Meta Tries to Poach OpenAI Staff, David Sacks Weighs In On Genius Act
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Developers like you are building the future, and you need the right AI tools to push what's possible. That's where Microsoft comes in. Microsoft helps you build with flexibility. With Azure AI Foundry, GitHub Copilot, and VS Code, you have the support to build the way you want. Whether you're building AI apps that enhance customer experiences or agents that automate complex processes, Microsoft gives you the tools to innovate with confidence.

To learn more, go to developer.microsoft.com slash AI. That's developer.microsoft.com slash AI. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.

This is Bloomberg Tech. Coming up, OpenAI CEO Sam Altman says Meta offered his employees signing bonuses as high as $100 million. Plus, it's a win for the crypto industry after a stablecoin bill passes the Senate. We discuss with the White House crypto czar, David Sachs. And another extension for the sale of TikTok. We have Frank McCourt Jr. to talk through where his bid stands.

Meanwhile, we talk about these markets. The macro perspective, Ed, is one of a Fed decision in but a few hours. The fact that in the Middle East tensions, will we see outreach between the US and Iran? At the moment, we're seeing a buying signal. We're up six tenths percent on the Nasdaq. Most of those magnificent seven names trading higher. But Ed, you're focusing in on one particular name. Yeah.

Yeah, I'm looking at Meta. Shares are kind of like modestly higher, up half a percentage point. Meta, OpenAI, ScaleAI have all been in the news a lot recently. The headlight right now is because of this.

They started making these like giant offers to, you know, a lot of people on our team, you know, like $100 million signing bonuses, more than that comp per year. It's crazy. And I'm actually, it is crazy. I'm really happy that at least so far, none of our best people have decided to take them up on that.

Bloomberg has reached out to Meta but we've not heard back on a request for comment for more on Meta and the competition for AI talent. Bloomberg's Jackie Douellas joins us now. Jackie, what we didn't hear in the rest of that conversation with his brother in Uncapped, he went on to really say some damning things perhaps about Meta and the fact that they lack innovation and ultimately he's not losing talent because they want to stay for the mission of open AI. How fierce is it out there right now?

Well, there's a few things that we can draw from his comments on the podcast. One, it confirms that there's this new chapter in the AI talent wars. It's always been fierce, but it's reaching a new level now. $100 million bonuses is something we've never heard of before. And it's really telling of how much Meta is willing to pay to regain its edge in this AI race. Altman's comments also highlight, like you said, the...

It's confidence that it's going to take more than just money to bring the best and brightest to your team. If you look at OpenAI's mission statement, they say that they think about their work for the benefit of humanity. That's really bold and large and purposeful. Whereas Meta, I looked up their mission statement earlier, and it says we're advancing AI for a more connected world to accelerate the potential future Meta products for the benefit of people. It's not as deep if you really dig into it.

Jackie, a big part of the conversation that Sam Altman was having were the reasons why $100 million isn't enough to get OpenAI employees to go to Meta. What was his argument?

Part of the argument is this larger purpose and also that they're not as innovative, that people want to go to a place where they feel like they're going to be able to do their best work and some of that culture problem that we've seen with Meta. And they've also admitted in the past that they kind of have trouble with middle management and just kind of the almost internal bureaucracy of how you get things out there.

That doesn't exist to the same degree, according to Allman at OpenAI. And so when you think about the people that are going to go over, they want to be able to have that assurance that their ideas are actually going to make it into reality. And Jackie, they want to be on the winning team. They want to get to AGI first.

And that seems to be the point of this. There's no point coming second. You need to be at the business that leads the charge. And interestingly, those pay packages have lured on some significant talent to the superintelligence team from DeepMind, from Sesame AI.

That's right. But, you know, we have to remember that they are working in a new kind of organization. Meta, at the end of the day, needs to incorporate this technology into its products, which is, you know, the moneymaker. They have shareholders they need to appease on a quarterly basis. And that kind of pressure...

could also affect the way, the speed at which they work, how quickly they roll out these tools. But AGI, super intelligence, this is new ground for Meta. They haven't really treaded this sort of landscape before in the same way that OpenAI was really founded on these principles to create AGI. And so

You know, you have the best and brightest going, really intelligent people, but we've seen some friction, some tension and, you know, going on in its own, in its fair team, the research team inside Meta. So they're not exactly going into a place that has this all figured out.

