Apple Chooses Alibaba For China AI, Elon Musk Continues OpenAI Feud
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From the heart of where innovation, money and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. Live from New York, I'm Caroline Hyde.

and i'm jackie devalos in san francisco this is bloomberg technology coming up apple's iphones will use alibaba's ai technology or the partnership helped apple revive iphone sales in china plus reddit shares fall as user growth underwhelms we talk with the coo about google's algorithm and its in-house ai and the feud between elon musk and openai it continues with musk saying he would drop his bid for the startup if

It halts its for-profit restructuring. Drip feed news, this coming as reports that yes, Alibaba is going to be lending its AI, generative AI technology for Apple intelligence in China. Crucial in terms of market share for this all-important geography. But will it remain?

main exclusive. There is so much to talk with Bloomberg's Rand Vlastelica about it, about the importance of China. But this is Joe Tsai, of course, the chairman of Alibaba, confirming previous reporting out there that Apple is getting its first generative AI partnership in China.

Hey, thanks for having me. So this is a big development. China is obviously a major market for Apple. I think they got about 17% of their revenue from the greater China region in their most recent fiscal year. They have been seeing a little bit of struggle there in terms of sales. They're seeing increased competition from companies like Huawei. So the idea that they can get sort of really strong AI features onto devices there in China that is seen as a real opportunity for them to kind of improve their fortunes there, and that would help with

overall growth, which is something that investors have been looking for for quite a while. Talk to us about some of the mechanics behind the manufacturing. I'm talking about the tariff risk. How are investors thinking about this potential risk as it relates to Apple?

So Apple's really in sort of the crosshairs here because it does have such a major manufacturing hub out of China. Now, we have seen tariff levied, I think it was 10% tariffs. China retaliated. It also had some kind of probe looking at Apple App Store policy. So there's certainly a lot of

questions here. We don't know how long tariffs might be in place for. We don't know if there's going to be an escalation. We don't know if Apple might get some kind of exemption the way it did during the first Trump term. So far, it seems like people aren't seeing too significant an impact to earnings from this. But this is something that could clearly escalate and become a much bigger issue very quickly.

And certainly we've seen the ramifications on the stock price from investigations coming from China from a regulatory perspective and certainly Germany also looking into it on the day as well. Ryan, point us forward from how this bakes into a valuation on Apple. As we see over the last five days, we're up 2.7%.

Yeah, recent performance has been pretty good. Overall, it has been an underperformer this year because of the early concerns about how strong iPhone 16 demand was and, you know, the overall kind of geopolitical environment. You know, the stock has have a pretty high multiple, given the fact that the growth is not what you're seeing in some of the other mag seven names.

But people do consider it a pretty defensive and sort of safe haven kind of company just because its cash flow is enormous. It spends billions of dollars on buybacks. It hasn't been plowing a ton of CapEx into AI, which has become a concern for some of the other stocks. So there's certainly still reasons to recommend it. You know, services growth, you can kind of go down the list of

issues like that. But do you think overall, I mean, people have been looking for a more pronounced growth inflection from the company. And when you have all these concerns about tariffs and China and so forth like that, that does make that a little bit harder in the near term. That's Bloomberg's Ryan Westelica. Thanks for joining us. Meanwhile, shares of Intel are rising and on track for its biggest one week jump in 25 years. This has a report from Baird says that the company could

could be in talks to work with a TSMC on a potential project. For more, Bloomberg's Ian King joins us now. Ian, Intel has had a turbulent couple months, its CEO being ousted. How much does Intel need a project like this? I think in general, we've seen the stock go up over the last few days. There's been a lot of speculation.

What investors want is something to happen from the outside that could help Intel because they've seen over the last couple of years that it really hasn't been able to change the direction of its fortune. So whether it's JD Vance talking in Europe about, hey, we need to do a made in America, whether it's speculation in Asia about it potentially getting help from partners who are currently competitors. Investors are just looking for something, you know, give me a sign, give me a spark.

