's accessing China alpha without compromising American national security or American values. How do we get this agreement with China without compromising American national security?

So I think there are specific Chinese companies and specific Chinese verticals that are coming in direct competition with their American counterparts. We're seeing that on chips, we're seeing that in the aerospace and defense space, we're seeing that in the critical mineral supply chains, we're seeing that in telecommunications.

Those are all verticals where there is direct Chinese threat to American superiority when it comes to leadership in those technology verticals, and what we really describe as kind of the industries of the future. There are, of course, plenty of Chinese companies and specific business lines that don't intersect with American interests. For instance, Chinese e-commerce companies that are selling into developing markets,

entertainment, communication businesses. And so that line needs to be walked very carefully and that can be done through these negotiations and through an investment platform that enables you to access the high alpha that China's generating both domestically and through its foreign counterparts where it is the leading trade partner to over 140 countries around the world.

but also it restricts America sending its most prized technological IP towards the Chinese as they try to compete with us in those industries of the future. What's so interesting, though, is that maybe some of those entertainment and e-commerce companies that you talk of have been embroiled in what's deemed national security threats. We think about what Tencent was painted as in some way, Ben. Is this the art?

or lack of art around negotiation and diplomacy, are companies going to get dragged in rightly or wrongly that may not have a direct exposure to national security?

China, through its own initiative, has recognized that these large-scale businesses, the Alibabas, the Tencents, the ByteDances, the Meituans of the world, became bloated and had too many business lines under one hood that stretched from innocuous grocery delivery all the way to web marketing.

military applications in the aerospace and defense maps, geospatial, etc. Even they, I think, are starting to piece apart those businesses and start to require that some of those are divested or spun off and that the core assets are left alone and

I think that will actually aid them as they work to negotiate with the Americans because it's easier than to sanction those specific verticals rather than the entire company getting caught up in one dragnet. So it's beneficial for antitrust, anti-monopoly efforts domestically in China as well as for U.S. trade and sanction talks. What does, therefore, a portfolio with exposure to Chinese names look like in the future for you, Ben? What should be accessed? Which bets should you be making at this time?

I think there will continue to be verticals where the United States and China are not going to be directly competitive. It's very hard for America today to build, for instance, a low-cost handset that competes with the Xiaomi's, Oppo's, and Vivo's of the world. We've seen the likes of Apple pricing themselves significantly outside of those companies'

at you know and and that the point where those kinda next billion consumers that are in say Africa Southeast Asia South Asia I just simply cannot pay and so there will be continue to be verticals were China through low-cost arm high-end manufacturing love consumer facing products will continue it to grow in market leadership but not directly intersect American national security or strategic imperatives America for its part has huge leadership and and a head start need

in the AI space, in obviously the chipset space, historically in aerospace and defense. And so those are verticals that should stay very much within the American camp and whose supply chains need to be reinforced such that there isn't dependence in the future on Chinese magnets or other key inputs to fortify those supply chains.

Will there be any change to global supply chains when it comes to rare earths in the future, though? For now, it is incredibly dependent on China. How quickly can that turn around, should you want to have them accessed here in the United States?

Absolutely we should. And this is one of the biggest problems that we face and why we needed change and why Donald Trump was elected. He's, you know, the objective of this Trump administration is to tear down a lot of those barriers that were impeding growth of the American industry. And we're seeing a resurgence of American aerospace defense and then this accompanying supply chain as a result of

the president coming to office. Silicon Valley historically has been almost entirely aligned behind this Trump administration because they see that he's tearing down a lot of those barriers, be it EPA or other forms of barrier, ensuring that there are stimulus and other forms of support, ensuring that procurement is done in an efficient way without the kind of cost plus

archaic methods that were used historically. We have a lot of these natural resources within our own borders, but we weren't extracting them because of environmental concerns and other DEI issues that got in the way of that. And so I think that that will be unlocked and must be unlocked to ensure American national security. Ben Harburg of Nova Capital, thanks for your time today. Let's get back to today's main tech story. Apple's Developers Conference, where our own Ed Ludlow is standing by. Ed.

