Plagued the telephone you coast for two weeks. Final mandatory evacuation orders have been called off. At its peak it drove about 100,000 people on their homes. Global news 24 hours a day, powered by more than 2700 journalist and analysts in 120 countries. Im Alisa Parenti. This is bloomberg. And more of Bloomberg Technology is straight ahead. Emily im emily chang and this is Bloomberg Technology. Bitcoin bears the bubble theory. Our deep dive into the four day selloff. Plus, validating an apple arben myth. A real story between older and smaller iphones and he lawsuits turning to pile up. The battle between two chipmakers. A hostile take over. Bitcoin investors may be having a reality check. Cryptocurrency l two below 13,000 on friday. Bitcoin has lost those 240 this close but it is lost to 40 this month. They sent all buying and selling was temporary disabled after having delays in processing wire transfers and verifying new customers. These issues it reignite the question, are we in a bitcoin bubble. Joining me for the hour is David Kirkpatrick. Also cory johnson. Lets discuss what is going on in bitcoin this week. Cory i am working on a Bloomberg News story coming soon to a terminal may argue here at check that out a lot of the point stocks. Today was weird i kept looking at the price look like it was going up. And since this morning, since the trading, not a stock, bitcoin is up and it is up eight today since 9 30 this morning new york time. Basically since ive been awake today, it has been rallying after a selloff. I think it highlights the enormous volatility that is still extant in the trade of bitcoin. Add to that a lot of the equities that have informed around the idea of blockchain and bitcoin. Yet, you still have the skeptics. The Hedge Fund Manager had this to say about his bitcoin chairs. This is a bubble and there is a lot of fraud mixed in. There is a lot of froth and fraud in anything as exciting as this. I want the record to show i didnt say that. Mostly because its so global. Emily he also says he is shelving plans for a cryptocurrency had one cryptocurrency hedge fund. David, where do you fall after this week . David my basic views have not changed, but its very important that someone like him that is a and whopected investor is enthusiastic for bitcoin and has been used as a legitimize her that this thing could go to the man is now saying it could be the biggest bubble of his lifetime. I think that is a healthy thing, because what we have here is something that is almost certainly going to be worth a lot at some point, but there is no objective reason it to be worth any given amount for any given reason. 400le say it could go to Million People throw out crazy numbers in any one of them is equally valid including zero. Until bitcoin settles down and it becomes clear what it is used for in the world, i think the ofatility is a consequence genuine uncertainty about what people are buying and that will continue. Emily nobody knows how to value it. Cory kirkpatrick is so unnecessarily positive. Any prediction here could be valid, which means any prediction is invalid. The idea before we have fully functioning usage of bitcoin is nouts. Bitcoinat volatility is nuts. Looking at volatility, i joked i collegeof put my kids funds into bitcoin a few months ago, but that would be all hearty that would be fool hearty. In terms of Intrinsic Value, it doesnt exist. Just like intrinsic lu to gold and silver dont exist. An Intrinsic Value is illusion. All of the farmland in the world would be far more productive than all of the gold in the world. Emily what you think of Companies Adding blockchain to the name or dying Blockchain Companies or getting into the currency in general because they think it is the hot thing . David you mean like long blockchain yesterday going up because they changed it from Long Island Iced Tea. What is happening is people are getting irrationally excited and to use the word greedy in hopes of shortterm gains and they are taking advantage of psychology. Cory could have done a great job with the school fund if he invested at 9 00 this morning and sold it before school started. If you have an incredible stomach for rapid bollettieri the rapid volatility and risk, i think that is fine. Thinkt i continue to ordinary people, people who are just trying to protect their longterm and financial future should not be investing in this thing. I do think longterm it is a his store Transformational Technology that will have a lot of value. Will it have a millions of dollars per bitcoin for value . I dont know. It will have value. Emily the crash we have seen this week, is this the beginning of something or is it just going to continue to go up in the new year . Massiveere have been price falls and rises in bitcoin since it very getting, falls more than 20 over and over again with this currency. It looked like we hadnt seen one in a while, but in a week down 19 is not remarkable for bitcoin at all. One would have thought the futures contracts provided more stability around that, the ability to be long and short, the ability to predict prices in the future. They are predicting them in their first monthly expiration next month, much lower than bitcoin. We will see if there is more trading around it. There is a limit on the total number of coins ever created in that has people believing there will be some ultimate care city in this, but scarcity doesnt always provide value. Questionst are you going to be asking and exploring going into the new year . Cory two things. Stocks,g is be silly the cares about Long Island Iced Tea . Its a tiny market cap. I dont think they pose a Systemic Risk right now, but i do think they are extraordinarily