Shocking. 10 years ago i predicted this would never happen but i think it shows you how right i am. Look at the technology in the games of or commission and alexa which is now common. You see. Im not take interest in the Voice Recognition part im very interested in a Voice Recognition with knowledge understanding. And the data that google already has. Or the underlying algorithms. You can use of google, with or pocket that you can get on your phone, speaking your language from it comes out on another foot in another language. Oh, my god, right . Does this really work . District is as good as a human translator . Not yet. Is a good enough to have a casual conversation . Yes how does it work . It takes your voice, digitize it and puts it into text. Thats done using a network. It then uses a different Translation Network which is learned how to translate. It translates it and it translates it back into voice. So you three different translations. Is there a name to the age we were looking at now, the transformative age of all of the technologies and what its doing forced . There is not a consensus name but i can define it better. Another example, theres again called ago which americans typically dont know anything about. Its infinitely harder than chess. A group, a subsidiary google, have been with for long time to try develop the concept of intuition. They develop an ability to take a game in the form of its, they can watch the bits on the screen and with enough work and playing enough games they can figure out what the objects that they cant or, how to win it and, indeed, all the humans. Thats pretty interesting. Whats interesting technologically is that you have to tell it what the game is. So how does it do this . It sort of watches for a while, seas, patterns and it begins to develop a base of knowledge. Then it learns against a database of knowledge. This is not a human intelligence yet, so we are not making that argument. You said yet. We dont know how hard it will get there but what we do know is it something which is never been done before. We apply this to the game of go which is thought to be uncomputable. What it did is it learned how to be the only at certain positions by the same route training method. We decided to have a game against the best player in the world in korea, a nice human being, and we beat him, 41, which was historic. It was historic and huge. Help us understand, we are not talk about Artificial Intelligence. Diversity me recently, eric is thinking a lot about Artificial Intelligence. On the one hand, you have deep mine which is able to beat ago. On the other hand, you have lots and which began with ches chestd then one jeopardy and theyre working on pashtun explain Artificial Intelligence to the folks because in this audience and those were everybody hears about it, some people make deep investment in it warren of what i said about the by theres a confluence of a platform, a set of ideas and a large amount of money and a lot of investing, a lot of people coming out of school board to audit and the since it is just one of you everyone. The same, the two are symmetric. With ai, the current ai complicated a couple that are simple. If youre familiar with the disease called diabetic retinopathy, diabetes revolution is tragedy if you will, taking over the world, causes the eyes to go bad. You become blind. It can be detected by an automotive but we did a test where we take pictures then your retina and we can do better than your ophthalmologist. It turns out we see more eyes. We saw a million eyes. Very hard for the ophthalmologist as hard as they work to see a million eyes. Theres a large number of cases where if you just let the computers do technology see more examples, they can come up with better systems. We believe you can apply this to all and gas dissipation networks. Theres a great deal of leakage and sort of decisions are made about flow and storage and so on and so on. By using the data we think we can reduce the emissions from that. So the real question is how far does this go . We think we can develop enough intuition, use that term carefully, that a physicist or a chemist could say, you not to work. They wake up in the morning and they said i want to combine this chemical with this addon will have the following grades reaction. Its not going to blow up. It will give me a promotion at work. They do that. Thats at 9 a. M. At 1150 we can. At three in the afternoon it fails so they go home and have dinner. The next morning they come up with another one. Thats how it really works. These are incredibly intelligent people of that process can be automated. We can ask the computer to go through and do the probability. Does that matter . These are trillion Dollar Industries around the world run chemicals, synthetic, drugs. With respect to Artificial Intelligence, deep mine has a different operating idea than what ibms watson. Explained how they are different and what theyre trying to accomplish each on their own. Each watson and facebook and defined are doing completely different problems that indicates the watson, they use a particular kind of inference model, technical term, which worked particularly well for jeopardy and for competition problemsolving. And having a lot of success applying this to complex systems and explaining them. Think of it as this account could system, they can read it literally and tell you whats in it. So this is sort of the lawyers added complexity can you take it away or whatever model you have. You can take all the contracts can read all of them and give an edge. Thats a powerful result the facebook announced this week that they have a breakthrough in language understanding around communications, sort of what to do. They have said they have made significant progress in detecting hate speech. Thats good a good thing. In our case we took the position we wanted to build an underlying platform that allows you to do all of this stuff. Its a multidimensional matrix and underlying system i described essentially multidimensional matrix algorithms. Weve given this framework to all of our