Bloomberg's Jackie DeVallis, thank you very much. Let's get to a story that broke in the last hour. OpenAI is phasing out the work it does with ScaleAI, cutting ties with that company just days after Meta's $14 billion investment. Bloomberg's Rachel Metz joins us with more. So I think there's a very important distinction of what's happening here. OpenAI has existing contracts with ScaleAI, but what we've learned is that that relationship is going to change in the future.

Yes, OpenAI is phasing out the remaining work that it's doing with ScaleAI. The company has branched out a lot over the past few years as its data needs have expanded vastly and also changed based on the kinds of models that it's building. So at this point, Scale represents the company as a very small fraction of its business. But over time, it's going to now be totally phasing that out.

Rachel, these two stories, yours and Jackie's, are linked, the narratives, because of course Alexander Wang goes to the superintelligence team over at Meta and indeed takes a lot of the talent from Scale AI there. Other companies, perhaps not just OpenAI, start to move away from Scale AI. Are you hearing it elsewhere that maybe these contracts get undone in the future?

We are definitely hearing that companies that provide data and data services, it's a very fractured, fragmented space. There are a lot of companies that are much less known than scale, but that are also worked with by these companies like OpenAI, Anthropic, Google, and many others.

And I know they're seeing a surge of inbound interest and they also are hearing from some nervousness from some of their customers. Companies tend to work with a bunch of players and it is possible that this tie up, even though scale has said it will remain as an independent business, it will make people nervous.

we should say that scale ai did decline to comment on the story uh just as meta declined to comment on on the sam altman claims on on comp um the history of scale is interesting because there's an element of manual work that they were doing and they relied on this kind of army of contractors just explain that the basics of that because my my reading of your story is that open ai was thinking about the relationship over the past year before a lot of this happened anyway yes so scale

Scale AI, you're absolutely correct. It started out as a business that had a large number of contractors that were paid to label data for AI models. Over time though, the AI market has shifted and it's shifted quite rapidly. So at this point, while it still has that legacy human data labeling business, it's also expanded into a few other areas. And one of them is increasingly hiring

experts that might work a few hours on the nights or weekends, someone with a PhD or a law degree. And instead of labeling data directly, what they're doing is coming up with difficult tasks for AI models to solve. And that's also something that's become increasingly important to open AI. But it seems like scale is opening. I felt that scale was not quite up to the level that it needed to support its products with this kind of work.

Bloomberg's Rachel Metz, we appreciate it. Thank you. Let's just talk about Elon Musk's AI startup now, XAI. It is burning through $1 billion a month with expected losses of $13 billion in 2025 due to the high costs of building advanced AI models. Now, this is all according to sources who say that to cover the gap, Musk's startup is currently trying to raise $9.3 billion in debt and equity. But even before the money is in the bank, the company has plans to spend more than half of it

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Amazon CEO Andy Jassy says he expects his workforce to shrink as AI handles more tasks. In an email to employees yesterday, Jassy wrote that over the next few years, Amazon expects to, quote, reduce our total corporate workforce, is the latest CEO to warn of AI's impact on headcount. Now, Amazon had over 1.5 million employees at the end of March, mostly, though, in warehouse jobs.

Another company that's warned about the impact of AI on the workforce is Klarna, embracing generative AI tools, though with some change of heart on hiring for customer services. Today, the startup known for its buy now, pay later service is entering the mobile market with plans to launch a $30 per month service in the US with plans to expand into the UK and Germany later this year. Klarna's CEO, Sebastian Chemekowski, joins us now. Welcome to the world of MVNO.

It was a headline I didn't expect to see, Sebastian. I mean, the simple question for Klarna is why? Why do this? It comes back actually to the fact that we do believe the future is a digital financial assistant that helps you save time, save money.

And in this case, if we not only identify that one of our customers can save money using this, but we can actually put it, bundle it together and offer it by the seamless experience of just a button, say, yes, I would like to get a better price or a better offer. And here it is. And it's live on my phone with virtual SIM cards. Now you can get it live very, very quickly. That makes a lot of sense. So it's just a way for us to kind of bundle more services and value to our existing customer base.

