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Lab-Grown Diamond Demand On The Rise · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
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  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Well, Matt, you know,
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  Speaker 1: as you know, this is not my first rodeo. I've
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  Speaker 1: been around this block a couple of times. I thought
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  Speaker 1: I kind of knew everything that's kind of worth knowing.
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  Speaker 1: But I learned something new today that you can grow
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  Speaker 1: a diamond in a lab. Did you know that? Oh? Yes,
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  Speaker 1: I had no idea where. Ye man, it's just amazing. Fortunately,
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  Speaker 1: we've got a great guest to talk to us about
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  Speaker 1: this growing business. A Miss Shaw, president of a l
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  Speaker 1: TR created Diamonds, joins us on the phone. I Miss again,
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  Speaker 1: I learned something new today. Tell me how you grow
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  Speaker 1: a diamond in a lab. A diamonds grown in a
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  Speaker 1: high tech labar tree in an enclosed chamber, and it
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  Speaker 1: starts from a diamond. If you think of a thin
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  Speaker 1: slice of a diamonds thes a hair um that is
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  Speaker 1: placed in a chamber that is pressurized with temperatures in
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  Speaker 1: the range of about degrees center centigrade about two thousand
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  Speaker 1: degrees fahrenheit, and a combination of propriety gases that contained
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  Speaker 1: pure carbon are being exposed. Carbon bonds with the slice,
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  Speaker 1: which is a lattice of carbon on the diamond, growing
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  Speaker 1: the diamond into a larger crystal. In about six hundred hours,
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  Speaker 1: you have a type two way which is among the
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  Speaker 1: two percent of the world's pure as diamonds born in
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  Speaker 1: this chamber. So how expensive is it to do that then,
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  Speaker 1: compared to, you know, just mining a diamond. I think
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  Speaker 1: from the perspective of technology worsus mining um. The first
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  Speaker 1: round of technology is very expensive, just like every other
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  Speaker 1: industry was. Over a period of time. The economy of
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  Speaker 1: volume and improved technology gives consumer almost a fifty better
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  Speaker 1: value and that's where we have already achieved. All right,
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  Speaker 1: So the technology is there, are you selling any of
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  Speaker 1: these times? Do we have a market price? Talk to
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  Speaker 1: us about that the commercials. Yeah, absolutely, So we entered
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  Speaker 1: the marketplace in two thousand sixteen. Our first retail fit
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  Speaker 1: out was that one of Berkshire had to store in Omaha.
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  Speaker 1: I mean the last five years, the overall category has
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  Speaker 1: grown to almost two billion dollars UM. The simplest weight
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  Speaker 1: to the comprices is if an Earth's Mind diamond was
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  Speaker 1: five thousand dollars for a one carrot, but the same prize,
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  Speaker 1: you would almost get a fifty larger diamond at one
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  Speaker 1: point five carrot. And how difficult is it to tell
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  Speaker 1: the difference? I mean, can you know the experts in
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  Speaker 1: I don't know where they are Antwerp or Street or whatever.
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  Speaker 1: Can they Can they look at one of these diamonds
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  Speaker 1: and an earth Mind diamond and tell the difference instantly?
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  Speaker 1: Actually not, because a diamond is a diamond irrespective of
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  Speaker 1: how it's grown. You would need is meter to tell
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  Speaker 1: the difference between these two diamonds. Alright, So I think
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  Speaker 1: about a big retail chain like Pandora. Are they selling
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  Speaker 1: your diamonds or are they selling diamonds that are lab
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  Speaker 1: grown diamonds? I guess uh. Pandora has just recently entered
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  Speaker 1: into the lab grown diamond category. UM labgown diamond category
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  Speaker 1: is expanding. The very high pace is the growthy year
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  Speaker 1: over a year is in triple digit and because of
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  Speaker 1: the value it's offering the consumer briant from accessory to find.
