>> live from bloomberg's world headquarters in new york. kailey: welcome to bloomberg crypto, a look at the people, transactions, and technology shaping the world of decentralized finance. today is a landmark moment that broadens access to the largest cryptocurrency. sonali: in a few minutes we are

going to talk to the grayscale ceo michael sean and shine -- kailey: it is not just grayscale. 10 others are part of the race to stand out among the crowd. we will speak with sandy kaul. all of that is ahead but first let's get a snapshot of the market. the price action on this first a of trading in the u.s. of spot bitcoin. bitcoin now around $46,400 or so. i will show you the intraday action in a minute. interesting to see either outperforming. the conversation has moved towards what can come next now that spot be -- interesting to see some bitcoin proxies moving lower in terms of different equities. microstrategy one of the biggest ones because it holds so much bitcoin. it is down by about 4.25%.

coinbase down about 5.5%. a lot of questions about what this development might mean. let's get back to that chart of bitcoin. at one point today we were at $49,000, the highest level going back to early 2022. around two years here. right after we broke through that level we went right back down. maybe some technical contributions to the intraday move but right now we are only higher by about 1%. sonali: this date was always going to be choppy but if you look at the volumes this will tell you why. you see the two biggest traders of the day. blackrock, bitcoin spot being the biggest gainers. here is the price and you are seeing them fluctuate. generally you have seen price movement in interesting directions higher.

there is a big question about that because there are flows involved to talk about and we don't get that flow data until later today into tomorrow. can we will get a better sense of the selling pressure if there is any in any of these funds, particularly when we come to the action in gbtc which is a big holder of bitcoin in the market. so we will keep and i on that. kailey: we will look forward to that tomorrow but the fact remains today the beginning of trading has been a decade in the making and here is some of what our guests had to say about it. >> first wave of initial spot launches in the u.s. >> institutions getting the green light now. >> we see aggressive commoditization of fees. >> this is a critical steppingstone. >> a steppingstone in terms of access. >> the access it provides to investors. >> this is going to be a net positive. >> even going to 0.14 0.5% of a portfolio for institutions is

going to be a price moving event. >> there is pent up, clients want this. >> this one has taken so long. >> we will have to see where the market goes. sonali: joining us now is sandy kaul, one of the 11 spot bitcoin etf issuers. what can you tell us about what you are seeing today in terms of new buyers into etf? sandy: today has been a super exciting session to watch the launch that has been so long in the making. the volumes have been really encouraging. you compare this to the launches of other etf's that have been high-profile like the gold etf it looks like we are on track for potentially a record day. and it is affirming a lot of the thinking that there is pent-up demand for these etf's. but this is just day one and there will be many more exciting

ones to come in the future as this product starts to be more widely listed and as people get broader access. kailey: there are a lot of questions about how much financial advisors will be willing to come into the product. and you even see some rivals, vanguard, not even offering them at all. how much caution is there still when it comes to this asset class? sandy: i think there is still a lot of misunderstanding of this asset class and a lot of the headlines from a decade ago or more still scare people. i think there is a lack of understanding around how much regulators around the world have been putting their lands onto the crypto domain. setting rules that are going to help to create a more professional trading environment. and how they have learned to adapt their regulatory systems to monitor the wallets trading bitcoin to ensure there are not bad actors coming into this space. a lot of people's reticence results from old headlines.

and i think that as they understand this etf is going to create much more easy access, the real technology innovation potential of the underlying ecosystem, bitcoin and all the coins bitcoin influences, that is a whole new area of innovation that we have never really been able to have adequately represented in our portfolios because we have always had to use proxies. we have never been able to really put an allocation in for the direct: because there were risks going into the crypto domain and this really helps to eliminate some of those risks. so it should open up a lot of investment capital for this space. kailey: at least to make investment in bitcoin directly or indirectly easier perhaps, but the s.e.c. was very specific in saying this approval was not an endorsement of bitcoin. also it applies only to bitcoin,

which they described as a nonsecurity commodity. it raises the question of everything else. would franklin templeton be willing to push the s.e.c. on that, or are you thinking about different spot products potentially in the future? sandy: franklin templeton is a leader in the digital asset space. we have the first mutual fund ever listed on blockchain. we are very active in the domain. we have our own internal research, we publish our own thinking on these coins. this is something we are committed to as an organization and have believed in for many years now. because we see the potential of this crypto domain. as we continue to offer our investors more opportunities to access this innovation and capture the beta of what we call this new protocol economy. kailey: but what would you start with? eth, something else, another alt coin? sandy: i think you can

