Tesla Sales Fall in Europe, US Drone Makers Take on China
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Live from New York, I'm Caroline Hyde, and this is Bluebird Technology. Coming up, Tesla sales slump 40% in Europe, having fallen in 10 of the last 12 months. We get the analysis. Plus, foreign officials and tech execs push Trump's administration to rethink the U.S.'s global chip strategy and export limits. This as the debate around AI regulation heats up.

And Alibaba chairman Joe Sain criticizes US tech giants for their massive spending on AI infrastructure and warns of a potential bubble in data center construction. We shine a light on what's happening in the markets. We bring you also breaking news as well, as we understand that

Russia is currently in the US saying that Russia agrees to ban on striking Ukraine energy assets. That was, of course, something that had been discussed in the previous end of the show. But we are seeing, of course, the United States coming out there and saying indeed that Russia agrees to a ban on

the striking of new Ukrainian energy assets. We'll bring you more on that story in a moment and the implications to the broader market. But right here, right now, we go back to what's happening in the tech space. I'm looking at the Nasdaq currently up about five-tenths of a percent after yesterday's significant rally. I want to drill into some of the individual companies that have been on the move as well. And interestingly, after the phenomenal rally that we saw in Tesla yesterday, it's not

about two tenths of a cent. That's in the light of that significant drop once again in European sales that are down 40% for the month of February after falling a similar amount in the month of January. And we're now down 43% over the last two months. I'm shining a light what happens to BYD as well. It's up by more than 4%, maybe even 5% after yesterday's rally as it finally shows that it crescendoed further

than Tesla in terms of its revenue for fiscal 2024. Let's drill into all of this, the pushes and the pulls. I'm pleased to welcome Craig Trudell with us. And Craig, look, the moon music has been sour for Tesla in terms of sales when it comes to Asia, when it comes to Europe. And this is more of the same, but it's not dragging on the stock too much today.

Yeah, I think it's really been something to watch the last few days now that we've seen this real rally in the shares. They were really getting beaten down. And we saw, you know, the Trump administration sort of mount this push, you know, with the Commerce Secretary coming out, Howard Lutnick, and saying, you know, go out and buy Tesla stock.

It's never going to be this cheap again. We didn't see an immediate perking up of the shares as a result of that, but they really furiously rallied to begin this week. And even despite the fact that these numbers from the European Auto Manufacturers Association

are really ugly, as you say. This isn't just the last couple of months. It's 10 of the last 12 that we've seen the red as this chart shows. I think what's important is to shine a light on how much it's the opposite of the trend in Europe more broadly, though. EV sales are actually up more than 30%. It really is an outlier.

Yeah, absolutely. And we should, of course, note that this is not just a story about Elon Musk and potential brand damage. There is a transition of the Model Y that's really important to keep in mind here where when you change over a vehicle from one generation to the next, it means some disruption in your output.

That is having an effect on Tesla to begin the year. But this is also the case that the industry was preparing for 2025 being a much tougher compliance year from an emissions perspective. So Tesla also is just going to have a lot more

to deal with in terms of competition because other car makers feel the need to bring their emissions down for those compliance reasons. If competition wasn't stiff enough coming from China's BYD, Craig Trudell, we thank you so much. Meanwhile, though, let's get an investor take because Cathy Wood,

well, maybe unsurprisingly for many, is remaining bullish on Tesla, but still calling for the stock to hit $2,600 in five years, almost ten times its current price. Bloomberg's David Ignis sat down for an exclusive interview with the ARK Invest CEO that was over at HSBC Global Investment Summit in Hong Kong. Take a listen.

China is very important to Tesla and I actually think that Elon Musk and May Musk, his mother, are sort of ambassadors for the United States. May Musk is a big star in China. Yes, yes, yes, yes. And rightly so. But to answer your question directly, if China were to fail, that would be a short-term hit to the stock. Would it take us away from $2,600? No.

because the robo-taxi story is much more a function of the Western world where ride-hailing costs are so much higher than they are in China.