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  Speaker 1: Jewelry are starting to enter the category, but your products
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  Speaker 1: are I'm thinking of your products on a higher price
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  Speaker 1: level than a Pandora, than the average take the price
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  Speaker 1: at Pandora. Yes, we currently operate in the larger from
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  Speaker 1: a one character four character price point, so we would
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  Speaker 1: be almost a few times of the Pandora price point. Okay,
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  Speaker 1: So I go into a diamond store. I feel like
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  Speaker 1: this isn't widely lone or maybe it's just me. I'm
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  Speaker 1: not haven't been in the diamond market. Dude, did you
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  Speaker 1: not see blood diamonds? I did not, Leonardo DiCaprio, it
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  Speaker 1: was awesome, and like, so here's the deal. The kids
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  Speaker 1: are unhappy, a justifiably so. I mean, you know, there's
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  Speaker 1: a lot of ethical and moral concerns with earth mind diamonds.
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  Speaker 1: That's why this is such a great solution, is um.
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  Speaker 1: And I just wonder how much of the market are
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  Speaker 1: you going to take with with lab grown diamonds As
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  Speaker 1: more and more people say, look, it's just as good
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  Speaker 1: or maybe better, and bigger is always better. So um,
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  Speaker 1: I'd rather have this than a diamond that I'm not
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  Speaker 1: really sure about the origin of Yeah, if you think
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  Speaker 1: about it today, if you and it's an environmentally and
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  Speaker 1: a socially conscious product, the product that's made above the
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  Speaker 1: ground in sophisticated labs. And the important part is it's
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  Speaker 1: actually a finer quality diamond. And then when you look
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  Speaker 1: from the prize val, it's like you're getting something better
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  Speaker 1: for less. In terms of how much market place this
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  Speaker 1: will cover over the next decade. From two billion dollars,
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  Speaker 1: we're looking at about fifteen billion dollars in the next
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  Speaker 1: ten years. What is also more interesting is the overall
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  Speaker 1: diamond in diamonds come to the market each here is
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  Speaker 1: about twenty billion dollars, so you can see that the
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  Speaker 1: consumption is going to grow. Also, it opens a much
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  Speaker 1: more bigger market space. I think that's the bigger part,
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  Speaker 1: aspirations are not going to be achievable because people can
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  Speaker 1: afford more diamonds. What is the diamond industry? What's been
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  Speaker 1: a response from the mind years. I think, like every industry,
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  Speaker 1: and I think yours you must have seen this more
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  Speaker 1: than meat. The manhoods always take it with hard feelings.
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  Speaker 1: Nobody likes their customers to change their taste or choice
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  Speaker 1: and nobody likes the midstream to change what is happening forever.
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  Speaker 1: It happened with cars, it happened with every consumer product.
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  Speaker 1: But at the end of the day, the consumer makes
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  Speaker 1: the decision. What's the marketing like now? I mean, I
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  Speaker 1: can imagine if I said diamonds are a girl's best friend.
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  Speaker 1: I think my wife might slap me. It just seems
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  Speaker 1: like a sexist thing to say. On the other hand,
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  Speaker 1: she loves diamonds, right, and I don't care about them,
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  Speaker 1: So what's the marketing play? The marketing play is a
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  Speaker 1: larger and more beautiful diamond for the same money. I'll
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  Speaker 1: put it this way. If you had to get your
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  Speaker 1: wife a one carrot diamond, and you went to a
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  Speaker 1: store with her, and she would have a one carrot
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  Speaker 1: on a finger or a pendem internet and she would
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  Speaker 1: have a one point larger and you were paying the
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  Speaker 1: same amount of money. You would be happy. But think
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  Speaker 1: about how much more happier she's going to be well,
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  Speaker 1: And she would be happy about the social aspect of
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  Speaker 1: it as well, because I don't think she's comfortable with
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  Speaker 1: the you know, the possibility that the diamonds she wants
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  Speaker 1: could have caused so many people, so much pain. It's
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  Speaker 1: such a fascinating story. Miss thanks so much for joining
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  Speaker 1: us and as Shaw there, President A. L. T R.
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  Speaker 1: Created diamonds. Let's talk taxation, global taxation and the corporate
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  Speaker 1: minimum attacks. To dive into that, we welcome Mimi's song,
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  Speaker 1: Chief Economists for Cross Border Solutions Me me, thanks so
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  Speaker 1: much for joining us here. Just give us a background here.
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  Speaker 1: Where are we? I know there's a lot of discussion here.
