Nvidia Buyer Megaspeed Faces Smuggling Probe

So what will Rachel Reeves' pivotal new budget mean for you? Has an innovative think tank just come up with a solution for replacing stamp duty? Hello, I'm Steph Maguvern. And I'm Robert Preston. And we wanted to recommend you our podcast The Rest Is Money, where we answer questions like these to try and make sense of the UK's economy. Look, we get it. You're a discerning sort of person. You're a Bloomberg listener after all. So we're not going to waste your time. Here's why it's worth you searching for The Rest Is Money in your podcast app or watching us on YouTube. Twice a week, The Rest Is Money tells you everything you need to know about the money matters affecting all our lives, fiscal and monetary policy, housing, immigration, even the high street. Yeah, we do conversations for curious minds, nor dry discussions here. That's why we speak to brilliant and fascinating people. Yeah, recent guests include Dan Needle, Art Laffer, JP Morgan's Karen Ward, and even the Chancellor herself. So why not give us a try? Search for The Rest Is Money. This is Bloomberg Tech. Coming up service now agrees to buy cyber security startup armist for $7.75 billion. It's largest acquisition to date. Plus, Nvidia's biggest southeast Asia buyer faces a chip smuggling probe despite the tech giant's insistence that chip diversion doesn't exist. And crypto is big year that wasn't a win for all. The billionaires hit hardest by recent price drops. First, we're checking on those markets and Bitcoin continues to be on the downside. We're off 5% to 2.87361. So once again, another annual loss for the OG in the crypto space. But we're seeing risk on perpetuate a little bit than the Nasdaq 100. We're higher on the day. We're higher on the month. And boy are we higher on the year. Are more than 20%. And of course, today's figures, the US economy expanding at 4.3% annualised pace, maybe just easing back a little bit of risk on feeling if, indeed, the Fed doesn't cut as much as that of an anticipated. Because this economy looks like it's doing fine. And let's talk about some of the animal spirits in the market right now, particularly when it comes to M&A and let's look at service now. We're currently trading lower on that particular stock. We're off by 2.5%. Because, well, they're going to use cash. They're going to use debt for his biggest acquisition so far. It's all about the world of cyber. And it's actually a story that Bloomberg broke well ahead of the formal announcement. Let's get to it, Bloomberg's Andrew Martin. And it was last week that you made clear to the market that service now was looking at this particular acquisition. Why isn't building up in cyber? Well, I think there's sort of following a path that Microsoft and Google have already followed, which is combining a enterprise software product and offering cyber as sort of a bonus. And so Microsoft sort of perfected this idea of having a package of their software offerings in the cloud and bringing it in cyber. Google bought whiz to do something very similar. And now service now is basically saying as we automate, they basically automate IT and personnel. And now their offering cyber is sort of a broader package to entice customers. The safety of Agente K.I. is crucial. Why is Armist the right holding? Tell us about the founding team and other resources. Armist is an interesting company that like a lot of cyber startups, it was started by Israeli military veterans who had worked in one of their elite cyber units. And what these guys do is they call it cyber exposure management. It's basically looking across your whole digital footprint and finding in real-time flaws and vulnerabilities and fixing them quickly. And it's something that's really lends itself to AI. You could see that being automated. And the company's grown incredibly fast. And for a company that automates processes, automating cyber just makes sense as part of that. What's interesting is, as you said, this is part of a theme. The fact that the mega deal of the year was whiz with Alphabet. Are we expecting yet more and more these platforms looking to bolt on cyber acquisitions? It just makes sense, right? It just makes sense to offer cyber as part of a broader package. And among the big cyber players, Microsoft being the biggest Google, CrowdStrike, Palo Alto, they're all trying to build a bundle that can attract users with sort of one-stop shopping in cyber. That word "platformization," which Palo Alto-- It's a horrible word. Yes. It's a horrible word, but they love it. Bloomberg's Andrew Martin. We so appreciate you coming on about the latest deal. But let's turn our attention to another huge piece of reporting by Bloomberg. In videos largest by in Southeast Asia, it's under investigation by the US government over whether it's muggled advanced chips into China. Now, Singapore-based mega-speed imported at least $4.6 billion worth of in-video hardware through November, since it's founding back in 2023. The company, what's in its obscure spin-off of a Chinese gaming enterprise, could become a prime example of Washington's fears of Beijing gaining access to advanced chips for commercial and military uses. Mega-speed denies any wrongdoing so as it abides by all regulations from the US and elsewhere relevant to its operations. Let's get the details on what was a very long-running investigation of Bloomberg's chips reporting Ian King. And the deep dive that reporters have done to understand whether we really understand how many GPUs are going to mega-speed and whether ending up here and talk us through it. Yeah, I mean, there's a lot of evidence. It's important to point out, as you already did, that in video sales there's nothing going on here. Mega-speed itself says there's nothing going on here. But our colleagues reporting here, Caroline, is that there is an investigation going on and, you know, Southeast Asian governments