China Chip Controls Weigh on Market, Crypto Selloff Gathers Steam
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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 Davalos in San Francisco. This is Bloomberg Technology. Coming up, anxiety builds with China chip controls weighing on semi-stocks all ahead of Nvidia's numbers tomorrow. Plus, Tesla sales in Europe plummet 45% last month to a two-year low in the region.

And Bitcoin, it slides below 90,000, its lowest level since mid-November as the crypto sell-off gathers steam. But first, we check in on these markets that identify the anxiety, whether it's around consumer sentiment here in the United States, whether it's around chip curbs into China, technology access to China once again under the focus. NASDAQ 100 off by 1.5%.

That is the longest losing streak as well, four straight days that we've seen since the beginning of this year. We're looking at Bitcoin under pressure down by more than 7%. Is it the macro picture? Is it concerns around a hack? Is it all just dialing in to the selling pressure that we see across what is, of course, an asset, risk asset of choice for this show? Move over and have a look at the individual movers that we want to cast a light on because Tesla off by 8%. It has lost

a third of its market capitalization since its high back in December. And we're looking at currently once again under pressure on the sales side of the equation. We'll dig into it in a moment. Biggest points drag on the Nasdaq, swiftly followed by Nvidia, off by more than 3% ahead of its numbers tomorrow. We worry about the limitations of its chips

into China. Once again, Trump extending the focus of the Biden administration here. And the Magnificent Seven, just a tidal wave above, is off by 2.8%. We are now in correction territory. This total return index is off by more than 10% from its highs. We're going to dig into the key focus of the day, though, that is the chip controls. Let's bring in Bloomberg's Mike Shepard. Mike, just an extension of Biden's focus here. And once again, it is going to be impacting European technology players and the key ones here in the U.S.?

Yeah, Cara, this is a rare moment where you see the Trump administration picking up where their Biden administration predecessors left off. And that is pressuring governments in Japan and the Netherlands to get two signature companies, Tokyo Electron and ASML, to stop servicing chipmaking equipment that they have sold in China.

Now, this matters because those photolithography machines that make semiconductors are really finicky. They're sensitive. Think of a Formula One racing car. They need a lot of upkeep and regular upkeep to continue working at that level. And if you cut that off, it undermines what China and China's chip makers may be able to do with those machines.

Mike, what does this mean for Trump's approach to chip policy toward China broadly? Are there any other signs that we're seeing that might make it different from the approaches Biden took?

Well, Jackie, I'm glad you asked that because this really does signal a broader direction of travel from the Trump administration. And that was one of the big questions coming in as they took office. Might they actually pull back a little bit on some of these restrictions as Trump tries to negotiate something with trade? Remember, he is someone who tries to think of himself as a dealmaker on everything. And why not throw chips?

into the mix. But he has also declared that artificial intelligence is an area where the U.S. must maintain dominance. And the way to keep China at bay really is to deny a lot of that technology. So we've talked about possible restrictions on NVIDIA's

China's access to NVIDIA chips used in AI. This is after the deep-seek breakthrough. We're also looking at another area that Trump may pick up where Biden left off, and that is possible measures against Chinese chipmakers, SMIC and CXMT, that are

really critical to the domestic production in that country. And then finally, the Trump team is also weighing whether to further tighten those AI diffusion rules. Remember that three-tiered system that the Biden folks unveiled just a week before the president left office?

This is a signal to the market and to China that the Trump team really is trying to get tough. And companies will have to brace maybe for more, especially when you consider that there are already 10% tariffs on Chinese imports with more to come. We may hear from Jensen Wang about this too. He's expressed a lot of concern and misgivings about this direction of travel. What about hearing from China? We know that they're trying to speed up their own independence. We hear of the latest developments out of Huawei and their chips, for example, Mike.

Well, that's a great question, Carol, because we are seeing Alibaba investing. China is going on the offensive with rhetoric, of course, decrying these kinds of measures from the Biden administration and now rumblings about the same possibly coming from Trump. We heard that when the 10 percent tariffs on Chinese imports were announced.

