>> from the heart of where innovation, money, and power glide in silicon valley and beyond, this is "bloomberg technology" with carolyn hyde and ed ludlow. caroline: i carolyn hyde at world headquarters in new york. ed: and i ed ludlow in san francisco. caroline: microsoft and labor unions form an alliance on artificial intelligence. we will break down the announcement.

ed: has global regulators examine microsoft's $13 billion investment in openai, the company has a simple response. it does not own a stake. we will discuss the antitrust concerns. caroline: the eu reaches april a merry deal -- a preliminary deal in the first artificial intelligence regulation. we'll discuss that. for a moment let's not talk about ai. we are all focused on the macro data. we take a pause and have the cpi. moves in the bond market more severe. we are up five basis points on the 10 year. we go in cautiously to the data point and the fed decision. i am looking at bloomberg commodity index on the downside is the oil selloff and gold selloff. for us it is our risk asset of choice.

it has had a more volatile ride. we have been rallying hard. we are at 41,736. we took a big leg lower in early asia trading. there was a bit of liquidity gap. people are thinking we are taking profits and we are currently off 4.7%. it has been quite a wild run. ed: we are also getting a reshuffle on the nasdaq 100. coming in doordash and mongo, coming out zoom and lucid. in order to qualify or meet the criteria for the nasdaq 100 you need to have a daily average trading volume of 200,000 shares. the benefit of going in doordash and mongo, visibility for investors. lower cost of capital. access to higher trading or equity volumes. those names going out. lucid moving to the downside. zoom is less impacted.

that change monday, december 18. that is a structural issue. the big news is microsoft. there were two pieces of news. on the one hand this relationship with the afl-cio, broad agreement with unions to cooperate on artificial intelligence. the other more specific piece of news is a case study involving a few hundred staff in a specific video games unit where ai has been brought into the pledge of bargaining agreement. i want to bring in bloomberg's jackie jeff rossen. -- i want to bring in bloomberg's jaffe -- jackie dav ros. jackie: the communication workers of america basically agreed with microsoft they will be able to incorporate ai language into their collective bargaining agreement. that move was one of the first where you saw microsoft agreeing to have language in those

contracts. that goes hand-in-hand with the broader announcement we saw today in collaboration with afl-cio. many people may not realize this labor organization encompasses 12.5 million workers. that includes other affiliated unions like sag-aftra, like the writers guild. the teachers union. a broad-based organization coming together with microsoft in one of the first partnerships of its kind that is tackling how to handle artificial intelligence impact on workers, what they can do to come to the table and say where are workers being impacted and how can we best prepare them? caroline: to that end we heard the president of microsoft saying honestly i cannot say jobs will not be impacted had become obsolete due to ai. how straight talking was he at the announcement? jackie: he was very candid

because you had a room full of people who have serious questions. you have teachers wondering how will this impact my students. the president of the american federation of teachers -- the teachers union -- they are in collaboration with microsoft saying we want to understand how the company is going to help us understand what artificial intelligence is doing to our teachers, our students, what can we do to prepare them. two things came out of the partnership. you've microsoft agreeing to host training sessions for workers across the board. how is artificial intelligence being developed? how can it affect you? giving ai 101 on what the technology is. the next being how can we incorporate your feedback into the room where developers are creating this technology. the third is where can we team up on policy proposals.

they said they want to join forces on putting forth legislation when you have members of the senate and congress coming together and saying we are accepting suggestions and to create an alliance of sorts to put together proposals that are in the best interests of workers. the other thing that came out of this is basically saying we understand that the collective bargaining process is important and we do not want to stand in the way. the agreement also includes a neutrality template, terms that can say we will not stand in the way of people organizing. that is a big step coming from a technology company. it puts the spotlight on other companies like amazon which have not taken a friendly approach when it comes to workers organizing. caroline: rate context. jackie davalos, thank you so much. microsoft has been busy because