Let's get the take from Bailey Lipschitz, who's been delving into the resilient bullishness coming from ARK Invest. But really, this isn't so much about worries and blips of European sales. This is about a long-time focus on AI and robo-taxis. No, exactly. And as Craig Trudell pointed out earlier, she's been predicting the dawn of robo-taxis from Tesla since 2008.

at least 2017. So long-term bullish, it is their biggest holding in the ARK ETF. But one thing I want to call out, when you look at this company, when it trades on its multiple, if you pull up the P/E on Tesla relative to the rest of the MAG7, P/E is north of 90. Are you saying that Tesla doesn't trade on fundamentals? They don't trade on fundamentals and also keep in mind that... You shock us, Bailey. You shock us. If you bought ARK...

Five years ago, you're up 27%. You're lagging the S&P 500 by 125%. Okay. And the NASDAQ by 150%. So been a losing bet in the long term. But nonetheless, Cathie Wood's sticking to those guns. It kind of does sound like some of the retail investors I talked to and the idea that the Cybertruck was only part of the thesis and now we're looking to driverless taxis as well as the humanoid robot. And she doesn't even factor in the humanoid robots, right?

Yeah, no, I mean, again, if you do the math with the current share count, that's an $8.5 trillion company with her forecasts. So they're going to be doing a lot with driverless technology. Even if you add up some of the bigger car makers with the likes of an Uber, you're still not even close to what that would look like. She's obviously been bullish. She's pounded the table for Bitcoin to hit a million dollars at some point in the not-too-distant future. So really talking her book, but definitely...

something to take a bit with a grain of salt. We put into perspective of Cathie Wood the bets that has won out, and she was a long-term bull on Nvidia, but actually removed her options and ultimately exposure to the company just as it started to rally hard. With Tesla, she has remained committed, but they have pulled some of their chips off the table, right? Yeah, it's a lower percentage of the holding. When you look at the flagship ETF, that ARK Innovation ETF, now about 11%, 12% of the ETF is allocated to that. That was closer to like one-fifth

when you look towards the beginning of the year, the end of last year. So pulling back, but as you mentioned, kind of as the stock was rallying, yes, it's down about a third year to date, but nonetheless taking that long-term view is retail investors will say you've been right about Tesla for five, six years at this point, and you're sitting pretty strongly in the green. But if you look at the rest of some of the investments that ARK has been pitching and been leaning into, they haven't all really worked out. And that's why there's been such a lag between the flagship ETF and

pretty much every other tech index. Bailey Lipschultz bringing us one investor take when it comes to Tesla. Let's go broader in terms of the overall market analysis of these EV numbers and the future for the company. Seth Goldstein, please say welcome from Morningstar, equity strategist. You're also the chair of the EV committee over there. You currently have a hold rating on Tesla. You've got a price target of $250,000, so actually below where we currently are after yesterday's rally.

Why are we not sinking more on these yet further dire sales news out of Europe? I think there's a lot of enthusiasm with the full self-driving technology. Yesterday's news that full self-driving was approved in China bodes

bodes well for China sales, which is a far bigger market for Tesla than Europe. And so when you look at full self-driving, we have the robo taxi testing that's going to be launched in Austin, the full self-driving unsupervised launched in Austin, and will come to California later this year. And then with the positive news of being able to launch the supervised level two version of full self-driving in China,

that bodes well for Tesla delivery. So I think that's the momentum that's carrying heavier today versus the European deliveries being down. Okay, is that optimism enough to vindicate the about 100 times future earnings that we currently trade at for Tesla as we were just hearing from Bailey?

Well, Tesla is a very high growth stock, has been for years. And with Tesla still having strong growth prospects, whether that's the energy storage system, whether that's robo taxis, full self-driving subscription softwares, there is still a lot of room for the Tesla growth story to play out. So I think the market is still valuing that Tesla does still have a lot of growth left, even if the Model 3 and Model Y are approaching that that

limit of deliveries, they still have the new more affordable SUV coming out later this year that should then push deliveries back into growth. Seth, get into the details here therefore. Is it the fact that they haven't really had an overhaul of their current product that is limiting current sales and of course the mismatch as they try and iron out a new form of production or actually is it the politicking of Elon Musk taking an effect here?

It's still unclear what the drivers are behind the first two months decline, especially in the European market. You could have a lot of consumers waiting for the new Model Y, which just began deliveries in Europe in March. So consumers could have been holding off until they could secure a new Model Y.

