♪ >> i am caroline hyde in

bloomberg's world headquarters in new york. ed: i am ed ludlow. this is bloomberg technology. >> section 230 is front and center. we will bring you the latest from the supreme court pivot -- supreme court. ed: meta-taking cues from twitter. we will run you through the details. caroline: we will hear from brad smith as it looks to save is activision deal in europe. let's check in on these markets first and foremost. we have a day where the wind has been taken out of the sales for these benchmarks. back 2.5% on the nasdaq, the 10-year borrowing cost spiking higher. we worry about the federal reserve having to tackle inflation, and though macroeconomy -- the

macroeconomy, the details we see from these retail numbers. in the equity market, over the last couple of days, bitcoin has been under pressure, but some of these correlations are breaking down. we are seeing the lowest correlations of years. we still managed to be holding over $24,000 despite the music. ed: it is the same themes, worries about the fed. tesla down five percent. across the nasdaq, 97 names close lower this tuesday. this was a story we were tracking, sigma, up 16%, biggest jump since 2021 a. according to sources, tesla is considering a bid for that lithium miner. elsewhere, lewis -- u.s. adr's

of chinese tech stocks are under pressure. jd.com is down on reports it will spend big to become more competitive on marketplaces in china. the other big name we were tracking is meta, the parent company of facebook. it delayed equity market reaction to news that meta is introducing a subscription tear for verification. ultimately closed down 0.5%, but that is outperformance relative to the declines we saw in tech stocks. litigation is front and center with regards to section 230. justices in the supreme court were discussing concern about opening internet companies to lawsuits from harmful user posts in a ruling that could transform the legal rule. let's bring in emily who is tracking all of the proceedings. give us the top lines of what we

are deliberating over. emily: the case in question is gonzalez versus google. they are trying to rule if youtube is liable for terrorism recruitment videos. caroline: overall it felt as if some holes were being punished into the arguments coming from the gonzales family. this is about the loss of a daughter, about islamic terrorism, but what did they have at issue with the legal arguments here? emily: we heard frustration and confusion from the justices off the bat during the three-hour oral arguments. the justices said, what is the line you are drying? most things on the internet are recommended to users through algorithms.

they say that the gonzalez family has not shown what they are even wanting to do to section 230. caroline: overall in terms of the arguments coming from big tech, what is its argument at the moment as it stands? we heard from mark zuckerberg, seeing ways in which it could be nuanced or updated. we saw what europe put in place to tackle some of the harassment and hate speech. will 230 be brushed aside for the time being, at least? emily: they are definitely leaving the possibility open. the social media companies say maybe it is time for congress to take a look at section 230, but this is not a question for the supreme court, which is not in the business of making laws or creating new policies. so essentially, tomorrow, there is going to be a case that revolves around similar issues,

whether social media companies can be held liable for aiding and abetting terrorism under federal laws, and it's possible the court will hear that case and decide the answer is no, that social media companies can't under this claim be held liable for aiding and abetting terrorism, and then scrap the gonzalez versus google case altogether. caroline: it's been a busy day. thank you for giving us the legalese around all of it. we want to be digging in a little bit more. we want to go to our guest. thank you for talking us through what you've made of the arguments. i know in many ways the chamber of progress, it is aligned center left with the industry, but from your perspective, what at the moment would be wrong with trying to pick apart section 230 as it stands? >> i think it is important to differentiate between what section 230 does, which is

provide a liability routing mechanism -- it means if i go on facebook and say, bob is a crook, bob can sue me, but he can't sue facebook, and the reason we have 230's so that facebook can continue to operate and allow user comments. what was being considered today is, when you go on to spotify and a son is recommended or you put something in your amazon shopping cart and something else is recommended, or you go to google and get google search recommendations, do those recommendations algorithmically driven have 230 protection? i think there was a lot of discussion about whether it was possible to separate the algorithmic suggestions from the value that the services provide to consumers. ed: the chamber of progress is a trade group, and it is worth pointing out that you represent technology companies, but one of

the things i continually here in silicon valley is that section 230 protects the user. that does not seem to be a point of consideration right now. >> i think that is absolutely right. if section 230 were reformed, the realities at google and facebook would be ok because they have armies of lawyers. they could tie up these cases in litigation. it is a lot of those small services -- clubhouse emerged during the pandemic, and section 230 is critical for a site like that because it can provide user-generated content and not have to worry about liability protection. but i agree with you, it protects the users, and i think this is misunderstood. section 230 becomes a democratic football because of democrats and republicans using it as a football.