and also Washington are looking at this and still trying to find out whether there has been anything significant going on. Go ahead, sorry. Well, from what we know, it's a Singapore-based company, Mega-speed, operating fully in compliance, as they say, with applicable laws. But what ultimately has had to spring up, ever since the Biden administration, back in 2022, was a restriction on sophisticated chips coming from Nvidia to China, so suddenly you saw other Asian countries become real areas of focus for importing chips so that Chinese companies could actually do the workload, could do the compute outside of their own country, correct? Yeah, now that's absolutely right. There's nothing illegal with setting up a data center and serving Chinese customers, providing those customers don't have links with a band entity in the US, whether that's the military or some company which the US government has decided serves China as military. However, there is suspicion about these links about who's in control of what. There is a, you know, and this is the problem that Nvidia has to face and Nvidia, you know, say, look, there's nothing to see here. There's nothing to worry about. But as you'll see from our story, there's a lot of links between individuals in China that are, you know, there's a lot of a lack of clarity in the relationships, which I think everybody is trying to work through to make sure that there is nothing untoward going on. Because Bloomberg didn't find evidence when in mega speed Nvidia chips actually being diverted to China, but there's all these inconsistencies, as you say, in mega speed Southeast Asia, demand and chip inventory and wherever all they all end up in. What's so interesting is this is a moment where maybe actually Nvidia will get more access to China. H200's have in theory, or at least according to a truth social post, but in our back into China, the question is whether China wants them. But also whether mega speed will actually have Chinese demand going forward, if indeed we start to see access once again to mainland. Yeah, I mean, there's, again, we're in a kind of a transition period where we're trying to find out exactly how this will all play out. Nvidia wants to do business directly in China. That's absolutely true at the moment. It cannot do that because of these restrictions. What we're trying to find out is whether the Chinese want to do business directly within video. And if that's the case, what level of demand that they'll be there, Nvidia has really kind of had a good year in Washington. It's gone from really restrictive rules to a freeing up of some of them. But again, that has to translate into shipments into that Chinese market. And we haven't seen that yet. And we don't know that that will actually happen clearly stories like this that there are suspicions about smuggling that we perhaps should be more secure and more kind of careful in how we deal with China and Chinese entities don't help that case. So again, there's a lot at stake here. And we really need a lot more clarity about the details of how this is all going to work out. It's a very thorough, incredibly complex story. And you broke it down perfectly for us. We're in vaccine King. Thank you very much indeed. Go read more about the Nvidia supplier on your terminal or online. But let's talk more now about chip and trade news because the US is actually accused today China of engaging in unfair trade practices in the semiconductor sector. But Washington won't place additional tariffs on ship imports till at least mid-2027. Chinese Embassy in Washington did not immediately respond to the request for comment. Let's get the details of Bloomberg's Jordan Fabian. And so we understand that the USTR, that's the office of US trade representative, is saying, look, what they're doing isn't fair. Exactly. It's an interesting development. This investigation actually started under the administration of former president Joe Biden with the expectation that Donald Trump, who talked tough on China during the campaign, would follow up on it when he became president. But in the interim, he started a trade war with China, he then struck a deal with Xi Jinping to take off those tariffs. And so the US right now, if you listen to what James and Greer, the trade representative has said, other senior administration officials, they want a stable relationship with China on trade. And so they're not going to look to hike tariffs at the current moment, which is why you have this odd outcome of an investigation saying the obvious, really, which is that China is using non-market practices to dominate the chip industry, but at the same time, the US isn't really going to do anything about it, at least not for the foreseeable future. So the USTR was legally required to publish the outcome of the investigation, the 301 investigation. But what actually is being thought of that China is up to in terms of unfairly supporting its industry? They say China's targeting the semiconductor industry for dominance is unreasonable and burdens or restricts US commerce, and thus is actionable, Jordan. What are they being told or accused of? You know, they're being accused of using non-market practices to bolster their domestic industry. You know, sell those chips at perhaps below market rates into various countries to get them hooked on the Chinese Technology Stack, and thereby increasing the market share of their chip industry. The irony is that the US is pretty much trying to do the same thing, which is basically doing a take it or leave it deal with countries around the world saying that you need to use the US Tech Stack. We want to make sure that countries are not on the Chinese Tech Stack. And it had been for a while trying to limit exports to China to other countries that are deemed unfriendly and also crack down on the Chinese market. So they're saying essentially, you know, China can't try to dominate