You also have the more affordable vehicle being launched. And so some consumers may be waiting for a lower price point vehicle from Tesla. But in the European market especially, you finally have long-range EV competition at a comparable price. For years, the Tesla Model 3 or Model Y was the only long-range. In this case, I'm defining it at at least 400 kilometers or more of range at the same price that would be Tesla.

as the same as an ICE after subsidies. So for key markets like Germany or the UK, a Tesla was the most affordable long-range EV. Now you have other competitors who are offering long-range EVs at a similar or slightly cheaper price point. And so there's true competition for the first time in the European market. And that could be leading some consumers to choose a different vehicle besides a Tesla.

Latin America, Europe can access BYD. And I was interested in Cathie Wood's take there that BYD isn't a competitor when it comes to AV, but we've heard that they are focusing on autonomous vehicle technologies. So could it start to ramp up and take on the robotaxi future of Tesla too?

Well, they very well could. So BYD has a level two product that they offer in China for free right now. Whereas even if you buy a Tesla in China, you still have to pay for full self-driving. So that could lead some consumers to choose a BYD. Both will be level two products inside of China. And China is a unique market because the data for A-B testing has to stay within China. You can't send it back to Tesla's headquarters in the U.S.,

for refinement. And so China may be a different market altogether, where BYD is more comparable to a Tesla. But if you're looking at a market like the US or Europe right now, I think Tesla would be more comparable with Alphabet's Waymo product as a robo taxi competitor.

So with the current price we're trading at, more than your $250 call, you hold and you brace for further volatility. Are we ever going to just see a karma up into the right trajectory for Tesla stock?

Well, if there are months and quarters of good news that comes out, then we could see Tesla's stock start to rally. But when it was trading in the high 400s like it was in mid-December, we had a one-star rating. We thought Tesla was a sell because we thought a lot of the good news was priced in. A lot of it was priced for perfection. Even when you're looking at valuing the robo-taxi business, we assign maybe a lower valuation than some of the more bullish forecasts.

Because when you think of RoboTaxi, it's going to be a cheaper price point, which means lower total addressable market for consumers and for Tesla's profitability. And they can't just take a 30% take like an Uber can. They also have to manage their expenses. That's another whole set of additional overhead expenses. So I do think it's going to be a very profitable business for them, but maybe not as profitable as the market's implying. How worried have you been about key man risk?

with Tesla as well, concerns about access to the pay he'd been promised and indeed the focus he has over at the White House right now. Well, Elon Musk has always had multiple positions, you know, whether that was buying Twitter and turning into X a couple of years ago or helping to lead SpaceX. He wasn't the CEO, but he still does take a leadership position in that company. He also has Boring Company, Neuralink. So

I'd imagine that Elon is still focusing most of his time and energy at Tesla. I think last week's event highlighted that, that he's still focused on Tesla. And he's probably taking a little bit of a step back as some of his other companies, letting the management teams at places like SpaceX and X

do more of the projects, take more of a leadership role so he can spend more time at the White House. I'm not too concerned right now that Elon is going to leave Tesla. I think they'll work on a deal that'll be a very favorable compensation package because the shareholder did vote for it. So there is a lot of shareholder support for Elon Musk to get paid. And I think what we'll see is Elon will get a pay package. He'll stay at Tesla. So I don't see a lot of key person risk for Tesla.

Seth Goldstein, it's been great catching up with you. Thank you, Morningstar equity strategist, for all things Tesla. Meanwhile, coming up, major tech companies and foreign officials, they are pushing the Trump administration to rethink the country's global semiconductor strategy. We'll have the details next. Meanwhile, let's talk about some of those key tech executives and companies. Nvidia, Broadcom, also Intel. Interesting

report coming out this time from analysis over at UBS. It looks as though Intel is reportedly strategizing to rejuvenate its chip design and broaden its foundry business. Could this be about securing these clients? NVIDIA, Broadcom, that being written up by UBS analyst Timothy Achuri. This is Bloomberg Technology.

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Foreign officials and major tech companies are lobbying the White House to loosen trade restrictions placed on AI chips. Of course, that was back in the final days of the Biden administration. Bloomberg's Mike Shepard joins us for more on this. Now, it's a so-called AI diffusion rule here, and it feels as though Oracle, Nvidia are the key companies that would like this not to go into act.

