Transcripts For BLOOMBERG Bloomberg Technology 20171017

Thousands of california residents have been given the all clear to return home as fire crews gained ground. Firefighters say although the dangers from the most destructive blazes in californias history is far from over, calmer winds are helping make progress. 40 have died and dozens are missing. Louisvilles Athletic Association has fired rick pitino three weeks up to the School Technology its mens Basketball Program is being investigated as part of a federal corruption probe. Todays move ins his 16 years with the program. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Emily im emily chang, and this is Bloomberg Technology. Coming out netflixs record thirdquarter, shares jumped to a new high. Why investors are looking beyond the spending strategy and focusing on subscribers. Plus, china sets the stage to reset its political agenda with the tech sector under the microscope. We will put beijings censorship and regulation laws and then perspective ahead of congress of the Chinese Communist party. And will moviepass become a victim of its own success . The ceo begs to differ. But first, netflix reported a blockbuster third quarter, the company blowing past the Company Domestic and International Subscriber growth targets and beating revenue. It is an encouraging sign for investors since netflix recently announced its first price hike since 2015. Joining us to discuss our bloomberg reporter lucas shaw and forrester principal analyst jim nail. Jim, i will start with you. What is your headline take away here . Like you said, blockbuster quarter. There have been many questions over how long can netflix continue to build this kind of subscriber growth. Theres no sign of it slowing down any further. They are continuing to make good steady progress in making their Service Really ubiquitous in homes of people who like to watch television. Emily i want to take a look at a chart in the bloomberg now. Btv 8077. This is a chart showing that subscriber growth is really growing in tandem with the stock price. Lucas, investors dont seem to be fussed about the billions of dollars netflix is spending on original content. Talk to us about just how much money netflix is putting down, what we know, and whether that is paying off. Netflix has spent about 6 billion this year, which was already a huge increase from years past. Next year, the chief content officer has said in an interview over the summer that they are probably going to spend 7 billion. Today they revise that to between 7 billion and 8 billion. Add up to that they 1 billion to what they will spend next year. It seems to be working. I am astonished by the consistency of growth overseas where they added more than 50,000 customers a day in the most recent quarter. That is primarily with shows that are being produced here. They are just getting going making shows for other countries. They just released their first italian original series and will release their first german one. Whatever they are doing seems to be working in enough countries outside the u. S. That Growth Continues at a pace that investors are happy. Emily we just saw the chart there. Jim, what is your take on the growth they are seeing internationally at how much more potential there is in other countries . There is significant potential because outside of the United States, those countries are at a much earlier stage of adoption of ott and streaming video viewing. They are probably at the adoption stage where the u. S. Was two or three years ago. There is clearly going to be faster growth over there for a while, and eventually it will slow a bit, but theres plenty of potential to go out there. Emily the amount they are spending on original content, that doesnt concern you, jim . No, it doesnt. The thing that was more striking to me than this quarters results were those enough was announcements adding another 1 billion to content and their guidance for q4 of . 41 earning per share and 6 million or so net new subscribers. Clearly very optimistic projections, very confident that the price hike, which is just starting to take place so it doesnt really affect to the q3 numbers, clearly they are very confident that is not going to slow them down at all. So it is quite interesting that off a Strong Quarter already, they are predicting even greater growth and strength, and therefore they will have the funds to spend that additional money on more original content. Emily lucas, would you echo that there seems to be a fair amount of confidence that customers are going to be willing to absorb this price hike and that if other price hikes come down the line, the customers will be receptive to them . It does actually affect the prospects for q4. Would netflix forecaster would add was below what analysts had hoped they would forecast. And is smaller than a year ago, so it will have some effect, but it is relatively slight when you look at how price hikes have affected them in years past. Theres been a lot more attention paid to them. Theres been a lot of concern, and netflix believes that may have affected who signed up, who didnt renew, things like that. There is increasingly a belief that customers are loyal enough and spent enough time using it that they will stick around with it. Netflix has not instituted or announced a price hike in some of the overseas countries were people would be more sensitive to it. In the u. S. , netflix is a pretty good bargain, especially if you are choosing to watch that instead of tv. In some of the newer countries across asia, middle east, even in latin america, netflix is a more expensive proposition. Emily jim, what are the issues you are going to be watching over the next quarter as this price hike goes into effect . To be lookingoing at is there any consumer reaction to that. In our consumer techno graphics studies we do and