Zahra Bahrololoumi, CEO of U.K. and Ireland at Salesforce, speaking during the company’s annual Dreamforce conference in San Francisco, California, on Sept. 17, 2024.
David Paul Morris | Bloomberg | Getty Images
LONDON — The UK chief executive of Salesforce wants the Labor government to regulate artificial intelligence — but says it’s important that policymakers don’t tar all technology companies developing AI systems with the same brush.
Speaking to CNBC in London, Zahra Bahrololoumi, CEO of UK and Ireland at Salesforce, said the American enterprise software giant takes all legislation “seriously.” However, she added that any British proposals aimed at regulating AI should be “proportional and tailored.”
Bahrololoumi noted that there’s a difference between companies developing consumer-facing AI tools — like OpenAI — and firms like Salesforce making enterprise AI systems. She said consumer-facing AI systems, such as ChatGPT , face fewer restrictions than enterprise-grade products, which have to meet higher privacy standards and comply with corporate guidelines.
“What we look for is targeted, proportional, and tailored legislation,” Bahrololoumi told CNBC on Wednesday.
“There’s definitely a difference between those organizations that are operating with consumer facing technology and consumer tech, and those that are enterprise tech. And we each have different roles in the ecosystem, [but] we’re a B2B organization,” she said.
A spokesperson for the UK’s Department of Science, Innovation and Technology (DSIT) said that planned AI rules would be “highly targeted to the handful of companies developing the most powerful AI models,” rather than applying “blanket rules on the use of AI. “
That indicates that the rules might not apply to companies like Salesforce, which don’t make their own foundational models like OpenAI.
“We recognize the power of AI to kickstart growth and improve productivity and are absolutely committed to supporting the development of our AI sector, particularly as we speed up the adoption of the technology across our economy,” the DSIT spokesperson added.
Data security
Salesforce has been heavily touting the ethics and safety considerations embedded in its Agentforce AI technology platform, which allows enterprise organizations to spin up their own AI “agents” — essentially, autonomous digital workers that carry out tasks for different functions, like sales, service or marketing.
For example, one feature called “zero retention” means no customer data can ever be stored outside of Salesforce. As a result, generative AI prompts and outputs aren’t stored in Salesforce’s large language models — the programs that form the bedrock of today’s genAI chatbots, like ChatGPT.
With consumer AI chatbots like ChatGPT, Anthropic’s Claude or Meta’s AI assistant, it’s unclear what data is being used to train them or where that data gets stored, according to Bahrololoumi.
“To train these models you need so much data,” she told CNBC. “And so, with something like ChatGPT and these consumer models, you don’t know what it’s using.”
Even Microsoft’s Copilot, which is marketed at enterprise customers, comes with heightened risks, Bahrololoumi said, citing a Gartner report calling out the tech giant’s AI personal assistant over the security risks it poses to organizations.
OpenAI and Microsoft were not immediately available for comment when contacted by CNBC.
AI concerns ‘apply at all levels’
Bola Rotibi, chief of enterprise research at analyst firm CCS Insight, told CNBC that, while enterprise-focused AI suppliers are “more cognizant of enterprise-level requirements” around security and data privacy, it would be wrong to assume regulations wouldn’t scrutinize both consumer and business-facing firms.
“All the concerns around things like consent, privacy, transparency, data sovereignty apply at all levels no matter if it is consumer or enterprise as such details are governed by regulations such as GDPR,” Rotibi told CNBC via email. GDPR, or the General Data Protection Regulation, became law in the UK in 2018.
However, Rotibi said that regulators may feel “more confident” in AI compliance measures adopted by enterprise application providers like Salesforce, “because they understand what it means to deliver enterprise-level solutions and management support.”
“A more nuanced review process is likely for the AI services from widely deployed enterprise solution providers like Salesforce,” she added.
Bahrololoumi spoke to CNBC at Salesforce’s Agentforce World Tour in London, an event designed to promote the use of the company’s new “agentic” AI technology by partners and customers.
