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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 Mike Shepherd in Washington. This is Bloomberg Technology. Coming up, tech CEOs flock to the inauguration of Donald Trump in Washington. Plus, President Trump gives a temporary reprieve to TikTok, granting a 75-day delay from a U.S. ban.
And live from the World Economic Forum in Davos, we'll hear from Bank of America CEO Brian Moynihan later this hour. But first, we check in on these markets. Look, some anxiety being shaken off as we see President Trump take office. The Nasdaq
pushing up and indeed the Nasdaq 100 up about a tenth of a percent as many look to perhaps the economic potential of this next administration. However, on the downside hasn't been some key names. Bitcoin is up 1.3 percent, 103,000 absolutely took off ahead of the inauguration. We'll get into some of those meme coins in a moment. But let's move on to some of the individual points, drags or
Indeed, Apple being the key one. I want to focus in on TSMC for a moment, though. We're up 1.9% on its ADRs. This is its restored operations at factories it evacuated after a 6.4 magnitude earthquake struck the island south. Look at injured four people. Key chipmaker, fabricator to NVIDIA and indeed to Apple. But Apple being dragged lower. The worst day we've seen since September of last year, in fact, 3.8% lower. Why?
This is yet more downgrades coming from Jeffries, coming from Luke Capital analysts worrying about sales of the iPhone and in particular Chinese weakness. Look, this is going to be top of mind for Tim Cook who yesterday was one of the who's who of the world's wealthiest people and tech elite surrounding President Donald Trump as he took the oath of office. All gathering a combined, get this Mike, net worth exceeding $1.3 trillion for the occasion. All sprinkled in among Trump's own family.
They were not just sprinkled in, they were seated ahead of Trump's incoming cabinet. It was striking to see how prominently Elon Musk and others were occupying that space in such a moment. And it really signals how much tech has arrived
with this new administration. And really, something else of note from yesterday was President Donald Trump scrapping the Biden administration's sweeping executive order regulating artificial intelligence. Let's bring in Bloomberg's balance of power co-host, Kayleigh Lyons, to discuss this. Kayleigh, thanks for joining us and for all the great reporting yesterday on the inauguration
Trump started this with some shock and awe on the regulatory front. Talk about the direction of travel that we see in undoing this AI order. Well, the direction of travel certainly is fast. Trump yesterday sent a modern day record for a number of executive orders in one day. There were 26 plus four presidential memoranda. And of course, as part of that, he rescinded 78 executive actions.
from President Biden. The executive action regulating AI, the sweeping order was one that was part of it. This, of course, during the Biden administration was intended to create safety and transparency guidelines around companies developing this technology. It also created the AI Safety Institute under the Department of Commerce that was essentially setting voluntary guidelines for how the development of this technology should work.
And now that goes away. The thing is, the president, while repealing this, did not say what is going to be replacing it, leaving a bit of a question mark. Certainly we could expect David Sachs, the venture capitalist who is now the AI crypto czar in this White House, could be playing a role in what happens next. But it also could speak to, by and large, a kind of hands-off regulatory approach this administration seems to take. And certainly that was a message frequently by Donald Trump yesterday and throughout the campaign.
And let's just talk about someone who's key to AI's future is Elon Musk. And indeed, it feels as though he's been cementing his power over the last couple of days as well.
Well, absolutely. In fact, it is now solidified through one of these executive orders, Caroline, that he will be leading this Department of Government Efficiency, and he will be doing so by himself as the person who was intended to be his co-head, Vivek Ramaswamy, is bowing out to instead run for governor of Ohio in 2026. There's been some reporting that there was a bit of consternation between Ramaswamy and Mar-a-Lago that may have played a factor, but it does clear the road for Elon Musk to essentially have the greatest degree of control over this agency, which will actually be part of
of the federal government. That was not the intent originally outlined by Donald Trump back in November, but through the EO yesterday, he made this part of the executive office of the president through an executive order that will rename the US Digital Service, something that was created during the Obama administration back
in 2013 to the United States Doge service. That means Elon Musk is getting an actual White House email address, space in the Eisenhower office building. It raises some ethics concerns given Elon Musk, of course, and his company's due contract with the United States government. And already this is drawing lawsuits, Caroline, including from the largest union representing federal workers saying that the office
Office of Budget and Management and Budget and the White House here are violating different rules that are supposed to govern this. But certainly Elon Musk is going to have a close ear of the president as this administration gets going. A controversial weekend for Elon Musk, which we'll get to a little bit later in the show. But Bloomberg's Kayleigh Lyons, spectacular. Thank you for joining us. Meanwhile, TikTok whiplash. ByteDance's U.S. services were restored after Donald Trump acted to delay the ban by 75 days, proposing a U.S.-China joint venture.