our social media listing, we are going to be looking for how consumers react to that. Obviously initially theres some pushback to it, but again, as lucas was saying, at 13, 14, it is still a bargain. It is a lot cheaper than any other kind of cable package. For all the great content they are putting out these days, for 13, 14, you cant even get two movie tickets. It is a really good bargain and in entertainment. Emily forrester principal analyst jim nail and bloomberg entertainment reporter lucas sure, thank you both. You can follow the Earnings Call coming up on bloomberg. Meantime, former u. S. Defense secretary leon panetta wants congress to permanently protect the socalled dreamers. He has thrown his name behind a new initiative dubbed the dream coalition. In an interview, he discussed support for passing a permanent fix or dreamers in both the house and senate. I think there is strong bipartisan support for fixing this program and being able to provide the protections that were promised to almost 800,000 children of immigrants. I think there is a Strong Coalition both in the house and senate in support of the dream act. Emily other dream Coalition Members include apple ceo tim cook and chicago mayor rahm emanuel. Coming up, the Supreme Court will weigh on microsofts fight against the Justice Department. What this could mean for your private data, next. And Bloomberg Technology is Live Streaming on twitter. Check us out at bloombergtechtv. This is bloomberg. Emily facebook continues to ramp up its site against agents trying to use the platform to meddle in elections. Bloomberg has learned the social media giant looks to hire people who have National Security clearances, a move the Company Thinks is necessary to prevent foreign powers from many dealing future elections. They will search more proactively for social media campaigns ahead of elections. Microsoft is getting its day in the Supreme Court over the future of digital privacy. The nations highest court agreed to take on the longrunning case between microsoft and the Justice Department on whether the government has a right to access customer information stored overseas. This is a case that could have a major impact on the Tech Industry as a whole, especially at a time when access to Sensitive Information and Cloud Storage is a top concern for consumers and corporations. Joining me to discuss, greg, Supreme Court suppor for bloomberg. What is the legal issue the court is being asked to decide . The court is being asked to look at a 21yearold law called the stored communications act. The question is whether that law lets prosecutors get information that is being stored overseas. The law doesnt really say specifically whether it does. The court will have to deal with that someone archaic law in this modern era of digital privacy. Emily is it a surprise that the Supreme Court agreed to take this up . It is not a surprise because the Trump Administration said basically, look, we have hundreds, maybe even thousands, of criminal investigations that are going to be jeopardized if we cant get access to information being held overseas by not just microsoft, but other Companies Like google and yahoo any Technology Company that Stores Information on the cloud and keeps some of it overseas could potentially be affected by the case. Emily on that note i recently interviewed the ceo of amazon web services, obviously a huge cloud platform. He suggested these issues actually dont come up that often where the government is asking for information on customers that was stored overseas. Take a listen to what he had to say. When you encrypt the data and keep the keys yourself, even in the odd event the Government Asks to try to get access, for us if they ask, we dont just say yes. We always advocate on behalf of our customers. They have to come with a subpoena. Even the odd case where they come with a subpoena and have a legal right to the data, if you encrypted the data and own the keys, there is not much people can do with it. Emily you mentioned hundreds of cases. What do we know about how often governments are actually asking for this kind of information . The federal government suggests it is an awful lot, and it is not just the federal government. It is also the states. 33 states have joined the Trump Administration in asking the Supreme Court to take it up. One issue may be whether the information is encrypted. That is not an issue in this case. There is no reason to think that the government would have to overcome that hurdle. It just says, let us have the information, and that will be sufficient. Emily so what do we know about how the court is likely to think about this particular Microsoft Case . There are a lot of crosscurrents in this case. You might think it is a Law Enforcement issue. The conservatives might be more inclined to side with the federal government. But the court as a whole has been rather protective of digital privacy. Some cases in recent years have been unanimous on that score. Then there is also the question of what we are doing is interpreting a federal statute. It is generally the conservative justices who are most reluctant to say a federal statute can apply overseas, which is the legal issue in this case. So there is a lot of things going on in this case, and it is really hard at this stage to predict how the case is going to come out. Emily what kind of impact could this have on the Tech Industry at large . The Tech Industry at the lower court level certainly all got behind microsoft, and you would expect them to do that at the Supreme Court as well. They want to say to customers, we are protecting your information. If it turns out they have to turn over this information, it will make it harder for companies, particularly Companies Based in the u. S. , to make that claim they are able to protect their customers and their information from