In short
The US Commerce Department ordered Anthropic to block foreign nationals’ access to its most advanced AI models, Fable 5 and Mythos 5, citing security vulnerabilities tied to “jailbreak” risks. The episode also covers AI capital markets (NVIDIA bond sale, SpaceX IPO impact), plus related tech business news (Fox-Roku deal, Salesforce-Finn acquisition, China tech funding dynamics, and orbital vs ocean data centers).
Guests and backgrounds
- Seth Figgerman (Bloomberg AI editor) and Mike Sheppard (Bloomberg in Washington, DC) discuss the policy action.
- Joel Pino (Chief AI Officer at Cohere; enterprise LLM/agentic platform and governance focus).
- Stephanie Aliaga (J.P. Morgan Asset Management global market strategist).
- Robert Shiffman (Bloomberg Intelligence senior credit analyst).
- Alicia Yap (Citigroup head of Pan-Asia Internet Research).
- Mike Schroepfer (Gigascale Capital founding partner; former Meta CTO).
- Mark Gurman (Bloomberg “Power On” host; Apple/Siri coverage).
Key claims and notable examples
- Anthropic pulled access worldwide, not just abroad, because restricting access to foreign nationals (including those in the US) was “unworkable.”
- “Jailbreak” is described as bypassing model guardrails to enable cybersecurity-attack outputs; Bloomberg notes no specific research has been shown.
- Cohere argues the restriction signals volatility and reinforces demand for predictable, secure, often on-prem deployments; it cites inbound interest from governments/investors seeking alternatives.
- NVIDIA plans a first corporate bond sale in years (about $20B+) to fund AI partner investments despite large cash.
- SpaceX shares rose ~8–10% day two; IPO supply/dilution is expected to create some volatility but remains digestible given market size and AI capex.
- Example deals: Fox buying Roku (~$22B enterprise value); Salesforce buying Finn ($3.6B).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOUS Government's AI Export Restrictions
0:30 to 1:29
Discussion on Anthropic's compliance with US government directives regarding AI models.
“So there's a lot of noise about AI, but time's too tight for more promises.”
US Government's AI Export Restrictions
2:35 to 4:03
Discussion on Anthropic's compliance with US government directives regarding AI models.
“Hello, welcome to Bloomberg Tech, Monday, June 15th.”
Anthropic's Response to Security Concerns
4:03 to 5:55
Exploring Anthropic's decision to restrict access to its AI models and the implications.
“And in essence, it forced the company's hand.”
Jailbreak Vulnerabilities Explained
5:55 to 7:27
Understanding the concept of jailbreak vulnerabilities in AI models and their implications.
“Seth, Anthropic is saying there's a misunderstanding here.”
Cohere's Perspective on Government Restrictions
7:27 to 12:53
Insights from Cohere's Chief AI Officer on the implications of AI access restrictions.
“Bloomberg's Seth Vigerman and Bloomberg's Mike Shepard in D.C.”
NVIDIA's Cash Strategy and AI Investments
14:00 to 16:01
Learn about NVIDIA's strategic financial moves in the AI space.
“Yeah, well, listen, you can never be too rich.”
Market Reactions to SpaceX's IPO
16:01 to 21:02
Explore the implications of SpaceX's IPO and market volatility.
“of trading following the company's blockbuster public markets debut Friday.”
Market Reactions to SpaceX's IPO
22:26 to 23:11
Explore the implications of SpaceX's IPO and market volatility.
“Public is an investing platform that offers access to stocks, options, bonds, and crypto.”
Market Reactions to SpaceX's IPO
23:18 to 23:36
Explore the implications of SpaceX's IPO and market volatility.
Fox and Roku: A Strategic Acquisition
23:41 to 26:31
Understand the strategic implications of Fox's acquisition of Roku.
“The tie-up will create the third largest player in the U.S.”
Show all 22 chapters
Geopolitical Tensions and Tech Leaders
26:31 to 28:00
Examine the intersection of tech leadership and international negotiations.
“This is what the technology sector looks like.”
Iran's Role in the G7 Discussions
28:00 to 29:25
Explore the significance of Iran's potential agreements concerning the Strait of Hormuz.
“before this potential signing ceremony happening here in Switzerland on Friday.”
China's Tech Landscape Developments
29:25 to 30:07
Understand the current status and investor sentiment regarding China's tech sector.
“Social media powerhouse Zhao Hongshu is reportedly gearing up for a blockbuster Hong Kong IPO this month, while shares of AI model maker Jipu skyrocketed following a major price target hike from JP Morgan.”
Analysis of China's AI and Tech Growth
30:07 to 33:53
Learn how Chinese tech companies are striving to close the gap with U.S. technology firms.
“Yeah, so I think the reason why we mention it is because I think the investor interest, especially for those from the U.S.”
Future Prospects for Chinese Super Apps
33:53 to 35:06
Discuss the potential evolution of Chinese super apps and their impact on the market.
“You brilliantly set out kind of what's happened 1H 2026.”
Upcoming Guest: Mike Schroepfer on Data Centers
35:06 to 36:31
Introduction to Mike Schroepfer and the upcoming discussion on data centers' future.
“Now, coming up, should we be sticking data centers in Earth orbit or should they be under the ocean?”