They are also trying to invest heavily in their area. We saw the heads of DeepSeek and Alibaba meet with Chinese President Xi Jinping just a few weeks ago to talk about how to get China tech back

not only on the map, but really in the vanguard of Chinese industry. And this is after a few years of estrangement. And we're also seeing Alibaba, as I said, investing heavily in this area. But, you know, a way to counter what we're seeing from the likes of Microsoft and U.S.-based companies that are trying to really dominate in this technology. Mike Shepard, thank you so much. Let's get...

the investment analysis now. Angelo Kakafas is with us. He is Senior Investment Strategist at Edward Jones. Angelo, we look at basically the only Mag7 company now in the green for this year is Meta. All of the rest are in the red. Were you expecting this going into 2025?

I think one of our themes has been that of rotation and broadening, and that's playing out at the sectorial level, investment style, and also regional, geographic. Many people probably are surprised by the market's resilience. If you told an investor six months ago that six of the seven magnificent names would be lagging the market down the group 5% for the year, most people would have thought the market would be lower, which it's not. And I think that speaks to the still supportive backdrop that we have.

Angela, what does this tell us about how investors are feeling or perhaps some of the reasoning behind it? Is this because of the uncertainty that Trump has injected into tech markets more so as of late? Or are investors growing more discerning about tech's growth prospects? Yeah, the market has had to navigate a lot of news thinking about deep-seek.

thinking about all the tariff announcements and uncertainty and the last harder than expected CPI print. All that has been weighing on sentiment. And right now we are navigating a growth scare. It's not the first, it will not be the last.

But at the same time, looking at the last three years, it's been a pattern that we do see some seasonality, negative seasonality in the first quarter of the year. Part of that probably related to weather, some snowstorms that are dragging down consumer spending. But the broader trend remains that where corporate profits are accelerating so they don't have a need for layoffs to protect

profit margins and we have a federal reserve that is not looking to go back into tightening mode. So all that to us remains supportive but in the near term we're going to experience probably a type of soft patch for the economy in the first quarter.

And I hate to say this sort of healthy flush out or what people like to talk about it, but many are thinking, look, this is froth that needs to come out. There were so-called tourist investors that had come in and not assessed really the geopolitical element of these names. Look, NVIDIA has traded lower than this this year, but are we going to start to see dip buying, do you think?

Yeah, I think that's exactly right. We have seen some froth and we are seeing some froth come out of the market. And we all know that sentiment is a contrarian indicator. So that sets up well for the second potentially half of the year, where for a long-term investor standpoint, these pullbacks can be opportunities to really deploy capital, fresh capital, diversify portfolios. We think that broadening and rotation theme has legs to it.

And for those that are worried about tariffs and the impact of policies, we have domestic cyclical companies and sectors that can benefit from the pro-growth policies that are likely coming down the road. So far, we're getting the vegetables before the cake. In the first Trump administration, we got the cake first with tax cuts and then the vegetables. So we have to navigate through this bumpier path earlier in the year. But everyone ate the Tesla cake the minute that basically Trump was announced as the winner in Elon's relationship.

But how idiosyncratic, how focused on individual names do you have to get and actually read through what are fundamental changes in the views on certain companies like European sales for Tesla, which we'll dig into later in the show?

Yeah, I think, you know, certainly the concentration is an issue for investors and people that manage money. But at the same time, we know that the 493 earnings are accelerating and actually are the strongest in three years. So there is a lot more beyond these seven names. Yes, they are important, but they're becoming less important than they were in the past. And I think diversification is going to be a key theme for investors to pay attention to.

Thanks, Angelo. Cora Coffa, Senior Investment Strategist at Edward Jones. Thanks for joining us. Let's get a look at Tesla. Shares are down after sales plummeted by nearly 50% across Europe at the start of 2025. That's dragged Tesla market cap now below a trillion dollars. Bloomberg's Craig Trudell joins us now for more. Craig, what's behind this disconnect? Because the UK's EV sales actually grew by 40%, but you're seeing Tesla registrations fall.

Yeah, they grew in the UK. They grew in Europe broadly. I think there's a couple of things going on here. Of course, there's a lot of questions about how much of this is a sort of backlash against Elon Musk and how much of it is some things going on specific to Tesla. And I think it's

Probably a mix of both. I think we'll be able to untangle that a bit more as the year goes on. But we know that early this year, the company is changing over its factories as part of a redesign of the Model Y. That is a really important vehicle for them. And so that's definitely coming into play here. But I think the fact that he inserted himself in politics in Germany and in the U.K. so emphatically last month really raises a lot of questions.