competitors. Its so strategic for us to build the community with all the players. We literally took this amazing intellectual property and have given it away. Some will say to you that deep mind, they are trying to understand how humans think and build from there. The idea people and watson people will say it dismantle smishing. That deep mind people are different because the founders came out of neuroscience. They imagined that you would build Computer Systems that use the same way we do learning. Out of you, i will do a good job of this because im not a neuroscientist but think about it when you came into this room. How much cognitive time did you spend figuring out that the floor was where your feet wet, the lights were up there, the table was bare, and he had a knife and fork and defense and roughly eight people and everyone is dressed properly . Zero time. You had already learned about. You had come to that, if you will. Theres evidence the way our brains work, if we study the scene and then we subset it to things that are really important. The things that are really important we then put into the brain. This is called reinforcement learning in the vernacular. We believe we for one is going to be a core part of this next set of ai offering. In terms of economics in the global economy. Take these five companies, apple, amazon, google, facebook, microsoft. Is there a race to do any one thing . Are they all in the same business . We know apple has made a fortune on its smartphone. Google has made a fortune on search. Microsoft made a fortune on software. Amazon made a fortune on a range of things. But in these companies are the in pursuit of a holy grail . The Tech Companies as a group are highly competitive, seeking new, want to say it right. Think of each of these as a Platform Company driven by innovation that solves the problem that is global. In some cases a problem you didnt know you had. So if you go back, microsoft being the eldest of them, solve the problem of workstation platforms. We all know the history. Amazon started off as essential to a virtual bookstore. I didnt realize i were a bookstore bigger than a current bookstore. Its a useful. Each of these has had the. Apples transformation is legendary with steve resuscitation of the company. Wednesday took over the second time he clearly wanted to do phones. And led the category. Each of these Companies Come we never in our industry, and i would argue the first four without mark soft microsoft, weve never had that Many Companies fighting so brutally against each other and get also collaborating. In our industry we always had ibm and microsoft and a few others. Where is the collaboration . You are also suing each other. [laughter] theres lots of collaboration. A typical example is our apps run on apple and microsoft. Last year they announced a partnership with microsoft. The traditional model, we would not put anything on the platform. It turns out that apple is a customer. It argues we are also a customer of apple for things. On and on and on. In fact, i do it argues with each other but we benefit, we as an industry have benefited from open markets globalization, the since the technology is transformative and the kind of speech should we insist on open sources in terms of the future, in terms of all that is being discovered, or overlook at a world in which each organization is going to be jealously guarding not only what it knows in learning but also trying to hide a way to protect itself from losing its most talented human beings . I think the competitive structure, the architecture you described, four to five companies, will continue for a while until another one joins us and one one we dont know now . Of course. I can tell you the current next one is uber, which has done remarkably well in disclosure, google is a large investor in uber. So is saudi arabians sovereign wealth fund. I didnt do that deal. Uber has done incredibly well. I wish i invented uber. What a great idea. At the same time travis and his partner were standing it was actually invented in paris at the base of the eiffel tower according to travis. At exact time he was there inventing in uber i was giving a speech Amazing Companies founded based on smartphones, gps and google maps. But i didnt figure out what the app was. The next uber, the one that is a new one, the one well be talking about in five or 10 years will be built on a Machine Intelligence platform of the kind i have defined, very fast networks. It will use a smartphone, android and iphone most likely, it will use very rapid iteration. I dont know what the app is. I dont know what problem is to be solved. Which raises in terms of Artificial Intelligence and how smart machines are coming, people like elon musk, larry, in some cases but not as strong, bill gates, the idea is there some danger from machines becoming so smart, so human, but uncontrollable that they provide a threat to the planet . These people have been watching a lot of movies. [laughter]. Your colleagues are smart people and my colleagues and competitors perhaps. Elon banged up the concern. And Stephen Hawking too. Elon, backed up his concern over this very important issue by investing a billion dollars in a competitor to [inaudible]. Well see how that plays out. It is, you never say never. Right. But lets go through what is needed to make that scenario happen. So the first thing is, were still learning how to do basic intuition and those kinds of things. It is there will be breakthroughs, and well get excited about it and begin to answer questions and answer email make suggestions what Movie Theater you should go to night. That is not intelligence. We may be able and hope to assist humans in their daily jobs. Who doesnt want help, right . Think of all the professionals and so on. We think we can do that. It is real speculation to get to the kind of human level intelligence that everyone here has in the room let alone going past. My own intuition, which is just a guess, is there is another discovery needed. Right. The human level infew wages, human intelligence is very hard problem, hard