The mechanism right is that this is on the AT&T network $40 a month does Klarna make any money on that arrangement? We do But most importantly this adds value to our customer base I think also like one of my beliefs is that if you have if we're gonna have truly digital financial assistance that can recognize

can come to you and wake you up in the morning and say, I can save you on the carrier bill. I can save you on the electricity bill. The only thing you need to do is say yes, and I'll take care of all the switching. I'll do everything for you, all the paperwork. So you're just going to save $10 a month or whatever it is. The point is,

What that means is the excess profits that has existed in utilities, in banking, in all these things will have to come down because we are predominantly stuck with our existing providers, not because we love them, not because they're awesome, but because we hate switching and we hate reading boring legal terms to realize is this offer really better or not, right? So the point is that like...

we believe that the margins in these services will be significantly lower going forward.

And that's why also it's smarter of us who are new entrants into this industry to come in with a very attractive offer from day one rather than believe that we can lure people into some lengthy contracts and make too much money on them over time. New entrants that already serve 25 million active users here in the United States, many users who associate you really with Buy Now Pay Later. How is that narrative shifting? How are we starting to see you as an everything app instead?

Well, definitely a neobank at least. I think that the neobanking concept again comes back to that digital financial assistant that

We want to help people save time, save money and have them not worry about their finances. We want to help them with all of that. And that is kind of what banking was supposed to do. But at some point in time, that banker got a little bit too smart, realized you didn't really have that good understanding of your own stuff and put you in some pension funds where they were charging you too high fees on it. Like that has to change. We have to come back and being customer obsessed.

and offer the greatest value at the lowest, you know, at the highest quality at the most affordable price. So that is what we're doing. And to us, it's everything related to, you know, your everyday spending. And phone is part of your everyday spending, right? It's an everyday cost for you. So this falls very naturally into that.

You, the Trump Organization, everyone's getting into the phone companies. But I'm interested, Sebastian, in you say you're customer obsessed. To be customer obsessed, you have to be employee obsessed. I'm interested on the shift you've made when it comes to customer services. You've come on this show before and said, we are all in on generative AI. I could replace myself as CEO. I'm replacing customer services. I don't need to add in terms of people and headcount. But you've changed your mind on that.

Well, partially. What we've said is that, look, I think in many countries you'll see that in the last 10 to 20 years, our doctors and nurses have spent less and less time with patients and more and more time on administrative tasks. In addition to that, the cost of administration in healthcare has risen much faster than the amount of money spent on actual doctors, nurses and being available to patients.

So what this AI technology can enable us to do is to again take all the administrative burdens out, make those be processed by AI and allow doctors and nurses to be available and actually spend time on patients. And this is the same for us as a company. We can use AI as a technology so that

when people want to speak to us and if they want to speak to a human, which we want to make sure that everyone who wants to speak to a human should always be able to do so. We also want to make sure that those humans have less administrative tasks and can actually spend more time. So to me, the value of human connection rises in the world of AI. It becomes more valuable. It becomes more expected that you have people that have time to talk to you properly, not rushed in the customer service center that can actually sit down with you and resolve your errands.

And so to us, two things can be true at the same time. We can use AI to take an automated, boring and mundane task away. And we at the same point of time must recognize that people will expect a human connection. Sebastian, being an everything app,

or everything platform is a goal and vision you share with others. X has similar ambitions, particularly in finance, right? But Uber would also say there are elements of its platform that in the future it can move into the areas you're talking about. Where do you see yourself sitting and who are your rivals in that domain?

It's the billion-dollar question, my friend, in Silicon Valley right now. Will there be one assistant to serve all, one ring to forge them all, or will there be multiple assistants, right? And the answer is nobody knows. I, at least, for one, need to know that.

our assistant digital financial system needs to be the best in the world at what it does for our customers and hopefully people want to use it for that now on the other hand as much as some people are here of course this is gonna be one I been around 20 years long enough to remember in 2007 when Facebook was supposed to be where all of Internet happened and all of Internet was gonna happen inside Facebook and

That didn't actually materialize that way. So I am still probably in the camp that there will be a few really smart assistants that help you on different topics and that you trust more on specific topics than others. But this is the billion-dollar question. And we're old enough to remember that our clan is older than Facebook, now Meta. So the IPO not happening this year, might it next year? Well, I would say market conditions look brighter than they did back in April. Now?

As you know, I can't comment on that. So I'm sorry, I would have loved to say something more than that. But I think at least it's great to see that markets look better. Sebastian, it's always great talking to you. Thank you, Klarna CEO. Sebastian Strzimilekowski.