Though it's unclear if the app's Chinese parent can or even wants to secure a US backer, not to mention if this is enough to appease Congress's national security concerns. Well, let's bring in a US representative, Jake Auchincloss from Massachusetts. Now, you served on the House China Select Committee last Congress and were an original co-leader of the TikTok divestment legislation. So I ask you this, what do you make of the extension?
The extension appears to be illegal. The law allows for one 90-day extension if the president can demonstrate that a sale is underway and there needs to be more time for the negotiations in the administration. That is not what's happened here. What's happened here is Trump has just declared 75 days of a free pass for TikTok. And there does not seem to be any statutory support for that. This is an example of how the social media corporations
have really come to plunder the American town square. There's an old saying in tech that if you're not paying, you're the product. Well, big tech has productized Americans' attention spans and our social lives for the last 15 years, and both parties have failed to rein them in. And now TikTok, excuse me, now Trump is not only inviting American corporate abuse of the town square, he's also allowing Chinese communist abuse of it.
Congressman, the order that Trump signed yesterday called for a review of the intelligence surrounding the risk posed by TikTok. Are you concerned at all that the incoming administration might be glossing over or prepared to gloss over those risks in its eagerness to try to strike a deal and keep the app going?
Yes, and there's two core risks. One is of course Americans personal data, geolocation data, personal contact information, the social graph of their lives. But the second, I think more concerningly actually, is control over the algorithm itself. What content is suppressed, what content is amplified. That is ultimately dictated by the Chinese Communist Party and we need to be very clear about this. There's a lot of hand waving around this. Xi Jinping makes those decisions.
And what that means is that Chinese kids see very different content, mostly educational, than American kids do. And I don't know why the United States would want to outsource the education and ideological cohesion of an entire generation to our greatest adversary. Now, you underlay this ignorance of that core risk with the fact that Trump just issued a meme coin that basically is the equivalent of him opening up a Swiss bank account
inviting foreign adversaries and foreign individuals and corporate interests to deposit money into it secretly and then show him the receipts. That opens up the way for monumental corruption in the sale of TikTok. We'll talk about Trump coin and indeed Melania's meme coin too a little bit later, but
Congressman, I go back to the fact that you said that this extension is ultimately illegal. Now, you've also said that there's hand waving. Now, ByteDance in and of itself would say, look, control does not lie in China or Xi Jinping, but up to TikTok in and of itself. But going back to if indeed we did see some sort of joint venture, more U.S. ownership of TikTok, would that in any way appease some of your national security concerns?
As with many things he says, I have no idea what Trump was talking about when he said the US government would have a 50% stake or something. There's about 75 unanswered questions in between that statement and the actuality of it. Here's what we want, though. Here is the goal of the bill. First of all, we don't want to ban TikTok. We don't want to ban any of the social media. They're here to stay, just like radio and TV before them.
But what we do want to do is reclaim control of the digital town square from this Chinese communist and American corporate malfeasance. And to do that, we need TikTok to answer to U.S. law. And then the second step is Congress needs to pierce Section 230 and establish a duty of care for all of these social media corporations. That means that we can't allow them to host things like deepfake pornography, which, uh,
98% of online deepfake videos are pornographic content targeting women non-consensually. These tech CEOs don't care. They don't have to care. They're not liable for it. Congress needs to end that.
When we're thinking, therefore, about the next steps, you seem to be going more broadly. We've had steps being taken by the CEO of Meta as well to reduce fact-checking here in the United States. Has that been a cause of anxiety for you or is that something that you feel ultimately, yes, we could see more community focus on preserving what is said on the internet or not?
So I'm actually sympathetic to Zuckerberg's claim that fact-checking was not proving effective. Now, we can debate how accurate the fact-checking was, but the point is that people didn't believe the fact-checking. And ultimately, truth has to be communally acknowledged. And so moving towards community notes,
If he can demonstrate that that's more effective in building trust and building shared consensus about the facts, I'm receptive to that. But the underlying point here is that any Web 2.0 approach to doing this is ultimately going to be ineffectual because these are walled gardens controlled by corporations. And ultimately, these corporations monetize the attention span of Americans and sell off
that product to the highest advertising bidder. And for so long as that is the case, they're always going to amplify the seven deadly sins, things that foment pride and greed and lust and envy because that's what people click on. We need a Web 3.0 transition where people have more custody of their personal data and where the algorithms are answerable to communities in a pluralistic fashion, the way that Taiwan has done so under the leadership of the digital minister.