disneyland is sort of a sanitized environment where nothing was allowed, or a wasteland where services were disincentivize from looking for that content. ed: one of the justices made the point that the justices are not the definitive experts, and the comment elicited a laugh from those in attendance. is it the supreme court that should be considering this? is it the right place to have this conversation? >> i and a lot of others went into today nervous about why the supreme court was looking at this case. what i heard was a lot of acknowledgment from justices about the benefit of section 230, so i don't think it is as

likely now as i was worried about at the beginning of the day. it is a possibility they could say, may be certain types of content recommendations don't have protection, and that could have downstream stakes for companies and consumers. caroline: certain types like what? >> section 230, one of the things, it is a pro competition law. it allows new social networks to emerge and not have to have the armies of lawyers like facebook and google do. that is important, but the issue here was about algorithmic recommendations, and what you saw the justices recommend was, it's all algorithmic recommendations. there were a lot of discussions about neutrality.

even justice gorsuch who would be someone critical of section 230, when i think about it, no algorithm is neutral. may be relevant content, so it is hard to say there should be any neutrality test applied. i think it was interesting to see the supreme court grapple with a lot of these concepts. caroline: push us towards tomorrow because then it is twitter's time in the spotlight, and that is more around how broadly you can read into the anti-terrorism act in some way. this sadly involves death by terrorism but twitter's rule in not taking down content. is there some sort of way in which the overall supreme court might find an offramp? >> emily talked about that, and i think that is a strong

possibility. the interesting thing about the arguments around this case, you wondered why the supreme court took this case. there were a lot of people who thought, there are a lot of justices like justice thomas who said in previous decisions, bring us more 230 cases, but by the tenor of their questions, many conservative questions were, why are we here? i think the justices' interest in looking at 230, they spent three hours on this. i don't think tomorrow's case will be quite as lengthy because it is a much narrower statute that is in question and a much narrower question. ed: thank you so much, and caroline, as we do, adam raised a lot of questions we ask our own audience, what should we do with section 230?

this is what our audience said. yes, it needs to be amended, but it is supposed to protect the user. caroline: how? we heard zuckerberg trying to put out ways perhaps ways you could amend it, but it ends up benefiting some more than others. europe has put into place their own rules. they have their own digital services act coming out in 2024. it is so interesting the way in which regulators try to grapple with this question and lawmakers. ed: and i don't hear many alternatives being proposed. coming up, hurdles facing the $69 billion microsoft activision blizzard deal. we will bring details. that is next. this is bloomberg. ♪ >> we don't see a viable path to

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>> i don't know if there is a clear path forward to regulatory approval. the agreements we announced provide two guardrails. one shows how we can come to terms to make call of duty available on other platforms. today it was nintendo. the other agreement we did with

nvidia showed how we can address concerns related to cloud gaming. caroline: microsoft president brad smith on the path to approval for the merger with activision blizzard. joining us is dana vass. talk to us. there is brad smith in europe trying to convince us why this deal should go through, but do you think he will be ultimately able to persuade? >> you're talking about the path to approval. in might be path to a block. that deal with "call of duty" was blocked by all three regulators. one of the questions for microsoft, which brad smith answered definitively, was, if you could buy activision blizzard only under the condition that you divest the

activation portion, would you do it? we got a pretty definitive answer from mr. smith. is it feasible? he seemed to be ruling out something proposed by the u.k. regulator, which was a structural remedy. he focused and on behavioral remedies. that is what microsoft wants. there would be promises by microsoft to change their behavior or not do certain things in order to address concerns, rather than a divestiture. ed: there were what brad smith called "guardrails." he talked about the deals with nvidia and nintendo. what did we learn about those deals? dina: if you remember, the nvidia deal was announced on the eve of microsoft trying to meet with the ftc.