risky for shareholders and there is a lot of money in and around these things. Emily some of these are multimillion dollar companies. Examining,are worth but that is separate from the usefulness of blockchain. I think the ultimate solution will be the day they can trade currencies, trade stocks using we endedechnology, if up with stocks it would be a dramatic change in the way wall street works. Emily all right. Cory johnson, thank you. David kirk actor, you are David Kirkpatrick, you are taking with us. A Morgan Stanley director is leaving the company to join a cryptocurrency trading firm. And cash for going clients. Also moving to the same company is an hsbc exec. Investors and products are lining up for regulatory approval. Coming up, hawaiian apple customers are going to court on complaints of slowing iphones. That is next. Bloomberg technology is streaming on twitter. Check that out. This is bloomberg. Oomberg. Emily a california judge has sanctioned apple in the federal trade commissions lawsuit against chipmaker qualcomm. The judge says apple has been holding documents related to the case resulting in fines of 125,000 a day. Apple has its own legal action pending against qualcomm. Sticking with apple, iphone users have taken their complaints to court, infuriated i an update that slow down there smartphones. At least two customers sued apple over the deterioration in their phones performance. Down said they did slow the devices with older batteries. Customers dont seem to be buying it. Joining us from minneapolis, longtime analyst covering apple, eugene munster. And tech economy medias David Kirkpatrick. The iphone shutting down has been happening to me. This has long been a conspiracy among apple users and apple released this statement about this happening. What is your take . Gene i think you need to step back and play the Conspiracy Theory through that if apple is slowing down phones for the purpose that you will buy a newer version phone, that to me sounds like a Risky Business approach. And the reason is that to make your product worth in hopes you will buy a more current products, they run the risk that people will say i dont want an iphone, lets go over to android. I think at phase level apple was in a catch 22. They did the right thing for the performance of the phone. I dont think it was a Conspiracy Theory, but there is no mincing words. When you connect the words slowing down the phone, people will react to that. If you look at the aftermarket pricing on craigslist or ebay of iphones a have consistently even though they have been slower, they have held their value much better than an android phone. Yes, it is an issue, but i dont think it changes how people think about the phone. Emily david, should apple have been more transparent about this from the outset . David absolutely. The problem in my opinion is one we are seeing more and more from the Technology Companies that play a heavier and heavier role in our lives is they are not good at communicating what they are really doing. As we become more dependent on their products and services and out the and as the demand grows for explanations for why they do things, they dont have any practice in explaining that stuff. I dont think apple did the wrong thing based on evidence ive seen, but what they did wrong is not volunteering it and waiting for users to essentially out them and then the press forced them to acknowledge it. And it doesmistake seem parallel to the kind of thing that facebook and google faced when failing to explain how their algorithms worked. Ametimes they will make little progress if they force them, but these companies dont want to basically take responsibility and give transparency to what they are doing. Are stille, people going to buy iphones, of course, but how do you expect the lawsuits to go down . Gene i dont think they had any merit. David ist to say that spot on, on that. The issue was apple not being forthright on this. People are seeing dollar signs there, easy to take a shot at them. I will make a large bet that these lawsuits go absolutely nowhere. Emily you do have a new note out talking about apples m a philosophy. What is the strategy you see playing out here . To bethey are going repatriating a lot of money with the new tax policy and that is probably close to 210 billion and that begs the question how will it change m a philosophy and it the answer is it will likely have no impact on it. Absurdly higher amount of cash in the u. S. Doesnt change that. They have done him things like beats that have been more than that, but they dont buy brands look at the investment that was in that same framework. If you are looking at a block esther m and a deal in the next one or two years from apple, i think it is a very low probability. Emily all right. Ventures,ster of loup thank you for stopping by. Coming up, welcome pushes back over broadcoms takeover plans. What is next for the chipmakers . This is bloomberg. Emily qualcomm continues attempts to keep takeover desires at bay. They are proposing 11 new directors by broadcom. Broadcom is considering a hostile takeover of its rival chipmaker. Isnt even in the ballpark. Joining us now is matt larson, what do you make of the legal direction today . Are lookingk they at where the company is and apples dispute in their licensing business. They have been saying we have been hit pretty hard, there is a lot of cash am a table we are trying to collect. Thes not indicative of value of the company. You are seeing additional value there if you can clean up legal overhangs and it is a good time to put a bid in. I think it is wise for well, to send those off. Emily how would it proceed . Broadcom is looking to insert members