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  Speaker 1: Where are we with a corporate minimum tax on a
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  Speaker 1: global basis? Well, we've we've already seen that the G
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  Speaker 1: seven has met to come to at least this consensus
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  Speaker 1: lot of framework of what that global minimum taxation would
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  Speaker 1: look like. And based on that, we've even had a
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  Speaker 1: hundred and thirty countries come to the table and agree
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  Speaker 1: that this makes sense and everybody is willing to negotiate,
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  Speaker 1: which is a huge step towards trying to get to
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  Speaker 1: this global minimum taxation. So is it a minimum uh
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  Speaker 1: tax rate? Or I mean in the US, for example, um,
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  Speaker 1: the corporate tax rate is and a lot of companies
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  Speaker 1: end up not paying any taxes at all? Is that
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  Speaker 1: still going to happen when it drops to fifteen? So
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  Speaker 1: the the idea here, and the reason for these proposals
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  Speaker 1: is ultimately such that corporations can no longer take advantage
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  Speaker 1: of those tax arbitract situations and establish these elaborate schemes
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  Speaker 1: where they don't pay any taxes at all. So this
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  Speaker 1: idea of you know, profit being untaxable, and so that
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  Speaker 1: this is what the the global community is coming together
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  Speaker 1: to try to mitigate. They want to they want to
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  Speaker 1: tax corporations. They want to make sure that corporations are
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  Speaker 1: paying their fair shared taxes in the right locations. And
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  Speaker 1: under the proposal there, it gets a little bit complicated,
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  Speaker 1: but essentially there's two aspects of it. Number one, the
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  Speaker 1: aspect that companies need to you know, companies operating in
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  Speaker 1: this digital economy because of the antiquated tax rules, they're
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  Speaker 1: not being taxed because in in the right countries, because
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  Speaker 1: those countries don't have the taxing rights of the idea
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  Speaker 1: of taxation historically was based on brick and mortar structures,
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  Speaker 1: and now that's no longer the case. They're redefining what
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  Speaker 1: that taxation right looks like. And then on top of that,
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  Speaker 1: they're going to be applying this concept of a minimum
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  Speaker 1: taxation where a company headquartered in a certain location. There
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  Speaker 1: is the global tax you know, the global effective tax
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  Speaker 1: rates should be at this minimum rate right where everybody
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  Speaker 1: has to taste the proposal somewhere around fifteen percent at
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  Speaker 1: this point, but of course all those details have yet
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  Speaker 1: to be finalized. God, this so complicated, man, it's I mean,
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  Speaker 1: it's already complicated classes right. I love the There is
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  Speaker 1: a letter circulating Donald Rumsfeld's into the I R S
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  Speaker 1: where he said, like, I've looked at this, I've got
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  Speaker 1: a college degree, I've had accountants look at it, and
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  Speaker 1: even my wife looked it over, and we still have
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  Speaker 1: no idea if this is right. Um, I was going
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  Speaker 1: to say, the tax is like hundreds and hundreds of
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  Speaker 1: pages long, and it just create It's even more complicated
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  Speaker 1: because it's layers on layers on top of you know,
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  Speaker 1: tax code. Right, it's just building upon something instead of
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  Speaker 1: building the house from scratch. I mean, is this just
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  Speaker 1: the way politicians like like it? Is this? You know
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  Speaker 1: how you know salaried professionals making a hundred seventies six
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  Speaker 1: thousand dollars a year end up being multi multi millionaires
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  Speaker 1: or is there any possibility of the tax code being simplified.
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  Speaker 1: You know, that's that's that's that's a difficult question to answer.
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  Speaker 1: I think everyone would love simplification of the tax code.
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  Speaker 1: But I think it's nearly impossible to go back to
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  Speaker 1: that state, right, because like I said, it's it's it's
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  Speaker 1: actually of thousands of pages of tax code. I mean
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  Speaker 1: that that that just is so complicated that trying to
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  Speaker 1: start over from scratch is going to be nearly impossible.