the market. We're going to try and dominate the market. But right now, they're, again, going to sort of stand off or hold back on increasing terrorists further on Chinese chips to address that problem. Complex trade web, Jordan Fabian. Thanks so much for talking us through it. We really appreciate you. Meanwhile, coming up, move out, Larry Allison. His big bet on Paramount that could alter his vast oracle fortune. More on that next. This is Blue Bag Tech. Hi, I'm Stephen Carroll. And I'm Caroline Hepke here to introduce you to a podcast that brings you the news you need to start your day in just 15 minutes. It's called Bloomberg Daybreak Europe Edition, covering all the top stories across Europe and around the world. Each week day morning, we're up early to bring you the latest news by 7 a.m. We've got everything you need to know from geopolitics and global events to economics and what's moving markets. I'm covering it all from London. And I'm in the used capital Brussels. We have 3,000 journalists and analysts around the world to tell you what's happening, what it means, and why it matters. It's more than just business headlines from the price of your breakfast to global shifts in power. Economics and money aren't just part of the story. They're often the driving force. So start your day with us on Bloomberg Daybreak Europe Edition for the news you need to know and the context to make sense of it. Find a new episode to Bloomberg Daybreak Europe Edition by 7 a.m. London Time, one Apple Spotify or wherever you get your podcasts. Larry, I listen to this ranger, to bowl bets. It is the biggest one yet, maybe in media, a potential personal guarantee. More than $40 billion to backstop paramounts all cash bid for Warner Brothers Discovery. It could dramatically reshape the Oracle founders' fortune. Bloomberg's Dylan Sloan joins us for more. As we're picking apart how Larry Ellison is basically helping his son, David Ellison, potentially by Warner Brothers Discovery, what's so extraordinary about your reporting on the billionaire is that he has consoled very little of Oracle stock over the years. He has, yeah. And even amongst the billionaires that we're looking at on the Bloomberg billionaires index, he really stands out. He sold about $7.5 billion worth of stock. Lifetime, no more than $1 billion in a single year since 2010. So that really pales in comparison and looking at some other founders. He still owns about 40% of the company, which is multiples higher than a lot of comparable tech founder peers. So his strategy in terms of his wealth management has been to stick really closely to holding his Oracle stock, not caching out at any point, which has been very successful for him as a stock has done well. But it does raise some questions about the cash that he has on hand and whether or not he would be able to immediately meet those equity financing commitments should he be called on to do so. Yeah, because like 40 billion in the grand scheme of things is actually not that much compared to his $252 billion net worth, but how liquid is any of that? Where has money gone? What could he sell to help out? Yeah, and you raise a good point, which is important to say that he can afford this. Of course, many times over, third richest man in the world, he has got more than enough assets to be able to cover this. But historically, Ellison's has relied on debt to finance money of his investments, his lifestyle purchases. Currently, about 30% of his Oracle stake is pledged to secure loans, which he uses to raise cash and fund his many lifestyle purchases. He has a really extensive real estate portfolio. You may remember even earlier this year, it feels like a lifetime ago, but he put up a big chunk of the equity for his son David's acquisition of national amusements, the acquisition of paramount. So should he need to raise cash down the line, of course, selling shares would be one option if he's called on to backstab the steel, which again, would constitute a pretty significant change from his strategy over the past few decades, or potentially increasing the size of those loans, which is something that the Oracle board would need to go through a view process of, to be able to OK. Just like Tesla, when Elon Musk fought now, X was Twitter. Dylan Sloan, it's great reporting, go and check it out on all things billionaires. But let's talk a little bit more about the potential bid or deal of paramount-biting water brothers discovery, and indeed Netflix too, the legal stakes of the mega-media mergers. Fiona Scott Morton, Professor of Economics over at Yale University School of Management and Adjunct Professor of Yale Law School is with us now, Fiona. Let's just go back to whether or not any of these will get through regulatory approval. Let's start with paramount buying water brothers' discovery. Does it cut legal mustard, do you think? Well, all three of the bidders, remember, there was concast in there to begin with, have overlaps with Warner Brothers. If you think about three buckets of, say, content production, streaming, and then channels or networks, they all overlap, and paramount in particular has a lot of production, studio kinds of assets, particularly because, of course, paramount merge with Skydance first. So that's a big issue for them. And they have a significant share of streaming as well. You served as deputy assistant attorney general for economic analysis, chief economist. You basically helped with antitrust division in your time. When, ultimately, it comes down to it, the courts are going to say, who's the competitor here? Do you think it's right that they bulk in YouTube and new ways of consuming content, even TikTok versus us all beyond linear and certainly on cable? Yes, I think this is the tricky thing for the paramount bid. I mean, we all understand what producing content is. And I think we have a pretty good grip on who does that and why it's different and