Well, that's right, Carol. They have the most at stake here. And to back up a little bit to remind our audience of what this AI diffusion rule does to help understand where the companies are, look, this rule divides the world into three tiers. It sets up a first tier of countries, the closest U.S. allies, maybe about 20 of them, that get unlimited access.

And then there's another tier of countries, the adversaries of the USA, China and Russia, that are really cut off from access to the most advanced AI chips. But then there's this big fat middle of nations, and that includes Israel, the United Arab Emirates, and even India, which all have their own tech ambitions.

and are all markets where Nvidia and Oracle are looking to do a lot of business. And the prospect of having to face restrictions on how much computing power they can sell to any one nation or having to deal with guardrails that could prove to be regulatory hurdles that might steer business elsewhere is what is prompting this lobbying push by Nvidia and also by foreign leaders.

I mean, just think, if you're not able to house more than 7% of your overall compute capacity in certain countries, that's really going to impact Oracle exactly as plants at the moment, plans over Malaysia, for example. So would they want a complete repeal? Are we likely to see a complete repeal?

Well, the reporting from our colleagues Jenny Leonard and Mackenzie Hawkins, and a shout-out to them for the great work that they did with this report. What they turned up was that NVIDIA and Oracle are most steadfastly against this rule. They are the ones who really want to see it

next altogether, and then started again from scratch. Everyone recognizes that there is a need for some sort of governance about where AI chips go. They do provide a security advantage or risk if they spread too widely, and the U.S. has already subjected

NVIDIA to restrictions on exports of chips also used in AI to China. We've seen that come up, for instance, with DeepSeek. But now what they want to do is they want this started from scratch. Are there companies like Google and Anthropic that are willing to work with the rule but would like to see it recast in ways that are a little bit more favorable? Bloomberg's Mike Sheckpard. We thank you so much on the AI diffusion rule.

It is time now for Talking Tech. First up, another TikTok executive steps down. Blake Chanley, who oversaw ad sales and global marketing, will step into an advisory role as part of a reorganization. Now, it's the latest management change by the social media company as it faces an April 5th deadline to reach a U.S. sale deal. Now, according to the information, at least eight other executives have left TikTok since 2025.

Plus, DeepSeek unveiled its latest V3 model promising better programming capabilities. Chinese AI startup dropped the update without actually a formal announcement as it looks to remain competitive against its rivals. DeepSeek claims the V3 model could address real-world challenges while remaining accurate and efficient.

And Alibaba chairman Joe Tsai says AI data centers may be at the beginning of a bubble. He was speaking over the HSBC Global Investment Summit in Hong Kong, and Tsai said a lot of US data center announcements were duplicative and overlap with each other. So let's get more on that exact story of Bloomberg's Peter Elstrom and Fighting Talk trying to push against these US giants, the Metas, the Amazons, about their commitment to AI infrastructure.

Yeah, it's interesting comments from Joe Tsai. As you mentioned, he's chairman of Alibaba. He's been through this for many, many years. He got his start in the dot-com bubble, so he's seen some of these bubbles in the past, and he's calling it out. He was at this conference in Hong Kong

talking with investors and tech executives at that point. And he said he's concerned about this AI bubble forming, particularly around data centers. We have seen incredible amounts of money getting poured into these data centers, especially from the U.S. tech companies. Amazon and Microsoft and Google all are

pouring tens of billions of dollars into these data centers. Of course, you'll recall that OpenAI and SoftBank talked about spending $500 billion on data centers in the US. So they're really kind of crazy numbers. Alibaba has not been shy about making these investments. In fact, they plan to spend more than $50 billion. But the numbers are starting to add up. And the question is whether those are going to pay off with some profitable services down the line.

And it speaks to investor anxiety over the last few months that we're just putting too much money in, not getting enough reward out. In fact, Mizuho analysis coming out today, I always love the notes coming over from Jordan Klein,

Or perhaps these are sort of these pot shots being fired over at Nvidia and US giants by China tech internet leaders. And he said it's kind of funny that just straight after GTC, we're getting these negative shots against Nvidia and the entire AI investment narrative that generally centers around 100% on US suppliers. Is there a theme that this is almost geopolitical, that this is China fighting back against US and how US has basically ridden the wave of AI more than them so far?