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  Speaker 1: And so now it's just a matter of you know,
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  Speaker 1: it's trying to fix what what is some you know,
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  Speaker 1: you know it will be interesting, Mami. One of the reasons, right,
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  Speaker 1: is that we try and incentivize behavior with UM tax deductions. Well,
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  Speaker 1: we no longer be able to do that if there's
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  Speaker 1: a minimum rate. Well, so this that's that's an interesting
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  Speaker 1: question because the minimum rate is one aspect of taxation,
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  Speaker 1: but that incentive there are other tax incentives, tax credits
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  Speaker 1: that will that will actually help to bolster and continue
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  Speaker 1: to UM sort of bring in investment and innovation. Right,
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  Speaker 1: So R and D tax credits, which is another section
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  Speaker 1: of the tax code beyond this this just overall effective
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  Speaker 1: tax rate. And so the interplay between all of these
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  Speaker 1: different aspects of taxation. It's just really complicated, and no,
• 12:49
  Speaker 1: it is really I was just thinking, Paul, we should
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  Speaker 1: do a podcast on taxation. It would be fun, it
• 12:56
  Speaker 1: would be fun for us, and we'd have mania on.
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  Speaker 1: But I don't know if anybody would click on a
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  Speaker 1: taxation podcast any case. Mimi, thanks very much for joining us.
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  Speaker 1: Great to have you. Mimi Song, chief economists at Cross
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  Speaker 1: Border Solutions. Let's bring in now Steve Wyatt, his chief
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  Speaker 1: investment strategist at b Okay Financial. They have ninety two
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  Speaker 1: billion dollars in assets under management, and Steve, maybe you
• 13:20
  Speaker 1: can help shut us, help us shed some light on
• 13:23
  Speaker 1: what's going on in treasuries right now. We're looking at
• 13:26
  Speaker 1: a yield of only one thirty sixty two and the
• 13:30
  Speaker 1: real yield is below one full percent. Why our investors
• 13:36
  Speaker 1: buying bonds after the fed's hawk ish turn and amidst
• 13:39
  Speaker 1: taper talk. Yeah, so, good morning, Matthew. Thank you for
• 13:43
  Speaker 1: the opportunity to be here, and I really appreciate you
• 13:45
  Speaker 1: starting off with such an easy question like that. Uh.
• 13:49
  Speaker 1: It's uh, it truly is something that has somebody that
• 13:51
  Speaker 1: started their career in two under a Paul Boker Fed
• 13:54
  Speaker 1: as in the bond market, you look at what's happening
• 13:58
  Speaker 1: and it's a it's it's a bit of a head scratcher.
• 14:01
  Speaker 1: I think that in the end we can talk about
• 14:04
  Speaker 1: the distortion of quantitative easing is is causing in today's
• 14:09
  Speaker 1: you know, on the domestic market, uh, the impact of
• 14:13
  Speaker 1: what's happening from a global standpoint. But I think if
• 14:17
  Speaker 1: you just have to look at the shape of the
• 14:18
  Speaker 1: yield curve and what's happened since the Fed came out
• 14:21
  Speaker 1: and gave some indication that there was some disagreement on
• 14:26
  Speaker 1: the f O m C about when the interest rates
• 14:28
  Speaker 1: may need to rise, and the response to that, This
• 14:32
  Speaker 1: flattening of the yield curve, to me, is a pretty
• 14:35
  Speaker 1: strong cautionary statement on the part of the bond market
• 14:39
  Speaker 1: that the Fed, as much as we want them to
• 14:41
  Speaker 1: be able to get back to a normal monetary policy,
• 14:47
  Speaker 1: we want our economy to be able to operate without
• 14:49
  Speaker 1: the level of extraordinary monetary accommodation that we have today.