anticipate you will see more filings coming from us at some point. sonali: how soon can they come? you see a market today with a lot of excitement already built around other assets. sandy: that is a normal progression path. there are many coins that have hit large racket -- rapid caps within the space. why stop with just bitcoin? there are other opportunities in different opportunities. ethereum is another asset in the crypto domain that offers a slightly different value proposition than bitcoin because it is more of an app development platform and fosters its own ecosystem. that is a slightly different proposition than bitcoin. in all portfolio theory it is better to have multiple than a single. so it would not be reasonable to expect bitcoin is going to be the only asset that moves into

vehicles that make it easier for investors to put their money into this space. sonali: earlier in your career you had a career in the commodities markets. a lot of people will liken this to digital gold, like an etf that would be backed by gold but now backed by bitcoin. do you agree with that categorization? sandy: i think there is a truth to that because there is a digital scarcity program into bitcoin where you only get 21 million coins ever going to be created, and you can track every one of those coins through a decentralized process, so no one can control that supply. there are some good analogies that can be drawn to the gold situation. i think the volatility that you see in the bitcoin markets are often similar to the volatility that you will see in commodity markets. and responsible trading firms like franklin templeton know how to handle that type of volatility and be get these markets every day on behalf of our investors. so i think this is a great

opportunity for them and there is a lot they can relate to with this investment, even if they don't understand bitcoin itself. kailey: we were just showing the fees on our board. obviously a lot of you came out of this date at one time, 11 and total. some issuers decided to waive a fee entirely for a certain span of time and they are lower already than franklin templeton when the fees actually do kick in. how long are you going to give it? what kind of flow data you need to see whether you need to reassess that 29 basis points? sandy: we are already in conversation with our investors to really understand what they are looking for from this moment in time. as i said, today is day one and it is super exciting but this is not the only day in the horse race. so i think this is something that we will be examining and i think you will hear news from us on this front when we feel it is appropriate. but our product is something

that is really exciting and new. we are seeing lots of engagement online and through our social media with our new logo we put out to celebrate the launch of our bts -- bitcoin etf today. we are just excited to be in the game and looking forward to seeing how this opens up the space in how we are going to build our volumes over time. kailey: we were excited to have you today, so thank you very much for joining us. sandy kaul of franklin templeton. still coming up, michael sonnenshein will join the show to discuss how all of this impacts grayscale's business because frankly, they started this all. sonali: then we are going to talk about another pioneer, circle is trying to go public for the second time since 2022. kailey: to access all the latest on crypto, check out see our wipe ego on the terminal. this is bloomberg. ♪

>> the chair is right to point out this is specific to a particular set of products. but obviously precedent matters, and so you look at the reasoning, and people will do this, they will look at the reasoning in order and seek to apply it to other circumstances as appropriate. so i think the only thing i will say is that one of my complaints in this area has been that we have not always stuck with precedent when it comes to these

kind of exchange traded products. we have not necessarily apply the same standards we do with respect to other kind of exchange traded products. but it is a precedent people will point to. sonali: that was fcc commissioner hester peirce speaking with me yesterday after the approval of spot bitcoin etfs. joining us is michael sonnenshein, ceo of grayscale. not just one of the 11 issuers, he had gbtc converted into this. arguably what started this all. thank you very much for joining us. if you look at the language in gary gensler's statement about the approval he specifically points to the grayscale case and says that changed the circumstances. why he felt it was the most sustainable path forward to approve the listing in trading of these etp's. how does it feel? michael: it is definitely a historic day.

joining you guys live from the floor of the new york stock exchange, this is the culmination of 10 years of work. it is a huge thank you at this moment to our investors for being patient and supporting us, a huge thank you to the grayscale team. looking back on the last couple of years, making the decision to sue our regulator, to have that unanimous victory in court, and all that come to fruition and actually have gbtc a blessed on the new york stock exchange as the world's second-largest commodity etf is such a historic moment and such a milestone. thrilled and feeling really good today. sonali: the largest crypto fund already in the world for bitcoin. how do you go around attracting new assets to this etf form? what do your conversations with clients look like today? michael: what is really exciting about this day is you are now going to have 11 different spot