Well, I think it's important to look at the China tech industry, China business more broadly, not as a monolith. These are individual companies making individual choices. But when you look at how they add up, there have been more than 10 AI models introduced just over the past two weeks. They're coming out fast and furious after deep seek. And you're exactly right.

they are positioning themselves as quite different from the US models. They're lower cost, they're much more efficient in a lot of ways, and they're not spending the same amount of money. Part of that is because of US restrictions. The US has stopped them from buying the highest end Nvidia chips in particular. So rather than spend tens of billions of dollars on some of these efforts, they're spending much more and they're using a lot of engineering expertise to be able to come out with models that are very

competent, they are competitive globally, and they're innovative in a lot of ways. So they're going at a different part of the market, and they could be bringing down profits overall for the whole market. Just good to remind ourselves that Alibaba's CEO, though, did say that AI is one-in-a-generation opportunities. So kind of speaking from two sides of the mouth here. Peter Elstrom, it's so good to have you. Thank you.

Welcome back to Bluebird Technology. I'm Caroline Hyde in New York. Let's get a quick check on these markets because we remain tentatively higher after yesterday's big rally on the Nasdaq across all benchmarks. We're up another five-tenths percent on the Nasdaq 100. You dig into the detail. Who leads us on a points perspective? Well, on the downside, it's Nvidia. We've still got some anxiety around geopolitics, on restraints from exporting for that name. But go into the companies that lead us on the higher side, and it's Apple. From a points perspective, we're off

Well, we're currently up by 1.25%. We're seeing, once again, maybe some feel-good factors coming from the EU for once for this particular name, but it really is your biggest points contributor. We're now back on the Nasdaq 100 to where we were trading at the beginning of March, but Nvidia, as I say, is still the worst on the points downside. We're off by 0.8%, as we're still trying to understand how much they are going to be able to get their incredibly sophisticated chips in more broadly around the world. I'm looking at Tesla, though.

Flitting between gains and losses today. We have negative news when it comes to EU sales, down 40% again for the month of February. However, we saw a significant rally yesterday at almost 11%, so maybe we just pull back a little bit and a little bit of profit-taking. We're down 0.3%.

There is so much volatility in this market. Let's get a broader context for you amid tariff threats and so much else for big tech. Denise Chisholm is with us, Fidelity Investments Quantitative Market Strategy Director. And you put such a historical lens, which we need at this moment, because often it feels unprecedented. Take us back to resentment right now and how it makes ultimately the context of what it was like back in the Gulf War, you say? We've never had as much pessimism?

Yeah, I mean, in some ways, we've had a very cluster of anomalous signals in this 10% correction. I mean, obviously, this correction has been one of the fastest on record, but I think the unique part of it was the decline in sentiment from, you know, you can look at the AAII measure from bullish to bearish. You can look at the Google trends in terms of recession sentiment. You can look at a lot of the sentiment indicators, the defensive rotation we've seen, just the rotation into international stocks. All of

these signals happen less than 3 and 1% of the time. And in some ways, much of it has been during war, crises, or prior recession. So without a recessionary event, this is incredibly unique. I think when you look at the signaling perspective and you're willing to take a medium term time horizon of 6 to 12 months,

All of these extreme signals are usually contrarian buy signals for the overall market. But the extreme anomaly this time is that the market isn't really down a lot, as much as we've seen a 10% correction. And even over the last six months, you can say it's flat. So to the extent that investors are uniquely concerned about the fact that

we're seeing Google recessionary trends spiking to recessionary levels to the extent that that has been the case in history. Should stocks go down to meet that recessionary sentiment, you actually find the opposite correlation, meaning the less stocks are down when you are at these peak levels.

recession sentiment levels, usually that's better signals in terms of a stock market advance in the future. It's almost like the lack of correction in stocks gets it right or that stocks are potentially looking through something. So I think that there's unique signals in the data that actually do suggest opportunity. Okay, so if you are willing to take on

the abrupt fall or two coming going forward. Are we nearing a bottom? Is that sort of the signal that you're getting from historical context right now? Yeah, I think when you look at it historically, it doesn't really nail the bottom. In terms of picking bottoms, I think that the signals that I look at from a probability perspective are longer term in nature. So when I look and say you want to look out six to 12 months and absorb the volatility, I think that there's opportunities in that. That's less to say that the bottom was yesterday or today or maybe even in two months from now.

