White House Works to Give US Agencies Anthropic Mythos AI

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2:04Scarlet Fu:Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Perhaps there's going to be peace talks of a different kind in Washington as well, because Anthropics CEO Dario Amodei is meeting with Susie Wiles, the chief of staff of the White House today. And of course, there's a lot of tension between the U.S. government, the executive branch, and Anthropic, the AI startup, AI monster at this point.

2:46Scarlet Fu:I feel like startup kind of undersells it. Let's bring in Jake Blyberg right now. He is Bloomberg News' cybersecurity reporter. And he's been talking to us and he's been doing a lot of reporting on what the White House is doing when it comes to Anthropic's latest AI motto, Mythos, or Mythos, as Alexis told us. Alexis is. Very good. but I approve Mythos. Okay. Jake, it's official. It's Mythos, not Mythos. Tell us a little bit about the backstory here of Mythos, because it's the latest AI model. It's very powerful for Anthropic, but Anthropic also has a testy relationship with this White House. That's all right.

3:22So Mythos is this model released by Anthropic, not to the public, but we learned about it publicly a couple of weeks ago when the company gave a select group of government organizations and banks and cybersecurity firms sort of special, tightly held access to it because the company believes it's this enormous threat and has sort of vastly more ability to find holes in computer systems that might let hackers get in and do malicious things. If they're limiting access, why are they allowing the government to have it? Well, we're not actually sure at this point just how much access the government has.

4:04But what we do know is sort of getting at the tension you raised earlier, there are a bunch of government agencies that are sort of eager to get their hands on it. And top government officials, the Secretary of the Treasury, Chairman Jerome Powell of the Fed, they've been urging banks and financial sector organizations to use this tool to plug their own holes. And that seems to be out of a worry that once this type of tool is out there in the public, those might become vulnerabilities.

4:36Scarlet Fu:So they want them to kind of stress test their own systems using Mithos before Mithos is released to the public. What does that mean for this meeting that Anthropic CEO is scheduled to hold with Susie Wiles, the chief of staff today? What is the relationship right now between the White House and the company at large? Because government agencies, or at least some of them, want to use this model, but the Pentagon has blacklisted Anthropic. It's a great question, and it's a little confusing. On the one hand, we have sort of top officials in the Trump administration saying this company is a supply chain risk.

5:17And they've been doing that as part of this dispute with the Pentagon over concerns about the artificial intelligence being used in surveillance or the targeting of weapons. On the other hand, we have top officials in the Trump administration also saying this is such a powerful tool. hey, you banks, financial sector, we need you to use this. And this email that we got yesterday, my reporting colleague, Margie Murphy, and I actually says the federal chief information officer is working on building guardrails, technical guardrails, so that the top cabinet level agencies and the government could begin using this tool.

5:57So it's a little bit confusing going into this meeting. All right. Maybe I'm a little cynical here, but it seems like individuals, consumers, corporations trying to figure out what AI is, how I use it, all that kind of stuff. I don't have a lot of confidence that my federal government is going to do a good job with AI here. To what extent do we know that the various government agencies are trying to incorporate AI into their workflows? I mean, I think we've seen massive efforts across the federal government, as we have in, you know, many different industries across the private sector, to build AI into their workflows.

6:36This tool is a little different, or at least we think it's a little different based on what we've heard from the limited number of people and organizations using it, in that it poses risks of a type that we haven't really seen, taken this seriously before. We've been talking to people who are using it, and one of that is, okay, AI used to be able to do the digital equivalent of picking a lock. Well, now it can pull off Ocean's 11, right? Now it's doing full heists.

7:06Scarlet Fu:Oh, I like that analogy. I'm going to steal that, by the way. Okay, so the capabilities it has is kind of a different order of magnitude than what we've seen so far. What kind of AI does the federal government use right now? What do we know in terms of the application? So different parts of the federal government use all sorts of AI tools, including chat GBT or, you know, the same types of large language models you or your colleagues or many people in many different sectors might consult to find a quick answer to a question or, you know, look up where they should stay in a trip. Stay with us. More from Bloomberg Intelligence coming up after this.

7:49Scarlet Fu:For years, the conversation around Bitcoin was the same. Is it real? And does it belong in a portfolio? While others debated, CoinShares got to work. In 2015, they launched the world's first Bitcoin EDP, regulated, listed, and built for institutional investors. Long before the U.S. market caught up. Today, they manage over$6 billion in assets and have remained profitable through every market cycle, including the 2022 downturn. What sets them apart? They're not a crypto exchange chasing trading fees, not a company betting its balance sheet on Bitcoin, not a mining operation. CoinShares is an asset manager with recurring fees, a fixed cost base, and a business model you can actually model.