u. S. Prosecutors. Emily what are the chances that congress could ultimately take this issue up . Microsoft urged the court not to take this case, said you should leave it to congress. This is a 20yearold law that Congress Needs to update. For now congress probably wont do anything. When the Supreme Court rules, they may have to go all or nothing. Either they can get access to these messages and other data overseas or not. Either way, congress could see a lot of pressure to come up with a more nuanced solution where prosecutors can get some information depending on the country, depending exactly what kind of information it is, depending on where it is stored, that sort of thing. After the Supreme Court rules, probably in the spring, you may see some impetus for congress to get on the issue at that point. Emily greg stohr, thanks so much for that update. Coming up, a lifeline for Harvey Weinsteins Production Company. Why billionaire tom barrett is returning to hollywood. A feature we want to bring to your attention, our interactive tv function at tv. You can watch us live, send our producers a message, play with charts on a of. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Emily the Weinstein Company continues to be in the spotlight after the firing of founder Harvey Weinstein due to several sexualharassment allegations. Amazon has announced it will sever ties with the Production Company. Amazon had ordered two seasons of a highprofile project produced by the Embattled Company starring Robert De Niro and julianne moore. That show will no longer be made. Amazon suspended the head of its own tv and movie studio, who was also accused of harassment. Sticking with the Weinstein Company, it has been thrown a lifeline by a billionaire investor. Tom barrick has agreed to provide immediate cash to the film studio and return the company to its rightful iconic position. No other details were disclosed. Will the Production Company turnaround from this harassment scandal . Joining me from l. A. , Anousha Sakoui covers hollywood for us, and in new york, Jordyn Holman of Bloomberg News who covers diversity issues. Barrick,o mention tom a close friend of President Trump. What do you make of the fact he still see some value in the Production Company itself . It is quite interesting because he owned miramax for a long time. He became an increasingly bigger shareholder after disney sold it , and last year he sold it to the Qatari Company bn. It is interesting because it is going to be questionable what the value of this company is going to be without the weinstein that is known for making oscarwinning movies. It is not surprising to me that hes gotten involved because he did have that link to miramax and has done deals with the weinsteins. Talking to some people around hollywood, it could be a good investment. I dont think it is probably a huge amount of money. If he backs this until it is either sold or he ends up owning it and makes some money in the short term, he is going to have a pretty good investment. It is what he does. He takes risks on Companies Like this. Emily jordyn, these allegations have sent a shudder through the Entertainment Industry and hollywood. How have they resonated in other industries and Human Resources departments outside of hollywood . Diversity and inclusion strategist and employment lawyers have impressed upon me that it is not just hollywood. Hr department should really taking a look at how they are messaging what is Sexual Harassment, how you train employees to understand that. It is definitely across all industries thinking about how they are messaging and making sure people understand what Sexual Harassment is and how corporations dont stand for it. Now that we are several days into this story, what are you hearing in hollywood . Should we be bracing for more stories like this on the lines what we saw with roy price . I think so. There had already been a report about roy price at amazon when he was a Senior Executive there. The accuser had not gone on the record, but that did come out on thursday when he was accused of sexualharassment, decided to go on the record, emboldened by all the women who have spoken out against Harvey Weinstein. It is really a followon effect of what happened last year with Gretchen Carlsons lawsuit against roger ailes, which also broken the dam for women to feel confident in coming forward t. The talk is about who else might it be. Some people say Harvey Weinstein was an outlier one would hope so given the description of some of that behavior. Clearly hollywood has put its foot down. The academy has expelled Harvey Weinstein. We have just had news the Producers Guild has expelled him. Amazon has cut ties. All the producers in town making content have cut ties with his company. Emily and yet it is unclear still what amazon knew and when with regard to roy price. The allegations against Harvey Weinstein, some of them outright rape allegations. Beyond that note though, why is there still confusion over what constitutes sexualharassment within companies in general . I think people just havent gotten the message that it is not as overt has the allegations as the allegations against weinstein. Theres interpersonal relationships that just dont, where there is a difficult and understanding that. A lot of people i have spoken to say it is not just hrs responsibility to stop Sexual Harassment in the workplace. It is also the responsibility of other coworkers who might see it, especially male coworkers who can speak out against that. Emily a lot of this has unfolded on twitter, including a women boycott after twitter kicked off rose mcgowan, an actress who was also making allegations against Harvey Weinstein. Alyssa milano kick started a me too campaign for other women to speak up about their stories of sexualharassment. How are women responding in the industry . I think it is really interesting time because they are being very vocal. I saw someone say you dont have you are not in a position where you want to disclose this publicly what you have gone through. There have been a huge number of women who have come out, and it is actually kind of shocking when you see the incidents ranging in severity. I think definitely there is going to be a bit of soulsearching in hollywood, especially with this take place at parties and whatever, so people will reassess where they do meetings i guess. Emily thank you both so much for joining us. We will be right back with more of Bloomberg Technology talking about china. That is up next. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. It is 6 29 a. M. In baghdad. Rock sinkers and territory has hit oil production. Out put slumped when troops clashed. Conquering after technicians failed to report to work and security guards left. Affect 275,000d barrels a day output. North korea warning Nuclear War May break out at any moment as the u. S. And south korea begin naval drills. Forh korea is preparing another Missile Launch from pyongyang to counter the exercises. The north deputy United Nations ambassador said his nation was an responsible nuclear state. President trump and Mitch Mcconnell emphasized their desire to move on at the white house. The clock is ticking on the legislative calendar. When the house returns, just 28 days left to tackle issues. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. A check on the markets. A mixed picture, stocks in the philippines leading gains after Financial Markets were shot in manila on monday. Taiwanese stocks snapping a 10 day rally, losing. 2 . Apple suppliers in focus after Credit Suisse cut estimates for iphone units. Chinese stocks swinging ahead of the party congress. Deleveraging concerns and low expectation of xi jinping reform are low. G market stability has been a priority for chinese authorities. Japanese stocks have erased gains as the yen is picking up pace against the dollar. Other asian currencies under pressure. Commodities of the big theme in markets. Mining shares tracking the rise and base metal like copper and net goal. Copper is at a threeyear high. Gold is losing ground, down. 2 . Oil under pressure, but Holding Onto Gains at two week highs. Market snapshot here in hong kong. This is bloomberg. Emily chinas most important political event kicks off on wednesday, the 19th. National congress of the Chinese Communist party. The event is designed to set the political path of chinas next five years under xi jinping, who assumed the position five years ago. One item sure to be agenda is beijings continued quest to tighten its grip on a rapidly growing Tech Industry. Joining me now is the former u. S. Ambassador gary locke to china. He was also the commerce secretary of the United States and governor of washington. Thank you so much for joining us, secretary locke. What do you think will be the main highlight to come out of this Congress Meeting . Locke obviously, it will be who will be the next set of rulers for china. China is really governed by a 79 member standing communist party. Key questions is whether they will raise the sodatory retirement age, that president xi jinpings key allies can stay on. If they are able to stay on as change the mandatory retirement, what will it mean five years from now when president xi jinping is facing mandatory retirement . Will he be able to stay on and assume an unprecedented third term . That is the big political question circulating around china today. Emily what do you make of the moves that the Chinese Government has taken to crack down even more on vpns, the social messaging site whatsapp, this after facebook and twitter being shut down there now for years, yet the government talks about openness and seems to be going in an opposite direction . China has tightened its grip in terms of what people can see and read, social media, television and radio. There is a crackdown on human rights activists, lawyers, nonprofit organizations. It is becoming an authoritarian and rigid climate in china under president xi jinping. They talk about the advent of technology but it has to be controlled by the Chinese Government because the one thing they want to most focus on is the continued efficacy, power of the communist party. Emily what is your take on the government to take managerial stakes in Companies Like tencent, like waymo . Again, they are trying to make sure they have control over what these Technology Companies are disseminating. They want to make sure that these forprofit, private companies are still supporting, towing the line of the companys communist party. So we are seeing the growing involvement, entanglement of the Chinese Government in many more layers, even in the private sector, especially in the technology area. Which is why for example google, facebook, youtube, snapchat, many of these things are not allowed to be accessed by the Chinese People. Expect president xi jinping to be in power another five years. Do you expect to see more of this for the next five years . If there is a new leader five years from now, do you expect this drumbeat to continue . As you see china trying to exert its influence around the world, while bringing more western ideas and technology into china, they still wants to want very much to control the thinking and what the Chinese People are able to access, what they talk about themselves, limiting debate even on sensitive topics whether it is human rights, religion, and everything else. So the Chinese People are having more access to things and technology from around the world, and china is really trying to play a preeminent role in the development of technology, in artificial intelligence, semiconductors and etc. , etc. They are trying to move away from lowcost manufacturing to be a country of innovation