to define what it actually is. But my own intuition there is another discovery to which might occur. Then the concerns, over, oh, my god, robot is let loose in the lab and basically decided to kill its owners, well i saw that movie and it was really good. There are also questions of disruptive technologies. Does google fear there is disruption so that Search Engines will be obsolete . The. In my industry you always worry about the next idea. Inevitably there is new team, in a garage, young professor and two graduate students. By the way that is how we started. You always worry about that. There are many, many ways what we currently do could be disrupted over time. This is why which invest so much. Were focused on the assistive model. We have significant advantages in terms of engineers in fact that is what technology has done. Uber is a disruptive technology. Amazon was a disruptive technology. Sure. That really, then the power of technology to disrupt the way things have been. But if you look at uber, uber is both disruptive Business Model and technology. It is a two sided market. A number of things written over two sides of a market. Tough have a pricing model they dont set for the drivers and pricing model to get enough customers. This is how it works. Okay, big picture, some people worry that there may be somehow a, go back to the 2000, 2001, you lived there you that, some kind of a collapse of technology companies, a bubble bursting. We lived through the bubble. The bubble, we were so much more handsome and beautiful during the bubble i must say. Bubbles make you feel like youre god, right . I remember being at this dinner in davos where you were and i looked around, i said these are the leaders of the free world . There was some we sort of got ahead of ourselves and thank goodness, that it crashed and we rebuilt it properly. The markets and investors are much savvier now. So for the companies that dont have strong profits, they have a strong potential revenue scale solution. There is this fact too. That is how i did a conversation the other night where john malone was being honored, very successful entrepreneur, and you know, he just bought time warner through one of his companies and he obviously is intent in terms of his vision, his access to the internet. That is what broadband and access to the internet is what these companies will do for him but you raise the question with me, people like google, and apple have so much money, that he worries about the possibilities that they have. In addition, they have so much money, can they scoop up all of the best talent of the five companies were talking about. Were trying to hire the best people, each of us globally because we understand the economic return of these people but this is a narrative not just unique to the five companies. For each of the Companies Represented here in the room, if you had five or 10 of the kind of engineers im talking about we could materially improve the effectiveness of your building or business. This is software, big data stuff and, there is a great many, many examples now where you take what your business is like, put it in a big data thing, analyze it for a while, you come up with Customer Insights that drive your bottom line. That is where the race is. And the value, the economic value of these people in the labor market is very, very high. They very high little paid. They know technology will bring productivity. Will it also create problems in terms of people being displaced from the job market . Weve had this for a long time. If you go back to the 1980s automation concerns and 1990s, there was a great deal of concern there would be a loss of jobs but in fact the American Economy has generated throughout the all the travails and ups and downs a large number of jobs during the time the jobs were supposed to go away. There is evidence that the american model does create jobs and the jobs are different. Everyone has a right to fear for their own future and fear that their jobs will be disrupted but fact of the matter is but the u. S. Is running near what economists call full employment. That is a testament to the recovery since 2008 and 2009. Everybody here was in new york, i assume, 2008, 2009. Try to remember how you felt, right . That was only seven years ago. Think about how strong this city what you all have done this. That is the testament. Im not as worried about this i want to be clear i think there is a problem with the loss of highpaying middle class manufacturing jobs with new data. This is hollowing out of the middle and we need to find ways to address the job dislowlation that with Service Workers and so forth. There are many Economic Solutions for that but the ultimate answer to this stuff is more education, more education, more education, more competitiveness and more entrepreneurs. It was interesting because you named the five companies. Everyone of them was started by incredibly brilliant entrepreneurs, right . Maybe we should thank them occasionally. Think about the number of jobs these people im not founder. Think of all the jobs and taxes they pay to the state in our case in california to bail a state out . You get the idea. Speaking of taxes, should there be a change in tax structure to bring all the money overseas home . We have argued for two decades the offshore cash should be brought into america. To create jobs at home . Of course. In googles case we generate a lot of cash from our own operation, thank goodness, but seems crazy to not let the cash come into the country to be used for capital. Here is another sore point. Were underinvesting in our infrastructure. The countrys population is growing, and interconnectivity is increasing. You have greater demand on fixed services, right . We need to spend the money on roads, bridges, airports, you name it, right . Were not doing it and Interest Rates are low. Therefore investment in infrastructure will create demand . Right. There is a set of things that businesses cant do and one of them in most cases theyre not allowed to build roads and bridges across a local river. There is