bitcoin etf's on the market. gbtc has really paved the way for a lot of those other products to come to market. gbtc will be differentiated. it came to market with $28 billion in assets, tremendous liquidity. we are seeing that play out even further today on the new york stock exchange. but it will not necessarily mean everything to all investors. some investors may look for these products that are super low cost and that is what is most important to them. two other investors the fact that gbtc has a tenure-track record, billions of dollars of a um, that liquidity profile, that will be differentiators. but it is too early to see how it will play out. sonali: we jumped up to $49,000 and now we are back to barely around $46,000. investors are concerned about potential selling pressure. what are you experiencing in terms of lows? michael: last time i checked

gbtc was one of the only etf's positive on the day. we had a successful and smooth up listing. the notional trading volume had eclipsed well above $1.5 billion today. so the volumes have been really strong. kailey: obviously that is for gbtc, which has taken up so much attention for this very reason about your attempts to convert it to the spot bitcoin etf, what it would mean to everyone else. but to go back what we were just hearing, this approval was very narrow and specific to bitcoin products. grayscale has plenty of other products out there. are you going to pick a fight with the s.e.c. about any of those, try and make any of those spot etf's? michael: i think you know our business model pretty well and we are pretty transparent about it. we have a family of 17 different digital asset products that are each at one stage of a very

prescribed lifecycle. gbtc is the first of those products to get to stage four and upload -- up list is a spot bitcoin etf. last year we filed for a spot at ethereum etf. we believe gbtc can pave the way for the rest of the product family to continue along that four-phase lifecycle. ultimately you will see from the grayscale family an entire suite of crypto-focused etf's. sonali: so if you want to see in a ethereum etf, how soon do you think something like that could happen? the s.e.c. was also clear this was just an approval for bitcoin-related etp's. in fact, they were critical about the crypto industry in their statement. michael: i do think one of the things we have to look at in how we got to this historic outcome was the fact the s.e.c. was treating the bitcoin futures-based products differently than the bitcoin spot based products like gbtc. the fact that we now have that

similar situation with a theory and futures-based etf's but not ethereum spot may pretend we have similar arguments that surround the eventual up listing or approval of spot a theory and products in the market. we have a market of significant size on the cme for ethereum and that is a really important point in another really important validation for how crypto as an asset classes here to stay. sonali: i am curious about the fee structure. i ask you this every time and it has been the biggest question. was the calculus you would rather keep the fee at 1.5%, and even face potential outflows because of it with others competing on fees, rather than try and compete in the race to zero for etf's? michael: i think for us, first of all like i have always told you, it is always going to be that we were going to reduce fees and we made good on that commitment. we reduced fees by 25%. other issuers coming into the market with no assets, no trading volumes, nobody's of

investors, were coming out of the gate offering incentives to get investors into their funds. i do think gbtc we have seen in other tf categories is that specialist, that first to market with the a um, with the trading volume and -- we are seeing it now for spot bitcoin products. sonali: this is an important differentiation. flows can mean inflows or outflows. what are you seeing in terms of directions either way? net flows. michael: it is too early to say. since gbtc has been trading since 2015 we have had investors come in and out of our fund every day, hundreds of thousands of investors. i think the same will be true of gbtc now as an etf. kailey: obviously this concludes what had been a long litigation mess that grayscale had to be

involved in with s.e.c. alameda has involved grayscale in a $4 billion suit, seeking $4 billion in value for grayscale shareholders. now that these spot etf products are approved, how does that change that legal issue for you? michael: it is tough to comment on ongoing litigation. but what i will say is that we have fulfilled the promise that we made to investors, which was getting gbtc up listed as a spot bitcoin etf, and that all came true this very morning. sonali: michael, what is next? what do the next couple of days look like to you? are you running around looking for new assets, are you planning on cutting fees once more? michael: the last few days have almost been a blur. having a lot of conversations with folks like yourselves. speaking a lot without investors. we are hearing an outpouring of

support from the investment community thanking the grayscale team for forging ahead and doing the tough work to go up against the regulator knowing we had sound arguments. and that has paved the way for the outcome we have now achieved. sonali: michael sonnenshein, thank you so much for your time on this historic day. i know a lot of the crypto industry is pointing to you for the reason this is all happening. so we would like to have you back on the next set of etf's. coming up we are going to talk about jeremy allaire pursuit of circle, which is submitting plans to launch an initial public offering. another big moment for the public markets in crypto. more on that next. this is bloomberg. ♪