Talking of spark and signs coming at the moment from Apple, I just want to return to some breaking news. Tim Cook is indeed posting about the next member of the Apple family coming on February the 19th. We're up 1.2%. Much has been reported about the latest cheaper SE revamp coming from our own Mark Gurman previously. But at the moment, all the statement coming from Tim Cook is we are awaiting the newest member of the family of Apple. And you go to...

the ex-post from Tim Cook, the CEO of that business. Ian, sticking more with what's occurring on the manufacturing side of things and what's happening with Intel, we know that maybe they'll look at outsourcing manufacturing, doing deals with TSMC, but more broadly, how in line with this is what Pat originally wanted or how much of it is a distinction from previous leadership?

Yeah, I think we have to be careful here and point to there being a lot of speculation. We don't actually know that much is happening right now. What we really need is big customers. If they get the big customers with huge orders that give them a lot of volume to fill those factories, then the plan is on. Then what Gelsinger tried to put in place is actually paying off. Until we see Apple or Incubus

Nvidia or somebody else like that putting lots and lots of chips into Intel's factories the plan is not really going anywhere in King and all things Intel which might say has been on quite the crescendo in the last three weeks in terms of its share price let's go to noon breaking news SpaceX we understand in South Africa the talks are stalling over tensions with Elon Musk

and with President Trump. SpaceX and South Africa, the negotiators intend to restart talks later. This is all about SpaceX's adoption and its satellite use in South Africa. We'll have more on that as and when we get it. But coming up, we'll be joined by Reddit COO, Jen Wong, to break down the company's earnings. That's coming next. This is Bloomberg Technology. ♪

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Let's look at Reddit right now. Shares are down. That's after fourth quarter user growth missed Wall Street's expectations. Look, we're having the worst day since November the 22nd. Reddit itself saying user growth was indeed impacted last quarter after Google made a change to its algorithm that impacted search traffic. Let's dig in. Reddit COO Jen Wong joins us now. And Jen, just talk to us about how

How this quarter is currently looking in terms of the reaction to Google's overall algorithm change and how you drive your own fortunes when it comes to the use and adoption and staying with Reddit?

Thanks for having me. Good morning. Q4 was a really strong quarter for us. We saw daily active users grow 39% year-over-year. The revenue grew 71% year-over-year. So I think in terms of growth, we're probably top of the market in terms of both of those. It's hard to find a company that's growing as fast.

For the things that we control in terms of making the product better, making it easier, helping people find communities faster, we're really happy with our work. Our work is working, and that's been consistent over the last four quarters. And there's a lot more there. We're still early in that process. In late Q4, we did see that there were some changes in Google. That sort of came and went. We've seen recovery since then, and we're off to a really good start.

And the work that we're doing again continues to bear fruit in making Reddit more extensible.

Reddit is an opportunity, has an opportunity to address everybody. The whole world needs community and has passions and interests and can be on Reddit. So we make Reddit easier, more accessible, help people find their communities faster. That's when it becomes extensible to everybody in the world. So our TAM is really everybody. We're just early in that journey. So we feel very good about our roadmap and our opportunity.

Jen, Reddit has a licensing agreement with Google and in the earnings call yesterday, the company called that relationship symbiotic. So the faster that users can find Reddit on a Google search, the more engaged they can be on your website and then in turn, the better data that Google is able to glean. Have you had conversations with Google about maybe cutting you some slack or at least giving you guys a heads up next time there's an algorithm change?

The way that Google works, you know, Google, the way the algorithms work is their proprietary work. The conversations we've had are around, obviously, the Reddit data and how that can be used for training and for in their search generative products. There's no question that it's a symbiotic relationship in that sense.

What happened last year, I think, in searches demonstrates this. So Reddit has become the sixth most searched term in US in Google. I mean, that's incredible. That means people are intentionally searching for Reddit. They're typing in a query. What's the best backpack? Reddit. Because they are trying to navigate to the recommendations and the trove of human intelligence on Reddit.

And because Reddit has the best answers on the internet and Google is a place where people go for broad-based questions, it's a really symbiotic relationship. And that helps reveal the core corpus of information that Reddit has to users who are searching the broad-based internet. So in that sense, you know, it's been a very fruitful partnership.

But if it's getting harder for users to find a Reddit link via Google search, do you see this kind of algorithm change or similar ones in the future straining that relationship?

We've been beneficiaries of the open internet. And again, when people are intentionally navigating to Reddit, that tells us that they are trying to access that information on Reddit, the recommendations, the advice. So I think we're really important because we're actually what users are seeking, right? They're actively searching for us.