But it is to say that after the correction, I think that it might be too late to be bearish to the extent that you have that year-long time horizon. And Denise, what we've seen is a real flip around in terms of who's outperformed, healthcare dominating, even a bit of financials, but technology has lagged. Is it now that we start to see people recommit? Have fundamentals changed at the same time as human anxieties and any pessimism across the broader markets?

Yeah, so back to that defensive rotation. The defensive sectors in the market, consumer staples, healthcare, the old telecommunication services, and utilities have outperformed by about 1,100 basis points. That, again, has only happened less than 3% of the time in history, and you usually see a cyclical rotation after that, despite the fact that fundamentals may, in fact, deteriorate, which is to say that, look, a lot of that concern around numbers or around the economy has been somewhat priced

So I do think that there are opportunities in technology. I think the intriguing part about technology is that we've seen really more multiple compression than we have seen a decline in earnings estimates. So once you're out of that top quartile, when I look back in history and say, okay, you're out of the top quartile of relative forward PE or even relative trailing PE, and you're now into that muddy middle, you usually have a positive risk reward to the extent that fundamentals continue to improve. Yeah.

And the positive risk-reward dominates in any particular part of technology? Are we still thinking hardware? The picks and shovels are where we reallocate? Or does software, which hasn't had so much whiplash, continue to support too?

Yeah, so I think software looks the most intriguing in my data set. So again, we have the data going back to 1962. And once you're into that bottom half of the distribution on any valuation measure, and software is there, so you're getting in, again, cheap relative to usually where software trades, you usually have a positive risk reward. Again, you don't have to necessarily be right on fundamentals because you have

above 50/50 odds of outperformance even if fundamentals tend to deteriorate. This isn't to say that software is set up to outperform right this second, but it is to say that it looks like from a historical context your downside is limited and to the extent that you have a call option for future growth, your upside is actually shifting the positive risk/reward. So I think

I think that of the three major subsectors, hardware, software, and semiconductors, software looks the most intriguing to me. A glass half full kind of a feeling coming from Denise. We thank you so much for joining the show. As always, Denise Chisholm of Fidelity Investments. Now, ARK Invest's Cathy Wood actually spoke exclusively with Bloomberg over at the HSBC Global Investors Summit in Hong Kong to discuss the global economic outlook. Let's give the context of how AI can help in the long term. Just take a listen.

We think the economy is getting hit by a lot of uncertainty. And I think a lot of people are scared for their jobs in the U.S. Anyone

Anyone involved with the government, so federal, state and local, or quasi-government in the health care and education space, that could be as much as 30% of the labor force in the United States. And then we've got AI as another layer of uncertainty. We're seeing middle management teams actually being let go.

because of the productivity gains associated with AI. You know, their bosses can handle more and more and more over time. So that's another source of uncertainty, but we think that is going to play out positively longer term. Technology and breakthroughs in technologies

are always associated with new jobs that we can't even imagine. We're very impressed by what is going on in China. And of course there was the deep-seek moment, which for China, or it was the equivalent in China and the rest of the world, that chat GPT was in late '22, I think. So that was a big wake-up call. And one of the things we learned, so interesting, is that

Yes, they may have done it less expensively, maybe much less expensively. We're not quite sure about that. But the algorithm is very creative. It had not been created in the West. This is from China. It is open source. So now everyone is starting to use it. They say, "We love that idea, and we're copying it."

What we've also learned and did not know until we started studying this open source movement here in China is that it really started a decade ago because a lot of software providers from the Western world were not providing their software to China out of fear of IP theft. So China said, "Okay, let's do it ourselves and move open source."

I love open source and I think it's going to create a lot of competition out there which when it comes to innovation is a very good thing especially for the end consumer.

ARK Invest's Cathy Wood there. Let's keep talking about competition. Stick with ChatGPT and the impact. For decades, Google dominated online search. But now generative AI and the competitiveness coming from open AI are forcing the company to rethink its most well-known product. Bloomberg's Julia Love joins us now today for Bloomberg's Big Take.