it did not work. the deal is officially signed now, and another deal announced was to give a bunch of games to nvidia's geforce cloud gaming service, which was another one of the concerns that regulators raised, whether this would allow microsoft to dominate gaming subscriptions and cloud gaming. smith's point was those deals give you an indication of what microsoft is thinking around behavioral guardrails. he took aim again at sony, rather theatrically pulling out what was the exact contract that microsoft offered sony to give it 10 years access to "call of duty," which sony hasn't been willing to sign. caroline: all of this ad course -- of course, they are sudden sounds of optimism from brad smith, but it feels like the redline is in place. they will not be buying this unless they can have "call of

duty"? dina: that is what smith said. they do not believe it is feasible or logical for them to buy activision blizzard and then sell off "call of duty." microsoft will have to convince regulators that it can behave according to these remedies rather than a divestiture. smith was optimistic in the interview he did with bloomberg television earlier about the chances of that, and in particular, the chances of convincing the ftc, which has been a staunch opponent to this deal. the ftc administrator said he thought if microsoft could work things out with brussels and london, they would be ok in washington, d.c. as well. ed: thank you so much. coming up, coinbase releases its earnings, and its stock is up 3% in after-hours. it had been trading lower, choppy but now higher.

we will tell you next. this is bloomberg. ♪

ed: time now for talking tech. let's talk about china. e-commerce leader jd.com closed down 11% after the close after a report said it was planning a subsidy campaign to compete against pdd holdings in the amount of 10 billion yuan. that is about $1.5 billion. elsewhere, made to long is hiring up to 12,000 people in china's mainland. the chinese shopping platform beat back competition from new

entrants like a bytedance in the chinese food arena. two key members of china's most influential scientific body have outlined the countries plan to circumvent u.s. chip sanctions. they say china should govern the next generation of chipmaking, from new techniques that could propel china's chip ambitions while giving the country cloud to push back against u.s. sanctions designed to hamstring its semiconductor sector. the switch from china to crypto, coinbase shares now higher in after-hours. here with more, shin oli basha. it took the market a wild to decide what it liked. >> you had revenue overall come in above estimates, but transaction revenues came in below estimates. that has been the king of the room when it came to coinbase,

trading volumes and fees, but now you have coinbase looking to how it is diversifying. subscription and services revenue is coming in hot, and you have the cfo of coinbase talking with bloomberg separately. it shows you that subscription and services revenue is starting to come back to a place so it can diversify it enough to avoid the volatility you're typically worried about with coinbase. ed: staking is a story you have been tracking, where users booked a yield on coin deposits. sonali: they say their business is not like, for example, the business that recently settled with the sec without admitting wrongdoing, but when you look at coinbase and top with their chief legal officer, they say

they are different. what is material is the cfo told bloomberg that they are not planning on disclosing another regulatory matter to this effect, and that chief legal officer in a podcast with "the scoop" said that they did not receive a wells notice tied to the staking service. those are things clear for coinbase right now. they still have a regulatory overhang. we spoke with an analyst who is more concerned about the moat when it came to coinbase, but when you look at the institutional business, their ability tied diversified, that is a story they are leaning on. ed: that earnings call kicking off in about five minutes, we will keep track of the headlines. caroline: coming up, the price of a blue check. meta is following in twitter's steps as it charges for verification. we will discuss with a former twitter employee.