The way we think about it is this whole process of data licensing has really, I think, revealed how important Reddit's content is. And we also have an opportunity to build our own products around our corpus of information. You see this with us testing something called Reddit Answers, which is a chat-based search that reveals recommendations on Reddit. Again, what's the best backpack? But it gives you a search result that is...

specific to Reddit that shows answers and opinions across every subreddit. A really different experience from broad-based internet search. And I think we have an opportunity to continue to build our own products around our corpus of information in addition to being in sort of broad-based search on the internet. So speak to those analysts or investors with some anxiety about the dependence on Google. How much

is Reddit Answers boosting the engagement that you control?

Reddit Answers is early right now. It's in a beta test, but we like what we're seeing there. I think the thesis of people wanting to come and be able to search Reddit and see what is happening across opinions across all communities, that thesis, I think, is borne out. And so we're excited about what we see there. We are investing in search, search of Reddit, and there's an opportunity for us that will continue to be building out.

When I think about the opportunity here, it's enormous, right? I mean, recommendations and advice. We have 20 years of conversations on every topic on the planet. And so it's core to our mission to empower communities and make their knowledge accessible to all.

That's Reddit COO Jen Wong. Thanks so much for joining us. We also caught up with the CEO of Lyft yesterday on the heels of the company's earnings. We discussed his outlook on autonomous vehicles and competition with the likes of Waymo. And he says Lyft's market share in San Francisco has not moved. Take a listen.

In San Francisco, it's flat. Interesting is even as they increase in San Francisco, our share has been flat. Now, so that suggests that the market is expanding. Maybe it suggests that they're taking some share from the other guys. I don't know. In Phoenix, we're actually growing faster than average. So we grow about 15% nationwide. In Phoenix, it's a little north of that. So that also even and Wim was quite active there.

So it's a great product, it's great technology, but I think a lot of people come and they use it and they like it and then they come back to traditional ride share and use this both. Your competitor Uber said it would, quote, "hopefully partner with Tesla on autonomous vehicles." They said that last year. Has Lyft had any conversations with Elon Musk or Tesla about a potential partnership? You know, I don't talk about individual things like that. I think, you know, there's this sort of danger of kind of trying to win the press release and announcement war and we try to win the service war. That's kind of our thing.

So I won't say not. I think it's I think there'll be all kinds of partnerships. I really do. And the ones that happen, we'll kind of have to see. The incoming transportation secretary, Sean Duffy, has proposed that a federal level law should kind of supersede this patchwork of state by state rules for autonomous vehicles. Do you think this new administration would help lift ambitions in autonomous vehicles? I do.

I do. Yeah, the state-by-state thing is really hard. I mean, you understand you want to do some local experimentation. And different states are different. They have different cultures. They have different geographies, different weather, and so on and so forth. But an overall sort of safety kind of framework and general autonomous vehicle framework I think would be very helpful in helping this industry move a little bit faster and, frankly, keep up with the way the rest of the world is going.

That was Lyft CEO David Risher. We're also watching shares of Coinbase. Shares are up over 6% because it's a key beneficiary of President Trump's promise to usher in a new era for the crypto space. The exchange is reporting fourth quarter results after the bell today. And Wall Street is expecting to see a boost in trading volumes on the back of Bitcoin's gains.

Blue Origin, Jeff Bezos' rocket company, is cutting 10% of its workforce to cut costs, to trim manager ranks, and to focus on ramping up rocket launches. And the surprise round of layoffs comes about a month after Blue Origin debuted its flagship New Glenn rocket, throwing years of delays and development setbacks. Jackie.

Startup K2 Space has raised $110 million in a Series B funding round led by Lightspeed Ventures and Altimeter Capital. The company, created by former SpaceX engineers, is developing a platform to launch multiple satellites into orbit at higher speeds and lower costs than currently available. Joining us now is K2 Space CEO, Karen Kundry. Thank you so much for joining us. Thanks for having me.

about what your platform actually does. It's essentially almost like a bus for satellites. How are

How are you able to do this at a cheaper price? So we're building a platform that is 10 times more powerful than existing platforms today. When it comes to applications in space, almost every application ties back to power. So my brother and I kind of started the company on a contrarian bet. We decided to go the opposite direction of the market that was going smaller and lower power with our satellites and redesign the satellite from the reaction we all up to build a platform that is higher power, higher capability, while still being able to multi-manifest into launch vehicles to do constellations.