Yeah, WWDC is a developers conference. And I kind of want to get to that conversation with creative strategies, principal analysts, and President Carolina Milanesi. Like, I always remind myself, why are we here? We're here for the developers. But in terms of expectation, right, what the reporting tells us is that

Apple will open up the LLMs it's been working on to third-party developers. That seems very important. It is absolutely critical because that's, at the end of the day, how developers will take advantage of the core of Apple intelligence going forward and how they can do that.

on device in a private and secure way if they want so and differentiate what they can do with others like chat GPD open AI and so forth. If you accept that Apple is behind in AI why would the step of opening up access to developers to the work it has done in AI remedy that?

I don't know if it's remedies, but it preps for the future, right? It is about allowing developers to take advantage of AI within their applications. And if there's one thing that I think we can all agree with is that the ecosystem from a developer perspective at Apple has always been the thing that got consumers engaged with their devices and kept them where they are. So it is important. We have the App Store today for a reason and everything that's inside of it. Absolutely. And that's what

Apple is trying to do to continue, especially as the pressure, if you're thinking about what Microsoft is trying to do, they're very clear that coming out of Build last month, they want developers to look at Microsoft as the future of development.

Let's think about specifics. One of the things we might hear today is translation across iMessage calls and live simultaneous translation. But the good thing about talking to you on WWDC days is you and I go to all the same conferences, particularly developers' conferences, and I've got deja vu, or at least I distinctly remember Meta talking about exactly the same thing. They've done it. Yeah.

And Google did too at some level, right? So I think part of it is catching up. Part of it is trying to give consumers what they want. If you're looking specifically at the U.S. market, there are a lot of people who are bilingual. And so translation, although we sometimes just narrow it down to, oh, when I go on holiday somewhere, is actually more important on day-to-day. What we're expecting are largely interface changes. What will that tell us about how Apple thinks...

consumers, knowledge workers, engage with AI in the future from like a human to device perspective? Yeah, it's interesting because I do think that there are probably two things, maybe three things that they're trying to address. One, there were some changes that came last year that consumers were not particularly happy with. Photo is a good example, for instance. Right.

And the second thing is that this is probably the biggest redesign, as Mark was saying, since iOS 7. So it's been a long time, which means that for some users, this is the first time that they're going to use iOS and other OSs in a different way. So trying to take away friction but not actually changing things so that you have a learning curve all of a sudden is going to be one thing. The other part is there's much more cross-device usage.

So trying to make that easier so that AI actually is useful across all Apple devices and getting out of the way so that AI can actually shine. We go from iOS version number to iOS year version number. It's just like the car companies do. And just like the car companies, they always go one year ahead. So what we might get is the 2026 year. How do you feel about that?

I think that with AI, we're going to see changes on a faster cadence, as we have seen with all the models that have been released over the past six months. So, you know, anchoring in what the core of DOS is going to do for a year and then having updates throughout the year. Yes, absolutely. Creative Strategies, Principal Analyst, President Carolina Milanesi, good to be back on the road with you.

Welcome back to Bloomberg Tech. I'm Caroline Hyde in New York. We've got a new look for you. But Tesla is basically trading lower, but only slightly. We're coming off of what had been a sell-off of more than a percentage point earlier in trade. And why was that? Well, because the company had been seeing not one, but

two downgrades from certain analysts. Let's dig into that particular move. We've got Argus Research on one side, we have Baird on the other. This is the EV maker, really received the downgrades on the back of anxiety around the ongoing feud between Trump and Elon Musk. Of course, that had been dialed back somewhat. But we also have Baird and the others really shining a light on what has been anxiety around RoboTaxi as well. Bloomberg's Ryan Vlastelica is joining us now. You've written up

the fact that we have these two downgrades. We're actually just seeing Tesla's stock price stabilize at the moment, Ryan. But what do you make of the reasons for their concerns? Hey, good morning. Thank you for having me. Well, I guess one thing you can say is that it is not too surprising, given just sort of how high profile and sort of just dramatic the blow up was between Elon Musk and Donald Trump last week. It's not surprising to see a bunch of analysts kind of taking stock of this and say, what is the real impact

of this kind of political uncertainty, this kind of fallout, it's extremely difficult to assess what could happen next. I've spoken to a few investors and analysts, and they all say that this sort of situation is basically unprecedented, having this kind of personal attack between a CEO, who is the richest person on the world,

and then the president. So obviously when you have a situation like this, it's very difficult to know what comes next. And that's why you saw two analysts so far downgrade the stock, basically saying the level of uncertainty and the outlook here is just too clouded to feel comfortable with a more overweight position. Today, we are only down by a tenth of a percent, but then we look at what's happened year to date, 27% lower. Can you put that into the context of other mag seven and just how negative analysts have gone?