Has there been much data drawn from whether this is a consumer reaction, knee-jerk reaction to Elon Musk's own behavior? Because one month doesn't an entire trend make, as you point out. Yeah. No, it's very fair. And I mean, we don't unfortunately have, you know, sort of

the equivalent of exit polls at dealerships, right? Where people tell us, you know, well, I bought this Renault or this Volkswagen because I didn't like Elon Musk. But what we do know is that, you know, some polls were taken in some of the biggest EV markets in Europe in January, and they did not look very good for Elon Musk. And so, you know, for him to be increasingly unpopular in some of these places and, you know, for him to take these stances that, you know,

are unpopular, whether it's kind of taking these -- supporting far-right parties or taking this hard-line stance against Ukraine. These sorts of things potentially put the Tesla brand at risk more so than even in the U.S. AMNA NAWAZ: Craig, who's gaining from this? What Tesla rivals are benefiting from this lag?

I think it's really honestly kind of diffuse in terms of who's benefiting. It's pretty consistent that other manufacturers are seeing increases in their EV sales, and that's probably no coincidence. We do know that in Europe,

in 2025, everyone's going to have to meet a tougher CO2 regulations. And so everyone really has to sort of put the pedal to the metal and sell more electric vehicles. That means more competition for Tesla this year in Europe. And that's also likely coming into play and going to be a sort of lasting thing that Tesla is going to have to face the rest of the year. All eyes on BYD in the UK, for example. Craig Trudell, it's a great story. Thank you.

Meanwhile, Elon Musk's SpaceX is seeking to deploy Starlink satellite internet terminals to help upgrade the IT networks that support the Federal Aviation Administration's National Airspace System, that's here in the US. It's all according to sources who say this latest effort really raises questions about conflicts of interest for Musk's business empire. Bloomberg's Alison Berseril is here with us for more.

What exactly is the FAA going to do with these Starlink terminals? So right now they're really in a testing phase. We know that they're starting to test them out in Atlantic City, which is kind of the air traffic control lab, if you will, where they do a lot of R&D. They're also testing them out in Alaska.

And the FAA statement that came out last night confirming this reporting, they essentially said, you know, we're looking to fix telecommunications connections in remote areas to provide more reliable information, such as weather information, which has been a problem in places like Alaska. At this point, we're still, you know, waiting to see how expansive the use of Starlink might get.

But we do know that, you know, from talking to our sources, that Elon Musk has approved the shipment of 4,000 terminals in total to the FAA. So, you know, it seems like more is to come. Alison, what does this mean for Verizon, who has an existing contract with the agency?

That's right. So Verizon has this existing $2 billion contract to provide all of these types of telecommunications services. And in kind of dueling statements last night, Elon Musk said on social media platform X that the Verizon system isn't working. Verizon said the enhancements that it is doing are critical to air safety. So

We're still waiting to see exactly what happens with the Verizon contract. That's something that we're continuing to talk to people about and the folks that we talked to already said they weren't sure exactly where that was going to go. And there is indeed the statement that Elon put out on X a little bit earlier, a reaction to your reporting. Look, the next steps therefore are going to be about conflicts of interest here. I'm sure that's something that everyone is considering. Is it something that Verizon considers, the government considers?

So, I mean, it's certainly something that lawmakers on Capitol Hill are considering. We already saw when Transportation Secretary Sean Duffy first announced that SpaceX would be involved in modernizing the U.S. aviation systems and air traffic control. You know, you saw lawmakers like Senator Maria Cantwell, who's the top Democrat on the Senate Commerce Committee, saying, you know, Elon Musk shouldn't be involved in this effort. He has a company, SpaceX, that's regulated by the FAA.

and he has had penalties proposed against him from that same agency. And then you have others like Senator Tammy Duckworth, who have questioned, can we afford to move this quickly, like Elon Musk likes to do with some of his companies, because this is something you really don't want to break. LISA DESJARDINS: That's Bloomberg's Alison Versperell. Thanks so much for joining us.

Elon Musk is doubling down and said federal workers will be given a second opportunity to respond to a government-wide email detailing what they did last week and threatened to fire any employee who doesn't meet his demands. But the federal agency sent that email, said that Monday it's up to agency leadership, not Musk, what happens to those who ignore the message. Caroline? Coming up, Jackie, Supermicro.

We're keeping an eye on the stock as it's a crucial day for the AI server maker. Why the company is facing a deadline to file its already delayed financials. We are off 12% on the day. This is Blue Meg Technology. Okay, business leaders, are you playing defense or are you on the offense? Are you just, excuse me. Hey, I'm trying to talk business here.