and technology at the same time that they want to control how that technology is used by the people of china. To make sure that they do not ever get thoughts of more democracy, human rights or freedom. Emily President Trump blocked the sale of a Semiconductor Company to chinese investors, he is cracking down to the extent that he has the power to do so, on trade with china. What do you make of that approach . What he did with respect to blocking the sale of the American Company to a chinese entity is no different from what has been going on for quite some time. He was merely reaffirming that decision of a committee that oversees Foreign Investment acquisition of u. S. Companies. A lot of transactions have been denied under president obamas administration, under President Trumps administration, and these are done at the department level, people from homeland security, treasury and others. That committee has consistently blocked this particular proposed acquisition, and the chinese buyer and the american seller simply went to President Trump for an appeal, and he denied the appeal and upheld the Committee Decision at the lower level. Many of these deals are blocked, whether they are deals from israel, france, china, germany, they have been blocked in the past by this littleknown committee. They are supposed to be focused on National Security and this is an area involving very Sensitive Technology that america felt that if china were to purchase, would jeopardize an independent supply chain of Semiconductor Chips that are ultimately used by American Companies and ultimately by our military as well. Emily and yet President Trump has certainly adopted an increasingly isolationist rhetoric approach when it comes to trade and other things. What does it mean for u. S. China relations . The u. S. China relationship is very strong. We are each others largest trading partners. Millions of jobs in america depend on exporting made in america goods and services to ,hina, boeing jets environmental technology, food, you name it. T, and we americans use many things in our daily lives manufactured in china. So millions of jobs depend on this ever deepening economic relationship. And if were ever to get into a trade war, if President Trump slap duties or tariffs on goods coming into the nine United States, it would raise the prices of those products and china would retaliate. They would impose huge tariffs on things like boeing airplanes, automobiles, agriculture, on airplanes, which would impact american workers. More than 50 of boeing airplanes are sold to chinese carriers. From airbus. Y that would mean more jobs for europeans and less for americans. No one wins and a trade war. Ands always the consumers always the workers. Emily do you think the u. S. Relationship with china is at risk in this administration . We certainly have differences with the chinese on trade, human rights, some of their territorial claims, but ever since nixon went to china 45 years ago, our relationship has gotten stronger. We have many more areas of common interest and cooperation. Our militaries and naval forces have worked together to stop piracy off the coast of africa. We have tried to stop north korea from developing a nuclear weapon. The list goes on and on. Our scientists are working together to fight cancer, aids, it of tb that are resistant to common drugs. There are areas of disagreement, not to minimize those, but we have to figure out how we can continue to work on those areas of disagreement while continuing to Work Together on very important issues that are important to the world. I think that certainly some of the things that President Trump has been saying are troublesome. At first he was going to slap all these punishing tariffs on china. He backed off on that, had a good meeting with the chinese president in maralago early into President Trumps administration, and he said he was counting on china to solve the north korean problem. China cannot solve that, so President Trump has said that he is disappointed in the lack of results and now the trade rhetoric has heated up again. I think that is bad. We need to work with china and find a way that we can work with china, south korea, russia, japan and north korea, to solve the north korean problem, to make sure they dont develop Nuclear Weapons and a Delivery System capable of delivering those Nuclear Weapons and threatening the United States mainland or our allies. Emily thank you, gary locke, former u. S. Ambassador to china and former secretary of commerce. Thank you for joining us. Coming up startup that is , one looking to turn the Movie Theater experience on its head. But will movie past earned through its cash before changing the industry . We will hear from its ceo next. This is bloomberg. Emily moviepass has been steadily gaining customers with a 10 a Month Service that allows customers to attend one film per day. Industry watchers are taking a look at the company questioning how it can make money and hold onto partnerships with theaters. The previous president of the red box and executive of Netflix Joins Bloomberg Television to explain why he is confident confident about the companys future. People really want to go to the movies more often, especially millennials, they do not like the transactional model. They grew up with netflix, amazon prime, and they love this concept of trying movies but not committing. A subscription allows you, kind of like movie insurance, i can and havets of movies to stress whether it is a great movie or not. But it is deal 30 a month and it means that you can watch as many movies as you want, but at the same time, if you watch more than three, you would be making a loss. How fireball is your profitability in the longterm . It is a better price, it is only 10 a month. Oh, right. The subscribers we acquire are those who previously wants to 35 movies