are you going to do it? this is bloomberg. ♪

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>> from the world of politics, the world of business, balance of power with david westin brings you news, analysis from power players. balance of weekdays on bloomberg. ♪ caroline: welcome back to bloomberg technology. i am caroline hyde in new york. ed: i am ed ludlow in san

francisco. i want to stick with meta. the company is talking about a subscription tier verification a la twitter. shares were markedly higher on tuesday, on a day when social media peers were lower. we fell down 0.5%, but broadly, perceptions of this plan that came out over the weekend were positive, even though we are down 0.5%. one note caught my eye. bank of america say, it is intriguing, clearly following from what twitter has done with twitter blue, but it is this last line that i am seizing on. audience size could be limited by the number of creators and influencers on meta's platforms. we talked about how important

the creator is on platforms like instagram, tiktok, and the analyst nervousness is about the core facebook product. it might not be there. caroline: i wonder how we square that circle of hooking in more content creators and asking them to pay more, but ultimately, how much does this maxed out at? let's ask an expert. you currently host creator upload podcast. my immediate reaction when i saw this was, i wonder how all the influencers and creators who have a blue check mark are going to feel about it, but what do you think the reaction is? laura: as i understand, they aren't going to lose it and don't have to pay for it if they already have it, but in general, the thing people aren't focusing on is what you are going to get for that subscription other than the blue check mark, which is customer service.

this is a huge issue even if you are a managed partner at facebook or instagram, the level of transparency and how you get things fixed is incredibly difficult. there's never been that opportunity before. for creators and otherwise, i think this is a great opportunity. i think people have been looking for a way to get answers, and this is a way,. what does the blue check mark mean anymore? it is devoid of all meaning. the criteria for getting one was evolving. when i got there, you had to be on specific databases like imdb or wikipedia. it is ever evolving, and i feel like it has lost all meaning. this now gives me something very tangible, and i like it. i think it will be a welcome change. caroline: give something to the

creator. what about the content consumer? in some ways, the blue check mark was supposed to be authenticity. it's also sort of a mark of creative excellence in some way. do we have different ranks of who gets it? what about companies? laura: i think it has meant everything and nothing for so long. some people who got it ended, there was no rhyme or reason. there were people with huge followings who could not get verified. it did not make any sense. then every platform did their version of it. it meant something/nothing. this gives me meaning, and across social, i think we should be focused on verified profiles. how do you get rid of bots?

you verify your identity. for a while, facebook, if you got hacked, they asked for a government-issued id. for some reason if you put friction and a pay wall in front of it and give a government id, i think more people will be willing to work with facebook as a platform. it engenders more trust because, i will get my blue check mark, customer service, etc. i think this is a welcome change. i can distinctly mark zuckerberg -- distantly remember mark zuckerberg laughing at the idea we would ever be pain. it's not that much less than $20 per month and i get all of these services?

i am not mad at it. ed: let's jump ahead to timing. you were at facebook 2014 to 2019. why is this happening now? this is a response from meta to the legs of twitter and tiktok, etc. laura: there are several reasons. there is the bought issue -- bot issue. they are focused on verifying identity, and this is a response and acknowledging the fact we had been paying for these services with our personal data. this is another way to do it, and this is something they've been trying to solve for a long time in terms of propping up some customer service. there are a lot of things going on. i don't see this as a huge cash cow for facebook. certainly not for quite a while, so i don't think that is the reason. i think they are trying to get

back in the good graces of folks, and i think this is a way of them providing tangible services so people can see benefit from it, and they will feel as if there is a big exchange. creators, who i consider small businesses, they can suffer devastation with businesses if there facebook attacked or instagram gets hacked. having been at facebook since 2015, i get friends of friends dme me when they get hacked, and it is demings -- dming me when they get hacked, and it is devastating. they need customer service in place to help with these situations. ed: a bloomberg intelligence analyst put out a note saying it could add to billing dollars to $3 billion a year in sales. laura: it's huge for me --

ed: it's not huge. we spent this segment talking about how youtube has the creators, tiktok has the creators. historically meta has not. laura: i am the host of a podcast, but i am also the vp corporative -- corporate development at jelly smack. we move content creators from youtube over to facebook and other platforms. it is just not as cool as other platforms, but there are real creators making real money on that platform. it wants to be known to your point as a place where creators start their careers. it is not that yet. this is one way to help creators get in and help understand how they can get services from facebook. i don't know that this will be a way for creators to flock to

the platform as a result of this because verification will mean something very different. i think it will be adopted widely. caroline: here's to customer service. jenny smack, corporate vp of development, great insight. coming up, how is generative ai impacting our future? what is open ai's role in kicking off the hype? do you have some more shares to watch out for? ed: a quick check on palo alto, the networks up in after hours. i think what we are looking at is the performance during tuesday's session, but we are up more than 7% in after-hours. this is bloomberg. ♪