• 14:54
  Speaker 1: I think the bond markets send in a signal to
• 14:56
  Speaker 1: the Fed that they better be very careful about how
• 14:58
  Speaker 1: they do that and how how important their communication process
• 15:03
  Speaker 1: between now and then is going to be Steve. A
• 15:06
  Speaker 1: big part of the inflation discussion is obviously wages, and
• 15:09
  Speaker 1: we got some the Jolts data this morning. Still a
• 15:13
  Speaker 1: lot of job openings out there. We had a pretty
• 15:15
  Speaker 1: good jobs number last week, but still, um, it's tough
• 15:20
  Speaker 1: to make a call for inflation if there's still uh,
• 15:23
  Speaker 1: you know, a lot of folks that are not employed. Yeah,
• 15:27
  Speaker 1: and look, I think it's going to be important one
• 15:29
  Speaker 1: of the uh you know, one of the important topics
• 15:32
  Speaker 1: that we're looking at, kind of the trends that we're
• 15:34
  Speaker 1: looking at between now and the end of the year
• 15:36
  Speaker 1: as we think about our outlook for the economy. How
• 15:38
  Speaker 1: the labor force unfolds from its current position is going
• 15:42
  Speaker 1: to be a key metric. It's so important as we
• 15:45
  Speaker 1: think about how we move from a stimulus based recovery
• 15:51
  Speaker 1: to a more private sector driven expansion that can last
• 15:55
  Speaker 1: for a longer period of time. What did we have
• 15:58
  Speaker 1: a hard John say that we're now up to nine
• 16:00
  Speaker 1: point to one million job openings, were still seven million
• 16:04
  Speaker 1: something jobs short of where we were in the economy
• 16:07
  Speaker 1: before we went into the pandemic. So there's clearly this
• 16:10
  Speaker 1: huge gap. It's not like there's a I think for
• 16:14
  Speaker 1: job seekers. It's not like there's a fear of missing out.
• 16:17
  Speaker 1: There's a lot of jobs out there. I think the
• 16:19
  Speaker 1: reasons why the labor market has been slow to respond
• 16:23
  Speaker 1: or complex, but we anticipate that is going to change
• 16:27
  Speaker 1: over time that we think that there is going to
• 16:29
  Speaker 1: we're gonna see steady improvement. I would not be surprised
• 16:32
  Speaker 1: to see non farm payroll gains of over a million
• 16:36
  Speaker 1: UH in a couple of months as we moved between
• 16:39
  Speaker 1: now and the end of the year. And there other
• 16:41
  Speaker 1: reason that's so important is that's going to play such
• 16:44
  Speaker 1: a big part and how the FED approaches their monetary
• 16:48
  Speaker 1: policy because they keyed in on the labor market right
• 16:51
  Speaker 1: or wrong, agree or disagree whether or not monetary policy
• 16:55
  Speaker 1: is the right tool to help solve the labor markets problems.
• 16:59
  Speaker 1: That what the FED has focused on, and that's what
• 17:03
  Speaker 1: we think is going to drive monetary policy from a
• 17:05
  Speaker 1: longer term perspective. In terms of investments, Steve Um Bloomberg's
• 17:12
  Speaker 1: Danni Burger put a chart out this morning that I
• 17:14
  Speaker 1: thought was interesting showing that the US Economic Surprise Index.
• 17:19
  Speaker 1: You know many banks have these, but Bloomberg has its
• 17:21
  Speaker 1: own U s ECO Surprise Index fell to the lowest
• 17:24
  Speaker 1: level since June of not still positive, but it's not
• 17:30
  Speaker 1: it's just barely positive. And I wonder if that means,
• 17:33
  Speaker 1: you know, most of the recovery, most of the growth
• 17:35
  Speaker 1: ahead of us is already priced in. Well, there's part
• 17:39
  Speaker 1: of that, and I think the other part of that
• 17:41
  Speaker 1: is whether or not we're at this peak growth. And
• 17:43
  Speaker 1: it's like the second derivative problem. It's still positive, but
• 17:46
  Speaker 1: not as positive as it was correct and so we
• 17:50
  Speaker 1: kind of think we're right at that peak stimulus, the
• 17:53
  Speaker 1: impact of monetary policy easing, the fiscal stimulus that occurred,
• 17:58
  Speaker 1: which was material and really frankly puts US in a
• 18:02
  Speaker 1: different position than we've been in past periods. We I think,
• 18:05
  Speaker 1: for all of us in this business, we have to
• 18:07
  Speaker 1: be humble enough to say that as we look forward,
• 18:10
  Speaker 1: there's a lot we just don't know. If we think
• 18:12
  Speaker 1: about where we were twelve months ago and the conversations
• 18:16
  Speaker 1: that we're having today versus then uh, it's a lot better.