The market has come to your contrarian bet because SpaceX is Starship, just the innovation in terms of bigger and bigger rockets being able to pay, take these bigger and bigger payloads. I'm interested in ultimately what the manufacturing therefore is needed in the United States because you're vertically integrated.

Exactly. Yeah. Launch players like SpaceX and Blue Origin are moving the market larger. We kind of equate it to we're moving from an era of launch constraint in space to launch abundance. It's almost as if we're operating in the age of dial-up internet and moving to broadband.

Our company was started under this premise of like what happens at this new age of broadband where we can do things differently. For us, it's vertical integration. It's rebuilding the satellite. We're building about 75% of the satellite in-house. And that allows us to do a lot of unique things to optimize the platform for the launch future that we see coming, not necessarily the launch vehicles of the past.

You've already brought in millions of dollars worth of contracts, both coming from the public sector, but also commercial contracts. We've heard a lot about the DOD getting inside Silicon Valley, trying to scoop up some of those startup ideas. But talk to us about your commercial partnerships, because there's a lot of space companies out there right now. Yeah, the interesting thing about going higher power...

when you 10x the amount of power, you also dramatically increase the throughput per satellite. So our commercial customers are mainly commercial operators that are beaming data down from space that see the potential when you have 10 times the amount of power to fundamentally change the unit economics of their business.

Higher power means more throughput while maintaining the low cost means that they're actually able to deploy even more satellites with even more capacity on orbit in a way they never could before. So are these like SpaceX, Blue Origin, those kind of players? SpaceX and Blue Origin are two of the players, but there's a bunch of others out there as well that are also thinking about how to better operate their constellations on orbit.

What's so interesting is the government side of things as well, Karen. And you've got John Plum, of course, who used to be in government, former Assistant Secretary of Defense for Space Policy, in-house now. But how is it liaising with the current administration? Look, we've just had breaking news that a deal with Starlink over in South Africa is in jeopardy because of relationships between Elon Musk and President Trump. How are you finding relationships?

Yeah, we were pretty excited to bring John on the team. He was the former Assistant Secretary of Defense for Space Policy. When we first briefed him, he kind of saw what was possible with this completely new platform. At the end of the day, we believe that if we build a platform that is as differentiated as what we claim it to be,

Our work with national security and commercial customers will come regardless of the political environment. What I will say is that the existing administration has clearly shown that they believe space is the next frontier, an important place to have investment, and we're pretty excited to continue to service our national security customers. News today that Blue Origin is cutting 10% of its workforce. Are you worried at all that that signals a broader slowdown in the space in any way?

Yeah, it's, you know, we have a lot of friends that work over there. We're pretty sad to hear about that. And, you know, we'll be trying to hire ourselves people that may be leaving from that company. I think layoffs and investment are always a part of the natural capital cycle when it comes to any business.

You don't like to see it, but sometimes that happens. And so I don't think it's indicative of a broader trend. I mean, we were preempted on our Series A 13 months ago. We were preempted again on our Series B two months ago. We've raised about $180 million in venture capital to date. We're not seeing that. What we see is if we're truly building something that's different with a differentiated team that's going after it, the capital is there to fund our vision. Okay, so potentially hiring up some of that talent that has to be pushed out.

Talk about next steps. Where next do we see K2 space? You've just this month, well I think it was in January in fact, flying several technology demonstrations using SpaceX. What's the next key marker?

Yeah, so we just finished up our first successful in-space mission. So as we like to say, we're now a real space company. And yeah, we were pretty excited to have that because, as I said, we're kind of resetting the entire supply chain. So we had to fly a bunch of the components that we built from scratch to start buying down risk on the full platform. We're now shifting gears. We're moving towards the full satellite platform on a mission that's called Gravitas that's launching February 2026.

We won a $30 million contract back in December from the Department of Defense to fly a number of national security payloads. And our goal is to basically showcase this differentiated platform and buy down the entire risk of the platform. We're going to fly to the harshest environments. We're going to test the platform. We're going to show what happens when you have 20 kilowatts of power. And we're really going to prove out this completely new capability to our customer set.