>> open ai deserves a lot of credit for taking what happened with transformers and language models and taken it out of the research labs of big tech companies. >> they are at the frontlines of bringing these two lots of application developers. >> when they released chat gpt, they put in safeguards to prevent toxic or harmful content or dangerous content from being shared. >> the danger with open ai is actually great. it highlights the opportunity that is out there. >> i wouldn't be surprised if in the next 6-12 months we have models that are capable of truthfulness. >> i think every company will be

an ai company, and everything we do at work will be transformed by ai. >> ai is the next generation technology of this decade. caroline: a lot of optimism, a lot of grand speak from recent guests talking about the impact of open ai, and about the very impact of artificial intelligence on our lives going forward, and that is one of the topics on which a new bloomberg original series makes a deep dive. it is "the future with hannah fry," looking at details with things like crypto, chemistry, ethics, you name it. it premieres tomorrow. i'm pleased that professor hannah fry joins us now. deep knowledge of mathematics, someone whose passion for learning and teaching, but you've been keeping a kenai on the extraordinary hurrah around artificial intelligence. deep mind, a lot of that was

baked in over the u.k. what do you make of the hype and reality? hannah: these large language models have been around for quite some time, and i think this current generation we have now are a step forward, but i don't think they are a seismic shift in public perception. the big difference is the public has access to them in a way they didn't before. i think the public is catching up with where things stand, but with that, with the impressiveness of this new generation, there's also an impression that these algorithms are capable of doing things they are not quite demonstrating. for instance, i don't think we are in a world where any artificial intelligence anywhere has demonstrated a conceptual understanding of what it was creating. ed: a big wednesday night ahead. we will get into the details of the show ahead. i'm looking across the six episodes, and it is not simply a look at ai.

you're looking at technology and ai within social inclusion. give us some of what we can expect. hannah: i wanted this to not just be about technology itself, but the impact of technology on society. one of the episodes is about technology for social inclusion, the idea that there are new creations that might be able to help people with disabilities to combat the way some groups end up being marginalized. there's a place around the corner from here in brooklyn where they are building the most beautiful, elegant prosthetic limbs that can be controlled by your mind, or a company in london creating these glasses that can subtitle conversations as they happen so people who are deaf or hard of hearing may be able to use that technology. it is not just about listing the new technologies that are coming. it is thinking about the impact.

in that episode, i also talk with some disability rights campaigners, and i ask them how they feel about the new silver bullets. the response is, can we just have ramps? we would like braille and a carpet that leads up to the reception desk of buildings. it is good to get excited about these techno the technology already that can impact people's lives, and what we are lacking is the societal will to implement it. caroline: well said. the first one, 150-year life, delving deep on longevity. thank you for joining us, hannah fry. don't forget to catch the prim mayor at 10:30 -- premiere at 10:30 p.m. eastern time. or you can stream it. ed: my night is sorted. let's stick with ai and join our

guest. i've been excited to have you on, james. i've been tracking what your company has been up to, but the starting point is what we've been talking about. this moment in ai is huge, and what has that experience been like for your company the last weeks and months? james: it has been incredible. in my 15 years of building things on the internet, it is the fastest growth company i've been a part of. people are so excited about the technology, and the use cases we are seeing are exciting. i'm stoked to see the impact of ai on society, but seeing real users use this, it's incredible. ed: this is a simplistic way of looking at your technology, but a quick way of developing a website using ai. what are some of the tools that your company uses, some technologies that make it happen? james: we had our own in-house

