Defense Tech in Focus As Iran Conflict Widens

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With Caroline Hyde in New York and Ed Lovell in San Francisco.

This is Bloomberg Tech.

I'm Caroline Hyde in New York.

And let's go straight to our top story today.

The war with Iran.

The conflict continues to reverberate across the Middle East today.

This is President Trump says the bombing campaign against Iran could last for weeks.

We are awaiting more updates from the President this hour,

but we want to bring you the latest of Bloomberg's Daniel Williams, who is in Jerusalem.

On the ground there, in Israel down, what is it like?

As you can see, the sun is set on what has been the third day of this extraordinary war,

a war that appears to be widening and gulfing not just the Middle East now,

but even lapping up against southern Europe with Cyprus saying that a British air base on its

soil was apparently targeted by a Hezbollah drone, Hezbollah being the Lebanese militia ally of Iran.

In fact, an ally of Iran in Lebanon, which opened a front from Lebanon with Israel, reopen that

front overnight. And now these really just saying their bombing targets in Lebanon,

pace as they continue their bombing of Iran alongside US forces. So we have several fronts

opening up, a number of Gulf Arab countries that also found themselves in the firing line being

struck by Iranian missiles and drones and not just US bases on that earth, but also hotels

and the like. This is imposing a good deal of economic pain on the region and it would appear

that what the Iranian regime is trying to do even though it's massively outgunned by its enemies

is to wait out this campaign in the hope that the pain and indeed the patience of the American

public that apparently disapproves of this by quite a margin already will wear thin and some members

of the Iranian regime might be able to survive. Talk to us about what remains of the Iranian regime

down. It's very hard to know. The Supreme Leader was killed over the weekend in one of those

opening salvos and almost by the minute we've received updates about other members who have

been killed sometimes as successors of those who were recently killed. However, to judge by the

cycle of fire being maintained by Iran, certainly in Israel, what we've been experiencing

every half hour or about a couple hours sirens and calls to take shelter in the face of missiles

or drones coming in, it would appear that there is still a vestigial cell state functioning,

managing to keep up the fight and presumably domestically managing to deter members of the opposition

from trying to take control of the country. That is of course the vision

are enunciated both by Israel and the United States at the outset. A situation whereby the Iranian

regime is sufficiently degraded, it's initially destroyed to enable the Iranian opposition,

which many in the west would see as the bulk of the Iranian population, certainly the young

population, to take to the streets again as it did only a few weeks ago, but this time not facing

the guns of the state and being able to assume control. We extraordinary day in Jerusalem as you say

a third day Dan Williams, we so appreciate you being with us of Bloomberg. Now let's check out

what is a human story that is affecting markets right now, and that's at 100 off by four tenths

of a percent. Big tech is seeing some significant moves on individual names, of course money moving

into the likes of NVIDIA Palantir, as you're seeing up 6% as a defense-related name in the tech

perspective pushes high. These are your big points contributors on the day, and in video in fact

making a deal, putting money into optical companies, we'll dig into that a little bit later, but

really we're also seeing significant moves in other parts of the market, different industry groups,

different asset classes, Brent Crude, unsurprisingly, up more than 7%, extraordinary moves as we

consider the straightforward moves, an issue about supply chains writ large for the globe to try and

digest. Bitcoin is up by more than 5%, recovering some of its losses as it was one of the main

tradable assets over the course of the weekend, and strategy of microstrategy is currently up 6.8%

on the back of that Bitcoin buying. Let's talk about the market impact wall with IPEC Oscar Desker,

Swiss quote, senior market analyst, and this is a moment of knee-jerk reaction of risk of sentiment,

but interestingly we are still seeing big tech managing to see some flows into it.

Exactly. What we see right now is that as the or the spike in oil prices is being

retraced, technology companies are also finding some breathing room right now, and we also do see

some individual divergences in the technologies phase. The companies that do have exposure,

greater exposures to energy costs like the ones that run data centers or being head more heavily,

then the others that are more or less capital intensive like Nvidia, for example,

the defense related names are also gaining in on the back of the Middle East conflict news.

Is that an automatic buying that you think will see the likes of Palantir hold on to gains,

going forward, is there something that is sticky about this demand for such defense tech?

