Global IT Outages Create Chaos and Netflix's Mojo Is Back | Bloomberg Technology

CrowdStrike Outage and Market Reactions

• A massive IT outage impacted global businesses and systems, including airlines, banks, and healthcare systems.
• The outage was caused by a faulty patch released by CrowdStrike, a cybersecurity company, which affected Windows systems worldwide.
• The outage highlighted the vulnerability of global systems to single vendors and the widespread reliance on Windows operating systems.
• The outage caused chaos and disruption, with many users experiencing the dreaded "blue screen of death."
• The impact of the outage was felt across various industries, including deliveries, flights, and financial markets.
• The incident underscores the fragility of global systems and the need for robust cybersecurity measures.
• Investors are reacting to the CrowdStrike outage because it is a popular company in the software sector, with a 40% increase in stock price this year.
• The outage, while not a hack, has caused concern among investors as it occurred close to the end of the quarter, potentially impacting business with new customers and their guidance estimates.
• Investors are looking for reasons to sell tech stocks and rotate into other sectors, using the CrowdStrike outage as an opportunity to reduce risk.
• Despite the outage, Jordan Klein believes that customers are unlikely to switch from CrowdStrike or Microsoft, the second-largest player in the endpoint security market.
• Some investors are buying shares of SentinelOne and Palo Alto Networks, competitors of CrowdStrike, assuming they will benefit from the outage.
• Jordan Klein advises investors to avoid making hasty decisions and to wait for more information before buying or selling CrowdStrike stock.
• He believes that the impact of the outage will be temporary and that CrowdStrike will recover quickly.
• It is unlikely that CrowdStrike will face financial repercussions from the outage, as their contracts are not likely to require them to compensate clients for lost business.
• Investors will likely have to wait until after the end of July, when CrowdStrike reports its quarterly earnings, for an official update on the financial impact of the outage.
• Companies affected by the global IT outages will likely receive credits to appease them.
• The market will react positively once the amount of these credits is quantified.
• Jordan Klein believes the market is not in panic mode, as the stock is not at its lows.
• He expects the stock to continue to rise, but acknowledges that the tech sector is nervous.
• Most investors are taking a wait-and-see approach, and trading volumes do not suggest panic.

Netflix Subscriber Growth and Concerns

• Netflix exceeded subscriber growth expectations in the second quarter, adding 8 million subscribers.
• However, the company's guidance for the third quarter is concerning, as subscriber growth is expected to be weaker.
• Laura Martin believes that the location of the new subscribers is suboptimal, as they are in regions with lower average revenue per user.
• Wall Street is not pleased with this development.
• Netflix will stop providing subscriber guidance in the first quarter of next year, focusing solely on revenue, which could increase stock volatility.
• Analysts are concerned about Netflix's subscriber growth, particularly in the US where subscription fees are higher.
• Netflix's live programming, including fights, roasts, and exclusive content, is seen as a key driver of subscriber retention.
• Netflix's video game offering is considered troubled, while live programming is seen as a promising genre.
• Netflix is investing heavily in live sports programming, including NFL games, which is a significant expense.

American Express Earnings and Marketing Investments

• American Express reported strong fiscal earnings per share but warned of increased marketing spending in the coming months.
• American Express is committed to marketing and technology investments, particularly in AI.
• The market is questioning American Express's ability to maintain profitability despite record revenue.

Salesforce's AI Agent and Global Outage Impact

• Salesforce announced the Einstein Service Agent, a fully autonomous AI agent designed to transform customer service jobs.
• The Einstein Service Agent is designed to provide a more human-like experience compared to traditional chatbots, capable of answering complex questions and taking complicated actions.
• The Einstein Service Agent is grounded in a company's trusted data, ensuring security and reliability.
• Salesforce has been developing large language models since 2018 and believes in open architecture, giving customers choice in AI models.
• Salesforce recently launched its CRM Leaderboard, the first LLM leaderboard for sales, service, marketing, and commerce.
• The global outage affecting CrowdStrike, Microsoft 365 integration with Salesforce platforms, and other companies has impacted Salesforce, with engineers working around the clock to restore full access to services.
• Salesforce emphasizes the importance of working with trusted partners and prioritizes uptime for its customers, including Air India, AAA, and OpenTable.
• Salesforce's AI agent can transfer conversations to a human if it exceeds the agent's capabilities, and the frequency of this depends on the company's documented knowledge and procedures.
• Salesforce's Einstein Trust Layer ensures that AI interactions are trusted, reliable, and accurate by filtering them before they are presented to customers.
• Clara, a Salesforce representative, discusses the three key ingredients for successful enterprise AI: ethical guardrails and data security, having the right context, and employee empowerment.