of having to defend that relationship with openai. it has been drawing a lot of scrutiny from global regulators and the software giant has a simple argument. it hopes it will resonate with antitrust officials. the message is it does not own a traditional stake in the startup. with us to discuss is rebecca allensworth. all of this comes about from friday, first the u.k., the cma wanting to start requesting people's input as to whether or not de facto microsoft controls openai more that would be seen on the surface of things. then we have the u.k. and u.s., regulators looking into the relationship more broadly. from a legal perspective, how strong is the argument that microsoft has acquired openai? rebecca: i think we do not know the answer to that question

because we do not know the terms of the deal. you notice he said traditional stake. what i want to know is in what sense do they have a nontraditional stake? there is some reporting that they have a nonvoting seat at the table, a position on the board. will that be a situation where that member says i'm not voting on this but if you vote for this i think microsoft will pull out? that will be seen as to factotum, having some kind of control. ed: here is what we know about the structure based on bloomberg reporting. the $13 billion to date did not equate to an equity investment according to bloomberg's reporting. it was that microsoft would derive half of the profits openai generates until a limit. due to its closed profit model. that is the argument microsoft is saying. it is not a stake because it is

not an investment in return for equity. the question is will regulators by that? rebecca: it is an open question we do not know the answer to. antitrust law is not well-positioned to challenge investments. it is specifically said in the clayton act that acquisitions that are merely an investment, that do not involve any decision-making authority, are not covered by that statute. if we're going to talk about section one of the sherman act or section two, i think the regulators would have to see this as a merging of decision-making authority. at the same time, the antitrust laws are pretty flexible about determining whether or not there is de facto decision-making authority. this will not be decided by the corporate form. this'll be a fact intensive inquiry and the facts we do not have yet. caroline: footage we have to try

not to speculate on facts but instead look at what legal ground is. the ftc has pursued a number of cases where they have not won, but they have been trying to swing a perception of where regulators should start to get involved, what consumer protection looks like. in the u.k. we know the cma backed off from its original view of microsoft and activision but did force change on that deal. what you think is ultimately trying to be got across? are they worrying about a monopolization that could go into the world of artificial intelligence and how they get ahead of that? rebecca: i think that is right. so many of the ftc actions happening right now, a major deep pockets competitor, one might say a monopolist, though in this case that is problematic, holding it input that everybody needs to effectively compete. that input here is the gpt model

and the idea would be this will become essential to compete in so many markets. if it is controlled by one single entity that has the power to bring it to market and can exclude other people who might compete, that could be bad for competition. as you point out, that theory of competition which is not about head-to-head, it is not about microsoft competes with the chatgpt product, that makes it a different type of challenge than the antitrust laws we have been used to over the last 40 years. it is not precluded by the statute but it is unorthodox. ed: how much weight do you think a regulator would give to the idea that there are companies offering similar foundation. they are not the same as gpt but there are other models. rebecca: this is a great question because this has always been a problem in antitrust. you are talking about market

definition. it is the chatgpt model because it is so different at is so important. there is artificial intelligence, which is brought, and people have been using artificial intelligence for many years and there a lot of competitors within it. the question should be about substitution. is there a substitutable product for openai technology. there is a good argument that the answer to the question is no. ed: our thanks to rebecca allensworth, professor at vanderbilt law school on potential antitrust action against openai and microsoft. european regulators striking a landmark deal to regulate artificial intelligence. we will discuss with ashley casovan. that is our conversation next. this is bloomberg technology.

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>> we lose control of the machines. to some extent, and the hows our very much being debated, of having the failsafe mechanisms in place that humans can override the systems. that is largest thing i worry about. if the machines or the algorithms can be developed in such a way that there is no failsafe mechanism that can be overridden by a human, that is what worries me. >> that was the ceo speaking

exclusively to bloomberg in november about his concerns regarding generative ai. he shares concerns with european regulators who reached a deal to formally regulate the technology. joining us with more is ashley casovan, managing director of the international association of the privacy professionals ai governance center, one of the largest and most comprehensive resources for global privacy and information. there is a lot in this eu ai act. the top line is the use policy, disclosure about the data used to train models. what is your take away on the depth of how this has been regulated in europe? ashley: this has brought in regulations for not only european companies but companies across the world. the fact they are looking to