Congressman, do you see any role for government in trying to help in this area of moderation? We've seen the direction of travel in Washington move far away from that. What do you see?
government needs to revoke Section 230. So the tech industry will claim that Section 230 protects free expression. And it's just laughable. James Madison did not write Section 230. It was drafted in the 1990s, and it is an industry-specific shield for the social media corporations to not be liable for toxicity, for defamation, for cyber-stalking and intimate privacy violations, things that are already illegal. I want to be clear about this. Things that are already torts under civil and criminal law.
they are not susceptible for a duty of care to prevent them. We need to make them liable for it. And then we need to bring in the blockchain industry under regulatory clarity so that we can transition to a Web 3.0 approach to social media governance because what's working in Web 2.0 has worked well for the tech CEOs, it has not worked well for American children.
Those are both pretty ambitious goals, Congressman. Do you see enough of a consensus in this Congress between Democrats and Republicans to be able to get both of those things done, especially with respect to Section 230, which we've been hearing about for so long?
You're certainly right that the tech lobby has been effective at crushing even marginal steps towards revoking Section 230. I will note, though, that last Congress, the chair and ranking member of the Energy and Commerce Committee on which I sit and which has jurisdiction over the tech industry, jointly wrote an op-ed in the Wall Street Journal calling for the sunsetting of Section 230. Now, it didn't happen last term.
But that is a significant step forward, where you see bipartisan leadership towards revoking it. I think we are hitting an inflection point, where Americans are tired of having toxicity pumped into the national discourse by people who get richer the more time their kids spend scrolling on their smartphones. It is time for us to move away from this phone-based childhood towards a play-based childhood. But to do that, we've got to reclaim ownership over how we talk to each other. Section 230 is the first step, and I do think we're building bipartisan support for it.
I hear you, but there was a lot of bipartisan support to ban TikTok, and then suddenly as the hour drew near, we saw some real 180s from across the aisle, Congressman. And I go back to the TikTok case in particular because the fact that you keep on talking about web...
3.0. You're talking about decentralization here. Well, we've heard that from a picture of one of the wannabe owners, Frank McCourt, and indeed working with Kevin O'Leary. They want to be seeing potentially this Project Liberty. What are you thinking more broadly about their particular offer? Because they don't want the algorithm.
Yeah, Web 3.0 fundamentally is about open governance. It's about creating pluralism and creating a sense of community ownership over this. In the same way that Americans insist that our actual town squares are places where people
Communities have an interest in upholding order and providing freedom of expression. We need the same thing for our digital town square because that's where Americans are spending four to six hours every day taking in news, information, and entertainment. I think too many Americans just assume that the status quo over the last 15 years
is all that we can expect from social media. But if you look back at every other media innovation from the printing press in the 1500s all the way through TV and radio, you will see that there was a moment of disruption and then new norms, conventions and laws were established to help bring
some harmony to this new way of disseminating information. The challenge here with social media is that we've had to digest this tech innovation in a much shorter amount of time. We've had less than half a generation to do it. And so the disruption has been even greater. But I do think that we are hitting an inflection point where we're going to start to adopt new roles and governance structures. U.S. Representative Jake Okunklaus from Massachusetts, thank you.
Coming up, we'll hear from Bank of America CEO Brian Moynihan out of Davos next. This is Bloomberg. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype? The right choice is crucial, which is why teams at Fortune 500 companies use Grammarly.
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Bloomberg is live at Davos and Bloomberg's Jonathan Farrow and Lisa Abramowitz are sat down with the Bank of America's CEO.
Hey, guys. Great to be with you. Day two of the World Economic Forum here in Davos, Switzerland. Mine's firmly elsewhere in Washington, D.C. Isn't that right, Lisa? 24 hours of conversations about how great America is and how the rest of the world will struggle with the incoming president, Donald Trump. Every conversation here at Davos has been, what's America going to do? How can I...
leverage myself to be in the best position possible. And, oh yeah, what's the latest headline? Brian Moynihan alongside us, the chairman and CEO of Bank of America. We're going to cover all of that through the next eight minutes or so. There's an important occasion to mark, 15 years at the top of Bank of America. No, it's been an honor to lead the company and we've had some fun and it was interesting to start, but for the last
10 years or so we've been on a roll just producing responsible growth and the team does a great job. And we can take pride. We put the company to where it should be as one of the great companies in the world. Beyond interesting, 15 years ago it was the absorption of Countrywide Financial, it was Merrill, it's a very, very different bank and a very, very different moment. That phrase you used is one you've used so many times, responsible growth.