Upcoming Guest: Mike Schroepfer on Data Centers
36:35 to 37:49
Introduction to Mike Schroepfer and the upcoming discussion on data centers' future.
“Brokered services by Public Investing, member FINRA SIPC.”
Impact of SpaceX IPO on Market Dynamics
38:59 to 42:00
Analyze how SpaceX's IPO affects market confidence and investor sentiment in tech.
“Shares higher, second day of trading after a blockbuster public debut Friday.”
Exploring Data Center Economics
42:00 to 47:40
Learn about the viability and cost differences between submarine and orbital data centers.
“a complicated and expensive ambition that our next guest says may only be achievable by SpaceX.”
Apple's Siri AI Update
47:40 to 49:48
Discover the new capabilities of Apple's Siri AI and how it compares to competitors.
“Apple's Siri AI is catching up to its chatbot competitors, pulling the tech company out of an AI slump.”
Recap of SpaceX Trading Impact
49:48 to 50:43
Understand the effects of SpaceX's IPO on market dynamics and technology investments.
“Bloomberg's Mark Gurman, a power on every Sunday.”
Recap of SpaceX Trading Impact
51:18 to 51:51
Understand the effects of SpaceX's IPO on market dynamics and technology investments.
“When you're running a business, the best days are the ones where priorities stay on track.”
Transcript
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2:07Ed Ludlow:This is Bloomberg Tech, coming up the biggest AI export restriction yet. Anthropic disables access to its most advanced models for all foreign nationals. The US concern jailbreaks in the code. NVIDIA is seeking to raise at least$20 billion from its first corporate bond sale since 2021. We'll have the details. And SpaceX shares throttle up on day two of trading, adding to a blockbuster public markets debut on Friday. And this is what markets look like. Hello, welcome to Bloomberg Tech, Monday, June 15th. There is a big focus on what is happening between the US and Iran. Later in the show, we'll get to that.
2:44Ed Ludlow:But SpaceX in its second day of trading up 8%. And it's putting a big spotlight on the AI trade, on AI infrastructure, the Nasdaq 100s off-session highs, but we're again close to records. And the narrative is that there is feel-good in this equity market. Let's get to our top story. A major escalation in Washington's approach to AI. The US government has ordered Anthropic to block foreign access to its most advanced models after officials flagged security vulnerabilities in its newly released Fable 5 system and MIFOS 5.2. Talks are underway between Anthropic and the Trump administration. Joining us now our AI editor, Bloomberg's Seth Figgerman, and in DC, Bloomberg's Mike Sheppard.
3:24Ed Ludlow:And Shep, I want to start with you. This came from the Commerce Department. Explain the export restriction and what the government asked of Anthropic. Well, Ed, this all dropped right as everyone was still so focused on the SpaceX IPO. 5.21 p.m. on a Friday, a letter, a directive to Anthropic saying, look, we are concerned about foreign nationals having access to two of your most advanced models, essentially the key products that the company would want to pitch as it's heading into this nearly trillion dollar IPO. And this really marked a huge shot across the bow once again for this AI developer from the Trump administration.
4:03And in essence, it forced the company's hand. And Fropic had to deny access worldwide to these two products, Fable 5 and Mythos 5, in response to the government's move. Now, this, in a way, it really marked not only an unprecedented step for any administration, it really marked a break from what the Trump administration had laid out just a little more than a week ago with that order, that executive order that President Donald Trump signed that was aimed at cybersecurity and AI. And that it included language that said this does not should not be interpreted as establishing a licensing regime. Yet, in effect, what we are seeing is that the government is blocking the release of these models over the kinds of safety concerns, in essence, the vetting that the government had wanted to see done on a voluntary basis.
4:51And yet it is setting its foot down now over security concerns and essentially holding off the release of these two products.
4:59Ed Ludlow:Seth, this was an action directed at the use of the models, Fable 5, Mythos 5, by foreign nationals. but Anthropic made the decision to close off access to everyone. What was the explanation that the AI lab gave? Yeah, well, they're saying access to foreign nationals, not just in other countries, but those residing in the United States. And it seems that Anthropic made the decision that this was unworkable to allow this model to remain on the market with those restrictions. So they've pulled it while they continue to talk with the government. Now, there's a certain irony here. Two days before this move, Anthropic's Dario Madej had come out and said, he thinks the government should have the ability to ban models that pose certain risks.
5:42Two days later, the government took a step that has effectively caused a model or two models to be pulled from the market. But in this case, Anthropic is saying it's essentially misguided, and the risks outlined may not be as severe as the government's think they are.
5:55Ed Ludlow:Seth, Anthropic is saying there's a misunderstanding here. The issue that the government laid out is something called a jailbreak in the code. It has to do with the guardrails that are placed on the models themselves. Could you explain to the Bloomberg Tech audience what the jailbreak concern is? It's important to note that at this point we have not seen the research that Anthropic and former White House star David Sachs have alluded to that implies that there is some kind of jailbreak vulnerability. What we understand is that it seems to be pretty narrow in nature. It may actually be something that enables cyber defenders to use the technology to spot and protect against flaws.