CrowdStrike Outage and Cybersecurity Concerns

• The recent global IT outages have impacted CrowdStrike, a leading endpoint security company.
• The outage has raised concerns about CrowdStrike's agentless security approach, as customers may seek alternatives.
• McAfee, a consumer-focused cybersecurity company, is providing support to its customers who rely on services impacted by the CrowdStrike outage.
• McAfee's Chief Technology Officer, Steve Groban, emphasizes the importance of learning from such events and adapting security practices to prevent future disruptions.
• Groban acknowledges that rebooting devices multiple times, as suggested by CrowdStrike support, is a plausible recovery procedure, but emphasizes the need for a comprehensive approach to address the diverse range of situations organizations may face.
• Steve, from McAfee, emphasizes that cybersecurity is a constantly evolving field, with bad actors constantly innovating and creating new attacks. This requires rapid deployment of new technology to stay ahead.
• He compares the situation to driving cars at high speeds, where accidents are inevitable, but safety measures are still crucial. Similarly, cybersecurity incidents are likely to occur, but the industry needs to learn and adapt quickly.
• Steve acknowledges that the recent global outage could have been handled differently, and the industry needs to learn how to update security measures quickly without causing widespread disruptions.
• He suggests that organizations should implement security updates in phases, rather than all at once, to minimize risks.
• Steve warns against overreacting to the incident by imposing excessive controls, which could hinder the ability to respond to future attacks.
• He highlights that McAfee is aware of the issue and is providing guidance to organizations to help them recover.
• McAfee is also seeing scammers taking advantage of the situation by impersonating banks and attempting to trick consumers into revealing sensitive information.

AI Impact on Content Creation and Streaming Industry

• The discussion focuses on the impact of Artificial Intelligence (AI) on content creation and the streaming industry.
• Steve, a speaker in the video, believes AI will create powerful tools for creators to tell better stories and that technology and entertainment work together to build successful businesses.
• Lizzie Francis, a partner at M13, emphasizes the paradigm shift happening in the industry, with AI driving productivity improvements across all sectors.
• M13 invests in companies like Maven AGI, which provides customer service for companies like Trip Advisor and Roe, demonstrating the focus on customer personalization and creating a better customer experience.
• M13's investment strategy involves identifying high-volume opportunities in the AI space, despite the competitive landscape.
• The discussion highlights the importance of discerning calculations and strategic investments in the rapidly evolving AI landscape.
• M13, a venture capital firm, is seeing a significant increase in investment dollars flowing into the artificial intelligence (AI) ecosystem.
• M13 focuses on investments in health, money, finance, and consumer sectors, prioritizing AI-powered or AI-native companies.
• Lizzie Francis, a partner at M13, believes that AI is unlocking creativity and innovation, empowering entrepreneurs to build transformative businesses.
• M13 has invested in a healthcare company called Care It's Noics, which helps doctors diagnose chronic conditions in patients early on.

Meta and Trump's Relationship and Political Influence

• Meta CEO Mark Zuckerberg discussed the upcoming 2024 presidential election with Emily Chang on Bloomberg Technology.
• Zuckerberg stated that Meta will be less involved in the election than in the past, as users have expressed a desire for less political content on their platforms.
• Zuckerberg also mentioned that he personally plans to play a less significant role in the election.
• Mark Zuckerberg, CEO of Meta, has stated that he will not endorse either candidate in the upcoming election.
• Zuckerberg believes that it is important for people to be able to express their views on political issues, and that Meta's role is to facilitate this.
• Zuckerberg's statement is seen as a calculated move, given the potential for political changes and the threats that Donald Trump has made against Meta.
• Some analysts believe that Zuckerberg's statement is a way to appease Trump and avoid further conflict.
• The relationship between Meta and Trump is likely to remain contentious.
• Elon Musk's endorsement of Donald Trump is significant because it has a ripple effect in Silicon Valley.
• Musk's endorsement is seen as a sign of support for Trump, and it could influence other tech leaders.
• Mark Zuckerberg is also seen as having a significant influence on politics, and his views are closely watched.