on the board of directors. There is a vote in march and we will see how that plays out here it we could the additional interest in qualcomms board that will try to sway shareholders and it you may see additional bids to move forward with the takeover process. Legal talk about the pressure facing qualcomm from apple, from the ftc, and other legislators. Matt welcome is under tremendous pressure right now. There is a lot of scrutiny. There are allegations that qualcomm overcharges for its chips because it supposedly has some kind of monopoly power. Torelies on Technology Connect with 3g, 4g, looking down the road at five g. As a result, apple and people who make apple devices are not paying qualcomms licensing fees, ultrahigh because of the leverage it has because of patents. Not getting hurt, it is looking to resolve it in litigation, but we are looking at the Third Quarter of next year before we see any progress. Emily interestingly, a judge find apple not turning over information fast enough. What do you make of that . Matt thats right. This is in the fccs dispute with qualcomm. Othered to get all of the parties. Apple has been producing documents about 2. 5 million i believe it says in the pleadings, but they have another 1. 6 million documents to turnover. With depositions coming down the pike, we are looking at things coming to a head at the end of next year, apple needs to get these things turned over. There are deadlines that have been breached and the judge is saying this needs to happen fast and imposing monetary sanctions. Emily David Kirkpatrick is still with us. David, what do you make of all of this happening, industry lawsuits, i asked and various dispute . Qualcomm is one of the companies that sort of created the world we live in. They have spent an enormous amount on r d and we are moving into the amazing world of 5g technology. I think of them as one of the great innovative companies, meanwhile broadcom is a much more roll up had company. Role one more thing up into its oost itso and b stock. The industry is not loaded with players that have fundamentally advanced progress and qualcomm is one. I find it unfortunate that this company has been so burdened by so many legal problems. The number of issues that surround qualcomm is very confusing for investors. For broadcomtime to jump in, but it is unlikely that they will succeed in the long term. Emily thank you so much. Coming up, the Venture Capital outlook for 2018. We will hear from Ethan Kurzweil from bessemer venture partners. This is bloomberg. Alisa im a Alisa Parenti and you are watching Bloomberg Technology. Lets check first word news. Congress will not return to session until january 8 can fling three days of the boats supposed to begin on the third. That is according to an updated agile release updated schedule release. The u. N. Approved new sanctions on north korea in response to the latest Ballistic Missile launch. They placed restrictions on imports on Refined Petroleum products and shipping. The head of catalonia is demanding spain recognize his victory in regional elections. He says the government must guarantee he wont be arrested if he returns to spain. He fred to brussels after a separatist declared independence in october. The vote was a bitter blow for spanish prime minister. On catalan lawmakers to meet demands of its people. Newlections always mean a start in democracy, the opportunity to start a new episode. I am hopeful a new based on dialogue, a time of operation and not imposition, a time for plurality and not unilateral is him unilateralism. Always within the rule of the law. Russian president Vladimir Putin says the u. S. Has violated in arms pact from the cold war. Washington denies the claim saying russia is developing a new Cruise Missile which would also break the 1987 treaty. The first visit to moscow by a u. K. Diplomat in five years took a controversial turn today. Should recognize that russian attempts to interfere in elections and our whatever they have been have not been successful, so you can reassure yourself on that point. That is an important consideration, be guys because had you been successful, that would be an entirely different matter. Global news 24 hours a day, powered by more than 2700 journalist and analysts in in more than 120 countries. We have more of Bloomberg Technology with emily chang coming right up. We hope you have a nice, happy holiday. Emily softbanks recordbreaking 93 billion vision fun has changed the Capital Venture landscape and effects can be seen in the u. S. Talks to raisely a new fund that could potentially top 5 billion. How do make a funds impact vcs and further down the line . Ethan kurzweilis from bessemer venture partners. How has softbank change the landscape internally . Ethan thanks for having me, emily. I think it is way too early to know that. There are two things going on, one that staying a lot longer and softbank is not quite ready to go public. But also there are companies not quite going the past they are used to, do they spend it efficiently or do they wasted and create companies that are not this table. Emily my question is, is this a good thing, or lead to companies that cannot stay afloat . Ethan the latter thing will absolutely lead to that. If youre getting 300 billion on your balance sheet, you dont cut costs or create the same efficiencies you would otherwise here at it is not necessarily bad businesses staying of staying afloat, but companies not developing fundamentals to become great companies. Emily clearly there is a lot of incentive to invest in tech. What you see investors raising a five lane dollar fund . A lot tech has generated of headlines and theres no better place to invest