Yes, we believe that globally the defense stocks have been in demand due to the rapid shift and

the significant shift in global geopolitics, and we have seen a couple of times since last year

that the geopolitical tensions are not ready to ease from the actual level, so the risk

are being quite high and technology companies are technology and defense companies are benefiting

granted from it. It's not only in the US, but we also think that the defense stocks in Europe will

also continue to benefit from deriving geopolitical tensions and risk across the globe.

I mean, what's notable is benchmarks are actually trying to turn around. I'm looking at the

NASDAQ more broadly, only off by about a tenth of a percent now. The S&P in the US currently

off by three tenths percent, even though we still market falls over in Asia and European trading

epoch. Just the macro picture for someone who is in the audience right now trying to understand where

to be navigating if they're exposed to technology names. Well, exactly. I mean, the big picture

of today was the rapid rise that we saw in energy prices at the beginning of today's session,

so the Asian and European stocks were heavily hit, but as we move on towards the US session,

we see that these gains have been raised. So some of the hawkish expectations regarding

the major central banks that would be lifted, that that would be that that was coming actually

from the fact that the energy prices would lift inflation expectations are also being

trimmed right now as oil prices are coming back down. And I think that that is the global macro

economic picture that investors should understand. It is really today about the energy prices,

the inflation expectations and the impact on central bank decisions. As energy prices move

lower, we are getting back to the levels of risk that we saw in the beginning of the session.

Now we are still higher in terms of energy prices and the risk of another upside potential move

and sustain again in energy prices due process, but at the moment it's quite interesting to see how

fast the early gains are being retraced and the global markets are immediately re-adjusting

that retracement. What is Bitcoin acting as in this moment?

Well it's interesting because Bitcoin has not necessarily been a risk haven or a safe haven

asset over the past few weeks. It was very much in line with technology companies and was

hit along with detectors to sell off that we saw across the technologist space. So what we see

today is that the Bitcoin is actually acting as a safe haven asset and we suspect that the regional

conflict could eventually bring some capital into Bitcoin regarding maybe the detentious or

or the fact that the gold has been overly valued and investors may be looking for other safe

haven. But to be perfectly honest with you, the mood that we see in Bitcoin and the coupling of

the correlation with the technologist is quite interesting right now even more so as the higher

energy prices should normally also have a negative impact on Bitcoin.

Impact is great to catch up with you. Thank you very much indeed.

Thank you.

Impact, Oscar Deschkeis, with us from Swiss Quote. We appreciate it meanwhile coming up.

We'll speak with representative Sam Lakado, a congressman from Silicon Valley about the conflict

in the Middle East and AI policy. Meanwhile, check out shares of Apple. There is other news happening

of course, the concerns in the Middle East were almost two tenths of percent. As Apple is

unveiling the iPhone 17 E. It's the latest version of its lower end smartphone, faster version of

an iPad Air also coming out with the iPhone 17 E including a faster processor new in-house wireless

chips. This is Bloomberg Tech.

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We are awaiting remarks from President Trump in Washington who is about to participate in a public

event and we anticipate there might be some commentary regarding the war with Iran.

We will bring you up to the moment breaking news on that subject, but within the context of

Middle East anthropic, it's been saying that there's been an outage that impacted thousands

of Claude users, but it's now been resolved. Reports of the issues with the chatbot came,

as the AI provider experiences a surge in demand driven by the company's feud with the Pentagon,

over the potential use of its technology for mass surveillance in the development of autonomous

weaponry. Now, Seth Vigvin, a Bloomberg News employee,

says joins us to set the context first, because while a feud is erupted between anthropic,

we've actually seen open AI complete a contract with the Pentagon in the use of its own AI

technology. Just take us through the weekend, Seth.

Yeah, I think this has to be the most dramatic weekend we've seen in AI lands since the

ouster of Sam Altman a couple of years ago, but to your point, Carolyn, yes, OpenAI swooped in

hours after anthropic was effectively blacklisted by the defense department, and so I think

to deal with the defense department for classified AI work. Now, OpenAI is not saying of this

replaces anthropics work, but they are signaling that they are comfortable with the contractual

safeguards to make sure that their technology is not used for domestic surveillance or for

autonomous weaponry, which were the two red lines that anthropic really centered on, and which led

to this fierce standoff with the Pentagon. It's been a standoff that has erupted online with many

people calling to stop using chat GPT to instead shift one's attention to anthropics consumer apps.

Now, it might be said that Claude for Enterprise hasn't been affected by the outages today.