what sort of market there is there. Streaming, however, is much trickier because we have user-produced funny cat videos. We have user-produced videos that actually sustain those users in terms of income. We have professionally-produced short things, professionally-produced long things. And so we're getting a kind of a continuum of content. And that includes YouTube, as you point out, which has a big chunk of that continuum. And it's for it going to be very difficult to draw the line on what is what we call the relevant market, which, in antitrust, is what matters because that's where you get head-dead competitors. It feels as though Netflix, for its part, which thus far is meant to be the front runner for buying Warner Brothers, or at least the streaming and the studio side of it, they've tried to front-run this sort of argument by making clear they think the market competitors are YouTube and they are TikTok. And there are just where our eyeballs are at. Who do they need to convince in this? Because many would say, oh, the Ellison's have got the ear of the administration, but really it's the courts. That's right. The president can say he wants the Ellison's to have it. And he can say that about his friends, or the people who give him money, or silence the voices that he doesn't want to hear. But ultimately, we have a law in the United States that can be enforced not only by the federal public authorities, but the states and actually by private plaintiffs as well. And so if there's some harm to competition, and that can be shown by a state or a private plaintiff, then they can go to court and try to block the transaction just like the federal government can. And indeed, we have seen states, coalitions of states, being very active and antitrust lately, when they have felt that the federal government is not doing a good job. Fiona Scott-Morton, I have a feeling this story is going to run. So we get to have you back at Yale University School and management. We appreciate your expertise. It's been a wild year in crypto. Despite big regulatory wins, it hasn't been kind to everyone. Even as prices and interests surged early on, billionaires tied to the space. They're charting very different paths heading into 2026. Let's take the Finkelvoss twins. They saw their fortunes pressured as Gemini Space Station continues to face losses after the exchanges in shares from a 60% following September IPO. On the other side, Jeremy Lairn's circle benefited from growing adoption of its USDC stablecoin helped by clearer regulation. And the shares have almost tripled since listing in June, although you can see they're well off their previous highs. Meanwhile, let's talk my other graphs. Galaxy Digital. Has actually seen some sort of a rebound alongside Bitcoin's gains earlier in the year, but it has had a tough stretch. Then there's Michael Saylor's wild ride. As two as the strategy founder doubled down on his high-conviction Bitcoin bet, further tying his wealth to the tokens' price swings, his net worth has collapsed almost 40% this year. So what next for crypto in 2026? Not just the billionaires. Lee Scalene, still mark managing partners, says she's going to see momentum. She writes, "We expect to continue progress through increased MNA activity, expanded entrepreneurial innovation, and a deeper, more robust base of both retail and institutional users." She joins us now for you, Elise, reflecting on 2025. What was the biggest landmark move? Was it institutional adoption? Well, 2025 was one of the most consequential years in Bitcoin's history, not because of price appreciation, but because of structural progress. And that includes policy, product, and institutional adoption across all of these fronts, Bitcoin moved meaningfully into the mainstream as an embedded part of the financial system. And 2026 will be able to take advantage of that foundation. What does advantage look like? Well, what it looks like is a recent regulatory clarity and an effort by regulators and policymakers to acknowledge Bitcoin as part of the financial system and to lay the foundational groundwork in terms of policy so that the US can continue to lead both in terms of innovation, distribution, as well as institutional adoption that can provide efficiencies and gains for US-based institutions from Bitcoin to asset and Bitcoin technologies. Elise, remind us quickly, just remind us where we are on policy, because genius act tick that helps stable coins and pass through Congress. But the clarity act, what will that give us if indeed it does get through the Senate? So in addition to the genius act passing this year, we've seen advancement of the click. What the Clarity Act attempts to do or aims to do, I should say, is to create a framework for Bitcoin and other digital assets that can create clarity, as well as consumer protection and can offer definitions of what these digital assets are. So for example, we expect that Bitcoin will be defined as a commodity along with other decentralized assets under the purview of the CFTC. And that will help drive institutional adoption, both in terms of institutions own interaction with Bitcoin, but also institutions covered with distribution of Bitcoin to their own clients. We've got about a minute left, but you'll put photos so interesting, because it's all around the Bitcoin ecosystem. None of us energy focused. How is that playing into also this need for energy and power in the AI era, as well? That's right. So we began the year talking about Bitcoin and the intersection of Bitcoin with other critical trends. And that included AI and energy infrastructure. What we've seen as the year comes to an end is an acknowledgement or recognition of the opportunity at the intersection of Bitcoin and energy. We've seen this with large transactions, such as those advanced by major AI stakeholders seeking energy development. And looking for a way to drive efficiencies and