Elizabeth Reid is a Google veteran that you really shine a light on in your Bloomberg Businessweek story because she's now got some big overhauls to do and she's doing them.

Yes, so Liz Reid is a fascinating rising star within Doodle. She is now in the top job leading Doodle Search. And she came to this role from the Maps Division. That's where she spent most of her career. And so while she knew Search very well, she was a little bit less wedded to some of the traditional ways of doing things. And she brought a more experimental spirit

that has been really crucial in this new age when so many of the basics about search are being challenged. And here comes AI overviews, for example. Now, just go back in history a little bit and talk about why there was a lack of real innovation on the product side of things. Why were people curtailed from upending what we all knew and understood in terms of the blue links?

Yes, with our reporting, we actually unearthed some new examples of how Google search employees were pushing to roll out generative AI in search well before the launch of ChatGPT. But they faced a lot of resistance. I think there was a lot of self-regulation happening that Googlers just weren't

inclined to challenge the company's fundamental business model. Executives were also concerned about whether the technology could deliver the necessary level of accuracy because people just hold Doodle to such a high bar, a much higher bar than a startup would be held to.

And there's the frustration that actually their transformers innovation is then used by someone else. But the question is monetization. Have they really got to the bottom of that? Because many are worried. What about the ads that you can put into an AI overview?

Yes, I think that remains the big question. Google has incorporated ads into AI overviews, and so far their search market share is pretty much unchanged, but there are some concerns among analysts that growth in search will begin to level off.

And in the meantime, Google's embrace of generative artificial intelligence is raising huge concerns for all of the publishers who depend on Google for traffic. It's a fascinating story. Deep read. Go take it on with Julia Love. We thank you. Coming up, U.S. drone makers are battling for a bigger share of the domestic market. I'll speak with Skydio's CEO about the growth and Chinese competition. That's next. This is Bloomberg Technology. ♪

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The global drone market is dominated by Chinese makers, but there are growing efforts by US lawmakers, defense giants and startups to gain a bigger foothold in key markets, including the US domestic one. Joining us now is Adam Rui, the CEO of drone maker Skydio. And I love a quote that you've been making saying that basically drones are evolving from toys to tools to infrastructure. How do you break down your growth right now in those three contexts?

So I think we're at a really exciting moment for the industry where historically drones have been manually flown. You know, if you're using it for work, you send an operator out in the field to fly the drone and people have done all kinds of amazing things in that kind of operating paradigm. But the big shift that we're seeing now is you can put the drone in a docking station. It can be flown remotely and autonomously. It basically becomes a fully autonomous robotic system. And the impact and the use cases that you unlock when you do that are just incredible. So...

One of the areas where we're seeing this accelerate the most is in public safety, where you can put drones in docking stations and they can autonomously fly out in response to 911 calls and just fundamentally change the outcome because they can get there in a few seconds. They give the responding officers better situational awareness. And, you know, I think we're at the beginning of this just entirely new chapter of drones as infrastructure. Talk to us about the chapter of U.S. versus Chinese-made drones in this conversation.

police and fire department demand, how much are you now able to fulfill it? So there's interesting historical context here. So if you think about what a drone is at its core, it's basically consumer electronics combined with a radio-controlled airplane, a radio-controlled helicopter. That's the origin of the industry. And historically, both those things have been made in China. And so the Chinese companies really got out to a substantial early lead, especially in the kind of toy market and then the tools market.

um you know we believe very strongly it's it's critical that there are strong u.s companies strong western companies that can provide this technology i think we're it's still early days for the industry it's going to become more and more important over time you know we're installing these things across our cities across critical infrastructure and the the risks from a data perspective from a national security perspective from a cyber security perspective are substantial our goal

is to build the best products in the world for this new chapter of drones right here in the US. We made very big early bets on AI and autonomy when we started the company 10 years ago, and we're now at the moment where we're starting to see those pay off. Yeah, and Adam, talk about the payoff though, because when we think about what China has done so well, it is about efficiency, it is about the scale at which they've been able to streamline production. How are you now managing to replicate that here in the US?