a year. After they start with moviepass, they go twice as often, roughly 10 times per year or slightly less than one per month. The reason they love it is now they do not have to stress over that decision. How are you financing it . Will you need more money by the end of the year . To acquire these programs you need to entice them away from loyalty programs. There are lots of ways to grab customers. That is why we priced it at 10 a month. We wanted to attract young people who will go more often. How much more money will you need by the end of the year . Lowe we will need much more money. When you are trying to differentiate yourself in this world because there is so much you can do with your entertainment dollar, we need to fund growth. The first people who joined the program are in highcost markets like new york, los angeles, because they see an amazing deal. It will take a few years for us to get to positive cash flow. Are you going to the popcorn business, any ads, anything on the side . Yes, yes, we get our customers to go twice as often, and that they buy 120 more of the concessions. We get them to go to the nearby restaurant, use uber, and the Movie Distribution system is broken. Studios are spending 50 million to 100 million marketing a film where they should know exactly who was to see that film viewed we can do that better than many he other market we collect revenues in many different areas. Dealse you reached any with theaters are studios . We have with the independents. We are able to get people to drive by the major brands such and go to the independents. We have not yet proven to the big guys that we are a valuable part of the ecosystem. But in the same way in the early days of netflix, we had to prove to the city is that revenue share with the right model and we had to the money where our mouth is. That is exactly what we are doing. We are investing the money for the next six months to show the studios we can improve their business. Amcs argument is that this model will not provide sufficient funds to fund quality theaters. What you think of that . That is what blockbuster told us when we started netflix, and what blockbuster said when we started red box. We were renting movies at red box at 1 5 of what blockbuster was renting them for. They said, how could you possibly do that, you will fail . It is all about putting technology and data behind your Retail Business to drive more profit. How much time do you need for that . We need probably six months. We are already talking to a number of studios to show them how we can ensure more people in the seats. We are already talking to the theaters. We are to have some deals to collect a portion of their concessions sales. Can see it being a genius idea, the only thing is you need the underlying business that you need to survive. For netflix, the question is can it afford the content that it needs to keep churning out, and in your case, will the theaters themselves survive . Even if we are talking about chains. Lowe it is funny, a few weeks ago i was on the phone with the former cfo of netflix and he reminded me that it took two years, for the first two years we were negative growth margins dramatically, and still today, netflix borrows huge amounts of money, billions of dollars a year. It is about the energizing a business and the need to fund that, and we are prepared to do it. Emily that was the moviepass ceo. Coming up, aspiring to be the tech. F pet coming up next. This is bloomberg. Emily pet care on demand, the latest startup up trend with multiple companies hoping to revolutionize an industry that has long relied on wordofmouth referrals and ads on lamp posts. Wag is drawing scrutiny. It is causing some investors to get cold feet. Joining us now with more details Bloomberg Technology journalist Olivia Zaleski about complaints facing these startups. What is going on here . Zaleski we have to take into consideration that you feel are walking thousands of dollars, some of them will get lost in some of them will die under the dog walkers care. The problem we are finding is how the company is dealing with it. Just as uber, wag is moving in and going into many markets, and customers have complained that they feel that the company did not handle responsibly their lost dog. Emily you talk about one dog in particular, what happened . Zaleski buddy was lost and her owner wanted to go on local news media to get the word out there and talk about the dog and the wag was very opposed to that. They dispute the claimant say that they did not do that all, but there are two sides to every story and wag has now sent the dog owner a cease and desist letter to put a gag on her. Emily some investors are getting cold feet. No surprise. There is a lot of money in pet care. Americans spend about 70 billion a year on their fourlegged friends. We really care about our pets. So these Silicon Valley companies are moving into that. Pet care is the last bastion it has not been interrupted by technology, because it is a very franchised business, people rely on their teenage neighbor to walk their dog, so these companies are trying to go in and digitize that and create an app like uber for dog walking. Emily were looking at one of the celebrity endorsers using the app. Which explains why they are burning about 4 billion a month. They are spending money as well. Investors are looking closely at the companies. Wag is trying to raise millions of dollars in seeking new management. Emily it was a great piece, Olivia Zaleski, our Bloomberg Technology reporter. New pet care investigator. Thank you so much for joining us. That does it for this edition of Bloomberg Technology. On tuesday, we travel to a conference in laguna beach, california. Do not miss our interview with Arianna Huffington one of the bloomberg board members. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered