Hi, I'm CNBC producer Zach Vali. Today on SquawkPod, a massive fund raise for the massively valuable private company OpenAI, $110 billion, including from Amazon. Leaders of both companies join us on this news.
The more we see revenue growing, the more we see demand growing, the more we want to invest to be able to serve that.
This is the most significant transformation in technology and maybe business in our lifetime.
Plus, Paramount, one step closer to a long sought prize, the legacy assets of Warner Brothers Discovery.
It's either the end of Hollywood in theaters or it's the magnification of Hollywood.
And we never thought artificial intelligence would come for us. It's such a bonkers and backwards thing to think because here we have this great innovation, this great technology that's supposed to move us forward, which it may, but could take our jobs in the meantime.
It's Friday, February 27th. SquawkPod begins right now.
Good morning and welcome to Squawk Box right here on CNBC. We're live at the NASDAQ market site in Times Square. I'm Andrew Ross Sorkin along with Joe Kernen. Becky is off today, but we got a lot going on on this Friday morning. Take a look though at shares of fintech company Block. They are soaring literally right now up about 20% here. This after the company said it would lay off roughly half of its workers. Block CFO saying if the company sees an opportunity to, in her words, move faster with smaller, highly talented teams using AI to automate more work. Block's headcount is in this case going to go from more than 10,000 people to just less than 6,000 people. And this may be one of those moments about AI and what it does to employment. In a letter to shareholders, CEO Jack Dorsey saying that AI tools have changed what it means to run a company. He said, quote, 'I don't think we're early to this realization. And I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion, make similar structural changes. I'd rather get there honestly and on our own terms than be forced into it reactively.' And if you think about this, if you could cut 50%, 40% of your workforce, which is what these folks are going to be doing literally overnight, what does that mean for the rest of us? I need a list of companies that are in a position like Block where they can do that. You must have some ideas.
Well, I would imagine first of all, you could look at a lot of the... By the way, the question is whether this is all white collar jobs that you could do this with, whether this is just, you know, in this case transactional companies. Could Stripe do this to itself for example? Stripe by the way may want to buy PayPal.
Okay. Could PayPal do this to itself? Give me individual names then give me total percent of the S&P 500 that could do something similar. 20%? 60%?
I wonder whether it's 50%.
That's a frightening... and that doesn't even include all the things that we've talked about with truck drivers and, you know, every... not just AI but, you know, look...
I think the truck driver... look at the future five years. Well, there's a lot of them though.
No, I know but I'm saying I actually think truck drivers are better off, are safer in this moment.
In this moment before you get to robotics.
Well that's what I mean. Well I mean just talking about five... I'm talking about the future and not just AI and the way AI will inform robotics too. So that's all part of it.
I saw it yesterday. I was like is Block in trouble? It's not necessarily it's in trouble.
It's... that's usually when you hear of a 40% work or whatever it is cut. That's usually what you're thinking of cost cutting or...
I'm often asked how can you get, you know, could we ever have another 1929...
Which ultimately turns into unemployment of 25% in 1932. I'm not even sure by the way I'd even say that the crash is related to that. But one... there's a couple ways to get there in 1932 of 25% unemployment. But oddly the success of AI could be one of them. Which is such a bonkers and backwards thing to think because here we have this great innovation, this great technology that's supposed to move us forward, which it may, but could take our jobs in the meantime. And I don't even know if there's a trans... what I can't figure out is people talk about a transitionary period, right? You know, for horse and buggies to this and that. The question is what is the transition in this case to?
I don't know whether it means like a 1929 type thing. Is it possible that it's so powerful and it increases productivity so much that we all only need to do three or four day work weeks and we all have all this leisure time that there is some kind of UBI that we all, you know, that it's actually a boon for... maybe someday we don't have to work when...
We can just... all we need to do is play golf. Elon Musk would say. But that only works if some people, and I'm pointing to you, but people that you like and associate with, decide that UBI and redistribution are the way to do it. Because otherwise all of the economics get concentrated in a very small number of hands and then I really don't know what happens.
Well, let's just hope the machines aren't deciding what to do with this.
Sure. But what I'm suggesting is you're not going to... this idea of this leisure society is a false choice if you believe that there's a group of people in America who don't believe in any form of redistribution. You can't. That's... then you're back to how many boats can you water ski behind? Elon Musk is never going to spend his trillion dollars. I mean...
Yes. But what I'm saying is for a very, very long time there's been, in particular on the right, a view of not to tax people, not to provide benefits to people and services to people.
That's not what it is at all. The right thinks that the private sector can generate more prosperity than the government, which helps the people that you're talking about. And in fact, the policies of the left nine out of 10 times end up hurting the people they're intended to help through redistribution. No one wants to be a leech of the state where all of a sudden...
But what I'm suggesting to you unfortunately is in the context of what you're saying, everybody may be a leech of the state. You may be a leech of the state.
I just think that is a really false premise that Republicans don't want to do any redistribution because they want to keep it for themselves because they're greedy bastards. I think they think that this is the best way to grow the pie for everyone.
But how would that work in this new world?
I don't know how it's going to work.
I'm saying that that approach may not work in this new world.
Let's talk Netflix. Netflix abandoning its pursuit of Warner Brothers Discovery's studio and streaming assets after Warner's board labeled a revised bid by Paramount Skydance and saw it as a superior offer. Shares of both Netflix and Paramount jumping this morning. And I'm not going to say that Netflix is up because it was... I mean there's arbitrage, there's all kinds of things, right, for why it's... maybe people were short Netflix. Netflix has got bigger problems than just trying to, you know, than what we talked about, whether there was a negative reaction to trying to buy Warner Brothers, which maybe it didn't even need. But in a statement, Netflix's co-CEO said at the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive. They went on to say this transaction was always a nice to have at the right price, not a must-have at any price. In his own statement, Warner Brothers Discovery CEO David Zaslav wished Netflix well. He said, 'Once Warner's board approves the Paramount merger, it will create, in his words, tremendous value for our shareholders.' The deal will still have to pass regulatory muster with the Department of Justice. California's attorney general also saying the state intends to carefully review the deal. Do you have any firm knowledge of what went on yesterday at the White House?
I do not. I've been trying to get some firm knowledge.
You've seen the reports from different places that Sarandos met with Pam Bondi and...
Did not meet with the president.
Did not meet with the president, but got the feeling that this is going to be tough. And so that's the big question to me was... and so I was surprised that they're walking away. I thought invariably for a buck a share, you know, can't be that much of a difference to it than just...
If they really wanted this asset, I always thought Paramount would raise, right?
Well, that's not what they're saying. I thought Netflix...
Saying it was nice at this price and it's not...
I know that's what they're saying and what I'm suggesting to you is...
Walking into yesterday my expectation was that they would try to match, they were fighting it out and then all of a sudden they stopped fighting it out. Now I don't know how much that was about yesterday's meeting at the White House.
I think there could have been some element to that. By the way, I think it could have even been some of the not noise, but indications and signals they got around the regulatory regime and what it would mean for them prior to ever showing up in the White House yesterday.
And around the world even. And it would create a pretty big streaming company. I don't know if it's too big. You know, the people that work in the business, I've said this all along, it was a terrible choice. According to them, like film Twitter type people, it's either...
It's either the end of Hollywood in theaters or it's the magnification of Hollywood.
And now that is the deal.
It's almost magnification of Hollywood.
Now they went from the frying pan into the fire, a lot of these people, and it set their hair on fire immediately about the Ellisons and Trump and what it means for Hollywood and Netflix. The more you heard about it, there are a lot of people...
Not on, you know, that I know of.
That think that Netflix is really selling a certain narrative in terms of the culture wars that they don't approve of.
Right. So, see, now we're getting somewhere. Now, we're getting to... No, we're getting to what I imagine has to underneath this been the problem for Ted Sarandos. You see it as a problem. I've always said I can't wait for Bari Weiss to be running CNN.
I didn't say it was a problem. I said that it was a... No, what I said the problem...
Neither one of us have any force in this.
I said the problem. No, the problem. No, I'm talking in the context of Ted Sarandos. I'm saying the problem that he was going to confront, trying to buy this asset, was going to be the steady drumbeat of Susan Rice, the type of films that you think that they are trying to push or the political message they're trying to push.
Cultural push. You can see it in everything.
I don't see it. I know you see...
Oh my god. You don't think you can see... How about even Disney has got the same...
But nonetheless I believe in a free market. So I think that everybody should be able to do whatever they want.
They certainly are able to at this point.
And well they're able to do only certain things. They're not allowed to buy other people because...
Now the new regime is going to be able to make whatever kind of movies it wants to make in the free market.
Well, the question in this case is how free is the market?
Well, how free was the market before when it was 99% slanted to the left?
I don't understand where you're even going with it. The free market is the free market if Netflix or Disney... and this is still the free market, right? Unless you think Trump's telling the Ellisons what to do.
No. Well, then why isn't it the free market? There's two elements to it. One is if you believe that Ted Sarandos couldn't acquire Warner Brothers because of its approach...
Then guess what? It isn't a free market. Let's start there. That's just plain as day.
That's a lot of assumptions that you're making that you and I don't know that you have no idea. I'm just... And then the flip side of that question is do you believe that the Ellisons were bending over backwards to do things to placate this administration in certain ways in which case around either coverage or this or that, in which case that wouldn't be the free market.
Well, I guess Sarandos didn't go to the White House yesterday to try to sell Melania the sequel. That probably... that might have... that was my idea.
New York Mayor Zohran Mamdani says he had what he called a productive meeting with President Trump and suggested that the two had found common ground on building more housing in New York City. Mamdani posted a photo on X from the Oval Office. President Trump held up a copy of the famous New York Daily News headline, 'Ford to City: Drop Dead,' as well as a mockup of a Daily News front page that said, 'Trump to City: Let's Build.' A small sub-headline says 'Trump delivers 12,000 plus homes.' Later on, Mamdani said he had spoken to President Trump on the phone and the president told him a Columbia University student detained by Immigration and Customs Enforcement would be released. Columbia's acting president said the student had been detained by agents who misrepresented themselves by saying they were looking for a missing child to get access to a residential building.
You know, the mayor, Andrew, I thought that picture... I thought it was a delicate dance for the mayor. And I thought the president's smile, he's beaming like he always does. I'm trying to read the mayor's expression.
Well, the mayor's usually beaming.