especially in terms of pace of development, including through partnership with Bitcoin miners and Bitcoin mining development institutions. Elise, it's been great as always getting your take throughout the year of 2025. I'm very much looking forward to checking in with you in 2026 as well. And apologies for a technical glitch. We have throughout that interview. Elise Cline, we thank you so much of Stillmark. Welcome back to Bluemberg Tech. Let's check in on these markets for you as we head towards what is a very short and weak. We're up to 20% on the NASDAQ 100 at the moment. Stock is actually driving near all-time highs, very close to the S&P 500 as well. Full-street session against. We've got something new to appetite for tech in particular. These are even as the US economy expanded fastest. We've seen in two years, 43% annualized pace, but does that mean the Fed won't cut? As much, maybe that's why Bitcoin's under pressure. We're off by 5.10% on crypto, 87,828. It's expected to have a down year. Tell you what's also had a down month, then also a down on the day. The last quarter has been pretty painful for some of these neo-clouds. Core weave off by 3%, but off-way, almost 40% in the last trading quarter. Nibbius is another neo-cloud. Basically, these new types of companies that come out to offer compute for the ever necessary need for AI, we're off by 21% on Nibbius. I'll talk about, though, at 1.2%. As it's actually really thinking about the energy side of this AI equation, and it brought, of course, a power company we saw yesterday intersect power to be able to offer more climate-friendly energy for its AI needs. And that's been a big theme of the year. And data centers, energy demands is one that we keep on intersecting with Bloomberg's Josh Sol, who covers energy, been highlighting the strain that it's all been putting on the power grid. So I'm interested as to if you've reflect on 2025, how energy markets were disrupted by the AI gold mark rush that we saw. It absolutely changed so much. We've never seen so much money rushing into the power sector. The numbers are just wild. I mean, the four biggest tech companies spending $344 billion this year. The power sector expects to invest $1.1 trillion over the next five years on the power grid in order to both work on decaying infrastructure, but also to connect all these new data centers. And they will get the financing from the end net need, or are they having to turn to the consumer as well to help finance all this infrastructure? Is the government who pays for the one-point, whatever trillion, and dollars it is of improvement? Tech companies kick in a lot of money, and utilities especially have been good about setting up contracts where they get paid, whether or not the tech companies use that much power over time. So there's some built-in protection for customers there. But when tech drives up the wholesale cost of electricity, that cost is then passed on to consumers. So they do see some upward pressure on bills from that. Many anticipating that 20, 26 min terms has become a lot about that. You saw issues in New Jersey, we've got it in Virginia, those areas of data center builder. Are you seeing the utilities and power companies also trying to get an easier regulatory environment? I mean, we've talked a lot about fast tracking of these big projects if they got a lot to put money into. It's hard because utilities for sure want to hook up the data centers. That's a huge new customer for them. That's like 700,000 people just moving to their territory. Who wouldn't want that business? But it can be tough for them because if it makes prices go up, that gets consumers mad, that gets regulators and politicians focused on the issue. And you can have like what we saw in Georgia where regulators are voted out, and new regulators, democratic regulators who are expected to be less friendly to the power company are voted in. Just so kind of a busy 2026. Thanks for breaking down what has been a wild ride for 2025. Let's talk more about that impact of energy demand on the tech industry. Jason Oxman's with us, his president CEO of the Information Technology Industry Council. You represent some of the biggest players in the AI domain. I'm thinking in video, opening AI and a lot of the demand off a compute or indeed the supplies to compute, Jason. What are you seeing in terms of the regulatory equation changing to help speed up some of this infrastructure investment? Well, great to be back with you, Caroline. And you're absolutely right. Policy makers are paying a lot of attention to this issue and the demand created by the construction of new data centers, demands new access to energy sources. Look, we've seen over the last few decades under investment in the energy grid, under investment in alternative forms of energy. And there are a lot of moves of foot here in Washington to address those issues. The biggest one that I've seen in recent weeks and that we're supporting is something called the Speed Act, which Congress moved through the house on its last day here last week. The Speed Act would invoke regulatory reforms to speed up the permitting process for construction of new energy projects. It would reduce some regulatory burden on those construction projects. It takes years and years to put new energy on the grid. Those grid modernization efforts take a lot of time and effort and financial resource. The one piece that Washington is trying to address is reducing the regulatory burden to make sure we can make those investments that we need to make. Data centers are not new. You mentioned Northern Virginia. They've been a data center hub for decades, two thirds of the world's internet traffic passes through Northern Virginia because it's been a traditional hub. But we're seeing the new construction of data center plays new energy demands. And as you noted, policymakers are trying to take action and make it move more