Spotify User Growth, Paramount’s Enhanced Offer

22:53Look, the move comes as the tech industry really grapples with the surge in chip demand and ongoing labor shortages. And Alibaba, well, it's pushing further into robotics. The company has debuted a new AI model called RinBrain, designed to give robots a more advanced understanding of their surroundings. With the release, Alibaba takes on AI leaders such as Google and NVIDIA. Ed, what have you got? Okay, so Andreessen Horowitz has become one of the most influential voices shaping the Trump administration's AI policies. Sources say the venture firm is often the first outside call that top White House officials and senior Republican congressional aides make when weighing moves that could affect tech companies' AI plans.

23:33And like a lot of this reporting, Caro, it's coming from current and former White House officials. There are things that are clearly in plain sight, right? So Sri Ram Krishnan, who is a senior AI policy advisor to the president, is a former Andreessen Horowitz partner. But he was in London. And there's reporting in there about David Sachs, who is from the world of venture capital in Silicon Valley, is close to the president and wants to hear out industry. And Andreessen has scale. Has scale. It has money to put into super PACs. We see what they did with the crypto fair shake and the way that they've then retargeted in the AI spectrum.

24:09But what's also interesting is one of the lines in the story says they de facto have a veto, really, over certain AI policies. Now, they push back on that. In particular, the named lobbyist for A16Z says, look, the only person who's got AI veto is President Trump himself. Yeah, yeah, the president makes policy back. You know, as we've reported, he often gets handed the docs, reads them himself and says, good call. Coming up on the program, Runway CEO Cristobal Valenzuela will be with us to talk about the startup's latest funding round at a$5.3 billion valuation. It is halftime and that conversation is coming up next.

24:45This is Bloomberg Tech.

24:52Welcome back to Bloomberg Tech. Let's check in on the markets that are actually giving away some of their gains that we had earlier in the session. We're now unchanged on the Nasdaq 100. We're trying to digest the retail data that we got, which was weaker than expected. But what does that mean in terms of the Fed and its ability to cut rates more broadly? But also, where are we buying back into? Is software still loved at the moment, having been so beaten up last week? And the hardware sell-off is just a little bit crimping some of that risk-on feeling of the day. I'm looking at a risk-off feeling in crypto.

25:19Bitcoin off by 1.4%. We're still at 69 ,000, so well off the lows of last week. But it's still the moon music not strong, particularly in ETH. We're off by 4.6%. So I'm still looking for a direction and really where the asset class buying comes and steps back in. Move on to what's happening underneath the hood of the benchmarks because, look, we are seeing significant gains with Spotify. I might add it has been crushed leading up to these numbers. So we're still down on the year in terms of a one-year basis. We're up 15%, almost a record move on their shares after their addition to monthly average users really eclipsed expectations.

25:55Snap gets an upgrade. It's really seeing that you could be buying into the strength of subscriptions for this company. Data Dog, check that out, up 16%. Again, software was beaten up, but Data Dog giving a earnings report that steadied some of those nerves, Ed. Joining us now is Bloomberg Equities reporter Ryan Vlaselica, who, I don't know how he does it, but he's across the entire lot. Let's start with the earnings part, because that's probably more common to some of the bigger movers, right, across the markets this morning, Spotify, Data Dog. What are the trends we're seeing and what's the action in the moment telling you?

26:28Hey, good morning. Thanks for having me. So a lot of these companies have gotten beaten down, as you mentioned, but they did a lot to reassure investors about some of the bigger concerns that are facing them. So in Spotify's case, they give a very strong outlook for their user growth. They gave a very strong outlook for their margins, both of which helped to address key concern that people have been having. Spotify, I think, is up by its biggest day, I think in several years by now. So certainly a relief rally there. Datadog, another company that has been really beaten down as part of the ongoing route in software stocks.