align with international definitions, so following and changing through the discussions to oecd definitions indicates how big of an impact this will have. caroline: the whole difficulty was frustrating innovation on the one side and on the others -- was fostering innovation on the one side and protecting consumers on the other. does this protect innovation in europe? many were worried about some of the startups. ashley: i think it is to be determined how this is going to be enforced and the implications. i do think what has been drafted and what we have seen from the dialogue because we have not seen the text of the final act will be left to how it is enforced i think relying on

product safety like third-party audits will provide that balance in the protection of the public. caroline: what is notable is we have had much talk of regulation but this is the first time you get fines being outlined, only up to 35 million euros, but that is a lot if you're a small company. a key negotiator in all of this try to drive across the line when it comes to the eu. he was talking about how much the eu is leading. is it and how much do you think this will set the scene for the global ai players? ultimately it is only openai that seems to be affected thus far. ashley: it is a great question. it is funny you are sharing that post, i guess that is what we

are calling tweets. the reason why is there is been a lot of conversations in nations all over the world. you mentioned the u.s. recent ai executive order that is looking to understand the implications of these systems and drive good guardrails around how to balance innovation and think through what different implications are. there were countries that want to get to the gates. it is great that europe did that. i think there is actually a converging of a lot of different guardrails in different formats all over the world. ed: whether it is at the parliament level in europe or congress in america, do the

people writing the rules and the regulation have a deep enough understanding of what it is they are regulating? ashley: it is going to be resource implication in any country looking to oversee some of these rules. i do not think they are doing it alone. i have seen how there has been a lot of public participation in these processes. civil society organizations providing feedback. companies that are brought to the table through not just some of this drafting dialogue, but as we have seen with some of the codes that have come out and were even referenced in the work from the commission, the g-7 hiroshima process that those companies are at the table providing input and will start to see that through enforcement. again there is a reliance on standards which are typically developed by the industry.

it is a bit of a misnomer to think it will just be relying on resources provided by the government. caroline: previously you are director of data and digital for government of canada. having to look around responsible ai a long time before all of this. ashley casovan, managing director of the eye governance center. coming up, the rise of pdd. how the company is outpacing alibaba. this is bloomberg technology. ♪

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crafted just for traders. all so you can trade brilliantly. ed: first up in the news, apple said it shut down third-party applications, enabling android

devices to use i message to communicate with iphone users, citing significant risk to user security and privacy. shares of the south korean firm wider planet, which uses ai to produce advertising, jumped 69% in two sessions after it said squid game's lead start would its biggest shareholder. tiktok agreed to invest $1.5 billion to combine it shopping businesses with indonesia's go to group. tiktok gets a 75% stake. caroline: let's talk about e-commerce more broadly. little-known pdd has been surging in china. now it's temu discount at its -- is rivaling amazon and walmart. we look at how the company is outpacing alibaba in terms of

market capitalization and in -- and earning this liberty ceo praise. a bit of an american addiction. they might not know that pdd is the company behind it but it feels like everyone is using temu. spencer: it has come into the u.s. by storm and is starting to gobble up spending and market share and had its big super bowl advertising blitz in february saying shop like a billionaire. you can splurge as if you have a ton of money even if you do not. it is like an online dollar general in your phone of a broad assortment of stuff, very low prices, and the sacrifice u.s. shoppers have to make is waiting for delivery times. that would be the downside. you'll get prices you cannot beat anywhere else but you have to wait for the stuff to come to your doorstep. caroline: what is the threat --

ed: what is the threat to amazon? spencer: the threat is the price sensitivity. will it win some of the market share from amazon, especially a stocking stuffer market share. amazon ceo is giving interviews where he says customers are still being cautious, they are not buying big ticket items, they are buying consumables, that is where teemu is. most of the products are low cost. they also seem to grab you with the social element. they have a lot of games. it could be overwhelming. it is like a casino on your phone with lots of spinning wheels and games about raising fish and farming so they tried to grab your attention and not just your money. ed: thank you very much. coming up we will take the pulse of the vc industry and be joined

by mitchell green who will give us his outlook for 2024. from new york city, this is bloomberg technology. ♪ first time i connected with kim, she told me that her husband had passed. and that he took care of all of the

internet connected devices in the home. i told her, “i'm here to take care of you.” connecting with kim... made me reconnect with my mom. it's very important to keep loved ones close. we know that creating memories with loved ones brings so much joy to your life. a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you.