Robo taxi firm Zoox has opened a production facility in the Bay Area that says has the capacity to turn out 10,000 robo taxis a year. The Amazon unit's been testing its purpose-built robo taxis that have no steering wheel or pedals in locations across San Francisco and Las Vegas. Zoox CEO Aish Reven joins us from the new facility. The obvious question is like 10,000 robo taxis a year at full scale capacity.

It's a lot of potential. But what's the reality, Aisha? I've always known you to be very pragmatic. Give me the sort of target for this year and next year for what will roll off the line.

Yeah, the reality is really, first of all, thanks for having me, Ed. Good to see you. The reality is that we're just ready. We are, as you know, we're very excited. We're finally headed to our commercial launch starting in Las Vegas later this year. And from there, you have more and more robotaxis coming in. Then we have San Francisco right after that, Austin and Miami coming up. And so we're gearing up to basically be ready because, as you know, with our robotaxis, it's purpose-built, serial production in the United States.

So putting the capacity in place and then turning it on little by little as we go city by city. The 10,000 number is important in the context of federal rules, right? Right now there's a limit on the number of vehicles that can be on public roads that have no driver controls, just like your vehicle. But NHTSA is looking at it. How are those talks going with NHTSA? And do you think you'll get that exemption to really scale up in the coming year or two?

So as you know, we went the self-certification route. That's all that was available at the time. I have to say we're very grateful to the administration for the progress. This innovation is happening worldwide. And so making sure the U.S. is prepared is really key. And the talks are going really well. I've always said that this is a huge transformation in transportation and working hand in hand with the regulatory authorities is key. And

really really impressed with the speed so far. How about Amazon support as well? How much are they loosening the purse strings? How much budget have you got, Aisha? So I don't know about loosening the purse string. We want to be every day. We're still a startup. We have a lot of work to do. This is very expensive. And so what I can say is that Amazon has been very supportive. They ask us good questions. They support us.

And, you know, of course, we come in with a budget. We discuss it. We come in with what we have to, what we say. We commit to doing. We have to do it. And if we don't do it, there are questions, as there should be. But, frankly, super, super happy. It's been five years, so way past the dating period. And a great pull to Amazon. Full-on relationship.

What's interesting is they're also eyeing others on the block, I'm sure, the competitors. Just tell us about the robo-taxi competition, Waymo, and particularly from Tesla. Is this narrative good for you? How much has that impacted the government?

Look, we've always said this is a huge market, right? At scale, after sort of shelter, meaning homes, apartments and dwellings, transportation is one of the most important and also costly things. We know that it could be a lot safer than it is right now on the roads.

And so it's a big market, it's a big industry, it's good to have multiple players. I've been public that we're super proud of Waymo, especially if you live in the areas they serve. I live in the San Francisco Bay Area and I call them the cute Casper ghosts. They are roaming around. And as far as Tesla, I've also said the more the merrier. I know they have their own path. I don't like to comment.

or criticize others. I'm sure they have their path laid out. And we all have to be on the same roads, and we're all subject to the same regulatory authorities. Aitra, I've taken the Zoox vehicle on the strip in Las Vegas, right? And you're inching towards commercial service. But I think people would really appreciate the literal understanding of what you'll do, number of Zoox vehicles on that strip, the pricing in charging fares for all of those tourists.

All right. So in terms of numbers, right now we have over a dozen or so roaming around the strip. I mean, you know, people could count them, so there's no point in not telling you the number. And they ride every day because we have to learn. Self-driving is the underlying technology, but at the end of the day, what the customer cares about is a wonderful experience.

that makes them feel special, that they are picked up where they want it to be picked up, dropped off where they want it to be dropped off, and that it took a reasonable amount of time and they have a great experience while doing it. And then you also have operations behind that. So you can expect us to be just adding tens and tens and tens

and serving the market and then controlling that relative to the demand. As far as pricing, obviously I'm not going to get into the details of pricing, but customers are already used to a certain pricing and we intend to be competitive and we also intend to be ready for what happens at scale. HR Evans, it's great to talk to you, the CEO of Zoox. What a backdrop. Welcome back to Bloomberg Tech. I'm Caroline Hyde in New York.