- Yeah, so with respect to the Mag 7, I believe Tesla is now the worst performing of them. I believe Apple was underperforming it a couple of weeks ago. Given the recent weakness, the double digit drop it saw in the wake of the big blow, I believe Tesla is now the worst performing stock. It saw very significantly from the peak it saw in the immediate aftermath of the election in November, I believe the stock peaked in December,

down 40% or so since then. So there are some growing concerns out there. With respect to the analyst consensus, Tesla is the least loved of the Mag 7 stocks. I believe fewer than half of the analysts that Bloomberg tracks recommends buying it. That is well below the rates that you see at other major companies. It's pretty low for large cap in general. And in general, analysts tend to be pretty positive on the companies they cover. But Tesla, bit of a unique outlier in this example.

Ryan Veselica, we thank you so much. Another stock that's had analysts not loving it so much is Apple. Let's go back to its developers conference where our own Ed Ludlow is standing by with a developer ad.

Yeah, it's about time we got the perspective of a developer. Paul Hudson is the creator of Hacking with Swift, a Swift developer, but his whole point, his whole raison d'etre is to help teach people how to develop within iOS and the broader Apple OS ecosystem. So let's just start by asking the simple question. What is it you want to see? What is it you want to hear? What is it you want to learn? Yeah, so fair enough. Developers right now are streaming in and mostly saying the same thing. Is this the year we get another big leap forward for developers

generating stuff with AI. Code, text, images, sound, something with AI on device, in the cloud. We don't really mind, but just something forward, basically. So based on current reporting, I think the answer is no. Oh, no! But what we are expecting is that Apple basically opens up access to your community, third-party developers, to its own LLMs, its own proprietary work in AI. Yeah.

Why would you welcome something like that, if at all? So Apple normally does a thing internally where they dog food the API, we call it. They work internally, they're trying things out, and then, okay, this is good, we're ready now, out it goes to the developers. And hopefully that's today. And so things like last year we had the writing tools to rewrite or summarize or bullet point or whatever. Really good stuff.

But we couldn't do it from our code. We had to let the user do it directly in the UI. So hopefully today, we can finally have that and add a whole bunch of layers to our apps. It's a real force multiplier, that kind of functionality. It is a force multiplier in the sense, if you think about the history of the App Store and what you can do across not just

iOS but macOS. That's how things generally get built. But it's distinct from whatever Apple will tell us or not tell us with Siri and Apple intelligence as one uses it with their handset. Why would you want to know about their own work and their own success? Well, look, last year they announced the big Apple intelligence push, right? They did.

That was the first part of the story. Because, you know, there's two parts to it. We all want the deep conversational Siri thing going on. But for that to work, us app developers have to expose our logic, our data, our functionality to the system. And last year, Apple announced a whole bunch of code just for that. So now we're working with tens of thousands of developers using this stuff now called App Intense. They all work. They all work great now.

Hopefully today Apple will go, "Right, we've got your data, let's go for it and ship something great all being well."

How much of a networking effect, literal networking, is WWDC? Like all of you and your peers are kind of gathered in one place and you wait to hear what Apple will tell you. But I also find it interesting in like the kind of access part of it to each other, but also to the team at Apple that are working on the code base that you build off. Yeah, yeah. So all the sort of Apple indie developer heroes are here. There's a new game, The Art of Fauna.