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The crypto sell-off is gaining traction. Bitcoin tumbling to the lowest level since November 10th. In fact, worst day since August as we stand. The Trump victory rally reversing under the pressure of industry setbacks and caused tariff policy a macro perspective. Let's bring in Emily Nicole. Is it macro?

Is it idiosyncratic? Are we worried about the hat, for example? I think it's a mix of everything, to be honest. With crypto, you can never rule out the macro impact that's going on around it. It's definitely still an asset that does move in tandem with traditional markets. And so the pain that we're seeing in Treasury is the pain that we're seeing in stocks. That is also spilling into crypto. But with the market having overcome a $1.5 billion hack on Friday, you can't ignore that either.

And so we're definitely seeing a tandem effect happening and Bitcoin is really suffering because of that. Emily, I'm sorry, what catalyst are we waiting for here? What are crypto markets looking for over the next couple of months that could turn the tides? Is it going to be another Trump meme coin?

few things that might be on the horizon. So, for example, in Solana, one of the smaller tokens a lot of people pay attention to these days, we have a big unlock coming next month. We're about $1.7 billion worth in tokens that could hit the market. So that's something that might weigh on prices. And for Bitcoin as well, you know, with

With Trump, every day there's something new that's coming out of Washington. There could be signs of things coming on the possible U.S. strategic reserve for Bitcoin that he floated last summer. There could be things coming in terms of bills on stable coins. So all of that will be weighing on sentiment. But none of it is really big enough that could push it really back above that $100,000 mark. And that's what crypto traders really want to see at the minute. We just saw ETH that was indeed more the focus of that Bybit hack.

There are issues that you see globally. Javier Mille over in Argentina getting embroiled in meme coin fiasco as well. This is a global sentiment indicator, but how much are you seeing people pull away from some of the more sordid sides of crypto more broadly? Well, I mean, crypto as a whole is an asset class that really does run

that gamut. You know, you've got Bitcoin now being considered firmly a bit of an institutional bet because of the debut of US spot ETFs tied to it last January. It's definitely one that has kind of ingratiated itself there, at least on Wall Street. But then if we look at something like Solana, the last year for that blockchain has been a lot about

pump and dump schemes, meme coins, assets that like the one supported by Malai can go to 4 billion and then down to almost nothing in the same day. So there's definitely a bit of a wait and see at the minute as to how these tokens really kind of go forward this year, whether or not institutions might look more favorably on coins in future. A lot of that will depend on how the regulatory landscape pans out.

That's Bloomberg's Emily. Nicole, thanks so much for joining us. Supermicro is set to submit outstanding financial reports today to remain listed on the Nasdaq. The stock, which recently rallied, is hinging on the company's ability to trade on the exchange. Bloomberg's Brody Ford joins us now for more. Brody, why are they taking this down to the wire? Has the company said anything about its plans to actually meet this deadline?

They've said a couple of times, and backing up a bit, I mean, Supermicro's had a rough couple of months. They weren't able to file some financials back in August. Their auditor dropped them with some pretty colorful language, some things you never want your auditor to say privately, let alone publicly. But you know what? They picked up a new auditor, and they said, we're going to be able to get it in time. We believe we'll be able to do it. They were saying this as recently as a week or two ago. And so...

the consensus, at least until today, was that they were going to be able to make it. The stock right now suggests there's some anxiety creeping in, certainly, but we don't have any reason to believe that their plans have changed or they're not going to be able to make it. Yeah, the CEO about a week or so ago, sounding pretty confident, there are five buy ratings on this stock. There are two sells. Where

a general fundamental analysis on the company you've been headed, Brody? Well, they are for sure in the AI story, they're making money. I mean, if you look at their revenue chart over time, I think their revenue annually is going to be up like

you know, four times where it was a couple years ago. You know, when you need to buy these NVIDIA chips, you need to buy them in a server. And Supermicro has done a really good job selling it to the major customers. The margins are pretty bad because chips are expensive and, you know, it's a competitive market. But they have been a clear beneficiary. They have picked up a lot of investor interest, including the retail side. And there's a lot of, you know, forums giving a lot of theories on the current situation. And so...