• 18:19
  Speaker 1: The risk that I think we're facing today are more
• 18:22
  Speaker 1: manageable than they would have been had we not taken
• 18:25
  Speaker 1: some of those steps. But our thought as we look
• 18:28
  Speaker 1: forward is what's next is somewhat less monetary accommodation, somewhat
• 18:34
  Speaker 1: less fiscal accommodation, somewhat slower economic growth, still positive, but
• 18:39
  Speaker 1: we're not going to do what's the Atlanta FA GDP
• 18:42
  Speaker 1: now and X ten ten eleven for the second quarter.
• 18:46
  Speaker 1: We're not going to see earning's growth at the same
• 18:48
  Speaker 1: level that we've seen, but still going to be positive
• 18:51
  Speaker 1: and uh, and that's still going to be an environment
• 18:53
  Speaker 1: where we can look for the economy to expand and
• 18:57
  Speaker 1: job growth to remain positive. All right, Steve, great to
• 19:01
  Speaker 1: get your thoughts. Really appreciate you dropping by with some insight.
• 19:04
  Speaker 1: Steve Wyatt, I said, is chief investment strategist to be
• 19:07
  Speaker 1: okay financially about ninety two billion dollars of assets under management,
• 19:12
  Speaker 1: and UM, you know, I think, if anything, this is
• 19:15
  Speaker 1: the time when you really need expert advice. I mean,
• 19:19
  Speaker 1: this is a very sensitive market. Is it priced to perfection?
• 19:23
  Speaker 1: Are there still opportunities out there? Um? I don't know
• 19:26
  Speaker 1: about you, but I need some guidance. And that's why
• 19:29
  Speaker 1: we talked to experts like Steve. This is Bloomberg bringing
• 19:37
  Speaker 1: Naomi Nick. She's a corporate influence reporter for Bloomberg News.
• 19:40
  Speaker 1: She joins us on the phone from Washington, d C. Naomi. Uh,
• 19:44
  Speaker 1: your story here about Amazon's really interesting. Here, just refresh
• 19:48
  Speaker 1: our memory here kind of how did this play out?
• 19:50
  Speaker 1: I guess it was a couple of years ago when
• 19:52
  Speaker 1: this big contract was being awarded, a Jedi contract, Jedi contract, Yes,
• 19:58
  Speaker 1: potentially you know out UM awarded the Jedi contract, which
• 20:03
  Speaker 1: is a which was a contract that would have given
• 20:07
  Speaker 1: the winner ten billion dollars up to ten billion dollars
• 20:10
  Speaker 1: over a decade to be the Pentagon's sort of big
• 20:14
  Speaker 1: cloud services provider. That project got a lot of pushback
• 20:19
  Speaker 1: from industry in Cooling Oracle, Microsoft, and IBM, who all
• 20:23
  Speaker 1: thought the deal was tailor made for Amazon because it
• 20:26
  Speaker 1: has already won a similar deal from the CIA. Uh.
• 20:30
  Speaker 1: Fast forward a couple of years and the Pentagon gives
• 20:33
  Speaker 1: it to Microsoft Amazon who saying the reason Microsoft got
• 20:39
  Speaker 1: it is because of President Donald Trump. Uh and um.
• 20:44
  Speaker 1: And then you know, now depending on saying okay, we're
• 20:46
  Speaker 1: going to just abandon the project altogether because Trumps is
• 20:50
  Speaker 1: the idea, right, Yeah. Essentially that that that Trump hatd
• 20:55
  Speaker 1: Bezos because you know, if you in the Washington Posts,
• 20:57
  Speaker 1: and Trump was making a lot of that publicly at
• 21:01
  Speaker 1: the time, questioning the fairness of the project, which was
• 21:04
  Speaker 1: unusual for a sitting president to do in a procament
• 21:07
  Speaker 1: like this. I have to say, the story is amazing.
• 21:12
  Speaker 1: I mean I woke up at three o'clock in the morning,
• 21:15
  Speaker 1: checked my Bloomberg and read this story and was like,
• 21:18
  Speaker 1: oh my god, it's there's so much drama. Um. So
• 21:21
  Speaker 1: the Jedi contract one of the things I found interesting.