So, you know, this is not the kind of thing that's going to happen overnight. The strength of China and the Chinese companies that we compete with is definitely in their hardware scale, their cost leverage, the hardware ecosystem that they're taking advantage of in China. We've been manufacturing our drones in the U.S. from the beginning. We didn't start doing this, honestly, because we thought it was going to be critical from a national security perspective. We started doing it because we felt like it was the best way to build the best product.

And we've gotten to the point now where we ship close to 50,000 drones, which is still small relative to our Chinese competitors. But our market share in the enterprise segments that we focus on, you know, public safety, critical infrastructure, like energy utilities, is substantial. And the more scale we get up to, the more cost advantages that we get. I think from a capability standpoint now, just on the hardware, you know, we've gotten to be very competitive with the Chinese companies and we have more advanced capabilities in AI and autonomy.

So, you know, it's tough competition for sure. You know, we have the exciting position of being the US underdog against big Chinese incumbents, but I feel very good about our position and I think especially as these things become more AI-driven, more autonomous, more and more capabilities defined through software, that really plays to our strengths as a country and as a company. Are they becoming ever more supported by the administration? What's on your wish list?

Well, look, we're a product and technology company. We're really focused on making our products as useful as they can be. I think that looking back now, I think the first Trump administration deserves a lot of credit for recognizing the nature of competition with China.

the kind of unfair trade practices that they had been partaking in. And that has now become kind of mainstream consensus view. I will say with the new administration, we're very optimistic about seeing a lot of people from the tech world in there that I think really understand that technology at a deep level. And, you know, it's still early days, but we're optimistic. Skydio CEO Adam Rui, thanks for the optimism and for joining us.

Levittown, it's a new six-part podcast series from Bloomberg investigating the rise of deep fake pornography online. It tells a story of a group of young women in a New York City suburb, horrified to learn that their photographs have been manipulated and posted online and how they took matters seriously.

into their own hands. Rhymergs Margie Murphy joins us now for more. You go back to 2020, you discuss how a female called Kayla in particular finds a manipulated photo of herself online, but this is a global story of issues of deepfake pornography, but start here in Levittown. Absolutely. I mean,

We start with Kayla and just to, it's not even Kayla who discovers a seemingly pornographic image of herself. It's her father. And we take you back into her bedroom when her father comes in, hands her a phone and says, what is this? And then we unravel what kind of becomes this horror story that engulfs dozens of women in Levittown, but they later realize they're part of a small network, a kind of

global clearinghouse of deepfake pornography, non-consensual deepfake pornography, revenge porn, harassment, all connected to one website, which Olivia and I tried to find out more about and meet lots of investigators, prosecutors, victims all around the world.

Of course, you've been doing your work with Olivia Carvel here at Bloomberg. And the story podcast, of course, based in 2020, and then you wrote up a key piece in 2023. But is this all still an issue that we're currently seeing? Right. So the story that we're covering began in 2020. We reported on it 2023, and now 2025, we've got this podcast coming out.

a lot has changed. The problem has not gone away. We've seen dozens of school cases where there's been children deepfaking their classmates. We're hearing obviously more about celebrity non-consensual deepfake pornography. And this is amidst the kind of rise of generative AI, improvements in technology. And we got a figure recently from a traffic analysis company that showed that

there was a 600% increase from last year for nudifying apps. And those apps are the kind of, they're like phone apps that are very easily accessible. And what they do is you can just screenshot a photo from someone's social media account, run it through the app, and minutes you've removed the person in the photo's clothes. So a lot of those apps are involved in these school cases. And those are just completely soaring in popularity. Very cheap and easy to use.

Briefly, law enforcement, is targeting it? The government targeting it? It's been a challenge and we've spoken to law enforcers, cops, prosecutors, lawmakers. Internationally, it's challenging because there are patchwork laws in different countries, in different states in the US they have different laws.

Right now, there is hope that an actual federal law will be brought into force. A bill passed through the Senate last month, and it will go through the House this month, hopefully, the Take It Down Act, which would put pressure on...

the platforms where these images are being shared to take the images down as quickly as possible and also penalize the people posting them. The right time to catch your full Big Take podcast series, therefore, on Spotify and iHeart. We thank you. This is Bloomberg Technology.

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