LEO, MEO, all the EOs, Karen, Kunja, we thank you so much. CEO of K2 Space, it's great having time with you. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.

And I'm Jackie Davalos in San Francisco.

down 31%, a rare miss for the advertising-focused business. And this is, as Fundamentals said, they disappointed themselves in terms of their own growth in the previous years. So investors really trying to take on board what this means in terms of sentiment for advertising and trade desk more broadly. Datadog also under pressure up

eight percent down eight percent this is as they too see an underwhelming forecast in particular and really trying to see from an analyst and investor perspective this is just conservative if actually the cloud trend is going to be good for them in the long term and indeed some of the generative ai adoption for the software company move on to generative ai story of the day apple

Because finally, we'll get some Apple intelligence into China because it seems though Joe Tsai over, of course, at Alibaba is confirming that yes, the reports are true. We are going to be teaming up with Apple. We're going to be giving them access to our generative AI models and you're going to get Apple intelligence in China. The first of these deals will remain exclusive for long. Jackie, what have you got?

Elon Musk's bid to buy OpenAI is being used against the tech billionaire. Lawyers for Sam Altman argue that the offer ultimately contradicts Musk's arguments

that OpenAI cannot be transferred away for private gain. In response to OpenAI's filing, Tesla CEO told the court he'd drop his bid for OpenAI if the company halts its restructuring. For more, Bloomberg's Rachel Metz joins us now. Rachel, does this feud risk slowing down OpenAI's progress?

That is a possibility, at least as far as the progress toward the restructuring. It certainly puts more attention on what's happening there. And they're in the middle of what is no matter what going to be a somewhat lengthy process. And it certainly, you know, with the court battle that OpenAI and Elon Musk have, this puts like one more, it's like one more way to gum up the works.

And I think we've got to remember the context, the complex context to all of this. 2015, Elon, Sam, other founders make a not-for-profit. 2019, it becomes in part a for-profit with a cap for profit that the non-profit controls. And now, well, that might reverse as to who controls whom.

It's very complicated. And you can see how that structure itself also makes it hard to even understand if you are putting in a bid for the startup portion of the company and that's in its assets. Like, what exactly are you buying? How much should it be valued at? So, yeah, it is overall just a very complicated situation. And then if you put in a feud there, yeah, you're making things ultra complicated. Yeah.

Well, the media and spectators are here for it. Rachel Metz, we appreciate your time and giving us the context. Meanwhile, Adobe, sticking with generative AI, is aiming to convince skeptical investors that it can compete with AI startups, such as OpenAI. The company introduced a new product that charges around 50 cents per AI-generated video. Now, it also launched new subscriptions for its Firefly AI models. For more, we're joined by Bloomberg's Brodie Ford. Interesting that we get the price point here.

Absolutely. So Adobe, it's really existential for them. In the pre-AI era, if you needed to edit some photos, some videos, you needed Adobe. The big question for the last two years has been, once generative AI becomes more commonplace, do you still need Adobe? And it seems investors change their mind every six months.

And so today what is so interesting is that we are getting, you know, it's going to be about 50 cents a pop to make AI videos. That's pretty competitive with some of the startup rivals, which is meaningful because the startup rivals don't have to report every quarter. They can eat some costs a little longer. So it's interesting to see them price what I would think as somewhat aggressively here. Brody, let's talk about the product itself. How does it compare with what's already on the market? Because OpenAI and even Runway also have competing products.

I thought it was pretty cool. I tried it out yesterday and I found it to be a pretty effective product. It worked well. And what Adobe has always said is not that we are going to have the number one best model visually, but that we're going to have really great controls. You're going to be able to integrate it with the software you already use. You're going to keep it in the ecosystem.

In general, especially for enterprises, they don't want to have a bunch of bespoke models coming in with potential security risks. And so Adobe has really tried to make sure that it integrates well into existing environments. And I was impressed with some of those manual tools when trying it out yesterday.

Brodie Ford, across the Adobe News. We appreciate it. Thank you. Let's bring you some macro news, government news here. Robert F. Kennedy Jr. has indeed been confirmed as a new head of the U.S. Department of Health and Human Services. He was approved with a 52 to 48 vote after pretty tense confirmation hearings. And will now, of course, have influence over the FDA, the CDC, and the federal insurance programs.