>> what it really tells you is

from a regulatory point of view there has been some maturing of the bitcoin markets to the point where the s.e.c. has now said we approve these new vehicles that allow retail investors to access bitcoin, they don't have to buy underlying bitcoin, but they can have an opinion about the trends in bitcoin and express themselves in a regulated market. sonali: nasdaq chair and ceo adina freeman speaking last night at ces. in other big news for digital asset adoption, circle set at confidentially exhibited plans to launch an ipo, two years after scrapping plans to go public via a spac. they filed a draft registration statement with the s.e.c. today. circle's valuation was estimated at $9 billion when it tried to go public in 2022. now we are going from bitcoin to stable coins. kailey: and of course there is still a lot of clarity the stable coin market may need from a regulatory standpoint,

although arguably there are still plenty of regulatory questions right now, even though we have at least now spot etf's in the u.s. beginning trading today. thank you very much for joining us on this special edition of bloomberg crypto to mark this milestone. we will be back next tuesday at 1:00 p.m. wall street time. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

jon: this is bloomberg markets. sonali: i want to get a quick check on the markets before we get into some interesting movements on the day. the s&p 500 down on the day and the nasdaq as well. we are looking at yields doing roughly nothing after very interesting inflation data this morning. we will talk about the rate path moving forward. bitcoin finally back on the rise but still below the $49,000

level it hit earlier today on the back of the bitcoin etf's. jon: we are watching media-related stocks, whether there is a deal circling paramount. that stock and warner bros. down after concerns about ad outlook. and with the financials right now ahead of citigroup quarterly results we are seeing weakness in that stock. a host of charges the company unveiled ahead of quarterly results. plus bloomberg reporting on the possibility of an upcoming settlement of a trading probe from morgan stanley. we will continue to watch the shares of morgan stanley and citigroup through the trading day as well. sonali: we are going to talk about u.s. inflation data because it accelerated in december as americans paid more for housing and energy. that complicates the bets that the federal reserve will cut interest rates soon. here's how bloomberg top guests reacted. >> cpi coming in hotter than expected. >> already complaining about inflation. saying the cost of doing

business is higher. >> that has proven to be very sticky. >> from wage increases to higher interest rates. >> the economy is rebalancing. >> it is not a spread. this is a marathon. >> it still puts us on a downward trajectory. >> we think the fed will not start cutting rates until june. >> they will have to be patient. >> push back the timing of the fed interest rate cut. >> the first one starting in march of 2024. >> the key thing will be the course of inflation. >> we see less rate cuts and we see them starting later because the fed needs more data around inflation easing. sonali: now the market is on fragile footing especially as the inflation data has come in hot. and as strong questions about the ultimate path of those fed rate cuts. joining us now is something things about this deeply, jason thomas, head of global research. at investment strategy at carlisle. nice to have you back. if you see what we saw today,

this higher-than-expected inflation and these steep expectations the market had on the direction of rate cuts, what does this mean for the interest rate trajectory in the united states when you pare this all together? jason: i think when we look at the market rebound in the last two months of 2023, it was predicated on three interlinking assumptions. rate cuts would begin soon, in march. they would be numerous, up to six, perhaps more. and he would arrive in an otherwise benign broader economic contexts. 1.5% gdp growth was the consensus expectation. over 10% growth in corporate earnings. this makes a march cut less likely but kurt serve as an impetus for a broader rethink of the likelihood of this broader scenario. sonali: paint a picture for me about what the economy could look like this year based on the

data we have seen so far. jason: the way i look at it is there is a large decline in conditional risk in this market. there is no case for additional rate hikes at the moment. but more importantly the decline in inflation has opened up policy space for the fed. should they need to ease aggressively, that they can anyway today that was not open to them six or nine months ago when they had to be concerned about entrenched inflation, perhaps entrenched higher inflation expectations. so the issue to me is if you have a relatively benign economic outlook where growth persists it is likely to be a situation where the fed is in more of a fine-tuning mode. similar to what we saw in the soft landing of 1995, 1996, where they cut three times. we also saw three cuts in 1998 and 2002.