There is a feeling that maybe we move towards something else in the world of banking over the next few years. Some might say it's sort of reckless growth. We're just going to go for it. How would you describe the future? So what you're hearing is enthusiasm for in the investment banking side, particularly transactions, right? For a long time, for the last...
couple years, it's been hard to get a transaction through. And what stops a seller from selling or a buyer from buying is, if this thing is delayed, I'm exposed. And so what they'll do is they'll push it through. So there's a lot of enthusiasm that there'll be better growth in the United States, a lot of enthusiasm by the bankers saying these deals can get done so I can go have this strategic conversation. It's just not another idea that goes through the system. Everybody says, that's a great idea, but it's not going to be a great idea. Let's go do it. Or a great idea, I don't want to do it, but it's a
more of a substance base than it is, more of a worry about the environment around us. Are you basically saying that there's more enthusiasm, that there is conviction and will to actually get stuff done? Yeah, I think you saw some deals getting announced, and you'll see more deals getting announced. In our sector, in banking, especially in the United States, the consolidation is still far away from being done. There will always be big banks, there will always be small banks, but you don't let people make a decision what they want to do, and there haven't been a lot of bank deals done, bank-to-bank deals. We can't do them. It's not legal, but
As investment banking, we can help other people do them. And there hasn't been a lot done because just the uncertainty of getting caught in a transaction and having issues. So the belief that they should promote the banks, consolidate and getting more efficient, passing that through to customers, passing that through to small businesses, et cetera, is a different, will be a change.
Well, there's the banking sector specifically and some of the deregulation and whether some of these mergers and consolidation will be allowed. And then there's the broader corporate sector and some of the enthusiasm we've seen and we've heard from the city's head of banking, from J.P. Morgan.
How much do you see that being maybe a little premature based on some of the policies coming down the pike and the uncertainty around debt deficit and rates? Well, I think you have to divorce a little bit some of the fiscal work that has to be done. And incoming Treasury Secretary and others have to take very seriously this question of how do we manage the revenue stream, the expense stream, and the amount of debt and get it all to work out.
One of the ways that that becomes easier is if you have more activity and more things going on. So I think the enthusiasm you're hearing from the bankers is more structurally that the belief is that even starting yesterday, you don't have the constraint that you have so you can go. If there's
more that enables more, that's good stuff. But right now, it'll stop it going in the wrong direction. And look, our medium and small-sized businesses, their biggest complaint last summer, last time I was here, we talked to them, to
the administration about it was the biggest complaint was you're in my pocket, you're slowing me down, I can't get things done, I want to permit to do something that takes forever, I want your labor rules, all this stuff is going on just over and over. And small and medium-sized businesses don't have the thousands of people that big companies have to figure it all out. And they're figuring it out on their own. The same person who's running the business at night sitting there saying, so what does this new taxation strategy on Social Security mean to me? How does it apply? How do I have to change all my systems? And so they're just saying, if you just stop,
you know, things will get better. So you're the number one lender to small businesses in the United States. Give us the read on things right now. Are they already making those decisions to make a move to make those investments that they were on hold over the last four years doing? Are they already making that move? So it become over the last, say, six, eight months or so that it went from
regulation and inflation. Inflation's kind of come down as their worry right now. And what's actually interesting is they're going back to labor shortages in the right way. Now, the interesting thing about that, that has a question about immigration and all the stuff going on. But what they're feeling then is demand. I need people to do things. And so they're starting to feel the demand steady.
Remember, when the Fed was raising rates high, their cost of borrowing went up a lot. They went from 300 basis points over an index that went up by 500 basis points. That's a big number. And so that caused them to say, let me be careful. And then as the rates come down a little bit, they feel better. Now they're saying, okay, I have the opportunity to grow.
But can I get the people? And remember, that was the 2021-22 timeframe. So in there, there's got to be a solution. It's immigration. It doesn't constrain those small, medium-sized businesses from growing. Or they're going to start letting us know. Would you say, just to jump in, would you say we are supply constrained? Do you think we are prone to have these bursts of inflation? Yes and no. And we don't know, honestly, because...
Because of stimulus after the pandemic, there was so much more than there maybe had to be by technical economic discussion. It's hard to say whether we're supply constrained and other things. And we're supply constraints because it cut off a supply and a stoppage of goods coming in the country and shipping and all that stuff that we went through. So you haven't gotten to a real normalized side of that yet. But that's the blame for the current thing. I think the supply shortages...
can mitigate if, you know, we gotta be a little careful about labor supply. We gotta be a little careful about the tariffs impacting supply and things. But I think people, the second sourcing's gone on, people are finding places to get stuff. So I'm not quite sure that's gonna be the issue. But a lot of what we think it was the issue is actually the pandemic, the stimulus, and the impact of pandemic on supply that's worked us through the system. - So John started with the fact that you've been at Bank of America for 15 years. We keep hearing about succession plans in different places. What's your succession plan?