caroline: welcome back to bloomberg technology. ed: a quick check on the markets. two stories that have been driving moves. this time europe with worldwide, fintech company that closed up 1.5% after an activist investor said get rid of the chairman and change the board. you will remember world line, a stock that fell 60% in a single day after dramatically revised its growth forecast and everyone said what on earth is going on, bluebell saying bring confidence and trust back to that name and

calling for changers which investors responded to positively. oracle is reporting earnings after the bell, a big focus on the data center business. one third of revenue. the story is can they get access to the high-performance gpu's they need to build out data set to the infrastructure, both on the training and inference side. we had some of the people come on and say why are we not talking more about oracle in the same context of the other hyper scalars. they can offer the same thing. there is a market for people who want to train large language models. oracle just needs the infrastructure to approach that. caroline: ai has sucked all of the oxygen out of the show and 2023 when it comes to investment. let's go from public market investments to the private side. mitchell green is on today's vc spotlight, the founder of lead edge capital, investing across

public and private companies and also looking for areas of liquidity when it comes to the sector market. i'm interested how much you think ai will be the play for 2024, whether buying on the secondary market were investing in early rounds. mitchell: thanks a for having me in. there'll will be a lot of things going on. not just ai where there are a lot of interesting software companies being built. i think it is a function of lots of different industries. ed: the friday lunchtime that sam altman was fired by that then board of openai, i do not think a bus will forget. the story i was looking into was the shocking liquidity on openai shares, largely through spv transactions, some of which blocks of shares or units of

spv's were valuing openai at $100 billion. i do not think our audience knows how liquid shares of openai and spacex are. which names do expect to be in this market you have outlined? mitchell: in a world where investors -- people who invest in funds, they are demanding investors, private equity funds give capital back to their investors, in which case people will look to secondary markets to sell. you will continue to see increase in companies for secondary markets. you will see a lot of continuation funds. anything that drives dpi, which is money back.

it is trying to return money to the lp. ed: is all of this a precursor or leading indicator that we will start to see more primary rounds and more listings or exits in 2024? mitchell: i do not think it is a precursor. i think it is a result of not having an ipo market right now. that being said, going all the way back to facebook and alibaba , there has been secondary markets for a lot of these big companies, even in robust ipo markets. i think investors need to get confident the fed is done raising rates. i do not think they need to lower them a bunch for the ipa will -- for the ipo market that happened, but they need to get a

sense that rate rising is done. i expect we will see more tech ipos in 2024 than 2023, but that is not hard to do. caroline: mitchell, you do take part in the liquidity movement and buying on the secondary market. what are the valuations we are looking at? a lot of these gps get stressed from their lps to be selling out an evaluation that is not as high as it was previously. mitchell: i think 2024 -- 2024, 2025, 2026, you will see a lot of ipos, that just means i handful of fools that have paid a high price in the last round are now having to down round. the company is smart. they raise money at x and when

they list their shares it became slightly lower than x. very few of these investors have blocks on the ipos so i think you'll see a lot of down round ipos happen. we have seen it before. down round ipo does not mean anything. they can still be a great opportunity to buy the stock over the long term. at that point in time somebody was willing to pay a higher price. in the secondary markets, it just depends. i think the price of openai is probably a bit naughty, but what do i know. in a world where gp -- people that run funds need to get liquidity, there is probably -- and have been sitting on positions, there probably interesting opportunities. we just bought something less than 15 times ebit up and it is

a rule of 60 business which means it grows 25 and as 35% ebit up. caroline: may be of people are looking to get into stripe an evaluation they found more digestible they will be able to do the seminary market right now. who are those buyers and who do you tend to be the sellers in this type of market? mitchell: that is a great question. on the sell side it could be a fund that was an early investor and could be a late investor that needs to get liquidity to their lps, your crossover hedge funds. it could be an early employee or a former employee. an early angel investor. depending on the type of company there a lot of secondary funds set up to do this.