You know, the stock movements we are seeing can be a bit unpredictable. I mean, look, a 12% decline is actually the only worst sell-off since January the 27th. We're used to this volatility, but how has the investor base changed? Is it more largely retail now or is it predominantly institution? I can't say the exact split, but certainly if I write a story about Supermicro, I'm getting a call from a retail trader, right? I mean, that doesn't happen.

if I write about Dell or HPE. So they are a sizable presence here. And yeah, there will be a lot of, they are watched often as the kind of bellwether for NVIDIA because if Supermicro says, hey, we'll be able to ship a lot more servers in the second half of 25, like they've said, people understand that as, okay, NVIDIA supply gets better in 2025. The two companies are pretty interestingly linked. Thanks so much.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. And I'm Jackie Davalos in San Francisco. We've got to check in on these markets, Jackie, because it is a turbulent day. The Nasdaq more broadly under pressure as we see consumer sentiment take a hit from a macro perspective. We're also worrying about the Magnificent Seven in particular. We are currently off more than 10% now in complete correction territory when it comes to the more Mag7 index that we focus here on Bloomberg, the total return index.

under pressure from its peak that we saw back in December. We're questioning valuations. We're questioning, of course, the run-in to Nvidia's numbers that come after the bell. We're questioning ultimately about some of the crackdown on chips going into China and what that means for local players. Move on and have a look at what we're seeing under duress. Look, we've seen Alphabet off by more than 14% from the beginning of the year. You've also seen other key names, all but Meta in the red. But Nvidia is now

off by more than 3%. It's off 15% from its highs. And this is on the back of worrying about valuations, about the curtailment of geopolitics. But there is good news out there. They're deepening their relationship with the likes of Cisco, networking player here, to make the rollout of AI easier more broadly, Jackie.

That's right. Now let's dive into the AI race between the U.S. and China following the latest restrictions on chip sales from the Trump administration. Let's bring in Jennifer Huddleston, Senior Tech Policy Fellow at the Cato Institute. Jennifer, we've been talking a lot about how the Trump administration is going about AI policy, chip policy, but a key component of this is also competition and the agency that oversees it.

the Federal Trade Commission. I think a lot of people were expecting Lina Khan's departure to mean perhaps a friendlier FTC toward tech deals. But what are you expecting in this administration?

Well, thank you for having me today. And I think when it comes to antitrust in this administration, it is important to remember that many of the antitrust cases against the leading tech companies actually began in the prior Trump administration. And what we've seen so far, particularly in the tech space, is that it seems like this administration is going to continue an aggressive approach to antitrust, whether it was recent statements from the FTC that they plan to continue the merger guidelines that were passed under Chair Kahn's FTC,

or whether it's things like last week's request for information on tech censorship that brought up questions of competition and content moderation, indicating that we could again see the Trump administration, FTC, seeking to perhaps use antitrust enforcement as a way to try and get change.

changes it perceives to content moderation, which could raise a lot of concerns both for tech companies, for online speech, as well as for the overall approach to antitrust in general. We've seen some creative deals specifically in the AI space with some of the big hyperscalers taking stakes in smaller startups. Do you expect those to come under additional scrutiny in this administration as well?

The AI space is still really early in its infancy and it's a very broad ecosystem. One of the reasons that mergers are important is not only to large companies but to small players as well. Small players are going to need a variety of exit strategies, particularly in the AI space and particularly when we look at the global nature of this competition.

For some small players, they may be the next real innovative product that forever changes our market and they may be seeking to IPO and go public. For others, they may be seeking to improve an existing product or operate further down the stack and a merger might make sense.

In some cases, they may be great innovators or serial entrepreneurs who just don't want to take the time to fully run a company. As a result, we need to ensure that they have a variety of exit strategies and that we don't wrongly demonize mergers just because of beliefs in certain amounts of concentration rather than looking at the actual impact they could have on consumers because in many cases, mergers can benefit both small players and consumers.

I just want to go a bit broader here, Jennifer, because we are in this context of US, China, and what seems to be this competitive race, whether it's a straw man or real. Ultimately, when you think about how the administration is overseeing emerging technology, as I know you focus on,

How are we seeing the U.S. able to propel itself forward versus China when we are also seeing restrictions on sales of key technology into other countries? One of the ways we've heard a lot of this discussion is in the approach to AI policy. The Trump administration very early on revoked the Biden administration's AI executive order, something that was seen as having a much more regulatory approach. You also recently saw

Vice President Vance really pushing back against the European approach to AI that he felt would strongly impact American companies and American leadership in AI. At the same time, while there seems to be a lot of indications, particularly in the AI space, that the Trump administration plans to take a very light-touch approach, there also have been some indications that we could still see regulation, particularly around issues as it might relate to labor,

and again, to the kind of impact that some of these antitrust cases could have on the development of AI technology, particularly by some of our larger leading tech companies. Okay, the larger leading tech companies, are they at the moment getting enough transparency on the future direction of policymaking, do you think?