It's interesting that Treasury Secretary Scott Besson has been saying that he's following President

Trump's direction on anthropic and in the Treasury Department is terminating all use of anthropic

products, but there's reporting to show that it's of course still being used at the moment and

was over the course of the weekend with Iran. Yeah, I think to step back, let's just say that what

seems clear is that the federal government is moving forward with rethinking its use of Claude.

What's less clear is what the broader impact than blast radius will be on anthropic from the many

other businesses and companies that work with the government to take pick the headsets tweet

literally, he's implying that any business that does commercial business with anthropic must stop

that if they also work with the military, but Dario Mede at the CEO of Anthropics over the weekend,

he thinks it's much more limited in scope. It will just be if they do military work with anthropic,

so that remains to be seen how it's interpreted. Still a lot of work to be done by the likes of

Palantir, for example, Bluemeg Seffigman across the story. Thank you very much indeed. Now look,

U.S. lawmakers, they're gearing up for a vote on a war power's resolution following the strikes in

Iran. This is unfolding as the debate over AI use by the military continues. We're pleased to say

we're joined by representative Sam Nacardo. His district includes parts of Silicon Valley.

There is drama in Washington where you've just got the train to us from. There is drama in where

you represent as well. Can I just ask you first and foremost, what do you think the relationship

or some of the companies that within your district is like evolving with the Pentagon? How do you

observe what occurred over the last few days? I think Silicon Valley, there's a strong libertarian

district. And so there are many who are cheering to see Anthropic step up as it had. And look,

there's a free market here and the Defense Department has many competitors to choose from,

and it has a right to choose whoever it wants. But it seems to me that at the end of the day,

when we're talking about AI safeguards, these ought to be decisions that are not confined

to back room negotiations between lawyers at the Pentagon and individual companies. These ought

to be very public discussions. The administration should be setting rules. Congress should be setting

rules. And the way this all went down now with retribution against Anthropic and the way that

Secretary Hegseth and others have articulated, I think, is very damaging to Silicon Valley and

frankly to the country. In many ways, Anthropic and Daria Amadeh have tried to make it a public

discussion, brought it into the light. What's interesting is Daria has also said that the law has

not yet caught up with AI's ability. Therein lies your role in Congress. How can Congress keep

up at this moment to ensure that there aren't these blurred red lines that everyone's trying to

digest from OpenAI's contract and from Anthropics? This isn't the first time someone has said Congress

is not moving at the pace of technology. We've been waiting 30 years for a day to privacy bill

for protections against, for protections for children online, etc. But the reality is this is an

area where both Congress needs to act and the administration needs to act. There should be

clear lines. I don't think a lot of folks argue with the lines that Anthropic articulated. In fact,

OpenAI seemed to have embraced them, so why not, rather than punching the company, hold these

up as examples. This is an opportunity where the industry can inform the government and we

ought to be taking those cues. You say OpenAI has embraced the red lines that Anthropic put forth.

There's reporting to suggest that there's cynicism around that. Yes, well, that is to be

determined. I guess I'm simply relying on what I'm hearing publicly, now obviously I understand

why there might be cynicism. Look, the bottom line is this shouldn't be enforced by one

particular CEO at one company. There's a reason why there ought to be a public discussion because

this is going to impact all of us and certainly when we talk about issues like public surveillance.

I mean, realistically, are you able to have the time, the insight, the focus at the moment when

we've got an erupting war with Iran and indeed, well, government shut down. How effective can

you be at this moment, Congress? Well, I'm not going to speak for Congress because, frankly, as you

know, if you ever made a bet on Congress not getting anything done, you win 99 times out of 100.

Diction's markets are for that. Well, yeah, they're doing pretty well. But I will say this week,

I'll be introducing a provision in what's called the Defense Productions Act, really to prevent

any federal agency from retaliating against companies like Anthropic when they propose reasonable

limits on the deployment of their technology. Technology is obviously a wonderful thing.

We know it has enormous risks. We ought to take the cues from industry when industry tells us

these risks are too great. Let's draw lines. What do you think will be the support of that bill

across both aisles? We'll be discussing it this week in the House Financial Services Committee

where we're having a markup. I'm still having those conversations with my colleagues.

Okay, so maybe we can find some support that it shouldn't be down. There shouldn't be retribution.