Her remarks come after U.K. Prime Minister Keir Starmer’s Labour refrained from introducing an AI bill in the King’s Speech, which is written by the government to outline its priorities for the coming months. The government at the time said it plans to establish “appropriate legislation” for AI, without offering further details.
Apple CEO Tim Cook (C) joins customers during Apple’s iPhone 16 launch in New York on September 20, 2024.
Timothy A. Clary | Afp | Getty Images
Apple’s second-largest division after the iPhone has turned into a $100 billion a year business that Wall Street loves.
In Apple’s earnings report on Thursday, the company said it reached just under $25 billion in services revenue, an all-time high for the category, and 12% growth on an annual basis.
“It’s an important milestone,” Apple CFO Luca Maestri said on a call with analysts. “We’ve got to a run rate of $100 billion. You look back just a few years ago and the the growth has been phenomenal.”
Apple first broke out its services revenue in the December quarter of 2014. At the time, it was $4.8 billion.
Apple’s services unit has become a critical part of Apple’s appeal to investors over the past decade. Its gross margin was 74% in the September quarter compared to Apple’s overall margin of 46.2%.
Services contains a wide range of different offerings. According to the company’s SEC filings, it includes advertising, search licensing revenue from Google, warranties called AppleCare, cloud subscription services such as iCloud, content subscriptions such as the company’s Apple TV+ service, and payments from Apple Pay and AppleCare.
On a January 2016 earnings call, when the reporting segment was relatively new, Apple CEO Tim Cook told investors to pay attention.
“I do think that the assets that we have in this area are huge, and I do think that it’s probably something that the investment community would want to and should focus more on,” Cook said.
Over the years, Apple has compared its services business to the size of Fortune 500 companies, which are ranked by sales, to give a sense of its scale. After Thursday, Apple’s services business alone, based on its most recent run rate, would land around 40th on the Fortune 500, topping Morgan Stanley and Johnson & Johnson.
Services appeals to investors because many of the subscriptions contained in it are billed on a recurring basis. That can be more reliably modeled than hardware sales, which will increase or decrease based on a given iPhone model’s demand.
“Yes, the the recurring portion is growing faster than the transactional one,” Maestri said on Thursday.
Apple’s fourth-quarter results beat Wall Street expectations for revenue and earnings on Thursday, but net income slumped after a one-time charge as part of a tax decision in Europe. The stock fell as much as 2% in extended trading.
Apple boasts to investors that its sales from Services will grow alongside its installed base. After someone buys an iPhone, they’re likely to sign up for Apple’s subscriptions, use Safari to search Google, or buy an extended warranty.
Apple also cites a “subscription” figure that includes both its first-party services, such as Apple TV+ subscriptions, and users who sign up to be billed by an App Store app on a recurring basis.
The company said the installed base and subscriptions hit all-time-highs, but didn’t give updated figures. Apple said it had 2.2 billion active devices in February, and in August said it had topped 1 billion paid subscriptions.
Still, Apple faces questions about how long its services business can continue growing at such a rapid rate. Between 2016 and 2021, the unit sported significantly higher growth, reaching 27.3% at the end of that stretch.
In fiscal 2023, services growth dropped to 9.1% for the year, before recovering to about 13% the next year. Apple told investors that it expected services growth in the December quarter to be about what it was in fiscal 2024.
Cook was asked on Thursday what Apple could do to make some of its services and its Apple One subscription bundle grow faster.
“There’s lots of customers to try to convince to take advantage of it,” Cook said. “We’re going to continue investing in the services and adding new features. Whether it’s News+ or Music or Arcade, that’s what we’re going to do.”
Amazon CEO, Andy Jassy speaking with CNBC’s Jim Cramer on Mad Money in Seattle, WA. on Dec. 6th, 2023.
CNBC
Amazon CEO Andy Jassy is trying to reassure investors who may be worried about the future payoff of the company’s massive investments in generative artificial intelligence.