I think it's still early in the administration. We've certainly seen a lot of statements already made. And so it remains to be seen fully what the trajectory will be when it comes to various issues around particularly AI policy. As mentioned, the Biden executive order was revoked, but we haven't fully seen what the Trump administration might plan to replace that with.

On antitrust, there do seem to be clear signals that it's unlikely to have a significant change, particularly around the cases that are already filed. What remains to be seen is kind of some of the questions around, we had started to hear rumblings around potential competition investigations in, for example, the AI space. And given some of the other comments,

Is that the type of thing where we will see antitrust enforcement really directed at kind of the concerns related to content moderation or at concerns related to quote-unquote big tech companies, which could have significant impacts on the future of antitrust policy as well as on consumers? Or will we see something that's much broader the way that we saw, for example, in the Biden administration under Lena Kahn's FTC?

Jennifer, as you mentioned, you spent a lot of time thinking about content moderation. Where do you see that going in an administration that has really decried woke social media and AI models?

It will be interesting to see particularly how the changes from the prior Trump administration in the social media marketplace might impact the positioning that we see towards content moderation. Elon Musk, of course, has bought X and made significant changes to content moderation policy there. We've also recently seen Mark Zuckerberg saying that he's making significant changes

to Meta and Facebook's content moderation policy. And of course, President Trump himself now has True Social, which has a very different content moderation policy. We continue to see a great amount of competition in the content moderation policy space. However, we did recently see this request for information from

the FTC around tech censorship, which could raise concerns that we could see the administration or the government via the FTC seeking to intervene into the speech rights of Americans and into the rights of private actors to make decisions around the content that they host.

Jennifer, you're sat in Washington, but take it out to the States for a minute because we had a key guest yesterday, Victoria Espinel. She's over at the Business Software Alliance yesterday, really talking about how important the states are at regulating AI at the moment. Is there a disconnect there?

There certainly has been a lot of state-level activity around AI. Several hundreds of bills have already been introduced or considered at a state level. And this is something to certainly watch because a state AI patchwork could impact the overall development of this industry, particularly when we're looking at bills like we saw last term in California or Colorado that could really impact the development side as well as any potential deployment. This is important not only for

large players who may be operating across state lines, but of course will certainly impact small players and in their ability to even launch their products in various states. Jennifer Huddleston, great to have you from the Cato Institute.

Now let's talk about AI more, because DeepSeek has reopened access to its core programming interface after a three-week pause. Now the Chinese startup stopped allowing customers to top up credits for use on its application due to capacity shortages. DeepSeek's AI chatbot reinvigorated the Chinese tech scene and stunned Silicon Valley when it was revealed last month. Jackie.

Anthropic is nearing a deal to raise $3.5 billion at a $61.5 billion valuation. It comes as the company releases a new artificial intelligence model that allows users to decide the complexity of the response that they want. Bloomberg's Seth Figerman joins us now for more on this.

Seth, let's talk about the fundraise first. Who participated in the deal and how does it stack up to some of the other players that have raised in recent months? Yeah, I mean, it's a smaller amount than we're seeing OpenAI and reportedly XAI go after. OpenAI is seeking $40 billion for the staggering sum. This one is $3.5 billion, an order of magnitude less, but still large by any other standard in tech history. Lightspeed Capital seems to be the one that's really leading the way here as we understand that they kind of

introduced the idea of doing a funding round and now it's oversubscribed. The most interesting one to me is that MGX, the Middle East Abu Dhabi fund, is now also weighing investment here and MGX is kind of sprinkling its money across the AI sector as we speak. When it comes to wanting to get in on these names, many have worried about the commoditization of these large language models more broadly, Seth. But it's interesting that here Anthropics is trying to set itself apart, trying to, for example, turn off and on the reasoning in Sonnet 3.7.