quickly. But what about the checks and balances that are needed? Because I think very much we've been reporting a lot about new players coming on the scene. Companies that have never built data centers before. I mean, boy, Oracle itself. I mean, one of the biggest data center infrastructure investors out there at the moment has never actually formally built a data center of its own. So how do you know about partnerships? - Yeah, a lot of partnerships are happening. You'll recall in January on date two of the Trump administration project Stargate, which Oracle was involved in. Also involved soft bank, open AI, other companies that are more traditional investors in these kind of projects. Data centers have been around for a long time, but a lot of new companies are getting into it as your graphic and your conversation with Josh showed. Only about 18% of the current demand for data centers is from the tech industry, financial services, other related industries are also building data centers. And I think, as you noted, there's a lot of attention being paid by consumers to this issue. They don't want to see their power bills go up as a result of these investments in data centers. And that's why we're pursuing these alternative projects. You've seen tech companies like Microsoft, invest in nuclear power. We're trying to move forward with small module reactors that can power these data centers. And I do think it's important for consumers to understand the value to the US economy, the value to job growth. It was this great report that Vanguard put out last week that said that job growth in AI affected industries is 1.7% job growth in non-AI affected industries is 0.8% so twice the job growth in AI affected industries. This has an enormous economic benefit. So we need to make sure these data centers are constructed that AI can continue to power the US economy, power wage growth and the like. But there are some things the policymakers like the speed Act can do to help move these projects forward. - Well, many would say that actually that job's growth is short term in nature. You need a lot of engineers, a lot of builders to build them, but actually don't mean that many people to manage a data center once it's up and running. And there's that short term long term perspective as well when you think about the incline impact. How much of the big tech companies really realize in the responsibility when they're having to bring up all this compute and power, they're also seeing their emissions go up into the right. - Well, I think you're right about the long term versus the short term it does create a lot of construction jobs, a lot of jobs to build these data centers. And there are also jobs created in the data centers themselves. But I think the long term effect is really, what does AI mean for improving productivity and creating not only the job growth, but also the wage growth. That Vanguard report that came out last week that I mentioned also noted that wage growth in AI-related industries was 3.8% versus 0.7% in non-AI-related industries. That wage growth is enormously important. It's what's made possible by the data center. So you're right, the data centers themselves create a lot of construction jobs. We're gonna see that continue to move forward. But it's what the data centers do. They're buildings that contain the future of technology for the country and the AI servers that are in there and the services that are powered for consumers and for productivity for businesses is really what we need to be focused on going forward. And that's the real benefit of all of this. - It's a global theme and we're seeing servers and the GPUs that go inside them being put up everywhere. Now there's a story, a really deeply reported story out today from Bloomberg around NVIDIA and the potential that we are seeing chips GPUs from NVIDIA get into China's hands maybe through middle parties and there's some concerns that mega speed, in particular it's a Singapore based company might have been making that able. Jason, how much of your company's thinking about diversion of chips and how much are they coming down on it? - Well, I think it's important to remember that in the reporting that you're talking about that NVIDIA didn't do anything wrong that there was no actual evidence that any chips were diverted. But it's an investigation of one of NVIDIA's customers which I think will play out by government. But the broader question that you asked is an important one. This is the question of national security and economics security and where they overlap. The Biden administration took a very clear approach to this which I think was the wrong approach quite frankly and that was to cut off access to the world to US technology. What the Trump administration has done has recognized that there are enforcement matters that will occasionally arise that they need to look into and they will do that. But as a general matter, the US economy benefits and the US consumers benefit if the world can buy American technology. This is a race against China and cutting off China and denying China access to technology really just provides an incentive for China to bypass the US market and build its own technology for the world. Denying US companies, the access to the global market is the wrong approach. There are certainly national security questions that need to be answered. There are enforcement matters that need to be addressed on occasion but as a broader matter, the idea as the Biden administration did and I think did wrong of cutting off the world's access to American technology, not just China but the rest of the world. That was what the Biden administration did. That's the wrong approach. We need to make sure that we recognize that the success of American economic activity, the success of American technology is dependent on America having access to the rest of the world. Very briefly, what about the approach being