8:28Scarlet Fu:Now listed on NASDAQ under ticker CSHR. Learn more at coinsharesipo.com.

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9:53Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. And we want to go back and talk a little bit more about Netflix, because even though it didn't raise its forecast for this quarter, the numbers show that it is definitely making more money on existing subscribers than it had been. That's according to the company itself. They said customer retention has improved in every region in the first quarter, and we know they raised subscription prices in June as well.

10:28Scarlet Fu:Mark Douglas is president and CEO of Mountain, and he joins us now for some more analysis on Netflix. And Mark, Netflix no longer really pushes the subscriber growth numbers. It's not even a figure that they release to investors anymore. It's all about making more money from your existing base of users. So what do we know about how much Netflix can extract from its subscribers? Yeah, so I think that's the right way for them to look at and for everyone to look at is just monetization. And so the way to think about it is that you have subscription pricing for all Netflix users. But I think they've announced in the past half of the new users are signing up for an ad-supported tier.

11:11The numbers you typically think of when there's ad-supported content for any network is that you can make somewhere between$7 or as much as$14 additional revenue per subscriber through ad-supported tier. And those numbers kind of originate in cable television, but they've carried over into streaming. And so where in cable, sometimes networks are part of a bundle, but then they also were showing ads. Now you're part of a subscription, but there's also showing ads. So there's a lot of room to grow. Netflix is currently under monetizing those users, meaning the people signing up for the ad supported tier.

11:51So that is just a backlog of revenue that is coming and it's going to be coming for many years to come. I think I've said in the past, I think Netflix could be the first trillion dollar media company in terms of market cap because of the ads. Mark, you're your company, Mountain. You guys are right smack in the middle of all this digital advertising, television advertising. You know where the dollars go here. Yeah. If for Netflix to really become a player in advertising, do they need a big sports franchise? I don't think they need a big sports franchise, mainly because I think sports is important.

12:29But Netflix, because they own this slot as like the first place the majority of streaming consumers go to, like you turn on your TV and you kind of like, let me see what's on Netflix. They're able to turn things like WWE or a normal NFL game into these big events. They turn, you know, I think we talked once before about the largest female professional boxing match was streamed on Netflix and things like that. So they've been able to basically take not these kind of like NBA contracts and things like that, but take other types of sports, turn them into things that are very attractive to consumers and then monetize from there.

13:10But sports is important, just not like having an NFL contract, you know, for a whole season or an NBA contract for a whole season.

13:19Scarlet Fu:Mark, it strikes me that a subscriber to the ad tier is probably more valuable than a subscriber who opts for the advertising free tier. So how would Netflix convince a Paul Sweeney or Scarlet Food to convert and to downgrade to that ad supported tier? The from a subscriber perspective, I think that's going to be hard. I mean, I think it's pretty binary. You either want to pay for the full subscription or you don't. And the people paying the full subscription, I don't think, are price sensitive. If Netflix is thinking, well, you're worth another in terms of revenue, seven dollars if you're in the ad supported tier.

13:54Well, that'll just be in your subscription costs, maybe a little bit discounted. But I don't think that's critical, especially when one out of two new subscribers are signing up for the ad supported tiers now. So it's not really, I think, that critical to convince everyone to do that when you're at 50 percent already. So our good friends at Moth at Nafison were out with a research report a couple of months ago where they did some work. And their work indicates that YouTube is actually the biggest media company in the world by value. What is your view of YouTube in this marketplace? They're so big.

14:29Do they still have room to grow? They're so big in the business. Yeah, I think absolutely. So the way I think of YouTube versus the entire rest of the streaming market, but let's continue with Netflix, is YouTube kind of owns the day and Netflix and other media companies own the night, right? Like, you don't I don't think most people go home at eight o 'clock at night and like, let me put on a podcast like they want to watch their favorite shows across whatever networks there are. But during the middle of the day, when they're if they're driving the work, if they're on the subway or things like that, you're going to tend to not be watching your favorite show while you're sitting on in a subway car.

15:06So in New York City. So, I mean, it's divided. Consumers want to be entertained essentially 24 hours a day. Their choices are streaming at any time, but I think generally at night, YouTube, Instagram, TikTok. And they're not in conflict with each other. I think the streaming industry is very healthy, growing. and like owns the highest form of entertainment with consumers and the ones that they like most talk about, most look forward to. And that's why you're able to monetize these at these levels and subscriptions at these levels is because of that. Stay with us. More from Bloomberg Intelligence coming up after this.