There shouldn't be sort of unprecedented moves where you deem a company, a homegrown domestic

champion, as a supply risk in some way. But when you think more broadly about AI regulation

in the hands of Congress, or in the hands of the executive right now, are you comfortable with

the amount of executive orders that have been deemed around AI, the way in which the administration

has had to take maybe the steps necessary if the Congress void is still there?

Well, I know this president is not unique in using executive orders where Congress is failing to act.

The way in which these executive orders have been deployed are deeply problematic. And certainly,

we've seen, in many cases, quite unconstitutional, Congress needs a step up. And that requires the

majority party to do its job. That is to defend the progress under Article 1 of the Constitution

where Congress has authority. And we've seen a host of areas from tariffs, certainly to AI,

where Congress has simply not been stepping up and allowing this president to take too much

of the turf. There's a reason why we want Congress to be deciding this. These are issues that

have massive impacts in many communities that are diverse communities that are simply not benefiting

from AI as much as my community, so okay, Valley might be. That's why you need to have a national

conversation. You were having a national conversation before the conversation became much more

more in the Middle East and more with Iran. You were talking about how we shouldn't see Congress

just slam the brakes on AI innovation. But equally, they shouldn't accelerate. There should be a way

of grabbing the steering wheel as the way you wrote it and op ed. Can we get some sort of bipartisan

approach to grabbing a steering wheel? And when you say so many states are affected in different ways

by AI? I'd like to think we can. Look, there's a lot of fears right now around AI, around

lots of jobs, around impacts on utility bills. There are opportunities for us to move together.

For example, we know these hyperscalers need speed. Let's give them federal permits and enable them

to accelerate if they're keeping rate pairs whole and protecting them from these utility

at the risk of higher prices on their utility bills and investing in batteries and the kinds of

technology we know that will be sustainable rather than simply pulling more natural gas and

coal in. For example, on jobs, there are things that we can do that are bipartisan that can

incentivize companies to invest in community colleges and local state universities to upskill and

reskill. These are not necessarily partisan notions. This is a time for us to be thinking more

creatively across the aisle on these kinds of solutions. We don't have the kind of administration

now in office that is particularly bipartisan and so it's really going to have to come from

ground up. You mentioned social media and I think in many ways people have felt that there's

been a void of law-making around social media because there is so much nuance to much of this.

Is there sometimes too much nuance when it comes to the likes of impact by the Pentagon's

decisions on mass surveillance, on issues of autonomous weaponry that really laws can't be made

that can keep up with? It's fair to say this is incredibly complex and you can't simply declare

amateur hour and start to announce, eat, et cetera, going to apply broadly across multiple

industries where the impact may be very different. What I have been proposing and we'll be coming

out of legislation soon is how, for example, on AI, we can essentially enable industry experts,

academic experts to be able to establish what those best practices are in an industry, allow

industry to reach those best practices rather than having some kind of monolithic edict come from

Congress or the administration. Government is not going to get it right. We have to acknowledge

that. This is moving too fast. We need to rely on the best thinking in the industry to establish

what the best practices are and then mandate that if folks can reach those, they can have the

benefits, for example, of preemption. If they don't, then they're subjected to the edicts of 50

different states. We appreciate you stopping by. It's great to be with you. I'm Lucy,

here in New York, representative Sam Nakado, who represents the heart of Silicon Valley and much

more in California. Now coming up, Bitcoin, it shakes off investor caution as Middle East

tensions, they rattle global markets. We'll bring you more market impact next. This is Bremberg Tech.

So there's a lot of noise about AI, but times too tight for more promises. So let's talk about

results. At IBM, we work with our employees to integrate technology right into the systems they

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Bitcoin staging a comeback,

nearing $70,000 levels after the US and Israeli attacks on Iran shook investor confidence over

the weekend. Here with the latest is Bloomberg Cross asset reporter Isabel Lee.

They shake people with thinking of a world of war that is not something to take lightly,

but we think about the assets impacted. How is Bitcoin managed to rally through this?

Definitely behaving like a risk asset. I feel like, I mean, when you see a big pullback

like that, it's eventually going to bounce back. It's now higher by around 6% after dropping

as much as 63%, 63,000 over the weekend. Other less liquid smaller coins are also

in degree in higher by 6%, like Ether. The thing I love about cryptocurrency is it trades 24,

seven and you really can see and use it as a risk sentiment when markets are closed.