taken from federal versus state regulation of AI, the actual large-language models, new act here in New York and in California, but are we ever going to get any clarity from federal level? Yeah, there were more than 100 AI laws adopted at the state level this year and there are more than 1,000 bills pending heading into 2026. Look, technology is best deployed not with 50 different regulatory regimes applicable but one common regime. And this is another thing that's on our 2026 roadmap. President Trump just signed an executive order testing the administration with proposing legislation to Congress that will replace those 50 potential separate regimes with one federal regime. And we think that's the right way to go because technology doesn't necessarily need to stop at state borders. We want to have one uniform national regime rather than a patchwork of 50 regimes. That'll be better for the technology. It'll be better for consumers and businesses that want to make use of that technology. But it's something really helping happen in 2026. Jason Knoxman, come join us again in 2026 until then have a very happy holiday. CEO of Information Technology Industry Council. We thank you. (upbeat music) One of the biggest questions facing investors in 2026 and beyond is whether the billions being spent on AI infrastructure will pay off. Bank of America CEO Brian Moynihan spoke yesterday with my colleague David Weston and said, we're starting to see the impacts kick in. The AI investment's been building during the year. It is probably a bigger contributor next year in the years beyond. And so if you look at a data center built out which is one of the ways in evidence itself, that's a big deal. If you look at customer clients spending like us spending on AI, that's hired it was last year. But frankly, overall spending levels are shifting towards that, not necessarily growing at a mid-single digit rate type of numbers. So I think that's part why the reason we feel constructive for next year. We think AI spending continues. We think there's benefits to the American taxpayer from tax rebates lower taxes due to the tax bill going through and being effective for next year. And we think the expense of experiencing other bonuses for businesses are good. So all that leads to our confidence that we go from basically a 2% type of growth level this year plus or minus up to 2.4%, which is all due to that. And AI is kicking in more and more. And so it's not all attributable to AI, but that's having a marginal impact is pretty strong. So much of the American economy is supported by the consumer. And you at Bank of America have a really powerful viewpoint into the American consumer. How is the American consumer doing? Because it has been very strong. There have been some people saying it's starting to slow down. You have to step back. We look at American consumers, 70 million consumers, putting $4.5 trillion plus into the American economy every year. And we've tracked a way that goes into the American economy for many years. And so in the third quarter, it was up about 5% of a last year. As we look at the fourth quarter here so far, in October, November, I'd say, in the fourth, 4.5%, which is very consistent with a very solid growing economy. In the end of the day, it's going to work against wage growth. And we see in the underlying consumers we have wage growth, either paychecks are going up. And so the labor markets flattened out a little bit in terms of job growth and things like that. It's normalizing in terms of unemployment, but you still see underlying wage growth. So the American consumer spending at 4% percent more, November this year versus November last year, is a very solid backdrop. The credit quality Americans consumers strong. And then you hear a lot about this discussion about different rates of growth among different income tursiles or thirds. So we look at the bottom third, middle third, and top third American income people in the Bank of America customer base. We do see differences either higher income and middle income are growing faster. But even the lower income third is still growing. And that's all good. And that means why is that true? Companies are employing people. They're paying people. Now the labor market's got a little soft. And as we look forward at 4.5, 4.6 unemployment, that is gotten worse, so to speak, that it was a beginning year. But frankly, this goes back to normalization question. If you look at the 10-year average unemployment, the 20-year to the 30-year or 40-year, it's 5% and 6% as you go back through time. And so a 4.5 to 4.6 unemployment rate is a very strong relative unemployment rate. It's just a lot of the years it's been below 4.5% has actually been on the last 10 years. So people are very used to numbers now, which were part of the tightness and labor in the 2017, '89, '19 era. And you had the pandemic and it re-tightened. And so it's normalizing. But we feel good about all that. And the consumers are in pretty good shape. Vancouver, Maccasey, O'Brien, Moynihan, speaking to Bloomberg's David Weston. And coming up, new details and the decisions behind Tesla's door design. Those electric doors are now in a spotlight following at least 15 fatalities. More on that next, this is Bloomberg Tech. (upbeat music) This is Tom Keane, inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter each and every business day. We bring you a recap of what happened overnight in Europe and Asia, the day's economic data and complete coverage of the US market open. We cover stocks, bonds, commodities, currencies, even crypto, all the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investment, and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg Surveillance on YouTube, Apple, Spotify, or anywhere else you listen. On the East Coast, listen at lunch and on the West Coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keane, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts. (upbeat