blackstone secondary fund, there are a bunch of them. also people like industry ventures. additionally, existing investors often have the right of first refusal to buy stock in the business and if the prices are attractive they often do. other venture firms that want exposure to a company, we became big enough and it was primarily through company facilitated secondary. there are two types of secondary transactions. it can be company facilitated or one-off rogue. rogue is not bad, it is just different. sometimes they are company organized secondaries. ed: what was the name you bought it 15 times ebit up. mitchell: i cannot tell you that. it is a software company i can

assure you that not one of your viewers have heard of the company. it makes time tracking software. ed: interesting. mitchell grade, founder and leading manager of lead edge capital. coming up, elon musk reinstates alex jones's attack -- alex jones's account on x after a five-year ban. we have the details next. this is bloomberg technology. ♪ just pour in some milk, throw in some frozen fruit, and in 20 seconds you've got yourself a nutritiou and delicious smoothie. mmm! tastes just like the ones they sell here. and for a whole lot less. i'm ruined. awww. kick your expensive smoothie bar habit to the curb. order yours now at blendjet.com. that first time you take a step back. i made that. with your very own online store.

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ed: some website -- ab's for websites that use ai to undress women in photos.

24 million people visited undressing websites. it is all part of a worrying trend known as deepfake pornography. at the center of that reporting is also data around the volume in advertising behind those apps and sites and where they are being advertised. >> one of the big problems is these app developers are getting a load of free marketing usual social media platforms. we saw 2400% increase from last year according to referral links from x and read it and eve can see if you search keywords associated with these app's that the adverts pop up with pictures of women teasing and winking at you saying if you follow this link you will get to this app and it is a free way for them to provide their services. the social network has said they

are cracking down on it. they have had free marketing for a good year now. caroline: some of them have also paid for sponsored content on google's youtube and google spokesperson says the company does not allow ads that contain sexually explicit content. the worrying thing is people who are being undressed do not realize, and also -- of course is a deepfake so it is not real -- but there is no legal recourse at the moment. margi: there is no federal law that prohibits nonconsensual deepfake pornography edit is something people who i have interviewed, experts in ai are concerned about. we have heard for years about celebrity deepfake pornography, which is awful, but now we are seeing normal people becoming part of this story. in businessweek we had a cover

story, and awful story about highschooler's in levittown. they were deepfake. they found the person who deepfaked them. it is one story that will keep happening because there is no legal recourse for victims. the technology is spiraling out of control. caroline: stellar reporting you and the team at bloomberg continue to do. elon musk has restored the account of right-wing conspiracy theorists alex jones on x after users voted for his reinstatement and five years after his initial band. bloomberg's kurt wagner joins us for more. not only was he reinstated, e that was put onto the platform and an audio recording with elon musk plus alex jones, plus others.

discusses return. what did you make of it all? kurt: this is what elon musk has been doing since he took over the company. he has been rescinding a lot of these rules and punishments that twitter 1.0 had put out, but welcoming these people back with open arms, giving them a platform by him showing up on that chat with alex jones, kind of bringing his audience along to alex jones rhetoric and message. it is part of elon musk's plan to drastically change what he views as x versus twitter and to reimagine what this company is supposed to look like. ed: as caroline outlined, elon musk today -- elon musk did a poll that asked the user based a bit on this. it is important to remind our audience why alex jones was

banned in the first place. kurt: he was banned in 2019 and had been a repeat rules violator under the prior management. he had come out and been attacking members of the media, i think even said in a video around get your battle rifles ready for the media, so he was banned for violating the rules around harassment and glorifying violence. those are the types of things that elon musk has said he does not care much about come as long as something is not illegal he thinks it should be fine. that is why we are seeing a lot of people that twitter 1.0 had band or punish starting to return to x. caroline: elon musk did say keep disagrees with what alex jones said about sandy hook. he posted his first-born child