On a conference call with analysts following the company’s third-quarter earnings report on Thursday, Jassy pointed to the success of Amazon’s cloud computing business, Amazon Web Services, which has become a crucial profit engine despite the extreme costs associated with building data centers.
“I think we’ve proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business,” Jassy said. “We expect the same thing will happen here with generative AI.”
Amazon spent $22.6 billion on property and equipment during the quarter, up 81% from the year before. Jassy said Amazon plans to spend $75 billion on capex in 2024 and expects an even higher number in 2025.
The jump in spending is primarily being driven by generative AI investments, Jassy said. The company is rushing to invest in data centers, networking gear and hardware to meet vast demand for the technology, which has exploded in popularity since OpenAI released its ChatGPT assistant almost two years ago.
“It is a really unusually large, maybe once-in-a-lifetime type of opportunity,” Jassy said. “And I think our customers, the business and our shareholders will feel good about this long term that we’re aggressively pursuing it.”
AI spending was a big topic on tech earnings calls this week. Meta on Wednesday raised its capital expenditures guidance, and CEO Mark Zuckerberg said he was “quite happy” with the team’s execution. Meanwhile, Microsoft‘s investment in OpenAI weighed on its fiscal first-quarter earnings released on Wednesday, and the company said capital spending would continue to rise. A day earlier, Alphabet CFO Anat Ashkenazi warned the company expects capital spending to grow in 2025.
Amazon has said its cloud unit has picked up more business from companies that need infrastructure to deploy generative AI models. It’s also launched several AI products for enterprises, third-party sellers on its marketplace and advertisers in recent months. The company is expected to announce a souped-up version of its Alexa voice assistant that incorporates generative AI, something Jassy said will arrive “in the near future.”
Amazon hasn’t disclosed its revenue from generative AI, but Jassy said Thursday it’s become a “multi-billion-dollar revenue run rate” business within AWS that “continues to grow at a triple-digit year-over-year percentage.”
“It’s growing more than three times faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly,” he added.
Matt Garman, CEO of Amazon Web Services, speaks during The Wall Street Journal’s Tech Live conference in Laguna Beach, California, on Oct. 21, 2024.
Frederic J. Brown | AFP | Getty Images
Amazon said revenue in its cloud unit increased 19% in the third quarter, just missing analyst estimates.
Revenue at Amazon Web Services totaled $27.45 billion, according to a statement Thursday, while Wall Street was expecting $27.52 billion, based on StreetAccount estimates. Year-over-year growth has accelerated for five consecutive quarters.
The artificial intelligence portion of AWS is in the billions of dollars in annualized revenue, more than doubling year over year, Amazon CEO Andy Jassy, who previously led AWS, said on a call with analysts.
“I believe we have more demand than we could fulfill if we had even more capacity today,” Jassy said. “I think pretty much everyone today has less capacity than they have demand for, and it’s really primarily chips that are the area where companies could use more supply.”
AWS leads the cloud infrastructure market over Google and Microsoft and is an important source of profit for Amazon.
On Tuesday, Google parent Alphabet said revenue from Google Cloud, which includes cloud applications as well as infrastructure, totaled $11.35 billion, up 35%. Microsoft said Wednesday that revenue from Azure and other cloud services grew 33%.
AWS recorded $10.45 billion in operating income, representing 60% of its parent’s profit. Analysts expected $9.15 billion.
The unit’s operating margin came in at 38%, the widest for AWS since at least 2014. Google Cloud reported an operating margin of 17%.
“We’re being very measured in our hiring,” Brian Olsavsky, Amazon’s finance chief, said on the call.
“If this is successful, we would love to find more pieces of their application stack that could run well in AWS and help customers do that,” AWS CEO Matt Garman told CNBC in a September interview.
Also in the quarter, AWS announced plans to discontinue some services, including code-repository tool CodeCommit. Garman told TechCrunch that AWS “can’t invest in everything.”