Are you trying to throw me out? No, not at all. I'm just wondering because this is something that we keep hearing about. Lisa, go right to the very end. There's still three minutes on the clock. That's like the last question. The fascination with all this is interesting. And one, it just means we're all getting older. Us too. But the reality is we run a process in our company through the top three layers, including for the CEO.
succession every six months we go through everything who the media successors for every one of our teammates jobs and and we have a slate and we go from a slate because if you run a big company people leave for a whole they retire they get another job whatever and you're always filling jobs and so that with the way the board will make a choice at some point I'm not going anywhere unless they throw me out they know that but my job and one of the biggest jobs I have is preparing people for the what it would be like to run this company
out there and that's important. So we do a lot with our team to get them used to experiences and get them to learn more about the trade-offs you have to make at the top of the house because if you come through a business or come through a function, you haven't made those trade-offs. That's part of our general strategy. And so we talk to our board, but you'll never hear us discuss
A is in and B is not. That to me is the worst thing you can do. I went through that process in the end of 2009 where there was day-to-day speculation. That's not the way to do it. Well, thank you for that very good answer. You'll be the first person to tell. Okay, thank you. I appreciate that. We only have about 30 seconds. You said something to us when we were at Bank of America that AI would basically keep the staff the same size but increase the footprint of business. Do you stand by that? Yeah. There are two...
Two facts I'll give you. One is we run the company on the nominal amount of dollars of expenses we did 10 years ago almost now. Nominal not, not inflation adjusted. And we run it on 30,000 less people. That is all digitization. And AI is an extension of automation, digitization models, et cetera, automating work, taking out work and automate, therefore you don't need. And I think AI keeps going. The idea is if we're good, we'll keep adjusting where the teammates end up. So it might not be the same 212,000 people
213,000 people doing the same thing 10 years from now. Yeah. But my guess is that our employment levels will stay relatively static. There's going to be more towards stuff that can't be replicated near term by air. Brian, you're a gent and you've been super generous with your time and you show me up every year because you always come out here with a suit jacket on and I'm sitting here with like a winter jacket. Yeah, but I actually wear a suit jacket. Yeah, I know. I know. You've been influenced by Brian. No, it's actually just a lot warmer this year. Brian Moynihan, the Bank of America CEO and Chairman. Brian, thank you. Guys, back to you. Ending in...
artificial intelligence. We so appreciate it. Out in Davos, fantastic conversation. Welcome back to Blue Meg Technology. I'm Caroline Hyde in New York. And I'm Mike Shepard in Washington. Quick check on these markets, Mike, because look, we've got a little bit
A little bit of a reprieve in the markets as we try to digest a whole host of executive orders and moves made by the new administration as Trump takes office. We're currently up 0.2% on the NASDAQ 100. Investors wanting to see the growth potential rather than some of the trade hindrances for now.
Apple in the spotlight, down more than 4.3%. This is the worst day since August of last year. It's currently trading at the lowest since September 2024. This, again, is China anxiety. Apple intelligence not really feeding through in demand for the iPhone as much as analysts had anticipated. Loop Capital and Jefferies cut their overall view of Apple from a hold or indeed one indeed saying to a sell. Let's move on and have a look at what's happening
happening in the world of crypto as well. Because no executive order when it comes to Bitcoin, I'm afraid. We're up 2.9%, but we're still above $105,000. MicroStrategy on the downside, a lot of the crypto exposed names are on the fact that maybe we didn't get an EO out the gate when it comes to the approval of Bitcoin and cryptocurrencies more broadly by the new administration. MicroStrategy by 2.8, it's buying yet more Bitcoin, as we know, an 11th consecutive week. But
But there was good news over the weekend into the inauguration for many crypto holders, a meme coin. Let's go to it. Bloomberg's Isabel Lee is here. An extraordinary announcement coming from the incoming, at that point, President Trump, now is President Trump, and Melania both having a
meme coin? What does this mean for the space? I really thought it was a joke when I saw it online because you see a lot of parodies but then it was real. I mean, now we don't know yet if this is related to Trump or not or if his team is behind it but we have his son, Eric Trump, saying that this is quote, the greatest digital meme on earth. So, what to make of this? Two things really. On one hand,
it's a great thing. It really signifies a new regime. The fact that you have a coin named after Trump and also Melania, when Melania was launched, by the way, it sucked some of the air out of the Trump coin, but still, at one point, it was as high as $60 billion. That's great. But on the other, you have... If you're long the space, it's great. Yes, yes. But on the other, you have people saying...
This highlights the meme-ification of the industry. How will the traditional finance people take us seriously? Because what is a meme coin? What is a meme stock? It's just really a joke. So it has no underlying asset. They're speculative, they're volatile. It's like, what is Dogecoin? But still, the whole market is 100 million in valuation. So it's an expensive joke. But will this last? Who knows? So it's really interesting. But lots of activity and billions of dollars changing hands at that.