so, conditional on a reasonably good economic outcome, growth persistent through the year at that 1% to 2% rate. people need to dial back rate cut expectations. conversely, we could get eight to 10 rate cuts. the fed has the space to do that but you are probably not going to like the economic conditions that ultimately give rise to that kind of policy response. jon: this seems to be the immediate discussion in the markets today, at what point we see rate cuts. there seem to be around 50-50 thinking, at least among traders polled by bloomberg, in a move in march. it seems like based on what you are saying we will not see any rate cuts starting in march. jason: it is certainly possible. it is less likely today than it was yesterday. we will just start from there. secondly, we need to think about

the magnitudes and the conditionality. three rate cuts is a reasonable baseline. if you expect the economy to continue to grow and you get that growth in earnings that is being forecast. in that kind of scenario you can imagine a cut in june and a very cautious approach, waiting a few months to see how the data response to that. also i would say much of the decline in inflation, in fact the main driver of the decline, has been an outright fall in goods prices. much of that has been attributable to households spending on experiences, traveling, going to taylor swift shows. that led to an unwanted accumulation of inventory. inventory sales ratio surged, businesses responded with aggressive price discounting. that is now effectively over. inventory sales ratios are back to pre-pandemic averages. he saw that this morning with

core goods prices being flat rather than declining and pulling overall inflation down. of course shipping costs going up. there were enough upside risks that people need to temper their expectations. jon: do we also have to consider something else you have talked about, the ai transition as well? all of this rate discussion happening in what feels like a period of great change for the broader industry. jason: when i think about the economic outlook and why i am reasonably constructive, there are three pillars. the first is that the household sector has not been as impacted by rate hikes as some suspect, largely because of the 30 year fixed-rate mortgage. households are paying 3.8% on the existing stock of mortgages today. secondly, we have quite a lot of preindustrial is a.

the fixed investment today in manufacturing facilities related to energy transition and semiconductors, building up capacity and redundancy in response to the vulnerabilities revealed by the pandemic is also supporting growth. third and perhaps more importantly is the broader economy's embrace of ai. i think this is something that has the potential to increase revenues and margins in terms of product development. software, biologics, pharmaceuticals especially. also in terms of sales and marketing come in terms of targeting consumers. also exhibiting greater price discrimination. using ai and related algorithms to find laces where you can raise prices and find perhaps profit maximizing and price cuts. this will be a big part of the story in 2024. sonali: it is certainly a relevant discussion to have.

another question, carlisle put out big questions and one of them is weighing in the minds of investors, this idea of how much more pain there is in the real estate sector in particular. you see commercial real estate nowhere near the pain yet investors were expecting. what has got to give? jason: look, we know that the market value of commercial real estate is ultimately a function of the market value of the economic activity that occurs on premises. in the office sector we know there has been a big decline in net economic activity occurring in officers. people that go to the office stay much shorter than had been the case previously. when you look at job postings, most offer remote or hybrid arrangements. people are very focused on the potential decline in office properties. what we suggest that is perhaps

less appreciated is this may be less value destruction than it is value transfer. because this economic activity is still occurring. in fact office consuming sector revenue grew about 6% last year. it is just that more of it is occurring at home. and with the decline in rental expense, as some businesses scale back on floor space demand, you are going to have a transfer to households. that is likely to be reflected in higher rents. this could also partly explain why rent has been so sticky in the cpi. people have been expecting some of the increase in rents to abate at this point. but today we are still seeing 6% analyzed growth in growth primary and owner rent. so this will be a huge question for 2024 and a lot of risks. but in underappreciated asset of this is this potential transfer of value to residential real

estate households more broadly. sonali: when you think about the impact of china lastly, that is another big question mark here on the geopolitical side as well as competitive dynamics. ai, autos, autos recently becoming such a large part of the economy. does that create an advantage that perhaps investors are not accounting for? jason: i think it does. china has had a very large auto sector for a number of years but it was not internationally competitive. at the onset of the pandemic china ran about a $35 billion annual deficit in auto trade. last year that was a $30 billion surplus and mostly attributable to ev use. ev's now account for over one third of them essex sales, 25% of exports and 50% of ev sales globally involves chinese brands. people focus on subsidies.

a lot of it is have different ev czar from traditional autos. you have a completely different form of propulsion of course. you have 60% fewer components and parts. no exhaust system, no fuel injection. that means you have a completely different assembly processes, different materials, different value chains. this competitive dynamic, people perhaps not appreciating the speed with which some of these new entrants could arrive is perhaps because they did not appreciate the scale of difference between these products. now going forward for investors, the giant issue, you have an intersection of geopolitical rivalry, energy transition, and industrial transformation, pushing across any one of these dimensions has immediate ripple effects on the others and it makes for such a complex time. sonali: we will have to have you back to talk about it. jason thomas, thank you so much for your time, head of investment strategy at carlisle.