music) A decision made by Tesla executives a decade ago. It's being linked fatalities in car crashes. Now, the incidents have prompted increased scrutiny of Tesla's electric doors, triggering lawsuits over whether the design can leave passengers trapped. Take a look. Tesla, for years, has built its reputation on being a cool, safe, good-looking car maker. Tesla is engineered to be the safest car in the world. And to be fair to them, they have done very well on U.S. crash tests. They often get five-star ratings. Flush door handles were very much part of the aesthetic and the engineering, you know, it looks very cool. For so many years, people who drive Tesla's love their Tesla's. They think their cars are safe, but these accidents reveal that there's actually something bigger going on. When you push this button, it sends a signal to the, you know, the 12-volt battery to say, "Okay, pop the door open." Now, if you have no 12-volt power, the first thing you're going to do is push this button over and over again. You're going to stop freaking out and realize this thing isn't working. In my opinion, this isn't terribly obvious that this opens the door. This is not a physical lever. This does not pull the cable. The actual way that you open a Tesla is you use this unmarked square right here. That's how you open it. Is that the same on every model it does, though? It is not the same. What if you're in the back seat? Now, the back seat is a scary part. So, in the front seat, they're by the handle. In the back seats, they might be under the rug or behind a speaker grill or behind the trim on the door. Or I actually found one in a model why it was in the door pocket under a plastic flap. A lot of Tesla owners themselves don't know that these manual releases exist. You can design the best vehicle in the world, but you have to also think about what happens to a human being after a crash. You are panicking and you're going to go to that muscle memory. And for most of us, muscle memory is like an old car where you just open the door. And we now have more reporting on that decision making process behind the dual design. According to multiple accounts from sources, the electric door handle was demanded by Tesla CEO Elon Musk despite safety warnings. Let's get more on this. We've been about business week, columnist Max Chaffkin. Goes back a decade. And it really goes back to almost this era of very sleek design where less is more. Yeah, and this is a design aesthetic that comes from Elon Musk. So, in certain ways, it's very interesting that he was involved in these conversations because this looks like a mistake in retrospect. We're seeing these deaths. You know, Tesla has said it's working on redesigns. There are inquiries and so on. It's not surprising that Musk was involved in this because he's involved in sort of all aspects of the car's design. On the other hand, it's interesting because, again, this kind of undercuts some of the claims that the company has made about the safety of its vehicles. There's this line in the story. The base is what Elon Musk said is the best part is no part. And so, this desire for something that was good-looking and sophisticated and sci-fi, but it's not just teases that have them. Everyone else adopted this design as aesthetic as well. Yeah, this has spread to the entire auto industry. You see a lot of higher-end cars, many EVs as well as some gas cars. It's not only sort of attractive from a design point of view, although I think people have different points of view. It's also less expensive because fewer parts, you know, means less cost. And that's one of the things that Tesla has been very successful at making cars with much fewer parts. They have this famously vertically integrated manufacturing system. It's allowed them to cut costs. Obviously, you see their potential problems when you diverge from the way the auto industry has done things for a really long time. Now, cheap designer has been on Bloomberg and said that they're looking to change things up. How quickly will that get into new models? And what about the old models that usually weeks be an update through software upgrades? Right. Well, so Tesla has said, unlike other automakers, they're continuously updating their cars. So in theory, I suppose they could get this done pretty quickly, though, again, this is not as simple as a software update. This is going to require tooling. It's going to require factories, retrofits, potentially in cars. The story of Bloomberg ran earlier today mentions a similar example around the shifter. I believe it was the Model X or the Model Y, where they took away the column that you used and replaced it with a button that didn't work out. They had to retrofit that. So you could see something similar here, although this is not something that's going to be taken care of overnight. Meanwhile, shares their record highs. As it's the more of a RoboTaxi humanoid robot kind of a company right now, Max, great to get your take. On what has been a theme throughout 2025, this deep investigation into Tesla handles by Bloomberg. Now that does it for this edition of Bloomberg Tech. Don't forget to check out our podcast, find it on the terminal, as well as online on Apple, Spotify, and I Heart. From New York, this is Bloomberg. In our new podcast, "Everybody's Business," we talk about the business news that concerns everybody. From Bloomberg Business Week, I'm Stacy Bannock-Smith, and I'm Max Schaffkin. Each week, we unpack what is happening on Main Street and Wall Street and all the streets. WrestleMania has taken over the U.S. economy. Poetry that executives write on LinkedIn. A little actual magic in our underrated story. That single-grates marketing campaign the music business has ever seen. I decided to ask people how they felt about the penny going away. Listen to "Everybody's Business," wherever you get your podcasts.