27:00Strong revenue forecast there, and the full year revenue forecast, I think, was a little bit under expectations. But at the same time, analysts said, this looks like it could be conservative, really helping to ease concerns about what is the impact that some of these software companies are going to see from AI-related services. That's it, isn't it? That's the read-across. It's how much is AI going to be eating any of these companies' lunches? Absolutely. It must be the desire of the executives right now to push back and to show real operating margin growth, and in particular, real revenue. I mean, Datadog was up 29 % for their last quarter just gone.

27:35Yeah, absolutely. Now, I will say that not all of the results have been strong. So yesterday, we got results from the company called Monday.com. That stock fell 20%. I think that one wasn't strong enough to help ease some of these concerns that have persisted around it. But Datadog is the one that I feel like you hear a lot of people talking about when you look at the overall software weakness. This is one name that gets singled out repeatedly as one that was sort of thrown out with the bathwater. So maybe overdone selling there. Certainly the results here are giving the bull something to cheer about.

28:05Bloomberg's Ryan Flastelica, thank you very much. Let's go to the private markets and the world of startups. AI startup runway hit a$5.3 billion valuation after the company glitched a new round of funding, raising$315 million. here to discuss Runway CEO, Cristobal Valenzuela. I was reading all of the different reports about this round, and we'll get to the money part. But I think what's jumping out at me, Cristobal, it's great to have you back on the program, by the way, is the need to make models that are more useful, that can do more. Do you think that's a fair place to start? It is, and thank you for hosting me again and having me here.

28:44It is. I think it's a reality of where the technology is heading and where the models are. We've seen this a little bit with language models, but now I think world models are basically eating research and eating AI. It's kind of clear that the next frontier of what we expect to see progress in all modalities will come from video and from models that can understand and simulate the world. And so a lot of what we're doing with this new funding is to basically double down on that vision and that mission, which I think we've been first to market in many other parts of AI, including, of course, video generation.

29:16But now it feels like more present than ever, then world models will start really unlocking the next stage of AI progress. You may be a little beaten down by this story and line of questioning, but the capital is for compute or it's for talent or it's for both? And give us a sense of what that environment is right now. Yeah, it's for both. I mean, the growth of the company seems from how we allocate these resources effectively. And look, we've been a very focused and very efficient company at spending what we've raised in putting it into compute, into training some of the world's best data models out there and hiring.

29:54For the impact that we've had as a company and for the kind of customers and enterprises that we serve, we're a very small team. And so right now we are scaling that. We are hiring across the board, more researchers, more great talent. and, of course, double down on compute, which is fundamental if you really want to get to the next stage of what we think will come. The kind of customers you serve. Cristobal, who is that then? As we still typecast you as an AI video generation company, but you're not. You're a robotics company. You're an avatar company. You're a world company. So who do you serve?

30:27Yeah, of course. That's a good question. So, look, I think it's important to understand how AI has progressed and language models are basically describing reality. World models are simulating the world. And when you simulate the world, you can start tackling many different kind of industries. So the question of like, will AI models will help advertising, marketing, Hollywood, media? I think the question is answered, and the answer is yes. It's kind of a pretty obvious yes these days. And so we're the best company and the best kind of like solution for marketers, media, Hollywood, entertainment.

31:00We've been doing this for quite some time. And so I think we've won there and want to continue to grow. There's a lot of expansion that we have to do in the industry there. Now, the models can simulate the world. So we started to simulate not only media and entertainment, but we started to simulate how the world works. And that is effectively very valuable for robotics, for physical AI, for AV. And so another way of thinking about it is we have some of the best tools to create media and videos for humans to watch. We now started to create videos and media for robots to watch and for those robots to learn from that data, which is fascinating.

31:34It is fascinating. It also has different impacts on different people. And when you say it helps an industry, it's kind of in the eye of the beholder. Christabel, talk to us about how you think about, as a leader of your business, the implications this has for the labor market, for what it means more broadly, for humans watching content that wasn't made by people and the reality of them. Yeah, look, that's a question that we've tried to grapple for a long time in terms of how do we make sure that companies and industries react accordingly to what's coming and what's happening. And I think my take after seeing the industry for quite some time is I think the industry is adapting pretty well, to be honest.