Yeah, it's a really novel hybrid approach. If we had talked a year ago, there really weren't any of these reasoning models. Now we're seeing deep seek, open AI, anthropic XAI all push in this direction. But the reality is for the average consumer, you may not always need some advanced reasoning engine to answer your question. You may just want to ask for a quick recipe or a synonym for a word. And in that scenario, maybe you don't need the computer or the system to take a long time to show you every chain of thought step that it takes along the way.

On the other hand, some people are trying to use it for advanced coding, mathematical questions, and the like. And so I think for Anthropic, that gives them a chance to kind of control a little bit of the experience, simplify it, and perhaps also limit the amount of computing resources it needs to devote to all the queries on a whole.

We're going to be hearing from Salesforce later this week when they report results, and it's widely seen as a gauge for how the market, for how the company is really navigating agents. This is kind of the next big thing. How is Anthropic going about it? They were really early here, this idea of a computer use program that could basically take your computer and start clicking around the web on your behalf.

but I don't think we've seen it quite make a dent in the workspace yet. It's being deployed gradually, but most people we speak with have not seen it fundamentally change their jobs. That said, OpenAI is moving in this direction, Salesforce, Microsoft, a whole slew of other startups. This is supposed to be the year of AI agents, but it's early in that year. Seth Fiegeman, great to have you. Thanks so much. Now coming up, we're going to dig into gaming. Josh Chapman from Convoy joining us on the landscape and how AI could change that industry too. This is Bluebeg Technology.

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Let's get to VC Spotlight. China just approved over 100 domestic video game titles this month, underscoring the country's support for the game industry after an earlier crackdown. Josh Chapman, managing partner and co-founder of Convoy, joins us now. Josh, geopolitical tensions between the U.S. and China play a huge role in big tech, but it's also a big part of the

also kind of veering its way into the gaming sector with Tencent, one of China's largest VCs, also has a stake in some of the largest games, Fortnite, League of Legends and those makers. How are you seeing this play out in the gaming sector?

Absolutely. And thanks for having me. This is certainly a very tense moment for not only the world geopolitically, but certainly within gaming, given that so much of the Chinese companies have such large ownership stakes into gaming companies around the world. A notable one is that Tencent owns Riot Games that has League of Legends, right, over 100 million monthly active players and based out of Los Angeles.

If geopolitical tensions continue, you could see things like the TikTok thing play out into the gaming space, which would lead to divestments or a forced sale due to government tensions. So, yes, it has a huge impact on the future of gaming as an industry and broadly, globally.

I mean, many were shocked to see Tencent placed on a sort of watch list, a military watch list. So how much do you think that we could see an unfolding of what's happened with TikTok across the gaming space? So I think, you know, high level, we are very excited that the United States is taking a firm stance against what is, you know, a...

categorically a foreign adversary of the United States, which is the Chinese Communist Party. I think when you see what companies come under that watch list, unfortunately, there are lots of great people that work at Tencent, and there's lots of great people that work at places like Riot Games and other companies that will be subject to whatever happens geopolitically. So I think this is

absolutely going to impact the space. And I think to your question, we're going to see the gaming industry kind of rally around finding a solution to keep these games going, regardless of the ownership. And I think there are solutions in the private markets, but also the public markets to find potential new homes for these assets if we get there. Right. And I think there is a big if, but if that plays out, that's probably where it's going to land. I

And much of this is in the context of the feeling of a race in terms of AI and China and the US, who's winning. It's interesting that we just saw Microsoft really show the future of AI within a gaming context last week with Muse AI. Tell us where we land in terms of US use of AI in gaming versus China, for example.

So there's basically two ways that I would highlight how AI is impacting gaming. First and foremost, it's impacting the cost of creating content by making the content game developers more efficient. Now, it's not necessarily making them eight times more efficient, but we're seeing anywhere from 20 to 50 percent improvement on costs.

at the content creation level. The second way that you're seeing this, even in the public markets, is groups like Applovin or even Unity that are using AI to improve their ad monetization strategies. And this has led to huge gains for both stocks, Applovin most notably, even though just recently they kind of gave back a lot of those gains in the past week.

But Unity just popped because they're also using AI to improve their own ad monetization platform. So I think you're seeing this absolutely play out in gaming, and it's leading to a lot of enterprise value creation for enterprises in the private markets and in the public markets. Josh, last year we saw Roblox attract a lot of scrutiny over child safety on its platform. Do you think the scrutiny is going to continue into this year? Because it seems like one of the spots where it really gained bipartisan support.