And now that we see US darks open, you see worries about an inflation resurgence.

For instance, bonds are slumping, traders are trimming their fed rate cuts.

Haven assets are surging, dollar, gold, oil. Of course, an interesting higher oil

prices will actually weigh on crypto prices because crypto prices are behaving like

tech stocks and risk assets. And of course, those are sensitive to fed rate moves.

So everything is just interconnected and I find that very interesting in a top of all of this.

It's a busy week for US eco data. We have non-farm payrolls. We also have unemployment rate.

And now for now, we have more questions than answers. We have President Trump saying that

the attacks could last a few weeks. So I think investors are just really preparing themselves

for the Taylorist events and preparing for a worse case outcomes. But at least for now,

Bitcoin is nearing 70,000. You keep us prepared as well. We appreciate it.

On all things of the market's reaction to a story that continues because coming up,

we will be joined by American Enterprise Institute senior fellow Corey Shockey.

On all things, defense tech, geopolitics, so much more. This is Bloomberg Tech.

Welcome back to Bloomberg Tech. We take a look at these markets, markets that are currently

reacting to the news over the course of the weekend, war in the Middle East, war with Iran.

We're currently down on the Nasdaq 100 by some 5.5%. Coming back into lows, having tried to

bounce into the green on the border indices, Nvidia is actually up more than 2%.

Because deals are still getting done from an MNA perspective or from an investment perspective.

This is, as we see in video, making $4 billion investment in data center optics companies

that's coherent and momentum. Their stocks surge. Palantir defense tech. There is buying of this

name for obvious reasons on the day. We're up almost 6%. But crowd strike is also interesting. Look,

our great colleagues at Bloomberg Intelligence, like Manning Singh, putting out really great notes

talking about how Palantir, of course, is going to see buying amid geopolitical tensions.

We'll also see tailwinds for security spending with the larger companies such as CrowdStrike,

Palo Alto, likely to see some focus amid concerns about cyber attacks. We'll get into that in

a little bit. But let's head back now to DC, where it's notable that the Pentagon is shifting

AI providers after reaching a deal with OpenAI to deploy its models within the department's

classified network. Remember senior tech editor, Mike Shepherd joins us on what is an extraordinary

story that intertwines with a geopolitical story? How significant is this move that Sam

Altman goes where Daria Amade won't? Well, it's not just significant that it happened. It's also

carried that it happened so quickly after the Pentagon decided that it would walk away

from its relationship with Anthropic, which had been in place for roughly a year. And Anthropic

had really worked itself into the classified space that is crucial for the Pentagon. Being able

to deploy artificial intelligence in some fashion during critical operations, including combat.

And Anthropics products have been used by Palantir as part of this so-called Maven system that

colloquially might be thought of as Windows for War, where battlefield commanders can have access

to information and have it interpreted and processed and analyzed and assessed in a much faster

fashion and presented to them. Now, what this means is that within six months, the Pentagon must

transition to a new provider, an OpenAI and Archrival to Anthropic is stepping in. And what they are

saying also is that they are willing to take the terms that Anthropic thought were unacceptable.

Terms that OpenAI says still respects its own guidelines when it comes to two key areas,

and that is mass surveillance of Americans and also deployment of fully autonomous weapons.

OpenAI says that the contract and the relationship with the Pentagon are strong enough that those two

requirements by the firm are respected. Anthropic from its standpoint did not see the same in

the contract language. And it'll be interesting to see how this unfolds, Carol, because the U.S.

government is declared Anthropica supply chain risk and also ordered it off U.S. government

agency networks elsewhere. And Treasury Secretary Scott Besant talking this morning saying that

the Treasury Department is terminating all use of Anthropic products. He's following President

Trump's direction on Anthropic, but of course this is as the consumer moves in a different direction

Mike. We've actually seen Anthropic in many ways knocked off line for consumers because so many

people were demanding the product and downloading it. And maybe as some sort of pushback to OpenAI

there's calls to cancel GPT on the internet. Well that's right, Carol. We are seeing some of

this popular sentiment swell in Anthropic's favor. Certainly online there is a lot of applause

in favor of Dario Amade and what has seen as a principled stance by many against the Pentagon,

against the administration that look if you thought that you couldn't do business with Anthropic,

why not just cancel the contract declaring them a supply chain risk was seen by many as going

step too far and being vindictive. It's also important to remember that Claude's products are

gaining popularity because many see them as quite good. And we have talked on this in this space

about how much Claude is threatening to disrupt other industries such as law, such as financial

services, wealth management, you name it. And the tools that Claude offers really have some

benefits and that is yet another reason in addition to perhaps this popular sentiment swing.