32:11If you look at advertising agencies, if you look at Hollywood, it's pretty obvious these days is that every studio has an AI department, an AI can function, an AI chief, and the organization has started to rethink themselves in an AI-native world. and that has allowed themselves to really find new jobs, new types of things that they weren't able to do before. So in a way, that's taking some of the tasks and things we've seen in the past and that will go away. And that's natural. I think that we've slowly realized that that's the case. At the same time, we've seen more jobs being put out there with new descriptions on things that even a year ago would have been unthinkable of.

32:48And I think that reaction is now becoming obvious not only for media, for Hollywood, but for gaming companies and for many other industries, Even for software engineers, I think it's kind of pretty obvious these days where you start to see that you can automate and simplify a lot of the entry-level tasks and jobs. And so that's where I think we'll continue to see growth industry-wise in media and entertainment. Cristobal, we find that there's a lot of interest in Runway, right? As a company, how the models are being deployed and used, commercialization. This was a big round. The valuation is interesting.

33:20A lot of the questions we get for you are about your future and whether you plan to go public. So I'd ask you to kind of be candid about that, the benefits and negatives of being a public company and why you might consider doing that. It's not something we would not consider at some point. I think right now, given the breadth and research innovation that we conduct at the company, I think we're in a much better position thinking about being private for a bit more time. I think there's tradeoffs as being a public company in terms of how you report, how you think about your growth, the kind of things that you need to focus on.

33:58Right now, for me, this is an area of unique frontier research. And being a private company allows you to do that frontier research with much more freedom. And so it's something we wouldn't necessarily not consider. But right now, given the growth that we see, we'll probably remain a private company for quite some time to retain their independence. Cristobal, briefly, I sort of asked you about whether the employee base in companies are ready. Am I, as a human, ready to digest the wall of AI-made content and discern what's real and what's not? Yeah, you know, that's an interesting question. I actually will kind of flip the assumption there.

34:38I would start to assume, and I would suggest, everyone probably starts to assume that most of the content that you see is going to be generated. And in that case, what we should be kind of watermarking and protecting isn't necessarily the generated content, it's the real content. It's the content that we've seen and we've recorded from a camera. And that inverse a little bit the problem because, yes, more content will start becoming the norm. more AI content will start becoming the norm of the content we interact with, specifically when you can also do it in real time, which is going to be a fascinating new avenue of gaming and nonlinear experiences.

35:11I think the world is adjusting to that. There's definitely a cultural and social adjustment period. But from what I've seen, I think it's happening faster than I've ever before. And just prepare because it's going to get even more crazy. Cristobal Valenzuela, Runway CEO, it's great to have you back. We appreciate it. Of course. Thank you, guys. Coming up, ahead of a landmark addiction trial, Meta ran thousands of commercials to promote its safety work with teens. Details on that next. This is Bloomberg Tech.

35:44I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball.

36:29Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts.

36:47Instagram owner Meta paid for thousands of TV commercials that promoted its safety with teens all ahead of a landmark case examining whether the company intentionally designed products to hook children. Bloomberg's Kurt Wagner, who leads our coverage of Meta, is here with us. This is about timing and proximity to events, but what do we need to know in our reporting? Yeah, so the trial is sort of the backdrop of this whole thing. That started yesterday in Los Angeles. As you point out, the allegations here are that Meta and YouTube and others have created these products to addict young people. You know, the infinite scrolling, the algorithms, things like that.

37:26And so these advertisements that Meta's been running for a while, but really in earnest since November, promote their teen accounts and all of the stuff they're doing to try and help and combat this issue with teenagers. And so, again, timing is interesting here. They're trying to sort of set this narrative about themselves with the backdrop of this trial going on at the same time. Now, in the story, it talks of Tech Oversight Project Executive Director Sasha Howarth really talking about this as being an influence play. But in many ways, to take the other side, it's meant to be an influence play for parents, for kids to understand that these tools are there for them to use, right?