Morgan Stanley boosting the latest debt offering of Elon Musk's X. Now the bank will upsize its offering from the marketed $3 billion to $4.7 billion, all due to strong investor demand, Jackie. Here's what some of Bloomberg's TV guests had to say about DeepSeek at the Paris AI Summit taking place earlier this week.

I feel so confident about our research roadmap and also our product roadmap that, you know, DeepSeek will do whatever DeepSeek is going to do. Other people do whatever they're going to do. And we're just going to try to like build the best technology we can and get into people's hands. It's a very impressive model, very impressive piece of work. I think the team is probably the best team that I've seen come out of China. So that said, I think a lot of the claims are exaggerated and a little bit misleading. A lot of the key things from DeepSeek are...

reducing the cost of innovation but also raising this question of data control. If you have potentially more constrained resources you can make a better job than if you have immense resources and stop thinking about what to do efficiently. I think there's been a lot of excitement but we'll have to see if it materializes.

Let's get to the infrastructure question in the age of deep seek with today's VC Spotlight with Anjane Mita, General Partner at Andreessen Horowitz. Anjane, where does this leave the conversation around how much infrastructure we actually need? What were you hearing on the sidelines of the PEAR Summit?

I heard that we are in the era of infrastructure independence. Basically, I think most large nation-state leaders have realized that modern AI models have risen to the level of general purpose technologies. In the history of humanity, we've had maybe 20, 22 of these: electricity, the printing press. And when that happens, leaders start realizing that that technology becomes critical to national progress. And so that's what I heard from President Macron and Prime Minister Modi. The summit was co-hosted by France and India.

And I also heard from JD Vance at the summit that the United States believes that now staying at the frontier of AI infrastructure and making sure that open source is competitive, American open source is competitive, allied

open source is competitive with the best models coming out of any country, including China. Well, speaking of China, when we have the biggest players, China and the US, with kind of different values competing against each other, you've talked about what you call joint ventures between nations that perhaps don't have the resources on their own to compete in AI. Talk to us about that.

Yes, one of the atomic units of AI is the data center, right? Because if you sort of look at the history or the ingredients of how we got the current deep learning wave, there's really three or four of them. There's compute, there's data, there's algorithms, and there's regulation. And so when it comes to compute, the idea is that

There are only some regions that have enough compute and access to the power that's cost competitive to stay at the frontier. I call these hypercenters. We clearly have at least two hypercenters now in the world today. We've got America and we've got China. And I think every other major nation is now hitting a reckoning point where they're trying to figure out, do they build, do they buy, or do they partner?

And so I think I'm quite bullish on the US and her allies teaming up across what we call the infrastructure stack. So at the lowest level, you've got chips, and then you get into models, and then you've got applications. And I think it's going to be much more likely that countries that aren't hypercenters today pick which hypercenter they want.

their value system the most. And then they work on joint ventures across the stack. Because I think it's quite unlikely that people reinvent the chip stack for them. They're much more likely to partner with a country that does match their value system. And I think clearly in France, America, France, and India were teaming up.

You're on Mr. Aal's board. We were hearing from Afrin a little bit ago, the CEO of Mr. Aal. So has France got it right now? Is that going to become a center in some way? They're committing to their own infrastructure build-out or they ultimately have to depend on the U.S., at least for chips, for example?

So the zeitgeist has definitely changed. I think from the last two summits, you know, the first that was in Seoul and the last one which was in Bletchley Park in the UK, the overarching theme was one of pessimism. You know, AI is really risky, we've got to think about the downside. And instead what I heard this time from leaders across the EU, by the way, not just France,

was the idea of optimism, that AI actually can unlock massive growth for Europe and for America. And I think that France is in the middle of figuring out how to accelerate its infrastructure. I think they have a huge head start when it comes to nuclear adoption, but when it comes to data center construction, they're clearly behind the United States, and they're happy to accelerate permitting and construction, and at the same time, they're happy to work with

American chip companies like Nvidia to actually rack and stack frontier chips in these data centers. So I think you're going to see over the long term Europe start to accelerate, but in the short term I think they're going to partner with folks like America. And the administration is cool with that? Because you have close proximity to the administration with A16Z and at the same time doesn't see relations are at their highest moment right now.