Isabel, are you sensing any bruised feelings in the industry from not seeing an executive order on day one from Trump on crypto or even a mention during his inaugural address after being sworn in? Absolutely. We have Bitcoin soaring to a record high on Monday and then it pared back some of those gains from 109 plus thousand, it became 103. And I asked some of the analysts because I was on on Monday, I was like, why is Bitcoin pairing its gains? And they were like, because Trump didn't mention it in the speech. But take note of that. The fact that Bitcoin
Faithfuls or crypto enthusiasts are expecting Trump, an incoming president or at that point the president of the United States, they're expecting him to mention it in his inaugural speech is already one thing. That really just means that crypto is becoming mainstream or if it isn't mainstream to you just yet. So it's really something. But, you know, Trump focused on tariffs and energy and trade, but they were really hoping and banking on the fact that Trump will say something about Bitcoin. Bloomberg's Isabel Lee, thank you.
Heading back to Davos now where Mistral AI CEO Arthur Mensch spoke with Bloomberg TV's Francine Lacroix about the company's expansion plans and about his thoughts on Europe's regulatory and competitive landscape.
I like to look at it from a positive point of view. Europe has a lot of strength, in particular the talent pool it has access to. The people that are building AI, including in the US, are actually mostly Europeans. And so the opportunity we had, and that's also the thing that we provide to our customers, is the expertise. And I think Europe can come together today and realize that we've been innovators. We're a continent of innovators. We need to keep being innovators. And AI is an opportunity to continuously innovate.
There's a lot of other companies that are building that. I'm thinking of ACML, I'm thinking of all of the AI startups that we're working with in France and in London. And so let's not look at the bad things. Effectively, we have a tendency to play a little too much referee in the trillion dollar race. But we...
But we have the strength and we just need to have the will to create in Europe and to innovate and create value there. Do you think that there's a first mover advantage in this industry or is it really execution and innovation that will win? In any industry you have a first mover advantage but the AI is...
It's going to be a revolution. It's going to be a long-lasting revolution. It's going to take decades to actually be rolled fully to enterprises, rolled fully to the way we actually behave and the way we actually deal with computers. So, and a lot of things, and we are realizing that enterprises are a bit struggling with realizing the value of AI. And that's where you need to partner deeply with someone that can help you get the expertise, distill the expertise
of your company into AI systems that can then help you drive the productivity that you're expecting. So we're only 5% there. And so everything that is sitting on top of model, all of the orchestration part, all of the managing data, all of the customization part are things that we still need to figure out. And I think we have a very good head start there.
That was Mr. Al-CEO Arthur Mensch, along with Francine Lacroix. Meanwhile, another closely watched interview at Davos was the OpenAI CFO, Sarah Fryer. She spoke with Bloomberg's Shireen Ghaffari about rising enterprise use of ChachiBT and the company's growth. Take a listen.
We have had to do an extraordinary amount of fundraising. Luckily, we also have a business model that supports it. I already talked about ChatGPT for Consumer, over 300 million users today. And it's a workhorse when it comes to revenue, revenue growth, and ultimately profitability.
But we are seeing now enterprises of every size embrace this technology and we really see ourselves also as the enterprise company. In fact, there's a really good symbiosis between those two areas because often when I meet customers, and I'm meeting a lot of them here in Davos, it's actually their personal experience they start with. When I say, "Hey, how are you using ChatGPT?" They'll actually give me a personal anecdote first
And for those of you who sell into enterprises, you know that if you've won your customer heart in just their day-to-day, being able to go in and then sell them into their enterprise environment gets an awful lot easier. And so that enterprise model is really building across every sector of the economy, every type of company, every scale of company. And I'd be happy to talk through examples
Morgan Stanley is a great example since we're talking financing and they're also a good partner on that front. But they're using our technology in areas like wealth management, in areas like even their investment banking, and they've been doing it now for multiple years. So in terms of the future from a financing perspective, I suspect we will continue to have to finance at pace, but we will do that on the merits of our business as well.
How about an IPO? What would that look like for OpenAI? You mentioned profitability. How far do you think we are from that? You're someone who's taken two companies public.
the steps be for OpenAI to get there and how far are we from profitability? Yeah, so as I've told every company I've been associated with on an IPO, it's not a destination. An IPO is just a marker on a journey. And if you get wrapped around the idea that the IPO is the destination, it's a very kind of dangerous world to live in because there's a feeling of finality
and man-to-man, going public is just the beginning of another very interesting part of your journey. What are the positives on IPO? Number one, I think it's a very strong credentializing moment for any company. I love that moment of sunlight, of being able to show your financials externally, to show how your business is building. It's the best disinfectant in any room.
it's a great way to fundraise because it opens the door not just to equity and selling your equity in that moment, but it also starts opening the door to many more areas of financing, starting with mezzanine debt, structured debt, and so on. And again, in a world where we're buying a lot of compute, we need to get there fast because equity is an expensive way to raise capital and to deploy capital. We need to make sure we continue to bring down that weighted average cost of capital.