38:02Right. Exactly. And, you know, you think about if you're meta and you're sitting here going, OK, there's going to be this landmark trial. And in fact, there's going to be trials for meta around child safety and teen safety throughout the year. And so if you think about there's this steady drumbeat of headlines and news and coverage about that issue, you certainly want to have your viewpoint out there as well. And so I think that's why we see them promoting these teen accounts, which they rolled out about two years ago. and really trying to, to your point, Caroline, show parents that, hey, all these things you're reading in the press, like we are addressing them with these safety settings that we've put in place as well.

38:40Remorse, Kurt Wagner. We thank you. We're going to talk more about that story in a moment, but first, Ed, you've got some breaking news. Yeah, my understanding is that Tesla has promoted Joe Ward, who was the vice president leading the EMEA region operations to basically run sales service and delivery globally. All those teams around the world are now reporting into him. We don't know that much about Joe Ward. I think he started at Tesla as an intern quite a long time ago. He's kind of climbed up the ranks and been based in Europe. But you'll remember yesterday, Bloomberg had reported that Raj Jigganathan had left Tesla and he had been running the sales org.

39:18And we try and track this because of how it runs with everything kind of filtering into Elon Musk, ultimately. We'll keep tracking it. Cara. Yeah, EME sales. They've been tough of late. Now, let's just return to our original conversation, because as mentioned, it's not just Meta that's currently under scrutiny over safety, particularly for teens. Other tech giants think Google, whether it's YouTube, are facing lawsuits as well over the addictive nature of social media. Let's get more on all of this. Eric Goldman, he's a law professor at Santa Clara University School of Law and co-director of the school's Center for High Tech Law.

39:49Eric, as I mentioned, it's Meta, it's Google. It's also Snap and TikTok facing legal focus throughout the year, correct? Yeah, there's a trial taking place right now in Los Angeles, putting all four of them on trial. There's also a federal case that's putting them on trial in June. And there are lawsuits against all of them throughout the country in parallel with that. The argument at its core from some of these so-called victims are that these tools and these platforms were designed to hook teens, young brains in particular, and keep them coming back for more. Eric, is that the understanding you have?

40:30What legal credence, what fight do they have to fight here? So the basic argument for the plaintiffs is, as you described, that the sites were designed to intentionally addict users and that the services are therefore liable for the harms that resulted from that addiction. There's a lot of questions about that. For example, we have to ask, what does it even mean to be, quote, addicted to a social media service? There aren't medical or psychological definitions of that. We also have to talk about whether or not the services cause the harms that the victims have suffered. There are many causes of harm in people's lives.

41:05And so isolating that causation is going to be tricky for the plaintiffs as well. Let's get Mehta's response to these lawsuits and questions, right? The company says that they don't reflect reality. The evidence will show a company deeply and responsibly confronting tough questions concerning research, listening to parents, academics and safety experts, etc. That's the company's reaction. Actually, what's happening in response to the wider issue is you see state by state different laws being enacted that are consistent with the complaints of the plaintiffs. That's my read of it, Professor Goldman.

41:45Is that a sort of useful strategy towards a solution here? I think you need to be careful about using the term solution, because in order for us to talk about that, we have to be very precise about exactly what problem we're trying to fix. There are a lot of problems in our society, a lot of problems plaguing kids. And there are also problems of over-responding to the content online that looks a lot like censorship. And so when we talk about solutions, we can't do that without talking about the problems. Having said that, I think that we're going to see a battle of experts in these trials, where both sides are going to bring in the best and brightest minds to tell their case to the jury.