• 21:24
  Speaker 1: It was going to be what a tenuere deal? Right,
• 21:26
  Speaker 1: but they said three and a half years later, all
• 21:29
  Speaker 1: that technology is basically obsolete Naomi, So now they're gonna
• 21:33
  Speaker 1: do what is it a five year deal? Um? And
• 21:37
  Speaker 1: I guess we're expecting it to just become obsolete near
• 21:40
  Speaker 1: the end of the contract. Why don't they just do
• 21:43
  Speaker 1: these every year? You know? Eventually I guess there will
• 21:46
  Speaker 1: be a tiny little clouds um everywhere and it will
• 21:49
  Speaker 1: be on the blockchain. But what what's the idea? So
• 21:52
  Speaker 1: the new contract, um, one of the biggest changes is
• 21:56
  Speaker 1: the Pentagon is saying we're going to give this contract
• 21:58
  Speaker 1: to multiple company these, which is what industry has been
• 22:01
  Speaker 1: planning for all along. And yet the main cont industry
• 22:05
  Speaker 1: outside of Microsoft, right, um. And so yeah, it's gonna
• 22:14
  Speaker 1: be over the course of five years. We're expecting it
• 22:17
  Speaker 1: to be in the billions UM and there right now
• 22:21
  Speaker 1: are saying, we know that Amazon and Microsoft are eligible
• 22:24
  Speaker 1: for this. We're planning to talk to some of the
• 22:25
  Speaker 1: other tech companies like IBM, an Oracle, and Google to
• 22:29
  Speaker 1: see if they're also eligible for this UM and if
• 22:32
  Speaker 1: they are, they can submit a proposal. But this is
• 22:35
  Speaker 1: expected to be like a bridge contract, and the depending
• 22:38
  Speaker 1: on is saying, you know, we're transitioning to the cloud,
• 22:41
  Speaker 1: and another five years they'll have maybe an even more
• 22:44
  Speaker 1: robust contract UH to award to some of the players.
• 22:49
  Speaker 1: What has been the response for Microsoft Microsoft was, I mean, look,
• 22:55
  Speaker 1: Microsoft was in a tough position. Amazon had actually filed
• 22:59
  Speaker 1: a lawsuit right that was against uh Microsoft win of
• 23:03
  Speaker 1: the contract, and so that the Microsoft was facing the
• 23:07
  Speaker 1: prospect that Amazon was going to drag this thing out
• 23:10
  Speaker 1: in court. Meanwhile, Microsoft at the time had to stop
• 23:14
  Speaker 1: doing any work with the Pentagon. So in some ways,
• 23:17
  Speaker 1: this this deal provides some resolution to Microsoft to actually
• 23:21
  Speaker 1: get started on doing some of the work. But obviously
• 23:24
  Speaker 1: it's what's the baby, and so they're getting less money.
• 23:27
  Speaker 1: So they offered somewhat optimistic comments public comments, which I expected. Yeah,
• 23:33
  Speaker 1: they're supportive as long as they keep getting paid. One
• 23:35
  Speaker 1: of the my takeaways was, how does the Pentagon not
• 23:38
  Speaker 1: have its own cloud? Shouldn't like DARPA have invented the
• 23:43
  Speaker 1: sweetest cloud for the Pentagon to have, And especially as
• 23:47
  Speaker 1: we were seeing like Cozy Bear. If a hacker group
• 23:50
  Speaker 1: called cozy Bear can get into your databases, um, how
• 23:55
  Speaker 1: are you gonna guard more confidence in Amazon and Microsoft
• 23:58
  Speaker 1: than I do the US government? Yeah? But if it's not,
• 24:01
  Speaker 1: it's not just Amazon, it's gonna be Microsoft and Amazon
• 24:05
  Speaker 1: and maybe Oracle and IBM and a longer change, it's
• 24:08
  Speaker 1: gonna have a weak link. Like I just I just
• 24:11
  Speaker 1: think it's such an amazing story. Naomi, thanks so much
• 24:13
  Speaker 1: for joining us on this. It'll be one we continue
• 24:16
  Speaker 1: to cover for sure. Naomi Mix and Matt Day wrote
• 24:19
  Speaker 1: the most recent story. Check it out on the Amazon ticker.
• 24:22
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• 24:25
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• 24:29
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• 24:33
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• 24:37
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• 24:40
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