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17:53Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Right now, the story also includes Netflix boosting spending on programming this year, especially live sports programming. Things like the World Baseball Classic really paid off for them this past quarter. And they're in talks to expand their relationship with the NFL as well. Randall Williams is our Bloomberg Business of Sports reporter. Randall, how big of a player is Netflix in live sports rights, do you think?

18:29They're as big of a player as they want to be. If they would like to get into sports broadcasting and having exclusive things, then I think that they will be a huge factor. But right now, they've been very selective. They've done a lot of boxing things. As you said, they've been more involved in MLB. But their strategy thus far has been event-focused. And in the NFL in particular, there's few events. Like the NFL, I think, has tried to make big events. So you think Thanksgiving, you think kickoff day, you think the Christmas Day game. And then, of course, NFL playoffs. But there are also other bidders.

18:59And Netflix hasn't, I think, dove into the process of trying to win a Thanksgiving Day game. They have Christmas, and Christmas has been great, but it's a lot better when Beyonce is performing. I'll think they're serious when they go bid for a Sunday afternoon NFL package. That's going to be the day. I want to ask you something else. Okay. Because I think, for me at least, and for a lot of people, one of the bigger stories in sports just in the last 24 hours is live golf. Absolutely. And some of the reporting, I'm surprised that we haven't heard anything definitive, But generally, some of the reporting is perhaps the Saudi Arabian fund is going to pull back its economic support for Lib.

19:35And if that's the case, people wonder whether it can continue at all. Yeah, that's that's what's been what we've reported, what everybody else has been reporting. You know, there was suspected that an announcement could come yesterday and then nothing came. And then LibGolf CEO Scott O 'Neill said earlier this week that they're funded through the end of the year and we'll see what happens next year. And so it sounds like based on that, that the funding will be pulled. It's not a matter of if, it's just a matter of when. And then whoever, whether that be Scott himself and investment bank, private equity, will have to go out and find more money to keep this tour alive.

20:10Scarlet Fu:What happens to the players who went over to Live Golf, signed with Live Golf, and then were essentially, it feels like they're blackballed from PGA Tour. What happens to them? What happens to their careers? They're going to have a decision to make. I think the PGA Tour obviously opened the possibility for some golfers, live golfers in particular, to come back. I don't know if that window has closed yet or if they will reopen that possibility. But I think in any event, if they were to decide to go back to the PGA Tour, that they probably would face some penalties. And the PGA Tour has been very strict with that.

20:42So they could go to the DP World Tour. There are other different leagues out there. But obviously, if you ask golf fans where do they want the best golfers playing, it's the PGA Tour. And the golfers themselves know that. Live was an option. But it remains unclear if it will continue to be an option long term. Interesting. I've heard that. I mean, it's been reported that the Saudis have lost north of five billion dollars. And now they're like, wait a minute. Listen, they were cutting checks for players for hundreds of millions of dollars. And I think at a certain point, if you were a player, it was sort of silly to not accept some of this money.

21:14You're talking about a hundred million dollars in cash that was going to be paid right away. And for some of the players, it's like, do I think, am I confident enough that I'm going to be able to get this on the golf course? Sky?

21:25Scarlet Fu:Did Live Golf ever really catch on with viewers or fans in the U.S.? I would not say so in the U.S. Now, there have been reports from Live Golf that their business is growing, that they are on track with different metrics that they have for themselves. But if you were to ask the average American, you know, where do you watch Live Golf? I'm not sure that they would have an answer. And the reason for that is because the PGA Tour has been around a long time. It's hard to uproot any league that has been here in America that is deeply rooted in American culture with something new. It just doesn't happen across any sport.

21:59I'm going to tell you what it is. I'm not a supporter of the Live Tour. I'm a PGA person. But I'll tell you what. Every golfer, every professional golfer should thank Greg Norman and Phil Mickelson for creating this whole Live thing. Because what it's done, it's lifted the wages for everybody out there. including this weekend when the RBC Classic down in Hilton Head, which is historically a smaller tournament, it's now has a purse of$20 million. Thank you, Greg Norman. Thank you, Phil Microson. Now the question is how do you put it back together? Right. I mean, that's the thing, though. That is an interesting perspective because for a long time, if you listen to the PGA Tour speak publicly about this, they blame Live Golf for splitting things up.

22:36And there was not a lot of accountability on how they could do things better until the strategic sports group came in. They invested a whole lot of money. And since then, between the Strategic Sports Group and Brian Rolap, the PGA Tour has been on fire. And I would say that Liv is running out of fuel.