website builder, and we layered on this ai engine. we are using open ai to generate the copy. we are picking images from a free stock photo archive, so really just using ai on top of our technology layer to build this user experience. caroline: james, let's get to some of the more click baity part of our media that we are part of, but there is an element of people stress testing generative ai. of course, chat gpt is part of it. what are you making of some of the coverage? what are you making of some of the worries we have, the way in which we seem to be going bonkers? james: it is a new technology. it is exciting. there will be a lot more headlines coming out for sure. as you have this brand-new technology and smart people trying to break the technology, i think you are going to see a

lot of breaking points. i think the ethics are really something to consider, but the reality of ai is that it is human input. you have a human being putting a prompt in. they are training the ai. where it gets interesting is this idea of artificial general intelligence where the ai is thinking for itself. we are 100 years from that itself, but a lot of smart people are working through the ethics here. caroline: james clift, i wish we had longer, durable ceo. coming up, why don't we delve deep into the world of big tech? one of the most recognizable and impactful leaders on the marketing side in recent years, bozoma st. john. she is joining us to talk about the stories she is sharing. this is bloomberg. ♪

caroline: it's a memoir of grief, of adversity, and of a drive to thrive. "the urgent life" is written by bozoma saint john, one of the most well-known c-suite executives across silicon valley, leading marketing at places like uber and netflix. how can companies like the ones she worked for enable that? we welcome her, bozoma saint john. great to have time with you. you have been telling stories all your life. you've been telling stories to help reduce bias. i think about instagram and other platforms. what is it in your story that you want to share? bozoma: first, thank you so much for having me. you are right. i've been sharing stories and telling stories, narratives for my entire career, and i feel like right now at this moment in

time we've all been suffering some sort of loss over the last three years, at the very least, if not longer. loss of identity, loss of comfort, sometimes loss of loved ones, and we are still not necessarily able to come all the way clean about it, to bring it into the public eye. we feel ashamed. we need to hide it. we need to hide our suffering and disquiet, and i think it's about time for us to start saying those types of things out loud. we are whole human beings, not just the professional side, but the personal side. so how do we bring out both of those to bring out the whole person? caroline: your story is one of loss with your husband peter who died of cancer. you've also grieved the loss of children and previous loved ones. i think of other executives, michelle samberg, someone who shared the story of loss and

trying to bring the full self to work. talk to us about the technology companies you worked at allowing that and sometimes the drive to thrive and survive can be a drive for happiness, not just the drive to get ever higher. bozoma: it is so true. the companies i've worked for and many in tech, they are such high-pressure environments. you are moving so fast, you have to think ahead three steps, four steps ahead. what happens if you are dealing with something that is very present, something dragging you down? grief has a way of pulling into the past. how could you possibly think about the next thing that is coming if you are grieving? i think we have to open space for that. for me, it has felt that in this present time there has been more conversation around mental health. there has been more conversation about how we can be whole human beings, but there is still a whole lot of -- what i would call taboo around that.

i think it is time for us to knock that down and have an open dialogue so we understand the fullness of our employees and colleagues. it certainly will be a better working environment if we allow them the space they need. ed: you were cmo at netflix for a time, and i wonder if you could reflect on some decisions netflix has made that weren't something received positively by everyone, namely the decision to charge for password sharing and adding in ada-supported -- ad-supported tiers. how do you assess how they've handled that? bozoma: i think storytelling is tough. there is so much that happens in corporate board rooms. even though i was not part of the decision to make that choice, i think storytelling sometimes, it is hard to get the

whole story out if you don't have a perspective on how it benefits everyone. for me, i think there is an opportunity always to think about the benefits to challenges people may face once a decision makes a decision that is good for the business and good for the customer. caroline: i wish we had more time. bozoma saint john, thank you for spending time with us, "the urgent life: a memoir." that does it for this edition of bloomberg technology. ed: check out our podcast on apple, spotify, i heart -- i heart. a lot more to come from caroline and i this week. this is bloomberg. ♪

i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

>> welcome to "daybreak: asia." we are cou