Well, look, the best thing about this administration is they share everything very publicly. I think JD was very clear in his speech in Europe that we're putting America first and we will partner and help our allies too. And, you know, NATO is a huge priority for America. And so I think we'll just continue seeing more investments in NATO alliances.

Andreessen Horowitz is an early investor in OpenAI and you're also on the board of Mistral. I'm just curious, what do you make of this feud between Elon Musk and OpenAI? Does it have broader implications for the progress for other players in the space? Definitely. Ultimately, where the frontier goes has implications for all of us. But I think the important thing to focus on is that

You know, just a year ago, there were lots of folks who were confidently testifying in front of Congress that America was so far ahead of China that China could never catch up. And I think what we're seeing is, one, the gap between open source and closed source has narrowed. That's something those of us in the open source community have been paying attention, have known for a while. But more importantly, the gap between America and China has narrowed as well. And incredibly fast. You know, O1, which is

One of the most cutting-edge models from OpenAI came out on December 5th and barely a month and a half later is when DeepSeek R1 came out on January 25th and it's comparable. And so I think the more important dynamic to pay attention to is that that gap has closed, especially between America and any adversarial nations that aren't in our alliances like NATO. What about Elon Musk's influence in Washington? Do you think that could have broader implications for other AI players in the space?

Oh, absolutely. I think Elon is an important voice, but I think the reality is that we are reaching a state

of disequilibrium in AI infrastructure, where a lot of basic assumptions that people had taken for granted are being revisited, like the gap narrowing between open and closed, between America and other countries. And so I think there are a number of voices, especially in the open source community. Obviously, you just played a great clip from Arthur Mensch, who is the CEO of Mistral.

I think there are other important voices like Jan Stojka, who's a professor at UC Berkeley, who has been leading an effort called LMSIS that works on AI model evaluations. And I think those kinds of voices are also becoming much more important to nation state leaders. So I'm just really glad that at the highest levels, frontier AI and especially open source AI is getting a lot of attention.

a lot of politicization as well. And how comfortable or uncomfortable does that make you? I sat down with David Ulovich a couple of weeks ago. We were talking about American dynamism within this new administration. Then, of course, there's a relatively politicized hire, rightly or wrongly, whether it was politicized, of course, Mr. Penny becoming a deal partner. Of course, Mr. Penny

26 year old was well known for having had an incident on a subway here in New York and ultimately led to the death of someone who was homeless and there was a read on that hire. How are you feeling about the cultural impact and the perspective of the culture at A16Z this has?

Yeah, look, taking a step back, I think one of the things that's always set A16Z apart is just how strongly the firm believes in its values, right? And so in the case of open source AI, for example, I think the firm has taken a very clear position that we believe open source, the history of computing infrastructure has shown that open source is critical to unlocking

massive amounts of productivity for humanity and for society. You know, when you look at storage, networking, compute and so on, I think a lot of the productivity we've seen from software comes from a value system and a philosophy and a belief that democratizing access to the best technology, putting control of that technology in the hands of the biggest companies and organizations is what pushes

technology forward and so you know while i'm not an expert on american dynamism and i and i'm sure you can uh you know get better opinions from my partner david on that um i think the more important thing to notice is that the firm just stands by its values and its philosophies very aggressively thanks for articulating that angie media it's great to have some time with you on the future of ai and regulation and throughout with general partner andreessen and holowitz jackie

Coming up, buy now, pay later firm Klarna has added to JP Morgan's payment platform. Klarna CEO joins us to discuss what it means for the startup's future. This is Bloomberg.

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Robinhood reported revenue that more than doubled as the online trading firm was buoyed by crypto market transactions around the US presidential election. Here's what the CEO just had to say on Bloomberg's open interest. Take a listen.

A lot of people focus on crypto and we're certainly going to be in a more innovation friendly environment in crypto. I think that's going to be a tailwind for our business as one of the few scaled players in both crypto and traditional financial assets.