And I'm Ed Ludlow in San Francisco. I want to look at the chip sector real quick because there's bits and pieces of news driving markets. Two names I'm looking at are Marvell and Intel. Marvell, best performer in the NASDAQ 100 and the SOX. The news, well, it's just been talking up its competence in AI at a conference, frankly. Marvell does ASICs, right, custom silicon, but that's a significant gain and a lot of sell-siders coming out and saying,

We like what we're hearing about Marvell and where it's going to fit in in that custom silicon landscape. Then you have Intel up 2% or so, a restructuring, new engineering leadership, new chief revenue officer, and the market's cheering it, although in a more muted way probably, Caro, than Marvell's getting, but always keeping an eye on the semiconductor space. That you are. We're also always keeping an eye on TikTok because the US deadline to divest or be banned

It's got a third, count them, third extension from President Trump. The administration delaying the ban by another 90 days, allowing the social media app to just keep on operating in the United States as it proceeds with negotiations. For more on the future of TikTok, Project Liberty founder, long-time bidder for TikTok, Frank McCourt Jr. joins us now. Frank, this is the never-ending story, is it not?

Well, it just, yeah, it does seem that it's taking a long time to get a deal made here. You know, you had the 270 days and then the two 75-day extensions and now another 90 days. So, yeah, it's been a while. But, you know, I

I've learned to be very patient, hang around the hoop. A lot of good things get done when that happens. And, you know, my sense is, and this is not a... You know, this is purely my opinion, but I think this is the last extension. I think 90 days, not 75 days, is significant. And I think something gets done within the next 90 days or not. But does it involve you? Have you been on the phone with the vice president? Have you been involved in the negotiations? Yeah, we were very much involved.

during the first extension and less so during the second. Things have been relatively quiet as a matter of fact. So I don't know if I should, you know, draw any inferences there, but it's been fairly quiet.

overall. Look, I still love our chances, Caroline, because look, the legislation is very, very clear on what is mandated. Our bid, as far as I know, is the only bid that actually qualifies, that actually meets the criteria in that legislation where we completely disentangle from the Chinese technology.

So Frank, I want to get really detailed on this because on the other side of the table in this bidding process there is a coalition of different individuals and technology companies whose proposal as I understand it is outside what's legislated for. In other words, some element of collocation of data and licensing the algorithm. Would you just explain how your bid is distinct from that?

Yeah, well, Ed, I think you've hit the nail on the head. And we're not looking to co-host the data or to use the Chinese algorithm. Project Liberty is about empowering individuals, not exploiting them. So we're not interested in scraping people's data, surveilling them, spying on them, scraping their data,

aggregating it and then micro profiling people and then using a black box algorithm to manipulate them. That's not what we're interested in. And that's why TikTok is so attractive to us, because we can not only solve the national security issue,

but we can move the user base and the data onto this new, clean, made-in-America stack, which doesn't rely on Chinese technology, doesn't surveil on people, and as a matter of fact, empowers people to permission the use of their data and get paid for it. This is going to be the new Internet. It's going to happen sooner or later. How many more days can go by where we're going to read about another horror story

That is occurring with the current internet technology, which is highly exploitive and highly predatory. The current model is not sustainable, in my opinion. It's going to change. We believe the sooner it changes, the better. Frank, as the extensions keep coming and the process continues, does the price for TikTok go up or down or stay the same?

Well, from our perspective, it stays the same because what we were buying, assuming the user base stays the same and there's no change in the numbers. As far as the value to others, I can't, I really can't comment on that. And I'd only be speculating. But, you know, our view is we can put a really clear value on TikTok, the U.S. TikTok, with the current user base, with the data, with the brand, without the algorithm.

Frank, we asked you and we thank you for being so transparent about your conversations with the administration. What about with China? What about with ByteDance? Because we understand much of the elongation of the process is they don't want to let go of the algorithm and they want to keep it intact. Caroline, I think that's a really important question you're asking. I don't think any of us know

what China's ultimately going to do here. And I think it's a big if in this whole transaction. I think one thing we do know

is they're not going to let US TikTok go with the algorithm or with the IP. So any chance of a deal, in my opinion, would be a deal that disentangles from their technology. And a deal that disentangles from their technology, I mean, why not make the deal then? Because if there's not going to be a deal and the only option is shutdown, why not sell the pieces and parts

for a lot of money and achieve their objective, which is no sharing of their technology. So I think that we just don't know if they're even going to let US TikTok go without the algorithm. We're betting they will, and that's been our bet from day one, but we'll see.