Love it. He's here. The Halide team are here. The Slopes team are here. They're all here. So you can go and meet your heroes and get selfies and stuff. A lot of fun. But there's also the labs with Apple's own engineers, where here's a SwiftUI team, here's a data team, here's the metal team, whatever. So the labs almost happen in parallel with WWDC. So for the uninitiated, what is it and why is it of value? Right. So today, the special event at Apple Park is the in-person labs, where the teams who make stuff, who are mostly locked away in this building behind us, right?

get to come out once a year. You mean they're not allowed out normally? Right, I know, right? They're allowed out once a year. It's like, oh, it's developers. They talk to us, and we throw our questions at them, and they get answers straight to our face, which is really nice. They enjoy it, too. They love it because they can meet us and see how we use their code in weird and wonderful ways. And that's really special. But then the rest of the week, there's also online labs you can book, which are very helpful. It's via WebEx call. And this year's new, they have group labs. So you can, as a group, go together, like 20 or 30 folks

and bounce questions off one end, someone lucky engineer to get our questions and learn via other folks questions too. - Paul, what's your biggest frustration with Apple at the moment? - I have no frustrations at Apple at all. No, just kidding. - There aren't that many of them standing behind the camera. Just be honest. Like if you are a developer and you are developing for an OS.

So the biggest thing right now is actually quite interesting. It's about revenue. So we have this thing, the small business program, where if you earn less than a million dollars, which is most developers, you pay only 15% towards Apple. What a brilliant scheme. And that includes support, APIs, credit card access, all that download stuff, all down 15%. Good deal.

If you earn $1,000,001, it's not progressive. So now we're getting into Epic Games territory a little bit. Well, $1,000,001 isn't quite Epic Games, but yeah. But when you hit $1,000,001, it's not progressive for that $1. You lose the previous million as well for all future years. So increasingly, you lose 15% extra every year. So that's not great. I know a lot of folks would like to see that fixed. A lot of what we expect to come today, and again, this is based on reporting by Bloomberg's Mark Gurman, but it's just interface changes. Mm-hmm.

Within that, you can look for hints about how Apple sees the future, about how we interact with hardware. I have an iPhone, I have a Mac. How do you think about that and approach that? So one of the nice things about Apple's big push towards their SwiftUI framework is, in theory, we just say, give me a button, give me an image, give me whatever you want, slider, and it adapts to the system correctly. So we'll find out in about an hour or so, but I'm kind of hoping I just press build an Xcode and

and it's going to look great and glossy automatically. And if that's true, then iOS, MacOS, VisionOS, whatever platforms they choose to unify,

will just work. You kind of give the impression, Paul, that it's the people behind the scenes that you're most excited about. But when you think about the keynotes, who is it from Apple's kind of more leadership-focused teams that you get excited most about hearing about? Honestly, if you're in Apple Park for a special event, everyone loves to see Craig. Okay. Because he's a massive fan favorite. The silver fox, right? Everyone loves Craig. There's the selfie with Craig and stuff. And from a technology perspective?

He's a massive coder. Okay. I mean, Craig, sorry, Craig, he's a super geek. He personally reviews a lot of work going out. He reviews Xcode every year. He's very, very in detail with APIs. You wouldn't believe it because given how high up he is, but he's very serious about code. I love that. Cool.

You seem upbeat. You've got us energized and ready. Paul Hudson is the creator of Hacking with Swift. And we're here at WWDC in Cupertino. Caro. I'm so psyched. The energy from Cupertino. We love it, Ed. Thank you. Meanwhile, coming up right here in New York, we'll talk about Warner Brothers Discovery. It plans to split its businesses, but separately into two traded stocks. Details behind the company's efforts to split TV and streaming. This is Bloomberg Tech.

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The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But let's be real. The road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and a ton of AI resources to keep you on the cutting edge.

But here's the best part. You can build with confidence, knowing that Microsoft security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft.

And with Azure AI Foundry, you can build your way. The future is yours to build, no strings attached. From ready-to-code tools to full flexibility, it's all in one place. The future's in your hands. So learn more at developer.microsoft.com.

Warner Brothers Discovery. Well, it plans to separate more formally its streaming and movie divisions from TV network operations. They're going to create two publicly traded operations by the middle of next year. For more, Bloomberg's Felix Gillette joins us now. Oh, what a surprise. Never seen that one before. Yeah.