6:29But what Anthropic is saying is there's not some universal jailbreak, some wider flaw that could be breached in a potentially damaging way. And it seems to believe that the government is either overstating or misunderstanding the nature of the risk here.
6:42Ed Ludlow:Mike, real quick, what's happening behind the scenes? Well, that is what we're trying to find out next, of course. And we want to first know what remedial steps the company could take at the government's behest, what those might look like, how long that might take and whether the company really would follow suit. We don't know how long this will unfold or if there will even be a legal challenge. And also, we have to look at the politics of this abroad. The president just arrived in Geneva for the summit in Evian with other G7 leaders. AI is on the agenda, and now it will be a more urgent issue, especially as we see economies, including the European Union, examining the question of tech sovereignty.
7:22and the concern that they have about perhaps over-reliance on U.S. technology that may be at risk of being taken away from them at a moment's notice.
7:31Ed Ludlow:Bloomberg's Seth Vigerman and Bloomberg's Mike Shepard in D.C. Thank you very much. The industry weighs in. For more on the impact across the AI ecosystem, we're joined by Joel Pino, Chief AI Officer at Cohear, a frontier AI firm focused on LLMs and AI applications for business customers. And Shep just said it out pretty clearly. at issue here is whether or not the government should be able to say you can or you cannot use a particular piece of technology because of the concern that was outlined. What is Cohere's position on that? Indeed. And, you know, Cohere is a company that's fully focused on developing models and agentic platform for enterprises and government.
8:09And so we've been talking to that segment of the market for a number of years now. What we've been hearing is that customers want the ability to really control their tech stack. They want to make sure that the technology runs in a predictable way, that it's stable, that it has high guarantees in terms of confidentiality and security. So there's a number of companies and governments already who are opting for on-premise installation where they can control the model and they can control all of the software stack. Clearly, you know, the news from the last few days is a huge wake-up call for others across the industry.
8:48The fact that models, which a few days before were presented as some of the most capable in industry, suddenly are no longer accessible means that there can be a lot of volatility in terms of access to the technology. And that's got to be a big concern for companies.
9:05Ed Ludlow:Joelle, this news hit 5.21 p.m. Eastern Time Friday. So I appreciate it's been just a couple of days over the weekend. But has Cohear had any inbound, right? If there are entities that can't get access to to meet those in fable five maybe they use you i would say like huge number of inbounds uh it's coming from uh business customers who are looking to diversify the set of technology that they can rely on both for the core models and we do build our own our own models and for the orchestration and governance platform a large number of inbounds from governments around the world, especially outside of U.S.
9:46and China. Governments are concerned about their own ability to access the technology, but also the economic trajectory of companies and citizens within their frontiers. And then, of course, a lot of inbound interest from investors who are wondering, what does that mean? We know there's, of course, the big IPOs coming, a lot of volatility from that point of view, and a lot of people who are just trying to understand the situation and see what have the news changed in terms of what should be their investment strategy.
10:15Ed Ludlow:I had asked Seth to explain the concept of a jailbreak in the code, right? That is the reported issue that the US government had with MIFOS and Fable 5. Explain technically how that works and how you'd approach, I guess, explaining it, if it was you that was dealing with the Commerce department on a restriction like this. Yeah. And so the concept of a jailbreak can be used pretty loosely, but quite specifically, there's a sense in which a particular system has some guardrails around the intended use of that system. And a jailbreak happens when someone manages to infiltrate the system in ways that weren't intended.
10:58So in this specific case, We can imagine, you know, from mythos to fable, Anthropic has put in some guardrails that prevent the ability for the model to be used to create cybersecurity attacks. So we can presume that the specific jailbreak that was identified is the ability to go around these defenses and, in fact, make the model produce outputs that would leverage some of the cybersecurity capabilities of the model.
11:29Ed Ludlow:something at the center of anthropics response is that many of their own staff wouldn't be able to access this technology based on the restriction right because many of their staff are foreign nationals it also highlights a world dependence right now on u.s technology you're a canadian company i get that but what's your thinking on that issue the concentration of of leadership in the field of a small group of U.S. companies. Maybe you dispute that. No, I don't fully dispute in the sense that, like, where we sit today, there's literally, you know, four countries in the world that have the ability to train foundation model, U.S., China, France, Canada right now.
12:10Even in those companies in the U.S., there's a large number of foreign nationals. The, you know, inbound talent into the U.S. has been a formidable force for the progress of this technology. So this is going to be a big challenge. And the other thing that's worth mentioning is, in many ways, a lot of the developments in AI of the last few years, you know, are at this level of ideas and concepts. Sure, we have the models, but really the recipe for training these models sits in the head of a relatively small number of people. But there is a large enough amount of circulation between the various companies that we can assume the capabilities to do that exist, not just at Anthropic.
12:52Ed Ludlow:Joelle Pinot of Cohere, thank you very much for your time. What is our top story today? Now, coming up, NVIDIA heads back to the bond market after a five-year absence. Why is the AI giant looking to raise billions of dollars while it's sitting on a mountain of cash? That's what the stock picture looks like. Be right back. This is Bloomberg Tech.