Mike Shepard, always on the news, we appreciate it so much from DC that let's bring in Corey Schrocke,

Senior Fellow and Director of Foreign and Defense Policy Studies at the American Enterprise Institute.

You've been thinking about really the Pentagon's reaction to this, just talk us through your

thinking as to whether the step of banning Anthropic from the supply chain in this way is the right step.

It's a petulant reaction by the Secretary of Defense that's likely to turn out to be

advantageous to Anthropic but it's going to be bad for the Defense Department and bad for

the security of the United States. The idea that you could either nationalize or blacklist

a leading American company is outrageous and it's going to discourage other leading edge tech firms

from being willing to expose their business by participating in the defense ecosystem.

Okay, there's going to be immediate shock as you say from those in the space and their reaction

function of the Pentagon. But more broadly, how transparent should these sorts of conversations

become at this moment? Very difficult ethical questions that seem to be shown a significant

public light on by Daria Amade, the leader of Anthropic himself. Yeah, I think that's exactly

right. I mean, this is a frontier technology that we are still understanding what its consequences

are going to be and to suggest that we have less transparency or that a firm has no right to set

standards on how a cutting edge technology will be utilized by the Defense Department. I think

is probably a losing proposition for DOD. What should be forced? What could be forced by Congress?

We just had a representative of California to start the show talking about wanting to bring

law to bear that companies are pushed off of any sort of national supply chain in any retribution act.

But what more broadly can't be done by Congress at this moment to make clearer the lives?

Well, Congress really runs defense policy and they can legislate in this space and DOD will be

required to be compliant with it. It's actually shocking to think that the Defense Department

blacklisted an American company. That's the kind of thing we do to Chinese firms,

not to patriotic American firms who are already participating in classified DOD activity.

Can you give us some guiding principles on then how open AI and Sam Altman

might be able to find appeasement in a contract? Do you think extra steps had been taken?

Is there really a need at this moment for companies to see the law as it stands

as where the line should be rather than trying to insert their own language into certain contracts?

Well, it's an open question, but I do think that open AI is saying yes, we trust the government

that they won't use our product in a way they say they won't. And anthropic is saying

we actually need proof and we need indemnification that our product is being used as we are

advertising our product. I think given the low level of trust in the Trump Department of Defense,

this is likely to be advantageous marketing for anthropic and very difficult for DOD to be able to

say you need to trust that we will abide by the law when so much of their behavior,

including blacklisting an American company, looks to be a bending of the law or at least an

aggressive and predatory use of the law. Cory, it's interesting open AI defended saying that it

built a number of safeguards into the contract with a Pentagon and said the Pentagon actually

agrees with these principles and reflects them in law and policy. When we're thinking about

where AI's role now is in defense, in law as we're currently seeing it unfold, can you just

educate our audience as to how integral AI has now become? Yes, what AI is already proving

incredibly valuable for in the defense space is serving enormous amounts of data and for example,

identifying threat portfolios and the ability to see patterns in large amounts of data.

But what anthropic is saying is we do not want it to be used for domestic surveillance of the US

or for decisions about the use of lethal force before we have higher confidence in the model.

And those are not unreasonable standards and provide the basis for what Congress

perhaps ought to put into law until we have better transparency and better understanding of what

these models are capable of in future iterations. Cory is shocking. Great to speak with you

of the American Enterprise Institute. We appreciate your time and expertise today. Look as the conflict

where they run intensifies cyber security experts. Their warning of a rise in Iranian linked

cyber threats targeting critical networks and infrastructure. Joining us to discuss Cynthia

Kaiser, SVP senior vice president of ransomware research center at Halcyon and former deputy

director of the FBI cyber division, Cynthia, are those threats real? They are. We're already seeing

Iran have real threats and conduct cyber activity against organizations in the Middle East

and we anticipate that they could follow on with operations here in the United States.

And we said infrastructure in particular, where are the vulnerabilities likely to be targeting?