Buy now, pay later provider Klarna has been added to JP Morgan's payment platform. The Swedish fintech company has been expanding partnership deals in recent months and it's targeting a US IPO later this year. The company's CEO Sebastian Szymankowski joins us now. Okay, let's talk about this partnership because it's a major US bank and I want you to quantify the upside of this for us. How much of a boost in revenue does this mean for Klarna?

Well, time will tell. But obviously, from our perspective, JP Morgan is probably the largest payments company in the world. They actually do $2 trillion worth of volume. And so for Klarna that does $100 billion on an annual basis, even if we're super successful with them and can get 5% to 10% of that volume over time, that's obviously a massive opportunity.

We'll find out. It's always a big partnership like this. You announce them and then it takes some time because there are systems, integrations, promotions and stuff like that. But we're very, very excited about it and super proud of the fact that JP Morgan decided to work with us. But they might decide to work with other Buy Now, Pay Later players. Is that an issue, the competition? No, I mean, I think, look, they work with both Visa, Mastercard and Amex.

And I think like the next generation of companies that you see on the screen here, they are kind of the next generation. We think of ourselves as a third party network. And I think there will obviously be others as well. So there will be others, but we're very happy to be first to announce this partnership with them. And let's talk about that third party focus and these partnerships.

Sebastian, because I know we can't talk too much about an IPO, but you've got a lot of investors to convince of the ultimate valuation of your company when you're signing up merchants but not having a direct relationship. Just tell us about the value that that has.

No, for sure. I mean, Klana have historically signed up merchants directly and that's brought us to about 600,000 merchants. But then we took a closer look at like, I mean, maybe the most successful expansion of a third party network was Amex in the last two, three decades, which went from, you know, being something you only use at restaurants and hotels to being, you know, something you can use everywhere.

And so it's all about acceptance points. And we realized that that's not going to happen by our own machine. That can only happen through these amazing partnerships with Stripe and the Adins of the world and the WorldPace and the JP Morgans of the world and so forth. So we're super happy about this. This gives us access to millions and millions of merchants to make Klana acceptable. I mean, in the US still a lot of people associate us primarily with Binampilator, but like

30%, almost 30% of our volume is pay in full, the full amount. We offer all types of payment forms. So we think about ourselves as a third-party network. Visa, Muscat, and the others need some competition. Let's stay in the U.S. for a minute, Sebastian, because here, the Consumer Financial Protection Bureau, its future is in question now that it's kind of come within striking distance of Elon Musk's doge. Is this a good thing for Klarna? Well...

I mean, look, I think we are based in Europe where there's very tough regulation, much tougher in many ways. I mean, it was actually funny. The only thing Trump said that was for more regulation was to cut credit card interest rate fees, which to me kind of made sense because, you know, a lot of markets we operate in Europe, you will see like max interest rate card can be like at 16 percent or 18 percent. Right. Well, in the U.S. is very, very different.

So I think you could expect from this administration to throw quite some tough challenges to the banks. But I think the best way is going to be more competition. And to some degree, you know, less regulation can help to accelerate more competition and to go after those excess profits that we've seen in the banking industry. So I think that the

We have always operated according to regulatory requirements, but also in addition to that, we have always said that the ethical standards are extremely important for us and to make sure that we provide services that are priced reasonably for consumers, that we don't charge too high interest or too high fees and so forth. And that's going to continue being an objective for us, whether CFPB is present or not.

All right. Well, real quickly, Sebastian, what about crypto? You called it a decentralized Ponzi scheme in 2022. Has that changed? Is Klarna planning to get into space?

I was happy you brought that up. Well, I actually this weekend after, thanks to my board member, Andrew from Sequoia, I met with a few very interesting crypto companies. And after listening to them and what's happening with crypto, stablecoins, bitcoins, I did a small tweet this weekend that said that like, okay, I give up. It's time to explore crypto for Klarna. And I thought that like everyone would be just sighing and thinking it was the most boring news ever because it feels like we're the last large fintech in the world to say that.

But I had over a million views and people were super engaged. The whole community opened up and I got like thousands of ideas of what we're going to do. So I'm excited about that now. So I'm happy, you know, sometimes you're wrong. Come back and talk with AI with us as well soon. We've run out of time. Client CEO Sebastian Chmielkowski. Thanks so much for the time. Now that does it for this edition of Bloomberg Technology, Jackie. Don't forget, your audience can go and check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Technology.

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