13:16Ed Ludlow:Today's big number,$20 billion. NVIDIA is looking to raise at least that in its first bond sale since 2021, according to sources. Seven tranches, maturities from two to 30 years. The proceeds will be used for general corporate purposes, including refinancing existing debt. As NVIDIA joins other AI leaders like Amazon and Alphabet in raising large amounts of capital to fund AI-related infrastructure. But why does a company so flush with cash need to borrow more? Bloomberg Intelligence reckons that it's to focus on funding partners. BI senior credit analyst Robert Shiffman joins us now. When you publish the react, that's the bit that jumps out at me off the page, right?
13:56Ed Ludlow:Why would they do that? Well, they have a track record of investing in the kinds of startups that rely on their technology. Extrapolate on that thesis. Yeah, well, listen, you can never be too rich. It's a good problem to have. Quite frankly, NVIDIA does have a cash problem. They have too much of it. So people are scratching their heads this morning thinking, why are they raising more? Listen, you take money down when it's available. There is so much money chasing after this AI build-out. They're going to put in the highest quality names that they can. And I think NVIDIA is just taking opportunity here to basically borrow at effectively a zero rate, at least from a WAC perspective, to give them more financial flexibility.
14:37I think they're likely to pour money probably back into strategic partners like OpenAI, like Anthropic. And who knows, maybe SpaceX, which is likely to do their own bond deal, might come to NVIDIA for some financing down the line as well.
14:51Ed Ludlow:There's like the smart cost of capital angle to this. the shareholder return story has changed recently with NVIDIA. You know, I'm a student of your work, right? It's not that unusual for companies flush with cash to just say like, OK, this is an interesting thing for the finance org or the treasury team to do. Explain the kind of nitty gritty of that. Well, listen, you know, the weighted average cost of capital is what they're looking at. The weighted average cost of debt when you have a five trillion dollar equity market cap is basically zero. So you could take money, borrow it from bondholders and use it for equity or equity style investments at a little or no cost.
15:30I think you're going to see more of this. You sell a lot of this from Apple over the years. We're not used to it now though, because most of these other companies have now turned free cash flow negative and they need it for funding for their AI investments. That's not what NVIDIA needs. NVIDIA is probably going to generate a couple hundred billion dollars of free cash flow over next year. So they're swimming in the money. But again, when people are willing to give it away for next to nothing, you're going to take it and you're going to give yourself that financial flexibility.
15:57Ed Ludlow:Robert Shiffman, who leads our credit research at Bloomberg Intelligence, thank you so much. Let's turn to SpaceX, who shares our extending gains for their second day of trading following the company's blockbuster public markets debut Friday. The trading offers this other glimpse into investor demand for what was one of the world's most private companies, and then they did the biggest IPO in history. There are some mechanics to what's happening in the market next. Joining us is Stephanie Aliaga, JP Morgan Asset Management, Global Market Strategist. The big anxiety in the days leading up to the IPO was this great rebalancing of the passive funds because NASDAQ, Russell indices, fast-track SpaceX's inclusion.
16:39Ed Ludlow:It's day two, shares are still higher. But how much does the market need time to digest before it has to undertake that rebalancing? It's a great question. And that's exactly the point. You know, this issue of all of this issuance hitting the market doesn't happen all at once, you know, relative to the size of how much supply of SpaceX there will be in the market right now. We're just looking at a small fraction of it, right? Four and a half percent was that first day's volume. and that's going to ramp up over time. We think that six-month mark is really going to be the point where you might see more volatility, just even a greater supply in the markets.
17:17And then that increasing over time, gradually over the course of the year, particularly given the S &P taking a more temperate pace there. But given that longer-term horizon, I mean, that's key here. You know, this is a market where we are looking at a large bump in terms of IPO issuance this year. this year projected around$260 billion. But for a market the size of$65 trillion, that is less than 1 % of the overall market cap of the market, a market that is also 55 % greater than it was in 2021. So we think so long as the market continues to trung along here with robust fundamentals, we just had a really solid earnings season, this AI CapEx boom continues to funnel earnings growth and revenue growth across the market and households remain pretty strong, buyers, retail activity is strong.
18:13We think that this is a market that can digest this increase in issuance and its issuance that we have really been strapped for for a number of years.
18:21Ed Ludlow:I want to go back to something we showed on the screen a minute ago, and it's basically more of an FYI that in the end, they sold more than the 550, 5.6 million shares and raised more than$75 billion, right? This is basically an instant exercising of the green shoe, 83.3 million shares, raising proceeds of 85.7 billion. This has been a story that started about a race to IPO. SpaceX now likely Anthropic and OpenAI. And it quickly changed to a story about race to capital. Alphabet came in, massive equity offering. NVIDIA tapping the corporate bond market. Do you see a race to capital? I think the economics around the AI boom continue to mount.
19:04Now, obviously, these companies are all in different pieces of this value chain and are raising capital for a variety of different reasons. But it is something that investors are going to have to get used to, I think. You know, we as great as the balance sheets of some of these companies are, this AI wave is just getting to be that much more expensive. and all of the revenues around AI will eventually come, but this is going to be a multi-year phenomenon. And right now we are ramping up to spend significantly more around AI infrastructure and all of these different pieces of the value chain. I think that points to the need for selectivity.