42:23we're going to hear from average Americans essentially plucked off the streets who are going to weigh that evidence and try and tell us whether or not they think there's a problem here that needs to be addressed. Professor, in the course of proceedings throughout the trials, those that are kind of trying to come to a decision in them, those presiding over the case, to what degree do they have expertise in the technicalities behind this? so ideally the jury doesn't have any direct expertise they're bringing in the idea is that that's not what they're being asked to do they're going to be presented with evidence from experts that have been chosen by the parties and they're supposed to sift through that evidence discuss it evaluate it and try to say which they find more convincing so in that sense i think it's even better for us that it's not a panel of experts trying to side it's really a bunch of what we hope are well-meaning Americans who are there to just tell us, I'm not going to respond to the hype.

43:25I'm not going to listen to the critics in the media or the plaintiffs, lawyers and the politicians per se. I'm going to listen to the evidence. Eric Goldman of Santa Clara University School of Law. Thank you very much for your time. Now, coming up on the show, Lyft's earnings are out later today. We're going to preview and see what to expect. That's next. This is Bloomberg Tech.

43:58Lyft earnings, they're out after the bell today. And less than a week after rival Uber kind of disappointed investors with its profit outlook. Let's talk about what we can expect from Lyft with Bloomberg's gig economy reporter, Nathalie Leung. We are expecting pretty healthy gross bookings, right, for the fiscal quarter just gone. Yes. If Uber's earnings was any guide, they posted pretty strong 4Q and Lyft is also expected to pose pretty strong growth there. One of the strongest growths we've seen in nearly two years. Natalie, Uber used its earnings to position itself structurally and from a personnel perspective for its robo-taxi era.

44:33We've spent a lot of time with Lyft who plan to do the same, right? What do we expect them to communicate in earnings in that respect? Lyft is going to roll out AVs in a couple of cities this year as they announced last year. those are Dallas and Nashville. So we might hear some of their rollout plans today and also hear them talk about how their fleet operations unit subsidiary FlexDrive might help with that. And Dave Richer and the team of late have really got the memo that they need to go global. They've been making M &A. How is that speaking to the growth opportunity here? So the fourth quarter will be the first full quarter where they take into account the European business, FreeNow, which is the taxi app in Europe that they acquired last year.

45:20So they might get a boost there. And they've also acquired this chauffeuring business, which is like this high-end rides type, which could also bode well for the bottom line. Did Lyft actually do anything in the quarter, Natalie, that you kind of think might give them a little bit of a boost? Is there anything that they've already announced that we think they'll show traction on? So last year was a big year for their Silver product, which is aimed at elderly users. They simplified their app interface for users, so there could be a boost in the rider base there. They also boosted a lot of their partnerships.

45:52In November, they announced a partnership with United Air, letting people earn miles if they connect their accounts with Lyft, so that might attract more businesses there on airport rides, too. How are they in terms of scale versus Uber? I mean, at the moment, analysts really like the stop, 15 of them say buy, only two say sell. But is it a like-for-like comparison here? Are they always going to be the second fiddle? Yeah, like Lyft's business is, you know, 30 or 20 to 30 % market share in the US. And they're just starting with their global expansion compared to Uber, which is already in more than, you know, 30 countries.

46:30And so there's still a lot to catch up there. But we know Lyft is on track with their three-year targets too. Bloomberg's Natalie Lung thank you very much I mean the earnings in the moment carries Spotify on track for their best day in about seven years 38 million subscribers added quarter gone 751 million total it was all about the unwrapped my average age 37 year old listener apparently I think I pipped you to the post with a 32 year old listener but I thank my kids for that that does it for this edition of Bloomberg Tech check out the pod you know where to find it this is Bloomberg This is Caroline Hyde.

47:07And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defence, AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast. Search for Bloomberg Tech on YouTube, Apple, Spotify, or anywhere else you listen.

47:44Join us every afternoon on your commute home and stay ahead of the tech news cycle. That's the Bloomberg Tech Podcast. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Subscribe today, wherever you get your podcasts.