money. I think it is a Capital Allocation game right now and over the next decade some of it will be well spent, they will get more money to spend, and some will be wasted. Emily given the money flooding the system, how does that change things at bessemer . Is there more money out there than ever chasing deals, which means you have to up your game or change strategy . Ethan we tried to keep the game high at all times. In the important thing is we can invest at any age and it forces us to reevaluate our strategy. Are we going to compete with deals, probably not. We will move to the stage game we can be more effective. We can go late where we sense more competition, we tend to shy away from those rounds, because we dont think there will be those kind of returns our investors expect. Emily there is talk about the bubble of 2014 and every year it seems things get brought fear, and investors have more money to spend. Much smarter than me would have to give you a prognostication on that, i dont know. I know we are at an alltime high in terms of roth the frothiness. It seems we are due for a pullback, but that prediction has been coming for five years. You need a trigger and i couldnt tell you i know what that is at this point. Emily i know you are interested in you sports, you made a big bet on twitch. Looking at teams, enabling technology, platforms. There is a lot of people whose time and attention is spent in you sports, it will actually surpass traditional sports. It is a big audience for this, but dollars have not yet come in , in the same proportion as baseball and football, but that will happen. Emily who is watching . Predominant is millennial men, but thats not it. It transcends beyond not becauses audiences are fairly big and diversified at this point. Emily what do you see as being the biggest platform . Ethan right now its a battle between twitch, facebook, and twitter. The sponsors are getting involved in you sports as well as platforms for the play, the actual gaming platforms. League ofrominent is legends right now and then blizzard has their own. There are other upstarts that will contribute as well. Does the games that people are playing right now. Emily you mentioned facebook, which is diving into original content, and then you talk about media bets. Where are you positive and where are they going awry . Ethan i think where rabid viewership is being created, thats where the money will flow ultimately. I think it has been really expensive to produce and brick wires a very long sort of payback cycle. Emily you mean like netflix and Amazon Studios . Ethan exactly. For start up things like twitch work. People create games every day and have a rabid and bays around it here at there are different types of gaming experiences that have that same characteristic, itferent kind of media where is user generated but people love it and watch it. Emily what if somebody has a show on a snapchat, and they are ending it weird is that bad for snapchat . Probably not. I think it is a good move force for cnn, i think that tells you about snapchat, cnn not being able to create a Sustainable Business on. I imagine that kind of experiment will work in other formats, im just not sure what it will be. Emily where are you putting money in 2018 . Ethan you sports, media, entertainment. Anything around entertainment, that seems to create more opportunities for startups. Emily where wont you put your money . ,than premium content something that we at bessemer have always avoided and late stage rounds where you are competing with the kind of investors you mentioned earlier. Emily all right. Great to have you back on the show. Ethan thank you. Emily a leadership change at alphabet was just one change in the top stories. This is bloomberg. Emily it is official. President trump has signed the gops tax plan. Republican leaders claim it will be a boon to the economy, but one person who disagrees with him is the president of m. I. T. Listen to what he told bloomberg in an exclusive interview. Means all of the money for what we are supposed to do, education, research, it is a very surprising move. M. I. T. Officials estimate the tax will will cost the university 10 million per year. The news of eric schmidt stepping down as googles executive chairman stepping down rocked the world on friday here is a likelythat candidate to replace him. We sat down to talk about that, the frenzied week in cryptocurrencies, and the news that uber s ceo has picked a righthand man. This is a really good hire for him. He is bringing on people he has already worked with and this guy basically took a company that was pretty debt laden and held it up to be quite a rival to expedia. He seems like a good operator. Emily presumably as he flies around the world trying to put fires out, Barney Harford can hold on the cold front the home front. Uber must be traded as a transport company, not a tech company, a huge blow to uberx. Driversit means is uber have to get licenses. R has beenube operating in europe like that for some time because of earlier rulings. Taxi drivers have to get licensed. It caps their growth and it is a challenge for a uber. Emily have to talk about big one, coin today halted buys and sells, but a massive plunge. Everybody asks whether it is a bubble pop, who knows . But what do we know about the malfunctions that happened today . I think it gets to the bottom of bitcoin, that it is an amazing idea, but the technical plumbing of how it works makes it actually quite slow, because there is no Central Party to confirm the transactions. Functioning in a decentralized way slows it down. Point base is a popular way to buy and sell bitcoin. The ceo says they are getting into insider