That was OpenAI CFO Sarah Fryer from Davos.
So one of the things that we shared, as you said at the beginning, is that we are moving away from the way that we were utilizing third party independent fact checkers and moving now to much more of a community notes program. We're starting that in the U.S. and then we'll see how that goes as we move it out over the years. So nothing changing in the rest of the world at the moment. We're still working with those fact checkers around the world. But in the U.S., that's the direction of travel to start with.
Meta's head of global business group, Nicola Mendelsohn, in Davos. And as is the company is gearing up to remove third-party fact-checking here in the United States. But Bloomberg's Kurt Wagner is joining us now to...
Talk about the timing of all of this, because just last week, a lawyer representing Meta quit, accusing the CEO, Mark Zuckerberg, of what he called a descent into toxic masculinity and neo-Nazi madness. Then there's a controversy swirling around gestures made by Elon Musk this inauguration weekend. This feels as though conspiracy theories are kind of running wild at the same time as fact-checking is taking a stand back.
Yeah, and that's just unfortunately the reality of what's going to happen when you take away fact checking. You sort of open the door for inaccurate information to spread pretty wildly on the platform, right? And so I don't think that's going to be a coincidence. I don't think this is the end of that conversation.
reality for us, right? I think community notes is sort of an interesting concept. I don't think it is a foolproof concept when it comes to fact-checking at scale. And so I'm sure that Metal will learn that, if not already, then certainly over time. I think the interesting thing about this fact-checking timing for them is
is that you know clearly they usually test things outside the US and then bring them to the US when they are ready for prime time because this is the most valuable market it's interesting in this case they're doing the test here in the US and leaving in the rest of world to me at the signal that this is more of a political decision for them right to appease the Trump administration than it is a a reality that fact checking was a major problem to begin with I see this more as you know something that they're doing to appease the Trump administration
more so than this was a huge ding or knock on the platform's ability to thrive. Bloomberg's Kurt Wagner, thank you. Sticking with meta, remember this moment from a Facebook town hall back in 2011? My name is Barack Obama and I'm the guy who got Mark to wear a jacket and tie.
That was former President Barack Obama joking with Meta CEO Mark Zuckerberg. Things certainly have changed for the Facebook founder and other tech leaders, as we saw during yesterday's inauguration. For more on the industry's relationship with politicians, we are joined now by Margaret O'Mara, professor of American history at the University of Washington. Margaret, I have to ask you, how are we going to look back at the
at this moment yesterday where we saw such a lineup of tech leaders and billionaires at the inauguration seated so prominently.
Well, it was really extraordinary. I mean, it remains to be seen how the relationship between tech and the Trump administration will evolve over time. But we have never in American history seen a lineup of business tycoons occupying a place of honor at a presidential inauguration like we did yesterday. Silicon Valley has long had ties with Washington and different presidential administrations, but this does feel like uncharted territory.
And how does this translate into the priority list that each of these CEOs may be bringing to the administration? How much does that proximity count? It counts a lot. And look, again, we've seen Silicon Valley leaders have very close relationships with the Obama administration, the Clinton administration, with other administrations other than Trump. So this, again, is not entirely unknown, but...
There are really high stakes and we see both on the regulatory side and in the spending and tax policy side. On the regulatory side, the promise to have a light hand on AI regulation, as well as Trump's boosting of crypto underscored by
his and the First Lady's personal involvement and issuance of their own coins in the last couple of days is something that is a real sea change for the industry, a real difference in attitude than what the Biden administration had approached. And then also we have the promise of tax policy being corporate friendly generally, and also things like defense contracting, which is a
The Defense Department and the national security establishment does a lot of business with Silicon Valley companies, and that only seems poised to increase. Margaret, take us back from a historical perspective. Have there been as many ethical questions when we've seen such relationships, perhaps not so flamboyantly demonstrated, but certainly close in previous administrations?
There haven't. Well, there have been questions, but they have been resolved. And let me point to a really interesting example from Silicon Valley's past. David Packard, the founder of Hewlett Packard, now HP, kind of a legendary Silicon Valley founder. He actually joined the Nixon administration as deputy secretary of defense in 1969. And he was a very wealthy man.
And he famously put his wealth in a blind trust while he was in office to resolve any ethical questions there might be about HP profiting from defense contracts, which it did have, while he was at the Defense Department. Let's just, I mean, thinking of what you've written, in particular, the code Silicon Valley and the remaking of America, is Silicon Valley, aren't
the tech leaders that we see remaking America from a political perspective right now, Margaret. I say that with the words of the previous administration still ringing on our ears, that this is some sort of oligarchy.