19:42Not all that glitters is gold. These companies do vary in their financials. We think at large the fundamentals of this market and of the companies spending the most and raising issuance in various markets is still robust. But you want to make sure in your portfolios that you have some proper diversification, just given that the leverage and the economics around this AI wave are definitely beginning to diverge.
20:07Ed Ludlow:Stephanie, we've just got 30 seconds, but how closely are you tracking private markets? Because there are competing stories, right? There is also the staying private for longer because you can. How much do you track that? Yeah, well, we think that that theme is still very much alive and well. I mean, you are going to get, likely, some big high-profile AI names, but the IPO markets are still going to be very selective. And a lot of the companies building in this AI race, whether it is robotics or even semis, but also particularly the application layer and building AI for healthcare, AI for logistics, all of those companies are in private markets right now.
20:46And of course, not all that glitters is gold. I mean, market returns there can be quite volatile too. But when these companies eventually reach public markets, a lot of that growth has already happened. And that is a reason for investors to make sure they're looking beyond just public markets in their portfolios.
21:02Ed Ludlow:Stephanie Aliaga of J.P. Morgan Asset Management. Thank you very much. A quick update on the Anthropic story. A U.S. official has just confirmed that Anthropic executives will be meeting at the Commerce Department today. We'll follow the story as it develops and bring you the latest. Now, coming up, Fox has agreed to buy device and streaming company Roku in a deal that would create a new TV juggernaut. We've got those details next. This is Bloomberg Tech.
21:45operating models, and governance, we help AI deliver real, lasting value at scale. When AI fits how you actually work, that is EY Consulting. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Support for the show comes from Public.
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23:40Ed Ludlow:Fox has agreed to buy Roku in a deal that values the streamer at$22 billion, including debt. The tie-up will create the third largest player in the U.S. television market by viewership. Bloomberg Deals' Michelle Davis joins us with the deets. Interesting one. I've got a Roku TV somewhere in my house. What's this about? What's the strategic play from Fox? Yeah, this is a really interesting deal because Roku is seen as kind of the last big aggregator out there that everyone was wondering when it would get taken over. The founder for years has controlled the company. And there was always a question as to, does it make more sense to aggregate content and be the platform on top of which content streams?
24:21Or does it make sense to be a really big streamer that generates most of its revenue that way? And by buying Roku, Fox is basically saying, we want to make sure we are that neutral third-party platform. Roku makes most of its money on advertising, which is an area that Fox had kind of fallen behind its competitors on in this new streaming central environment. And so that's a lot of what the value is going to be coming from here for them.
24:47Ed Ludlow:21st century Fox down significantly. Take me into the terms, like where we're at in the process. So the deal, it's a cash and stock deal. The shares are down on the news, of course, because investors don't always love to see a stock deal. At this point, the deal values Roku at about$22 billion enterprise value, so that's including debt. Of course, if Fox shares continue to decline up until the deal closes, that will mean that some of the overall value for the deal will be a little bit lower than$22 billion. But this really caps off a multi-month process where Roku had been exploring strategic alternatives.
25:26The founder, Anthony Wood, as we were just talking about, had been thinking about what's next, succession planning. And Roku and Fox actually have a long history. Fox had invested in Roku years ago before the IPO. They sold out of their stake at the time that they bought Tubi. But by buying Roku, the two companies are coming back together. The founder will have a role on the board of the combined company.
25:52Ed Ludlow:And that's Michelle Davis. Thank you very much. In other M &A news, Salesforce has agreed to buy AI firm Finn for$3.6 billion. Finn's customer service tools will complement Salesforce's agentic capabilities, according to the company. AI is a key part of the software maker's growth strategy as it works to boost investor confidence. Salesforce shares up a percentage point, right? And M &A has been at the heart of the Salesforce story for a little while now. We'll keep tracking it. Coming up, Citi's head of Pan-Asia Internet Research, Alicia Yap, join us to break down where China's tech market stands in a big global race.
26:29Ed Ludlow:It is halftime, people. We'll be right back. This is Bloomberg Tech.
26:42Ed Ludlow:Welcome back to Bloomberg Tech. This is what the technology sector looks like. There is a big focus on the outcome of what's happening between the United States and Iran and some sort of deal. We're going to get the details on that in just a moment. SpaceX is trading for just the second day as a public company, up 8%,$173.55 a share and rising. We'll keep tracking that story. There's a lot of factors going into the biggest IPO in history. Let's get out to Geneva. Global leaders are arriving in France for the G7 summit. And this time, the usual geopolitical guest list has tech additions. The chief executives of major AI companies, OpenAI, Anthropic, Google, are all slated to attend.
27:25Ed Ludlow:The gathering comes just days after an unprecedented White House order forced Anthropic to block foreign access to its most advanced AI platforms. But first on the agenda, the US and Iran. The two countries reached an interim deal to reopen the Strait of Hormuz. Bloomberg's Tyler Kendall joins us now live from Geneva. Tyler.
27:48Hey, Ed. Well, at this point, we're waiting for some firmer details from either side about what is in this potential memorandum of understanding, though we did hear from the vice president, J.D. Vance, earlier today, who said that they are going to try to get that text out before this potential signing ceremony happening here in Switzerland on Friday. So far, we know that the main pillars of the deal are what we've been tracking for weeks, which of course includes reopening the Strait of Hormuz. But there is still some big questions here about how Iran feels its role is going to be connected to this going forward after Iranian state media earlier today seemed to indicate that Iran wants to continue to impose fees and have some sort of grip over the strait even after a deal is signed.