some complicated crosscurrents. jon: we want to get to some breaking news, a bloomberg exclusive. a u.s. national security review of nippon steel's takeover of u.s. steel is unlikely to conclude until late this year, might extend into 2025, according to sources that have spoken with bloomberg. scrutiny by the secretive committee on foreign investment in the u.s. is in its early stages. the precise timing of the review mains unclear, according to some sources, although they expect it to take about a year longer. that timeline would contrast with statements from the u.s. steel and nippon executives who have talked about completing this deal by the spring or end of summer. we're also tracking the story of technology and the european commission executive vice president margrethe vestager is in san francisco meeting executives from some of the

world's most prominent technology companies who are off facing a breadth of new rules under the digital markets act. ed ludlow joins us now with more from san francisco. ed: that's right. the executive vice president is here to meet with the ceo's of the world's biggest technology companies and what they have in common is that in march they face new rules under the digital markets act. margrethe vestager, welcome to san francisco and thank you for your time. is that why you are here, to prepare those companies for what is to come in march? margrethe: i am here for a speaking obligation. and an antitrust conference. and the opportunity to do my rounds to talk about what is new and what is expected of google, apple, for living up to new obligations under european law. ed: apple and meta have made

legal challenges. are those legal challenges, in your analysis of them, significant enough such that they pose a risk that the digital protection act in its current form may not happen? margrethe: not at all. the obligations of the core platform services that has this label that they have gatekeeper obligations, they are vast compared to the areas where we have been challenged in court. of course it is important that the court is there in order to settle these challenges but for the companies in questions it does not have a suspension effect. they will have to work on how to comply. and since the deadline for complying is already on march 7, of course it is important for us to see that they work with us and that they work with market participants to make sure that they know that they comply. ed: i should rephrase my question, given that specific deadline, that the legal

challenge is pending, that your expectation is they are compliant by that deadline? margrethe: yes. we have a full expectation of compliance by march 7. and these are not trivial details to deal with. it is about sideloading, it is about second or third app store, being able to have that on your device, it is about data not being used for own purposes. so it is not trivial. that is why this is important for us to see those who have been labeled gatekeepers, that they work with market participants in order to test if this is what is expected and what can bring new changes in the digital marketplace. ed: apple's robust argument is that the rules, for example, third-party downloads, put at risk work they feel they have done being a leader in customer privacy and security. and that the third party

download issue will open up cybersecurity risks. your response to that? margrethe: i think for everyone, cybersecurity is really, really crucial. not only for the public, but for apple competitors. we have seen that sideloading as possible for others. we have also shown in one of our recent apple cases that it is indeed possible both to open, while at the same time maintaining that you have a very high level of security of your device. ed: you are due to meet with tim cook, i believe, in the coming 24 hours. margrethe: indeed. ed: what will your message to him be during that meeting? margrethe: first and foremost, i think we have good and constructive cooperation with apple about what is needed in order to comply with these new obligations. but also to encourage, to start working with other market participants.

because ensuring compliance is not just to be sort of ok with the commission. it is for market participants to see, well, this has changed the marketplace, we have a new chance to fiercely compete with those who previously kept the gate to the digital market. ed: executive vice president, the commission launched its first official probe of x, formerly twitter, and that was under the digital services act. that was in december. bloomberg has learned in the course of its reporting that talks with elon musk are going quite well. however, there are technology changes to that platform very regularly. and so, from a technology perspective, do all of these rapid updates comply with the dsa, and where does that fit in? margrethe: well, the point of the digital services act is that

what is considered to be legal offline is also treated as legal online. sorry. ed: please. margrethe: and that goes for hate speech, for incitement to terrorism. i'm sorry. and here, having followed what was ongoing on x, over the months in particular after the hideous terrorist attacks on israel, we found reasons to open. and now of course, we hope that the investigation will lead to compliance with the digital services act. of course we don't have final completions yet, but what was important was to see in real life that what we consider illegal off-line is also treated illegal in an online reality. ed: is there a real risk that you are moved to ban x in the