Yeah, a little bit of deja vu. I mean, Comcast just did the same move, essentially spinning off its cable networks. In fact, you can go back to 2019 when Rupert Murdoch broke up his empire and sold the studios and the IP and the franchises to Disney and then spun off the legacy networks, the news, the sports.

So yeah, we're basically seeing consolidation into two different markets. One being the legacy traditional cable networks and then the other being streaming and content production. David Sassluff keeps the content production, the streaming, you get a CFO, Biden failed.

taking over as the leader of the other business, we had to get the names, but one analyst reaction caught my attention in your guy's story. Like the recent pivot back to HBO Max, this move reveals a company fumbling its way through disruption. - Yeah. - Are you fumbling?

Yeah, I mean, I think it's an admission that the entire rationale for this merger of assets to begin with three years ago hasn't worked out, right? I mean, you think about the deal in 2022, AT&T, we're going to spin off WarnerMedia. We're going to combine it with Discovery. You're going to get the premium content production. You're going to get the reality TV from Discovery. You're going to create this huge streaming colossus that's going to take on Netflix. And, you know, we're going to change it from HBO Max to Max.

And now, three years later, you're saying, "Eh, we're going to go back to HBO Max. We're going to make it a premium. We're going to get rid of this low-cost streaming from Discovery that people aren't watching on the service." So yeah, it's kind of unwinding everything that's happened over the past three years. And the value of the company has dropped by 60% since then. So it's not a huge surprise.

So when you put that into the context, many would say the investors love it today. It's the best performing stock on the NASDAQ 100. The shares spike. But in the longer term context, it has just been so under pressure because of these underperforming assets as a whole. Yeah. And now I think, you know, people are thinking, well, it will set up both companies for better M&A positioning. Okay. So that's the growth story, isn't it? Yeah, I think so at this point because someone's going to come along probably in the next couple of years and consolidate all the cable networks, you would think.

Comcast having spun off theirs. You have Fox, which is, again, pure entertainment network news at this point. And then on the other side, yeah, I mean, it's interesting to hear the company talk about their new streaming strategy, which is basically, okay, Netflix and

have essentially won the all things for all people business. And what we really offer is a premium streaming option with HBO. And so we're an add-on service. And again, Paramount, their merger is up in the air at this point. So I think there is going to be a lot more consolidation. I think investors are probably thinking, okay, this move sets up

both companies for better M&A, either as a buyer or as a seller at this point. We know about David Zaslav and M&A thoughts, but what do we know about Gunnar Weidenfels? What do we know about the CFO? I mean, he's been responsible for cutting costs. There's been all these layoffs, consolidations over the past three years, paying down the debt, which they've done a great job of, you know,

$20 billion paying down the debts in the past three years. So I think he's going to be in charge of managing these assets, which are still profitable, but they're all losing subscribers, losing audience. It's a downward trajectory. So how do you manage that? It's going to be managing costs. Meanwhile, they say they're going to raise a bridge loan from J.P. Morgan of $17.5 billion, but going to recapitalize that before the split. Felix Gillette.

It's time now for Talking Tech. First up, Meta is set to invest in Scale AI with potentially more than $10 billion, making it one of the largest private company funding projects of all time. Now, according to Bloomberg reporting, Scale generated about $870 million in revenue in 2024, expects to make $2 billion in revenue this year. Plus, IonQ has agreed to buy UK startup OptiMaker.

up Oxford Ionics in a $1.08 billion deal. The takeover will bring together IonQ's quantum hardware and software capabilities with Oxford Ionics quantum chip technology. The transaction is expected to close in 2025, subject to regulatory approvals.

And Qualcomm has agreed to buy semiconductor company Alphawave for about $2.4 billion in cash. That's a 96% premium to Alphawave's shares priced in March 31st. The deal is expected to close in the first quarter of 2026 pending regulatory and shareholder approval. Now, let's head back to Apple's developers conference. Ed, you're standing by. Yeah, and even if the news flow isn't about Apple's...

Apple intelligence specifically, there's still the read across of what we hear today and how it drives adoption of the ecosystem and sales of the iPhone. And that's why I'm delighted to speak with IEDC's Senior Research Director Nabila Popal.

That's how I think about it. So the reporting tells us that it will be largely interface changes. It will be some developer access to Apple's work in AI that will drive some innovation. How does that translate to the iPhone? Absolutely. Thank you. And it's nice to be here.

I think those are, you know, really still big steps. You know, it's really important. It's going to help even if there aren't really those big revolutionary announcements in AI. Those two things that you mentioned are going to help drive innovation

steps towards moving Apple in the right direction, right? Like opening Apple's models to the developers, which they haven't done before, are going to create innovation, even if it's from the community and not driven by Apple. I think that's a big step, and that's also an innovative step, even if it's different, right?

and the changes to the operating system across platforms. I think that's also very important and that's going to do two big things, right? One, it's going to give users a new experience because the last time data design overhaul was especially with iOS a decade ago. And then two, it's going to unify the experience and increase the user's stickiness. So if there are some

potential users thinking to move over, it's going to make that even more difficult. How do consumers respond to OS labeling? Will it go from version iOS 17, 18 to year OS 26 point blah, blah, blah, blah, blah? I think it's going to make it easier, right? Before there was just so much confusion between the different platforms and we see users

using more devices. And when you say platforms, you mean iOS, macOS, et cetera? Between different devices, right? We have more consumers having multiple devices, and it's harder to track what's the different version, even though consumers aren't that much focused in terms of what's the software and what version it's on. It's going to make that much easier,

for the average consumer to follow. And we're used to that with other products, right? Other consumer products. So I think it's a really good move and simplifies things. - What's the kind of IDC must watch list for today? What are the top three things that you want to hear from the company?

Well, I do, you know, I know that even though we're not going to get the big announcements around kind of Apple intelligence and that will appease the Apple AI critics, but I'm still eager to hear what the announcements will be around Apple intelligence. I do still think they will address those to, you know, signify that they are making those, even if they are smaller steps.

that they are still pacing towards that and they have not dropped the ball. So I think that I'm eager to see that. I'm also eager to see what kind of design, we did hear some different obviously rumors about the design changes, about some liquid glass. So I'm very interested to see how that looks

Because Apple, even though sometimes they make simple and small changes, it's always really brilliant. So I'm eager to see that. There's some functionality discussion as well. Live translation in iMessage calls and through AirPods is something that we may hear about. But I also think about the discussions I've had quite recently with Meta, who have been working on this across different form factors of hardware. Google's been working on translation for a really long time. Apple's going to catch up there.

Well, you know, there's always, again, the critics are always going to be saying that, oh, you know, Android's had this for so and so many years. But we have to think about the ecosystem of Apple users. I mean, I have friends that the average Apple consumer doesn't really know what's been announced on Google I.O. or Microsoft Build. They don't really know. To them, it's their Apple universe. And to them, this is going to be revolutionary. And live translation is one of the biggest problems.

AI features that's been used, it's really popular in the, you know, where it's, so to the Apple consumer, they're going to be really happy about that. And if that does get announced, I'm really, it's going to be very well received. Just really quickly, how uncertain is it right now for Apple, in particular the smartphone or iPhone context with tariffs, et cetera?

Of course, the tariff question. There's definitely a lot of uncertainty, but regardless of where the tariffs land and, you know, despite the high uncertainty that we've seen, even you've seen with our latest forecast, we still expect a growth for Apple because we've seen even with the pandemic, right, in times of high uncertainty, we see that the Apple consumer segment is still pretty resilient. So we'd still expect a low single digit growth for Apple this year.

Nabila Popal, IDC Research here at Cupertino at Apple's WWDC. Carrie. Still so much to come. You're reporting throughout the day on an extraordinary event that's about to unfold. And that does it for this edition of Bloomberg Tech. Do not forget to check out our podcast. You'll find it on the Terminal as well as online on Apple, Spotify and iHeart.

Do go back to Cupertino with Ed a little bit later throughout our programming. This is Bloomberg. Developers like you are building the future, but you need the right tools to move fast and go further, right? That's where Microsoft comes in. With tools like GitHub Copilot, VS Code, and Azure AI Foundry, you have everything you need to push the limits and bring your ideas to life faster.

And with security, compliance, and responsible AI built in, you can focus on what matters most, building the next big thing. Learn more at developer.microsoft.com slash AI.

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