Yes. So the scrutiny around child safety within gaming is absolutely going to be a trend. This is something that we at Convoy are actively investing around, is child safety, whether it's the experiences that they're having, whether it's the data around them, whether it's what you can advertise to them or not advertise to them. And so this is a huge topic that's affecting families worldwide and also in our country here in the United States. And so advertising

absolutely this is going to remain a huge issue. And then most recently, just a couple of weeks ago, the sec opened up, uh,

an investigation into Roblox, but it's under exemption 7A, which means that they don't have to disclose what they are investigating exactly. To make a delineation here, though, the FTC went after Fortnite and gave them a huge fine. I believe it was about $400 million around the misuse of child data. And Fortnite had to pay that huge fine. This investigation, though, is not from the FTC. It's actually from the SEC. And so this has something to do with reporting requirements. Back in the fall,

We as a firm put out a piece talking about how we believe that Roblox may not be aging up exactly as they are reporting. And we think that that's not the fact that they are misreporting. It's the fact that users are likely misrepresenting how old they are.

So an eight-year-old is saying that they're over the age of 18. So the data is accurate, but the input of that data is inaccurate. And this is something we challenged back in the fall. And I think that's probably what's going to play out this year.

It's an important issue we'll be following. Josh Chapman, managing partner of Convoy, thanks for joining us. Caroline? Time now for Talking Tech. Jackie, first up, quantum machines raised $170 million in a Series C round following advances in the technology announced, of course, by Google and Microsoft that have sparked renewed interest in quantum computing. The raise, led by PSG Equity, brings the Israeli start-up's total funding to $280 million today.

Plus, 23andMe CEO Ann Wojcicki has raised her Take Private offer for the genetic testing company. Now, Wojcicki has secured backing from private equity firm New Mountain Capital. Together, they are offering $2.53 a share, according to a letter to a special committee at 23andMe's board.

And according to reports, telecom provider Altice France is close to finalizing a deal to cut the company's debt by $9 billion. In exchange, creditors will get a non-controlling equity stake in governance changes. Remember, this is billionaire Patrick Draghi who retains control. Apple currently holding its annual meeting of shareholders as we speak, which includes a vote on shareholders' proposal to abolish its corporate diversity, equity, and inclusion program. The board currently recommending, of course, that it

it votes against the proposal and indeed they did vote against that proposal. Mark Gurman is here. This is very much a live event and we just had the latest indeed that investors have rejected that outsider shareholder proposal. Where else do we think this day will lead?

Yeah, so Apple got a clean sweep, at least on the preliminary tallies, right? So the entire board, eight people, including Tim Cook, reelected. They ratified Ernst & Young as their outside accounting firm. They approved executive pay, right, 2024 pay for Tim Cook and the other named officers.

rejected an outside proposal on artificial intelligence policies. They rejected an outside proposal that asked Apple to seize its DEI efforts. They rejected an outside proposal related to CSAM or child sex abuse material efforts at Apple. And they rejected another proposal related to charitable giving. So that's a lot, clean sweep. Apple got what it wanted across the board, both its internal proposals and its external proposals from shareholders.

The AI one and the DEI ones are obviously the hottest topics right now. The AI one was related to what OpenAI is doing with consumer data. Some shareholders were concerned about Apple's partnership with OpenAI. Apple's response was to reject that given that OpenAI's integration is separate from their core on-device LLMs, Apple Intelligence, and that Apple already publishes its privacy policies related to that. So that is sort of a moot issue. DEI, it's interesting.

projected, but Tim Cook said as the legal landscape continues to evolve, Apple may need to make changes in the future, but they're still going to offer employees a collaborative environment.

Mark, what do we know about how Apple has handled these sorts of DEI issues in the past? We saw dissent come from companies like Google who had employees that were disputing certain contracts they were taking in defense. Have we ever seen something similar play out with Apple? 30 seconds. Yeah, at a large scale, we have not seen dissent at Apple related to DEI. I mean, Apple has a very inclusive culture.

I don't get the sense that anything is going to happen at Apple related to its DEI efforts unless there is some sort of legal mandate to do so. Mark Gurman with the very latest out of the shareholder meeting. We so appreciate it. Now that does it for this edition of Bloomberg Technology. Do not forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. From New York and San Francisco, this is Bloomberg Technology.

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