So throughout infrastructure in the Middle East and in the US, we see Iran target what they can get

into. So it doesn't really matter the sector. It matters how the specific organization has done

with their cyber security has been able to fix those vulnerabilities because what Iran does,

they go on, they try to exploit something, get into something, and then they go out in the media

and they say, we've done more. So I've gotten under one machine and an organization,

but I'm going to say that we've gotten onto the entire facility and say a water treatment facility

is down. So it's really a mix within critical infrastructure of getting onto something,

but then moving on and lying and exaggerating to try to stoke fear and chaos.

How sophisticated is their ability to get onto something?

So they are one of the world's most malicious and capable cyber actors. In critical infrastructure

overall, there are many, many devices that are connected to the internet and haven't been

hatched for vulnerabilities that Iran is exploiting just late last year. FBI put out a warning

about Iranian state-sponsored actors who are targeting critical infrastructure in the United

States through these types of vulnerabilities. From the perspective that we see the market, as always,

trying to get ahead of any sort of concerns and indeed, well, move money on the back of it,

we've seen CrowdStrike on the higher side, seen Palo Alto Networks in the green.

Are we seeing really a desire to be far the infrastructure of resistance to be see our companies

having the right place, the right sort of restraints and, well, use cases in place in the moment?

Absolutely. We've seen a lot of movement chores being able to practice incident response plans.

Know what you're going to do if you are hit, including what you're going to do in the media to say

if something's being exaggerated, to hatch devices that maybe were on some type of schedule to be

patched later doing that today and conducting a lot of engagement across industry as well as with

the FBI to be able to know the latest on what might be coming down and what threats that they're

facing. On the threats of all AI in many ways, I'm sure Cynthia. They are. We've seen a lot of AI

enabled threats and really where we see the biggest risk with AI enabled threats is in kind of want to be

or very low level actors, but that's who I ran might use. I ran uses proxies to be able to conduct

their activity. There's one group our healthy on intel team had identified who named Sikari who

is currently telling its members to conduct activity, conduct attacks in the Middle East,

but they've used AI to make their bad software. They're what they're deploying and it doesn't

work very well, but what it actually means is it destroys networks when it gets on instead of

being this kind of ransom you're going to pay to try to get back online. Oh, so like collateral

damage when actually just tried to exert financial damage. Cynthia, from the perspective of AI,

we just come off the beat back of a couple of weeks where software names were pummeled where

particularly cyber companies were under pressure because people thought generative AI companies

were going to be able to take their business. A plug-in from Anthropic would be the answer to

all our ransomware and cyber concerns. How are you seeing that evolve? How are you seeing companies

actually wanting to use and build from within or still dependent on external offerings?

Being able to build within is really important in a way to consistently know what's going on

your network, be able to fix those vulnerabilities I talked about in real time and then be able to

identify other errors or things that might be going on that are malicious across a network.

But it's only going to know what's plugged into it. It's not going to have a lot of these

additional information. What a threat group might be saying in a dark web forum?

What's the new zero day that might be coming down the pike? Figuring out that aspect being able

to plug the really sensitive grade information the private sector has into some of these new

processes organized to just being cybersecurity is going to be better. It doesn't mean there's

a replacement on either side. Can you take us to allies? Can you take us just to how strong that

defences on? Across the close allies the United States has there are lots of sharing things

implemented as well as these sharing mechanisms where we're sitting inside different governments.

They're sitting with us to be able to counter cyber threats because this has been practiced for

years. Cyber threats just don't have any boundaries. They're going across the entire world. That's

especially true with our European allies, with Australian allies, with Israel. And so we have

really identified ways to share quickly, share in real time these threats that are facing all of us.

And we all face the same challenges, but we all can come up with the same solutions and really

counter these adversaries together. And look, Cynthia, from just an audience perspective,

is this likely to be an attack that is focused in the enterprise, in one's work environment?

Or could this be something that you're navigating as a consumer right now?

It's mostly going to be focused within the enterprise environment, especially within the United

States. We have seen Middle Eastern countries and organizations in those countries being

targeted by Iranian state-sponsored groups in the last few days. For some of the data, they might

have on people, whether that's patients, customers, parts and employees of that organization.

We do see Iran going out trying to identify personal information for people they perceive,

maybe dissidents or enemies of the Iranian regime. And that's something to watch out for there.

But we haven't necessarily seen that come over to the United States or to our European allies.

Cynthia Kaiser, of House in, I'm former FBI Deputy Director. We appreciate your time.

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