european union jurisdiction completely? is this a possible outcome? margrethe: of course the legislation gives the enforcer very strong tools of issuing fines, also very high fines, eventually also to ban from doing business in our jurisdiction. but i would not even go there. because we expect of the businesses that we work with that they have the same ambition in complying with european law as we have in enforcing the law. ed: let me give you a moment to drink some more water. we appreciate your time, your schedule here in the bay area and san francisco is packed, and that is an understatement. let's think a little bit about m&a. on bloomberg technology it is one of the stories of 2023. amazon has decided formally not to offer concessions in the

context of its $1.4 billion deal to buy irobot. your team and you are merger enforcers highlighted concerns about competitive issues of the deal. so amazon has taken that decision, you have to block the deal now, do you? margrethe: well, in any merger, it is so that if we have concerns, it is for the businesses either to address these concerns by debunking them, or by addressing them by coming up with remedies that will solve the problem. and if a company says we will not come up with remedies, well, then of course we expect that they have big arguments that our concerns should not be sustained. and we are still in the process of assessing our concerns compared to a situation where we do not have a remedy to the concerns that we have drawn up. ed: the story up 2023, i think you would agree, was artificial intelligence.

margrethe: indeed. ed: you announced this week you will look at microsoft's investment in openai, and i believe you are due to meet with some openai leaders. what were you concerned about in the motivations to look at that investment? margrethe: i think we all followed almost hour by hour the situation of the leadership of openai, the back-and-forth, how it was first very opaque and then became more and more clear. and what is interesting for us of course is what is the real relationship between openai and microsoft. when it comes to control of the business in question. this is very preliminary but it is part of a larger endeavor to understand how ai will affect our marketplaces. because what we have seen with technology over the last two decades has completely upended how a number of markets are working, both the digital

markets themselves but also other markets. now when we put in ai to that game, of course we see that this may accelerate some of the behaviors we have seen and some of the things we have been concerned about. we have just launched a probe for market participants, for businesses, for lawyers, for academics to participate and to give us feedback as to how will ai influence competitive t in the market. ed: nvidia disclosed you were looking formally at its behavior within the graphics card market. again, a similar question, but what were your concerns that prompted you to look? margrethe: well, ou concernsr, it may sound very trivial but it is always the same thing that is driving us, to make sure that the market is truly open and competitive. and when it comes to everything digital we are in a situation where network effects, where

scale really matters. that goes for both some of the hardware companies, it goes for software. so we are driven to buy sort of what we have seen over the last 10 years, that you really need to be on point before markets tip if you want to make sure smaller businesses, competitors, can both innovate also scale in this environment. ed: i want to go back to a periof of time before you took a leave of absence. one of the last things you did was order on a prelim basis that google break up its ad tech business. you have kind of follow the steps of the doj. is that kind of a template or model of some action you could take in your remaining year in this role? margrethe: it all depends on the cases. ed: which cases? margrethe: in order to ask, or

suggest something as far-reaching as a breakup, of course that has to be the only solution. if any other solution is possible, in order for competition concerns to go away, we would take the least intrusive. so here with the google ad tech case, we have an example where you find you cannot do away with the conflicts of interest in this ecosystem of advertising without google stepping out of part of that ecosystem. so, it would depend on the specific case if we were again to see this as the only solution. ed: you were unsuccessful in gaining the eib job, but you returned to a role you have held since 2019, the competition role since 2014. you have one more year. what do you plan to do after that? do you envision a role within the commission, or what else? margrethe: i intend to pursue

the priorities for this year, as you properly would guess. enforcing the digital markets act is absolutely top priority. and finalizing some of the cases that we have now in the antitrust pipeline, obviously doing that as well. after these mandates, well, there are quite a number of opportunities. but i think for me with the complexity of what we have ahead of us this year, it's really important to focus on what is at hand. ed: executive vice president for the european commission and commission of competition, margrethe vestager there. jon: thank you very much for a detailed conversation. ed ludlow joining us from san francisco on a day where we are also watching a little bit of selling pressure within the technology stocks at this hour on a back-and-forth day is the market digested that latest inflation print.

we will continue to watch the market story throughout the session here. this is bloomberg. ♪

romaine: the bitcoin etf, the cpi report and an ev over at hertz. i'm romaine bostick. katie: i'm katie greifeld, kicking you off to the closing bell in the u.s. take a look at stocks right now. pretty soggy. off our session lows. the s&p 500, down about .2%. we were much lower earlier in the day, .9%. coming back here. the nasdaq