28:33We also have questions about what economic relief will look like and ultimately what sort of curbs Iran will agree to in this deal, though. It is our understanding that this is going to be a phased agreement where those negotiations come later. And while the conflict in Iran is dominating the conversation already here at the G7, as you mentioned, President Trump has some really important meetings scheduled for later in the week on Wednesday, where we will see this face-to-face meeting with G7 leaders and these big tech CEOs. And that meeting is going to be just as much about the potential opportunities around AI as well as those potential risks, because, Ed, Bloomberg News has now confirmed that senior staffers for Anthropic are meeting in Washington today with members of the Commerce Department after this unprecedented move by the administration to threaten that export ban.
29:21Ed Ludlow:Bloomberg's Tyler Kendall in Geneva. Thank you very much. There's also a massive wave of news across China's tech landscape today. Social media powerhouse Zhao Hongshu is reportedly gearing up for a blockbuster Hong Kong IPO this month, while shares of AI model maker Jipu skyrocketed following a major price target hike from JP Morgan. But despite all this heavy corporate activity, Citigroup warns that global investors are still treating China tech as, quote, a source of funds, with Wall Street dumping local stocks to fund the global AI hardware trade. Joining us now is Alicia Yap, head of Pan-Asia Internet Research at Citigroup.
30:00Ed Ludlow:And let's start with that thesis. I find it so interesting. There's a big distinction between news flow and activity, China's tech sector, and deployment of capital or finding capital to deploy elsewhere. Explain what you're arguing. Yeah, so I think the reason why we mention it is because I think the investor interest, especially for those from the U.S. and Europe, so outside of Asia, and even for those that we speak to in Asia, they're based in Asia, I mean, people have interest, but then somehow we know that they've been underway, China internet specifically or even to many investors that share with us they're actually using internet as a source of fun obviously to fund their hardware trade in Korea, in Taiwan, in Japan partly because I think despite internet for example Alibaba, Baidu they're a full stack of AI but then because of their core business they're not really doing as well they've been investing aggressively on food delivery, for example.
31:12They've been dragging the profit. So a lot of investors give us the feedback is that why should I bother so much of that while I have to deal with the core business? It is not a pure play, and I might as well just play directly into some of the hardware name. So that's why this has been happening and we've seen the last few weeks, I mean, sorry, the last few months, China internet sector has not been performing, despite the valuation is actually getting quite attractive.
31:42Ed Ludlow:Right. Alicia, the story of the first half of this year was Chinese internet giants and frontier labs moving very quickly to try to close the gap with American technology companies. Does your research show that that gap is closing? Yes, I think indeed. Especially, for example, take Alibaba QAM model. So, you know, since 3.5 and then 3.6, 3.7 now, we're actually seeing there's a huge step up in terms of the model intelligence. And then same thing for, you know, the independent lab, for example, Minimax that we cover, and also I think Tencent, the latest model, Hunyuan 3 that they released at the end of April, this is also increasingly closing the gap with the Frontier model.
32:31Ed Ludlow:The story and the data that we track in the US is capital expenditures on the hyperscaler side. And then how real is the agentic AI deployment on the enterprise side? Take that story to China. How is that playing out in that market? So I think from the CapEx point of view, I think many of us aware that I think China side is not spending as high as what the US hyperscaler is indicating. Partly, I think there's a lot of cost components is cheaper in China. Partly, I think there's also some of the existing capacities that's already built up last few years is actually able to support it. And then in terms of the agenda, the future agenda workflow, we think that Alibaba is trying in terms of the current versus their existing application, for example, the Taobao, the AMAP.
33:25But then I think over time, And we do hope that Tencent, at the end of the day, could actually come up with their AI agents inside WeChat, which they are obviously testing on it. And then with the next versions of the model, if it's intelligent enough, because I think they're going to train a lot of their proprietary data into the next versions of the model. And then hopefully that could actually ensure the AI agents also working within the WeChat ecosystem.
33:52Ed Ludlow:Another big story overnight from China was Ant Group basically planning to overhaul the Alipay super app, but to bring in an agentic AI user face. You brilliantly set out kind of what's happened 1H 2026. What does Citi think happens in China's tech sector in the second half of this year? So we hope that, for example, you know, a company like Tencent or even, you know, and to some extent, some of these super apps, that if they're actually able to bring up the agenda workflow working within the super app, which allow a lot of the enterprise that have mini program, for example, they're able to use agents within that ecosystem.
34:33then most of these enterprises would be able to stay within that ecosystem in a way then hopefully things could take off, especially for the super app environment that they can become the AI power ecosystem that we are looking for and hopefully that could help to re-rate the leaders like Tencent or Alibaba then in that sense to help the entire sector to get the front row rotation back. Yeah.