Yeah, I think that they are trying to. I mean, what certainly is the case and hasn't been the case in the past is that the platforms that they control just thinks solely about the people who were on the inaugural dais yesterday in their capital rotunda, Mark Zuckerberg, Sandra Beshai, Jeff Bezos, Elon Musk, that they have such an outsized influence over online communication, on online commerce,
that there already is such an immense consolidation of power that again, there have been big power structures and successful companies in the Valley before, but this is a next level, the influence is tremendous. - Margaret, last question, 30 seconds. These companies have a position to shape history as we will be reading it later. Talk about that unique role.
They do, just as the history textbooks now have Andrew Carnegie and John Rockefeller in them, and people around the world know those names. Regardless of what happens next, a century from now, probably people are going to be reading about Mark Zuckerberg and Jeff Bezos and Elon Musk.
And I think with great power comes great responsibility. This is part of the criticism that has been levied at tech over the last decade about what the ripple effects of their platforms might be. Now, again, these are businesses. These are people in the business. These are for-profit companies. And I think there also is a very important public sector government regulatory role that has been absent. So that's one of the reasons that they have become this large. So I think it needs to be a balance, and we need to think more broadly about how this shakes out.
Margaret O'Meara, professor of American history at the University of Washington. So appreciate your time. Coming up, streaming giant Netflix. It's set to report its results after the closing bell. A look at what we can expect next. This is Blue Mag Technology.
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Netflix, it's set to report earnings after the bell. What can we expect? Let's bring in Bloomberg's Lucas Shaw. And the shares had a phenomenal 2024. How was Q4 from a profit and revenue perspective?
Well, we'll find out at the end of the day, but people are expecting a very strong quarter. They had the Mike Tyson-Jake Paul fight in the quarter, which was the biggest live event they've ever done, one of the most watched things they've ever put out, and I believe, according to some third-party researchers, led to the biggest one day of spike in new customers they've had in years. They also had...
NFL on Christmas Day, they had season two of Squid Game, they had new seasons for a bunch of other hit shows. So most people are expecting it to be a very strong quarter, which will be, unfortunately for us, the last one in which they report their subscriber numbers. Yeah, we suddenly have to read tea leaves in a whole new way.
we are expecting strength coming from the live side of the equation. And I mean, the market capitalization reflects that. How much more strings do they have to pull to outperform going into what analysts are pretty buoyant on the company?
Yeah, I mean, it's pretty crazy to think that Netflix is now worth almost $400 billion. It's more than Disney and several other big media companies combined. And you have to figure that there should be some kind of ceiling on this. But look, the Netflix position is going to be, you know, these live events were going big into that area, and it's going to boost our advertising business, which is one of the reasons that they want to stop reporting subscriber numbers, because they believe that their revenue growth and their profits...
are going to look really good going forward. It just won't be as many new subscribers quarter after quarter. And how technically robust has the live offering been? Well, look, they had well-documented problems during the Tyson-Paul fight. That was largely due to too much demand, which is a good thing if you're trying to attract an audience. They didn't have a lot of problems during the NFL match. I think
You know, these live events on streaming tend to have the same life cycle where there are issues early on where the company is newer to it and they have some issues usually when they put on something that people really want to watch and then they figure it out over time, right? You know, we stream all sorts of things live these days
So I think long term it's going to be fine for them. The question is, what are the events that they're going to collect that deliver or attract a big enough audience if they're not a major buyer of sports rights? Because they're trying to create their own events. But look, they just had the WWE debut. Everyone at Netflix is really happy with it so far. We'll see in three, six, nine months if that remains the case. Don't even get our producer started on her love for Raw. Remix, Lucas Shaw. Brilliant.
Thank you very much indeed. Meanwhile, look, an unlikely winner in the TikTok band saga of late has been Tumalingo. Here's what the CEO had to say earlier on Bloomberg Open Interest. We do have a good number of people learning Mandarin. It's not our most popular language, but it is definitely a popular language. It's among the top eight languages that people are learning.
And we did see a huge spike. And it's mainly because people who are when they thought that TikTok was going to be banned, they started trying some Chinese apps like Red Note. And as soon as they showed up, most of the things were in Chinese. So they came and wanted to learn Chinese on Duolingo because of that.
Duolingo CEO there, a reminder that many of the apps that TikTok users flock to during the quick US ban and turnaround, Mandarin-based. So, Louise Van Haan, optimistic that actually the users will stick around even though TikTok is back online. We start with TikTok, we end with TikTok. That does it for this edition of Bloomberg Technology. Don't forget to 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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