died in his arms and said i have no mercy for anyone who would use the deaths of children for gain. he sort of didn't about turn. we moved to a different story occurring on x, which is another voice has taken off the platform to start a different version of subscriber growth for himself. i wanted to ask about top or carlson. he is -- about tucker carlson. he is not launching a new service on x, but it seems like he is launching a new streaming service. it seems like launching on x did not work out. kurt: there is a reason x is not tv. they tried to do this in 2016. they tried to make twitter a streaming service. they got the nfl and got a bunch of deals with other media publishers. it did not work. i think twitter is best as a

complement to tv in my guess is tucker carlson probably figured that out himself as he is trying to build up the new platform. i've no doubt given his relationship with elon musk, i have no doubt that x will be an important distribution channel for him, but x is not a video or tv service and they have not been able to turn it into one yet. ed: bloomberg's kurt wagner, good to have you back after a few weeks away from the show. coming up, we'll talk the state of the metaverse and wearables when it comes to health and wellness. this is bloomberg technology. ♪

ed: we are looking at apple. the iphone maker offering incentive to artists and record labels to produce music using the spatial audio technology that surrounds listeners in sound. starting next year the company plans to give added waiting to streams of songs mixed in dolby at most technology according to bloomberg sources. that could mean higher royalty payments for artist who were the first to embrace the technology made by dolby laboratories. caroline: let's stick with apple

and turn our attention to health and wellness. in 2024 bloomberg showed that apple is planning on updated watch that will detect blood pressure, sleep apnea, and much more. let's discuss where we are with wearables and digital fitness. it is the ceo of future, company that peers users with coaches and is backed by investors. i am pleased to welcome rishi ma ndel. we are seeing this new type of relationship with us and our fitness and knowledge of our own wellness, how much of that is being driven by wearables and the like? rishi: there are 100 million plus wearables and better than ever we can understand each individual. we can understand the history of health understanding is based on men. recruited studies, small population. imagine a world where we are now

getting inputs about every individual, how women's help might change and evolve. the consumers thinking a lot about health and fitness, and in nai world, often the biggest winners are those with the largest proprietary data sets. you look at a company like apple now just test on how your moving through the world and your blood glucose and certain markers bridging across that information can help taylor to an individual better what they should be doing when and why and then you can build innovative delivery mechanisms on top of that. caroline: i have been a guinea pig, i have a wearable ring because it was meant to be better for women tracking cycles and the like but i have not found it that good at it. it did not realize i had covid. i have no idea if the calorie content is true. i am interested how many are using you from women versus men. what are the demographics coming to her platform?

rishi: i love what you're talking about about the lack of accuracy or frankly a lot of that data is hard to parse through on your own. with future we match every single person with a coach. that coaches ai assisted and able to sift through so much data, not because they are manually doing it but we have built technology to allow them to spot trends and interpret different markers about you. right now we see a lot of ai is rudimentary in health. what we will see over the next five years is an explosion of this idea of augmented intelligence. taking your physician and making sure they are armed with that information. taking a radiologist and double checking a scan. there is still that human there and with future that is what we see. with fitness we give you a coach. that coaches highly sophisticated in building your program, whether you are working

out at home. then we use a lot of ai to augment for that coach what kind of data reach out to caroline and what is the right thing to say and what are the trends we are observing? that is powerful and it is about 50-50 men and women who reach out to get a coach on future. ed: is it fitness that will be the driver of wearables adoption or is it health data that will be the principal driver? rishi: the reason we started with fitness is because there is a daily and very common interaction with fitness. people who are engaging with it are doing it daily, weekly, that kind of cadence. and what i was saying early is the biggest winners are those with the largest proprietary data sets. when we interact with a member every single day we can come to understand their life in a fulsome way. our average member will trade three text every day with their coach, 1000 a year.

lay that on top of the biometrics we get from wearables and the understanding of their behaviors and now you have a big picture. ed: -- caroline: wish we had longer. future ceo there. that does it for this edition of "bloomberg technology." ♪

♪ >> welcome to the "bloomberg etf iq." it's the last week that matters when it comes to 2023. let's get to it, to the biggest stories in the more than 10 children dollar global etf industry. it is a packed week with economic data and central-bank decisions that will test optimism, investors and lay the groundwork for 2024. scarlet: will