35:01Ed Ludlow:Alicia Yap, head of Pan-Asia Internet Research at Citigroup. Big focus on China tech right now. Appreciate it. Thank you. Now, coming up, should we be sticking data centers in Earth orbit or should they be under the ocean? We're going to speak with Mike Schroepfer, founding partner of GigaSale Capital. You might recognize the name, former Meta CTO. He has a thesis. This is what the Nasdaq 100 looks like. We're back nearer toward session highs and a gain of almost 3%. A lot of momentum. The index is near record highs. A big part of it is kind of feel good from the SpaceX IPO Friday, but also, of course, what was outlined by Tyler from Geneva about a US-Iran deal.
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38:59Ed Ludlow:Check back in on SpaceX. Shares higher, second day of trading after a blockbuster public debut Friday. That performance has helped boost confidence in a broader AI rally. And it marks the start of a shift from two decades of shares disappearing from public markets to this new era of stock abundance as the likes of OpenAI and Anthropic also prepare for IPOs and other companies sell new shares. Bloomberg's Carmen Reinecke has been all over it. And we expect in the next days, weeks and months, a bit of volatility. Should we start with like the here and now? I hope you had some of a weekend to digest what happened Friday.
39:36Ed Ludlow:But right now, the net takeaway is what, Carmen, about this IPO? The net takeaway is very positive. We see shares up a second day here. It was up about 8 percent the last time I looked at my terminal. extending gains from Friday's first day of trading. And this gives the company a valuation of about $2.2 trillion. So it's already launched itself into one of the top companies, one of the biggest companies in the stock market. So the takeaway was really positive. Investors bought into the IPO, there was solid trading, nothing went horribly wrong. And that's kind of given investors the ability, one, just to be very enthusiastic about the AI trade that's supported by what happened over the weekend, a potential peace deal with Iran.
40:21And investors can hopefully start to shift their focus towards a Fed meeting on Wednesday.
40:27Ed Ludlow:Carmen, you and the team are out with the big take. And basically, there's going to be a lot of new equity that hits the market. And it's going to change the story of like the last two decades. Explain that to us. Give us the key numbers that we need to know? Yeah, so this is a really huge deal. Basically, over the last few decades, there's been, you know, 12 trillion of equity taken out of the markets as company buy back stock, which is a key way that they once spend, you know, money down on their balance sheet and, you know, return value to shareholders. It's been a major support of the stock market, especially these big companies.
41:04So what's happening now, I mean, we see IPOs like SpaceX's, record IPO on Friday, as well as equity issuances from companies like Alphabet, Meta, and Oracle bringing equity back into the market. So growing the total number of shares that are available in a way that actually it can be diluted for stockholders. So$1.5 trillion in shares coming back into the markets this year. That's according to a JP Morgan analysis. And really what the signal is, is these companies are saying, one, we can go to the equity markets. There's investor desire, demand for our shares. And it's a good way to raise money to spend on what we need to do to build out more capacity, more data centers to use AI in a way that will hopefully be accretive to earnings going forward.
41:54Ed Ludlow:Thank you very much. So one way that Musk aims to drive revenues and profit is to build out-of-orbit data centers. a complicated and expensive ambition that our next guest says may only be achievable by SpaceX. Instead, others should turn to submarine data centers to save on things like energy costs. Mike Schroeder helped add tens of millions of square feet of cloud computing capacity as the former CTO at Meta. He's now the founding partner of Gigascale Capital, a venture firm making some early stage bets on those companies that are more focused on climate impact. But you put yourself in one bucket or another, I guess, orbital data center or data centers where the ocean is the playground.
42:40Ed Ludlow:Present your thesis to me. Well, I don't think it's an either or. I think it's a little bit of all of the above. You know, for space, it's very hard and expensive to get there. And I think nobody but SpaceX can do it with their vertical integration and launch costs at wholesale. Otherwise, economics are just tough. You know, I can put a ton of mass in the ocean 100 times cheaper than I can put it in orbit. So I think you've got a lot of room to go in terms of using huge energy resources. We've got 10 terawatts of power in the southern ocean that's completely untapped, unused. We've also got, you know, I built a lot on land, tens of millions of square feet.
43:16I don't think we're anywhere close to done using solar resources on land. Between solar and batteries, I could put together a new power plant in 12 to 24 months. you know, in a pace that's faster than gas or launching into orbit. So I think there's a lot of different ways to do this. I think SpaceX is going to do space-based data centers. I'm bullish on on-land, solar plus batteries plus next generation, and in the ocean with companies like Panthalossa.
43:42Ed Ludlow:I think we therefore need to kind of understand the lasting and ripple effects of SpaceX's IPO, right? Which is, you know, the prospectus could not be more clear. Here is the plan, orbital data center. But when you're in private markets putting bets on earlier stages, you know, if someone comes to you with a deck and it says, I, too, have a plan for Orbital Data Center, do you bother? Do you just say, well, SpaceX has got that covered? There isn't a need to fund this concept, this idea, this plan elsewhere. I mean, I'm in the business of looking at everything. So I'll always take a meeting to understand to see if I've missed something.
44:21And I'll update my priors if I see new information. Every time I've looked at the math, the economics on space-based data centers, it's doable. It's just like it's extraordinarily expensive because you have to pay for launch. You have to pay for radiation hardening. You have to pay for radiators large enough to get rid of the heat because these servers produce a lot of heat. And once you add up all those costs, I just don't see how it's cost competitive with current on land or current ocean. You'd have to assume a dramatic increase in the price of building stuff on land. before you want to go into space.