And what about the moon music of the user base? When this all first came to light under the Biden administration, there was fierce opposition from many of those users, but actually the US public at large actually wanted to get rid of TikTok. But now it feels as though we've moved the other way. Where is general public consensus on whether we want to kick out TikTok or not?

You know, I think it shifts and moves. I think right now what's happened is that because, you know, that this is the third extension, people are a bit anesthetized and, you know, you're not sure what's going to happen. And so I kind of not as it's it's not as front and center on the minds of the user base as it was when it was threatened to be shut down with with the legislation, by the way.

I believe US TikTok is going to be sold or shut down. The legislation is very clear and something's going to give here. And I, you know, again, I said earlier and I have no, please, I have no proof of this, but I just have a gut feel this is the last extension. Something's going to happen during this 90 days. So Frank, sorry to interrupt you. So you've also, you basically opened the door to a third part.

which we discussed last, which is that the president could indeed decide, you know what, I don't want to go with Ivor Bida and I will shut down U.S. TikTok or TikTok in the U.S. Just explain, you know, how you've been transparent. The contact with the administration has been limited in this period. But that seems a possibility.

Yeah, I think it is a third possibility. And this is, again, I've said from the beginning, I think when push comes to shove or when this process has come to a conclusion, TikTok will be sold without the algorithm. But you're quite right, Ed. It may be shut down on the U.S. side.

and or China may just not allow it to be sold. These are all distinct possibilities. So there is uncertainty here, but look, Project Liberty is continuing to build the technology, onboard users, and create this alternative internet, which we think we need now. The bottom line is we have an internet that's broken.

but nobody's not going to use it until there's an alternative. So our goal is to build that alternative and then actually migrate users and, by the way, build new apps in this new world and to create user base there. So who would not, I mean, given the choice of an Internet that surveils you, scrapes your data, and it basically exploits you versus an Internet that,

where you're permissioning the use of your data, you get paid for your data, if it's a commercial use case that it's used for, and you're in charge of you again. You're at the center. Right now, we have an internet where the platforms are at the center. We're all just commodities. We need an internet where we're at the center, we have agency again, we're in charge, and we're respected, quite frankly.

Frank McCourt Jr., Project Liberty, one of the bidders as well, of course, for U.S. TikTok. Thank you very much. Discover how one of China's largest financial services companies serves 240 million customers with AI-powered solutions. Hear from Ping An's co-CEO and chief scientist.

We're on a goldmine of data integrated to provide tailored solutions to our customers. Public domain tax, 3.2 trillion tokens, 7.5 billion images. Tune in to our technology-powered growth podcast. Find it at group.pingan.com, Spotify, or Apple Podcasts.

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With Azure AI Foundry, GitHub Copilot, and VS Code, you have the support to build the way you want. You can design, customize, and manage AI agents, automating routine tasks to give you the time to focus on your vision. You can innovate confidently with responsible AI and security that's built in from the start. Microsoft has everything you need to help you push what's possible.

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The US Senate voted to pass the Genius Act late yesterday, moving the country's first crypto legislation forward, a rare moment of bipartisanship in the Senate. However, Republicans did block Democratic efforts to bar the president from profiting from crypto efforts he's affiliated to while he's in office.

White House AI and crypto czar David Sachs joins us now in an exclusive conversation. David, good morning. Thank you for being back here on Bloomberg Tech. I think the immediate question is the immediacy of how quickly the bill passes to the president's desk and how you see that happening.

Well, thanks, Ed. Glad to be here. So the next step here is for the House to take it up, and I think the House is considering its options, but I think we're basically at the finish line here. The House already passed a similar version of the bill called the Stables Act, and I think that we're very close here to having a bill that can go to the President's desk.

There is also a lot of parallel interest from our audience in particular in the market structure efforts that are underway. Do you believe or see the president considering packaging them together, the stablecoin legislation with market structure?

Well, like I said, I think the House is still considering its options. The issue with packaging them together is that the market structure bill has never been taken up by the Senate. It did pass the House in the last Congress, but it never passed the Senate or was even taken up by the Senate.

You could say that the market structure bill is on the 10-yard line, whereas the market structure bill is really just a few yards away from becoming law. So I think there are different stages of the process, and if they were packaged together, it would slow down the stablecoin bill. But those decisions still have to be made.