trading. This is the wild west and we shouldnt be surprised that this is what they are getting into at the ok corral. It is poorly regulated and people are getting oil with a lot. If you bought in the last couple of weeks, you are hurting right now. Emily eric schmidt is stepping down as executive chairman of alphabet. He is becoming a technical advisor. This is the end of a 17 year career. What is the story . Why did this happen . There is the obvious thing, which is the alphabet organization alphabet reorganization two years ago. Reasonsy be some other to do with his life outside of google and his work. In the politics arena he was close to the democratic organization. He also had a runin with and antitrust Research Organization and that caused a bit of a scandal. There are things past year that may have precipitated this. Emily a lot of people are asking . Is there more to this story brad its true there has been an inordinate amount of attention on people pop a personal lives and behavior in the work ways. It is a fact that eric schmidt has been separated from his wife for many years. They have an open relationship. He has girlfriends and has brought them to company had been company events. Perhaps it is just safer to have them not be in that front man role. Emily meanwhile, Companies Like google seems like they are trying to hit reset in this climate. There are leaders who have emerged and interestingly in a statement larry page shared yesterday, he mentioned himself and sundar as the leader of the company. I thought it interesting he brought sundar into that. He came through a generation of leaders. Some of those people left under a similar cloud, but sundar has emerged relatively unscathed and he seems a pretty straightforward operator. Person he is the perfect to leave the google part of the business. The also, john hennessy, forefather of stanford, but hennessy seems to me would be a natural successor. Emily that was a week in tech with brad stone and alistair barr. Coming up, the dispute between alphabets waymo and a uber. We will bring you the details. This is bloomberg. Emily elon musk talkies spacex will cap a record year with a rocket carrying satellites to californias central coast. It will complete 18 missions this year, twice as many than last year. Suing itsidu is executive for driverless it at those a lawsuit between waymo and uber. Chinast largest largest Internet Provider is joining. Joining us now is alex webb and David Kirkpatrick. Alex, we have heard this story before. Alex in this space, what we have seen is a huge amount of startups being given a huge amount of money. These startups ask why should i take this much money. He raised 2 million and started this company. That is not what happened with waymo or over. Those guys have been sued for technology have. Allegedly they are doing the same year. Emily david, what do you make of this . Obviously be war for tech talent has always been fierce, but now it seems the stakes are even higher. David allow me to be cynical, because we dont think of china as being the of intellectual protection, so i dont think it will yield all kinds of fruit in that area, first of all. Second of all, a lot of things are done for if that in this arena and china spends an enormous amount of time and can about chinese companies. The Chinese Government thinking how can we be as good or better than american tech companies. So, i think it probably serves their interest tremendously well as having the same problem as google had and suing this guy in the exact same way as google sued its executive who left. , look at investors nvidia extremely reputable investors, i cant believe they would invest in this company if he were buying a lot of tech that didnt belong to him. I think the whole thing smacks of a pr exercise. Emily thats interesting. Yet, i think it happened before. They are clearly competitors. Upshot is it has created a headwind. Emily a huge headwind. Alex absolutely. Baidu and nimble than they are trying to find a way to put up more buffers for them. Emily tell us about baidus approach to finding more cars, and cant open source approach. Alex it is interesting. Baidu comes out and announces several dozen partners in this project called apollo are they are borrowing intellectual skills, some rivals, people with different skill sets and rendered a map of all of these companies being completely redundant because they have more partnerships than anyone else. I am always skeptical when anyone calls anything open source, because there is google stuff driving people towards google cloud. Completely open cloud . Likely not. Emily self driving cars were a big theme this year as well as cryptocurrency. What do you expect to see in the self driving car realm . David probably legal progress to allow things to operate on roads. He will see them on streets and limited areas. I think it is one of the most exciting arenas right now. The progress will be limited, but it is going to be very important. I put a lot of importance on it. To be thing that is going really interesting is going to be the kind of businesses that trafficautonomous cars, lights that can talk to cars and there will be a lot of capital flowing in there. Emily thank you. We are talking to alex webb of bloomberg tech and David Kirkpatrick. Happy holidays to you. Happy holidays to everyone watching. We will be back next week. That does it for this edition of Bloomberg Technology. We will see you this tuesday. David what would you say are your greatest pleasures. Thank you. This is good. David i know how to do some interviews. I was really busy. I was busy into building this company. All the diseases have been taken. I will take a tax. Powello, general