44:56Again, unless you're SpaceX and you get all of those things at wholesale costs, in which case your costs are very different. So I'm not a holy no, but I'm skeptical when people pitch me on these ideas.
45:08Ed Ludlow:Mike, if we measure the economics of, and we're just showing what SpaceX presented the other night, the design, the economics of the space-based data center is a dollar per token basis. How does submarine data center compare on paper? Well, again, I think you have to look at all the assumptions into that. And, you know, when I've done the modeling and math, if you just sort of do some basics on this, it is, again, it's about 100 times cheaper currently to put a ton of mass in the ocean than it is to put that same ton of mass in space. So I think you have a huge cost advantage. And when you look at the ocean, you have almost unlimited free cooling in cold seawater.
45:51In space, you can radiate heat, but that requires building radiators or radiating into a vacuum. It's expensive. So, again, I don't see how the math closes. For anyone but SpaceX, who, again, has everything at wholesale cost, already launching large volumes of Starlink satellites. So I think it's a great business for them. I'm just not clear on how anyone else can compete on costs.
46:14Ed Ludlow:So our starting assumption is right now the world is compute constrained, right? You were at Meta for a long time. Meta is going to be one of the big capital expenditure deployers. Do you see Meta being open to a world of submarine data center as a solution or looking at Orbital data center as an alternative? I think all of these providers, you know, will look at these technologies when you show tokens being generated. You know, once I'm at a terminal, I can say here's a chat experience with a live webcam of a little buoy bobbing in the southern ocean. or a feed from the live satellite and saying this is where the tokens are getting generated, I think everyone's going to perk up and add more attention.
46:56Until then, we're talking about theory because no one's done either of these things. But I think that at the end of the day, people want reliability, they want availability, and they want tokens now. So if you can provide people compute now,
47:11Ed Ludlow:then they're open to it. And a reminder to the audience that SpaceX said the earliest deployment of Orbital Data Center is 2028. Mike Schroepfer, founding partner at Gigascale Capital. Thank you so much. And as all eyes continue to be on SpaceX, we bring you some of the biggest investors in the company. Tomorrow, Sequoia Capital partner Sean McGuire joins us, a conversation you don't want to miss. Now, coming up, we're going to discuss the newest update on the long-awaited AI capabilities of Apple's Siri. Power on. This is Bloomberg Tech.
47:44Ed Ludlow:Apple's Siri AI is catching up to its chatbot competitors, pulling the tech company out of an AI slump. Two years after making promises of AI functions, Siri's newest features center around its so-called personal context and on-screen awareness technology. Bloomberg's Mark Gurman got the access and joins us now. This is so interesting. So you've had time to use Apple's Siri AI in a way that you can explain where we're at with it. In Power On over the weekend, you detailed the most important parts. What's it been like? Yeah, Siri AI, Apple's revamped Siri. You want to call it Siri 2.0, you can do that.
48:24Here's what I'll say. It fulfills the promise of Siri that the company made 15 years ago when it debuted the first version as part of the iPhone 4S in 2012. 2011. It's terrific. It's on par, probably with recent versions of ChatGPT, Google Gemini, and Claude. It's not perfect. There's a lot it can't do. You can't do in-depth research like you can do on ChatGPT. You're not going to get major PDF summaries of very long documents. You're not going to get tax preparation. You're not going to get Excel and PowerPoint slide deck creation. But for 95 % of people, they use ChatGPT and Gemini for web AI search, for historical information, for asking questions about anything.
49:10It could do all of that, plus actually do the things that Siri has been supposed to do, like correctly play your music or correctly navigate you places. This is a big win for Apple.
49:21Ed Ludlow:Just as people use ChatGPT for the most part right now, the title of the power on Apple's new Siri is just good enough to ease AI crisis. Have I put the emphasis in the right place? Quick. It is just good enough because it's not exactly as good as the competition. But for 95 % of people and to meet the needs of the majority of the Apple user base, 2 billion plus strong, it does that. Bloomberg's Mark Gurman, a power on every Sunday. You've got to read it and then Mark will be on the show. Give us the details that we need. Thank you very much. A quick check on shares of SpaceX. So the gains in the second day of trading now up to 10%, giving SpaceX as it stands a market cap of around$2.32 trillion.
50:05Ed Ludlow:Just day two as a public company trading in the public markets. But we talked throughout the hour about the lasting effect this will have in not just the next few weeks, but the next few months and years. That does it for this edition of Bloomberg Tech. Those conversations are really worth recapping. There's a lot happening in capital markets across public equity, across debt. And it's the biggest technology companies in the world that are dominating that news flow and that market move. Check out the podcast. You know where to find it on all the Bloomberg platforms as well as on Apple, Spotify and iHeart.
50:40Ed Ludlow:From San Francisco, day one. This is Bloomberg Tech.
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From the publisher
Bloomberg’s Ed Ludlow breaks down why Anthropic disabled access to its most advanced models for all foreign nationals after a request from the Trump administration. Plus, Nvidia is seeking to raise at least $20 billion from its first corporate bond sale since 2021. And, SpaceX shares throttle up on day 2 of trading, adding to a blockbuster public markets debut on Friday.
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