Let's just talk about what this could unleash if it does go forward. Stablecoins could swell to as high as $3.7 trillion by 2030. That's according to Citi. Are we seeing perhaps a delay in regulation elsewhere that could stymie that sort of growth? Is Citi saying, "Look, if we don't see others getting on the bandwagon here, it could be limited to just $500 billion"?

No, I mean, I think that the stablecoin bill is very helpful. It provides regulatory clarity and stability for the stablecoin industry. Like you were saying, there's already something like $250 billion in float of stablecoins, and that's without there being a true regulatory framework in the United States. Right now, the number one issuer of stablecoins is offshore.

And what this bill would do is provide, like I said, the regulatory clarity and safety. It would bring the whole stablecoin industry onshore. It would enhance consumer protection. The issuers of stablecoins would have to get audited on a quarterly basis. Consumers could be confident that their dollar-based stablecoins were reserved on a one-to-one basis with actual dollars and U.S. bank accounts.

And I think this would increase confidence in the industry. And I think that you would also see banks getting into the act. I think you'd see traditional financial players getting involved in it. And that's why the float is expected to grow from call it roughly 250 billion to trillions of dollars. And that would create more demand for the U.S. dollar internationally. I think you could see

other economies start to dollarize from the bottom up as their citizens would prefer to use U.S. digital dollars as opposed to whatever fiat currency they're using.

and that would create potentially trillions of dollars of new demand for US Treasury. So I think this bill is a major piece of legislation. I think it's a fantastic bill just on its own. I think that the House should go ahead and take it up, and I think they will take it up, and I think they're going to put it on the President's desk very soon. What about businesses taking it up? As you say, people waiting in the wings, reports Amazon, Walmart wanting to have their own stablecoin issuance.

What is the regulatory oversight going to be like? You say of course it's put in stone in terms of the law. What about the resources for the regulation? Because there's going to be a lot to analyze it feels like.

Yeah, so the stablecoins will be under the purview of the banking system and banking regulators will look at that and stablecoin issuers will have to go through a regulatory process and they'll get approved. And like I said, there'll be quarterly audits. And I think that the bill will provide the framework that will give confidence to a lot of traditional financial players to enter the space. And so I think you're going to see new stablecoin products. And I think you'll also see

stablecoins being used as payments. I think this is one of the really exciting things about the bill is that blockchain infrastructure will be used as a new kind of dollar-based payment system. Yes. That's faster, it's more efficient, smoother. It's a payment system of the future. It's kind of ironic that when the crypto industry really started with Bitcoin about 15 years ago, what was anticipated is that you would get a new kind of currency. You would get a non-fiat currency.

But as it turns out, a really important use case of blockchains has been to support digital dollars, to support tokenized dollars. And I think you'll see the extension of that payment system online with that legislation. And that's a really exciting thing. We don't want this innovation being driven offshore right now. Like I said, the leading stablecoin issuer is offshore. I think that you will see this be a new U.S.-based payment system that emerges online.

David, I'm looking at, for example, shares of Coinbase and Circle and basically the market cheering the passage of the bill. You're basically talking about dollarization. And I wondered if you'd just reflect for a minute of how you feel that the final sort of composition of this legislation supports the goals, the bigger picture goals that you and the president had hoped for when you set out to do it.

Sure. So when the president first took office and even before he took office, when he was on the campaign trail, he promised to make the United States the crypto capital of the planet and to replace the approach of the Biden administration, which was

essentially regulation through prosecution. I mean, the Biden administration was doing everything it could to drive crypto companies offshore. And he promised to change that approach and make and provide regulatory clarity so that the innovation could happen in the United States. And I think that, you know, the Trump administration has done that.

Even before this bill, the president had signed an executive order to make Bitcoin a strategic reserve asset, providing, I think, a kind of legitimacy for the industry that it had been seeking.

We also have formed a president's working group on digital assets that's been systematically hunting down and eliminating some of these war on crypto regulations that have been impeding the industry. The bottom line here is that we just want a fair approach. What founders and entrepreneurs have been asking for is just tell us what the rules are and we'll abide by those rules. So we've been trying to provide that regulatory clarity. But at the end of the day, if you want to make sure that the rules stay the same,

for founders, you need to enshrine them in law. And it's great when you can get the various agencies and departments of the government to change their rules, to take a better rulemaking, and we've done that. But again, the way that you provide long-term protection against the return of a new Gary Gensler or something like that is

and trying them into law. And that's what this bill, the Genius Act, would do. And it's also what the market structure legislation would do. And we want to take that up next, to be sure. Sorry to interrupt you. What is missing from the bill and what Democrats push for were specific controls on the president and the president's family in their ability to move within the...

Corners of the crypto market with which they're affiliated. There's a lot of concern that that wasn't done is the concern justified I don't think so I mean so first of all you should ask them what they're doing because I'm not involved in any particular companies products I'm just an innovation advisor But my understanding is that what they've said is that the president's assets are in a blind trust His sons are not in the government. They're adults and they're allowed to engage in business and they have a company and I think that these are unrelated things

You're an innovation expert, not just in crypto, but in AI too. We shift there a little bit because you've hunted down rules that perhaps weren't serving some of the business entrepreneurship in the US, for example, the diffusion rule. But what follows it, David?

Well, I think it's a good question about what comes next. I think the problem with the diffusion rule, this was the Biden diffusion rule that was dropped at the 11th hour by the Biden administration, something like five days before the end of their term. I don't think it was really thought through. It was overly burdensome. And what it did is it required every sale of a GPU worldwide to, it required a license from the Commerce Department.

or one of several narrow exemptions that also had to be lawyered.

And so this was just incredibly burdensome. I think it impeded the global, the U.S. semiconductor business and the U.S. data center business. I think it hampered its market share worldwide, which should be an important objective of U.S. policy is for the U.S. to win the AI race by becoming the dominant tech stack internationally. So the diffusion rule, I think, would have shot our technology industry in the foot.

out of a concern to prevent chips from going to China. To be sure, I think the leading American semiconductors should not go to China, but we have export controls on that. And I don't think we need a new global licensing regime on every single GPU transaction to achieve that objective.

David, Jensen Huang was on the show very recently and he expressed his concern that Huawei has technology that is as performant as Nvidia's H200. There had been a lot of focus on H20. I know that the Commerce Department has issued some assessment of how

much Huawei can produce. I think they said 200,000 GPU capacity. But there are concerns that actually their ability to export to markets outside of America is much greater than that. What is your assessment of how China can compete with its own GPUs in markets outside of America? Well, it is true that today

China is supply constrained on how many GPUs they can produce. But I would expect that to change pretty rapidly because China has proven adept at working around our restrictions. And you saw that back in January, we had this deep seek moment where before deep seek, people thought that Chinese AI models were years behind and then deep seek launch, we realized that maybe they're more like three to six months behind. I think today,

China is maybe one and a half to two years behind us in chip design, but Huawei is moving fast to catch up. And even before they fully caught up, I think you will see them exporting their chips for the global market. For example, there was a story out of Malaysia that they were creating a sovereign data center with Huawei Ascend chips, and that story got walked back because

Because I think the government was afraid of the US reaction But it was a minister of the government who did announce that they were creating a sovereign data center using Huawei chips so I think that we do have to be concerned about Huawei competing on the global market and

They may not fully be there yet, but I would expect that to change in the future. And I think that if we're overly restrictive in terms of U.S. sales to the world, I think there'll be a time where we're kind of kicking ourselves saying, you know, when we're in all of a sudden Huawei is everywhere, we'll be saying, well, wait, when we had this whole market to ourselves,

Why didn't we take advantage of that opportunity and lock in the American tech stack? I think it's very important that when we think about our goals here with respect to AI, we want the American tech stack to win. We want it to become the global standard. We want to have the largest market share we can. We want Alt to be the partner of choice for the world. And I think it's a valid policy objective.

to prevent our leading-edge semiconductors from going to China, but at the same time, we don't want to restrict them from going to our friends and allies. To be sure, we should name our security requirements, but our friends and allies are eager to comply with those security requirements. So I think we can achieve our objective here, our dual objective of preventing leading chips from going to China while also making the United States a global standard. David Sachs, it's great to have you back on the show.

We thank you. Of course, the White House, AI and cryptos are. Meanwhile, that does it for this edition of Bloomberg Tech. What a wide-ranging conversation with David Sachs and plenty of others. We've talked autonomous vehicles. We've talked AI within super apps as well.

Yeah, and there's an intense focus on that bill, right? So I think go back and recap what David said about what happens next. That is the question. Recap it on the podcast. You can find the Bloomberg Tech pod on the terminal, all the Bloomberg platforms, as well as online on Apple, Spotify, and on iHeart. From San Francisco, New York City, this is Bloomberg Tech.

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